• Rental property owners or recipients of rental property income must issue Forms 1099 to service providers for payments of $600 or more.  The 1099 Act repeals this provision, which would have become effective for payments made in calendar year 2011.
• Business must file form 1099 for all payees (including corporations) from whom they purchased goods or services aggregating $600 or more in the calendar year. The 1099 Act returns the rules to the prior legislation, requiring only organizations issue Form 1099s for services provided by attorneys and non-corporate entities where total payments were $600 or greater for the calendar year. 

As you might imagine, the administrative burden required by these additional 1099 reporting requirements would have been incredible, placing an unnecessary bookkeeping burden on small businesses.  Both business and rental property owners can breathe a sigh of relief that their workload just got a little bit lighter.  As always, if you have questions give us a call at the office 

 Bonus Depreciation allows businesses to claim a special first-year bonus depreciation allowance for eligible property acquired after December 31, 2007.  Under this rule, you can deduct 50% or 100% (for a limited time) of the property’s cost in the year it was placed in services, with the remaining cost to be subject to regular depreciation rules.  NOTE: Bonus depreciation can only be taken on new equipment, while the Section 179 deduction be taken on both new and used equipment.  

When applying these provisions, Section 179 is generally taken first, followed by Bonus Depreciation.  These provisions deliver a number of benefits to small business owners; however, they have limits and exceptions so give us a call to see if your business can take advantage of these tax breaks.

• Dedicate a computer or system for only online banking, especially EFT (ACH transactions and wire transfers).
• Log and monitor key computers or systems.
• Segregate EFT controls.  For example, one person performs online EFT function and a second person approves the transfer or verifies/reconciles that transaction.
• Reconcile EFT transactions daily.
• Dedicate clearing accounts using “just-in-time” deposits.  For example, set up a separate bank account for EFT transfers, and make deposits (or online transfers from a different computer) into that account just before a wire transfer occurs.  The risk is limited to a very brief time frame when money is available in the clearing account.  This type of fraud is a risk to many companies; however, it can be especially harmful to small to mid-size businesses because of the potential financial damage.  You can find more information about EFT fraud at on the FDIC website by visiting www.tinyurl.com/2cz9sto.

This type of fraud is a risk to many companies; however, it can be especially harmful to small to mid-size businesses because of the potential financial damage.  You can find more information about EFT fraud at on the FDIC website by visiting www.tinyurl.com/2cz9sto.

In light of these newly enacted requirements you should take proper steps to ensure compliance.  While these new requirements will create additional time and effort to maintain compliance in 2011, unfortunately there will be additional reporting requirements beginning January 1, 2012.   As always, if you have questions or concerns, give us a call at the office. 

“The Internal Revenue Service has issued several recent consumer warnings on the fraudulent use of the IRS name or logo by scamsters trying to gain access to consumers’ financial information in order to steal their identity and assets. When identity theft takes place over the Internet, it is called phishing.Suspicious e-Mail/Phishing
Phishing (as in “fishing for information” and “hooking” victims) is a scam where Internet fraudsters send e-mail messages to trick unsuspecting victims into revealing personal and financial information that can be used to steal the victims’ identity. Current scams include phony e-mails which claim to come from the IRS and which lure the victims into the scam by telling them that they are due a tax refund.

Generally, the IRS does not send unsolicited e-mails to taxpayers. Further, the IRS does not discuss tax account information with taxpayers via e-mail or use e-mail to solicit sensitive financial and personal information from taxpayers. The IRS does not request financial account security information, such as PIN numbers, from taxpayers.   

What to Do
Taxpayers who receive a suspicious e-mail claiming to come from the IRS should take the following steps:

• Avoid opening any attachments to the e-mail, in case they contain malicious code that will infect your computer.
• Avoid clicking on any links, for the same reason. Alternatively, the links may connect to a phony IRS Web site that appears authentic and then prompts for personal identifiers, bank or credit card account numbers or PINs.
• Visit the IRS Web site, http://www.irs.gov/, to use the “Where’s My Refund?” interactive tool to determine if they are really getting a refund, rather than responding to the e-mail message.
• Forward the suspicious e-mail or url address to the IRS mailbox phishing@irs.gov, then delete the e-mail from their inbox.

Consumers who believe they are or may be victims of identity theft or other scams may visit the U.S. Federal Trade Commission’s Web site for identity theft, http://www.onguardonline.gov/, for guidance in what to do. The IRS is one of the sponsors of this site.

More information on IRS-impersonation scams, identity theft and suspicious e-mail is available on IRS.gov.”

The complete article can be found here. 

• Construction of real property in the U.S. (Real property may consist of residential or commercial buildings, permanent structures, permanent land improvements, oil and gas wells, platforms, or pipelines and infrastructure.)
• Performance of engineering or architectural services in connection with real property construction projects in the U.S. (Examples include residential remodelers, commercial and institutional building construction contractors, electrical, plumbing, heating and air-conditioning contractors.)

Unfortunately, tangential services such as repairs or delivery of supplies (even if the services are essential for construction) or construction services that are cosmetic in nature (such as painting) are not considered eligible activities. 

The bottom line is that businesses engaged in qualified production activities will need to implement cost accounting mechanisms to make sure their tax deduction is accurately calculated.  The more complicated the business, the more complicated the math for calculating the amount of the deduction.  Since the rules are somewhat complicated, give us a call at the office to see if your business has taken advantage of this deduction.  This deduction is unpopular with lawmakers and may be repealed in the future. 

Enrolling in the program is relatively simple and easy to do.  While E-Verify is a voluntary program, participation in E-Verify is considered an affirmative defense to allegations of hiring undocumented workers.  For more information, give us a call at the office or visit www.dhs.gov/e-verify.

Health Insurance Premiums Can Be Deducted in Calculating 2010 Self-employment Taxes.  For 2010, health insurance premiums for self-employed individuals are allowed as an expense to reduce Self-Employment Tax (Social Security and Medicare tax).  This could be significant, especially if your health insurance premiums are considerable and you are a sole proprietor or single member LLC taxed as a sole proprietor. Small Business (Section 179) Expensing.  The new law doubles the maximum annual Section 179 deduction to $500,000 for eligible assets placed in service in tax years beginning in 2010 and 2011 (up from the previous $250,000 maximum).  Most type of depreciable personal property (including software and computers) qualify.  (Income and other limitations still apply).  In addition, some real property improvement costs now qualify for Section 179 deduction privilege.  Up to $250,000 of qualified improvement costs for interiors of leased nonresidential buildings, restaurant buildings, and interiors of retail buildings can be immediately deducted under Section 179, subject to related party and other limitations.

50% First Year Bonus Depreciation Retroactively Reinstate for 2010.  This covers qualifying new (not used) personal property assets and purchased software placed in service by 12/31/10. 

Bigger First-year Deprecation for New Autos and Light Trucks for 2010.  For new cars, bonus depreciation raises to the maximum first-year depreciation write off for 2010 to $11,060; for light trucks, the maximum is raised to $11,160 (assuming 100% business use).

There are a number of more specific provisions included in the tax legislation that affect businesses and individual returns.  Since these tax law changes are somewhat complicated, we would be happy to meet with you to determine if your business can take advantage of the provisions included in this legislation.

• Improve after tax cash flows due to accelerated tax depreciation.
• Claim “catch-up” depreciation on future tax returns for corrections in tax deprecation (without amending prior tax returns).

Studies can be performed on most all types of business properties, as long as they were built, acquired or renovated after 1987.  Since CSS can be expensive, it may only be cost effective for owners whose property is valued over $750,000 to $1 million and may be more beneficial with buildings used in specialty industries such as restaurants, hotels, etc.  Additionally, contractors may want to consider providing cost segregation information to their clients as a valued added service.  CSS is normally done by an appraiser or an engineering company specializing in cost segregation.  The results of the CSS are then given to the taxpayer’s CPA or tax advisor for income tax filings.  If you are interested in learning more about cost segregation, give us a call at the office to determine if CSS  is feasible for your business.