Tax Newsletter Excess Passive Income in an S Corporation   Generally, an S corporation pays no federal income taxes. Any income or loss is usually passed through to shareholders in proportion to the ownership interests on a per-share, per-day basis, and the shareholders report their portion of the entity's income or loss on their individual tax returns. However, additional taxes may be assessed against S corporations with excess passive income. More...   Liens   Once the Internal Revenue Service has assessed a tax and has sent the taxpayer a bill in the form of a Notice and Demand for Payment, a lien arises in favor of the government on all real, personal, tangible, or intangible property of the delinquent taxpayer until the amount is paid. By filing notice of the lien, the IRS has publicly notified all creditors of the taxpayer that it has a claim against the taxpayer's property, including property acquired after the lien was filed. The notice establishes priority of the government's lien in circumstances such as bankruptcy proceedings or sales of real estate. A federal tax lien may harm a taxpayer's credit rating and impair his or her ability to get a loan, a credit card, or a mortgage.More...   Bartering   The fair market value of the value of the goods and services exchanged must be included in the gross income of both parties.More...   Welfare and Other Public Assistance Benefits   If you are the recipient of benefit payments from a public welfare fund, you do not have to include them in your income. In addition, any payments from a state fund that you received as a victim of a crime should not be included in income. However, if you paid medical expenses that were reimbursed by a victim's fund, you are not entitled to a deduction for those expenses.More...   Identity Theft Scheme Involving E-mails   You get an email from the Internal Revenue Service informing you that you are under investigation for tax fraud and are subject to criminal prosecution. Once you have started breathing again, you read further and get to the good news. According to the e-mail, there is an IRS website that can help your investigation if you provide certain personal and financial information. You go the website, which is certainly official looking, and think about entering the requested data, including your social security and drivers license numbers, and bank and credit card information. But then you see a grammatical error in the website text, and a bell goes off in your head. Fortunately, you contact your local IRS office before doing anything else.More...