Important Notice

To ensure compliance with the requirements imposed on us by IRS Circular 230 (31 C.F.R. 10.33 – 10.37, et. Seq.), we inform you that to the extent the information on this page mentions any federal tax matter, it is not intended or written and cannot be used, for the purpose of avoiding Federal Tax penalties.

The information contained in this website is for informational purposes only and is not and does not constitute legal advice on any subject. Receipt of this information does not create an attorney-client relationship. Do not act or refrain from acting based upon this information without seeking your own professional legal counsel.

Friday, September 30, 2011

Deceased Spouse's Unused Exemption Amounts

Starting in 2011, any unused exemption amounts of a deceased spouse (up to $5 million) may be passed along to the surviving spouse, even if there was no estate planning. The new portability election allows estates of married taxpayers to pass along the unused part of their exclusion amount to their surviving spouse. However, to make the portability election, a Form 706 must be timely filed with the IRS, even if the form would not otherwise be required. Form 706 is due 9 months after the date of death, and an extension may be obtained for an additional 6 months (but must be requested prior to the original deadline).
Note: Returns are due on October 3, 2011 for spouses that died on January 1, 2011!

Wednesday, September 28, 2011

Employee or Independent Contractor? New IRS Program to the Rescue

The issue:  Is a person that does work for you or your company an employee or an independent contractor?

If you classify the person incorrectly as an independent contractor, you may be liable for unpaid taxes.

According to the IRS:

The IRS has started a new program that will enable many employers to resolve past worker classification issues by voluntarily reclassifying their workers. This new program will allow employers the opportunity to get into compliance by making a minimal payment covering past payroll tax obligations rather than waiting for an IRS audit....

The new Voluntary Classification Settlement Program (VCSP) is designed to increase tax compliance and reduce burden for employers by providing greater certainty for employers, workers and the government. Under the program, eligible employers can obtain substantial relief from federal payroll taxes they may have owed for the past, if they prospectively treat workers as employees. The VCSP is available to many businesses, tax-exempt organizations and government entities that currently erroneously treat their workers or a class or group of workers as nonemployees or independent contractors, and now want to correctly treat these workers as employees.

The requirements to qualify are set forth as follows:
  • Consistently have treated the workers in the past as nonemployees,
  • Have filed all required Forms 1099 for the workers for the previous three years
  • Not currently be under audit by the IRS, the Department of Labor or a state agency concerning the classification of these workers
If you have any questions regarding this program, please let me know.