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Tax Tips Newsletter
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September 2010 - Vol 5, Issue 8
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If you have not gotten your individual income tax information to us, please do so as quickly as possible. Our cutoff date has passed, but we may be able to complete your returns on time.

For those businesses that are considering dissoving in 2010, you need to file formal dissolution documents with the State of California. If you need any additional information, please let me know.

Tax Coffer
The IRS plans to conduct more "correspondence audits" than it has in the past because the Service is finding that these audits deliver more revenue than office and face-to-face audits. Correspondence exams can be as simple as asking about a tax return data discrepancy, correcting an error on a return, or asking for a missing form. But the IRS is also using these audits to focus on other issues, including such things as employee business expenses, the earned income credit, charitable deductions, and the tax credit for buying a home.

As states struggle with budget issues, they, too, are getting more aggressive in collecting taxes. One particular state issue is "use taxes." Like sales tax, the use tax is assessed on items you purchase out of state and use in your home state. If you purchase items on the Internet from an out-of-state company or buy from Canada or overseas, you may be contacted about use taxes.

If you get a letter from the IRS or the state, contact us as soon as possible. Don't ignore the correspondence because it will not go away. Let us know about the notice when you receive it. It is much easier for us to resolve the problem if we're involved from the beginning. There are Practitioner Hotlines at the IRS we can call to talk to experienced representatives to settle the matter as quickly as possible.
Tax Deadline
If you serve a nonprofit organization in some capacity, you need to be aware of this important tax filing requirement: All nonprofit organizations, except for churches and church-related groups, must file an annual return with the IRS. Failure to do so for three consecutive years will result in the loss of the organization's tax-exempt status.

This annual filing requirement went into effect for small nonprofit groups (those with less than $25,000 in annual revenue) for the filing of their 2007 return, generally due on May 15, 2008. The filing deadline for the 2009 return was May 17, 2010. Thousands of small charities who hadn't filed for 2007, 2008, and 2009 hit the three-year failure to file point on that date.

The IRS had conducted an extensive notification program to remind charities of their filing obligation, but more than 300,000 still have not filed. Now the IRS is offering a one-time chance for these nonprofits to bring their filings up to date and avoid losing their tax-exempt status. Their three years of returns must be filed by October 15, 2010.

Organizations that do not meet the October 15, 2010, deadline will automatically have their exempt status revoked. Once the exempt status is revoked, the organization must apply for reinstatement.

If you are responsible for a nonprofit organization and need details or filing assistance, please contact our office.
Cornucopia
The Tax Tip of the Week deals with Limited Liability Companies and the IRS.

The Business Tip of the Month gives small business owners some further tips to reduce their costs in this very tough economy.

The Financial Tip of the Month. Your credit score is important now, more than ever, if you want to borrow money. Read about some ways to improve your FICO score.

The Fraud Alert: Do you own a lap top? Here are some tips on how to keep it safe from theft whether you travel or use it in your office.

Photos © Bigstockphotos.com, istockphoto.com, Felix Orona

Sincerely,
Linda Heineman
Linda L. Heineman, CPA

phone: 626-577-0979
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