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2013 IRS Changes to Lockbox Addresses

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The Treasury Department’s Financial Management Service (FMS) and the IRS are in the process of streamlining the lockbox network. Effective December 31, 2012, the IRS will close lockbox operations located in the Atlanta (State of Georgia) and St. Louis (State of Missouri) areas. Moreover, other P.O. box address closings affect addressed in Hartford, Connecticut and Charlotte, North Carolina. These changes will affect individual taxpayers in nine states and business taxpayers in 26 states.

Effective January 1, 2013, individual and business taxpayers living or located in affected states will send payments to new lockbox sites.

P.O. Boxes Closed on December 31, 2012

The P.O. Boxes for the following lockbox sites will close effective December 31, 2012. To avoid any delays with mail, check your office materials and discard anything referring to these P.O. boxes. If you are an accountant or a tax attorney, make sure that your office discards of the following addresses.

St. Louis, MO – closing 12/31/12
P. O. Box 970007
P.O. Box 970009
P. O. Box 970010
P. O. Box 970019
P. O. Box 970026

Atlanta, GA – closing 12/31/12
P. O. Box 105877
P. O. Box 105659
P. O. Box 105703
P. O. Box 105094
P. O. Box 105092
P. O. Box 105279
P. O Box 105421
P. O. Box 105401
P. O. Box 105900
P. O. Box 105093
P. O. Box 105073
P. O Box 105571

Charlotte, NC- – closing 12/31/12
P. O. Box 1210
P. O. Box 1212
P. O. Box 1213
P. O. Box 1269
P. O. Box 1236
P. O. Box 70503
P. O. Box 660002
P. O. Box 660169

Hartford, CT – – closing 12/31/12
P. O. Box 37001
P. O. Box 37002

2013 New Address for Individual Taxpayers Living in Certain States

Starting January 1, 2013, if you or your individual client live in Alabama, Georgia, Kentucky, North Carolina, South Carolina, Tennessee, Missouri, New Jersey, and Virginia, then the following address changes will affect you:

Forms 1040, 1040A, 1040EZ should be mailed to:

P. O. Box 1000
Louisville, KY
40293-1000

Forms 1040ES should be mailed to:

P. O. Box 1100
Louisville, KY
40293-1100

Forms 4868 should be mailed to:

P. O. Box 1300
Louisville, KY
40293-1300

2013 New Address for Business Taxpayers Living in Certain States

Starting January 1, 2013, if your business or your business clients are located in Alabama, Alaska, Arizona, Arkansas, California, Colorado, Hawaii, Idaho, Iowa, Kansas, Louisiana, Minnesota, Mississippi, Missouri, Montana, Nebraska, Nevada, New Mexico, North Dakota, Oklahoma, Oregon, South Dakota, Texas, Utah, Washington, Wyoming then the following address changes will affect your business and your business clients:

Forms 940 should be mailed to:

P. O. Box 37940
Hartford, CT 06176-7940

Forms 941 should be mailed to:

P. O Box 37941
Hartford, CT 06176-7941

Forms 943 should be mailed to:

P. O. Box 37943
Hartford, CT 06176-7943

Forms 944 should be mailed to:

P. O. Box 37944
Hartford, CT 06176-7944

Forms 945 should be mailed to:

P. O. Box 37945
Hartford,CT 06176-7945

Additional Medicare Tax: Introduction

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Starting January 1, 2013, Additional Hospital Insurance Tax (Additional Medicare Tax) will come to life as a result of section 9015 of the Patient Protection and Affordable Care Act (PPACA) (as amended).

In essence, PPACA increased the existing Medicare tax for high-income earners. Currently, the Medicare tax rate is a flat 2.9% tax on all wage and self-employment income. Starting January 1, 2013, the flat 2.9% Medicare tax is likely to continue to apply to wages under the threshold amount (see below). However, PPACA imposes Additional Medicare Tax on wages, compensation and self-employment income above a certain threshold amount received after December 31, 2012. The tax rate is 0.9 percent.

The threshold amount depends on your filing status as indicated below:

Married filing jointly $250,000
Married filing separately $125,000
Single $200,000
Head of household (with qualifying person) $200,000
Qualifying widow(er) with dependent child $200,000

It is important to remember that Health Care and Education Reconciliation Act of 2010 further expands the Medicare tax by imposing a 3.8% Medicare tax on investment income – the so-called “unearned income Medicare contribution tax”. The details of this tax increase are discussed in another article.

Tax Year 2012 Income Tax Brackets for Individuals

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The 2012 tax season is nearing. As calendar year 2012 is drawing to its end, the time for any tax planning is getting shorter and shorter. In order to do the tax planning properly, it is essential to know what tax bracket you are likely to be in and whether you can lower this bracket.

For the year 2012, the following tax brackets apply:

Filing Single

10% $0 – $8,700
15% $8,701 – $35,350
25% $35,351 – $85,650
28% $85,651 – $178,650
33% $178,651 – $388,350
35% Over $388,350

Filing Married Filings Jointly

10% $0 – $17,400
15% $17,401 – $70,700
25% $70,701 – $142,700
28% $142,701 – $217,450
33% $217,451 – $388,350
35% Over $388,350

Filing Married Filings Separately

10% $0 – $8,700
15% $8,701 – $35,350
25% $35,351 – $71,350
28% $71,351 – $108,725
33% $108,726 – $194,175
35% $194,176 or more

Filing Head of Household

10% $0 – $12,400
15% $12,401 – $47,350
25% $47,351 – $122,300
28% $122,301 – $198,050
33% $198,051 – $388,350
35% Over $388,350

2013 Standard Mileage Rates

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On November 21, 2012, the Internal Revenue Service issued the 2013 optional standard mileage rates used to calculate the deductible costs of operating an automobile for business, charitable, medical or moving purposes.

Beginning on January 1, 2013, the standard mileage rates for the use of a car (also vans, pickups or panel trucks) will be:

• 56.5 cents per mile for business miles driven
• 24 cents per mile driven for medical or moving purposes
• 14 cents per mile driven in service of charitable organizations

The rate for business miles driven during 2013 increases 1 cent from the 2012 rate. The medical and moving rate is also up 1 cent per mile from the 2012 rate.

The standard mileage rate for business is based on an annual study of the fixed and variable costs of operating an automobile. The rate for medical and moving purposes is based on the variable costs.

Taxpayers always have the option of calculating the actual costs of using their vehicle rather than using the standard mileage rates.

A taxpayer may not use the business standard mileage rate for a vehicle after using any depreciation method under the Modified Accelerated Cost Recovery System (MACRS) or after claiming a Section 179 deduction for that vehicle. In addition, the business standard mileage rate cannot be used for more than four vehicles used simultaneously.

Underpayment and Overpayment Interest Rates for the Third Quarter of 2012

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On May 22, 2012, the IRS announced that the interest rates will remain the same for the calendar quarter beginning July 1, 2012.  The rates will be:

  • three (3) percent for overpayments [two (2) percent in the case of a corporation];
  • three (3) percent for underpayments;
  • five (5) percent for large corporate underpayments; and
  • one-half (0.5) percent for the portion of a corporate overpayment exceeding $10,000.

Under the Internal Revenue Code, the rate of interest is determined on a quarterly basis.  For taxpayers other than corporations, the overpayment and underpayment rate is the federal short-term rate plus 3 percentage points.

Generally, in the case of a corporation, the underpayment rate is the federal short-term rate plus 3 percentage points and the overpayment rate is the federal short-term rate plus 2 percentage points.  The rate for large corporate underpayments is the federal short-term rate plus 5 percentage points.  The rate on the portion of a corporate overpayment of tax exceeding $10,000 for a taxable period is the federal short-term rate plus one-half (0.5) of a percentage point.

The rate for large corporate underpayments is the federal short-term rate plus 5 percentage points. The rate on the portion of a corporate overpayment of tax exceeding $10,000 for a taxable period is the federal short-term rate plus one-half (0.5) of a percentage point.

Interest factors for daily compound interest for annual rates of 0.5 percent are published in Appendix A of Revenue Ruling 2011-32. Interest factors for daily compound interest for annual rates of 2 percent, 3 percent and 5 percent are published in Tables 7, 9, 11, and 15 of Rev. Proc. 95-17, 1995-1 C.B. 561, 563, 565, and 569.