Here are some examples:

Company A has 50 employees but little turnover so they pay just 50 times the SUI and just 50 times the FUTA.  They are at the lowest rate for Alabama in 2012.  All of their employees make more than $8,000.00.  They would pay $5,000 in SUI (50×8000=400,000×1.25%) and $2,100.00 in FUTA (50×7000=350,000x.6%) for total unemployment taxes of $7,100.00.

Company B has 50 employees but they have high turnover so they pay SUI and FUTA on 75 employees throughout the year because of this turnover.  They are at the lowest rate for Alabama in 2012.  All of their employees made more than $8,000.00.  They would pay $7,500.00 in SUI (75×8000=600,000×1.25%) and $3150.00 in FUTA (75×7000=525,000x.6%) for total unemployment taxes of $10,650.00. 

They will also have a rate increase for Alabama for SUI for 2013 due to the unemployment claims filed.  This rate will be high for the next three years because Alabama uses a ratio of wages to unemployment claims and uses three years of data!  This is often a missed or forgotten cost of turnover.  We all know that unemployment claims can hurt a business however there is a direct cost.  The higher rate for 2013 will be applied to all employees so even if the 2013, 2014 or 2015 turnover is low, the tax paid will be higher. 

Let’s look at Company B for 2013 assuming that the SUI rate went up only 1% and the turnover was low.  They would pay $9,000.00 in SUI for 50 employees (50×8000=400,000×2.25%) so as you can see even with less turnover they are paying for the 2012 turnover into the next year.  Remember Company A only paid $5,000.00 in SUI on 50 employees because of the low rate!

When you make decisions about hiring, layoffs, furloughs and terminations, take a minute to consider the cost of the turnover.  When you make decisions about insurance plans or other employee benefits, remember to calculate a realistic cost of turnover (or benefit of retention) into your cost analysis.  If you need help with this process, please contact your JamisonMoneyFarmer PC accountant.  We will be happy to assist you.

• The terminal charge has increased to $44.88 (previously, $43.79).
• The rate for the first 500 miles of travel is now 24.55¢ per mile (previously, 23.95¢ per mile).
• The rate for miles 501 to 1,500 is now 18.72¢ per mile (previously, 18.26¢ per mile).
• The rate for miles traveled over 1,500 is now 18.00¢ per mile (previously, 17.56¢ per mile).

A complete list of the SIFL Fare Formulas (1979 to present) can be viewed at http://ostpxweb.dot.gov/aviation/domfares/siflb.pdf.  Please contact us if we can be of any assistance.

If you use other software, please check with your support to ensure that you have the correct rates for payrolls beginning March 1st.

Form 8850 must normally be filed with the state workforce agency within 28 days after an eligible veteran begins work, but for those hired after 11/21/11 and before 5/22/12, employers have until 6/19/12 to file the form.

As we roll out of deer season and into turkey season we are reminded of the passage of  Alabama Senate Bill 84.  Senator Gerald Allen (R-Cottondale) sponsored this bill and it was signed into law last year by Governor Bentley.  This important piece of legislation will hopefully pave the way for many more tracts of land in Alabama to be available for the enjoyment of hunters and outdoor enthusiasts from both in and out-of-state.  This law provides landowners with some reasonable assurance that they will not be held liable for damages resultant from lawsuits that arise when their land is leased to third parties who are responsbile for the safety and up-keep of the land.  Landowners will still be liable for their actions if they intentionally put others in danger, but not for the unforeseen damages resultant from their lessees actions or lack thereof.  For more information please click here.

The top litigation areas highlights where the IRS is focusing most of its enforcement effort, especially directed at  individuals and small business owners. Those areas are:

• Trade or business expenses
• Gross income – What counts as income
• Accuracy Related Penalties – Section 6662
• Liens and Summons
• Joint and Several Liability – Innocent Spouse
• Charitable Deductions
• Frivolous issues; failure to file; and, failure to pay

Each of the above issue areas are described at length in the Forbes article if you need further explanation, or as always, you can connect with one of our tax advisers.

We are still waiting on Congress to act on extending the Social Security payroll tax cut beyond February 29, 2012.  I will post something as soon as we know what the rules will be.  QuickBooks is currently pushing out a payroll update that reverts the rate to 6.2% on the employee portion as of March 1, 2012.  If you use other payroll software, please check with your provider about payroll tax rate updates.

WASHINGTON — The Internal Revenue Service today unveiled IRS2Go, its first smartphone application that lets taxpayers check on their status of their tax refund and obtain helpful tax information.

“This new smart phone app reflects our commitment to modernizing the agency and engaging taxpayers where they want when they want it,” said IRS Commissioner Doug Shulman. “As technology evolves and younger taxpayers get their information in new ways, we will keep innovating to make it easy for all taxpayers to access helpful information.”

The IRS2Go phone app gives people a convenient way of checking on their federal refund. It also gives people a quick way of obtaining easy-to-understand tax tips.

Apple users can download the free IRS2Go application by visiting the Apple App Store. Android users can visit the Android Marketplace to download the free IRS2Go app.

“This phone app is a first step for us,” Shulman said. “We will look for additional ways to expand and refine our use of smartphones and other new technologies to help meet the needs of taxpayers.”

The mobile app, among a handful in the federal government, offers a number of safe and secure ways to help taxpayers. For the full article, including features of the first release of the IRS2Go app, click here.

The President has declared Chilton, Jefferson and Perry counties a federal disaster area. Individuals who reside or have a business in this county may qualify for tax relief.

The declaration permits the IRS to postpone certain deadlines for taxpayers who reside or have a business in the disaster area. For instance, certain deadlines falling on or after Jan. 22, and on or before March 22, have been postponed to March 22, 2012.

In addition, the IRS is waiving the failure-to-deposit penalties for employment and excise tax deposits due on or after Jan. 22, and on or before Feb. 6, as long as the deposits are made by Feb. 6, 2012.

For more information, please contact one of our tax professionals.