February 26th, 2010 by admin

Tax Advice for Starting, Operating or Closing a Small Business

http://www.irs.gov/newsroom/article/0,,id=172970,00.html

To many citizens, running a successful business is part of the American dream. But while they may be experts in their chosen field, few small business owners are tax experts. Many business decisions have significant tax implications. The structure and accounting methods you choose can dramatically affect how much tax you pay. Even before you check with your accountant or tax advisor, you can check out the IRS Web site for useful information.  No matter what stage your business is in, you will find the tax help you need by clicking on the tabs near the top marked "Businesses," then "Small Business/Self-Employed," and then on the lower link "Starting, Operating, or Closing a Business." 

Remember that for the genuine IRS Web site be sure to use .gov. Don't be confused by internet sites that end in .com, .net, .org or other designations instead of .gov. The address of the official IRS governmental Web site is www.irs.gov. 

SBA Launches Tax Savings Resource Center

http://www.sba.gov/stimulus/

SBA has created an online tax savings resource center to help small businesses understand how they can benefit from the 2008 economic stimulus package. The package includes the following tax incentives for businesses: a 50% bonus depreciation allowance on equipment purchased and placed in service in calendar 2008 and an almost 100% increase in the amount (from $128,000 to $250,000) that a business can expense for equipment purchased and placed in the business tax year beginning in 2008.  SBA’s tax savings resource center demonstrates the benefits entrepreneurs can gain from the 2008 economic stimulus package. The center, located on www.sba.gov/stimulus , contains three resources on the package: (1) Fact Sheet that provides a clear explanation of the small business tax benefits; (2) Deprecation Calculator tool that provides an estimate of the first-year depreciation available under the provisions; and (3) a brief tutorial summarizing the tax benefits that concludes with the depreciation calculator. 

IRS Seeks New Issues for the Industry Issue Resolution Program

http://www.irs.gov/newsroom/article/0,,id=185547,00.html

Businesses and associations have until Aug. 31 to submit tax issues to the Internal Revenue Service to be included in the Fall 2008 review in the Industry Issue Resolution (IIR) Program.  IIR is an IRS program to resolve business tax issues common to significant numbers of taxpayers through new and improved guidance. In past years, issues submitted by associations and others representing both small and large business taxpayers, resulted in tax guidance that has affected thousands of taxpayers.  Recent submissions accepted into the IIR program include Auto Last In First Out - for automobile wholesalers, manufacturers and dealers regarding the proper treatment of the dollar-value, LIFO inventory method for pooling purposes of crossover vehicles, which have characteristics of trucks and cars. IIR project selections are based on the criteria set forth in Revenue Procedure 2003-36. 

Is Your Hobby a For-Profit Endeavor?

http://www.irs.gov/irs/article/0,,id=186056,00.html

Is your hobby really an activity engaged in for profit?  Internal Revenue Code Section 183 (Activities Not Engaged in for Profit) limits deductions that can be claimed when an activity is not engaged in for profit. IRC 183 is sometimes referred to as the “hobby loss rule.”  This educational fact sheet provides information for determining if an activity qualifies as an activity engaged in for profit and what limitations apply if the activity was not engaged in for profit. 

Taxpayers with 25 or More Heavy Vehicles Now Must File Excise Tax Forms Electronically

http://www.irs.gov/newsroom/article/0,,id=185565,00.html

Individuals and organizations with 25 or more trucks, tractors or other heavy vehicles used on highways now are required to make their excise tax filings with the Internal Revenue Service electronically, rather than by paper.  Form 2290, Heavy Highway Vehicle Use Tax Return, is used to report and pay highway-use excise taxes.  Most Forms 2290 are due by August 31.  

Farmer and Fisherman Income Averaging

http://www.irs.gov/businesses/small/article/0,,id=185877,00.html

Recent legislation permits fishermen to average their income over three years similar to taxpayers involved in a farming business.  The American Jobs Creation Act of 2004 amended Internal Revenue Code section 1301 to permit fishermen to average their income over three years. Recently released Regulations 1.1301 provide guidance on this change. 

New Page Highlights Business Provisions of the Economic Stimulus Package

http://www.irs.gov/newsroom/article/0,,id=185699,00.html

A new page on IRS.gov is devoted exclusively to the business provisions of the Economic Stimulus Package and includes links to two videos. 

¿Habla español? So does the IRS!

http://www.irs.gov/newsroom/article/0,,id=173247,00.html

Tax information can be difficult to understand in any language; but it can be even more difficult if it is not in your first language. To assist Spanish speakers, the IRS provides a wide range of free products and services. 

Recent Articles from e-News for Small Businesses

SBA introduces new online courses for small business owners

The Small Business Administration’s Small Business Training Network has introduced two new free online finance courses to help small business owners with the basic principles of finance and borrowing:

Retirement News and Employee Plans News

Read the spring issue of Retirement News for Employers and the summer edition of Employee Plans News.

IRS videos offer information on retirement plans

IRS has nine new videos to help retirement plan sponsors and participants choose and operate their plans, ensure benefits are protected, and learn more about the value of plans as a way to save for retirement. Check out other resources on Employee Plans at www.irs.gov/ep.  

Social Security Business Services Online recommends early registration

Social Security encourages you to register to use Business Services Online early to avoid the rush during its peak season, December through March.  Register and select Business Services Online now to avoid any delays in receiving your User ID and activation codes, if required.

OSHA’s “Safety Pays” program provides planning tool for businesses

OSHA has developed a new interactive tool, the Safety Pays program to help employers approximate the costs of occupational injuries and illnesses and the estimated impact on a company’s profitability.  In addition, OSHA’s electronic Compliance Assistance Tool provides employers with guidance for developing and implementing a comprehensive safety and health program.

Visit SBTV.com for small business news

Today’s daily news on SBTV.com highlights IRS’s online Small Business Tax Workshops.

Return to the site next Wednesday for an interview on the depreciation provisions of the Economic Stimulus Act.

Business.gov introduces toolkit

Business.gov has a new “gadget” that you can place on your Web site which allows small business owners to:

  • Search for information, forms, and contacts from federal, state and local governments
  • Find topics of current interest to the nation's small business community
  • Get a listing of licenses and permits that apply to your business
  • Watch videos featuring expert advice from successful entrepreneurs and small business owners

Order a bookmark with IRS tax information for small businesses

Publication 4667, Tax Information for Small Businesses and the Self-Employed, provides Key Search Words to help you locate important tax information on IRS.gov quickly and easily. Order this free laminated bookmark on the Small Business Products Online Ordering page. 

Subscribe to e-News for Small Businesses

If you would like to receive e-News for Small Businesses, please visit this link to subscribe: http://www.irs.gov/businesses/small/content/0,,id=154826,00.html

Recommend e-News for Small Businesses

If you already receive e-News for Small Businesses, you can share it with a business acquaintance, colleague or employee. Just forward this link to them to view a sample edition and subscribe.

The IRS has recently given us the following informational links to distribute to our small business members - please review it to see if there are any items that can be helpful to you -

  IRS Updates & News Releases:

The Tax Gap: Rental Property

http://www.irs.gov/newsroom/article/0,,id=172596,00.htmlThis fact sheet is the 14th in a series to help reduce the tax gap by helping taxpayers better understand the tax code. Landlords need to be aware of everything that counts as income so they pay their fair share of taxes. They also need to be aware of all deductible expenses so they don’t overpay their taxes. In the simplest terms, rental income is any payment received for the use or occupation of property.  The article discusses various forms of rental income that may need to be declared. Landlords can deduct the ordinary and necessary expenses for managing, conserving, and maintaining their rental property. Ordinary expenses are those that are common and generally accepted in the business. Necessary expenses are those that are deemed appropriate, such as interest, taxes, advertising, maintenance, utilities and insurance.   To find more resources on the tax gap — the difference between the amount of tax that taxpayers should pay and the amount that is paid voluntarily and on time, go to the Tax Gap Web site.

Treasury, IRS Release Report on Improving Voluntary Compliance

http://www.irs.gov/irs/article/0,,id=172790,00.htmlThe Treasury Department and the Internal Revenue Service released today an IRS report addressing the agency’s implementation of the 2006 strategy to improve voluntary compliance with federal tax laws. The IRS report, “Reducing the Federal Tax Gap: A Report on Improving Voluntary Compliance,” details steps currently being taken by the IRS, as well as those under development, to address key elements of the “tax gap.” The report builds on the seven components of the “Comprehensive Strategy for Reducing the Tax Gap,” which the Treasury Department released in September 2006.  Direct link to the report: http://www.irs.gov/pub/irs-news/tax_gap_report.pdf 

National Taxpayer Advocate Releases Report to Congress; Identifies Priority Challenges and Issues for Upcoming Year

http://www.irs.gov/newsroom/article/0,,id=172415,00.htmlNational Taxpayer Advocate Nina E. Olson delivered a report to Congress that identifies the priority issues the Office of the Taxpayer Advocate will address in the coming fiscal year. Among the key areas of focus will be improving taxpayer services, ensuring that taxpayer rights are protected in the IRS’s private debt collection initiative, and making the IRS’s offer-in-compromise program more accessible for taxpayers who are unable to pay their tax debts in full. The report also addresses the challenges the IRS is facing because of pressure to close the tax gap quickly. The tax gap represents the difference between the amount of tax owed and the amount of tax collected.  “For fiscal year 2008, both the IRS and the Taxpayer Advocate Service (TAS) face similar challenges,” Olson wrote.  “The IRS is under scrutiny for its efforts to close the tax gap, while TAS is struggling to address taxpayer difficulties that arise as a result of these very efforts.” 

Hydrogen-Powered Honda Vehicle Qualifies for Tax Credit

http://www.irs.gov/newsroom/article/0,,id=172612,00.htmlPurchasers of the 2005 and 2006 Honda FCX, which is only capable of operating on hydrogen, may rely on their certification concerning the vehicle’s qualification for the Qualified Fuel Cell Motor Vehicle Credit.   Recent Articles from e-News for Small Businesses Federal Minimum Wage Increased on July 24The Fair Labor Standards Act increases the federal minimum wage in three steps:

  • July 24, 2007, $5.85 per hour
  • July 24, 2008, $6.55 per hour
  • July 24, 2009, $7.25 per hour

See the U.S. Department of Labor’s Wage and Hour Web site or call the DOL toll-free help line at 1-866-4US-Wage (487-9243) for more information and a copy of the poster every employer with employees subject to the Fair Labor Standard Act’s minimum wage provisions is required to display at their business. Using Retirement Funds to Start a BusinessRecent news articles discuss using retirement funds to start a business. This is a complex area and without the guidance of a competent pension practitioner it could result in a prohibited transaction subject to taxes and penalties imposed by the IRS and U.S. Department of Labor.Generally, prohibited transactions are transactions between the plan and a disqualified person that are prohibited by law. If you are a disqualified person who takes part in a prohibited transaction the sanctions mentioned above would be applicable.  The final authority to determine whether a given transaction is a prohibited transaction rests with the DOL. DOL has issued two advisory opinions that provide some idea of how DOL treats an IRA investing in a business:

 Home Office DeductionIf you use a portion of your home regularly and exclusively for business purposes, you may be able to take a percentage of your expenses as a home office deduction.  Expenses may include the business portion of real estate taxes, mortgage interest, rent, utilities, insurance, depreciation, painting and repairs. Related Links:

 Can’t Pay the Entire Balance Due on a Tax Return?No one plans on getting behind in their taxes, but sometimes it happens. The first thing to do is contact the IRS and explain your situation. For taxpayers who cannot resolve their tax debt immediately, an installment agreement can be a reasonable payment option. If you don’t make an effort to pay the bill, or make other payment arrangements, the IRS could take more serious enforced collection action which may have an adverse affect on your credit rating. Related Links:

 Are You Aware of the Work Opportunity Tax Credit? After December 31, 2006, the Welfare-to-Work Credit was combined with the Work Opportunity Credit.  The WOC provides an incentive for businesses to hire individuals from targeted groups that have a particularly high unemployment rate or other special employment needs. There are also some changes for employees, including the qualified veterans group, hired after May 25, 2007.  The law provides immediate increases in tax incentives for employers in Renewal Communities, Empowerment Zones, and rural renewal counties.

There is an estimated $11 billion in tax incentives available to businesses that hire local residents, upgrade equipment needs, and build or rehabilitate commercial property in Renewal Communities and Empowerment Zones. These incentives include wage credits, increased deductions, accelerated depreciation, low-interest loans through facility bonds, tax savings on capital gains, and other incentives. Related Links:

·         Headliner Volume 209, Work Opportunity Tax Credits Expanded to Promote Tax Incentives for Economically Distressed Areas

  • Headliner Volume 196, Work Opportunity Tax Credit and Welfare-to-Work Credit Extended
  • Form 5884, Work Opportunity Credit
  • Form 8850, Pre-Screening Notice and Certification Request for the Work Opportunity Credit

 Subscribe to e-News for Small BusinessesIf you would like to receive e-News for Small Businesses, please visit this link to subscribe: http://www.irs.gov/businesses/small/content/0,,id=154826,00.html  



IRS broadcasts through the Web a free monthly program about current tax issues and policies.  While generally aimed at tax professionals, Tax Talk Today is available to the public and we want to ensure our partners view these informative shows. Please share this message with your staff and members/clients in the restaurant business.  All are welcome to view this program to find out more information.

The February 13th broadcast would be of interest to your organization.  The title of the program is Simplifying Tip Reporting. Our panel of experts will discuss the Attributed Tip Income Program (ATIP), a new program designed to improve tip income reporting. ATIP expands the existing IRS tip reporting and education program by offering employers and employees in the food and beverage industry an additional tip reporting program. ATIP reduces industry recordkeeping burdens, has simple enrollment requirements that do not require one-on-one meetings with the IRS and promotes reporting tips on Federal income tax returns 

Panelists scheduled to appear are:

  • Mary C. Gorman, Assistant Division Counsel (Pre-filing), IRS
    Daniel R. Lauer, C.P.A, Program Manager, National Tip Income Reporting Compliance, IRS
  • Michael M. Lloyd, Associate,  Miller & Chevalier
  • Cindy Hockenberry, Tax Information Analyst, National Association of Tax Professionals (NATP)

The show also includes a taped interview with Kathy Petronchak, the new commissioner of the Small Business/Self-Employed Division of  the IRS. 

To view the show, please go to www.taxtalktoday.tv and register.  The show airs at 2 p.m. (EDT).  You can even submit questions on ATIP during the live broadcast.  Archives of each program are available online 24 hours after the broadcast, by podcast, or you can purchase a VHS copy.

Tips for Choosing a Tax Preparer
 

If you pay someone to prepare your tax return, choose that preparer wisely. Taxpayers are legally responsible for what’s on their own tax returns even if prepared by someone else. So, it is important to choose carefully when hiring an individual or firm to prepare personal returns. Most return preparers are professional, honest and provide excellent service to their clients. Here are a few points to keep in mind when someone else prepares your return:

  • A Paid Preparer is required by law to sign the return and fill in the preparer areas of the form. The preparer should also include their appropriate identifying number on the return. Although the Preparer signs the return, you are responsible for the accuracy of every item on your return. In addition, the preparer must give you a copy of the return.
  • Review the completed return to ensure all tax information, your name, address and Social Security number(s) are correct. Make sure that none of these spaces is left blank.
  • Review and ensure you understand the entries and are comfortable with the accuracy of the return before you sign.
  • Never sign a blank return, and never sign in pencil.
  • If you have provided specific authorization in a power of attorney filed with the IRS, you may have copies of notices or refund checks mailed to your preparer or representative; but only you can sign and cash your refund check. For further information on Powers of Attorney, refer to Topic 311.
  • A Third Party Authorization Check Box on Form 1040 allows you to designate your Paid Preparer to speak to the IRS concerning how your return was prepared, payment and refund issues and mathematical errors.

It’s important for taxpayers to find qualified tax professionals if they need help preparing and filing their tax returns. Unqualified tax preparers may overlook legitimate deductions or credits that could cause clients to pay more tax than they should. Unqualified preparers may also make costly mistakes causing their clients to incur assessed deficiencies, penalties, and interest. Here are some suggestions to consider when hiring a tax professional:

  • A paid preparer must sign the return as required by law.
  • Avoid preparers who claim they can obtain larger refunds than other preparers. If your returns are prepared correctly, every preparer should derive substantially similar numbers.
  • Beware of a preparer who guarantees results or who bases fees on a percentage of the amount of the refund. A practitioner may not charge a contingent fee (percentage of your refund) for preparing an original tax return.
  • Understand that the most reputable preparers will request to see your receipts and will ask you multiple questions to determine your qualifications for expenses, deductions and other items. By doing so they have your best interest in mind and are trying to help you avoid penalties, interest or additional taxes that could result from an IRS examination.
  • Choose a preparer you will be able to contact and one who will be responsive to your needs. Ask who will actually prepare the return before engaging services. Avoid firms where your work may be delegated down to someone with less training or some unknown worker. You should know exactly who works with your tax matters at all times and how to contact him or her; after all, you are paying for it. Determine if the preparer is exporting your return to a foreign country for preparation. Foreign countries do not have the same security and privacy laws as the United States nor is there any recourse should your information be compromised as a result of lax or nonexistent privacy procedures.
  • Investigate whether the preparer has any questionable history with the Better Business Bureau, the state’s board of accountancy for CPAs, the state’s bar association for attorneys or the IRS Office of Professional Responsibility (OPR) for enrolled agents.
  • Determine if the preparer’s credentials meet your needs. Is he or she an Enrolled Agent, Certified Public Accountant (CPA) or Tax Attorney? Only attorneys, CPAs and enrolled agents can represent taxpayers before the IRS in all matters including audits, collection actions and appeals. Other return preparers may represent taxpayers only in audits regarding a return that they signed as a preparer.
  • Find out if the preparer is affiliated with a professional organization that provides or requires its members to pursue continuing education and holds them accountable to a code of ethics.
  • Check IRS.gov for information regarding abusive shelters and other tax schemes and scams. Remember, if it sounds too good to be true, chances are it is.
  • The IRS can help many taxpayers prepare their own returns without the assistance of a paid preparer. Before seeking a paid preparer, taxpayers might consider how much information is available directly from the IRS through the IRS Web site. Check out these helpful links:
    • e-file for Individual Taxpayers
    • Free File
    • Free Tax Return Preparation For You by Volunteers

Unfortunately, unscrupulous tax return preparers do exist and can cause considerable financial and legal problems for their clients. Examples of improper actions by unscrupulous preparers include the preparation and filing of false paper or electronic income tax returns that claim inflated personal or business expenses, false deductions, unallowable credits or excessive exemptions.

Tax evasion is both risky and a crime, punishable by up to five years imprisonment and a $250,000 fine. Remember, no matter who prepares a tax return, the taxpayer is legally responsible for all of the information on that tax return.

Report suspected tax fraud and abusive return preparers by completing Form 3949-A and mailing it or a letter with similar information to:

Internal Revenue Service
Fresno, CA 93888

Minority certification covers 2 cities, ADOT 

Now getting certification as a disadvantaged business enterprise with the city of Phoenix means a business is certified in Tucson and with the Az Dept of Transportation as well.

The three recently signed an intergovernmental agreement to acknowledge each other's certifications.

About 1,000 businesses are DBE-certified statewide. To become certified, a business must prove that at least 51 percent of the firm is owned by an African-American, Hispanic, Asian-American or Native-American, or by a woman.

(Arizona Republic, February 28, 2005, Section D4)

________________________________________

 

 

 

 

 

 

 

 

 

Internet hosting provided by GetNet Inc.

Posted in Uncategorized |

Comments are closed.