Haiti Relief Business

Archive for March, 2011

The IRS is at it again. The stealthy and highly aggressive agency has added two new 1099 tax forms for businesses, requiring extra caution and countless more hours in reporting and preparing your tax returns. This means all business, no matter how small, will be affected. Whether big or small, it is essential to be aware of these new tax extensions NOW- or you could find yourself in BIG trouble when filing your tax return next year.

Additionally, we can expect the number of IRS audits to continue to rise for small-business owners in 2010. About 25% to 30% of my tax relief clients are small businesses with tax problems – so I know how important it is to avoid IRS penalties, IRS audits or other tax problems that could be detrimental to your business.

Neil deMause revealed in his CNNMoney.com article “Stealth IRS changes mean millions of new tax forms” these two new tax extensions:

1) 1099-K – an extension to the 1099 form, which requires businesses to report non-wage income (dividends, earned interest, contract work). The 1099-K addresses “hard -to-track” payment streams used by businesses: credit cards. From 2011, businesses making over 200 payment transactions per year (and totaling over $20,000) through credit or debit cards have to fill out the 1099-K, documenting the year’s transactions and send this to their clients and the IRS. ?This will have little effect on companies currently reporting all credit card transactions to the IRS, though if you are not currently in the practice of doing so, it’ll be worth it to anticipate this for the near future.

2) 1099-Misc – used by companies use to record payments to individual service providers and freelance workers, has been massively expanded to include, from 2012, all annual business payments and purchases over $600. While previously payments to corporations and purchases of goods have been excluded, now all?businesses?need to obtain the taxpayer ID number of firm or individual you are paying. This form will now be a tracking mechanism used for any and all business transactions.

What This Means For Your Business: Swimming in Paperwork and Receipts!

The simple truth is that these extensions to tax legislation are quite the burden. There is a high probability you may?get lost in the paperwork and tracking of receipts. ?A small business currently spends 3 – 5 hours a year on average filing 1099 forms. A survey conducted by Pennsylvania-based SMC Business Councils, shows that filing these two 1099 extensions for services purchased from corporations only would cause a standard small business at least 200 filings per year and an additional cost of $6,000 in preparing yearly tax returns. This estimate excludes the requirement for filing 1099s for purchases of goods – this would cause a staggering increase.

How did this tax provision blizzard come upon us??This new legislation has been in the works since 2007 when a tax-gap study was conducted.?This ‘tax gap’ between businesses and individuals costs the government about $300 billion per year in lost revenue.?The study showed that adding additional 1099 tax extension forms could produce $345 billion per year in federal tax revenue and this is?where the health reform bill comes into play. These two extension requirements are part of the health reform bill – snuck in the 2,000 page bill, allowing the government to track down unreported income. The goal of this new tax legislation is to catch income that is not currently reported to the IRS.

For more information on these tax extensions, ?view draft versions of the 1099-K form and watch a video on “How to avoid a tax audit by the IRS” read the full article on CNNMoney.com.

If your business is under audit or you owe back taxes or IRS penalties – it’s important to get immediate tax relief to protect the future of your business. And you don’t want to go up against the IRS alone without the expert help of a professional tax attorney or Certified Tax Resolution Specialist.

Tax relief is any deduction from taxes allowed to taxpayers by federal or state tax authorities for certain expense categories. An example is allowing the deduction of interest paid on educational loans from the income tax payable. Tax relief also takes the form of full or partial tax exemptions for low- and moderate-income families. In some cases, tax relief includes releasing citizens from paying taxes immediately, particularly during cases of natural disasters and similar contingencies. An example is tax relief granted to families following the devastation caused by hurricanes in the south during 2005.

Tax relief helps everyone, particularly the low-income families. It is normally provided as deductions from any of the various taxes like income tax, state tax, property tax, etc. In 1992, a tax-relief program introduced by the Internal Revenue Service was specifically targeted at helping individuals and corporations settle back taxes. This helped persons who were in financial hardship to pay back at least a part of the taxes that they owed. This process, which allows taxpayers settle the back taxes that they owe for less than the full amount, is known as an offer in compromise.

Normally, tax relief works through a process where tax authorities review the ability of a taxpayer to pay taxes based on information regarding the person’s income and assets. A tax relief is granted if it’s found that the recovery of a certain tax is unreasonable on the grounds that asset values have significantly decreased. However, tax authorities grant a tax relief only if the taxpayer’s request for relief is based on a valid reason as defined under law. Tax relief is also granted under special circumstances. In the case of taxes on inheritance and gifts, a relief can be granted if it’s ascertained that the value of the assets received has significantly reduced.

Need a Break? Businesses, just as individuals, are responsible for paying income taxes to the government. Daily business expenditures and benefits provided to employees may actually be opportunities for some tax relief for your business. Outlined below are some ways for saving money on your taxes. And who doesn’t want to save money on their tax return?

Fringe Benefits: companies that offer benefits to their employees in addition to wages and bonuses may find some relief in their taxes. The largest category is retirement plans. Here, your company makes contributions to your employee’s retirement plan and gets a great tax break! Child Care Credit: Providing on site daycare for employee’s children. This gives employers a great tax credit plus makes an excellent work environment for employees with families. Health Credit: Paying for group term life insurance and health plans will yield you another tax break. You can opt to pay for some or all of your employee’s health options. Feed them! Ever noticed some businesses have a cafeteria on site? They are reaping the benefit of being able to deduct 100% of the meals. With the stipulation that the meals provided are for the convenience of the employee. Parking Deductions: Think about paying for employee parking. Either by paying directly for the parking or offering a cash stipend, this can be deducted on your business’ tax return.

Relieving some of the burden of taxation is possible for many businesses. Take it from a former IRS-Hitman, any option that fall within the category of ‘fringe benefits’ are well worth investigating. Keep in mind to take time to do the proper research to verify your plans are in compliance with IRS tax laws.

Now you have the smoking gun…Use it!