Annual Business Outlook Luncheon
How’s the 2012 economic outlook for the world, nation, the state, and our area shaping up?
Forecasts will be made at the Annual Business Outlook Luncheon.
The Luncheon will be Tuesday, November 29, from 11:30am to 1:00pm at the Anderson Country Club. The panel of experts will include:
Global & US Outlooks - Doug McCoy
Outlook for Financial Markets - Cathy Bonser-Neal
Indiana Outlook - Tim Slaper
Local Area Outlook - Dagney Faulk
The luncheon is sponsored by the Anderson Rotary Club and is open to the public. Luncheon price is $15 per person.
For reservations, contact Janet Brewer at 765-641-4272 or 765 621-0470 or jlbrewer@anderson.edu
Are You Prepared For The New NLRB Poster Requirements?
Most employers in the private sector are required to display the updated workplace poster that describes employee rights by January 31, 2012. The poster (Notice) must be displayed in an area of the workplace where all employees have access and where other employment-related policies and rules are posted. If the employer posts the policies and rules online or on a server, then they must also provide employees a link to the NLRB Notice. The updated poster is available at no charge from any NLRB office, or you can download it at www.nlrb.gov/poster. This link also includes a link to Frequently Asked Questions, which address issues such as which employers are required to display the Notice, where the Notice should be posted, what the requirements are for employees who speak a language other than English, and what the consequences are for failing to post the Notice. If you have additional questions, please feel free to contact our office.
WE ARE MOVING
Yes, that is right. We made a strategic decision in an effort to better serve our clients. With this move, we will be easy to get to and we will have ample parking.
If all goes as planned, you will be able to visit us at our new location the first full week of December. Our new address will be 7303 Quality Circle, Anderson, IN 46013. You will still be able to reach us at 765.640.1211 and www.jpkanecpa.com.
So, where is 7303 Quality Circle …. It is in the Flagship office park, just off of Exit 22; from Martin Luther King Blvd., turn west on 73rd Street to the second street, which is Quality Circle. Ours is the first building on the right, and you will see our name on the east end of the building.
For a map or directions, click here.
IRS Announces “Fresh Start” to Correct Employee Classification Errors
The IRS hopes to give taxpayers a “Fresh Start” in several areas. Today, they announced one Fresh Start initiative: The Voluntary Classification Settlement Program (VCSP). The program will allow eligible employers to make changes in the way they classify employees without the burden of paying years of back taxes and the related penalties and interest. Businesses that are erroneously paying employees as if they are independent contractors will benefit from this program. Employers are required to apply for the program at least 60 days in advance of changing their classification.
To be eligible, an applicant must:
- Consistently have treated the workers in the past as nonemployees,
- Have filed all required Forms 1099 for the workers for the previous three years
- Not currently be under audit by the IRS, the Department of Labor or a state agency concerning the classification of these workers
In order to apply for the program, employers must file Form 8952. If they are accepted, they will be required to remit a payment of almost 1.4% of the past year’s wages paid to the incorrectly classified employees. No interest or penalty will be assessed, and the IRS will not audit previous years’ payroll taxes for the employees in question. In order to participate, employers must also agree to extend the statute of limitations to six years, rather than the normal three years, for their first three years in the program.
An IDEA For Increasing Profits
Businesses in the Madison County Indiana area have an incredible opportunity to participate in a year-long program called the IDEA Academy that will help identify and address issues that are holding businesses back. The Madison County Chamber, the Flagship Enterprise Center, and the Corporation for Economic Development are working together to provide this valuable service to the business community.
What exactly is the IDEA Academy? It is a series of classes and roundtable discussions led by DeWayne Landwehr, Executive Director of IDEA and the Flagship Enterprise Center. Participants will establish a baseline of their revenue, profit, jobs, and payroll at the beginning of the program, and then identify areas that need improvement. They will develop an Action Plan and participate in networking with other business owners. They will be given assignments at each monthly session, and at the end of the program, they will again measure their revenue, profit, jobs, and payroll to evaluate the progress that was made.
This is a very brief description of a program that will improve the bottom line for businesses that are committed to the program. For more information, contact DeWayne Landwehr at dewayne@flagshipenterprise.org or 765.622.0800.
IRS Increases Standard Mileage Rates
Due to the increasing cost of driving a vehicle, the IRS announced on Thursday that it will raise the standard mileage rates for the last half of the year. From July 1 through December 31, 2011, the standard mileage rate for business use will increase to 55.5 cents/mile and the medical and moving standard mileage rates will increase to 23.5 cents/mile. The standard mileage rate for charitable work is set by statute at 14 cents/mile and has not been changed by this announcement. To read the full IRS announcement, see Announcement 2011-40.
The rates that were in effect for the first half of the year will continue to apply to miles driven between January 1 and June 30. Those rates, which were announced in Notice 2010-88, are 51 cents/mile for business miles and 19 cents/mile for medical or moving miles.
Expanded 1099 Requirements Are Officially Repealed
On April 14, President Obama signed into law a bill that repeals both the expanded Form 1099 requirements that were included in last year’s health care act, as well as the new 1099 reporting requirements for owners of rental property which had been enacted with the Small Business Jobs Act last year.
The Comprehensive 1099 Taxpayer Protection and Repayment of Exchange Subsidy Overpayments Act of 2011 did not repeal the increased penalties that were enacted last year by the Small Business Jobs Act, however. Penalties are assessed for failure to timely file information returns and were doubled with last year’s legislation. The penalties will be adjusted for inflation every five years.
The 1099 rules are essentially unchanged now, requiring businesses to report payments made to individuals or unincorporated businesses for services rendered when the total annual payments are $600 or more. Payments to attorneys of $600 or more are to be reported on a 1099 even if the law firm is incorporated. Because individuals who receive rental income are not considered to be engaged in a trade or business, they are not subject to these requirements.
New 1099 Rules: Is There Hope for Some Relief?
Most small businesses are dreading the thought of having to produce a Form 1099 for every payee to which they paid at least $600 – yes that is right, based upon where things are right now, that is what they will have to do beginning January 1, 2012 . The Patient Protection and Affordable Care Act, PL 111-148, caught many by surprise (including those who voted for it) when it became known after passage that payments to corporations are no longer exempt from information reporting requirements after 2011 and that 1099s would be required for purchases of goods as well as payments for services. The IRS National Taxpayer Advocate estimated that the new rules affect approximately 40 million businesses (including 26 million sole proprietors) and other entities, which will have to issue a Form 1099 for everyday transactions, such as purchase of a printer from an office supply store if it costs at least $600.
The purpose of the new requirements is to resolve the “Tax Gap” – the difference between income earned and income reported. This will not accomplish the intended outcome – the cost to business and the government agencies will far exceed any economic windfall. The tax gap, for the most part, arises from payments made to individual taxpayers for services, not corporations for goods and services.
Efforts to repeal the expanded Form 1099 reporting requirements failed during Congress’ lame-duck session at the end of 2010. However, two bills were recently introduced in the Senate to repeal the section of the Patient Protection Act that enacted the expanded 1099 requirements, which would repeal the requirements without any revenue offset.
But relief for those who will have to comply with a close cousin of that rule—another new law requiring rental income recipients to issue 1099s for total payments of $600 or more to service providers—is less hopeful. That law applies to all payments made in 2011.
The Tax Relief Act of 2010 – Business Provisions
President Obama signed the Tax Relief, Unemployment Insurance Reauthorization, and Job Creation Act of 2010 (Tax Relief Act) on December 17, 2010, finally giving taxpayers some certainty for short-term tax planning. However, most of the provisions will expire within two years, so this is not a permanent solution. Last week we focused on provisions that impact individuals. Today we will cover highlights for businesses.
Bonus Depreciation: Earlier this year, the 2010 Small Business Jobs Act extended the 50-percent bonus depreciation through the end of 2010 for qualified property. The Tax Relief Act increased the bonus amount to 100 percent for assets placed in service after September 8, 2010, and before January 1, 2012. For assets placed in service after December 31, 2011 and before January 1, 2013, the bonus depreciation will be 50 percent.
Section 179 Expensing: The 2010 Small Business Jobs Act increased the Section 179 dollar limit to $500,000 and the total asset investment limit to $2 million for tax years beginning in 2010 and 2011. The 2010 Tax Relief Act set the dollar limit at $125,000 for tax years beginning in 2012, and the total asset investment limit to $500,000 for that year.
Research Tax Credit: The Tax Relief Act extended the research tax credit through December 31, 2011.
Small Business Stock: The 2010 Small Business Jobs Act had previously enhanced the 100 percent exclusion of gain on the sale of qualified small business stock, but the purchase dates of the stock had to fall after September 27, 2010, and before January 1, 2011. The Tax Relief Act extended the purchase date one more year to January 1, 2012. In order for the stock to qualify, it must be held at least five years, it must be issued by a C corporation with assets of $50 million or less at the stock issuance date, and the purchaser (taxpayer) cannot be a C corporation. In addition, the exclusion is limited to the greater of $10 million or 10 times the taxpayer’s basis in the stock.
Work Opportunity Tax Credit: The Tax Relief Act extended the Work Opportunity Tax Credit (WOTC) for employers who hire individuals in certain groups, with a hire date before January 1, 2012. This credit will not include unemployed veterans or disconnected youth who are hired after 2010.
Payroll tax cut: The Tax Relief Act reduces the employee’s share of Social Security taxes by 2% for calendar year 2011 only. The employer will still pay the full 6.2% portion, but the employees will pay 4.2% in 2011. Self-employed individuals will pay 10.4% on self-employment income rather than 12.4%.
Extenders: Many tax incentives that had expired at the end of 2009 were extended two years by the Tax Relief Act. Some of the extenders include:
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New Markets Tax Credit (modified)
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Railroad track maintenance credit
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Differential wage credit
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15-year depreciation for qualified leasehold improvements, restaurant building and improvements, and retail improvements
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Film/television production costs
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Five-year write-off of farm machinery & equipment
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Tax incentives for empowerment zones
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Credits for biodiesel and renewable diesel fuel
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Energy efficient home credit for qualified builders
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Percentage depletion for oil and gas from marginal wells
The Tax Relief Act of 2010 – Individual Taxpayer Provisions
Congress approved the Tax Relief, Unemployment Insurance Reauthorization, and Job Creation Act of 2010 (Tax Relief Act) on December 16, 2010, finally giving taxpayers some certainty for short-term tax planning. However, most of the provisions will expire within two years, so this is not a permanent solution. Today we will briefly cover some of the highlights for individuals. Next week we will highlight the business and estate tax implications.
Individual tax rates: The current tax rates were scheduled to increase after December 31, 2010. However, the Tax Relief Act extended the current rates until December 31, 2012.
Payroll tax cut: The Tax Relief Act reduces the employee’s share of Social Security taxes by 2% for calendar year 2011 only. The employer will still pay the full 6.2% portion, but the employees will pay 4.2% in 2011. Self-employed individuals will pay 10.4% on self-employment income rather than 12.4%.
Capital gains/dividends: The current tax rates for capital gains and dividends have been extended through 2012 (0% for taxpayers in the 10% and 15% income tax brackets, and 15% for those in higher tax brackets).
Itemized deduction limitation: The repeal of the itemized deduction limitation for higher-income taxpayers was scheduled to end on December 31, 2010. The Tax Relief Act extends the repeal through December 31, 2012.
Personal exemption phaseout: Higher-income taxpayers were subject to phaseout of their personal exemptions prior to 2010. This was repealed for 2010 by the Economic Growth and Tax Relief Reconciliation Act of 2001 (EGTRRA), but the Tax Relief Act has extended the repeal through December 31, 2012.
Marriage penalty relief: The standard deduction for married taxpayers filing jointly was increased by EGTRRA, as was the upper income threshold of the 15% tax bracket, in order to alleviate the “marriage penalty.”Ã? These reliefs were scheduled to expire December 31, 2010, but the Tax Relief Act extended them through December 31, 2012.
Child tax credit: The credit of $1,000 per qualifying child has been extended through December 31, 2012. In addition, taxpayers whose child tax credit exceeds their tax liability may qualify for the additional child tax credit (which is refundable) if they have earned income in excess of $3,000. Under EGTRRA, the additional credit would have been based upon earned income exceeding $10,000.
Dependent care credit: The credit for expenses paid for care of a dependent child under age 13 in order for the taxpayer to work or look for work will remain at the 2010 rates and limits through December 31, 2012.
American Opportunity tax credit: The 2009 Recovery Act renamed the Hope education credit and enhanced the credit for qualified taxpayers with higher education expenses. The Tax Relief Act extended this credit through December 31, 2012.
Alternative minimum tax: The Tax Relief Act includes increased alternative minimum tax (AMT) exemption amounts for 2010 and 2011.
Individual tax extenders: The Tax Relief Act extended through 2011 several tax incentives that had expired December 31, 2009, including:
- State and local sales tax deduction
- Higher education tuition deduction
- Teacher’s classroom expense deduction
- Charitable contribution of IRA proceeds
- Charitable contributions of appreciated property for conservation purposes