From Forbes, Tax Hikes Loom For Businesses (slideshow)
Taxes take the top spot on the legislative agenda when Congress returns from its summer recess in September. Lawmakers have said they’ll take up legislation to provide a boost to small businesses and to extend some expiring (or expired) tax breaks. They’re also under pressure to reduce the budget deficit. It’s got to be paid for somehow.
As part of a Special Edition Tax Tip, the IRS provides 9 Tips on the 10 Percent Tax on Tanning Services for businesses offering tanning services :
- Businesses providing ultraviolet tanning services must collect the 10 percent excise tax at the time the customer pays for the tanning services.
- If the customer fails to pay the excise tax, the tanning service provider is liable for the tax.
- The tax does not apply to phototherapy services performed by a licensed medical professional on his or her premises.
- The tax does not apply to spray-on tanning services.
- If a payment covers charges for tanning services along with other goods and services, the other goods and services may be excluded from the tax if they are separately stated and the charges do not exceed the fair market value for those other goods and services.
- If the customer purchases bundled services and the charges are not separately stated, the tax applies to the portion of the payment that can be reasonably attributed to the indoor tanning services.
- The tax does not have to be paid on membership fees for certain qualified physical fitness facilities that offer indoor tanning services as an incidental service to members without a separately identifiable fee.
- Tanning service providers must report and pay the excise tax on a quarterly basis.
- To pay the tax, businesses must file IRS Form 720, Quarterly Federal Excise Tax Return using an Employer Identification Number assigned by the IRS. Businesses that don’t already have one can apply for an EIN online at IRS.gov.
Other resources:
Excise on Indoor Tanning Services FAQs
Affordable Care Act Tax Provisions
And for good measure a video from the IRS explaining the tax. Enjoy!
The Internal Revenue Service has released IR-2010-69 which encourages small businesses to take advantage of tax incentives included in recently enacted federal legislation. The release, in recognition of National Small Business Week, includes a summary of a variety of tax-saving opportunities as well as resources. Summaries and links to resources are provided below:
Health Care Tax Credit
The Affordable Care Act is designed to encourage small employers to offer health insurance coverage for the first time or maintain existing coverage. The Credit is generally available to small employers that pay at least half the cost of single coverage for employees in 2010.
For tax years 2010 to 2013, the maximum credit is 35 percent of premiums paid by eligible small business employers. The maximum credit goes to smaller employers –– those with 10 or fewer full-time equivalent (FTE) employees –– paying annual average wages of $25,000 or less. The credit is completely phased out for employers with more than 25 FTEs or with average wages of more than $50,000.
Answers to Frequently Asked Questions
Benefits for Hiring and Retaining Recently Unemployed
Employers who hire unemployed workers this year (after Feb. 3 2010 and before Jan. 1, 2011) may qualify for a 6.2-percent payroll tax incentive. This in effect exempts them from the employer’s share of Social Security tax on wages paid to these workers after March 18. Further, if the qualified employee is retained for at least a year and whose wages did not significantly decrease in the second half of the year, a qualifying business may claim a new hire retention credit up to $1,000 on their tax return.
Form W-11 – fulfills required signed statement regarding eligibility
Answers to Frequently Asked Questions
Work Opportunity Tax Credit
This credit offers tax savings to business that hire employees belonging to various target groups. Groups include: people ages 18 to 39 living in designated communities in certain states and D.C., recipients of various types of public assistance, certain veterans, ex-felons, and certain youth workers.
Form 8850- filing with state workforce agency within 28 days after eligible worker begins work
An eligible employer can claim both the WOTC and the new hire retention credit for the same employee. However, an employer may not claim both the payroll tax exemption and the WOTC for the same employee. Therefore, any employer that chooses to apply the exemption to wages paid to a qualified employee may not receive the WOTC on any wages paid to that employee during the one-year period beginning on the employee’s hiring date.
Gain Exclusion on Sale of Certain Small Business Stock
Investors in qualified small business stock can exclude 75 percent of the gain upon sale of stock if acquired after Feb 17, 2009 and before Jan. 1, 2011 and is held for more than five years. If acquired prior to these dates, the exclusion rate generally remains at 50 percent.
COBRA Credit
Employers that provide the 65 percent COBRA premium subsidy to eligible former employees can claim credit for this subsidy on their quarterly or annual payroll tax returns. To help avoid imposing an unnecessary cash-flow burden, affected employers can reduce their payroll tax deposits by the amount of the credit.
Other Resources:
In IR 2010-63, the Internal Revenue Service provides information and general guidance to help small businesses determine whether they are eligible for the new health care tax credit under the Affordable Care Act and how large a credit they will receive.
In general, the credit is available to small employers that pay at least half the cost of single coverage for their employees in 2010. The credit is specifically targeted to help small businesses and tax-exempt organizations that primarily employ moderate- and lower-income workers.
Notice 2010-44- The notice provides detailed guidelines and illustrates more than a dozen examples intended to help small employers determine whether they qualify for the credit and estimate the amount of the credit. The notice also requests public comment on issues that should be addressed in future guidance.
Other IRS Resources:
Today, the IRS announced that as a result of the Affordable Care Act, health care coverage for an employee’s child under 27 years of age is now generally tax-free to the employee, effective March 30, 2010. The changes allow employers with cafeteria plans (“plans that allow employees to choose from a menu of tax-free benefit options and cash or taxable benefits”) to permit employees begin making pre-tax contributions to pay for this expanded benefit. A child under the new changes includes “a son, daughter, stepchild, adopted child, or eligible foster child.”
In addition, to changing the rules regarding cafeteria plans, the Act also requires plans that provide dependent coverage of children to continue to make the coverage available for an until child until the child turns age 26.
Notice 2010-28 explains the changes in more detail as well as provides examples for determining whether a child qualifies or not.
