Archive for the ‘Business Taxation’ Category

Taxing Internet Sales

April 23, 2013
By Kaye A. Thomas

If you read the Wall Street Journal, you may be aware that legislation dealing with Internet sales is moving forward. Monday, the Senate voted 74 to 20 in favor of opening debate on the measure. [Update: the Senate subsequently passed the bill; action in the House is pending with the outcome uncertain at this point.] The picture of this legislation painted on the Journal’s editorial pages is misleading, however.

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Proposed Regs on Indebtedness Basis for S Corporation Shareholders

June 12, 2012
By Kaye A. Thomas

The IRS has issued proposed regulations explaining when an S corporation shareholder can claim basis from a loan to the corporation. The most significant development here is clarification of when the IRS will respect “back-to-back” loan arrangements, in which an S corporation shareholder borrows from one entity in order to make a loan to the S corporation.

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IRS Loosens up on Local Lodging

May 4, 2012

The IRS has issued proposed regulations that would make it easier to deduct “local lodging” costs — in other words, staying overnight when not away from home. The new rules provide a safe harbor for certain local lodging at a business meeting, conference, or other activity or function. Other local lodging expenses may be deductible as business expenses depending on the facts and circumstances. Although these rules will officially take effect when final regulations are published, the IRS says taxpayers can rely on them now, including on returns that have already been filed but for which the statute of limitations for claiming a refund has not expired (generally returns for years 2009 or later).

Resource: Proposed regulation in the Federal Register (PDF)

Unpopular Paperwork Requirement Appears Doomed

February 4, 2011

It turns out there’s one feature of the healthcare reform law just about everyone agrees on. A provision requiring increased reporting of payments by businesses using Form 1099 was designed to increase government revenues by some $44 billion without increasing taxes. Yet the paperwork burden brought complaints from all quarters, reaching such a level that President Obama mentioned the need to repeal this provision in his State of the Union address. Repeal had been stymied by disagreement over how to prevent a $44 billion increase in the projected budget deficit. The Senate has now voted overwhelmingly in favor of repeal with a provision that calls for unspecified cuts in spending.

FTD Goes Paperless

August 20, 2010

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.

Congress to Debate 1099 Reporting

August 10, 2010

Under 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

June 30, 2010

Seeking 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

June 25, 2010

This week’s biggest story is continuing gridlock on tax legislation, derailing the extenders law and threatening to block others. (more…)

Friday Wrapup

June 11, 2010

The 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

May 21, 2010

The 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…)


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