Biggest Tax Cut in US History – Let’s See …

As always, before you start participating in whether this is good or bad, read it for yourself. You can read everything about the Bill being presented here, H.R. 25.

These are the kinds of things News should be letting us know of. This was introduced in January! Of course, the likelihood of it happening any time soon is slim, but it gives us insight into Trump’s thinking when it comes to taxes.

I am not a lawyer, but can read, here are some things of interest (at least to me, maybe not to you). Again, please read it for yourself. Education is powerful when you use it. These are actual quotes from the bill followed by where you find it, page #.line #. Any additional comment or words inserted by me are written in pink.

  • this Act shall take effect on January 1, 2019 (8.9)
  • imposed a tax on the use or consumption in the United States of taxable property or services. (10.8-10)
    • FOR 2019.—In the calendar year 2019, the rate of tax is 23 percent of the gross payments for the taxable property or service. (19.12-14)
    • For years after the calendar year 2019, the rate of tax is the combined Federal tax rate percentage (19.15-16)
    • The combined Federal tax rate percentage is the sum of the general revenue rate [14.91%]  + the old-age, survivors and disability insurance rate + the hospital insurance rate (19.20-24 & 20.1-5)No tax shall be imposed under- section 101 on any taxable property or service purchased for a business purpose in a trade or business. (21.5-8)
      • means purchased by a person engaged  in a trade or business and used in that trade or business (21.19-20)
      • for resale, to produce, provide, render, or sell taxable property or services, or in furtherance of other bona fide business purposes. (21.21-25)
  • No tax shall be imposed under section 101 on any taxable property  or service purchased for an investment purpose and held exclusively for an investment purpose. (21.9-12)
    • means property purchased exclusively for purposes of appreciation or the production of income but not entailing more than minor personal efforts. (22.3-5)
  • any tax imposed by this subtitle shall be collected and remitted by the seller of taxable property or services (22.10-12)
  • Each person shall be allowed a credit with respect to the taxes imposed by section 101 for each month in an amount equal to the sum of
    • person’s business use conversion credit + person’s intermediate and export
      sales credit + the administration credit + the bad debt credit + the insurance proceeds credit + the transitional inventory credit + any amount paid in excess of the amount due (24.1-14)
    • Business Use Conversion Credit:  is the lesser of
      • the rate  [For 2019-23%; after 2019 see above] multiplied by the fair market value of the property or service when its use is converted divided by the quantity that is one minus the tax rate (25.7-14)
      • the amount of tax paid with respect to such taxable property or service (25.15-18)
    • Intermediate and Export Sales Credit:
      • amount of sales tax paid on the purchase of any taxable property or service purchased for a business purpose in a trade or business (25.22-25)
      • export from the United States (26.1-2)
    • Administration Credit: Every person filing a timely monthly report shall be entitled to a taxpayer administrative credit equal to the greater of (26.3-10) but shall not exceed 20 percent of the tax due to be remitted prior to the application of any credit or credits permitted (26.11-14)
      • $200
      • one-quarter of 1 percent of the tax remitted. (if I’m reading this right, it looks like this number would be greater after $7,999,999.00 of taxes are remitted: ($7,999,999.00 * 1%) * .25% = $200)  or it could be $79,999 ($79,999 * .25% = $200.00)??
    • Bad Debt Credit Any person who has experienced a bad debt (other than unpaid invoices within the meaning of subsection (b)) shall be entitled to a credit equal to (26.16-25)
      • the rate  [For 2019-23%; after 2019 see above] multiplied by (the amount of the bad debt divided by the quantity that is one minus the rate imposed)
      • Any person electing the accrual method who has  invoiced the tax,  remitted the invoiced tax, actually delivered the taxable property or performed the taxable services invoiced, and not been paid 180 days after date the invoice was due to be paid shall be entitled to a credit equal to the amount of tax remitted and unpaid by the purchaser. (27.1-11)
      • The credit provided by this section shall not be available with respect to sales made to related parties
    • Insurance Proceeds Credit – read the stipulations yourself but in general, The amount of the credit shall be: (28.9-25 * 29.1-2)
      • the rate  [For 2019-23%; after 2019 see above] multiplied by (the amount of the payment made by the insurer to the insured divided by the quantity that is one minus the rate imposed)
    • Refunds (30.3-31.1-2)
      • the over-payment shall be refunded to the registered seller within 60 days of receipt of said application.
      • No interest shall be paid on any balance due from the sales tax administering authority (30.19-22) if such balance due is paid within 60 days after the application for refund is received
      • Balances due not paid within 60 days shall bear interest from the date of application. Interest shall be paid at the Federal short-term rate (31.23-24 & 31.1-2)
    • Family Consumption Allowance
      • the rate  [For 2019-23%; after 2019 see above] multiplied by  the monthly poverty level
      • ‘qualified family’ shall mean one or more family members sharing a common residence (31.20 -34.23)
        • all lineal ancestors and descendants of said individual (and such individual’s spouse)
        • have a bona fide Social Security number
        • be a lawful resident of the United States.
        • Any person who was a registered student during not fewer than 5 months in a calendar year while living away from the common residence of a qualified family but who receives over 50 percent of such person’s support during a calendar year
        • If a child’s parents are divorced or legally separated shall be treated as part of the qualified family of the custodial parent (the parent that has custody of the child for more than one-half of the time during a given calendar year)
        • a qualified family must register with the sales tax administering authority
        • Registration is not mandatory for any qualified family.
      • Monthly Poverty Level
        • the annual level determined by the Department of Health and Human Services poverty guidelines + in case of families that include a married couple, the ‘annual marriage penalty elimination amount’ divided by 12  (37.17-38.1-5)
        • The annual marriage penalty elimination amount = the amount that is two times the annual  for a family of one –  the annual level
  • Reports and Payments
    • On or before the 15th day of each month, each person who is  liable to collect and remit the tax or  liable to pay tax shall submit a report relating to the previous calendar month. (54.11-20)
    • The report:  the gross payments, the tax collected, the amount and type of any credit claimed, other information reasonably required (55.3-14)
    • Payment Date: on or before the 15th day of the succeeding month (55.16-20)
  • Sellers
    • Any person liable to collect and remit taxes who is engaged in a trade or business shall register as a seller with the sales tax administering authority (60.2-5)
    • Any person that is required to register and who fails to do so is prohibited from selling taxable property or services. (60.19-25)
    • Registered sellers and other persons shall report transactions using the cash method of accounting unless an election to use the accrual method of accounting (61.1-10)
    • penalty of $500 for not registering (61.14-18)
    • For each purchase of taxable property or services for which a tax is imposed  the seller shall charge the tax imposed separately from the purchase and shall provide to the purchaser a receipt for
      10 each transaction that includes (72.3-10)

      • property or services price exclusive of tax, the amount of tax paid, the property or service price inclusive of tax, the tax rate, the date that the good or service was sold, name of vendor, vendor registration number.
  • Hobby Activities —Neither the exemption for intermediate sales nor the credits  shall be avail able for any taxable property or service purchased for use in an activity if that activity is not engaged in for-profit. (87.2-15)
  • Gaming Activities A 23 percent tax is hereby imposed on the taxable gaming services of a gaming sponsor. (87.16-89.3)
  • Not for Profit Organizations Dues, contributions, and similar payments to qualified not-for-profit organizations shall not be considered gross payments for taxable property or services (94.7-95.6)
    • Taxable property or services in connection with contributions, dues, or similar payments to the organization, then it shall be required to treat the provision of said taxable property or services as a purchase taxable (95.7-13)
    • Taxable property and services purchased by a qualified not-for-profit organization shall be eligible for the exemptions (95.14-16)
  • Social Security Wages
    • Employers shall submit such information to the Social Security Administration as is required by the Social Security Administration to calculate Social Security benefits (109.3-10)
    • the term ‘wages’ means all cash remuneration for employment (including tips to an employee by third parties provided that the employer or employee maintains records documenting such tips) including self-employment income (109.11-16)
  • Revenue from tax allocated among
    • the general revenue
    • the old-age and survivors insurance trust fund
    • the disability insurance trust fund
    • the hospital insurance trust fund, and
    • the Federal supplementary medical insurance trust fund
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