Tax Filings Calendar for 2011
Documents Required for U.S. Tax Preparation
Federal Tax Returns, DUE DATE: MARCH 15, 2012, FINAL DUE DATE: SEP 15, 2012
Annual income tax returns are due by March 15. Once our firm has been engaged to prepare your tax returns, we will provide the service of automatically requesting an extension on your behalf until September 15. However, if you are expecting net income for the year, an estimated tax payment must be included with the extension request.Please refer to the checklist for the information necessary for the preparation of the tax returns.
Forms 5471 and 5472, DUE DATE: MARCH 15, 2012, FINAL DUE DATE, SEP 15, 2012
The IRS requires that certain information returns be filed to report the financial activity and intercompany transactions of US companies with their foreign related parties. The form’s purpose is to provide the IRS with the necessary information in order to determine that the transfer price agreements are being conducted at arm’s length. This is relevant to your company’s foreign (Israeli, European or Asian) subsidiaries or to the foreign (i.e. Israeli) parent company. While this is considered an information return, nevertheless it carries an AUTOMATIC $10,000 penalty for late filing. These penalties are strictly enforced and will rarely be abated. It is therefore essential that the federal tax return (including Forms 5471/5472) be filed no later than September 15, 2012 (the final extension date).
State Tax Returns, DUE DATE: MARCH 15, 2012, FINAL DUE DATE: SEP 15, 2012
Annual state tax returns may be required for each state in which your company has presence via an employee, office or warehouse. Tax returns can also be required even if the company only has a subcontractor in the state, or has sent an employee to a customer’s location for a limited time period, or has significant sales in a particular state. Please advise us as to all your company’s state activity so that we can properly guide you in assessing your tax obligations. The due date for filing state tax returns is March 15 and can be extended until September 15. However, many states have a minimum franchise tax requirement regardless if the company is reporting losses and has no income tax due. This tax must be paid by March 15 in order for the extension request to be honored.
Delaware Annual Franchise Tax Report, DUE DATE: MARCH 1, 2012
You should have already received the notification from Delaware to file the Delaware report in a timely manner. Remember that the tax is generally recalculated based on gross assets and issued shares. If you already have completed financial statements, please send them to us as soon as possible so that your report can be filed by March 1. Otherwise there will be a penalty of $125 and interest at 1.5% per month. In addition, your company will not be in good standing for as long as the tax is not paid.
Payments to Employees – Forms W-2/W-3, DUE DATE: JANUARY 31, 2012
Annual compensation to each employee is reported on Form W-2. The summary information of all payments to employees is reported to the IRS on Form W-3, accompanied by copies of all employees’ Forms W-2. Annual federal and state payroll tax forms are due as well. Your payroll service provider will be handling all these filings on your behalf.
Payments to Subcontractors – Form 1099-MISC, DUE DATE: MARCH 31, 2012
A form 1099-MISC is required to be filed for:
a – Non-employee compensation – Any US individual or entity (except corporations) who received a payment of $600 or more for services provided on behalf of your US company. This may include director fees, consulting fees or subcontractors.
b – Payments to attorneys – All payments to attorneys (including corporations) for legal services provided to your US company are required to be reported on Form 1099.
c – Compliance with Sec. 409(a) – Options granted at a price lower than fair market value (as determined by a 409(a) study) must report the difference as income on Form 1099.
d – Rental payments –A rental payment for $600 or more should be reported on Form 1099-MISC. This includes rental payments for office space and machine rentals.
In order to obtain the necessary information to be compliant with the above filing requirements, please have the person or entity receiving payment complete Form W-8 or W-9. Form W-8 should be signed by a non-US citizen and will establish that form 1099 is not required to be filed. Form W-9 should be completed by any US individual or entity and will provide the necessary information which will be included in the Form 1099 issued. Please retain the Forms W-8 and W-9 for your records as proof that your company has been in compliance with reporting requirements. Note that Form W-8 is valid for 3 years from the date it was signed. For example, a W-8 signed in 2007 would be valid through December 31, 2010. If the individual or entity will receive an additional payment in 2011, a new form W-8 is required.
Our fees for the preparation of Forms 1099 are $30 per form. In order for us to prepare form 1099 please forward the Form W-9 (or equivalent information) and the total invoice amount for each vendor.
Form 1099-INT/DIV or Form 1042-S, DUE DATE: MARCH 31, 2012 or Form 1042-S, DUE DATE: MARCH 15, 2012
Any individual or entity who received an interest or dividend payment (whether in cash in or the form of additional shares) from your US company is required to receive either a form 1099 for US citizens or a form 1042-S for non-US citizens. Please refer to Forms W-8 and W-9 in order to establish which form is required to be filed. Note that interest/dividend payments may be subject to tax withholding when paid to a non US citizen/entity.
Our fees for the preparation of Forms 1099-INT/DIV are $30; Forms 1042-S are $55 per form.
Options Exercise – Form 3921/3922, DUE DATE: MARCH 31, 2012
Every corporation which transfers a share of stock pursuant to a person’s exercise of an incentive stock option must report such information to the IRS and to the recipient. The information reported includes the date the option was granted, date exercised, exercise price per share, fair market value per share on exercise date and the number of shares transferred.
There are similar requirements for the transfer of shares pursuant to the exercise of an option granted under an employee stock purchase plan where the exercise price is less than 100% of the value of the stock on the date of grant.
If any shares of your company are actually sold to a third party (unlike a new issuance under a financing round), the sale of stock is reported on Form 1099-B.
Foreign Bank Account Report, DUE DATE: JUNE 30, 2012
If your company has a non-US bank account or a subsidiary with a non-US bank account, then Form 90-22.1 must be filed to report the foreign bank account details. This form also carries criminal penalties for non-compliance and must be timely filed.
State Annual Reports DUE DATE: Various
Most states require an annual update of address, registered agent, officers and directors if you have obtained a license to transact business in their state. These are generally filed online and some states have a corresponding annual fee. You will likely receive a reminder from the state to file these reports; otherwise please reach out to us to verify your filing requirements.
Personal Property Tax Returns, DUE DATE: Various
Many states require any registered corporation to file a Personal Property Tax Statement listing the value of all tangible personal property located in that state. The property is then assessed resulting in a tax bill. If you choose not to file the Property Tax Statement, then the tax will be automatically assessed based on the property that the state has record of. If in prior years your tax assessment was minimal then we suggest you retain such status and rely on the tax assessment that will be automatically generated.
Form 8937, DUE DATE: JANUARY 17, 2012
A company restructuring or reorganization which affects the basis of shareholders’ stock, requires reporting within 45 days. This includes stock splits or a distribution of nontaxable dividends (either cash or stock). This form has been issued recently as it only affects stock transactions post 2010. The filing requirement for 2011 can be satisfied by posting a completed Form 8937 in a readily accessible format in an area of your primary public website dedicated to this purpose and you keep it accessible to the public on this website or the primary website of any successor organization for 10 years.
State Registrations
In any state in which you have activity, your company may be required to register with such state in order to legally transact business there. Accordingly, if you have already registered to do business in a state, but no longer have employees there, you must file a withdrawal certificate in order to close your file and remove your company’s filing obligations. Please contact us if you would like us to assist you in obtaining and/or withdrawing the necessary licenses.
Sales Tax Filings
Unlike VAT in Israel, the US sales tax system operates under very different regulations. If your company has any sales it the US, it is quite likely that you are required to either collect and remit sales tax or request the necessary documentation to ensure that you are exempt. A complete analysis would be required to determine that you are meeting your sales tax obligations.
FIN 48
Accounting for Uncertain Tax Benefits – Your auditors may request that you provide them with an analysis of your US tax positions and any related uncertainties for proper reporting under FIN 48 in your financial statements. These may include issues such as transfer pricing, open state tax returns and proper treatment of income and deductions. Please contact us if this is applicable to you so that we can assist you in obtaining the necessary information.
Employee Related Information
Hiring new employees involves many issues. Below are some notable items you should be aware of:
A – Relocations – Proper tax planning will enable both you and your employees to maximize the benefits available when relocating to the US such as moving costs and treatment of stock options.
B – Payroll Taxes – Ensuring proper payroll tax filings requires the following steps:
1. Registration with the relevant state authorities (mentioned above), including unemployment insurance.
2. Establishing payroll tax filings with a payroll service provider.
3. Obtaining a workers’ compensation package from an insurance agent.
C – Fringe Benefits – Many benefits can be exempt from tax or alternatively be required to be included in employees’ income if the proper requirements are not met. These include rent paid on behalf of the employee, transportation expenses, education benefits and family airline tickets.