Businesses should act now to protect potential severance pay tax refunds

Did your business lay off workers in the past several years? If so, the IRS may owe you money.

Recently, the U.S. District Court for the Western District of Michigan ruled that severance payments made to terminated workers are not subject to Social Security and Medicare taxes. This ruling could translate to significant refunds for some employers.

While the IRS is expected to appeal the court’s decision, it is important for you to protect your interests in the meantime. If you paid severance to employees back in 2006, you should file a protective refund claim, using IRS Form 843. You must file this form prior to April 15th for 2006, since the three-year statute of limitations for tax returns expires on this date.

The IRS will retain all filed claims until any appeals are decided. Please note that you should continue to pay Social Security and Medicare taxes on severance pay until the issue is decided.

It is critical that protective claims be filed accurately for the claim to be valid should the IRS lose on appeal and the refunds become claimable. We will be glad to assist you in preparing or reviewing claims to reduce the risk of them being rejected for administrative reasons.

In addition, Elliott Davis will continue to update you on the impacts of the court decision, potential appeals and the possible effects on your business.

If you have any questions or need assistance with IRS Form 843, please contact Jason Sweatt at 864.242.2602 or .(JavaScript must be enabled to view this email address).

Elliott Davis Dental Services Practice: Financial Check-Up Newsletter March 2010

April 15th is fast approaching. With the right amount of preparation, you should have a firm estimate of what to expect on Tax Day. If you have not prepared, it’s not too late.

If you have received word of a large balance due, do not panic. Let us take a second look. There are steps to take, even at this late date, that could reduce your tax burden. Have you fully funded your retirement account? Have you made the correct decisions regarding depreciation? Is your information presented properly on your tax return?

While taxes are on your mind, now is a good time to seriously consider a possible Roth IRA conversion. Shanna Morales lays out the important points below. Theresa Kaake follows with some good bookkeeping information. As always, we hope you enjoy this issue of our newsletter and we wish you a great spring!

SEC Delays Plan to Adopt IFRS

The Securities and Exchange Commission (SEC) confirmed plans this week to move ahead with International Financial Reporting Standards (IFRS) for U.S. companies. However, the SEC now says it needs more time to make the transition.

On Feb. 24, the SEC unanimously approved a new timeline with a target date of 2015 for the required use of IFRS by public companies. The former roadmap stated a 2014 deadline. The delay came after the SEC said it needed more time to study IFRS. A vote is expected in 2011 on whether to move forward with a mandate to use IFRS.

Click here to read the full article from the Journal of Accountancy.

Click here to read more about IFRS and its far-reaching impacts.

Please contact Kay Biscopink, International Tax Services Practice Chair, if you would like more information.

Deadline for Haiti Donations for 2009 Tax Deductions is Feb. 28

You have until midnight on Sunday, Feb. 28 to make charitable donations to the earthquake relief efforts in Haiti, if you want to take the tax deduction for 2009.

Typically, if you file an itemized individual federal return and you want to deduct your charitable contributions, you can only deduct the contributions you made in that tax year. The earthquake hit Haiti on January 12, 2010. Under the normal rules, charitable contributions made to help Haiti would be deductible when taxpayers file their 2010 returns in 2011. However, due to special legislation signed into law by President Obama in January, there is a special and temporary exception for Haiti relief.

Under the new law, you can treat a contribution made to help Haiti after January 11, 2010 and before March 1, 2010 as if made on December 31, 2009. You can decide whether to deduct your 2010 Haiti contribution on your 2009 return or on your 2010 return. While you cannot deduct the same Haiti contribution on both your 2009 and 2010 returns, you can allocate multiple donations to more than one year.

Click here to read more.

Elliott Davis’ Jay Gibson Discusses Importance of Business Valuations in The Mecklenburg Times

When it comes to determining the value of your business, there’s more to consider than just the numbers. Yes, cash flow, profit margins and debt all must be taken into consideration — but so must your company’s viability, management staff and the competition in the market. Click here to read more.

Elliott Davis Real Estate Advisor March-April 2010

Real Estate Advisor is a great source for the latest in real estate trends for all real estate professionals.

We are pleased to present the March/April 2010 issue of Real Estate Advisor as a way to help you make smart investment and development decisions in the real estate market. The articles cover several topics we think you’ll want to know about.

Specifically, we describe creative concessions that buyers may be able to obtain from sellers in lieu of a lower selling price. We show that conduit financing, though scarcer than in recent years, can still be an attractive option for certain borrowers. We also discuss five important steps in establishing a strong preventive maintenance program, and look at how environmentally friendly paving projects can not only enhance developers’ reputations, but also save money on materials and labor.

Business Owners Offered Broad Slate of Deductions

Richard Battle, CPA

This article was published in the Charlotte Business Journal on February 12, 2010.

This tax year presents new challenges and new opportunities for business owners. You are likely questioning how the increasingly confusing and ever-changing tax laws will affect you and your business. Couple this with the impact of the recent economic slowdown and it’s no surprise that savvy business owners are looking for ways to reduce tax liabilities and preserve cash balances. There are several new or expanded deductions and other incentives that, depending on your specific situation, may help reduce the overall tax burden of your business for 2009 and 2010.

New Department of Labor Rule Prompting Employers to Review 401(k) Deposits

The Department of Labor (DOL) recently issued a safe harbor rule aimed at protecting employee contributions to benefit plans subject to ERISA with fewer than 100 participants.

Effective January 14, 2010, employee 401(k) contributions and loan repayments to these “small” plans must be deposited by plan sponsors no later than the seventh business day following the payroll date.

Currently, this ruling does not extend to plans with more than 100 participants. However, large plans must still comply with the prior deposit rule and plan sponsors may be subject to a faster deposit requirement.

Elliott Davis is here to help you evaluate, interpret and implement this new requirement. Please contact Terri McNaughton, Employee Benefit Plan Practice Chair, at 864.552.4740 or .(JavaScript must be enabled to view this email address) for assistance.

To read the press release from the Department of Labor, click here.

Your Donations to Haiti Relief Can Be 2009 Tax Deductions

Following the devastation in Haiti, did you make a charitable donation to the earthquake relief efforts? If so, you can choose whether you want to take the tax deduction for 2009 or 2010, due to special legislation signed into law by President Obama in January.

Elliott Davis On-Site Newsletter Winter 2010

Do you know how to choose the best subcontractor for a particular job? Or feel uncertain about the new world of social networking?

We are pleased to present the Winter 2010 issue of On-site. In it, we discuss:

• Two important steps to take to be sure of hiring the best subcontractors,
• Five prime suspects in an investigation of profit fade,
• How contractors can improve their bidding practices, and
• The pros and cons of social networking for construction companies.

The ideas we discuss in On-site are relevant to your success, and we would welcome your questions or comments.