Category: New Legislation

Racing cars - IRS Fast Track Audit Dispute

IRS Fast Track Dispute Resolution

IRS Institutes Fast Track Dispute Resolution

The IRS announced a new Fast Track Settlement program (“FTS”) allowing self-employed and small business owners to shorten the time it takes to resolve audit disputes.

How To Arbitrate a Tax Dispute

The new FTS program resembles a program that had been available to larger taxpayers (with assets exceeding $10M) for some time.  The program allows small businesses and the self-employed to cut the time it takes to resolve an IRS audit dispute to as few as 60 days in some cases by allowing people to dispute audit findings in arbitration while the audit is still ongoing.  This is a departure from what has been the case to now, which is that the taxpayer had to wait until the audit was over to dispute it.  This process typically meant going to the Appeals division (technically a separate division from the other organs of the IRS), and then, if that didn’t work out, to tax court.  The process could take months, if not years, with penalties and interest accruing on the alleged liability all the while.

Racing cars - IRS Fast Track Audit Dispute
Well, sort of fast

Small business and self-employed taxpayers apply to the FTS program by filing a Form 14017 along with a brief summary of the their position regarding the auditor’s findings.  The IRS then refers the tax audit dispute to an Appeals officer who, as stated, is supposed to act as a neutral third party.

Your Friendly IRS Appeals Officer

Going to Appeals in general, and especially early in the process, has some definite advantages.  First, the Appeals Division represents another “bite of the apple” on the issues presented during the audit.  Audits can be rocky, especially where the taxpayer isn’t responsive to the auditor’s requests, or conversely, where the auditor is overly demanding or intrusive, or fails to explain the process in a meaningful way.  As a practical matter the IRS often takes very aggressive positions at the audit level, leaving them room to negotiate later.  The Appeals officer is not as close to the ground and therefore may serve as a fresh set of eyes on the disputed issues.  Appeals officers can also take certain considerations into account in their analysis, such as whether the IRS faces “hazards of litigation”, that is, whether they would lose if the taxpayer went to court.

This is a welcome change to a difficult process, and levels the playing field for hard working small businesses and individuals facing a very technical and burdensome process.  It takes skill and experience to use these tools, and an experienced tax lawyer can make a major difference in the audit result.

Call us for information on how to use the FTS in your tax audit and how to defend yourself aggressively against the IRS.

Ari Good, JD LLM, a tax, aviation and entertainment lawyer, is the shareholder of Good Attorneys at Law, P.A. He graduated from the DePaul University College of Law in 1997 and obtained his L.L.M. in Taxation from the University of Florida.  He has helped hundreds of clients to defend themselves against the tax authorities and negotiate their liabilities.

Contact us toll free at (877) 771-1131 or by email to

The Obamacare Tax Credit

Obamacare tax credit for small businesses
Employers providing health care coverage to employees get credit

The Obamacare Tax Credit – The Patient Protection and Affordable Care Act (“Obamacare”) permits certain small businesses to claim a tax credit for providing health insurance to their employees.  While there are many different options for claiming the Obamacare tax credit, the following is broad breakdown.  The maximum credit is 35% (25% for charities) of the total cost paid to employee covered health care premiums and expands to 50% (35% for charities) in 2014.  Small businesses may also still claim a deduction for premium expenses paid beyond the allowable tax credit.  This tax credit is transferable between tax years and can even create a refund when no federal taxes are owed. To qualify, a small business: (1) must cover at least 50% of the cost of single (not family) health care coverage for all of its employees; (2) cannot have more than 25 full time employees; (3) and employees must have an average wage of less than $50,000.  A business’ tax credit will vary, but generally, the smaller your business, the larger the tax credit.  An amended tax return can even capture health care tax credit unclaimed in prior years. An experienced tax advisor can assist you in maximizing your tax savings, not just this tax year, but for past and future years.  Contact us.

Florida extends aircraft maintenance tax exemptions

Florida legislators wisely passed a law that expanded the pre-existing tax exemption for aircraft maintenance costs, including equipment used in repairs. This is great news for general aviation aircraft owners and business aircraft operators. The law was initially passed by the Florida House of Representatives in February 2012, and has been in effect since July 2012.

Under the old Florida law, the maintenance tax exemption was applicable to aircraft weighing more than 15,000 pounds (rotary aircraft weighing over 10,000 pounds). This meant that most light-weight, corporate, and private aircraft were subject to in-state maintenance and repair tax, and small aircraft owners took their business elsewhere accordingly. The new law reduces the weight limit to 2,000 pounds, considerably broadening the types of aircraft that fit in under the state tax exemption.

This revision is a home run for the Florida general aviation community in a sluggish economy. With this new tax exemption there are rising hopes that Florida can return to its leadership role in attracting general aviation contractors and related small businesses. Florida is now one of 32 states to have passed significant aviation-based tax exemptions in the last few years. Both lawmakers, and local business leaders, expect an immediate boost in employment, maintenance traffic, and production.

Rep. Stephen L. Precourt, chairman of the Finance and Tax Committee, introduced the new tax exemption law as a bill, and moved it directly to the House late last year. However, the bill was initially created based on provisions provided by two separate bills, introduced by House Rep. Steve Crisafulli, and Senator Mike Bennett. Their goal was to expand sales, use tax, and maintenance tax exemptions to encourage economic growth in the industry. The new tax exemption bill, formally known as HB7087, was heavily supported by local organizations such as the Florida Aviation Trade Association (FATA), the Florida Airports Council (FAC), and the Aircraft Owners and Pilots Association (AOPA).

IRS Federal Excise Tax Surprise – New Rules For Aircraft Management Companies?

IRS Federal Excise Tax
IRS excise tax & aircraft management companies:  and you thought the catering was exempt

The IRS’ new view of federal excise tax on aircraft management services in unwelcome indeed. To recap, in an IRS Chief Counsel Memorandum Re Federal Excise Tax and Aircraft Management Companies, the IRS is taking the position that aircraft services such as hiring and providing pilots and management services, even for part 91 aircraft, are “amounts paid” for “transportation services” and therefore subject to federal excise tax.  This in essence has the potential to raise general aviation services costs by 7.5%, a federal excise tax surprise that neither aircraft management companies nor aircraft owners need in this environment.

It has never been disputed that ” amounts paid” for commercial flights under Parts 121 or 135 are subject to excise tax as “taxable transportation”, and the price and availability of these flights reflect this.  Part 91 owners and operators make a conscious decision to assume more risk in retaining “operational control” of their flights and pay management companies for collateral services in making pilots, fuel and services available.  We could be left under the IRS’ new policy where a private aircraft owner would have to pay excise tax for flights over which he still has full legal liability.  This is clearly a surprise when it comes to federal excise tax, for the owners and aircraft management company alike.

Unfortunately there is also a “gotcha” factor here.  One might conclude that the IRS’ apparent aggressiveness with respect to auditing, and potentially assessing, federal excise tax against aircraft management companies is designed to catch us off guard.  There are a couple of problems with this.  First, a Chief Counsel opinion details the Service’s interpretation of existing law.  It is not equivalent to the Internal Revenue Code, regulations or Tax Court decisions, and therefore forms a questionable basis upon which to set aircraft management companies up for formal federal excise tax audits.  Second, if in time aircraft management companies are deemed to be receiving “amounts paid for taxable transportation” for support services, the industry must be given some reasonable opportunity to adjust to this without facing retroactive application of a brand-new interpretation along with the interest and penalties that go with it.

Call me for a free phone consultation if you think you may be subject to the new federal excise tax rules.  877.771.1131

Aviation Business News – A View From The 2012 FATA Conference

Aviation Business News
A report from the 2012 FATA Conference

For those looking to keep up on Florida’s aviation business news, one of the best events of the year was the 2012 Florida Aircraft Trades Association (FATA) annual conference.  This three day event included aviation business news, recent developments in aircraft sales tax laws, aviation industry outlooks and, of course, golf, dinner and drinks!

Of the many excellent presentations one of my favorites was the “manufacturers’ panel”.  Leaders from Gulfstream, Piper, Cessna, and Embraer talked a little about the state of the aircraft industry and recent sales data.

Dustin Cordier, Regional Vice President for Cessna Aircraft Company, was pleased that in addition to sales of new aircraft being up slightly from last year there is also a robust market in the used aircraft market.  Aircraft between 3 and 10 years old constituted a combined 80% of the near 1000 Cessna transactions that occurred in Q1 2012, with an emphasis on the North American market.

Steve Cass of Gulfstream reported that sales of their largest aircraft continue to improve.  Simon Caldecott of Vero Beach-based Piper Aircraft expressed “cautious optimism” about the remainder of 2012, encouraged by well-improved numbers from the last few years in Piper’s newer models.  Clint Clouatre of Embraer, the “new kid on the block” confirmed everyone’s recognition of the BRIC countries (Brazil, Russia, India and China) as major markets for general aviation aircraft going forward.

Special thanks to lobbyist Eric Prutsman, who worked tirelessly in Tallahassee to bring about positive changes for Florida’s aviation business, such as extending the state “maintenance and repair” aircraft sales tax exemption to aircraft of 2,000 GTOW and smaller, Association President Sandy Showalter for his excellent leadership and consummate skill as the Conference MC, and of course Paula Raeburn, without whom FATA would not be nearly as colorful, effective or fun!

If you’ve never stayed at the Four Seasons Palm Beach, I might add, I absolutely recommend it, and I would also like to thank whatever tech company was there with the same color badges for not throwing me out when I crashed your unbelievable buffet breakfast on the veranda.  Look, it was an accident!