Disclosure Requirements re: Multi-Employer Pension Plans

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#

New Home Tax Credits Available

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.

Women in Construction Week

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

More contractors are likely to perform stimulus funded work this year

From the Associated General Contractors of America:

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

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

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

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

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

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

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

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

National Association of Women in Construction (NAWIC)

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.

Tips for increasing profit and cash flow

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

National Association of Women in Construction (NAWIC)

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.

Free Webinar on Employee vs. Contractor Issues

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.

SBA training on winning federal contracts

The SBA has released its newest online course for women small business owners, titled: Winning Federal Contracts: A Guide for Women Entrepreneurs. This training is free and includes numerous resources. The SBA also has an online training program related to the American Recovery and Reinvestment Act of 2009, titled Recovery Act Opportunities: How to Win Federal Contracts. This program is also free, and includes resources to help you understand and engage in the government’s contracting process. The program is fully automated and indexed so you can review all or only the parts you are interested in.

Subcontracting to Snag Stimulus Dollars

From the Wall Street Journal last week: For small business owners trying to find a way into the lucrative market for federal contracts, subcontracting can provide a back door. With billions of extra federal dollars being offered though the economic stimulus package, many small business owners have set their sights on winning contracts directly from federal agencies. For those with no previous experience, this may be aiming too high. By subcontracting, business owners can boost their profits and learn about the many requirements of government work without the requirement to meet all of them. At the same time, they can provide the prime contractor with expertise and resources they may lack. Attending meet-and-and greets held by federal agencies, trade shows, conferences and other networking events, such as those sponsored by the U.S. Small Business Administration and industry-related associations, can help get in front of prime contractors and decision makers at federal agencies. Entrepreneurs can also post their profiles online and network with contractors through Web sites such as the Federal Contracting Network at www.tfcn.us and at www.mySBX.com. (Some charge fees, although basic services and listings are often free.) Small businesses can also sign up with large prime contractors through their corporate Web sites. Browsing sites, such as the SBA's Subcontracting Network (www.sba.gov/subnet), where prime contractors post opportunities, can be a way to identify key players.

IRS reminder of worker classification issues

The issue of worker classification, meaning the issue of is whether you treat someone as an employee or as an independent contractor, remains a key focus of the IRS. As we've posted here and here, the government is looking to close the tax gap by going after businesses who treat workers as contractors that should really be treated as employees. Last week, the IRS again reminded taxpayers of the need to consider this issue carefully, publishing the following Ten Tips for Business Owners:

1. Three characteristics are used by the IRS to determine the relationship between businesses and workers: Behavioral Control, Financial Control, and the Type of Relationship.

2. Behavioral Control covers facts that show whether the business has a right to direct or control how the work is done through instructions, training or other means.

3. Financial Control covers facts that show whether the business has a right to direct or control the financial and business aspects of the worker's job.

4. The Type of Relationship factor relates to how the workers and the business owner perceive their relationship.

5. If you have the right to control or direct not only what is to be done, but also how it is to be done, then your workers are most likely employees.

6. If you can direct or control only the result of the work done -- and not the means and methods of accomplishing the result -- then your workers are probably independent contractors.

7. Employers who misclassify workers as independent contractors can end up with substantial tax bills. Additionally, they can face penalties for failing to pay employment taxes and for failing to file required tax forms.

8. Workers can avoid higher tax bills and lost benefits if they know their proper status.

9. Both employers and workers can ask the IRS to make a determination on whether a specific individual is an independent contractor or an employee by filing a Form SS-8 – Determination of Worker Status for Purposes of Federal Employment Taxes and Income Tax Withholding – with the IRS.

10. You can learn more about the critical determination of a worker’s status as an Independent Contractor or Employee at IRS.gov by selecting the Small Business link.

For more information on the topic, please visit the FAQ section of our website.

Good to Great

The Construction Contractor's Digest provides a summary of Jim Collins' best selling book, Good to Great - Why Some Companies Make the Leap and Others Don't. Matt Stevens applies the book's in-depth study and conclusions to construction contractors and their challenges.

ABC Releases Construction Backlog Indicator

From the Associated Buildings and Contractors website:

ABC June 22 released its inaugural Construction Backlog Indicator (CBI), a forward-looking measurement reflecting the amount of work to be performed by contractors in the months ahead. A high backlog value a large amount of work is due to begin in the near term, leading to a positive economic impact, and a low backlog value indicates fewer projects are under contract, leading to a more uncertain economic impact. 'Commercial and industrial construction is a major part of the American economy. We have developed this new, innovative measurement not only to track the level of commercial and industrial construction activity, but also to look into the future for signs of recovery,' said ABC Chief Economist Anirban Basu. 'Significantly, we are able to track backlog by region as well as by industry sector and company revenue to paint a complete picture of this critical economic segment on an ongoing basis.' The overall CBI in the nation’s nonresidential construction industry, which includes industrial, infrastructure, and commercial/institutional segments, rebounded in May to 6.3 months, up from 6.2 months in April, but is still down by roughly 0.8 months since November 2008, when ABC began collecting data. During the past seven months, nonresidential backlog is down by an average of 24 days. To read the view the full report, including charts and graphs, and to learn about the methodology, visit www.abc.org/backlog. To sign up to receive the Construction Backlog Indicator every two months, visit www.abc.org/subscriptions.

Where is all of Obama’s stimulus money going?

On February 17, 2009, President Obama signed the American Recovery and Reinvestment Act (ARRA). The Act explicitly lists the following five purposes of the Act:

• To preserve and create jobs and promote economic recovery.
• To assist those most impacted by the recession.
• To provide investments needed to increase economic efficiency by spurring technological advances in science and health.
• To invest in transportation, environmental protection, and other infrastructure that will provide long-term economic benefits.
• To stabilize State and local government budgets, in order to minimize and avoid reductions in essential services and counterproductive state and local tax increases.

Federal, state, county, and city resources are now dedicated to ARRA opportunities (all of the websites noted below use the term "opportunities" to describe projects funded by ARRA).

Federal business opportunities are available at FBO.gov, which provides extensive search options to find Federal contracts. A simple search for California opportunities as of today resulted in 160 projects that many of our clients may be interested in bidding on. Opportunities that are funded by ARRA are noted as such.

California's governor and the city of San Francisco have created dedicated agencies and websites that provide information about the impact of ARRA. Contra Costa County and local cities have also added links and information to their existing websites about ARRA opportunities.

Governor Schwarzenegger has created the California Recovery Task Force, which will be tracking ARRA funds. The Task Force's website provides information so that Californians can access the stimulus money. The site includes information on how to bid for contracts, apply for grants, and get some tax relief . We highly recommend that you check out this site.

San Francisco's Office of Economic and Workforce Development provides information for small businesses owners. Its website is jam-packed with business assistance information such as tax credits and incentives, construction development in the pipeline, neighborhood revitalization projects, and workforce development. The site has links to other city resources that may be helpful to you and your business.

Contra Costa County has expanded its website to provide information about ARRA. For the most part, the site encourages you to search for local opportunities at FedBizOpps.gov and Grants.gov. However, we found that individual cities in Contra Costa County, such as Walnut Creek, are predominately displaying RFPs for ARRA projects on their homepages, rather than making you go search for them.

If you become aware of other resources that provide local ARRA opportunities, please email them to lsilva@ty-llp.com and we will get them posted for all of our readers to explore.

Builder confidence on the rise?

BusinessWeek reports that "U.S. homebuilders seem to be coming out of hibernation as the gloom over the housing market begins to lift. " A National Association of Home Builders/Wells Fargo Housing Market Index reported a slight increase in builder confidence, as the index measuring builder confidence in the current market for newly built single-family homes rose 3 points. Another index measuring the traffic of prospective buyers rose 1 point.

This level of confidence is the highest it's been since September 2008, so perhaps things really are starting to turn around. We can certainly hope.

IRS Construction Industry Guide

The IRS recently published a current version of their Construction Industry Audit Technique Guide to the IRS website. Here is a link to view the guide. www.irs.gov/businesses/small/industries/article/0,,id=208324,00.html The guide is "intended for examiners conducting audits in the construction industry and as information for taxpayers and practitioners associated with the construction industry". If you are curious about the processes the IRS uses when auditing a construction company or are a construction company faced with an audit the guide may be helpful to you. The guide's effective date is May 2009 and includes all current law related to Internal Revenue Code Section 460, Special Rules for Long-Term Contracts. Happy reading.

California to start 5,000+ infrastructure projects

Governor Schwarzenegger announced Wednesday that the state would restart more than 5,000 infrastructure projects, which had been on hold since December 2008. The state has begun the process of selling $6.85 billion in bonds, of which $5.2 billion are backed by the federal government as part of the economic recovery act passed in February. California is the first state to issue these federally-backed Build America Bonds.

According to the governor's website, the funding will be allocated as follows:

• $1.7 billion for the state’s taxable general obligation bonds to fund stem cell research and stem cell related projects, various housing programs, and additional needs for High Speed Rail.
• $5.2 billion on projects for California State University, the University of California, California Community Colleges, Caltrans and the Department of Water Resources, school construction projects, environmental and park projects, grant programs to support clean air (engine retrofits and clean port projects), wastewater treatments projects, improvements to drinking water infrastructure, children’s hospitals, public safety grants and local library grant projects.

(If you're a math wiz, you probably noticed this adds up to $.05 billion more than the total bond proceeds of $6.85 billion. Did they think we wouldn't notice an extra $50 million in spending?)

The press relates announced that a complete list of the more than 5,000 projects will be available shortly at http://www.dof.ca.gov/.

Unfortunately, we cannot provide you an exact definition for what the state considers "available shortly."

New construction increases 5% in March

New construction increased 5% in the month of March, primarily due to increase in public works construction, according to McGraw-Hill Construction. The changes by category:

• Nonbuilding construction increased 27%
• Nonresidential building decreased 3%
• Residential building decreased 8%

Man hired by subcontractor sues general for injuries

A general contractor hired a subcontractor, who then hired an independent contractor to do the work. The independent contractor fell into a hole at the project site. The injured man filed suit against the general contractor. The trial court granted summary judgment in favor of the general contractor. The injured party appealed, and the appellate court sent the case back to the trial court, ruling that the non-employee of the subcontractor has the right to sue the general contractor. If the independent contractor wins, general contractors could face a slew of lawsuits from non-employees hired by subcontractors. If this were to happen, general contractors would likely require any workers hired by subcontractors to be employees, not independent contractors. We will be watching for the trial court's ruling. The complete article is available at: http://www.claimsjournal.com/news/west/2008/12/09/96170.htm