JK Harris warns of trouble of failing to pay payroll taxes

From the Flashpoints blog

One of the more common ways small business owners get into trouble with the IRS is by getting behind on their payroll taxes. Normally you would pay your employees, withhold the appropriate taxes (income and employment taxes), and remit those funds along with your (as the employer) share of your federal tax deposit to the IRS on a monthly or quarterly schedule (depending on the size of your payroll). When you pay your employees, withhold the appropriate taxes, and then don’t send the funds to the IRS, you can find yourself in serious trouble.

To read more, click here.

Where in the world is JK Harris?

by Gina Anton, Director – Corporate Communications

JK Harris leaves South Carolina today to begin his job creation speaking tour in Boston. He plans to meet with business leaders in Boston (and in future cities) to discuss how entrepreneurs and business owners can grow their companies, create jobs and jump start economic recovery at the local level, in their own communities.

Visit The Flashpoints blog to find out more information on Mr. Harris’ tour or to sign up for the free Flashpoints newsletter. The Flashpoints newsletter was created for the small business owner and is published once a month. As a bonus, when you sign up to receive the newsletter, you will also receive the free e-book, “The Mindset of High Achievers.”

CNN lists 6 new small business tax breaks

At JK Harris, we have a lot of small business clients who come to us for either back tax help through our tax resolution services or for bookkeeping services through JK Harris Small Business Services. And, since our company is technically considered a small business, we always keep an eye out for small business owners and their needs.

CNN Money ran an article a few weeks ago which talks about six new breaks for small business owners.

Own a business? 6 new tax breaks by Catherine Clifford

Doing your taxes stinks, right? No fun at all. But take note as you brace for your 2010 return: A handful of changes in the tax code could translate into a fatter refund check.

The Small Business Jobs Act, passed last September, and the historic health care reform law, passed in March, enacted hefty credits and deductions for capital investments and employee health insurance costs.

Here is a rundown of six new credits and deductions likely to affect the most small business owners. Read the rest of the article here.

Where in the world is JK Harris?

by Gina Anton, Director, Corporate Communications

Next month, JK Harris embarks on a speaking tour to promote some big ideas. JK Harris is passionate about small business and is embarking on this tour to share his ideas on growing small businesses, creating jobs on the local level. He feels that small business owners can play a big part in the regrowth of our economy.

Read more about his speaking tour on The Flashpoints blog.

You can also sign up for The Flashpoints newsletter on this site to get business tips for your small business.

JK Harris presents… News from the Net

There is a lot going on with tax news and financial information right now, so I decided to do a news round up – something I have not done on the Tax Resolution blog before. There were several informative links I found and wanted to share with our readers this morning. The first link was provided by one of our blog readers, Ann.

Ann covered the topic of “5 Tips for determining the amount a bank will lend you to buy a home.” Her article is an informative one that may help many of our clients who are getting out of tax debt so they can buy a home of their own. Thank you to Ann for providing this link.

MarketWatch covered some of the best tax tips in their Tax Guide 2011. This web guide offers advice on everything taxes. While it may be too late for your 2010 tax return, this helpful article can give you ideas on tax planning for 2011.

And, according to CNNMoney.com, it looks like Congress will be getting right to work on repealing the much hated IRS ruling with regard to 1099s. The rule, as it currently stands would have required small businesses to issue a 1099 IRS form not only to contracted workers, but also to any individuals or corporations from which they buy more than $600 in goods or services in a year. This rule was slated to take effect in 2012 and was much maligned by small business due to the amount of additional work it would cause. (Many small businesses would have had to hire additional staff to keep up with the paperwork alone.)

And last, but not least – the IRS’ tax tip of the day recommends taxpayers choose direct deposit to receive your tax refund faster. Visit the IRS website to read the full article.

Things to keep in mind when choosing a tax preparer

The IRS sent out its list today of what to look for when choosing a tax preparer. Remember, it is important to choose carefully when you decide to have your returns prepared by a professional. JK Harris offers tax preparation in conjunction with our tax representation services, small business services or as a stand alone service.

If you pay someone to prepare your tax return, the IRS urges you to choose that preparer wisely. Taxpayers are legally responsible for what’s on their tax return even if it is prepared by someone else. So, it is important to choose carefully when hiring an individual or firm to prepare your return. Most return preparers are professional, honest and provide excellent service to their clients.

Here are a few points to keep in mind when choosing someone else to prepare your return:

1. Ask if the preparer is affiliated with a professional organization that provides its members with continuing education and resources and holds them to a code of ethics.New regulations require all paid tax return preparers including attorneys, CPAs and enrolled agents to apply for a Preparer Tax Identification Number — even if they already have one — before preparing any federal tax returns in 2011.

2. Check on the preparer’s history. Check to see if the preparer has a questionable history with the Better Business Bureau and check for any disciplinary actions and licensure status through the state boards of accountancy for certified public accountants; the state bar associations for attorneys; and the IRS Office of Professional Responsibility for enrolled agents.

3. Find out about their service fees. Avoid preparers who base their fee on a percentage of your refund or those who claim they can obtain larger refunds than other preparers.

4. Make sure the tax preparer is accessible. Make sure you will be able to contact the tax preparer after the return has been filed, even after the April due date, in case questions arise.

5. Provide all records and receipts needed to prepare your return. Most reputable preparers will request to see your records and receipts and will ask you multiple questions to determine your total income and your qualifications for expenses, deductions and other items.

6. Never sign a blank return. Avoid tax preparers that ask you to sign a blank tax form.

7. Review the entire return before signing it. Before you sign your tax return, review it and ask questions. Make sure you understand everything and are comfortable with the accuracy of the return before you sign it.

8. Make sure the preparer signs the form and includes their PTIN. A paid preparer must sign the return and include their PTIN as required by law. Although the preparer signs the return, you are responsible for the accuracy of every item on your return.The preparer must also give you a copy of the return.

Obama signs $30B small business lending bill, according to Associated Press

On Monday, President Obama signed a bill to help give small businesses and entrepreneurs a much needed boost. The bill offers small businesses the opportunity to expand and hire by cutting taxes and offering a $30 billion loan fund. Obama credits small businesses with being the anchors of our Main Streets and the provider of most American jobs. Read the full article below, written by Darelen Superville of the Associated Press.
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WASHINGTON (AP) – Scoring a prized political victory five weeks before the Nov. 2 elections, President Barack Obama on Monday signed a bill to help small businesses expand and hire by cutting their taxes and creating a $30 billion loan fund.

Obama said the incentives will help small businesses right away. But any hiring may not be enough to help some Democrats ahead of crucial midterm elections in which voters are expected to vent their frustrations over a slow-growing economy and near-10 percent unemployment.

The bill had been delayed for months, blocked in the Senate by Republicans. Most in the GOP objected to the loan fund, comparing it to the 2008 financial industry bailout and arguing that it would encourage banks to make loans to risky borrowers. Two GOP senators, George Voinovich of Ohio and George LeMieux of Florida, helped Democrats break the filibuster this month – and the bill passed.

Obama said small businesses are “the anchors of our Main Streets,” creating most of the jobs in the country.

“It was critical that we cut taxes and make more loans available to entrepreneurs,” he said before signing the bill in the East Room of the White House. “Today, after a long and tough fight, I am signing a small business jobs bill that does exactly that.”

The bill creates a $30 billion government fund to help encourage lending to small businesses, many of which have been having difficulty securing bank loans and credit. The fund will be available to community banks, which could use the money to leverage billions more in loans.

The legislation also includes about $12 billion in tax breaks for small business – eight separate tax cuts that take effect Monday. One such provision increases to $500,000 the amount of investments that businesses would be allowed to write off this year and next.

The measure also gives a boost to some Small Business Administration loan programs.

The new law follows earlier administration efforts to help small businesses, including eight different tax cuts as well as a temporary payroll tax holiday for companies that hire people off the unemployment lines.

“This bill will do two big things,” Obama said before signing the bill. “It’s going to cut taxes and it’s going to make more loans available for small businesses. It’s a great victory for America’s entrepreneurs.”

Several business owners who stood with Obama for the signing echoed his sentiments afterward.

Prachee Devada, founder of Synergy Enterprises, Inc., an information technology company in Silver Spring, Md., told reporters that she’ll be hiring at least 20 people as a result of the new law. She said she hired about 20 people under contracts funded by the economic stimulus.

“Obviously this bill is making a huge difference to me as a small business,” Devada said.

Posted by JK Harris

JK Harris reminds taxpayers – IRS holds special open house to help veterans and people with disabilities on September 25

JK Harris wants to reminds taxpayers that the IRS will be holding an open house on September 25th to help veterans and people with disabilities solve their tax problems and respond to IRS notices. For more details, read the full IRS release below.
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WASHINGTON — The Internal Revenue Service will host a special nationwide open house on Saturday, Sept. 25 to help taxpayers –– especially veterans and people with disabilities –– solve tax problems and respond to IRS notices.

One hundred offices, at least one in every state, will be open from 9 a.m. to 2 p.m. local time. IRS staff will be available on site or by telephone to help taxpayers work through issues and leave with solutions.

In many locations, the IRS will partner with organizations that serve veterans and the disabled to offer additional help and information to people in these communities. Partner organizations include the National Disability Institute (NDI), Vets First, Department of Veterans Affairs, National Council on Independent Living and the American Legion.

“Taxpayers have tremendous success solving their tax issues at our open houses,” IRS Commissioner Doug Shulman said. “I want to encourage veterans and people with disabilities to come in on Sept. 25. Just like we reached out earlier this year to small businesses and victims of the Gulf Oil Spill, we want to help other taxpayers put their toughest problems behind them.”

IRS locations will be equipped to handle issues involving notices and payments, return preparation, audits and a variety of other issues. At a previous IRS open house on June 5, over 6,700 taxpayers sought and received assistance and 96 percent had their issues resolved the same day.

At the Sept. 25 open house, anyone who has a tax question or has received a notice can speak with an IRS employee to get an answer to their question or a clear explanation of what is necessary to satisfy the request. A taxpayer who cannot pay a balance due can find out whether an installment agreement is appropriate and, if so, fill out the paperwork then and there. Assistance with offers-in-compromise — an agreement between a taxpayer and the IRS that settles the taxpayer’s debt for less than the full amount owed — will also be available. Likewise, a taxpayer struggling to complete a certain IRS form or schedule can work directly with IRS staff to get the job done.

Taxpayers requiring special services, such as interpretation for the deaf or hard of hearing, should check local listings and call the local IRS Office/Taxpayer Assistance Center ahead of time to schedule an appointment.

The open house on Sept. 25 is the third of three events scheduled after this year’s tax season. Plans are underway for similar events next year. Details will be available at a later date.

Reminder for Small Tax-Exempt Organizations

The IRS also encourages representatives of small tax-exempt charitable community organizations, many of which serve people with disabilities and veterans, to file Form 990-N before the Oct. 15 deadline. Community organizations that fail to file a Form 990-N by this date risk losing their tax exempt status. As of June 30, more than 320,000 organizations were at risk of losing their exempt status.

Posted by JK Harris

Got taxing issues?

The IRS is looking for tax issues for the industry resolution program

From IR 2010-093

Friday, August 27th, the IRS issued their latest release seeking business taxpayers, associations, and any other ‘interested’ parties to send the IIR (Industry Issue Resolution) program any controversial tax issues, disputes needing resolved or any other issue causing an unnecessary burden to the business taxpayer.

The IIR typically takes on these types of business tax issues – particularly ones common to a significant number of taxpayers. It aims to resolve the issues through issuing new and improved guidance. According to the IRS, in the past several years, issues have been submitted to the IIR by associations, and both small and large businesses which have resulted in tax guidance that has helped thousands of taxpayers.

Some of the recent submissions to IIR cited by the IRS are:

* Network assets in the telecommunications industry (unit of property)
* Asset class determination under Revenue Procedure 87-56 for wireless telecommunication assets
* Vendor markdown allowances in calculation of inventory under the retail inventory method
* Network assets in the utilities industry (unit of property)

Some of the guidance/resolution that has come of the IIR program includes:

* Technical terminations of publicly traded partnerships – procedures for requesting relief, delegation of authority for granting relief, and a sample closing agreement documenting the conditions under which relief is granted.

* Auto Last In First Out – for automobile wholesalers, manufacturers, and dealers regarding the proper treatment of the dollar value, LIFO inventory method for pooling purposes of crossover vehicles, which have the characteristics of trucks and cars.

IIR project selections are based on criteria set forth in revenue procedure. On each issue selected an IIR team of IRS and Treasury personnel gather the necessary facts from the taxpayers or other interested parties affected by the issues being brought forth. The goal is to recommend guidance to resolve the issue. In doing so, both the taxpayers and the IRS benefit by saving time and expense that would be spent resolving the issue through audits.

Requests for issues to be reviewed by the IIR can be submitted at any time to IIR@irs.gov. Submissions are reviewed semi-annually. The next group of selections will be made from all issues submitted by September 30, 2010.

Employee vs. Independent Contractor – Seven Tips for Business Owners

The most recent posting in the IRS’ series of “Summertime Tax Tips,” the IRS discusses employee vs. independent contractor. As an employer, a small business owner must know the difference as each is treated very differently for tax purposes. Reading the IRS’ tax tips should help you in choosing how to classify your employees or contractors. Caution: it is very important to correctly identify whether you have contractors or employees since you can end up owing the IRS a substantial amount if you misclassify your employees. JK Harris & Company urges you to read the full release below.
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As a small business owner you may hire people as independent contractors or as employees. There are rules that will help you determine how to classify the people you hire. This will affect how much you pay in taxes, whether you need to withhold from your workers paychecks and what tax documents you need to file.

Here are seven things every business owner should know about hiring people as independent contractors versus hiring them as employees.

1. The IRS uses three characteristics to determine the relationship between businesses and workers:

* 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.
* Type of Relationship factor relates to how the workers and the business owner perceive their relationship.

2. 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.

3. 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.

4. Employers who misclassify workers as independent contractors can end up with substantial tax bills. Additionally, they can face penalties for failing to pay employment taxes and for failing to file required tax forms.

5. Workers can avoid higher tax bills and lost benefits if they know their proper status.

6. 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.

7. 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, Publication 1779, Independent Contractor or Employee, and Publication 1976, Do You Qualify for Relief under Section 530? These publications and Form SS-8 are available on the IRS website or by calling the IRS at 800-829-3676 (800-TAX-FORM).

Posted by JK Harris