February 13, 2014
Calendar

Major Tax Deadlines for February 2014


February 17 -
Presidents' Day, a federal holiday. When any tax deadline falls on a Saturday, Sunday, or legal holiday, the deadline is moved to the next business day.

 

February 18 -  

Deadline for providing Forms 1099-B and 1099-S to recipients.

 

February 28 -  

Payers must file information returns (such as 1099s) with the IRS. (Electronic filers have until March 31 to file.)

 

February 28 -

Employers must send W-2 copies to the Social Security Administration. (Electronic filers have until March 31 to file.)





AFFORDABLE CARE ACT- UPDATE

White House offers some employers transition relief under health care law.   

 

Some employers will receive relief under the Affordable Care Act's employer mandate next year, the White House announced Monday. The delay gives employers with 50 to 100 full-time-equivalent employees an additional year - until 2016 - before they must offer health benefits to full-time employees or face possible penalties.

 

 
Collection of Sales Tax on Service Charges
               
We're sending out a reminder about the new IRS rules regarding service charges.  To take that a step further, please note the following tax updates for DC/MD/VA.   

DC Tax  

Charges for room service and other service charges in connection with the serving of food or beverages (including alcoholic beverages) in hotels, motels, inns, cafes, bars, and similar establishments where food or drink are served shall be subject to tax under § 116 of the Act.
 

Cover, minimum, entertainment, or service charges, whether collected at the door of the establishment or added to the check, shall be taxable at the same rate as the food, drink, and alcoholic beverages served for consumption on the premises. 

 

If a fixed percentage of the guest check representing gratuities or tips is added to charges for meals and drinks, and the purchaser is afforded no discretion with respect to the amount or method of payment, this charge is subject to the tax even though all or a part of the charge is paid by the vendor to the employees.  

 

A gratuity or tip is not subject to tax (even though it may be charged to the customer's regular or credit card account and not paid directly to the server, waiter, or waitress at the time of sale or service) if both of the following conditions apply:  

  1. The tip is given voluntarily by the customer; and
  2. The amount of the tip is determined by the customer at the discretion of the customer.

 

SOURCE: Administrative Ruling No. 3, 16 DCRR.

  

MD Tax

In Maryland, payment of a separately stated mandatory gratuity or service charge, which is in the nature of a tip, is not subject to the tax if the food or beverages are served to a group of ten persons or less. However, mandatory gratuity or service charges on sales of food or beverages to a group of more than ten persons are taxable whether or not they are separately stated.

  

VA Tax  

The Virginia state tax code states that a mandatory gratuity that amounts to 20% or less of the sales price of the meal, the tip is not subject to sales tax. A mandatory gratuity charged by the seller that exceeds 20% of the sales price of the meal is subject to the tax to the extent it exceeds 20%. Tips that are given wholly at the discretion of the customer are not subject to the tax, regardless of the amount.

 

  

IRS RULING REMINDER

 

Automatic Gratuities Added for Large Groups  

Are Now Taxed as Service Charges subject  

to Payroll Withholding Tax 

 

We want to remind our clients that beginning in January, 2014 the Internal Revenue Service has started classifying automatic gratuities as service charges and now treats them as regular wages, subject to payroll withholding tax-instead of tips.

 

For more information related to this topic, visit:  

  http://www.irs.gov/taxtopics/tc761.html  

http://www.irs.gov/irb/2012-26_IRB/ar07.html#d0e170