by Bantonelli on February 17, 2012
The Temporary Payroll tax cut Continuation Act of 2011 temporarily extends the 2% payroll tax cut for employees, continuing the reduction of their Social Security tax withholding rate from 6.2 % to 4.2% of wages paid through February 29, 2012. This reduced Social Security withholding will have no effect on employees’ future Social Security benefits. Employers should implement the new payroll tax rate as soon as possible in 2012 but not later than January 31, 2012. For any Social Security tax over-withheld during January, employers should make an offsetting adjustment in workers’ pay as soon as possible but not later than March 31, 2012.
by Bantonelli on January 31, 2012
Q. What is an FBAR?
A. An FBAR is a Report of Foreign Bank and Financial Accounts. The form number is TD F 90-22.1. FBAR rules were established to protect against international terrorism. The reports filed as a result of this regulation provide leads to investigators that facilitate the identification and tracking of illicit funds or unreported income, as well as providing additional prosecutorial tools to combat money laundering and other crimes.
Q. Who must file an FBAR?
A. Any US person who has a financial interest in or signature authority or other authority over any financial account in a foreign country, if the aggregate value of these accounts exceeds $10,000 at any time during the calendar year.
Q. What constitutes signature or other authority over an account?
A. A person has signature authority over an account if such person can control the disposition of money by delivery of a document containing his or her signature.
Q. When is the FBAR due?
A. The FBAR is due by June 30 of the year following the year that the account holder meets the $10,000 threshold. An extension to file Federal income tax returns does not extend the due date for filing an FBAR. Filers cannot request an extension of the FBAR.
Q. What happens if an account holder is required to file an FBAR and fails to do so?
A. Failure to file an FBAR when required to do so may potentially result in civil penalties, criminal penalties or both.
- Failure to File Penalty – up to $250,000 and/or up to 5 years in prison for any person ”willfully violating” the requirements to file.
- Fraud Penalty – up to $500,000 and/or up to 10 years in prison for any person “willfully violating” the requirements to file “as part of a pattern of any illegal activity involving more than $100,000 in a 12-month period.”
- False Information Penalty – fine or up to 5 years in prison for any person providing false, misleading, fictitious, or fraudulent statements on TD F 90-22.1; or up to 8 years in prison if the false information involves domestic or foreign terrorism.
by Bantonelli on January 26, 2012
Early in 2011, the IRS launched the VCSP which allows employers to reclassify their workers who were previously labeled “independent contractors” in error as employees for future tax periods.
IRS Update:
- The VCSP application (or rejection of) will not automatically trigger initiation of a Federal audit.
- The VCSP concerns future years only. A taxpayer that signs a VCSP closing agreement is not admitting liability or wrongdoing for past periods.
- The VCSP filing of Forms 1099 Requirement states “a taxpayer will be eligible for the VCSP if it files the required Forms 1099 within 6 months of their due date (including extensions).”
- The VCSP permits taxpayers to reclassify some or all of their workers; However, once a taxpayer chooses to reclassify its workers as employees, all workers in the same class must be treated as employees for tax purposes.
- The IRS will not share information about VCSP applicants with the Department of Labor or with States.
