NOTICE TO ALL SOUTH CAROLINA EMPLOYERS:

You Must Verify All New Hires through E-Verify Effective January 1, 2012

Amendments to the “South Carolina Illegal Immigration and Reform Act” were signed into law by Governor Nikki Haley on June 27, 2011. The amended law requires all employers to enroll in the U.S. Department of Homeland Security’s E-Verify system beginning January 1, 2012 and to verify the legal status of all new employees through E-Verify within three business days. Failure to enroll in and use E-Verify to verify new hires will result in probation for the employer or suspension/revocation of the employer’s business licenses.

Verification Requirements

In addition to completing and maintaining the federal employment eligibility verification form, more commonly known as the Form I-9, all South Carolina employers must within three business days after employing a new employee:

1. Verify the employee’s work authorization through the E-Verify federal work authorization program administered by the U.S. Department of Homeland Security.

2. Employers may no longer confirm a new employee’s employment authorization with a driver’s license or state identification card.

E-Verify

E-Verify is a free Internet-based system maintained by the U.S. Department of Homeland Security. E-Verify compares the information an employee provides on Form I-9, Employment Eligibility Verification, against millions of government records maintained by the Department of Homeland Security and the Social Security Administration. The database generally provides results in three to five seconds. If the information matches, the employee is eligible to work in the United States. If there’s a mismatch, E-Verify will alert the employer and the employee will be allowed to work while he or she resolves the problem. To enroll in E-Verify, go to www.dhs.gov/e-verify.

License

Under the law, all private employers in South Carolina are imputed a South Carolina employment license which permits a private employer to employ a person in the state. A private employer may not employ a person unless the private employer’s South Carolina employment license and any other applicable licenses as defined in Section 41-8-10 are in effect and are not suspended or revoked. Under Section 41-8-10, a “license” means an agency permit, certificate, approval, registration, charter, or similar form of authorization that is required by law and that is issued by any agency political subdivision of the state for the purpose of operating a business in the state. Professional licenses are excluded, but “license” includes employment licenses, articles of organization, articles of incorporation, a certificate of partnership, a partnership registration, a certificate to transact business, or similar forms of authorization issued by the South Carolina Secretary of State, and any transaction privilege tax license.

Employment of Unauthorized Alien Prohibited

Section 41-8-30 provides that a private employer who knowingly or intentionally employs an unauthorized alien violates the private employer’s licenses.

Enforcement

The South Carolina Department of Labor, Licensing and Regulation (LLR) is charged with investigating complaints and conducting random audits of private employers to assure compliance. The agency must: (1) notify the United States Immigration and Customs Enforcement (ICE) of suspected unauthorized aliens employed by a private employer; and (2) notify state and local law enforcement agencies responsible for enforcing state immigration laws.

Failure to Comply

For a first occurrence by a private employer, prior to July 1, 2012, of failure to verify a new hire through the E-Verify federal work authorization program within three business days, an employer must swear or affirm in writing to the South Carolina Department of Labor, Licensing and Regulation that the employer has complied with the provisions of the federal law covering employment of unauthorized aliens (8 U.S.C. Section 1324a) from January 1, 2012 until notification by LLR of a violation, and comply with the state law on verification of new hires within three business days.

For a first occurrence by a private employer, after July 1, 2012, of failure to verify a new hire through the E-Verify federal work authorization program within three business days, the Department of LLR must place the employer on probation for a period of one year, during which time the private employer must submit quarterly reports to the agency demonstrating compliance with the law. A subsequent violation within three years of the law’s verification requirements must result in the suspension of the private employer’s licenses for at least 10 days but not more than 30 days.

A private employer who knowingly or intentionally employs an unauthorized alien must have his licenses suspended by the Department of LLR on a first occurrence for at least 10 days but not more than 30 days. During the period of suspension, the private employer may not engage in business, open to the public, employ an employee, or otherwise operate. The private employer’s licenses are reinstated when the employer demonstrates that the unauthorized alien has been terminated, and pays a reinstatement fee equal to the cost of investigating and enforcing the matter, not to exceed $1,000. For a second occurrence, the employer’s licenses must be suspended for at least 30 days but not more than 60 days. Following a third occurrence, the private employer’s licenses are revoked.

It’s sad, but true, that most Americans spend more time planning their “Black Friday” shopping than they spend planning their taxes. But that can be an expensive mistake!

What if the IRS had a sale? What if the IRS let you discount your taxes by thousands of dollars, this year and every year to come? And what if they let you do it from the comfort of your home or your office, without lining up in the pre-dawn hours of a chilly November morning? Would you give thanks for a sale like that?

You’re probably not holding your breath for the scrooges at the IRS to hold a “sale.” The good news is, you don’t have to wait for that to happen. You just need a plan. Tax planning is the key to paying the legal minimum. And a good tax plan can pay for a holiday season full of gifts and fun. There are legal ideas for tax reduction that you won’t read about in the paper. You need a CPAs like us who are continually trained to help you reduce your taxes.

Call us now at (704) 752-9845 for your free Tax Analysis. We’ll find the mistakes and missed opportunities that may be costing you thousands today, and show you how “Black Friday” tax planning can save thousands more tomorrow. We guarantee you’ll give thanks for the savings, or we’ll donate $50 to your local charity. So call now to schedule your Analysis.

You may recall that the estimate from the Tax Policy Center of American households that owe no Federal Income Tax is at 47%.  This can not really be compared to the 36% of American tax filers that owe no Federal Income tax that included in this report.  The big different is the millions of American households that are not required to file tax returns. 

Nationally, the totals ranged from 21% of Alaskan households to 45% of Mississippi households who owed no Federal income tax.

(Hat Tip:  to Peter Pappas of the Tax Lawyer’s Blog)

In many cases, it may be necessary to file an extension if you receive K-1′s for partnership or other business interests because that information is not available yet.  If there are questions about the accuracy of information, don’t be afraid of extensions.  It is better to wait and file with real information than to “guesstimate” the information.

There is also one other reason you may want to consider routinely filing an extension each year.  There have been several studies that indicate that you could be reducing audit risk by filing your returns later.  Amir D. Aczel, PhD, a professor of statistics, was once audited and it took him two years to get a no change conclusion.  He was not thrilled with the time this took and the IRS process so he decided to dig in and write a book about the process.  He surveyed several accountants on timing and research about audit risk.  He showed statistically in his book, “How to Beat the IRS at its Own Game,” that filing later reduces audit risk and the changes of being selected.

When asked about how to avoid an audit at a seminar of 500 CPAs, a former District Director of the IRS when asked about how to avoid an audit he said “pay your tax on time and file late. If you file late the service is just glad to get the return and get it processed…”

Is this fool proof?  I don’t know, but can it hurt you?  No, there is no reason that you cannot fully comply with your responsibilities as a tax payer and file by October 15 as required by law.  Do your part, but be smart.

It all goes back to value.  When you are setting the value of your services or products, what is it worth?  Chris is a well known business strategist, but lets look at this same scenario in a typical small business – for instance a contractor who does home remodeling services.

Let’s look at two scenarios.  Jim Contractor has ten different jobs working at the current moment.  In order to win the bids on the jobs, he had to be the low bigger.  His expected profits was cut to the bone and he has to work around the clock to get them done on time – and if his budget is off – he will likely lose money on a few of the jobs?

Bob Contractor has only three jobs in process right now.  When he bid the jobs, he priced the jobs so that he could make a nice wage once the jobs were completed.  His prices were more expensive than Jim’s and he had a higher profit margin.  Bob has time to excel in not just the quality of his work, but also in building a relationship with his customers.  He is able to give them comfort that the job is being done right – providing that extra little bit of value in the eyes of his customers.  He also does not have to worry as much about making an error figuring up his job cost – if he is off a little bit, he isn’t as likely to go into the hole.

Who would you rather be – Jim or Bob?

There are thousands of Jim’s out there – fighting for that customer who is always looking to pay the cheapest price.  He is always struggling to win bids and a typical dinner time conversation is how he keeps getting underbid by his competitors – ultimately resulting in him lowering his prices even more.    Jim is selling a commodity.

There are only a handful of Bob’s.  Bob creates value for his customers.  I suggest you strive to become Bob.

The American opportunity credit, in many cases, offers greater tax savings than existing education tax breaks. Here are some key features of the credit:

• Tuition, related fees, books and other required course materials generally qualify. In the past, books usually were not eligible for education-related credits and deductions.

• The credit is equal to 100 percent of the first $2,000 spent and 25 percent of the next $2,000. That means the full $2,500 credit may be available to a taxpayer who pays $4,000 or more in qualified expenses for an eligible student.

• The full credit is available for taxpayers whose modified adjusted gross income is $80,000 or less (for married couples filing a joint return, the limit is $160,000 or less). The credit is phased out for taxpayers with incomes above these levels. These income limits are higher than under the existing Hope and lifetime learning credits.

• Forty percent of the American opportunity credit is refundable. This means that even people who owe no tax can get an annual payment of the credit of up to $1,000 for each eligible student. Existing education-related credits and deductions do not provide a benefit to people who owe no tax. The refundable portion of the credit is not available to any student whose investment income is taxed at the parent’s rate, commonly referred to as the kiddie tax. See Publication 929, Tax Rules for Children and Dependents, for details.

Tax planning may be in order to see how this credit change effects your tax liability.  As we have discussed in the past, we do not recomend overpaying your taxes this year in case federal or state governments decide they may repay with I.O.U.’s.  With tax planning and coaching, we can help you adjust your withholdings to increase your net pay now instead of being at the mercy of the taxing authorities to grant you your own money back in the form of a “refund”.

North Carolina
G.S. 105-164.13C provides an exemption for certain items of tangible personal property sold between 12:01 A.M. on the first Friday in August and 11:59 P.M. the following Sunday. For 2009, the dates are Friday, August 7th through Sunday, August 9th. Clothing, footwear, and school supplies of $100 or less per item; school instructional materials of $300 or less per item; sports and recreation equipment of $50 or less per item, computers of $3,500 or less per item; and computer supplies of $250 or less per item will be exempt.

Clothing accessories, jewelry, cosmetics, protective equipment, wallets, furniture, items used in a trade or business, and rentals are not covered by the exemption and will be subject to the applicable tax.   For a more detailed list of what is and is not included in the Sales Tax Holiday, visit the list of items exempt during the sales tax holiday.  For other information, visit the North Carolina Sales Tax Holiday FAQ.

South Carolina
SC Code Section 12-36-2120(57) provides an examption from the sales and use tax for any sales taking place during a period beginning 12:01am on the first Friday in August and ending at twelve midnight the following Sunday on (a) clothing; (b) clothing accessories including, but not limited to, hats, scarves, hosiery, and handbags; (c) footwear; and (d) school supplies including, but not limited to, pens, pencils, paper, binders, notebooks, books, bookbags, lunchboxes, and calculators;(e) computers, printers and printer supplies, and computer software; (f) bath wash clothes, blankets, bedspreads, bed linens, sheet sets, comforter set, bath toels, shower curtains, bath rugs and mats, pillows, and pillow cases.  The exemption specifically does NOT apply to jewelry, cosmetics, eyewear, wallets, watches, furniture.  The exemption also does not apply to items placed on layaway or a similar deferred payment and delivery plan, the rental of clothing or footwear, or and item the is purchased for use in a trade or business.  For a more detailed listing of items, read the SC Revenue Ruling 05-09.

Original Post:

I was about to do a lengthy post on the Cash for Clunkers program when I see that FoxNews is reporting that it is dead. 

“Congressional officials say the government plans to suspend the popular “cash for clunkers” program amid concerns it could quickly use up the $1 billion in rebates for new car purchases”

“Through late Wednesday, 22,782 vehicles had been purchased through the program and nearly $96 million had been spent. But dealers raised concerns of large backlogs in the system, prompting the suspension.”

The program, officially named the Car Allowance Rebate System, was set to end after the government had burned through $1 billion in rebates or November 1st – whichever came first.  The plan allowed for rebates of up to $4,500 for trading in older vehicles for more fuel efficient ones.  It only took an estimated 6 days to burn through the cash.

I will save my detailed post on the program, and post it if and when they inject more cash into it.  It doesn’t take a lot of persuasion to convince President Obama and Congress to throw a few billion dollars here or there, so maybe they will do something to extend it.  For now, it appears halted at midnight tonight.  I do applaud them for taking the measures to “halt” the program and keep it within its specified budget.  I will stop short of saying it should have been budgeted for in the first place.

The SBA defines a financial hardships as any of the following:

• Loss/reduction of customer base
• Increase in cost of doing business
• Loss/reduction of working capital and/or loss/reduction of short term credit  facilities
• Inability to restructure existing debts due to credit restrictions
• Loss/reduction of employees (intellectual capital)
• Loss/reduction of major suppliers (major suppliers out of business)

Other quick facts are as follows:

• ARC loans are deferred payment loans are 100% guaranteed by the SBA;
• There are no SBA fees associated with ARC loans;
• ARC loans are only available to established, viable, for-profit small businesses;
• ARC loans are disbursed over a period of up to six months;
• Proceeds from ARC loans can be used for payments of principal and interest for existing, qualifying small business debt including, mortgages, term and revolving lines of credit, capital leases, credit card obligations and notes payables to vendors, suppliers and utilities;
• The SBA will pay the interest on the ARC loans to the lenders at the variable rate of Prime plus two percent; 
• ARC Loans are interest free to the borrower [This beats the heck out of the 25.9% some of you are paying to Bank of America on your revolving lines];
• Repayment will not begin until 12 months after the final disbursement
• After the 12-month deferral period, borrowers will pay back the loan over a period of five years. 

It will be interesting to see how all of this ultimately goes down.  Based on the details that I have read, there seems to be little risk on the part of the lender; however, many of them have been hesitent to get on board with the program.  A CNNMoney article last week revealed that most SBA lenders hesitant to jump into the program.    While the rate to the lender is variable, it isn’t as high as some of the other SBA loan programs.  This could be a turnoff to some banks, but as an SBA spokesperson pointed out in the CNNMoney article, there is virtually no risk to the lender since the SBA is providing a 100% guarantee. 

Please let me know of your experiences with ARC loans – whether it be finding a lender who is doing these or any pro’s and con’s you have seen through the process.  I know a lot of businesses that will be applying for these in the next few weeks – providing that they can find lenders.

For more information on ARC Loans, visit the ARC Loan portion of the SBA’s Website.