Wednesday, June 2, 2010


Not much BUZZ – due to holiday week-end.

* I always enjoy Trish McIntire’s posts at OUR TAXING TIMES. She start’s today’s BUZZ off with a good one that involved the consequences of “Begging Forgiveness” from the IRS.

* A tweet from a fellow tax twit led me to an interesting story from the NY TIMES that concerns student loan debt titled “Placing the Blame as Students Are Buried in Debt”.

* Joe Kristan’s ROTH AND COMPANY TAX UPDATE BLOG led me to two good posts on the new rules for issuing 1099s that will begin for payments made in 2012.

In “Get Ready for Onerous New 1099 Reporting Rules” by Scott Heintzelman, the EXUBERANT ACCOUNTANT, explains the rules as they now exist and what will change under the new rules.

Among the issues that arise from these new rules –

TINs must be obtained from your vendors to avoid having to institute backup federal income tax withholding on payments made to them. By the same token, your business must ensure that your customers have your TIN to avoid backup withholding on payments made to you.”

And –

To compound the problems with the new reporting requirements, many businesses use accounting methods other than the cash basis. In addition, a number of businesses file their returns using reporting periods other than calendar years. In an audit, imagine your business and the IRS attempting to reconcile 1099s with these complications.”

In “As Carl Sagen Would Say ‘Get Ready for Billions of Form 1099s’” at FARM CPA TODAY author Paul Neiffer goes further to point out - “if we do not comply properly with the rules, two bad things can happen”.

What are the two bad things -

First, if you do not report the transaction to the IRS, they can assess a penalty of $50 per form 1099 not reported up to a current maximum of $100,000. . . .

Second and perhaps more important is that if you do not provide your federal identification number to your customers, they may be required to perform backup withholding on payments to be transmitted to you. This backup withholding is usually 20% of the total sale. . . . . you have to wait until the following year {when you file your tax return – rdf} to get your money

* Twitter has turned out to be, if nothing else, at least a good source of BUZZ. Like “How Do You Rank as a Taxpayer?” – a tool from KIPLINGER that shows “your income status compared to your fellow Americans. . . .based on adjusted gross income (AGI) reported on 2007 tax returns -- the latest statistics available”.