TYS, LLP: Trusted Advisors and Accountants

Applicable Federal Rates (AFRs) for January

2012-01-02T12:55:00.000-08:00

The Applicable Federal Rates (AFRs) for the month of January are as follows:

	Annual	Semiannual	Quarterly	Monthly
Short-term (≤3 years)	0.38%	0.38%	0.38%	0.38%
Mid-term (>3 years but ≤ 9 years)	1.50%	1.49%	1.49%	1.49%
Long-term (>9 years)	3.47%	3.44%	3.43%	3.42%

Year End Payroll Reminders For Employers

2011-12-05T10:32:00.000-08:00

The following was included an article by the American Payroll Association (APA) which noted some tasks that employers should perform in December and January to make year-end processing go more smoothly.

December

Remind workers who have had life changes, such as marriage, divorce, or a change in the number of dependents, to make the appropriate changes to their withholding on Form W-4.

Remind employees who wish to continue claiming exemption from withholding to submit a new Form W-4 by Feb. 15, 2012. Beginning Feb. 16, 2012, you must withhold based on a marital status of “single” with zero withholding allowances for employees who claimed exemption from withholding in 2011, but who have not submitted a 2012 Form W-4.

Collect benefit and payroll adjustment information and post to employees' payroll records. This information should include relocation, educational assistance, group-term life insurance, third-party sick pay, company cars, manual checks, and void checks.

Order enough W-2 forms for all the employees who have worked for you this year, as well as some extras to allow for any mistakes. Consider preparing, printing, and filing W-2s online at the Social Security Administration (SSA) website, if you don't do this already.

Verify employees' names and Social Security Numbers (SSNs) at http://www.ssa.gov/employer/ssnv.htm.

Run a special payroll, if necessary, to record all manual and voided checks issued between the last regular payroll and December 31st.

Conduct a final review of the general ledger for hidden wages (generally, taxable noncash fringe benefits).

Make sure your payroll system will be updated by January 1 to take into account any changes in federal tax-free limitations and state unemployment taxable wage bases.

December-January

Obtain new forms, withholding tables, and publications. Review the new Social Security wage base, deferred compensation limits, mileage rates, and state unemployment wage bases.

Let employees know about changes to tax figures. The above communications may help reduce the number of questions that you receive from employees in the coming months.

January 1

Reset all year-to-date balances to zero.

Reset all wage bases, rates, and taxable limits.

Rember that all W-2s need to be mailed no later than January 31, 2012.

Hope the above was helpful and hope your year end processing goes smoothly.

Applicable Federal Rates (AFRs) for December 2011

2011-11-28T10:56:00.000-08:00

The Applicable Federal Rates (AFRs) for the month of December are as follows:

	Annual	Semiannual	Quarterly	Monthly
Short-term (≤ 3 years)	0.45%	0.45%	0.45%	0.45%
Mid-term (> 3 years but ≤ 9 years)	1.69%	1.68%	1.68%	1.67%
Long-term (> 9 years)	3.55%	3.52%	3.50%	3.49%

CPA Licensure Requirements

2011-11-16T08:18:00.000-08:00

Anybody that will soon be graduating with an accounting degree or that is currently working on getting their CPA license knows that the rules for licensure in California have been a hot topic for quite some. One of our partners, Glen Thomas, is on the Californnia CPA Society Accounting Education Committee along with UC Berkeley Professor Maria Nondorf. Professor Nondorf recently created a Powerpoint presentation which clearly presents the CA CPA licensure requirements. If you have any confusion regarding the new rules here is a link to Professor Nondorf's presentation which should help clarify.

The Pathway For Accounting Students

Good luck to all you future CPAs.

Labor Department Expands Enforcement Of Wage Violations

2011-10-31T15:45:00.000-07:00

The Labor Department is signing agreements to share information with nearly a dozen states and the Internal Revenue Service as it gets more aggressive in its program to crack down on businesses that cheat workers out of their wages. The information will help Labor officials target businesses that improperly label workers as independent contractors or as non-employees to deprive workers of minimum wage and overtime pay. Misclassifying workers also lets companies avoid paying workers compensation, unemployment insurance and federal taxes. Patricia Smith, the Labor Department's top lawyer, said sharing information between state and federal agencies could subject businesses to multiple fines. "There's more of an incentive to be in compliance because the cost of what we consider to be illegal activity has increased," Smith said in an interview. In the past, Smith said, a company might pay a single fine to a state agency for not making proper unemployment insurance payments. Under the new agreements, a state can share the information with the Labor Department, which also can seek fines and penalties for federal wage violations. The violation also would be reported to the IRS, which can go after the company for unpaid taxes, Smith said. States that have agreed to work with the Labor Department so far include Connecticut, Hawaii, Maryland, Massachusetts, Minnesota, Missouri, Montana, Utah and Washington. Labor officials from New York and Illinois plan to sign up in the near future. Recently, the agency began targeting large U.S. homebuilders to see if they failed to pay workers the minimum wage or overtime. The Labor Department collected nearly $4 million in back wages on behalf of about 6,500 employees who had been misclassified, a 400 percent increase over the amount collected in 2008. The department has hired about 300 additional investigators to probe wage theft complaints.

Applicable Federal Rates (AFRs) for November 2011

2011-10-31T14:47:00.000-07:00

The Applicable Federal Rates (AFRs) for the month of November are as follows:

	Annual	Semiannual	Quarterly	Monthly
Short-term (≤ 3 years)	0.41%	0.41%	0.41%	0.41%
Mid-term (> 3 years but ≤ 9 years)	1.38%	1.38%	1.38%	1.38%
Long-term (> 9 years)	3.41%	3.38%	3.37%	3.36%

Top Earners Doubled Share of Nation’s Income

2011-10-28T15:45:00.000-07:00

The top 1 percent of earners more than doubled their share of the nation’s income over the last three decades, the Congressional Budget Office said Tuesday, in a new report likely to figure prominently in the escalating political fight over how to revive the economy, create jobs and lower the federal debt. In addition, the report said, government policy has become less redistributive since the late 1970s, doing less to reduce the concentration of income. “The equalizing effect of federal taxes was smaller” in 2007 than in 1979, as “the composition of federal revenues shifted away from progressive income taxes to less-progressive payroll taxes,” the budget office said. Also, it said,federal benefit payments are doing less to even out the distribution of income, as a growing share of benefits, like Social Security, goes to older Americans, regardless of their income. In its report, the budget office found that from 1979 to 2007, average inflation-adjusted after-tax income grew by 275 percent for the 1 percent of the population with the highest income. For others in the top 20 percent of the population, average real after-tax household income grew by 65 percent. By contrast, the budget office said, for the poorest fifth of the population, average real after-tax household income rose 18 percent. And for the three-fifths of people in the middle of the income scale, the growth in such household income was just under 40 percent. The findings, based on a rigorous analysis of data from the Internal Revenue Service and the Census Bureau, are generally consistent with studies by some private researchers and academic economists. But because they carry the imprimatur of the nonpartisan budget office, they are likely to have a major impact on the debate in Congress over the fairness of federal tax and spending policies. Also cited as factors contributing to the rapid growth of income at the top were the structure of executive compensation; high salaries for some “superstars” in sports and the arts; the increasing size of the financial services industry; and the growing role of capital gains, which go disproportionately to higher-income households.

Guidance Issued on Tax Treatment of Business Cell Phones

2011-10-27T17:00:00.000-07:00

The IRS recently issued a notice providing guidance on the tax treatment of employer-provided cell phones now that they have been removed from the definition of listed property. The notice discusses the treatment of employer-provided cell phones as an excludible fringe benefit. The IRS says it has received questions about the tax treatment of employer-provided cell phones and similar telecommunications equipment in the wake of changes enacted by the Small Business Jobs Act of 2010. Prior to the act, cell phones were included under the definition of “listed property” and, for employers to deduct the cost of cell phones they provided to employees, strict substantiation requirements had to be met. The Small Business Jobs Act removed cell phones from the definition of listed property for tax years beginning after Dec. 31, 2009. However, the IRS points out that the act did not otherwise alter the requirement that an employer-provided cell phone be treated as a fringe benefit, the value of which must be included in the employee’s gross income, unless exclusion applies. The IRS says that the value of the business use of an employer-provided cell phone is excludible from an employee’s income as a working condition fringe to the extent that, if the employee paid for the use of the cell phone, the employee would be able to deduct such payment as a trade or business expense. For such treatment to apply, the cell phone must be provided to the employee for noncompensatory business reasons, for example, to speak with clients when away from the office. The notice says a cell phone provided to promote employee morale or goodwill is not provided primarily for a noncompensatory business reason. The notice says that, if an employer provides an employee with a cell phone primarily for noncompensatory business reasons, the IRS will treat the employee’s use of the cell phone for reasons related to the employer’s trade or business as a working condition fringe benefit, the value of which is excludible from the employee’s income. The IRS will also treat any personal use of such a cell phone as a de minimis fringe benefit, excludible from the employee’s income.

Move To Ease Student Loan Burdens

2011-10-26T15:25:00.000-07:00

President Obama recently announced a plan to allow college graduates to cap federal student loan repayments at 10 percent of discretionary income starting in January 2012, two years before the cap was due to take effect under federal law. The accelerated “pay as you earn” program, which Obama will authorize through executive order, could benefit up to 1.6 million borrowers and reduce their payments by as much as a couple hundred dollars a month, administration officials said. All remaining debt on the federal loans would be forgiven after 20 years — five years earlier than under current law. In addition, some borrowers who have more than one federal student loan will be allowed to consolidate their debt, in some cases reducing their interest rates by up to half a percentage point, officials said. “These are real savings that will help graduates get started in their careers,” Education Secretary Arne Duncan said in a conference call with reporters on Tuesday. “These changes could make a big difference in the lives of current college students and recent graduates as they enter one of toughest job markets in recent memory.” Yet it remains unclear how many people will take advantage of the offer--even with the economy lagging and college tuition prices continuing to rise. Since 2007, borrowers have been allowed to cap federal student loan repayments at 15 percent of discretionary income. But White House officials acknowledged that just 450,000 of the nation’s 36 million student loan borrowers are participating in the income-based repayment program. Under current law, former students are allowed to cap repayments of federal loans at 15 percent of discretionary income. Last year, Congress approved legislation that would reduce the amount to 10 percent in 2014. Obama is using his executive authority to create a separate provision that would offer the same program in 2012, said Melody Barnes, Obama’s domestic policy adviser. Barnes said that the initiative is partially a response to a petition signed by more than 30,000 people on “We the People,” a recently added section of the White House’s Web site aimed at allowing citizens to lobby for action. It marks the first time the White House has taken action in response to a petition, she said. “They rightly pointed out the weight of this debt in preventing college graduates from achieving their dreams,” Barnes said. She emphasized that the program will not cost taxpayers anything because the administration plans to use savings from the elimination of loan subsidies to pay for the reduction on interest rates on loans that are consolidated. Those interested in learning more about the new programs can call 1-800-4FEDAID or go to www.studentaid.ed.gov.

Auditor to IRS: Speed it up

2011-10-12T17:59:00.000-07:00

The IRS could quicken the pace of its responses to taxpayers, a new government audit has found. The Treasury Department’s inspector general for tax administration, in a recent report, says that the IRS almost always responds accurately to taxpayer inquiries. But, the audit adds, the agency is not nearly as successful in getting back to taxpayers within its self-imposed 30-day deadline. “Inadequate and untimely responses to taxpayer correspondence adversely affect taxpayers and tax administration,” Russell George, the tax administration inspector general, said in a statement. The audit looked at three separate sets of responses from the IRS, finding them to be accurate at least 80 percent of the time in all three. But the replies were timely only between 10 and 56 percent of the time. The inspector general also found that interim letters, required if a reply cannot be made within 30 days, were not always issued. In all, the audit recommended that the IRS study the interim letter process and clarify instructions for employees, among other things. In its response, the IRS, which received 20 million pieces of correspondence in 2010, quibbled with the how audit compiled its statistics. The agency also noted that it had staffing constraints and defended its use of interim letters.

FASB Issues Multiemployer Pension Plan Standard

2011-10-10T15:40:00.000-07:00

After more than a year of debate the Financial Accounting Standards Board has released a new Accounting Standards Update aimed at improving employer disclosures for multiple-employer pension plans. Read below for more information on the new requirements and effective dates. Accounting Standards Update No. 2011-09, “Compensation— Retirement Benefits—Multiemployer Plans (Subtopic 715-80): Disclosures about an Employer’s Participation in a Multiemployer Plan,” is intended to encourage employers to supply additional information about their financial obligations to multiemployer pension plans. Those plans typically are used to provide benefits to union employees, who may work for many employers during their working life, allowing them to accrue benefits in a single pension plan for their retirement. Up to now, employers have been required to disclose only their total contributions to all of the multiemployer plans in which they participated. The new disclosures, as proposed in July, go much further (see FASB Requires More Pension Plan Disclosures). They include the amount of employer contributions made to each significant plan and to all plans in total; an indication of whether the employer’s contributions represent over 5 percent of the total contributions to the plan; an indication of which plans, if any, are subject to a funding improvement plan; and the expiration dates of any collective bargaining agreements and any minimum funding arrangements. Another change involves the most recent certified funded status of the plan, as determined by the plan’s so-called “zone status,” a requirement of the Pension Protection Act of 2006. If the “zone status” is not available, an employer will be required to disclose whether the plan is less than 65 percent funded, between 65 percent and 80 percent funded, or at least 80 percent funded. The update, which was released Wednesday, also requires a description of the nature and effect of any changes that affect the comparability for each period in which a statement of income is presented. The September 2011 edition of FASB in Focus provides an overview of the main provisions in the update. For public entities, the enhanced disclosures will be required for fiscal years ending after Dec. 15, 2011. For nonpublic entities, the enhanced disclosures will be required for fiscal years ending after Dec. 15, 2012. Early application will be permitted.

Applicable Federal Rates (AFRs) for October 2011

2011-09-28T12:20:00.000-07:00

The Applicable Federal Rates (AFRs) for the month of October are as follows:

	Annual	Semiannual	Quarterly	Monthly
Short-term (≤ 3 years)	0.32%	0.32%	0.32%	0.32%
Mid-term (> 3 years but ≤ 9 years)	1.27%	1.27%	1.27%	1.27%
Long-term (> 9 years)	3.51%	3.48%	3.46%	3.46%

Holiday Office Closure - Labor Day

2011-08-30T15:10:00.000-07:00

In observance of the Labor Day Holiday, tys, llp offices will close at 12:00pm on Friday, September 2 2011.

We will re-open Tuesday, September 6, 2011.

Please have a safe and happy holiday!

Applicable Federal Rates (AFRs) for September 2011

2011-08-30T15:03:00.000-07:00

The Applicable Federal Rates (AFRs) for the month of September are as follows:

	Annual	Semiannual	Quarterly	Monthly
Short-term (≤ 3 years)	0.35%	0.35%	0.35%	0.35%
Mid-term (> 3 years but ≤ 9 years)	1.47%	1.46%	1.46%	1.46%
Long-term (> 9 years)	3.77%	3.74%	3.72%	3.71%

Applicable Federal Rates (AFRs) for August 2011

2011-08-02T10:06:00.000-07:00

The Applicable Federal Rates (AFRs) for the month of August are as follows:

	Annual	Semiannual	Quarterly	Monthly
Short-term (≤ 3 years)	0.32%	0.32%	0.32%	0.32%
Mid-term (>;3 years but ≤ 9 years)	1.90%	1.89%	1.89%	1.88%
Long-term (>; 9 years)	3.86%	3.82%	3.80%	3.79%

Holiday Office Closure

2011-07-01T11:38:00.000-07:00

In observance of the 4th of July Holiday, tys, llp offices will close at 12:00pm on Friday, July 1, 2011.

We will re-open Tuesday, July 5, 2011.

Please have a safe and happy holiday!

Eric Yeoman V Promoted to Manager

2011-05-24T09:52:00.000-07:00

tys, llp has promoted Eric Yeoman V to the position of manager. tys, llp recognizes Eric’s significant technical contributions and is appreciative of Eric’s commitment toward achieving sustainability and creating an innovative firm. Eric also makes meaningful contributions through his mentoring and educating of tys, llp staff. Eric will continue to work with his existing clients and will be responsible for managing A&A engagements for tys, llp.

Eric Yeoman V, CPA, CFE

CA Reports on Median Income for 2009

2011-04-04T17:37:00.000-07:00

The California statewide median income for all personal income tax returns decreased to $34,079 (5.1 percent below 2008), while the median income listed on joint returns decreased to $65,025 (5.7 percent below 2008) according to state statistics. The four Bay Area counties of Contra Costa, Marin, San Mateo, and Santa Clara have led California for 38 years in reported highest median incomes. California taxpayers filed 15.3 million 2009 state income tax returns reporting $1.08 trillion in adjusted gross income, a 2.9 percent decrease from 2008 figures. Adjusted gross income is total income increased or reduced by specific adjustments, before taking the standard or itemized deduction. Marin County had the highest median income for joint returns at $108,465, a decrease of 8.6 percent from 2008. San Mateo County ranked second with $95,176, Santa Clara County ranked third with $94,209, Contra Costa County ranked fourth with $85,942, and Alameda County ranked fifth with $83,886. Los Angeles County taxpayers filed 25.5 percent of all 2009 income tax returns in California. They reported median incomes of $30,112 for all returns, and $56,438 for joint returns, ranking 34th and 27th, respectively for all counties. The largest percentage gain in median income for all counties was 7.5 percent, reported in Alpine County.

California Payroll Tax Reporting Changes

2011-04-01T06:00:00.000-07:00

The quarterly payroll tax forms filed with the Employment Development Department are changing effective with the filing of your first quarter 2011 forms. The new forms to be aware of are the DE 9 and DE 9C. These two forms replace the quarterly form DE 6 and the annual form DE 7. Each quarter employers will prepare a reconciliation similar to what was done on the year end reconciliation. The state believes that this new quarterly reporting will allow the EDD and employers to recognize discrepencies more quickly. This will help you receive refunds faster but will also help the EDD find shortages sooner. If you prepare your own payroll in house you may want to check with your accounting software provider to ensure that your system can handle the forms. For those of you using Quickbooks, it appears that your software will be updated if you are current on your support contract. As a reminder your first quarter returns are due on April 30th.

Certain CA Service Providers Must File Use Tax Return

2011-03-31T09:16:00.000-07:00

The California State Board of Equalization (BOE) is notifying approximately 300,000 service business owners that they may owe use tax. Businesses that meet the statutory definition of a "qualified purchaser" are required to register with the BOE, file returns by April 15 (April 18 in 2011) of each year, and report all purchases subject to use tax from the previous calendar year. A "qualified purchaser" is a business that receives at least $100,000 in gross receipts per year from business operations, is not required to hold a seller's permit with the BOE, is not a holder of a use tax direct payment permit, is not required to be registered with the BOE, and is not otherwise registered with the BOE to report use tax. Businesses that do not meet the $100,000 gross receipts threshold are still required to report and pay use tax, but are not required to register with the BOE for that purpose. Persons that have multiple businesses with the same ownership must register if the aggregate gross receipts of those businesses meet or exceed the $100,000 threshold. New applicants have been automatically registered to eFile their returns for 2010. If a taxpayer is not a retailer or service business currently required to register with the BOE, the easiest way to report and pay use tax is on the California state income tax return.

Relief Provided for CA Winter Storm Victims

2011-03-27T08:00:00.000-07:00

The Franchise Tax Board (FTB) has announced that special tax relief is available for California corporate and individual income taxpayers affected by the recent winter storms that occurred in California from December 17, 2010, through January 4, 2011. The storms were declared a federal disaster in 10 counties on January 26, 2011. The counties declared major disaster areas include Inyo, Kern, Kings, Orange, Riverside, San Bernardino, San Diego, San Luis Obispo, Santa Barbara, and Tulare. Affected taxpayers may claim their disaster losses in the current or the prior tax year. Claiming the loss on a previously filed tax return allows the FTB to issue refunds quickly. Taxpayers claiming the disaster loss should write "California Winter Storms 2010" in red ink at the top of their tax return to alert the FTB to expedite the refund. If taxpayers are e-filing, they should follow the software instructions to enter the disaster information. Taxpayers can get forms for an amended 2009 tax return or an original 2010 tax return on the FTB's website at http://ftb.ca.gov/. Taxpayers needing copies of lost or damaged state returns should complete Form FTB 3516, Request for Copy of Tax Return, available online. Disaster victims can receive copies of their tax returns for free. They should print "California Winter Storms 2010" in red ink at the top of their requests. More information about disaster losses is available in FTB Publication 1034, Disaster Loss, IRS Publication 547, Casualties, Disasters, and Thefts. Taxpayers who have questions about their accounts can call the FTB toll-free at (800) 852.-5711, Monday through Friday, from 7 a.m. to 5 p.m.

Textbooks are Eligible for an IRS Tax Credit

2011-03-26T09:06:00.000-07:00

The National Association of College Stores (NACS) is urging students and their families to take advantage of the American Opportunity Tax Credit, which applies to textbooks and other course materials in 2009 through 2012. The credit covers textbooks and other course material expenses—as well as tuition and fees not covered by scholarships or grants up to $2,500 each year for the first four years of college. Forty percent of the credit is refundable. The NACS has created a Web site, www.textbookaid.org, to provide information about how to best take advantage of the program, according to NACS director of government relations Rich Hershman. The association has also developed brochures and a Facebook page in partnership with the Internal Revenue Service. It includes a summary of the AOTC, explanatory examples, answers to frequently asked questions about the credit, and direct links for further information from the IRS. According to an October 2010 study by the Treasury Department, AOTC recipients in 2009 received an average tax credit of more than $1,700. In addition, 4.5 million students and families received a tax refund from the AOTC in 2009 with an average value of $800.

AFRs for April 2011

2011-03-22T15:55:00.000-07:00

The Applicable Federal Rates (AFRs) for the month of April are as follows:

	Annual	Semiannual	Quarterly	Monthly
Short-term (≤ 3 years)	0.55%	0.55%	0.55%	0.55%
Mid-term (>3 years but ≤9 years)	2.49%	2.47%	2.46%	2.46%
Long-term (> 9 years)	4.25%	4.21%	4.19%	4.17%

CA Mandatory e-Pay Penalty Reminder

2011-03-16T07:51:00.000-07:00

Just a reminder that beginning January 1, 2011 the California Franchise Tax Board began enforcing the mandatory e-pay penalty. The penalty applies to personal income taxpayers whose tax liability is greater than $80,000, or who make an estimated tax or extension payment that exceeds $20,000 for taxable years beginning on or after January 1, 2009. Once either of these conditions is met, all payments regardless of the type, amount, or tax year must be remitted electronically. Electronic payment methods include Electronic Funds Withdrawal (EFW), Web Pay, or credit card. There is a one percent penalty of the amount paid unless the failure to pay electronically was for reasonable cause and not willful neglect. For those that are not required to e-pay you can voluntarily pay your taxes electronically but you must first complete and submit an application to the FTB to get approval.

AFRs for March 2011

2011-02-21T10:34:00.000-08:00

The Applicable Federal Rates (AFRs) for the month of March are as follows:

	Annual	Semiannual	Quarterly	Monthly
Short-term (≤ 3 years)	0.54%	0.54%	0.54%	0.54%
Mid-term (> 3 years but ≤ 9 years)	2.44%	2.43%	2.42%	2.42%
Long-term (> 9 years)	4.30%	4.25%	4.23%	4.21%

AFRs for February 2011

2011-01-21T13:25:00.000-08:00

The Applicable Federal Rates (AFRs) for the month of February are as follows:

	Annual	Semiannual	Quarterly	Monthly
Short-term (≤ 3 years)	0.51%	0.51%	0.51%	0.51%
Mid-term (> 3 years but ≤ 9 years)	2.33%	2.32%	2.31%	2.31%
Long-term (> 9 years)	4.15%	4.11%	4.09%	4.08%

TYS Starts Off 2011 with Fun & Friends

2011-01-13T15:16:00.000-08:00

Recently, our NY office came to CA to visit for a few days. During this time we laughed, ate good food, did some site seeing in SF and now we're ready to tackle busy season as one great team. We all look forward to a great 2011 both within our firm and with our clients.

To see more photos of our time together, check out our Facebook page: http://www.facebook.com/pages/TYS-LLP/59288227795

Debate on Reverse-Mortgage Risks Heat Up

2011-01-07T16:00:00.000-08:00

A report by Consumers Union and other advocacy groups has ignited a debate about whether reverse mortgages are too risky for house-rich seniors in need of extra cash. The groups are urging the new Consumer Financial Protection Bureau to boost oversight of the complex loans and to move to fight scams and deceptive marketing. The call for increased oversight comes as the market for reverse mortgages is poised for expansion as the baby-boom generation retires. Meanwhile, lenders are aggressively marketing reverse mortgages, tapping celebrities such as actor and former U.S. Sen. Fred Thompson as spokesmen and holding seminars at senior centers to sell the loans. Most reverse mortgages are made under the Home Equity Conversion Mortgage program, begun in 1988 and administered by the Department of Housing and Urban Development. A borrower must be at least 62 years old and have paid off all or most of the mortgage. Instead of a monthly mortgage payment, the borrower receives payments as a lump sum, monthly cash advances or line of credit. When the homeowner dies moves or sells the house, the loan must be repaid. The consumer advocates say seniors should use reverse mortgages—which allow older Americans to tap into the equity in their home—only as a last resort because fees can be high and the loans could affect eligibility for government-assistance programs such as Medicaid. Also, if borrowers deplete home equity, they won't have much to pass on to heirs and could have a harder time funding long-term care, the groups warn. Defending reverse mortgages, groups such as RetireSafe and the National Reverse Mortgage Lenders Association say the report fails to acknowledge recent pro-consumer changes. "I think they're rattling the cages here without having much concrete to offer or any evidence to back up their allegations that there are widespread problems," said Peter Bell, president of the NRMLA. Congress directed the new Consumer Financial Protection Bureau to study reverse mortgages. According to a bureau official who works closely on mortgage-related issues, the bureau is beginning to examine reverse mortgages and plans to build on the Federal Reserve's and GAO's efforts to improve disclosures and prevent misleading advertising. The advocacy groups say reverse mortgages are reasonable for some seniors in foreclosure who don't plan to move into assisted living and for low-income seniors who lack other retirement assets, don't qualify for lower-cost alternatives and can't meet their current mortgage obligation. But most seniors should consider alternatives, the groups say. Still, Barbara Stucki, a vice president at the National Council on Aging, expects homes to become more popular sources of income for retirees, given that fewer Americans have defined-benefit pensions and more Americans are living longer after retirement. "Today's retirement realities are daunting, and when you combine that with the economic challenges, people are going to be tapping the equity in their homes," she said. "We want to make sure that options like reverse mortgages are viable and properly regulated." "We understand that the demographics are in our favor. The market will grow, and the need will grow because people need to fund longevity, but it will only grow if consumers feel the products are fair and the people who offer them are trustworthy," said Mr. Bell of the National Reverse Mortgage Lenders Association. "If the regulatory regime helps get us there, that's great."

EFT Rules Now In Place

2011-01-07T07:03:00.000-08:00

Beginning January 1, 2011, all employers must use electronic funds transfer (EFT) to make all federal tax deposits. These deposits include employment taxes, excise tax and corporate income tax. Forms 8109-B, Federal tax Deposit Coupon, cannot be used after December 31, 2010.

IRS Releases 2011 Standard Mileage Rates

2011-01-04T09:04:00.000-08:00

The IRS released in early December the standard mileage rates for use in 2011. The optional standard mileage rates can be used by taxpayers to calculate the deductible costs of operating an automobile. For business use of an automobile after Dec. 31, 2010 is 51 cents a mile; for medical or moving expenses, 19 cents a mile; and for services to charitable organizations, 14 cents a mile. For tax year 2010, the rates were 50 cents, 16.5 cents and 14 cents, respectively. Rather than using the standard mileage rates, taxpayers may instead use their actual costs, if they maintain adequate records and can substantiate their expenses. IRS Revenue Procedure 2010-51 prohibits a taxpayer from using the business standard mileage rate to compute the deductible expenses of five or more automobiles a taxpayer owns or leases and uses simultaneously.

Holiday Office Hours

2010-12-23T08:47:00.000-08:00

Happy Holidays

To celebrate this holiday season, TYS, LLP will be closed starting Friday, December 24th until Sunday, January 2, 2011.

We will re-open on Monday, January 3, 2011.

We wish you a safe and Happy Holiday Season!

ThomasYork, LLP is now TYS, LLP

2010-12-23T08:44:00.000-08:00

Now there's more of us to love.

We've changed our name and logo to make room for a new partner, Tim Shortsleeve. Tim and his talented staff of accounting professionals are located in our new office in Rochester, NY. (We didn’t want to make them commute.)

Tim shares our passion for client service, and brings 20+ years of outstanding tax experience. He also provides accounting, business consulting and coaching support services. We know you will benefit from his knowledge and skills.

We look forward to serving you as we continue to expand the range of services and solutions TYS can offer.

Disclosure Requirements re: Multi-Employer Pension Plans

2010-11-12T16:40:00.000-08:00

If you are a participating employer in a union collective bargaining agreement I'm sure you have been hearing about the possible changes to the financial statement disclosure requirements related to your participation in the union plans. The Financial Accounting Standards Board (FASB) has proposes some pretty onerous requirements which were originally intended to go into effect for public companies beginning with financial statements for years ending after December 15, 2010. All of our clients are non public entities so they have a one year delay on the effective date. This has been a pretty hot topic at the FASB meetings with lots of input from contractors and union representatives among other interested parties. I'm sure most of the comments were not in favor of the new requirements. The FASB met on November 10th and the September 2010 Exposure Draft on this topic was discussed. The result of the discussion is that the FASB has decided that a final standard will not be effective for the 2010 calendar year as originally planned for public companies. Revised effective dates will be decided at a future meeting after it has concluded it redeliberations. Hopefully the final requirements are not quite as onerous as originally published. We will all wait patiently I'm sure for the next Exposure Draft. For anyone wanting more information on the subject here is a link to the FASB website for this specific project. Happy reading. http://www.fasb.org/cs/ContentServer?c=FASBContent_C&pagename=FASB%2FFASBContent_C%2FProjectUpdatePage&cid=1176156724606#

AFRs for November 2010

2010-10-28T15:29:00.000-07:00

The Applicable Federal Rates (AFRs) for the month of November are as follows:

	Annual	Semiannual	Quarterly	Monthly
Short-term (≤ 3 years)	0.35%	0.35%	0.35%	0.35%
Mid-term (> 3 years but ≤ 9 years)	1.59%	1.58%	1.58%	1.57%
Long-term (> 9 years)	3.35%	3.32%	3.31%	3.30%

What is the Difference Between a Bid, Performance and Payment Bond?

2010-10-20T15:36:00.000-07:00

I found this on LinkedIn and thought it could be useful to help us understand the different bonds that are needed on public works contracts and some non public contracts.

What is the difference between a bid bond, a performance bond and a payment bond?

The three primary bonds that are purchased on construction projects are bid bonds, performance bonds and payment bonds. Over the years, I have spoken to contractors and owners and, in many instances, there is confusion about what each bond covers. This brief article will attempt to explain the differences. Example 1: Bid Bond ABC School District has put out a Request for Proposals for a new roof on their high school building. Contractors X, Y and Z submit bids to perform the work listed in the RFP. The School District requires each of the contractors to submit a bid bond with their bid. The bid bonds are purchased by the three contractors from sureties. The School District decides to accept Contractor Y's bid. Contractor Y determines that they have underbid the project and decides not to execute the contract and not to perform the work. In this instance, the School District can make a claim against the bid bond due to Contractor Y's failure to abide by its bid. Thus, a bid bond is a type of bond (often required on publc construction projects, but not exclusively) designed to protect the owner in the event that the bidder refuses to enter into a contract after the contract is awarded or the bidder withdraws his bid before the award. A bid bond is an indemnity bond, which will be discussed below. Example 2: Performance Bond Municipality 123 retains Contractor AB to construct a municipal swimming pool at its recreation center. Contractor AB enters into a written contract and begins performing the work. During the performance of the work, Contractor AB goes out of business leaving the work about 50% finished. Additionally, some of the work that was performed was defective. Contractor AB has provided Municipality 123 with a performance bond. Municipality 123 can assert a claim against Contractor AB's performance bond for the cost to perform the unfinished work and the cost to correct the defective work. Thus, a performance bond protects the owner from the contractor's failure to perform in accordance with the terms of the contract. A performance bond does not provide protection against subcontractor or suppliers who have not been paid. A performance bond is also an indemnity bond. Example 3: Payment Bond Public Water District QQ has retained Contractor ZZ to install a new water tower. Because the project was over $25,000, Contractor ZZ was required by the Water District to provide a payment bond. Contractor ZZ completed the work, but failed to pay Subcontractor X for its work. Subcontractor X cannot pursue any claim against the Water District. However, Subcontractor X can assert a claim against the payment bond for the amount owed to it for its work on the project. Thus, a payment bond is designed to provide security to subcontractors and materials suppliers to ensure payment for their work, labor and/or materials on the project. A payment bond is also an indemnity bond. Indemnity Bonds: As set forth above, bid bonds, performance bonds and payment bonds are indemnity bonds. These bonds are not insurance policies. If a covered claim arises against a commmercial general liability policy, the insurer has a contractual obligation to indemnify and defend the insured (i.e. the party obtaining the policy) and cannot seek repayment from the insured for amounts paid out as a result of a covered claim. If a claim arises and is paid out on a bid bond, performance bond or payment bond, the surety (the party issuing the bond) will look to the contractor to indemnify and defend it. So, if a claim is asserted against Contractor XYZ's performance bond, the surety is going to look to Contractor XYZ to defend the lawsuit and to pay any damages.

FASB Backs EITF Decisions on Four Issues

2010-09-30T10:06:00.000-07:00

Based on the FASB's decisions at its most recent meeting, three Emerging Issues Task Force (EITF) consensuses will be issued as proposals for public comment. A fourth will be published as a final standard.

EITF Issue No. 09-G, “Accounting for Costs Associated with Acquiring or Renewing Insurance Contracts,” will be issued as a final standard.
The board also agreed to publish EITF Issue No. 09-H, “Health Care Entities: Revenue Recognition,” as a proposal. The proposed amendment to U.S. GAAP calls upon health care providers to disclose the policy for considering the collectability of an unpaid medical bill.
The task force agreed to seek public comments on EITF Issue No. 10-A, "How the Carrying Amount of a Reporting Unit Should Be Determined When Performing Step 1 of the Goodwill Impairment Test,"
The task force agreed to seek public comments on EITF Issue No. 10-G, “Disclosure of Supplementary Pro Forma Information for Business Combinations.”

Source: WG&L Accounting & Compliance Alert Checkpoint 9/30/2010

AFRs for October 2010

2010-09-27T16:02:00.000-07:00

The Applicable Federal Rates (AFRs) for the month of October are as follows:

	Annual	Semiannual	Quarterly	Monthly
Short-term (≤ 3 years)	0.41%	0.41%	0.41%	0.41%
Mid-term (> 3 years but ≤ 9 years)	1.73%	1.72%	1.72%	1.71%
Long-term (> 9 years)	3.32%	3.29%	3.28%	3.27%

2010 Largest Accounting Firms

2010-09-24T14:16:00.000-07:00

ThomasYork was ranked #44 on the SF Business Times Largest Accounting Firms list in the Greater Bay Area. We moved up three spots from last year. The ranking for this list is based on the number of professionals (CPA and CPA-track staff) in the Greater Bay Area. Everyone at TY looks forward to moving up the list year after year.

SMALL BUSINESS JOBS ACT OF 2010

2010-09-23T22:15:00.000-07:00

Looks like the folks in Washington are finally agreeing on something. Yesterday, September 23, the House passed the Small Business Jobs Act of 2010 (H.R. 5297). It is expected to be signed by the President soon.

Here are some of the key provisions:

§179 expanded: For tax years beginning in 2010 and 2011, expense limit is increased to $500,000 and phaseout threshold increased to $2 million;
§179 for (some) real estate: For tax years beginning in 2010 and 2011, taxpayers can elect to treat certain real estate as §179-eligible. Qualifying real estate includes:

Qualified leasehold improvements;
Qualified restaurant property; and
Qualified retail improvement property.

Bonus depreciation extended: Available for property purchased through December 31, 2010;
Luxury auto depreciation increased: As a result of the extension of bonus depreciation, first-year depreciation of automobiles is bumped up $8,000;
Deduction for start-up expenditures increased: Under IRC §195, increased from $5,000 to $10,000 for taxable years beginning in 2010 (only);
Exclusion for small business stock: For purchases made after the date of enactment and before January 1, 2011, the exclusion for small business stock under IRC §1202 is increased to 100%;
Five-year carryback for general business credits: Effective for credits determined in the taxpayer’s first taxable year beginning after December 31, 2009 (one year only), the carryback period for an “eligible small business” is increased from one to five years. In addition, the credit is not subject to the AMT limitation;
Built-in gain period shortened to five years: For taxable years beginning in 2011 (only), the recognition period for the BIG tax is shortened to five years;
Deduction for health insurance for SECA purposes: For 2010 (only), the deduction for self-employed health insurance is also a deduction for purposes of the SE tax;
Cell phones removed from listed property: Permanent and effective for tax years ending after 2009;
Information reporting required for rental property: Effective for payments made after December 31, 2010, rental real estate is treated as a trade or business for information reporting purposes. IRS to prescribe de minimis exceptions;
Higher information return penalties: Penalties under IRC §6721 are substantially increased beginning in 2011;
§457 plans can include Roth accounts: For tax years beginning after December 31, 2010; and
Rollovers from elective deferral plans to in-plan Roth accounts allowed: Effective on the date of enactment. Will allow a two-year deferral (2011 and 2012) for rollovers done in 2010.

Now let's see what else happens by the end of the year.

Franchise Tax Board Auditing Head Of Household Returns

2010-09-22T19:52:00.000-07:00

Sacramento - The Franchise Tax Board (FTB) announced mailing more than 135,000 review letters to taxpayers who claimed the “Head of Household” filing status on their 2009 state tax return.

Taxpayers who do not qualify will have their tax reassessed at either a single or married-filing-separate filing status. Nearly 29,000 taxpayers who used this status last year did not meet its requirements and were issued more than $31 million in tax assessments.

Each year FTB reviews tax returns of taxpayers who claim the Head of Household filing status because the qualifications are commonly misunderstood. The status generally results in lower tax liabilities for unmarried taxpayers who care for a dependent. To qualify, the taxpayer must provide care for more than one-half of the year and pay more than one-half the cost of maintaining their home. The qualifying person must be related to the taxpayer and meet the requirements to be a qualifying child or relative. More than 2 million California taxpayers use this filing status each year.

FTB advises taxpayers who receive an audit letter to respond promptly by completing the enclosed questionnaire. Failure to respond could result in a tax assessment and penalty. Questionnaires can be submitted by any of these methods:

Respond electronically at ftb.ca.gov. Use HOH Audit Letter Web Response page.
Respond by fax at 866.223.8195.
Respond by mail using the pre-addressed envelope provided with the audit letter.

FTB provides the following tools on its website to assist taxpayers:

Head of Household “self-test.”
Answers to frequently asked questions.
Publication 1540, “CA Head of Household Filing Status,” in English and Spanish.

Final Schedule on Disclosures of Uncertain Tax Positions

2010-09-22T15:39:00.000-07:00

The IRS has looked at the comments submitted in response to its proposed schedule of uncertain tax positions, and it's ready to produce a final version. Some of the concerns that businesses raised have been incorporated into the finished product.

Internal Revenue Service Commissioner Douglas Shulman said the agency plans to move forward with an unpopular plan to require businesses with more than $10 million in assets and have taken a reserve on the financial statements to file the new Schedule UTP, Uncertain Tax Position Statement. The schedule will require annual disclosure of uncertain tax positions with a concise description of the positions. The proposal does not require companies to disclose their risk assessment or tax reserve amounts, even though the IRS can issue a summons to compel submission of the information.

Many businesses are required by FASB Interpretation (FIN) No. 48, Accounting for Uncertainty in Income Taxes, (FASB ASC 740-10), to identify and quantify a tax position relating to a specific federal tax return for which a taxpayer is required to reserve an amount. The IRS said that the information developed in the course of complying with FIN No. 48 or other accounting standards is highly relevant to understanding the tax positions and assessing how those affect the taxpayer’s tax liability, Shulman said in a speech at Financial Executives International's Washington Policy Conference on September 21, 2010.

The agency said the information would allow it to focus its examination resources on returns that contain specific uncertain tax positions that are of “particular interest or of sufficient magnitude to warrant inquiry, as well as allowing examination teams to identify all of the issues underlying the tax returns more quickly and efficiently.” The proposed schedule and instructions seek information related to three categories of tax data:

Positions for which a reserve is reflected in the taxpayer’s financial statements;
Positions for which no reserve is reflected because the taxpayer expects to litigate and win the position; and
Positions for which no reserve is reflected because the IRS has a general administrative practice of not examining the position.

The IRS released Announcement 2010-09 in January 2010 and extended the comment deadline in March. It was followed with a proposed Schedule UTP and draft instructions in Announcement 2010-30 in April. The comment period ended June 1.

Many accountants voiced concerns during the comment period. One complaint centered on the burden on taxpayers who are already stretched to meet current disclosure requirements. Some accountants argued that the proposal could undercut the integrity of the financial statement process by creating tension between taxpayers and tax advisers. They also feared that a disproportionately large share of the costs would fall on small businesses.

Source: WG&L Accounting & Compliance Alert Checkpoint 9/22/2010

GAAP Just for Private Companies?

2010-09-17T10:45:00.000-07:00

A blue ribbon panel on private company financial reporting, expected to make its final recommendations before the end of the year, does not believe the current approach for setting generally accepted accounting principles (GAAP) related to private companies is meeting user needs in a cost-effective matter. The panel also has rejected any near-term future model based solely on International Financial Reporting Standards (IFRS).

The panel was formed earlier this year by the AICPA, the Financial Accounting Foundation (FAF) which oversees the Financial Accounting Standards Board (FASB), and the National Association of State Boards of Accountancy (NASBA) to explore the future of standard setting for private companies.

Three financial reporting models are being considered by the panel and would result in appropriate differences in GAAP for private companies. The panel will be deciding whether to recommend either: (1) U.S. GAAP with exclusions and enhancements for private companies, (2) a basic U.S. GAAP with public company add-ons, or (3) separate, stand-alone standards for private companies based on current U.S. GAAP.

The panel also is exploring whether to recommend a board separate from the FASB to oversee private company standards.

Input on how accounting standards can best meet the needs of users of private company financial statements may be given by visiting www.fasb.org, and the public comment period ends Wednesday, September 15, 2010.

Source: http://www.aicpa.org/News/FeaturedNews/Pages/BlueRibbonPanelUpdate.aspx

Employer Information Report (EEO-1) Due September 30th

2010-09-17T10:11:00.000-07:00

The deadline for filing the Employer Information Report (also known as the EEO-1 Report) with the Equal Employment Opportunity Commission (EEOC) is September 30th. The report must be filed by: (1) employers with federal government contracts of $50,000 or more who have 50 or more employees; and (2) employers who do not have a federal government contract but have 100 or more employees.

The report requires employers to provide a count of their employees by job category, ethnicity, race, and gender. Employment numbers may be obtained from any pay period in July through September of 2010. The EEOC prefers the report to be filed using the EEO-1 online filing system. The system requires a login ID and password. Other filing options for private employers include submitting the report as a data file or filing the report as a computer printout. EEOC will only allow the report to be filed on paper if so requested by an employer with no Internet access.

The EEOC website contains a list of frequently asked questions on the report which can be viewed at http://www.eeoc.gov/employers/eeo1survey/faq.cfm. Further information on the reporting process can also be obtained by calling the EEO-1 Joint Reporting Committee at: (866) 286-6440.

Just Announced: 2010 Best Accounting Firms to Work For

2010-09-16T14:29:00.000-07:00

New York, NY – September 16, 2010 – 100 accounting firms have been honored as the 2010 Best Accounting Firms to Work For in our third annual program created by Accounting Today and Best Companies Group. These top firms will be announced and honored at an awards luncheon on November 17 during Accounting Today’s Growth & Profitability Summit in Las Vegas and published in the December 13 issue of the magazine.This survey and award program was designed to identify, recognize and honor the best places of employment in the accounting profession, which benefit the nation's economy, its workforce and businesses.

The Best Accounting Firms to Work For list comprises 100 companies organized into three size categories: 45 small-sized companies (15-49 employees), 45 mid-sized companies (50-249 employees) and 10 large-sized companies (more than 250 employees). To be considered for participation, companies had to be public or privately held U.S. accounting firms with at least 15 employees.Firms from across the country entered the two-part survey process to determine the Best Accounting Firms to Work For. The first part consisted of evaluating each nominated firm's workplace policies, practices, philosophy, systems and demographics. The second part consisted of an employee survey to measure the employee experience. The combined scores determined the top companies and the final ranking. Best Companies Group managed the overall registration, survey and analysis process and determined the final rankings.

For more information on the Best Accounting Firms to Work for program, visit http://link.p0.com/u.d?f4GrW2cTthyrG_83F0V8h=591.

2010 Best Accounting Firms to Work For (alphabetical order, no ranking)

Anchin Block & Anchin LLP Anglin Reichmann Snellgrove & Armstrong Anton Collins Mitchell LLP Averett Warmus Durkee Bader Martin, P.S. Baker Newman Noyes Barfield, Murphy, Shank & Smith, PC Bartlett, Pringle & Wolf, LLP Bartolomei Pucciarelli, LLC BeachFleischman PC Berlin, Ramos & Company, P.A. Berntson Porter & Company, PLLC Biscotti, Toback & Company, CPA's, P.C. Blue & Co., LLC Bond Beebe Accountants and Advisors Boyer & Ritter, CPAs and Consultants Brown Schultz Sheridan & Fritz Brown Smith Wallace LLC Burr Pilger Mayer, Inc. Citrin Cooperman Clark Nuber Cohen & Company Coulter & Justus, P.C. Covenant Consulting Group LLC Cowan Bolduc Doherty LLC Daszkal Bolton LLP Deemer Dana & Froehle LLP DeLeon & Stang CPAs & Advisors DiSanto, Priest & Co. Dixon Hughes PLLC Dunton & Associates, LLC E. Cohen and Company, CPAs Edelstein & Company LLP Ennis Pellum & Associates, CPAs Fesnak and Associates LLP Fulcrum Inquiry GALLINA LLP Ganze & Company Garcia, Espinosa, Miyares, & Co. LLP GBH CPAs, PC Hancock Askew & Co., LLP Hemming Morse, Inc. Hertzbach & Company, P.A. Homes, Lowry, Horn & Johnson, Ltd. Howard, Wershbale & Co. Hoyman Dobson Hughes Pittman & Gupton, LLP Hungerford, Aldrin, Nichols & Carter, PC Isdaner & Company, LLC Johanson & Yau Accountancy Corporation Johnson Jacobson Wilcox Kahn, Litwin, Renza & Co., Ltd. KatzAbosch Kaufman, Rossin & Co. Kearney & Company Kolb+Co. SC KraftCPAs PLLC Kreinces Rollins & Shanker, LLC Lanigan, Ryan, Malcolm & Doyle, P.C. LaPorte Sehrt Romig Hand Layton Layton & Tobler LLP LMGW Certified Public Accountants, LLP Lumsden & McCormick, LLP Mahoney Ulbrich Christiansen & Russ PA Mark Bailey & Company Martin Starnes & Associates, CPAs, P.A. May & Company, LLP Montgomery Coscia Greilich LLP Onisko & Scholz, LLP Certified Public Accountants Pannell Kerr Forster of Texas, P.C. Payne, Nickles & Company Pender Newkirk & Company Petrinovich Pugh & Co, LLP Pittman & Brooks, P.C. Porter Keadle Moore, LLP PSK LLP RBZ, LLP RINA Accountancy Corporation Riney Hancock CPAs PSC Rodman & Rodman, P.C. Sample and Bailey CPAs SGA GROUP, PC Sikich LLP SingerLewak Sisterson & Co. LLP Smith Leonard PLLC Squire Swindoll, Janzen, Hawk & Loyd, LLC The Bonadio Group The Whitlock Company ThomasYork, LLP Wall, Einhorn & Chernitzer, P.C. Walter & Shuffain, P.C. Wessel & Company WhippleWood CPAs, P.C. Whitley Penn LLP Wilkin & Guttenplan, P.C. Williams Benator & Libby, LLP Windham Brannon WithumSmith+Brown, PC

About Accounting Today and SourceMedia, Inc. SourceMedia's Accounting Today has served as the premier news vehicle for the nation’s tax and accounting community since 1987. Regular coverage includes news and features surrounding tax-law changes, regulatory and legislative updates, technology, financial planning, practice management, mergers & acquisitions and international developments. Accounting Today’s readership encompasses one of the widest demographics of any publication in the field, from the sole practitioner, to firms with multi-professionals, to national firms and ultimately, to the Big Four. SourceMedia, an Investcorp company, is a leading provider of timely and essential news, analysis, research, and insights for members of the financial services community, and the related fields of professional services and technology. SourceMedia offers its clients and subscribers professional publications and online information services, industry-standard data applications and in-depth seminars and conferences.

San Bruno Explosion Employer Payroll Tax Extension

2010-09-15T22:48:00.001-07:00

Tax relief extended to Employers Affected by San Bruno Explosion and Fire

Employers in San Mateo County, California, that have been directly affected by the explosion and fire that occurred in that county in September 2010 may request up to a 60-day extension of time from the California Employment Development Department (EDD) to file their state payroll reports and/or deposit state payroll taxes without penalty or interest. Written requests for extension must be received within 60 days from the original delinquent date of the payment or return to file/pay. Related information is available on the EDD Web site at http://www.edd.ca.gov/Payroll_Taxes/.

Source:

http://www.edd.ca.gov/Payroll_Taxes/Emergency_and_Disaster_Assistance_for_Employers.htm#sanmateoseptember

Are Business Owners Risk-Takers?

2010-09-08T18:00:00.000-07:00

I recently read the following summary, and as a new business owner found it intriguing. During tough economic times like we have now, many business owners, including yours truly, wonder if it was the right decision to start their own business. Thankfully I can still answer with an emphatic yes.

I hope you find this interesting as well.

Chris-

Are Business Owners Risk-Takers? Not When It Comes to Their Finances

Are entrepreneurs financial risk-takers? Conventional wisdom says yes, but a recent research report from the Kauffman Foundation, Business Owners, Financial Risk, and Wealth, suggests otherwise.
Tami Gurley-Calvez, from the Department of Economics at West Virginia University, studied 1989 to 2007 data from the Federal Reserve Board, Survey of Consumer Finances (SCF) to research three questions:
1.) Are business owners generally more or less financially conservative than their non- business-owning counterparts?
2.) Do business owners accumulate more wealth?
3.) Do business owners hold a smaller share of their financial assets in risky stock holdings?
While entrepreneurs are typically portrayed as financial risk-takers, Gurley-Calvez found that when it comes to saving and borrowing, they are actually more conservative than non-business owners. For instance, 45 percent of business owners said it was important to them to save for retirement; just 32 percent of non-business owners said the same. In addition, business owners were focused on saving for the long term; they were more likely than non-business owners to say their savings horizon was five or more years in the future.
Finally, whether investing, saving or borrowing, business owners were more thorough than non-business owners in investigating their financial options. Ninety-one percent said they spent a "moderate" amount of time or more shopping for the best investment or borrowing terms; just 82 percent of non-business owners said the same.
Business owners accumulate more wealth over time than non-business owners. But although business owners showed more willingness to assume above-average risk in return for financial gain, in reality, both business owners and non-business owners invested similar shares of their portfolios in safe assets.
Business owners were less likely to say that an important reason for saving is having liquid cash available. However, they were substantially more likely than non-business owners to say they could borrow $3,000 from family or friends if needed.
They are also more likely to borrow from other sources. In the past five years, 84 percent of business owners had applied for a loan, compared to just 64 percent of non-business owners. And only 23 percent of them had been declined, compared to 31 percent of non-business owners.
Gurley-Calvez thinks perhaps the reason business owners aren't so concerned with liquidity is that they have "a stronger financial safety net." Compared to non-business owners, business owners seem to have more financial resources available to them—meaning that what others perceive as "risky" does not seem that way to them
Source: http://smallbiztrends.com/2010/09/business-owners-risk-takers-finances.html

OBAMA TO PUSH TAX BREAK

2010-09-06T20:50:00.001-07:00

It has been awhile since our last post so I thought this would be a good one to get back on track. I received the following news alert today and thought I would share it. As it says below the details will be released this coming Wednesday but if it does include the ability to write off 100% of new purchases for plant and equipment it could be a huge benefit for lots of businesses. I'm sure there will be all kinds of caveats and limitations but lets keep our fingers crossed that some of this actually comes to be.

__________________________________ News Alert from The Wall Street Journal

President Barack Obama, in one of his most dramatic gestures to business, will propose that companies be allowed to write off 100% of their new investment in plant and equipment through 2011, a plan that White House economists say would cut business taxes by nearly $200 billion over two years. The proposal, to be laid out Wednesday in a speech in Cleveland, tops a raft of announcements, from a proposed expansion of the research and experimentation tax credit to $50 billion in additional spending on roads, railways and runways. http://online.wsj.com/article/SB10001424052748704392104575475920686869934.html?mod=djemalertNEWS

Holiday Office Hours

2010-06-30T13:39:00.000-07:00

Wishing you a safe and happy 4th of July! The team at TY will be observing the Fourth of July holiday. Please note that our office will be closed from Noon on Friday, July 2nd, until Monday, July 5, 2010. We will resume our normal business hours on Tuesday morning.

2010 Tax Organizer Raffle

2010-05-11T09:10:00.000-07:00

Congratulations Chris Avant & David Freer!

Chris Avant (pictured below) and David Freer were the winners of $250 each through our Tax Organizer Raffle.

As an incentive for our clients during tax season, we hold two raffles. To be entered in the first raffle you must be one of the first 25 clients to return a completed organizer. All remaining clients who return a completed organizer will be entered into our second raffle.

Every year the prizes change, so don't miss your opportunity to be the next winner!

New Home Tax Credits Available

2010-05-06T08:00:00.000-07:00

From the California Franchise Tax Board (FTB):

The 2010 New Home/First Time Buyer tax credits are available for taxpayers who purchase a qualified principal residence on or after May 1, 2010, and before January 1, 2011. Additionally, these tax credits are available for taxpayers who purchase a qualified principal residence on or after December 31, 2010, and before August 1, 2011, pursuant to an enforceable purchase agreement executed on or before December 31, 2010. The purchase date is defined as the date escrow closes.

These tax credits are limited to the smaller amount of five percent of the purchase price or $10,000 for a qualified principal residence. Taxpayers must apply the total tax credit in equal amounts over three successive tax years (maximum of $3,333 per year) beginning with the tax year in which the home is purchased. The tax credits cannot reduce regular tax below tentative minimum tax (TMT). The tax credits are nonrefundable and the unused credits cannot be carried over.

The total amount of allocated tax credit for all taxpayers may not exceed $100 million for the New Home Credit and $100 million for the First-Time Buyer Credit.

COBRA Subsidy Eligibility Period Extended to May 31

2010-05-05T08:00:00.000-07:00

From the IRS:

Workers who lose their jobs during April and May may qualify for a 65-percent subsidy on their COBRA health insurance premiums, according to the Internal Revenue Service. The American Recovery and Reinvestment Act established this subsidy to help workers who lost their jobs as a result of the recession maintain their employer sponsored health insurance.
The Continuing Extension Act of 2010, enacted April 15, reinstated the COBRA subsidy, which had expired on March 31. As a result, workers who are involuntarily terminated from employment between Sept. 1, 2008 and May 31, 2010, may be eligible for a 65-percent subsidy of their COBRA premiums for a period of up to 15 months. In some cases, workers who had their hours reduced and later lose their jobs may also be eligible for the subsidy.
Employers must provide COBRA coverage to eligible individuals who pay 35 percent of the COBRA premium. Employers are reimbursed for the other 65 percent by claiming a credit for the subsidy on their payroll tax returns: Form 941, Employers QUARTERLY Federal Tax Return, Form 944, Employer’s ANNUAL Federal Tax Return, or Form 943, Employer’s Annual Federal Tax Return for Agricultural Employees. Employers must maintain supporting documentation for the claimed credit.
There is much more information about the COBRA subsidy, including questions and answers for employers, and for employees or former employees, on the COBRA pages of IRS.gov.
Some people who are eligible for the COBRA subsidy also qualify for the health coverage tax credit (HCTC) and may want to choose the more generous HCTC benefit, instead. The HCTC pays 80 percent of health insurance premiums for those who qualify. See more at HCTC: Eligibility Requirements and How to Receive the HCTC.

Health Care Tax Credit

2010-05-04T13:20:00.000-07:00

Millions of small businesses have begun receiving postcards from the IRS alerting them to the new Small Business Health Care Tax Credit and encourage them to check their eligibility. The IRS provides a fact sheet to determine whether a business qualifies. The IRS also provides answers to Frequently Asked Questions. Key provisions of the credit are as follows: Eligibility Rules

Providing health care coverage. A qualifying employer must cover at least 50 percent of the cost of health care coverage for some of its workers based on the single rate.
Firm size. A qualifying employer must have less than the equivalent of 25 full-time workers (for example, an employer with fewer than 50 half-time workers may be eligible).
Average annual wage. A qualifying employer must pay average annual wages below $50,000.
Both taxable (for profit) and tax-exempt firms qualify.

Amount of Credit

Maximum Amount. The credit is worth up to 35 percent of a small business' premium costs in 2010. On Jan. 1, 2014, this rate increases to 50 percent (35 percent for tax-exempt employers).
Phase-out. The credit phases out gradually for firms with average wages between $25,000 and $50,000 and for firms with the equivalent of between 10 and 25 full-time workers.

IRS Open House May 15

2010-05-04T11:49:00.000-07:00

From the IRS website: The Internal Revenue Service will host a special nationwide Open House on Saturday May 15 to help small businesses and individuals solve tax problems.

Approximately 200 IRS offices, at least one in every state, will be open May 15 from 9 a.m. to 2 p.m. local time. IRS staff will be available on site or by telephone to help taxpayers work through their problems and walk out with solutions.

“Our goal is to resolve issues on the spot so small businesses and individuals can put any issues they have with the IRS behind them,” IRS Commissioner Doug Shulman said. “If you have a problem filing or paying your taxes or resolving a tough tax issue, we encourage you to come in and work with us.”

IRS locations will be equipped to handle issues involving notices and payments, return preparation, audits and a variety of other issues. At a previous IRS Open House on March 27, approximately two-thirds of taxpayers requested and received assistance with payments and notices.

So, for example, a taxpayer who cannot pay a tax balance due can discuss with an IRS professional whether an installment agreement is appropriate and, if so, fill out the paperwork then and there. Assistance with offers-in-compromise will also be available. Likewise, a taxpayer struggling to complete a certain IRS form or schedule can work directly with IRS staff to get the job done.

At the March 27 Open House, 88 percent of the taxpayers who came in for help had their issues resolved the same day.

Locations for the May 15 Open House are listed here.

The Open House on May 15 is the first of three events scheduled through the end of June. The next two are planned for Saturday June 5 and Saturday June 26. Details regarding those events will be available soon.

Value Billing Model

2010-04-20T14:57:00.000-07:00

In this excerpt from his presentation, "Transition to Value Billing Model", Glen Thomas describes some of the benefits ThomasYork, LLP has received by moving to a value billing model. This was recorded on December 3, 2009 at the Boomer Technology Circles™ Circle #5 meeting in Kansas City.

Tax Exempt Organizations

2010-04-08T07:45:00.000-07:00

I thought this might be of interest for those of you with tax exempt organizations. There have been some significant changes to the Form 990. If you haven't looked into the changes I would recommend doing that sooner rather than later. It may take longer to prepare the return this year. The IRS posted a list of FAQs (updated 4/5/10) to www.irs.gov/charities/article/0,,id=96581,00.html on the annual reporting requirements for exempt organizations. The applicable return (Form 990 or Form 990-EZ, the short form return) is due on the 15th day of the 5th month after the end of the organization's tax year. This is May 15th for calendar year organizations. Organizations with gross receipts and assets below certain thresholds at the end of their tax year can file Form 990-EZ. In addition, certain church-affiliated organizations and governmental organizations are not required to file an annual return. Organizations whose annual gross receipts are normally less than $25,000 are not required to file an annual return, but may be required to file an annual electronic notice (e-Postcard).

Haiti Donations Deductible for California

2010-03-18T07:36:00.000-07:00

From the California Franchise Tax Board Tuesday:

The Franchise Tax Board (FTB) announced today that a new state law allows taxpayers to immediately deduct their donations made to provide relief for the January 12 Haitian earthquake.
"This is welcome news for Californians who are supporting earthquake recovery efforts in Haiti," said State Controller and FTB Chair John Chiang.

Charitable deductions are normally taken on a tax return the following calendar year. The new law gives donating taxpayers the added option to claim the deductions immediately on their 2009 returns instead of waiting to claim it on their 2010 returns.

To claim the charitable deduction on the 2009 tax return, both individuals and businesses must have made the Haitian-relief contributions to qualified charities before March 1, 2010. Only cash contributions such as those made by text message, check, credit card or debit card qualify. The contributions must be made specifically for the relief of victims in areas affected by the January 12, 2010, earthquake in Haiti.

The new legislation, Assembly Bill 347 (Stats 2010, Ch. 8), conforms to similar federal law (Haitian Relief Bill H.R. 4462; P.L. 111-126).

Information on the federal law is available in our previous post here.

Women in Construction Week

2010-03-10T10:22:00.000-08:00

Women in Construction (WIC) Week will be celebrated March 7-13 by the National Association of Women in Construction (NAWIC). NAWIC’s mission is to enhance the success of women in the construction industry. As a NAWIC community, we will strive to make changes, to build new homes and businesses, roads and bridges. Together, we can make a difference in the lives of others. WIC Week provides a unified time for more than 5,500 NAWIC members to raise awareness of the opportunities the construction industry holds for potential employees and to highlight women as a visible, growing force in the industry. A broad range of activities will be employed to spread NAWIC members’ passion for working in construction. Award banquets, membership drives, community service projects and hands-on workshops will be conducted from coast to coast - all designed to promote construction and the value of women's contributions to the industry. We ask that you take few minutes this week to recognize the Women in Construction who have made a difference in your lives. Women who "do it all" from leading successful businesses, to raising great kids, or being a loving wife, or excelling in a career. We do it all. If there is a woman who you think has made a difference and made things better or brighter, this is the time to recognize her. For more information on WIC Week or NAWIC, click any of the links below. http://www.nawic.org/nawic/WIC_Week_2010.asp http://www.nawic.org http://www.facebook.com/nawicregionten

Free Webinars on California Withholding

2010-03-02T06:55:00.000-08:00

The California Franchise Tax Board if offering free webinars about employer's withholding requirements, including changes that became effective in January of this year. To view descriptions, times, and register for a free webinar, click here.

Accelerated California Estimated Taxes Required

2010-02-26T09:32:00.000-08:00

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

2010-02-25T04:46:00.000-08:00

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

2010-02-24T08:12:00.000-08:00

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.

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.
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.
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.
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.

2010-02-23T12:47:00.001-08:00

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

2010-02-17T11:01:00.000-08:00

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

2010-02-11T16:48:00.000-08:00

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

2010-02-05T21:07:00.000-08:00

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!

Tax Credit for New Jobs

2010-01-28T08:42:00.001-08:00

Yesterday, the California Franchise Tax Board (FTB) posted answers to Frequently Asked Questions about a new tax credit that is available starting with the 2009 tax year. Here are some facts about the credit:

A new tax credit of $3,000 for each additional full-time employee hired is available to small businesses with 20 or less employees beginning January 1, 2009.
The credit is not subject to the 50% limitation for business credits.
The total amount of credit available to be claimed by all taxpayers is capped at $400 million.
The credit must be claimed on a timely filed original return received by the Franchise Tax Board on or before a cut-off date specified by the Franchise Tax Board.
Taxpayers claiming the credit on an original return received by the Franchise Tax Board after the cut-off date is met will be notified that the credit has been denied.
Taxpayers that have been denied the credit as a result of the $400 million cap being reached will not be assessed an underpayment of estimated tax or underpayment of tax penalty to the extent the underpayment was created or increased by the disallowance of this credit.

An employer will qualify for the credit if:

Each qualified full-time hourly employee is paid wages for not less than an average of 35 hours per week.
On the last day of the preceding taxable year, they employed a total of 20 or fewer employees.
Each qualified full-time employee that is a salaried employee was paid compensation during the year for full-time employment within the meaning of Section 515 of the Labor Code.
There is a net increase in qualified full-time employees compared to the number of full-time employees employed in the preceding taxable year. For taxpayers who first commence doing business in California during the taxable year, the number of qualified full-time employees employed in the preceding year would be generally be zero, unless certain special rules apply.

An employer may not claim the credit for those employees who are any of the following:

Certified as a qualified employee in an enterprise zone or targeted tax area.
Certified as a qualified disadvantaged individual in a manufacturing enhancement area.
Certified as a qualified disadvantaged individual or qualified displaced employee in a local agency military base recovery area.
An employee whose wages are included in calculating any other credit allowed.

More information is available on the FTB website.

Meet Our Newest Employees

2010-01-27T12:23:00.000-08:00

The TY team would like to welcome our two newest employees. John Williams joins us as a Tax Manager and Chad Rahmani is a Senior Accountant. John has been a CPA for approximately 15 years with experience in public accounting, industry and academia. His public accounting experience includes both audit and tax. Throughout his career, John has specialized in international, corporate, and partnership tax. Some of his previous responsibilities included world-wide tax compliance, planning, provision, FIN 48, SOX 404 and audit. In addition, John was an adjunct professor of accounting at San Francisco State University teaching courses in accounting and taxation. John’s education includes a BS – Accounting from S.F. State, a MBA from Baylor University, a Juris Doctor from Oklahoma City University School of Law and a Master of Laws in Taxation from New York University School of Law. Chad Rahmani joins us a Senior Accountant with 11 years of experience. He is a Certified Public Accountant and graduated from California State University Fullerton with a Bachelor of Arts in Business Administration focused in Accounting. He previously worked for a San Francisco based CPA firm since 2000. Chad's experience includes tax preparation, audit planning, review, compilation, and financial statement preparation. Please join us in welcoming John and Chad to TY!

Accelerated Deduction for Haiti Relief

2010-01-25T14:33:00.000-08:00

On Friday, the President signed into law a special provision allowing taxpayers to deduct on their 2009 tax returns charitable contributions made to provide relief in Haiti. Today's IRS announcement provides guidance on the deduction, including the following requirements for a 2009 deduction:

Only cash contributions qualify. This includes contributions made by text message, check, credit card or debit card.
The contribution must be made after Jan. 11, 2010, and before March 1, 2010.
The contributions must be made specifically for the relief of victims in areas affected by the Jan. 12 earthquake in Haiti.
Taxpayers have the option of deducting these contributions on either their 2009 or 2010 returns, but not both.
To get a tax benefit, taxpayers must itemize their deductions on Schedule A. Those who claim the standard deduction, including all short-form filers, are not eligible.

We do not have word yet as to whether California will conform to this legislation. We'll keep you posted.

Tax Credit Helps Pay for Higher Education Expenses

2010-01-21T08:00:00.000-08:00

The IRS provides the following information about the new credit for higher education... The American Recovery and Reinvestment Act was passed in early 2009 and created the American Opportunity Credit. This educational tax credit – which expanded the existing Hope credit – helps parents and students pay for college and college-related expenses. Here are the top nine things the Internal Revenue Service wants you to know about this valuable credit and how you can benefit from it when you file your 2009 taxes. 1. The credit can be claimed for tuition and certain fees paid for higher education in 2009 and 2010. 2. The American Opportunity Credit can be claimed for expenses paid for any of the first four years of post-secondary education. 3. The credit is worth up to $2,500 and is based on a percentage of the cost of qualified tuition and related expenses paid during the taxable year for each eligible student. This is a $700 increase from the Hope Credit. 4. The term "qualified tuition and related expenses" has been expanded to include expenditures for required course materials. For this purpose, the term "course materials" means books, supplies and equipment required for a course of study. 5. Taxpayers will receive a tax credit based on 100 percent of the first $2,000 of tuition, fees and course materials paid during the taxable year, plus 25 percent of the next $2,000 of tuition, fees and course materials paid during the taxable year. 6. Forty percent of the credit is refundable, so even those who owe no tax can get up to $1,000 of the credit for each eligible student as cash back. 7. To be eligible for the full credit, your modified adjusted gross income must be $80,000 or less -- $160,000 or less for joint filers. 8. The credit begins to decrease for individuals with incomes above $80,000 or $160,000 for joint filers and is not available for individuals who make more than $90,000 or $180,000 for joint filers. 9. The credit is claimed using Form 8863, Education Credits, (American Opportunity, Hope, and Lifetime Learning Credits), and is attached to Form 1040 or 1040A. For more information about the American Opportunity Tax Credit visit the IRS Web site at IRS.gov/recovery.

10 Questions if Current Health Care Legislation is Passed

2010-01-20T04:31:00.001-08:00

The attorneys at Litter law firm give their suggested Top 10 questions employers should ask if the current health care bill is finalized. Here's a summary of their Top 10 Questions: 1. Do we have to provide health care benefits to our employees?

Answer: Yes, if you want to avoid paying a penalty.

2. Do we have to pay a penalty if our employees decide to drop out of the employer sponsored plan?

Answer: Yes, in certain circumstances.

3. Can we provide our employee’s health insurance through the health insurance exchange?

Answer: Initially, smaller employers would be able to offer health insurance through the exchange once the exchange becomes operational in 2013 under the House bill and in 2014 under the Senate bill. Larger employers may eventually be able to do so as well.

4. Do we have to change our benefit plan?

Answer: Yes, if it does not comply with certain new requirements.

5. What is a “Cadillac” plan?

Answer: If you offer a high-premium health insurance plan to your workers, you may be subject to a new excise tax on these so-called “Cadillac” plans.

To help pay for the cost of expanding health care coverage, the Senate bill would, beginning in 2013, impose a 40% excise tax on employment-based health plans whose premiums exceed $8,500 for singles and $23,000 for family plans, indexed for inflation plus 1%.

6. Will health insurance plans be taxed?

Answer: Yes, both the House and Senate bills would impose a new premium tax on group health plans to fund comparative effectiveness research. Annual fees on health insurers and device manufacturers may also be passed on to employers.

7. What is a medical loss ratio and why should employers care?

Answer: A medical loss ratio is the percentage of health insurance premium revenues that must be spent on clinical services and quality.

8. Can we change our retiree health benefits?

Answer: The House bill significantly restricts the ability of employers to change retiree health benefits, while the Senate bill does not.

9. What happens to Flexible Spending Accounts?

Answer: Employers who offer flexible spending accounts (FSAs) and workers who utilize them would face new contribution limits under both the House and Senate bills.

10. Will this reduce our health care costs?

Answer:The ultimate question for employers is whether or not the current health care legislation will, in fact, bend the cost-curve or, in other words, reduce employers’ ever-increasing health care costs. For employers grappling with the impact of rising health care costs in the competitive global economy, the answer is far from certain.

For more information on each question, you may visit the full article. (via CPA Trendlines)

New Year’s Resolutions for Small Business

2010-01-18T07:20:00.001-08:00

WebCPA offers 10 tips for small businesses as we head into the new year.

Pay your employees first, they are your highest priority and don’t forget the IRS – keep current with payroll taxes.
Pay attention to the credit worthiness of your customers so you are confident your will get your money. Remember a sale is not a sale until you have been paid.
Limit the amount of business you do with any one customer so you aren’t left penniless if they run into trouble and are unable to pay.
Bad business is worse than no business. Customers who fail to pay their bills on time should not be your customer any longer.
If a customer becomes undependable, change the terms to COD (cash on delivery). That way you can keep the customer and avoid the uncertainly of payment.
Keep an accurate and complete audit trail. Don’t do business on a handshake when the future of your company could be at stake.
Keep management accounts and use financial reporting. Plan how you will pay your expenses, rather than paying bills based on how much is in your checking account at that moment.
Cash flow counts. Focus on shortening terms with your customers and structure the pricing to coincide with those terms. If you wait 90 days to be paid that means you are financing your customer’s business. Or, if you give extended terms, get paid more.
Think about establishing a lending relationship when you don’t need financing; that’s the best time to ask for money. Then follow the financial reporting requirements. Make it easy for the financial institution to lend you money.
Explore alternative lenders. You will probably be surprised to learn what’s out there. It can take time to find financing sources. Do your homework and get all of your questions answered ahead of time – before a crisis hits.

National Association of Women in Construction (NAWIC)

2010-01-13T10:11:00.000-08:00

We would like to invite you the next NAWIC meeting. Our next meeting will be on Thursday, January 21, 2010 in San Ramon at 5:30pm. Our speaker for this meeting will be Alice Powers from Lewis, Brisbois, Bisgaard & Smith, LLP. Ms. Powers will be discussing wage and hour lawsuits and exempt vs. non-exempt in relation to the construction industry. NAWIC offers a great support system for women who are in the construction industry. Through NAWIC, we have increased our knowledge of the industry by networking with other members employed in the construction industry. It has also enabled us to broaden valuable contacts for our firm and build lasting relationships. The NAWIC meetings are always educational and related to the construction industry. If you are interested in attending this meeting, learning more about our personal experiences, or how you can benefit from NAWIC please contact us and we will be happy to answer any questions you may have. Linda Martins - LMartins@ty-llp.com Lisa Silva - LSilva@ty-llp.com NAWIC Background: NAWIC is a professional Association comprised of women working in construction and related industries. It was established in 1955 by 16 founding members. Today, approximately 5,800 women in approximately 170 chapters across the United States are NAWIC members. Members of the Association are business owners/managers, executives, subcontractors, accountants and estimators. Members are also employed in construction trades, including welding, carpentry, plumbing and electrical work. You can visit the NAWIC website, www.nawic.org, for more detailed information.

Worker classification audits on the way

2010-01-12T08:00:00.001-08:00

As we've posted before, the IRS is increasing enforcement efforts related to worker classification -- meaning the issue of treating a worker as an employee or an independent contractor. AccountingWeb provides an update on these efforts:

Beginning in February, 2010, the IRS is launching an examination of 6,000 randomly selected companies to focus on employment tax issues ranging from executive compensation to fringe benefits. The IRS will perform an examination of 2,000 random companies per year over the next three years. Companies targeted will be of varying sizes and include both for profit and non-profit employers. While these audits can target any reporting aspect of the tax return the IRS's primary focus will be on worker classification, executive compensation, fringe benefits, nonfilers and reimbursed expenses.

More information on this issue, including examples of worker classification for the construction industry, is available on the FAQ section of our website.

IRS Offers Tax Tips

2010-01-12T08:00:00.000-08:00

With tax time approaching, the IRS offers a series of Tax Tips for 2010 on topics such as dependents, filing status, and tips for recently married or divorced taxpayers. The following are what the IRS called the Top Ten Tax Time Tips:

Start gathering your records. Round up any documents or forms you’ll need when filing your taxes: receipts, canceled checks and other documents that support an item of income or a deduction you’re taking on your return.
Be on the lookout. W-2s and 1099s will be coming soon from your employer; you’ll need these to file your tax return.
Try e-file. When you file electronically, the software will handle the math calculations for you. If you use direct deposit, you will get your refund in about half the time it takes when you file a paper return. E-file is now the way the majority of returns are filed. In fact, last year, 2 out of 3 taxpayers used e-file.
Check out Free File. If your income is $57,000 or less you may be eligible for free tax preparation software and free electronic filing. The IRS partners with 20 tax software companies to create this free service. Free File is for the cost conscious taxpayer who wants reliable question-and-answer software to help them prepare a return. Visit IRS.gov to learn more.
Consider other filing options. There are many different options for filing your tax return. You can prepare it yourself or go to a tax preparer. You may be eligible for free face-to-face help at an IRS office or volunteer site. Give yourself time to weigh all the different options and find the one that best suits your needs.
Consider Direct Deposit. If you elect to have your refund directly deposited into your bank account, you’ll receive it faster than waiting for a paper check.
Visit IRS.gov again and again. The official IRS Web site is a great place to find everything you’ll need to file your tax return: forms, tips, answers to frequently asked questions and updates on tax law changes.
Remember this number: 17. Check out Publication 17, Your Federal Income Tax on IRS.gov. It’s a comprehensive collection of information for taxpayers highlighting everything you’ll need to know when filing your return.
Review! Review! Review! Don’t rush. We all make mistakes when we rush. Mistakes will slow down the processing of your return. Be sure to double-check all the Social Security Numbers and math calculations on your return as these are the most common errors made by taxpayers.
Don’t panic! If you run into a problem, remember the IRS is here to help. Try IRS.gov or call our customer service number at 800-829-1040.

Another source for answers to FAQs is the FAQ section of our website.

Small Business Tax Calendar

2010-01-08T07:52:00.000-08:00

The IRS recently released its annual Tax Calendar for Small Businesses and Self-Employed Taxpayers. The calendar includes information on general business taxes, electronic filing and paying options, retirement plans, business publications and forms, and common tax filing dates. Welcome to 2010!

That time of year!

2010-01-07T07:13:00.001-08:00

With tax time upon us, the IRS has again reminded taxpayers to use caution in choosing a tax preparer in its January 3 article titled How to Choose a Tax Return Preparer and Avoid Preparer Fraud. The IRS explains:

While most preparers provide honest service to their clients, the IRS urges taxpayers to be careful when choosing a preparer –– as careful as they would be choosing a doctor or lawyer. Even if someone else prepares a tax return, the taxpayer is ultimately responsible for all the information on the return. For that reason, taxpayers should never sign a blank tax form. And they should review the return before signing it and ask questions on entries they don't understand.

The article goes on to provide the following specific suggestions when choosing a preparer:

Be cautious of tax preparers who claim they can obtain larger refunds than other preparers.
Avoid preparers who base their fee on a percentage of the refund.Use a reputable tax professional who signs the tax return and provides a copy.
Consider whether the individual or firm will be around to answer questions about the preparation of the tax return months, or even years, after the return has been filed.
Check the person’s credentials. Only attorneys, certified public accountants (CPAs) and enrolled agents can represent taxpayers before the IRS in all matters, including audits, collection and appeals. Other return preparers may only represent taxpayers for audits of returns they actually prepared.
Find out if the preparer is affiliated with a professional organization that provides its members with continuing education and resources and holds them to a code of ethics.

The California Franchise Tax Board often issues similar advice. As we've said before, regardless of whether you choose ThomasYork as your preparer, we encourage you to follow this counsel!

Happy Holidays

2009-12-22T10:02:00.000-08:00

From everyone at ThomasYork, we would like to wish you a Happy Holiday Season.

Please note that our office will be closed from Noon on Thursday, December 24th, until Friday, January 1, 2010. We will resume our normal business hours on Monday, January 4, 2010.

It's December 10th, Have You Paid Your Property Taxes

2009-12-10T11:41:00.000-08:00

As a gentle reminder most property tax payments are due today. Make sure you have paid your 1st installment. Payments must be postmarked today or you will be assessed a late penalty.

2009 Best Accounting Firms to Work For

2009-12-08T08:50:00.000-08:00

During the summer everyone at TY participated in the 2009 Best Accounting Firms to Work For survey. We are proud to announce that we ranked #14 out of 20 in the Small Firm category (15-24 employees). Accounting Today’s Top 100 Best Accounting Firms to Work for rankings are available online at www.AccountingToday.com. The rankings will also be published in the December 14th issue of Accounting Today. Companies from across the country entered the two-part survey process to determine the Best Accounting Firms to Work for. The first part consisted of evaluating each nominated company's workplace policies, practices, philosophy, systems and demographics. The second part consisted of an employee survey to measure the employee experience. The combined scores determined the top companies and the final ranking. Best Companies Group managed the overall registration, survey and analysis process and determined the final rankings.

IRS Announces 2010 Standard Mileage Rates

2009-12-03T11:49:00.000-08:00

The Internal Revenue Service today issued the 2010 optional standard mileage rates used to calculate the deductible costs of operating an automobile for business, charitable, medical or moving purposes. Beginning on Jan. 1, 2010, the standard mileage rates for the use of a car (also vans, pickups or panel trucks) will be:

50 cents per mile for business miles driven
16.5 cents per mile driven for medical or moving purposes
14 cents per mile driven in service of charitable organizations

The new rates for business, medical and moving purposes are slightly lower than last year’s. The mileage rates for 2010 reflect generally lower transportation costs compared to a year ago. 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 any vehicle used for hire or for more than four vehicles used simultaneously. Taxpayers always have the option of calculating the actual costs of using their vehicle rather than using the standard mileage rates. Revenue Procedure 2009-54 contains additional details regarding the standard mileage rates.

Tips for increasing profit and cash flow

2009-11-30T10:55:00.000-08:00

The Journal of Accountancy provides nine suggestions for builders and contractors to increase profits, including:

Take every available tax credit.
Save on workers’ compensation insurance with safety programs.
Update overhead percentages.
Hold a weekly collection meeting.
Manage subcontractors and material suppliers to the project schedule.
Partner with subcontractors and suppliers to win bids.
Set up a rolling cash flow projection.
Close out pending change orders and backcharges weekly.
Take advantage of the U.S. Small Business Administration’s new American Recovery Capital (ARC) Loan Program.

The full article is available here. Previous posts on Small Business Administration loans are available here:

SBA training on winning federal contracts Subcontracting to Snag Stimulus Dollars How to Win Federal Contracts 6 Tips to Speed up SBA Loan Approval Recovery Funded Ultra-Low Interest Loans The ABCs of SBA Lending Interest-free SBA Loans

Newsletter on Year-End Tax Planning

2009-11-25T19:13:00.000-08:00

Our firm sends an occasional e-newsletter on such topics as tax planning, current tax developments, and important compliance matters. Our most recent e-newsletter on year-end tax planning for 2009 includes discussion about such items as:

Expiring opportunities in depreciation.
Expiring deduction for sales tax on new car purchase.
Extended carryback period for business losses.
Extended & Expanded Homebuyer Credit.
Energy credits.
Charitable donations.
401(k) contributions.
Health savings accounts (HSAs).
Health flexible spending accounts.
Dependent care FSAs.
Self-employed plans.
Retirement income.
IRA conversion.
Capital losses.
Income Deferral.
AMT Considerations.
Gift tax.
Kiddie tax reminder.

If you would like to read the full newsletter, or subscribe for future newsletters, you may visit our Newsletter Archives.

Expansion of 5-year carryback election for NOLs

2009-11-20T21:56:00.000-08:00

On Nov. 6, 2009, President Obama signed the “Worker, Homeownership, and Business Assistance Act of 2009” (the 2009 Assistance Act) into law. The Act includes tax changes for businesses, the most significant of which are liberalized rules for certain net operating losses (NOLs). If your 2008 or 2009 tax return results in a net operating loss, you may benefit from this provision.

A net operating loss (NOL) is the excess of business deductions (computed with certain modifications) over gross income in a particular tax year. The loss can be deducted, through an NOL carryback or carryover, in another tax year in which gross income exceeds business deductions. In general, NOLs may be carried back two years and forward 20 years. The NOL is first carried back to the earliest tax year for which it's allowable as a carryback or a carryover, and is then carried to the next earliest tax year. A taxpayer may elect to forego the entire carryback period for an NOL and instead carry it forward. The 2009 Assistance Act provides an election for most taxpayers (not just small businesses) to increase the carryback period for an applicable NOL to 3, 4, or 5 years from 2 years. An applicable NOL means the taxpayer's NOL for any tax year ending after Dec. 31, 2007, and beginning before Jan. 1, 2010. This means the election may be made for a tax year beginning or ending in either 2008 or 2009. Taxpayers electing a 5-year carryback can use the NOL to offset up to 50% of the available taxable income for the 5th tax year preceding the loss year, and 100% of all taxable income in the remaining 4 carryback years. The amount of the NOL otherwise carried to tax years after the 5th preceding tax year is adjusted to take into account that the NOL could offset only 50% of the taxable income for the 5th year. In addition, the Act suspends the 90% limitation on the use of an NOL deduction for alternative minimum tax purposes, for alternative tax NOLs attributable to carrybacks for which the extended carryback is elected. We will work with our clients individually to determine whether they might benefit from this new provision.

National Association of Women in Construction (NAWIC)

2009-11-18T11:11:00.000-08:00

Linda Martins (an Audit Manager here at TY) and I have become members of the National Association of Women in Construction (NAWIC). NAWIC offers a great support system for women who are in the construction industry. Through NAWIC, we have increased our knowledge of the industry by networking with other members employed in the construction industry. It has also enabled us to broaden valuable contacts for our firm and build lasting relationships. The NAWIC meetings are always educational and related to the construction industry. NAWIC Background: NAWIC is a professional Association comprised of women working in construction and related industries. It was established in 1955 by 16 founding members. Today, approximately 5,800 women in approximately 170 chapters across the United States are NAWIC members. Members of the Association are business owners/managers, executives, subcontractors, accountants and estimators. Members are also employed in construction trades, including welding, carpentry, plumbing and electrical work. You can visit the NAWIC website, www.nawic.org, for more detailed information. If you are interested in learning more about our personal experiences and how you can benefit from NAWIC please contact us and we will be happy to answer any questions you may have. Linda Martins - LMartins@ty-llp.com Lisa Silva - LSilva@ty-llp.com We would like to invite you to our next meeting so you can see for yourself how beneficial and supportive this group is for women. Our next meeting will be on Thursday, January 21, 2010 in San Ramon at 5:30pm. If you are interested in attending, or know someone who is, please let us know so we can provide you with more information.

California SDI amounts for 2010

2009-11-16T07:54:00.001-08:00

California announced that the State Disability Insurance (SDI) rate for 2010 will remain the same as the prior year at 1.1%. However, the the taxable wage limit and corresponding maximum amount increase as follows:

	2009	2010
Taxable wage limit	$90,669.00	$93,316.00
Maximum SDI amount	$997.36	$1,026.48

For January, please be sure to update your payroll programs to reflect the changes!

Newly Extended & Expanded Homebuyer Credit

2009-11-12T09:00:00.000-08:00

On November 6, the President signed into law H.R. 3548, the ''Worker, Homeownership, and Business Assistance Act of 2009.'' The new law extends and generally liberalizes the tax credit for first-time homebuyers. The following is a summary of these tax provisions. Homebuyer credit basics. Before the new law was enacted, the homebuyer credit was only available for qualifying first-time home purchases after April 8, 2008, and before December 1, 2009. The top credit for homes bought in 2009 is $8,000 ($4,000 for a married individual filing separately) or 10% of the residence's purchase price, whichever is less. Only the purchase of a main home located in the U.S. qualifies. Vacation homes and rental properties are not eligible. The homebuyer credit reduces one's tax liability on a dollar-for-dollar basis, and if the credit is more than the tax you owe, the difference is paid to you as a tax refund. For homes bought after Dec. 31, 2008, the homebuyer credit is recaptured (i.e., paid back to the IRS) if a person disposes of the home (or stops using it as a principal residence) within 36 months from the date of purchase. Before the new law, the first-time homebuyer credit phased out for individual taxpayers with modified adjusted gross income (AGI) between $75,000 and $95,000 ($150,000 and $170,000 for joint filers) for the year of purchase. Revised homebuyer credit. The new law makes four important changes to the homebuyer credit: (1) Extension. The homebuyer credit is extended to apply to a principal residence bought before May 1, 2010. The homebuyer credit also applies to a principal residence bought before July 1, 2010 by a person who enters into a written binding contract before May 1, 2010, to close on the purchase of the principal residence before July 1, 2010. In general, a home is considered bought for credit purposes when the closing takes place. So the extra two-months (May and June of 2010) helps buyers who find a home they like but can't close on it before May 1, 2010. They can go to contract on the home before May 1, 2010, close on it before July 1, 2010, and get the homebuyer credit (if they otherwise qualify). Note that certain service members on qualified official extended duty service outside of the U.S. get an extra year to buy a qualifying home and get the credit; they also can avoid the recapture rules under certain circumstances. (2) Expansion of qualifying homes. The homebuyer credit may be claimed by existing homeowners who are “long-time residents.” For purchases after November 6, 2009, you can claim the homebuyer credit if you (and, if married, your spouse) maintained the same principal residence for any 5-consecutive year period during the 8-years ending on the date that you buy the subsequent principal residence. For example, if you and your spouse are empty nesters who have lived in your suburban home for the past ten years, you are potentially eligible for the credit if you “move down” and buy a smaller townhome. There's no requirement for your current home to be sold in order to qualify for a homebuyer credit on the replacement principal residence. Thus, the replacement residence can be bought to beat the new deadlines (explained above) before the old home is sold. For that matter, you can hold on to your prior principal residence in the hope of achieving a better selling price later on. The maximum allowable homebuyer credit for qualifying existing homeowners is $6,500 ($3,250 for a married individual filing separately), or 10% of the purchase price of the subsequent principal residence, whichever is less. (3) Expansion of eligible taxpayers. The homebuyer credit is available to higher income taxpayers. For purchases after November 6, 2009, the homebuyer credit phases out over much higher modified AGI levels, making the credit available to a much bigger pool of buyers. For individuals, the phaseout range is between $125,000 and $145,000, and for those filing a joint return, it's between $225,000 and $245,000. (4) Limit on home price. For purchases after Nov. 6, 2009, the homebuyer credit cannot be claimed for a home if its purchase price exceeds $800,000. It's important to note that there is no phaseout mechanism. A purchase price that exceeds the $800,000 threshold by even a single dollar will cause the loss of the entire credit. The new purchase price limitation applies whether you are buying a first-time principal residence or are a qualifying existing homeowner purchasing a replacement principal residence. Other homebuyer credit changes. The new law includes a number of new anti-abuse rules to prevent taxpayers from claiming the homebuyer credit even though they don't qualify for it. The most important of these are as follows:

Beginning with the 2010 tax return, the homebuyer credit can't be claimed unless the taxpayer attaches to the return a properly executed copy of the settlement statement used to complete the purchase of the qualifying residence.
For purchases after Nov. 6, 2009, the homebuyer credit can't be claimed unless the taxpayer has attained 18 years of age as of the date of purchase (a married person is treated as meeting the age requirement if he or his spouse meets the age requirement).
For purchases after Nov. 6, 2009, the homebuyer credit can't be claimed by a taxpayer if he can be claimed as a dependent by another taxpayer for the tax year of purchase. It also can't be claimed for a home bought from a person related to the buyer or the spouse of the buyer, if married.
Beginning with 2009 returns, the new law makes it easier for the IRS to go after questionable homebuyer credit claims without initiating a full-scale audit.

Please feel free to contact us if you think you may benefit from the homebuyer credit.

Is Facebook Right For My Business?

2009-11-11T09:23:00.000-08:00

Everyone seems to be jumping on the social media bandwagon, but if you are like me, you are wondering if it is the right thing to do for business and how. Experts in all industries are encouraging businesses to use social media to help create business or additional exposure for your business. One of my questions has been how to bridge the gap from personal use of social media to business use. I think most of us use Facebook for a primarily personal focus, but I found an article (excerpt below) that helps bridge the gap and provides some thoughts on using Facebook for your business. Hope you find this helpful. Is Facebook Really a Good Tool for Business? Ann Handley (MarketingProfs) Nov 10, 2009 - In a recent article on MarketingProfs, Paul Chaney identified what he sees as the “big three” social networks for business: Twitter, LinkedIn and Facebook. The first two I understand… but Facebook? It seems to me that lots of companies set up Fan Pages or Groups. They use them to collect friends like a squirrel hoarding nuts for winter. They even might post a few photos or press releases or blog posts. But then, the pages languish. So is Facebook really a good tool for business? Paul says, unequivocally: Yes. The author of The Digital Handshake: Seven Proven Strategies to Grow Your Business Using Social Media, Paul schools me and (I hope) you in how businesses can leverage a presence on Facebook. Click here to read the full article

California Governor announces 5 new stimulus projects

2009-11-04T18:41:00.000-08:00

Governor Arnold Schwarzenegger’s California Recovery Task Force announced this month that $53 million in American Recovery and Reinvestment Act (Recovery Act) funding has been allocated by the California Transportation Commission (CTC) to five additional transportation projects in California, located in:

San Luis Obispo County
Santa Barbara County
Santa Clara County
Alpine County
Inland Empire

A comprehensive list of all projects that received allocations of this funding is available here.

Tax Credits Help Homeowners Winterize their Homes

2009-11-03T10:56:00.000-08:00

The IRS reminds taxpayers of tax credits available for energy-saving improvements. The American Recovery and Reinvestment Act (Recovery Act), enacted earlier this year, expanded two home energy tax credits: the nonbusiness energy property credit and the residential energy efficient property credit. (1) Nonbusiness Energy Property Credit: This credit equals 30 percent of what a homeowner spends on eligible energy-saving improvements, up to a maximum tax credit of $1,500 for the combined 2009 and 2010 tax years. The cost of certain high-efficiency heating and air conditioning systems, water heaters and stoves that burn biomass all qualify, along with labor costs for installing these items. In addition, the cost of energy-efficient windows and skylights, energy-efficient doors, qualifying insulation and certain roofs also qualify for the credit, though the cost of installing these items does not count. By spending as little as $5,000 before the end of the year on eligible energy-saving improvements, a homeowner can save as much as $1,500 on his or her 2009 federal income tax return. Due to limits based on tax liability, other credits claimed by a particular taxpayer and other factors, actual tax savings will vary. These tax savings are on top of any energy savings that may result. (2) Residential Energy Efficient Property Credit: Homeowners going green should also check out a second tax credit designed to spur investment in alternative energy equipment. The residential energy efficient property credit, equals 30 percent of what a homeowner spends on qualifying property such as solar electric systems, solar hot water heaters, geothermal heat pumps, wind turbines, and fuel cell property. Generally, labor costs are included when calculating this credit. Also, no cap exists on the amount of credit available except in the case of fuel cell property. Not all energy-efficient improvements qualify for these tax credits. For that reason, homeowners should check the manufacturer’s tax credit certification statement before purchasing or installing any of these improvements. The certification statement can usually be found on the manufacturer’s website or with the product packaging. Normally, a homeowner can rely on this certification. The IRS cautions that the manufacturer’s certification is different from the Department of Energy’s Energy Star label, and not all Energy Star labeled products qualify for the tax credits. Eligible homeowners can claim both of these credits when they file their 2009 federal income tax return.

Free Webinar on Employee vs. Contractor Issues

2009-11-02T07:43:00.000-08:00

The issue of classifying workers as employees or contractors continues to be of top concern to the IRS and FTB. Intuit is offering a free webinar on Nov. 4 about deciding when to hire an employee vs. a contractor, including a discussion of the necessary forms to file for each (W-2s, 1099s, etc.). If interested, you can click here for more information.

Happy Halloween!!!

2009-10-30T14:46:00.001-07:00

This year along with decorating the office and showing off our costumes, the TY team participated in a Pumpkin Decorating Contest. Everyone was given a pumpkin last week and encouraged to let their imaginations run wild. And here are the results...

1st Place - Barbara Toland

2nd Place - Tricia Millena

3rd Place - Teresa Karlson

Other creative entries...

New Publication for Unemployed

2009-10-30T09:48:00.001-07:00

The IRS has released a new publication titled "Tax Impact of Job Loss," which discusses tax issues connected to severance pay, unemployment compensation, pension plans, job search expenses and moving costs. If you or someone you know is dealing with unemployment, you may find some useful information in the publication, available online here.