The filing extension applies to tax-exempt organizations with January and February filing due dates which now have until March 30, 2012, to file their yearly returns.

The IRS said that it is granting this extension of time to file because the part of the e-file system that processes electronically filed returns of tax-exempt organizations will be offline during January and February. The agency stressed that the rest of the e-file system will continue to operate normally.

In general, the extension applies to tax-exempt organizations whose normal filing deadline is either January 17 or February 15, 2012. Ordinarily, these deadlines would apply to organizations with a fiscal year that ended on August 31 or September 30, 2011, respectively. The extension also applies to organizations that already obtained an initial three-month filing extension and now have an extended filing deadline that falls on January 17 or February 15, 2012. However, the IRS says that the majority of tax-exempt organizations will be unaffected by this extension because they operate on a calendar-year basis and have a May 15 filing deadline.

In order to avoid receiving a late filing penalty notice, the agency is advising tax-exempt organizations affected by the changes to attach a ‘reasonable cause’ statement to their tax return. Late-filing penalties will be abated, however, if these organizations contact the IRS. The agency has encouraged these organizations to consider either e-filing early (before the end of December) or waiting until March to file electronically.

If your organization is in default or needs to get in compliance, don’t overlook the deadline extension and contact us immediately to bring your organization up to date. A Gonzalez CPA partner can be reached at 877-914-2500, we can assist you in all 50 states.

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The changes in this final rule are applicable to any patent application in which a proper request for continued examination has been filed before, on, or after December 19, 2011.

“Our goal is to continually provide patent applicants with a variety of processing options that are more responsive to their real-world needs,” said Under Secretary of Commerce for Intellectual Property and Director of the USPTO, David Kappos.

Following passage of the Leahy-Smith ‘America Invents Act’ in September this year, the USPTO began accepting requests for prioritized examination of patent applications through the Track I prioritized patent examination program.

Track I provides applicants with greater control over when their applications are examined and promote greater efficiency in the patent examination process. Track I allows inventors and businesses, for a fee, to have their patents processed within 12 months.

Under the procedure set forth in this final rule, it is said that, once the application is accorded special status after the filing of a request for continued examination, it will be placed on the examiner’s special docket throughout its entire course of continued prosecution before the examiner until a final disposition is reached in the application.

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Small Business Saturday

Saturday, November 26, 2011 is Small Business Saturday® – a day to celebrate and support small businesses and all they do for their communities.  Please join the SBA and organizations across the country in supporting your local small business by shopping at a small business.

How You Can Participate

For shoppers
Pledge to “Shop Small” on November 26, 2011
Share our video promoting Small Business Saturday®

For small business owners
Get free Small Business Saturday® marketing materials – including sample posters, press releases, and social media updates
Join Small Business Saturday® on Facebook and spread the word on other social media
Learn about holiday marketing best practices
For partner organizations and other government agencies
Follow, friend, and like SBA on social media for all the latest updates on #SmallBizSat

Additional information
SBS-American Express

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Managing federal, state and local employee-related regulations can be a time-consuming and potentially costly challenge. Our firm takes this responsibility off your hands with solutions that manage a range of payroll requirements. The value in this program is in the minimization of risk and in reducing the probability of fines and penalties. Our firm is in association with nation wide providers that manage small to large accounts with ease.

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The SEC alleges that Pompano Beach, Fla.-based DHB Industries (now known as Point Blank Solutions) engaged in pervasive accounting and disclosure fraud through its senior officers and misappropriated company assets to personally benefit the former CEO. This resulted in the filing of materially false and misleading periodic reports to investors. The SEC further alleges that outside directors Jerome Krantz, Cary Chasin, and Gary Nadelman were willfully blind to numerous red flags signaling the accounting fraud, reporting violations, and misappropriation at DHB.

How can you protect yourself against charges like these? Engaging with a reputable firm that will keep you updated on all financial and compliance matters will minimize the risk. Further, a firm like ours can assist you in developing policies and procedures that will separate various critical duties to minimize the risk of fraud.

For more information on our internal controls consultancy please contact us or schedule an appointment.

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Observation: It could be a busy year for tax legislation, even if only a fraction of the tax changes in the budget are enacted.

Observation: A number of provisions in the President’s FY 2011 budget wound up being enacted, such as the removal of cell phones from the listed property category, enhanced writeoffs for business buying machinery and equipment, and the extension of a number of popular tax breaks for individuals.

Tax proposals for businesses and investors include:

Expanding the research credit by nearly 20% and making it permanent.
Revamping the Federal Unemployment Tax Act (FUTA) tax. Currently, the tax is 6.2% through June of 2011, and 6.0% for the remainder of calendar year 2011 and later years. It’s levied on the first $7,000 paid each employee as wages during the calendar year. Under the budget proposal, the FUTA rate would remain at 6.2% after June of 2011, and, beginning in 2014, the FUTA wage base would be raised to $14,000.
Repealing the use of the LIFO inventory accounting method. Taxpayers currently use this method would be required to write up their beginning LIFO inventory to its FIFO value in the first tax year beginning after Dec. 31, 2012, but this one-time increase in gross income would be taken into account ratably over ten years, beginning with the first tax year beginning after Dec. 31, 2012.
Repealing current law’s boot-within-gain limitation in the case of any reorganization transaction if the exchange has the effect of the distribution of a dividend, as determined under Code Sec. 356(a)(2). This would apply for tax years beginning after Dec. 31, 2011.
Taxing as ordinary income a partner’s share of income on an “investment services partnership interest” (ISPI) in an investment partnership, regardless of the character of the income at the partnership level. The partner would have to pay self-employment taxes on such income, and gain recognized on the sale of an ISPI would generally be taxed as ordinary income, not as capital gain. In general, an ISPI would be defined as a carried interest in an investment partnership that is held by a person who provides services to the partnership. These changes would apply for tax years beginning after Dec. 31, 2011.
Barring a deduction for punitive damages. Where the liability for punitive damages is covered by insurance, such damages paid or incurred by the insurer would be included in the gross income of the insured person. These changes would apply to damages paid or incurred after Dec. 31, 2012.
Repealing the lower-of-cost-or-market inventory accounting method, and the subnormal goods method, effective for tax years beginning after Dec. 31, 2012.
Repeal the additional information reporting requirements imposed by the Affordable Care Act, but requiring businesses to file an information return for payments for services or for determinable gains aggregating to $600 or more in a calendar year to a corporation (except a tax-exempt corporation). Regulatory authority would be provided to make appropriate exceptions where reporting would be especially burdensome. Information returns would not be required for payments for property. These changes would be effective for payments made after Dec. 31, 2011.
Requiring all corporations and partnerships that must file Schedule M-3 to file returns electronically, effective for tax years beginning after Dec. 31, 2011.
Permitting IRS to require prospective reclassification of workers who are currently misclassified and whose reclassification has been prohibited under current law. This would apply upon enactment, with a transition rule.
Eliminating tax preferences (e.g., expensing of intangible drilling costs, enhanced oil recovery credit, production tax credit for marginal wells, percentage depletion) for oil, gas and coal companies.
Replacing the current Code Sec. 179D deduction for energy efficient commercial building property with a more generous and effective tax credit that will encourage building owners to retrofit their properties.
Imposing a financial crisis responsibility fee on certain liabilities of the largest firms in the financial sector. The fee would apply after 2012, would be reported on the federal income tax return, and would be deductible in computing corporate tax.
Effective for forward contracts entered into after 2011, requiring a corporation that enters into a forward contract to issue its stock to treat a portion of the payment on the forward issuance as a payment of interest.
Repealing the exception from the pro rata interest expense dis-allowance rule for contracts covering employees, officers or directors, other than 20% owners of a business that is the owner or beneficiary of the contracts. This would apply to contracts issued after Dec. 31, 2011, in tax years ending after that date. Any material increase in the death benefit or other material change in the contract would be treated as a new contract except that in the case of a master contract, the addition of covered lives would be treated as a new contract only with respect to the additional covered lives.
Effective for tax years beginning after the enactment date, requiring dealers in commodities, commodities derivatives dealers, dealers in securities, and dealers in options to treat the income from their day-to-day dealer activities in Code Sec. 1256 contracts as ordinary in character, not capital.
Effective on the enactment date, amending the definition of “control” in Code Sec. 249(b)(2) to incorporate indirect control relationships of the nature described in Code Sec. 1563(a)(1).
Reinstating Superfund excise taxes for periods after 2011 and before 2022, and reinstating the corporate environmental income tax for tax years beginning after 2011 and before 2022.
Reforming the current Code Sec. 30D credit for purchasers of electric vehicles by allowing dealers to claim it, with clear transparency requirements to ensure the benefit of the credit is passed on to consumers.
Making permanent the Code Sec. 179 rule allowing up to $125,000 to be expensed. (Under current law, the maximum expensing amount is $500,000 for tax years beginning in 2010 or 2011, dropping down to $125,000 for tax years beginning in 2012, and then falling to $25,000 for tax years beginning after 2012.)
Making permanent the Code Sec. 1202 rule excluding all gain on qualified small business stock. (Under current law, the exclusion applies only for disposition of qualified stock acquired before 2012.)
Extending Build America Bonds (BABs) at a 28% subsidy rate, and expand them to cover a broader set of investment such as capital infrastructure projects and financing for nonprofit colleges and hospitals.
Replacing the current tax deduction for energy efficient commercial building property with a more generous and effective tax credit that will encourage building owners to retrofit their properties.

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Five common eye myths dispelled

Myth: Doing eye exercises will delay the need for glasses.

Fact: Eye exercises will not improve or preserve vision or reduce the need for glasses. Your vision depends on many factors, including the shape of your eye and the health of the eye tissues, none of which can be significantly altered with eye exercises.

Myth: Reading in dim light will worsen your vision.

Fact: Although dim lighting will not adversely affect your eyesight, it will tire your eyes out more quickly. The best way to position a reading light is to have it shine directly onto the page, not over your shoulder. A desk lamp with an opaque shade pointing directly at the reading material is the best possible arrangement. A light that shines over your shoulder will cause a glare, making it more difficult to see the reading material.

Myth: Eating carrots is good for the eyes.

Fact: There is some truth in this one. Carrots, which contain vitamin A, are one of several vegetables that are good for the eyes. But fresh fruits and dark green leafy vegetables, which contain more antioxidant vitamins such as C and E, are even better. Antioxidant vitamins may help protect the eyes against cataract and age-related degeneration. But eating any vegetables or supplements containing these vitamins or substances will not prevent or correct basic vision problems such as nearsightedness or farsightedness.

Myth: It’s best not to wear glasses all the time. Taking a break from glasses or contact lenses allows your eyes to rest.

Fact: If you need glasses for distance or reading, use them. Attempting to read without reading glasses will simply strain your eyes and tire them out. Using your glasses won’t worsen your vision or lead to any eye disease.

Myth: Staring at a computer screen all day is bad for the eyes.

Fact: Although using a computer will not harm your eyes, staring at a computer screen all day will contribute to eyestrain or tired eyes. Adjust lighting so that it does not create a glare or harsh reflection on the screen. Also, when you’re working on a computer or doing other close work such as reading or sewing, it’s a good idea to rest your eyes briefly every hour or so to lessen eye fatigue. Finally, people who stare at a computer screen for long periods tend not to blink as often as usual, which can cause the eyes to feel dry and uncomfortable. Make a conscious effort to blink regularly so that the eyes stay well lubricated and do not dry out.

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We are working closely with the IRS to process all tax returns as quickly as their systems will allow, but we suggest that tax professionals stagger the number of returns they submit over the course of the week, rather than submit all returns on the first day or two of processing.

As a result of the IRS staged transmissions over the course of the week of Feb. 14-18, some customers may experience delays in return processing and in the time it takes to receive their refunds. However, we expect that all processing should be back into the standard processing flow by Friday, Feb. 18, and, based on our projections, we believe that the vast majority of Intuit’s professionally prepared returns will be accepted normally throughout the week.

Helping the IRS manage its systems capacity in the first week of e-filed submissions – in this unusual year of forms delays – is in the interest of achieving a successful season for our tax professionals and their clients. Although we understand getting your clients’ refunds quickly is important, we also know that the IRS is processing returns as rapidly as possible.

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The enactment of HR 4851 results in the following:

Individuals who experience(d) a loss of coverage due to an involuntary termination occurring on or after September 1, 2008 and on or before May 31, 2010 are eligible for the subsidy.
Individuals who lost coverage due to a reduction of hours on or after September 1, 2008 and who are subsequently involuntarily terminated from employment on or after March 2, 2010 and on or before May 31, 2010 are eligible for the subsidy. These individuals must be notified of their subsidy eligibility within 60 days of the involuntary termination regardless of whether or not they elected COBRA based on the reduction of hours qualifying event. COBRA coverage elected based on the involuntary termination event is effective as of the first coverage period following the involuntary termination. HOWEVER, the 18-month COBRA coverage period is measured from the reduction of hours event. Consequently a gap in coverage may exist between the dates of the reduction of hours and involuntary termination qualifying events. The 15-month subsidy period is measured from the involuntary termination event.
An individual who experiences a qualifying event that is termination of employment on or after April 1, 2010 and prior to April 15, 2010 and who has previously been provided an Election Notice not containing the HR 4851 provisions (extension of subsidy through May 31, 2010) must be provided a new Election Notice and new 60-day election period. This notice must be provided within the required timeframe for providing a COBRA Election Notice. COBRA coverage elected and paid will be effective as of the termination of employment qualifying event date. However, only those individuals who lose coverage due to an involuntary termination are eligible for the COBRA premium subsidy. Individuals who are now eligible for the subsidy and had previously paid for a subsidy eligible period (e.g. April of 2010) in fully may be entitled to a refund or credit.
In response to this legislation, ADP is working to accommodate these changes. ADP will continue to monitor legislative guidance regarding the American Recovery and Reinvestment Act as it becomes available. Check back often for updates regarding other components of the legislation or subscribe to our RSS feed for updates.

COBRA Update – 12/24/09

On December 19, 2009, the Department of Defense Appropriations Act of 2010 (HR 3326) was signed into law by President Obama. As a result of the enactment of this legislation, the Consolidated Omnibus Budget and Reconciliation Act (COBRA) premium subsidy provided under the American Recovery and Reinvestment Act of 2009 (ARRA) has been extended. HR 3326 extends the duration of the subsidy from nine months to 15 months and extends the deadline for eligibility from December 31, 2009 to February 28, 2010.

In response to this legislation, ADP is working to accommodate these changes. As we take action to make our client’s HR experience better, we will continue to notify clients accordingly.

For more information on the COBRA ARRA premium subsidy provisions, please see ADP Tech Flex.
In response to a large number of questions received regarding eligibility for the COBRA premium reduction under current law, The Employee Benefits Security Administration updated the COBRA page, www.dol.gov/COBRA , to add new FAQs at http://www.dol.gov/ebsa/faqs/faq-cobra-arra.html . Visitors are encouraged to subscribe to the COBRA page for updates.
The stimulus plan includes changes to the way COBRA assistance is provided to employees. Click here to learn more on COBRA changes.
Existing ADP COBRA clients click here for additional information.
Tax Credit Incentive Update – 3/5/09

The stimulus plan includes a variety of changes and additions to tax credit/incentive programs, such as the Work Opportunity Tax Credit program. Click here to learn more.
Making Work Pay Tax Credit Update – 3/4/09

The Making Work Pay provision of the stimulus plan gives workers a rebate/credit for the 2009 and 2010 tax years. Click here to learn more about the Making Work Pay tax credit.
Expanded Earned Income Tax Credit (EITC) Update – 3/3/09

There is a temporary increase in the Earned Income Tax Credit. Click here to learn more about the expanded Income Tax Credit.
Commuter Benefit Update – 2/25/09

The IRS has increased the limit for pre-tax contributions and benefit limits under the Commuter Benefits Transit Accounts. The new limit will take effect March 1, 2009. Click here to learn more on Commuter Benefits Transit Account changes.

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Newly Enacted Tax Legislation to Affect Employers on January 1st

On December 17, 2010, President Obama signed into law H.R. 4853, the Tax Relief Unemployment Insurance Re-authorization and Job Creation Act Of 2010, which will affect every U.S. employer and several areas of payroll, tax and benefits administration in January.

The most significant provisions involving payroll administration include:

• The so-called Bush Tax Cuts enacted in 2001 and 2003 have been extended at all income levels through 2012. Without this legislation, federal withholding would have increased substantially on January 1, 2011.
• Specifically, the Economic Growth and Tax Relief Reconciliation Act of 2001 (“EGTRRA”) created a 10-percent income tax bracket, and reduced income tax rates of 28 percent, 31 percent, 36 percent and 39.6 percent to 25 percent, 28 percent, 33 percent, and 35 percent, respectively. The new law in effect generally keeps income tax rates at the same levels as those in effect for 2010.
• The employee Social Security tax rate for wages paid in 2011 has been reduced to 4.2 percent from 6.2 percent. The Social Security wage base remains $106,800, and the employer Social Security tax rate remains 6.2 percent. The maximum Social Security withholding for 2011 will be $4,485.60, compared to $6,621.60 for 2010.
• Employer-provided Educational Assistance under IRC §127 was scheduled to expire after 2010. The new law extends IRC §127 tax benefits through 2012. Up to $5,250 annually of educational assistance provided by an employer to an employee is excluded from gross income for income tax purposes and from wages for employment tax purposes. This exclusion applies to both graduate and undergraduate courses.
• Employer-provided Adoption Assistance is also extended for one year (2012). Adoption credit and exclusion from income for employer-provided adoption assistance provided a maximum adoption credit and a maximum exclusion of $13,170 per eligible child. After 2011, the maximum credit and exclusion would have been reduced to $6,000. The new law extends these benefits for one year. For 2012, the maximum benefit is $12,170 (indexed for inflation).
• Employer-provided Child Care Tax Credit: Employers may receive a tax credit for eligible employer-provided child care expenses. This tax credit would have expired after 2010, but is now extended through 2012.
• The Act also maintains tax parity for Qualified Transportation Fringe Benefits under IRC §132 for employer-provided mass transit and parking benefits.
• Qualified transportation benefits include parking, transit passes, van-pool benefits, and qualified bicycle commuting reimbursements. The American Recovery and Reinvestment Act of 2009 increased the monthly exclusion for employer-provided van-pool and transit pass benefits to the same level as the exclusion for employer-provided parking ($230 for 2010). The ARRA limits were set to expire on December 31, 2010. The provision extends the parity in qualified transportation fringe benefits through 2011.
• The employer wage credit for Military Differential Pay was also extended for eligible small businesses. These employers are allowed to take a credit against income tax liability of 20 percent of differential wage payments to qualified active duty members of the uniformed services. The credit was to expire after 2010, but is now extended to amounts paid in 2011.
• Empowerment Zone Tax Incentives, including the income tax credit for hiring qualifying employees, were extended through 2011. A 20-percent credit is available to employers for the first $15,000 of qualified wages paid to each employee (i.e., a maximum credit of $3,000 per qualified employee).
• The Work Opportunity Tax Credit (WOTC) was scheduled to expire after August 2011, but is now extended for individuals who begin work for an employer before January 1, 2012. WOTC generally provides for tax credits of 40 percent of qualified first-year wages up to $6,000; i.e., a maximum per-employee credit of $2,400.
• Those employers utilizing ADP’s payroll service are well positioned to seamlessly remain in compliance with these and many other provisions in the Tax Relief Unemployment Insurance Re-authorization and Job Creation Act Of 2010.

Employers may want to consider adding brief explanations to initial 2011 paychecks. The Making Work Pay Tax Credit, a credit of roughly $400 per worker built into the federal tax tables, will expire after December 31, so some workers may inquire about a small increase in income tax withholding, and/or the reduced Social Security tax withheld.

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