
July, 2003	The Payroll News	Volume 1, Issue 2
http://www.custompay.us/

The Latest News, Tips and Tools For Payroll and Tax Issues

This Independence Day declare freedom from heavy payroll burdens!
Safe and Happy Holiday Wishes From the Team of CustomPay, Inc.!

CustomPay has recently joined The Washington Council of Agencies VendorBank… (read more)

7th Global Payroll Conference will be held in San Francisco… (read more)

Based on the data provided by the Bureau of Labor Statistics on June 6, 2003… (read more)

New Form W-7 Must Be Used for All ITIN Applications as of April 15, 2003… (read more)

The Internal Revenue Service now lets businesses obtain identification numbers directly from… (read more)

U.S. won't tax Incentive Stock Options until… (read more)

Many small business owners will be getting letters from the IRS … (read more)

*** CustomPay has recently joined The Washington Council of Agencies VendorBank, a searchable database of businesses and consultants that work with nonprofits. Founded in 1979, The Washington Council of Agencies is a membership organization of nearly 1,000 nonprofit organizations. The mission of the WCA is to strengthen, promote and represent nonprofit organizations in metropolitan Washington in order to help them better meet the diverse needs of their communities. Visit the WCA website at http://www.wcanonprofits.org/.

Washington DC, June 20, 2003.

*** 7th Global Payroll Conference will be held in San Francisco on August 24-27, 2003. There will be 35-Plus workshops highlighting -

Best Practices - Streamline Your Global Processes and Reduce Operational Expenses

Technology Trends - Leverage Technology for More Efficient Global Payroll Processing

Outsourcing - Explore Global, Regional, and Local Issues

Compensation and Benefits - Apply Global Approaches to Your Compensation and Benefit Arrangements

Expatriate Assignments - Examine How World Events Impact International Assignments.

American Payroll Association, June 2003.

*** Based on the data provided by the Bureau of Labor Statistics on June 6, 2003 in May 2003 total number of unemployed in the U.S. has increased to 8,998 compare to 8,786 of unemployed in April. Based on preliminary data from the Bureau of Labor Statistics average hourly earnings of non-supervisory workers on private non-farm payrolls have increased in May to $15.34 compare to $15.11 in April.

http://www.whitehouse.gov/fsbr/employment.html

*** NEW FORM W-7 MUST BE USED FOR ALL ITIN APPLICATIONS AS OF APRIL 15, 2003.

Resident and nonresident aliens applying for an Individual Taxpayer Identification Number must begin using the new Form W-7 as of April 15, 2003. The IRS issues the nine-digit numbers to individuals who must have a US taxpayer identification number but who are not eligible for a Social Security Number, which requires work authorization inherent in the individual's immigration status or an employment authorization document (EAD) issued by INS (now BICS). The new Form W-7 requests additional information. Along with the application, an individual must also submit documents proving alien status and identity. ITINs are for tax purposes only and have no affect on immigration status, authorization to work in the United States, or eligibility for social security benefits or the Earned Income Credit.

Individuals can submit Form W-7 with applicable documentation

To an IRS Taxpayer Assistance Center (TAC);

By mail to the Internal Revenue Service, Philadelphia Service Center, ITIN Unit, PO Box 447, Bensalem, PA 19020; or

Through an IRS authorized acceptance agent.

On March 14, 2003 the IRS released Publication 1915 (Rev. November 2002), "Understanding Your IRS Individual Taxpayer Identification Number (ITIN)."

*** THE INTERNAL REVENUE SERVICE NOW LETS BUSINESSES OBTAIN IDENTIFICATION NUMBERS DIRECTLY FROM ITS WEB SITE, ANOTHER STEP TOWARD ELIMINATING UNNECESSARY IRS PAPERWORK FOR SMALL BUSINESSES.

The taxpayer completes an online application form and receives an employer identification number (EIN) that may be used immediately. Once a business has its EIN, it can file tax returns and may enroll in the Electronic Federal Tax Payment System to handle its payments most efficiently.
Businesses do not need to pre-register before requesting an EIN. The number issued is the permanent EIN for the business, unless the IRS finds that it has already issued an EIN for that business or if the principal officer's name and social security number do not match Social Security records. In such cases, the IRS will void the number issued through the Web site and notify the business.
The online application process is not available to some EIN requestors, including federal, state or local government agencies, Indian tribal governments, real estate mortgage investment conduits, and taxpayers with addresses outside the 50 States.

SmartPros, June 16, 2003.

*** U.S. WON'T TAX ISOS UNTIL SOLD.

The Department of the Treasury and the Internal Revenue Service issued proposed regulations Friday on incentive stock options, clarifying that employees won't be taxed on them until they are sold.
The IRS caused a firestorm of controversy last year by proposing to impose Social Security, unemployment and other payroll taxes on ISOs and employee stock-purchase plans.
Shareholders must approve an ISO plan, and the number of ISOs that can be granted to an employee is limited. The employer doesn't get a deduction.
Taxpayer can rely on the proposed regulations for any ISO granted after today, the government said.

Investment News, June 2003.

*** IRS REACHES OUT TO SMALL BUSINESSES.

Many small business owners will be getting letters from the IRS that won't be tax bills or audit announcements -- they'll be reminders about the benefits and requirements of retirement plans.

The agency says it's trying an approach it has never used before -- an outreach to small businesses -- in hopes of persuading owners to start retirement plans such as IRAs, SEPs, SIMPLEs and 401(k)s or to be sure their existing plans comply with federal tax regulations.

Many small businesses don't have retirement plans, and one aim of the IRS campaign is to nudge owners toward creating them by giving them more information about their options.

The IRS has several publications about small business retirement plans; they can be downloaded from the Web site or ordered by calling 1 800-TAXFORM. There is some overlap among the publications, but they nonetheless can be useful for business owners considering retirement plans for the first time.

Among the publications is 3998, "Choosing a Retirement Solution for Your Small Business," which includes a table spelling out the various plans. It also refers the reader to other IRS publications and other re s.

Publication 560, "Retirement Plans for Small Businesses" describes the plans and their requirements in more detail.

At www.irs.gov/retirement, business owners can find a link to "Small Business Resource Guide -- Starting Your Business -- Retirement Plans for Small Businesses," which is another quick look at the various plans.

O'Donnell said one impetus for the IRS outreach campaign was a pattern of compliance problems found in audits of small businesses' plans. But he added, "we do not link this letter to any kind of audit program."

When audits reveal problems in retirement plans, companies are given a chance to correct them without losing their plans' tax advantages. The IRS said it has simplified its procedures for corrections, and the agency has issued a document called Revenue Procedure 2003-44 that contains the changes.

A word of advice: Don't try to handle this yourself. Revenue Procedure 2003-44 is written in officialese. If your plan has compliance problems, get help from a tax professional as you work to resolve them.

Financial Planning Journal, April 2003

With all tax questions please contact Natalie Berman, CPA at nberman@nbaccorp.com
With payroll questions please contact Sepi Jahed, CPP at sjahed@custompay.us
With employee benefits questions please contact Boris Foxman, RFC at bfoxman@custompay.us