From the July 15, 2011 IRS Newswire – IRS Gives Truckers Three-Month Extension; Highway Use Tax Return Due Nov. 30, 2011
WASHINGTON — The Internal Revenue Service today advised truckers and other owners of heavy highway vehicles that their next federal highway use tax return, usually due Aug. 31, will instead be due on Nov. 30, 2011.
Because the highway use tax is currently scheduled to expire on Sept. 30, 2011, this extension is designed to alleviate any confusion and possible multiple filings that could result if Congress reinstates or modifies the tax after that date. Under temporary and proposed regulations filed today in the Federal Register, the Nov. 30 filing deadline for Form 2290, Heavy Highway Vehicle Use Tax Return, for the tax period that begins on July 1, 2011, applies to vehicles used during July, as well as those first used during August or September. Returns should not be filed and payments should not be made prior to Nov. 1.
To aid truckers applying for state vehicle registration on or before Nov. 30, the new regulations require states to accept as proof of payment the stamped Schedule 1 of the Form 2290 issued by the IRS for the prior tax year, ending on June 30, 2011. Under federal law, state governments are required to receive proof of payment of the federal highway use tax as a condition of vehicle registration. Normally, after a taxpayer files the return and pays the tax, the Schedule 1 is stamped by the IRS and returned to filers for this purpose. A state normally may accept a prior year’s stamped Schedule 1 as a substitute proof of payment only through Sept. 30.
For those acquiring and registering a new or used vehicle during the July-to-November period, the new regulations require a state to register the vehicle, without proof that the highway use tax was paid, if the person registering the vehicle presents a copy of the bill of sale or similar document showing that the owner purchased the vehicle within the previous 150 days.
In general, the highway use tax applies to trucks, truck tractors and buses with a gross taxable weight of 55,000 pounds or more. Ordinarily, vans, pick-ups and panel trucks are not taxable because they fall below the 55,000-pound threshold.
For trucks and other taxable vehicles in use during July, the Form 2290 and payment are, under normal circumstances, due on Aug. 31. The tax of up to $550 per vehicle is based on weight, and a variety of special rules apply to vehicles with minimal road use, logging or agricultural vehicles, vehicles transferred during the year and those first used on the road after July.
Last year, the IRS received about 650,000 Forms 2290 and highway use tax payments totaling $886 million.
Current and future tax law changes will make the role of your construction company’s CPA more important – not less.
This weeks Freebie Friday is an article from the Construction Financial Management Association (CFMA) about what your construction company should look for in a CPA.
Download the article by clicking here.
I hope you enjoy this article - I did!
Have a great weekend 
A payroll tip about who the IRS may hold liable for 941 tax payments.
Are you the bookkeeper or accountant for your company? Are you a signer on any of the company bank accounts? What about your client’s accounts? Do you sign on any of them? If so, you may be held responsible by the IRS for underpaid 941 liabilities. Sounds scary, but it can be true.
How is it possible that can be true? The IRS says the federal income tax and the employee’s portion of social security and medicare taxes withheld is a trust fund. It is to be deposited according to the schedule they have determined for your company. The IRS cannot collect this tax from the employee, even if the employer does not pay the tax to the government.
To protect the government when the tax has not been paid, Internal Revenue Service Code 6672 subjects “all responsible persons” for withholding and payment of taxes to a penalty equal to the amount of taxes due. The penalty is imposed on anyone who is required to collect, administer and pay over the tax and who willfully fails to so.
Two requirements must be met. First you must be a “responsible person”. The IRS considers a responsible person anyone who has authority to make business decisions for the company, not just owners of companies. If you pay the company bills and sign the checks, then you are making business decisions. You process payroll and sign checks, make the 941 tax deposits and file the 941 quarterly returns, you are making business decisions.
The second requirement for the penalty to be imposed would be if you willfully failed to pay the tax due. You withheld the money from the pay checks that you signed, but rather than paying the tax liability, you decided to pay a supplier, or a utility, or another vendor. Once you have done that, you have met both requirements and are subject to the penalty imposed by I.R.S. Code 6672.
Once the IRS determines that a tax is due, forms 4180 and 4183 are completed by an agent, which identifies the responsible person in the company. In 1993 the IRS determined that secretaries, bookkeepers (nonaccountants), and charitable volunteers are not subject to I.R.S. Code 6672. Accountants, however, are still held accountable.
What can you do as an employee? Advise your employer of the penalties he will face for not paying the taxes due. If possible, don’t be a signer on any accounts. You don’t want to be personally responsible for the company you are working for.
What can you do as an owner? Pay your taxes on time. Pay them before you pay your other vendors. It’s not your money once you have paid your employees.
Is your company short on cash and wondering which bill to pay first? That bill should be your payroll taxes!
At one point or another, every business is going to be short on cash and will be faced with the challenge of figuring out which bill they should pay first. The first bill that you absolutely have to pay first is your is your payroll tax bill – otherwise it is going to cost you dearly in the long run!
Below is a real example, taken from the March edition of The General Ledger, a monthly newsletter from the American Institute of Professional Bookkeepers.
To deal with its financial problems T Corporation decided to pay several creditors, putting off for two quarters paying employment (payroll) taxes and filing related returns. T Corporation finally paid the taxes and over $30,000.00 in penalties and interest, then asked for a refund of the penalties, claiming that it had been “teetering on the brink of bankruptcy.”
The case then went to court and the IRS won.
An employer must pay federal employment taxes when it has the cash flow to make the payments. Spending the money for other purposes is considered to be “willful failure” to pay taxes.
If necessary, a taxpayer must make an effort to borrow the funds or delay payment of loans or obligations so it can pay the taxes. Failure to pay employment taxes may be excused when payment would cause “undue hardship,” defined as a substantial financial loss, such as losing business or contracts, facing actions against the company by creditors that would damage the business, or having to sell property at a sacrifice price to pay the taxes by the due date.
But T Corporation provided no proof of any hardship(s).
Moral of the story — pay your payroll taxes; if you can’t contact your tax advisor for help in working with the IRS to delay payment AND be prepared to show proof. Don’t just make the decision to not pay them or pay them late; it is too costly in the long run.
The Balance Sheet by Class Report is new in QuickBooks 2011 and it gives users the option of selecting “Classes” (fund, location, profit center, or other category) as their column/class grouping.
Over the last several days, I’ve been discussing and sharing some information about how we all will need to change our data entry procedures in order to utilize the New Balance Sheet by Class Report available in QuickBooks 2011.
In previous articles:
- QuickBooks 2011 – New Balance Sheet by Class Report – Part 1, we touched briefly on the fact that transactions will have to be entered in a very specific manner and there are many data entry transactions that are not supported by the Balance Sheet by Class Report
- QuickBooks 2011 – New Balance Sheet by Class Report – Part 2, we discussed how accounting professionals and end users would need to change their procedures when creating journal entries so that they were balanced
- QuickBooks 2011 – New Balance Sheet by Class Report – Part 3, we discussed how users and accounting professionals would no longer be able to assign multiple classes to a single paycheck.
- QuickBooks 2011 – New Balance Sheet by Class Report – Part 4, we discussed how you would need to classify Payroll Liability Payments in order for them to be appropriately recognized on the final report.
In this article, we’ll discuss how Sales Tax Liability Payments must be handled.
When you create an invoice, the sales tax that you owe will be accurately displayed on the Balance Sheet by Class report under the appropriate class heading.
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However, when you create the Sales Tax Liability check, the amount will appear in the Unclassified column of the Balance Sheet by Class Report in both cash and accrual based reports.
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The reason that your Sales Tax liability payment is not accurately allocated is because there is not a Class column available in the Sales Tax check form.
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The resolution in the QuickBooks Help file provides pretty clear instructions on how you, as the QuickBooks user or accounting professional, can manually allocate classes to the payment AFTER you create the Liability Check, through the use of a Journal Entry. However, you must follow the instructions carefully in order for your Balance Sheet by Class report to be accurate.
In order to resolve this problem, you will need to create a journal entry to move the sales tax payment amount from unclassified to the correct class. In order to accomplish this, you’ll need to:
Create a special “Clearing” Bank account in your Chart of Accounts, if you currently do not have one.
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Run a Balance Sheet by Class report as of the date that you will be paying the Sales Tax through, (1/31/2010) to determine the amount of Sales Tax that you owe for each class ($108.00 liability for the Installation class).
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Make a journal entry to move the payment from the unclassified column to the appropriate class, using the Clearing Account.
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The Clearing Account should ALWAYS have a zero balance.
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While this work around will provide an accurate Balance Sheet by Class Report, procedures will need to be changed, documented, and followed carefully. Business owners will need to inform the accounting professionals that they work with of these new procedures.
How will this procedure impact you, as a business owner or accounting professional?
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