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Takeaways from the Miami Dolphins’ Locker Room: The Legal Risks of Workplace Bullying

By Michael J. Volpe & Nicholas M. Reiter


Think your workplace has nothing in common with a National Football League locker room? Think again. The story of Jonathan Martin teaches a valuable lesson for all employers. 

Martin, an offensive lineman for the Miami Dolphins, walked away from his job in late October 2013 after his teammate, Richie Incognito, allegedly bullied him on at least several occasions.

The allegations, whether or not true, are not pretty. Preliminary reports allege that Incognito, who is white, left a voicemail for Martin, who is biracial, which included a racial slur and sexually suggestive comments about Martin. Other allegations include Incognito forcing Martin to fork over nearly $15,000 to finance several Dolphins players’ trips to Las Vegas—a trip Martin was supposedly prohibited from attending. A recent report also alleges the Dolphins’ coaching staff instructed Incognito to “toughen up” Martin. After the allegations surfaced, the Dolphins suspended Incognito for “conduct detrimental to the team” and announced their cooperation with the NFL’s investigation of the incidents.

Now, however, the Dolphins have much more to worry about than the loss of two of their football players. Unless they reach an amicable agreement with Martin and his representatives, it’s quite possible the Dolphins will face one or more legal claims arising from Incognito’s alleged behavior.

Employers face legal claims associated with bullying because the conduct is often related to one or more legally protected characteristics, e.g., a bullying victim’s race, disability, religion, sexual orientation, etc. The potential causes of action which arise from bullying commonly include discrimination, harassment, retaliation, intentional infliction of emotional distress, defamation, assault, false imprisonment, negligent supervision and negligent hiring. Employees often assert these potential claims under common law theories and/or various federal and state employment statutes, including Title VII of the Civil Rights Act of 1964. Unfortunately for employers, in many cases, an employer’s lack of knowledge about the bullying is irrelevant because the employer may be held vicariously liable for its employee’s conduct.

In the recent case involving the Dolphins, Incognito allegedly made at least one comment related to Martin’s race and supposedly harassed Martin until he no longer felt comfortable in the workplace. If true, these allegations may permit Martin to assert a claim for “constructive discharge” under the theory that a reasonable person in his position could not continue working within the Dolphins’ organization. The recent allegation that the Dolphins directed Incognito to “toughen up” Martin may further support other legal claims such as intentional infliction of emotional distress, harassment and negligent supervision, among others. Even if the Dolphins were unaware of Incognito’s alleged behavior, which may be the case, the organization could still face claims brought under theories of vicarious liability.

The media’s attention to Martin’s allegations sheds light on a common problem for many employers in the U.S. Zogby International’s 2010 study showed that 35 percent of American workers experienced bullying now or at some point in their careers. In 2012, the Society for Human Resource Management reported that 51 percent of the employers it surveyed had incidents of bullying in their workplaces. Employee-to-employee bullying can occur in various ways, including insults, the spreading of rumors, unwarranted criticism, exclusion from meetings or other workplace activities, exclusion from “off the clock” social gatherings, pranks, and unreasonable work demands among other things.

The cost to employers due to bullying is real. It’s no surprise studies show that bullied employees tend to be less productive than other workers. Other consequences include high employee turnover, excessive absenteeism and more frequent schedule change requests, all of which add to an employer’s human resources responsibilities and hurt efficiency. Additionally, employers often see their insurance premiums increase due to more workers’ compensation claims filed on behalf of the bullied employees.

For all of these reasons, employers can (and should) proactively protect themselves against the legal risks of workplace bullying. The first step for many employers is to craft an employment policy under which bullying is defined and expressly prohibited. This policy should include an easily understood reporting process for employees to assert internal complaints of bullying. Employers should also assure their employees, in writing, that retaliation for raising a complaint is also prohibited, that all complaints will be taken seriously, and that confidentiality will be maintained to the extent it does not interfere with the employer’s investigation.

Additional measures employers may take include conducting anti-bullying training sessions for their workforce, internal audits of bullying complaints and background checks for potential new hires who may have a history of workplace violence, harassment or other bullying behavior.

Michael J. Volpe is a partner in Venable LLP’s New York office and co-chairs the firm’s national labor & employment group.  Nicholas M. Reiter is a labor & employment associate in the firm’s New York office.





Program Kids – Hiring for your Culture


If you didn’t catch it last week, Michigan State Basketball, rated #2 in the country, knocked off the University of Kentucky, rated #1 in the country.  An early season match-up in college basketball which ultimately has little impact on the bigger picture of this basketball season, but it as fun to watch!


What the game really ended up being about was two different sets of kids, not based on their uniform, but based on their path.  Kentucky, under current coach John Calipari, has become a NBA basketball factory of first round draft picks.  Coach Cal has basically made the decision to use the NBA draft rules, that a kid must be one year out of high school and over 19 before being draft eligible, to build his winning program.  He basically sells to the best high school basketball kids in the country, who could probably jump immediately to the NBA, that you come to UK for 1 year, then leave and go to the NBA.  This system is working really well for him!  These kids come and take classes for one semester, and then basically leave as soon as basketball is over in March.  Doesn’t really seem to fit the goal of intercollegiate athletics, but what the hell, he’s winning…


On the other side you had Michigan State and coach Tom Izzo (to be fair, I’m a big fan of the program and Tom, I think Coach Cal is a cheater and a liar) whose has built one of the best programs in the country over the past 19 seasons, by taking almost the opposite way to success.  Tom goes out and recruits ‘Program’ kids.  Tom grew up in Northern Michigan, he was raised with a blue collar work ethic.  He is everything that Calipari isn’t.  He isn’t flash.  He’s loyal.  He wants his kids to leave MSU better men, not better basketball players.  While Tom would take a top player, he’s only ever taken a kid who was ‘one and done’, and even that kid didn’t think that would be the case when he came to MSU.  The kids who get recruited to MSU know they’ll be broken down, taught how to play defense first, team basketball, it’s about the program, not about you.  As you can imagine, a kid wanting to jump right to the NBA, doesn’t find this attractive.  Coach K at Duke is very similar, although, he tends to get a few one-and-dones based on his past success!


The game was close at the end, but not really as close as the final score.  MSU had juniors and seniors on the floor – grown mature men.  Kentucky had kids on the floor, very, very talented kids, but kids all the same.


Both programs successful.  Both programs win.  I like one way more than another, but I can’t argue the successful business model that Coach Cal has produced.


It brings up a great question for HR/Talent Pros and leaders of organizations.  We all say we want the ‘best’ talent. We want ‘rock stars’. But I wonder, do we?  Do you want ‘Program kids’, hires that fit your culture?  Or do you want ‘One-and-dones’, hires that have extreme talent, but might not want a long-term career with you?


You might say it’s a hard comparison because we are talking about amateur (Program Kids) versus professional (One-and-done) level talent. Of course in business we would always want professional level talent.  But I’ll argue that Program hires, those who fit what and where you want your organization to go will always be better in the long run.  What happens when the next big school or pros come calling for Coach Cal?  What happens to Kentucky?  It would left in shambles.  The strategy doesn’t have legs because you must rebuild every year. What happens if another big time school with a flasher coach starts getting all the one-and-dones?  Program kids don’t want to go to Kentucky.




Tax Fraud Blotter: Apparently, They Can Make This Stuff Up

November 22, 2013

By Jeff Stimpson


Some of our favorite recent tax fraud cases:


Manteca, Calif.: Robert Eldon Robertson and Esther Lynne Robertson have been indicted on charges of filing two false claims for federal refunds, filing liens against the former IRS commissioner, and impeding the administration of federal tax laws.

According to the indictment, the Robertsons filed two false federal income tax returns claiming large refunds based on fictitious 1099-OID withholdings: one for tax year 2005 claiming a $90,538 refund and one for 2007 claiming a $313,248 refund. The indictment also charges each of the Robertsons with filing a false lien against the property of the IRS commissioner for “a sum certain amount determined as triple the stated amount of any purported determination of tax liability.”

            According to the indictment, the couple also sent a bogus “international promissory note” with a request that the IRS apply the purported $800,000 face value of the note towards their outstanding tax liabilities. The IRS also received a letter containing credit card bills belonging to the Robertsons asking the IRS to pay nearly $20,000 worth of their debt.

If convicted, the Robertsons face a maximum of five years in prison for each false claim count, three years for the obstruction count and 10 years for the count of filing false liens.


Houston: Preparer Alisa Grisson has pleaded guilty to one count of making a false claim against the government. According to case records, Grisson prepared returns in her name and in the names of others and acknowledged that she knew the returns were fraudulent, reporting income that had not been earned or expenses that had not been incurred or both.

Specifically, she admitted to falsely claiming a refund of more than $7.4 million for the 2009 tax year. Grisson stipulated that the tax loss to the government totals $674,284.62 and has agreed to pay that in restitution. She also agreed never again to aid or assist in preparing or presenting returns for any taxpayer except herself and not to oppose any civil action brought by the federal government seeking to enjoin her from preparing income tax returns for others.

Sentencing is set for Jan. 28, 2014, when Grisson faces up to five years in federal prison and a possible $250,000 fine.  


Claymont, Del.: Preparer Dawn Chamberlain, 36, pled guilty to charges of false claims conspiracy and mail fraud.

According to statements made at the plea hearing and documents filed in court, from 2009 through 2012 Chamberlain filed more than 450 false federal income tax returns for others claiming more than $730,000 in credits to which her clients were not entitled.

She directed tax authorities to deposit the refunds into her own bank accounts and bank accounts of her family members, then returned less than the full refunds to clients. She also used her clients’ names, dates of birth and Social Security numbers to file false and fraudulent New York State resident income tax returns, requesting refunds of more than $210,000. 

Chamberlain faces a maximum sentence of 20 years in prison, a fine of $250,000 and three years of supervised release.


Montgomery, Ala.: Local resident Kevin Jackson has been sentenced to 102 months in federal prison and three years of supervised release and ordered to pay $150,840.49 in restitution for his role in a stolen ID refund fraud scheme.

According to court documents, Jackson possessed a storage locker in which authorities found a computer, three cellular phones, at least 500 names and SSNs of ID-theft victims and at least 70 prepaid debit cards, all tied to a scheme to obtain fraudulent federal refunds via federal returns filed in the names of stolen IDs. 


Waterloo, Iowa: Former preparer Victoria A. Jones, 49, has been sentenced to 15 months in prison and a year of supervised release, as well as ordered to pay a $15,000 fine and $4,833 in restitution after being accused of preparing at least 20 fraudulent returns resulting in $30,000 and $80,000 in excess refunds, published reports said.

Jones reportedly pleaded guilty to a single count of preparation of a false tax return in August as part of an agreement with prosecutors. In the charged case, authorities said Jones listed $36,000 in inflated business expenses and other deductions and an improper $500 energy tax credit, according to reports.


Royersford, Penn.: Stephanie Patterson, 41, has pled guilty to false claims conspiracy, mail fraud, and aiding and abetting Social Security fraud.

According to hearing statements and court documents, Patterson participated in a tax-fraud conspiracy involving the filing of more than 180 false individual federal income tax returns using stolen identities. The returns sought refunds of more than $1.8 million. She and her co-conspirators received more than $800,000 on account of the fraudulent returns.

Patterson’s role involved providing names and SSNs to a co-conspirator who used the information to file the returns. Patterson also acted as a facilitator between the co-conspirators responsible for filing the returns, and those who provided additional compromised IDs. She received more than $55,000 for her part in the scheme.

Patterson will be sentenced on March 13, 2014, and faces a maximum of 20 years in prison, a fine of $250,000 and three years of supervised release.




Don’t Fall for Charity Scams Following Disasters

The IRS warns consumers not to fall for bogus charity scams. They often occur in the wake of major disasters like the recent tornadoes in the Midwest or the typhoon in the Philippines. Thieves play on the goodwill of people who want to help disaster victims. They pose as a real charity in order to steal money or get private information to commit identity theft.

The scams use different tactics. Offering charity relief, criminals often:

  • Claim to be with real charities to gain public trust.
  • Use names similar to legitimate charities.
  • Use email to steer people to bogus websites that often look like real charity sites.
  • Contact people by phone or email to get them to ‘donate’ money or give their financial information. 


The IRS offers the following tips to help taxpayers who wish to donate to victims:

  • Donate to qualified charities.  Use the Exempt Organizations Select Check tool at to find qualified charities. Only donations to qualified organizations are tax-deductible. You can also find legitimate charities at the Federal Emergency Management Agency website, For more information about the kinds of charities that can receive deductible contributions, see Publication 526, Charitable Contributions.
  • Don’t give out information.  Don’t give your Social Security number, credit card and bank account numbers or passwords to anyone. Scam artists use this information to steal your identity and money.
  • Don’t give or send cash.  For security and tax record purposes, don’t give or send cash. Contribute by check, credit card or another way that provides documentation of the donation.
  • Report suspected fraud.  If you suspect tax or charity-related fraud, visit and click on ‘Reporting Phishing’ at the bottom of the home page.

Get more information about tax scams and schemes at Click on ‘Tax Fraud & Abuse’ at the bottom of the home page. You can also get Publication 526 at or call 800-TAX-FORM (800-829-3676).




Amazon Rejected by U.S. Supreme Court on New York Sales Tax

Washington, D.C. (December 2, 2013)

By Greg Stohr


The U.S. Supreme Court stayed out of the multibillion-dollar fight over Internet sales taxes, leaving intact a New York law that forces Inc. to collect money from customers in that state.

Acting on one of the biggest online-shopping days of the year, the justices made no comment in rejecting appeals by Amazon and Inc., another Internet retailer. The companies said the law, upheld by New York’s top court, violates the Constitution by demanding tax collection from businesses that don’t have facilities in the state.

States lose an estimated $23 billion a year in uncollected sales taxes from web retailers. Although Amazon has agreed to collect taxes in some states as it sets up distribution centers, it has resisted efforts by others to impose sales taxes unilaterally. New York’s measure is among a handful that have been dubbed “Amazon laws” because they affect only the largest online sellers.

The New York law “subjects Internet retailers to significant burdens on pain of serious civil and criminal penalties,” Seattle-based Amazon argued in its appeal. The world’s biggest online retailer now collects taxes in 16 states.

The rebuff leaves it to Congress to craft a nationwide approach to the sales-tax issue. Amazon supports federal legislation that would explicitly let states require tax collections by all online retailers above a certain size.


‘Physical Presence’

The legal dispute revolved around a 1992 Supreme Court case involving a mail-order company. The court said retailers can be forced to collect a tax only in states where they have a “physical presence.”

The rise of the Internet has increased the stakes since then, putting tens of billions of dollars at issue. New York alone lost $1.8 billion in 2012 on Internet and catalog sales, according to the National Conference of State Legislatures. Although consumers are supposed to pay the taxes themselves, few do unless the seller collects the money.

New York has a 4 percent statewide sales tax, and local jurisdictions impose additional levies. In New York City, the total tax rate is 8.875 percent.

New York said in court papers that its 2008 tax law “seeks to restore a level playing field between in-state brick-and-mortar stores and their out-of-state Internet-only counterparts.”


In-State Affiliates

Under the New York law, retailers without a physical presence in the state must collect tax if they use a local resident to solicit business online. Amazon is subject to the law because it gets business through New York-based affiliates, paying them commissions for hosting online links to the retailer.

The New York Court of Appeals, the state’s highest court, said affiliation agreements had the effect of creating an “in-state sales force.”

Amazon fell $1.79 to $391.83 at 1:45 p.m. in Nasdaq trading in New York.

Overstock said in its appeal that the New York court ruling “functionally abrogates the physical-presence requirement.”

Overstock suspended its own affiliates program in New York when the law was enacted, sparing the Salt Lake City-based discount Internet retailer from having to collect taxes. Overstock was seeking to re-establish that program so it could generate more business in New York and potentially other states


Commerce Clause

Amazon and Overstock sued to challenge the New York law soon after it was enacted. They argued that the measure violates the Constitution’s commerce clause, which the Supreme Court interprets to limit state taxing power. The court has said taxes must bear a “substantial nexus” to activity within the taxing state.

Amazon has struck tax deals with some states as it adds distribution centers that will let the company get products to customers more quickly.

Those states include California, where the company agreed to collect sales taxes after a one-year reprieve and dropped efforts to repeal the tax measure through a referendum. Amazon has since opened three distribution centers in California. Nationwide, it has spent $14 billion and added 50 new facilities since 2010.

At the same time, the company supports proposed federal legislation that would let states collect taxes from online retailers with at least $1 million in annual out-of-state sales.

“Amazon is in favor of having to deal with a single bureaucracy rather than 50,” said Michael Pachter, an analyst at Wedbush Securities in Los Angeles.


Senate Vote

The Senate passed the Amazon-backed legislation May 6 on a bipartisan 69-27 vote, and opponents vowed to fight in the House. Other supporters include Wal-Mart Stores Inc. and Best Buy Co.

The measure “would protect states’ rights to make their own revenue policy choices while allowing them to collect more than a fraction of the revenue that’s already owed,” Ty Rogers, an Amazon spokesman, said in an e-mail.

The House Judiciary Committee, led by Republican Representative Bob Goodlatte of Virginia, hasn’t held a hearing or released a schedule for considering the measure.

Goodlatte said he wants changes to the Senate bill and he released a set of principles in September. At the time, he said he wanted the legislation to be so simple that it wouldn’t require a small-business exemption.


Congressional Action

Rachelle Bernstein, vice president and tax counsel at the National Retail Federation, said she is hopeful that Congress will pass a law this year or next.

“There was always a need for federal legislation to provide some uniformity and simplicity to this area of the law and that need is still there,” said Bernstein, whose group represents Macy’s Inc. and The Container Store Group Inc.

EBay Inc., operator of the largest online marketplace, opposes the legislation. The company didn’t take a position on the Supreme Court appeals. Newegg Inc., which sells electronic products, backed the Amazon and Overstock appeals.

The cases are v. New York State Department of Taxation, 13-252, and v. New York State Department of Taxation, 12-259.





Who Moved My Seven Effective Good to Great Habits? How to Build Operational Efficiencies With Simple Requests of Your Team
By Mark Faust

[Editor’s note: This article originally appeared in the June 2010 issue of Echelon Magazine.]

Every week a new book hits the shelves touting the "new" idea in management and "new" wisdom for business. With regard to the processes of business, human nature and true wisdom, nothing is new under the sun, just as that phrase dates back to Solomon.

If you want to improve profits and productivity, if you want to improve operational efficiencies then stop looking for an elixir on the shelf — but look within. Start looking to your team for innovations big and small. True innovation revolves around where your focus lies; how unique your solutions to customers are; and how you define, promote and deliver the value you have to offer.

One of the best ways to begin your accelerated growth fueled by innovation is to list and prioritize your top constraints. You can begin by asking questions like:

1.Where are our greatest untapped sales growth potentials, either existing or specific new customers or both?

2.What do we need to improve to win more business?

3.What are the top risk factors that need to improve?

4.What are our top operational constraints; the inefficient areas that could likely be improved?

Once these questions are asked, consider that one of the simplest ways to find out from your team about innovation opportunities is to just ask this one simple question:

What are our company's biggest problems that hinder its growth?

Great question, but be ready for the answers. Oftentimes the top constraints to growing a business begin with its culture, talent management and talent engagement.

Talent engagement represents the extent to which the workforce identifies with the company, is committed to it and provides discretionary effort so that it can be successful. Engagement is a key leading indicator for high performance workplaces, improved employee productivity and subsequent turnover.

Often while top management is looking into the marketplace to find the levers of growth, the linchpin to growth may be inside the heart of the organization: your people.

Innovation efforts should be holistic and involve improvements in how you serve your internal customers as much as how you might improve your products and services to your external customers.

If you are committed to growing the company through accelerating your efforts in innovation, you must be willing to focus on the people within your company and work on ways at getting and keeping more of your internal customers. And no one has more impact on the talent and employee engagement of a company than the top-echelon leader. Innovation thrives when leadership is humble.

Culture is often ignored, yet frequently needs improvement. Often a company’s culture is set by the attitudes and character of the top leader. The strengths of a leader’s character can sometimes be the flip side of his or her weaknesses. One who is patient and a great listener may be slow to make a decision, while the hard-charging visionary can often be a poor listener and not as focused on the people as needed. These weaknesses tend to trickle down to the behavior of the team and ultimately absorbed into the cultural weaknesses that can become abrasive to both customers and employees.

When the answers to the “biggest problems” question are things like “no one around here appreciates…” or “the company tends to tolerate (fill in a negative term)” then you know you have got to work on fostering a cultural improvement effort.

Solutions to improve your culture:

1.Ask your team for ideas around, "What would make this company a better place to work?" or "What would make your job more fun, or you more excited about coming to work?

2.Put in place a character recognition program where you recognize people for good character qualities.

3.Conduct a value clarification process and work to reinforce the values.

Operational efficiencies come about by going after big challenges with big questions and listening to the ideas of your team. By using these steps and making simple requests, you can uncover insights and make changes that will reap millions in improved operations and results.

About the Author
Mark Faust is founder of He is a growth consultant, executive coach and national speaker, and the author of “Growth or Bust: Proven Turnaround Strategies to Grow Your Business.” Mark can be reached at






Seven Reasons Why Powerful People Fall
By Steven Mundahl


Recent NYC mayoral hopeful Anthony Weiner, Yankees star Alex Rodriguez, and hedge fund manager Steven Cohen all share something in common. They're all influential leaders in their field who engaged in risky behavior that caused them to plummet from positions of power. No leadership sphere is free of fallen heroes, whether it's in business, the government arena, the entertainment world, athletics or religion.

Why do powerful people make such poor decisions? Behavioral scientists, neuroscientists, and psychologists have identified attitudes, beliefs and other factors that contribute to risky behavior. Here are seven of them.


1.They don't know about "hedonic adaptation." The term hedonic adaptation describes the pleasure and excitement of something new wearing off. For example, a leader starts to feel a loss of interest in his spouse, and the wife seems unhappy and dissatisfied as well. He starts to resent coming home, and opts instead to stay at work in the company of a playful and attractive staff member. But if that leader acquired the scientific awareness that the normal "high" in any relationship lasts for approximately two years, he might instead look within his marriage for new activities, spiritual time together, and honest communication to keep the intimacy alive.


2.They have unchecked self-importance. One reason people engage in destructive behavior, such as overspending, overeating, shoplifting, smoking, pornography, abusing alcohol or drugs, gambling, embezzling and infidelity is because they have an attitude of entitlement. They may believe that they "deserve" forbidden treats because they work hard, they're smarter than others, or their status places them above the law. They believe they have the right to act without consequences and enjoy the risk-taking "high." Working on self-awareness is the only way out of this particular trap.


3.They aren't tuned in to their "vibrational gap." Picture a gap that widens if something in your life is pulling your emotional state downward. I call this a “vibrational gap.” Signs that your gap is widening include depression; a desire to get "high" with alcohol, gambling, or an affair; or a simple desire to leave the office a few hours early. These intuitive signals are meant to lead us to take action to close the gap instead of simply filling it with destructive short-term "highs." Leaders need to continually monitor their vibrational levels, overcome blocks to resolution, and take corrective action—aligning with their purpose, securing true satisfaction in relationships, and building a spiritual inner life, for example—instead of succumbing to the pull of negative behaviors.


4.They don't weigh the reward. Leaders who pursue behaviors that make them feel good for a moment forget to ask these two questions: 1.)"What is the greatest reward I could receive from taking this risk? and 2.) “What is my greatest fear?" These questions, if asked, would eliminate most of the impulsive and risky behaviors. The reality is people are internally "outed" the minute they perform the risky or addictive behavior. Guilt, shame, embarrassment, self-talk and remorse are all internal reminders that we're not living in accordance with our true values. It's our conscience on one side versus the immediate gratification on the other. We have to learn how to weigh them.



5.They experience "amygdala hijack." Author Daniel Goleman coined the term amygdala hijack, which describes how brains under stress are not properly equipped for self-control. The amygdala is the part of the brain that triggers the parasympathetic nervous system (fight, flight, or freeze), which takes over for the thinking parts of the brain in the neocortex, responsible for rational decision making. The key here is for leaders to learn ways to manage stress, because if they don't, they're liable to make poor choices at work and in their personal lives. One quick strategy is to take deep breaths, which slows down the heart rate and enables the prefrontal cortex to regain control.


6.They have weak will power. Some neuroscientists say our inner voice that seeks immediate gratification is akin to having a second-self living inside us. One version of us acts on impulse; the other version controls our impulses to protect our long-term goals. We switch back and forth between these two selves. These two opposing parts can and do work together. If what we desire comes with a big negative, such as a high price tag or big danger, our more primitive instinct, or "gut reaction," can agree with our wiser self, which is already saying no. The will-powered self can only be operational if one handles stress throughout the day. Ensure your brain has plenty of sleep, good food, proper exercise, and ongoing stress reduction each day to act on those values.


7.They tumble from the "domino effect." When one poor decision is made in a distracted or unaware moment, a door to an unsavory path opens for us to walk through. An example would be choosing to stay up late to watch a TV show. The next morning you have under-slept, so you skip the gym. You feel grumpy and depleted, so you grab a donut someone brought to work. And the repetitive tumble continues. Research shows if you're feeling bad about a mistake, it can lead to other bad decisions. With your brain now under stress, you may say "what the heck" and keep going down the self-destructive path.


About the Author
Steven Mundahl is a leadership scholar and professor, and president and CEO of Goodwill Industries in Western Massachusetts. His new book is “The Alchemy of Authentic Leadership” (2013). Interested readers can learn more at






The Art of Listening
By Jeff Gitterman

[Editor’s note: This article was partly adapted from the author’s book, Beyond Success: Redefining the Meaning of Prosperity.]

Have you ever noticed that the words listen and silent are spelled with the same letters? Perhaps this is no accident, because in many ways, they mean the same thing. Have you ever talked to someone and walked away feeling enriched because the person was such a good listener, even if being a complete stranger? This talent is what accounts for some of the best psychologists in the world — and some of the best salespeople. Interestingly, the ability to listen is also the trait most people refer to in a great relationship partner or leader.

My own understanding of the power of listening came about many years ago when I was just starting out as a financial advisor. One of the initial appointments that I’d have with any new perspective client is what we call a fact-finding session. The idea is that you’re there simply to get information and gather data like date of birth, place of work, the kind of house, income, assets, and so on.

One day, I was getting out of my car and about to walk into a potential client’s house. I was way behind on my bills, and my mind was going on and on about how much I needed to make a sale. Desperation poured out of me as I caught my reflection in the car window. I stopped, looked hard at that reflection and said to myself, "Who would want to buy anything from you? Look at how desperate you look!"

I thought of the successful people in my office and realized that to some extent, they all had a confidence about themselves that I sorely lacked. And so I decided in that moment that I needed to drop my desperate, needy attitude and walk into this prospect's house with the confidence of someone who didn't want anything.

I took one last look at my reflection and saw that I had taken on an air of serenity, and that's when I began to realize that I really didn't need anything; that deep down there was nothing for me to get. I dropped my need to make a sale. I became still and quiet.

I soon began to approach more of my clients this way, just focusing on listening to them, without any personal desire or expectation. And to my amazement, my meetings really started to transform and my success as a financial advisor grew exponentially.

Once, I arrived for an appointment with a doctor client when he had just gotten home from work. He'd had a bad day, got home late, and was running around trying to get ready for me. He and his wife were frazzled, and their eight-year-old daughter was bouncing off the walls, happy to have her parents home and craving their attention.

I don't even remember what we spoke about; I mostly just listened to them. But within ten minutes, the doctor's daughter fell asleep on her mother's lap, and the mother leaned back in her chair. The doctor loosened his tie, his breathing calmed, and the frenzied atmosphere in the room relaxed. He turned to me at the end of the appointment and said I must have hypnotized his family. Half joking, he asked me if I could come and do the same thing at 5 p.m. every day!

Have some faith that the Universe has brought you and the other person together for a more important reason than what you can get out of it in the moment. And if that's true, the only way we are going to see that purpose and reason is to become silent and truly listen to the other person and see what happens next. And silence doesn't only mean refraining from speaking. It also means quieting the ongoing dialogue in our head—the mental noise—so that we can really focus on another person and what is being communicated.

The first thing that people often say to this is, "If I’m not looking out for myself, I'm going to get walked all over!" Many people assume that if they come from a position that isn’t fixed, they’re going to be taken advantage of. But I’ve actually found the opposite to be true, because when another person isn’t met with resistance, he or she will then begin to back down from a fixed position, which creates a space for something new to occur.

Give your attention completely to another person and see what happens. When you're in that space, you'll know exactly what decision to make when it comes to your relationships, and your business. Unfortunately, too many of us spend our whole lives waiting to get something from the world so that we can show up as the person we always knew we could be. Deep in our hearts we think there's something missing. But when we flip that mindset, we can discover that by becoming a giver rather than a taker, we can become agents for change in the world.

About the Author
Jeff Gitterman is an award-winning financial advisor and the CEO of Gitterman & Associates Wealth Management, LLC. He is also the co-founder of Beyond Success,, a consulting firm that brings more holistic values to the world of business and finance. His first book, Beyond Success: Redefining the Meaning of Prosperity, was recently published by AMACOM, the publishing house of the American Management Association. Jeff has been featured in Money Magazine, CNN, Financial Advisor, London Glossy Magazine and New Jersey Business Journal, among others. He can be reached at






Cyber Security: How Much is Enough?
By Neil Rerup



“What should I do to make my company secure?” is a critical question in a business landscape replete with hackers, attackers, and in-house security imperfections.

The best answer varies by organization, the sensitivity of its data and infrastructure, as well as the business requirements (including budget constraints). Quite simply, a mom and pop printing shop requires a lower level of IT security than a health care provider managing medical records while processing credit card transactions, which in turn, requires somewhat less of a defense than a critical utility installation.

Determining the right level of cybersecurity for your company and the necessary actions to achieve that state of IT protection is a strategic balancing of factors; however, company leaders face myths, rumors, varying “expert opinions” and a plethora of expensive solutions touted as absolute necessities by salespeople disguised as unbiased cybersecurity analysts.

In reality, any business leader can discover the right level of IT security by first understanding that cyber threats fall into these categories:

1.Motivated hackers


3.Criminal organizations

4.Nation states

5.Internal source, such as a disgruntled employee (this is the number one threat)

Consider that most incidents, according to some studies between 75 and 90 percent are of this internal sort, but it’s important to be aware of and address the others, too.

Concurrent with identifying and estimating the most likely risks, your business requirements analyses will include identifying what assets (and responsibilities) must be protected. These fall within defined categories, with some crossovers, such as intellectual property, customer (or client or patient) data, company processes, infrastructure, and firm data not falling within these categories — but nonetheless important and needing IT protection.

With your list of assets and responsibilities needing protection in hand and a thoughtful consideration of the most likely threats specific to your company, the final step is to consider the cybersecurity resources available to counter the threats and provide protection. Every company has three tools to wage and win the cybersecurity battle, better known as the three P’s of IT security: processes, people and products. It is the strategic balancing of these tools within the parameters of a budget that will define the optimal cybersecurity solution for your company.

In practice, it is your knowledge of the workings of the company that will frame this solution matrix. For instance, one security goal of a small company might be to know who is accessing what information. Simply adding a log-in requirement is an easy and practical solution that surely fits within any budget while achieving the business requirements. A more complex organization, such as a utility, might have hundreds of servers that instead require an automatic monitoring solution, which is more expensive from a capital expenditure standpoint but a lower cost from a sustainment and operations perspective. The message is that your optimal solution will be defined by balancing people, processes, and products in a combination that fits within the budget.

This framework will enable any business leader to determine the right level of IT security for a specific circumstance. However, there are four pitfalls that can derail even the best plans. The good news is that if you know about them, you can bypass these challenges that have caused security turbulence for your less well-planning competitors.


1.Security for security’s sake. Keep your business requirements at the forefront of your analyses. If your solution goes far beyond meeting those requirements, you are wasting resources.


2.Trying to do it all at once. Know your time frame for meeting those requirements. If your business strategy calls for entering a new market in three years, the cybersecurity solution for that market does not demand an in-place solution in six months.


3.Bigger or more expensive does not mean better. Cyber-security vendors are masters of showmanship, but do not become mesmerized by the spectacular technology. Most often, the best solution is nothing more than changing a process.


4.Conflicts between IT Management and cybersecurity. Be certain that conflicts between IT management and cybersecurity management are resolved at the executive level by the leader responsible for the overall strategy.


As a final bit of counsel, be aware that in the cybersecurity field there is no such thing as “Industry Best Practice” solutions. What this phrase really means is “I don’t want to take the time to understand your business requirements so just do as I say and don’t question me.” As a now-prepared strategy decision maker for your company, you know that every solution must be focused on meeting your company’s specific business requirements. Anything else is a waste of your time, energy and resources.

About the Author
Neil Rerup, an enterprise security strategist and founder of Enterprise Cyber Security Architects, helps companies and governments efficiently and effectively achieve their business requirements in the cybersecurity arena. Neil, a 12 year veteran of the cybersecurity wars, is the author of the upcoming CyberPeril (Sutton Hart 2013). Interested readers can contact Neil at and can get additional information by visiting







How to Co-Exist With Your Forces of Nature
By Leslie Ungar


We admire them, we swear at them, and we swear by them. Some of us work for them, work with them, or are related to them. Wherever you are on the organizational chart it benefits you to know how to co-exist with them. How we see these people is very much a matter of what role they basically fill in our lives; how we are connected to them. They are always in some way bigger than life.

Most people admire them from afar. You could make the argument that many have changed the world, or at the very least, changed their world. They are people who think big, speak big and dress big. Who are they? I call them Forces of Nature.

Do you have your very own Force of Nature? It is someone who sweeps into a room taking all of the attention and seemingly all of the oxygen. This person sees life differently than us mere mortals and also thinks the rules of life do not apply. Regardless of the relationship you have with your Force of Nature, you will benefit from knowing the proper care and handling of this limited-edition breed.

What to Know About Your Force of Nature

1.No responsibility for what is done.

This individual is like a tornado that comes and wreaks all kinds of havoc and then innocently asks: Who me? The most effective way to keep this individual accountable is to ask the questions that relate to roles and responsibilities.


2.This person sends others to do the dirty work.

Remember this so you are not inclined to kill the messenger. Whoever is delivering your news is not the one who created the message. Forces of Nature like to create havoc and stand aside. They are likely to light the match and then innocently ask who started the fire. Look beyond the messenger to see the big picture.


3.Feeding them makes them hungrier.

Your Force of Nature has an insatiable appetite for everything: power, money, jewelry. The problem is that the appetite is never satisfied. Mere mortals get full when fed. Feeding Forces of Nature just makes them hungrier. There is never enough of anything. When you understand this you will understand that giving in to them or giving them more is not the answer. Setting up and adhering to boundaries is the answer.


4.Forces of Natures don’t see the bigger picture.

They tend to be more tactical than strategic. They look at the process rather than the results of the process. Their force can be invaluable, but not their vision. Team up a Force of Nature with a visionary and you have a winning combination.


5.You can identify them by their recognized attributes.

It may be their hair, jewelry, or eye glasses. In some way they wear their own uniform: they look different than a mere mortal. It may be in the quantity or the quality but they will be wearing more of something.


6.Forces of Nature take all the oxygen then ask why you can't breathe.

Their standard operating procedure is to put the oxygen mask on themselves first. They take all the sunlight and then ask why you are cold and pale. They usually don’t even know they are doing it. You need to be consistent in what you need and how you request what you need. Consistency is key, so that you are consistent in the inconsistent world of a Force of Nature.


7.Forces of Nature think anything can be changed at any time.

Deadlines of any kind are not meant for them. They truly believe with a call, a wave of their magic wand, they can change anything. Your task is to stay consistent to a deadline. Eventually they will adapt to your requirements.

The odds are against you getting through your professional life without a Force of Nature in the mix. The more you control your communication style the more effective you will be in spite of the force field. The force of Forces of Nature is undeniable. Used for the good, this force can change their world and your world in positive ways.

About the Author
Leslie G. Ungar, president of Electric Impulse Communications, Inc., which helps you find your competitive edge. Electric Impulse, Inc. is an idea factory for leaders who want to think and act with a 21st century mindset. She can be reached at







IRS to Employers: Hire Veterans by Dec. 31 and Save on Taxes

If you plan to hire soon, consider hiring veterans. If you do, you may be able to claim the federal Work Opportunity Tax Credit worth thousands of dollars.


You must act soon. The WOTC is available to employers that hire qualified veterans before the new year.


Here are six key facts about the WOTC:

1. Hiring Deadline.  Employers hiring qualified veterans before Jan. 1, 2014, may be able to claim the WOTC. The credit was set to expire at the end of 2012. The American Taxpayer Relief Act of 2012 extended it for one year.

2. Maximum Credit.  The tax credit limit is $9,600 per worker for employers that operate a taxable business. The limit for tax-exempt employers is $6,240 per worker.

3. Credit Factors.  The credit amount depends on a number of factors. They include the length of time a veteran was unemployed, the number of hours worked and the amount of the wages paid during the first year of employment.

4. Disabled Veterans.  Employers hiring veterans with service-related disabilities may be eligible for the maximum tax credit.

5. State Certification.  Employers must file Form 8850, Pre-Screening Notice and Certification Request for the Work Opportunity Credit, with their state workforce agency. They must file the form within 28 days after the qualified veteran starts work. For more information, visit the U.S. Department of Labor’s WOTC website.

6. E-file.  Some states accept Form 8850 electronically.




How to Avoid the Line at Starbucks


By Gene Marks


The worst thing is waiting in line at Starbucks, right? Especially first thing in the morning. The line is always enormous. And there's always that guy in front of you ordering one of those complicated 800-calorie ice-cream/coffee drinks. And all you want is a quick cup. In the company's defense, it's not just Starbucks. It's the restaurant where you're waiting for your check. It's the pharmacy where you're standing in that endless line to pay for a tube of toothpaste. It's your favorite clothes store.


You will soon be able to avoid those lines. Because a few weeks ago I saw the future. And it was with a guy from PayPal. The guy is Anuj Nayal. He's their fast-talking director of global initiatives. I was in midtown New York doing an unrelated project for them and while there we talked about two major products they've launched that will impact mobile payments. PayPal is not compensating me to write this.


Actually, that's not entirely true. Anju did buy me a coffee and a blueberry muffin for my efforts. He insisted on going to a place all the way down in the Village, though. Why? To show me the future of retail. As the driver pulled away from the curb, Anuj asked me what kind of coffee I wanted. I asked for a simple, plain cup of coffee. Anuj said, "No problem," proudly pulled out his smartphone and launched PayPal's new app. And here's how it worked.


The app already had a directory of thousands of retailers who had previously signed up for the service. One of those who signed up was a little coffee shop near Washington Square. He chose two cups of coffee from the menu and a couple of blueberry muffins. Then he paid for it. On his phone. From the car. How? He had set up his PayPal account to access money from his bank account (or credit card). With the initial setup done, there was no more need for any more cards or cash. Going forward, all he needed was his phone. And when we arrived at the coffee shop, our two coffees and blueberry muffins were waiting for us to be picked up. And we didn't have to wait in line!


And neither will you, anymore. Because the next generation of mobile payment applications are upon us.


Google has been struggling with its "Wallet" product, which uses Near Field Communication technology to let consumers "tap" their phones to pay. But it has not been catching on. There have been many reasons given. In my opinion, it's not just the technology. It's because one big thing is missing: We still have to wait in line!


The next generation of mobile payment applications will eliminate some people from the process, as well as the plastic credit cards that we are forced to carry. This is one step toward eliminating our wallets altogether. These applications will save us time. They are getting the sales clerks, waitresses, ticket-sellers and baristas out of our way. And they are making the really good sales people even better -- getting them out from behind the cash register and on the shop floor where they belong, assisting customers and taking orders. And in the process they are making retailers and other consumer-driven businesses more profitable. They are reducing overhead and cutting payroll. And it's all happening right now.


PayPal will have plenty of competition. Banks and credit card processing companies are developing similar technologies. Square and other mobile payment software developers are creating competing products. Ziosk and similar point-of-sale vendors are attaching tablets to restaurant tables across the country.


All of these applications are slowly, but enormously, changing retail as we know it. Because now we can place our order and pay for it without ever speaking to a human being. We can buy things in advance and pick them up later. The retailer can offer coupons for special items and frequent customers. They can collect (with permission) customer data for future marketing and communications. There's the mobile app. But there's something else happening on your phone. It's called BLE, or Bluetooth Low Energy. What's that? As you enter one of your favorite stores, a very low-energy Bluetooth "beacon" signal emanating from your phone alerts the store's point-of-sale system that you're there. BLE is now standard issue on the new iPhone and many Android devices.


How does this change your life? You choose and swipe a product's bar code. Or the items already have embedded Radio Frequency ID chips that are readily scanned. When you go to check out, the clerk already has your photo and payment information sent to them by BLE. The clerk gets a verbal confirmation from you or asks for a fingerprint, and from this ID-check you're authorized and a payment is made from your phone. Your phone never left your pocket. You have no credit cards. You've already told the app which stores are allowed to "check in" with you.


This is reality today. The just-released PayPal Beacon uses BLE and already works with many major POS systems. The retailer only needs to purchase an inexpensive plug-in device that will sense the BLE signal. PayPal is also offering a programming interface for developers to create more customized in-store solutions. The company is piloting this product in the fourth quarter of this year and plans a full rollout in 2014. And keep an eye out for Apple because they've got their own BLE service called iBeacon and it's included on the newly released iOS 7 operating system.


This is important stuff for your clients in the retail business. And especially if they're small retailers. They are looking for better ways to make their customers happy. They want to provide the highest level of service at the lowest cost possible. They want their customers to enjoy doing business with them because not only are their products great, but they're efficient and fast. They want to stand out from their competition and offer a better all-around experience. They want an easy way to offer promotions for drawing in new buyers. Will the transaction fees that PayPal, Square, Apple or other leading mobile payment application providers charge be worth all of this?


I hate carrying around a wallet. I hate fumbling with my credit cards. I hate waiting to pay my check at a busy restaurant. But most of all, I hate standing in line Starbucks. So it's worth it to me.


Gene Marks, CPA, is the owner of the Marks Group, which sells customer relationship, service, and financial management tools to small and midsized businesses. Besides Accounting Today, he writes for Forbes, The New York Times and



Obama forced to stick with a BlackBerry for 'security reasons'


Thursday, December 5, 2013, 8:12 AM


At a meeting with youth on Wednesday to promote his landmark healthcare law, Obama said he is not allowed to have Apple's smart phone, the iPhone, for "security reasons," though he still uses Apple's tablet computer, the iPad.

The troubled mobile phone maker BlackBerry still has at least one very loyal customer: U.S. President Barack Obama.

At a meeting with youth on Wednesday to promote his landmark healthcare law, Obama said he is not allowed to have Apple's smart phone, the iPhone, for "security reasons," though he still uses Apple's tablet computer, the iPad.


Apple was one of several tech companies that may have allowed the National Security Agency (NSA) direct access to servers containing customer data, according to revelations by former NSA contractor Edward Snowden. The companies deny the allegation.


Obama fought to keep his BlackBerry after coming to the White House in 2009, though he said only 10 people have his personal email address. Neither George W. Bush nor Bill Clinton used email during their presidencies.


BlackBerry, a Canadian company formerly known as Research In Motion Ltd, virtually invented the idea of on-the-go email, but lost its market stranglehold as rivals brought out more consumer-friendly devices, like Apple's iPhone and phones using Google's Android software.


The company recently halted plans to be sold and is trying to chart a new course by focusing on large business and government clients





Minimizing the 3.8% Net Investment Income Tax

Higher income taxpayers beware. There is a new surtax to contend with. Originating as a component of 2010 health care legislation and first effective in 2013, the 3.8% net investment income tax (3.8% NIIT) is assessed on the lesser of net investment income (NII) or modified adjusted gross income (MAGI) above specific thresholds. The MAGI thresholds are $200,000 for single individuals, $250,000 for joint filers and surviving spouses, and $125,000 for married taxpayers filing separate returns.

Only individual taxpayers with some amount of NII and MAGI above the applicable threshold amount will be subject to the 3.8% NIIT. In other words, taxpayers with only wage or self-employment income are exempt. For example, if a married couple has $500,000 of wage income and $100,000 of interest and dividend income (i.e., MAGI totaling $600,000), the 3.8% NIIT only applies to the investment income ($100,000), not the $350,000 that is over the $250,000 MAGI threshold.

Since the 3.8% NIIT is assessed on the lesser of NII or MAGI above the threshold, planning strategies to reduce the surtax will only be effective if they target the applicable exposure point. If NII is the lower number, planning strategies should focus on reducing investment income. If the taxpayer's MAGI is lower, reduction strategies should focus on reducing AGI. The following strategies can be used to reduce NII and AGI.

NII can be reduced currently by:

  • Selling securities at a loss in a taxable account (also reduces AGI).
  • Using an installment sale to spread a large gain over several years (also reduces AGI).
  • Facilitating a like-kind exchange to defer gain (also reduces AGI).
  • Gifting appreciated securities instead of cash (also reduces AGI).

AGI can be reduced currently by:

  • Maximizing deductable contributions to a tax-favored retirement account, i.e., 401(k), SEP, and defined benefit pension plans.
  • For cash-basis self-employed individuals, deferring business income into the following year and accelerating business deductions into the current year.
  • Gifting appreciated securities to children and letting them sell the appreciated securities to avoid recognizing gains on the parent's return (also reduces the parent's NII). Be aware that the Kiddie Tax may apply; however, the child will receive his or her own MAGI exemption from the 3.8% NIIT.

Longer-term strategies:

  • Convert traditional retirement account balances to Roth IRAs, but watch out for the AGI impact in the conversion year. In the long run, gains and earnings that build up tax-free in a Roth IRA are not included in either AGI or NII when eventually distributed.
  • Invest in tax-exempt versus taxable bonds, which will reduce both AGI and NII.
  • Use tax-favored retirement accounts to invest in securities that are expected to generate otherwise-taxable gains and dividends.
  • Invest in life insurance and tax-deferred annuity products. Life insurance death benefits are generally exempt from ordinary income tax and, thus, from the 3.8% NIIT, as well. Death benefits will not increase the recipient's exposure to the 3.8% NIIT by increasing his or her AGI.
  • Invest in rental real estate and oil and gas properties. Depreciation, intangible drilling costs, and depletion deductions reduce both AGI and NII.
  • Invest in growth stocks and defer gains until the stocks are sold; offset gains with losing positions.

These are some of the ways to reduce exposure to the 3.8% NIIT. Please contact us if you have questions or need additional information to eliminate or minimize your exposure to this new surtax.




Year-end Mutual Fund Purchases

Many taxpayers make adjustments to their investment portfolio near year-end to take profits, to recognize tax losses, to reallocate their assets, and for various other reasons. When making purchases of mutual funds near year-end, however, you should be wary of actually purchasing a tax liability.

This is the danger: mutual funds must pay out their gains and income to shareholders at least annually to avoid taxation at the fund level. Income funds and balanced funds typically make taxable distributions to shareholders either monthly or quarterly. However, equity funds often make one annual distribution at or near the fund’s year-end. These taxable distributions to shareholders reflect the income and net gains realized by the fund for the period.

An equity fund that appears to have a minimal or negative overall return for the year may actually make taxable distributions to shareholders at the end of the year. This is because of gains the fund recognized on appreciation that occurred in prior years. From an investor’s standpoint, these distributions do not result in any real net benefit; instead, the distributions are already reflected in the fund’s per share value. So after a distribution is made, the share value is reduced accordingly.

Because of the income distributions mutual funds must make, the timing of a share purchase in a particular fund can affect your tax liability. Purchasing shares just before the record date (i.e., the date that determines which shareholders will receive the distribution) is essentially purchasing a tax liability. This is because the (inflated) price of the shares just before the distribution includes the income that is about to be paid out.

When the distribution is made, the price per share falls, though the total investment value remains the same (i.e., if the income distribution is reinvested, the shareholder now owns more shares with a lower value per share; if the income is distributed, the cash received plus the share value equals the shareholder’s investment before the distribution). Thus, mutual fund investors should pay particular attention to when they invest. This is especially true for equity funds that make only one distribution each year. So be sure to check with the mutual fund company to determine the status and nature of any forthcoming dividends when purchasing equity mutual funds late in the year to avoid an unexpected tax liability.





Qualified Charitable Distributions

IRA owners and beneficiaries who have reached age 70 1/2 are permitted to make donations to IRS-approved public charities directly out of their IRAs. These so-called qualified charitable distributions, or QCDs, are federal-income-tax-free to you, but you get no charitable deduction on your tax return. But, that is fine because the tax-free treatment of QCDs is the same as an immediate 100% deduction without having to worry about restrictions that can delay itemized charitable write-offs. QCDs have other tax advantages, too.

A QCD is a payment of an otherwise taxable distribution made by your IRA trustee directly to a qualified public charity. The funds must be transferred directly from your IRA trustee to the charity. You cannot receive the funds yourself and then make the contribution to the charity. However, the IRA trustee can give you a check made out to the charity that you then deliver to the charity. You cannot arrange for more than $100,000 of QCDs in any one year. If your spouse has IRAs, he or she has a separate $100,000 limitation. Unfortunately, this taxpayer-friendly provision is set to expire at year-end unless extended by Congress.

Before Congress enacted this beneficial provision, a person wanting to donate money from an IRA to a charity would make a withdrawal from his or her IRA account, include the taxable amount in gross income, donate the cash to charity, and then claim an itemized charitable donation.

QCDs are not included in your adjusted gross income (AGI) on your federal tax return. This helps you remain unaffected by various unfavorable AGI-based phase-out rules. It also keeps your AGI low for computation of the 3.8% NIIT. In addition, you don’t have to worry about the 50%-of-AGI limitation that can delay itemized deductions for garden-variety cash donations to public charities. QCDs also count as payouts for purposes of the required minimum distribution (RMD) rules. Therefore, you can donate all or part of your 2013 RMD amount (up to the $100,000 limit on QCDs) and thereby convert otherwise taxable RMDs into tax-free QCDs. Individuals can arrange to simply donate amounts that they would normally be required to receive (and pay tax on) under the RMD rules.

Note that the charity must provide you with a record of your contribution. Also, you cannot receive any benefit from the charity in return for making the contribution. If the donor receives any benefit from the charity that reduces the deduction under the normal rules, tax-free treatment is lost for the entire distribution.



Itemized Medical Deductions

Before this year, you could claim itemized deductions for medical expenses paid for you, your spouse, and your dependents to the extent those expenses exceeded 7.5% of your adjusted gross income (AGI). But the rules have changed for the worse in 2013 and beyond.

Due to the 2010 Affordable Care Act, the old 7.5%-of-AGI hurdle is now 10% for most taxpayers in 2013. An exception applies for taxpayers, or their spouse if married, who are age 65 or older on December 31. They can still use the 7.5%-of-AGI threshold through 2016.

Many individuals have flexibility regarding when certain medical expenses will be incurred. They may benefit from concentrating expenses in alternating years. That way, an itemized medical expense deduction can be claimed every other year instead of lost completely if it doesn’t exceed the threshold.

Medical expenses paid for a taxpayer’s dependent, such as a parent or grandparent, can be added to the taxpayer’s own expenses for itemized medical expense deduction purposes. For a person (other than a qualified child) to be the taxpayer’s dependent, the taxpayer must pay more than half of that person’s support for the year. If that test is passed, the taxpayer can include medical expenses paid for the supported person—even if the taxpayer cannot claim a dependency exemption for that person. While the taxpayer must still clear the applicable AGI threshold to claim an itemized medical expense deduction, including a supported person’s expenses in the computation can really help.



Find Property Tax Exemption Info for Disabled Veterans Online
U.S. Military veterans, deemed to be 100% disabled as the result of military service, must have filed an affidavit by Dec. 10 with their local government confirming eligibility for property tax relief provided under Public Act 161 of 2013, which Gov. Rick Snyder signed into law last month. The exemption is available for current and future years, but not for property taxes paid prior to 2013. For more information on P.A. 161 of 2013, visit the State Tax Commission page, under Local Government Services, on the Michigan Department of Treasury website. Also, read more in this press release.



US Government Recommits to Renewable Energy Ramp-up

James Montgomery, Associate Editor,
December 05, 2013

New Hampshire, USA -- Today the Obama administration issued an executive order re-establishing one of the proclamations from the climate change plans it issued this summer: significantly boosting the U.S. federal government's support of renewable energy to supply 20 percent of its energy consumption by 2020.

The U.S. federal government's broad climate-change initiatives issued earlier this summer gained a lot of notice for their emphasis on standards for carbon pollution reductions and energy efficiency. They also pressed the Department of Interior (DOI) to expand permitting of renewable energy projects on federal lands. Now the Obama administration is revisiting and reiterating another part of that broad climate plan: expanding the federal government's electricity consumption from renewable sources to 20 percent by 2020, nearly triple the current 7.5 percent. (It adds the window of uncertainty, though, that such a target must be "economically feasible and technically practicable.")

The order maintains the definitions of "renewable energy" as those laid out in Executive Order 13514 circa 2009: solar, wind, biomass, landfill gas, ocean (tidal, wave, current, and thermal), geothermal, municipal solid waste, and new hydroelectric generation capacity from existing projects (increasing their efficiency or adding more capacity).

This 20/2020 renewables mandate prioritizes on-site production or procurement, retaining renewable energy certificates (REC); followed by purchasing the electricity and RECs, and then just purchasing the RECs alone. For on-site projects the government urges a focus on brownfield sites including contaminated lands, landfills, and mines. There's also a plan to add Green Button pilots on federal facilities, coordinating efforts among the DOE, FEMP, and EPA, which will update the Energy Star Portfolio Manager to include building energy usage data using Green Button.

Here's the official roadmap being laid out for federal renewable energy consumption:

·         Fiscal 2015: Not less than 10 percent

·         Fiscal 2016-17: Not less than 15 percent

·         Fiscal 2018-19: Not less than 17.5 percent

·         Fiscal 2020: Not less than 20 percent

Note the U.S. military arms already are under a legal mandate to reach 25 percent renewable energy consumption by 2025, which will amount to 1 GW of new installed capacity each for the Army, Navy, and Air Force.

What's missing, of course, is any direction or definition on how agencies and federal facilities should build or obtain all this new capacity, what is the overall mix among renewable sources, how much money this effort will save, or how it will be paid for.

Nevertheless, "this is a landmark moment in our nation's history," proclaimed Rhone Resch, president/CEO of the Solar Energy Industries Association (SEIA). The solar industry is already doing its part, with more than 10 GW of installed capacity and representing nearly all the nation's new electricity generation. He also urged the administration to set up a more modernized procurement process that lets agencies adopt long-term power purchase agreements (PPA).

Nathanael Greene at the National Resources Defense Council (NRDC) applauds the new standards, but points out that Congress needs to throw its weight behind renewable energy as well, by extending federal tax credits, most notably the PTC.

Back in June the Union of Concerned Scientists' Mike Jacobs suggested those 20/2020 goals shouldn't be too difficult given that many states are already approaching or even exceed that number.

We'll keep updating this story as more details and analysis becomes available.




Mileage Rates Released for 2014

washington, D.C. (December 8, 2013)


By Jeff Stimpson


The IRS has issued its 2014 optional standard mileage rates to calculate deductible costs of operating an automobile for business, charitable, medical or moving purposes.

Beginning on Jan. 1, 2014, the standard mileage rates for the use of a car, van, pickup or panel truck will be:

·         56 cents per mile for business miles;

·         23.5 cents per mile driven for medical or moving purposes; and,

·         14 cents per mile driven in service of charitable organizations.

The business, medical and moving expense rates decrease one-half cent from the 2013 rates. The charitable rate is based on statute.

The standard mileage rate for business is based on an annual study of the fixed and variable costs of operating an automobile. The rate for medical and moving purposes is based on the variable costs.

Taxpayers can also calculate actual costs of using their vehicle, rather than using the standard mileage rates. They may not use the business standard mileage rate for a vehicle after using any depreciation method under the Modified Accelerated Cost Recovery System or after claiming a Section 179 deduction for that vehicle.

In addition, the business standard mileage rate cannot be used for more than four vehicles used simultaneously.

These and other requirements are in Rev. Proc. 2010-51. Notice 2013-80 contains the standard mileage rates, the amount a taxpayer must use in calculating reductions to basis for depreciation taken under the business standard mileage rate and the maximum standard automobile cost that a taxpayer may use in computing the allowance under a fixed and variable rate plan.


Tax Prep Fees on the Rise




Tax practitioners will be charging more this year for tax preparation, according to an annual survey by the National Society of Accountants.

Taxpayers can expect to pay an average of $261 for an itemized Form 1040 with Schedule A and a state tax return, the survey found, compared to the $246 reported in last year’s survey.

The fee for non-itemized return will also rise, to $152 for a Form 1040 and state return, against $143 last year.

“The IRS says it takes an average of four hours just to complete and submit a Form 1040,” says NSA executive vice president John Ams. “Add at least another hour if you also have to complete a state return. You have to ask, ‘How much is your time worth?’”

Fee information was collected in a survey of tax preparers conducted by NSA. The tax and accounting firms surveyed are largely owners, principals and partners of local “Main Street” companies who have an average of more than 26 years of experience.

The survey also reported the average fees for preparing other Internal Revenue Service (IRS) tax forms, 





Disclaimer: This article is for general information purposes only, and is not intended to provide professional tax, legal, or financial advice. To determine how this or other information in this newsletter might apply to your specific situation, contact us for more details and counsel.


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