Frequently Asked Questions
1.
Can your company handle 100% of a client’s accounting records?
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We are our
clients’ accounting department and more... Our company will maintain
your books at your location or at our location based upon one of our
staff accountant arrangements with you. We will make journal entries
as often as your operations require. We will make any statement your
business needs require available to you, your suppliers, your
customers, and your employees promptly. We will prepare and possibly
file your quarterly and annual returns timely unless extension to
file was requested and granted. Whether you have a trust or you
are planning an estate, we will perform the same type of assistance
to your organization.
2.
In what fashion do you suggest a startup company to maintain its
accounting records? -
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It really
depends on the level of operation and the economic resources
available to the startup company. In instance where the young
company can accommodate at least one accountant or a bookkeeper,
this option is available to it. A small company with enough resource
to outsource the task may choose this path as well. Either way,
PC Touch Services Inc. will assist a startup company achieving its
business goals through well-maintained accounting records.
3.
Can you help straighten out accounting and tax issues for the last 5
years? -
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As long as all
bank records and cancelled checks, invoices, bills, and other
receipts information are available, we will reconstruct your
accounting records and prepare your tax returns for filing. Then,
all of your accounting and tax issues will be resolved to continue
conducting business with peace of mind.
4. Is bookkeeping necessary for filing business tax returns? - Return to list
Financial
statements are the best document to rely upon for business tax
returns preparation. They are similar to summaries of activities for
specific period such as one year of a company’s operations.
Financial statements are generated from bookkeeping work. As a
result, it is necessary to maintain the books - bookkeeping.
5.
Does a company pay payroll tax weekly for monthly salaries? -
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No. A company
pays payroll tax after salaries were paid to employees and as
payroll tax becomes due. Although salaries may be paid on a weekly,
semi-monthly, or monthly basis, tax agencies set a maximum amount
of tax for which employers can wait until the end of the current
quarter to pay. Otherwise, penalties may apply on the amount due.
6. What are the steps to compute payroll tax due for employees? - Return to list
There are a
number of different methods to compute payroll tax. Marital status,
number of exemptions, pay period impacts on payroll tax
computations. This task should be delegated to a professional due to
the monetary loss that may result from improper computation and filings.
7.
Can
payroll return be filed without paying the tax? -
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A business owner
must consider the consequences of any decision before making it.
Handling fiduciary fund is one of such delicate decisions. Although
employers pay a portion payroll taxes out-of-pocket for their
employees, about 50% of the payment is made on behalf of the
employees. If the returns are not filed and full payment is not
made, the employer will be assessed nonfiling penalties and
interest. If the returns are filed without payment, an amount of up
to 25% of the tax due amount may be assessed as penalties. The best option is to
file and pay. In the event of some financial difficulties, file the
return and postpone payments because you will save on the amount of
nonfiling penalties.
8.
What can I do about notices regarding back taxes owed received from
the IRS? -
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The Internal
Revenue Service (IRS) is very good at issuing timely nonfiling
penalties. If you have been ignoring the service for a long time and
want to straighten out matters now, our team of experienced
accountants will help you update your accounting books, and with the
filing of all required tax returns. Feel free to click on the
“Contact us” link on this page to choose your most convenient means
of contacting us.
9. How concerned should a taxpayer be about the IRS if a state is conducting an audit? - Return to list
Our team of
former government tax auditors can tell you based upon experience
that the Internal Revenue Service (IRS) and New York State (NYS)
have a very good relationship. Upon concluding an audit of a
resident of the state or an entity conducting business within the
state, the IRS sends NYS an RAR that discloses the adjustments made
to one’s returns. NYS does the same as well. How likely is it that
either one of the tax agency pursue the matter? You bet! It will.
The earlier you act upon the matter, the least costly it will be.
10.
Does the IRS exchange information with New York State? -
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Yes, the
Internal Revenue Service (IRS) exchanges information with New York
State based upon disclosure policies the two agencies have agreed
upon.
11.
Does a New York resident pay tax on income of a New Jersey
corporation? -
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The general rule
is that a New York State resident pays tax on 100% of his or her
income. It is irrelevant whether the resident’s income was earned
within or without the state.
12. Is tax shelter illegal? - Return to list
For several
years already, the Internal Revenue Service (IRS) and most of the
states in the country have made some drastic decisions about tax
shelters. There has been much discussion about abusive tax shelters,
which are the illegal tax shelters. There are some very
sophisticated abusive tax shelters such as Son of Boss (SOS) in the
industries that originated in the mid 1990s. If you should require
advices, contact us immediately and we will evaluate the shelter for
you.
13.
What is the difference between general business corporations and S
corporations for New York State purpose? -
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Since 2004, New
York State (NYS) began to look at S Corporation almost in the same
manner as Internal Revenue Service (IRS) considers this type of
entity. The state eliminates its differential – between article 22
and 9A – tax for S Corporation. Now, the entity pays almost no tax
to NYS. The entity has to be both a federal and state S corporation.
Otherwise, like a general business corporation, both shareholders
and corporation pay tax to NYS.
14. Is it possible for New York State to conduct more than one audit of the same company at once? - Return to list
New York State
has been making effort to combine its Income and Franchise Tax units
while the Sales Tax unit will continue to exist separately. Until
the complete convergence realizes, the eventuality of NYS conducting
three different audits of the same entity has always been customary.
A corporation could have a corporate, a payroll, and a sales tax
audit concurrently. The manner in which the taxpayer allows all
three audits to proceed should be addressed in consensus between the
taxpayer and a professional tax matter representative.
15. What is business allocation percentage? - Return to list
Business
allocation percentage (BAP) is a methodology tax law makers of
states created to allow corporation to allocate tax
payments based upon business conducted within and without the state.
The BAP is applied against entire net income (ENI) to compute
required corporate tax payment to each state.
16. What is a withholding audit? - Return to list
Every pay
period, an employer must withhold tax on employees to remit to the
tax agencies as the tax becomes due. Computation of payroll tax is
very complex due to the number of factors that are involved. As a
result, employers often make mistake and submit the improper amount
of tax. In addition, employers also forget or simply fail to pay the
tax. In an attempt to reconcile the tax agency’s records with the
taxpayer, tax agencies conduct audit of the company’s payroll
records. The process involves submitting other records that contain
limited information related to payroll such as corporate tax returns
to verify salaries, cost of goods sold, outside service line items,
etc.
17. What is an income tax audit? - Return to list
A portion of the
taxes paid by corporations, and usually most of taxes paid by
individuals are income taxes. Since corporation may pay tax on
capital instead of income for the same purpose, the corporate tax is
not always income tax. When an entity’s return fails to meet some
essential criteria, it is reviewed and eventually submitted to tax
auditors for audit. In this situation, the taxpayer has to submit
all requested documents to the tax auditor for examination.
Following his or her examination, the auditor will determine if
either additional tax is due or no changes will be made to the
return as filed.
18. What is a sales tax audit? - Return to list
For states like
New York State (NYS) where individuals and companies pay tax on
items bought or used, the tax agency may attempt to verify whether
companies with fiduciary responsibility to collect sales tax remit
the proper amount of tax. This process is known as a Sales Tax
Audit.
19. Do I have to pay myself salary from my own company? - Return to list
Shareholders of
publicly traded companies have no problem understanding the
separation between the personal assets and the company’s assets. By
the same token, it is very difficult to convince some owners of
closely held corporations to require their corporation to compensate
them for their work. In some instances, tax agencies have forced
owners to accept a reasonable compensation from the company to avoid
delaying payment of tax.
20.
Do not-for-profit organizations pay any tax to the government? -
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If application
to become a tax exempt organization was filed and tax-exempt status
granted, a
not-for-profit organization may only be required to file tax exempt
returns only for income and/or even sales tax for information
purpose.
However, the organization will still have a fiduciary responsibility
to collect and remit payroll tax for most of its employees.
21. What is the New York State 11-month rule? - Return to list
In situations
where someone resides in New York State (NYS) for a portion of a
calendar year that did not exceed 11 months, the part-year resident
cannot be held as a resident of NYS. This is briefly the NYS
11-month rule.
22. Can an individual taxpayer pay tax to New York State and New Jersey for the same year? - Return to list
No. Taxpayers
don’t pay tax to two different states on the same income for the
same year. In most instances, the wrong amount of tax paid to one
state can be refunded. The taxpayer has to be knowledgeable of the
necessary actions to take in a timely manner. Consult us for proper tax
professional advice.
23.
Is there any withholding requirement for a New York State foreign
corporation employing New York State residents? -
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New York (NY)
income tax rate had been over 6.8% for a very long period of time.
As a result, it has exceeded the tax rate of the neighboring states
for a long period of time as well. When a company employs residents
of Connecticut (CT) to work in NY, they withhold the equivalent of
the NY tax rate on employees. On the other side, they have to
withhold the equivalent of the Connecticut tax rate plus the
difference between the NY and CT tax rates to match the NY’s full
withholding amount required.
24.
Is there any tax to withhold on nonresident working in New York?
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Unless an
employee is a resident of California (CA), for instance, while
working in New York (NY), the employer is usually required to
withhold NY income tax on the employee for remittance purposes to
the state. This is due to the fact that NY tax rate is one of the
highest in the country.
25. Is there any need to withhold NYC tax on a NYC resident employed on Long Island? - Return to list
New York City
(NYC) residents pay income tax to New York State (NYS) and to the
City of New York. Employers paying salaries or wages to NYC
residents are required to withhold NYC resident tax in addition to
NYS tax regardless of the work location.
26.
Does a
partnership pay tax to New York State? -
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Partnerships pay
no income tax to the New York State. However, partnerships
conducting business in New York City (NYC) are required to pay
unincorporated tax to the city. Sole proprietorships fall under the
same category of taxpayer for the City of New York.
27.
How can NYS ask someone to pay tax on the loss from a Federal S
corporation? -
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A federal S
corporation pays no income tax to the Internal Revenue Service
(IRS). The same is true for New York State (NYS) S corporation since
tax year 2004. However, in situations where the federal S
corporation was not an NYS S Corporation, the state requires that
the Federal loss is not reported on the NYS tax return. The
shareholder’s income increases as result. This may be called payment
of tax on the federal loss.
28. Why is withholding tax due to New York if the employees work in a neighboring state? - Return to list
New York State
(NYS) income tax rate is usually higher than that of any of the
neighboring states. When a resident of NYS works in New Jersey (NJ),
for instance, the employer is only required to withhold NJ tax for
that state. However, the employee will not have enough tax withheld
upon him or her for NYS. As a result, the difference between the two tax rates
must be withheld and remitted to NYS.
29. Can New York State take money out of my bank account for tax due? - Return to list
There have been
instances where New York State (NYS) asked financial institutions to
withdraw from customers’ money in their custody and give it to the
state as payments for delinquent tax due. The institution is only required to
give notice
to the customer
and a short period of time
to resolve the issue prior to handing over the cash. Yes, NYS
can take money out of one’s bank account for tax due.
30. Is it possible to stop my bank from sending my savings to the IRS of any state? - Return to list
It is possible to stop such unauthorized withdrawal. However, there are multiple steps to take to succeed. We can advise you in resolving such issues. Please contact us promptly.
Wilson Louis-Elias, EA
John Thomas, CPA - right
Two former government tax auditors who, jointly, bring decades of experiences, skills and knowledge to you. Do not delay to contact them about all of your personal and business tax matters. Your tax problem cannot wait because the consequences can be too devastating...
Services Overview:
- IRS & State Representation in
Individual & Business Tax Matters
- Individual Tax Returns
- Business Tax Returns
- Information Tax Returns
- Not-for-Profit Tax Returns
- Payroll Services, including
Payroll return, Paychecks,
and Direct Deposit
- Trust and Estates Administration
- Business Creation Assistance
