IRS announced that SSA IRS Reporter Fall Issue is now available for download at IRS.gov

The SSA IRS Reporter is available in PDF format and english and spanish language.

The SSA IRS Fall report contains information on American Recovery and Reinvestment Act of 2009 Provides Energy Incentives for Businesses

Download SSA/IRS Reported Fall Issue from here

IRS has announced that the 2010 IRS Tax Calendar for Small Businesses and the Self-Employed is now available for pre-order at IRS.gov.  The 2010 IRS Tax calender is available in english and spanish language.

This 2010 Tax Calender edition is a 12-month wall calendar filled with useful information on general business taxes, IRS and SSA customer assistance, electronic filing and paying options, retirement plans, business publications and forms, and common tax filing dates. Each page highlights different tax issues and tips that may be relevant to small business owners with room on each month to add notes, state tax dates, or business appointments.

You can pre-order now at this page. Please note that English version of the 2010 Tax Calendar will be shipped on November 1

The American Recovery and Reinvestment Act Stimulus Bill provided $300 million to states for consumer rebates on the following ENERGY STAR qualified appliances:

• central air conditioners
• heat pumps (air source and geothermal)
• boilers
• furnaces (oil and gas)
• room air conditioners
• clothes washers
• dishwashers
• refrigerators/freezers
• water heaters

Each state will develop its own rebate program, and has the flexibility to select which appliances to include and what rebate amounts to offer.

State plans are due to DOE by October 15, 2009.  Once approved, and the funds are disbursed, states can begin to roll out their programs.  Rebates could be available for consumers by late 2009 or early 2010, though this will vary by state.

Amounts commonly offered range from $50 to $250, depending upon the product being purchased, purchase price, and other market factors. Federal tax credits and other financial incentives may be claimed for the same products, as long as they qualify under the rules of the programs and are not specifically excluded.

Federal law requires you, as an employer, to withhold taxes from your employees’ paychecks. Each time you pay wages, you must withhold – or take out of your employees’ paychecks – certain amounts for federal income tax, social security tax, and Medicare tax. Under the withholding system, taxes withheld from your employees are credited to your employees in payment of their tax liabilities.
Who Must File Form 941?

Use Form 941 to report the following amounts.

Do not use the Form 941 to report backup withholding or income tax withholding on nonpayroll payments such as pensions, annuities, and gambling winnings. Report these types of withholding on Form 945, Annual Return of Withheld Federal Income Tax. you must file a return for each quarter.

If you sell or transfer your business, you and the new owner must each file a Form 941 for the quarter in which the transfer occurred. Report only the wages you paid.

Download IRS Form 941 from here

Download IRS form 941 instructions from here

How to Deal with an IRS Notice if ever you receive one? Most americans are confused, terrified by the IRS notice showing up in their mailbox. However history says that you can very well handle the IRS notice without any need to panic.

Every year, IRS sends millions of letters and notices to taxpayers. Many taxpayers will receive this correspondence during the late summer and fall. Here are eight things every taxpayer should know about IRS notices – just in case one shows up in your mailbox.

1. Don’t panic. Many of these letters can be dealt with simply and painlessly.
2. There are number of reasons the IRS sends notices to taxpayers. The notice may request payment of taxes, notify you of a change to your account or request additional information. The notice you receive normally covers a very specific issue about your account or tax return.
3. Each letter and notice offers specific instructions on what you are asked to do to satisfy the inquiry.
4. If you receive a correction notice, you should review the correspondence and compare it with the information on your return.
5. If you agree with the correction to your account, usually no reply is necessary unless a payment is due.
6. If you do not agree with the correction the IRS made, it is important that you respond as requested. Write to explain why you disagree. Include any documents and information you wish the IRS to consider, along with the bottom tear-off portion of the notice. Mail the information to the IRS address shown in the upper left-hand corner of the notice. Allow at least 30 days for a response.
7. Most correspondence can be handled without calling or visiting anIRS office. However, if you have questions, call the telephone number in the upper right-hand corner of the notice. Have a copy of your tax return and the correspondence available when you call to help us respond to your inquiry.
8. It’s important that you keep copies of any correspondence with your records.

If you still need help, You can either consult an IRS Tax Attorney or call IRS for help.

IRS has issued an updated guidelines for the new modernized E-file MeF platform used for IRS form 1040.

Software Developers and Transmitters who currently participate in the e-file program and want to participate in the 1040 MeF program can update their e-file application to add “MeF Internet, XML” as a transmission method on their “Forms” page for Form 1040. While updating your application, please also verify that your “Primary Contact” information is not missing and contains current information.

Please note that this doesn’t impact Electronic Return Originators who already participate in the 1040 e-file program – no application change is necessary in order to participate in 1040 MeF. Of course, EROs who are new to the 1040 program must complete their application as usual.

Recap:  What do current 1040 e-file participants have to do:
ERO – nothing
States – nothing (IRS will update the state’s e-file application to include participation in 1040 MeF)
Software Developer – add “MeF Internet, XML” as a transmission method
Transmitter – add “MeF Internet, XML” as a transmission method
Note: a participant who is a developer and a transmitter will need to update both roles

Via: IRS.gov

This notice is for all software developers, Return Transmitters and Authorized IRS e-file Providers/EROs.

IRS has updated the Form 1120/1120F/1120S and 7004 for Tax Year 2009.  The Tax Year 2009 Form Family 1120/1120F/1120S and 7004 Schemas, Business Rules and Release Memo have been posted on IRS.gov.

You can access the new files from the Valid XML Schemas and Business Rules for 1120/1120F/1120S/7004 Modernized e-File (MeF) on IRS.gov.

If you have any questions regarding the new files, you can contact IRS e-Help Desk at 1-866-255-0454.

IRS has officially announced the inflation adjustment factor and phase-out amount for the enhanced oil recovery credit for taxable years beginning in the 2009 calendar year.  The IRS  Notice 2009-73 also contains the previously published figures for taxable years beginning in the 1991 through 2008 calendar years.

The notice contains a major update on Oil Recovery Tax Credit. The enhanced oil recovery credit under § 43 for
any taxable year is reduced if the “reference price,” determined under § 45K(d)(2)(C), for the calendar year preceding the calendar year in which the taxable year begins is greater than $28 multiplied by the inflation adjustment factor for that year.

The credit is phased out in any taxable year in which the reference price for the preceding calendar year exceeds $28 (as adjusted) by at least $6.

Although most people won’t be filing their tax returns for several months, the dog days of summer are actually a great time to start planning for the tax filing season by ensuring your records are organized.  Whether you are an individual taxpayer or a business owner, you can avoid headaches at tax time with good records because they will help you remember transactions you made during the year.

Here are a few things the IRS wants you to know about recordkeeping.

Keeping well-organized records also ensures you can answer questions if your return is selected for examination or prepare a response if you are billed for additional tax. In most cases, the IRS does not require you to keep records in any special manner. Generally speaking, you should keep any and all documents that may have an impact on your federal tax return.

Individual taxpayers should usually keep the following records supporting items on their tax returns for at least three years:

• Bills
• Credit card and other receipts
• Invoices
• Mileage logs
• Canceled, imaged or substitute checks or any other proof of payment
• Any other records to support deductions or credits you claim on your return

You should normally keep records relating to property until at least three years after you sell or otherwise dispose of the property. Examples include:

• A home purchase or improvement
• Stocks and other investments
• Individual Retirement Arrangement transactions
• Rental property records

If you are a small business owner, you must keep all your employment tax records for at least four years after the tax becomes due or is paid, whichever is later. Examples of important documents business owners should keep Include:

• Gross receipts: Cash register tapes, bank deposit slips, receipt books, invoices, credit card charge slips and Forms 1099-MISC
• Proof of purchases: Canceled checks, cash register tape receipts, credit card sales slips and invoices
• Expense documents: Canceled checks, cash register tapes, account statements, credit card sales slips, invoices and petty cash slips for small cash payments
• Documents to verify your assets: Purchase and sales invoices, real estate closing statements and canceled checks

Source: IRS Publication 552

If you are a small business owner, whether you hire people as independent contractors or as employees will impact how much taxes you pay and the amount of taxes you withhold from their paychecks. The tax rate structure differs a lot for employee and a independent contracts. Lets understand the tax implications for hiring them.

IRS has listed down top ten most important things you should consider as a business owner about hiring people as independent contractors versus hiring them as employees.

1. Three characteristics are used by the IRS to determine the relationship between businesses and workers: Behavioral Control, Financial Control, and the Type of Relationship.
2. Behavioral Control covers facts that show whether the business has a right to direct or control how the work is done through instructions, training or other means.
3. Financial Control covers facts that show whether the business has a right to direct or control the financial and business aspects of the worker’s job.
4. The Type of Relationship factor relates to how the workers and the business owner perceive their relationship.
5. If you have the right to control or direct not only what is to be done, but also how it is to be done, then your workers are most likely employees.
6. If you can direct or control only the result of the work done — and not the means and methods of accomplishing the result — then your workers are probably independent contractors.
7. Employers who misclassify workers as independent contractors can end up with substantial tax bills. Additionally, they can face penalties for failing to pay employment taxes and for failing to file required tax forms.
8. Workers can avoid higher tax bills and lost benefits if they know their proper status.
9. Both employers and workers can ask the IRS to make a determination on whether a specific individual is an independent contractor or an employee by filing a Form SS-8 – Determination of Worker Status for Purposes of Federal Employment Taxes and Income Tax Withholding – with the IRS.
10. You can learn more about the critical determination of a worker’s status as an Independent Contractor or Employee at IRS.gov