Business Taxes

, , , , ,

Green Apple

, , , , ,

For 20 years now, Apple has blazed a reputation for stylish design and innovative products, creating a near-cult following among fans. Apple's computers appeal to the artists and designers who set so many of today's trends. Their iPod has helped change how the world listens to music. Their iPad has made online content available nearly anywhere. And their iPhone is helping change the way we communicate with friends, family, and colleagues. (Just a few years ago, your mother-in-law didn't have a cell phone. Now she sends text messages and "checks in" on Facebook.)

Apple may be the most successful company on earth. At one point last year, they had more cash on hand ($76.2 billion) than the United States government ($73.8 billion). And Apple is currently the most valuable company on the planet, with a "market cap" (total value of tradable shares) that topped $590 billion dollars on April 10. (That's right . . . those iTunes you casually download for a buck each have created a company worth over half a trillion dollars.) In fact, Apple's current market cap is more than the gross domestic products of Iraq, North Korea, Vietnam, Puerto Rico, and New Zealand — combined.

, , ,

A Dubious Privilege

, , ,

The "Occupy Wall Street" movement argues that we live in a divided nation. First there's a gilded "1%" enjoying lives of ease and privilege. Then there's a downtrodden "99%" struggling just to stay in place. But here's a take on "the 1%" that you won't hear at your local tent city . . .

The IRS is struggling just like the rest of us to carry out its mission with limited resources. Back in 2003, they audited just one out of every 203 returns. By 2010, that number was up to one out of 90. To stretch that audit budget even further, they're auditing more and more taxpayers by mail. But one study shows that 10% of IRS mail never gets where it's supposed to go, and 27% of those who do get their mail don't even realize they're actually being audited! Naturally, that leads to more and more of the paperwork screw ups that every taxpayer fears.

, ,

Gimme Shelter

, ,

Sunday night's Grammy Awards ceremony illuminated two sides of today's music industry. On stage, British soul singer Adele cleaned up big time, winning Album of the Year, Record of the Year, and Song of the Year. On the darker side, the night was filled with tributes to fallen angel Whitney Houston, who died Saturday after years of backstage struggles with drugs and alcohol.

When you think of your favorite musician, you probably don't think about a third side — taxes. But you might be surprised to learn just how much influence tax laws have over the music we listen to every day.

Rock-and-roll fans know "Gimme Shelter" as one of the Rolling Stones' all-time classics — the opening cut on their 1969 album Let it Bleed, and a dark, brooding meditation on the war and violence that seemed to characterize that era. Surprisingly, it turns out that "Gimme Shelter" describes the band's philosophy on taxes, too.

, ,

HIRE Act Affidavit Posted by IRS, Form W-11

, ,
The Internal Revenue Service has been working over time thanks to all the new tax laws just passed. Thankfully they placed a rush order for their team to create the new form needed to allow employers to take advantage of some nice provisions of the HIRE Act.

Form W-11, "Hiring Incentives to Restore Employment (HIRE) Act Employee Affidavit," is now posted on IRS.gov, along with answers to frequently asked questions about the payroll tax exemption and the related new hire retention credit. The new law requires that employers get a statement from each eligible new hire, certifying under penalties of perjury, that he or she was unemployed during the 60 days before beginning work or, alternatively, worked fewer than a total of 40 hours for anyone during the 60-day period. Employers can use Form W-11 to meet this requirement.

, , , ,

Hiring Incentives to Restore Employment (HIRE) Act

, , , ,

As was expected, today President Obama signed the most recent jobs bill passed by Congress, the Hiring Incentives to Restore Employment (HIRE) Act.  While many businesses are hesitant about hiring new employees within the current economic climate, "this jobs bill should help make their decision that much easier," President Obama said during the bill signing.

While I am happy to see some effort being made to help small businesses let us be sure to keep this HIRE Act in perspective. First, unless you were already considering hiring another employee the Act is not going to offer you enough hard dollar incentive to make a hire. For example, if you were to hire a qualified previously unemployed worker and pay her $30,000 this year your tax savings would amount to $1,860. Plus, if you kept her on the payroll for a full 52 weeks you would also get a tax credit of $1,000. Your total potential savings is $2,860.  You can see that while nice to have, it is not likely these tax breaks by themselves will create much hiring. But, for all you business owners out there currently debating whether you need to add staff, this just might help you pull the trigger and make the hire.

, ,

IRS Announces Extensive Employment Tax Audits; Is your contractor really an employee?

, ,

As you can imagine, with the economy still reeling and tax collections dropping the importance of the governments' oversight of our system of taxes becomes ever more critical. From both the federal and state levels we continue to read about new and improved compliance measures being put in place. Take one of the recent announcements at the end of 2009 from the IRS as an example.

The IRS has announced it will conduct intensive employment tax audits under its National Research Program (NRP) starting in 2010. This is a multi-year program with random audits scheduled to begin in February 2010. The IRS has said it will audit U.S. companies under this program. The NRP is a study and data collection project that helps the IRS update its noncompliance estimates and update its computer-based audit programs. "Normal" audits do not yield as valuable compliance data as random audits because the IRS, in normal audits, is intentionally targeting the taxpayers they believe have noncompliance problems. NRP audits on the other hand, are random to allow the IRS to statistically measure the total amount of noncompliance in a specific area. The IRS then uses this data to update its computers and estimates of the tax gap—the difference between total taxes owed and the amount actually paid by taxpayers.