Ongoing computer scams targeting small businesses cost U.S. companies US$25 million in the third quarter of 2009, according to the U.S. Federal Deposit Insurance Corporation.

Online banking fraud involving the electronic transfer of funds has been on the rise since 2007 and rose to over US$120 million in the third quarter of 2009, according to estimates presented Friday at the RSA Conference in San Francisco, by David Nelson, an examination specialist with the FDIC.

The FDIC receives a variety of confidential reports from financial institutions, which allow it to generate the estimates, Nelson said.

Read more at PCWorld

When it comes to paying taxes, perhaps more so than in any other area of our daily lives should the adage “there is no such thing as a free lunch” be ringing in our ears.  Yet, each year numerous taxpayers persuade themselves that they are exempt from tax based on any one of a number of too often recurring themes.

The Internal Revenue Service has released the 2010 version of its discussion and rebuttal of many of the more common frivolous arguments made by individuals and groups that oppose compliance with federal tax laws.

Anyone who contemplates arguing on legal grounds against paying their fair share of taxes should first read the 80-page document, The Truth about Frivolous Tax Arguments.

The document explains many of the common frivolous arguments made in recent years and it describes the legal responses that refute these claims. It will help taxpayers avoid wasting their time and money with frivolous arguments and incurring penalties.

Congress in 2006 increased the amount of the penalty for frivolous tax returns from $500 to $5,000. The increased penalty amount applies when a person submits a tax return or other specified submission, and any portion of the submission is based on a position the IRS identifies as frivolous.

IRS highlighted in the document about 40 new cases adjudicated in 2009. Highlights include cases involving injunctions against preparers and promoters of Form 1099-Original Issue Discount schemes and injunctions against preparers and promoters of false fuel tax credit schemes.

From the Journal of Accountancy:

The IRS provided the 2010 inflation adjustments to the depreciation limitations and lease inclusion amounts for certain automobiles under IRC § 280F (Revenue Procedure 2010-18).

For passenger automobiles (other than trucks or vans) placed in service during calendar 2010, the depreciation limit under IRC § 280F(d)(7) is $3,060 for the first tax year; $4,900 for the second tax year; $2,950 for the third tax year; and $1,775 for each successive tax year. Trucks and vans have higher limits: $3,160 for the first tax year; $5,100 for the second tax year; $3,050 for the third tax year; and $1,875 for each successive tax year.

IRC § 280F(c) likewise limits deductions for the cost of leasing automobiles, expressed as an income inclusion amount according to a formula and tables prescribed under Treas. Reg. § 1.280F-7. The revenue procedure provides an updated table of the amounts to be included in income by lessees of passenger automobiles and another for trucks and vans, in both cases with lease terms that begin in calendar 2010.

The nation finally may be clawing out of the longest recession since the 1930s. But states still are groping to find the bottom of a fiscal crisis prolonged by historic revenue drops, eye-popping budget deficits, double-digit unemployment in more than a dozen states and rising demands for social services.

In State of the States 2010, the Pew Center on the States looks beyond the acute problems caused by the Great Recession to examine larger trends that have the potential to change state government in lasting ways.

Both policy makers and voters will make key choices this year that will help determine the shape of state government in this new decade and beyond. The latest in a series of annual publications, State of the States 2010 can help inform those choices with its nonpartisan, analytical look at the recession’s effects on policy and politics in the 50 states.

Stateline.Org

Taking a client out for lunch is one of the most basic business activities there is. And it’s one that can run a small business owner afoul of the IRS.

There has been a tug of war for years between the government and businesses over entertainment expenses. The agency is on the lookout for companies that take excessive deductions, or that try to bundle together personal and business expenses.

AP article as reported on Yahoo News

It’s probably a good idea for most business owners to focus on the core of their business, such as selling fishing lures or designing websites, and use experts to help them in financial matters. According to the IRS, more than 80% of small businesses use accountants to prepare their returns, something you may be acutely aware of during tax season. But tax return preparation isn’t the only reason to use an accountant.

Here are five areas to discuss with your accountant:

• Cash Flow –  Cash flow, which is the cycle of money in and out of your business, is the lifeblood of any company.
• Theft Protection – According to the *Annual Report to the Nation by the Association of Certified Fraud Examiners, the median loss by fraud in small businesses (fewer than 100 employees) is $200,000.
• Financing – You may want or need to raise additional funds to grow your business or undertake a specific purchase or project.
• Taxes – Taxes are a complex and costly concern for most businesses.
• Inventory – If your business involves inventory, you’ll want to stay on top of your merchandise and find new or better ways to handle your inventory.

Read the entire article: Business.gov

In early January 2010, *CNN Money reported that the Small Business Administration’s flagship lending program – the Basic 7(a) Loan Program – backed 37% more loans in its latest quarter than it did during the same period in the year prior. That’s $3.8 billion spread across 12,393 loans.

If you have struggled to get financing in the past, or are thinking of venturing into small business loan territory for the first time, here are some pointers. Business.gov

Utah State Tax Commissioner R. Bruce Johnson Feb. 4 urged Congress to abandon the physical presence standard for sales taxes and not to consider it for income or business activity taxes in the new economy, as lawmakers look at legislation (H.R. 1083) to require physical presence for certain such activity taxes.

At the same time, Joseph Crosby, chief operating officer and senior director of policy for the Council on State Taxation, said the wide variety of existing state tax laws and regulations are a heavy burden on interstate commerce and need clarification.

The third and final witness at the hearing, Walter Hellerstein, Francis Shackelford distinguished professor in taxation law at Georgetown University, Washington, D.C., said in its consideration of the various proposals for limiting, expanding, or otherwise modifying the existing nexus rules embodied in judicial doctrine, the subcommittee should keep in mind that there is no global or “one-size-fits-all-solution” to the problems involved.

Tax News By BNA Software

The President has released the details of the proposed new jobs tax credit for businesses.  Although there will undoubtedly be changes as it goes thru the legislative process, the following is a brief summary of the current proposal:

A $5,000 tax credit for each new employee.  This will be measured against wages subject to the federal unemployment wage base ($7,000) times 72%.  The credit will be used against their quarterly payroll tax payments.

1. A reimbursement for social security taxes on increased payroll, whether thru new hires, wage increases in excess of inflation or expanded hours for employees.  Since this is based upon social security wages, increases for employees making in excess of that amount ($106,000) will not result in any tax credit.  As with the credit based on the unemployment wage base, the credit can be used quarterly against payroll tax payments.
2. Non-profits are eligible for the credit.  New companies (start-ups) are also eligible but only at ½ the above amounts.
3. The above credits are for 2010 only and the maximum credit allowable to a company is $500,000.

There are also anti-abuse rules built in so that a company cannot fire one employee and hire a new one nor fire a $50,000 employee and hire two new $25,000 employees; neither of these actions would result in a credit.

As more details become available and as the credit parameters change, we will keep you up-to-date.

The Internal Revenue Service announced today that some taxpayers who file paper income tax returns will send them to different processing centers this year.

Taxpayers in Maine, Maryland, Massachusetts, New Hampshire, Vermont, Virginia and the District of Columbia will now send their tax returns to the IRS Kansas City Service Center in Kansas City, Mo.

The IRS continuously monitors work flow at its centers and makes appropriate adjustments by altering the volume of returns to be sent to each. Taxpayers who use the envelope provided with the income tax instructions do not have to be concerned with the address change; their returns automatically will go to the correct center.

Taxpayers who e-file will not be affected by the address changes. For taxpayers who file paper returns, the correct center addresses are on labels inside the tax packages they receive in the mail. Taxpayers who do not receive a package and need the service center address should refer to the back cover of the instructions to Form 1040, Form 1040A and Form 1040EZ.