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BUSINESS FORUM

Increase in IRS Mileage Rates- July 2011

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The IRS has increased the optional standard mileage rates for the final six months of 2011. Although the mileage rates are normally updated once a year, in recognition of recent gasoline price increases the IRS has decided to increase the medical, moving, and business mileage rates by 4.5 cents. From July 1st 2011 through December 31st 2011 the standard mileage rates will be:

Business Mileage Rate

The standard mileage rate for business mileage will be 55.5 cent per mile

Medical or Moving Mileage Rate

The standard mileage rate for miles driven for medical or moving purposes will be 23.5 cents per mile

Charitable Mileage Rate

The standard mileage rate for miles driven in service of charitable organizations will be the same as the first half of 2011, at 14 cents per mile

US Immigration Audits on Forms I-9

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As part of the Dept. of Homeland Security, US Immigration announced that it will increase the number of employer I-9 audits. The US Immigration and Customs Enforcement will typically allow three business days to present the Forms I-9.

An employer may receive a monetary fine for all substantive and uncorrected technical violations. Monetary penalties for knowingly hire and continuing to employ violations range from $375 to $16,000 per violation. For an overview of the US Immigration Form I-9 Inspection see ICE_Form_I-9_Inspection_Overview

Employers, especially large employers, should consider conducting a self-audit of their Forms I-9 to ensure that they are in compliance. Certain industries such as agriculture, construction, food processing and staffing firms can expect to be targeted for these inspections, although no company will be immune.

New NJ Law helps Small Businesses

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A new NJ law which helps small businesses was signed by Gov. Christie on April 28, 2011.
S2754 will allow small business owners who pay their taxes through the personal income tax (S-Corps, LLC’s, LLP’s, sole proprietorships or partnerships) to carry forward net operating losses for 20 years. This carry forward provision is phased in over a five year period. The new law will also allow businesses to offset gains and losses from one category of income to another. Under the old law, losses from rental property owned individually could only offset other rental income, owned in a similar manner, for NJ purposes. Per the new law, if your firm is an S corporation, then you can offset a percentage of the losses from your investments in rental property from your S corp income. This is the case even though the rental property is not owned by an S corporation. If there is no income from which one can deduct the rental loss, the loss can be carried forward until there is business or rental income for up to twenty years.

What Percentage of my Business Losses Can I Deduct?

The first tax year in which one may deduct losses is 2012. Taxpayers may deduct 10% of their business losses from business income in 2012.  In 2013 one may deduct 20%. In 2014: 30%. In 2015: 40%. And in 2016 and subsequent years, one may deduct 50%.

Are there Planning Opportunities?

If you are the owner of a start-up company in 2011 operating as a sole proprietor, partnership or S corp, or if you expect a loss from your rental property in 2011, you should make efforts to defer the loss to 2012. By choosing different depreciation elections or methods and/or deferring expenses to 2012, you may be able to shift some of the loss into 2012, when 10% can offset other business income. Speak to one of our tax advisors for planning now before losing your loss. For a copy of the complete law see

NJ Law S2754– Deducting Business Losses

 

NJ Eases the Unemployment Tax Increase

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With NJ jobless rate fixed above 9 percent for two years, the unemployment fund has reached a soaring deficit. Such a deficit would normally trigger the highest possible tax rate for employers on July 1st. Fortunately, lawmakers stepped in and passed a bill (through the NJ Assembly) which would increase the tax to $58 per employee, down from $177 for employee if no legislative action were taken. The cost will then climb steadily over the next three years. The bill (S2730) heads to the Senate Budget Committee for approval. Here is a summary of  the proposed Bill S2730 in its entirety;2730_S1.

 

NJ Appoints Taxpayer Advocate

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NJ has established the Office of the Taxpayer Advocate. The Advocate will provide free and independent assistance to individuals who have been unsuccessful in resolving their tax problems with the NJ Div. of Taxation. The contact information is: State of NJ, Division of Taxation, Office of the Taxpayer Advocate, P.O. Box 240, Trenton, NJ 08695-0240. Fax:(609) 984-5147. EMail: nj.taxpayeradvocate@treas.state.nj.us

Repeal of 1099 information reporting requirements

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Congress repealed expanded 1099 information reporting requirements! On April 5th, the Senate approved the “Comprehensive 1099 Taxpayer Protection…Act of 2011”. This act retroactively repeals the expanded Form 1099 information reporting rules. As a result the original information rules remain which generally required payments totalling at least $600 in a single calendar year to a single recipient to be reported to the IRS. Reporting on Form 1099 is required only when the payor is considered to be engaged in a trade or business and has made payments in connection with that trade or business.