The Internal Revenue Service has released guidance aimed at clarifying the tax treatment of mobile phones provided by employers to their employees. The guidance explains a provision of last fall’s Small Business Jobs Act of 2010 that removed cell phones from the definition of listed property, a category under tax law that normally requires taxpayers to perform additional recordkeeping.
IRS Notice 2011-72, issued in mid-September, provides guidance on the treatment of employer-provided cell phones as an excludible fringe benefit. According to the new guidance from the IRS, when an employer provides an employee with a cell phone primarily for noncompensatory business reasons, the business and personal use of the cell phone is generally nontaxable to the employee. The IRS will not require recordkeeping of business use in order to receive this tax-free treatment.
Employers had long complained that the categorization of mobile phones as listed property required businesses and their employees to keep detailed records listing exactly which phone calls were business-related and which ones were personal. Many employees needed to carry multiple cell phones just to avoid having their personal calls going to their business phone, and risk a heavy recordkeeping burden.
Simultaneously with the notice issued in September, the IRS also announced in a memo to its examiners a similar administrative approach that applies with respect to arrangements common to small businesses that provide cash allowances and reimbursements for work-related use of personally owned cell phones.
Under this approach, employers that require employees, primarily for noncompensatory business reasons, to use their personal cell phones for business purposes may treat reimbursements of the employees’ expenses for reasonable cell phone coverage as nontaxable. This treatment does not apply to reimbursements of unusual or excessive expenses or to reimbursements made as a substitute for a portion of the employee’s regular wages, the IRS noted.
Under the guidance, in cases where employers provide cell phones to their employees or where employers reimburse their employees for the business use of their personal cell phones, tax-free treatment is available without burdensome recordkeeping requirements. The guidance does not apply to the provision of cell phones or reimbursement for cell phone use that is not primarily business-related, as such arrangements are generally taxable. Details are in the memo and in Notice 2011-72, posted on IRS.gov.
This QuickBooks tip explains where you can easily access employee payroll forms; including the Federal I-9, W-4, and W-9′s.
Having used QuickBooks for many years, I can remember when needing an I-9 (Employment Eligibility Verification), a W-4 (Employee’s Withholding Allowance Certificate), or a W-9 (Request for Taxpayer Identification Number and Certification) meant a trip to the appropriate website to obtain the most current form – and depending on how busy I was at the moment, that could be a royal pain!
The I-9, Federal W-4, and W-9 are now available to anyone with a current payroll subscription using QuickBooks Pro/Premier 2009-2012 or Enterprise 9.0-12.0 from the Employees menu -> Employee Forms option; you’ll also find a Direct Deposit and Pay Card Authorization form.
Right click on the image to enlarge it.
NOTE: If you don’t see the Employee Forms menu option; choose the Get Payroll Updates option and get the latest payroll update. Restart QuickBooks after the update has been installed.
The forms open in a “fillable”. pdf format, so employees can type in their I-9, W-4, Direct Deposit or Pay Card Authorization information and it will be legible!
You can easily send W-9′s to your vendors as an email attachment {once the .pdf of the W-9 is open and visible, from the File menu -> choose Attach to email}.
You will still need to obtain the current version of the State W-4 from their website and have that on hand.
These are certainly handy forms to have quick access to and will save you from having to worry about whether or not you have a copy of the form, the most current version of the form, or from having to go searching on the internet to download the most current version that is available.
Critical note: You MUST have a .pdf creator/reader installed on your computer in order to open/use these forms. If you currently don’t have a pdf creator/reader, check out Foxit Reader – it’s free!
We hope you’ve found today’s QuickBooks tip to be helpful; if so please take a moment to leave a comment or share this tip with others via your favorite social networking site using the buttons below.
Has the need for instant gratification made us forget our manners? More and more people seem to want everything their way and they want it now – no matter when NOW is. Instant everything. Instant messages, email, fax, internet. Instant food, the faster the better. Instant education, job, wealth. Instant medical service, diagnosis, and an instant cure. Instant family. Instant travel. Instant information. Instant banking. Instant support and training – even if it’s 10 p.m. at night. Right or wrong, good or bad, it seem that most people want it NOW! What happened to please and thank you?
I live in a very small, rural town – where people still wave at strangers, if you see someone broken down on the side of the road – you stop to help them out. Life flows along at a very relaxed pace in our little corner of the world.
Cell phones are nothing more than expensive paperweights up here – if you try to use them {IF you are lucky enough to get a signal} you get a Canadian operator who asks you for your credit card — in French! We are not connected 24/7 – nor do we want to be.
Wanting and demanding things NOW is a pretty uncommon occurrence – around here — until I walk across my yard and up the stairs to go to work and then it all changes.
Gone are the days when the phone would ring and we’d hear “Hi, this is so and so from company name – how are you today?” Instead we hear “I need help!” when we answer the phone and seldom is there a please or a thank you. Everyone is in a hurry, their poor planning induced emergency is supposed to become our one and only priority – I need it now is not for me!
Computers and all of these gadgets were supposed to make our lives easier – give us more time for friends, family and fun. As an outsider, for the most part I don’t see that’s happened. People can’t drive down the road without being on their cell phones {even though it’s illegal here in Vermont}, they can’t go to the grocery store and get their groceries without being on their cell phone {the grocery store 14 miles away is one of the few places that you can actually get cell phone service}, my grandchildren seldom go outside because they are glued to video games, and my oldest granddaughter {12} has had a cell phone for 2 years and my daughter complains because she’s always on it “texting” to her friends instead of doing her homework!
If I took “do unto others as they do unto you” to heart – I’d be disconnecting the phone and the internet and hanging a “closed” sign on our website.
Thank you for reading this. If it hits home, please take a moment to leave a comment or share this on your favorite social media site using the button below.
Employers and employees, be aware that you could be receiving name/SSN no-match letters at home from the SSA {Social Security Administration} – learn what it means and how to respond to such a letter. Information contained in this article is from the General Ledger – the Complete Newsletter for Professional Bookkeepers, published by the American Institute of Professional Bookkeepers.
The SSA started sending out name/SSN no-match letters again in March of this year to employer and employee or self-employed at home. The new notices have one mismatch per letter and are called “Decentralized Correspondence” (DECOR). SSA wants to make sure that a worker’s earnings are posted to the right account. Exception: SSA will not be sending no-match letters for tax years 2007-2009.
SSA recommends responding to a no-match letter as follows:
- check your records to see if there is a discrepancy in the records submitted to SSA,
- ask the employee to check his/her records to determine if the information was accurately recorded/reported,
- instruct the employee to contact the SSA to resolve any discrepancy.
- provide the employee a reasonable amount of time to resolve the discrepancy (“reasonable” is not defined, but the “suggested” period is 120 days, the period used by E-Verify – but circumstances can change this); and
- document your efforts to resolve the matter.
There is no specific guidance on your obligations for responding to a no-match letter from the SSA, Immigration and Customs Enforcement (ICE) or Office of Special Counsel for Immigration-Related Unfair Employment Practices (OSC). But OSC offers some general guidance for setting up a response plan:
- Keep in mind that name/SSN no-matches can result from typos, misread numbers, name changes, etc.
- Check no-matches against your personnel records.
- Inform the employee of a no-match notice and request and confirm the name/SSN in your personnel records.
- If the employee confirms your records as correct, advise the employee to contact SSA to correct and/or update his or her SSA records.
- Give the employee a reasonable period of time to work out a reorted no-match with the local SSA office.
- Periodically meet with or contact the employee to findout about and document the status of his/her efforts to resolve the no-match.
- If the employee offers to supply a document that may resolve the no-match, review it carefully.
- Submit employer or employee corrections to the SSA.
Follow the same procedures for all employees, regardless of citizenship or national origins. Failure to do so may spark discrimination lawsuits against your company.
OSC also offers some don’ts:
- Don’t use the receipt of a no-match notice alone as a basis to terminate, suspend or take any other adverse action against the employee.
- Don’t try to immediately re-verify the employee’s employment eligibility – e.g., don’t ask the person to hand in a new I-9 solely because of a no-match letter.
- Don’t require specific I-9 documents to deal with the no-match letter.
- Don’t require the employee to provide a receipt of a request for an SSN or name change. (OSC points out that SSA receipts may not always be obtainable.)
Key Point: A no-match letter recipient is not required to respond. But if you don’t, the SSA may share the information with the IRS or Justice Department.
To avoid getting a no-match letter, use SSA’s:
- SSN Verification Services (SSNVS) at www.ssa.gov, click on Business Services Online, second link, far left; or
- Employer Verification (TNEV), an automated telephone service that allows registered users to verify names or SSNs over the phone without talking to an agent – call 800-772-1213 and at the prompt say “Employer SSN Verification”.
Federal law prohibits using SSNVS or TNEV for work authorizations – use it only to verify a current employee’s SSN.
I hope you’ve found this article helpful – if so, please take a moment to leave a comment and feel free to share this information with others on your favorite social media site.
Protecting your business from fraud and theft is a tough job these days – are you doing enough as a business owner to ensure that your assets are safe?
Did you know that according to a 2010 report from the Association of Certified Fraud Examiners, incidents of occupational fraud are 31% more likely to occur at small business as opposed to larger companies? And, to add insult to injury, as many as 40% of small business owners are embezzlement victims and that a staggering one-third of all bankruptcies are the direct result of internal theft!
To be hones, I had no idea of these statistics – until I read a very interesting article yesterday called Five steps to prevent small business fraud, in the Hartford Business Journal Online.
The article discussed:
- Managing finances using secure online banking
- Protecting computer systems and practicing online awareness
- Safely handling sensitive documents and financial statements
- Obtaining fidelity insurance {which protects your business against criminal acts such as robbery, embezzlement, forgery, and credit card fraud}, and
- Incorporating appropriate checks and balances
The author, Michael LaBella, offered some excellent advice about incorporating appropriate checks and balances;
Every small business owner should perform an internal review and assessment of company finances on a monthly basis. Make sure payment amounts match all invoices and check for any missing documents. Running random audits or having a third party audit your books once a year will show your employees you are serious about fraud and deter them from committing deceptive acts.
While that’s very good advice, I don’t think it’s quite enough, below are some additional tips for protecting your business from fraud.
- As a business owner you should be signing all of the checks written on your company checking account – throw out the signature stamp and don’t use the QuickBooks option that allows checks to be printed with your signature already in place! That’s just asking for trouble…..
- Balance your checking account and credit card statements each month – that way you can “see” those transactions and verify where the company’s money has gone.
Yes, this means more for you to do as a business owner – and I’m sure that you already have a full plate – but isn’t it better to be safe than sorry?
What safeguards do you have in place to protect your business from fraud?
I hope you’ve found this article to be helpful and thought provoking, if so please take a moment to leave a comment or share it with others on your favorite social media platform using the buttons below.
