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Archives for March 2019

IRS revises EIN application process; seeks to enhance security

IRS revises EIN application process; seeks to enhance security

WASHINGTON — As part of its ongoing security review, the Internal Revenue Service announced today that starting May 13 only individuals with tax identification numbers may request an Employer Identification Number (EIN) as the “responsible party” on the application.

An EIN is a nine-digit tax identification number assigned to sole proprietors, corporations, partnerships, estates, trusts, employee retirement plans and other entities for tax filing and reporting purposes.

The change will prohibit entities from using their own EINs to obtain additional EINs. The requirement will apply to both the paper Form SS-4, Application for Employer Identification Number, and online EIN application.

Individuals named as responsible party must have either a Social Security number (SSN) or an individual taxpayer identification number (ITIN). By making the announcement weeks in advance, entities and their representatives will have time to identify the proper responsible official and comply with the new policy.

The Form SS-4 Instructions provide a detailed explanation of who should be the responsible party for various types of entities. Generally, the responsible party is the person who ultimately owns or controls the entity or who exercises ultimate effective control over the entity. In cases where more than one person meets that definition, the entity may decide which individual should be the responsible party.

Only governmental entities (federal, state, local and tribal) are exempt from the responsible party requirement as well as the military, including state national guards.

There is no change for tax professionals who may act as third-party designees for entities and complete the paper or online applications on behalf of clients.

The new requirement will provide greater security to the EIN process by requiring an individual to be the responsible party and improve transparency. If there are changes to the responsible party, the entity can change the responsible official designation by completing Form 8822-B, Change of Address or Responsible Party. A Form 8822-B must be filed within 60 days of a change.

Plug-In Electric Vehicle Manufacturer Crosses 200,000 Sold Threshold; Tax Credit for Eligible Consumers Begins Phase Down on Apr. 1

Plug-In Electric Vehicle Manufacturer Crosses 200,000 Sold Threshold;
Tax Credit for Eligible Consumers Begins Phase Down on Apr. 1

WASHINGTON – The IRS announced today that General Motors, LLC has sold more than 200,000 vehicles eligible for the plug-in electric drive motor vehicle credit during the fourth quarter of 2018. This triggers a phase out of the tax credit available for purchasers of new General Motors plug-in electric vehicles beginning Apr. 1, 2019.

Qualifying vehicles by the manufacturer are eligible for a $7,500 credit if acquired before April 1, 2019.  Beginning Apr. 1, 2019, the credit will be $3,750 for General Motors’ eligible vehicles. On October 1, 2019, the credit will be reduced to $1,875 for the next two quarters. After March 31, 2020, no credit will be available.

The plug-in electric drive motor vehicle credit was enacted in the Energy Improvement and Extension Act of 2008 and subsequently modified in later law.  It provides a credit for eligible passenger vehicles and light trucks.  By law, five quarters after reaching the sales threshold, the credit ends for the manufacturer.  General Motors vehicles are eligible for some portion of a credit until Apr. 1, 2020.

BUREAU OF CANNABIS CONTROL § 5421. Delivery Route

§ 5421. Delivery Route

While making deliveries of cannabis goods, a retailer’s delivery employee shall only travel from
the retailer’s licensed premises to the delivery address; from one delivery address to another
delivery address; or from a delivery address back to the retailer’s licensed premises. A delivery
employee of a retailer shall not deviate from the delivery path described in this section, except
for necessary rest, fuel, or vehicle repair stops, or because road conditions make continued use of
the route unsafe, impossible, or impracticable.

Authority: Section 26013, Business and Professions Code. Reference: Sections 26070 and
26090, Business and Professions Code.

All taxpayers will file using 2018 Form 1040; Forms 1040A and 1040EZ no longer available 

All taxpayers will file using 2018 Form 1040; Forms 1040A and 1040EZ no longer available

As the April filing deadline approaches, IRS reminds taxpayers that Form 1040 has been redesigned for tax year 2018. The revised form consolidates Forms 1040, 1040A and 1040-EZ into one form that all individual taxpayers will use to file their 2018 federal income tax return.

Forms 1040-A and 1040-EZ are no longer available to file 2018 taxes. Taxpayers who used one of these forms in the past will now file Form 1040. Some forms and publications released in 2017 or early 2018 may still have references to Form 1040A or Form 1040EZ. Taxpayers should disregard these references and refer to the Form 1040 instructions for more information.

The new form uses a building block approach that can be supplemented with additional schedules as needed. Taxpayers with straightforward tax situations will only need to file the Form 1040 with no additional schedules.

People who use tax software will still follow the steps they’re familiar with from previous years. Since nearly 90 percent of taxpayers now use tax software, the IRS expects the change to Form 1040 and its schedules to be seamless for those who file electronically.

Electronic filers may not notice any changes because the tax return preparation software will automatically use their answers to the tax questions to complete the Form 1040 and any needed schedules.
For taxpayers who filed paper returns in the past and are concerned about these changes, this year may be the year to consider the benefits of filing electronically. Using tax software is a convenient, safe and secure way to prepare and e-file an accurate tax return.

More information:

  • e-File Options for Individuals
  • Free File: Do Your Federal Taxes for Free
  • About the Form 1040, U.S. Individual Income Tax Return
  • Questions and Answers About the 2018 Form 1040
  • Here are five facts about the new Form 1040
  • There are six new schedules some taxpayers will file with the new Form 1040

BUREAU OF CANNABIS CONTROL § 5420. Delivery Request Receipt

§ 5420. Delivery Request Receipt

A retailer shall prepare a hard copy or electronic delivery request receipt for each delivery of
cannabis goods.
(a) The delivery request receipt shall contain the following:
(1) The name and address of the retailer;
(2) The first name and employee number of the retailer’s delivery employee who delivered the
order;
(3) The first name and employee number of the retailer’s employee who prepared the order for
delivery;
(4) The first name of the customer and a retailer-assigned customer number for the person who
requested the delivery;
(5) The date and time the delivery request was made;
(6) The delivery address;
(7) A detailed description of all cannabis goods requested for delivery. The description shall
include the weight, volume, or any other accurate measure of the amount of all cannabis goods
requested;
(8) The total amount paid for the delivery, including any taxes or fees, the cost of the cannabis
goods, and any other charges related to the delivery; and
(9) Upon delivery, the date and time the delivery was made, and the handwritten or electronic
signature of the customer who received the delivery.
(b) At the time of the delivery, the delivery employee of the retailer shall provide the customer
who placed the order with a hard or electronic copy of the delivery request receipt. The delivery
employee shall retain a hard or electronic copy of the signed delivery request receipt for the
retailer’s records.

Authority: Section 26013, Business and Professions Code. Reference: Sections 26070 and
26090, Business and Professions Code.

BUREAU OF CANNABIS CONTROL § 5419. Cannabis Consumption During Delivery

§ 5419. Cannabis Consumption During Delivery

A retailer’s delivery employees shall not consume cannabis goods while delivering cannabis
goods to customers.

Authority: Section 26013, Business and Professions Code. Reference: Sections 26070 and
26090, Business and Professions Code.

Spread the word about a tax credit that helps millions of Americans

Spread the word about a tax credit that helps millions of Americans

All individual taxpayers and families should claim tax credits for which they are eligible. Tax credits can not only reduce the amount of taxes owed, but some can result in a tax refund. The earned income tax credit is such a credit. It benefits millions of taxpayers by putting more money in their pockets.

The IRS encourages taxpayers who have claimed the credit to help their friends, family members and neighbors find out about EITC. They can go to IRS.gov/eitc or use the EITC Assistant tool on IRS.gov, available in English and Spanish. Word of mouth is a great way to help people who may be eligible for this credit in 2019 for the first time. People often become eligible for the credit when their family or financial situation changed in the last year.

Based on income, family size and filing status, the maximum amount of EITC for Tax Year 2018 is:

  • $6,431 with three or more qualifying children
  • $5,716 with two qualifying children
  • $3,461 with one qualifying child
  • $519 with no qualifying children

Every year, millions of taxpayers don’t claim the EITC because they don’t know they’re eligible. Here are some groups the IRS finds often overlook this valuable credit:

  • American Tribal communities
  • People living in rural areas
  • Working grandparents raising grandchildren
  • Taxpayers with disabilities
  • Parents of children with disabilities
  • Active duty military and/or veterans
  • Healthcare and Hospitality workers

Free tax help from volunteers:

The IRS works with community organizations around the country to offer free tax preparation services. They train volunteers who prepare taxes for people with low and moderate income. These volunteers can help determine if a taxpayer is eligible to claim the EITC. There are two IRS-sponsored programs:

  • Volunteer Income Tax Assistance: This program, also known as VITA, offers free tax return preparation to eligible taxpayers who generally earn $55,000 or less.
  • Tax Counseling for the Elderly: TCE is mainly for people age 60 or older but offers service to all taxpayers. The program focuses on tax issues unique to seniors. AARP participates in the TCE program through AARP Tax-Aide.

IRS expands penalty waiver for those whose tax withholding and estimated tax payments fell short in 2018; key threshold lowered to 80 percent

IRS expands penalty waiver for those whose tax withholding and estimated tax payments fell short in 2018; key threshold lowered to 80 percent

WASHINGTON — The Internal Revenue Service today provided additional expanded penalty relief to taxpayers whose 2018 federal income tax withholding and estimated tax payments fell short of their total tax liability for the year.

The IRS is lowering to 80 percent the threshold required to qualify for this relief. Under the relief originally announced Jan. 16, the threshold was 85 percent. The usual percentage threshold is 90 percent to avoid a penalty.

“We heard the concerns from taxpayers and others in the tax community, and we made this adjustment in an effort to be responsive to a unique scenario this year,” said IRS Commissioner Chuck Rettig. “The expanded penalty waiver will help many taxpayers who didn’t have enough tax withheld. We continue to urge people to check their withholding again this year to make sure they are having the right amount of tax withheld for 2019.”

This means that the IRS is now waiving the estimated tax penalty for any taxpayer who paid at least 80 percent of their total tax liability during the year through federal income tax withholding, quarterly estimated tax payments or a combination of the two.

Today’s revised waiver computation will be integrated into commercially-available tax software and reflected in the forthcoming revision of the instructions for Form 2210, Underpayment of Estimated Tax by Individuals, Estates, and Trusts.

Taxpayers who have already filed for tax year 2018 but qualify for this expanded relief may claim a refund by filing Form 843, Claim for Refund and Request for Abatement and include the statement “80% Waiver of estimated tax penalty” on Line 7.  This form cannot be filed electronically.

Today’s expanded relief will help many taxpayers who owe tax when they file, including taxpayers who did not properly adjust their withholding and estimated tax payments to reflect an array of changes under the Tax Cuts and Jobs Act (TCJA), the far-reaching tax reform law enacted in December 2017.

The IRS and partner groups conducted an extensive outreach and education campaign throughout 2018 to encourage taxpayers to do a “Paycheck Checkup” to avoid a situation where some might have had too much or too little tax withheld when they file their tax returns. If a taxpayer did not submit a revised W-4 withholding form to their employer or increase their estimated tax payments, they may have not had enough tax withheld during the tax year.

Additional information

Because the U.S. tax system is pay-as-you-go, taxpayers are required, by law, to pay most of their tax obligation during the year, rather than at the end of the year. This can be done by either having tax withheld from paychecks or pension payments, or by making estimated tax payments.

Usually, a penalty applies at tax filing if too little is paid during the year. This penalty is an interest based amount approximately equivalent to the federal interest on the amount not paid in a timely manner. Normally, the penalty would not apply for 2018 if tax payments during the year met one of the following tests:

  • The person’s tax payments were at least 90 percent of the tax liability for 2018 or
  • The person’s tax payments were at least 100 percent of the prior year’s tax liability, in this case from 2017. However, the 100 percent threshold is increased to 110 percent if a taxpayer’s adjusted gross income is more than $150,000, or $75,000 if married and filing a separate return.

For waiver purposes only, today’s relief lowers the 90 percent threshold to 80 percent. This means that a taxpayer will not owe a penalty if they paid at least 80 percent of their total 2018 tax liability. If the taxpayer paid less than 80 percent, then they are not eligible for the waiver and the penalty will be calculated as it normally would be, using the 90 percent threshold. For further details, see Notice 2019-25, posted today on IRS.gov.

Like last year, the IRS urges everyone to take a Paycheck Checkup and review their withholding for 2019. This is especially important for anyone now facing an unexpected tax bill when they file. This is also an important step for those who made withholding adjustments in 2018 or had a major life change to ensure the right tax is still being withheld. Those most at risk of having too little tax withheld from their pay include taxpayers who itemized in the past but now take the increased standard deduction, as well as two-wage-earner households, employees with nonwage sources of income and those with complex tax situations.

To help taxpayers get their withholding right in 2019, the updated Withholding Calculator is now available on IRS.gov.

BUREAU OF CANNABIS CONTROL § 5418. Cannabis Goods Carried During Delivery

§ 5418. Cannabis Goods Carried During Delivery

(a) A retailer’s delivery employee shall not carry cannabis goods in the delivery vehicle in excess
of $10,000 at any time. The value of cannabis goods shall be determined using the current retail
price of all cannabis goods carried by, or within the delivery vehicle of, the retailer’s delivery
employee.
(b) A delivery employee may only carry cannabis goods in the delivery vehicle and may only
perform deliveries for one licensed retailer at a time. A delivery employee must depart and return
to the same licensed premises before taking possession of any cannabis goods from another
licensee to perform deliveries.
(c) A retailer’s delivery employee shall not leave the licensed premises with cannabis goods
without at least one delivery order that has already been received and processed by the retailer.
(d) Before leaving the licensed premises, the retailer’s delivery driver must have a delivery
inventory ledger of all cannabis goods provided to the retailer’s delivery driver. For each
cannabis good, the delivery inventory ledger shall include the type of good, the brand, the retail
value, the track and trace identifier, and the weight, volume or other accurate measure of the
cannabis good. After each customer delivery, the delivery inventory ledger must be updated to
reflect the current inventory in possession of the retailer’s delivery driver.
(e) The retailer’s delivery driver shall maintain a log that includes all stops from the time the
retailer’s delivery driver leaves the licensed premises to the time that the retailer’s delivery driver
returns to the licensed premises, and the reason for each stop. The log shall be turned in to the
retailer when the retailer’s delivery driver returns to the licensed premises. The retailer must
maintain the log as a commercial cannabis activity record as required by this division.
(f) Prior to arrival at any delivery location, the retailer must have received a delivery request
from the customer and provided the delivery request receipt to the retailer’s delivery driver
electronically or in hard copy. The delivery request receipt provided to the retailer’s delivery
driver shall contain all of the information required in section 5420 of this division, except for the
date and time the delivery was made, and the signature of the customer.
(g) Immediately upon request by the Bureau or any law enforcement officer, the retailer’s
delivery driver shall provide:

(1) All delivery inventory ledgers from the time the retailer’s delivery driver left the licensed
premises up to the time of the request;
Bureau of Cannabis Control Emergency Regulations Readopt Text – Readopt June 2018 Page 58 of 120

(2) All delivery request receipts for cannabis goods carried by the driver, in the delivery vehicle,
or any deliveries that have already been made to customers; and
(3) The log of all stops from the time the retailer’s delivery driver left the licensed premises up to
the time of the request.
(h) If a retailer’s delivery driver does not have any delivery requests to be performed for a 30-
minute period, the retailer’s delivery driver shall not make any additional deliveries and shall
return to the licensed premises. Required meal breaks shall not count toward the 30-minute
period.

(i) Upon returning to the licensed premises, all undelivered cannabis goods shall be returned to
inventory and all necessary inventory and track-and-trace records shall be updated as appropriate
that same day.

Tax reform brought significant changes to itemized deductions

Tax reform brought significant changes to itemized deductions

Tax law changes in the Tax Cuts and Jobs Act affect almost everyone who itemized deductions on tax returns they filed in previous years..  One of these changes is that TCJA nearly doubled the standard deduction for most taxpayers. This means that many individuals may find it more beneficial to take the standard deduction. However, taxpayers may still consider itemizing if their total deductions exceed the standard deduction amounts.

Here are some highlights taxpayers need to know if they plan to itemize deductions:

Medical and dental expenses
Taxpayers can deduct the part of their medical and dental expenses that’s more than 7.5 percent of their adjusted gross income.

State and local taxes
The law limits the deduction of state and local income, sales, and property taxes to a combined, total deduction of $10,000. The amount is $5,000 for married taxpayers filing separate returns. Taxpayers cannot deduct any state and local taxes paid above this amount.

Miscellaneous deductions
The new law suspends the deduction for job-related expenses or other miscellaneous itemized deductions that exceed 2 percent of adjusted gross income. This includes unreimbursed employee expenses such as uniforms, union dues and the deduction for business-related meals, entertainment and travel.

Home equity loan interest
Taxpayers can no longer deduct interest paid on most home equity loans unless they used the loan proceeds to buy, build or substantially improve their main home or second home.

More information:
• Publication 5307, Tax Reform: Basics for Individuals and Families
• Publication 501, Standard Deduction, and Filing Information
• Schedule A, Itemized Deductions
• IRS Tax Map

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