Tax Attic

Useful tax tips and information from Jerry Coon of Action Tax Service.


February 23, 2015 // 0 Comments

This past November, I was re-elected for a second four-year term to the Rockford City Council. Due to the fact that I had been the Mayor Pro-tem for the previous two years, at the next City Council meeting, I became a member of a rather small group of Rockford residents. In a unanimous vote, the four other City Council members elected me to be the 24th Mayor of the City of Rockford. The first Mayor was a fellow by the name of Crawford Young. I will have to ask Rockford’s historian, Terry Konkle, to tell me about Mr. Young sometime. Mr. Young served as Mayor for the first 10 years of the City of Rockford’s existence, 1935-1945. He must have been a real mover and shaker in his day. The rule now is that we serve for two years and it is then time for the next person to step up. Currently, fellow Council Member Tamra Bergstrom is the Mayor Pro-tem who is in line to be the 25th Mayor of Rockford. Rockford was incorporated in 1935 as a Home Rule City. We use a Council-Manager form of government. The Council is elected by the residents. The Mayor is then elected by the Council. To compare this set-up to a business, the Council is the Board of Directors and the Mayor is the Chairman of the Board. The Council performs Board of Director functions. It establishes policy. It passes local ordinances. It is responsible for approving appropriations and setting the tax rates. The Council is also responsible for developing and implementing an overall vision for the community. One of its most important functions is hiring; giving direction; and working with the City Manager. 20 years ago, the Council made a strategic hire when they picked Michael Young to be the new City Manager. What role does the City Manager play in the Council-Manager form of government? If the Council is the Board of Directors, the City Manager is the Chief Executive Officer. He is the professional manager to the Council’s civilian members. The Manager serves at the pleasure of the Council. In effect, he is the Council’s only employee. The Manager is then responsible for hiring and managing all city staff. He implements the policies […]

The Tax Attic

February 17, 2015 // 0 Comments

So far, the tax season is getting off to a great start. The Internal Revenue Service is reporting that they have processed more than 14 million tax returns already this year. Since the filing season did not start until January 20, that is a large number. As far as Action Tax Service goes, we have been forced to add an extra form to our processing sequence. We call it the “Affordable Care Act Interview Form”. This year, part of the due diligence that comes with preparing income tax returns for pay is we have to determine for every taxpayer what part of the year he or she and their dependents had health insurance coverage. Those without coverage for the entire year could be subject to a penalty. Of course, like all things in the tax world, there are a myriad of exceptions that might be applied to eliminate that penalty in whole or in part. Our Interview Form starts out by asking if the taxpayer, spouse and dependents had insurance coverage for the entire year. If yes, we move on to the next series of questions concerning where the insurance was purchased. Was it purchased through the Marketplace Exchange’s online website? Was it purchased through the taxpayer’s employer? Was it purchased directly through a policy sold by an agent for a health insurance provider such as Priority or Blue Cross? The final alternative for this section asks if the taxpayer purchased coverage through the government such as through Medicare, Medicaid, or another federal or state program. If the policy was purchased through the Marketplace Exchange, the taxpayer will receive a Form 1095-A detailing the total policy cost; the amount paid by the taxpayer; and the amount of subsidy paid to the insurance company on behalf of the taxpayer. These figures are supplied on a monthly and an annual basis. For those who purchased coverage through the online website Marketplace Exchange, we can’t complete a taxpayer’s tax return without the 1095-A. Period. This is an important point. If the taxpayer has misplaced the form or didn’t receive the form, a replacement can be requested from the Marketplace. Of course, the Marketplace isn’t saying how long that replacement is going to take. The taxpayer just has to […]


February 5, 2015 // 0 Comments

On August 5, 2014, we had a state-wide vote that approved a change to the Personal Property Tax system. The changes were massive and affected every business that owned any equipment that was physically located in the state of Michigan. Historically, Michigan had taxed the equipment owned by businesses at basically the same rates that real property was taxed. The difference between the personal property tax and the real property tax was that personal property tax collected stayed right here in Rockford with zero going to the state of Michigan. The City of Rockford, Rockford Public Schools, Krause Library, Kent County and other local agencies all received a portion of the personal property tax without filtering it through the state government. Concerning the real property tax system which is a tax on land and buildings, all of the above entities receive funding through the collection of the real property tax but it is filtered through Lansing. Lansing has a habit of doing a good filtering with some of that money sticking to the filter, so to speak. Lansing was asking the local entities to give up non-filtered money. This was a non-starter until the Michigan legislature agreed to reimburse the local entities for revenue given up due to any changes. We taxpayers had to vote and agree to make the changes and we did. The change that affects the greatest number of businesses is called the “small business exemption”. Any business that has less than $80,000 of eligible personal property equipment can file an affidavit with the local assessor and that business will be exempt from personal property tax for the coming year. The catch, if there is one, is that the affidavit must be filed every year and it must be in the assessor’s hands by February 10. Miss that deadline and the business is subject to Personal Property Tax for the coming year. There seems to be no exception to this rule. Let’s just say that we make every effort to make sure that every qualifying client of Action Tax Service has an affidavit filed. The best part of the deal with Michigan is that all local entities will receive 100% replacement of the lost revenue. There are more changes that will kick […]

The Tax Attic

January 23, 2015 // 0 Comments

Deb & I went to “American Sniper” last weekend. What a great movie. The story of Chris Kyle, credited with over 160 enemy kills, was well-done by Producer Clint Eastwood and actor Bradley Cooper. Navy Seal Kyle possibly had another 95 but that additional number was not verified. Of course, the movie had a very sudden and very sad ending when he himself was shot at a range by a veteran he was trying to help. I wish there had been a better way to end it, but the fact is during any of Mr. Kyle’s 4 tours of duty in Iraq, similar to a number of his fellow soldiers, it could have ended just like that anyway. He had survived getting shot twice and lived through 6 IED explosions so he used up a few lives over there. Philosophically speaking, it makes one wonder how many lives does a person get on this earth before he moves on to the next one? I have used up a couple that I know of, but if I get as many as Chris, I might be writing The Tax Attic for another 62 years. Beth would be pleased but I don’t know about Deb.   Watching the movie brought up memories of Rockford’s only Congressional Medal of Honor winner, John Sjogren. Similar to Mr. Kyle, Mr. Sjogren was credited with a large number of enemy kills. It’s just that John’s all came within a few hours in one intense battle. On May 23, 1945, his unit of the 40th Division was charged with taking Hill 3155, better known to the soldiers as Suicide Knob. No matter, an assault was ordered on the hill so up the hill they went. During the battle, under great personal duress, John took on Japanese soldiers firmly entrenched in pill boxes. He had his men pass up their hand grenades and then John moved into position where he could stuff the grenades into the pill boxes one after another. By the time it was all over, he had taken out 9 pill boxes and was credited with ending the lives of 43 Japanese soldiers. That type of effort was enough to earn John the Medal of Honor and it was presented by […]

Tax Attic September 19, 2013

September 19, 2013 // 0 Comments

October 1, 2013 is a big day in the world of Obamacare. It appears that by October 1, anyone who works for an employer with revenue of more than $500,000 and has at least one employee should receive a letter from that employer titled “Notice to Employees of Health Insurance Marketplace Coverage Options”. The employee can then take the letter to the federal on-line insurance exchange and use it to buy coverage. What is the letter going to say? There are two versions of the model letter that are available through the Department of Labor’s website at The first version is for employers who do not provide health insurance to their employees. The second version is for employers who do currently provide employer-paid health insurance to their employees. Both versions have a Part A and a Part B. Part A is “General Information”. Part B is “Information About Health Coverage Offered by Your Employer”. Part A includes several important pieces of information. First, it notifies the employee that the federal on-line insurance exchange, called “Health Insurance Marketplace”, does exist. It gives contact information for the Marketplace; a brief description of the Marketplace; and the products and services available through the Marketplace. It directs interested people to the government’s website: for more information. Second, it notifies the employee that there is potentially a premium tax credit available to help the employee pay for coverage should the employee buy insurance through the Marketplace. The credit is based on several factors, including the family income of the purchaser; the actual policy purchased; whether the employer provides insurance or not; and if the employer does provide insurance, does that insurance cover less than 60% of the value of allowable claims. The third item the letters must itemize is the fact that employee may lose a tax-free fringe benefit if the employee opts to purchase health insurance through the Marketplace. The employee may gain a credit but lose a tax-free fringe benefit. Part B for employers who do not provide health insurance gives employer information the employee needs to go to the Marketplace to purchase insurance. The Marketplace coordinator may contact the employer to verify the accuracy of the letter so common information such as name, address, telephone […]

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