In IR-2009-73, the Internal Revenue Service (IRS) announced that interest rates for the fourth quarter of 2009 would remain unchanged from the third quarter. The rates are as follows:
- Four (4) percent for overpayments [three (3) percent in the case of a corporation];
- Four (4) percent for underpayments;
- Six (6) percent for large corporate underpayments; and
- One and one-half (1.5) percent for the portion of a corporate overpayment exceeding $10,000.
The IRS will publish the rates in Revenue Ruling 2009-27. Contact Vision Payroll if you have any questions on the fourth quarter rates.
Due to severe storms, flooding and straight-line winds in Kentucky on August 4, 2009, President Barack Obama declared Jefferson County a federal disaster area. Therefore, the Internal Revenue Service (IRS) announced recently that it will waive failure to deposit penalties for employment and excise taxes due after August 3, 2009 and before August 20, 2009 as long as the deposits were made by August 19, 2009. In addition, affected taxpayers will have until October 5, 2009 to file most tax returns. Contact Vision Payroll if you were affected by the severe storms, flooding and straight-line winds and need further information on the relief provided by the IRS.
In Private Letter Ruling 200930029, the Internal Revenue Service (IRS) ruled that a taxpayer’s expense reimbursement arrangement (the Plan) satisfied the accountable plan requirements of §62(c). The taxpayer in question expanded its business to include a new division that sells professional tools and equipment and repairs and maintains the tools. The technicians who repair the tools “are required to provide and maintain their own tools and equipment for performing the repair and maintenance work.” Under Regulations §1.62-2(c)(1), payments under a reimbursable plan are not taxable if the plan “meets the requirements of business connection, substantiation, and returning amounts in excess of substantiated expenses.” Since the taxpayer’s plan meets these requirements, “all payments made under the Plan in accordance with the terms of the Plan will be excluded from the Technician’s income and will not be wages subject to the withholding and payment of employment taxes.” Contact Vision Payroll if you have any further questions on accountable plans.
This weeks question comes from Barry, a business owner. We have always provided several employees with company cars. Now we plan to reimburse them for business use of their personal cars. How much can we reimburse employees for automobile expenses? Answer: As announced by the Internal Revenue Service (IRS) in IR-2008-131, the mileage rate for 2009 is 55 cents per mile. Therefore, if employees account for their business miles to their employers, the employers may reimburse at a rate up to 55 cents per mile without any requirement for the employees to include the reimbursement in taxable income. Contact Vision Payroll if you have any further questions.
The Internal Revenue Service (IRS) in IR-2009-071 reminded consumers to be aware of identity theft scams that spoof the IRS name, logo, or Web site. The scammers may use e-mail, fax, or telephone for their schemes. The goal is obtaining personal or financial information such name, address, birth date, bank account numbers, credit card numbers, social security numbers (SSNs), PINs, and passwords.
Some of the more common scams revolve around the following:
- Making Work Pay Refund
- Inherited Funds/Lottery Winnings/Cash Consignment
- Form W-8BEN
- Refund Scam
The IRS recommends knowing the following warning signs of a scam:
- Requests detailed or an unusual amount of personal and/or financial information, such as name, SSN, bank or credit card account numbers or security-related information, such as mother’s maiden name, either in the e-mail itself or on another site to which a link in the e-mail sends the recipient.
- Dangles bait to get the recipient to respond to the e-mail, such as mentioning a tax refund or offering to pay the recipient to participate in an IRS survey.
- Threatens a consequence for not responding to the e-mail, such as additional taxes or blocking access to the recipient’s funds.
- Gets the IRS or other federal agency names wrong.
- Uses incorrect grammar or odd phrasing (many of the e-mail scams originate overseas and are written by non-native English speakers).
- Uses a really long address in any link contained in the e-mail message or one that does not start with the actual IRS Web site address (http://www.irs.gov/). To see the actual link address, or url, move the mouse over the link included in the text of the e-mail.
If you are suspicious of any item you receive purporting to be from the IRS, remember that the IRS will never ask for personal or financial information in an e-mail and it does not send unsolicited e-mails. Never click on links or open attachments in such e-mails and contact the IRS at (800) 829-1040 if you receive one.
In the recently released Chief Counsel Advice (CCA) 200929004, the Internal Revenue Service ruled that money distributed from a company’s tip jar should be considered tips, not wages.
The company requires that all its retail locations maintain a tip jar to collect cash to be distributed to certain employees. A non-management employee distributes the tip money according to a time sheet showing hours worked by eligible employees. Management employees are not eligible to share in the tips.
The company estimates an hourly amount that each employee earns and reports that amount times the number of hours worked as wages on Form W-2. The employer also instructs employees to report any amount received above this estimate as income.
Although under §3121(q) of the Internal Revenue Code of 1986 (IRC), tips are considered remuneration for FICA tax purposes (also known as OASDI or social security and Medicare), the remuneration is not deemed paid until the employee furnishes the employer with a written statement detailing the amount of tips received (see IRC §6053(a)). This notification is not supplied by the employees in this case. Since the procedures used by the company do not have the same level of control as described in Revenue Ruling 95-7, Q & A 2, the company is not liable for the employer share of FICA tax until the IRS makes a notice and demand for such taxes.
Contact Vision Payroll if you have any questions on taxation of distributions from tip jars.
The Internal Revenue Service (IRS) has released Notice 2009-27, Premium assistance for COBRA benefits. Pursuant to the American Recovery and Reinvestment Act of 2009 or ARRA, certain involuntarily terminated employees are eligible for employer-provided subsidies to help pay for their Consolidated Omnibus Budget Reconciliation Act (COBRA) continuation coverage. Employers may then claim a payroll tax credit on their Form 941 to be reimbursed for the assistance provided.
In recently issued guidance, the IRS explained how state agencies should allocate the COBRA premium reduction credit. Often a single state agency may provide health care coverage to employees of several other state agencies and local government units. Generally, the credit is attributed to the agency or unit that was the former employer whose termination of the employee made the employee eligible for the subsidy. When a plan is subject to COBRA under the Public Health Services Act (PHSA) and the former employee is required to pay the thirty-five percent share directly to the agency that maintains the health plan, however, that agency may claim the credit as long as it has received notification that the former employee was involuntarily terminated and that the former employing agency will not claim the credit. Contact Vision Payroll if you have any questions on the COBRA premium reduction credit.
The Internal Revenue Service (IRS) has released Notice 2009-27, Premium assistance for COBRA benefits. Pursuant to the American Recovery and Reinvestment Act of 2009 or ARRA, certain involuntarily terminated employees are eligible for employer-provided subsidies to help pay for their Consolidated Omnibus Budget Reconciliation Act (COBRA) continuation coverage. Employers may then claim a payroll tax credit on their Form 941 to be reimbursed for the assistance provided.
In recently issued guidance, the IRS discussed the results when a group health plan (other than a multiemployer plan) covers employees of two or more employers that are members of a single controlled group. A controlled group is considered a single employer for purposes of employee benefits but not for payroll taxes. Consequently, the credit is attributed to the former employer whose termination of the employee made the employee eligible for the subsidy. Contact Vision Payroll if you have any questions on the COBRA premium reduction credit.
The Internal Revenue Service (IRS) has released Notice 2009-27, Premium assistance for COBRA benefits. Pursuant to the American Recovery and Reinvestment Act of 2009 or ARRA, certain involuntarily terminated employees are eligible for employer-provided subsidies to help pay for their Consolidated Omnibus Budget Reconciliation Act (COBRA) continuation coverage. Employers may then claim a payroll tax credit on their Form 941 to be reimbursed for the assistance provided.
In recently issued guidance, the IRS explained that when a group health plan covers employees of two or more unrelated employers, then the credit is attributed to the former employer whose termination of the employee made the employee eligible for the subsidy. Contact Vision Payroll if you have any questions on the COBRA premium reduction credit.
The Internal Revenue Service (IRS) has released Notice 2009-27, Premium assistance for COBRA benefits. Pursuant to the American Recovery and Reinvestment Act of 2009 or ARRA, certain involuntarily terminated employees are eligible for employer-provided subsidies to help pay for their Consolidated Omnibus Budget Reconciliation Act (COBRA) continuation coverage. Employers may then claim a payroll tax credit on their Form 941 to be reimbursed for the assistance provided.
In recently issued guidance, the IRS confirmed that employers, multiemployer plans, and insurers are not required to report on Form W-2 or Form 1099 any premium subsidies provided to Assistance Eligible Individuals (AEIs). They are requited to keep records and supporting documentation for any such payments to AEIs and to support any credit claimed on Form 941. Contact Vision Payroll if you have any questions on the COBRA premium reduction credit.
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