IRS tightens the rules on the treatment of for FICA tax purposes. Service chargers are treated as wages, not tips, according to the agency. For example, a mandatory fee imposed by restaurants for tables of six or more diners equal to fixed percentage of the bill is a service charge. As a result, these charges are not eligible for the employer tip credit and cannot be used to figure the tip rate for establishment to determine whether servers are reporting enough of their tips. Although this rule is effective immediately, examiners have been told to go easy on employers. Businesses that made good faith efforts to comply with the rules will have until the end of this year to bring their payroll systems into compliance. See www.kiplinger.com/letterlinks/tips for complete details on all of the rules.

IRS reverses course on reconciling gross receipts with 1099-K forms. Businesses won't have to separately report amounts shown on 1099-Ks on a special line on Schedule C and on Forms 1065, 1120 and 1120-S after all. The revenue Service had waived separate reporting for gross receipts for 2011, but firms squawked about the added work involved to reconcile the 1099-K data with their own record-keeping systems. So IRS waived the requirement permanently. The Service had hoped to match amounts listed on 1099-Ks directly with returns, making discrepancies easier to spot. This decisions will make the 1099-Ks less useful in uncovering businesses that under-report income, and will give more ammunition to critics in Congress who want to repeal the reporting requirements altogether.

Buyers of new heavy SUVs put in use in 2012 can get a substantial write-off, thanks to 50% bonus depreciation. Assume your business buys a new $60,000 SUV with a loaded gross weight over 6,000 pounds and places it in service before year-end. First, the firm can expense $25,000. Half of the remaining $35,000 cost... $17,500... qualifies for 50% bonus deprecation this year. The company can also deduct 20% of the $17,500 balance... $3,500... as a regular depreciation. Assuming that the vehicle is used 100% of the time for business, the total write-off in the first year is $46,000.