On July 21st, President Obama signed into law H.R.4173, the Dodd-Frank Wall Street Reform and Consumer Protection Act (the Act). Among its more publicized changes, such as the new Consumer Financial Protection Agency, are a number of regulations on executive compensation and shareholder voting rights. The Act establishes new guidelines for compensation committee independence, executive pay, golden parachutes, and clawback provisions.
Independence of Compensation Committees
Under the Act, each member of a public company’s compensation committee is required to be both independent and a member of the board of directors. This does not apply to controlled companies, limited partnerships or certain other entities. A covered company’s failure to comply will prohibit listing on any national securities exchange. “Independence” is based on the source of the director’s compensation (including independent contractor consulting fees) and the director’s relationship with the company and affiliates.
Florida’s 2010 Sales Tax Holiday begins tomorrow. No Florida sales tax or local option taxes (also known as discretionary sales surtax) will be collected on sales of books, clothing, footwear, and certain accessories selling for $50 or less, or on certain school supplies selling for $10 or less. This three-day tax exemption is in effect from 12:01 a.m., Friday, August 13, 2010, through midnight, Sunday, August 15, 2010.
The sales tax exemption applies to each eligible book or item of clothing selling for $50 or less and to each eligible school supply item selling for $10 or less. The exemption will still apply no matter how many items are sold on the same invoice to a customer.
The President recently signed into law the Homebuyer Assistance and Improvement Act of 2010, which extends the closing deadline for the Homebuyer Tax Credit to September 30, 2010. The extension comes in response to concern from buyers worried about filing closing paperwork by the prior July 2 deadline. As guidance from the IRS states, homebuyers still must have entered into a binding contract to purchase a home before May 1, 2010.
In addition to Form 5405, First-Time Homebuyer Credit and Repayment of the Credit, homebuyers claiming the credit must provide the following documentation:
Under the Section 3121(v)(2) nonduplication rule for nonqualified deferred compensation (NQDC) plans, once deferred amounts have been taken into account for FICA tax purposes, they are never again subject to those taxes. Earnings on those amounts deferred after they are taken into account for FICA purposes are not considered wages for FICA tax purposes.
In recent informal emailed advice, an IRS attorney noted that taxpayers who pay FICA as they should have upon deferral only pay FICA on the amounts deferred, and they pay it prior to retirement when they may have other wages to get them over the FICA wage base (so they may only pay Medicare).
If your organization has a foreign bank account, you need to make certain that you comply with reporting rules because the penalties for noncompliance can be substantial.
U.S. persons, including tax-exempt organizations, with a financial interest in or signature authority over a foreign financial account are generally required to file Form TD F 90-22.1, Report of Foreign Bank and Financial Accounts (“FBAR”) with the Department of the Treasury. The FBAR is due by June 30 for a foreign account in which the aggregate value exceeded $10,000 at any time during the previous calendar year.
Among the Health Care Act changes in effect this year is a provision to expand the requirements for a child to be kept on their parent’s health coverage plan. The Act changes requirements for both cafeteria plans and plans offering dependent coverage, making it possible for adult children to be kept on their parent’s insurance plans for a longer period of time. The IRS recently released guidance (IRS Notice 2010-38) on the full implementation of the provision.
Cafeteria Plans
Effective March 30, 2010, employers with cafeteria plans are permitted to allow employees to make pre-tax, salary reduction contributions to covered children. The credit will take effect as of March 30 regardless of the plan’s most recent language. Plan sponsors will have until December 31, 2010 to amend cafeteria plans to formally incorporate the change.
In a speech to the National Press Club (NPC) earlier this month, IRS Commissioner Douglas Shulman addressed his views on the IRS’s role in tax collection both during a recession, and into the future. His remarks examined both the historical role of the IRS, and its expansion into the future. Shulman is particularly focused on IRS collaboration with other governments in order to enforce tax compliance in individual offshore financial assets.
Shulman points to this time in the IRS’s history as a “new era of global tax administration.” The argument relies not only on the increasingly global nature of both personal and corporate finances, but also increased pressure on US citizens due to the recession. In remarks made later on April 13, he said that “it is more important than ever that the American public feels confident that individuals and corporations are playing by the rules.”
Given the scope of this landmark legislation, this short summary is by no means a comprehensive review of the new law. As your tax professionals at CB&H continue to study the legislation, we will continue to keep you informed and up-to-date regarding the health care reform’s tax implications for you and your business.
April 15th is around the corner, and for many people that means it’s time to pay Uncle Sam what’s due for 2009. In some cases, funds will also be needed for first quarter estimated tax payments as well as the balance due on 2009 taxes. But what if you can’t pay the full amount owed by the April deadline? Should you still file your return on time and pay as much as you can or should you wait to file until you can pay it all? There is no question, to avoid penalties and unnecessary interest charges, you definitely want to file on time and pay as much as you can. If you cannot pay the full amount, alternative payment options are available. Here are some of the alternative payment options you may want to consider:
Additional Time to Pay
Based on your circumstances, you may be granted a short additional time to pay your tax in full. A brief additional amount of time to pay can be requested through the Online Payment Agreement application at IRS.gov or by calling 800-829-1040. Taxpayers who request and are granted an additional 30 to 120 days to pay the tax in full generally will pay less in penalties and interest than if the debt were repaid through an installment agreement over a greater period of time.
Multitaskers proclaim the ability to accomplish many things at once, but won’t admit that multitasking could present a serious drag on their productivity. At work, our time is always being balanced between email, phone calls, spreadsheets, documents, meetings and a host of other office distractions. We pride ourselves in being able to “get the job done” while doing many jobs at once. Recently, scientific reports assert that multitasking is more detrimental to our productivity than we think. One report suggests that it takes 25 minutes to return to a task once we’ve been interrupted. In this video entitled “Work Smart” by Inc, Gina Trapani describes the effect that “juggling” tasks has on our overall productivity and outlines ways we can combat distractions and get more done.
Independence of Compensation Committees
