QUESTION ON PAYROLL DEPOSITS NOT MADE

Larry, what are your thoughts on this. My business is not doing very well. I have some serious cash flow issues. I can't make my payroll tax deposits. How much trouble am I in?

Ted

Ted, sorry that you are having problems. My best advise is to do a cash flow budget to determine if there is a light at the end of the tunnel. As far as missing the deposits, this is a big mistake.

Failing to deposit withheld income taxes, Social Security and Medicare contributions, and employer matching amounts on time can be expensive. The government wants its money by strict deadlines. Penalties accrue quickly if your business or organization misses deposit deadlines. As far as the government is concerned this is money that you are holding from them. Not giving it to them timely is paramount to stealing. That is why the penalties are so high.

The penalty for not making deposits on time is:

1 to 5 days late, 2 percent of amounts due.
6 to 15 days late, 5 percent.
16 or more days, 10 percent.
15 percent if notice from the IRS is ignored, plus interest on the amount not deposited, plus 100 percent of the uncollected amounts if the failure to deposit is willful.

Note this grave, personal danger: These penalties can be levied personally against all responsible individuals in a business or organization. The corporate veil is no shield in these situations. Any individual with a responsibility for getting the money to the government on time faces possible exposure to penalties and fines. This includes non owners.

Let me know if there is anything I can do to help.

Larry Kopsa CPA

QUOTE OF THE WEEK

"And in the end, it's not the years in your life that count. It's the life in your years."

Abraham Lincoln

BETTER BUSINESS BUREAU WARNS ABOUT A PHISHING SCAM

The AP reports, "Companies in Nebraska and across the nation are being warned to be on the lookout for bogus e-mails supposedly sent by the Better Business Bureau." According to the story, "the e-mail's subject line includes a nine-digit complaint number," and the text of the message "claims that the recipient didn't respond to a complaint filed by 'Jason Harlow'" or other name. If the link is opened, "malware is downloaded." See the AP story by going to http://www.krvn.com/news/index/7019ed14-95d8-4c5b-97c5-c50df2a63b59>

HOW WOULD THE EXPIRATION OF THE BUSH-ERA TAX CUTS AFFECT AVERAGE MIDDLE-INCOME?

Nationally, the typical middle-income family, which has a median income of $63,366, would see its federal income tax burden increase by $1,540 if the Bush-era tax cuts expire.

A new report by the Tax Foundation shows how the expiration of the Bush-era tax cuts would affect the average middle-income family in each state and congressional district. The report looks at the average family in the middle 20 percent of the income spectrum and compares their 2011 federal income tax liability if all the tax cuts expire to their tax bill if all the tax cuts are extended.

BUSH TAX CUTS

If you are interested in the debate on letting the Bush Tax Cuts expire I have harvested some of the pro and con articles. My thinking is that I agree with the first article that increasing taxes in actuality slows down revenue. I can give you examples of clients that did not expand their businesses during the high Carter tax years because the government was going to get up to 80% of any profit that was made. Here is a quote from President Kennedy on taxes that is in the Soak the Rich Catch-22 piece.

"Tax reduction thus sets off a process that can bring gains for everyone, gains won by marshalling resources that would otherwise stand idle—workers without jobs and farm and factory capacity without markets. Yet many taxpayers seemed prepared to deny the nation the fruits of tax reduction because they question the financial soundness of reducing taxes when the federal budget is already in deficit. Let me make clear why, in today's economy, fiscal prudence and responsibility call for tax reduction even if it temporarily enlarged the federal deficit—why reducing taxes is the best way open to us to increase revenues."
—President John F. Kennedy,
Economic Report of the President

The Soak-the-Rich Catch-22

To deal with the deficit, let the tax cuts expire

A tax increase in these uncertain economic times would be devastating.

Pending tax hikes cause Democratic tension

Liberal Tax Revolt Game-Changer

The calamitous effects of Obama's tax hikes

Pence promises full-fledged GOP campaign to keep Bush tax cuts

Tax hikes for the rich: Can the economy afford them?

Battle Looms in Washington Over Expiring Tax Cuts

Geithner says allowing tax cuts for wealthy to expire would be responsible thing to do

CREDIT CARD ISSUERS ROLL OUT NEW FEES

Consumer advocates claim that some of the largest credit card companies, including Citigroup, JPMorgan Chase, and Discover Financial Services are introducing new fees to recover lost revenue from the Credit Card Accountability Responsibility and Disclosure Act of 2009. Consumer groups are claiming some banks may even be breaking the law, which was set up to protect consumers. The Wall Street Journal

QUOTE OF THE WEEK

"Do your little bit of good where you are; it's those little bits of good put together that overwhelm the world."
- Bishop Desmond Tutu