Thursday, October 27, 2011

IRS Shows Continued Progress on International Tax Evasion

The Internal Revenue Service has made progress with its ongoing battle against international tax evasion.  The IRS recently completed the Offshore Voluntary Disclosure Initiative (OVDI) program, giving U.S. taxpayers holding undisclosed assets or income offshore, a second chance to get compliant with the U.S. tax system to avoid potential criminal charges.
            The IRS conducted the same program in 2009 and collected a total of $2.2 billion.  It led to about 15,000 voluntary disclosures and another 3,000 applicants who came in after the deadline, but were allowed to participate in the 2011 initiative.  Between the two programs there has been a total of $2.7 billion collected.
            IRS commissioner Doug Shulman explained that his goal all along was to get people back to the U.S. tax system; not only that but to bring revenue into the U.S. Treasury.
            There are large amounts of fines and imprisonment if found guilty of tax evasion.  Americans need to understand that if they try to hide assets overseas, the chances of being caught continue to increase.  Do you have any financial investments abroad?  If so, please contact us to discuss any necessary filing requirements.

Friday, October 14, 2011

Noncash Fringe Benefits


          Get ready to calculate those noncash fringe benefits that need to be added to your 2011 payroll, prior to year end.  Various benefits to employees and owners can be taxable as compensation, and are subject to payroll taxes.  Noncash compensations must be reflected on  W-2s, payroll reports, and payroll tax payments.  It is critical that all calculations on this matter be made prior to your last payroll run of the year so that they may be included in a 2011 paycheck.  Avoid penalties and extra costs of amending your payroll reports by taking action at the appropriate time.   

           To make life a little easier, the IRS allows you to cut off your calculation as early as October 31. This allows you to gather your information and get it into a payroll two months early!  By acting now, you can gather your information, get it to us, and have your calculations back in time to decide which of the remaining payrolls of the year you want to include the noncash fringe benefits.

The following items are selected noncash fringe benefits
  • Employer-provided automobiles
  • Discriminatory benefits
  • Benefits provided to S corporation owners, partners, LLC members
  • Group term life insurance in excess of $50,000

Other items you may need to consider for correct payroll reporting include: Moving expenses, employee’s payroll taxes paid by the employer, medical savings accounts, cafeteria plans, adoption benefits, sick pay paid by a third party, coverage under an employer pension plan, and reimbursement of employee business expenses.

McDaniel & Company is now available to help you with your calculations.  Let us assist you in getting the right information into your payroll system.  We can also help you correctly report it to your third party payroll service if using one.