SmallBiz Builder Newsletter

Padgett understands that as a small business you don’t have time to focus on researching new trends, updates in the industry, and tips on new ways to run your business. That’s where we come in. Through our Padgett News section and Small Biz Builder Newsletter we will keep you up to date on information that impacts your decisions everyday. It’s just one more way that we help you do what you do best – focus on your business.


August 2012 Issue (Click Here to Download)

Vol. 9, No. 6 – June 2011Atlanta Small Business Newsletter Jun 2011

Don’t Overanalyze and Miss an Opportunity
Overanalyzing a situation can be as bad as not giving it enough thought. Most decisions are made on some sort of deadline. Even very smart individuals examine the data to the point that coming to a conclusion is put off for too long. It is easy to continue to research in order to make sure a decision is absolutely correct.

Installment Agreements for Small Businesses
The IRS will make streamlined Installment Agreements available. Small businesses with $25,000 or less in unpaid tax can now participate. Previously, only those with $10,000 in liabilities could participate. Small businesses will have 24 months to pay. Small businesses that file either as an individual or as a business will need to enroll in a Direct Debit Installment Agreement. Small businesses with an unpaid assessment balance greater than $25,000 would qualify for the streamlined Installment Agreement if they pay down the balance to $25,000 or less.

Husband and Wife Businesses
One of the advantages of operating your own business is hiring family members. However, the employment tax requirements for family employees may vary from those that apply to other employees.


Vol. 9, No. 5 – May 2011Atlanta Small Business Newsletter May 2011

Should I Panic if I Receive an IRS Notice?
NO!!! Each year, the IRS sends millions of letters and notices to taxpayers for a variety of reasons. Many can be dealt with simply and painlessly. Check out this article for some tips!

Record Keeping
After you file your taxes, you will have many records that may help document items on your tax return. You will need these documents should the IRS select your return for examination. Generally, this means you must keep records that support items shown on your return until the period of limitations for that return runs out.

Repeal of 1099 Reporting
President Obama signed into law on April 14th a bill to repeal expanded Form 1099 information reporting requirements for certain business payments and rental property expense payments. Learn more in this article.

Recent Hires Leaving?
Whenever there is an economic downturn, some newly hired employees may be over qualified for the job which they were hired. This means that you might get a great deal when it comes to their salary. The problem is, once the market rebounds, they may start looking for another new job, one that better suits their skill set. What should you do?

Forms W-2 Health Care Reporting for Smaller Employers
In March, the IRS issued interim guidance concerning the Patient Protection and Affordable Care Act of 2010. 1. Reporting of aggregate cost of employer sponsored health plans is now optional for employers filing fewer than 250 Forms W-2 in the previous tax year. This is effective for 2012 W-2s and remains in effect until further guidance is issued. 2. Employers filing 250 or more Forms W-2 for 2011 must include the cost of employer-sponsored health coverage on the forms for the tax year 2012.


Vol. 9, No. 3 – March 2011Atlanta Small Business Newsletter Mar 2011

Employees vs. Independent Contractors
It’s crucial to know whether your workers are employees or independ-ent contractors. Big dollars may be at stake in the form of federal and state assessed penalties resulting from misclassification. The validity of your company’s pension plan may also be at stake.

Taxable or Non-Taxable Income?
There are situations when certain types of income are only partially taxed or not taxed at all. Some income may be taxable under certain circumstances, but not taxable in other situations. Learn more about taxable and non-taxable income here.

Name Change as a Result of Marriage or Divorce
If you changed your name as a result of marriage or divorce you’ll want to take the necessary steps to ensure the name on your tax return matches the name registered with the Social Security Administration (SSA). A mismatch between them can cause problems in the processing of your return.

Title Matters: Who Owns the Car?
If your company is paying for a car, make sure you title it in the company’s name. If the company writes the check but you put the title in your own name, the IRS is almost surely going to deny the business a depreciation deduction.

Write-off for Heavy SUVs Used Entirely for Business
Under the 2010 Tax Relief Act, the bonus first -year depreciation percentage is 100% (instead of 50%) for bonus-depreciation eligible “qualified property” that is generally (1) placed in service after Sept. 8, 2010 and before Jan. 1, 2012, and (2) acquired by the taxpayer after Sept. 8, 2010 and before Jan. 1, 2012. Qualified property includes autos and trucks which are 5-year MACRS property and thus qualify for bonus depreciation. For example, a taxpayer buys and places into service a new $50,000 heavy SUV on October 1, 2010 and uses it 100% for business, may write off its entire cost of $50,000 on his 2010 tax return.


Vol. 9, No. 2 – February 2011Atlanta Small Business Newsletter Feb 2011

Delayed Filing for Some Taxpayers
Due to Congressional action at year-end, taxpayers will need to wait to file until middle to late February if any of the categories outlined in this article. Learn more today.

Nondeductible Expenses
As a small business owner, you have the opportunity to deduct certain expenses from your taxes. Don’t let yourself get carried away though; there are some expenses that are not deductible, regardless of the situation. Just as a reminder, below are some common expenses that CANNOT be deducted as a business expense.

Should I File a Return?
You do not have to file a tax return in all cases, but there are some instances in which you still should file, even if it is not expressly required. You should file if any of the following apply:

Tax Refund Options
In an effort to help individuals build their savings and retirement funds, a new direct deposit option in 2010 allows taxpayers to use their tax refunds to purchase U.S. Series I Savings Bonds. Additionally, a new debit card option has been added as well.


Vol. 9, No. 1 – January 2011Atlanta Small Business Newsletter Jan 2011

Important Dates for Q1 2011
Important dates for your calendar.

Payroll Tax Cut in the 2010 Tax Relief Act
The Social Security payroll tax on individual wages will be lowered to 4.2% in 2011, from the 6.2% rate. Self-employed workers will also get a two percent reduction from 12.4% to 10.4%. Read more details.

2011 Standard Mileage Rates
Beginning January 1, 2011, the standard mileage rates for the use of a car change. Get details here.

Small Business Health Care Credit
The Affordable Care Act provides for a small business health care tax credit designed to encourage small businesses to offer health insurance coverage to their employees for the first time or maintain coverage they already have. In general, the credit is available to small employers that pay at least half of the premiums for single health insurance coverage for their employees.

Changes to Flexible Spending Arrangements
Effective Jan. 1, 2011, the cost of an over-the-counter medicine or drugs cannot be reimbursed from Flexible Spending Arrangements or health reimbursement arrangements unless a prescription is obtained. The change does not affect insulin or other health care expenses such as medical devices, eye glasses, contact lenses, co-pays and deductibles.

Optional Reporting of Health Insurance Coverage on Form W-2 for 2011
The Internal Revenue Service announced interim relief to employers with respect to reporting the cost of coverage under an employer-sponsored group health plan on Form W-2.


Vol. 8, No. 11 – November 2010Atlanta Small Business Newsletter Nov 2010

Small Business Jobs Acts of 2010

The recently enacted 2010 Small Business Jobs Act (the Act) provides for $12 billion in tax breaks and incentives, and implements various revenue raisers to fund the bill. Despite the name “small business,” the act includes retirement saving incentives for individuals. Since only a few provisions are permanent and many have a very short lifespan, this Act is crucial to your year-end tax planning. Here’s a brief overview of the new law. Call us to discuss how the Act affects your business.

 

 


Vol. 8, No. 10 – October 2010Atlanta Small Business Newsletter Oct 2010

Elimination of the Federal Tax Coupon Voucher
If you aren’t yet paying the IRS through their electronic transaction system, you will want to start soon. Beginning January 1st, 2011, most taxpayers must start paying electronically.

IRS Warns of EFTPS Phishing Scam
The IRS wants you to be aware of a fraud scheme targeting Electronic Federal Tax Payment System (EFTPS) users. The scheme starts with an e-mail claiming that the user’s tax payment was rejected, then directs the user to a website for additional information. The user’s computer is then infected with malware located on the site.

Keeping Access to Your Records
There are many situations where a business owner or other taxpayer can find themselves without complete records. Here are some tips to ensure you always ahve complete financial records for your business.


Vol. 8, No. 9 – September, 2010Atlanta Small Business Newsletter Sep 2010

SIMPLE Plan Deadline Approaches
Under a SIMPLE plan, employees can choose to de-fer as much as $11,500 (for 2010) to the plan rather than receiving these amounts as a part of their regular pay, and there generally is a mandatory employer contribution as well. Plan assets grow tax deferred until withdrawal and partici-pants have complete direction over their own retirement as-sets held in their account.

Car Sales vs. Trade In
The decision of whether to trade in an old business car or try to sell it for cash ought to hinge on factors such as the amount you can get on a sale versus a trade-in, and the time and bother a sale will entail. However, important tax factors also may affect your decision-making process. Here’s an overview of the complex rules that apply to what appears to be a simple transaction, and some pointers on how to achieve the best tax results.

Expense Reimbursements
The general rule is that funds received in connection with services you render are included in your taxable income. Reimbursements of your out-of-pocket expenses, however, are another matter. Learn more.


Vol. 8, No. 8 – August, 2010Atlanta Small Business Newsletter Aug 2010

Employer Contribution to Employee Education
Do you have an employee who you would like to see further their education? It may not be as tough as you think to help them meet that goal.

Summertime Child Care Expenses May Qualify for a Tax Credit
Did you know that your summer day care expenses may qualify for an income tax credit? Many parents who work, or are looking for work, must arrange for care of their children under 13 years of age during the school vacation. Those expenses may help you get a credit on next year’s tax return.

Tanning Services Tax Q&A
Answers to common questions regarding indoor tanning services.


Vol. 8, No. 7 – July 2010Atlanta Small Business Newsletter Jul 2010

Where’s My Refund?
You filed your tax return and you’re expecting a refund. You have just one question and you want the answer now – Where’s My Refund? If you file a paper return it will take six to eight weeks after the IRS receives your return. File electronically and you’ll get the refund in half that time. Using direct deposit speeds things up significantly. If you filed a paper return you completed without tax preparation software, you’re chances of making an error increase substantially and that could delay your refund.

3rd Quarter 2010 Due Dates
Important dates for your calendar.

Tax Deductible Vacations
Although business is business, and pleasure is pleasure, the world rarely adheres to absolutes. So, as the summer vacation season begins to unfold, you may want to consider mixing some leisure time in with your business travel. With a lit-tle planning, you can get Uncle Sam to subsidize your down-time.


Vol. 8, No. 6 – June 2010Atlanta Small Business Newsletter Jun 2010

2010 Health Reform Impacts Small Business
Small businesses and their workers have good reason to pay attention to some of the key provisions in the recently-enacted health reform legislation. Whether a business will be affected by them depends on a variety of factors, such as the number of employees the business has. Below is an overview of the provisions in the new law that will have the biggest impact on small business. If you would like more details about these provisions or any other aspect of the new law, please do not hesitate to call your local Padgett office at 770-287-1040.

Customer Service: A Personal Experience with Small Business by Dan Sautner, Padgett Vice Chairman
A small business may not have the advertising budget and may not offer the gift cards and fancy showrooms, but making their customer happy is their focus because happy customers keep them in business. Long may they thrive!


Vol. 8, No. 5 – May 2010Atlanta Small Business Newsletter May 2010

Determining Insolvency
It is becoming common to experience debt relief in these challenging times. Debt relief is usually taxable if not relieved through bankruptcy pro-ceedings. However, canceled debt is not included in income to the extent that you are insolvent immediately before the cancellation. Learn more!

HIRE Act
Recently signed into law, the “Hiring Incentives to Re-store Employment Act of 2010” (the HIRE Act), includes several provisions of extreme importance to many businesses. If you would like more details about these provisions or any other aspect of the new law, please do not hesitate to contact our office.

Effective Dates for Major Tax Provisions of Health Care Laws
The Patient Protection and Affordable Care Act and Health Care and Education Reconciliation Act of 2010 phases in tax changes over a span of eight years and contains key provisions of importance to both individual and business taxpayers. Below is an expected timeline for when certain tax-related provisions will become effective. Please call our offices for details of how the new changes may affect your specific situation.

Warranty Expense
If you purchase an extended warranty for an auto used for business purposes, the cost must be deducted over the life of the warranty. Take the full cost and divide by the number of months in the warranty period.


Vol. 8, No. 4 – April 2010Atlanta Small Business Newsletter Apr 2010

New ERP Look-Up Tool
The IRS recently developed the “Did I Receive an Economic Recovery Payment?” look-up tool which gives taxpayers an easy way to deter-mine if they received the one-time ERP payment and which agency made the payment. Beginning March 8, 2010, tax-payers can call 866-234-2942 to access the phone application. The Web application will be available in late March on IRS.gov.

Qualified Non-Personal Use Vehicles
Annual depreciation limits apply to autos and trucks, but some special vehicles are exempt such as qualified non-personal use vehicles, which by their nature are not likely to be used more than a minimal amount for personal purposes. If your truck or van has been specially modified in ways that limit personal use – by the installation of permanent shelving, for example – annual limits will not apply. Delivery trucks with seating only for the driver, or only for the driver plus a folding jump seat are also qualified non-personal use vehicles.

Self-Employed Health Insurance
If you’re a sole proprietor, S corporation and partnership for tax filing purposes, you may be able to deduct your health insurance premiums on the front of Form 1040. Learn more today!

Rental Property Held as Tenant-In-Common
You don’t have to form a corporation, partnership or other entity to own a rental property with a friend, relative, or business associate. You can own the property as tenants-in-common. And in-terests don’t have to be on a 50-50 (or other amount based on solely on the number of tenants) basis.


Vol. 8, No. 3 – March 2010Atlanta Small Business Newsletter Mar 2010

2009 Economic Recovery Payment Verification
A one-time pay-ment of $250 was made in 2009 to recipients receiving benefits from the Social Security Administration, disabled veterans receiving benefits from the U.S. Department of Veterans Affairs, and Railroad Retire-ment beneficiaries.

10 Facts about the Extended First-Time Homebuyer Credit
If you are in the market for a new home, you may still be able to claim the First-Time Homebuyer Credit. Congress passed The Worker, Home-ownership and Business Assistance Act Of 2009, extending the First-Time Homebuyer Credit and expanding who qualifies.

Barter Transactions
In today¡¯s economy, small-business owners sometimes look to the oldest form of commerce ¡ª the exchange of goods and services, or bartering. The Internal Revenue Service wants to remind small-business owners that bartering transactions generally have associated tax reporting, accounting and record-keeping responsibilities.

Title Matters: Who Owns the Car?
If your company is paying for a car, make sure you title it in the company’s name. If the company writes the check yet you put the title in your own name, the IRS is almost surely going to deny the business a depreciation deduction.

Haiti Relief Donations
People who give to charities providing earthquake relief in Haiti have the option of deduct-ing these contributions on either their 2009 or 2010 returns, but not both.


Vol. 8, No. 2 – February, 2010Atlanta Small Business Newsletter Feb 2010

2009 Tax Law Changes Provide Saving Opportunities for Nearly Everyone
In 2009, numerous new and expanded deductions and credits came into being for a broad cross-section of taxpayers. The following is a summary of these, and other key changes, that may apply to your 2009 federal income tax return.

 

 


Vol. 8, No. 1 – January, 2010Atlanta Small Business Newsletter Jan 2010

1st Quarter 2010 Due Dates
Important dates for your calendar.

2010 Standard Mileage Rates Drop
The Internal Revenue Service recently issued the 2010 optional standard mileage rates used to calculate the deductible costs of operating an automobile for business, charitable, medical or mov-ing purposes.

IRS Begins Employment Tax Research in 2010
In February 2010, the Internal Revenue Service will begin its first Employment Tax National Re-search Project (NRP) in 25 years. Business practices regarding employment tax issues may have changed significantly since the last IRS employment tax study in the 1980s, necessitating the need for this study.

Section 179: A Year-End Decision
It generally makes sense to write off eligible equipment using the Section 179 expense option in the year of purchase. You’ll get the tax deduction faster than if you took depreciation over time. Learn more.


Vol. 7, No. 12 – December, 2009

8109 Coupon Days are Numbered
It has been a longstanding routine for most small businesses to remit their Federal payroll tax deposits, as well as other tax payments, by taking a deposit coupon to their bank. However, some banks are no longer taking coupons.

Worker, Homeownership, and Business Assistance Act of 2009
On November 6, President Obama signed into law H.R. 3548, the Worker, Homeownership, and Business Assistance Act of 2009. The new law extends unemployment benefits and includes a number of tax law changes for individuals and small businesses as well. If you would like more information about this new law and how it may affect you or your business, please do not hesi-tate to contact us.

Multi-State Sales Tax
Doing business in multiple states can be complicated. State threshold requirements vary for how frequently returns have to be filed. Learn more.


Vol. 7, No. 11 – November, 2009

Assignment of Income
Personally earned income can’t simply be reported on a corporation, partnership, etc. tax return, or vice versa. Compensation for services (whether wages, salaries, com-missions, profit-sharing, pension, etc.) is taxable to the person who earns it. You can’t escape taxation by arrangements and contracts to share earnings or to have them paid to someone else.

IRS Eases IRA Conversion Rules
Beginning in 2010, an IRA conversion to a Roth IRA can be done regardless of income level. The previous AGI threshold of $100,000 will be eliminated. Additionally, married filing separate tax-payers will be able to make the conversion to a Roth, which has previously been an unavailable option. These new rules will pose tax planning challenges and opportunities for the next few years.

Employee Wage Records
Many small business owners are confident in their knowledge of regulations concerning the retaining of receipts, canceled checks, bank statements, etc. for their business. But are you as cautious when it comes to keeping records for employee wages and personnel information?

Got Debt Relief?
If a debt you owe is forgiven by the creditor, or you settle the debt for less than the full amount, the canceled portion is taxable income to you. However, there are exceptions and exclusions.

Reminder
The IRS reminds taxpayers of the special sales tax deduction for car pur-chases that is available through the end of 2009. A new car, light truck, motorcycle, and even a motor home could qualify – and you don’t have to itemize to get the deduction. There are income limitations, and only tax on the first $49,500 applies. Questions? Ask your Padgett representative.


Vol. 7, No. 10 – October 2009

Choosing the Proper Business Structure
Of all the choices you make when starting a business, one of the most important is the type of legal organization you select for your company. This decision can affect how much you pay in taxes, the amount of paperwork your business is required to do, the personal liability you face and your ability to borrow money.

Child Care Tax Credit
Many parents who worked or were looking for work this summer had to arrange for care of their children under 13 years old during the school vacation. The Child and De-pendent Care Credit is available for expenses incurred over summer break and through-out the rest of the year. Here are five facts you should know about this tax credit.

4th Quarter 2009 Due Dates
Important dates for your business calendar


Vol. 7, No. 9 – September 2009

Check Your Withholdings!
Earlier this year, the Making Work Pay Credit was approved to stimulate the urchasing power of working Americans by putting more of your paycheck into you pockets.

Taxpayer Advocate Service
The Taxpayer Advocate Service is an independent organization within the IRS that assists taxpayers who are experiencing economic harm, who are seeking help in resolving tax problems that have not been resolved through normal channels, or who believe that an IRS system or procedure is not working as it should.

Employee Discounts
Offering employee discounts for your products is a benefit which is appreciated by your employees, while not costing the company a lot of money. When handled correctly, the employee gets a tax-free perk, and your company is rewarded residually by having your employees use their products.

Bartering Income
Transactions involving the exchange of property or services instead of cash are called barter exchanges. The fair market value (FMV) of the property or services received in an exchange is taxable income to the recipient.

More Taxpayers Can Use Cash Method of Accounting
Generally, if you engaged in a trade or business in which the production, purchase, or sale of merchandise was an income-producing factor, you must take inventories into account at the beginning and end of your tax year.


Vol. 7, No. 8 – August 2009

Minimum Wage Reminder
The federal minimum wage increased to $7.25 an hour on July 24, 2009.

No Business – No Deductions
A recent Tax Court decision bolsters the IRS stance regarding deductible business expenses. Investigatory and start-up expenses were denied because the business had not yet begun an active trade.

Tax Aspects of “Cash for Clunkers”
Cash for Clunkers gives a cash incentive for individuals and businesses to trade in older gas-hogging vehicles for new, more fuelefficient ones. The incentive takes the form of a voucher of $3,500 or $4,500 depending on the type of vehicle traded in and the fuel efficiency of the vehicle purchased. The new vehicle must be purchased between July 1 and November 1 of 2009.

Employer-Paid Disability Premiums
If you think that paying your employee’s disability premiums is always a good thing, think again. If you provide your employees disability as a nontaxable fringe benefit, payments they receive upon their disability will be, in most cases, FULLY taxable to them!

Importance of Accountable Plans
If you often reimburse employees for job-related expenses they incur, accountable plans can offer significant benefits. Accountable plan reimbursements are not taxable to the employee and are fully deductible by the employer, with the exception of meal and entertainment expenses.


Vol. 7, No. 7 – July 2009

REMINDER: New Form I-9!
Beginning April 3, all employers are required to use the newly-revised Form I-9 Employment Eligibility Verification, available at www.uscis.gov.

Determining Insolvency
It is becoming common to experience debt relief in these challenging times. Debt relief is usually taxable if not relieved through bankruptcy proceedings. However, canceled debt is not included in income to the extent that you are insolvent immediately before the cancellation.

Tax Deductible Vacations
Although business is business, and pleasure is pleasure, the world rarely adheres to absolutes. So, as the summer vacation season begins to unfold, you may want to consider mixing some leisure time in with your business travel. With a little planning, you can get Uncle Sam to subsidize your downtime.


Vol. 7, No. 6 – June 2009

No ITIN on Form W-2
A Treasury Inspector General for Tax Administration audit report notes that some employers are reporting an employee’s individual taxpayer identification number (ITIN) on the Social Security Number (SSN) line of Form W-2, which is not allowed under IRS regulations.

Looking Ahead
Looking to make 2009 less taxing than 2008? Here are some tax moves that may ease next year’s tax burden.

Audit Alert!
These audits will focus on three main issues: employee vs. independent contractor, fringe benefit reporting, and reasonable executive compensation. The selection process will be random and will involve all sizes of employers. It appears that the program will look at 1500 to 1800 businesses each year and will last for three years.


Vol. 7, No. 5 – May 2009

Stimulus Demystified
Since President Obama signed the economic-stimulus package into law February 17, there has been much confusion about the Making Work Pay tax credit.

What Happens After I File?
Most taxpayers have already filed their federal tax returns but may still have questions. Here’s what you need to know about refund status, recordkeeping, mistakes and what to do if you move.


Vol. 7, No. 4 – April 2009

2009 Recovery Act
The recently enacted “American Recovery and Reinvestment Act of 2009” (2009 Recovery Act) contains a wide-ranging tax package that could have a significant impact on you, your family, and your business. Below is an overview of the more widely applicable tax changes. If you would like more details about this or any other aspect of the new law, please do not hesitate to call.

2nd Quarter 2009 Due Dates
Important dates for your business calendar


Vol. 7, No. 3 – March 2009

Investors May Need to Amend
Sometimes it does not pay to file early. A new law, enacted last fall, changed the deadline from Jan. 31 to Feb. 15, when brokers, including brokerage firms, mutual fund companies and barter exchanges, must furnish year-end Forms 1099-B to their customers. Where a broker furnishes these forms by mail, this means that the forms must be mailed, not received by that date. Because Feb. 15 fell on Sunday in 2009, and Monday, Feb. 16 was a federal holiday, the deadline was Feb. 17 this year.

IRS Tips to Avoid Recovery Rebate Credit Confusion
In response to errors showing up on early tax filings, the Internal Revenue Service has urged taxpayers to make sure they properly determine eligibility for the recovery rebate credit before filing their 2008 federal tax returns. An early sampling of tax returns shows about 15 percent have errors involving the recovery rebate credit. Some tax returns erroneously claim the credit, do not claim the proper amount of recovery rebate credit or mistakenly enter the amount of the stimulus payment they received last year on the recovery rebate credit line.

IRS Help for Financially Distressed Taxpayers
If you are facing financial difficulties and struggling to meet your tax obligations the IRS can help. As the 2009 tax filing season begins, in addition to new credits, deductions and exclusions, the IRS is taking steps to help people who owe back taxes.


Vol. 7, No. 2 – February 2009

Avoiding Direct Deposit Woes
Direct deposit of your income tax refund makes a lot of sense – you’ll get it quicker and it’s often safer. This year there are more options for distributing the refund.

Worker, Retiree, and Employer Recovery Act of 2008
The Worker, Retiree, and Recovery Act of 2008 was enacted recently. It contains many technical changes that are of interest primarily to actuaries and defined benefit plan administrators. However, the Act also contains several changes that impact a broader range of taxpayers. Below is a brief summary of those provisions.

Business- Savvy Tips for the Times
Check out four great tips to help your business in these tough economic times.

Voluntary Use of Form 944
Employers whose estimated annual employment tax liability is $1,000 or less can file Form 944, Employer’s Annual Federal Tax Return, rather than Form 941, Employer’s Quarterly Federal Tax Return. Learn more.


Vol. 6, No. 12 – December 2008

Retirees Not Eligible for FICA Refund
A recent IRS information letter notes that retirees cannot be reimbursed for FICA taxes that they paid on wages earned for part time work, even though their Social Security benefits will not increase as a result of this income.

SS Benefits and Earnings Threshold Increase
The Social Security Administration has announced that monthly Social Security and Supplemental Security Income (SS/SSI) benefits will increase 5.8 percent in 2009 – the largest increase since 1982.

Substantiating Charitable Contributions
In order to substantiate a charitable contribution, a taxpayer must maintain one of the following: (1) a canceled check; (2) a receipt or letter from the donee charitable organization showing the name of the donee, the date, and the amount of the contribution; or (3) other reliable records showing the name of the donee, the date, and the amount of the contribution.

Reimbursing Independent Contractors
Whether or not an independent contractor is separately reimbursed for his/her expenses depends on industry practice and the agreement between you and the contractor. If you simply cut the contractor a check based on a line on his/her bill, it’s taxable income to the contractor (and reportable on his/her
1099) and he/she will have to deal with tax issues.

Changing Entities?
The end of the year is a good time to consider making a tax entity change. If you’re thinking of switching, the first person you should talk to is your Padgett Representative to find out if changing makes sense for your business and to discuss the potential tax consequences.

Unclaimed Property Laws
Unclaimed wages are a form of abandoned property that may become the property of the state. If your business has hourly workers or a transient workforce you are most likely to have unclaimed wages.


Vol. 6, No. 11 – November 2008

2008 Extenders Act
As you know, the “Tax Extenders and Alternative Minimum Tax Relief Act of 2008” (the 2008 Extenders Act) as well as several other Acts, were enacted recently. It provides extensions for several popular tax breaks and the addition of several new relief provisions, including disaster area tax relief. Here’s an overview of the key provisions in the new legislation.

Election to Deduct Startup & Organizational Expenses Eliminated
The IRS has issued regulations that eliminate the need to make a formal election to deduct startup expenses, effective generally for expenses paid or
incurred after Sept. 6, 2008.


Vol. 6, No. 10 – October 2008

Choosing a Buisness Structure
All businesses must file an annual return. The form you use depends on how your business is organized. Sole proprietorships and corporations file an income tax return. Partnerships and S Corporations file an information return. For an LLC with at least two members, except for some businesses that are automatically classified as a corporation, it can choose to be classified for tax purposes as either a corporation or a partnership. A business with a single member can choose to be classified as either a corporation or disregarded as an entity separate from its owner, that is, a “disregarded entity.” As a disregarded entity the LLC will not file a separate return; instead all the income or loss is reported by the single member/owner on its annual return. Learn what structure makes the most sense for you.

Verifying Social Security Numbers
All businesses should verify social security numbers (SSNs) of all employees and subcontractors. The IRS and the Social Security Administration have made it easy to do this via the internet. You can verify up to 10 names and SSNs (per screen) online and receive immediate results. Learn more.

4th Quarter 2008 Due Dates
Important dates for your business calendar


Vol. 6, No. 9 – September 2008

New Extended Due Dates for Partnerships and Trusts
The IRS has recently announced a change in the extended due date on certain business returns to help individuals better meet their filing obligations. Currently, the extended due date for both businesses and individuals often falls on the same date, generally October 15 (for calendar year taxpayers). This creates a burden for individual taxpayers who rely on the information from Schedule K-1 and other similar statements to prepare and file their personal tax returns in a timely manner.

Housing Assistance Tax Act of 2008
The Housing Assistance Tax Act of 2008 provides four important tax law changes that impact individuals and small businesses.

Bartering Income
Transactions involving the exchange of property or services instead of cash are called barter exchanges. The fair market value (FMV) of the property or services received in an exchange is taxable income to the recipient.

More Taxpayers Can Use Cash Method of Accounting
Generally, if you engaged in a trade or business in which the production, purchase, or sale of merchandise was an income-producing factor, you must take inventories into account at the beginning and end of your tax year.


Vol. 6, No. 8 – August 2008

Minimum Wage Reminder
The federal minimum wage increased to $6.55 an hour on July 24, 2008.

Mileage Rate Increased
The IRS has announced recently that the standard mileage rate for business and medical and moving purposes will increase by 8 cents per mile for the second half of 2008. Thus, the rate for business purposes increased from 50.5 cents per mile on July 1 to 58.5 cents; for medical and moving purposes the rate increased from 19 cents per mile to 27 cents.

Importance of Accountable Plans
If you often reimburse employees for job-related expenses they incur, accountable plans can offer significant benefits. Accountable plan reimbursements are not taxable to the employee and are fully deductible by the employer, with the exception of meal and entertainment expenses.

Employer-Paid Disability Premiums
If you think that paying your employee’s disability premiums is always a good thing, think again. If you provide your employees disability as a nontaxable fringe benefit, payments they receive upon their disability will be, in most cases, FULLY taxable to them!

Getting the Best Deal in a Credit Card Processor
When shopping for a credit card processor, there are a number of things to look for in determining which company will truly offer the best deal. One important item to evaluate is how the processor assesses fees.


Vol. 6, No. 7 – July 2008

Employment Tax Changes under the Heroes Act
“Heroes Earnings Assistance and Relief Tax Act of 2008” (Heroes Act), has been recently enacted. The Heroes Act includes several employment tax provisions taking affect after 2008.

3rd Quarter 2008 Due Dates
Important dates for your business calendar.

Did You know?
That payments for the services of a child under age 18 who works for his or her parent in a trade or business are not subject to Social Security and Medicare taxes?

Recordkeeping for Listed Property
Good recordkeeping is of great importance for all income and expenses, otherwise, the IRS may disallow the deduction. This is especially true for travel and entertainment and for “listed property”.

Good Time to Buy a Car
If you’re considering purchasing a car for business use, this would be a good year to do it. Normally, the maximum depreciation or Section 179 deduction you can take in the year of purchase is limited.

Tapping into Retirement Plans
Beware of tapping into your retirement places for cash – it may be a very expensive proposition. Unless you are drawing from a Roth IRA, more than likely the entire distribution will be subject to the tax at ordinary income rates.

IRS Matching Program
The Combined Annual Wage Reporting is a document matching program that compares the Federal Income Tax withheld, advance Earned Income Credit, Medicare wages, Social Security wages, and Social Security Tips reported to the IRS on Form 941, 943, and 940 and Schedule H against the amounts reported to Social Security Administration (SSA) via Forms W-3 and the processed totals of the Forms W-2.


Vol. 6, No. 6 – June 2008

Withdrawal of Stimulus Rebates
If you provided the IRS with your bank account number on your tax return, both your refund and any Economic Stimulus rebate you qualify for will be automatically deposited to that account. And if you instructed that your refund be deposited into an account that is given favorable tax treatment under the Code, your Economic Stimulus Payments will be deposited there.

Tax Deductible Vacations?
Although business is business, and pleasure is pleasure, the world rarely adheres to absolutes. So, as the summer vacation season begins to unfold, you may want to consider mixing some leisure time in with your business travel. With a little planning, you can get Uncle Sam to subsidize your downtime.


Vol. 6, No. 5 – May 2008

Where’s My Refund?
You filed your tax return and you’re expecting a refund. You have just one question and you want the answer now – Where’s My Refund? If you file a paper return it will take six to eight weeks after the IRS receives your return. File electronically and you’ll get the refund in half that time. Using direct deposit speeds things up significantly. If you filed a paper return you completed without tax preparation software, you’re chances of making an error increase substantially and that could delay your refund.

Rebate Questions?
Starting in May, the Treasury will begin sending economic stimulus payments to more than 130 million households. To receive a payment, taxpayers must have a valid Social Security number, $3,000 of income and file a 2007 federal tax return.

Deducting Refi Costs
Refinancing your home mortgage can result in some deductions. While points paid to obtain a mortgage to purchase a home are deductible in the year paid as interest, points paid to refinance a mortgage are generally deductible only over the life of the loan. But if part of the loan is new money to be used for improvements, a portion of the points may be deductible in the year paid.

Do You Qualify for the Savers Credit?
A credit of up to $1,000 ($2,000 if filing jointly) is available for eligible contributions to an employer- retirement plan or to an individual retirement arrangement. The credit can be as much as 50% of to the IRA or retirement plan for taxpayers at the lowest income levels.

Kiddie Tax
If the kiddie tax applies, Form 8615, Tax for Children Under Age 18 With Investment Income of More Than $1,700 must be completed and attached to the child’s tax return.


Vol. 6, No. 4 – April 2008

Walking the Line between Business and Personal
The line between business and personal assets and expenses is a fine one and is often crossed in a closely held business, but that’s exactly what the IRS often looks for in an audit. While usually unintentional, it can prove costly.

2nd Quarter 2008 Due Dates
Important dates for your business calendar.

Do You Have to File a Gift Tax Return?
If you gave any one person gifts in 2007 valued over $12,000, you must report the total gifts on Form 709, United States Gift (and Generation-Skipping Transfer) Tax Return. In some cases you may have to pay tax on the gifts.

Medical Reimbursement Plans and Reasonable Compensation
If you have a written medical reimbursement plan, you can reimburse your employees’ medical expenses according to the plan. Learn more today.

Gambling Winnings
You spent a day at a nearby casino last year and won a small amount of money and didn’t get a W-2G. Do you have to report the amount as income? You bet you do!


Vol. 6, No. 3 – March 2008

Avoiding Direct Deposit Woes
Direct deposit of your income tax refund makes a lot of sense – you’ll get it quicker and it’s often safer. This year there are more options for distributing the refund. If you want, your refund can be split into three accounts, including your Individual Retirement Account and Health Savings Account.

Economic Stimulus Act of 2008
By now, you’ve probably heard about the recently- passed economic stimulus package, the Economic Stimulus Act of 2008, which is intended to jump-start our economy in part through the government’s issuance of rebate checks to most individuals, and also through tax incentives aimed at encouraging businesses to increase their investments in new equipment by the end of 2008. The following discussion is a summary of the new Act. If you would like more details about the new law, please do not hesitate to call.


Vol. 6, No. 2 – February 2008

AMT – How It Affects Filing Season 2008
The upcoming tax season is expected to start on time for everyone except for certain taxpayers potentially affected by late enactment of the Alternative Minimum Tax (AMT) “patch.” Following extensive work in recent weeks, the IRS expects to be able to begin processing returns for the vast majority of taxpayers in mid-January.

Late 2007 Tax Law Changes
New laws carrying important tax changes for individuals and businesses were enacted in late December 2007. Most of the changes apply in 2008 but some are retroactive to 2007. The most important change prevents many middle-income taxpayers from being snared by the alternative minimum tax (AMT) for 2007. But there were other changes as well.


Vol. 6, No. 1 – January 2008

1st Quarter 2008 Due Dates
Important dates for your business calendar.

New I-9 Form Issued
The USCIS announced on November 7, 2007, that a new Form I-9 and a revised version of the “Handbook for Employers, Instructions for Completing the Form I-9” are now available. The significant revision to the Form I-9 is the removal of several “List A” documents which previously could be used for proof of both identity and employment eligibility.

Auction and Yard Sale Income
Depending on facts and circumstances, you may have reportable income. Selling your ‘67 Mustang? Any gain is likely to be a long-term capital gain. Occasional sales of items previous purchased for personal use for less than what you bought them for would not be reportable.

Standard Mileage Rate Changes for 2008
The IRS has recently announced the standard mileage rate for 2008. The rate for business miles will increase to 50.5 cents per mile, up from 48.5 cents.

Section 179: A Year-End Decision
It generally makes sense to write off eligible equipment using the Section 179 expense option in the year of purchase. You’ll get the tax deduction faster than if you took depreciation over time. However, expensing may not make sense if you’re in a low tax bracket in the year of purchase but expect to be in a higher bracket in future years.


Vol. 5, No. 12 – December 2007

Gambling Losses
Gambling losses are deductible against gambling winnings, but not directly. Although the full amount of the winnings is reported on Form 1040, losses are deductible as an itemized deduction on Schedule A.

Substantiating Charitable Contributions
In order to substantiate a charitable contribution, a taxpayer must maintain one of the following: (1) A canceled check; (2) a receipt or letter from the donee charitable organization showing the name of the donee, the date, and the amount of the contribution; or (3) other reliable records showing the name of the donee, the date, and the amount of the contribution.

Changing entities?
The end of the year is a good time to consider making a tax entity change. If you’re thinking of switching, the first person you should talk to is your Padgett Representative to find out if changing makes sense for your business and to discuss the potential tax consequences.

Like-Kind Exchanges
Chances are you know someone who has done a like-kind exchange of real property – a commercial building or residential rental, for example. Qualifying exchanges allow you to get a new property without having to report the gain on the sale of the old. But not all exchanges qualify.

Need Cash?
Maybe you’ve got plenty of it sitting in your IRA and you’re desperate to pay college tuition, put a down payment on a new car, etc. If so, think twice about hitting that IRA – it can be very expensive.


Vol. 5, No. 11 – November 2007

Padgett Scholarship Program
PADGETT BUSINESS SERVICES®, through its Foundation, is proud to offer a $500 scholarship in your community to a graduating high school senior whose parent or guardian owns and operates a small business.

Before You Sell Your Business
If you are considering selling your business or any significant asset, check with a Padgett Representative before signing. While there are several reasons to consider doing this, one of the most important is tax liability – you may end up owing more in taxes than you think.

Reimbursing Independent Contractors
Whether or not an independent contractor is separately reimbursed for his/her expenses depends on industry practice and the agreement between you and the contractor.

Unclaimed Property Laws
Unclaimed wages are a form of abandoned property that may become the property of the state. If your business has hourly workers or a transient workforce you are most likely to have unclaimed wages.

Employee Wage Records
Many small business owners are confident in their knowledge of regulations concerning the retaining of receipts, canceled checks, bank statements, etc. for their business. But are you as cautious when it comes to recordkeeping for employee wages and personnel information?


Vol. 5, No. 10 – October 2007

4th Quarter 2007 Due Dates
Important dates for your business calendar.

“No-Match” Letters
The Department of Homeland Security (DHS) has finalized regulations related to the unlawful hiring or continued employment of unauthorized aliens. The final regulations, effective Sept. 14, 2007, describe an employer’s legal obligations when it receives a “no-match” letter and include “safe-harbor” procedures that an employer can follow to avoid penalties.

Verifying Social Security Numbers
All businesses should verify social security numbers (SSNs) of all employees and subcontractors. The IRS and the Social Security Administration have made it easy to do this via the internet. You can verify up to 10 names and SSNs (per screen) online and receive immediate results.


Vol. 5, No. 9 – September 2007

Charitable Contribution of Services
A contribution of your time isn’t deductible, but if you incur out-of-pocket expenses in connection with a contribution of your services, you may be entitled to a deduction. Car and truck expenses are the most common example.

Taxpayer Advocate Service
The Taxpayer Advocate Service is an independent organization within the IRS that assists taxpayers who are experiencing economic harm, who are seeking help in resolving tax problems that have not been resolved through normal channels, or who believe that an IRS system or procedure is not working as it should.

Business Income and the Tax Gap
The IRS has developed a series of fact sheets in response to data taken from a National Research Program (NRP) reporting compliance study of individual taxpayers for tax year 2001. The purpose of the study was to measure reporting compliance and determine the tax gap, which is the difference between the amount of tax that taxpayers should pay for a given year and the amount that is actually paid. The fact sheets are designed to assist small businesses and self-employed taxpayers to better understand their reporting, filing and payment obligations.


Vol. 5, No. 8 – August, 2007

Minimum Wage Increase Reminder
Beginning July 24, 2007, the Federal minimum wage increased
to $5.85 per hour.

Spousal Partnerships – Electing Out of Partnership Rules
Under prior law, a husband and wife who both work in the same unincorporated business cannot file as a sole proprietorship. Instead, they must file a partnership return. Under the 2007 Small Business Act, where a qualified joint venture is conducted by a husband and wife who file a joint return for the tax year, the joint venture is not treated as a partnership for tax purposes.

Keeping Access to Your Records
There are many situations where a business owner or other taxpayer can find themselves without complete records. While you may get some sympathy from the tax authorities, you’re still responsible for your records. In some cases, the solution is pretty simple.

Getting the Best Deal in a Credit Card Processor
When shopping for a credit card processor, there are a number of things to look for in determining which company will truly offer the best deal. One important item to evaluate is how the processor assesses fees.


Vol. 5, No. 7 – July 2007

Minimum Wage Set to Increase
President Bush has signed the Iraq spending bill into law which includes a minimum wage increase. The minimum wage, which is currently $5.15 an hour, will increase in three $0.70 increments over the next two years.

3rd Quarter 2007 Due Dates
Important dates for your business calendar.

Small Business and Work Opportunity Tax Act of 2007
As you may know, Congress recently passed the 2007 Small Business Act. This new legislation, designed to soothe the burden on small business of an increase in the minimum wage, contains an assortment of tax relief and revenue raising provisions. Here are the main tax provisions under the new law.


Vol. 5, No. 6 – June 2007

Husband and Wife and Schedule C
If you and your spouse jointly own and operate a business and share in the profits and losses, you are partners in a partnership, whether or not you have a formal partnership agreement.

Tracking Rental Expenses
If your rental activities extend beyond simply renting out part of your house, you should use a separate checking account – especially if you have loans that you are drawing on for, say, repairs or improvements to the property.

Deducting an Auto Lease
If you’re deducting lease payments as a business expense there are several points to keep in mind.

Warranty Expense
If you purchase an extended warranty for an auto used for business purposes, the cost must be deducted over the life of the warranty. Take the full cost and divide by the number of months in the warranty period.

Car Sales vs. Trade-Ins
The decision of whether to trade in an old business car or try to sell it for cash ought to hinge on factors such as the amount you can get on a sale versus a trade-in, and the time and bother a sale will entail. However, important tax factors also may affect your decision-making process.


Vol. 5, No. 5 – May 2007

Determine Whether the Worker is an Independent Contractor or an Employee
Employers must be very cautious when hiring independent contractors since they are often reclassified as employees by federal and state taxing authorities.

Comply with Applicable Federal and State Labor Laws:
Find out more information about the FLSA, OSHA, and the EEOC and how they impact your small business.

Display Required Federal and State Posters
Various posters must be displayed for all applicants to view.

Complete Form I-9, Employment Eligibility Verification Form
The Immigration Reform and Control Act requires an employer to verify an employee’s legal authorization to work in the United States by completing Form I-9 within 3 days after they are hired.

Notify the Appropriate State Agency that an Employee Has Been Hired
Welfare legislation requires employers to furnish W-4 information on all new hires to each state in which a newly hired worker works.

Employees in the Home
Many people fail to consider their own household when thinking about employees. But employees can be anywhere, even at home. All it takes is a household employee, such as a maid, cook or gardener.

Have the Employee Complete and Sign Form W-4, Employee’s Withholding Allowance Certificate
This form determines the amount of federal income tax to withhold from wages. If no W-4 is on file, the employer must withhold at the single/zero withholding allowance rate.

Secure Necessary Workers’ Compensation Employer Liability Insurance Coverage
Workers’ compensation laws, legislated and regulated by each individual state, require employers to furnish standardized insurance coverage that will provide compensation in the event of a job-related injury, illness, or death of an employee.


Vol. 5, No. 4 – April 2007

2nd Quarter 2007 Due Dates
Important dates for your business calendar.

Home Improvement Credit Reminder
With warm weather approaching, you may be considering improving your home’s energy efficiency. A current tax law allows homeowners a lifetime tax credit of up to $500 for eligible energy efficient improvements placed in service after 2005 and before 2009.

Do You Have to File a Gift Tax Return?
If you gave any one person gifts in 2006 valued over $12,000, you must report the total gifts on Form 709, United States Gift (and Generation- Skipping Transfer) Tax Return. In some cases you may have to pay tax on the gifts.

Medical Reimbursement Plans and Reasonable Compensation
If you have a written medical reimbursement plan, you can reimburse your employees’ medical expenses according to the plan.

IRS Taking Action on S Corp Owner Wages
The IRS is stepping up action on S corporations where shareholder and officers are taking no or little salary. This has been in the limelight for several years, but a 2005 report by the Treasury Inspector General for Tax Administration indicated that failure of sole-shareholder S corporations to treat amounts distributed as compensation is responsible for $5.7 billion in employment tax breaks.


Vol. 5, No. 3 – March 2007

Title Matters
If your company is paying for a car, make sure you title it in the company’s name. If the company writes the check yet you put the title in your own name, the IRS is almost surely going to deny the business a depreciation deduction.

Taxpayers Have Until April 17 to File and Pay
Individual taxpayers across the nation will have until Tuesday, April 17, 2007, to file their 2006 returns and pay any taxes due, the Internal Revenue Service announced recently. Taxpayers will have extra time to file and pay because April 15 falls on a Sunday in 2007, and the following day, Monday, April 16, is Emancipation Day, a legal holiday in the District of Columbia.

IRS Audit Stats
In a recent audit by the Government Accountability Office of the IRS’s fiscal years 2006 and 2005 Financial Statements, the GAO reported for fiscal year 2006…

Walking the Line between Business and Personal
The line between business and personal assets and expenses is a fine one and is often crossed in a closely held business, but that’s exactly what the IRS often looks for in an audit. While usually unintentional, it can prove costly.

Avoiding Direct Deposit Woes
Direct deposit of your income tax refund makes a lot of sense – you’ll get it quicker and it’s often safer. This year there are more options for distributing the refund. If you want, your refund can be split into three accounts, including your Individual Retirement Account and Health Savings Account.


Vol. 5, No. 2 – February 2007

Tax Relief and Healthcare Act of 2006– Individuals
Tax Relief and Health Care Act of 2006 The recently passed 2006 Tax Relief and Health Care Act is a wide-ranging measure that preserves a variety of popular tax breaks for individuals.

Tax Relief and Healthcare Act of 2006– Businesses
Tax Relief and Health Care Act of 2006 The recently passed 2006 Tax Relief and Health Care Act is a wide-ranging measure that preserves a variety of popular tax breaks for businesses.

Reasonable Compensation
As the owner of an S corporation, you’re probably aware that there’s a tax advantage to drawing money out of the corporation as a distribution rather than as compensation (wages). The reason is simple. Unlike wages, distributions you take out to the extent of basis in your corporate stock is nontaxable.


Vol. 5, No. 1 – January, 2007

1st Quarter 2007 Due Dates
Important dates for your business calendar.

The Right Tax Advisor
Is your tax advisor right for your business? Your tax advisor plays a key role in the success of your business. So how can you evaluate your options and decide the right tax advisor for you?

Rental Property Held as Tenant-in-Common
You don’t have to form a corporation, partnership or other entity to own a rental property with a friend, relative, or business associate. You can own the property as tenants-in-common.

What is PADGETT Connect™?
PADGETT Connect™ is a customized small business checkbook, invoicing and payroll software application.


Vol. 4, No. 12 – December, 2006

Gambling Losses
Gambling losses are deductible against gambling winnings, but not directly. Although the full amount of the winnings is reported on Form 1040, losses are deductible as an itemized deduction on Schedule A.

Substantiating Charitable Contributions
In order to substantiate a charitable contribution, a taxpayer must maintain one of the following: (1) A canceled check; (2) a receipt or letter from the donee charitable organization showing the name of the donee, the date, and the amount of the contribution; or (3) other reliable records showing the name of the donee, the date, and the amount of the contribution.

Standard Mileage Rate Increases for 2007
The IRS has recently announced the standard mileage rate for 2007. The rate for business miles will increase to 48.5 cents per mile, up from 44.5 cents.

IRS Announces Online Payment Agreement Application for Overdue Taxes
The IRS has created an Online Payment Agreement (OPA) application that allows individual taxpayers who owe delinquent federal income taxes (or such a taxpayer’s authorized representative under a power of attorney) to self-qualify, apply for a payment agreement, and receive immediate notification of approval.

Need Cash?
Maybe you’ve got plenty of it sitting in your IRA and you’re desperate to pay college tuition, put a down payment on a new car, etc. If so, think twice about hitting that IRA – it can be very expensive.


Vol. 4, No. 10 – October, 2006

Pension Protection Act of 2006
The recently passed Pension Protection Act of 2006 is a massive tax law that contains provisions intended to protect workers’ retirement benefits and a number of other tax-related provisions.


Vol. 4, No. 5 – May, 2006

Tax Deductible Vacations?
Although business is business, and pleasure is pleasure, the world rarely adheres to absolutes. So, as the summer vacation season begins to unfold, you may want to consider mixing some leisure time in with your business travel. With a little planning, you can get Uncle Sam to subsidize your downtime.

Changing the Workweek
The Fair Labor Standards Act (FLSA) requires employers to establish a “workweek.” A workweek is seven consecutive 24 hour periods that total 168
hours. The workweek may begin on any day of the calendar week and at any time of that day.


Vol. 4, No. 9 – September, 2006

Telephone Excise Tax Refund
In a new IRS notice, the IRS has conceded that the 3% excise tax doesn’t apply to certain long-distance calls. The IRS solution is to refund the tax for billings from March 1, 2003 through July 31, 2006.

Business Income and the Tax Gap
IRS recently completed a National Research Program (NRP) reporting compliance study of individual taxpayers for tax year 2001. It was designed to measure reporting compliance and determine the tax gap, which is the difference between the amount of tax that taxpayers should pay for a given year and the amount that is actually paid.

IRS Offers Advice on Recordkeeping
The IRS has issued an announcement that provides taxpayers and businesses with tips on how to protect financial and tax records in the event of disasters, including hurricanes.