Jared

I am examining options to improve our cash flow, in this case by considering offering potential for a trade discount (Ex. 2% 5 Net 15).

I must charge sales tax on the sale of this commodity under the State of Texas code unless I have a resale cert or related exemption cert presented to me.

So, as an example:

I sell $1,000 of commodity and assess X% sales tax on that amount.

A customer exercises the discount option, paying within 5 days.

Must the customer remit the full amount of sales tax on the original extended amount, or would the customer only owe sales tax on the discounted amount (i.e. $1,000 less 2% discount = $980)?

In general, I sell a commodity that the State of Texas requires me to charge sales tax on. Fuel surcharges and other fees related to the immediate sale/delivery are also subject to sales tax.

I have been unable to find an answer to these questions:

1) If I assess a late fee (let's say the day after a Net 30 invoice is due and remains unpaid), must I charge sales tax on the late fee?

2) If I assess a finance charge (Ex. If not paid within 15 days, interest will accrue @ X% per annum.) -- must I charge sales tax on the finance charges?

Thanks a bunch. I'm a finance guy, and these questions stumped my CPA. If you can cite any code or any experience to support your answers, you will be of so much help.

I do not see how surcharges assessed against my driver's license are tax penalties. They are assessed above and beyond any fines that were assessed. Since I need my DL for work, ergo these expenses are business expenses for which I am not compensated by my employer. It would be easy to say that they are part of commute-expenses; but, I am required by my job to drive my own car. So, they are not just commute-related expenses.

This is something the state of Texas does that the IRS will probably not like; but, it seems valid to me. What do you think?

I manage a portfolio of commercial and residential properties. We are thinking of selling the residential properties by owner financing them, and we are small enough that we use cash basis accounting for IRS purposes.

I can think of two ways to do it, but I do not know which is correct. It seems that I could sign the title over and place a lien against the property as the mortgagee. This would immediately unravel the accumulated depreciation and the gain/loss on the sale would materialize during the current federal income tax reporting period. The interest portion of the monthly payments we receive will count as investment interest income until the property is paid for, at which point there is nothing else to do.

Or, do we not treat it as a sale until all principal and interest payments have been made and the title is actually signed over (lien released) to the new owner? In this case interest received would be capitalized and become part of the basis used to determine the gain or loss in the year in which the title is signed over. We could still depreciate the property during the payoff period and write off assessed property taxes. If the prospective owner defaults, then all payments made toward principal and interest (in the old spirit of it being a "loan") would become rent payments realized in some future year.

Which way is correct?

I manage a portfolio of commercial and residential properties. We are thinking of selling the residential properties by owner financing them, and we are small enough that we use cash basis accounting for IRS purposes.

I can think of two ways to do it, but I do not know which is correct. It seems that I could sign the title over and place a lien against the property as the mortgagee. This would immediately unravel the accumulated depreciation and the gain/loss on the sale would materialize during the current federal income tax reporting period. The interest portion of the monthly payments we receive will count as investment interest income until the property is paid for, at which point there is nothing else to do.

Or, do we not treat it as a sale until all principal and interest payments have been made and the title is actually signed over (lien released) to the new owner? In this case interest received would be capitalized and become part of the basis used to determine the gain or loss in the year in which the title is signed over. We could still depreciate the property during the payoff period and write off assessed property taxes. If the prospective owner defaults, then all payments made toward principal and interest (in the old spirit of it being a "loan") would become rent payments realized in some future year.

Which way is correct?

If an executive takes out a company loan for $1,000,000, and two years later, that loan is forgiven, in full (no payments were made toward it during that period), is that $1 million treated as income for the executive in that year? If so, how is it reported by the company?

I manage the finances of a C-Corp with 14 employees. Due to lack of sales, I have been unable to remit payroll tax deposits weekly, as required for our company, for approximately eight periods out of Q2 2013. I was recently told by our CPA that this may soon lead to a levy letter from the IRS against our bank accounts. Is it more likely that this will occur after the end of a fiscal quarter? Is economic hardship / abnormally low sales (historically) a mitigating factor the IRS may factor into the equation (not the equation to send the letter; but the equation to determine whether to proceed with the levies)?

We have a truck that needs to be apportioned, at this time, because it leaves Texas and goes to Oklahoma. If everything goes as planned, it will travel less than 5,000 miles this annual period. That qualifies me to claim the truck as exempt, and pay no taxes; just file the return. However, if things do not go as planned, the truck may be used for the rest of the year. If that is the case, then I will need to refile Form 2290 on this truck and pay the required taxes on it.

Is it permissible to file the return as exempt on this truck now, and then amend Form 2290 and pay the prorated taxes later, if necessary?

If I file the return now, it will cost $550 at least. If the truck, indeed, travels less than 5,000 miles, then I would have to file a request for return of those taxes paid one year from now, which is a bookkeeping headache I would prefer to avoid.

I paid a guy over $1,000 in December 2012 to revamp our website. The contract, which he produced and we both signed, said it would be completed in 30 days. At the end of Q1 2013, there is nothing to show for it. He is obviously in breach of contract. Which is a civil matter.

When/how does lack of attention to the contract become fraud (a criminal offense)?

I have located sales tax that we paid for jobs that were exempt... either because products were bought for resale, or because the end-user was a tax-exempt entity.

Will there be any problems claiming a credit for purchases made many years ago? (Is there a time frame I should be aware of for claiming a credit?)

Texas sales tax is 6.25%. Different vendors may charge different amounts of tax based upon the percentage sales tax for their location (I saw this warning on the Sales & Use Tax Credit form).

For instance, the county & municipality tacks on an extra amount to make the effective sales tax rate for my location 8.25%. If a vendor charges me less, does this matter?

Can I just tally up all sales tax paid (that did not need to be paid) and claim the credit on the Sales & Use Tax return this month? -- or, do I need to take other factors into account when determining how much of a credit I can claim?

Thanks in advance.

A worker was terminated for being too slow at his job. The person who fired him told him this was not the type of work for him, and the worker said he understood because he has a health problem that causes him to stand still, stare into the distance, and sometimes he can't even recall where he is. He worked for the company for a little less than three months. He subsequently filed for unemployment benefits. Reason given for termination was performance issues. What is the best way, as the employer, to look out for our interests while looking out for him? I cannot employ a person who stands around and does little compared to other workers. But, he did say he has a health problem (no substantiating documents provided). To me, he was fired. What do I need to substantiate this? If he had health issues, then with documentation, he might have reduced hours. Without them, he is fired. Am I correct? Thanks for your input.

I'm an employer, and I ask this question for academic purposes (nobody would come to work for me for the rate I'm inquiring about!). My minimum wage poster on the wall states (roughly, as my memory serves me) that employees 19 and younger can be paid $4.25 per hour for the first 90 days of their employment with the company. Is that still accurate? Do employers still ever invoke that privilege?

A guy was fired for, in workforce terms, unsatisfactory performance. The reality of it is that the terminated employee was not working as hard as others, and hiding to avoid his work duties. He was warned, and ultimately he was fired. Now he has filed for unemployment as a permanent layoff. In relaying this to Texas, I was asked if there were any witnesses to the incident. I named three employees, and they feel reluctant to "snitch" -- which is saying they do not want to provide the statements being asked of me (them). I know I cannot force them to say anything. How would you approach this problem -- and are those statements really necessary?

Let's say I have $3400 in royalty income, and that is my gross unearned income. After taxes and expenses, it falls. If it falls below the threshold (think that's $3200), do I qualify for the earned income credit?

If it is still too high, but depletion expense brings it below the threshold, would I then qualify?

Thanks.

I suspect I will have about $3,500 in passive net income from mineral royalties. I inherited these mineral interests, and I work a full-time job (earning less than the limit set by the IRS to initially qualify for the credit). I believe the wording is less than $3,200 in investment income. I own mineral interests; pay property taxes on them; and, get 1099-Misc's. Is that investment income, thus disqualifying me for the EITC?

An employee filed a reduced hours unemployment claim against the company (Texas) for a particular week. I verified that his hours were less due to downturn in business. Since then, he has made a habit of being tardy, and voluntarily leaving early (or taking off outright). Now, his hours are reduced by his choice. Will Texas ever ask me if anything has changed? Or, is that claim only for that particular week in question?

An employee drove a company truck, and the truck broke down -- unable to be fixed until the next morning. I paid for a motel room, and his dinner and breakfast. He is paid an hourly wage. Do I pay him for every hour he was away (i.e. also when he was asleep)? Or -- just for every hour he worked?

I have an employee who drives a tractor-trailer. His truck had a mechanical problem, stranding him. I paid for a motel room, and authorized him to charge dinner and breakfast on the company credit card.

Am I required to pay him for every hour he was away? Or, do I only have to pay him for hours logged "on duty"? Truckers have to "log off" for a night, of course, as there is a maximum number of on-duty hours permitted by law.

What's the standard for this situation (trucker or any employee)?

15,000 square foot warehouse (shell building, with concrete slab, ceiling insulation, advanced electrical, and a couple of acres of surrounding land <$5,000/acre assessed value>).

Taxes are $2,417 a year and a our insurance is less than $500.

If customer wants no customization expense on our end, what is a good per-square-footage rent?

A realtor has shown a commercial/industrial property that I own several times over several years, and knows me personally, so no discussion of potential commission happened.

If her client signs with me, what is a fair commission / fair compensation for her?

A month's rent? Or two? (that avenue)

Or, some percentage of the net present value of the lease? (that avenue)

Just looking for common practices in the industry. Thanks.