Lump-sum social security benefits

Article Abstract:

The Social Security Administration (SSA) disclosed an error in its software that resulted in underpayment of benefits from the years 1978 to 1991. This scenario creates the problem of determining how to tax the payments made by the agency that are attributable to prior years. One technique is to consider the payment as any other Social Security benefit in the present year. This involves the integration of the SSA lump-sum benefit payment for prior years and current-year benefits to compute the total taxable income. Another option is to treat a fraction of the payment as being received in prior years, thereby subjecting them to those years' tax rules and inclusion formulas, and then incorporate the amount in the gross income for the present year. This could be a significant saver for taxpayers because Social Security benefits were not taxable until 1983 and taxed for only 50% from 1984 to 1993.

Methods, Management, Tax administration and procedure, Tax administration, Social security taxes

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State tax and electronic commerce

Article Abstract:

Companies must recognize the tax consequences of their electronic data interchange (EDI) activities. They should know that the use of electronic funds transfer systems, corporate purchase cards, electronic exemption certificates and evaluated receipt settlement could expose them to considerably higher sales and use tax costs. Compliance with state tax laws using the aforementioned instruments could be severely hampered, particularly if there is no consistency in the requirements among states. Aside from the lack of uniformity among states, companies should also consider such problems as determining timely filing, determining their due diligence and integrating payment and return data. To avoid offsetting the efficiencies that can be achieved through EDI, businesses should cooperate with the government in developing desirable procedures and requirements for record keeping.

Evaluation, Column, State taxation, Electronic data interchange, EDI (Electronic data interchange)

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