Two Critical Tax Updates for Lancaster County Businesses
Lancaster County businesses should be aware of two updates to local and federal tax rules. Ignoring these changes could have a significant impact on your bottom line.
New Enforcement Guidelines for Lancaster County Quarterly Estimated Tax Payments
Due to a large number of taxpayers who have chosen not to file quarterly returns and pay estimated tax due, the Lancaster County Tax Collection Bureau (LCTCB) plans to more closely monitor and enforce compliance deadline compliance.
The rule applies to all taxpayers with earned income or net profits not subject to employer withholdings. Taxpayers who fail to make prompt, quarterly estimated payments will be subject to interest, penalties and fines.
The good news, however, is that because the enforcement notice went into effect June 1, 2015, taxpayers won’t be charged interest or penalties for missing the first and second quarterly payments of the year, so long as the estimated taxes for the first three quarters is paid by Oct. 30, 2015.
Some taxpayers may have accidentally received a balance due letter notifying them of interest, penalties and fees for failing to submit estimated payments for the 2014 tax year. If you have not paid, the LCTCB asks that you not pay those erroneous bills. If you have paid, expect approximately 6 to 8 weeks for the LCTCB to process your refund.
Small Businesses Lose Health Care Break (Again)
Businesses reimbursing workers for Medicare or individual health insurance policies are once again facing the prospect of having to shell out a $100-a-day-per-employee excise tax to the federal government. The IRS had temporarily waived the tax for firms with fewer than 50 full-time-equivalent employees, but the waiver expired on June 30, 2015. The federal tax collection agency has taken the position that employer-paid policy reimbursement payments skirt the spirit of the Affordable Care Act.
While the IRS has not issued any statements on whether waivers will be extended in the future, S corporations can continue to reimburse owners or shareholders with more than 2 percent equity for their insurance premiums without fear of having to pay the excise tax. It is uncertain, however, how much longer S corps will enjoy this freedom.
Legislation has been introduced in the House and Senate that would allow small employers to continue these types of reimbursement plans on a pretax basis.
For more information, contact Simon Lever today, and let’s start a conversation.