IRS Launches Voluntary Classification Settlement Program
Partial relief from federal employment taxes may be available to certain taxpayers
The Voluntary Classification Settlement Program (VCSP) is a new program that will allow taxpayers to reclassify their workers as employees for future tax periods, with limited federal employment tax liability for the past nonemployee treatment.
Keith WofseySummer Associates Tax Services
48 Union Street | Suite 1C Stamford | CT | 06906 tel. 203.327.4311 fax 203.327.4312 www.summertax.com
You can deduct car-related expenses that you incur during the course of your job or business. This includes traveling from one workplace to another in the course of your job or business; visiting clients, vendors or customers; and going to a business meeting away from your workplace. You can’t, however, deduct the costs of commuting to and from work.
The Commuting drive between your home and your work are nondeductible personal expenses.
If your Employers has established a The Pretax Commuter Benefit Program (which is a qualified transportation benefit program authorized by Internal Revenue Code (IRC) § 132), your employers Commuter Benefit Program may allow all or some of the following:
Parking at or near your work location or at or near a location from which you commute to work by car pool, commuter highway vehicle or mass transit. Out-of-pocket parking fees for parking meters, garages and lots qualify. Parking at or near your home is not an eligible expense.
Van-pooling in a commuter highway vehicle with a seating capacity of at least 7 adults, including the driver. At least 80 percent of the vehicle mileage must be for transporting employees between their homes and workplace with employees occupying at least one-half of the vehicle’s seats (not including the driver’s seat). Not all employees must work for the employer sponsoring the Commuter Benefit Program.
Transit passes, tokens, fare cards, vouchers, or similar items entitling you to ride a mass transit vehicle to or from work. The mass transit vehicle may be publicly or privately operated and includes bus, rail or ferry132
Keith WofseySummer Associates Tax Services
48 Union Street | Suite 1C Stamford | CT | 06906 tel. 203.327.4311 fax 203.327.4312 www.summertax.comBusinesses that must pay the monthly sales and use tax, business use tax, room occupancy tax and other levies will have until Sept. 7 to file.
The filing extensions will be granted in counties subject to federal or state declarations of emergency or disaster.
Keith WofseySummer Associates Tax Services
48 Union Street | Suite 1C Stamford | CT | 06906 tel. 203.327.4311 fax 203.327.4312 www.summertax.com| The IRS has publicized that the interest rates for tax underpayments and overpayments and for the calendar quarter starting Oct. 1, 2011, will reduce by 1%.For corporations, the underpayment rate for the fourth quarter of 2011 will be 3%. For large corporations, the underpayment rate will be 5%. The overpayment rate for the 4th quarter of 2011 will be 2%. Corporations will receive .5% for overpayments exceeding $10,000. For non-corporate taxpayers, the rate for both underpayments and overpayments for the 4th quarter of 2011 will be 3%. |
Summer Associates Tax Services
48 Union Street | Suite 1C Stamford | CT | 06906 tel. 203.327.4311 fax 203.327.4312 www.summertax.comRoughly 73,000 Connecticut employers in the state received bills last week for interest owed on $810 million the state borrowed in federal funds to pay unemployment insurance benefits.
The employers owe the federal government $30 million in interest for 2011, which the state’s Department of Labor tax unit has begun collection through a special assessment.
The special assessment established by the DOL equates to $1.70 for everyone $1,000 in taxable payroll with a maximum of $25.50 an employee.
Keith WofseySummer Associates Tax Services
48 Union Street | Suite 1C Stamford | CT | 06906 tel. 203.327.4311 fax 203.327.4312 www.summertax.comThis week the IRS provided IR-2011-77 in which they announced the Form 2290, HeavyHighway Vehicle Use Tax Return due date was extended three months from August 31 to November 30, 2011.
The IRS issued this extension in an attempt to alleviate any future confusion. Currently, the highway use tax is scheduled to expire on September 30, 2011, and the extension should prevent multiple filings if Congress decides to reinstate the credit or modifies the tax.
Keith WofseySummer Associates Tax Services
48 Union Street | Suite 1C Stamford | CT | 06906 tel. 203.327.4311 fax 203.327.4312 www.summertax.comMany clients have asked us when the updated Form 2290, Heavy Highway Vehicle Use Tax would beavailable. The IRS liaison we contacted is unsure when the 2011 Form 2290 would be available but advised we continue to check the Trucker Tax Center for updates. We will monitor this and let you know when the 2011 form becomes available.
Keith WofseySummer Associates Tax Services
48 Union Street | Suite 1C Stamford | CT | 06906 tel. 203.327.4311 fax 203.327.4312 www.summertax.comHere’s an overview of three common concerns:
Is a tax return required? The answer depends on several factors, including the total amount of income received. For instance, if wages are the only source of income, your child can generally earn up to $5,800 during 2011 before a federal tax return is necessary.
However, unless your child can claim an exemption from withholding, a return may be required even when wages earned are lower than the filing requirement. That’s because filing is the only way to claim a refund of overpaid taxes. In addition, self-employment income, tips, and interest, dividends, and stock sales can affect the filing requirement.
Can my child open an IRA? Anyone under age 70½ who has earned income can contribute to a traditional IRA. There’s no age restriction for Roth accounts, though the amount of the contribution phases out at higher income levels (starting at $107,000 for single individuals in 2011).
If your child will receive a federal income tax refund, you could choose to have it deposited directly into an IRA account. As an alternative, you can provide the funds for an IRA and let your child keep the refund. The maximum standard contribution for 2011 is $5,000.
Are there any tax breaks if my child works for me? You can take a business tax deduction when you pay a reasonable wage for work your child performs in your sole proprietorship or a partnership you and your spouse operate. In addition, as long as your child is under age 18, you don’t have to pay social security, Medicare or federal unemployment taxes. The wages are subject to income taxes.
If you have other questions about the tax implications of a summer job, give us a call. We’re happy to help.
Keith WofseySummer Associates Tax Services
48 Union Street | Suite 1C Stamford | CT | 06906 tel. 203.327.4311 fax 203.327.4312 www.summertax.comReports That the Swiss are Relaxing Tax Information Sharing Rules (7/6/11)
There are reports that the Swiss Government
in moving / inching toward real exchange of information under its double tax
treaties, which are (like the most U.S. tax treaties, based on the OECD Model
Treaty). See Swiss
Government Adopts OECD Standards On Bank Secrecy, Tax Offenses, Nasdaq
(7/6/11) which reports in part as follows:
ZURICH -(Dow Jones)- The Swiss government Wednesday adopted
standards on banking secrecy laid out by the Organization for Economic
Cooperation and Development, or OECD, which will allow foreign authorities to
pursue citizens suspected of using hidden Swiss accounts for tax evasion, and no
longer only for outright tax fraud.
MAIN FACTS:
* * * *
- In spring 2009, the Federal
Council took the decision to adopt in future the international standards set out
in Article 26 of the OECD Model Convention with respect to administrative
assistance in tax matters. According to this, international administrative
assistance should be possible not only in the case of tax fraud but also in the
case of tax evasion and for tax assessment. The implementation of this decision
requires appropriate wording in the double taxation agreements, or DTAs, with
other countries. Up to now, over thirty DTAs have been adapted or renegotiated.
Execution of administrative assistance must ensue under national law. To this
end, the Tax Administrative Assistance Act is to be introduced.
- The Act contains the principle that administrative
assistance will only be provided upon request in individual cases. No
administrative assistance will be provided by Switzerland if a request is based
on information which was acquired by acts which are punishable under Swiss law.
Information transmitted abroad is only allowed to be used to enforce Swiss tax
law, in so far as it could have been obtained in accordance with Swiss
law.
I will add more specific information as I learn of it. Whether
this move is real remains to be seen.
It would appear that John Doe
Treaty requests will not be allowed under this description. However, I suspect
that that too may be honored in the breach, although the only instance of a
John.Doe treaty request to Switzerland that I am aware of appears to be request
arising out of the UBS fiasco which the Swiss would like present and potential
furture clients to believe will never happen again.
There is also a
perhaps related report that some Swiss banks are blocking access to accounts
related to other country potential tax evasion. Elena
Logutenkova, Some Swiss Banks Are Blocking Access to Offshore Accounts Over Tax
Deals, Bloomberg (7/6/11). The report says:
Some Swiss banks are
blocking clients from gaining full access to offshore accounts in connection
with tax treaties being negotiated between Switzerland and Germany, the U.K. and
the U.S., the Swiss banking ombudsman said.
