Time is running out before the payroll tax rate automatically increases in two weeks, and the dispute over how to fund it continues.
The tax measure at issue would maintain the payroll tax rate at 4.2 percent for the year 2012 instead of allowing it to revert to 6.2 percent January 1. It’s a tax cut worth about $1,000 to families earning $50,000 a year. The payroll tax bill also would renew benefits for the long-term unemployed and prevent a cut in Medicare benefits for seniors.
This morning (December 19), the Associated Press reported that “Boehner spoke after a chaotic weekend in which Senate leaders first failed to agree on a full-year bill, then coalesced around the two-month extension that passed overwhelmingly, only to spark a revolt among GOP conservatives in the House.”
Here’s a summary of what’s been happening:
While the GOP-led House passed a bill on December 14 extending the tax cut, the legislation relied on a pay freeze and increased pension contributions for civilian federal employees. In addition, it raised Medicare premiums for seniors, and it raised a fee that’s charged to banks with mortgages guaranteed by Fannie Mae and Freddie Mac. The bill didn’t have the votes to pass the Senate.
On Friday, December 16, Senate leaders reached an agreement to pass a two-month extension on the payroll tax cut, keeping the 4.2 percent rate through February. The agreement requires the administration to decide within 60 days if the controversial 1,700-mile Keystone XL pipeline is in the nation’s best interests. Some environmental groups oppose the project, but several unions support it.
Senate Republican Leader, Mitch McConnell, said Keystone XL would create about 20,000 jobs. Critics say the figure would be fewer than 3,500, including fewer than 1,000 that would be permanent.
House Speaker, John Boehner, said Friday that his chamber will not sign off on an extension of the payroll tax cut without including a provision to force a quick decision on the pipeline construction.
Obama would prefer to postpone the controversial matter, and he threatened to veto any bill that forces a decision. Because the project crosses international borders, it requires White House approval. The administration complained that House Republicans are injecting “ideological issues into what should be a simple debate about cutting taxes for the middle class.”
QuickBooks Online, a cloud-based accounting solution for small businesses, has experienced 40 percent growth over the past year; it now has 280,000 users. More and more small business owners are reaping the benefits of anytime, anywhere access to their accounting records. Further, cloud-based solutions, such as QuickBooks Online, eliminate the need to install periodic software patches and updates because new features are added automatically.
While QuickBooks Online makes things easier for day-to-day users, it can make the accountants’ tasks harder because commands get buried within the software. In response to this, Intuit has introduced a new product: QuickBooks Online Accountant (QBOA). This add-on to QuickBooks Online is aimed squarely at helping accountants serve their clients more efficiently.
Figure 1: A single sign in grants access to multiple clients.
A simple sign in to QBOA gives the accountant access to all of his or her clients’ accounting records (see Figure 1). This dashboard allows accountants to maintain contact information for all of their online clients in one place.
Figure 2: The Accountant tab adds features and aggregates frequently used tools.
A new “Accountant” tab (see Figure 2) appears within a client’s books and enables access to several time-saving features. “This provides one place for all of an accountant’s tools and reports as well as a snapshot reconciliation of all accounts,” said Samir Khosla, director of product management for Intuit Accounting Professionals Division. “Plus, updates appear automatically, so the product always has the latest features.” (Keep in mind that only the accountant has access to the Accountant tab; it will not appear to end users when they sign in to QuickBooks Online.)
The Accountant tab assembles the most frequently used accountant tools on a single screen – the “Accountant Center.” Features include:
The ability to reclassify transactions in batch, which allows the accountant to change the general ledger account and/or class for multiple transactions all at one time.
A simple way to find deleted or voided transactions.
The ability to write off multiple invoices in batch.
A reconciliation snapshot that makes it easy to monitor bank and credit card accounts. QBOA also lists problems that can affect reconciliations, such as changed transactions and auto adjustments (see Figure 3). Khosla said, “This is one of my favorite features, as the accountant is notified if a client takes a shortcut during reconciliation.”
Figure 3: Reconciliation issues are brought to the accountant’s attention.
QBOA also offers some reporting enhancements:
Accountants can mark journal entries as “Adjusting Journal Entries” and then generate an adjusted trial balance report, also known as a working trial balance.
Comparison reports allow one-click access to this year/last year profit and loss and balance sheet reports. While such reports can be created in QuickBooks Online, they must be built by hand.
Accountants are invited to try QBOA free of charge during Intuit’s pilot phase. To access QBOA, go to http://accountant.intuit.com/qboa. According to Khosla, “the focus has been on time-savings, and eventually [QBOA] will be a subscription-based product.” Pricing will be announced after the pilot phase.
Intuit also is offering practitioners up to 6 free CPE credits through a virtual conference on cloud-based accounting and tax solutions. The conference will be presented November 15-16, 2011, from 10:00 a.m. to 5:00 p.m. central standard time.
Posted by AccountingWEB in Tax, Payroll Tax on 10/07/2011 – 08:38
By Ken Berry
The Internal Revenue Service (IRS) is extending an olive branch to employers that may have misclassified “employees” as “independent contractors.”
Under a new initiative announced by the IRS on September 21, 2011 (IR-2011-95), employers can resolve – at a low cost – uncertainties relating to the employment status of workers by voluntarily reclassifying workers. The Voluntary Classification Settlement Program (VCSP) enables employers to avoid time-consuming and potentially expensive audits by paying small amounts to cover past payroll tax obligations.
“Two features make the VCSP particularly attractive,” says Kathy Mort, a managing director with PwC’s Tax Controversy and Dispute Resolution department. “First, the cost of entering into an agreement under the VCSP is minimal and will make the program very appealing in many cases. For example, employers who are aware of potentially misclassified workers but have avoided reclassifying them prospectively because of the tax exposure such reclassification might cause for prior years, may seek an agreement under the VCSP. Additionally, the VCSP is structured so that participation in the program does not impact the affected worker’s prior year income tax return.”
The VCSP requires employers to prospectively treat workers as employees. It is generally available to businesses, tax-exempt organizations, and government entities that have mistakenly treated workers as nonemployees, including independent contractors. To qualify, an employer:
* Must have consistently treated the workers in the past as nonemployees; * Must have filed all required Forms 1099 for the workers for the previous three years; and * Cannot currently be under audit by the IRS, the Department of Labor, or any state agency concerning the classification of the workers.
An employer may apply for the VCSP by filing Form 8952, Application for Voluntary Classification Settlement Program, at least sixty days before it begins treating the workers as employees. Once an employer is accepted into the program, it must pay an amount effectively equal to slightly more than 1 percent of the wages paid to reclassified workers for the prior year. No interest or penalties will be due, and the employers will not be audited on payroll taxes relating to those workers for prior years. For the first three years in the program, participating employers are subject to a six-year statute of limitations instead of the usual three-year period that generally applies to payroll taxes.
This summer Pete McAllister and Dan Kittell presented at a luncheon in cooperation with WealthCare Partners on Social Security.
Dan Kittell presented on the beginnings of Social Security and it’s history while Pete McAllister presented on Taxation of Social Security Benefits. See short clips of them presenting below.
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Want to learn more about Taxation of Social Security benefits? you can call Pete McAllister at 317.549.3091.
The Indiana Department of Revenue wants taxpayers who sent in paper checks for payment of their 2010 income tax liability to anticipate that those checks could take until June 1, 2011 to process. The Department received about 500,000 paper returns and checks after the April 18 deadline. These returns and payments must be processed manually. Manual processing takes more time than processing returns and payments which were submitted electronically.
