Posts Tagged ‘IRS’

Expanded Work Opportunity Tax Credit Available for Hiring Qualified Veterans

Tuesday, November 13th, 2012

Tax CreditsSource:  IRS.gov

The VOW to Hire Heroes Act of 2011 made changes to the Work Opportunity Tax Credit (WOTC). The Act added two new categories to the existing qualified veteran targeted group and made the WOTC available to certain tax-exempt employers as a credit against the employer’s share of social security tax. The Act allows employers to claim the WOTC for veterans certified as qualified veterans and who begin work before January 1, 2013.

The credit can be as high as $9,600 per qualified veteran for for-profit employers or up to $6,240 for qualified tax-exempt organizations, but the amount of the credit will also depend on a number of factors, including the length of the veteran’s unemployment before hire, the number of hours the veteran works, and the veteran’s first-year wages. The amount of the credit for qualified tax-exempt organizations may not exceed the organization’s employer social security tax for the period for which the credit is claimed.

Pre-screening and Certification

All employers must obtain certification that an individual is a member of the targeted group, before the employer may claim the credit. The process for certifying the veterans for this credit is the same for all employers.

Normally, an eligible employer must file Form 8850, Pre-Screening Notice and Certification Request for the Work Opportunity Credit, with their respective state workforce agency within 28 days after the eligible worker begins work. But under a special rule included in IRS Notice 2012-13, employers have until June 19, 2012, to complete and file this newly-revised form for veterans hired on or after Nov. 22, 2011, and before May 22, 2012. The 28-day rule will again apply to eligible veterans hired on or after May 22, 2012.

Notice 2012-13 also provides additional guidance on submission of Form 8850.

For more information, see Form 8850 , Pre-Screening Notice and Certification Request and the instructions.

Claiming the Credit

For-profit Employers

For for-profit employers, the law now allows a tax credit for hiring qualified veterans who begin work before January 1, 2013.

After the required certification is secured, for-profit employers claim the tax credit as a general business credit against their income tax. The process for for-profit employers claiming the Work Opportunity Tax Credit under the VOW to Hire Heroes Act for qualified veterans remains the same.
For additional information, see:

Tax-exempt Employers

Qualified tax-exempt organizations, organizations described in IRC Section 501(c) and exempt from taxation under IRC Section 501(a), may claim the credit for qualified veterans who begin work on or after Nov. 22, 2011, and before January 1, 2013.

After the required certification is secured, tax-exempt employers claim the credit against the employer social security tax by separately filing Form 5884-C , Work Opportunity Credit for Qualified Tax-Exempt Organizations Hiring Qualified Veterans.

File Form 5884-C after filing the related employment tax return for the employment tax period for which the credit is claimed. It is recommended that qualified tax-exempt employers do not reduce their required deposits in anticipation of any credit as the forms are processed separately.

In addition to Form 5884-C and its instructions, tax-exempt employers should see IRS Notice 2012-13 and the Frequently Asked Questions & Answers for more details for claiming the credit.

References/Related Topics:

Legal Disclaimer: This article is intended for informational purposes only and by no means should replace or substitute other legal documents (governmental or non-governmental) reflecting similar content or advice. If you have any questions concerning your situation or the information provided, please consult with an attorney, CPA or HR Professional.

Dirty Dozen Tax Scams for 2012

Saturday, February 25th, 2012

Dirty Dozen Tax ScamsIR-2012-23, Feb. 16, 2012

WASHINGTON –– The Internal Revenue Service today issued its annual “Dirty Dozen” ranking of tax scams, reminding taxpayers to use caution during tax season to protect themselves against a wide range of schemes ranging from identity theft to return preparer fraud.

The Dirty Dozen listing, compiled by the IRS each year, lists a variety of common scams taxpayers can encounter at any point during the year. But many of these schemes peak during filing season as people prepare their tax returns.

“Taxpayers should be careful and avoid falling into a trap with the Dirty Dozen,” said IRS Commissioner Doug Shulman. “Scam artists will tempt people in-person, on-line and by e-mail with misleading promises about lost refunds and free money. Don’t be fooled by these scams.”

Illegal scams can lead to significant penalties and interest and possible criminal prosecution. The IRS Criminal Investigation Division works closely with the Department of Justice to shutdown scams and prosecute the criminals behind them.

Here are the top three from the Dirty Dozen tax scams list for 2012:

Identity Theft

Topping this year’s list Dirty Dozen list is identity theft. In response to growing identity theft concerns, the IRS has embarked on a comprehensive strategy that is focused on preventing, detecting and resolving identity theft cases as soon as possible. In addition to the law-enforcement crackdown, the IRS has stepped up its internal reviews to spot false tax returns before tax refunds are issued as well as working to help victims of the identity theft refund schemes.

Identity theft cases are among the most complex ones the IRS handles, but the agency is committed to working with taxpayers who have become victims of identity theft.

The IRS is increasingly seeing identity thieves looking for ways to use a legitimate taxpayer’s identity and personal information to file a tax return and claim a fraudulent refund.

An IRS notice informing a taxpayer that more than one return was filed in the taxpayer’s name or that the taxpayer received wages from an unknown employer may be the first tip off the individual receives that he or she has been victimized.

The IRS has a robust screening process with measures in place to stop fraudulent returns. While the IRS is continuing to address tax-related identity theft aggressively, the agency is also seeing an increase in identity crimes, including more complex schemes. In 2011, the IRS protected more than $1.4 billion of taxpayer funds from getting into the wrong hands due to identity theft.

In January, the IRS announced the results of a massive, national sweep cracking down on suspected identity theft perpetrators as part of a stepped-up effort against refund fraud and identity theft. Working with the Justice Department’s Tax Division and local U.S. Attorneys’ offices, the nationwide effort targeted 105 people in 23 states.

Anyone who believes his or her personal information has been stolen and used for tax purposes should immediately contact the IRS Identity Protection Specialized Unit. For more information, visit the special identity theft page at www.IRS.gov/identitytheft.

Phishing

Phishing is a scam typically carried out with the help of unsolicited email or a fake website that poses as a legitimate site to lure in potential victims and prompt them to provide valuable personal and financial information. Armed with this information, a criminal can commit identity theft or financial theft.

If you receive an unsolicited email that appears to be from either the IRS or an organization closely linked to the IRS, such as the Electronic Federal Tax Payment System (EFTPS), report it by sending it to phishing@irs.gov.

It is important to keep in mind the IRS does not initiate contact with taxpayers by email to request personal or financial information. This includes any type of electronic communication, such as text messages and social media channels. The IRS has information that can help you protect yourself from email scams.

Return Preparer Fraud

About 60 percent of taxpayers will use tax professionals this year to prepare and file their tax returns. Most return preparers provide honest service to their clients. But as in any other business, there are also some who prey on unsuspecting taxpayers.

Questionable return preparers have been known to skim off their clients’ refunds, charge inflated fees for return preparation services and attract new clients by promising guaranteed or inflated refunds. Taxpayers should choose carefully when hiring a tax preparer. Federal courts have issued hundreds of injunctions ordering individuals to cease preparing returns, and the Department of Justice has pending complaints against many others.

In 2012, every paid preparer needs to have a Preparer Tax Identification Number (PTIN) and enter it on the returns he or she prepares.

Signals to watch for when you are dealing with an unscrupulous return preparer would include that they:

  • Do not sign the return or place a Preparer Tax identification Number on it.
  • Do not give you a copy of your tax return.
  • Promise larger than normal tax refunds.
  • Charge a percentage of the refund amount as preparation fee.
  • Require you to split the refund to pay the preparation fee.
  • Add forms to the return you have never filed before.
  • Encourage you to place false information on your return, such as false income, expenses and/or credits.

For advice on how to find a competent tax professional, see Tips for Choosing a Tax Preparer.

The remaining 9 scams are:

  • Hiding Income Offshore
  • “Free Money” from the IRS & Tax Scams Involving Social Security
  • False/Inflated Income and Expenses
  • False Form 1099 Refund Claims
  • Frivolous Arguments
  • Falsely Claiming Zero Wages
  • Abuse of Charitable Organizations and Deductions
  • Disguised Corporate Ownership
  • Misuse of Trusts

To see the complete article for the full details on these scams, click here.

Legal Disclaimer: This article is intended for informational purposes only and by no means should replace or substitute other legal documents (governmental or non-governmental) reflecting similar content or advice. If you have any questions concerning your situation or the information provided, please consult with an attorney, CPA or HR Professional.

Federal Tax Info Via Social Media

Monday, January 30th, 2012

IRS Reaches Out With Social MediaIRS Tax Tip 2012-13

Using the latest technologies, the IRS offers multiple avenues for you to get tax information. If you have a smartphone, we have an app! If you like to watch videos from your phone or computer, we have dozens of helpful YouTube videos…and, of course, follow us on Twitter.

Check out how the IRS delivers the latest tax information, initiatives, products and services through social media.

  1. IRS2Go The IRS recently launched a smartphone application that allows you interact with the IRS using your mobile device. Our app can help you get your refund status and tax updates. IRS2Go is available for the iPhone or iTouch and the Android.
  2. YouTube The IRS offers short, informative videos on an assortment of tax-related topics through our YouTube Video channel. The videos are offered in English, American Sign Language and a variety of foreign languages.
  3. Twitter IRS tweets include tax-related announcements, news for tax professionals and updates for job seekers. Follow us @IRSnews.
  4. Audio files for podcasts These short audio recordings provide useful information on one tax-related topic per podcast. They are available on iTunes or through the Multimedia Center on IRS.gov (along with their transcripts).
  5. Widgets These tools, which can be placed on websites, blogs or social media networks, direct others to IRS.gov for information. The widgets feature the latest tax initiatives and programs and can be found on Marketing Express, the marketing site that allows IRS partners and tax preparers to customize their IRS communications products.
  6. RSS Really Simple Syndication, or RSS, is an easy way to gather a wide variety of content in one place on your computer. The IRS now offers RSS feeds. RSS, is an easy way to get the news you want whenever it is updated, even if you are not on our website.

Keep in mind that the IRS uses these tools to share information with you. Do not post any confidential information on new or social media sites, especially your Social Security number. The IRS will not be able to answer personal tax or account questions through any of these services.

To find links to all of IRS’s social media tools, visit www.irs.gov and click on “Social Media.”

Links:

Legal Disclaimer: This article is intended for informational purposes only and by no means should replace or substitute other legal documents (governmental or non-governmental) reflecting similar content or advice. If you have any questions concerning your situation or the information provided, please consult with an attorney, CPA or HR Professional.

Electronic Federal Tax Deposits Mandated

Wednesday, May 25th, 2011

EFTPS Deposits MandatedIRS AnnouncementNew Regulations Expand the Use of Electronic Payment System and Discontinue Paper Coupons in 2011

Are you making all of your federal tax deposits electronically?  Do you make your own federal tax deposits?  What about your corporate tax payment(s)?  Have you ever wanted to check your federal tax payment history for an audit?

The new IRS regulations (T.D. 9507) eliminates making federal tax deposits by paper coupon because the paper coupon system will no longer be maintained by the Treasury Department.  The new regulations generally maintain existing rules for depositing federal taxes through the Electronic Federal Tax Payment System.  Information on EFTPS, including how to enroll, can be found at the EFTPS website or by calling EFTPS Customer Service at 1-800-555-4477.

What is EFTPS and why should you enroll on the EFTPS website?
EFTPS is a service offered FREE by the U.S. Department of the Treasury to pay federal taxes electronically.  All federal taxes can be paid using EFTPS and you can make your payments via the website or a voice response system 24 hours a day, 7 days a week.  The system is more secure, reliable and accurate than the old coupon system and payments may be scheduled up to 120 days in advance for businesses and 365 days in advance individuals.

EFTPS will also display all electronic payments made online, by phone, or by a third party within the last sixteen months. This information can be viewed, printed, or even downloaded in files as comma-delimited format for use in other programs, such as Microsoft Excel.

Doesn’t my financial institution make my payment electronically for me?
You should ask your financial institution if it makes ACH Credit payments – not all do – and ask about fees and deadlines associated with this service.

Which taxes will be required to be paid electronically?
Any tax you previously paid with an IRS Form 8109/Form 8109-B coupon.

What if I don’t pay my business taxes electronically?
Businesses with an electronic deposit requirement must make those deposits electronically or face the potential of a 10% penalty for incorrect payment method.

For more information please log on to www.eftps.gov or contact Payroll Control Systems.

Submitted By:

The Payroll Control Systems Tax Team

Legal Disclaimer: This article is intended for informational purposes only and by no means should replace or substitute other legal documents (governmental or non-governmental) reflecting similar content or advice. If you have any questions concerning your situation or the information provided, please consult with an attorney, CPA or HR Professional.

New 2011 IRS Tax Calendar

Tuesday, January 25th, 2011

IRS Tax CalendarThe New 2011 IRS Tax Calendar for Small Business and Self Employed is available in both English and Spanish (Publication 1518SP), and is filled with useful information to address your business concerns. Each month highlights a different tax topic. Tax reminders and instructions are shown by date, and you can add your own notes such as state tax dates or business appointments. In addition to the monthly topics, you’ll find online resources along with a list of Forms and Publications, and a tear-out sheet of quick reference items.

Find the online version at:

www.irs.gov (search: tax calendar) or just click here.

Here are a few of the highlights contained in the new tax calendar:

Hiring Incentives to Restore Employment (HIRE) Act

Two new tax benefits are now available to employers hiring individuals who were previously unemployed or only working part time. These provisions are part of the Hiring Incentives to Restore Employment (HIRE) Act enacted into law on March 18, 2010.

Payroll Tax Exemption for Hiring the Unemployed:
The payroll tax exemption provides employers with an exemption from their 6.2 percent share of social security tax on wages paid to qualifying employees. This provision is effective for wages paid from March 19, 2010 through December 31, 2010.

Business Credit for Retention of Certain Newly Hired Individuals in 2010:
This is a general business credit to encourage retention of new hires. The employer may claim the credit for each qualified employee who remains an employee for 52 consecutive weeks, provided that the employee’s pay does not decrease significantly in the second half of the year. The amount of the credit is the lesser of $1,000 or 6.2 percent of wages (as defined for income tax withholding purposes) paid by the employer to the retained qualified employee during the 52 consecutive week period. The credit cannot be carried back but may be carried forward.

Go to www.irs.gov, search: HIRE Act.

Health Care Tax Credit

Health coverage legislation enacted this year includes a Small Business Health Care Tax Credit to help small businesses and small tax-exempt organizations provide health insurance coverage to their employees. Small businesses and tax-exempt organizations providing health insurance coverage will qualify for a special tax credit.

Included in the health care reform legislation, the Patient Protection and Affordable Care Act encourages small business employers to offer health insurance coverage for the first time or maintain coverage they already have. In general, the credit is available to small business employers paying at least half the cost of single coverage for their employees.

Go to www.irs.gov, search: Health Care Tax Credit.

The American Recovery and Reinvestment Act (ARRA) of 2009 contains several tax provisions that affect businesses including the following.

COBRA Changes

The Recovery Act outlines changes to the health benefit provisions of the Consolidated Omnibus Budget Reconciliation Act of 1985. The provision affects former employees and other potential COBRA payers such as insurance carriers.

ARRA provides a 65 percent subsidy for up to 15 months of the cost of COBRA coverage for an employee who was involuntarily terminated from his/her job from September 1, 2008, through May 31, 2010. The former employee must have been enrolled in an employer provided health plan at the time of involuntary termination to qualify for the credit.

The eligible former employee must pay 35 percent of the total premium and the former employer claims the remaining 65 percent of the total premium as a credit on Line 12a of Form 941, Employer’s Quarterly Federal Tax Return. The credit was first available with the first quarter Form 941 due April 30, 2009. The credit is subject to verification requirements, so the former employer must keep adequate documentation to support the credit claimed.

The COBRA subsidy is available to people who become eligible for COBRA coverage as a result of a reduction in hours occurring between September 1, 2008, and May 31, 2010, followed by an involuntary termination between March 2, 2010 and May 31, 2010. Individuals who did not take COBRA coverage after the reduction in hours or who signed up but later dropped it, get another chance to sign up for COBRA coverage.

Go to www.irs.gov, search: COBRA.

Earned Income Tax Credit

Help your employees increase their take-home pay at no cost to you!

Please help the IRS alert your employees about a valuable tax credit that could put up to $5,600 in their pockets.  If you have employees who earned less than $48,000 in 2010, they may qualify for the Earned Income Tax Credit, or EITC. However, IRS estimates that up to one in four qualifying individuals will fail to claim and receive the credit. With your assistance, we can reduce that number.

However, before taxpayers can receive EITC, they must first file federal income tax returns, even if they are not otherwise required to file. Some states have a similar tax credit, increasing the dollars due these employees.

IRS has several resources to help you inform your employees about EITC. Go to the EITC employer page for links to technical information, communication toolkits and marketing materials. Corporate Voices, a leading nonprofit nonpartisan organization that represents the private sector on working family policy issues, also publishes a downloadable employer EITC guide which you can access by clicking here.

Some relatively inexpensive ways you can alert your employees about EITC include:

  • Posters in employee break rooms
  • Messages on your company intranet site
  • Articles in your company newsletter
  • A link from your intranet site to EITC information on www.irs.gov
  • E-mail messages to your workforce
  • Stuffers with your Form W-2 mail-out
  • Leveraging other internal communication channels
  • Including EITC information in new employee orientations

Article Provided By:

The PCS Team

Legal Disclaimer: This article is intended for informational purposes only and by no means should replace or substitute other legal documents (governmental or non-governmental) reflecting similar content or advice. If you have any questions concerning your situation or the information provided, please consult with an attorney, CPA or HR Professional.