Lee B

California is pushing the nexus boundaries to the breaking point. It's way beyond whether you have a resident employee. Just read FTB Pub 1050, it's a real eyeopener!

Yes, I still receive mail and email from the FTB even though it's been 3 or 4 years since I last filed a CA Tax Return.

I responded to a CP 2000 13 months ago. I have received 2 letters from the IRS saying they needed more time. Still waiting. Another accountant here in Oregon mailed a reply back in May 2021. Her correspondence was opened and recorded in November 2021. So far she has received 4 letters from the IRS saying they needed more time. Don't even know what to say.

Abby, your friend's consulting does not appear to be a "protected activity'. My preliminary reading is that she would have to register.

Tom, your original post triggered me to find out if anything had changed since the last time I looked into this issue. :)

I found the applicable information in FTB Pub 1050: https://www.ftb.ca.gov/forms/misc/1050.pdf Based on my reading I believe my client's shipping of Roasted Coffee to customers in CA still meets the definition of "protected activity" under Public Law (PL) 86-272, 15 U.S.C. §§381-384, which Congress adopted in 1959. "PL 86-272 prohibits a state from imposing a net income tax on the income of a person derived within the state from interstate commerce if the only business activities within the state conducted by or on behalf of the person consist of the solicitation of orders for sales of tangible personal property." Abby, this Pub has a lengthy list of protected and unprotected online activities.

I have a S Corporation client who is a Coffee Roaster/Wholesaler. They have customers in California to whom they ship Roasted Coffee every week. In the past that has not created a California Nexus. What changed and when was the effective date. I would appreciate a link to the applicable part of the FTB website. Also, have you noticed any commentary and analysis? Thanks in advance, Lee

"If a taxpayer makes a charitable contribution of cryptocurrency valued at more than $5,000, a qualified appraisal is required the IRS held in Chief Counsel Advice 202302012.[1] The IRS finds that cryptocurrency fails to fall into any category of property exempted from the qualified appraisal rules of §170(f)(11)(C)." It doesn't get any easier, does it?

I had to call BSO technical support. I got through right away. The support person was helpful, then I was able to log in and start uploading my clients W 2s.

I wouldn't go as far as keeping the payroll software back that many years. However I would keep the following for each client/year: 1. Payroll Check History Detail 2. Quarterly Payroll Reports 3. Annual payroll reports My past experience trying to keep that many years of ATX Software up and running was definitely an exercise in frustration! However, I currently have 5 years of Drake currently up and running with zero problems

I remember when I was taking Accounting Classes in college waiting and waiting until the cost of a Texas Instrument handheld calculator finally dropped to to $125 so that I could finally afford to buy one:)

The 25% applies to Employer Matching Contributions

January is my busiest month due to 4th Quarter and Year End Payroll Reports, so I don't have any more time to spend on this area. The objective of my posts was to point out that this is an area which is more complicated than it first appears, which is why I keep referring to the client's Plan Document and to the client's Fiduciary who has expert advice available.

He has to have a formal plan even if it's just boilerplate. Why don't you do a conference call with your client and his Fiduciary.

First you need to refer to your Plan Document to see what your client's plan allows. Second the Fiduciary for your clients plan employees people who are experts in this area, who would be the most knowledgeable people to answer your questions. For example if the plan allows Employer Nonelective Contributions, the employee could contribute $ 0 and the employer could make a Nonelective Contribution of the max $61,000.

To further clarify, Employer Nonelective Contributions are voluntary, the Employer has no obligation to make these contributions. In the right circumstances with the cash available, they would be a good tax planning tool. With enough time to read, it's amazing what you can learn.

You are correct with respect to the limit on Employer Matching Contributions, however many plans also allow "Nonelective Employer Contributions" for which the 25% of compensation does not apply: https://www.irs.gov/retirement-plans/plan-participant-employee/retirement-topics-401k-and-profit-sharing-plan-contribution-limits "Overall limit on contributions Total annual contributions (annual additions) to all of your accounts in plans maintained by one employer (and any related employer) are limited. The limit applies to the total of: elective deferrals (but not catch-up contributions) employer matching contributions employer nonelective contributions allocations of forfeitures"

Again it depends on the plan document. I believe plans can be written so that the employer contribution can exceed 25 % of compensation as long as the combined employee/employer contributions doesn't exceed the designated max of $61,000 for 2022 or 100% of compensation whichever is lower.

Amusing discussion, since the IRS still hasn't implemented optical scanning and all paper filed 1099s have to be entered by an employee.

In 30 years I only have personal knowledge of the IRS visiting a client unannounced once, about ten years ago. My client kept making their federal payroll tax deposits very late. It was kind of surprising since they only had 3 or 4 part time employees. According to my client, the IRS Agent didn't actually do much except to ask some payroll related questions which as I remember they didn't answer truthfully. This was a client who I fired.

It is supposed to, however for years I just printed and mailed black & white laser printed copies with no problems. Now I efile thru a third party.

I tried to sign in the middle of January which I consider to be timely. Even the IRS uses text to send Pin numbers to you.

Why don't you look at the Plan Document or contact the Fiduciary?

Last year when I couldn't sign on, the SSA mailed me a temporary password which took over two weeks to arrive, which I didn't receive until the 31st of January. I waited until the 27th of January then mailed in all of my client's W - 2s. Why can't the SSA email you a temporary password like everyone else?

"When the Advocate’s report went to press in mid-December 2022, the IRS had reduced those backlogs to 1 million original individual returns, 1.5 million original business returns, and 1.5 million amended returns. By Dec. 23, the IRS had further reduced its unprocessed paper backlog of original individual returns to about 400,000 and original business returns to about 1 million." According to Nina Olson, the former Taxpayer Advocate, the overall situation isn't quite as positive because there are Millions more returns in Suspense waiting for a live person to resolve processing problems.