CB&H’s Bill Becker to Address 1099-MISC Issues During Live Webcast

William F. Becker, Jr., a Tax Partner with Cherry, Bekaert & Holland, L.L.P. (CB&H) will speak at an upcoming two-hour webcast entitled “1099- MISC Issues for 2011: What You Need to Know.” This event is scheduled for Tuesday, October 25, 2011 at 12:00 PM – 2:00 PM (ET).

2010-2011 proved to be a tumultuous year for taxpayers especially in the area of 1099 reporting requirements. Although the passing of the Comprehensive 1099 Taxpayer Protection and Replacement of Exchange Subsidy Overpayments Act of 2011 nullified some of the thorniest issues, companies, small businesses, and individuals need to understand the new 1099 requirements left over to stay ahead of the penalty curve.

Join us as we discuss:

• Update on all things 1099 for 2011 and beyond
• Impact of the repealed 1099-MISC reporting requirements expansion on Small Businesses and Landlords
• Small Business Paperwork Mandate Elimination Act of 2011
• Comprehensive 1099 Taxpayer Protection and Replacement of Exchange Subsidy Overpayments Act of 2011
• And other up-to-the-minute regulatory updates

This webcast will be presented by The Knowledge Group as part of The Knowledge Congress Live Webcast Series.

Click here for more details or to register.

Budget Control Act Sets the Stage for Tax Debate

On August 2, 2011, President Obama signed into law the Budget Control Act of 2011. The new law provides immediate relief from the federal debt ceiling and makes more than $900 billion in spending cuts during the next 10 years, but does not any immediate changes to the Tax Code.

However, the Act does outline expedited procedures for implementing another $1.5 trillion in deficit reductions, coupled with an additional increase in the debt ceiling of between $1.2 trillion and $1.5 trillion. To accomplish these future reductions, the Act created a bipartisan joint select committee on deficit reduction.

The committee, which will consist of six senators and six representatives with an equal number of Democrats and Republicans from each chamber, must make its recommendations (which require seven or more votes) and submit proposed legislation by December 2, 2011. Congress will then be required to vote on the bill, without the ability to make changes and pursuant to expedited procedures, by December 23, 2011.

Depending on the joint committee’s level of success, these additional savings will be coupled with an additional increase in the debt ceiling ranging from $1.2 trillion to $1.5 trillion (also subject to congressional disapproval by veto-proof resolution), which is expected to last until 2013. If the committee recommends, and Congress approves, between $1.2 trillion and $1.5 trillion in savings, the debt ceiling will increase on a dollar-for-dollar basis. So, for example, $1.3 trillion in savings would increase the debt ceiling by $1.3 trillion.

Failure to achieve at least $1.2 trillion in savings will trigger automatic spending cuts, beginning in 2013, coupled with a $1.2 trillion debt-ceiling increase. “Failure” under the Act translates to one of three things:

• The committee fails to produce a bill,
• Congress doesn’t pass the committee’s bill, or
• the legislation produces less than $1.2 trillion in savings.

If automatic spending cuts are triggered, half will come from defense spending and half from domestic programs. Certain benefits are exempt from cuts, including Social Security and Medicaid. But Medicare spending (on the provider side) is subject to cuts. The amount of automatic cuts is equal to the difference between $1.2 trillion and any savings achieved by the joint committee. The automatic cuts are designed to provide the joint committee and Congress with a powerful incentive to make a deal.

Alternatively, Congress can avoid automatic cuts by passing a balanced budget amendment and submitting it to the states for ratification. But a constitutional amendment requires a two-thirds majority in both the House and the Senate, a threshold that’s not likely to be met.

The Budget Control Act relieves some of the pressure the debt ceiling placed on the U.S. economy. At the same time, it creates a great deal of uncertainty over how lawmakers will satisfy their deficit reduction mandate. Once the joint committee makes its recommendations later this year, we’ll have a better understanding of how the law may affect your financial and tax planning strategies in 2012 and beyond.

While there are uncertainties as to what specific tax laws will be addressed and possibly recommended for change by the committee, it is clear that tax reform will be a part of the long-term deficit solution.

CB&H will continue to monitor the debates in Washington and the joint committee’s proposals and how they will impact you and your business.

Standard Mileage Rates Increased Through End of 2011

Effective from July 1, 2011 through December 31, 2011, the IRS has released new 2011 standard mileage rates for certain qualifying use of an automobile. Taxpayers driving a car, van, pickup or panel truck can use these rates to determine the deductible costs of that vehicle’s operation.

• 55.5 cents per mile for business miles driven
• 23.5 cents per mile as part of moving and medical expenses
• 14 cents per mile driven in service of charitable organizations

Both the business and moving rates are up relative to last year from 51 and 19 cents, respectively. Taxpayers can use the actual cost of using the vehicle rather than the standard mileage rate. However, once actual costs are used, use of the standard mileage rate is not permitted. The standard mileage rate is also not applicable to any vehicle for hire or for more than four vehicles used simultaneously.

If you have any questions regarding deductions available to you in connection with operating a vehicle, please contact your local tax professional.