The first version of the letter indicated that the Treasury indentified the recipient as having an obligation to file the quarterly flow-through withholding return based on prior filings.  This version contained a Notice of Change or Discontinuance form on the bottom of the notice.  If you received this version, the Treasury will be expecting you to file these returns quarterly.  If you determine you do not have a filing requirement, you should complete the Notice of Change or Discontinuance attached to the notice and check the box to delete “Flow-Through Withholding.”  A copy of the Notice of Change or Discontinuance can also be found by clicking here.

The second version of the letter appears to have been sent to taxpayers that didn’t receive the first letter.  This version outlines the changes to the law as of January 1, 2012.  If you determine that you do not have a filing requirement, no further action is needed.  If you meet the requirements for flow-through withholding, you must register with the Treasury.  This can be done at www.michigan.gov/business.    

Please contact us if you have any questions.   

Geenen & Kolean, PC

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

Read the entire announcement – click here.

“Treasury is providing entities that have not previously reported or have underreported unclaimed property in the past with an opportunity to voluntarily comply with the requirements of the Act by offering a Voluntary Disclosure Program.  This program will waive all penalty and interest on property voluntarily remitted pursuant to your enrollment in this program.  To enroll in the program, complete and return the Michigan Unclaimed Property Voluntary Disclosure Agreement (Form 4869) by January 31, 2012.  If you are certain you do not have unclaimed property to report and remit, complete and return the Attestation of Compliance with Unclaimed Property Reporting (Form 4305) by January 31, 2012.”

So, what is Unclaimed Property?  Here’s what the Michigan Department of Treasury says:

“Most businesses have unclaimed property resulting from normal operations.  Any asset, tangible or intangible, belonging to a third party that remains unclaimed for a specified period of time is considered unclaimed property.  For example, uncashed payroll checks must be turned over to the State after one year; most other property types, such as vendor checks and accounts receivables credit balances, must be turned over after three years.”

What is your next step as a business owner?  Determine if you business has any unclaimed property.  If so, complete and return the Form 4869.  If your business does not have any unclaimed property to report, complete and return Form 4305.

For more information, visit the Michigan Department of Treasury website, or review the Manual for Reporting Unclaimed Property.
 
Please contact us at 616.393.0398 if you have any questions, or if we can assist in any way. 
 
Thank you,
 
Geenen & Kolean, PC

What should I keep and for how long?

For more information, click here to view IRS Publication 552.

Geenen & Kolean, PC
(616) 393.0398

 
On December 17, 2010, the president signed into law the Tax Relief, Unemployment Insurance Reauthorization, and Job Creation Act of 2010.  This Act postpones the sunset of the 2001 and 2003 tax cuts, temporarily reduces the estate tax and extends a number of expired provisions.  It also extends unemployment benefits.
 
Business Provisions include:

• Increased capital investment expensing for small businesses

To see the full list of business provisions –  click here

 
Individual Provisions include:

• Extension of the 2001 Tax Cuts (maintaining lower Income tax rates)
• Capital gain rates remain the same
• Dividends are taxed at capital gain rates
• Alternative minimum tax patch for 2010 and 2011

To see the full list of individual provisions – click here

 
 
Payroll Tax Holiday – This act also reduced the Social Security (OASDI) tax rate on employees to 4.2% (from 6.2%).  Employers still pay the 6.2% rate.  This should result in a 2% net pay increase for the employee, however, with the expiration of the Making Work Pay credit most workers will not see much of a change on their paychecks for 2011.
 

 
Please give us a call at 616.393.0398 to discuss any questions you might have.

Thank you,
 
Geenen & Kolean, PC

Keep your file of insurance certificates up to date. You may find that some of your vendors are sole proprietors with no employees or subcontractors of their own. They cannot get worker’s compensation insurance on themselves. In that case you should have them complete a sole proprietor statement to release your company from any workers compensation liability related to that sole proprietor.

If you have employees you are likely required to carry worker’s compensation insurance.  Typically you pay up front based on estimated payroll costs. At the end of your policy period an audit is conducted to find the exact amount of insurance premiums that should have been paid and a bill is sent for any balance or a refund is issued for an overpayment.  The auditors will also ask about any subcontract work that you may have had completed. This is when you will need insurance certificates on file for those subcontractors. If you don’t have these insurance certificates you may be billed additional premiums for insurance for your subcontractors. Contact your insurance agent if you have additional questions.

Click Here for a sample Request for Information

Click Here for a sample Sole Proprietor Statement

Click Here for a link to the IRS Form W-9

Take this blank form, fill in the requester’s name and address, and send copies to each of your vendors. This form will give you the Federal Id number of the vendor, type of entity, and the correct company name and address. Keep copies of the W-9 forms in a file. Then in the future ask new vendors to complete a W-9 form.

More details regarding 1099 Filing:

There are numerous 1099 forms used to report a variety of transactions. However, the most common 1099 for a small business is form 1099-MISC, which is used to report miscellaneous income payments to non-employees (contractors). This 1099 form is due to the contractor before January 31 and to the IRS before February 28 of the following year. Copies should also be sent to states where required. The business must also file a form 1096 which summarizes the 1099 MISC form information. The form 1096 and the 1099s are filed with the IRS together as a package.

There should be a 1099-MISC filed for each person you paid as follows:

• Payments of $600 dollars or more to contract employees, independent contractors and/or consultants, physicians, physician’s corporation, or other providers of health or medical services, purchases of fish for resale, and crop insurance proceeds
• Payments of $10 or more for royalties, substitute dividends and tax exempt interest
• Payments of any amount to attorneys and crew-members of fishing boats
• Payments of any amount to persons subject to the backup withholding rules
• Sale of $5,000 or more of consumer products for resale anywhere other than a permanent retail establishment

Penalties for Late Filing

1099 MISC forms filed after the return due dates are subject to the following penalties:

• For corrections made within 30 days after the filing date, the penalty is $15 per 1099, with an annual maximum of $25,000 for small businesses.
• For corrections made between April 1 and August 1 of the calendar year in which the 1099 was due, the penalty is $30 per 1099, with an annual maximum amount of $50,000 for small businesses.
• For corrections after August 1 of the year the 1099 is due, the penalty is $50 per 1099, with an annual maximum amount of $100,000 for small businesses.

Penalties for not filing:

Penalties for not filing could be $100 per statement and you could be liable for some of the recipient’s taxes.

Under specific conditions, payers making certain payments to payees must withhold federal income tax from those payments at the federal backup withholding rate, which is currently 28%. Backup withholding maybe required if the payee did not provide you with a Taxpayer Identification Number.

If you have any questions, please contact us at 616.393.0398.

Geenen & Kolean, PC

Give us a call at 616.393.0398 if you would like more information. 

Geenen & Kolean, PC