Of course just when we are closing up for the holidays we get breaking news on H.R. 5771. President Obama has signed the bill that retroactively renews parity in transit and parking benefits back to January 1, 2014. As discussed in an earlier blog this month, the IRS will issue guidance on how to handle the taxes and Forms W-2. It will more than likely follow the same guidance they issued back in 2013 for 2012 when this happened last time.
Yesterday, the U.S. Senate passed what is known as the extender bill (Tax Increase Prevention Act of 2014, HR 5771) and the president is expected to sign it. As we discussed in our previous blog on this subject, this bill give parity for transit passes and parking and is retroactive back to January 1, 2014. Effective January 1, 2014, (no that is not a typo, I meant 2014) transit passes are increased to $250 per month.
This happened in 2012/2013 and the IRS had to issue guidance on how to handle Forms W-2 etc. This guidance was contained in Notice 2013-8. It appears the IRS will issue the same guidance again for 2014. We will keep you posted as more information comes in.
On December 6, 2014 the White House issued an Executive Order designating Friday, December 26, 2014 as a holiday for federal employees. As a result, with very few exceptions, all executive branch departments and agencies will be closed and their employees given the day off. This includes the Internal Revenue Service. However, even though the IRS employees will be enjoying an extra day off for the holiday it is still business as usual for the taxpayers. Normally tax payments and returns due on a federal holiday are delayed until the next business day. However, the IRS has confirmed that based on its interpretation of the Executive Order, Friday, December 26th does not meet the definition of a federal legal holiday. Therefore tax deposit and return deadlines are unaffected and must be made. The humans get the day off but no rest for the tax deposits or returns.
The IRS has released the mileage rates for 2015 in Notice 2014-79. They are as follows:
57.5 cents per mile for standard mileage
23 cents per mile for moving expenses
14 cents per mile for charity
Misclassification of workers as independent contractors instead of employees is a nationwide problem facing not only the IRS but all 50 states. A recent audit by the nonpartisan National Employment Law Project (NELP) looked at agency audits in 25 states and found that 10 to 30 percent of employers misclassify their employees as independent contractors. And it could actually be higher than that. That equates to several million workers nationally being misclassified. This results in billions of lost tax revenue and millions of workers without wage and hour or other protections. So now the states are starting to take the matter seriously. In my October 16th blog I wrote about Alabama beginning to crack down. Now it is Rhode Island’s turn in the ring. As part of a six-agency task force the Rhode Island Division of Taxation has set up an anonymous telephone tip line to receive allegations of worker misclassification. The chairman of the Joint Task Force on the Underground Economy and Employee Misclassification is the Department of Labor and Training Director, Charles J. Fogarty. The tax fraud tip line is staffed by the Division of Taxation. The tip number is 401.574.TIPS or 401.574.8477.
Better late than never it seems for this year. The IRS has released the 2014 Form 940, its instructions and the Schedule A. All are available on the IRS’ website. There are no changes to the form from 2013. The seven states announced earlier in November that will have a FUTA credit reduction are indeed listed on the Schedule A. They are:
In addition, the territory of the Virgin Islands’ rate is 1.2%.