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By Editor, January 19, 2012

The following is a summary of the many important tax developments that have occurred in the past three months that may affect you, your family, your investments, and your livelihood. Please call us for more information about any of these developments and what steps you should implement to take advantage of favorable developments and to minimize the impact of those that are unfavorable.

Payroll tax cut temporarily extended. The Temporary Payroll Tax Cut Continuation Act of 2011 was enacted late last year. It temporarily extends the two percentage point payroll tax cut for employees, continuing the reduction of their Social Security tax withholding rate from 6.2% to 4.2% of wages paid through Feb. 29, 2012. Shortly after its passage, the IRS instructed employers to implement the new payroll tax rate as soon as possible in 2012 but not later than Jan. 31, 2012. The law also includes a “recapture” provision, which applies only to those employees who receive more than $18,350 in wages during the two-month period (i.e., two-twelfths of the 2012 wage base of $110,100). This provision imposes an additional income tax on these higher-income employees in an amount equal to 2% of the amount of wages they receive during the two-month period in excess of $18,350 (and not greater than $110,100). In addition, under the new law, the social security tax rate for a self-employed individual remains at 10.4%, for self-employment income of up to $18,350 (reduced by wages subject to the lower rate for 2012). Congress is going to try to negotiate a deal to extend the payroll tax cut for all of 2012. If a deal is struck to extend it for the full year, the recapture provision for employees would not apply.

Credit for hiring veterans extended and enhanced. A law enacted last November extended and enhanced a credit for hiring qualified veterans. Before the law was passed, the credit would have been available only if the qualified veteran were hired before Jan. 1, 2012, and only certain veterans were considered qualified veterans. The new law extends the credit for hiring qualified veterans, adds two new classes of veterans who are considered qualified veterans, increases the credit for hiring certain qualified veterans, “fast-tracks” the process for certifying that an individual is a qualified veteran, and provides tax-exempt employers with a credit against payroll tax for hiring qualified veterans. The credit amount varies depending on a number of factors. It can be as high as $9,600 for hiring a qualified disabled veteran. For an employer to qualify for the credit, the qualified veteran must begin work for the employer before Jan. 1, 2013 and other requirements must be met.

New rules for deducting or capitalizing tangible property costs. The IRS has issued new regulations for determining whether amounts paid to acquire, produce, or improve tangible property may be currently deducted as business expenses or must be capitalized. The regulations will affect virtually all taxpayers that acquire, produce, or improve tangible property. They are comprehensive, voluminous and virtually rewrite the rules in this area. For example, they provide detailed definitions of “materials and supplies” and “rotable and temporary spare parts” and prescribe new rules and elective de minimis and optional methods for handling their cost. They also have rules for differentiating between deductible repairs and capitalizable improvements, among many other items. The regulations generally are effective in tax years beginning after Dec. 31, 2011. However, to add to their complexity, some of the new rules in the regulations do not supersede prior IRS guidance.

New foreign asset reporting guidance and form. The IRS issued detailed guidance on the new law requiring individuals with an interest in a “specified foreign financial asset” during the tax year to attach a disclosure statement to their income tax return for any year in which the aggregate value of all such assets is greater than $50,000 (or a dollar amount higher than $50,000 as the IRS may prescribe). In addition, the IRS issued Form 8938 (Statement of Specified Foreign Financial Assets), which individual taxpayers will use starting in the 2012 tax filing season to report specified foreign financial assets for tax year 2011. The guidance consists of detailed temporary regulations. They define terms that apply for purposes of the reporting requirement; provide rules to determine if a specified individual must file a Form 8938 with their annual return; define what are specified foreign financial assets; detail what information needs to be reported; provide guidelines for valuing specified foreign financial assets; list exceptions to the reporting requirements; and describe the penalties that apply for failure to comply with the reporting requirements.

Standard mileage rates flat or lower. The optional mileage allowance for owned or leased autos (including vans, pickups or panel trucks) is 55.5¢ per each business mile traveled after 2011. For 2011, it was 55.5¢ for miles driven after June 30 and 51¢ per mile for miles driven before July 1. Further, the 2012 rate for using a car to get medical care or in connection with a move that qualifies for the moving expense deduction is 23¢ per mile. For 2011, it was 23.5¢ for miles driven after June 30 and 19¢ per mile for miles driven before July 1.

New Form 8949 replaces Form 1040, Schedule D-1. Many transactions that, in previous years, would have been reported on Form 1040, Schedule D or D-1 must be reported on Form 8949 if they occurred in 2011. Specifically, a taxpayer uses Form 8949 to report:

• The sale or exchange of a capital asset not reported on another form or schedule,
• Gains from involuntary conversions (other than from casualty or theft) of capital assets not held for business or profit, and
• Nonbusiness bad debts.

The taxpayer uses Schedule D to figure the overall gain or loss from transactions reported on Form 8949 and to report capital gain distributions not reported directly on Form 1040, line 13, a capital loss carryover from 2010 to 2011, and certain specialized items.

Withholding requirement for government contractors repealed. A law enacted in 2005 was to have required the Federal government and the government of every state, political subdivision of a state, and instrumentality of a state or state subdivision (including multi-state agencies) making certain payments to a person providing any property or services (e.g., payments to a government contractor) to deduct and withhold 3% from that payment. Although the withholding requirement was originally set to apply to payments made after 2010, it was subsequently deferred to apply to payments made after 2012. A law enacted in November 2011 repealed the government contractor withholding requirement.

If you have any questions regarding these tax developemtns, please contact your Warren Averett Wilson Price accountant. 

Circular 230 Notice: To ensure compliance with requirements imposed by the IRS, we inform you that any tax advice contained in this communication (including any attachments) is not intended or written to be used, and cannot be used, for the purpose of (i) avoiding penalties under the Internal Revenue Code or (ii) promoting, marketing or recommending to another party any transaction or matter addressed herein.

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By Editor, December 20, 2011

Expiring Business Tax Provisions: According to a Congressional Research Service report dated 12/1/11, the following will expire on 12/31/11: (1) the research and development and the work opportunity tax credits; (2) the enhanced charitable deductions for contributions of food, books, and computer technology; (3) the special S corporation built-in gains tax suspension period; and (4) the 15-year recovery period for leasehold improvements, restaurant property, and retail improvements. Furthermore, the 100% bonus depreciation deduction will be scaled back to 50% in 2012, and the Section 179 deduction limit will fall from $500,000 this year to an inflation-adjusted $139,000 in 2012.

Expiring Individual Tax Provisions: According to the same Congressional Research Service report, the following deductions will expire on 12/31/11: (1) elementary and secondary school teacher expenses, (2) state and local sales taxes, (3) mortgage insurance premiums, and (4) qualified tuition and related expenses. The 2010 Tax Relief Act allowed a taxpayer’s nonrefundable personal credits to offset regular tax (net of any allowable foreign tax credit) and AMT for 2011, and also authorized a reduction in the employee’s share of the Social Security payroll tax to 4.2% for 2011. Congress may extend the payroll tax break, and presumably will pass another (one year) AMT patch. Finally, the tax-free treatment of distributions from IRAs for charitable purposes will expire at the end of 2011.

Recharacterizing S Corporation Distributions: S corporation taxable income passed through to a shareholder-employee and S corporation distributions paid to a shareholder-employee are not subject to federal employment taxes or self-employment tax. While this has tempted some shareholder-employees to reduce or even eliminate their salary to avoid employment taxes, the IRS can recharacterize distributions as disguised salary. In one recent case, the S corporation paid its sole shareholder an annual salary of $24,000, but also made distributions of $320,000 over a two-year period. In holding that $67,000 of each year’s distribution should be treated as salary (on top of the $24,000 salary already paid), the District Court noted that the shareholder was a highly qualified accountant with an advanced degree, and was a primary earner in a reputable firm with $5 million in gross revenue over the two-year period. Watson, P.C. v. U.S. , 107 AFTR 2d 2011-311 (DC Iowa).

Portability Election: Executors for the estates of decedents dying after 12/31/10 must file Form 706 , even if not otherwise required to do so, to make the portability election under IRC Sec. 2010(c)(5) allowing the surviving spouse to use the unused portion of the decedent’s exclusion ($5,000,000 in 2011 and $5,120,000 in 2012). This notice alerted taxpayers that the timely filing of Form 706, prepared in accordance with the instructions, will constitute the appropriate portability election for the unused exclusion. Estates not wanting to make the portability election whose gross value exceeds the applicable exclusion should follow the Form 706 instructions. [IRS Notice 2011-82, 2011-42 IRB 516.

Relief for 2010 Decedents: This notice provided estates of decedents who died in 2010 with additional time to file an estate tax return and to pay the estate tax due. The IRS will not impose late filing and late payment penalties on the estates of decedents who died after 12/31/09 and before 12/17/10 if the estate timely files Form 4768 [Application for Extension of Time to File a Return and/or Pay U.S. Estate (and Generation-Skipping Transfer) Taxes], and then files Form 706 or Form 706-NA and pays the estate tax by 3/19/12. Similar relief is available to the estates of decedents who died after 12/16/10 and before 1/1/11 if the estate timely files Form 4768 and then files Form 706 or Form 706-NA and pays the estate tax within 15 months after the decedent’s death. Furthermore, the due date of Form 8939 (Allocation of Increase in Basis for Property Acquired from a Decedent) is delayed from 11/15/11 to 1/17/12. Finally, this notice provided penalty relief to certain persons who received property whose basis is determined under the Section 1022 carryover basis rules and then disposed of that property during 2010. Notice 2011-76, 2011-40 IRB 479.

Bonus Depreciation: In this revenue procedure, the IRS explained how the 100% bonus depreciation rules under IRC Sec. 168(k) will be applied. In part, the IRS (1) allowed 100% bonus depreciation for qualified restaurant or retail improvement property that also qualify as leasehold improvement property; (2) enabled taxpayers that placed qualified property in service in the tax year that includes 9/9/10 to elect out of bonus depreciation for any class of property, or default into bonus depreciation for the whole year, or claim 50% bonus depreciation for the whole year; and (3) provided a safe harbor method for handling post-year-of acquisition depreciation of autos subject to the Section 280F(a) luxury auto limits. Rev. Proc. 2011-26, 2011-16 IRB 664 .

Employer-provided Cell Phones: Almost a year after the removal of cell phones from the definition of listed property by the 2010 Small Business Jobs Act, the IRS issued guidance treating an employee’s use of a cell phone related to the employer’s business as an excludable working condition fringe benefit under IRC Sec. 132(d) when provided for substantial noncompensatory business reasons. Examples of substantial noncompensatory business reasons for providing a cell phone include the need to contact an employee at all times for work-related emergencies, and the need to speak with clients while away from the office or when the client is in another time zone. Notice 2011-72, 2011-38 IRB 407

Rental Real Estate Activities: Under IRC Sec. 469(c)(7)(A) and Reg. 1.469-9(g) , qualifying taxpayers can elect to treat all interests in rental real estate activities as a single activity. This can help them meet the material participation standard necessary to treat rental real estate losses as nonpassive (and so be used to offset wages, interest, and other nonpassive income). The IRS issued special procedures, in lieu of a letter ruling request, to obtain relief for late elections. To qualify, the taxpayer must have reasonable cause for failing to meet the election requirements, and must have filed all tax returns as if the election had been made. Rev. Proc. 2011-34, 2011-24 IRB 875.

Sale of Professional Practice: In this case, the 9th Circuit affirmed a District Court’s finding that amounts received by the taxpayer for personal goodwill from the sale of his dental practice represented the sale of a corporate asset and a subsequent dividend distribution. In the same year the taxpayer incorporated his dental practice, he entered into a covenant not to compete with the corporation. As an employee of the corporation with a covenant not to compete, any goodwill generated from his professional work belonged to the corporation. While the patient relationships were personal, the economic value of those relationships did not belong to the taxpayer. Howard v. U.S. , 108 AFTR 2d 2011-5993 (9th Cir.).

Standard Mileage Rates: The IRS raised the standard mileage rates for the last six months of 2011 to 55.5 cents per mile for business miles driven and 23.5 cents per mile for medical or moving expenses-both a 4.5 cent per mile increase over the rates in effect for the first six months of the year. The rates for 2012 will be 55.5 cents per mile for business miles (with 23 cents per mile treated as depreciation) and 23 cents per mile for medical or moving expenses. (This means the rate for business miles is unchanged from the midyear adjustment that took effect on 7/1/11.) The rate for providing services for a charity is set by statute and equals 14 cents per mile. IRS Ann. 2011-40, 2011-29 IRB 56 ; Notice 2012-1, 2012-1 IRB 1 .

If you would like to discuss these, or other matters, further,
please contact your Wilson Price accountant.

Circular 230 Notice: To ensure compliance with requirements imposed by the IRS, we inform you that any tax advice contained in this communication (including any attachments) is not intended or written to be used, and cannot be used, for the purpose of (i) avoiding penalties under the Internal Revenue Code or (ii) promoting, marketing or recommending to another party any transaction or matter addressed herein.

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By Editor, November 21, 2011

The 2010 Tax Relief Act provided bigger depreciation deductions for business assets. In fact, under Section 179, businesses can expense up to $500,000 of depreciable business assets acquired during 2011, with any remaining basis fully deducted using the 100% bonus depreciation. Unfortunately, unfavorable depreciation rules apply to most passenger autos and light trucks used in business. For a vehicle acquired in 2011, depreciation deductions are generally limited to the following amounts: 

Of course, when a vehicle is used less than 100% for business, these figures are cut back even further. In fact, the average client may not live long enough to fully depreciate a really expensive car.

Exception for Heavy Trucks, Vans, and Sport Utility Vehicles (SUVs).

These vehicles are not subject to the above limits. A truck, van, or SUV is “heavy” if it has a Gross Vehicle Weight Rating (GVWR) (the manufacturer’s maximum weight rating when loaded) above 6,000 pounds.  We’ve listed below many of the 2012 vehicle models that qualify for these special tax benefits based on their GVWRs at the time we checked them. As you can see, it’s a surprisingly long list. In addition, there may be some we have missed (new and retooled models are coming out all the time). Thus, always verify the GVWR for yourself before making a buying decision. The GVWR can normally be found on a label attached to the inside edge of the driver’s side door.

If you buy such a vehicle in 2011 and use it more than 50% for business, you may be able to deduct the entire business portion of the vehicle’s cost this year. For example, if before the end of the year you buy a new $65,000 heavy SUV that has a gross vehicle weight above 6,000 pounds and is used 100% for business, you may be able to deduct the entire $65,000 this year.

To claim these deductions, you must establish through contemporaneous records (such as, a mileage log) that you use the vehicle over 50% of the time for business. If your business usage later falls below 51%, a portion of the deductions previously claimed will need to be recaptured and reported as ordinary income in that year. Also, deductions allowable for used vehicles may be limited as such vehicles do not qualify for 100% bonus depreciation. Finally, this strategy works best if you are self-employed-claiming a Section 179 and bonus depreciation deductions for a heavy corporate-owned vehicle is much more difficult. Nevertheless, the heavy vehicle deductions can generate major tax savings given the right circumstances.

If you would like more details, please do not hesitate to call.

Vehicles with GVWRs above 6,000 Pounds

Contact Us

Circular 230 Notice: To ensure compliance with requirements imposed by the IRS, we inform you that any tax advice contained in this communication (including any attachments) is not intended or written to be used, and cannot be used, for the purpose of (i) avoiding penalties under the Internal Revenue Code or (ii) promoting, marketing or recommending to another party any transaction or matter addressed herein.

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By Editor, October 21, 2011

As we approach year-end, it’s again time to focus on last-minute moves you can make to save taxes-both on your 2011 return and in future years. Before we get to specific suggestions, here are two important considerations to keep in mind.

First, remember that effective tax planning requires considering both this year and next year-at least. Without a multiyear outlook, you can’t be sure maneuvers intended to save taxes on your 2011 return won’t backfire and cost additional money in the future. For example, postponing a stock sale gain until next year would reduce your 2011 adjusted gross income (good), but increase the 2012 figure (bad). Higher income next year could make you ineligible for the child tax credit; reduce or eliminate the credits or deduction for college expenses; limit deductible losses from your rental real estate investments; and so on.

Second, be on the alert for the Alternative Minimum Tax (AMT) this year. It’s an add-on tax over and above your “regular” tax. Although you may have never owed AMT in the past, your odds of being hit are higher now. Why? Because the tax brackets, standard deduction, and personal exemption allowances used in calculating your regular tax liability are all indexed annually for inflation. Most AMT parameters are not. The odds of owing the tax go up every year due to this factor alone. The risk goes up another notch or two if you deduct a significant amount of state and local taxes or miscellaneous itemized deductions (like unreimbursed employee business expenses) or claim multiple dependents. These deductions are not allowed against the AMT. Finally, if you exercised incentive stock options or recognized a large capital gain this year, consider yourself a likely AMT victim.

Here are a few tax-saving ideas to get you started. As always, you can call on us to help you sort through the options and implement strategies that make sense for you.

Ideas for Your Business

Take Advantage of Tax Breaks for Purchasing Equipment, Software, and Certain Real Property. If you have plans to buy a business computer, office furniture, equipment, vehicle, or other tangible business property or to make certain improvements to real property, you might consider doing so before year-end to capitalize on the following generous, but temporary tax breaks:

• Bigger Section 179 Deduction. Your business may be able to take advantage of the temporarily increased Section 179 deduction. Under the Section 179 deduction privilege, an eligible business can often claim first-year depreciation write-offs for the entire cost of new and used equipment and software additions. (However, limits apply to the amount that can be deducted for most vehicles.) For tax years beginning in 2011, the maximum Section 179 deduction is $500,000. For tax years beginning in 2012, however, the maximum deduction is scheduled to drop back to $125,000.
• Section 179 Deduction for Real Estate. Real property costs are generally ineligible for the Section 179 deduction privilege. However, an exception applies to tax years beginning in 2011. Under the exception, your business can immediately deduct up to $250,000 of qualified costs for restaurant buildings and improvements to interiors of retail and leased nonresidential buildings. The $250,000 Section 179 allowance for these real estate expenditures is part of the overall $500,000 allowance. This temporary real estate break will not be available for tax years beginning after 2011 unless Congress extends it.

Note: Watch out if your business is already expected to have a tax loss for the year (or be close) before considering any Section 179 deduction, as you cannot claim a Section 179 write-off that would create or increase an overall business tax loss. Please contact us if you think this might be an issue for your operation.

• 100% First-year Bonus Depreciation. Above and beyond the bumped-up Section 179 deduction, your business can also claim first-year bonus depreciation equal to 100% of the cost of most new (not used) equipment and software placed in service by December 31 of this year. For a new passenger auto or light truck that’s used for business and is subject to the luxury auto depreciation limitations, the 100% bonus depreciation break increases the maximum first-year depreciation deduction by $8,000 for vehicles placed in service this year. The 100% bonus depreciation break will expire at year-end unless Congress extends it.

Note: 100% bonus depreciation deductions can create or increase a Net Operating Loss (NOL) for your business’s 2011 tax year. You can then carry back a 2011 NOL to 2009 and 2010 and collect a refund of taxes paid in those years. Please contact us for details on the interaction between asset additions and NOLs.

Claim the Health Insurance Tax Credit for Small Employers. Qualifying small employers can claim a tax credit that can potentially cover up to 35% of the cost of providing health insurance coverage to employees. A qualifying small employer is one that: (1) has no more than 25 Full-time Equivalent (FTE) workers, (2) pays an average FTE wage of less than $50,000 and (3) has a qualifying healthcare arrangement in place. The allowable credit is quickly reduced under a complicated phase-out rule when the employer has more than 10 FTE employees or an average FTE wage in excess of $25,000. Please contact us if you have questions about this break.

Evaluate Inventory for Damaged or Obsolete Items. Inventory is normally valued for tax purposes at cost or the lower of cost or market value. Regardless of which of these methods is used, the end-of-the-year inventory should be reviewed to detect obsolete or damaged items. The carrying cost of any such items may be written down to their probable selling price (net of selling expenses). [This rule does not apply to businesses that use the Last-in, First out (LIFO) method because LIFO does not distinguish between goods that have been written down and those that have not].

To claim a deduction for a write-down of obsolete inventory, you are not required to scrap the item. However, in a period ending not later than 30 days after the inventory date, the item must be actually offered for sale at the price to which the inventory is reduced.

Ideas for Maximizing Nonbusiness Deductions

One way to reduce your 2011 tax liability is to look for additional deductions. Here’s a list of suggestions to get you started:

Make Charitable Gifts of Appreciated Stock. If you have appreciated stock that you’ve held more than a year and you plan to make significant charitable contributions before year-end, keep your cash and donate the stock (or mutual fund shares) instead. You’ll avoid paying tax on the appreciation, but will still be able to deduct the donated property’s full value. If you want to maintain a position in the donated securities, you can immediately buy back a like number of shares. (This idea works especially well with no load mutual funds because there are no transaction fees involved.)

However, if the stock is now worth less than when you acquired it, sell the stock, take the loss, and then give the cash to the charity. If you give the stock to the charity, your charitable deduction will equal the stock’s current depressed value and no capital loss will be available. Also, if you sell the stock at a loss, you can’t immediately buy it back as this will trigger the wash sale rules. This means your loss won’t be deductible, but instead will be added to the basis in the new shares.

Maximize the Benefit of the Standard Deduction. For 2011, the standard deduction is $11,600 for married taxpayers filing joint returns. For single taxpayers, the amount is $5,800. Currently, it looks like these amounts will be about the same for 2012. If your total itemized deductions are normally close to theseamounts, you may be able to leverage the benefit of your deductions by bunching deductions in every other year. This allows you to time your itemized deductions so that they are high in one year and low in the next. You claim actual expenses in the year they are bunched and take the standard deduction in the intervening years.

For instance, you might consider moving charitable donations you normally would make in early 2012 to the end of 2011. If you’re temporarily short on cash, charge the contribution to a credit card-it is deductible in the year charged, not when payment is made on the card. You can also accelerate payments of your real estate taxes or state income taxes otherwise due in early 2012. But, watch out for the AMT, as these taxes are not deductible for AMT purposes.

Bunch Deductions Subject to an Adjusted Gross Income Limit. Miscellaneous itemized deductions (such as unreimbursed employee business expenses) are deductible to the extent they exceed 2% of your adjusted gross income (AGI). (Your AGI is the number at the bottom of the first page of your return.) Medical expenses are deductible only to the extent they exceed 7.5% of AGI. To lessen the affect of these AGI limitations, try to bunch your miscellaneous and medical expense deductions into every other year.

Making the Most of Year-end Securities Transactions

For 2011 sales, you’ll generally owe only 15% on gains from investment assets held over one year (0% if the gains would otherwise fall into the 15% regular income tax bracket). Gains from investments held one year or less are taxed at your ordinary rates. So, the framework for year-end tax selling of investment securities is fairly simple. First, list those stocks, mutual fund shares, and bonds that you feel you could easily live without. You’ll probably have some winners (current market value above your cost) and some losers (value below cost) on the list.

Between now and year-end, you can sell enough losers to offset any capital gains recognized earlier this year. Plus, you can sell enough to generate another $3,000 in losses ($1,500 for married filing separate status), which then can be deducted against your income from all other sources. Because selling the losers reduces your income, the odds are increased that you’ll qualify for various other tax breaks.

If your year-to-date sales have resulted in an overall loss in excess of $3,000, you can sell enough winners between now and year-end to get back to the “negative $3,000″ level. Cashing in gains to that extent won’t add a cent to your federal tax bill, whether or not the assets have been held over 12 months. On the other hand, if your year-to-date sales are currently standing at zero or a net gain and you want to unload some winners, but no more losers, before year-end, try to sell only those you’ve owned over 12 months. Then, the resulting gains will be taxed at no more than 15%.

When selling stock or mutual fund shares, the general rule is that the shares you acquired first are the ones you sell first. However, if you choose, you can specifically identify the shares you’re selling when you sell less than your entire holding of a stock or mutual fund. By notifying your broker of the shares you want sold at the time of the sale, your gain or loss from the sale is based on the identified shares. This sales strategy gives you better control over the amount of your gain or loss and whether it’s long-term or short-term.

Secure a Deduction for Nearly Worthless Securities. If the dismal economy has left you with securities that are all but worthless with little hope of recovery, you might consider selling them before the end of the year so you can capitalize on the loss this year. You can deduct a loss on worthless securities only if you can prove the investment is completely worthless. Thus, a deduction is not available, as long as you own the security and it has any value at all. Total worthlessness can be very difficult to establish with any certainty. To avoid the issue, it may be easier just to sell the security if it has any marketable value. As long as the sale is not to a family member, this allows you to claim a loss for the difference between your tax basis and the proceeds (subject to the normal rules for capital losses and the wash sale rules restricting the recognition of loss if the security is repurchased within 30 days before or after the sale).

Employer Stock Options. If you own appreciated stock acquired by exercising Incentive Stock Options (ISOs) and are now considering selling as part of your overall year-end strategy, remember what it takes to qualify for the 15% rate. First, the shares must be held over two years from the option grant date (the date you received the ISO). Second, the shares must be held over 12 months after the exercise date (the date you acquired the stock by exercising your ISO). Selling sooner means all or part of your gain may be taxed at your higher ordinary tax rate.

What if you own nonqualified options? It may pay to exercise now, if there’s just a modest spread between market value and your exercise price and you expect the stock to appreciate. You’ll owe tax at your ordinary rate on the spread, but any future appreciation will qualify for the 15% rate if you’ve held the shares over 12 months by the time you sell.

If you already own shares from exercising nonqualified options, remember your post-exercise gains will qualify for the 15% rate as long as more than 12 months have passed since you acquired the stock. A shorter holding period means your gains will be taxed at your higher ordinary rate, unless you have offsetting capital losses from other transactions this year.

Ideas for Seniors Age 701/2 Plus

Make Charitable Donations from Your IRA. IRA owners and beneficiaries who have reached age 70½ are permitted to make cash donations totaling up to $100,000 to IRS-approved public charities directly out of their IRAs. These so-called Qualified Charitable Distributions, or QCDs, are federal-income-tax-free to you, but you get no itemized charitable write-off on your Form 1040. That’s okay because the tax-free treatment of QCDs equates to an immediate 100% federal income tax deduction without having to worry about restrictions that can delay itemized charitable write-offs. QCDs have other tax advantages too. Contact us if you want to hear about them.

Be careful-to qualify for this special tax break, the funds must be transferred directly from your IRA to the charity. Also, this favorable provision will expire at the end of this year unless Congress extends it. So, this could be your last chance.

Take Your Required Retirement Distributions. The tax laws generally require individuals with retirement accounts to take withdrawals based on the size of their account and their age every year after they reach age 701/2. Failure to take a required withdrawal can result in a penalty of 50% of the amount not withdrawn. There’s good news for 2011 though-QCDs discussed above count as payouts for purposes of the required distribution rules. This means, you can donate all or part of your 2011 required distribution amount (up to the $100,000 limit on QCDs) and convert taxable required distributions into tax-free QCDs.

Also, if you turned age 701/2 in 2011, you can delay your 2011 required distribution to 2012 if you choose. But, waiting until 2012 will result in two distributions in 2012-the amount required for 2011 plus the amount required for 2012. While deferring income is normally a sound tax strategy, here it results in bunching income into 2012. Thus, think twice before delaying your 2011 distribution to 2012-bunching income into 2012 might throw you into a higher tax bracket or have a detrimental impact on your other tax deductions in 2012.

Ideas for the Office

Maximize Contributions to 401(k) Plans. If you have a 401(k) plan at work, it’s just about time to tell your company how much you want to set aside on a tax-free basis for next year. Contribute as much as you can stand, especially if your employer makes matching contributions. You give up “free money” when you fail to participate to the max for the match.

Take Advantage of Flexible Spending Accounts (FSAs). If your company has a healthcare and/or dependent care FSA, before year-end you must specify how much of your 2012 salary to convert into tax-free contributions to the plan. You can then take tax-free withdrawals next year to reimburse yourself for out-of-pocket medical and dental expenses and qualifying dependent care costs. Watch out, though, FSAs are “use-it-or-lose-it” accounts-you don’t want to set aside more than what you’ll likely have in qualifying expenses for the year.

Married couples who both have access to FSAs will also need to decide whose FSA to use. If one spouse’s salary is likely to be higher than what’s known as the FICA wage limit (which is $106,800 for this year and will likely be somewhat higher next year) and the other spouse’s will be less, the one with the smaller salary should fund as much of the couple’s FSA needs as possible. The reason is the 6.2% social security tax levy for 2012 is set to stop at the FICA wage limit (and doesn’t apply at all to money put into an FSA). Thus, for example, if one spouse earns $115,000 and the other $40,000 and they want to collectively set aside $5,000 in their FSAs, they can save $310 (6.2% of $5,000) by having the full amount taken from the lower-paid spouse’s salary versus having 100% taken from the other one’s wages. Of course, either way, the couple will also save approximately $1,400 in income and Medicare taxes because of the FSAs.

If you currently have a healthcare FSA, make sure you drain it by incurring eligible expenses before the deadline for this year. Otherwise, you’ll lose the remaining balance. It’s not that hard to drum some things up: new glasses or contacts, dental work you’ve been putting off, or prescriptions that can be filled early. Although, over-the-counter drugs (e.g., aspirin and antacids) no longer qualify for reimbursement by healthcare FSAs, bandages and medical equipment (e.g., thermometers and blood pressure monitoring devices) do qualify.

Adjust Your Federal Income Tax Withholding. If it looks like you are going to owe income taxes for 2011, consider bumping up the Federal income taxes withheld from your paychecks now through the end of the year. When you file your return, you will still have to pay any taxes due less the amount paid in. However, as long as your total tax payments (estimated payments plus withholdings) equal at least 90% of your 2011 liability or, if smaller, 100% of your 2010 liability (110% if your 2010 adjusted gross income exceeded $150,000; $75,000 for married individuals who filed separate returns), penalties will be minimized, if not eliminated.

Don’t Overlook Estate Planning

For 2011 and 2012, the unified federal gift and estate tax exemption is a relatively generous $5 million. However, the exemption will drop back to only $1 million in 2013 unless Congress takes action. In addition, the maximum federal estate tax rate for 2011 and 2012 is 35%. For 2013 and beyond, it is scheduled to rise from the current 35% to a painfully high 55%. Therefore, planning to avoid or minimize the federal estate tax should still be part of your overall financial game plan. Even if you already have a good plan, it may need updating to reflect the current $5 million exemption. Contact us for more information on the best ways to minimize estate taxes for someone in your situation.

Conclusion

Through careful planning, it’s possible your 2011 tax liability can still be significantly reduced, but don’t delay. The longer you wait, the less likely it is that you’ll be able to achieve a meaningful reduction. The ideas discussed in this letter are a good way to get you started with year-end planning, but they’re no substitute for personalized professional assistance. Please don’t hesitate to call us with questions or for additional strategies on reducing your tax bill. We’d be glad to set up a planning meeting or assist you in any other way that we can.  

Contact Us

Circular 230 Notice: To ensure compliance with requirements imposed by the IRS, we inform you that any tax advice contained in this communication (including any attachments) is not intended or written to be used, and cannot be used, for the purpose of (i) avoiding penalties under the Internal Revenue Code or (ii) promoting, marketing or recommending to another party any transaction or matter addressed herein.

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By Editor, September 13, 2011

President Obama introduced The American Jobs Act last night during a speech to Congress and the nation.  Details of this plan are outlined below in the official press release from The White House.

If you have any questions about how this act may effect your individual or business tax planning, please contact your Wilson Price accountant.

The White House
Office of the Press Secretary
For Immediate Release
September 08, 2011 

Fact Sheet: The American Jobs Act

THE AMERICAN JOBS ACT  

1. Tax Cuts to Help America’s Small Businesses Hire and Grow

• Cutting the payroll tax in half for 98 percent of businesses: The President’s plan will cut in half the taxes paid by businesses on their first $5 million in payroll, targeting the benefit to the 98 percent of firms that have payroll below this threshold.
• A complete payroll tax holiday for added workers or increased wages: The President’s plan will completely eliminate payroll taxes for firms that increase their payroll by adding new workers or increasing the wages of their current worker (the benefit is capped at the first $50 million in payroll increases).
• Extending 100% expensing into 2012: This continues an effective incentive for new investment.
• Reforms and regulatory reductions to help entrepreneurs and small businesses access capital.
    

2. Putting Workers Back on the Job While Rebuilding and Modernizing America

• A “Returning Heroes” hiring tax credit for veterans: This provides tax credits from $5,600 to $9,600 to encourage the hiring of unemployed veterans.
• Preventing up to 280,000 teacher layoffs,while keeping cops and firefighters on the job.
• Modernizing at least 35,000 public schools across the country, supporting new science labs, Internet-ready classrooms and renovations at schools across the country, in rural and urban areas.
• Immediate investments in infrastructure and a bipartisan National Infrastructure Bank, modernizing our roads, rail, airports and waterways while putting hundreds of thousands of workers back on the job.
• A New “Project Rebuild“, which will put people to work rehabilitating homes, businesses and communities, leveraging private capital and scaling land banks and other public-private collaborations.
• Expanding access to high-speed wireless as part of a plan for freeing up the nation’s spectrum.

3. Pathways Back to Work for Americans Looking for Jobs.

• The most innovative reform to the unemployment insurance program in 40 years: As part of an extension of unemployment insurance to prevent 5 million Americans looking for work from losing their benefits, the President’s plan includes innovative work-based reforms to prevent layoffs and give states greater flexibility to use UI funds to best support job-seekers, including:
  • Work-Sharing:  UI for workers whose employers choose work-sharing over layoffs.
  • A new “Bridge to Work” program: The plan builds on and improves innovative state programs where those displacedtake temporary, voluntary work or pursue on-the-job training.
  • Innovative entrepreneurship and wage insurance programs: States will also be empowered to implement wage insurance to help reemploy older workers and programs that make it easier for unemployed workers to start their own businesses.
• A $4,000 tax credit to employers for hiring long-term unemployed workers.
• Prohibiting employers from discriminating against unemployed workers when hiring.
• Expanding job opportunities for low-income youth and adults through a fund for successful approaches for subsidized employment, innovative training programs and summer/year-round jobs for youth.

4. Tax Relief for Every American Worker and Family

• Cutting payroll taxes in half for 160 million workers next year: The President’s plan will expand the payroll tax cut passed last year to cut workers payroll taxes in half in 2012 – providing a $1,500 tax cut to the typical American family, without negatively impacting the Social Security Trust Fund.
• Allowing more Americans to refinance their mortgages at today’s near 4 percent interest rates, which can put more than $2,000 a year in a family’s pocket.

5. Fully Paid for as Part of the President’s Long-Term Deficit Reduction Plan.To ensure that the American Jobs Act is fully paid for, the President will call on the Joint Committee to come up with additional deficit reduction necessary to pay for the Act and still meet its deficit target. The President will, in the coming days, release a detailed plan that will show how we can do that while achieving the additional deficit reduction necessary to meet the President’s broader goal of stabilizing our debt as a share of the economy.

AMERICAN JOBS ACT OVERVIEW

The American people understand that the economic crisis and the deep recession weren’t created overnight and won’t be solved overnight. The economic security of the middle class has been under attack for decades. That’s why President Obama believes we need to do more than just recover from this economic crisis – we need to rebuild the economy the American way, based on balance, fairness, and the same set of rules for everyone from Wall Street to Main Street.  We can work together to create the jobs of the future by helping small business entrepreneurs, by investing in education, and by making things the world buys. The President understands that to restore an American economy that’s built to last we cannot afford to outsource American jobs and encourage reckless financial deals that put middle class security at risk.

To create jobs, the President unveiled the American Jobs Act – nearly all of which is made up of ideas that have been supported by both Democrats and Republicans, and that Congress should pass right away to get the economy moving now. The purpose of the American Jobs Act is simple: put more people back to work and put more money in the pockets of working Americans. And it would do so without adding a dime to the deficit.

Tax Cuts to Help America’s Small Businesses Hire and Grow

New Tax Cuts to Businesses to Support Hiring and Investment:The President is proposing three tax cuts to provide immediate incentives to hire and invest:

• Cutting the Payroll Tax Cut in Half for the First $5 Million in Wages:This provision would cut the payroll tax in half to 3.1% for employers on the first $5 million in wages, providing broad tax relief to all businesses but targeting it to the 98 percent of firms with wages below this level.
• Temporarily Eliminating Employer Payroll Taxes on Wages for New Workers or Raises for Existing Workers:The President is proposing a full holiday on the 6.2% payroll tax firms pay for any growth in their payroll up to $50 million above the prior year, whether driven by new hires, increased wages or both. This is the kind of job creation measure that CBO has called the most effective of all tax cuts in supporting employment.
• Extending 100% Expensing into 2012:The President is proposing to extend 100 percent expensing, the largest temporary investment incentive in history, allowing all firms – large and small – to take an immediate deduction on investments in new plants and equipment.
• Helping Entrepreneurs and Small Businesses Access Capital and Grow: The President’s plan includes administrative, regulatory and legislative measures – including those developed and recommended by the President’s Jobs Council – to help small firms start and expand. This includes changing the way the government does business with small firms. The Administration will soon announce a plan to accelerate government payments to small contractors to help put money in their hands faster. The President is also charging his CIO and CTO to, within 90 days, stand up a one-stop, online portal for small businesses to easily access government services. As part of the President’s Startup America initiative, the Administration will work with the SEC to conduct a comprehensive review of securities regulations from the perspective of these small companies to reduce the regulatory burdens on small business capital formation in ways that are consistent with investor protection, including expanding “crowdfunding” opportunities and increasing mini-offerings. Finally, the President’s plan calls for Congress to pass comprehensive patent reform, increase guarantees for bonds to help small businesses compete for infrastructure projects and remove burdensome withholding requirements that keep capital out of the hands of job creators.

Putting Workers Back on the Job While Rebuilding and Modernizing America 

• Tax Credits and Career Readiness Efforts to Support Veterans’ Hiring:The President is proposing a Returning Heroes Tax Credit of up to $5,600 for hiring unemployed veterans who have been looking for a job for more than six months, and a Wounded Warriors Tax Credit of up to $9,600 for hiring unemployed workers with service-connected disabilities who have been looking for a job for more than six months, while creating a new task force to maximize career readiness of servicemembers.
• Preventing Layoffs of Teachers, Cops and Firefighters:The President is proposing to invest $35 billion to prevent layoffs of up to 280,000 teachers, while supporting the hiring of tens of thousands more and keeping cops and firefighters on the job. These funds would help states and localities avoid and reverse layoffs now, requiring that funds be drawn down quickly. Under the President’s proposal, $30 billion be directed towards educators and $5 billion would support the hiring and retention of public safety and first responder personnel.
• Modernizing Over 35,000 Schools – From Science Labs and Internet-Ready Classrooms to Renovated Facilities:The President is proposing a $25 billion investment in school infrastructure that will modernize at least 35,000 public schools – investments that will create jobs, while improving classrooms and upgrading our schools to meet 21st century needs. This includes a priority for rural schools and dedicated funding for Bureau of Indian Education funded schools. Funds could be used for a range of emergency repair and renovation projects, greening and energy efficiency upgrades, asbestos abatement and removal, and modernization efforts to build new science and computer labs and to upgrade technology in our schools. The President is also proposing a $5 billion investment in modernizing community colleges (including tribal colleges), bolstering their infrastructure in this time of need while ensuring their ability to serve future generations of students and communities.
• Making an Immediate Investment in Our Roads, Rails and Airports: The President’s plan includes $50 billion in immediate investments for highways, transit, rail and aviation, helping to modernize an infrastructure that now receives a grade of “D” from the American Society of Civil Engineers and putting hundreds of thousands of construction workers back on the job. The President’s plan includes investments to improve our airports, support NextGen Air Traffic Modernization efforts, and resources for the TIGER and TIFIA programs, which target competitive dollars to innovative multi-modal infrastructure programs. It will also take special steps to enhance infrastructure-related job training opportunities for individuals from underrepresented groups and ensure that small businesses can compete for infrastructure contracts.The President will work administratively to speed infrastructure investment through a recently issued Presidential Memorandum developed with his Jobs Council directing departments and agencies to identify high impact, job-creating infrastructure projects that can be expedited in a transparent manner through outstanding review and permitting processes. The call for greater infrastructure investment has been joined by leaders from AFL-CIO President Richard Trumka to U.S. Chamber of Commerce President Thomas Donohue.
• Establishing a National Infrastructure Bank: The President is calling for Congress to pass a National Infrastructure Bank capitalized with $10 billion, in order to leverage private and public capital and to invest in a broad range of infrastructure projects of nationaland regional significance, without earmarks or traditional political influence. The Bank would be based on the model Senators Kerry and Hutchison have championed while building on legislation by Senators Rockefeller and Lautenberg and the work of long-time infrastructure bank champions like Rosa DeLauro and the input of the President’s Jobs Council.
• Project Rebuild: Putting People Back to Work Rehabilitating Homes, Businesses and Communities. The President is proposing to invest $15 billion in a national effort to put construction workers on the job rehabilitating and refurbishing hundreds of thousands of vacant and foreclosed homes and businesses. Building on proven approaches to stabilizing neighborhoods with high concentrations of foreclosures, Project Rebuild will bring in expertise and capital from the private sector, focus on commercial and residential property improvements, and expand innovative property solutions like land banks. This approach will not only create construction jobs but will help reduce blight and crime and stabilize housing prices in areas hardest hit by the housing crisis.
• Expanding Access to High-Speed Wireless in a Fiscally Responsible Way: The President is calling for a deficit reducing plan to deploy high-speed wireless services to at least 98 percent of Americans, including those in more remote rural communities, while freeing up spectrum through incentive auctions, spurring innovation, and creating a nationwide, interoperable wireless network for public safety.  

Pathways Back to Work for Americans Looking for Jobs 

• Reform Our Unemployment Insurance System to Provide Greater Flexibility, While Ensuring 6 Million People Do Not Lose Benefits: Drawing on the best ideas of both parties and the most innovative states, the President is proposing the most sweeping reforms to the unemployment insurance (UI) system in 40 years help those without jobs transition to the workplace. Alongside these reforms, the President is reiterating his call to extend unemployment insurance, preventing 6 million people looking for work from losing their benefits and extending what the independent Congressional Budget Office has determined is the highest “bang for the buck” option to increase economic activity.
• Reemployment Assistance: States will be required to design more rigorous reemployment services for the long-term unemployed and to conduct assessments to review the longest-term claimants of UI to assess their eligibility and help them develop a work-search plan.  These reforms are proven to speed up UI beneficiaries’ return to work.
• Work-sharing: The President will expand “work-sharing” to encourage arrangements using UI that keep employees on the job at reduced hours, rather than laying them off.
• State Flexibility for Bold Reforms to Put the Long-Term Unemployed Back To Work: The President is proposing to provide additional funds to allow states to introduce new programs aimed at long-term unemployed workers, including:
• “Bridge to Work” Programs:States will be able to put in place reforms that build off what works in programs like Georgia Works or Opportunity North Carolina, while instituting important fixes and reforms that ensure minimum wage and fair labor protections are being enforced.  These approaches permits long-term unemployed workers to continue receiving UI while they take temporary, voluntary work or pursue work-based training. The President’s plan requires compliance with applicable minimum wage and other worker rights laws.
• Wage Insurance:  States will be able to use UI to encourage older, long-term unemployed Americans to return to work in new industries or occupations.
• Startup Assistance:  States will have flexibility to help long-term unemployed workers create their own jobs by starting their own small businesses.
• Other Reemployment Reforms:  States will be able to seek waivers from the Secretary of Labor to implement other innovative reforms to connect the long-term unemployed to work opportunities.
• Tax Credits for Hiring the Long-Term Unemployed: The President is proposing a tax credit of up to $4,000 for hiring workers who have been looking for a job for over six months.
• Investing in Low-Income Youth and Adults: The President is proposing a new Pathways Back to Work Fund to provide hundreds of thousands of low-income youth and adults with opportunities to work and to achieve needed training in growth industries. The Initiative will do three things: i) support summer and year-round jobs for youth, building off of successful programs that supported over 370,000 such jobs in 2009 and 2010; ii) support subsidized employment opportunities for low-income individuals who are unemployed, building off the successful TANF Emergency Contingency Fund wage subsidy program that supported 260,000 jobs in 2009 and 2010; and iii) support promising and innovative local work-based job and training initiatives to place low-income adults and youths in jobs quickly.
• Prohibiting Employers from Discriminating Against Unemployed Workers: The President’s plan calls for legislation that would make it unlawful to refuse to hire applicants solely because they are unemployed or to include in a job posting a provision that unemployed persons will not be considered.  

 More Money in the Pockets of Every American Worker and Family

• Cutting Payroll Taxes in Half for 160 Million Workers Next Year:The President’s plan will expand the payroll tax cut passed last December by cutting workers payroll taxes in half next year. This provision will provide a tax cut of $1,500 to the typical family earning $50,000 a year. As with the payroll tax cut passed in December 2010, the American Jobs Act will specify that Social Security will still receive every dollar it would have gotten otherwise, through a transfer from the General Fund into the Social Security Trust Fund.
• Helping More Americans Refinance Mortgages at Today’s Historically Low Interest Rates:The President has instructed his economic team to work with Fannie Mae and Freddie Mac, their regulator the FHFA, major lenders and industry leaders to remove the barriers that exist in the current refinancing program (HARP) to help more borrowers benefit from today’s historically low interest rates. This has the potential to not only help these borrowers, but their communities and the American taxpayer, by keeping borrowers in their homes and reducing risk to Fannie Mae and Freddie Mac. 

Fully Paid for as Part of the President’s Long-Term Deficit Reduction Plan. 

• To ensure that the American Jobs Act is fully paid for, the President will call on the Joint Committee to come up with additional deficit reduction necessary to pay for the Act and still meet its deficit target. The President will, in the coming days, release a detailed plan that will show how we can do that while achieving the additional deficit reduction necessary to meet the President’s broader goal of stabilizing our debt as a share of the economy.

• Proposal has a gross cost of $10 billion, but a net deficit reducing impact of $18 billion because of spectrum auction proceeds.

Circular 230 Notice: To ensure compliance with requirements imposed by the IRS, we inform you that any tax advice contained in this communication (including any attachments) is not intended or written to be used, and cannot be used, for the purpose of (i) avoiding penalties under the Internal Revenue Code or (ii) promoting, marketing or recommending to another party any transaction or matter addressed herein.

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By Editor, August 2, 2011

On June 9, 2011 Governor Robert Bentley signed into law the Beason-Hammon Alabama Taxpayer and Citizen Protection Act which imposes tough new restrictions on dealing with unauthorized aliens as well as significant new obligations for employers. Although the Act is being challenged, it is scheduled to go into effect in part on September 1, 2011.

Employer Provisions

This new Act includes two major provisions that affect employers. The first makes it unlawful (by State law) to knowingly employ, hire, or continue to employ an unauthorized alien. The second mandates employers to use the E-Verify system to verify the employment eligibility of every new employee starting April 1, 2012 (or January 1, 2012 if contracting with any State-funded entity).

While we suspect the E-Verify system may be a little burdensome, its correct use will provide “protection” should the employee later be determined to be an unauthorized alien.   Additionally, the Act provides employers immunity from claims by terminated employees, provided the termination was within the law and not made in regard to race, ethnicity, or national origin but instead was consistent with the requirements of the law and Act.

Penalties for Non-Compliance

Penalties for first violation include:

• Court ordered termination of every unauthorized alien;
• Three year probation requiring quarterly reports to the local DA regarding each new employee;
• File an affidavit with the DA regarding compliance; and
• Business license suspended for up to ten (10) days for the violating location.

Penalty for second violation:

• Permanent revocation of business license for violating location.

Penalty for third violation:

• Permanent revocation of business license for all locations through-out the state.

While it remains improper to deduct any wages or compensation of any kind from state income or business taxes for the performance of any services paid to an unauthorized alien, the new Act imposes a penalty equal to ten (10) times the business expense deduction claimed in violation of the Act.

The Act also includes new causes of action for discrimination for failure to hire a “legal” job applicant or for discharging a “legal” employee while hiring or retaining any unauthorized alien that the employer should have reasonably known was unauthorized. Damages may include compensatory relief, court costs, and reasonable attorney fees.

The Act allows any Alabamian to petition the Attorney General to bring enforcement action against a noncompliant business. Additionally, the Act makes it illegal for an unauthorized alien to apply for work, solicit work in a public or private business, or perform work as an employee or independent contractor. Violations are a Class C misdemeanor and are subject to a fine of up to $500.

Contractual Agreements Un-Enforceable

The courts will not enforce any contracts between a party and an unauthorized alien if the party had constructive knowledge that the unauthorized alien was “illegal” unless the contract did not require the unauthorized alien to remain in the U.S. for more than twenty-four (24) hours upon execution of the contract. Exceptions to this rule include: one (1) nights lodging, food to be consumed by the unauthorized alien, medical services, or travel to the unauthorized alien’s home country.

Contractor/Subcontractor Liabilities

A prime contractor will not be liable if it obtains an affidavit from its subcontractors that they are in compliance with the law. This should include a statement that they do not employ any unauthorized aliens and that they use the E-Verify system.

Definitions and Other Components Included in the Act

• The Act includes self-employed individuals but excludes casual domestic labor performed within a household.
• An unauthorized alien is anyone who is not a citizen or national of the United States and who is not authorized to work in the U.S. pursuant to federal law.
• What is considered “reasonable knowledge” under Federal standards?
  • Unauthorized alien admits that he/she is unauthorized/illegal;
  • Employer fails to require the timely or correct completion of the I-9 Form (or use the E-Verify system starting April 1, 2012); or
  • Failure to act or follow-up on a “No-Match Letter” or “Tentative Nonconfirmation” from the E-Verify system.

What Should You Do?

• Enroll in the E-Verify system at https://e-verify.uscis.gov/enroll/StartPage.aspx?JS=YES
• Audit current I-9 practices and documentation to ensure compliance;
• Designate and train responsible parties on the Alabama Immigration Act including I-9 and E-Verify;
• Include an E-Verify policy in your employee handbook.

Wilson Price Human Resource Services can help. For assistance, please call your Wilson Price professional or Kelly Cochran at 334-260-2433.