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┌───────────────────────────────────────┐
│ UPDATE INFORMATION--CHANGES IN RECENT │
│ QUARTERLY RELEASES OF THIS PROGRAM: │
│ │
│ (Numbers in brackets indicate YEAR/QTR│
│ when update or new feature was added)│
└───────────────────────────────────────┘
HIGHLIGHTS OF FEDERAL DEVELOPMENTS IN THIS RELEASE:
───────────────────────────────────────────────────
[NOTE: WE WILL RELEASE NEW VERSION WITH 1997 TAX
PLANNING MODULE AFTER NOVEMBER 1, 1996]
. CONGRESS INCREASES MINIMUM WAGE. Effective October 1,
1996, the federal minimum wage will increase to $4.75
an hour, further increasing to $5.15 on September 1,
1997. The new legislation permits a subminimum wage
of $4.25 to be paid to employees under the age of 20
for the first 90 days after they are hired. Certain
computer professionals, including those paid on an
hourly basis at a wage of at least $27.63 an hour,
are now exempted from minimum wage coverage. [96/3]
. NEW TAX LAWS CHANGES INCLUDED IN MINIMUM WAGE BILL.
The new minimum wage bill signed into law by President
Clinton on August 20, 1996, called the "Small Business
Job Protection Act of 1996," contained a number of
significant business-related tax provisions, including:
. An increase in the $17,500 first year expensing
deduction for business equipment, which gradually
will rise to $25,000 over a period of several years.
. A number of favorable S corporation changes were
made, including an increase in the maximum number
of S corporation shareholders from 35 to 75, and a
provision allowing an S corporation to own 100% of
the stock of a "qualified Subchapter S subsidiary"
corporation.
. Various expiring or expired income tax credits
were extended again, including the education credit
for employees, the former "Targeted Jobs Tax Credit"
(now the "Work Opportunity Credit," as modified,
with the credit reduced from 40% to 35% of first
year wages), and the research and experimental tax
credit (reinstated from July 1, 1996 to May 31, 1997
only).
. The spousal IRA deduction was increased from $250 to
$2,000, beginning in 1997.
. A new simplified kind of pension plan, called a
"Simple Savings Plans" was approved under the new Act.
. Excise tax changes, including a phasing out of the
10% tax on luxury automobiles (which is reduced to 9%
for the rest of this year), and the reinstatement of
the 10% airport tax on air travel, which had expired
January 1, 1996.
. A delay of 6 months in the January 1, 1997 deadline
for beginning EFT (electronic funds transfer) deposits
of withheld federal income taxes, for small employers
with $50,000 or more of withheld taxes during calendar
year 1995. The new deadline will be July 1, 1997, for
those employers newly subject to the EFT tax deposit
requirements. [96/3]
. NEW HEALTH CARE BILL ENACTED. President Clinton has
signed into law a new health care bill which, among
other things, creates "portability" of health insurance
coverage for employees who change jobs and adopts, on a
limited and experimental basis, "medical savings
accounts." The new law also increases the percentage
of health insurance that is deductible by a self-employed
person, from 30% in 1996 to 40% in 1997, 45% in 1998,
to 50% in 2003, 60% in 2004, 70% in 2005, and finally to
80% in 2006 and subsequent years. [96/3]
. IRS PROPOSES REGULATIONS TO SIMPLIFY TAX TREATMENT OF
UNINCORPORATED BUSINESSES. In a revolutionary move
towards tax simplification, the IRS has proposed new
regulations that would allow all unincorporated business
entities with two or more owners to be taxed as
partnerships, unless they affirmatively elect ("checking
the box") to be taxed as corporations. This would remove
a great deal of complexity from the tax code for entities
such as limited partnerships and limited liability
companies. Under current law, if such entities have too
much of a resemblance to corporations under detailed
tests in the tax regulations, they may be reclassified as
corporations by the IRS, for tax purposes. As a result,
it is quite easy for an attorney who lacks tax expertise
to prepare articles of organization for a limited liability
company that may inadvertently cause the LLC to be taxed
as a corporation, rather than as the owners intended, as
a partnership. In addtion, in a change of heart, the new
IRS regulations will allow one-person LLCs to also gain
noncorporate treatment, being treated the same as sole
proprietorships for tax purposes. But note that these
regulations are only in PROPOSED form at present,
although they are expected to go into effect before the
end of 1996. However, because these regulations promise
to revolutize the process of choosing a legal entity
for your business, we have completely rewritten the
program segments that discuss LLCs and choice of legal
entity, to reflect the new realities. [96/3]
. NEW SECTION ADDED ON INTERNET BUSINESS SITES. This new
release of the program includes a listing of various
Web and Internet sites that provide business information
or links to such information, with summaries of what
they contain, including federal, state government, and
privately supported sites, with URL addresses. These
helpful sites include everything from where you can
download IRS tax forms, to obtaining SBA loan application
documents, to ordering books on doing business in any
state. To view this new file on Internet business sites,
use the index feature of this program, and look for the
key word "INTERNET". The same section also includes an
expanded list of telephone hot-line services, and BBS
(electronic bulletin board) sites. [96/3]
. NEW SECTION ADDED ON ENTERPRISE ZONE ("EMPOWERMENT
ZONE") TAX CREDITS. A new section has been added
regarding the 20% (of first $15,000 qualified wages
per employee) tax credit allowed to enterprise zone
employers for wages paid to certain qualified zone
employees, for businesses based in a number of
designated urban and rural "empowerment zones" in
various parts of the country. [96/3]
. IS EDI IN YOUR FUTURE? A new section has been added to
this new release of the program, on Electronic Data
Interchange ("EDI"), systems in which trading partners
are linked together for ordering, inventory control, and
payment purposes by electronic data links, taking the
place of paper invoices and other types of transactional
documentation which, prior to EDI, had to be re-keyed
manually into the computer system of the recipient.
Many government agencies and large wholesalers or retail
firms are now requiring their contractors or suppliers
to use EDI if they wish to continue to be contractors
or suppliers with those agencies or large companies, so
you will need to know about EDI, and how to implement
this capability, soon. [96/3]
. EXPANDED SEC COVERAGE. New material has been added on
securities law compliance for "public" companies, plus
coverage of SEC exemptions for intrastate offerings
(Regulation A) and Rule 147 exemptions. [96/3]
. NEW TAX PLANNING SECTION ADDED ON THE TAX BENEFITS OF
HIRING CHILDREN OR OTHER FAMILY MEMBERS AS EMPLOYEES.
This new segment discusses a number of income, Social
Security, and unemployment tax advantages of hiring
minor children, and in some cases a spouse or parent,
as an employee in your small business. [96/3]
. CONGRESS ENACTS LIMIT ON STATE TAXATION OF PENSIONS
OF NON-RESIDENTS. On January 10, 1996, President
Clinton signed new legislation that prohibits states,
such as New York and California, from attempting to
impose state income taxes on non-residents who formerly
lived in such states. This prevents, for example,
California from taxing the pension of a former resident
who moves to Nevada or Florida, where there is no
income tax, and is a major win for taxpayers. [96/1]
. IRS ANNOUNCES NEW STANDARD MILEAGE ALLOWANCE FOR 1996.
In 1996, you may deduct business mileage at the rate of
31 cents a mile, if you use the optional standard mileage
rate, instead of depreciation and actual automobile
operating expenses. The rate for 1995 was 30 cents per
mile. The rate for rural mail carriers increased to 46.5
cents per mile, from 45 cents in 1995. [96/1]
. NEW TELEMARKETING RESTRICTIONS IMPOSED. Effective 1/1/96,
new FTC Regulations went into effect, imposing new
restrictions and limitations on companies that engage
in telemarketing activities. Use the "INDX" feature of
this program, and select the "TELEMARKETING RESTRICTIONS"
item for details. [96/1]
. COURT INVALIDATES EXECUTIVE ORDER IMPOSING STRIKER
REPLACEMENT BAN. On February 2, 1996, the U.S. Court
of Appeals invalidated an Executive Order that had been
issued by President Clinton in 1995, which had imposed
a ban on the hiring of replacement workers during
strikes by government contractors, after attempts to
pass such a ban in Congress had twice failed, in 1993
and 1994. [96/1]
. LUXURY TAX ON AUTOS -- THRESHOLD INCREASED FOR 1996.
The 10% excise on automobiles only applies to the
portion of the purchase price in excess of $34,000
in 1996 (vs. $32,000 last year). [96/1]
. IRS FINALLY INCREASES AMOUNT OF UNSUBSTANTIATED T&E
EXPENDITURES TO $75. Effective after September 30, 1995,
the IRS has amended its regulations so that amounts spent
for lodging, meals, entertainment, gifts, or so-called
"listed property" in amounts under a $75 threshold need
not be evidenced by documentary evidence (such as receipts
or invoices). For several decades, this threshold amount
had been set at $25 for such items, until this recent
action by the IRS, announced in Notice 95-50, IRB 1995-42.
[96/1]
. IRS EXCLUSION FOR EMPLOYER PROVIDED TRANSPORTATION
FRINGE BENEFITS INFLATION INDEXING ANNOUNCED FOR 1996.
The amounts allowed as tax-free "qualified transportation
fringes" are increased from $160 to $165 for qualified
free parking, and from $60 to $65 for transit passes,
in 1996. [96/1]
. NEW 1996 TAX CALCULATION MODULE NOW INCLUDED. Our new
1996 tax planning module, fully updated for 1996 tax
rates and brackets and for tax law changes (as known as
of January 1, 1996) and our updated module for 1995, are
both included with this release of the program.
[96/1]
. INDEXING FOR ANNUAL DEPRECIATION LIMITS ON "LUXURY
AUTOMOBILES" ACQUIRED IN 1996 ANNOUNCED BY IRS. The
IRS has announced that, because of modest inflation in
the last year, and the fact that the indexing of luxury
auto depreciation limits only goes up in $100 increments,
the 1996 limits will be unchanged from those for
acquisitions of automobiles made in 1995. [96/1]
. UPDATED FOR 1996 INDIVIDUAL TAX RATE BRACKET CHANGES.
The IRS has announced 1996 tax brackets, as indexed
for inflation, for the individual income tax. These
are now reflected in the text, throughout the program.
[95/4]
. UPDATED FOR 1996 PENSION PLAN LIMITS INDEXING. Release
95.4 and subsequent releases have been updated to
reflect IRS indexing of various dollar limits applicable
to employee pension benefit plans for 1996, such as the
increase in the maximum deferral allowed per employee
for a 401K plan, from $9,240 in 1995 to $9,500 in 1996.
[95/4]
. UPDATED FOR INCREASE IN FICA AND SELF-EMPLOYMENT TAX
WAGE BASE IN 1996. The program has been updated
throughout to reflect the 1996 inflation-adjusted
amounts of income subject to the full rate (15.3%)
of FICA or Self-employment tax, which was increased
from $61,200 in 1995 to $62,700 in 1996. Amounts
in excess of $62,700 are subject only to the 2.9%
Medicare portion of the social security taxes. [95/4]
. OTHER WITHHELD TAXES NO LONGER REPORTED ON FORM 941.
Taxpayers required to withhold certain taxes other
that wage withholding and FICA (such as "backup
withholding on interest or dividends) will now report
such withholdings on new IRS Form 945. However,
these rules were recently liberalized, so that a
taxpayer only has to file Form 945 in years when
taxes have been withheld that must be reported on
the Form 945. Previously, a taxpayer was required
to continue filing the form every calendar year after
the initial year it was filed, even if no taxes were
withheld for such year. [95/4]
. BILL INTRODUCED IN CONGRESS TO ALLOW STATES TO FORCE
OUT-OF-STATE SELLERS TO COLLECT USE TAX. A bill has
been introduced in the Senate by Sen. Dale Bumpers of
Arkansas, which would authorized states to require
out-of-state sellers, such as mail order companies,
to collect sales or use tax on sales of tangible
property shipped into a state, at a single uniform
state wide rate (even if the state has varying local
rates) for each state. Certain small sellers would
be exempt, if unless they have either $3 million of
total sales of such items or $100,000 of such sales
in the particular state, in the 12 months ending in
September of the preceding calendar year. Couched
as a "tax fairness" bill to "help main street
businesses" who compete against out-of-state mail
order firms that are not currently required to
collect use tax or sales tax from in-state buyers,
the proposed legislation may have a good chance of
passing, particular since it is sponsored by
President Clinton's Democratic colleague from
Arkansas, a powerful member of the Senate. We
will keep you advised of the status of the proposed
legislation in future updates of this program. [95/3]
HIGHLIGHTS OF RECENT STATE LAW CHANGES:
───────────────────────────────────────
. REDUCING STATE UNEMPLOYMENT TAX THROUGH VOLUNTARY
CONTRIBUTIONS. Coverage has been added of provisions
in 23 states that allow employers to reduce their
unemployment tax rate by making a voluntary contribution
of tax to their account. [96/1]
. CALIFORNIA REDUCES MINIMUM FRANCHISE TAX ON CERTAIN
NEW BUSINESSES. New tax reduction legislation will
reduce the minimum franchise tax on corporation, which
is currently $800 a year, to $600 a year for new
businesses with under $1 million in gross receipts,
for years beginning on or after January 1, 1997. The
reduction will not apply to corporations if 50% or
more of their stock is owned by another corporation.
[96/4]
. CALIFORNIA ANNOUNCES NEW SDI RATE FOR 1997. The rate
of tax to be withheld from employee wages for State
Disability Insurance drops from 0.8% in 1996 to 0.6%
in 1997, still computed on the first $31,767 of an
employee's wages only. [96/4]
. CALIFORNIA CUTS FRANCHISE TAX RATE. The California
franchise tax on banks and corporations, currently a
tax of 9.3% on taxable income, has been reduced to
8.84%, for tax years beginning on or after January 1,
1997. In addition, the corporate alternative minimum
tax rate will decline from 7% to 6.65%, beginning in
1997. [96/3]
. CALIFORNIA HIGH INCOME TAX BRACKETS ELIMINATED FOR
1996. The temporary 10% and 11% tax rate brackets on
high income taxpayers are scheduled to expire this
year, and would not apply for 1996. However, there
is an initiative on the November, 1996 ballot to
restore these high brackets, if passed. [96/3]
. CALIFORNIA WITHHOLDING TAX THRESHOLD DECREASED IN 1996.
For California employers required to make federal
deposits of withheld income and FICA taxes, California
requires that withheld state income tax and SDI must
be paid by in the same date as the federal deposit,
if total withheld California taxes exceed $400. In
1995, this threshold amount was $500 of accumulated
withheld taxes. [96/1]
. CALIFORNIA TIMBER YIELD TAX RATE FOR 1996 UNCHANGED.
The State Board of Equalization announced that this
tax rate, which was 2.9% in 1995, will remained
unchanged again for 1996. [96/1]
. CALIFORNIA REDUCES, RAISES CERTAIN FILING FEES. The
state of California has reduced the qualification
filing fee for a foreign corporation from $350 to
$100, and has reduced the fee for filing articles of
organization for a limited liability company (LLC)
from $80 to $70. However, the annual report filing
fee for domestic and foreign corporations and LLCs is
now increased from $5 to $10 a year. [96/1]
. SMALL CALIFORNIA EMPLOYERS CAN PROVIDE PAYROLL TAX
INFORMATION BY PHONE IN 1996. Starting in April of
1996, the E.D.D. began to allow California employers
with 1-4 employees to provide payroll tax information
by telephone, instead of filing a quarterly DE-6 wage
report. [96/1]
. INCOME TAX FILING BY TELEPHONE. Starting with the
1996 tax filing season, certain individual California
taxpayers who file Form 540EZ returns are permitted
to file their tax returns by telephone. [95/4]
. CALIFORNIA--California has adopted a Limited Liability
Partnership (LLP) law, allowing certain types of
professional services firms to operate as LLPs. In
general, professionals are not allowed to operate as
LLCs in California. Under the new LLP law, only
certain law and accounting firms will be allowed to
set up LLPs under California law. Firms that qualify
must file Form LLP-1 with the Secretary of State.
[95/4]
CONNECTICUT PHASING OUT TAX ON S CORPORATIONS. Under
new legislation enacted May 31, 1996, Connecticut will
eventually phase out the entity-level income tax on
the income of S corporations by the year 2000, making
the state tax treatment of S corporations more like
the federal tax treatment at that time. [96/3]
. DELAWARE LOWERS PERSONAL INCOME TAX RATE. Beginning
in tax years after December 31, 1995, the top personal
income tax rate in Delaware is reduced to 7.1%.
[95/4]
. DELAWARE ADOPTS FURTHER REDUCTION IN PERSONAL INCOME
TAX RATE. The maximum personal income tax rate, which
was lowered to 7.1% for 1996, is reduced to 6.9% for
tax years beginning after December 31, 1996. [96/3]
. DELAWARE CUTS GROSS RECEIPTS TAX. The Delaware gross
receipts tax on businesses, which is imposed at varying
rates on different classes of businesses (generally at
rates of less than 1% of gross receipts), is reduced
by 4% across the board, effective January 1, 1996.
Thus, for example, the current 0.75% tax rate on retail
companies is reduced to 0.72%. [96/3]
. DISTRICT OF COLUMBIA REPEALS ANNUAL REPORT REQUIREMENT.
In the future, domestic and foreign corporations will
only be required to file reports every 5 years, on the
15th of April every 5th year after the date of
incorporation or admission to do business in the
District, effective after 9-8-95. The annual fee
remains $100 a year, but payment will now be in the
form of one $500 payment every five years. [96/2]
. GEORGIA REPEALS TAX ON INTANGIBLE PROPERTY. Effective
as of January 1, 1997, Georgia has repealed its personal
property tax on intangible property. If Georgia voters
approve the actions of the legislature in a November,
1996 referendum, the repeal will become effective as of
January 1, 1996 instead. [96/2]
. HAWAII ADOPTS LLC AND LLP LAWS. Hawaii, which was the
last state without a limited liability company law,
finally joined the rest of the states by enacting laws
in 1996 to permit formation of both LLCs and limited
liability partnerships (LLPs) by April, 1997. [96/4]
. HAWAII INTRODUCES NEW INDIVIDUAL TAX RETURN FORM FOR
1995 RETURNS. Hawaiian residents who file federal
income tax returns will now generally file a new
tax return form, N-11, beginning with the 1995 tax
return. Part-year residents and certain other filers
will continue to use form N-12. [96/2]
. KENTUCKY GAS TAX RATE UPDATED FOR 3RD QUARTER. The
Kentucky Revenue Cabinet has announced that the gasoline
tax rate for the 3rd quarter of 1996 will remain at
15 cents per gallon. The petroleum storage tank
environmental assurance fee is 1.4 cents per gallon.
[96/3]
. LOUISIANA REPEALS INTANGIBLE PROPERTY TAX. The voters
of the state of Louisiana, in the congressional primary
election of September 21, 1996, amended the state's
constitution to exempt virtually all intangible property
from property taxation, except for bank stocks, public
service properties and other narrowly limited types of
property. [96/4]
. MASSACHUSETTS ADOPTS LIMITED LIABILITY COMPANY LAW.
Massachusetts has joined 47 other states and the
District of Columbia in enacting a limited liability
company (LLC) law, leaving Vermont and Hawaii as the
only two states that have not adopted LLC laws. The
new law, effective 1-1-96, also provides for creation
of limited liability partnerships (LLPs). A filing
fee of $500 is required for both LLCs and LLPs. An
LLC is required to file an annual report. State tax
treatment of LLCs and LLPs will follow the federal
law. [96/1]
. MICHIGAN PHASING OUT INTANGIBLES TAX. Michigan has
repealed its tax on intangible property, effective
as of 1998. It is being phased out gradually over
the years 1994-1997. [96/2]
. MICHIGAN SINGLE BUSINESS TAX CHANGES. New (1996)
legislation will drastically increase the importance
of the sales factor, for businesses required to
apportion their income between Michigan and other
states, for SBT purposes, after 12-31-96. Small
business exemptions and credits under the SBT have
also been modified. [96/1]
. MISSISSIPPI ENACTS LIMITED LIABILITY PARTNERSHIPS LAW.
Mississippi, which already has an LLC law, has now also
enacted a limited liability partnership (LLP) law,
providing similar limited liability to partners in an
LLP. However, a partner in an LLP is not protected
by the LLP law from his or her own negligence or
malpractice, or for that of a person under his or
her direct supervision. There is a $250 filing fee,
payable to the Secretary of State, for either a
domestic or foreign LLP. [96/1]
. MISSOURI REINSTATES LOCAL USE TAX. In 1994, the
Missouri state supreme court invalidated the state's
uniform local 1.5% use tax, which was higher than
the local sales tax in some counties. The state has
now enacted a new local use tax law, on May 21, 1996,
which allows local governments to impose a use tax
equal to the local sales tax rate. [96/3]
. NEBRASKA ADOPTS LLP LAW. Effective July 19, 1996, the
state of Nebraska allows partnerships to register with
the Secretary of State, by filing an application form
and a $200 fee, to become limited liability partnerships
("LLPs"). Like LLCs, LLPs offer the dual benefits of
corporate-like limited liability from the claims of
creditors, and the pass-through tax treatment of a
partnership. [96/3]
. NEW JERSEY TAX CUTS ENACTED. Effective as of January
1, 1996, the maximum individual income tax rate in
New Jersey is reduced from to 6.37%. The top rate
of 7% before 1994 was reduced in stages in 1994 and
1995. In addition, the tax rate on income of C
corporations with $100,000 or less of net income are
reduced from 9% to 7.5%, effective July 1, 1996. [95/4]
. NEW MEXICO AUTHORIZES LIMITED LIABILITY PARTNERSHIPS.
Effective June 16, 1995, limited liability partnerships
(LLPs) are authorized in New Mexico. To elect LLP
status, a partnership must file a notice and a $50 fee
with the Secretary of State. Thereafter, the LLP must
file an annual registration and $50 fee. Foreign LLPs
must also file a notice and $50 fee, then re-register
every two years. The name of an LLP mus contain the
words "Registered Limited Liability Partnership," or
"L.L.P." or "LLP". Every LLP must maintain at least
$500,000 insurance (per occurrence) for errors,
omissions, negligence, wrongful acts, misconduct or
malpractice for which limitation of liability is
granted. [96/3]
. NEW MEXICO UNEMPLOYMENT TAX RATES FOR 1996. For both
1995 and 1996, Schedule 2 (rates ranging from 0.3% to
5.4%) is in effect. The wage base subject to tax in
1996 is $13,900. [96/3]
. NEW MEXICO TO REQUIRE ESTIMATED TAX PAYMENTS. Starting
in 1997, individual taxpayers in New Mexico will be
required to make quarterly estimated income tax payments,
on the same dates as they are required to make federal
estimated tax payments. No estimated tax need be paid
if less than $500. [96/2]
. NEW MEXICO REDUCES GAS TAX RATE TEMPORARILY. The state
excise tax on gasoline and certain special fuels,
previous 20 cents a gallon, is reduced to 17 cents
a gallon as of July 1, 1995. The rate will drop to 16
cents on July 1, 2003 (or earlier, if certain funding
levels are attained earlier for highway debentures).
[95/4]
. NEW YORK REPEALS PROPERTY GAINS TAX. Effective for all
transfers occurring on or after June 15, 1996, the New
York state real property transfer gains tax, a special
transfer tax on appreciated real property, is repealed.
[96/3]
. NORTH CAROLINA CUTS UNEMPLOYMENT TAXES AGAIN. The
state of North Carolina has reduced the new employer
unemployment tax rate from 1.8% of covered wages to
1.2% in 1996, which should benefit some 26,000 new
employers. In addition, some 95,000 other businesses
with credit balances in their experience rating account
will see their tax rate reduced to zero. [96/2]
. NORTH CAROLINA MOTOR FUEL TAX RATE INCREASES. For the
first half of 1996, the tax rate on gasoline and other
motor fuels is increased from 21.6 cents to 22 cents
per gallon. [96/1]
. NORTH DAKOTA FUEL TAX RATE INCREASE. Effective January
1, 1996, the gasoline and fuel tax rate increased from
18 cents to 20 cents per gallon. The rate is scheduled
to drop back to 17 cents on January 1, 1998. [96/1]
. OHIO GASOLINE TAX RATE TO REMAIN UNCHANGED FOR FISCAL
YEAR ENDING 6/30/96. The state's motor fuel tax will
remain at the previous level of 22 cents per gallon
for the fiscal year July 1, 1995 through June 30, 1996.
[95/3]
. OKLAHOMA ADOPTS LIMITED LIABILITY PARTNERSHIP LAW. On
or after November 1, 1996, Oklahoma will allow domestic
or foreign partnerships to register as limited liability
partnerships (LLPs), which will protect partners from
the debts or liabilities of the partnership or other
partners, like a corporation or LLC. Oklahoma had
previously adopted an LLC law. [96/3]
. PENNSYLVANIA LOCAL TAX CHANGES. Effective in 1996,
the tax rate for the Philadelphia Wage and Net Profits
Tax is reduced to 3.36% for residents and to 4.2256%
for nonresidents. [96/1]
. PENNSYLVANIA CUTS CORPORATE INCOME TAX RATES. Corporate
tax rates in Pennsylvania, previously 12.25%, have been
reduced to 9.99%, starting in 1995. State inheritance
tax on spousal transfers has also been eliminated, for
deaths occurring on or after January 1, 1995. [95/3]
. PENNSYLVANIA ENACTS JOB CREATION TAX CREDIT. Effective
July 1, 1996, Pennsylvania has enacted a job creation
tax credit for employers who create 25 or more new jobs
in the Commonwealth. The tax credit, which applies only
to full time jobs paying at least 150% of the federal
minimum wage, is $1,000 per new job created, for
employers who qualify for the credit. [96/3]
. UTAH LOWERS PERSONAL INCOME TAX RATES. For 1996 and
subsequent years, the maximum individual income tax
rate under the Utah income tax is lowered from 7.2%
to 7%. Beginning in 1997, the tax rate on the lowest
taxable income bracket is lowered from 2.55% to 2.3%.
[96/2]
. VERMONT SALES TAX 5% RATE EXTENDED ANOTHER YEAR. The
Vermont sales tax, which dropped back to 4% on July
1, 1993, was temporarily increased to 5% again, until
July 1, 1995, at which time it was due to drop back to
4%. However, the 5% rate has now been extended for
another year, through 6-30-96. [95/3]
. VERMONT MINIMUM WAGE INCREASED. The Vermont minimum
wage, currently $4.75 an hour in 1996, increases to
$5.00 on January 1, 1997, and to $5.15 when the federal
minimum wage goes to $5.15 on September 1, 1997. [96/4]
. VERMONT ENACTS LLC LAW. Vermont, one of the last two
states without a limited liability company law (Hawaii
was the other), enacted such a law just before Hawaii
did so, effective July 1, 1996. One or more persons
can form a Vermont LLC by filing articles of organization
with the Secretary of State and paying a $75 filing fee.
Foreign LLCs may register for $100. Like partnerships,
LLCs will be subject to a $150 annual minimum tax, and
will be required to make estimated tax payments on
behalf of nonresident members, beginning in 1997. [96/4]
. WASHINGTON ELECTRONIC AUTHENTICATION ACT. The Governor
has, in April, 1996, just signed into law a new bill
providing for a secure method of using electronic
"signatures" for documents that are transmitted
electronically, and making such signatures legally
binding. [96/2]
. WASHINGTON B & O TAX ON INSURANCE AGENTS AND INSURANCE
BROKERS REDUCED. Effective July 1, 1995, the Business
& Occupations Tax on insurance agents, brokers, and
solicitors was reduced to 0.55% plus a surtax equal to
4.5% of the base rate, or a total rate of 0.575%. The
surtax is due to expire after June 30, 1997. [95/3]
. WASHINGTON B & O TAX CREDITS, REDUCTIONS. B&O credits
have been increased for employers, creating new
manufacturing and research jobs in Washington, after
January 1, 1996. In addition, effective January 24,
1996, the Business and Occupation tax rates have been
reduced for various types of service businesses. For
example, "selected business services" (including
lawyers, business consultants, accountants, advertising
services) now pay a rate of 2.0%, reduced from 2.5%;
financial services pay 1.6%, reduced from 1.7%; and
most other "miscellaneous" services are now subject to
a total tax rate of 1.829%, reduced from 2.09%. [96/2]
. WISCONSIN ENACTS LIMITED LIABILITY PARTNERSHIP LAW.
Legislation effective December 11, 1995 provides that
foreign or domestic partnerships may now register as
"limited liability partnerships" (LLPs) in Wisconsin.
Such registration (after payment of a $100 fee to the
Department of Financial Institutions, which will handle
such filings, rather than the Secretary of State, as of
July 1, 1996), will confer limited liability on such
partnerships, similar to an LLC, except that negligence
or malpractice of an individual partner will not be
shielded (as with professional corporations). LLPs will
primarily be of interest to professional service firms.
[96/1]
. WISCONSIN LLC LAW NOW ALLOWS SINGLE OWNER. Under new
amendments to the Wisconsin limited liability company
laws, effective July 1, 1996, a Wisconsin LLC may now
be formed with only one owner. [96/3]
. WYOMING EXTENDS EXTRA 1% SALES TAX FOR 2 MORE YEARS.
The 4% state sales tax, scheduled to revert to 3% on
July 1, 1996, has now been extended until July 1, 1998.
However, if the state makes a determination that it has
met certain specified budget goals before that date,
the tax will drop to 3.5% on the July 1 after the
Governor certifies that such a determination has been
made. [95/4]
OTHER CHANGES AND ADDITIONS IN RECENT QUARTERLY RELEASES:
────────────────────────────────────────────────────────
. IS A LIMITED LIABILITY COMPANY THE BEST ENTITY FOR YOU?
The "XPERT" module, which already included a consulting
session on whether or not you should incorporate your
business, or elect S corporation treatment, has been
revised to now include a fourth entity choice: The
limited liability company (LLC), which will be the
optimal legal entity choice for an increasing number
of small businesses. This "consulting session" will
now compare the pros and cons of C corporation, S
corporation, LLC, or other unincorporated entity. [96/3]
. ELECTRONIC DATA INTERCHANGE (EDI). New section (see
index) on electronic data interchange between trading
partners has been added, with discussion of how it may
impact your ability to serve as a supplier to large
customers who are, more and more, require EDI links
between their computer systems and those of their
trading partners. [96/3]
. NEW SEGMENT ADDED ON MULTILEVEL MARKETING PROGRAMS.
Is there an Amway or Tupperware distributorship in
your future? Multilevel marketing programs are
being used to sell everything from soap to vitamins
to telephone services. This new segment gives you
advice on the kinds of questions you should ask
before you invest money and time in a multilevel
marketing program. [96/3]
. NEW SEGMENT ADDED ON TAKING DEDUCTIONS FOR A PC IN
YOUR HOME. This new item guides you through the IRS
requirements for deducting a home computer used for
business-related purposes in your home, or in your
home office. [96/1]
. TELEPHONE HOTLINES. Updated various telephone numbers
of government agencies, many of which have changed or
been disconnected in recent months. Also added Justice
Department information line number for information on
the Americans with Disabilities Act, and INS immigration
law hiring requirements for employers. [96/2]
. INTERNET BUSINESS SITES. A new segment has been added,
listing and describing a number of highly useful private
and government-sponsored business information sites on
the Internet. [96/3]
─────────────────────────────────────────────────────────────
NOTE: Things change....Rapidly.
─────────────────────────────────────────────────────────────
The above are changes made in the last 4 quarterly updates,
not including earlier revisions. Thus, if you have an
earlier version of the program issued more than 12 months
ago, there are a great many update changes since then that
are NOT listed above, since those have long since been
incorporated into the program, and, from our point of view,
are now ancient history.
─────────────────────────────────────────────────────────────
┌─────────────────────────────────────────────────────┐
│AS YOU WILL NOTE FROM THE FOREGOING CHANGES, THE LAWS│
│AFFECTING BUSINESS TEND TO CHANGE VERY RAPIDLY, AND│
│THIS PROGRAM IS REVISED ON ALMOST A DAILY BASIS TO│
│KEEP UP WITH THE FLOOD OF TAX AND LEGAL CHANGES THAT│
│OCCUR. ACCORDINGLY, IF THIS PROGRAM IS MORE THAN A│
│YEAR OLD, A LARGE PORTION OF THE INFORMATION IN IT│
│IS LIKELY TO BE DANGEROUSLY OUT-OF-DATE. WE ISSUE│
│UPDATES OF THE PROGRAM EVERY THREE MONTHS, AT A VERY│
│REASONABLE PRICE. TRY US. │
└─────────────────────────────────────────────────────┘
┌─────────────────────────────────────────────────────┐
│ OUR FAVORITE QUOTE OR PITHY REMARK FOR THIS EDITION:│
│ │
│ "A banker is a person who will only lend you an │
│ umbrella if the sun is shining." -- Alan Abelson │
│ │
└─────────────────────────────────────────────────────┘