Vision Payroll

Under the Hiring Incentives to Restore Employment Act (HIRE Act), employers who hire certain unemployed workers are exempt from certain employment taxes. In order to qualify under the HIRE Act, the wages must be paid by a qualified employer “with respect to employment” in the period beginning March 19, 2010 and ending December 31, 2010. The Internal Revenue Service (IRS) has provided employers further information on the HIRE Act.

Under the HIRE Act, employers are required “get a statement from each eligible new hire certifying that he or she was unemployed during the 60 days before beginning work or, alternatively, worked fewer than a total of 40 hours for someone else during the 60-day period.” According to the IRS, work performed as self-employed individual does not count toward the forty hours or less that an employee must have worked in the sixty day period in order to be a qualified individual.

Employers should review employees who may have been disqualified under the mistaken belief that work performed as a self-employed individual counted toward the forty hours test.

Contact Vision Payroll if you have further questions on the HIRE Act.

Under the Hiring Incentives to Restore Employment Act (HIRE Act), employers who hire certain unemployed workers are exempt from certain employment taxes. In order to qualify under the HIRE Act, the wages must be paid by a qualified employer “with respect to employment” in the period beginning March 19, 2010 and ending December 31, 2010. The Internal Revenue Service (IRS) has provided employers further information on the HIRE Act.

According to the IRS, the HIRE Act payroll tax exemption applies to an employee who has been on furlough, standby status or temporary layoff “only if the furlough, standby status, or temporary layoff constitutes a termination of employment and, upon reestablishment of the employment relationship, the requirements to be a qualified employee are satisfied. Whether the employment relationship has terminated is based on facts and circumstances.” An earlier post reviewed when employment begins for purposes of the HIRE Act.

Employers should review employees who have been on furlough, standby status or temporary layoff and determine if the rehired employee is eligible under the HIRE Act.

Contact Vision Payroll if you have further questions on the HIRE Act.

Due to the damage caused by Hurricane Alex in Texas beginning June 30, 2010, President Barack Obama declared the following counties a federal disaster area: Cameron, Hidalgo, Jim Hogg, Maverick, Starr, Val Verde, Webb and Zapata. Therefore, the Internal Revenue Service (IRS) announced recently that it will waive failure to deposit penalties for employment and excise taxes due after June 29, 2010 and before July 16, 2010 as long as the deposits were made by July 15, 2010. In addition, affected taxpayers will have until August 30, 2010 to file most tax returns. Contact Vision Payroll if you were affected by Hurricane Alex and need further information on the relief provided by the IRS.

Under the Hiring Incentives to Restore Employment Act (HIRE Act), employers who hire certain unemployed workers are exempt from certain employment taxes. In order to qualify under the HIRE Act, the wages must be paid by a qualified employer “with respect to employment” in the period beginning March 19, 2010 and ending December 31, 2010. The Internal Revenue Service (IRS) has provided employers further information on the HIRE Act.

According to the IRS, the HIRE Act does not address when an individual begins employment; therefore, general principles relating to employment apply. Under these general principles, employment includes the establishment, maintenance, and termination of the employer-employee relationship, all of which depend on the facts and circumstances. Accordingly, an individual begins employment on the date when, based on the facts and circumstances of the particular situation, the employer-employee relationship is first established.

In the case of an individual who was previously employed by the qualified employer and whose employment was terminated, for purposes of determining qualified employee status, the individual begins employment on the date when, based on the facts and circumstances of the particular situation, the employer-employee relationship is reestablished.

Contact Vision Payroll if you have further questions on the HIRE Act.

In response to a letter from Senator Amy Klobuchar (D-MN), the Internal Revenue Service (IRS) recently released Information Letter 2010-0144, which includes a response to her constituent about the effect of the Making Work Pay tax credit on his employees’ annual withholding for 2009. The constituent was concerned that the reduced withholding would either reduce his employees’ refunds or increase the tax they would owe when they filed their 2009 and 2010 income tax returns. The IRS recommended that concerned employees consult the IRS withholding calculator and submit a revised Form W-4, Employee’s Withholding Allowance Certificate or its Spanish equivalent, Formulario W-4(SP), Certificado de Exención de la Retención del Empleado. Additionally, they should consult Publication 919, How Do I Adjust My Tax Withholding? Vision Payroll recommends that employees regularly review their income tax withholding to ensure the proper amount is paid in so that underpayment penalties may be avoided.

Starting a new business can be an exciting and challenging time. Writing a business plan, picking a name, deciding how to finance, choosing a location, hiring your employees, and many more decisions can be stressful for entrepreneurs. If you’re starting a new business, the Internal Revenue Service (IRS), in IRS Summertime Tax Tip 2010-05, lists the following six tax tips:

1. First, you must decide what type of business entity you are going to establish. The type of business entity will determine which tax form you have to file. The most common types of business are the sole proprietorship, partnership, corporation and S corporation.
2. The type of business you operate determines what taxes you must pay and how you pay them. The four general types of business taxes are income tax, self-employment tax, employment tax and excise tax.
3. An Employer Identification Number is used to identify a business entity. Generally, businesses need an EIN. Visit IRS.gov for more information about whether you will need an EIN. You can also apply for an EIN online at IRS.gov.
4. Good records will help you ensure successful operation of your new business. You may choose any recordkeeping system suited to your business that clearly shows your income and expenses. Except in a few cases, the law does not require any special kind of records. However, the business you are in affects the type of records you need to keep for federal tax purposes.
5. Every business taxpayer must figure taxable income on an annual accounting period called a tax year. The calendar year and the fiscal year are the most common tax years used.
6. Each taxpayer must also use a consistent accounting method, which is a set of rules for determining when to report income and expenses. The most commonly used accounting methods are the cash method and an accrual method. Under the cash method, you generally report income in the tax year you receive it and deduct expenses in the tax year you pay them. Under an accrual method, you generally report income in the tax year you earn it and deduct expenses in the tax year you incur them.

Vision Payroll works with clients as diverse as brand new start-ups and billion dollar companies. If you’re starting a new business, contact us today for all your payroll and human resources needs.

Due to the severe storms, flooding, and mudslides in Kentucky beginning July 17, 2010, President Barack Obama declared the following counties a federal disaster area: Carter, Lewis, Madison, Mason, Pike, and Rowan. Therefore, the Internal Revenue Service (IRS) announced recently that it will waive failure to deposit penalties for employment and excise taxes due after July 16, 2010 and before August 3, 2010 as long as the deposits are made by August 2, 2010. In addition, affected taxpayers will have until September 15, 2010 to file most tax returns. Contact Vision Payroll if you were affected by the severe storms, flooding, and mudslides and need further information on the relief provided by the IRS.

The Internal Revenue Service (IRS) recently released Information Letter 2010-0146, which answers “several questions about the tax consequences of certain employer-provided transportation benefits.” Among the issues the IRS addressed are the ability to perform, and the repercussions of, rollovers of unused benefits on smartcards, limits on the amounts of rollovers or accumulations, the definition of a commuter, the requirement to use transit passes only for commuting and only by employees, as well as several other guideline questions. Vision Payroll recommends that employers providing such benefits review their plans and procedures with their attorney to ensure compliance with the latest guidance.

In Medical Practice Solutions, LLC, et al., v. Commissioner, TC Memo 2010-98, the Tax Court ruled that an individual and her single-member LLC are not distinct taxpayers and thus she is personally liable for unpaid payroll taxes assessed against the LLC. Carolyn Britton was the sole member of Medical Practice Solutions, LLC (the LLC) in Beverly, Massachusetts. The Internal Revenue Service (IRS) assessed liabilities for unpaid employment taxes reported by the LLC on three different Forms 941. The IRS proceeded with collection proceedings against Ms. Britton when it was unable to collect the taxes from the LLC. According to the Tax Court, “Ms. Britton [made] several related arguments that [challenged] her liability, and they all [rested] on her insistence that she and the LLC [were] distinct taxpayers with distinct liabilities and the right to distinct notices and filings. This premise, however, is flawed both as a matter of law and as a matter of fact.” The court ruled that Ms. Britton and the LLC were a single taxpayer and she was personally responsible for the unpaid taxes. Vision Payroll recommends taxpayers review their rights and responsibilities as LLC members with their attorney to help ensure compliance with tax laws.

Due to the severe storms, flooding, mudslides and landslides in West Virginia beginning June 12, 2010, President Barack Obama declared the following counties a federal disaster area: Lewis, Logan, McDowell, Mingo, and Wyoming. Therefore, the Internal Revenue Service (IRS) announced recently that it will waive failure to deposit penalties for employment and excise taxes due after June 11, 2010 and before June 29, 2010 as long as the deposits were made by June 28, 2010. In addition, affected taxpayers will have until August 11, 2010 to file most tax returns. Contact Vision Payroll if you were affected by the severe storms, flooding, mudslides and landslides and need further information on the relief provided by the IRS.