No, we aren’t talking about floral arrangements. The federal tax deposit system, or FTD, is used to collect various taxes including employment taxes and corporate income tax. (It isn’t used by individual taxpayers filing their income tax returns, so they aren’t affected by this announcement.) The system has long accepted and encouraged electronic payments, and fewer than 10% of the payments are still made with old-fashioned paper coupons. Apart from being less efficient, the paper coupons account for a disproportionately large number of errors and penalties. Beginning next year paper coupons will be eliminated and all these deposits will have to be made electronically.
Archive for the ‘Business Taxation’ Category
FTD Goes Paperless
Friday, August 20th, 2010Congress to Debate 1099 Reporting
Tuesday, August 10th, 2010Under current law, a business paying more than $600 for services provided by an individual other than an employee must report that payment to the IRS on Form 1099. One of the revenue provisions in the Patient Protection Act expands the Form 1099 reporting requirements to include payments to corporations (other than exempt organizations), and payments for property and other “gross proceeds.” The provision, which applies to payments after 2011, is aimed at preventing tax avoidance by individuals and companies receiving those payments. It has the virtue of raising government revenue without imposing a tax increase, yet it’s controversial because of the paperwork burden it imposes on companies making the payments. Senate debate of the small business tax bill early next month will include consideration of amendments to repeal or amend this requirement before it goes into effect. (more…)
Tanning: Not Quite a Top Ten List
Wednesday, June 30th, 2010Seeking to inform tanning salons of their obligations relating to the 10% excise tax that takes effect July 1, the IRS has circulated a list of nine tips concerning the law. (more…)
Friday Wrapup
Friday, June 25th, 2010This week’s biggest story is continuing gridlock on tax legislation, derailing the extenders law and threatening to block others. (more…)
Friday Wrapup
Friday, June 11th, 2010The most active piece of tax legislation right now bears the name American Jobs and Closing Tax Loopholes Act of 2010. Congress is working on other tax legislation as well, including tax breaks for small business and a permanent fix for the estate tax. Here’s where things stand. (more…)
Ending S Corporation Employment Tax Abuse
Friday, May 21st, 2010The extenders legislation currently under consideration (see related post) would shut down a method of avoiding employment tax (including self-employment tax) used by many individuals who earn money from personal services. A dentist, for example, who earns $90,000 in fee income might form an S corporation to receive that income, and pay himself a salary of $2,000 per month, taking the rest of the money as a distribution (dividend). He would still pay income tax on the entire $90,000, but avoid paying Social Security and Medicare tax on the amount above his salary $24,000. These arrangements are subject to challenge by the IRS, but the tax agency doesn’t have the resources to pursue all the individuals who use this technique. (more…)
Form Released for Payroll Tax Exemption
Wednesday, May 19th, 2010Businesses hiring unemployed workers can qualify for an exemption from paying the 6.2% Social Security payroll tax this year. The IRS has released a revised version of Form 941 that can be used to claim the exemption beginning with the second quarter of 2010. (more…)
