Accelerated California Estimated Taxes Required

In an effort the keep cash coming into the state coffers, the legislature included in the most recent budget a provision requiring taxpayers who make estimated tax payments to pay more upfront. This applies to both individual and corporate taxpayers. Taxpayers may be required to make estimated tax payments if their withholding will not cover their tax liability. For federal tax purposes, the payments must be paid in four equal quarterly installments. Starting in 2009 with the state's fiscal challenges, California began to require a higher percentage of the payments in earlier quarters. Starting in 2010, it is accelerating required payments even more, to the following schedule:

Quarter	% due
1st quarter	30%
2nd quarter	40%
3rd quarter	0%
4th quarter	30%

If you are required to make estimated tax payments, be sure to reference these new requirements.

More contractors are likely to perform stimulus funded work this year

From the Associated General Contractors of America:

Stimulus funded infrastructure projects are saving and creating more direct construction jobs than initially estimated, according to a new analysis of federal data released today by the Associated General Contractors of America. The analysis also found that more contractors are likely to perform stimulus funded work this year as work starts on many of the non-transportation projects funded in the initial package.

"The stimulus is one of the very few bright spots the construction industry experienced last year and is one of the few hopes keeping it going in 2010," said Ken Simonson, the association's chief economist. "The stimulus is saving construction jobs, driving demand for new equipment and delivering better and more efficient infrastructure for our economy."

Simonson noted that new federal reports show the $20.6 billion dollars worth of stimulus highway projects initiated over the past twelve months have saved or created nearly 280,000 direct construction jobs. That amounts to 15,000 jobs per billion dollars invested, well above pre-stimulus estimates that every billion invested in infrastructure projects would create 9,700 direct construction jobs.

The economist added that heavy and civil engineering construction employment was stable last month even as total construction employment declined by 75,000. Meanwhile, highway and road construction was one of the only areas to see an increase in spending last year even as total construction spending fell by $100 billion. The two figures are a clear sign the stimulus is having a significant, and stabilizing, impact on the industry, Simonson noted.

Simonson cited examples like Pittsburgh's Golden Triangle Construction Co as an indication of the benefits of investing in infrastructure. The company is hiring two new engineers and over 100 employees this spring just to perform $24 million worth of stimulus-funded projects this year.

It also is ordering new construction equipment to perform the work from Ripon, California-based Guntert and Zimmerman. As a result, the equipment maker saved 40 jobs on its assembly line. And thanks to its stimulus work, Golden Triangle decided to complete construction of its delayed headquarters, providing even more local construction jobs.

Simonson cautioned however that overall declines in construction activity have, and likely will continue to overshadow the benefits of the stimulus. "The stimulus will keep a bad situation from deteriorating further," Simonson said. "That may not make for great headlines, but it is welcome news for construction workers anxious to continue receiving paychecks."

Read Ken Simonson's analysis of the impacts of the stimulus.

Tax Tips: Children's Investment Income

IRS Tax Tip 2010-38

The IRS wants parents to be aware of the tax rules that affect their children’s investment income. The following four facts will help parents determine whether their child’s investment income will be taxed at the parents’ rate or the child’s rate.

1. Investment Income Children with investment income may have part or all of this income taxed at their parents’ tax rate rather than at the child’s rate. Investment income includes interest, dividends, capital gains and other unearned income.
2. Age Requirement The child’s tax must be figured using the parents’ rates if the child has investment income of more than $1,900 and meet one of three age requirements for 2009: a. The child was born after January 1, 1992. b. The child was born after January 1, 1991, and before January 2, 1992, and has earned income that does not exceed one-half of their own support for the year. c. The child was born after January 1, 1986, and before January 2, 1991, and a full-time student with earned income that does not exceed one-half of the child’s support for the year.
3. Form 8615 To figure the child's tax using the parents’ rate for the child’s return, fill out Form 8615, Tax for Certain Children Who Have Investment Income of More Than $1,900, and attach it to the child's federal income tax return.
4. Form 8814 When certain conditions are met, a parent may be able to avoid having to file a tax return for the child by including the child’s income on the parent’s tax return. In this situation, the parent would file Form 8814, Parents' Election To Report Child's Interest and Dividends.

More tax tips are available on the IRS website.

Have you filed your FAFSA? Financial Aid Filing Deadline Looming.

For those of you that have college bound kids and were thinking about financial aid or trying to get grants to help with college expenses you might want to read the following from SFGATE.com. Good luck with those applications, it sounds like they are making them easier now. College-bound students in California have just one more week to file their federal financial aid application to be considered for some important types of state and university aid for the 2010-11 school year. Many students will find it easier to fill out the online version of the Free Application for Federal Student Aid this year thanks to the addition of skip logic, which skips questions that are deemed irrelevant based on answers to previous questions. Students must fill out this application, known as the FAFSA, to be eligible for federal aid such as Pell grants, work study and guaranteed loans. Many states and schools use the same application to dole out their own financial aid. California residents who will attend a public or private college in California and want to be considered for a first-time Cal Grant must file the application by March 2. These grants go to undergraduate students from low- and some middle-income families. They cover systemwide fees at public universities (up to $4,026 at California State University and $10,302 at UC campuses). Students attending a private university can get up to $9,708 toward tuition. Some students can get an additional $1,551 for books and living expenses. Students must fall below certain income and asset ceilings that vary by family size and type of grant. A dependent student from a family of four with up to $80,200 in income and less than $62,000 in assets might get at least a partial grant. To get a Cal Grant, students also must verify by March 2 that they have a certain minimum grade point average. Many high schools are automatically verifying GPAs for all graduating seniors, but students should check. Students who attend a Cash for College workshop before March 2 and fill out an application and a survey will be entered in a drawing to win an additional scholarship worth $1,000. For details and to find a workshop near you, go to calgrants.org and click on Cash for College. Many universities also encourage or require students to fill out the form by March 2 (earlier in some cases) to be considered for institutional aid. "We always say, file by March 2 to be sure to get the maximum package," says Cheryl Resh, financial aid director at UC Berkeley. Despite federal efforts to simplify the application, it can still be challenging, even for financial aid experts such as Diana Fuentes-Michel, executive director of the California Student Aid Commission, which administers Cal Grants. "It's a little easier this year, but it's still daunting," says Fuentes-Michel, who recently helped her 17-year-old daughter fill out the form. Thanks to skip logic, many students will have to answer fewer questions this year, but some colleges worry they won't get all the information they need. For example, a student whose family has less than $50,000 in adjusted gross income and is eligible to file a 1040A or 1040EZ tax return is no longer required to disclose assets on the federal form. However, without that information, financial aid offices don't know whether the student exceeds the asset limit for a Cal Grant, says Yvonne Gutierrez-Sandoval, associate director of financial aid at Pitzer College and president of the California Association of Student Financial Aid Administrators. Fuentes-Michel says she is taking this and similar questions to the student aid commission. "I hope to get an answer to campuses in writing in the next five to six weeks," she says. David Levy, director of financial aid at Scripps College, says he's getting a lot of questions this year because the worksheet that students fill out before tackling the application was also simplified. The new worksheet, he says, doesn't prepare students for all the questions they will encounter, and as a result, it's taking some families longer to fill it out. Another question he's getting more often is how to explain special economic circumstances. To get aid for 2010-11, students use information from their family's 2009 tax return. That information might look too rosy if a parent recently lost a job, but there's no way to explain it on the form. Levy encourages these students to contact the financial aid offices at schools where they have applied and explain the situation, even before they have been admitted, so "colleges can make a more informed decision" when offering aid. "We want to accept the family in their current financial state," he says, but his office will ask for verification such as termination letters or confirmation of unemployment benefits. Net Worth runs Tuesdays, Thursdays and Sundays. E-mail Kathleen Pender at kpender@sfchronicle.com.

Union Retiree Health Benefits

I recently read the summary below about union retirees health benefits and thought it would be good information for our union contractor clients. The short story is that retiring union members can maintain their health insurance benefit even if they elect to take the lump sum retirement distribution. For more details read the following. Battoni v IBEW Local Union No. 102 Employee Pension Plan (2010, CA3) 2010 WL 395823 An amendment to a union welfare plan, which conditioned receipt of retiree health care benefits upon the retirees' not choosing the lump sum offered under the union pension plan, was a constructive amendment of the pension plan. And since the amendment decreased the value of the lump-sum benefit in violation of the anti-cutback rules, the amendment was prohibited. Facts. A merger of two International Brotherhood of Electrical Workers local unions effectively dissolved Local 675 and transferred its members to Local 102. The merger also combined the locals' two pension plans into a single Local 102 Pension Plan. To accommodate Local 675 members whose former plan had allowed them to choose between a lump-sum pension benefit or a periodic monthly pension benefit, the revised Local 102 plan allowed former Local 675 members to receive a lump-sum benefit for pre-merger accruals. As another result of the merger, two welfare plans were combined by moving Local 675 members to the Local 102 Welfare Plan, which, among other things, provided eligible retirees with health care benefits for themselves and their spouses. Shortly after the merger, the Local 102 plan was amended to add an additional condition regarding eligibility for retiree health care. Specifically, the amendment conditioned receipt of health benefits on the retirees' not choosing the lump-sum benefit offered under the pension plan. A group of current and retired Local 102 members who had been members of Local 675, challenged the amendment. They argued that the amendment violated ERISA § 204(g) 's anti-cutback rule which prohibits reducing a participant's accrued benefit (with certain exceptions not relevant here) by plan amendment. While acknowledging that the lump-sum pension benefit was an accrued benefit under ERISA, the union argued that the amendment was an amendment of a welfare plan and that welfare plans are exempt from coverage under the anti-cutback rule. However, the district court ruled in favor of the union members, finding that the amendment did violate the rule. The union appealed to the Third Circuit. Court finds an amendment to the pension plan. The Third Circuit first decided that the welfare plan amendment constructively constituted an amendment of the pension plan. While acknowledging a “certain superficial appeal” to the union's argument that the pension plan had not been amended, the view of what constitutes an “amendment” to a pension plan has been construed broadly to protect pension recipients, the court noted. Accordingly, even though welfare and pension plans serve different purposes under ERISA's scheme, it is the meaning and function of an amendment that determines whether the amendment modifies a pension plan, a welfare plan, or both. Here the court found that the amendment was part of the welfare plan to the extent that it pertained to welfare benefits, and part of the pension plan to the extent the amendment pertained to pension benefits. The amendment constructively amended the pension plan by adding a condition to the receipt of a benefit accrued under that plan, the court said. Assuming, hypothetically, that the pension plan did not exist, the amendment would have no meaning; however, if the amended provision were added to the pension plan, it would retain the exact same meaning and function. Thus, while the amendment was added to the welfare plan and dealt with health care benefits, the amendment also functioned to condition receipt of the lump-sum pension benefit, the court determined. Amendment decreased an accrued benefit. Having determined that there was an amendment of the pension plan, the Third Circuit had to address whether the amendment decreased an accrued benefit. The court noted that in Central Laborers' Pension Fund v. Thomas E. Heinz, et al, (S Ct 6/7/2004) 94 AFTR 2d 2004-5071 ( Weekly Alert ¶ 2 06/10/2004 ), the Supreme Court ruled, among other things, that at the moment a new condition is imposed, an accrued benefit becomes less valuable. The same reasoning applied to this case, the Third Circuit said. The Local 102 Pension Plan imposed a new condition on the receipt of an accrued benefit because previously, the lump-sum pension benefits accrued before the amendment was added to the welfare plan, but after the amendment, receipt of those same accrued benefits was conditioned on forfeiting health care benefits. Thus, this new condition in and of itself, decreased the value of the lump-sum pension benefit, the court held. Similarly, IRS regs supported the union members' position. Reg. § 1.411(d)-3(a)(2)(i) states that the anti-cutback rule is to be construed broadly to cover both direct and indirect amendments to pension plans, and Reg. § 1.411(d)-4, Q&A 7 provides that the imposition of conditions on accrued benefits violates the anti-cutback rule. Relying on both Supreme Court precedent and IRS regs, the Third Circuit concluded that by imposing a condition on the receipt of the lump-sump benefit, the amendment decreased an accrued benefit, and was thus prohibited. References: For the anti-cutback rules, see FTC 2d/FIN ¶ H-7300 ; United States Tax Reporter ¶ 4114.45 ; TaxDesk ¶ 286,018 ; TG ¶ 8093 .

Phishing Alert for QuickBooks Customers--security plug-in or digital certificate

For those of you that are using QuickBooks accounting software please be aware that there have been some "phishing" emails floating around. The information below was posted on Intuits website. Please review so you know what Intuit will do if it needs to fix a problem. Overview IMPORTANT UPDATE FOR QuickBooks Customers: Intuit is receiving reports of individuals receiving fraudulent emails from QuickBooks or QuickBooks Online. The two separate emails ask customers to either download a plug in to assess their security or download a Digital Certificate. Customers should delete either of these emails. As we discover these fraudulent sites (cyber criminals often use the same email repeatedly, although they change web sites), we take them down. Email texts The text of the fraudulent emails are below. The first email is about a fake security plug-in. As is the case with many companies that maintain large databases of information, Intuit is the target of fraudulent attempts to access and extract information from its database. We recently learned our database was illegally accessed and certain contact and personal data were taken, including QuickBooks names, email addresses, phone numbers. The information accessed does not include banking information. Immediately upon learning about this, Intuit started an investigation and took corrective steps. It is important to know the company continually monitors for any illegal use of information in our database, and so far, we have not detected the misuse of this information. In order to help assure the security of your information, we have developed a special plug-in for browser and Windows - QuickBooks Update. This software will protect users private information from any kinds of spyware or malware. System requirements: •Windows XP, Vista, 2000, 2003 •Internet Explorer 6.x, 7.x, 8.x ATTENTION: You will not be able to use our service without update from 29 of November 2009 Download: •Windows QuickBooks Update •Internet Explorer plug-in If you are not Microsoft Windows user you can use our services as usual This is the end of the first fraudulent email. The second email is about a fake digital certificate and appears exactly as it is sent (mistakes included): Dear Mr(s). In order to access Intuit after 20 of December 2009, you must have a valid Digital Certificate installed on your Computer. Creating and installing your Intuit digital certificate s a quick and automaed process. Knowing with whom you are communicating, it security on internet operations. only encrypt is not enoug, as it provides no proof of the identity of the sender of the encrypted information. Without special safeguards, you risk being impersonated online. Digital certificates provide an electronic means for Intuit to verify your identity. Used in conjunction with encryption, digital certificates provide a more complete security solution, assuring the identity of all parties participating in a transaction. The Intuit server has its own digital certificate to assure you that you are actually connecting with Intuit and not with an gyp. To generate your own Digital Certificate, you need to download Digital Certificate generation tool. For security reasons, download is available only once. Please download Digital Certificate generation tool direct to your Microsoft Windows PC. It is important to note that: Your Intuit digital certificate will expire after one year. You will be prompted to enter an automatic renewal process 30 days prior to certificate expiration. System requirements : Internet Explorer 6.x, 7.x, 8.x Windows XP, Vista, 2000, 2003 ATTENTION: You will not be able to use our service without update from 20 of December 2009 Download : Digital Certificate generation tool If you are not Microsoft Windows user you can use our services as usual Have more than customers, or want to give your accountant access to your books? Then Upgrade Today! -- simply log in and click "Upgrade" from your home page. For faster access, bookmark accounting.quickbooks.com in your browser. This is the end of the second fraudulent email. Information On the Internet, "phishing" refers to criminal activity that attempts to fraudulently obtain sensitive information.�There are several ways a scam artist will try to obtain your social security number, driver's license, credit card information, or bank account information. Here is our QuickBooks Online commitment to you, as well as some steps you can take to make sure your data is safe and secure. Our commitment to you: What we won't do 1.We will never send you an email with a "software update" or "software download" attachment. 2.We will never send you an email asking you for login or password information to be sent to us. 3.We will never ask you for your banking information�or credit card information in an email.�We will never ask you for confidential information about your employees in an email. What we'll do 1.We will provide you with instructions on how to stay current with your Intuit product, and we will provide you with information on how to securely download an update from your computer. 2.If we need you to update your account information, we will request that you do so by logging into your account. Here's what you can do to protect yourself from a phishing attack: 1.If you suspect you have received a phishing email from Intuit, please forward it immediately to spoof@intuit.com.�We will look into each reported instance. 2.Make sure you subscribe to an anti-virus software�and keep it�up-to-date. 3.Make sure you have updated your web browser to one that includes anti-phishing security features, such as Internet Explorer 7 or Firefox version 3 or higher 4.Make sure that you keep up to date on the latest releases and patches for your operating systems and critical programs. These releases are frequently security related. 5.Do not respond to emails asking for account, password, banking, or credit card information. 6.Do not open up an attachment that claims to be a software update.� We will not send any software updates via email. 7.Do not respond to text messages or voicemails that ask you to call a number and enter your account number and pin. 8.Make sure you have passwords on your computer and your payroll files. Here are 3 common methods that phishers use in their emails 1.Spoofed email address. Don't reply to unsolicited email and don't open email attachments. It's easy to fake a From or Reply To address, either manually or with spam software, so never assume an email is real by looking at its header. You might be able to spot fake addresses by checking for domain name misspellings, but this isn't foolproof. Some email service providers combat the problem of spoofed addresses by using authentication techniques to verify a sender's integrity. 2.Fake link. When in doubt, never click on a link in an unsolicited or suspicious email. Scam emails can contain a hidden link to a site that asks you to enter your log on and account information. A clue: if the email threatens you with account closure if you don't log on soon, you could be the target of phishing. You may be able to tell if a link is real by moving your mouse over it and looking at the bottom of your browser to see the hidden Web address - it will look different than the one you see on the surface. 3.Forged Website. If you must visit a financial site, like your bank or credit card company, enter its known address into the browser location field manually. Use a browser with an anti-phishing plug-in or extension, like FireFox version 3 or higher or Internet Explorer 7. These browsers warn you about forged, high-risk sites. Phony Web sites mimic real sites by copying company logos, images, and site designs. Malicious webmasters can also use HTML, Flash or Java Script to mask or change a browser address. Visit security.intuit.com to get the most up to date information about phishing. Forward suspicious emails to spoof@intuit.com.

Our Knowledge is Expanding

One of the ThomasYork core beliefs is that of continous learning. The firm and it's employees believe in continuing the learning process throughout their careers. Along those lines, the firm would like to congratulate Eric Yeoman, one of the firms senior accountants, for his recent accomplishment. Eric recently obtained his Certified Fraud Examiner (CFE) certification. To obtain this certification Eric had to complete 100 hours of education and pass the CFE examination. With this certification Eric can follow his interests and begin to build an expertise in the area of forensic accounting and the search for fraud in financial statement engagements. TY is very proud of its employees and their individual accomplishments. Congratulations Eric!