NEWS FROM BPS

We had a very busy December, but surprisingly, no newsletter material. No new hires; no softball or other sporting endeavors (unless you count Stormer’s ski trip); and no seminars.

We hope everyone had a Merry Christmas and a safe New Year’s celebration.

TECHNICAL ISSUES

Next year’s standard mileage rate decreases from post-Aug. 2005 rate

IRS has announced that the optional standard mileage rate has decreased 4¢ to 44.5¢ a mile for all business miles driven after 2005, down from 48.5¢ for the last four months of 2005. The rate for computing deductible medical or moving expenses after 2005 is decreased to 18¢ a mile, down from 22¢ for the last four months of 2005.

Changes Affecting Employment Tax

• Effective January 1, 2006, South Carolina withholding payments will no longer be accepted by your financial institution.   There are three options for depositing this tax:

1. Pay by credit card or by electronic funds withdrawal by going to www.sctax.org and clicking on the ePAY logo.  There is no charge or pre-registration for using this service.

2. Make payments by telephone or the internet by using the EFT program.  You must pre-register by contacting the EFT office at 1-800-476-0311 or 898-5740.

3. Mail in your payment along with the completed coupon.

• You should have received your 2006 Federal Tax Deposit Requirement notice from the IRS.  The notice states whether you are a monthly or semi-weekly depositor for 2006.  If you are unsure how this affects you, please call our office.

• The compensation limit on Social Security tax for 2006 is $94,200.  Please make sure that your payroll system is set up to stop withholding Social Security tax once an employee reaches this point.  There is no limit on the Medicare tax.

• FUTA tax is deposited quarterly once you have a $500 liability.  Until then, no deposits are required.

• New procedures are effective for 2006 for calculating the amount of federal income tax withholding on the wages of nonresident alien employees.  Let us know if you need additional information on this change.

• Keep in mind that with each new hire you are required to have the employee fill out Form I-9, Form W-4 and you are required to report the new hire to the state’s new hire registry.

• You may want to consider paying your federal payroll taxes using e-file or through the EFTPS.  Call our office if you are interested in more information regarding this option.

• Now is a good time for your employees to update their Form W-4 if they want to change withholding allowances or if their situations have changed during the year.

• It is very important that you verify your employees’ social security numbers and legal names so that they match with the information with the Social Security Administration for Form W-2 reporting.  For subcontractors receiving Form 1099, it is important that the social security number/employer identification number match the name associated with these numbers.  You should have on file Form W-9 requesting this information for each subcontractor that you use.

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