What's New
FUTA Rate Changes Effective July 1, 2011
Beginning July 1, 2011, the effective Federal Unemployment (FUTA) tax rate will be reduced from 0.8 to 0.6 percent for all employers liable for FUTA. Refer to Internal Revenue Service Publication 15 for additional information.FUTA tax for check dates on or after July 1, 2011, should be calculated at the new rate. Payrolls with a check date prior to July 1 should be calculated at the previous effective rate of 0.8 percent.
We cannot predict if there will be future FUTA tax increases in 2011. We will notify you of any changes in the rates.
~~~~~~~
Standard Mileage Rates Increased
for Rest of 2011
The IRS raised the standard mileage rates for the last six months of the year.
The rate will increase to 55.5 cents per mile for business miles driven from 7/1/11
through 12/31/11, a 4.5 cent per mile increase from the rate in effect for the first
six months of 2011 [see Rev. Proc. 2010-51 (2010-51 IRB 883) ]. The rate for computing
deductible medical or moving expenses will also increase by 4.5 cents per mile to
23.5 cents per mile, up from 19 cents per mile for the first six months of 2011.
The rate for providing services for a charity is set by statute, and remains at 14 cents per mile. IRS Ann. 2011-40, 2011-29 IRB.
~~~~~~~
NEW Small Employer Health Care Tax Credit
On December 2, 2010, the Internal Revenue Service released guidance on legislation which provides eligible small employers with a new small business health care tax credit.
Who is eligible for the Credit?
The maximum credit goes to smaller employers - those with 10 or fewer full-time equivalent (FTE) employees - paying average annual wages of $25,000 or less. The credit is completely phased out for employers that have 25 or more FTEs or pay average wages of $50,000 or more per year. Because the eligibility rules are based in part on the number of FTEs, not the number of employees, employers that use part-time workers may qualify even if they employ more than 25 individuals.
How much is the Credit?
The maximum credit is 35 percent of premiums paid by eligible small businesses and 25 percent of premiums paid by eligible tax-exempt organizations.
~~~~~~~
PENNSYLVANIA USE TAX
The State of Pennsylvania has over the last year initiated a program to bring taxpayers into compliance with their use tax filing requirements. The Department of Revenue is sending letters to businesses, including Schedule C filers, that have not reported or remitted use tax in the previous three years.
Use tax is a 6% (8% in Philadelphia, 7% in Pittsburgh) tax due on the purchase of tangible personal property or services delivered or used in Pennsylvania, for which sales tax has not been charged by and paid directly to the vendor. Purchases made online, through toll free numbers, from mail order catalogs, and from out-of-state locations are examples of purchases subject to use tax where sales tax is not charged by the vendor. In addition, if you are a retailer and remove inventory from stock for use within your business or personally, you are subject to use tax on the value of the inventory used.
If you receive a letter from Pennsylvania under the State's Use Tax Voluntary Compliance Program, you will be requested to file a use tax return for the previous three years and the current year. If the return is filed by the specified due date, the Department will not assess penalties. However, interest will be charged on the amount due.
If you have not been paying use tax, please review your records for purchases for which no sales tax has been charged. If you are currently registered to pay sales tax through the State's e-tides or telefile programs, you should include the amount of use tax with your sales tax remittance. Nonrecurring or infrequent purchases subject to use tax may be reported on Form PA-1. If you incur use tax liability on a regular basis, we will need to register you for a use tax account number by completing the PA Enterprise Registration Form PA-100. You will also need to register for the e-tides on-line payment system or the telefile payment system.
Please contact us with any questions regarding potential use tax liability and for assistance in completing the required forms.
~~~~~~~
When excellence counts, you can count on us. Robin Kramer & Green, LLP.