- Hobbies become a taxable business when, in any 2 of 3 consecutive calendar years, sales from the hobby exceed the sum of: taxable purchases for the hobby; wages or salaries paid for the hobby; and any taxes paid for the hobby.
Key Points Summary – Hobbies #HR25 #S122 #Fairtax Act of 2013
Key Points Summary – Not-For-Profit Organizations #HR25 #S122 #Fairtax Act of 2013
- Qualified not-for-profit organizations will enjoy tax benefits similar to those allowed under the current tax system.
- Not-for-profit organizations meeting applicable qualifications will be issued a ‘qualification certificate’.
- Taxable properties or services provided by a qualified not-for-profit in connection with contributions, dues or other similar payments will be treated as the provision of a taxable property or service and the sales tax will be imposed on the property or service at the fair market value.
(Not-for-profit organizations will also benefit from charitable donations made with untaxed dollars.)
Key Points Summary – Social Security #HR25 #S122 #Fairtax Act of 2013
- All employers are required to report employee wages and self-employment income (minus gross payments for taxable property and services and wages paid to employees) to the Social Security Administration for the accumulation of benefit credits.
- Tips in an annual amount not to exceed $5,000 may be reported for the accumulation of benefit credits.
- If, after implementation of the FairTax, the computation of the Consumer Price Index (CPI) does not include the sales tax in either the base or cost-of-living quarter, then the quarter omitting the tax will have the computed CPI multiplied by: 1 + (.23/(1-.23), currently 1.3, which represents the ‘CPI increase percentage’. This will also provide, in the first cost-of-living quarter after implementation of the FairTax, a sales tax inclusive CPI to be compared with a non-sales tax inclusive CPI from the base quarter prior to implementation of the FairTax.
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(The CPI increase percentage protects the purchasing power of Social Security benefits.)
Key Points Summary – Government (Federal, State and Local) #HR25 #S122 #Fairtax Act of 2013
- All governments, excluding those entities designated a government enterprise, will pay the sales tax on the purchases of taxable properties and services.
- A government enterprise is an agency of any government that provides properties and services to the public and for which the individual consumer renders a payment.
- Government enterprises will collect the tax on the sale of properties and services and enjoy the exemptions and credits extended to a trade or business.
(The U.S. Post Office, local government utility services, and parks operating on a pay as you go fee are examples of government enterprises.)
Key Points Summary – Credits and Refunds #HR25 #S122 #Fairtax Act of 2013
- The ‘Business Use Conversion Credit’ provides a means to recoup a portion of the taxes paid for a property or service subsequently transitioned to a business use in a trade or business.
- The ‘Mixed Use Property or Services Credit’ can be claimed for that portion of a property or service used for both private and business use.
(The reverse applies and at fair market value for any property or service converted from a business use to a personal consumption use.)