3 tips for last-minute tax filing

The US Internal Revenue Service (IRS) received fewer tax returns by the end of March than it did the previous year as more Americans delayed filing. National Association of Tax Professionals director of tax content Tom O'Saben joins Wealth host Brad Smith to share some tips for last-minute tax tips.
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IRS Can And Does Assess This 100% Tax Penalty—Over And Over Again

Employees, Payroll Binder data finance report business with graph analysis in office. getty For anyone with employees, paying employment taxes is inevitable. You withhold taxes from employee pay, then send the money to the IRS. The taxes are withheld from wages and are supposed to be promptly paid to the government. This is trust fund money that belongs to the government, and no matter how good a reason the employer has for using the money for something else, the IRS is strict. If you are in business, it can be tempting to figure that you have to keep the rent paid and the supplies ordered, and that the IRS won't miss the payroll tax money if you just divert it temporarily. You never want to become delinquent in paying taxes, especially employment taxes. The IRS is vigorous in going after these payroll taxes. It is one reason that in cases where the IRS catches the problem early, the IRS may encourage use of a payroll service. If the payroll service automatically takes out and remits all the payroll taxes, the business won't have the discretion to divert the money, even briefly. When a tax shortfall occurs, the IRS will usually make personal assessments against all responsible persons who have ownership in or signature authority over the company and its payables. The IRS can assess a Trust Fund Recovery Assessment, also known as a 100-percent penalty, against every 'responsible person" under Section 6672(a). You can be liable even if have no knowledge the IRS is not being paid. If you're a responsible person, the IRS can pursue you personally if the company fails to pay. The 100% penalty equals the taxes not collected. The penalty can be assessed against multiple responsible persons, allowing the IRS to pursue them all to see who coughs up the money first. "Responsible" means officers, directors, and anyone who makes decisions about who to pay or has check signing authority. When multiple owners and signatories all face tax bills, they generally do their best to direct the IRS to someone else. Factual nuances matter in this kind of mud-wrestling, but so do legal maneuvering and just plain savvy. One responsible person may get stuck, while another may pay nothing. Meanwhile, the government will still try to collect from the company that withheld on the wages. And those IRS collection efforts can be serious. The IRS can move to collect, too, including via a levy on your bank accounts. But before a levy can be issued the IRS must provide notice and an opportunity for an administrative Collection Due Process hearing. A Collection Due Process hearing is only available for certain serious IRS collection notices. Among other things, it allows you the opportunity to ask for an installment agreement, an offer in compromise or another collection alternative. The IRS also looks for situations where one company owing payroll taxes seems to morph into a 'new' company, and there are special rules in the case of a 'predecessor' employer. That is, some procedural safeguards won't apply if you are a predecessor employer. Here's what the IRS evaluates to determine if one business is a predecessor of another: Does it have substantially the same owners and officers? Are the same individuals actively involved in running the business, regardless of whether they are officially listed as the owners/shareholders/officers? If the taxpayer's owners or shareholders are different, is there evidence they acquired the business in an arm's-length transaction for fair market value? Does the business provide substantially the same products, services, or functions as the prior business? Does the business have substantially the same customers as the prior business? Does the business have substantially the same assets as the prior business? Does the business have the same location/telephone number/fax number, etc. as the prior business? See IRC Section 6330(h). A business won't be treated as a predecessor if there was a genuine change in control and ownership, as where the business was acquired in an arm's-length transaction for fair market value, where the previous owners have ceased all involvement. The IRS's guidance lists examples of predecessor status and explains how to determine if a business requesting a Collection Due Process hearing for employment taxes is a 'predecessor.' There's no right to a Collection Due Process hearing to resolve the employment tax liabilities if you already had your chance.

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Trump's Iran strike could boost — or ruin — his troubled presidency

President Trump's decision to bomb Iran's nuclear sites is a high-stakes gamble that could either breathe new life into or irreparably damage his troubled second term in the White House. Yet for the world at large, it may well prove to be a welcome development. Before we get into why Trump's decision aligns with the consensus among the world's biggest democracies — that Iran should not be allowed to obtain nuclear weapons — let's remember that Trump's popularity was falling fast before the strike. Only 42% of Americans approve of Trump's job performance, while 54% disapprove of it, according to a large-sample Reuters-IPSOS poll conducted June 11-16. Most Americans view Trump negatively, not only on the economy, which was once his strong point, but also on immigration, according to polls. The U.S. economy has slowed dramatically since Trump took office and launched his erratic tariff wars. According to the latest World Bank projections, the U.S. economy will only grow by 1.4% this year, which would be half of its 2.8% growth last year, in part because of the uncertainty created by Trump's on-and-off threats to impose huge import taxes on foreign goods. Likewise, many Trump voters in states with large immigrant communities, like Florida, are disappointed by Trump's decision to deport hundreds of thousands of immigrants without criminal records, including more than 350,000 Venezuelan Temporary Protected Status (TPS) holders who entered the country legally. During the 2024 campaign, Republicans claimed that Trump would focus on deporting violent criminals. Before his Iran strike, Trump was also haunted by his growing image as a wavering leader. His repeated reversals of his own tariff ultimatums — first vowing to impose 145% tariffs on China, then reducing them to 30% — made him an object of mockery in European capitals and among U.S. critics. A Financial Times columnist popularized the acronym TACO — Trump Always Chickens out — to describe the U.S. president's trade strategy. Trump got visibly upset when he was asked about the TACO reference at a recent press conference. His fear of being perceived as an indecisive leader may have pushed him — after weeks of reportedly telling Israel's Prime Minister Benjamin Netanyahu he would not get dragged into the conflict — to join Israel's military offensive against Iran's nuclear sites. But if Trump's Iran gamble turns out well and Iran's theocratic dictatorship either crumbles or gives up its uranium enrichment program through diplomatic negotiations — a big if — Trump will be credited with having done something four previous presidents contemplated but ultimately failed to do. Internationally, virtually all major Western democracies agrees that Iran is a threat to Israel, and to the world. In a statement at the end of the June 16 summit of the G-7 group of Western democracies in Alberta, Canada, the leaders of the United States, the United Kingdom, France, Germany, Japan, Italy and Canada said that 'We have been consistently clear that Iran can never have a nuclear weapon.' The G-7 bloc's statement added that 'Iran is the principal source of regional instability and terror in the Middle East,' and that 'We affirm that Israel has a right to defend itself.' Days earlier, on June 12, the International Atomic Energy Agency (IAEA) for the first time in 20 years issued a statement warning that Iran was not complying with its nuclear nonproliferation agreements. Translation: Iran was enriching uranium at levels only justified to build nuclear weapons. Skeptics who don't follow Iran's political history may ask themselves why the world doesn't allow Iran to have nuclear weapons like India, Pakistan and other countries. 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Iran's proxies have carried out terrorist attacks as far away as Argentina, where Hezbollah was found responsible for the bombing that killed 85 people and wounded hundreds at the AMIA Jewish Community Center in Buenos Aires in 1994. There are many ways in which Trump's political gamble may go wrong, especially if Iran moved some of its enriched uranium into a secret location outside Fordo, or if it unifies Iranians behind their decrepit regime. But if Iran's regime falls, or agrees to a serious international nuclear monitoring agreement, Trump's faltering second term will get a second wind. Don't miss the 'Oppenheimer Presenta' TV show on Sundays at 9 pm E.T. on CNN en Español. Blog:

Forbes

4 hours ago

• Forbes

The Tax Consequences Of Debt Financing For Small Business Loans

Close-up of JP Morgan Chase and Co sign outside an office building in the SoMa neighborhood, San ... More Francisco, California, March 18, 2025. (Photo by Smith Collection/Gado/Getty Images) Small business loans Small businesses require financing, often using equity or debt. Financing decisions can significantly influence business outcomes. High-interest or unstructured loans have been linked to increased business insolvency rates over time. Interest deduction limitations on some larger businesses The Tax Cuts and Jobs Act of 2017 placed new limitations on how much interest certain businesses can deduct. These changes are outlined in Internal Revenue Code section 163(j). Businesses with gross receipts averaging $31 million or less over the prior three tax years are not subject to these limitations. Loans from business owners Many owners lend money to the business, especially in the early stages of operation: At least the minimum applicable federal interest rate must be charged on these loans. The business will deduct the interest as an expense, and the owner will count the interest paid to them as interest income. Documenting these loans with promissory notes and repayment schedules is necessary to comply with IRS requirements. Related-party loans are subject to specific IRS rules. General thoughts on business loans If you take out a loan or get a cash advance, it is extremely important that you understand the terms: Please read all of the fine print. Are there penalties for early payment? Does the interest rate change? Are there other fees involved? Borrowers should evaluate the consequences of missed or late payments. Borrowers should review all loan terms thoroughly and negotiate changes as appropriate. Different states have different regulations regarding loans and cash advances. Traditional lenders and banks Traditional lenders and banks frequently provide loans to businesses with sufficient credit or collateral. These loans can be term loans or lines of credit. The interest rates might be specific or might be variable over time. These loans are very common and relatively straightforward. They are heavily regulated and insured by the Federal Deposit Insurance Corporation. Traditional lenders and banks dominate business lending. Some Americans cannot qualify for these loans due to low credit scores, high debt-to-income ratios, insufficient income, or unemployment. Further, the traditional loan process often requires a fair amount of paperwork and time to complete. Private lenders Private lenders are rapidly expanding their market share and are not subject to the same level of regulation as traditional lenders. 75% of all private lending in the world occurs in the United States. Currently, private lending is growing three times as quickly as traditional lending. Private lenders typically impose higher interest rates and fees to offset higher risk. Merchant cash advances A Merchant Cash Advance (MCA) is business financing where a company receives a lump sum of cash in exchange for a portion of receivables or future sales. An MCA is not a loan and is not subject to as many regulations as private lenders. These loans are often riskier and typically result in higher fees. I analyzed 11 MCA advances from six lenders to four different businesses and this showed effective annual fees from 60% to 144%. Significant marketing by private lenders and MCAs Private lenders and MCAs market their offerings through the following strategies: Fast approvals, often promised within 24 to 72 hours. Streamlined approval process with minimal paperwork. Options for borrowers rejected by traditional lenders. What is tax deductible when your business has a loan or cash advance From an accounting and tax standpoint, money loaned or advanced to the business is recorded as a liability on the balance sheet. Repaying the principal reduces this liability on the balance sheet and does not affect the income statement. Anything paid to the lender that does not lower the principal is either a financing fee or interest. Both are tax deductible on the income statement for tax purposes as ordinary business expenses. Conclusions When and how businesses are financed and the fees associated with small business loans vary greatly and the available options are expanding. Verify eligibility for full interest deductibility under IRC 163(j). Understand all terms before borrowing. Nontraditional loans often come with significantly higher costs. Borrowers should assess the total repayment obligations before proceeding.