Amazon Ends Affiliate Program In North Carolina Over Sales Tax Bill

Amazon terminated its affiliate program in North Carolina to avoid paying a proposed sales tax, according to media reports.

In an e-mail message to associates — businesses that get a commission because they link their Web sites to Amazon.com, generating sales for the online retail giant — Amazon.com said the associates’ accounts have been closed as a “direct result of the unconstitutional tax collection scheme” expected to be passed by lawmakers and signed by Gov. Bev Perdue.

Amazon currently collects sales tax for a small number of states. But many states such as New York, Connecticut, Rhode Island and Hawaii are looking at collecting sales tax from online retailers as a new revenue stream that will help close their budget gaps.

Bizjournal.com

Wall Street Journal

Los Angeles Times

New Jersey's Tax Windfall from Amnesty Program

New Jersey was expected to generate $100 million when the 45-day tax amnesty program was launched, but as of last week the state has collected more than $600 million in back taxes owed. Final revenue could increase by another $50 million to $100 million once the remaining 17,500 envelopes are opened and processed, the Governor’s Office said.

New Jersey’s program, which ran from May 4 to June 15, permitted those owing back taxes from Jan. 1, 2002 and to Feb. 1, 2009, to settle up without penalty and for half the interest owed. Of the collections processed to date, 56 percent were for the corporation business tax, 23 percent for sales and use taxes and 14 percent for gross income tax.

A vote on a final budget for New Jersey is expected Thursday. Gov. Jon S. Corzine would like to see the additional revenue be put toward property tax relief, which was slated to be eliminated for all but seniors and the disabled to address an up to $9 billion deficit in fiscal year 2010.

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All American Patriots

I'm Back

I have been away for awhile due to an extremely busy work schedule at my day job, some personal demands of my family, and the fact that I am looking to change careers (new job) from education which I have done for the last 3 years into a career as a financial analyst or accountant with a private company in the New York City or Connecticut area. I specify private company because I have done analytical work for governmental agencies where I have created reports, revenue and expense analysis and all types of other fun stuff. Well, I am telling you a job search can be a job all by itself with the endless amount of time searching job boards and attending networking events. That being said, I am back to blogging about one of my favorite topics and do not anticipate any more distractions that will keep me away.

Phil

Small Business Audit Triggers Part 3

7. Taking the home office deduction. If you work at home, remember you need a section of your house exclusively used for business to qualify for a home office deduction. The IRS particularly likes to challenge this. I generally advise that this deduction will automatically cause an audit. According to the IRS:

In order to claim a business deduction, you must use part of your home for one of the following two reasons:

• Exclusively and regularly as either: your principal place of business, or as a place to meet or deal with patients, clients or customers in the normal course of your business. Where there is a separate structure not attached to your home, the regular and exclusive use does not need to be your principal place of business as long as the use is in connection with your trade or business.
  


• On a regular basis for certain storage use -- such as storing inventory or product samples -- as rental property, or as a home daycare facility.
  

Generally, the amount you can deduct depends on the percentage of your home that you used for business. Your deduction for certain expenses will be limited if your gross income from your business is less than your total business expenses.

8. Using your car for business. Like entertaining, this is another area the IRS thinks has the possibility of being misused. You're less likely to be audited if you have a separate personal car. But you've got to see customers face-to-face to keep them loyal. And this year, the mileage rate deduction was increased: 50.5 cents per mile from 1/1/08-6/30/08 and 58.5 cents the rest of the year.

9. File at the last minute. Since fewer returns are filed early, you'll have a lower chance of being audited if you file closer to deadline. So thumbs up on your procrastination!

10. Use of your cell phone for business. If you use a cell phone as part of your business, this could be a big deduction for you. So don't make the mistake of mixing business with pleasure by sneaking too many personal calls onto your cell phone bill. You need to keep good records and keep their actual telephone bill so they can demonstrate that a majority of the calls were business calls. Take a look at your cell-phone bill to make sure you receive an itemized report. Because cell phones are considered listed property, you need to keep detailed records of their use.

Small Business Audit Triggers Part 2

5. Losing money more than three out of five years. The IRS is on the lookout for people writing off hobbies as businesses. They want to see that you've at least had the intent to make a profit. Here are some of the factors that the IRS uses to determine whether an activity is caried on for profit or as a hobby

• Does the time and effort put into the activity indicate an intention to make a profit?
  


• Do you depend on income from the activity?
  


• If there are losses, are they due to circumstances beyond your control or did they occur in the start-up phase of the business?
  


• Have you changed methods of operation to improve profitability?
  


• Do you have the knowledge needed to carry on the activity as a successful business?
  


• Have you made a profit in similar activities in the past?
  


• Does the activity make a profit in some years?
  


• Do you expect to make a profit in the future from the appreciation of assets used in the activity?

6. File a Schedule C return. If you're a sole proprietor, you'll file a Schedule "C" — Profit or Loss from a Business — as part of your 1040 form. BDO Seidman says the IRS is scrutinizing Schedule Cs more closely this year, so make sure you have proper documentation. But unless you're incorporated, you'll need to file this form. And according to an SBA report released just April 2, 2009, sole proprietors pay half the effective tax rate of S corporations (13.3 percent versus 26.9%).

Small Business Audit Triggers Part 1

As April 15th comes closer, and many people have turned to turn some of their hobbies into businesses as a result of losing their jobs, be on the lookout for these nine areas that may cause the IRS to scrutinize your return.

1. Unreported income. Any profession that deals with a lot of cash, such as waiting tables, tends to spark the curiosity of IRS audit agents. One of the first things they compare in cases such as this is bank deposits vs. claimed income.

If you get paid in cash, rather than by check or credit card, it's tempting to just 'forget' to declare some of that income. Make sure you keep accurate records of all cash that is received. The reason is that checks and credit card payments leave a paper trail that can be traced back to the origanal payee. Cash does not leave a paper trail and can easily go unreported.

2. Making more than a million dollars. I know many people wish this was a concern of theirs. If you have an adjusted gross income of more than a million dollars, You'll have the highest chance of getting audited. In 2008, according to the IRS, they audited 5.6% of millionaires' returns, compared with 2.9% of those making more than $200,000, and less than 1% of those making less than $200,000. But, heck, if you can clear a million dollars profit, take the audit. ..

3. Mixing personal and business expenses. It's tempting to write off your new living room furniture or that trip to the Caribbean as a business expense (after all, you read e-mail while sitting on the couch or at the beach, right?) but the IRS certainly frowns upon that. Don't.

4. Entertaining. Another area where personal and business expenses are likely to be construed as intertwined. Also, the IRS doesn't want to see excessively lavish parties (except, it seems, from huge banks getting TARP money, but that's another story). Remember, you can only take 50% of entertaining and food expenses as a deduction. Nevertheless, small businesses need to be out there talking to customers over lunch or dinner, at a ballgame or golfing. Most entrepreneurs don't entertain nearly enough. Do.

Tax Break On New Car Purchases

The Internal Revenue Service announced today that taxpayers who buy a new passenger vehicle this year may be entitled to deduct state and local sales and excise taxes paid on the purchase on their 2009 tax returns next year. “For those thinking about buying a new car this year, this deduction may give them a little more drive to make their purchase this year,” said IRS Commissioner Doug Shulman. “This deduction enables taxpayers to buy now and get cash back later on their tax returns.”

The deduction is limited to the state and local sales and excise taxes paid on up to $49,500 of the purchase price of a qualified new car, light truck, motor home or motorcycle. The amount of the deduction is phased out for taxpayers whose modified adjusted gross income is between $125,000 and $135,000 for individual filers and between $250,000 and $260,000 for joint filers.

IRS also alerted taxpayers that the vehicle must be purchased after Feb. 16, 2009, and before Jan. 1, 2010, to qualify for the deduction. The special deduction is available regardless of whether a taxpayer itemizes deductions on their return. The IRS reminded taxpayers the deduction may not be taken on 2008 tax returns.