Category Archives: Uncategorized

Payroll Tax Cut Extended For First Two Months of 2012

The two percent payroll tax cut for employees that was in effect for 2011 has temporarily been extended until the end of February 2012. Under this measure, employees pay a reduced 4.2 percent of Social Security tax withholding on wages instead of the usual 6.2 percent. It has no impact on employees’ future Social Security benefits.

Employers must make the change to the reduced payroll tax rate by January 31, 2012 at the latest. If any employee’s Social Security tax is withheld at the higher rate in January, the employer has until March 31, 2012 to adjust that employee’s withholding so that the total withholding amount is correct for that period.

For more information, see the IRS website at,,id=251650,00.html.

Why You Should Encourage Employees to Take Vacations

Businesses offer vacation time to their employees for a number of reasons. It boosts morale. Employees return to work with recharged mental batteries. And generous vacation policies attract new employees. Can it also uncover fraud?

Two of The Wall Street Journal’s blogs, In Charge and The Juggle, describe novel vacation policies at two different companies. One company pulls an employee’s name out of a hat each month; that employee is required to take two weeks off the following month. (Some workaholic employees don’t want their names to be chosen, if you can believe it.) Another offers employees who take off two consecutive weeks another two weeks of vacation time.

Why force employees to take time off? These companies say workers need time off to recharge. Employees are also forced to keep their co-workers in the loop on their projects, so no one employee is indispensable.

And, it seems, requiring employees to take time off helps uncover fraud, if there is any. Comments from readers note that employees involved in any ongoing fraud, like embezzlement, hate going on vacation. Fraudulent activity requires constant attention to prevent discovery, and forcing employees to take time off will usually bring the fraud to light.

IRS Issues Warning About Tax Scams

The IRS issued a warning to taxpayers this week about a recent increase in tax return scams where taxpayers are told to file their claim asking for tax credits, refunds, or rebates which they are not entitled to take. Many cases involve unsuspecting taxpayers who don’t have any obligation to file a tax return at all. These people are deceived into filing fraudulent claims by unscrupulous or dishonest tax return preparers who often charge unreasonable fees for advice on how to file the false claims.

The IRS advises taxpayers to watch out for the following:

  • Fictitious claims for refunds or rebates based on excess or withheld Social Security benefits.
  • Claims that Treasury Form 1080 can be used to transfer funds from the Social Security Administration to the IRS enabling a payout from the IRS.
  • Unfamiliar for-profit tax services teaming up with local churches.
  • Home-made flyers and brochures implying credits or refunds are available without proof of eligibility.
  • Offers of free money with no documentation required.
  • Promises of refunds for “Low Income – No Documents Tax Returns.”
  • Claims for the expired Economic Recovery Credit Program or Recovery Rebate Credit.
  • Advice on claiming the Earned Income Tax Credit based on exaggerated reports of self-employment income.

For more information, visit the IRS website at, call the IRS toll-free number at 800-829-1040, or visit a local IRS Taxpayer Assistance Center. For questions about rebates, credit, and benefits from a federal agency, contact the relevant agency directly.


Seeking Small Business Innovators

In the hopes of spotlighting American ingenuity, The Wall Street Journal is inviting small businesses to apply for its Small Business, Big Innovation competition. The paper is looking for small business owners who revolutionized their business models to prosper during the current economic recession. The deadline to enter is September 5, 2011. More information can be found on The Wall Street Journal’s website.