Stoner, Jeffers & Associates


The Staff of Stoner, Jeffers & Associates Welcomes You
Standard Mileage Rates for 2010

The standard mileage rates used to calculate the deductible costs of operating an automobile for business, charitable, medical or moving purposes for 2010 are as follows: The rates for business miles driven beginning January 1 (including vans, pick-ups or panel trucks) will be 50 cents per mile for business miles driven. The standard rates for charitable miles is 14 cents per mile driven in service of charitable organizations. The standard rates for medical or moving  purposes is 16.5 cents per mile.

California Business: How to identify California Use Tax due

If your business purchases physical merchandise (for example, supplies, furniture, fixtures and equipment) from out-of-state sellers you may owe CA Use Tax. The Use Tax rate is the same as your local Sales Tax rate. If your business purchases these items for use or consumption and the seller is located outside California and does not collect or report California Tax, you may owe CA Use Tax.

The use tax is intended to protect CA sellers who otherwise would be at a competitive disadvantage when out-of-state sellers make sales of products to CA customers and do not charge tax. The use tax also assures that all businesses in the state contribute fairly to the funding of state and local programs.

When you purchase physical merchandise from sellers within the state you pay the tax at the time of purchase. When you purchase physical merchandise from an out-of-state seller and the seller does not collect and report the tax on your purchase, then you must pay the use tax directly to the State Board of Equalization (BOE)

If you do pay CA tax on a purchase from an out of state seller be sure to get a receipt. The receipt must describe the item(s) and the purchase amount, seller's name, address and CA seller's permit number (or use tax registration number), and your name and address. The full tax rate applies to the CA location in which the merchandise is being used. If the seller charged you at a lower rate you generally would owe the remaining use tax. The current statewide tax rate is 8.25%. Some areas have the statewide rate plus district tax rates. See www.boe.ca.gov for more information on tax rates for your area.

Shipping and Handling:

Shipping and Handling are generally exempt from tax provided they are:
    1. For delivery directly to the purchaser by common carrier, contract carrier, or US Mail;
    2. The invoice clearly lists delivery, shipping, freight, or postage as a separate charge; and
    3. The charge is not higher than your actual cost for delivery.
If any of these three requirements are not met, the shipping charge is generally taxable. IF "handling" is charged with shipping, the handling portion of the charge is subject to tax. (See publication 100, Shipping and Delivery Charges)

Tax Tip:

One of the most common communications that we get from the IRS or Franchise Tax Board has to do with estimated tax payments. To keep correspondence to a minimum, we recommend that before you mail in your estimate, you make a copy of the check and store it with a copy of your estimate voucher. Then, when tax season rolls around, bring the copies to your tax appointment. Then there is no question about the amount you paid or when. If you get checks returned to you from your bank, put the cancelled check with your copy of the estimate voucher. Then if there is a question, you will be ready.

Consent to Disclose Tax Return Information

Federal law now requires you to fill out a consent form to release your tax return to any third party. In the past you were able to call us and have a copy of your tax return sent directly to a third party vendor such as a mortgage lender. Now we are required by law to have you fill out a consent form giving us authorization to release your tax information to a third party. Go directly to the form (Consent to Disclose Tax Return Info) and copy/paste/print the form and send it to us.  Or come by our office and fill out the form or have us send one to you via e-mail or fax. You can fill it out and return it to our office. Not until we receive the signed form are we able to release your tax information to the requesting party. You are still welcome to come in and get a copy of your tax return yourself, without having to fill out the consent form.



What to do if you receive a notice from the IRS

First, Don't Panic!! Many issues can be dealt with easily and quickly with a simple phone call.

Every year the IRS sends out numerous notices for various reasons, some request payment of taxes, some are just to notify you of a change to your account and some are simply requesting further information. The notices usually cover a very specific period and/or form. The notice offers instructions on what you are asked to do to satisfy the inquiry. Sometimes it is just a notification and sometimes you must take action.

If you agree with the notice, no reply is necessary unless a payment is due. If you do need to make a payment, simply mail your payment in with a copy of the letter, which is often provided. Don't forget to write any specific information regarding the notice on your check, just do not write your social security number on the check. It is ok to write the last four digits (ie: SS# ending in 1234).

If you disagree with the notice, a response is necessary to get the issue resolved. Sometimes it may be done over the phone by calling the number in the upper right-hand corner of the notice. Or it may require writing a letter to explain why you disagree. If you need to include any documents to back up your claim, a letter is the best choice. Write your letter explaining why you disagree and include any documentation that you want the IRS to consider, along with the bottom tear off section of the notice. Mail it to the address shown on the notice in the upper left-hand corner. Allow at least 30 days for a response. Be sure to keep a copy of everything you sent in for your records.  You may also visit the IRS office located at 1395 Ridgewood Chico, CA 95973. You may call them at (530) 343-2324 to set up an appointment.

Living Trusts

Do you have a living trust? If so, have you done all of your homework?

Living trusts are an excellent tool to make the transfer of property after death easy, but you have to do a little work regarding title to your assets. It is very important that all of your assets be titled in the name of the trust, especially your real property. If you are married, there are a few reasons that your real property should have a joint-tenancy on the title with your spouse.

To check title on real property is easy. Look at your property tax bill from the county. It will reflect the title that is on record with the county as to who the owners are. If the title is not what it should be contact your attorney. There is an easy process to get the title corrected. At least it is easy while the original owner is still alive. If you wait and your heirs have to deal with the title problem, there are significant legal hoops to jump through to get the title corrected so that the heirs can use the property.

Suspicious e-Mails and Identity Theft

When identity theft takes place over the internet it is called "phishing" (as in "fishing for information" and "hooking" the victims). Phishing is a scam where internet fraudsters send e-mail messages to trick unsuspecting victims into revealing personal and financial information. They create websites that seem to represent a legitimate company. Sometimes even using the real company's logo. Some have even been know to mimic the IRS. The victim is directed to the site thinking they are using a legitimate website, they submit their personal information such as passwords, social security numbers and financial institution information, to the site. Then the criminals use the information for their own purposes or sell the information to other criminal parties.

A classic example of phishing is an identity thief setting up a website that looks like it belongs to a major bank. Then, that thief sends out numerous emails that claim to be from the major bank and request the email recipients to input their personal banking information (such as their PIN) into the website so the bank may update their records. Once the scammer gets a hold of the needed personal information, they attempt to access the victim's bank account.

The IRS has set up an e-mailbox, phishing@irs.gov. If you receive any suspicious e-mails claiming to be from the IRS please send them to the above address. URLs and links in the suspicious e-mail should be sent to trace the hosting website and to help shut down the fraudulent sites.

Identity theft in another manner, identity theft of a deceased individual's personal information. Upon a person's death, a family member or friend must request the credit reporting agencies to send out the deceased alert. The purpose of the deceased alert is to prevent identity thieves from stealing and abusing the name of the deceased person. A notification on a person's credit report alerts credit agencies that the person is deceased and should not be issued credit in the future. While it is unfortunate that such measures need to be taken after a person has passed away, doing so will reduce the risk of identity thieves preying upon the personal records of the deceased individual. Identity thieves can cause serious financial damage, for which estate of the deceased may have to pay to resolve.

We are often asked "how long do I need to keep these papers?"

Record retention refers to the practice of retaining copies of business or personal records over time. Record retention policies differ from businesses to individuals. Some aspects of record retention are determined by the IRS. The records can be in the form of paper files or computerized data. More information is available in the IRS publications Recordkeeping for Individuals and Guide to Record Retention Requirements. It is important for business owners and individuals to not only keep good records, but also to know which ones to retain and for how long. Generally, record-retention periods are the same for computerized records as for hard-copy documents.  However, retrievability is crucial. Not only must certain records be maintained, the IRS must be able to access those records. In other words, if your computerized records are stored in a format that is becoming, or has become, obsolete, you need to upgrade those records to more current media. Remember to keep an off site back up of all your important computer files.

PERSONAL RECORDS

Three Years                                                                                      

Six Years

Permanently

Other

BUSINESS RECORDS

One Year
Three Years

Six Years
Permanently

What's New

This is where we'll announce the most recent additions to our web site. If you've visited us before and want to know what's new, take a look here first.
HIRE Act - Hiring Incentives to Restore Employment Act


Two new tax benefits are now available to employers who hire previously unemployed or minimal time employees.

Benefit #1:
Employers who hire unemployed workers after 2/3/2010 and before 1/1/2011 may qualify for a 6.2% payroll tax incentive, in effect exempting them form their share of the Social Security taxes paid on those employees beginning 3/19/2010 and going through 12/31/10. No changes to the employees share of Social Security taxes and no changes to withholding and Medicare taxes.

Form W-11

Employers can save up to $6,622 in employer Social Security taxes for each qualified hire. There is no limit to the total amount of benefits or hires during this period. The earlier you hire the greater the benefits. The HIRE Act can not be taken in conjunction with WOTC (Work Opportunity Tax Credit).

Employers claim the payroll tax credit on the 941 form filed quarterly with the IRS. The new 941 forms will be available in the 2nd quarter of 2010. Or they can reduce their Federal deposits through out the quarter by the eligible employer Social Security tax amount.

W-2's and W-3's will be modified to include a new box 12 code of CC, to report the exempt wages and tips for qualified employees under the HIRE Act.


Benefit #2:
For each worker that is retained for at least one year (52 consecutive weeks) the business may claim and additional general business tax credit of up to $1,000 per worker, when they file their 2011 income tax returns. The amount of the credit is the lesser of $1,000 or 6.2% of wages (as defined for income tax withholding purposes) paid by the employer to the retained qualified employee during the 52 week period. The credit cannot be carried back but can be carried forward. The credit will be calculated on FIT taxable wages, not Social Security wages.