Posts Tagged ‘IRS’

IRS Revises Mileage Reimbursement Rate for 2011

Tuesday, July 12th, 2011

In Announcement 2011-40, the Internal Revenue Service (IRS)  has revised the optional standard mileage rates for computing the deductible costs of operating an automobile for business purposes.  While gasoline costs are a major factor the IRS also considered depreciation and insurance and other fixed and variable costs when revising the rate from  $0.51 cents per mile to $0.55 cents per mile effective July 1, 2011. If your employee handbook follows the IRS optional standard mileage rates, please be sure to adjust your business mileage reimbursements.

The new six-month rate for computing deductible medical or moving expenses will also increase by 4.5 cents to 23.5 cents a mile, up from 19 cents for the first six months of 2011. The rate for providing services for charitable organizations is set by statute, not the IRS, and remains at 14 cents a mile.

Mileage Rate Changes

Purpose Rates 1/1 through 6/30/11 Rates 7/1 through 12/31/11
Business 51 55.5
Medical/Moving 19 23.5
Charitable 14 14

2011 Mileage Reimbursement Rates Increasing

Wednesday, December 29th, 2010

The Treasury Department has increased the standard mileage reimbursement rates effective January 1, 2011 ( although only a one cent increase)  to 51 cents per mile for business miles driven. Additional increased mileage rates are as follows:

  • 19 cents per mile driven for medical or moving purposes
  • 14 cents per mile driven for service of charitable organization

More information is availalbe at http://www.irs.gov/newsroom/article/0,,id=232017,00.html

Healthcare cost reporting not required on W-2 forms for 2011

Monday, October 18th, 2010

On October 12, 2010, the Internal Revenue Service (IRS) issued Notice 2010-69, which provides that the W-2 reporting of the cost of employees’ health coverage will be voluntary, rather than mandatory, for 2011.  The Patient Protection and Affordable Care Act originally would have required employers to report the total cost of health coverage on employees’ W-2 forms for 2011.

 The IRS  expects to issue additional guidance on the reporting requirements before the end of this year, however it recognizes that employers may need additional time to modify their payroll systems to comply with the new reporting requirement.   Based on Notice 2010-69 employers will not face a penalty if they do not report the cost of employer-provided health coverage on employees’ W-2s for 2011.

Healthcare Reform Intersects with 1099 Forms

Thursday, September 23rd, 2010

Many changes related to healthcare reform go into effect today, September 23, 2010, with more changes coming throughout 2011 and 2012.  One of the lesser known provisions of healthcare reform is a new requirement regarding submittal of 1099 forms.  Effective January 2012, the provision will require any business that purchases more than $600 worth of goods or services from another business to submit a 1099 tax form to the Internal Revenue Service.

 The Senate considered amending this provision as part of the Small Business Jobs and Credit Act of 2010, which passed just this week.  Neither amendments by Sens. Mike Johanns, R-Nebraska, and Bill Nelson, D-Florida, were able to achieve enough votes to move forward.

 The IRS is requesting public comment on how it can best implement the new law. Under the proposed regulations, businesses would have to report their payments to goods and other property, and payments to most corporations on Form 1099. Currently, most payments to corporations are currently exempt from this requirement. Purchases with debit cards and credit cards will remain exempt from this requirement because those are already reported by banks and other payment processors, the IRS said in a statement.  The public can submit comments by:

 •E-mail, with “Notice 2010-51″ in the subject line (Notice.Comments@irscounsel.treas.gov)
•Posting a letter to: Internal Revenue Service, CC:PA:LPD:PR ( Notice 2010-51), Room 5203, P.O. Box 7604, Ben Franklin Station, Washington, DC 20044; and
•Hand-delivering a comment letter to CC:PA:LPD:PR (Notice 2010-51), Courier’s Desk, Internal Revenue Service, 1111 Constitution Avenue NW, Washington, DC, between 8 a.m. and 4 p.m., Monday through Friday.
The deadline for comments is Sept. 29, 2010.

Employer Healthcare Reform Update- IRS Ruling on FSA

Wednesday, September 15th, 2010

The IRS has issued guidance on statutory changes concerning the use of certain flexible spending arrangements, also known as flexible spending accounts (FSAs), to pay for over-the-counter medicines and drugs.  The Affordable Care Act (ACA) established a new uniform standard that applies to FSAs and health reimbursement arrangements,  (HRAs). The standard is effective Jan. 1, 2011.

Under the new standard, the cost of an over-the-counter medicine or drug cannot be reimbursed from the account unless a prescription is obtained. The change does not affect insulin, even if purchased without a prescription, or other health care expenses such as medical devices, eye glasses, contact lenses, co-pays and deductibles.

The standard applies only to purchases made on or after Jan. 1, 2011.   Employees can  submit claims for medicines or drugs purchased without a prescription in 2010 and can still be reimbursed in 2011, if allowed by the employer’s plan.

A similar rule goes into effect on Jan. 1, 2011 for Health Savings Accounts (HSAs), and Archer Medical Savings Accounts (Archer MSAs).

Additional information can be found at the IRS website.   For details on the current rules see Publication 969.  Details on the changes are found in  Notice 2010-59 and Revenue Ruling 2010-23.

Contractor or Employee? Misclassification of employees key enforcement issue in 2010

Thursday, April 29th, 2010

The Department of Labor (DOL) announced that $12 million of its 2011 budget will go towards increasing enforcement of wage and overtime laws involving misclassification of employees.

The U.S. Secretary of Labor Hilda L. Solis addressed the need to “secure minimum and overtime wages and to help middle class families remain in the middle class. Working on the issue of misclassification is key to attaining those goals because misclassification of employees as independent contractors deprives employees of critical workplace protections and employment benefits to which they are legally entitled.”

As state and federal governements look for additional revenue cracking down on employers who misclassify employees can generate needed funds stated an article recently reported  in the New York Times.

Currently misclassification is not against the law, but its practices often violate labor and tax laws, such as failing to pay employees overtime or minimum wage.  Congress is also considering additional regulations on this issue.

For additional information and resources visit the IRS website to download the Independent Contractor vs Employee Guide or view KPA’s webinar, Contractor or Employee: How to Tell the Difference.

HIRE Act Forms Now Available (Claim $1000 per new hire)

Wednesday, April 14th, 2010

Ready to start hiring?  Don’t forget to claim your tax credits for each new hire who has been unemployed for at least 60 days.  The IRS has released the new W-11 form used by employees to certify eligibility.  To claim the HIRE Act tax credit employers will also have to submit  Form 941 .  Form 941 is currently available in a draft form with the final version available next month.

  Additional information on the HIRE Act and available tax credits can be found in the April KPA Newsletter or by attending the free KPA webinar Easy Money: Tax Credits for Dealerships.

Department of Labor (DOL) investigation and enforcement in 2010

Wednesday, February 3rd, 2010

Investigation and enforcement is the Department of Labor’s focus in 2010. Despite an overall reduction of $300 million in discretionary spending, the Department of Labor will ask Congress for an increase in workplace enforcement funding of $67 million, or 4 percent, according to the budget it released on Monday, February 1.

In an online video statement and Q&A, Secretary of Labor Hilda Solis  emphasized department funding for investigation and enforcement along with training programs. The agency request for fiscal year 2011, which begins October 1, 2010, totals $117 billion.   Secretary Solis indicated that the $1.7 billion allocated in the DOL budget for worker protection programs would allow the agency to restore staffing to 2001 levels. Of the 350 employees that the department expects to add over the next fiscal year, 177 are investigators and other enforcement staff.

For instance, the Wage and Hour Division would receive $244 million in funding, a $20 million increase, and hire 90 new investigators. The Occupational Safety and Health Administration would get $573 million, an increase of about $14 million.  OSHA will add 25 new inspectors in 2011 and reallocate 35 to enforcement from a program that helps businesses comply with safety laws.

“We need to decide whether we will spend our limited resources on supporting those companies who really ‘get it,’ who are doing a great job at protecting their employees,” Solis said. “Or do we spend our scarce resources on companies that disregard workplace safety and allow workers to die in situations that could easily have been prevented?”

The department also indicated that it is going to crack down on employers that define workers as independent contractors rather than employees. Critics say the move allows companies to pay lower wages and benefits. As part of a joint initiative with the Department of Treasury, the DOL budget includes $25 million to target “misclassification” and hire 100 additional enforcement personnel.

Are your HR and OHSA programs in compliance? If not you might want to think about improvements before one of the new investigators comes  knocking at your door.

Join the conversation- do you agree with the emphasis on investigation and enforcement?

COBRA Premium Subsidy Extended

Tuesday, December 22nd, 2009

The COBRA Premium Subsidy has been extended with President Obama signing into law on December 21st.

The bill would extend the nine-month, 65 percent premium federal subsidy by six months. The change would apply to those who are involuntarily terminated through February 28, 2010, and would also would provide another six months of subsidized coverage for beneficiaries whose nine-month COBRA premium subsidy has run out.

In addition, the legislation would give beneficiaries whose subsidy expired and who didn’t pay the full premium the opportunity to receive retroactive coverage. For example, a beneficiary whose nine months of subsidized coverage ran out November 30 and who didn’t pay the unsubsidized premium for December could pay his or her 35 percent share in January and receive COBRA coverage for December.

The legislation requires employers to notify current and future COBRA beneficiaries of the new 15-month premium subsidy. Employers can offset future COBRA premiums or issue refund checks for beneficiaries who overpaid their COBRA premium.  This could happen if a beneficiary whose subsidy ran out in November paid the full premium rather than the 35 percent share in December.

To learn more about how the extension of the COBRA subsidy will impact your company register for a free webinar on How to Solve the  Riddle of Employee Leave Law on January on January 7th presented by John Boggs, nationally recongized labor and employment attorney.

IRS Reducing Mileage Reimbursement Rate for 2010

Wednesday, December 16th, 2009

The standard-mile rate for business miles driven will be 50 cents per mile in 2010, down from 55 cents per mile in 2009 and from 58.5 cents in the second half of 2008. According to the IRS notice, the reduction reflects a reduction in travel related expenses.

Beginning on January 1, 2010, the standard mileage rates for the use of a car (also vans, pickups or panel trucks) will be:

  • 50 cents per mile for business miles driven
  • 16.5 cents per mile driven for medical or moving purposes
  • 14 cents per mile driven in service of charitable organizations

The optional business standard mileage rate is used to compute the deductible costs of operating an automobile for business use in lieu of tracking actual costs. This rate is also used as a benchmark most  businesses to reimburse their employees for mileage.

Employers that use the IRS standard mileage rate to reimburse employees may deduct the reimbursement as a business expense. If employers use the approved rate (or a lower rate), the IRS considers that requirements to substantiate and adequately account for the expense are satisfied without extensive documentation of actual expenses.