In the current anti-tax climate, some towns are finding it hard to produce enough money to keep even basic city services afloat.
Many employers prefer to classify employees as contractors to avoid paying payroll taxes and employee benefits. If the IRS , state employment agency, or the Department of Labor (DOL) audits a taxpayer and determines that employees have been miss classified as contractors, the employer may have to pay the employees’ shares of taxes, including estimated income tax, plus the employer share of payroll taxes, interest, and penalties. In addition there is a special six year statute of limitations rather than the normal three year limit as to how far back the IRS can asses additional tax.
The IRS Voluntary Classification Settlement Program (VCSP) as described in Announcement 2012-45 offers employers the opportunity to reclassify their contractors as employees and limit exposure to additions to tax, penalties and interest. Announcement 2012-46 temporarily expands the VCSP through June 30, 2013, to employers that failed to file Forms 1099 for their contractors.
Here’s a good article about the VCSP: Get Your Worker Reclassification Relief While It Lasts
The sales tax collected in Texas is in fact a sales and use tax. When consumers purchase items online and no sales tax is paid, the purchaser is supposed to remit the tax to the state. Form 01-156 Texas Use Tax Return should be filed with a payment on or before the 20th day following the period (month or year) during which items subject to use tax are brought into Texas. For example, if you purchase a Kindle from Amazon.com, no sales tax is collected. Your responsibility is to remit the tax.
Why do some online vendors collect sales tax and other’s don’t?
A fancy word for the reason is nexus. Nexus is a connection and in the sales tax world, that means if a company has a connection to Texas, usually a physical connection, that company is required to collect sales tax. Amazon.com closed a Dallas distribution center to avoid collecting sales tax on sales delivered in Texas.
This ability to disregard sales tax on sales creates an advantage for online stores over Main Street stores. The legislation introduced, referenced above, by a bipartisan group of 10 senators attempts to level that field. Amazon does support the legislation.
This is what David Lenohardt wrote in the NYT on March 1. His major points:
Government workers receive compensation that is similar–with somewhat lower salaries and somewhat better benefits on average–to that of private sector workers with similar qualifications.
Government pay is skewed too heavily toward pensions and health insurance.
Health plans for union workers and retirees are much more likely to require little or no co-payment, which leads to lots of medical treatments that don’t make people any healthier, and to huge costs.
Many government workers receive pensions that start at age 55 and still let retirees draw a full salary elsewhere.
Only recently have teachers’ unions started to cooperate with serious efforts at teacher evaluation, and they are still not giving their full cooperation.
The cause of our looming federal and state deficits . . .is Americans’ collective desire for low taxes and generous government benefits. . . Eventually we will have to pay for the government we want.
I have a friend that retired from the state, receives his pension, and was rehired as a contract employee by the same agency: working full time and receiving his pension from the same agency. Texas has a defined benefit retirement plan so that retired employees receive a guaranteed benefit rather than a value based account as in a typical 401K account. Steven Greenhouse discusses the differences between retirement plans.
In Texas, the Margin Tax and a cigarette tax were supposed to make up income deficits created from reducing the property tax , and to date, the Margin Tax has increased revenues modestly but not at the levels expected at enactment. (David Gilliland, Texas Margin Tax).
On June 30 of each year, business owners in Texas need to determine whether they are holding abandoned property: property for which they have had no contact with the owner for the applicable abandonment period and their whereabouts are unknown.
For most business owners the most common financial assets will be outstanding payroll, accounts payable, or refund checks. For payroll checks, the abandonment period is one year. For other checks the period is three years.
The reports are due November 1 and no extension of time to file is available. Effective for the 2010 reporting cycle, which just ended, holders reporting to Texas are required to mail a notice in July to all owners of property over $250 that are due to be included in their November report. Here is a sample letter: Due Diligence Letter.
The Texas Comptroller is able to go back ten years to look for unreported unclaimed property. Although the Comptroller is holding the property for the rightful owner, the state wants to be the one holding the property rather than the business owner. Although there is no legal limit to make a claim, the state can invest this money much as lenders use escrow funds to make money on your money.
Investigate outstanding checks and contact vendors or employees on a regular basis so that you will limit your exposure to the unclaimed property regulations.
From the Texas Comptroller’s email:
A new slide show on the Texas Comptroller’s Web site can help homeowners who are protesting their property tax appraisals. County appraisal districts establish the taxable value for residences, but in most counties, homeowners have until June 1 to file a protest.
How to Present Your Case at an Appraisal Review Board Hearing: A Guide for Homeowners makes the property tax process more transparent by providing easy-to-understand information about what to expect at a property appraisal protest hearing.
“Homeowners are empowered by understanding the protest process, knowing what information to present to the local Appraisal Review Board and how to present it,” Texas Comptroller Susan Combs said. “It helps homeowners make convincing appeals and helps the review boards make better decisions.”
Appraisal review boards generally hear property appraisal protests between May 15 and July 25, except in major urban areas with extended protest periods.
Harris County Appraisal District Chief Deputy Sands Stiefer said the slide presentation is a welcome new resource for property taxpayers.
“We plan to link our Web site to the Comptroller’s video, and we are considering running the video in the waiting room at our ARB hearings,” Stiefer said.
To view the narrated slide show and read much more information about the property tax appraisal and appeal process, visit the Comptroller’s Web site at www.window.state.tx.us/taxinfo/proptax/index.html.