Category Archives: Business Tax

Taxpayers The IRS Is Targeting This Year

Out of the millions of tax returns that are filed with the IRS each year, a certain percentage are inevitably flagged and chosen to be audited. In some cases, this is because the taxpayer filing the return is already being investigated for tax fraud or other crimes, while other returns are merely selected at random. The formula that the IRS uses to flag returns for random audit, known as the Discriminant Function, is a highly classified secret known only to a few. However, there are several types of returns that the IRS tends to focus on in general. Filers with returns that fall into one of these categories must accept that there is a higher probability that they will be audited than other taxpayers. Some of the types of returns that the IRS tends to scrutinize more closely include:

Read more at Investopedia…

2013: a window of opportunity for S corporation asset sales

In general, when an S corporation sells its assets, the gain on sale flows through to, and is reportable by, the shareholders and is not subject to a corporate level tax. In the case of an S corporation that previously was a C corporation, however, such S corporation is subject to a corporate level tax on its “built-in gain” if the asset sale occurs during the “recognition period.”

Read more at Lexology…

Online sales taxes back on Senate’s docket

A proposal to allow states to collect online sales taxes will be reintroduced in the Senate on Thursday, with support for the measure growing among Republican and Democratic governors and state legislators.

On the heels of President Barack Obama once again tagging a U.S. tax code overhaul as a top priority in his State of the Union speech, Senator Richard Durbin said he will offer a bill that could resolve the long-unsettled online sales tax issue.

Read more at Reuters…

S corporation distribution treated as wages subject to FICA taxes

Judging by the number of recent cases on this issue, both taxpayers and the IRS have figured out that if the owner of an S corporation withdraws all of the earnings of the business conducted by the corporation in the form of dividends rather than as wages, he avoids paying the FICA taxes on those amounts. Where an owner works for his business but takes no salary, upon audit the IRS very likely will take the position that some part of the distributions to the owner must be treated as wages for services rendered.

Read more at Lexology…

Guidance issued on additional Medicare tax

The IRS issued proposed regulations concerning the 0.9% Medicare surtax, which takes effect next year (REG-130074-11). The proposed regulations contain guidance for employers and individuals on the implementation of the tax, including the requirement to file a return reporting the tax, the process for employers to make adjustments of underpayments and overpayments of the tax, and the processes for employers and employees to file claims for refund for an overpayment of the tax. The IRS intends to finalize the rules in 2013; however, taxpayers may rely on the proposed rules now.

Read more at The Journal of Accountancy…

Standard mileage rates go up a penny in 2013

Optional standard mileage rates for use of a vehicle will go up by 1 cent per mile for 2013, the IRS said Wednesday (Notice 2012-72). Taxpayers can use the optional standard mileage rates to calculate the deductible costs of operating an automobile.

Read more at the Journal of Accountancy…

Employers hiring qualified veterans before the end of the year may be eligible for expanded tax credit

Employers who act now may be able to claim an expanded tax credit for hiring certain qualified veterans.  According to the IRS, both for-profit and tax-exempt employers may qualify to receive thousands of dollars through the expanded Work Opportunity Tax Credit (WOTC) should they hire qualified veterans who begin work before January 1, 2013.

Read more at Lexology…

The time for family business owners to act is now

Succession planning is one of the most challenging and complicated concerns family business owners face. Succession planning can be difficult for most companies, but it’s even more complex for family businesses because typical business concerns need to be balanced with the family’s needs.

Read more at cpa2biz.com…

Developments in tax reform: a focus on capital gains and corporate tax rate

Looking ahead to the lame duck session of Congress after the November elections and into the new year when the new 113th Congress will be seated and we will have either a second Obama administration or a new Romney administration, there are increasing developments on the expected debate on tax reform. While nothing will happen on this issue during the current legislative work period – just 8 days in September before breaking until after the elections – the lame duck and new year are certain to see action.

Read more at Lexology…

Federal law preempts Alabama statute denying tax deduction for illegal alien employees

The Eleventh Circuit Court of Appeals held that the section of Alabama House Bill 56 that disallowed an employer a state tax deduction for wages and compensation paid to an alien unauthorized to work in the United States was preempted by federal immigration law (United States v. Alabama, No. 11-14532 (11th Cir. 8/20/12)). Thus, Alabama was enjoined from enforcing the provision. The court also held many other of the law’s immigration provisions to also be preempted.

Read more at the Journal of Accountancy…

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