Important Reminders For Employers: 

New Mexico bases its withholding tax on an estimate of an employee’s income tax liability. Employers are required to report and pay withholding taxes to the New Mexico Taxation and Revenue Department (the Department) on their CRS-1 returns. 

Additionally, Annual statements of income and withholding (W-2’s and 1099’s) are required to be reported to the Department by the last day of February. Starting tax year 2019, the Department will be requiring electronic submittal of the annual withholding statements if you have more than 25 employees. The electronic submission will be due at the end of January. In preparation for this transition, the Department will be accepting electronic submissions starting January 5, 2019 for the 2018 tax year via the Taxpayer Access Point (TAP) https://tap.state.nm.us. 

The link below for the Department’s publication FYI-330, describes all the requirements, due dates and filing methods available. 

http://www.tax.newmexico.gov/Businesses/wage-witholding-tax.aspx 


TAP Technical Assistance 
New Mexico Taxation & Revenue Department 
https://tap.state.nm.us/tap

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The American Institute of CPAs is asking the Internal Revenue Service and the Treasury Department to develop a new income tax form to improve S corporation shareholder compliance with basis rules.

The AICPA sent a letter Tuesday proposing the form. It would be a required attachment to any income tax return filed by an S corporation and include items such as income, loss, deductions and credits. The goal would be to calculate the S corporation shareholder’s basis in the stock and debt of the S corporation correctly.

“Without accurate tracking of shareholder stock and debt basis, a taxpayer may not know whether he or she is entitled to deduct losses flowing from the S corporation or whether distributions and/or loan repayments from the S corporation to the shareholder are taxable or nontaxable,” wrote AICPA Tax Executive Committee chair Annette Nellen in the letter.

Without such a form, she noted, taxpayers can improperly claim losses and deductions in excess of basis. They may also fail to report as taxable gain distributions or loan repayments in excess of basis, or inaccurately report gains or losses on dispositions of S corporation stock.

“We believe that a significant contributing factor to S corporation shareholders claiming losses in excess of basis is that S corporation shareholders are not required to attach a form, to his or her income tax return, on which their basis in the S corporation is computed and the loss limitation rules are applied,” Nellen wrote, adding that the form would provide “shareholders and the IRS with the information necessary to properly determine the taxability of distributions and loan repayments made by the S corporation to its shareholders, gain or loss on stock dispositions, as well as the amount of losses and deductions that shareholders are allowed to take into account when computing taxable income for the year.”

(Bloomberg) Ivanka Trump has urged lawmakers writing a tax overhaul to include a deduction for child care expenses, but with a price tag of as much as $500 billion over a decade she may have trouble finding support in Congress.

Members of the House and Senate met with the president’s eldest daughter in the Roosevelt Room at the White House last week to discuss her proposed child care tax benefit, according to a person with knowledge of the meeting. President Donald Trump said earlier this month that he would soon propose a comprehensive tax overhaul, without offering any details.

Ivanka Trump’s involvement in tax negotiations between the White House and congressional Republicans is a signal of her influence with her father despite having no formal role in his administration. Dina Powell, the former Goldman Sachs Group Inc. executive who is an economic adviser to the president, is helping Trump to ensure a tax overhaul includes both the child care benefit and a requirement that employers provide paid maternity leave, policies that she pressed her father to embrace on the campaign trail last year.

"Ivanka is really pushing that none of it gets passed unless it includes the child care tax plan,” said Sheila Marcelo, founder of www.care.com, a website to find babysitters and other caregivers. "She and Dina Powell are really pushing to make sure it gets included."

In January, Ivanka Trump invited Marcelo to dinner at the home of Wendi Deng, the ex-wife of Twenty-First Century Fox Inc. co-Chairman Rupert Murdoch, to discuss her plans to focus on women’s empowerment during her father’s presidency. The dinner included top female executives, including International Business Machines Corp. Chief Executive Officer Ginni Rometty, Xerox Corp. Chairman and CEO Ursula Burns, and Deloitte CEO Cathy Engelbert.

It’s not clear whether Ivanka Trump is finding much appetite on Capitol Hill for her proposal. A deduction for child care expenses is both costly and regressive because it would favor wealthier families with two working parents. The deduction would cost the federal government $500 billion in revenue over a decade, according to an estimate by the Tax Foundation, a politically conservative, nonprofit research group.

"The child care proposal is generous and broad; almost everyone with young children will get some benefit from it. However, the largest benefits will go to relatively affluent dual-income families using paid child care," said Alan Cole, an economist with the Tax Foundation.

Republican aides on the tax-writing House Ways & Means Committee have discussed a child care tax deduction with the Trump administration. The proposal is not a priority for House GOP leaders, who made no mention of child care in their tax-reform blueprint released in June 2016. The blueprint vows to eliminate "carve-outs and loopholes," describing them as unfair and market-distorting, in favor of a flatter and simpler code.

“We’ve had some preliminary and very productive discussions with the Trump transition team and their desire to make child care more affordable for families,” the committee’s chairman, Kevin Brady, told reporters earlier this month. "So we’re exploring a number of options. They’ve brought some ideas forward, and it’s early in those discussions, but we’re having them."

The cost of the plan is a problem for Republican congressional leaders, who are already struggling to win consensus in their party on revenue increases to offset trillions of dollars in proposed tax rate cuts. A tax overhaul that adds to the deficit would likely have to be temporary, to avoid a Democratic filibuster in the Senate.

In her July 2016 speech at the Republican convention, Ivanka Trump promised that her father would "focus on making quality child care affordable and accessible for all" if elected president. The remark was a surprise; Trump had made virtually no mention of the issue during the campaign. Soon, Trump said he was working on a child care plan, with his daughter’s input, and released it in September.

The plan Ivanka Trump is pushing is broadly similar to the outline Trump released in September, with his daughter at his side. It would allow individuals earning less than $250,000 a year, or couples earning less than $500,000, to deduct the cost of child care expenses from their income taxes. Lower-income families without tax liability would get a rebate for their expenses in the form of a larger earned income tax credit.

The September proposal said the cost of the child care deduction could "more than be offset" by additional economic growth.

Trump said his plan also would guarantee six weeks of paid maternity leave by amending the existing unemployment insurance system. The measure would only apply to employers that don’t already offer paid maternity leave.

The leave plan would be "completely self-financing" by reducing fraud in the unemployment insurance program, Trump said in September.

Trump’s opponent, Democrat Hillary Clinton, decried the child care deduction as a boon to wealthier households with nannies and insufficient to help working families. Marcelo echoed that concern, saying the plan in its current form doesn’t help families whose incomes are too low to pay taxes and thus don’t benefit from deductions.

"It actually doesn’t help make child care affordable for the vast majority of working families,” Marcelo said. She hasn’t given Ivanka Trump her feedback on the plan yet, she said.

Bloomberg News

(Bloomberg) Investors counting on major U.S. tax reform in 2017 are going to be disappointed, according to Goldman Sachs Group Inc.

The problem is that lawmakers and Donald Trump’s administration are going to be so caught up figuring out how to repeal Obamacare that coming up with a new corporate tax system will get pushed to the side, economists at the bank led by Alec Phillips wrote in a note Wednesday.

“This process is likely to take longer than expected, which is likely to delay the upcoming debate over tax reform,” they said. “The difficulty the Republican majority is having addressing a key political priority suggests that lawmakers might ultimately need to scale back their ambitions in other areas as well, such as tax reform.”

Republicans disagree on a number of aspects of the repeal process, such as whether to scrap the Affordable Care Act first and pass a replacement later and how big the changes to health benefits should be. Goldman’s expectation is that legislation will be enacted in the second quarter that will probably modify tax credits for health-insurance coverage and increase the amount of flexibility that states have under Medicaid.

A delay to tax reform has been cited as a risk by other banks as well, which have warned it could spell trouble for a stock market that has priced in Trump’s pledges for a “phenomenal tax plan,” as well as scaled-back regulation and a boost in fiscal spending. Goldman itself says that the prospects of tax cuts have played a huge role in the 10 percent rally the S&P 500 Index has seen since Nov. 8, but that the risks are continuing to rise.

Bloomberg News

(Bloomberg) Legislation aimed at preventing fraud is delaying U.S. tax refunds and is likely to crimp consumer spending by as much as $21 billion this month, according to Goldman Sachs Group Inc.

The provision in the Protecting Americans from Tax Hikes Act passed by Congress near the end of 2015 will postpone funds remitted to between 25 and 30 million U.S. households (the majority of which are lower- and middle-income) via two federal tax credits until the week of Feb. 27, economist Spencer Hill wrote.

These groups tend to have a higher marginal propensity to consume—that is, they're more likely to spend additional income than wealthy households—so this delay is likely to have an immediate and meaningful impact on purchasing activity.

"Just two weeks into the tax filing season, tax return statistics from the IRS and U.S. Treasury are already showing a meaningful slowdown," writes Hill in a Feb. 8 note to clients. "Because a significant portion of households spend their income almost immediately—due to credit constraints or other factors—the refund delay could result in a pothole in consumer spending in February."

Hill estimates that February's tax refunds could be cut in half relative to 2016. The hit to personal-consumption expenditure this month could reach nearly 2 percent, says the economist, while cautioning that any weakness would be short-lived and reversed after households eventually receive the refunds associated with the Earned Income Tax Credit and Additional Child Tax Credit.

Evidence of the lag is likely to be visible in February and March consumer-spending data as well as potentially in some companies' first-quarter earnings reports, he added, though not in the monthly personal-income figures compiled by the Bureau of Economic Analysis.

Bloomberg News

Deadlines for Forms W-2, W-3, 941 (4th Quarter), 943, 944, and 940 payments January 31, 2017

Deadlines for 1099-MISC Forms January 31, 2017

IRS Marks Small Business Week 2016 with Four Webinars

As the nation celebrates Small Business Week May 1-7, the IRS will host four free webinars. The webinars will help small business owners with their taxes. The IRS also highlights popular products and services available on IRS.gov.

Here are some details about the free webinars:

1. Tax Tips for Your New Business, May 2. Small business owners and tax professionals with small business clients who may be starting new endeavors are the focus of this webinar.

Topics include:

2. Staying Afloat: Planning for Emergencies Before they Happen, May 3.Small business owners, tax professionals and payroll organizations learn about emergency preparedness in this broadcast.

Topics include:

3. Worker Classification: Employee or Independent Contractor? May 4. This webinar is in Spanish. It teaches Spanish-speaking small business owners, tax professionals and payroll organizations how to classifying workers.

Topics include:

4. Tip Reporting and Tips vs. Service Charges, May 5. This webinar provides small business owners, employers, tax professionals and payroll organizations with details on tips and reporting.

 Topics include:

All four webinars are an hour long and start at 2 p.m. (ET). Live Q&A sessions with IRS experts will be available. To register and to find out more visit the Webinars for Small Businesses page on IRS.gov.

Many other IRS products and services provide small business owners with the help they need. Here are three pages that you can check out anytime:

Visit IRS.gov to get small business forms and publications. You can also call 800-TAX-FORM (800-829-3676) to get them by mail.

Follow the IRS on Twitter. The IRS has three key accounts: @IRSnews,@IRStaxpros and @IRSenEspanol. For all the IRS Small Business Week information, keep an eye on these IRS Twitter accounts and the key hashtags: #IRSsbw16 and #DreamSmallBiz.