Under the newly enacted law, Hiring Incentives to Restore Employment (HIRE) Act, both businesses and tax exempt organizations have two new tax benefits available to them. These benefits are referred to as the payroll tax exemption and the new hire retention credit, respectively.

Employers who hire previously unemployed or previously part time workers after February 3, 2010 and before January 1, 2011 qualify for the payroll tax exemption and will be exempt from paying the employer’s 6.2 percent share of Social Security tax on wages paid to “qualified” employees from March 19, 2010 through December 31, 2010. The payroll tax exemption does not exempt the employee’s share of Social Security tax, and the Medicare tax continues to apply to both the employer and employee.

To be a qualified employee, the employee has to have been unemployed or employed for less than 40 hours during the consecutive 60 days prior to their employment. In order for the employer to claim the payroll tax exemption, the employee must certify by a signed affidavit (Form W-11), under penalties of perjury, that they have not worked more than 40 hours in the consecutive 60 days prior to new employment. Employees related to the employer are not considered to be qualified employees for the purposes of the payroll tax exemption. Form W-11, Hiring Incentives to Restore Employment (HIRE) Affidavit, is available on the IRS website.

The payroll tax exemption is claimed on Form 941 “Employer’s Quarterly Federal Tax Return”, starting with the second quarter of 2010. If an employer paid wages to qualified employees during the first quarter of 2010, the exemption related to those wages will be claimed on the second quarter of 2010 Form 941.

The new hire retention credit is available to employers for each qualified employee retained for at least 52 consecutive weeks. The amount of the credit is the lesser of $1,000 or 6.2 percent of wages paid by the employer to the qualified employee during the 52 week period. The new hire retention credit is claimed on the employer’s 2011 tax return.

As of January 1, 2010 high income earners can now convert IRA, 401k and other tax deferred assets to a Roth IRA. There are many benefits to a Roth IRA, including tax-free growth of your invested assets. Please contact Bart Haag, or your ARB tax advisor, for more information or for a detailed analysis of whether or not a conversion makes sense for you.

Financial Institutions subject to the regulations of the Bank Secrecy Act (BSA) are required to file a Suspicious Activity Report (SAR) on a transaction if they know or suspect the transaction involves illegal activities or is intended to evade BSA regulations. Financial institutions who find they are repeatedly filing SARs on a continued activity often find themselves wondering when they can stop filing the SARs on these continued transactions. As a general rule of thumb, the reporting financial institution should file a report on the continued activity at least every 90 days. This reporting will continue even if the financial institution is aware of an open investigation by law enforcement. The reporting should also continue if the financial institution has been contacted by a law enforcement agency that has declined to investigate the continued activity. It is important for financial institutions to remember that data contained in a SAR is reviewed and possibly investigated by a number of law enforcement agencies. Continued reporting of timely and accurate SARs can help combat money laundering, consumer loan fraud, identity theft, credit card fraud and other financial crimes.

Albin, Randall & Bennett will be participating in the 93^rd Annual National Auto Dealer Association Convention and Exposition on February 13-15 at the Orange County Convention Center, 9800 International Dr., Orlando, FL. Please stop by our booth, #314, to say hello to Bart and learn more about how our services can benefit you.

Forms W-2 and 1099 must be furnished to recipients by February 1, 2010. Related forms to be provided to the IRS must be filed by March 1, 2010 (paper) or March 31, 2010 (e-file).

Generally, any person in a trade or business who receives more than $10,000 in cash in a single transaction or related transactions must complete a Form 8300 within 15 days after the date the cash was received. The business must also notify its customers, in writing, by January 31 of the subsequent calendar year that it has filed a Form 8300 regarding the cash transactions with the customer. The penalties are severe for non-compliance. Please contact us for a definition of cash, more details regarding this form, and a sample letter for notifying customers.

The IRS recently released the 2010 standard business mileage reimbursement rate, which has been lowered to 50 cents for all business miles, effective January 1, 2010. The 2010 standard mileage rate for medical and moving pruposes has been lowered to 16.5 cents per mile, effective January 1, 2010. The 2010 standard mileage rate for charitable purposes is unchanged at the rate of 14 cents per mile.

Maine Business Equipment Tax Reimbursement forms are due December 31, 2009. Reimbursement is for taxes paid in 2008. Forms 801A, 801B and 800 may be downloaded at www.maine.gov/revenue. If you need help, please call our office.

Welcome to our redesigned website.  We hope the information here will be helpful and informative.

The firm’s annual CPE day will be held on Wednesday, November 18th, at the Woodlands Country Club, located at 39 Woods Road in Falmouth.

A continental breakfast will be available at 7:30am for all professional staff. Training session will begin promptly at 8:00am.

Administrative staff should plan to arrive for lunch at noon.

Due to the number of important issues that will be discussed, attendance is mandatory and the offices will be closed for the afternoon.