A new $67 user fee will apply to any estate that requests a closing letter for its federal estate tax return starting Oct. 28, the Internal Revenue Service has announced.
Closing letter requests must be made using Pay.gov.
By law, federal agencies are required to charge a user fee to cover the cost of providing certain services to the public that confer a special benefit to the recipient. Moreover, agencies must review these fees every two years to determine whether they are recovering the cost of these services.
Under the final regulations, the IRS has determined that issuing closing letters is a service that confers a special benefit warranting a user fee.
Obtaining a closing letter from the IRS can be helpful to an executor of an estate, but it is not required by law. The estate has the option of obtaining from the IRS, free of charge, an account transcript, showing certain information from the estate tax return, comparable to that found in a closing letter.
The Internal Revenue Service reminds business owners that it’s critical to correctly determine whether those providing services are employees or independent contractors.
An employee is generally considered to be anyone who performs services if the business can control what will be done and how it will be done.
Independent contractors are normally people in an independent trade, business or profession offering services to the public.
Whether a worker is an independent contractor or an employee depends on the relationship between the worker and the business.
Misclassifying workers as independent contractors adversely affects employees because the employer’s share of taxes is not paid, and the employee’s share is not withheld, the IRS said.
If a business misclassified an employee without a reasonable basis, it could be held liable for employment taxes for that worker, the IRS said.
Generally, an employer must withhold and pay income taxes, Social Security and Medicare taxes, as well as unemployment taxes.
Workers who believe they have been improperly classified as independent contractors can use IRS Form 8919, Uncollected Social Security and Medicare Tax on Wages, to figure and report their share of uncollected Social Security and Medicare taxes due on their compensation.
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