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…)
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Congress to Debate 1099 Reporting
August 10, 2010
August 10, 2010
Employers Reap Benefits of HIRE Act
August 2, 2010
Earlier this year President Obama signed into law the Hiring Incentives to Restore Employment Act, or HIRE Act. A new estimate from the Treasury indicates that some 5.6 million eligible workers have been hired in the months from February through June, qualifying the businesses that hired them for billions of dollars in exclusions and credits.
To be eligible, a business must hire an individual who has been out of work at least eight weeks. The cost of hiring is reduced by eliminating the employer-paid portion of Social Security tax through the end of the year. (This exclusion does not reduce the individual’s Social Security benefit.) If the individual remains employed for twelve months, the employer can receive an additional $1,000 credit.
August 2, 2010
Earlier this year President Obama signed into law the Hiring Incentives to Restore Employment Act, or HIRE Act. A new estimate from the Treasury indicates that some 5.6 million eligible workers have been hired in the months from February through June, qualifying the businesses that hired them for billions of dollars in exclusions and credits.
To be eligible, a business must hire an individual who has been out of work at least eight weeks. The cost of hiring is reduced by eliminating the employer-paid portion of Social Security tax through the end of the year. (This exclusion does not reduce the individual’s Social Security benefit.) If the individual remains employed for twelve months, the employer can receive an additional $1,000 credit.
Small Business Tax Bill Stalls
July 29, 2010
A day after it appeared there was a breakthrough to permit Senate action on the small business tax bill, negotiations hit a snag that apparently will prevent movement until after the August recess. The parties were unable to reach agreement on what amendments Republicans would be permitted to offer for floor consideration, and sixty votes to close debate are not available without such agreement.
July 29, 2010
A day after it appeared there was a breakthrough to permit Senate action on the small business tax bill, negotiations hit a snag that apparently will prevent movement until after the August recess. The parties were unable to reach agreement on what amendments Republicans would be permitted to offer for floor consideration, and sixty votes to close debate are not available without such agreement.
GRAT Restrictions Removed From Law
July 28, 2010
[Corrected] Congress has approved a war funding bill that does not include the new restrictions on grantor retained annuity trusts, or GRATs, that had appeared in an earlier version of the bill. The key provision imposes a minimum ten-year term on these trusts used in estate planning. Although the provision was eliminated from this law, it is likely to appear in later legislation as it is part of President Obama’s budget proposal.
For fuller discussion see our earlier reporting on this development: Last Gasp for Short GRATs?
Correction: An earlier version of this entry indicated that the GRAT restrictions were included in the bill as passed by Congress.
July 28, 2010
[Corrected] Congress has approved a war funding bill that does not include the new restrictions on grantor retained annuity trusts, or GRATs, that had appeared in an earlier version of the bill. The key provision imposes a minimum ten-year term on these trusts used in estate planning. Although the provision was eliminated from this law, it is likely to appear in later legislation as it is part of President Obama’s budget proposal.
For fuller discussion see our earlier reporting on this development: Last Gasp for Short GRATs?
Correction: An earlier version of this entry indicated that the GRAT restrictions were included in the bill as passed by Congress.
Senate to Act on Small Business Tax Bill
July 28, 2010
Following agreement by Majority Leader Harry Reid to allow floor consideration of Republican amendments, the Senate appears poised to move forward with the small business tax bill. In addition to providing various tax benefits to small business, the Senate version of the bill would permit rollovers from regular 401k accounts to designated Roth accounts within the same plan. The most recent version would also eliminate the advance earned income credit.
It isn’t clear what amendments Republicans will offer, but a likely candidate is a repeal of the expanded Form 1099 reporting requirement that was included in the healthcare legislation.
July 28, 2010
Following agreement by Majority Leader Harry Reid to allow floor consideration of Republican amendments, the Senate appears poised to move forward with the small business tax bill. In addition to providing various tax benefits to small business, the Senate version of the bill would permit rollovers from regular 401k accounts to designated Roth accounts within the same plan. The most recent version would also eliminate the advance earned income credit.
It isn’t clear what amendments Republicans will offer, but a likely candidate is a repeal of the expanded Form 1099 reporting requirement that was included in the healthcare legislation.
Friday Wrapup
July 23, 2010
Tax news of interest to investors came mainly from the courts this week, though the IRS gave paid tax return preparers something to groan about. (more…)
July 23, 2010
Tax news of interest to investors came mainly from the courts this week, though the IRS gave paid tax return preparers something to groan about. (more…)
Anticipated Tax Rates for 2011
July 13, 2010
Federal income tax rates are set to change next year. We need to be taking these anticipated changes into account right now as we make decisions about such matters as tax management of investments, retirement plan contributions, and Roth conversions. We’ve added a page that explains the Obama proposal on tax rates and tracks developments on this issue.
July 13, 2010
Federal income tax rates are set to change next year. We need to be taking these anticipated changes into account right now as we make decisions about such matters as tax management of investments, retirement plan contributions, and Roth conversions. We’ve added a page that explains the Obama proposal on tax rates and tracks developments on this issue.
Friday Wrapup
July 9, 2010
Tax developments were a little slow for this shortened holiday week, but we managed to find several interesting topics to cover, including a court ruling on exempt status for an organization formed for the purpose of . . . well, you’ll just have to read on. (more…)
July 9, 2010
Tax developments were a little slow for this shortened holiday week, but we managed to find several interesting topics to cover, including a court ruling on exempt status for an organization formed for the purpose of . . . well, you’ll just have to read on. (more…)
Last Gasp for Short GRATs?
July 6, 2010
It appears that the grantor retained annuity trust, or GRAT, is about to lose much of its flexibility. Legislation to curtail the popular estate planning tool has been on the table for some time. Just days after the Senate removed GRAT provisions from the pending small business legislation, the House plugged it into a supplemental appropriations bill that provides funding for the troop surge in Afghanistan, among other measures. Assuming the bill is passed by the Senate, the measure would apply to transfers occurring after the date President Obama signs it into law. (more…)
July 6, 2010
It appears that the grantor retained annuity trust, or GRAT, is about to lose much of its flexibility. Legislation to curtail the popular estate planning tool has been on the table for some time. Just days after the Senate removed GRAT provisions from the pending small business legislation, the House plugged it into a supplemental appropriations bill that provides funding for the troop surge in Afghanistan, among other measures. Assuming the bill is passed by the Senate, the measure would apply to transfers occurring after the date President Obama signs it into law. (more…)
Friday Wrapup
July 2, 2010
A rare break in congressional gridlock produced some actual tax legislation this week, albeit of limited scope. In addition, it appears we may be heading toward an expansion in the use of Roth retirement accounts. (more…)
July 2, 2010
A rare break in congressional gridlock produced some actual tax legislation this week, albeit of limited scope. In addition, it appears we may be heading toward an expansion in the use of Roth retirement accounts. (more…)
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