Talking Shop Blog

The Illinois Department of Revenue has issued new electronic payment requirements effective October 1, 2010. 

Electronic payments are now required for Illinois taxpayers who have an annual liability of at least $20,000 for most taxes beginning October 1, 2010, or $12,000 for withholding income tax beginning January 1, 2011.

The new rules apply to corporate income and replacement taxes, sales and use taxes, excise taxes and other taxes.

The new requirements are detailed in Informational Bulletin FY 2011-01, which you can find at http://www.revenue.state.il.us/#t=tab1 .

People sometimes use exaggeration to make a point. Or we may use exaggeration for emphasis or effect.

“This box weighs a ton”. No it doesn’t.

Or, “I’ve been stuck in traffic for 10 days now”.

Actually, that’s not an exaggeration.

There’s a 60-mile traffic jam on the Beijing-Tibet Highway that started August 13. And government officials say it may be mid-September before the traffic is cleared.

How would your business be affected if you and your employees were stuck in traffic until mid-September?

OK, that’s an extreme case.

But ask the question this way: How would your business be affected if you lost power for days because of a storm? Or your office building was hit be a tornado or micro-burst?

In the aftermath of 9-11 and Katrina, many companies and organizations turned their attention to contingency planning and disaster recovery planning.

But many have not.

Here are some resources to check out that may help you implement or update your own business continuity plan:

http://www.educause.edu/node/645/tid/32634?time=1282748244

http://www.ready.gov/

The IRS has announced that it plans to discontinue the use of paper tax coupons by the end of the year.

Taxpayers will be required to use the IRS’ Electronic Federal Tax Payment System (EFTPS) to make tax deposits.

The new rules apply to corporate income and estimated tax payments, employment taxes, excise taxes and other taxes.

The IRS announcement with related links can be found at  http://www.irs.gov/newsroom/article/0,,id=226706,00.html .

The new rules were issued in the form of proposed regulations. The IRS will issue additional guidance once the regulations are finalized.

And the IRS will be sending notices and information to taxpayers affected by the new rules.

The detailed proposed regulations were just posted yesterday in the Federal Register which you can find at http://www.federalregister.gov/articles/2010/08/23/2010-20737/electronic-funds-transfer-of-depository-taxes

A word of caution: The “Explanation of Provisions” is somewhat easy to read and understand. But the actual regulations are written in tax legalese, not in Plain English.

So proceed at your own risk.

USA Today had a recent article about investors turning to master limited partnerships (MLPs) for higher income returns.

Whether a MLP is right for you is between you and your investment advisor. But make sure you ask about the tax reporting complexities of MLPs before you invest.

A MLP is a publicly traded limited partnership that typically invests in oil & gas, energy or other natural resources.

MLPs are not subject to federal income tax. Instead, the income is taxed to the investors.

Investors receive an annual “Schedule K-1” that reports the investor’s share of income, losses, deductions and credits.

The K-1 is similar to a 1099, but with a lot more tax information to report.

It’s not unusual for the K-1 and the supporting schedules to run 20-30 pages or more.

And that’s information that’s reported on various forms and schedules on your personal income tax return.

MLPs also typically send out separate K-1 information for the various states in which the MLP has investments. 

So not only does your federal return get more complicated, you might also be required to file tax returns in multiple states.

Like we said, ask about the tax reporting complexities before you jump on the MLP bandwagon.

You can learn more about MLPs at http://naptp.org/index.html .

Not much is happening in Washington right now with Congress out for the August recess.

But things are different here in Illinois.

Illinois’ first ever back-to-school sales tax holiday ended Sunday.

Then on Monday, August 16, Illinois Governor Pat Quinn signed into law a new tax amnesty program.

The program applies to unpaid taxes due between July 1, 2002 and June 30, 2009.

The amnesty period will run from October 1, 2010, through November 8, 2010.

Taxpayers who participate in the program will avoid penalties and interest on their back taxes.

The Illinois Department of Revenue is currently working out the details of the new amnesty program.

And we’ll be posting information as soon as it’s released.

“You’d really be amazed at how much government you’d never miss”.

- Indiana Governor Mitch Daniels

The Congressional Budget Office announced that the this year’s budget deficit stands at $1.2 trillion through July.

Illinois has a $13 billion budget deficit and the lowest bond ranking in the country.

Across the border, Indiana has had a budget surplus for several years running. But Indiana State Auditor Tim Berry recently announced the state’s FY2010 revenues were $957 million less than budgeted.

So to make ends meet, the state cut $669 million in spending and tapped into their reserves to cover the rest.

The state didn’t raise taxes.

Instead they reduced spending.

Budget reserves? Reduce spending?

How novel.