• Don’t get excited or panic. Many of these notices are generated through IRS analytics and can be dealt with painlessly.
  
  
• There are a number of reasons the IRS sends inquiries to taxpayers. Perhaps a request to pay taxes which are past due. Some just notify you of a change to your internal IRS account. Others request additional information. Usually there is specific issue which needs to be resolved.
  
  
• Included in each notice are instructions on how to satisfy the inquiry. Typically the tax period and form are located in the upper right hand corner of the first page. If a simple correction and no balance is due, you may quickly compare the figures located in the body of the notice with your tax return and if no response is requested, just file with the documents for your next year’s return unless you disagree with the change made.
  
  Robert Palmer and Associates can quickly review these documents and provide an answer to you as to what the next steps are for notice resolution.
  
  
• If there is a disagreement, timing is very important. It is important that these notices are responded to in the time period required. Should we need to make a telephone call on your behalf, we will need to file a power of attorney form to enable us to discuss the issue in question with the IRS. The filing of this POA form normally takes two to three weeks of processing on the IRS’s side.
  
  As such, please see us as soon as you receive a notice to allow proper time for filing and a telephone call to be made. If a response is required, we will prepare the response for you using the specific language and code sections required to resolve the issue. Incorrect or incomplete responses to the IRS by a taxpayer will usually lead to further inquiries, so please contact us to resolve these issues on your behalf.
  
  
• It is very important for the taxpayer to retain a copy of all notices for future reference. I can't count the number of times a taxpayer has read a notice and mailed a response, and then received an additional inquiry based on the response given and they failed to keep a copy of the original notice because they checked a box or wrote on the original document and just mailed it back in the enclosed envelope only to find the notice was not resolved completely.

attention s corp owners:
It is that time of year again to make sure you have that annual meeting and do the required minutes for that meeting to be filed in your corporate book.

Your corporate book should contain the following:

1. Original certified copy of the Articles of Incorporation
2. Original set of bylaws and any changes thereafter
3. The advance ruling letter or determination letter from the IRS confirming the company EIN
4. Copy of sales tax license if applicable
5. Minutes of annual meetings
6. Share certificates
7. Buy/sell agreements
8. Any other legal documents compiled for the corporation

It is also a good idea to keep the last three year’s tax returns in this book along with copies of any business insurance policies. It is very important to keep this book up to date and complete as it is typically the first item inspected during an IRS face to face examination.

Call 803.547.7676 to set up your appointment, or send us an email with questions.

HSA changes Affect over the counter drug purchases:
The IRS has issued guidance regarding the recent change in Health Savings Account guidelines contained in the Affordable Healthcare Act. One change affecting many HSA plan contributors that you must take note of immediately, HSA, MSA, FSA, and HRA accounts will no longer be able to be used to pay for over the counter drugs effective January 1, 2011. Your employer should notify you of this change, but if not, please be sure to take the effect of this change in determining the total amount to be deducted for payroll for these plans during plan year 2011. Three types of drugs are still allowed under this new statute including prescription drugs, over the counter drugs (for which a prescription has been obtained), and insulin. Distributions outside these guidelines will be subject to the 20% penalty. (Notice 2010-59)

For more information on this HSA change, send us an email, we look forward to answering any questions you may have.

• Let’s review the energy efficiency credit for a minute. Please remember for homeowner’s to claim the energy credit the improvement must be made to a primary residence and must be installed by December 31. The credit is 30% of the cost of energy saving improvements and has a maximum of $1,500 total for all of the years the credit is available. The improvements may include outside doors, windows, skylights, special asphalt roofs, and high efficiency furnaces, water heaters and central air conditioners.
  
  
• Recently the IRS admitted to an error in their computer system which caused thousands of notices to be issued to businesses who have hired the unemployed and are taking the current tax break.
  
  Employees hired after February 3, 2010 who worked less than 40 hours in the past 60 days achieve the employer a credit for their 6.2% of Social Security tax on their wages. Should you receive a notice regarding a shortfall in tax deposits, please contact us immediately to assist in handling the issue timely.

SIMPLE IRA DEADLINE:

SIMPLE IRA Deadline for initial setup is approaching. The deadline for setting up a SIMPLE IRA for 2010 deferrals is October 1. Please make sure you discuss this option with your financial planner immediately if you do not have a plan set up today.

Call 803.547.7676 to get more information on the SIMPLE IRA deadline, send us an email.