Tips on How to Handle an IRS Letter or Notice

The IRS mails millions of letters every year to taxpayers for a variety of reasons. Keep the following suggestions in mind on how to best handle a letter or notice from the IRS:

  1. Do not panic. Simply responding will take care of most IRS letters and notices.
  2. Do not ignore the letter. Most IRS notices are about federal tax returns or tax accounts. Each notice deals with a specific issue and includes specific instructions on what to do. Read the letter carefully; some notices or letters require a response by a specific date.
  3. Respond timely. A notice may likely be about changes to a taxpayer’s account, taxes owed or a payment request. Sometimes a notice may ask for more information about a specific issue or item on a tax return. A timely response could minimize additional interest and penalty charges.
  4. If a notice indicates a changed or corrected tax return, review the information and compare it with your original return. If the taxpayer agrees, they should note the corrections on their copy of the tax return for their records. There is usually no need to reply to a notice unless specifically instructed to do so, or to make a payment.
  5. Taxpayers must respond to a notice they do not agree with. They should mail a letter explaining why they disagree to the address on the contact stub at the bottom of the notice. Include information and documents for the IRS to consider and allow at least 30 days for a response.
  6. There is no need to call the IRS or make an appointment at a taxpayer assistance center for most notices. If a call seems necessary, use the phone number in the upper right-hand corner of the notice. Be sure to have a copy of the related tax return and notice when calling.
  7. Always keep copies of any notices received with tax records.
  8.  The IRS and its authorized private collection agency will send letters and notices by mail. The IRS will not demand payment a certain way, such as prepaid debit or credit card. Taxpayers have several payment options for taxes owed.

National Ice Cream Day 2017

By Debby Winters

It is finally here! July 16, 2017!! Hip Hip Hooray! To help you celebrate National Ice Cream Day, here are a few tidbits about ice cream that you may not have already known

1- In 1984, President Ronald Reagan decreed that July would be National Ice Cream Month. And on the third Sunday of July—yes, that’s today—we celebrate National Ice Cream Day.

2- The sound of the ice cream truck is a trademarked sound: On May 21, 2013 the Australian company Breville received the trademark for the sound the ice cream truck makes, which they described as follows: The mark consists of the song “Turkey in the Straw”, which consists of a keyboard synthesizer playing pickup measure: G4 eighth note followed by F4 eighth note; first measure: E-flat4 quarter note followed by E-flat4 eighth note followed by F4 eighth note followed by E-flat4 eighth note followed by B-flat3 eighth note followed by G3 eighth note followed by B-flat3 eighth note, played simultaneously with E-flat3 half note followed by B-flat2 half note; second measure: E-flat 4 eighth note followed by C5 eighth note followed by B-flat4 eighth note followed by G4 eighth note followed by B-flat4 quarter note followed by E-flat4 eighth note followed by F4 eighth note, played simultaneously with E-flat3 half note followed by B-flat 2 half note; third measure: G4 quarter note followed by G4 quarter note followed by G4 eighth note followed by F4 eighth note followed by E-flat 4 eighth note followed by F4 eighth note, played simultaneously with E-flat3 half note followed by B-flat 2 half note; fourth measure: G4 quarter note followed by F4 quarter note followed by F4 quarter note followed by G4 eighth note followed by F4 eighth note, played simultaneously with B-flat2 half note followed by F3 half note; fifth measure: E-flat4 quarter note followed by E-flat4 eighth note followed by F4 eighth note followed by E-flat4 eighth note followed by B-flat3 eighth note followed G3 eighth note followed by B-flat3 eighth note, played simultaneously with E-flat3 half note followed by B-flat2 half note; sixth measure: E-flat4 eighth note followed by C5 eighth note followed by B-flat4 eighth note followed by G4 eighth note followed by B-flat4 quarter note followed by E-flat4 eighth note followed by F4 eighth note, played simultaneously with E-flat3 half note followed by B-flat2 half note; seventh measure: G4 eighth note followed by B-flat4 eighth note followed by eighth rest followed by C5 eighth note followed by B-flat4 eighth note followed by G4 eighth note followed by E-flat4 eighth note followed by F4 eighth note, played simultaneously with B-flat2 quarter note followed G3 quarter note followed by B-flat3 half note; eighth measure: G4 quarter note followed by F4 quarter note followed by E-flat4 quarter note followed by quarter rest, played simultaneously with B-flat2 half note followed by E-flat2 half note.

3- Around 1832, Augustus Jackson created multiple ice cream recipes and pioneering a superior ice cream preparation technique and decoration.

4- Nancy Johnson of Philadelphia created the hand-cranked device that was the first ice cream machine in 1843. This revolutionizing the distribution and sale of ice cream throughout the United States and Canada.   It was a manual device cranked by a handle with a pewter cylinder.  Her invention, as illustrated in her patent no. 3,254 looked like the diagram below and was described as: An outer wooden pail contained crushed ice; an inner tin or pewter cylinder contained the ice-cream mix to be frozen.  A manual device cranked by a handle with a lid bolted on and the handle inserted through the top of the lid and turned to freeze the mix. The device inside attached to the handle was called a dasher. It was possible to split the inner cylinder such that 2 different ice cream flavours could be frozen simultaneously but separately.

5- Syrian immigrant and waffle salesman Ernest Hamwi has generally been credited with inventing the first edible ice cream cone at the 1904 St. Louis World’s Fair when a nearby vendor ran out of serving dishes, and the creation sparked a nationwide sensation.

6- Philadelphian entrepreneur by the name of Robert Green would regularly mix syrup and cream into his carbonated beverages in the last decades of the 1800s. Legend has it that on one fateful day, he ran out of these regular ingredients and used ice cream as a substitute, creating the first ice cream soda in the process.

7- The Oregon Research Institute in Eugene and published a study in the American Journal of Clinical Nutrition that found that when the brain craves ice cream and other high-fat/high-sugar foods, it reacts in the same way as a cocaine user’s does in a period of withdrawal.

8- In 2012, after an exhaustive survey of regional credit card transactions throughout the nation, researchers found that “Long Beachers eat ice cream a whopping 268 percent more than the average American.” Fort Worth and Dallas also scored well above average when it comes to devouring ice cream.

9- Prior to the invention of refrigeration, ice cream was a rather expensive dessert. Our nation’s first president is rumored to have once spent $700 on the delicacy in New York City over the course of one summer. Sharing her husband’s zeal, Martha Washington acquired a “cream machine for ice” in 1784 to serve ice cream to her guests at Mount Vernon.

10- Ben And Jerry wanted to buy a bagel machine but could only afford an ice cream maker, thus was born their famous ice cream.

Go get yourself some ice cream! Happy National Ice Cream Day 2017!

One Month Left for Arkansas Nonprofits to Apply for SBA Disaster Loans

FROM THE SBA:

SACRAMENTO, Calif. – Director Tanya N. Garfield of the U.S. Small Business Administration’s Disaster Field Operations Center-West today reminded Arkansas private nonprofit organizations of the Aug. 14, 2017, deadline to apply for an SBA federal disaster loan for property damage caused by severe storms, tornadoes, straight-line winds and flooding that occurred April 26 – May 19, 2017. Private nonprofits that provide essential services of a governmental nature are eligible for assistance.

According to Garfield, eligible private nonprofits of any size may apply for SBA federal disaster loans of up to $2 million to repair or replace damaged or destroyed real estate, machinery and equipment, inventory and other business assets. SBA can also lend additional funds to help with the cost of making improvements that protect, prevent or minimize the same type of disaster damage from occurring in the future.

In addition, SBA offers Economic Injury Disaster Loans to help eligible private nonprofits meet working capital needs caused by the disaster. Economic Injury Disaster Loans may be used to pay fixed debts, payroll, accounts payable and other bills that cannot be paid because of the disaster’s impact. Economic injury assistance is available regardless of whether the private nonprofit suffered any property damage. Private nonprofits have until March 15, 2018, to apply for an SBA Economic Injury Disaster Loan.

SBA low-interest federal disaster loans are available in Baxter, Benton, Boone, Carroll, Clay, Cleburne, Conway, Craighead, Cross, Faulkner, Independence, Izard, Jackson, Lawrence, Madison, Marion, Mississippi, Montgomery, Newton, Ouachita, Perry, Poinsett, Prairie, Randolph, Saline, Washington, White and Woodruff counties.

The interest rate is 2.5 percent with terms up to 30 years. Loan amounts and terms are set by SBA and based on each applicant’s financial condition.

Applicants may apply online, receive additional disaster assistance information and download applications at https://disasterloan.sba.gov/ela. Applicants may also call SBA’s Customer Service Center at (800) 659-2955 or email disastercustomerservice@sba.gov for more information on SBA disaster assistance. Individuals who are deaf or hard of hearing may call (800) 877-8339. Completed applications should be mailed to U.S. Small Business Administration, Processing and Disbursement Center, 14925 Kingsport Road, Fort Worth, TX  76155.

Devil Horns Gesture Trademarkable?

By Debby Winters

In the past few months, Gene Simmons, of the famed rock n roll band Kiss, has applied for a number of trademark applications.  Simmons, one of the most successful musician-entrepreneurs in history, owns a number of other trademark registrations through his Gene Simmons Company.  The most notable of his recent filings is for the hand gesture shown below. This application was filed June 9, 2017 claiming it was for live performances by a musical artist; personal appearances by a musical artist, which has first been used in 1974 .  Simmons claimed that it became a part of the band’s act during its Hotter Than Hell tour — on Nov. 14, 1974 to be exact.

Mark Image

At the time of the filing, it was controversial as to whether Simmons was the owner of the hand gesture, as it is not only an international symbol of rock, but a perusal of photographs that predate 1974 show other rock stars using the gesture.  This is now a moot point as on June 20, 2017,  less than 2 weeks after the filing, Simmons filed an express abandonment of the mark.  It appears that he sought registration of the hand gesture itself, rather than an image or depiction of the gesture, describing the mark in the application as “a hand gesture with the index and small fingers extended upward and the thumb extended perpendicular.”  While images or stylized drawings of hand gestures can function, and be registered as trademarks, either by themselves or as part of a design mark, hand gestures in and of themselves cannot function as trademarks.

Even if they could be registered as a trademark, how would one enforce such a thing against others?  That would be virtually impossible.

Nice try, Gene, but no go.

IRS Offers Tips for Teenage Taxpayers with Summer Jobs

Students and teenagers often get summer jobs. This is a great way to earn extra spending money or to save for later. The IRS offers a few tax tips for taxpayers with a summer job:

  1. Withholding and Estimated Tax. Students and teenage employees normally have taxes withheld from their paychecks by the employer.  Some workers are considered self-employed and may be responsible for paying taxes directly to the IRS. One way to do that is by making estimated tax payments during the year.
  2. New Employees. When a person gets a new job, they need to fill out a Form W-4, Employee’s Withholding Allowance Certificate. Employers use this form to calculate how much federal income tax to withhold from the employee’s pay. The IRS Withholding Calculator tool on IRS.gov can help a taxpayer fill out the form.
  3. Self-Employment. A taxpayer may engage in types of work that may be considered self-employment. Money earned from self-employment is taxable. Self-employment work can be jobs like baby-sitting or lawn care. Keep good records on money received and expenses paid related to the work.  IRS rules may allow some, if not all, costs associated with self-employment to be deducted. A tax deduction generally reduces the taxes you pay.
  4. Tip Income. Employees should report tip income. Keep a daily log to accurately report tips. Report tips of $20 or more received in cash in any single month to the employer.
  5. Payroll Taxes. Taxpayers may earn too little from their summer job to owe income tax. Employers usually must withhold Social Security and Medicare taxes from their pay. If a taxpayer is self-employed, then Social Security and Medicare taxes may still be due and are generally paid by the taxpayer, in a timely manner.
  6. Newspaper Carriers. Special rules apply to a newspaper carrier or distributor. If a person meets certain conditions, then they are self-employed. If the taxpayer does not meet those conditions, and are under age 18, they may be exempt from Social Security and Medicare taxes.
  7. ROTC Pay. If a taxpayer is in a ROTC program, active duty pay, such as pay for summer advanced camp, is taxable. Other allowances the taxpayer may receive may not be taxable, see Publication 3 for details.
  8. Use IRS Free File. Taxpayers can prepare and e-file their federal income tax return for free using IRS Free File.  Free File is available only on IRS.gov. Some taxpayers may not earn enough money to have to file a federal tax return, by law, but may want to if taxes were withheld. For example, a taxpayer may want to file a tax return because they would be eligible for a tax refund or a refundable credit.  IRS Free File can help with these issues.

Plan Ahead for Tax Time When Renting Out Residential or Vacation Property

Summertime is a time of year when people rent out their property. In addition to the standard clean up and maintenance, owners need to be aware of the tax implications of residential and vacation home rentals.

Receiving money for the use of a dwelling also used as a taxpayer’s personal residence generally requires reporting the rental income on a tax return. It also means certain expenses become deductible to reduce the total amount of rental income that’s subject to tax.

Dwelling Unit.  This may be a house, an apartment, condominium, mobile home, boat, vacation home or similar property. It’s possible to use more than one dwelling unit as a residence during the year.

Used as a Home.  The dwelling unit is considered to be used as a residence if the taxpayer uses it for personal purposes during the tax year for more than the greater of: 14 days   or 10% of the total days rented to others at a fair rental price. Rental expenses cannot be more than the rent received.

Personal Use.  Personal use means use by the owner, owner’s family, friends, other property owners and their families. Personal use includes anyone paying less than a fair rental price.

Divide Expenses. Special rules generally apply to the rental of a home, apartment or other dwelling unit that is used by the taxpayer as a residence during the taxable year. Usually, rental income must be reported in full, and any expenses need to be divided between personal and business purposes. Special deduction limits apply.

How to Report. Use Schedule E to report rental income and rental expenses on Supplemental Income and Loss. Rental income may also be subject to Net Investment Income Tax. Use Schedule A to report deductible expenses for personal use on Itemized Deductions. This includes such costs as mortgage interest, property taxes and casualty losses.

Special Rules.  If the dwelling unit is rented out fewer than 15 days during the year, none of the rental income is reportable and none of the rental expenses are deductible. Find out more about these rules; see Publication 527, Residential Rental Property (Including Rental of Vacation Homes).

Use IRS Free File.  Renting a vacation home can be complicated and IRS Free File can make filing a tax return easier. IRS Free File is available until Oct. 16. Taxpayers earning $64,000 or less can use brand-name tax software. Those earning more can use Free File Fillable Forms, an electronic version of IRS paper forms. Free File is available only through the IRS.gov website. You can get forms and publications on IRS.gov/forms at any time.

The Slants fought the law and The Slants won!

By Debby Winters

Should an all Asian-American rock band have the right to call themselves by what the U.S. Patent and Trademark Office termed a disparaging name? The US Supreme Court says yes. The Slants fought the law and The Slants won!

The recent Supreme Court ruling could have broad impact on how the First Amendment is applied in other trademark cases.  The USPTO initially kept the band from registering its name, The Slants, and then rejected its appeal, citing the Lanham Act, which prohibits any trademark that could “disparage … or bring … into contemp[t] or disrepute” any “persons, living or dead.”  A Federal Court sided with the band and the USPTO sued to avoid being compelled to register the name as a trademark. The Supreme Court has now weighted in and has sided with The Slants.

You may be asking why the band wanted the name in the first place. “We grew up and the notion of having slanted eyes was always considered a negative thing,” Simon Tam, the band leader, said.  “Kids would pull their eyes back in a slant-eyed gesture to make fun of us. … I wanted to change it to something that was powerful, something that was considered beautiful or a point of pride instead.” This attitude is in contrast to the Native Americans, who in 2014, asked the USPTO to cancel the registrations for the Washington Redskins because the Native Americans considered the name offensive.

This decision may lead to more marks the USPTO terms “scandalous” to ruling that allow the marks based on First Amendment grounds.  And if so, will this mean a short-term run on the Trademark Office to register offensive trademarks while you may be able to get them through?  Applications that have been rejected on the basis of Section 2(a) may have a new life for those who use or intend to use the marks in commerce. Only time will tell. Stay tuned!