Tuesday, December 19, 2006

Alternative Power Supply Units

Many trucks now have been outfitted with alternative power supply units. These units are normally tied into the main fuel supply for the truck. This means that on-road taxed fuel is being used in an off-road manner. The fuel used in the power supply would then be eligible for the fuel tax credit for the federal taxes paid in the price of the fuel.

The units usually have an hour meter on them measuring the use of the unit. The manufacturer can supply the gallons per hour usage of the machine. Proper documentation would mean that you would be eligible for the taxes paid on this fuel as a refundable credit.

If you would like more information give Jeff Lovelady at call 501.753.9700 or e-mail jeff.lovelady@bellandcompany.net.

Wednesday, December 06, 2006

Arkansas Proposed Rules 2006-3

The Arkansas Department of Finance and Administration has filed proposed rule 2006-3, “Withholding on Nonresident Members of Pass-Through Entities. The public hearing will be held Wednesday, January 3, 2007, at 1:00 p.m. in the second floor conference room (#2330) of the Ledbetter Building, 1800 West Seventh Street, Little Rock, Arkansas. All interested parties may attend and present their views on the subjects and issues involved.

This proposed rule will require all pass-through entities that make a distribution to a non-resident member to deduct and withhold Arkansas income tax from the distributions that would be taxable as Arkansas source income. Pass-through entities include (not limited to) S-corporations, partnerships, limited liability companies and trusts. The tax would be withheld at the highest tax rate levied under the code for that type of entity. Distributions aggregating less than $1,000 a year would not be subject.

Each pass-through entity that makes distributions subject to Arkansas income tax would be required to register, with the Department, using form AR4ER. Annually, the pass-through entity would be required to file a Form AR 941PT with the Department to report distributions and withholdings, and Form AR1099PT must be provided to the non-resident member who received the distribution and was subject to withholding.

If you would like more information contact Roxie Benincosa 501.753.9700 or e-mail roxie.benincosa@bellandcompany.net.

Tuesday, December 05, 2006

Per Diem Ruling - Additional Information

Last post we posted the latest IRS REV Ruling on using cents per mile to determine per diem. The new guidelines would have you test the monthly payroll calculations, to see if per diem paid exceeded the daily $52 allowance. It is not clear if the testing should be random or 100% testing, and if required weekly, bi-weekly or monthly. The gist of the ruling is to curb abuse where more than the $52 limit is being paid out, thus payroll taxes are not collected on the overage. The penalty for being out of compliance is loss of the entire per diem amount, thus subjecting the whole per diem payment to payroll tax liability, plus penalty and interest.

Next post:

In a recent state audit of a truck company, the state position was to require our firm to pro-rate the federal income to the domicile state based on mileage run thru the state to total miles driven, and did not allow the company to report all income to its state of domicile.