October, 2008

“B” Notice for 1099s

If you issued 1099s in 2007 where the contractor name doesn’t match the tax ID number on file, the IRS has recently sent you a CP2100 notice. You’re supposed to do something with this.

Typically, this happens because someone gave you their personal Social Security number and their business name, or it could be a data entry error over at the IRS, or you could have copied the name or number down wrong.

You need to check the W-9 you have from the contractor against the IRS notice. If they have different numbers from what you reported, you’re done. Don’t do anything (except put the right name/number combination down NEXT year).

Don’t have a W-9 filled out by your contractor? Get one at: http://www.irs.gov/pub/irs-pdf/fw9.pdf?portlet=3.

If the IRS has what you have, then there’s a second step. If you’ve received a notice about this contractor twice in three years you have to do a further step that we won’t talk about here. See IRS Publication 1281 for further information.

Generally, if you get a CP2100 you have to begin “backup withholding” – you keep back 28% of the amount due and send it to the IRS unless you get a revised W-9 back from the contractor with a corrected number. You are supposed to mail out a “B” notice (see below) with a blank W-9 within 15 days, and they’re supposed to fill out the W-9 and return it within 15 more days. The envelope you mail this stuff in has to say “Important Tax Information Enclosed.” The new W-9 has to be written and signed (fax or PDF is OK by me) – you can’t just get the info over the phone.

The actual text of the “B” notice is on page 22-23 of Publication 1281 available at: http://www.irs.gov/pub/irs-pdf/p1281.pdf. The IRS doesn’t seem to include what you’re required to mail out with the CP2100 letter you get, so you’ll need this link to do what you’re supposed to do!

Don’t send the new W-9 in to the IRS. Don’t amend your 2007 1099s (unless the dollar amount was wrong).

Personal due October 15th

If you are on extension, your return is due quite soon. We’ve been pretty busy so if you know you need to file, give us a call so we can schedule to prepare your return, get us your materials, and do it soon please!

If you’re not on extension, you’re already filing late, and there’s a penalty (based on the amount you owe) of 4.5% per month, so you should want to file as soon as possible too! There’s really nothing I can do to lessen this penalty other than to get your return filed.

Classes – Basic Payroll, Household Employees, Schedule C and Mortgage Interest Tracing

In conjunction with the IRS and EDD, Andy's going to be doing some Basic Payroll seminars coming up in the near future.

Basic Payroll: Seminar runs 9 am – 3 pm with an hour for lunch

The next seminar will be
Basic Payroll in Oakland at Elihu M. Harris State Building,1515 Clay Street, Room 2, Second Floor,
October 15th http://www.edd.ca.gov/Payroll_Tax_Seminars/Reserve_Space.asp?SemID=3136

Basic Payroll in San Rafael is presented at 120 North Redwood Drive, 2nd floor, Redwood Room East Wing, Room E-212 on
October 22nd http://www.edd.ca.gov/Payroll_Tax_Seminars/Reserve_Space.asp?SemID=3147

These seminars have proven to be very popular, plus they’re free.

Household Employees
Learn what you need to prepare Household Employer Payroll Taxes to protect yourself from loosing your house if a household worker is injured while working for you, or just avoid penalties when they file for unemployment. This class is TENTATIVELY scheduled for Saturday, November 15th in Lafayette, 9 am to 1 pm at 100 Lafayette Circle. Look for our Tax Buddha sandwich board sign (space is limited, so sign up early!). Sign up sheet is at http://www.taxbuddha.com/class and the CPE is pending. The class is good for people who have household employees and need to know what to do, and this appears to be the only place to learn about both California and Federal law at the same time that I’ve ever seen.

How to Prepare your Own Schedule C
Prepare your business taxes for ’07 and get ready for ‘08. Review what the IRS wants to know from you and how to report it on the Schedule C for your business. This is a class for business owners who need a basic understanding of their 1040 Schedule C tax forms. We’ll also talk about what to do with the numbers once you have them. We can’t guarantee you won’t get audited, but this class will make it less likely.

Andy will be at the US Small Business Administration offices in San Francisco at 455 Market Street, 6th Floor October 1, 6-8:30 pm. This class will be free.

For the Tax Professional:

S-Corporations Part 1: Getting in and Staying in, along with the NEW Part 2: Staying in and Getting Out are scheduled for mid-November in Lafayette, dates and location yet to be determined.

For relaxation and Clear Thinking: On The Spot

To carry you through the summer, we recommend meditation and that you check out On The Spot Massage at http://www.onthespotmassage.com/corporate.html to help you relax. A relaxed mind is a clear thinking mind. Makes an excellent gift for your tax preparer or other important person in your life.

The 8-Fold Path to Paying Less Tax and Avoid an Audit

“The 8-Fold Path to Paying Less Tax and Avoid an Audit” is a booklet for people already in business who need to know what they need to know to stay out of trouble while maximizing their after-tax profit. We’re just finishing up the cover for the booklet, but Andy will be presenting a talk by the same name at the “Business Conference for Women Entrepreneurs” on Monday November 3 at the Hyatt Regency in SF 9:45 – 11:15 am. Admission is $200 to the general public. You can register at http://www.regonline.com/Checkin.asp?EventId=652062
Kelly McKae has more information at 415 320-5936

Here’s the blurb:
The 8 most important things a business owner needs to know, do, or not do to minimize taxes and stay out of trouble. Includes:

New Phone and Fax Numbers

We have moved our office to a shared commercial space in Alameda (the Berkeley address is still good, it is a PMB) and have new phone numbers. The old numbers still forward, but AT&T gets a fee for each call forwarded. New numbers are:
Phone (510) 522-2300
Fax (510) 522-2307