Here are the top 10 stories of the year, as chosen by our readers.

1. IRS changes W-2 reporting requirement for health benefits

2. EPA says it’s ‘creating jobs’

3. Immigration laws: States get tougher on employers

4. What’s going to happen to employer health coverage in 2014?

5. Labor board gets an earful over pro-union rules

6. 3 lessons every company can learn from the Netflix debacle

7. Congress puts 12 EPA ‘job-killing’ rules on chopping block

8. What do you think of these 3 ideas to create jobs?

9. Why the payroll tax cut may be a bad idea

10. Does being a jerk make you a better boss?

Generally, the news is good for employers and employees. The IRS has decided that the value of employer-provided cell phones, even if partly used for personal calls, is exempt from employees’ wages. According to IRS Notice 2011-72, if an employer provides an employee with a cell phone “primarily for noncompensatory business purposes,” the cell phone will be treated as a “working-condition fringe benefit,” and the value of the cell phone usage will be excluded from the employee’s wages.

The agency defines  “noncompensatory business purposes” as including, but not limited to:

• the employer’s need to contact the employee at all times for work-related emergencies
• the employer’s requirement that the employee be available to speak with clients at times when the employee is away from the office, and
• the employee’s need to speak with clients located in other time zones at times outside of the employee’s normal work day.

IRS has also recognized that employer-provided cell phones can be used to promote the morale or goodwill of an employee and to attract applicants while still being considered noncompensatory, meaning the phones amount to a nontaxable de minimis fringe benefit. IRS has grandfathered an phones issued on or after  January 1, 2010.

In 2010, under the Small Business Jobs Act, cell phones had already been removed from the definition of “listed property,” meaning they no longer required exacting documentation and substantiation to qualify as a business expense. The act, however, hadn’t resolved whether cell phones are a taxable fringe benefit. That’s been settled by the latest ruling.

To see all the details of IRS Notice 2011-72, go here.

OK, we know all about what President Obama proposes to help American businesses. Now, CNN Money asks 10 small-business owners what the president could do immediately to boost the economy in general and their companies in particular. Here’s what they said.

• Make credit and cheap capital available. As a consequence of the near collapse in 2008, banks have made credit so tight that small-business people are suffocating. How about government-backed loans? Too complicated, too much paperwork, and too time-consuming.
• Cut healthcare costs. The threat of more double-digit-percentage increases in the cost of health coverage stops many owners from hiring and expanding. Owners simply don’t want to add people for fear of adding to the company’s health-benefit costs — which keep going up, up, up.
• Boost tax credits for hiring. Every time a company brings in a newbie, there are multiple costs, such as training — and risks. Make sure companies get tax credits commensurate with the costs and risks that go into hiring.
• Streamline regulations. Or, as one owner put it, “Leave us alone and we’ll do fine.” One big problem: product testing and retesting to meet government standards. Another owner: “Don’t do anything.”
• Lower taxes. The talked-about $250,000 annual threshold is too low. The combined income of a lot of small-business owners exceeds that amount, and pulling taxes from their take will lessen investment in their businesses.

To read more of the owners’ ideas and profiles of their businesses, go here.

President Obama’s proposal has some major implications — tax and otherwise — for business.

Here’s a look at three major points in the president’s American Jobs Act and four related measures:

• Equipment deduction. Businesses would get a one-year extension of the tax break that allows a full dollar-for-dollar deduction for all equipment purchases.
• Payroll tax cuts. All businesses with annual payrolls up to $5 million would see the payroll tax cut in half, from 6.2% to 3.1%. Plus, business would get a payroll-tax holiday on wages paid to new hires.
• Employer tax credits. Businesses that hire an applicant who’s been out of work at least six months will get a tax credit of up to $4,000 per hire.

In addition to those three, the president has proposed:

• raising $105 billion plus private-sector money to go toward infrastructure projects, such as modernizing roads, bridges and schools
• providing $35 billion to local governments to prevent layoffs of teachers and emergency personnel
• cutting the employee portion of payroll taxes – on earnings up to $106,800 — from 6.2% to 4.2% for all of 2011 and a further cut to 3.1% in 2012, and
• spending $45 billion to extend unemployment benefits and provide job training to the long-term unemployed.

Sources: Associated Press, Congressional Record, New York Times.

As reported by The Wall Street Journal, Nite Moves, a New York strip club, argued in court that lap dances are not taxable. The court disagreed and slapped the club with a $124,000 back-due tax bill, plus interest.

The club’s lawyers had argued that the lap dances were “dramatic or musical arts performances,” which are exempt from business taxes in New York.

The club plans to appeal the decision to the New York Court of Appeals. They have even brought in an expert, whom Nite Moves’ attorney calls the “foremost expert in the field” of exotic dance.

What are the qualifications of an “expert”? In this case, it’s a cultural anthropologist who has previously testified that the lap dances are choreographed performances that should deserve the exemption. However, state attorneys argued about the expert’s qualification, noting that the anthropologist hadn’t actually seen the private lap dances at Nite Moves.

No word on whether the expert is eager to meet the court’s qualifications.

If your company is in a position to make some larger purchases in the near future, you’ll want to move sooner rather than later. There are some serious incentives to do so.

And the IRS just issued new guidance to help you take advantage.

Several temporarily extended depreciation deductions come courtesy of the Small Business Jobs Act of 2010 and The Tax Relief, Unemployment Insurance Reauthorization and Job Creation Act of 2010.

While the breaks were passed months ago, there’s still time to capitalize. If your company thinks it’s a possibility, encourage your CFO to take a look at the just-released IRS Revenue Procedure 2011-16 ASAP.

Here’s a peek at what’s inside.

First: Timetables to take advantage

The new guidance provides your company with the timetable it will need to comply with the tax breaks. These are important when determining whether or not you can get the buys in on time. And it’s not only when you purchase the items, but when you put them into use that counts. A few of the key dates revealed:

• Property your company purchases must now be placed in service before 2013 in order to qualify for the 50% additional first-year depreciation deduction, while
• For the additional 100% first-year deduction depreciation for certain purchases, you’ll have to have made them after September 8, 2010, and before January 1, 2012.

That’s great news — it means your company still has time for some big-ticket buys.

Second: Examples to help your company comply

However, one of the most helpful parts of the new guidance is six specific examples of how companies can take the depreciation and how you’d calculate it. Be advised: They’re pretty technical. This is something you will likely want to go over with a CPA.

Still, it’s well worth a little time to take a look. You never know — you may discover your business already qualifies for a break.

A new and temporary change in tax law may make it a good idea to buy sooner rather than later.

In December, Congress approved a so-called 100% bonus depreciation tax benefit as part of the 2010 Tax Relief Act. The law was made retroactive to last September and will expire next year.

That means companies making IT purchases in 2011 could be eligible for a significant break. For example, a company that pays the top corporate tax rate of 35% and spends $100,000 on new equipment can reduce its taxes by $35,000, said Ernst & Young’s Greg Rosica in a recent ComputerWorld article.

Experts say that could be enough to convince businesses considering new equipment to make those purchases before the end of the year.

Check with your IT folks and see what’s on their wish list.

President Obama has signed into law the latest attempt to jumpstart the economy. To take advantage of some of the benefits, you’ll have to act fast. 

The Small Business Jobs and Credit Act of 2010 has incentives for companies of every size, not just the small ones.

But you will need to get moving — the changes are effective immediately. In fact, some are only good for the remainder of this year.

Check out the eight biggest changes to come out of the new law to see what your organization can take advantage of:

1. More Section 179 expensing. If you have any large purchases planned, pull the trigger this year or get them in next year’s budgets. For Tax Years 2010 and 2011, the limit will now be $500,000. (The dollar-for-dollar phaseout doesn’t start until purchases exceed $2 million.)
2. More property that counts (at a smaller cap). If leasehold-improvements, restaurant- or retail-improvements are on your list of initiatives, you can expense up to $250,000 of it.
3. A (brief) extension of bonus depreciation. Even if you’re not eligible for Section 179 expensing, you can take advantage of this tax break. All businesses can recover the costs of qualifying depreciable property they buy in the remainder of 2010 more quickly by immediately deducting 50% of the cost.
4. A biz-tax carryback. Looking for a break on this year’s taxes? Certain small businesses can “carry back” their general business credits to offset five years of taxes while also allowing these credits to offset the Alternative Minimum Tax.
5. Capital gains relief. Never mind the 75% exclusion of capital gains on key small biz investments. The new law eliminates all capital gains taxes on these investments if held for five years.
6. Fewer substantiation headaches on a key tech purchase. Your finance department will be relieved to know cell phones were removed from the definition of “listed property” subject to tighter substantiation requirements and special depreciation rules.
7. More Small Business Association (SBA) loans available. You can enjoy two changes on this front. First, SBA recovery loans were extended, and second, the maximum SBA loan size was doubled.
8. New loans from small and community banks. The biggest selling point of this part of the law, though, was the $30 billion dollar small biz lending fund. One caution: Those dollars only go to community and smaller (healthy) banks that want them. Informal polls of these target banks show little interest in getting on board thus far. That could mean new financing for you or your small business customers isn’t quite as much of a done deal as it was presented to be.

Info: For the full text of the law, go to  http://www.opencongress.org/bill/111-h5297/show

Here’s a simplified three-step illustration of how a VAT tax works — in other words, who pays and how much they pay, assuming a VAT-tax rate of 10%:

1. A dairy farmer produces milk, and then sells the milk to an ice-cream maker for 20 cents, plus a 10% VAT, for a total of 22 cents. The dairy farmer sends 2 cents in VAT to the government.
2. The ice-cream maker uses the milk to make ice cream and sells it to a grocery store for 60 cents, plus a 10% VAT (6 cents) for a total sale price of 66 cents. Of the 6 cents in VAT collected from the store, the ice-cream maker sends 4 cents to the government after taking credit for the 2 cents paid when the milk was purchased from the farmer.
3. Then the consumer buys the ice cream from the grocery store for a total of $1.10 — $1.00 for the ice cream and 10 cents in VAT. The grocery store collects 10 cents in VAT, takes credit for the 6 cents paid when the milk was purchased from the farmer and then sends 4 cents to the government.

You can see that in the end, the government collects 2 cents from the farmer, 4 cents from the ice-cream maker and 4 cents from the store. That adds up to 10 cents, which is 10 percent of the final sale price of $1.00. And you can see that everyone along the way received a credit for taxes paid except the consumer, so, generally speaking, the tax applies to anyone who ultimately consumes goods and services, and at the same tax rate regardless of the consumer’s income.

And the tax has the potential to raise money for government spending — lots of money. U.S. consumption of goods and services comes to about $10 trillion a year. Levying a VAT of only 1% yields $100 billion in revenue.

Maybe rather than asking why the federal government might enact a VAT, we should ask what obstacles there are to the idea, besides sheer politics:

• State sales tax. The majority of states already use sales tax — a modified VAT — as a major revenue source. Would states be willing to repeal their sales taxes in order to share in the federal VAT revenue? Or would states insist on keeping their sales taxes and piling on the VAT for consumers to pay?
• Paperwork and administration. Invoices and the software that produces them would need to be updated to reflect VAT paid on every transaction for goods and services. Businesses would have to implement new reporting and scheduling procedures.
• Less consumer spending. If we assume that consumers’ dollars are limited, and that every dollar paid in taxes represents a dollar not spent on more goods and services, a VAT could result in less spending and, by extension, less job creation.

President Obama recently rolled out his plan to boost business — and, presumably, hiring. Will it work?

Here are the details:

• Extending the “Bush tax cuts”: If you’re an individual making more than $200,000 a year or a couple making more than $250,000, expect your tax rate to rise.  Those income levels represent the cutoffs for keeping your tax rate at current levels. Anyone above that can expect the rate to go to pre-2001 levels.
• Offering tax credits for business research and experimentation: The news is good here. Congress has had to periodically renew the tax credits for research and experimentation — in fact, the credit died earlier this year. The president wants to renew the credit and make it permanent.
• Getting write-offs for equipment: Under the proposal, businesses would be able to take a full write-off for equipment purchases through 2011. This one looks like a no-brainer, as both parties and most business groups favor it.
• Appropriating infrastructure funds. The president wants $50 billion immediately to build roads, air traffic control systems, waterways and more — and give a boost to companies in those industries.

OK, the big question: Will it pass Congress? Even administration officials concede that it could be well past Election Day before any of this gets signed into law.

Some say they’re a way to save on business taxes. The U.S. Congress has termed them “loopholes” and is looking at ways to close them.

Here’s what’s being considered under what’s known as the American Jobs and Closing Tax Loopholes Act:

Carried interest
“Carried interest” occurs when a partner receives an interest in future profits in exchange for services. That income is taxed at capital gains rates. The  House and Senate want to change the way carried interest will be taxed:

House

• Part of the income that is recharacterized would be taxed at ordinary income rates, which, for tax years beginning before 2013, would be 50%.
• For tax years beginning after January 1, 2013, that rate increases to 75%.
• No industries would be exempt. This provision would be effective now, for tax years ending in 2010.

Senate

• This bill would tax the recharacterized income at 65% beginning after 2012.
• The rate would be reduced to 55% for gain or loss from the sale of assets held at least seven years.
• For 2011 and 2012, the applicable tax rate would be 50%.
• A carve-out would exempt the recharacterized income from the sale of certain interests in energy-related public partnerships.

With the top ordinary income rate currently at 35% and the top capital gain rate currently at 15%, the tax hike would be enormous as it is. Plus, after 2011 the two ordinary income rates are expected to rise to 39.6% and 20%, respectively. In addition, ordinary income would be subject to self-employment taxes.

S corporations
Both House and Senate bills address what some lawmakers see as evasion of employment tax by certain individuals. The Internal Revenue Service has stated that many taxpayers receive nominal salaries and take their earnings through distributions by S corps., limited partnerships, or other entities. The House and Senate bills would change that situation by imposing self-employment payroll taxes on 100% of S-corp. pass-through income when:

• The S corp. is engaged in a professional service business, with the key assets being the reputation and skill of no more than three employees, or
• The S corp. is a partner in a professional service business.

Foreign Tax Credit Reforms
The foreign tax credit was intended to prevent double taxation on foreign-source income. But corporations have found ways to use the credit to reduce the taxes they pay in the United States.

The House and Senate have adopted a matching rule that prevents the separation of creditable foreign taxes from the related foreign income. The bill contains various provisions which suspend the recognition of foreign tax credits until the associated foreign income is taxed in the U.S. Further:

• Stock acquisitions that are treated as asset purchases generally qualify for a stepped-up basis. For foreign companies, the step-up cannot be used for foreign taxes, but only for U.S. taxes, in order to prevent taxpayers from claiming foreign tax credits against foreign income that was never taxed in the U.S.
• The foreign tax credit is limited to the top U.S. tax rate of 35%. The Obama administration states that some taxpayers are inflating foreign source income by using treaties to shift the source of some assets to their foreign branches. House and Senate reforms set aside this income so that it is not used to claim foreign tax credits.

The bill, HR 4213, as of this date is still going through various procedural measures.

The White House and the Internal Revenue Service just released the details on eligibility for companies that want to get a tax credit under the new healthcare legislation.

To start with, generally, the smaller your business, the greater the tax credit. The max credit goes to companies that have 10 or fewer full timers and pay annual average wages of $25,000 or less. Once your company hits 25 FTEs receiving average annual wages of $50,000 per year, the credit phases out completely.

More details:

Dental and eyecare. Besides getting credit for the usual health coverage, employers can get the credit for supplemental dental and vision plans — or what’s known as limited-scope coverage. To get the credit, eligible small employers must pay at least 50% of the premium of such coverage.

Determining FTEs. You have some flexibility here, and that’s important because the value of the credit goes down as your number of FTEs goes up. The new guidance allows employers to choose from among three different methods of determining hours to minimize paperwork and still get the maximum credit. Employers can use (a) actual hours of service,  (b) an estimate of hours based on total days of service, or (c) an estimate based on total weeks of service.

State-based credits. Except in a few instances, the federal tax credit won’t be reduced if you get a state healthcare tax credit or subsidy — currently available in 20 states. You’ll get the full federal credit based on its entire contribution, as long as the federal credit doesn’t exceed the employer’s net contribution.

See IRS Notice 2010-44 for more details. The notice gives examples to help employers decide if they qualify for the credit. Generally, small businesses that pay at least half the cost of single coverage qualify. The maximum credit from 2010 to 2013 will be:

• 35% of premiums paid for eligible small business employers, and
• 25% of premiums paid by tax-exempt organization employers.

The study was conducted by USA Today and the Bureau of Economic Analysis, and compared tax rates today with those of the past. Here’s what came out:

• Federal, state and local taxes — including income, property, sales and other taxes — ate up 9.2% of all personal income in 2009, the lowest rate since 1950 and below the average of 12% for the past 50 years.
• On average, the federal tax rate has fallen 26% since the recession began in 2007.
• One-third of last year’s $862 billion economic stimulus went for tax cuts. Biggest reduction: The Making Work Pay tax credit reduced income taxes $800 for married couples earning up to $150,000.
• Changes in the tax code under Presidents Clinton and G.W. Bush — credits, lower rates, higher exemptions — cut income taxes for poor and middle-class families, meaning a drop in income now can trigger big tax breaks and sharply lower rates, sometimes zero.
• Consumers cut spending sharply in this downturn, thereby paying less in sales taxes.

The bad news

If the statistics are on target, that’s obviously good news. Here’s the bad news:

• The statistics cover what has happened. They don’t cover what’s going to happen as a result of increased government spending. Many experts say that higher taxes are inevitable.
• As noted, tax revenue has taken a hit in the last few recessionary years. People are spending less and making less, which usually pushes them into a lower tax bracket. After a meaningful recovery, the IRS bite should increase.

A review of the relevant details of the HIRE Act:

• Employers who hire unemployed workers this year (after Feb. 3, 2010, and before Jan. 1, 2011) may qualify for a 6.2% payroll tax incentive, in effect exempting them from the employer’s share of Social Security tax on wages paid to these workers after March 18.
• The reduction will have no effect on the employee’s future Social Security benefits. The employee’s 6.2% share of Social Security tax and the employer and employee’s shares of Medicare tax still apply to all wages.
• For each qualified employee retained for at least a year whose wages did not significantly decrease in the second half of the year, businesses may claim a new-hire retention tax credit of up to $1,000 per eligible worker.

You can get further details about the tax credit and the payroll tax exemption from a recently expanded list of answers to frequentlyasked questions about the new law.

To claim the payroll tax exemptions
New Form 941, Employer’s QUARTERLY Federal Tax Return, revised for use beginning with the second calendar quarter of 2010, will be filed by most employers claiming the payroll tax exemption for wages paid to qualified employees. The HIRE Act does not allow employers to claim the exemption for wages paid in the first quarter but provides for a credit in the second quarter. The instructions for the new Form 941 explain how this credit for wages paid from March 19 through March 31 can be claimed on the second quarter return.

Important notes:

• The HIRE Act requires that employers get a signed statement from each eligible new hire, certifying under penalties of perjury, that he or she was not employed for more than 40 hours during the 60 days before beginning employment with that employer. You can use new Form W-11, Hiring Incentives to Restore Employment (HIRE) Act Employee Affidavit, released last month, to meet this requirement.
• Though employers need this certification to claim both the payroll tax exemption and the new hire retention credit, they do not file these statements with the IRS. Instead, they must retain them along with other payroll and income tax records.
• New hires filling existing positions — and not just positions that have been added to your payroll — also qualify as long as they are replacing workers who left voluntarily or who were terminated for cause and otherwise are qualified employees.
• Family members and other relatives do not qualify for either of these tax benefits.
• Businesses, agricultural employers, tax-exempt organizations, tribal governments and public colleges and universities all qualify to claim the payroll tax exemption for eligible newly-hired employees. Household employers and federal, state and local government employers, other than public colleges and universities, are not eligible.

Sure, everyone’s talking about health reform and its down-the-road costs. There will be real and imposing administrative demands on your staff, too.

Here’s a five-year time line for major admin adjustments:

2010:

Your plan will have to:

• add employee dependents up to age 26
• drop preexisting condition exclusions on children
• lift lifetime limits on the value of coverage

Your payroll people will have to:

• Allow for a bigger income exclusion for qualified adoption assistance. The maximum adoption tax credit and income exclusion for employer-provided adoption assistance increases to $13,170 (indexed for inflation).
• Gather and provide data needed to qualify for employer subsidies and to receive a tax credit for employer-provided coverage for firms with no more than 25 employees and an average wage of less $50,000 per employee. From 2010 to 2013, the credit equals 35% of an employer’s contribution if the company pays at least 50% of the premium.

2011:

• The company will have to report the value of each employee’s employer-provided health coverage, along with other info, on Forms W-2.
• Get ready to change records if employees decide to set less money aside in a healthcare spending plans. Beginning next year, employees won’t be able to buy over-the-counter drugs tax-free through a flexible spending account health reimbursement account, or health savings account.

2012:

That’s the year Payroll will start increasing the paycheck deduction for the Medicare portion of the FICA tax increases — to 2.35% (up from 1.45%) — for individuals earning more than $200,000 annually ($250,00 for couples).

2013:

Payroll will have to adjust deductions to reflect new limits on pre-tax contributions to health accounts. Employees will be able to set aside up to $2,500 for health flexible spending accounts.

2014:

• This is the kick-in date for employers to begin offering a minimum level of health coverage — paying penalties for noncoverage. If you offer coverage that’s considered “unaffordable,” the company pays the lesser of $250 a month for each full-time worker receiving a government subsidy or $166.67 a month for each full-time worker
• If you don’t offer coverage, the penalty is $2,000 per full-time worker – even if just one employee receives a tax credit to buy insurance.

If you’re looking for a tax preparer, IRS cautions to look for red flags. Be wary if the prospective preparer:

• Promises to get you a bigger refund than another preparer. A blanket promise of a bigger refund is a dead giveaway that’s something’s not right.
• Uses a fee schedule that’s based on a percentage of the amount of a refund. Honest preparers won’t base fees on refunds.
• Promises to represent you in any dealing with the IRS, even though the preparer isn’t a tax attorney, a CPA or an otherwise enrolled agent. Tax preparers are authorized to represent you only in matters relating to forms they’ve actually prepared.
• Has no affiliation with recognized professional groups. Most legitimate tax preparers are members of professional organizations that provide continuing education and update on the tax laws, as well as having a code of ethics.

The IRS has also listed sample case studies involving prosecution of underhanded preparers and their clients.

The U.S. Chamber of Commerce and various unions have signed off on their opposition to the proposed 40% excise tax on so-called “Cadillac” health plans — those whose premiums exceed $8,500 for individuals and $23,000 for families.

Under the proposal, the tax would be levied on insurance companies that offer such plans and on employers who self-insure. The Congressional Budget Office says the tax would provide $149 billion in revenue by 2019. Further, proponents of the tax say it will help curb healthcare costs by forcing employees to be more aware of their medical spending and by discouraging insurance companies and employers from offering lavish plans.

Employers and unions firmly oppose the plan, for different reasons:

• Unions contend their workers have given up wage increases in return for better benefits. Labor leaders warn that the excise tax will force cuts in benefits or pass-along cost increases to workers. In an e-mail to members, the Teamsters said the tax would fall on one-third of Americans in a decade, and the average affected household would pay $7,600 more in taxes between 2013 and 2019. Further, as health-plan costs would almost certainly rise in the coming years, the tax would hit more and more people whose premiums would grow into the “Cadillac” category.
• Employer groups note that about 160 million people receive health coverage through employers that self-insure. The Chamber of Commerce argues that those employers will be hit with the cost burden, likely resulting in reduced worker benefits to avoid the tax or reduced wages to make up for the tax.

Both sides also argue the tax would be a killer in high-cost areas such as California or the Northeast, where health plans tend to be more expensive.

As previously reported, the Internal Revenue Service was gearing up for the audits to uncover unpaid business and payroll taxes. IRS is still planning the nationwide audit, but is pushing it back to February.

Here’s what auditors will be looking at:

• Three federal taxes collected, paid and/or remitted by employers — employee income taxes deducted by the employer, FICA and FUTA.
• Employment taxes related to four areas — worker classification, fringe benefits, reimbursed expenses and compensation of owner employees.

The audits have been triggered by an IRS study that shows a “tax gap” in the billions of dollars for unpaid business and payroll taxes.

The Internal Revenue Service is calling it “the National Research Program on employment tax compliance.” What it amounts to is a far-reaching audit program to dig up business-tax revenues.

Here are the two main areas that are going under the IRS spotlight:

• Improper worker classification. The agency is mainly concerned with workers classified as independent contractors because the classification affects the revenue state governments receive to pay for unemployment benefits.
• So-called nonconforming benefits. Those are benefits that could be considered wages subject to employment taxes. The typical targets: personal use of company vehicles, employee discounts, employer-provided housing and meals, accident and health benefits, educational assistance and stock-based compensation. Reimbursed expenses, in order to be tax-free and deductible, must generally be reasonable, have a business connection, include reasonable accounting for the expenses, and all excess reimbursement should be repaid within a reasonable time.

IRS has announced that it will be looking at mainly tax records for 2007 and 2008, but that doesn’t mean other years are exempt from examination. The announcement about the program was first made by the agency’s Anita Bartels at the Annual Congress of the American Payroll Association.

proposing a boost in the federal tax deduction for business meals from 50% to a whopping 80%.

U.S. Representative Neil Abercrombie (D-Hawaii) introduced the legislation, which would make changes in the tax code.

The new rate would apply to legitimate business deductions and have the additional benefit of helping restaurants and small businesses.

As you can imagine, that’s good news for restaurant and small business owners, who’ll likely see an increase in traffic if the new deduction gets passed. Restaurants are a big driver of the economy, responsible for about $1.5 trillion that circulates through the industry.

It’s estimated that a an increase in the tax deduction for business meals to 80% will boost business meal sales by $6 billion a year and create an $18 billion increase to the overall economy.

The industry currently employs an estimated 13 million people, or 9% of the U.S. workforce.

The federal tax deduction for business meals was reduced to 50% in 1993.