Bear in mind: Private letter rulings (PLRs) only apply to the companies seeking them. But they do give you an idea of how IRS looks at certain issues.

In this case, employees sued the company for unpaid leave and vacation time. As part of the settlement, the court ordered the company to pay attorney’s fees for the employees in the suit. According to the PLR, the awarding of attorney’s fees is essentially a reimbursement of an expense. Therefore, it’s not subject to taxes or reporting.

You can the download the PLR here to see all the details.

The site, which has made improvements to search functions, ease of navigation and other areas where users complained it was lacking, gained eight points on a scale of 1 to 100, giving it a solid “C.”

No doubt there’s still room for improvement — but at least it’s headed in the right direction.

To claim the credit, you’ll need the proper documentation:

• Proof you received the employee’s share of the premium (35%)
• A declaration that the former employee was “involuntarily terminated,” and
• For insured plans, a copy of the invoice or similar statement from the insurance carrier, as well as proof the premium was paid on time.

You can claim your credit on Form 941, starting with the first quarter of ‘09.

IRS has also released a new FAQ page for employers who need more details on the new procedure. If employees (or former employees) have questions about their rights and responsibilities, you can refer them to this page, which has several links to even more info.

Starting with Tax Year ‘11, all “payment card transactions” will have to be reported on information returns, just like all your other vendor payments — but in this case, you’ll be relying on the card issuer or other third-party processor to hand over the vendor’s name, address, Taxpayer Identification Number (TIN) and the gross amount paid.

All of this is to make sure that those payments (a) get reported and (b) get taxed properly. The rule also drives home the point that these transactions are subject to backup withholding if you don’t have a TIN for the vendor –  just as any other payment would be. The problem there is, you can’t backup withhold on a payment that’s already been made.

For that reason, the rule also allows card issuers and other payment processors to immediately start submitting the names and TINs of vendors in their networks to IRS’ TIN Matching Program. The hope is that by getting a running start, the payment processors can confirm accurate TINs for every vendor and avoid having to do any backup withholding.

A new form 1099 needed?

Two things are still up in the air:

1. How exactly these transactions will be reported, and
2. How you and your card processor will need to interact to ensure all the correct info is recorded and filed.

It may require a new form altogether, or IRS may opt to simply add a few lines or boxes to the existing 1099-MISC. It may also require you and the bank or other third party that facilitates these payments for you to get together to revamp processes, confirm transaction records, etc.

The good news is: You have two years to prepare — and IRS still has time to work out the kinks. We’ll keep you posted on any developments.

You can read all the details here.

Worse: Companies found to have gone awry of the rules will be hit with a 20% penalty on the claimed credit.

• Military differential pay
• Online filing of W-2s and W-3s, as well as extended due dates for e-filers
• Undeliverable W-2s, and
• Reporting nonqualified deferred compensation.

Click to download the entire set of instructions.

• Employment tax adjustment process — Found an error on a tax return you already filed? You’ll need to follow a new procedure to make the correction, including filing a Form 941-X.
• Submitting Forms W-4 and W-5 electronically, and
• Sending employees their W-2s electronically.

You can download the entire pub here.

• There’s a new due date for sending 1099s to payees. If you’re reporting gross proceeds paid to an attorney (Box 14) or substitute payments (Box 8 ) the deadline is now Feb. 15 for statements due after 2008.
• Death benefits paid to the estate of a deceased employee are now reported on 1099-MISC, not the 1099-R. That’s true whether the payment comes from a qualified or nonqualified compensation plan.
• You are not required to complete Box 15a in relation to deferrals paid under nonqualified plans subject to Sec. 409A.
• If you make military differential payments after 2008 those payments should be reported on the W-2, not the 1099. This applies to payments made to former employees on active duty for more than 30 days.

Updated: For more info on how to treat military differential payments, check this guide from IRS or download Publication 15, Employer’s Tax Guide.

Keep these tips in mind to minimize your extra work — and make sure you’re covered if IRS has any questions about what you sent when:

• When sending W-2s and 1099s, make a copy of the postmarked envelopes for your files. It shows that you sent the documents on time and confirms that you had the right address from the start.
• If a form is returned by the postal service, keep it in the original envelope. If the employee or vendor provides you with a new address, you can merely send the entire package in a new envelope. If you don’t hear from them, hold the docs for 4 years — to show any future auditor that you did your required filing.
• For 1099s that need to be reissued, there’s a check box to indicate if it’s a duplicate or a correction. For W-2s, you’ll need to write “reissued statement” in the upper-right corner.

Bonus: If you have a lot of requests for duplicate W-2s or 1099s, consider this time-saver. IRS allows you to charge a nominal fee, say $5 or so, to reissue lost forms. You’d be amazed how many “lost” documents are found once people realize they’ll have to pay for a new copy.

Just be sure the document was actually lost or misplaced. You can’t charge for a duplicate if the person says he or she never received the original.

Your company qualifies if its estimated employment tax liability is $1,000 or less. You’ll receive written notice from IRS if you qualify. (But don’t expect a new notification every year. IRS will contact you again only if you cease to qualify.)

Note: Once you receive notice you qualify for Form 944, you must file it rather than continuing to file Forms 941 quarterly. Ultimately, the new form should be a time-saver for smaller companies. But if you want to opt-out, you can, as long as your company meets at least one of the following:

• It anticipates an employment tax liability of more than $1,000 for the year, or
• It wants to file Forms 941 electronically.