IRS: No More Tax Forms In The Mailbox

From CNNMoney.com:

Electronic filing of tax returns has become so popular that the Internal Revenue Service will no longer automatically mail a traditional paper form.

"We're finding that more and more people are choosing to e-file, and the number of paper returns is going down," said IRS spokesman Anthony Burke. He told CNN Tuesday that the agency last year mailed the old-style set of paper forms, tables and instructions to just eight percent of the nation's taxpayers.

Burke said 96 million taxpayers this year have filed electronically, with another 20 million filing through professional tax preparers. The IRS hopes to save $10 million a year by not automatically mailing the materials.

Those who prefer hardcopy documents can still find them at libraries, post offices and walk-in IRS offices around the country. After Jan. 1, they can request a mailing through the IRS toll-free number, 800-829-3676.

The materials will also be available to download and print out from the IRS website: www.irs.gov

Health Care Reform’s Tax Change Creating Headaches

The media might be putting the news to the extreme in the article, Health care law's massive, hidden tax change from CNNMoney.com, but yes, it looks as though a provision of the health reform law is creating some extra paperwork for business owners.

Section 9006 of the health care bill states that beginning in 2012 all companies will have to issue a 1099 tax form to any individual or corporation from which they buy more than $600 in goods or services in a tax year.

IRS Form 1099s are currently used to document income for contract workers (meaning non-employees). The change in how 1099s will be used is twofold: it expands their scope by using them to track payments not only for services but also for tangible goods, and it requires that 1099s are issued to corporations, not just individuals. Yes, expanding the definition of person to include corporation means more reporting requirements, not to mention the enormous amount of paper and postage involved, and that can be fairly burdensome especially for small businesses.

People are also concerned, however, that this will mean any retail purchase a freelancer does at a major store or every routine purchase a business makes, they will need to send a 1099 to that supplier at the end of the year tallying up their purchases. However, Tax Girl, in her blog today feels like I do: when the IRS regulations come out routine purchases and large retailer corporations may be excluded.

The phrase in the new law that’s likely to ease the potential reporting chaos:

“The Secretary may prescribe such regulations and other guidance as may be appropriate or necessary to carry out the purposes of this section, including rules to prevent duplicative reporting of transactions.”

The IRS will hold public hearings on any proposed regulations and give you, as a taxpayer, the right to put in your two cents. They usually accept public comment via US mail and email. Take advantage of the opportunity to make your voice heard if you feel the added paper work is too much or you are not happy with the regulations. Since the new law is effective January 1, 2012, you will likely see proposed regulations and public hearings in 2011.

Read more here.

States Weigh Campaign-Finance Changes

From USAToday.com:

State lawmakers around the country are rushing to rewrite campaign-finance laws following the U.S. Supreme Court's recent ruling that opened the door to unlimited corporate and union money in elections and upended laws in nearly half the states.

The nation's highest court ruled last month that limits on corporate and union spending on independent political ads violate the Constitution's free-speech protections.

Bills pending in Iowa and Maryland, for instance, seek to blunt the ruling's effect by requiring shareholder approval of political spending and forcing public disclosure of corporate spending in state candidate elections. Two top Democrats in Congress, New York Sen. Chuck Schumer and Maryland Rep. Chris Van Hollen, recently proposed a bill that would impose similar disclosure requirements in congressional and presidential elections.

"States can't overturn it directly, but they can nip at the edges to make it more difficult for corporations to spend this kind of money," said Nathaniel Persily, a Columbia Law School professor and election-law expert.

"The shareholder-approval bills, if they become law, could have a dramatic effect," Persily added, "only because few companies are going to want to jump through the hoop of getting shareholder approval" before launching ad campaigns that call for the election or defeat of candidates.

Certain Deductions May Delay the Processing of Your Return

The IRS announced that due to recent changes in the law they announced that a certain percentage of returns would be delayed in their processing. In particular, returns with a state and local sales tax deduction, higher education tuition and fees deduction, and educator expenses deduction. If you will be claiming any of these deductions and would like to have your return processed faster you should e-file your return. Returns that are e-filed tend to have fewer errors and are processed faster which means that if you are entitled to a refund you will get that faster too! You can read all of the IRS’s advice at www.IRS.gov.

Effects of Election on Tax Laws

Now that the Democrats have won control over the House and Senate, you can expect changes in our tax laws. If you are interested in reading about some of the proposed changes you can read an interesting article in USA Today by clicking here.