January 15

Terri recently sat down with Suzanne Kearns of Intuit Quickbooks to discuss what options small-business owners have available to them when they find themselves behind in their taxes owed to the IRS. Here are some highlights from Terri’s interview:

Small Business Center: What are some of the reasons that small-business owners fall behind in their taxes owed to the IRS?

Terri Brunsdon: One example is that a business suffers an economic slump and, instead of paying taxes, it pays vendors. The biggest issue I encounter is a business’s failure to remit payroll tax withholdings. Because payroll withholdings are fiduciary taxes (meaning it has been collected from employees on behalf of the IRS), the IRS will hold the business owners, accountant, and any other responsible parties personally liable for the tax.

What power does the IRS have over business owners to force them to pay overdue taxes?

If a business fails to pay its taxes, the IRS can levy and lien its assets. To levy means the IRS seizes financial assets, usually cash in bank accounts or payments from customers. On the other hand, a lien is public notice that the IRS has a priority claim on the business’s assets that must be satisfied before they may be sold. A lien also affects the credit rating of the business. If the unpaid tax is fiduciary, the IRS can levy or lien the assets of the owners and any other responsible party.

To learn more about Terri’s advice to small-business owners, read the full interview from Intuit Quickbooks.

February 28

On February 26, 2014, the Ohio Senate passed bill S.B.243 that authorizes an annual three-day sales tax holiday the first Friday in August. The bill covers items such as computers (less any manufacturer’s rebate) costing $1,000 or less, computer supplies (less manufacturer’s rebate) costing $750 or less, clothing costing $100 or less, school supplies costing $20 or less and school instructional materials costing $20 or less. The legislation was co-sponsored by Senators Faber, Hit, Hughes, Jones, Lehner, Obhof, Oelslager and Schaffer. The bill now goes to the House for approval.

February 12

Have you ever wondered what is “alternative minimum tax” and how it affects you? To answer the first question, alternative minimum tax, AMT for short, was enacted in 1969 as an attempt to make sure that wealthy taxpayers – usually taxpayers having the largest tax deductions – paid at least a “minimum” amount in tax. However, middle income taxpayers soon found themselves subject to the tax because Congress had failed to inflation index the AMT exemption brackets (exemption brackets are per filing status, dollar based thresholds used to exempt taxpayers from the tax). In 2013, Congress finally passed an AMT fix by permanently inflation indexing the brackets.

So does AMT affect you? You may be subject to AMT if you have taxable income, plus certain deductions, exceeding your AMT exemption bracket. For 2013, the exemption bracket for Single or Head of Household filers is $51,900. If you file Married Filing Joint or Qualifying Widow(er), the exemption is $80,800. For Married Filing Separate, the exemption is $40,400.

The rules for calculating AMT are complex. However, in a nutshell, you begin with taxable income as computed under regular tax rules and add back certain Schedule A deductions (like state and local income taxes, investment interest expense, certain home mortgage interest, etc.) and other deductions like net operating losses, certain depletion and depreciation expenses, etc. You then compute the amount of alternative tax that would be due on the AMT taxable income. If the alternative tax is higher than the regular tax, you pay the alternative tax. In other words, if the amount of tax you owe under normal tax rules is not high enough, you must pay the higher alternative tax.

You should contact your tax or legal advisor if you would like more guidance on how AMT affects you. In addition, the IRS provides an AMT Assistant tool to help you assess.

 

June 25

IRS Formalizes Employer Mandate Delay in Providing Health Insurance

The Internal Revenue Service has issued a formal notice that officially delays the employer shared responsibility provisions of the Affordable Care Act, also known as the employer mandate, for a year and postpones the information reporting requirements.

The announcement gives larger employers an additional year to comply with the health care reform law. The requirements will instead begin in January 2015 for employers with 50 or more full-time employees (or the equivalent in full- and part-time employees) to offer quality affordable health insurance to employees or face a $2,000 fine per employee if the employee receives a premium tax credit for purchasing individual coverage on one of the upcoming health insurance exchanges.

Source: http://www.accountingtoday.com/news/IRS-Formalizes-Employer-Mandate-Delay-Providing-Health-Insurance-67392-1.html