A Tax Consultant for All Seasons

Due to the devastation of hurricane Ike, the IRS has extended the 9/15 deadline for estimated tax payments to Sept 22, for victims. Please read the information published by IRS regarding this extension.  If you need additional information, visit the IRS Website.

Because the storm is falling within one business day of the Sept. 15 due dates, taxpayers directly impacted by the storm will have until midnight Sept. 22 to meet their tax filing obligations without incurring late filing and payment penalties.The IRS is likely to further postpone that deadline and make further tax relief available following damage assessments by the Federal Emergency Management Agency.

Affected taxpayers can mark paper tax returns with the words “Hurricane Ike.” Taxpay

September 15th is an important day for several reasons:

• Payroll tax deposits for August payroll taxes is due for monthly depositors
• 3rd Installment of Estimated Tax Payments is due (for self-employed individuals)
• C Corporation’s 1120 forms are due for those that filed an extension
• S Corporation’s 1120S forms are due for those that filed  an extension

Be sure you follow these deadlines to avoid penalties and interest. If you have reasonable cause to miss these deadlines, contact the IRS. Be prepared to substantiate your reasons for late filing or paying of taxes. Visit the IRS Website if you need information on deadlines or contact an Enrolled Agent.

If you have recently set up a new tax-exempt organization or are planning to set one up in the near future, the information in the article below published by the IRS is for you. It gives you important details about the new regulations and forms required of tax-exempt organizations. If you have additional questions after reading this article, contact an Enrolled Agent or other tax professional.

The Internal Revenue Service and the Treasury Department today issued new regulations that will streamline the approval process for organizations seeking tax-exempt status as publicly supported charities.

The new regulations do away with the so-called advance rulings that granted public charity status for an initial five-year period but required exempt organizations to demonstrate, after the initial period, that they in fact received a substantial part of their support from public sources to receive a final determination letter.

The IRS was able to eliminate the advance rulings process because of the recent redesign of the Form 990, the tax return filed by organizations exempt from federal income tax.

“The revised Form 990 enhances transparency for exempt organizations and makes it easier for them to show that they are ‘publicly supported’ charities, rather than private foundations,” said IRS Commissioner Doug Shulman.

Private foundations under federal law are subject to more restrictions on the way they operate than publicly supported charities. To apply for exempt status either as a private foundation or as a publicly supported charity, an organization must file a Form 1023, the application for recognition of tax exemption.

Over the years, approximately 95 percent of exempt organizations that received advance rulings were later recognized as publicly supported charities at the end of the five-year period.

“Given the high ‘recognition’ rate and the redesigned Form 990, it makes sense to eliminate the burdensome advance ruling process” said Lois G. Lerner, Director of the IRS Exempt Organizations division. “Not only will the streamlined process aid exempt organizations, but it will also allow the IRS to redirect staffing to other program areas without compromising compliance.”

The IRS will use the new Form 990 and other traditional techniques to continue to ensure organizations are complying with the rules for publicly supported charity status on an ongoing basis.

Organizations that have already received an advance ruling under the old regime, but are still in their first five years of existence, can use their advance ruling letter as their final determination letter. In addition to the streamlined approval process, the new regulations include other modifications necessary to implement the redesigned Form 990.  Organizations will begin filing the new Form 990 for their 2008 tax year.

The IRS has published important information for all employers who outsource their payroll. Be sure you are aware of your responsibilities as the employer, even if your payroll company is contracted to make your payroll deposits. Read the information below from the IRS. If you find yourself with a payroll tax problems and need assistance with the IRS, contact an Enrolled Agent.

Many employers outsource some of their payroll and related tax duties to third-party payroll service providers. They can help assure filing deadlines and deposit requirements are met and greatly streamline business operations.  Some of the services they provide are:

• Administering payroll and employment taxes on behalf of the employer, where the employer provides the funds initially to the third-party.
• Reporting, collecting and depositing employment taxes with state and federal authorities.

Employers who outsource some or all of their payroll responsibilities should consider the following:

• The employer is ultimately responsible for the deposit and payment of federal tax liabilities.  Even though the third-party is making the deposits, the employer is the responsible party.  If the third-party fails to make the federal tax payments, the IRS may assess penalties and interest on the employer’s account.  The employer is liable for all taxes, penalties and interest due.  The employer may also be held personally liable for certain unpaid federal taxes.
• If there are any issues with an account, the IRS will send correspondence to the employer at the address of record.  The IRS strongly suggests that the employer does not change their address of record to that of the payroll service provider as it may significantly limit the employer’s ability to be informed of tax matters involving their business.
• For the employer’s protection, employers should ask the payroll service provider if they have a fiduciary bond in place.  This could protect the employer in the event of default.
• Employers should ensure that their service providers are using EFTPS (Electronic Federal Tax Payment System) so the employer can confirm payments made on their behalf.  Everyone should use EFTPS and Treasury regulations require electronic payment for payroll taxes over $200,000 in a calendar year.  EFTPS maintains a business’s payment history for 16 months and can be viewed on-line after enrollment.  In addition, EFTPS allows employers to make any additional tax payments that their third-party provider is not making on their behalf such as estimated tax payments.  The IRS recommends employers verify EFTPS payments as part of their bank account reconciliation process

EFTPS is secure, accurate, easy to use and provides an immediate confirmation for each transaction.  The service is offered free of charge from the U.S. Department of Treasury and enables employers to make and verify federal tax payments electronically 24 hours a day, 7 days a week through the Internet, or by phone.  For more information, employers can enroll online at EFTPS.gov, or call EFTPS Customer Service at (800) 555-4477 for an enrollment form.

There have been recent prosecutions of individuals and companies who have, acting under the guise of a service provider, stolen funds intended for payment of employment taxes.  For more information, visit the IRS Web site at IRS.gov and type in the key words “employment tax investigations.”

Remember, employers are ultimately responsible for the payment of income tax withheld and both the employer and employee portions of social security and Medicare taxes.

If you are a small business owner and are unsure about whether to classify you workers as employees are contact labor, the IRS just published important information to help you make that determination. Once you have read the information from the IRS, if you have additional questions, follow the links below or contact and Enrolled Agent.

The answer can have a profound impact on how much tax you pay as a small business owner. Knowing whether your workers are or are not employees will affect the amount of taxes you must withhold from their pay. It will affect how much additional cost your business must bear, what documents and information they must provide to you, and what tax documents you must give to them.

Employers who misclassify workers as independent contractors can end up with substantial tax bills as well as penalties for failing to pay employment taxes and failing to file required tax forms. Workers can avoid higher tax bills and lost benefits if they know their proper status.

Both employers and workers can ask the IRS to make a determination on whether a specific individual is an independent contractor or an employee by filing a Form SS-8, Determination of Worker Status for Purposes of Federal Employment Taxes and Income Tax Withholding, with the IRS.

Generally, whether a worker is an employee or an independent contractor depends upon how much control you have as a business owner. If you have the right to control or direct not only what is to be done but also how it is to be done then your workers are most likely employees. If you can direct or control only the result of the work done, and not the means and methods of accomplishing the result, then your workers are probably independent contractors.

Three broad characteristics are used by the IRS to determine the relationship between businesses and workers - Behavioral Control, Financial Control, and the Type of Relationship. Behavioral Control covers facts that show whether the business has a right to direct or control how the work is done through instructions, training, or other means. Financial Control covers facts that show whether the business has a right to direct or control the financial and business aspects of the worker’s job. The Type of Relationship factor relates to how the workers and the business owner perceive their relationship.

Knowing the proper worker classification can be critical to your business. Don’t guess. Act now to make certain you know for sure.

You can learn more about the critical determination of a worker’s status as an Independent Contractor or Employee at IRS.gov by selecting the Small Business link. Additional resources include IRS Publication 15-A, Employer’s Supplemental Tax Guide, and Publication 1779, Independent Contractor or Employee. Both of these publications and Form SS-8 are available on the IRS Web site or by calling the IRS at 800-829-3676 (800-TAX-FORM).

Remember that for the genuine IRS Web site be sure to use .gov. Don’t be confused by internet sites that end in .com, .net, .org or other designations instead of .gov. The address of the official IRS governmental Web site is www.irs.gov.

Links:

• Contractor vs. Employee
• Publication 1779
• Publication 15-A

No, I don’t mean the Olympics. As I indicated in a blog a few days ago, the company I work for - Effectur was in the running for the Best Place to Work in the Triad.  There are 35,000 companies in the Triad area and they were divided into 3 groups, Small, Mid-Size, Large. Effectur was running in the Mid-Size Group. We came in second. While needless to say, I was disappointed in not winning First, I am still proud of what we accomplished.

It is still quite an accomplishment to even come in second place amoung so many businesses. It attests to the commitment of our management team to provide not only excellent customer service, but excellent employee service. To give you an idea, one the items that they brought up in the presentation, was that the President of our company sent an employee to a Ritz Carlton hotel so she could see how the Ritz treated people. He wanted her to experience their level of service so she could come back and provide that level of service to her fellow employees.How many companies are willing to do that!!

We may have taken second place, but we are tops on my list of the best places to work! I am proud to be an employee of a company that strives to treat both its customers and it’s employees with integrity, professionalism, and compassion.

Yes,  you certainly can, but you may not want to.  If you only owe the IRS a small amount, it would make sense to call the IRS yourself and set up a payment plan. However, if you owe the IRS a sizable amount, you may need representation. Does that mean you need to hirer a lawyer? No, but you may need an Enrolled Agent.  An enrolled agent can talk to the IRS on your behalf.  Why would you pay someone to help?

Did you know if you call the IRA yourself, they will ask you to commit to a larger amount that you might be comfortable with? They may ask for a lot of financial information, which depending on the amount you owe, you may not be required to give them.  Unless you are very sure you know all your rights and otpions, you may need an Enrolled Agent to represent you.  A CPA can also represent you before the IRS.

There are several option that you may qualify for, but the IRS representative you are speaking with, may not make you aware of these option. Their job is to have you repay what you owe as quickly as possible.  At Effectur, we  have many clients who were in a payment plan that they got themselves, but the amount is more than they can pay. We help negotiate a lower rate in many cases. What you have to pay depends on what you owe and what your net income is (income less expenses (the ones the IRS allows).

If you need peace of mind in dealing with the IRS, Effectur is here to help.

Today rather than talk about taxes, I want to talk about where I work. My employer (Effectur) is in the running for Best Place To Work in the Triad. (the Triad being our local tri-city area)  I share this information with pride.

If you have ever Googled any of the other tax resolution companies on the internet, you will see a lot of negative comments. You will quickly surmise that none of these are in the running as Best Place to Work.  Our management team has created an environment that is both employee and customer service oriented.

I am proud to work for a company that strives to stand out above the crowd.  A company that has as it’s mission statement “Providing Our Clients With Peace of Mind”.  I hope I will be able to blog next week to tell you we won first place. But even if we don’t, we were nominated and have been recognized for our company’s efforts to provide a fantastic place to work.  They are well aware that a great work environment inspires employees to do their best for their clients.

If you need assistance with a tax resolution problem, check out our web link above.  Google Effectur. Google other tax resolution companies too. Check with the BBB. Pick the one with the least complaints and the most satisfied clients. I know who that will be.

If you are a small business owner and need information on setting up or running your business, two websites that provide assistance are the IRS and the Business.gov site.  Business.gov has available a new toolkit you can use to:

• Search for information, forms, and contacts from federal, state and local governments
• Find topics of current interest to the nation’s small business community
• Get a listing of licenses and permits that apply to your business
• Watch videos featuring expert advice from successful entrepreneurs and small business owners

The website is a great find and you will find a lot of useful information to help you start or run your small business. If you find you need additional help on tax matters, contact a tax professional such as an Enrolled Agent for more help.

The IRS just published a helpful calendar for small business owners. This calendar has important dates and information that will help you meet your tax deadlines.  Read the information below from the IRS that tells you how to get the calendar and has other helpful information.

Are you running a small business?  Would you like a calendar packed with valuable business tax information?  The IRS is offering a free calendar to help you keep track of tax deadlines and important dates throughout the year.

You might be surprised to learn that the IRS publishes a calendar, like our popular Web site, IRS.gov, the calendar is part of our many services to help owners and operators of small businesses.

The Tax Calendar for Small Businesses and Self-Employed Individuals from the Internal Revenue Service is a 12-month calendar filled with deadline reminders, important information such as changes in deductible mileage rates and business tips such as how to organize business and travel expenses.

This widely-used special business tax calendar provides the small business owner with a ready resource for meeting his or her tax obligations.

Each page of the calendar highlights different tax issues and tips such as business planning, accounting methods, tracking your records, and protecting your information that are especially relevant to small-business owners.  The calendar has room each month to add notes, state tax dates or business appointments.

Topics include information on general business taxes, IRS and Social Security Administration customer assistance, electronic filing and paying options, retirement plans, business publications and forms, common tax filing dates, federal holidays and much more.

The 2008 IRS Tax Calendar for Small Businesses and Self-Employed, Publication 1518, is now available in both English and Spanish versions.  For an online version of the calendar, visit the Small Business Self-Employed pages on the IRS Web site at IRS.gov. On IRS.gov you can download the tax calendar due dates and actions, and import them into Outlook or iCal. Printed copies of the tax calendar can also be ordered online or by calling 800-TAX-FORM (800-829-3676).

Remember that for the genuine IRS Web site be sure to use .gov.  Don’t be confused by internet sites that end in .com, .net, .org or other designations instead of .gov. The address of the official IRS governmental Web site is www.irs.gov.
Links:

• Small Business and Self-Employed One-Stop Resource
• Small Business Products Online Ordering