 HARDING, SHYMANSKI & COMPANY Certified Public Accountants and Consultants
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| Manufacturing and Wholesale Distributors |
Is today's business environment presenting unique opportunities and issues for your manufacturing operation? How are you addressing the push from your customers for continuous quality improvement? Are you having difficulty finding and retaining quality employees? Add to these issues declining profit margins and strained resources due to rapid growth and you have major challenges facing you day in and day out.
At Harding, Shymanski & Company, P.S.C. we have a dedicated team ready to assist you with those unique challenges and issues facing your industry.
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| Indiana Enacts New Employer Tax Credit | |
Indiana has created a temporary new employer tax credit available against the corporate and personal income tax and the insurance premiums tax. The credit amount is equal to 10% of the wages paid by the new Indiana business to qualified employees during a 24-month period.
The credit may be claimed by a business that after December 31, 2009:
- either (a) locates or relocates the operations of a business enterprise in Indiana, (b) incorporates or otherwise first organizes in Indiana, or (c) expands the entity's operation of a business enterprise in Indiana;
- employs at least 10 qualified employees;
- makes an application to the Indiana Economic Development Corporation (IEDC); and
- is issued a certificate of approval by the IEDC.
It should be noted that a "new Indiana business" includes an existing business that expands operations.
A "Qualified Employee" is an individual who is a full-time employee, a resident of Indiana, and not more than a 5% shareholder/partner in the business. The term does not include rehired individuals or individuals employed to fill positions vacated as a result of layoffs during the past two years.
The IEDC will verify whether the business is employing at least 10 qualified employees in each month of the 24 month period for which the credit applies. In doing so, the IEDC may consider the applicant's employment levels in previous years to determine if the applicant is hiring new individuals or rehiring individuals. Based upon this criteria and the definition of qualified employee, it appears that the IEDC will look back two years to see where employment levels were, and only certify the business if the new hires exceed the employment level before any layoffs during that timeframe.
Please contact John Rittichier if you have any questions regarding this new credit. |
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| Handle with Care: IRS Questionnaire May be in Your Future | |
The IRS recently sent approximately 1,200 letters to 401(k) plan sponsors requesting they complete a 46-page questionnaire regarding their plan. The letter provides the employer a personal identification number (PIN) that needs to be used to complete the questionnaire on-line. Employers will have 90 days from the date of receiving the letter to complete the questionnaire. Although the IRS has stated that completion of the questionnaire is voluntary, an IRS spokesperson made it clear that they want the information. Failure to respond may result in enforcement action so this is not a letter you want to ignore! Read the article in its entirety - IRS Questionnaire May be in Your Future. |
| Conexus Report Card Suggests Manufacturing Growth
(Source: Inside Indiana Business, published June 10, 2010) |
The 2010 Manufacturing and Logistics Report Card from Conexus Indiana projects a manufacturing sector recovery in the second half of 2010 and into 2011. The report, put together by Ball State University's Center for Business and Economic Research, shows Indiana's total manufacturing compensation is expected to grow by almost $2.5 billion over that period. It has been falling, or remaining flat, since mid-2007.
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| McGladrey's 5th Annual U.S. Manufacturing and Wholesale Distribution Report now available |
McGladrey's 5th Annual U.S. MWD Survey Shows Small to Mid-sized Companies More Cautious about Economic Recovery than Larger Companies. Although domestic sales are expected to rise sharply in 2010, international trade is key to securing competitive advantage and fostering long-term growth.
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| Hiring Incentives to Restore Employment (HIRE) Act | |
In an effort to confront high unemployment, the Hiring Incentives to Restore Employment (HIRE) Act provides incentives for hiring and retaining unemployed workers. Under the HIRE Act, a qualified employer's 6.2 percent share of OASDI Social Security tax liability is forgiven for new hires, and a general business credit is allowed for each retained worker that satisfies a minimum employment period.
Payroll Tax Forgiveness for Hiring Unemployed Workers. The HIRE Act provides relief from the employer share of OASDI taxes on wages paid by a qualified employer with respect to certain covered employment. Covered employment is limited to service performed by a qualified individual in a trade or business of a qualified employer, or in the furtherance of the activities related to the purpose or function constituting the basis of the employer's exemption under Code Sec. 501. This provision applies to wages paid beginning on the day after enactment and ending on December 31, 2010.
Although a qualified employer does not include the United States, any State, any local government, or any instrumentality thereof, a qualified employer may include a public higher education institution.
A qualified individual is any individual who: 1) begins work for a qualified employer after February 3, 2010, and before January 1, 2011; 2) certifies by signed affidavit (under penalties of perjury) that he or she was employed for a total of 40 hours or less during the 60-day period ending on the date such employment begins; 3) is not employed to replace another employee of the employer unless such employee separated from employment voluntarily or for cause; and 4) is not a related party.
Employers who qualify for the OASDI forgiveness in the first quarter of 2010 will receive the benefit through a credit toward general second quarter 2010 OASDI liability; they can't simply stop paying the 6.2 percent OASDI tax immediately on wages paid to new hires. After the first quarter, however, the employer does not pay the 6.2 percent tax as wages are paid.
A qualified employer may not receive the work opportunity tax credit on wages paid to an individual during the one-year period beginning on the hire date for the same wages used to qualify for the forgiveness of payroll tax. However, an employer may elect to not have payroll tax forgiveness apply.
Because payroll taxes are deductible as an ordinary and necessary business expense, employers may have a correspondingly smaller business expense deduction on their 2010 tax returns. By combining the benefit of the business credit for new hires with the forgiveness incentive, employers in the highest brackets will realize a net tax benefit of just over four percent of wages paid to qualified new employees, up to the $106,800 social security maximum wage base. Therefore, for the maximum $6,621.60 tax forgiveness for a new hire, a net benefit of approximately $4,304 would be realized.
Contact Alan Stabenfeldt, CPA, at (800) 880-7800 for additional information.
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Harding, Shymanski & Company, P.S.C. provides accounting, tax, and consulting services to clients from offices in Evansville, Indiana, and Louisville, Kentucky.
Call us today! (800) 880-7800 in Evansville and (502) 584-4142 in Louisville
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| Disclaimer |
The information contained in this email is for general guidance on matters of interest only. The publication does not, and is not intended to provide legal, tax or accounting advice. |
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