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In 2018, the government attempted to “simplify” the tax-filing process by drastically shortening Form 1040. The result was six new schedules that created a lot of confusion. Now the IRS is attempting to ease some of that pain by revising the form and removing some schedules. Will it help? Here is what you need to know:

• More information on the main form. 
  • To make it easier for the IRS to match pertinent information across related tax returns, new fields have been added on the main Form 1040. For example, there’s now a spot for your spouse’s name if you choose the married filing separate status. In addition, there’s a separate line for IRA distributions to more clearly differentiate retirement income.
• 3 schedules are gone.
  • What was your favorite memory of Schedules 4, 5 and 6? Was it the unreported Social Security tax on Schedule 4? Or the credit for federal fuels on Schedule 5? While those schedules will no longer exist, those lines (and many others) have found a new home on one of the first three schedules. Less paperwork, but still the same amount of information.
• You can keep your pennies!
  • For the first time, the IRS is eliminating the decimal spaces for all fields. While reporting round numbers has been common practice, it’s now required.
• Additional changes on the way. 
  • The current versions of Form 1040 and Schedules 1, 2 and 3 are in draft form and awaiting comments on the changes. Because of the importance of the 1040, the IRS is expecting to make at least a few updates in the coming weeks (or months) before they consider it final. Stay tuned for more developments.

How to prepare for the changes

The best way to prepare is to be aware that 1040 changes are coming. The information required to file your taxes will remain the same, but some additional hunting will be necessary to find the shifting lines and fields on the modified form.

Remember, changes bring uncertainty and potential for delays, so getting your tax documents organized as early as possible will be key for a timely tax-filing process.

If you need help, give us a call at 832-303-3995.

Maybe you’re behind on paying your bills because of circumstances outside of your control. Or perhaps there’s been an error in billing. Either way, these scenarios may lead to a run-in with a debt collector. Fortunately, there are strict rules in place that forbid any kind of collector harassment in the U.S. If you know your rights, you can deal with debt collection with minimal hassle. Here’s what to remember:

• You have a right to details — without harassment. 
  • When a debt collector calls, they must be transparent about who they are. They need to tell you: “This is an attempt to collect a debt, and any information obtained will be used for that purpose.”In addition, debt collectors cannot use abusive language, or threaten you with fines or jail time. The most a debt collector can truthfully threaten you with is that failure to pay will harm your credit rating, or that they may sue you in a civil court to extract payment.
• You don’t have to put up with 24/7 calls. 
  • Debt collectors may not contact you outside of “normal” hours, which are between 8 a.m. and 9 p.m. local time. They may try to call you at work, but they must stop if you tell them that you cannot receive calls there.Keep in mind that debt collectors may not talk to anyone else about your debt (other than your attorney, if you have one). They may try contacting other people, such as relatives, neighbors or employers, but it must be solely for the purpose of trying to find out your phone number, address or where you work.
• You can tell them to stop. 
  • Whether you dispute the debt or not, at any time you can send a “cease letter” to the collection agency telling them to stop making contact. You don’t need to provide a specific reason. They will have to stop contact after this point, though they may still decide to pursue legal options in civil court.
• You can dispute collection. 
  • If you believe the debt is in error in whole or in part, you can send a dispute letter to the collection agency within 30 days of first contact. Ask the collector for their mailing address and let them know you are filing a dispute. They will have to cease all collection activities until they send you legal documentation verifying the debt.

If a debt collection agency is not following these rules, report them. Start with your state’s attorney general office, and consider filing a complaint with the U.S. Federal Trade Commission and the Consumer Financial Protection Bureau, as well.

If you or your business sells product on Amazon using the Fulfillment by Amazon (FBA) service, you are well into the multi-state sales tax mess … even if you are not aware of it. You may be asking yourself:

• Do I now need to register my business with every state and collect tax on their behalf?
• Do I really have physical nexus? What about economic nexus? What is nexus?

Background

The old sales tax standard required you to collect and remit sales tax only in states that you have a physical presence (also known as physical nexus). The recent South Dakota vs. Wayfair, Inc. decision by the Supreme Court then legitimized the concept of economic nexus. This means your business could be required to collect and remit sales tax based on where you ship a product and not whether you ever set foot in a particular state (economic nexus).

The bigger mess

States were quick to jump on the bandwagon and actively identify Amazon, Ebay and Walmart sellers to demand sales tax for website sales. Some states, like California, got even more aggressive and decided that FBA sellers actually have physical presence because Amazon may put your product in a warehouse in their state. They got seller lists from Amazon and sent out threatening letters to small sellers demanding back sales tax, even though businesses have no way to retroactively collect the tax because the customers are Amazon customers.

Marketplace facilitator to the rescue?

To help address this mess and alleviate the need for small businesses to collect and remit sales tax forms to 50 states, many states acknowledged the problem and have passed what is called Marketplace Facilitator laws.

In short, it’s on the facilitator, NOT you. States with these laws require Amazon, Ebay and similar companies that facilitate sales for resellers to collect and remit sales tax on reseller Amazon activity. There are more than 30 states that have adapted these laws.

You DO NOT need to register your business to collect sales tax in states that have Market Facilitator legislation unless you are otherwise required to do so.

What you need to know 

• Know the states.
  • Know which states have Marketplace Facilitator laws. If you don’t, you could unwittingly register your business with a state when you do not have to do so.
• Some states deploy deceptive tactics.
  • For example, California passed a Marketplace Facilitator law effective October 2019. Despite this law, the California Department of Tax and Fee Administration (CDTFA) is actively soliciting (threatening?) small businesses who sell on Amazon to register and remit sales taxes for a time period prior to this date without disclosing the new law. To make matters worse, their sales tax registration form could make you personally liable for business-related sales tax and disclose your confidential supplier list. It may also be filled with other legal entrapments.
• Know the minimums.
  • Even states without Marketplace Facilitator laws typically have minimum thresholds before they require you to collect and remit sales tax. Every state is different, but the typical limit is 200 transactions or $20,000 in sales.
• Check out streamline states.
  •  Collecting and remitting sales tax is a daunting task for any small business. Using a third party sales tax administrator is very expensive. There is some help, albeit still complicated, for registering with 23 states that are part of a streamline sales tax agreement.Sales tax collection in multiple states is not for the faint of heart. Streamline Sales Tax  and Bill Track 50 are a few of the popular sites that can help.

You should be using two factor authentication

For small business owners, the risk of data breaches and fraud is high, so taking all the necessary steps to protect your sensitive data is a must.

Unfortunately for many entrepreneurs the decision to increase their company’s data protection comes too late – after they’ve been victimized by a malicious hacker.

The good news is, simple and inexpensive steps can be taken to avoid being hacked. According to a recent study, 80% of data breaches could be prevented if users simply implemented two-factor authentication.

In this article you’ll learn how  Two Factor Authentication (2FA) works, as well as the pros and cons of using it to secure your company’s digital data.

Encrypted passwords aren’t enough

Cybercrime is on the rise, and the vast majority of hacking-related data breaches involve weak or stolen passwords.

Unfortunately, if someone has access to – or finds a way to decode – an encrypted password, without another layer of security it’s all too easy to access a vulnerable account.

Two-factor authentication prevents data security breaches by requiring users to enter more than a username and password to sign into an account. Once the first password has been entered, a second, time-sensitive verification code is sent to another device for the user to unlock access.

The second factor typically takes the form of an auto-generated code, an OTP (one time password), or a biometric verification on a device (such as a fingerprint).2FA apps are your best bet

Authenticator apps like Microsoft Authenticator are free, user-friendly options designed to increase data security across your devices.

With Microsoft Authenticator you get the benefits of two-factor authentication without the need for a password. Instead, you sign in securely using your phone and a PIN, fingerprint, or facial recognition. You can choose to use a password to sign in, and the app will create a new verification code that refreshes every 30 seconds.

Other options for 2FA apps include Authy, Blizzard, and Google Authenticator (an excellent choice as it will sync to any service and run without a wifi or cell connection).

The limitations of two-factor authentication

Although 2FA does make it considerably more difficult for a cybercriminal to hack your data, there are instances where your sensitive info can become vulnerable (if, for instance, someone were to steal your smartphone and hijack your SIM).
A smart hacker who knows your phone number can easily slip past the second authentication barrier by redirecting 2FA notifications to their own devices and entering the verification code to access your accounts.

An additional security barrier is recommended for any website that saves your sensitive personal or company data – bank websites, accounting software, cloud storage, calendar, communication apps, social media networks, password managers, and email accounts.

And don’t overlook Google Advanced Protection – a more complex security system designed to lock down your data, heralded by Wire magazine as currently the most secure authentication protection for any online software.