Foreign companies often form U.S. subsidiaries when they enter or expand their U.S. operations. If your business involves a foreign entity and US related entity your business will have to file IRS Form 5472 for every transaction with its related business entity. Form 5472 is an information return and does not impose a tax, but rather the form is used as a reporting mechanism to ensure compliance with US tax law. In short, it is a audit tool for the IRS. It becomes very important to properly report on Form 5472 so that the IRS does use this audit tool as a weapon against its filer. If you need assistance in preparing or reviewing your company’s 5472 and related party transactions click here to contact Paul.
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On March 18, 2010 the Hiring Incentives to Restore Employment (HIRE) Act was enacted. The HIRE act contains two new tax benefits that are available to employers who hire certain previously unemployed workers (the Act calls them “qualified employees”).
The first, referred to as the payroll tax exemption, provides employers with an exemption from the employer’s 6.2 percent share of social security tax on wages paid to qualifying employees, effective for wages paid from March 19, 2010 through December 31, 2010.
The payroll tax compliance issues here are a bit daunting.
The second tax benefit is that for each qualified employee retained for at least 52 consecutive weeks, businesses will also be eligible for a general business tax credit, referred to as the new hire retention credit, of 6.2 percent of wages paid to the qualified employee over the 52 week period, up to a maximum credit of $1,000.
If you have questions about qualifying for the tax credits under the HIRE Act, contact Paul by clicking here.