New California Use Tax Registration Required for Small Businesses

The California State Board of Equalization (BOE), pursuant to newly added Section 6225 of the Revenue and Taxation Code, is now requiring “qualified purchasers” to register with the Board of Equalization (BOE).  In an effort to collect sales and use tax on internet and out of state purchases, this seems to be another effort by the state government to raise revenue to deal with the budget deficit.

In general, persons or businesses that collect at least $100,000 in gross receipts per calendar year and are not otherwise already registered with the BOE, must register as a “qualified purchaser”.  Additionally, qualified purchasers must then file a return and pay the associated tax for the 2009 calendar year by April 15, 2010.  Additionally, the BOE is requesting these individuals and businesses report and pay tax on purchases from 2007 and 2008 as well, which were due by January 31st of the following years, and is not offering any abatement of related penalties and interest.

The BOE has started sending registration forms and an explanatory letter to businesses throughout the state.  Following is a link to the notice and application recently received by Nienow & Company, LLP:

http://img202.imageshack.us/img202/1260/im451020091025113908.pdf

Please contact us if you would like assistance with registration under this plan.

Filed under: State Taxes, Tax

California –Corporate, Personal Income Taxes: Tax Relief Available to Santa Cruz County Wildfire Victims

The California Franchise Tax Board (FTB) has announced special corporation franchise and income and personal income tax relief available to California taxpayers affected by the recent wildfires in Santa Cruz County. Taxpayers that have lost homes or suffered property damages as a result of the fires can quickly get some financial relief by immediately claiming their disaster losses on their tax returns.

The Franchise Tax Board has instructed that taxpayers claiming the disaster losses should write "California Wildfires 2009" in red ink at the top of their tax returns to alert the FTB to expedite tax refunds. Original and amended return forms for the 2008 tax year are available on the FTB’s Web site at http://www.ftb.ca.gov.

Taxpayers needing copies of lost or damaged state returns should complete Form FTB 3516, Request for Copy of Tax Return, and print "California Wildfires 2009" in red ink at the top of the request. Disaster victims can receive copies of their tax returns for free.

Filed under: California, Tax

Government Official Suggests Tweaks to Form 1040

Via Journal of Accountancy

The Treasury Inspector General for Tax Administration (TIGTA) has issued a report suggesting ways that Form 1040 could be improved to make it easier for taxpayers to avoid common errors.

The TIGTA analyzed the approximately 7 million math error notices the IRS sends out annually to narrow down the list to those that could partly be attributed to confusing wording or design of the forms.

The suggestions include better labeling of certain lines and the use of red ink to highlight important features.

Filed under: Tax

Small Firms Considering Switch from S-Corp to C-Corp for Tax Advantages

Via Business Week

With upper-income tax rates set to increase in 2011, many firms are taking a look at ways to save taxes.  Traditionally, many small firm have elected to be treated as an S-Corporation due to the simplicity of compliance, among other factors.  This article from Business Week explores the trend of small firms looking into possible changes to C-Corporation status in the face of increased tax rates.

Filed under: Corporations, Tax

The Current Future of AMT

Via Investment News

The most current AMT patch exempts 26 million people from Alternative Minimum Tax, but is set to expire after 2009. So, as always, the future of the alternative minimum tax remains uncertain, Joseph W. Walloch writes in an InvestmentNews commentary.  It is unclear what Congress will do for 2010 and beyond. Congress is not expected to repeal the AMT altogether.

Filed under: AMT, Tax, Tax Legislation

Legislation Would Make Estate-Tax Exemptions Permanent

Via InvestmentNews

The estate tax is currently set to expire in 2010, and without further legislation will be reinstated in 2011 with higher rates and reduced exemptions.  Proposed legislation by Senate Finance Committee Chairman Max Baucus, D-Mont., would make permanent the 2009 estate-tax exemption of $3.5 million for an individual.

Filed under: Estate & Gift Taxes, Tax, Tax Legislation

California LLC Fee Constitutionality Update

Via Spidell

The US Supreme Court declined to review the Ventas case pertaining to LLC fees paid by LLC’s with income from both California and non-California sources.

According to the FTB, they will issue a notice sometime in the next few weeks with instructions on when and how to obtain refunds for LLCs that have income inside and outside the state of California and have filed protective claims for refunds.

LLC’s that had income outside of California in a year prior to 2007 should file a protective for refund as the statute of limitations of four years expires in 2009.

Filed under: California, Tax, Tax Season

Depreciation Limits Updated for Inflation

Via the Journal of Accountancy

IRS Revenue Procedure 2009-24 issued in April adjusted depreciation limits for considered “luxury automobiles” to $2,960 for the first tax year, $4,800 for the second tax year, $2,850 for the third and $1,775 for each year thereafter.

Filed under: Tax

California Apparently Postpones Penalties for Failure to Comply with the New E-Pay Requirements

Via Spidell

Spidell has reported that the California Franchise Tax Board will NOT assess penalties if a taxpayer subject to the new mandatory e-pay requirements pays by check instead of electronically during 2009.

The law currently states that all payments made by an individual on or after January 1, 2009, regardless of taxable year or amount, must be remitted electronically to the FTB after the individual has:

• Made a single estimated tax or extension payment greater than $20,000 for a taxable year beginning on or after January 1, 2009; or
• Filed an original return with a tax liability greater than $80,000 for a taxable year beginning on or after January 1, 2009

Filed under: California, Tax

Congress Urges IRS to Ease Up on Audits of Small Businesses

Via Webcpa

A recent study found that in 2007, small businesses were 41% more likely to be audited than in 2005, ,while companies with $250 million in assets or more were audited 40% less often.  In a recent hearing, law makers pressed the IRS to ease up on audits of small businesses.

Read the full story here:

http://www.webcpa.com/article.cfm?articleid=31216

Filed under: Tax