March 2012
The IRS allows you to make a gift of $13,000 per year without gift tax consequences (subject to certain limitations). However, any gift in excess of that amount must be reported on a Form 709 (Gift Tax Return).
Recently, the IRS has started an initiative to enforce the laws regarding unreported gifts, especially gifts of real estate. To ensure taxpayers are abiding by the law, the IRS is reviewing local real property records to evaluate transfers of real estate. Texas is one of several states that has disclosed their property records to the IRS.
Gift tax audits are becoming more common. It only makes sense to avoid the penalties that could result from not reporting a gift, as well as the stress, work, and potential fees to attorneys and CPAs, that are associated with an audit. If you make gifts, I strongly suggest that you consider the requirement to report those gifts in accordance with federal law.
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March 2012
The IRS is aware that many businesses, in order to save payroll taxes, will classify a worker as an independent contractor. They have recently begun to look more closely at these classifications. Over the next three years, they will randomly select businesses to audit to determine if workers have been wrongly classified. The Department of Labor is also looking at these issues.
Do not make the mistake of enjoying a short term savings and end up with long term costs. If it is found that a worker should have been classified as an employee, as opposed to independent contractor, the costs can be significant in the form of back taxes, penalties and fines. If you need more information on whether a worker is an employee or independent contractor, the IRS provides guidance in the form of a 20 factor test. That test is accessible online at www.texasworkforce.org.
The government is looking for additional revenue, so do not take this issue lightly. Please call us if you need clarification of the rules or more information.
Disclaimer:
This information does not constitute the rendering of legal, accounting or other professional services by Pete Benenati or Benenati Law Firm, PC. This information is not intended to create or provide an attorney-client relationship. Although care is taken to present the material accurately, any implied or actual warranties as to any materials herein are hereby disclaimed along with any liability with respect thereto.