It’s difficult to know where to start with major issues in 2010 affecting all taxpayers and businesses.  I am going to give you a punch list and will try to publish more details on each issue as the year goes along:

1.       There is a bill in Congress right now that will require all Sub-S corporate tax filers with 3 or fewer Shareholders to pay Social Security and Medicare on 100% of the Income Distributions.  Currently they are required to pay themselves “reasonable compensation” in the form of payroll, but adding this requirement will double the amount of FICA most Sub-S Shareholders will have to pay.  This means that the “Return on Investment” from investing in staff, websites, equipment etc. will be subject to FICA – huge cost and change to the “small guy”.

2.       We are still in complete limbo with Estate taxes and gifts.  People think it is great there are no Estate taxes for 2010 –BUT not so fast.  A lot of heirs will be paying Capital Gains when the Estates Assets are sold because a lot of those assets will not have a “Step up in Basis” to date of death value.  Gifts over $13,000 per person per year are also subject to a huge tax.  Congress does not appear to even be aware of this issue.

3.       All Retailers of goods that are shipped anywhere (whether in State or out of State) need to be aware of the destination tax requirement now in place in most areas.  This is extremely complex and all municipalities are desperate for money.

4.       In the State of WA, B&O Tax on most professionals increased to 1.8% May 1st of 2010, and Sales Tax is due on soft drinks, most candy and a few other products (i.e. increases cigarette taxes)as of June 1, 2010.  In addition, Director fees are now subject to B&O tax. Make sure you are aware of these changes.