Posts Tagged ‘small business’

The National Labor Relations Board (NLRB) has issued a final rule requiring nearly all U.S. businesses to post a notice telling employees their union rights. This is a new federal requirement.

Recent changes to the Texas tax laws may affect your business. The late filing penalty for many Texas taxes has been increased and will be assessed. The one million threshold for Franchise Tax has been extended through December 31, 2013.

To reflect changes in the employee rate for social security and the elimination of advance payment of the Earned Income Credit*, there have been big changes to form 941, Employer’s QUARTERLY Federal Tax Return.  Form W-2, Wage and Tax Statement, now includes a new code for reporting designated Roth contributions under a governmental section 457(b) plan.

But the IRS will no longer send you forms or instructions in the mail.

With the increased emphasis on e-filing, the IRS has been implementing plans to stop mailing tax packages to business taxpayers. Last fall, the IRS announced it would no longer mail annual income tax returns to businesses. In early March, the IRS added several forms and instructions to the list of discontinued mailings, most notably the Form 941, Employer’s QUARTERLY Federal Tax Return.

*EIC-eligible individuals can claim their credit when they file their 2011 federal income tax returns. Employees who expect to be eligible for the EIC and who will have income tax withheld from their wages in 2011 may reduce their withholding. This option allows those employees to receive a portion of the credit throughout the year.

On April 5, the Senate approved H.R. 4 by a vote of 87-12.  The new law will effectively revert reporting  to the requirements in place before enactment of PPACA and the Small Business Jobs Act of 2010.

H.R. 4, the “Comprehensive 1099 Taxpayer Protection and Repayment of Exchange Subsidy Overpayments Act of 2011” was previously passed by the House on March 3 by a vote of 314-112 and will retroactively repeal the new and unpopular Form 1099 information reporting rules. The White House has indicated that the President will sign H.R. 4 into law. A press release dated April 5 declares that “Small businesses are the engine of our economy and eliminating the 1099 reporting requirement is the right thing to do.”

Before amendment by the Small Business Jobs Act of 2010 (P.L. 111-240) and the Patient Protection and Affordable Care Act (PPACA, P.L. 111-148), Code Sec. 6041 generally required payments totaling at least $600 in a single calendar year to a single recipient to be reported to IRS.

Reporting on Form 1099 was required for payments by businesses in connection with that trade or business. The type of payment that most commonly required to be reported was payment for services. The most notable exception from Code Sec. 6041’s reporting requirements under prior law was payments to corporations (which were exempt under Reg. §1.6041-3(p)(1)).

In the prior legislation scheduled to begin in 2012, Sec. 9006 of PPACA added payments of amounts in consideration for any type of  goods or services—to the list of payments subject to information reporting.

Sec. 9006 of PPACA further provided that payments to non-tax-exempt corporations—which had previously been exempt from the reporting requirement—would be subject to information reporting.

Additionally, for payments made after 2010, the Small Business Jobs Act of 2010 provided that, subject to limited exceptions, a person receiving rental income from real estate would be treated as engaged in the trade or business of renting property for information reporting purposes. In particular, rental income recipients making payments of $600 or more to a service provider (for example, a painter or plumber) in the course of earning rental income would have to provide an information return to the service provider and IRS.

For payments made after Dec. 31, 2011, the new law will repeal the provisions in Sec. 9006 that impose a reporting requirement for payments to corporations and payments for goods or other property. (Code Sec. 6041(a), Code Sec. 6041(i), and Code Sec. 6041(j), as amended by Act Sec. 2)  For payments made after Dec. 31, 2010, the Act also repeals application of the information reporting requirements to recipients of rental income from real estate who are not otherwise considered to be engaged in the trade or business of renting property. (Code Sec. 6041(h), as repealed by Act Sec. 3)

If you make payroll tax deposits for your small business at your bank using paper coupons you need to know that you will no longer be able to do so after December 31, 2010. Internal Revenue Service regulation (REG 153340-09) generally maintains existing rules for depositing federal taxes through the Electronic Federal Tax Payment System (EFTPS).  The paper coupon system will no longer be maintained by the Treasury Department after Dec. 31, 2010.

Using EFTPS to make federal tax deposits provides substantial benefits to both taxpayers and the government. EFTPS users can make tax payments 24 hours a day, seven days a week from home or the office.

Deposits can be made online with a computer or by telephone. EFTPS also significantly reduces payment-related errors that could result in a penalty. The system helps taxpayers schedule dates to make payments even when they are out of town or on vacation when a payment is due. EFTPS business users can schedule payments up to 120 days in advance of the desired payment date.

Information on EFTPS, including how to enroll, can be found at www.eftps.gov or by calling EFTPS Customer Service at 1-800-555-4477.

Some businesses paying a minimal amount of tax may make their payments with the related tax return, instead of using EFTPS. More details regarding taxes required to be deposited using EFTPS, dollar thresholds and other specific requirements are in the proposed regulations.

Additional Information:

• Publication 4132, which explains the process of enrolling and paying via the Internet
• Publication 966, The Secure Way to Pay Your Federal Taxes for Businesses and Individuals
• Publication 4169, Tax Professional Guide to Electronic Federal Tax Payment System
• Publication 4320, EFTPS Toolkit, which contains PDF(s) and descriptions of EFTPS educational materials and their intended target audience, and is for use by tax professionals and financial institutions to assist in educating their clients on the benefits of EFTPS.
• Publication 4275, Express Enrollment for New Businesses
• Electronic Payment Options Home Page