Tax Blog/Blawg

The Government has been aggressively seeking injunctive relief against employers ordering them to timely file the corporation's tax returns and to withhold and pay over federal income taxes and employment taxes.  Most recently, the Government has increased its enforcement efforts in the temporary staffing arena.  On March 17, 2001 in US v. LCL Administration, Inc. the U.S. District Court for the Eastern District of California granted  the Government's request for a preliminary injunction against LCL, a temporary staffing company, and its officers, ordering them to timely ...

Following on the heels of the IRS announcement that a problem was identified in the way the first quarter HIRE credit (line 12e) was applied when computing the Failure to Deposit (FTD) penalty on second quarter Forms 941, IRS announced the audit criteria for HIRE Act examinations. John Tuzynski, Chief of Employment Tax Operations, IRS Small Business/Self Employed Division, said an IRS enforcement initiative is under way for employers that claimed tax credits under the HIRE Act.    He indicated that the exams focus on verifying Forms W-11, payroll amounts claimed by employers and ...

According to the Department of Homeland Security, the federal government has started its crackdown on businesses suspected of hiring illegal immigrants.  Federal agents are expected to visit companies to verify employees' identity and eligibility for employment in the United States.  Documentation, such as Forms I-9 will be reviewed.

ICE is not expected to name the companies listed in its audit plans but may identify the specific sectors that will be targeted.

Companies should manage these audits carefully because there is a significant potential for the findings to result in ...

Will Employers Get a Payroll Holiday?

Senator Rob Portman, a Republican from Ohio, introduced Senate Bill 12 which would offer a temporary employer payroll tax cut.  The Portman bill proposes a one-year, 2 percentage-point reduction in the payroll taxes paid by employers.  Portman contends that such a payroll holiday would be a job-creation device.

Businesses should closely monitor this legislation because of the potential cost savings associated with it and compliance issues.

Guest Post by Heather Pesikoff

Careful consideration must be given to the new rules established by section 9003 of the Patient Protection and Affordable Care Act enacted March 23, 2010 (the "Act")(Pub. L. No. 111-148). Cafeteria plans should be reviewed and, in some instances, may need to be amended to conform to the new over-the-counter medicine and drug requirements. The failure to do so may result in noncompliance including potential tax liabilities, penalties and interest.

Guest Post by Heather Pesikoff

In a unanimous decision, the Supreme Court recently ended the multi-decade debate over whether medical residents are eligible for the student FICA exception. It ruled that the exception is not applicable, medical residents are employees and therefore subject to Federal Insurance Contributions Act (FICA) taxes.

Student FICA Exception

The IRC section 312(b)(10) student exemption excepts employers from withholding and paying FICA taxes on services performed in the employ of a school, college or university if those services are performed by a ...