ZOMMA Group

"Building Bridges 🌉
Ray Zomerfeld's philosophy of 'always keep climbing the ladder' is more than a mantra; it's a guiding force in creating robust connections within the UM community.

His role on the Advisory Council has been pivotal in expanding UM's brand and establishing a network of opportunities for students and alumni.

Read on for some tips from Ray's on how to climb the ladder and set new benchmarks for success.

** Excerpt from the UM Advisory council spotlight article on

As the school year comes to a close and summer vacations start, teachers are tallying up their expenses from the past year. Qualified educators have the opportunity to deduct up to $300 of unreimbursed expenses on their 2023 tax returns. These expenses can include books, classroom supplies, computer equipment, professional development tuition costs, and athletic supplies for health and physical education. To be eligible for the deduction, teachers must work at least 900 hours during the school year and be involved in kindergarten through 12th-grade education. For more information, reach out to us for assistance.

A group of Senate Democrats has introduced the Working Families Tax Relief Act, which aims to reintroduce and make permanent an enhanced version of the Child Tax Credit (CTC). The proposed legislation would provide a monthly payment of $3,000 for children aged 6 to 17 ($3,600 for children aged 0 to 5) and make the credit fully refundable. Additionally, the act includes updates to the Earned Income Tax Credit, expanding eligibility to individuals as young as 19 with no upper age limit. These changes are projected to increase the incomes of 40 million families.

A bipartisan bill has been introduced in the U.S. House of Representatives called the Tax Deadline Simplification Act, which aims to shift estimated tax deadlines to a quarterly basis. Under the proposed legislation, estimated tax installments for individuals, businesses, estates, and trusts would be due 15 days after the end of each quarter, aligning with the 15th day of January, April, July, and October. The bill sponsors highlight that this realignment would bring the deadlines in line with normal quarterly dates and provide greater consistency. The progress of the bill will be monitored for further updates.

The IRS has issued new guidance regarding the elective payment provisions of the Advanced Manufacturing Investment Credit (AMIC), which benefits certain U.S. manufacturers of semiconductors and semiconductor manufacturing equipment. The guidance provides details on how eligible taxpayers can make elective tax payments and transfer certain credits to unrelated parties. It also outlines anti-abuse provisions and the process for repaying excessive elective payments. The temporary regulations will be effective starting from June 21, 2023.

The U.S. Tax Court ruled in favor of an elderly attorney who faced penalties for failing to meet his tax obligations. The court determined that his noncompliance was due to reasonable cause, rather than willful neglect. The attorney had diligently fulfilled his tax responsibilities until severe health issues forced him to rely on his assistant, who failed to file timely tax returns and pay employment taxes on his behalf. Upon discovering the issue, the attorney promptly rectified the situation by filing the returns, paying the taxes, and requesting penalty abatement, which the court granted.

The U.S. Supreme Court has declined to review a case involving a Colorado ma*****na dispensary that had been in a legal battle over an IRS summons for business information. The U.S. Appeals Court for the 10th Circuit had previously ruled in favor of the IRS, stating that the summons was properly granted. The case revolves around the fact that ma*****na businesses are unable to claim federal business tax breaks due to the substance's illegal status under federal law, resulting in disallowed deductions or credits for amounts related to operating such businesses.

On May 31, the U.S. House of Representatives passed a bill to suspend the debt ceiling through Jan. 1, 2025. The bill now heads to the Senate, where it’s expected to pass soon to avoid a U.S. government default. If enacted, the Fiscal Responsibility Act would also limit non-defense federal spending, and according to the Congressional Budget Office, would reduce federal budget deficits by $1.5 trillion over the next 10 years. Among other provisions, the bill would rescind some of the funds appropriated to the IRS under a law passed last year.

Two years ago, the National Collegiate Athletic Association (NCAA) implemented the interim Name, Image, and Likeness (NIL) Policy, allowing college student-athletes to be compensated for their athletic abilities and fame. In a recent legal Advice Memorandum (2023-004), the IRS examined whether the development of NIL opportunities by boosters and fans of college athletic programs serves a tax-exempt purpose. The IRS guidance concluded that in many cases, these "NIL collectives" are primarily driven by the private interests of the students and operate with a substantial nonexempt purpose, suggesting that they may not qualify for tax-exempt status.

Tax relief is potentially available for student loan debtors, but it is subject to income requirements. Individuals with qualified student loans can deduct up to $2,500 of interest annually on their federal income tax return if their modified adjusted gross income is $75,000 or less ($155,000 for married couples filing jointly). The deduction gradually phases out at $90,000 ($185,000 for married filing together) for those earning more. Eligible loans must be incurred to pay qualified education expenses. If debtors pay more than $600 in student loan interest in a calendar year, they should receive Form 1098-E from their lenders, reporting the interest amount.

Republican U.S. House Ways and Means Committee members have introduced a series of bills that collectively amount to approximately $237 billion in tax cuts. The bills aim to extend and reinstate three expired business tax breaks related to research spending, interest expenses, and equipment purchases, while also introducing a two-year individual bonus standard deduction for those earning less than $400,000 annually. Additionally, the package includes provisions to raise the reporting threshold for IRS Form 1099-K to $20,000 and repeal certain clean energy credits. However, even if the legislation passes in the House, its prospects in the Democratic-controlled U.S. Senate are anticipated to face significant resistance.

The American Institute of CPAs (AICPA) believes that the U.S. tax code should undergo significant simplification. In a letter to the IRS and U.S. Treasury Department, the AICPA called for continued efforts toward tax simplification. The AICPA provided suggestions such as implementing safe harbor alternatives, clear and consistent definitions, simple and general rules, aligning with existing record-keeping practices, and ensuring that complexity matches the intended audience. Additionally, the AICPA recommended using "horizontal drafting" to ensure that rules applicable to one tax code section are applied consistently in other areas.

The IRS is issuing a warning to taxpayers about a scam known as "offer in compromise" (OIC) mills, which claim to help resolve tax debt for a fraction of the amount owed. These unscrupulous companies falsely promise to magically eliminate tax debt, but in reality, taxpayers often end up paying excessive fees, sometimes amounting to thousands of dollars. This tax-related scam, included on the IRS's 2023 "Dirty Dozen" tax schemes list, tends to become more prevalent after the filing season as individuals seek solutions for their tax debts. The IRS advises taxpayers to be cautious and contact them for information on legitimate OIC options or visit the provided link for more details.

Organizations can qualify for federal income tax exemption under Section 501(c)(3) of the tax code if they are operated exclusively for charitable, religious, scientific, or other qualified purposes. However, in a specific case, a coffee shop/restaurant operated as a tax-exempt organization, providing training and employment opportunities. After conducting a tour of the facility, the IRS determined that the organization was operating primarily commercially and not fulfilling its exempt purpose. As a result, the IRS issued a final adverse determination, revoking the organization's tax-exempt status. (PLR 202321005)

According to tax law, businesses can only deduct compensation that is considered reasonable, and any portion deemed unreasonable, if paid to a shareholder, is not deductible and may be treated as a taxable dividend. In a specific case, a U.S. Appeals Court ruled that a closely held construction company failed to prove the reasonableness of the compensation paid to its CEO. As a result, the court disallowed a portion of the corporation's business deduction for CEO bonuses over two years, agreeing with the U.S. Tax Court's assessment that the excessive amount represented disguised dividend payments that were not eligible for deduction.

The IRS is intensifying its campaign to warn business owners about deceptive claims related to Employee Retention Credits (ERCs). The agency has observed a surge in misleading advertisements, direct mail solicitations, and online promotions regarding ERCs, with promoters making exaggerated and false claims about eligibility. To address this issue, the IRS has ramped up compliance efforts, and its Criminal Investigation division is actively targeting fraud and those promoting fraudulent ERC claims. Businesses found to have falsely claimed ERCs may face the consequences, including penalties and interest payments, imposed by the IRS.

In an estate tax case, the U.S. Court of Appeals ruled that life insurance proceeds were taxable and correctly valued. The case involved two brothers who held sole ownership of a corporation and had life insurance policies to facilitate the redemption of shares in the event of one brother's death. The IRS assessed taxes on the deceased brother's estate, considering the insurance proceeds as part of the corporation's fair market value. The Eighth Circuit upheld the trial court's decision, affirming the correctness of the IRS's assessment.

The IRS electronically matches the information you provide on your tax return with the data reported by others on documents like W-2s and 1099s. If any discrepancies arise, the IRS may subject your return to closer examination. Therefore, it is essential to inform us about all your income when we prepare your return, even if you didn't receive a specific form, as the payment may have been reported to the government but not received by you due to various reasons like non-delivery or lost mail. If you receive an incorrect 1099 or W-2, it is advisable to request a corrected copy from the payer, and in some situations, filing an amended tax return may be necessary.

A recent report by the nonpartisan Joint Committee on Taxation delves into the complex definitions of "small business" for tax purposes. The report highlights that there is no universal definition of a small business, but rather multiple definitions depending on specific criteria, thresholds, and contextual considerations. Criteria for classification may include factors such as a business's gross assets, gross receipts, number of shareholders, and employees. Furthermore, the tax code may employ different definitions of small business for various purposes, even if certain criteria like gross receipts are consistent across them.

Nonprofit hospitals are eligible for federal tax exemptions if they fulfill specific criteria, such as offering free or discounted care and conducting community health education initiatives. However, a report by the Lown Institute, a self-described nonpartisan think tank, discovered that over 1,350 nonprofit hospitals did not meet these requirements. The president of the Lown Institute emphasized the need for hospitals to utilize their tax breaks to address medical debt and improve access to care. At the same time, the American Hospital Association criticized the report, citing biases and methodological flaws.

According to a report by the Treasury Inspector General for Tax Administration (TIGTA), the IRS hiring situation sheds light on the size of the "tax gap," which represents the difference between the amount of tax owed and the amount actually paid on time. The report reveals that the IRS estimated the gross annual tax gap for 2014 to 2016 to be $496 billion per year, with a projected increase to $540 billion per year for 2017 to 2019. TIGTA warns that a reduction in the number of enforcement employees could impact the IRS's ability to conduct sufficient audits and address entities and individuals who contribute the most to the tax gap.

To fulfill your tax obligations, you must pay taxes on the income you earn or receive throughout the year through withholding or estimated tax payments. There are four payment periods for estimated tax purposes, with the next quarterly revenue for 2023 due on Thursday, June 15. Different rules may apply to farmers, fishermen, and individuals with uneven incomes. Failing to pay sufficient tax during the year, whether through withholding or estimated tax payments, may result in a penalty for underpayment of estimated tax.

Individuals who travel for business purposes may qualify for tax deductions. According to the IRS, a "business traveler" is someone who travels away from home for a duration longer than a regular workday and requires overnight accommodation to fulfill work obligations while away. To be eligible for deductions, expenses must be ordinary, necessary, and not excessive or personal. Deductible expenses include transportation costs (e.g., airfare, train, bus, or car) between home and the business destination, fares for local transportation (e.g., taxis) between the airport and hotel, lodging expenses, and 50% of unreimbursed meal costs.

Having seriously delinquent tax debt (SDTD) exceeding $59,000 in unpaid federal taxes can put your passport at risk, subject to certain exceptions. The U.S. State Department has the authority to deny, revoke, or restrict the passport of individuals with SDTD if the IRS follows specific procedures. In a recent case, an individual challenged the IRS's certification of SDTD for unpaid taxes totaling over $100,000 across eight tax years, claiming procedural errors. However, the U.S. Tax Court ruled that the certification was valid and upheld the decision.

In certain investigations, the IRS can issue summonses to third parties in order to obtain records. Tax law grants individuals subject to an IRS audit the right to petition a court to set aside or quash such summonses. In a recent case involving the sale of a taxpayer's ownership interest in a limited liability company, the taxpayer sought to quash the summonses, claiming they were a "fishing expedition" and that the IRS had not followed proper procedures. However, a U.S. District Court found no evidence of improper actions by the IRS and denied the motion to quash.

If you have made your home more energy efficient by installing energy-efficient windows, doors, or solar panels, you might be eligible for tax credits. The Energy Efficient Home Improvement Credit applies to improvements made to an existing home and offers a credit of up to 30% of the total improvement expenses, capped at $1,200 per year from 2023 to 2032. The Residential Clean Energy Credit, available for both existing and newly constructed homes, provides a 30% credit with no annual or lifetime limits on the total improvement expenses from 2023 to 2032. For further information, it is recommended to reach out for more details.

With summer approaching, many young people will take on part-time jobs such as babysitting or dog walking to earn extra money. It's important to remember that if you exchange goods or services for money, there may be tax implications. Even if you are a dependent on your parents' tax return, you must file your own return if you owe taxes. If you have self-employment earnings of $400 or more, you are required to file a tax return and may owe self-employment tax. Parents cannot claim a dependent child's self-employment income on their own tax return. It is advisable to keep accurate financial records if you are self-employed and make estimated tax payments if required.

Previously, businesses could deduct 30% of their earnings before interest, tax, depreciation, and amortization (EBITDA). Still, the current requirement mandates interest expense deductions to be calculated based on the stricter earnings before interest and taxes (EBIT) standard. As a result, businesses affected by this change are expected to experience nearly a threefold increase in their tax obligations. The U.S. Chamber of Commerce has expressed concerns about reduced investment, slower job creation, smaller wage increases, and overall lower economic growth. A bipartisan bill called the American Investment in Manufacturing Act has been introduced to address this issue, aiming to restore the EBITDA standard.