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On September 19, 2011, Commissioner Shulman and Secretary of Labor Solis signed a memorandum of understanding that will allow for the sharing of information intended to combat employee misclassification. The sharing of information and collaboration between the two agencies is intended to help reduce the incidence of misclassification, reduce the tax gap, and improve compliance with federal tax and labor laws. The increased collaboration will also strengthen the relationship between the IRS and DOL, enable both agencies to leverage existing resources and send a consistent ...
- For 2012, the employee's portion of Social Security tax would be 3.1%; the employer's portion would also be 3.1%, up to the first $5 million of wages paid by the employer. The tax on self-employed workers would be reduced to 6.2%.
- From October 1, 2011 through December 31, 2012, the proposed bill would provide a payroll tax credit to offset the employer portion of Social Security tax due to wage increases ...
In a speech to a joint session of Congress on September 8, 2011, President Obama proposed cuts to both employee and employer payroll taxes for 2012 and tax credits meant to encourage hiring of unemployed workers.
The President's proposal, the American Jobs Act, would cut employee Social Security payroll taxes in half in 2012. It would also reduce business payroll taxes by the same percentage on companies' first $5 million in wages and would completely eliminate payroll taxes for companies that increase their payroll by up to $50 million relative to the prior year. The payroll tax ...
In the September 2011 issue of BNA International's Transfer Pricing Forum, Jonathan and I summarized the dispute resolution process for transfer pricing controversies against the IRS. Transfer Pricing Forum provides an overview of selected transfer pricing issues under the tax laws of twenty-five countries. For U.S. tax professionals, the publication provides a succinct resource for addressing transfer pricing problems in foreign countries.
Apparently, there are a large number of U.S. citizens living outside the United States as well as a large number of individuals who are dual citizens of the United States and their country of residence (estimated to be in the millions). Judging from the phone calls that I have been receiving from my contacts at foreign law and accounting firms, a large number of them have recently become aware of the IRS Offshore Voluntary Disclosure Initiative (“OVDI”) providing reduced penalties for U.S. citizens who come forward to report previously undisclosed foreign financial accounts ...
In Chief Counsel Advice 201120021, the Service concluded that an enterprise's tool reimbursement plan failed the accountable plan business connection requirement because it impermissibly recharacterized wages and reimbursed employees for tool expenses incurred before the start of employment. The IRS reiterated its view that for an expense to satisfy the business connection requirement of the accountable plan rules, it is not sufficient for an employee to incur a deductible business expense but the expense must also arise in connection with the employment. Thus, since the ...
Last, year the IRS requested public comment on the continuing need for the high-low method for substantiating under IRC section 274(d), lodging, meal and incidental expenses incurred in traveling away from home. The IRS received no comments.
On July 19, 2011, IRS Announcement 2011-42 indicated that the IRS intends to discontinue authorizing the high-low substantiation method. The IRS will publish a revenue procedure providing the general rules and procedures for substantiating lodging, meals, and incidental expenses incurred in traveling away from home (omitting the ...
IRS's Small Business/Self-Employed (SB/SE) Division has issued an internal memorandum which provides that the trust fund recovery penalty may be imposed against third-party payroll service providers as well as the employer. IRC section 6672 imposes the TFRP on any person who: 1) is responsible for collecting, accounting for, and paying over payroll taxes; and, 2) willfully fails to perform the function. This is also known as the 100% penalty because it is equal to the amount of the tax that was no collected and paid.
This appears to represent a major policy change by the IRS, which ...