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In recent months, we have noticed an area of increased scrutiny in tax audits. The Internal Revenue Service is closely examining the withdrawals of funds from controlled corporations in the form of shareholder loans.

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As we are sure you’re aware, there have been two significant pieces of legislation passed so far in 2010. We’d like to give you an overview of the key tax changes affecting both individuals and small businesses in the recently enacted Health Care and Education Reconciliation Act of 2010 (Reconciliation Act) and the Hiring Incentives to Restore Employment Act (HIRE Act). Click here to read about tax law provisions 2010-2018.

If you have less than 20 employees, and have hired new full-time employees after January 1, 2009, you may qualify for a $3000 tax credit from the state of California. But you need to act fast - there is a limit of $400 million on the funds to be paid by the state, and credit dollars will be doled out on a first come, first-served basis.

As you would expect from a “gift” from the government, the credit has a number of requirements including a net increase over the number of full-time employees from the prior year. Please contact us for help in determining your eligibility or visit the Franchise Tax Board website for full details.