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Weddings mean tax changes

It may not be as high on the wedding plan checklist as the venue, invitations and attire, but there are important tax issues created by a marriage that warrant some prompt attention following the wedding.

Name change. Anytime names are changed, it should be reported to the Social Security Administration (SSA). The name associated with an individual’s Social Security Number (SSN) should match the name on the tax return. To change a name with the SSA, file Form SS-5, “Application for a Social Security Card.” The form is available from, by calling (800) 772-1213, or from the local SSA office. 

Address change. Let the IRS know about an address change by filing Form 8822, “Change of Address.” Also notify the U.S. Postal Service at to forward mail. You may also report the change at your local post office.

Change tax withholding. A change in marital status requires that a new Form W-4, “Employee’s Withholding Allowance Certificate,” be furnished to the employer(s). Combined incomes may move the taxpayers into a higher tax bracket. Search for the IRS Withholding Calculator tool for help completing the new Form W-4. 

Change in filing status. Marital status is determined as of December 31 each year. Spouses can choose to file jointly or separately each year. We can help you make that determination by calculating your tax liability both ways. 

Change in circumstances. Taxpayers receiving an advance payment of the health care premium tax credit in 2014 should report changes in circumstances, such as a change in income or family size, to the Health Insurance Marketplace. Also, the Marketplace should be notified when you move out of the area covered by your current Marketplace to ensure you get the proper type and amount of financial assistance.


Small business resources

If you are a small business owner, here is a list of organizations that may have tools, information, and other resources to help your business grow.

Business USA ( The mission of Business USA is to be a centralized, one-stop platform for businesses to access government services to help them grow and hire. Business USA uses technology to connect businesses to the services and information relevant to them, regardless of where the information is located or which government agency’s website, call center, or office they go to for help.

Department of Agriculture — Office of Small and Disadvantaged Business Utilization (OSDBU) ( mission of the OSDBU is to provide maximum opportunities for small businesses to participate in USDA contracting activities by establishing and attaining small disadvantaged business program goals.

Department of Commerce ( The Commerce Department’s mission is to create the conditions for economic growth and opportunity by promoting innovation, entrepreneurship, competitiveness, and stewardship.

Department of Labor — Occupational Safety and Health Administration (OSHA) ( OSHA’s mission is to assure the safety and health of America’s workers by setting and enforcing standards; providing training, outreach, and education; establishing partnerships; and encouraging continual improvement in workplace safety and health. ( The U.S. government’s official Spanish language web portal.

Service Corps of Retired Executives (SCORE) ( SCORE is a nonprofit organization that is federally supported to provide free business mentoring and low-cost training to aspiring and existing business owners.

Small Business Administration (SBA) ( The mission of the SBA is to maintain and strengthen the nation’s economy by enabling the establishment and viability of small businesses and by assisting in the economic recovery of communities after disasters.

Small Business Development Centers (SBDCs) (, which are located across the U.S., are hosted by leading universities and state economic development agencies. SBDC advisors provide free business consulting and low-cost training services including business plan development, financial packaging and lending assistance, exporting and importing support, procurement and contracting aid, and health care guidance.

Social Security Administration ( The Social Security Administration is the nation’s primary income security agency. It pays retirement, disability, and survivors benefits to workers and their families; administers the Supplemental Security Income program; and issues Social Security numbers.

State and Local Contacts ( State and Local Government on the Net directory provides convenient one-stop access to the websites of thousands of state agencies and city and county governments.

U.S. Department of Labor (DOL) ( The DOL administers a variety of federal labor laws, including those that guarantee workers’ rights to safe and healthful working conditions, a minimum hourly wage and overtime pay, freedom from employment discrimination, unemployment insurance, and other income support.

U.S. Equal Employment Opportunity Commission (EEOC) ( mission of the EEOC is to eradicate employment discrimination at the workplace. The U.S. government’s official Web portal.


Paying partnership expenses

Individual partners are often required to incur business expenses that will not be reimbursed by the partnership (such as travel and entertainment expenses). Partners are generally not entitled to deduct partnership expenses on their individual income tax returns. However, if the partnership’s agreement or practice requires a partner to pay certain partnership expenses from his or her own funds, with no right to reimbursement from the partnership, the partner is entitled to deduct, in arriving at AGI (on Schedule E), these as trade or business expenses on his or her personal return. These Schedule E deductions should also generally be deducted in computing net self-employment income on Schedule SE.

Strategy: Partners should make explicit the “requirement” that partners incur partnership expenses without right of reimbursement, either as a provision of their partnership agreement or through a written policy of the partnership.


Unneeded life insurance policies could be a significant source of cash

Besides providing loved ones with a source of funds for income replacement in the event of an untimely death of the family’s breadwinner(s), people buy life insurance for a variety of reasons:

      To fund a buy-sell agreement or key person insurance for a business.

      To satisfy a lender’s requirement when a loan was made.

      To fund expected estate taxes that might have decreased since the policy was taken out.

Whether it was one of these needs or something else, circumstances change and sometimes people find that they no longer need, or perhaps can no longer afford, policies that were taken out several years ago.

If this describes your situation, before you allow a term life policy to lapse (or turn in a whole life policy for its cash surrender value), we recommend that you consider whether it might be more beneficial to sell the policy. Known in the industry as a life settlement, selling a policy can sometimes net the policyholder a sufficient sum that’s far in excess of a whole life policy’s cash surrender value or a term policy’s unearned premium. An ideal candidate for a life settlement is an insured individual over the age of 70 who no longer needs or wants the life insurance policy and who has experienced a significant change in health since the policy was bought.

If you have an unneeded policy that you’re thinking about getting rid of or just letting it lapse, we’d be glad to talk to you about whether it might make sense to try to sell it instead.



Deducting medically necessary home improvements

Individuals can claim medical tax deductions for the cost of special equipment installed in a home, or for home improvements, if the main purpose is to accommodate the individual’s, spouse’s, or dependents’ medical needs. Medically required home improvements that would not ordinarily be for medical care are deductible only to the extent the costs exceed the increase in the home’s value.

Certain home improvements made to accommodate a disabled condition do not usually increase the value of the home, and the cost can be included in full as medical expenses. These improvements include, but are not limited to, the following items:

      Moving or modifying electrical outlets and fixtures.

      Installing porch lifts and other forms of lifts. (Exception: Elevators generally add value to the house.)

      Installing railings, support bars, or other bathroom modifications.

      Constructing entrance or exit ramps.

      Widening doorways at entrances or exits.

      Widening or modifying hallways and interior doorways.

      Lowering or modifying kitchen cabinets and equipment.

      Modifying stairways.

      Adding handrails or grab bars.

      Modifying hardware on doors.

      Modifying fire alarms, smoke detectors, and other warning systems.

      Modifying areas in front of entrance and exit doorways.

      Grading the ground to provide access to the residence.




Identifying charities eligible to receive tax deductible contributions

If you’re counting on a federal income tax deduction for donating to a charity, you should confirm that the charity has been approved by the IRS as a tax-exempt organization eligible to receive deductible contributions.

For some charities, this is easy — everybody knows the American Red Cross, the Salvation Army, and Goodwill are IRS-approved tax-exempt charities. But what about verifying that tax deductions are allowed for contributions to less well-known charities? Good question.

To determine which organizations are tax-exempt outfits eligible to receive deductible contributions, follow this procedure.

      Access the IRS website home page at

      At the top of the home page, enter “EO Select Check” in the search bar.

      Click on “EO Select Check.”

      Click on the blue “Exempt Organizations Select Check Tool” box.

      Under “Limit search to organizations that (select only one),” select “Are eligible to receive tax-deductible contributions.”

      To the extent you’ve got the requested information, fill in the blanks for the charity you’re searching for. You probably won’t have the charity’s EIN, but if you know its name and the city and state where it’s located, that should be sufficient. Hit the search key.

      A (probably long) list of charities will appear. Scroll down until you find the one you’re looking for. By clicking on the arrow beside the “Legal Name” link at the top of the list, you can order the list alphabetically by name of organization. You can also organize the list by the cities where organizations are located.

      Once you find the line for the charity you’re searching for, click on the “Deductibility Status” link on the far right. For example, if the status is PC, the organization is a public charity (the most common kind). You can make deductible donations of up to 50% of your adjusted gross income (AGI) to one or more public charities. (AGI is the number at the bottom of page 1 of your Form 1040; it includes all your income items and subtractions for certain deductible items such as IRA contributions, alimony paid to an ex-spouse, and self-employed health insurance premiums.) If the organization’s status is SOUNK, the outfit is an organization that supports a public charity. You can make deductible contributions of up to 50% of AGI to such organizations. If the status is PF, the organization is a private foundation. You can make deductible contributions of up to 30% of AGI to one or more private foundations. Contact us for details on the deduction limitations that apply to charitable contributions.

It is not necessarily a deal-breaker if an organization is not on the IRS-approved list. For example, some churches and church-related organizations may not appear on the IRS website’s list of tax-exempt organizations because they are not actually required to apply to the IRS for tax-exempt status. For a non-church organization, not being on the IRS-approved list doesn’t necessarily mean it’s not IRS-approved, but serious skepticism is appropriate. If you’re still considering a contribution, ask the organization to send you a copy of the IRS determination letter that recognizes its tax-exempt status.

It’s smart to be skeptical about making significant contributions to organizations that claim to be tax-exempt organizations. Taking the steps outlined in this letter is probably a good idea even if you don’t care about a tax write-off. If you have questions or want more information about deducting charitable contributions, please contact us.




IRS Warns Businesses Not to Get Caught in Backup Withholding



The Internal Revenue Service has issued a notice warning businesses not to get caught in backup withholding if the name and taxpayer identification number submitted on a Form 1099-K doesn’t match the IRS’s other records.

Notice 1430, “Don’t Get Caught in Backup Withholding,” contains information about the possible requirement to have backup withholding kept from receipts.

The IRS has begun requiring more information reporting from credit and debit card providers and is using it to match the data it receives from tax returns to safeguard against tax fraud. In the notice, the IRS tells businesses that the name and taxpayer identification number, or TIN, submitted on Form 1099-K, “Payment Card and Third Party Network Transactions,” by a payment card processor or third-party settlement organization does not match IRS records.

“If a payment card processor or third-party settlement organization submits a Form 1099-K for tax year 2013 with an incorrect TIN or name for you, the payments you receive for your payment card or third party network transactions will be subject to backup withholding,” the IRS notice said. “This means the payment card processor or third-party settlement organization will be required to withhold 28% from each payment to you beginning as early as September 2014. If you operate as a partnership or subchapter S corporation, any monies withheld due to an incorrect name or TIN can only be claimed by the partners and shareholders on their individual income tax returns for their shares of the withheld amounts. The monies are not refundable to the partnership or subchapter S corporation.”

The IRS is advising businesses to immediately contact their payment card processor or third-party settlement organization to remedy the problem.

“Verify that the name and TIN the payment card processor or third-party settlement organization has in its records matches the exact name and TIN on your income tax return,” said the IRS.

For additional information on Form 1099-K reporting and backup withholding, visit and enter the keywords, “Third Party Reporting Center” or “Backup Withholding.” The Third Party Reporting Information Center - Information Documents  page contains additional information.




5 Steps To Building The Perfect Job Interview


Hiring well is crucial to any organization’s success, and an important part of that is the interview. After all, the resume can give you some basics, but the interview is your primary chance to uncover real insight about your applicant pool.

But how does that happen? Can you really tell the strength of a candidate from a 20-minute interview?

The answer is yes, if the interview is built correctly. The keys to a great interview are:

1. Having A Clear Understanding of the Job

The goal of any interview is finding out if the candidate has the skills and personality traits necessary for the position. But that can only happen if you know what skills and what personality traits are necessary for the position.

That means clearly defining a profile of a perfect candidate before advertising a position (ESPN does a great job of this). Then, you can design an interview around finding that person.

2. Building A Structured Interview

Studies have shown that structured interviews are more effective than unstructured interviews. This is partly because structured interviews provide more objective data, whereas unstructured interviews often lead to a hiring manager “trusting their gut” and are prone to bias (Google agrees).

What does that mean? Each candidate gets the same questions in the same order. This way, you can make apples-to-apples comparisons between applicants.

3. Using The Talent You Already Have

Ensuring a candidate has the right skills to do a job is vital, and the best way to determine that is to use the talent you already have. For example, if you need a developer, it makes sense to involve your existing software engineers to help you build the interview and assess the applicants.

Sounds obvious, but there are some examples of hiring managers who, for whatever reason, don’t involve their employees in their hiring process. But it makes good sense to use people under you who have a different set of skills and a different perspective while hiring.

4. Asking Tough And Relevant Scenario Questions

Behavioral interview questions should definitely be part of any job interview (Warren Buffettdoes a great job of this). Specifically, giving candidates a worst-case scenario they might face on the offered job is a great way to gain insight into their thought process.

These types of scenario questions often provide better insight than asking an applicant about an obstacle they had to overcome in the past, for example. Generally, the person is more likely to give a sugar-coated example that doesn’t provide the same sort of insight an on-the-spot scenario can garner.

5. Ensuring The Candidate Wants What You're Offering

We all hear about Zappos and the importance of hiring for cultural fit. What that really means is matching what the candidate wants to what you offer. And the best way to find that out is again through behavioral interviewing, such as asking an applicant about their biggest accomplishment.

So if you offer, say, an independent environment and you have someone whose biggest accomplishment involved working with a team, it probably isn’t going to be a great fit. The key here is not finding a person you want to get a beer with, but instead a person who wants what your organization offers.


The key to designing the perfect job interview comes in the preparation. And that means understanding what type of person you’re looking for and then using the people around you to ensure you get that person.

Granted, hiring can be a pain and everyone is already busy with everything else. But some investment ahead of time can mean bringing on better people, which pays off ten-fold in the long run.

About VoiceGlance

VoiceGlance is a cloud-based hiring tool used by forward-thinking companies to hire smarter, instead of harder. Learn more here.



Learn about Our Tax System with “Understanding Taxes”

Did you know there’s a free, online program to help teachers and students – or others who may be interested – learn the “hows” and “whys” of taxes? The IRS calls it “Understanding Taxes.” It was designed by the IRS and teachers to make learning about federal taxes as easy as A-B-C.

  • Accessible (web-based)
  • Brings learning to life
  • Comprehensive

Here are six more reasons to check out the Understanding Taxes program:

1. There are thirty-nine lessons available 24/7 on The program helps you learn with lessons that are easy, relevant and fun.  

2. The site map is user friendly. You can quickly look through the program and skip to the part you want.

3. A series of tax tutorials guide you through the basics of tax preparation. Another feature is a chance to test your knowledge through tax trivia. There’s also a glossary of tax terms.

4. If you’re a teacher, you can customize the interactive program to fit your own style. You can use your own lesson plans and plan your own activities. It’s easy to add to your school’s curriculum.

5. You don’t need to register or login to use the program. You can take a break and return to where you left off whenever you choose. Just take note of the page and lesson number before you leave the page. 

6. The program is a great way to learn about the history and theory of taxes in the USA.

You can use the program anytime during the year. Just visit and type “Understanding Taxes” in the search box. The IRS usually updates the content each fall so that it reflects current tax law and tax forms.



Scam Phone Calls Continue; IRS Identifies Five Easy Ways to Spot   Suspicious Calls

WASHINGTON — The Internal Revenue Service issued a consumer alert today providing taxpayers with additional tips to protect themselves from telephone scam artists calling and pretending to be with the IRS.

These callers may demand money or may say you have a refund due and try to trick you into sharing private information. These con artists can sound convincing when they call. They may know a lot about you, and they usually alter the caller ID to make it look like the IRS is calling. They use fake names and bogus IRS identification badge numbers. If you don’t answer, they often leave an “urgent” callback request.

“These telephone scams are being seen in every part of the country, and we urge people not to be deceived by these threatening phone calls,” IRS Commissioner John Koskinen said. “We have formal processes in place for people with tax issues. The IRS respects taxpayer rights, and these angry, shake-down calls are not how we do business.”

The IRS reminds people that they can know pretty easily when a supposed IRS caller is a fake. Here are five things the scammers often do but the IRS will not do. Any one of these five things is a tell-tale sign of a scam. The IRS will never:

1.Call you about taxes you owe without first mailing you an official notice.

2. Demand that you pay taxes without giving you the opportunity to question or appeal the amount they say you owe.

3.Require you to use a specific payment method for your taxes, such as a prepaid debit card.

4.Ask for credit or debit card numbers over the phone.

5.Threaten to bring in local police or other law-enforcement groups to have you arrested for not paying.

If you get a phone call from someone claiming to be from the IRS and asking for money, here’s what you should do:

  • If you know you owe taxes or think you might owe, call the IRS at 1.800.829.1040. The IRS workers can help you with a payment issue.
  • If you know you don’t owe taxes or have no reason to believe that you do, report the incident to the Treasury Inspector General for Tax Administration (TIGTA) at 1.800.366.4484 or at
  • If you’ve been targeted by this scam, also contact the Federal Trade Commission and use their “FTC Complaint Assistant” at Please add "IRS Telephone Scam" to the comments of your complaint.

Remember, too, the IRS does not use email, text messages or any social media to discuss your personal tax issue. For more information on reporting tax scams, go to and type “scam” in the search box.




Possible Relief for Consumers with Low Credit Scores

The Agbay Group

Anthony D. Agbay


Changes to a widely used credit score may make it more likely for consumers struggling with low scores to obtain loans. Fair Isaac Corporation's newest FICO® credit scoring model will change certain aspects of how it computes the information on an individual's credit report. The changes come in the wake of discussions with lenders and regulators looking to find ways to increase consumer lending without creating additional credit risks.

Highlights of the changes

These are some of the changes included in the FICO® Score 9 formula:

  • Any debt that has been repaid or settled with a collection agency will not be included in a consumer's credit score calculation
  • Medical debt that is in collections will have a smaller effect on a consumer's credit score
  • The scoring formula will incorporate new techniques to better assess the risk of consumers with limited credit histories

Why is there a focus on medical debt?

More than half of collections on credit reports are related to medical bills, according to the Federal Reserve. Quite often, consumers may not even realize that medical debt has gone into collections if they have had problems with billings and insurance payments. These collections issues can remain on a credit report for up to seven years, regardless of whether they were later resolved, and can affect consumers' ability to obtain loans (Source: CFPB Press Release, CFPB Study Finds Medical Debt Overly Penalizes Consumer Credit Scores, May 2014).

What do the changes mean for consumers?

According to Fair Isaac Corporation, the changes to its scoring formula could result in some consumers receiving a FICO® Score increase of up to 25 points. Even small credit score increases may help consumers qualify for better interest rates from lenders (although other factors are also considered).

Fair Isaac Corporation isn't the only credit scoring company that has adjusted the calculations for its credit scoring formula. A lesser known company, VantageScore Solutions, already has a credit scoring formula that does not include paid collections on its credit reports. Other credit scoring companies may follow suit and make adjustments to their credit scoring calculations.

Fair Isaac Corporation hopes to begin releasing the software for FICO® Score 9 in the fall. However, it is up to individual lenders whether or not to upgrade to the newer version. As a result, it may take some time to gauge whether the changes will have an impact on consumer lending.



One Thing at a Time Yields the Best Results
By Jeff Davidson


Every day, you engage in some form of multitasking. This might feel temporarily satisfying, but multitasking cannot compete with the long-term productivity of handling one thing at a time. 

To become a master of doing one thing at a time, pick an activity that you enjoy, and where there's a high probability that you can engage in that activity without doing anything else. It could be driving your car with the radio off, or reading in your favorite armchair without having any snack. Here are a few tips to get you started:

  • Start with small segments. If you're reading in your favorite armchair, promise yourself you'll go ten minutes without any snacks the first night. On the second night go 15 minutes, then 20 minutes, and so forth. Eventually you may get to the point where you can read for an hour or more without having to resort to snacks. I know, you like to read and have snacks, but this is a practice run. Your ultimate goal will be to focus on work-related tasks one at a time, so that your concentration and quality of performance goes up, your anxiety level goes down, and the clock slows down.
  • If you're trying to engage in reading, conceptual or breakthrough thinking, or creative problem solving, find as quiet a place as possible. The old argument you gave your parents when you were studying in high school—the one about the radio helping you to do better—is for the birds.
  • If you're surrounded by various types of tasks competing for your attention, identify the one that's most important to tackle and stay with it until completion, or for as long as you can. If you're temporarily pulled away by something else, return to the important task at hand, and again stay with it to completion, or for as long as you can.
  • If you are paid to simultaneously handle a number of items competing for your attention, practice the ability to give at least short bursts of your full attention to one task at hand before turning away to something else that begs your attention.



Fly Me

If you've ever noticed airline reservation attendants in the middle of a pressure situation, you know what I mean. Suppose the plane is going to be leaving in a matter of minutes and several passengers have arrived late. Rather than trying to deal with three or four passengers at the same time, the ticket agent deals with one person and ticket situation at a time, often not even raising his head from the computer screen. He is ensuring the ticket will be correct once it's printed. 

The same observation can be made of a bank teller, a bus driver, or a construction worker walking on scaffolding five stories high. Indeed, when you look around, you find all kinds of people who are adept at doing one thing at a time. 

Here are more supporting steps:

  • Initiate personal balancing techniques. Take deep breaths, stare out the window, envision yourself tackling the situation easily, or close your eyes for a few seconds before confronting the task again.
  • Observe the people in your organization who concentrate well. What do they do different than the rest? Talk to them, learn from them.
  • If it's necessary, bring earplugs to work. Use a sound screen if it helps.
  • Let others in on your crusade to increase your powers of concentration.



When It's Okay to Double Up On Activities

You need to disengage in multitasking far more frequently than you know. However, there are times when it's perfectly permissible to do more than one thing at a time. Most of those times occur away from work. Obviously, at dinner with a friend or loved one you'll be talking and eating simultaneously. Generally, it's okay to drive and listen to the radio, CDs, or your iPod. The exception is when the decibel level is so high that your concentration is impaired.

The issue becomes foggy when it comes to using a cell phone or smoking. Both have the potential to diminish your concentration and increase your probability of being involved in an accident. Some people argue that cell phones come with speakers, so you can hold a phone conversation while keeping both hands on the wheel. 

The problem with being engaged in conversation and performing other tasks is that speaking requires far more brain activity than the passive act of listening to the radio or a CD player. If you insist on engaging in conversations with your cell phone while in the car, perhaps it's best for you to pull off to the side of the road.

Exercising with an iPod is not terrible, but it's not the greatest. I was at my health club recently and was amused by a lady who was not only on the stair climber with an iPod, but she also pulled out a book and proceeded to read it. I almost asked her if she wanted to chew some gum to see if she could do four things at once.

The physical exercises in which you engage are ideally their own reward. Still, I know many people who use workout exercise DVDs, or get on a stationary bike while watching a movie or sports on television. It seems to work well for them, so there's probably no real harm.

You may think you need to be entertained or constantly active. This is not true. The more often you can get into the habit of doing one thing at a time, the better you'll do, and the more time will slow down for you.

About the Author
Jeff Davidson, CMC, MBA, is The Work-Life Balance Expert®. A speaker at many large companies, Jeff believes that career professionals today in all industries have a responsibility to achieve their own sense of work-life balance. He supports this quest through his websites and Jeff can be reached at




How to Prevent the Five Rookie Mistakes People Make in Their First Job
By Vicky Oliver

A new study found that 2014 college grads face a challenging job market and may end up having to take a low-quality job to start with. But whether your starter job will put you on the path to your dream job or not, there are some basic, informal rules of behavior that every new employee needs to learn. 

As a leader in your organization and someone who should serve as a mentor to the younger professionals, here are some classic mistakes you may see today’s Gen Yers make. So if you are prepared to deal with these workplace challenges, here is some advice to dispense.

Mistake #1: Acting like a "temp" worker.

You have a BA in marketing and communications, but the only job you could find was assistant manager in a retail clothing store at the mall. Is this your dream job? Absolutely not, and you let your coworkers (but not your supervisor) know how you feel. The classic rookie mistake here is doing exactly what you're asked to do but nothing more, with little curiosity or intellectual investment. 

Advice: If you truly believe you have nothing to learn from this job, then you're going to have a really hard time when you do find a job that's more aligned with your career goals. Tap into your expertise and learn about this company's marketing and advertising. Step outside your comfort zone, and ask about floor design, customer satisfaction metrics, or employee retention. Show your supervisor that you're interested in the business, and see what kinds of challenging tasks or interesting industry information pop up. There's no such thing as a "worthless job." 

Mistake #2: Forgetting the 4Cs of etiquette.

You don't live in a dorm anymore, and the workplace isn't an extension of your social network. Millennials at a starter job tend to forget that a job, even if it's fun or casual, is still a place where there are unspoken norms of behavior and decorum. 

Advice: A quick way to make a good impression is to follow my 4Cs of etiquette: Courtesy, Consideration, Camaraderie, and Class. Be extremely polite; use "please," "thank you" and "excuse me." Don't interrupt others, and try to listen more than talk. Keep your voice low and your cell phone on vibrate. Do everything you can to assist coworkers. And be a model of good hygiene and professional dress.

Mistake #3: Ignoring the people part of the job.

You think you were hired for your computer skills, not your people skills. So you go to work each day and do what's asked of you in the best, most efficient way you know. That's great, but do you know the name of all the senior people in the business, and who works under them? Come to think of it, do you even know the names and jobs of all the people working next to you?

Advice: Find out who runs each department and learn the names and titles of everyone at the workplace. As a new employee, this will save you potential embarrassment when discussing work-related issues with both your higher-ups and colleagues. Learn who the "go-to" person is on each team. (Often this has little to do with his or her title.) Once you figure out who's who in your office, do your due diligence on the client side as well. This will make you a more effective and efficient employee.

Mistake #4: Being too passive and timid.

You're in the real world now and it frankly feels intimidating. Everyone seems to know more than you do. The stuff you learned in college doesn't help much with the tasks your manager expects you to perform. So you suffer in silence. You feel shy. You don't speak up in meetings. And you try to figure things out on your own, lest others realize how uptight you feel. The office bully seems to be eyeing you; you have a target on your back!

Advice: Guess what? Almost everyone at your job felt just like you did when you started. No one expected you to know everything. In fact, your boss and coworkers are waiting for you to ask questions. This shows that you are curious and want to learn. There's no shame in saying, "Hey, I'm a bit lost. Would you mind explaining this concept a bit more so I can understand?" The smartest people in your company are those who know they have a lot to learn.

Mistake #5: Trying too hard to be liked.

At school, you were known as the funniest guy in the room — famous for your pranks, jokes, and general good cheer. So the first month of your job you make it a point to go out to the local pub with everyone in your department at least once. You bring boxes of donuts in every Friday. You make irreverent jokes to get people to not be so serious.

Advice: It's great to be popular, but it's better to be respected in a work situation. Especially at new jobs, over-socializing and too much people pleasing can really backfire. You don't know enough about office politics; who's shaping the culture; which people gossip; who has the most informal power and influence; and who might feel envious or competitive with you. It's better to be observant and quietly charming in the beginning. That way, you won't find yourself allied with the wrong people, pigeonholed as a party animal, or disliked by key coworkers. 

About the Author 

Vicky Oliver is a Manhattan-based job interview consultant, and the bestselling author of five career development books, including 301 Smart Answers to Tough Interview Questions, 301 Smart Answers to Tough Business Etiquette Questions, and Bad Bosses, Crazy Coworkers & Other Office Idiots. She's been featured and interviewed widely in the business media, including Fox News, Wall Street Journal, US News and World Report, Forbes, Fortune, CareerBuilder, and many others. Interested readers may




Ruling in corporate tax case could cost Michigan $1 billion

In a motion asking the court to stay its July 14 ruling, Michigan Attorney General Bill Schuette said there are 134 similar cases filed by out-of-state corporations pending in Michigan courts. / Kimberly P. Mitchell/Detroit Free Press
By Paul Egan 
Detroit Free Press Lansing Bureau


LANSING — A little-noticed tax case the Michigan Supreme Court decided in July could have huge financial implications for the state — costing it more than $1 billion.

In a 4-3 opinion, the court overturned two lower courts, ruling in favor of IBM and against the Michigan Treasury Department in a long-standing tax dispute about how corporations that do business in several states may calculate their Michigan taxes.

The ruling means IBM gets a $6-million tax refund for 2008, rather than the $1.3 million calculated by Michigan Treasury.

But the ruling has implications for many more companies and also could affect Michigan Business Tax cases in the 2009 and 2010 tax years.

And the case has implications beyond Michigan, but Michigan is the first state where a Supreme Court has ruled in favor of out-of-state corporations at the expense of the state Treasury, said Amy Hamilton, a senior writer for Tax Analysts, a publication that caters to tax professionals in law and accounting firms.

The Treasury Department estimates the state’s exposure from the decision at $1.1 billion, plus interest. Just what trickle-down effect the ruling may have on the state’s programs — and ultimately residents — is not yet known. But officials say it would be felt.

In a strongly worded post-opinion motion seeking a rehearing of the case, Attorney General Bill Schuette said the ruling “results in the state potentially owing a budget-busting aggregated tax refund in the hundreds of millions of dollars (not including interest) to mostly out of state corporations.

“The total cost to the state is likely to exceed $1 billion,” Schuette said.

In a separate motion asking the court to stay its July 14 ruling “as to all lower court cases,” Schuette said there are 134 similar cases filed by out-of-state corporations pending in Michigan courts and “there are thousands of potential claims.”

Kurt Weiss, a spokesman for the Michigan Department ofTechnology, Management and Budget, said officials believe most of the impact would be felt in the 2014-15 fiscal year, though there could also be some impact this year.

“It creates a significant problem for the budget,” Weiss said. “We are hoping for reconsideration from the Supreme Court.”

It’s exceedingly rare for the Michigan Supreme Court to reverse one of its own opinions in a rehearing.

And an appeal to the federal courts does not appear to be an option, said Dave Murray, a spokesman for Gov. Rick Snyder.

Justice David Viviano wrote the majority opinion in favor of IBM, joined by Justices Michael Cavanagh and Stephen Markman, and by Justice Brian Zahra, who wrote a separate concurring opinion. Justice Bridget McCormack wrote the dissent, siding with the Treasury Department, joined by Chief Justice Robert Young Jr. and Justice Mary Beth Kelly.

At the heart of the cases are state corporate income tax policies designed to favor local corporations at the expense of out-of-state corporations, Hamilton said. The Michigan Business Tax, which was repealed in 2011, required out-of-state corporations to calculate their taxes based on sales, she said.

But since 1970, Michigan has belonged to a multistate compact, intended to make things easier for out-of-state corporations by providing greater uniformity in how they calculate their tax bills for various states.

Under the compact, corporations have the option of using the state tax law or an optional formula that considers not just sales but the property and payroll a corporation has in a given state.

Weighing in those factors generally leads to lower income tax bills for out-of-state corporations, Hamilton said. And companies such as IBM went to court to argue they could still use that method, despite what the MBT said.

The Michigan Court of Claims sided with the Michigan Treasury Department, as did the Michigan Court of Appeals.

But the Michigan Supreme Court has ruled for IBM, rejecting the state’s arguments that Michigan implicitly repealed the alternative tax calculating option set out in the compact when it passed the MBT — even if it didn’t explicitly do so.

The Legislature “had full knowledge of the compact and its provisions” when it passed the MBT, yet it “left the compact’s election provision intact.”

In fact, the court suggested the Legislature shot itself in the foot in 2011, when it amended the legislation related to the multistate compact to say that starting Jan. 1, 2011, out-of-state corporations no longer had the option of using the three-pronged method to calculate state taxes.

If the Legislature hadn’t wanted corporations to use that method in 2008, 2009 or 2010, it would have made the 2011 statute fully retroactive, the court said.

The ruling arguably gives out-of-state corporations better tax treatment than those located in Michigan.

In her dissent, McCormack said the MBT law and the compact law are “irreconcilably in conflict” and it makes sense to follow the law that is more specific and passed more recently — the MBT.

The Michigan case received no attention in the mainstream media, but corporate number crunchers have been watching. Accounting firms such as Deloitte have sent out alerts to clients in the wake of the Michigan ruling, letting them know the case could reduce tax liability for certain corporations.

“That’s a huge chunk of money for any state and that’s why it’s been watched so closely,” Hamilton said.

Contact Paul Egan: 517-372-8660



Vanessa Williams Faces IRS Tax Lien for $369,249


The Internal Revenue Service has reportedly filed a tax lien against actress, singer and model Vanessa Williams for $369,249 in unpaid taxes dating back to 2011.

The IRS filed the lien in New York City on August 13, according to CNN. Williams, 51, became the first African American to win the Miss America pageant in 1983, but was forced to give up the title after nude photos of her were published in Penthouse magazine.

She began a music career and released two hit albums in 1988 and 1991, generating hit songs like “Save the Best for Last” and “The Right Stuff.”

She also appeared on Broadway in 1994 in the musical version of “Kiss of the Spider Woman,” and then became a movie and TV actress, appearing in the films “Eraser,” “Soul Food,” “Dance with Me,” “Shaft,” “Johnson Family Vacation” and others. Williams also landed recurring roles in the TV series “Ugly Betty,” “Desperate Housewives” and “666 Park Avenue.”



Tax Planning for 2015


This year's tax planning is going to be heavily focused on accelerating deductions and maximizing tax credits, according to Evan Stephens, a tax manager at the business consulting and accounting firm Sensiba San Filippo.

“However, taxpayers should be advised that a number of tax benefits available in 2013 are not yet available in 2014, as Congress has let some very popular provisions lapse for 2014 and has yet to reinstate them into law for 2014,” he said. “These include bonus deprecation, larger Section 179 deductions, and a number of tax credits, such as the Research and Development Credit.”

Stephens recommends practitioners consider the following tips for their clients:

• Pay your real estate taxes, personal property taxes and state income taxes before year end in order to push down your taxable income by increasing you itemized deductions. However, be aware that these deductions can phase out and/or be limited by alternative minimum tax.

• Reduce income by taking advantage of other tax-exempt investment vehicles, such as muni bonds, which are tax-free for federal purposes, and, in most states, home-state bonds are also state tax-exempt for state purposes. However, be wary that investing in municipal bonds that have a private activity element (bonds funding new sports stadiums, etc.), as they are still taxable for Alternative Minimum Tax purposes.

• Congress has not yet committed to reinstating the added benefits of bonus depreciation on fixed asset purchases for 2014. However, there is still a much smaller benefit through a Section 179 deduction of up to $25,000.

• A small blip in the code allows for a much larger, $500,000 Section 179 benefit, for non-calendar year taxpayers whose tax years begin in 2013, but end in 2014. This may benefit some taxpayers who do not carry a calendar year end.

• Congress has not yet reinstated the Research and Development credits or nonbusiness energy credits, but given these programs’ popularity will likely do so before year end. Taxpayers should be sure to keep up with the latest legislation, as some believe these will likely be extended into 2014 at some point in the coming year.

• The business energy credits remain. These credits are for taxpayers that install solar, geothermal, combined heat and power (CHP), geothermal heat pump, fuel cell, microturbine or transition energy property for use in their business. The credit can be as much as 30 percent of the cost of the property.

“Long-term capital gains still maintain their preferential rates, but are subject to the additional 3.8 percent Medicare investment tax,” Stephens said. “Short-term capital gains are subject to ordinary income rates and the 3.8 percent Medicare investment tax.”

He recommends considering tax deferral mechanisms for significant tax gains, such as Section 1031 like-kind exchanges for real property sales or structuring the sale as an installment sale. “An installment sale will spread the gain over several tax periods in order to minimize or entirely avoid the Medicare tax on investment income,” he noted.

“Taxpayers should also consider realizing losses on existing stock holdings while maintaining the investment position by selling at a loss and repurchasing at least 31 days later or swapping it out for a similar but not identical investment. This is often referred to as loss harvesting,” said Stephens. “However, if the 31-day repurchase is not adhered to, the sales are considered a wash sales transaction and the losses are disallowed.”

Finally, Stephens urges his clients to maximize contributions to their tax savings and retirement vehicles such as 401K, 403(b), 457 plans, 529 plans, Health Savings Accounts, SEPs, and Keogh plans.

“If self-employed, set up a self-employed retirement plan,” he said. “Revisit decisions to contribute to a traditional versus a Roth retirement plan. Distributions from Roth IRAs and 401(K)s are not subject to regular tax or the Medicare investment tax and, therefore, are a more attractive retirement savings vehicle for high net worth individuals. On the contrary, if a taxpayer is hovering around the threshold for the new Medicare tax, he or she should consider moving Roth contributions to a traditional retirement plan. Maximizing contributions to a traditional plan could reduce taxable income below the threshold and, therefore, avoid an additional 3.8 percent tax on investment income.”




IRS Recovers $576 Million in Erroneous Tax Refunds from Outside Leads


            The Internal Revenue Service recovered $576 million in erroneously issued tax refunds last year thanks to outside tips provided by financial institutions and other sources such as tax preparers, more than double the amount from three years ago.

A new report from the Treasury Inspector General for Tax Administration examined the IRS’s External Leads Program, which receives leads about questionable tax refunds identified by a variety of organizations, including financial institutions, brokerage firms, government and law enforcement agencies, state agencies and tax preparers. The questionable tax refunds include Treasury checks, direct deposits and prepaid debit cards.

The program helps the IRS to recover erroneous tax refunds and save money, but the TIGTA report noted that improvements are needed to ensure that the IRS verifies the leads on a timely basis.

The External Leads Program has grown from 10 partner financial institutions returning $233 million in calendar year 2010 to 258 partner financial institutions and partner organizations returning more than $576 million in calendar year 2013, the report noted.

“The IRS’s External Leads Program has more than doubled the amount of questionable refunds returned over the past three years, thus saving tax dollars,” said TIGTA Inspector General J. Russell George in a statement. “However, opportunities exist to improve the program.”

Since taking over the External Leads Program in January 2010, the IRS’s Wage and Investment Division has performed outreach in an effort to continuously increase the number of organizations participating in this program. Participation and the number of questionable refunds returned and the dollars associated with them have grown significantly.

However, the IRS is not always verifying leads in a timely manner, and the verification time frame goals differ significantly based on the lead type, according to the report. The goals do not take into consideration the burden on legitimate taxpayers whose refunds are being held until verification is completed.

In addition, the IRS inconsistently tracked the leads in multiple inventory systems, and the inventory systems did not provide key information such as how the lead was resolved, that is, whether the refund was confirmed as erroneously issued or legitimate.

TIGTA recommended that the IRS establish more consistent time frames to verify the leads it receives based on an analysis of the current and historical lead verification data and, once established, communicate the verification time frames with its external partners. The report also suggested the IRS develop a process to ensure that leads are verified within established time frames. The IRS should also consolidate the current four lead inventory tracking systems into a single tracking system and ensure that key information is captured as to how each lead is resolved, according to the report.

The IRS agreed with TIGTA’s recommendations. The IRS said it is evaluating the treatment streams and work processes associated with the various types of referrals received in the External Leads Program to identify appropriate time frames. The agency is also completing other systemic and procedural enhancements to improve the effectiveness of existing reporting capabilities in evaluating program quality and timeliness. In addition, the IRS is evaluating the feasibility and potential benefits of consolidating the four independent inventory tracking databases into one system.

“The IRS is committed to the proactive detection of fraudulent refund claims and preventing their payment from occurring,” wrote Debra Holland, commissioner of the IRS’s Wage and Investment Division, in response to the report. “Unfortunately, those individuals who commit fraud against the U.S. taxpayers continually modify their tactics to evade or avoid detection, which sometimes results in the issuance of erroneous refunds. Since 2010, the IRS has reached out to financial institutions, government entities, federal agencies, software providers and other stakeholders to develop processes whereby those partners may alert the IRS to suspected refund fraud, and return those funds to the Treasury when the suspected fraud is confirmed.”




Ted on Tech: Your AC Outlet is Trying to Kill Your Equipment


There’s an evil demon lurking behind your wall. It’s hiding in your AC outlets, just waiting to wreak havoc on your expensive PCs and peripherals. It’s called line power, and it’s up to no good.

Many of us take our power company’s claim of providing 110 volts AC at the wall outlet as being more or less truthful. It’s not—over time, the voltage at your outlet can vary from 90 volts or less to 140 volts or more. And that’s under normal operating conditions. It doesn’t take into account that the power in this country is full of power drop offs, power spikes, and noise on the line that rides along with the expected sine wave of current sweeping from positive to negative and back (the AC stands for alternating current).

Truth be told, even at the best of times, line power at the outlet is pretty lousy. And that’s not really good for your PC, monitor, printer or any other peripheral that depends on line power. In fact, power supply problems are one of the leading causes of PC problems. The output from one of today’s high-quality power supplies is pretty well regulated, but many motherboard and component failures can be traced back to power supply problems, with voltage and current spikes managing to make their way through the power supply. And that’s if the power supply itself doesn’t die first.

You may think you have the problem aced with that surge protector you picked up at Best Buy, but you don’t. The problem is that the surge protectors you can buy at Best Buy and Walmart serve only one purpose—to stop a large surge of electricity, such as sometimes happens when lightning strikes a power line, from getting through to your PC and peripheral’s power supplies.

Typical power line glitches, such as voltage dipping below 90 volts or topping out at over 160 volts, zip right through a surge protector and can damage or kill the power supplies found in many PCs and laser-based printers and MFPs. Faulty or damaged power supplies account for a significant number of equipment failures.

If Not Surge Protection, Then What?

As the quality of power at the wall outlet continues to deteriorate, the need for power protection increases. And that means that you need some form of power conditioning. Simple power conditioners are available from about $90, and most do a really great job of filtering out line noise and limiting power spikes, shutting down the power when there’s a surge that exceeds a preset limit (150 to 160 volts is a good setting). Don’t mistake these for an Uninterruptable Power Supply (UPS)—a power conditioner doesn’t level out the line voltage, it just prevents catastrophic amounts of power anomalies from making into the power supply. For example, it’s not uncommon for line voltage to dip, and then overshoot when it recovers, dropping to 60 volts and then zooming to 160 volts before settling back down at 110-120 volts. Called overshoot, this kind of power roller coaster might not completely fry your power supply, but can cause component damage on the motherboard or controller circuitry.  

One solution is a power conditioner. There are a number of good units on the market. The one I have the most experience with is the Next Gen PCS from Electronic Systems Protection. They’re not inexpensive, costing between $170-$200, but worth it if you live in an area with poor power, and it provides data logging capabilities as well, though many of you won’t have a use for this feature. A power conditioner (not necessarily this expensive) is probably a good choice if you want to protect a laser-based printer or MFP—something that doesn’t need a controlled shut down.

A more likely solution for most of us, and the one I employ, is a high-end UPS with power conditioning capabilities. I actually have three of these. I have two APCC rack mount UPS units, one 1,500 watts the other 2,000 watts, mounted in the server rack in the basement. I’ve had these for years, and while the batteries need to be replaced every two or three years, they’ve provided good service and protection over the years for the five servers downstairs.

On my production machine, which is where I do most of my mission-critical work, I’ve have a 1,500 watt CyberPower Systems CP1500PFCLCD mini-tower. This model provides excellent power conditioning, a clean sine-wave power output (some UPS devices put out power with a rough waveform that can put a strain on a PC or peripheral’s power supply), and can provide a run time of between two and 11 minutes, depending on the load my PC and display is putting on it at the moment. It has a multi-function LCD display that shows various data such as line voltage, output voltage (116 volts at the moment) and battery charge. This model sells online for around $200, and after a year, I’m very pleased with the way it’s performed through several power outages and brownouts. When the time comes to replace my rack mount units, the APCC UPS models are likely to be replaced with ones from CyberPower.

Whether you go the power conditioning route, or more likely, with a power conditioning UPS, keep in mind that it’s very likely that your AC power is way more problematic than you think, and that $200 or so for a high-quality UPS with power conditioning features is inexpensive insurance for mission critical data. Consider it just as necessary as good backup plan.



IRS Still Struggling With Tax Treatment Of Immigrants, Changes Rules Again

Kelly Phillips Erb

  • Forbes

Tax refund fraud costs taxpayers billions of dollars each year. In an effort to curb fraud, the Internal Revenue Service has made a number of  changes over the past few years, including new controls over Individual Taxpayer Identification Numbers (ITINs) which took effect in 2013. Those rules, however, are changing again.

ITINs are numbers assigned to taxpayers who are not eligible to obtain Social Security Numbers. Social Security Numbers are generally assigned to U.S. citizens and those noncitizens who areauthorized to work in the United States by the Department of Homeland Security (downloads as a pdf). Social Security Numbers and ITINs are intended to be used only for tax and benefits purposes but as banks, schools and insurance companies use them as identification numbers, more and more folks want them for non-tax purposes: only a quarter of ITINs assigned since the program began in 1996 have been used to file tax returns.

According to a 2012 study by the Treasury Inspector General for Tax Administration (TIGTA), the IRS was all too happy to comply with requests for ITINs without checking to make sure those requests were valid. As a result, TIGTA found significant potential for “the improper assignment of ITINs to individuals who have not substantiated their identity or foreign status.”

What does that have to do with fraud? Easy. Those looking to take advantage of the system seized on the idea that the sheer volume of assigned ITINs combined with the volume of tax returns processed has presented opportunities to cheat.

In 2011, TIGTA found that the IRS issued more than 2.9 million tax returns filed with ITINs requesting tax refunds of $6.8 billion. Not all of those refunds were fraudulent but many of the returns were associated with fraudulent behaviors. In many instances, those behaviors began with the ITIN application. TIGTA found, for example, that 154 mailing addresses were used 1,000 or more times on an ITIN application. Some addresses on ITIN applications were used in excess of 6,000 times, including an address in Phoenix, Arizona, which was used to assign 15,795 ITINs in one year.

According to TIGTA, the problem seems to revolve around lack of attention to the process. While reviewing data, TIGTA found that of the 1,638,737 ITINs assigned between January 1 and December 31, 2011, supporting documentation such as work papers and foreign status was certified by a Certifying Acceptance Agent only about a quarter of the time.

            With fraudulent ITINs in hand, tax returns were then processed, issuing billions of dollars in refunds. Again, addresses went unchecked: four single addresses in Atlanta were used to process more than 40,000 refunds totaling more than $51 million dollars. In one case, a single bank account was used to direct refunds more than 8,000 times. More than $16 million in ITIN refunds were directed to just ten bank accounts.

As a result of concerns about tax refund abuse, including those involving ITINs, the IRS initially made two important policy changes:

  1. Effective for the 2015 tax season, the IRS will limit the number of refundselectronically deposited into a single financial account (such as a savings or checking account) or prepaid debit card to three. Under the new rules, any subsequent refunds will be issued by paper check and mailed to the taxpayer; and
  2. Beginning in 2013, ITINs were to expire after five years. Taxpayers could no longer hold onto them indefinitely and must reapply after the end of the term.

But just as quickly as the second policy change was announced – with little fanfare – the IRS has changed its policy governing the issuance of ITINs. Again. The second policy change has been eliminated:

Under the new rules, ITINs will not automatically expire so long as those who hold the ITINs file a tax return. But just one. The IRS will not allow an ITIN to automatically expire so long as it has been used on at least one tax return in the past five years.

The new rules will apply to all ITINs, regardless of when an ITIN was issued.

Under the old rules, those with ITINs had to reapply in 2018. Under the new rules, the IRS will begin deactivating unused ITINs in 2016. This allows taxpayers to file a return in 2015 (remember, you just have to file one) in order to retain a valid number.

It’s clear from the new rules – a change from the heavily criticized“interim” rules which were made permanent in 2012 – that IRS is still struggling with how to curb ITIN-related fraud. There’s no question that ITINs are being used for fraud. And there’s no question that ITINs are being snatched up by some of the more than 11 million immigrants in this country illegally (remember, ITINs are used for everything from banking to getting a drivers license). It’s worth remembering, however, that there are valid reasons to issue ITINs for those who are legitimately in the U.S. to work and pay taxes. Paying taxes is the part we want to encourage, right?

My guess is that these new rules are not the final say. I anticipate that we’ll see a flurry of the discussions about immigration and reform (emphasis on discussions rather than on reform) and that eventually, these rules will be tweaked again. For now, however, the newest change to the ITIN system is effective immediately.

Want more taxgirl goodness? Pick your poison: follow me on twitter, hang out onFacebook and Google, play on Pinterest or check out my YouTube channel. For cases and tax related docs, visit Scribd.



Will Google be Your Business Banker?


Think about it: Does your business really need a bank? Maybe you should just let Google handle it all.

According to a recent piece in the Washington Post, the "universe of [banking] competitors has grown to include T-Mobile, Wal-Mart, Google and a host of other retail, tech and telecom companies that are now operating like banks. These upstarts are gaining footing in the banking world with prepaid debit cards that customers can use to pay bills, make purchases and deposit checks via a smartphone camera -- pretty much all the things you can do with your traditional checking account."

Banking with Google? Hey, why not? They'll be driving our cars and controlling our vision soon enough, so why not just let them take over our finances, too? If not them, then how about other online services like Simple, PayPal and Square? They're also out to replace our banks, too.

The banking industry is undergoing an enormous change. And whether you like it or not, your business is stuck in the middle of it. Your paper checks are slowly disappearing in lieu of electronic payments. Your need to make a physical deposit at your branch is becoming less necessary. It's hard to believe that, for many of us, our moms and dads had to take cash out of the bank every week, and be there before the branch closed at 3 p.m. Those were simpler times. So, like gas station attendants and Tab cola, will banks disappear altogether?

Relax. Google's not going to take over the world. Or your banking. At least, not anytime soon. In fact your banking relationship will soon be changing ... for the better.

"Yes, banking will significantly change for most companies," said Keri Gohman, executive vice president and general manager, Small Business Bank, at Capital One (a client of mine). "Good banks will not only adapt, but also play an increasingly vital role to many small companies."

Gohman is right. Banks are surely not going away. That's because many small companies will need the cash management and financing support that only a good bank can provide. But there is no question that your company will have a different relationship with your banker over the next few years, and particularly in these four ways:

Crowdfunding and other alternative investments will help both banks and small companies. Today's small companies can raise crowdfunding money from sites like Kickstarter and Indiegogo to help them fund projects in return for favors and gifts. Soon, the Securities and Exchange Commission will ultimately allow these same companies to use these platforms to raise equity financing, too. Couple that with the recent proliferation of venture capital firms, angel investors and micro-lending businesses. It's becoming easier and easier for a small business or startups to raise some much-needed seed money from places that, frankly, bankers don't want to be. Going forward, they won't have to be the bad guy as often. That's because markets will perform the due diligence for these young companies that banks were in the past forced to provide. If a company can survive this early stage and mature, more of tomorrow's banks can pick up the ball and deliver next-stage financing, comfortable that there's a track record and that someone else assumed the early-stage risk.

Big data will help banks prove creditworthiness. In addition to the help that crowdfunding and other alternative investments can provide to get companies out of the startup stage, banks will increasingly rely on more data to make better financing decisions. Information will soon be coming faster from their existing customers (see below). But other sources of data such as purchasing and payment histories, popularity, and conversations about your company on social media sites such as Facebook and Twitter and reviews on other sites such as Yelp, Foursquare and Angie's List, will all play into a bank's loan-making decision process. There will be no place to hide from the bank's credit department.

New software will put your bank in a better position to help you (and themselves). Banks are increasingly developing applications to help small businesses pay their bills, do their invoicing, receive money, manage their cash flow and even do payroll. Most integrate with popular accounting applications like QuickBooks, and I wouldn't be surprised to see some banks develop their own simple bookkeeping software in competition with companies like Intuit and Xero. This benefits the bank because they can keep closer, more real-time tabs on their customers. But it also benefits their customers, as good bankers will also provide feedback and advice based on the latest metrics and data that customers are providing to them as they do their day-to-day work. Loans can be provided, and increased (or decreased) based on this information, reducing delinquencies and losses.

Finally, retail and small-business banking will go almost entirely mobile. Capital One, for example, has a suite of products called Spark Pay that enables its customers to do all of their banking from any mobile device from wherever they are. Other good banks are increasingly offering similar options. Ultimately we'll see more "co-opetition" between the banking community and the growing number of companies that now provide mobile payment and cash management services. This will enable small businesses to pay their employees, contractors and suppliers wherever they are, whoever they use as a bank and in whatever currency they require. The smallest of banks will be providing the types of international transactional services that only the big guys could once perform. And, dare I say it, even virtual currencies such as Bitcoin will likely find their way into the banking mainstream.

"We're going to lean on our customers to tell us where we can do things better and what services we can provide," Gohman promised. "We can build or we can partner with others because the banking and financial ecosystem for small businesses needs to become more linked together."

Will you be banking with Google in a few years? For most small businesses, probably not. But the relationship you have with your banker will be much different over the next few years. Hey, whatever happened to getting a new toaster?

Gene Marks, CPA, is the owner of the Marks Group, which sells customer relationship, service, and financial management tools to small and midsized businesses.



The House on Monday passed legislation to enhance prosecutions of tax return identity theft.

Passed by voice vote, H.R. 744 would subject people convicted of tax return identity theft to up to 20 years in prison. 

Rep. Debbie Wasserman Schultz (D-Fla.), the bill's sponsor, said it would help prevent taxpayers from filing their tax returns only to be told by the Internal Revenue Service that someone has already filed under their name.

"Over the past several years, we've seen tax return identity theft explode into a nationwide epidemic," Wasserman Schultz said. "We cannot allow billions of taxpayer dollars to be stolen from hardworking Americans and from our Treasury."

The measure would further broaden the definition of tax return identity theft victims to include organizations, instead of only individuals. 

Another provision of the bill would direct the Justice Department to submit a report to Congress within 180 days on trends in tax return identity theft and recommendations on how to prosecute the crime. 

The House passed a similar version of the legislation in 2012 in the previous Congress, but it never received action in the Senate.

House Judiciary Committee Chairman Bob Goodlatte (R-Va.) said it would help protect taxpayers' personal information from fraud.

"The ways in which someone with criminal intent can obtain our personal information are too numerous to list," Goodlatte said.



Stay Tuned for Offer in Compromise Impossible. Does a Beleaguered Owner Relaunched by Kitchen Nightmares or Bar Rescue Eventually End Up in Tax Deficiency Purgatory when the IRS come a calling?

Jay KatzContributing Editor and Member of the Tax Facts Advisory Board at The National Underwriter CompanyTop Contributor

Any owner on the verge of closing would gladly allow Ramsay or Taffer to transform the failing restaurant or bar from a dump to something fancy smancy. However, can the saved owner afford to pay the tax piper for the value received? 

Here’s the drill. A beleaguered restaurant or bar owner who swears to the high quality of the freezer burned food rotting in a bacteria and rat poop infested freezer heated in a non-functioning microwave from the ‘70s in a roach infested kitchen reaches out to Gordon Ramsay or Jon Taffer for help because he or she cannot imagine why the business is failing. In spite of the owner’s insistence that the food is awesome, the patrons have stopped coming. Mountains of unpaid bills including delinquent taxes (most likely payroll) piled high on the owner’s desk in a makeshift cluttered office are indicative of the financial despair of the owner. 

In most cases, the economy or a disrespectful staff, or both, (never the food or the owner) are the blame, or so says the owner. Go figure.

After hearing the barrage of excuses and finger pointing, Ramsay scratches his head and says “Right.” Then, Ramsay samples each “dish” on a menu the size of a telephone book comparing the food unfavorably to inedible scraps he would not even feed to a dog; and, of course, on camera, spitting it out in disgust. In spite of Ramsay’s profanity laced bleeped out assertions that the owner is delusional for not acknowledging indisputable evidence that the food is crap, he or she stubbornly insists that it is the best food in town loved by the loyal diners (of which there are none). 

Predictably, after 50 minutes of being reamed out, degraded and exposed as a selfish and disrespectful owner who has “given up” or “doesn’t care” on national television, there is an epiphany and the poor soul suddenly “gets it.” Perhaps by divine intervention, the owner realizes that the Ramsay/Taffer tongue lashing rants were intended to be constructive criticism rather than the personal character assaults they had initially seemed to be. 

Finally, there is the ultimate happy ending. Miraculously and literally overnight, Ramsay’s crew of carpenters, designers and electricians the size of a small (or not so small) regiment transforms the roach infested dump that should have been condemned into a five star fine dining establishment. The transformation often includes replacing the nonfunctioning microwave with high tech state of the art kitchen equipment, a professional cleaning, creating and installing a new glitzy eye catching sign, a complete inside and outside renovation (i.e., new floors, art work, high definition televisions, lighting and other expensive décor) and maybe an executive chef to run the kitchen for a period of time. 

So who pays for the transformation? Certainly not the hopelessly in debt owner. Obviously, the network pays. Although I am not privy to the contract between the owner and the network, the bargained for consideration is most likely the owner’s unconditional blessing to allow the network to air his or her humiliation to a national audience.

Finally, the tax question. After an exhaustive review of the Internal Revenue Code, there is no provision that proclaims the economic value, i.e., the cost of such a transformation to be tax-free. In other words, swapping humiliation for improvements is not considered a tax-free like kind exchange. So, if it is all taxable, an owner unable to pay delinquent payroll tax (among other bills) probably cannot pay the tax on the transformation? So, in the end, did the owner go from restaurant or bar hell to tax liability purgatory? Stay tuned for Offer in Compromise Impossible.



Walmart Fined For Fake 'Sugar Tax' On Coca-Cola Sales

New York might have failed in its efforts to tax sugary sodas but that didn’t keep retail giant Walmart from trying to tax it anyway.

This week, New York Attorney General Eric T. Schneidermanannounced that the state reached a settlement with Wal-Mart Stores WMT -0.03%, Inc. (also known as Walmart) over false advertising claims. The settlement followed an investigation into claims that Walmart advertised a sale on Coca-Cola soft drinks but actually charged customers across New York State more than the advertised sale price.

The sale in question was a Father’s Day sale, which touted 12-packs of Coca-Cola products for just $3.00 – a pretty good price. However, when Walmart customers in the State of New York attempted to buy Coca-Cola products, they were charged $3.50, more than 15% over the sale price. When customers complained about the difference, Walmart employees remarkably told customers that the difference reflected New York’s “Sugar Tax.” You know, the one that doesn’t exist.

And Walmart kept doing it. It turns out that the cash registers were programmed, according to the Attorney General’s Office, not to recognize the sale price. But rather than take corrective action when the error was brought to the company’s attention by its customers, Walmart employees simply lied about it. Over and over. All while the retailer was pocketing the difference. That is, until the Attorney General got involved. Like magic, once the Attorney General’s Office contacted Walmart, the price was adjusted to the amount as advertised.

You’d think this was just a fluke. But it turns out that this isn’t an isolated incident. Walmart had similar complaints just three months before this incident – and again failed to adjust the price until the Attorney General stepped in. Apparently, that’s the best way to get the retailer’s attention.

In total, Walmart sold 66,000 12 packs of Coca-Cola products – or nearly 800,000 individual sodas – at the inflated price. That, says the Attorney General, was a violation of state law. As a result, the company is required to pay, as part of a settlement, over $66,000 in penalties and other costs. The company was also tasked with taking steps to improve the way that the respond to customer complaints about pricing. I would suggest, as a start, not lying about a tax that doesn’t exist.

Attorney General Schneiderman said, about the investigation:

There has to be one set of rules for everyone, no matter how rich or how powerful, and that is why our office must ensure that even the largest corporations cannot advertise one price and then charge a higher one to New Yorkers. Whether it’s securing the largest financial settlements in U.S. history to address misconduct that crashed the economy, or settling cases with the nation’s largest retailers, this office will continue to stand on the side of ordinary New Yorkers.

Walmart is one of the world’s largest retailers, operating more than 11,000 stores in 27 countries; 117 of those stores are located in the State of New York. It ranks #20 on Forbes’ Global 2000 for 2014. The company, founded by Samuel Moore Walton and James Lawrence Walton in 1962, pulls in over $400 billion annually.

Author’s Note/Update: Randy Hargrove, a company spokesperson for Walmart, reached out to me after this story was published and asked that I include the following statement:

We are pleased to have reached an agreement with the New York Attorney General’s office that addressed concern about a promotional pricing issue in our New York stores. We strive for accuracy, and we are further enhancing our procedures to help ensure proper promotional pricing. We apologize for any inconvenience to our customers. They can rest assured that Walmart is committed to delivering the products they need at everyday low prices.

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IRS Could Improve Oversight of Troublesome Preparers


The IRS could improve the way it picks problematic paid preparers for further enforcement actions, according to a recent report.

The report was the result of a review conducted by the Treasury Inspector General for Tax Administration of the activities of the return preparer coordinators of the IRS’s Return Preparer Office, who provide oversight of paid preparers with patterns of preparing inaccurate returns.

            Since the majority of individual taxpayers pay someone to prepare their tax returns – nearly 60 percent of all individual taxpayers in 2013 – paid preparers’ impact on tax compliance can be significant, TIGTA observed. 

“While most paid preparers can be trusted, a troublesome few have intentionally manipulated tax return information to generate excessive refunds for taxpayers, modified tax returns after the taxpayers signed them to steal the refunds, or used taxpayer identities to create fictitious returns to generate fraudulent refunds,” TIGTA said.

The inspector general found that the IRS’s return preparer coordinators effectively managed most of the paid preparer activities under their control and provided good audit leads for further enforcement actions. However, more actions could be taken to ensure that the return preparer coordinators timely review referrals with allegations of inappropriate paid preparer behavior and that the referrals and complaints are shared among the various functions responsible for reviewing them.

TIGTA reviewed 2,134 paid preparer referrals received by three area offices during fiscal years 2010 through 2012, finding that the return preparer coordinators had not evaluated 722 referrals (34 percent) to determine if a preparer case was warranted. This resulted primarily from limited resources and ineffective controls. In addition, due to a lack of guidance, many of the complaints processed by the Return Preparer Office are not shared with the return preparer coordinators.

            “Since the majority of individual taxpayers now rely on others to prepare their income tax returns, preparer accuracy, integrity and reliability have never been more important,” said Inspector General J. Russell George, in a statement. “The IRS must do everything it can to enforce the law and protect the taxpayer against inaccurate or fraudulent return preparation.”

TIGTA recommended that the IRS develop inventory controls and timeliness standards for the referral process to help ensure that problematic paid preparers are identified and considered for further enforcement actions. In addition, TIGTA recommended that the Small Business/Self-Employed Division work with the Return Preparer Office to develop a methodology for sharing information on paid preparer referrals and complaints to improve the identification of the most egregious paid preparers for further enforcement actions.

In their response to the report, IRS officials agreed with both recommendations and plan to take appropriate corrective actions.



7 Signs Your Best Employees Are About to Leave

Tell-tale indicators that your rock stars are eyeing the door

Time and money have gone into hiring the right employee for your firm. Mindflash notes several signs that might be noticeable before a high-performing employee hands in their notice, and it is imperative not to miss them, because “even if they're looking around, it's not a sure thing that they're ready to leave you just yet.”

Talking to your employee before the decision may help sway them toward staying.


1. Slacking Off

An employee who begins to slack off, miss deadlines and turn in sloppy work may very well be disenchanted with the work, and is already starting to form an exit plan. A friendly sit-down meeting to ask questions and find out how to resolve the problem may help prevent full-blown disengagement.


2. Dressing Up

Most office dress codes are rather casual, but if you notice that an employee that has begun showing up the past two weeks in dress slacks and sporting an occasional tie -- or otherwise dressing above and beyond what you usually require -- there’s a strong possibility they’re going on interviews with other firms


3. Hiding Out

When a usually straight-arrow employee is taking a high number of personal calls in empty conference rooms, covering their mouth when talking on the phone, or just generally acting furtive … it may be a sign that they are talking to another firm. While one or two incidents isn’t a cause for alarm, continued behavior like this should start to raise some concerns.


4. Slowing Down

When punctuality, focus and hard work go out the door, it could be a sign your employee might be looking for a new gig. The complaining and change in work ethic are meant to clue you in that they are unhappy with their current employee-employer situation and feel they can find a better job.


5. Faking Illness

When your best employee is taking more sick days than usual, but doesn’t show the slightest inkling of having ever been sick, or when they’re leaving early or coming in late, it could be a sign that they increasingly disengaged and preparing to leave for a new job -- especially if they are trying to milk out the rest of their sick leave and PTO for fear it will go unused.


6. Changing Up

Big life events such as divorce, marriage, illness, death and birth can all be a warning of an imminent departure. It may be worthwhile to sit down and talk about your employee’s future plans, as well as to setting up some short- and long-term solutions to any emergency events that might come up.


7. Pulling Back

When your most outgoing employee becomes increasingly silent and isolated, it could be yet another sign that they are not happy with their current position. Although personalities vary from person to person, you can still use general social activity as a litmus test for an employee’s job satisfaction.



ACA Updates Tax Preparers Should Know About


As we make our way towards 2015, the Affordable Care Act and how it will affect the upcoming tax season seems to be clearer, according to Chuck McCabe, president of Peoples Income Tax and The Income Tax School. “While there are still some questions to be answered, there are a number of issues that have been settled and that tax preparers should be aware of as we head into tax season,” he said.

“There’s been quite a bit of back and forth about a disputed provision of the Affordable Care Act – the one where millions of Americans get tax subsidies,” McCabe said. “The dispute is whether people who qualify for tax credits and bought insurance through the federal exchange -- because their state did not set up a marketplace -- will receive them. The law says that you qualify for tax credits if you buy insurance on an exchange ‘established by the state.’ The dispute is in the part of the clause that ends in ‘established by the state.’”

In July, a three-judge panel from the D.C. Circuit Court ruled that those who qualified for subsidies and purchased insurance on federal exchanges because their states did not set up an exchange would not receive those subsidies because they did not purchase insurance through a state exchange, McCabe explained.

“The Obama administration has requested that the U.S. Circuit Court of Appeals for the District of Columbia rehear the case in front of the full complement of judges. That request was granted and the rehearing is set for December 17,” he said.

“If your clients purchased health insurance through any of the exchanges, there will be a new form they have to bring you from their insurance exchange before you can file their tax return. The form, Form 1095-A, lists everyone in the household who has coverage and what the government paid for each person in subsidies,” he said.

In addition to this form, the standard Form 1040 is going to have a few changes to it, McCabe noted:

  • Line 46: You will need to report the excess of any premium tax credit received throughout the year.
  • Line 62: You will need to report whether your client has the minimum essential coverage or owes a penalty.
  • Line 69: You will need to report the amount of the Premium Tax Credit

“Form 8962 is the Premium Tax Credit Form. This form is to be used to claim the premium tax credit or reconcile any PTC amounts received in advance during the year to cover health care premiums,” McCabe said.

Finally, Form 8965 is the health coverage exemption form. This form is used to report exemptions from insurance requirements.

Many organizations are predicting a delay to the tax season due to the need for Form 1095-A before filing tax returns. A number of observers speculate that these forms will not be sent out by their January 31 deadline, thus delaying the start to the season, according to McCabe.




6 Tips to Prevent a Data Breach

The steps businesses should take to protect against a credit card breach, according to the AICPA

            Home Depot’s recent data breach made the company the latest victim in a recent spate of compromises to the security of national retailers and restaurant chains. These credit card breaches, which in the case of Target has already cost banks $240 million, according to, position forensic accountant CPAs as especially critical to the security of big businesses in preventing these costly hacks. Armed with that expertise of spotting and correcting weaknesses to credit card systems, the American Institute of CPAs has outlined 6 tips for businesses to protect themselves from future security threats.

Annually assess all potential IT risks and exposures and perform frequent testing of all controls related to the monitoring and protection of data.

Provide frequent and meaningful employee awareness information, like examples of suspicious activity and who to contact.

Stay prepared by regularly conducting simulation attacks to test procedures, controls, and employees responses.

Implement "EMV" (Europay, Mastercard, Visa) chip card readers and the technology to accept the cards.

Have your forensic accountants use comprehensive data analysis and productivity software that support any investigative activities.

Work with your forensic accountants to extract and identify all transactions that contain certain risks.



Wage Garnishments All Too Common among Workers


Approximately 7.2 percent of U.S. employees have their wages garnished, according to a new study released Monday by the payroll giant ADP, with the percentage rising to 10 percent for those who earn between $25,000 and $39,999 per year.

The study, conducted by the ADP Research Institute, found that the reason for approximately 40 percent of the wage garnishment is child support, followed by about 20 percent for tax debts.

The highest garnishment rate is 10.5 percent among employees age 35 to 44, which is typically the age of peak debt load, child rearing and divorce. 

A lack of data about current trends in U.S. wage garnishments prompted ADP to analyze aggregate, anonymous payroll data from 2013 for 13 million employees ages 16 and older.  The study identified demographic information of the employees whose wages are garnished, such as gender, income, geographic location and industry to assess possible reasons behind these findings.

Researchers found that the manufacturing sector has the highest percentage of companies with garnishments at 48 percent, while the Midwest has the highest garnishment rate at 8.9 percent of employees.  This disparity suggests a possible relationship between garnishments and blue- and white-collar job categories.  There’s a higher concentration of manufacturing companies located in the Midwest, which could explain the geographic disparity.

The Northeast had the lowest rate of wage garnishment, at 4.9 percent.  This disparity may be related to a higher concentration of manufacturing companies being located in the Midwest. 

The manufacturing sector’s 48 percent was followed by the transportation and utilities industry at 42 percent.  Companies in the professional and business services, financial activities, and education and health services industries have the lowest rate at 23 percent for each segment.  The disparity suggests a possible relationship between garnishment and blue- and white-collar job categories.

Wage garnishments can have a significant impact on both employees and employers, according to the study.  Employees who have their wages garnished can find it humiliating and stressful, often resulting in decreased workplace productivity and motivation.  Employers may be exposed to financial risk when their employees’ wages are garnished by becoming liable to creditors for an employee judgment if they do not assist with the garnishment appropriately. 

“We conducted this study in order to paint a clearer picture of current garnishment trends among U.S. workers,” said Ahu Yildirmaz, vice president and head of the ADP Research Institute, in a statement.  “ADP’s robust data set allowed us to bring some clarity to a process that affects a large number of people, the scope of which has been poorly understood.”

For nearly all categories of garnishments, the rates are similar for men and women with the exception of child support: 5.8 percent of male workers versus only 0.6 percent of females. This finding may reflect that more women than men have physical custody of children, and men are more likely to be required to pay child support.



Congressional Bill Could Help Married Couples Deduct More Interest on Student Loan Debt


Rep. Mark Pocan, D-Wis., has introduced a bill that would help low-income married couples deduct twice as much of the interest charged on their student loan debts.

Pocan introduced on Thursday the Student Loan Interest Deduction Fairness Act, which would help low-income households who have made payments on their loans access greater equity in receiving the Student Loan Interest Deduction currently available to borrowers.

Under the Tax Code, individuals are able to receive up to a $2,500 tax deduction for interest paid on student loans, but when a couple is married and files jointly, the couple can only receive a maximum of $2,500. The Student Loan Interest Deduction Fairness Act, H.R. 5508, would allow married couples to access up to the full $5,000 benefit, which would have been available to individuals prior to marriage.

Currently, the average student graduates with around $29, 400 in loans, Pocan’s office noted, and 58 percent of all student debt is held by families in the bottom 25 percent of household incomes. Nationally, student debt tops $1.2 trillion. 

“Student loan debt is disproportionally affecting low-income households—burdening them with financial adversity and weighing down our economy,” Pocan said in a statement. “This bill will fix an inequity in our tax code and help these families, which hold 58 percent of all student debt, pay off their crushing levels of student loan debt.”

The bill is supported by Supported by the American Council on Education, the Association of Public-Land Grant Universities, Equal Justice Works and One Wisconsin

Pocan is also sponsoring several other bills targeted at addressing the student loan debt crisis including the Federal Student Loan Refinancing Act, H.R. 4622, and the Relief for Underwater Student Borrowers Act, H.R. 5239.




IRS Issues New Instructions for Obamacare


The Internal Revenue Service has issued new draft instructions, notices and a publication to help taxpayers and tax practitioners deal with the Affordable Care Act.

The draft instructions were released last week for Form 8962, “Premium Tax Credit,” and Form 8965, “Health Coverage Exemptions.” The IRS had previously released draft versions of the forms themselves, both 8962 and 8965, along with draft instructions for several other draft forms for the Affordable Care Act (see IRS Gears up for Impact of Health Care Reform on Tax Season).

“They are still draft, but in the world of today’s technology and computer-based tax preparation, early drafts—and even more important—the instructions to the drafts, are very important and pretty much the way it will ultimately shake out,” said Jackson Hewitt chief tax officer and senior vice president Mark Steber.

The IRS also released last month a one-page publication to help taxpayers find out if they qualify for an exemption from the individual mandate for health coverage or from paying a penalty. Publication 5172, Health Coverage Exemptions includes information about how you get an exemption (see IRS Publishes Guide to Health Coverage Exemptions). The Affordable Care Act calls for each individual to have qualifying health insurance coverage for each month of the year, have an exemption, or make an individual shared responsibility payment when filing their federal income tax return, the IRS said Tuesday.

Taxpayers may be exempt if they have no affordable coverage options because the minimum amount you must pay for the annual premiums is more than eight percent of your household income, have a gap in coverage for less than three consecutive months, or qualify for an exemption for one of several other reasons, including having a hardship that prevents you from obtaining coverage or belonging to a group explicitly exempt from the requirement.

On, taxpayers and practitioners can find a comprehensive list of the coverage exemptions. The IRS noted that taxpayers can obtain some exemptions only from the health insurance marketplace in the area where they live, others only from the IRS when you file your income tax return, and others from either the marketplace or the IRS.

Additional information about exemptions is available on the Individual Shared Responsibility Provision web pageon The page includes a link to a chart that shows the types of exemptions available and how to claim them. For additional information about how to get exemptions that may be granted by the marketplace,

Last week, the IRS also issued several notices related to the Affordable Care Act,  Notice 2014-49 describes a proposed approach to the application of the look-back measurement method, which may be used to determine if an employee is a full-time employee for purposes of Section 4980H of the Tax Code, in situations in which the measurement period applicable to an employee changes.

Notice 2014-55 expands the permitted election rules for health coverage under a Section 125 cafeteria plan and addresses two specific situations in which a cafeteria plan participant is permitted to revoke his or her election under the cafeteria plan during a period of coverage.  The first situation involves a participating employee whose hours of service are reduced so that the employee is expected to average less than 30 hours of service per week but for whom the reduction does not affect the eligibility for coverage under the employer’s group health plan.  The second situation involves an employee participating in an employer’s group health plan who would like to cease coverage under the group health plan and purchase coverage through a competitive health insurance marketplace established under the Affordable Care Act.

Notice 2014-56 provides the applicable dollar amount that applies for determining the Patient-Centered Outcomes Research Institute fee for policy years and plan years ending on or after October 1, 2014 and before September 30, 2015. This notice applies to health insurance providers.

Jackson Hewitt is already finding the draft forms and instructions useful in training its preparers for what to expect next tax season, according to Steber.

“The IRS was not historically prone to releasing draft documents, but they recognized the sooner that they get that information into the hands of the tax industry, the software development industry and public media at large, the better people are able to understand it and communicate open issues,” said Steber. “For example, we’ve noted a mistake in the instructions already. It’s a period of refinement, but the IRS is very careful to say, ‘Draft—Not for Filing.’ There will be some period of correction and towards the end of the year they’ll issue the finals. But they do tell a great story of how the new Affordable Care Act rules will work, some of the nuances in terms of what the shared responsibility payment computation will look like, the Premium Tax Credit reconcilement and those things. The drafts, even though they say ‘draft,’ cannot be overemphasized in terms of their importance to tax preparers to understand what it all really means when tax time comes.”




Gym, Tan, Laundry – and Tax: Jersey Shore's "The Situation" Charged with Failure to Pay Taxes


Jersey Shore’s Michael “The Situation” Sorrentino and his brother Marc are due in court to face an indictment alleging they failed to pay taxes on $8.9 million in income that Michael received from promotional activities, according to U.S. Attorney Paul J. Fishman.

The money was largely received by two companies controlled by the brothers.

They are charged with one count of conspiracy to defraud the United States. In addition, Marc and Michael are charged with three and two counts, respectively, of filing false tax returns for 2010 through 2012.

Michael Sorrentino faces an additional count for allegedly failing to file a tax return for 2011.

“According to the indictment, Michael and Marc Sorrentino filed false tax returns that incorrectly reported millions made from promotions and appearances,” said Fishman. “The brothers allegedly also claimed costly clothes and cars as business expenses and funneled company money into personal accounts. The law is absolutely clear: telling the truth to the IRS is not optional.”

The conspiracy and filing false tax return counts each carry a maximum potential penalty of three years in prison and a $250,000 fine. The count charging Michael Sorrentino with failing to file a tax return carries a maximum potential penalty of one year in prison and a $100,000 fine.



IRS May Shift W-2 Deadlines to Combat Identity Theft and Tax Fraud


The Internal Revenue Service is being urged to move up its W-2 filing deadline to January 31 and to lower the threshold for requiring electronic filing of W-2 returns in an effort to curb the growing trend of identity theft related tax fraud.

A new report from the Government Accountability Office suggested that additional actions such as these could help the IRS combat the threat of tax refund fraud. Based on a preliminary analysis, the IRS estimates it paid $5.2 billion in fraudulent identity theft refunds in the 2013 filing season, while preventing $24.2 billion in such refunds, based on what it could detect. The full extent of the fraudulent refunds is unknown, however, because of the challenges endemic in detecting identity theft-related refund fraud.

            Identity theft-related refund fraud takes advantage of the IRS’s “look-back” compliance model, the GAO pointed out. Under this model, rather than holding refunds until completing all of its compliance checks, the IRS issues the tax refund after conducting selected reviews.

While there are no simple solutions, one option is earlier matching of employer-reported wage information to taxpayers’ returns before issuing tax refunds, the GAO noted. The IRS currently cannot do such matching because employers' wage data (from Form W-2s) are not available until months after the IRS issues most tax refunds. As a result, the IRS begins matching employer-reported W-2 data to tax returns in July, after tax season. But if the IRS had access to W-2 data earlier—through accelerated W-2 deadlines and increased electronic filing of W-2s—it could conduct pre-refund matching and identify discrepancies to prevent the issuance of billions in fraudulent refunds, according to the GAO report.

The Treasury Department proposed earlier this year that Congress accelerate W-2 deadlines to January 31. However, the IRS has not yet fully assessed the impacts of this proposal, the GAO noted, and without this assessment, Congress does not have the information it would need to determine the merits of such a significant change to W-2 deadlines or the use of pre-refund W-2 matching. Such an assessment is consistent with the IRS’s strategic plan, which calls for analytics-based decisions, and would help the IRS ensure effective use of resources, the GAO pointed out.

The Treasury Department has also requested authority to reduce the 250-return threshold for e-filing information returns. The Social Security Administration estimated that to meaningfully increase W-2 e-filing, the threshold would have to be lowered to include those filing five to 10 W-2s. In addition, the SSA estimated an administrative cost savings of about $0.50 per e-filed W-2. Based on these cost savings and the ancillary benefits they would provide in supporting the IRS’s efforts to conduct more pre-refund matching, a change in the e-filing threshold is warranted, according to the GAO. Without this change, some employers’ paper W-2s could not be available for IRS matching until much later in the year, due to the additional time needed to process paper forms.

The GAO recommended that Congress should consider providing the Treasury with the authority to lower the annual threshold for e-filing W-2s. In addition, the GAO suggested, the IRS should fully assess the costs and benefits of shifting W-2 deadlines and provide this information to Congress.

The IRS neither agreed nor disagreed with the GAO's recommendations, and stated it is determining how these potential corrective actions would align with its available resources and IRS priorities.

“The ability to narrow or close the gap between the time tax returns are filed and the time at which third-party information is available for use by the IRS is a concept with the potential to yield significant benefits to the government and to taxpayers, but can also impose burdens that must be quantified and carefully considered by policy makers,” wrote IRS deputy commissioner for services and enforcement John Dalrymple in response to the report. “Implementing such a change to the tax system would be a substantial undertaking, and we agree that the Congress needs to have a well-informed understanding of the costs and benefits in order to determine the best course of action.”

Ellen Minkow, a CPA tax practitioner in New York, said she sees problems with the proposals. “I do not believe you can change the filing deadline of the W-2s,” she said in an email.  “All entities have 30 days to reconcile and file W-2s for their employees. This is a tremendous task to do in 30 days.”



SEC to Give Biggest-Ever Whistleblower Award


The Securities and Exchange Commission announced on Monday an expected award of more than $30 million to an unidentified whistleblower who provided key original information that led to a successful SEC enforcement action.

The SEC said the award would be the largest ever made by the agency’s whistleblower program to date and the fourth award to a whistleblower living in a foreign country, demonstrating the program’s international reach.

“This whistleblower came to us with information about an ongoing fraud that would have been very difficult to detect,” said SEC enforcement director Andrew Ceresney in a statement. “This record-breaking award sends a strong message about our commitment to whistleblowers and the value they bring to law enforcement.”

The SEC’s whistleblower program rewards original information that results in an SEC enforcement action with sanctions of more than $1 million. Whistleblower awards can range from 10 percent to 30 percent of the money collected in a case.  The money paid to whistleblowers comes from an investor protection fund established by Congress at no cost to taxpayers or harmed investors.  The fund is financed through monetary sanctions paid by securities law violators to the SEC.  Money is not taken or withheld from harmed investors to pay whistleblower awards.

“We’re pleased with the consistent yearly growth in the number of award recipients since the program’s inception,” said Sean McKessy, chief of the SEC’s Office of the Whistleblower.

By law, the SEC protects the confidentiality of whistleblowers and does not disclose information that might directly or indirectly reveal a whistleblower’s identity. The previous high for an SEC award to a whistleblower was $14 million, which was announced in October 2013.

A Washington, D.C. law firm known as Phillips & Cohen LLP said Monday it had represented the whistleblower. The firm claimed the unidentified whistleblower would receive at least $30 million to $35 million for providing information and assistance that led to a substantial recovery by the federal government.

“Our client exposed extraordinarily deceitful and opportunistic practices that were deeply entrenched and well hidden,” said Erika A. Kelton, an attorney with the firm, which specializes in representing whistleblowers. “Federal regulators never would have known about this fraud otherwise, and the scheme to cheat investors likely would have continued indefinitely.”

To encourage whistleblowers who often put their jobs and careers at risk by reporting wrongdoing, the Dodd-Frank Act allows SEC whistleblowers to remain anonymous to the fullest extent allowed by the law. The whistleblower in this case is a foreign citizen, according to the firm.

“I was very concerned that investors were being cheated out of millions of dollars and that the company was misleading them about its actions,” said Phillips & Cohen’s whistleblower client in a statement. “Deception had become an accepted business practice.”

Phillips & Cohen said its client had provided extensive assistance to the SEC. The company went to great lengths to conceal the fraud, which raked in millions for the company.

“The SEC was extremely responsive and acted quickly after our client provided detailed information about the fraud,” Kelton said. “It immediately launched an investigation.”

Kelton praised government enforcement officials for their work, particularly the SEC Whistleblower Office, the SEC Division of Enforcement, the Justice Department’s Fraud Section and the Federal Bureau of Investigation.

“This case demonstrates how effective the SEC whistleblower program is,” Kelton said. “Federal enforcement officials worked closely with the whistleblower to stop a scheme that hurt investors, and by doing so the government was able to hold wrongdoers accountable for their actions. Whistleblowers and investors are fortunate to have Sean McKessy leading the SEC Whistleblower Office.”

Other attorneys were gratified at the whistleblower award. “This award is significant for a number of reasons," said Christopher Robertson, a partner with Seyfarth Shaw in Boston and a former senior counsel in the SEC's Enforcement Division. "First, it reinforces the SEC’s commitment to the bounty program established under Dodd-Frank and its willingness to pay bounties where original information leads to significant recoveries. Second, the size of the award will likely encourage additional whistleblowers to come forward, knowing that they can come forward and obtain a significant recovery while remaining anonymous and protected.”

“The SEC’s bounty award strengthens the incentives for an employee, particularly one in a foreign country, to report allegations of misconduct to that agency rather than seeking to address the issue internally,” said Jason Knott, a partner at Zuckerman Spaeder LLP in Washington, D.C,. A number of courts have already ruled that Dodd-Frank does not protect a foreign employee’s internal reporting of misconduct overseas. Now, those employees have the added incentive of a potentially life-changing bounty, which will serve as additional motivation for them to go to the agency first.”

The SEC awarded its first whistleblower under the program following its inception in fiscal year 2012.  The program awarded four more whistleblowers in FY 2013, and has awarded nine whistleblowers in FY 2014.

For more information about the whistleblower program and how to report a tip, visit





NFL’s Tax-Break Foes Face 4th and 20 with Wind in Their Face


             If there were ever a politically opportune time for Congress to remove the National Football League’s tax exemption, it would seem to be now.

A handful of U.S. lawmakers have seized on the domestic violence, child abuse and team-name controversies swirling around the league to renew calls for ending the tax break for the NFL’s central office. They aren’t making much progress, though, in advancing a measure through Congress.

Influential lawmakers in both parties, dealing with military action in Iraq and Syria and international tax rules, aren’t interested. That adds a roadblock in a Congress that can’t pass tax policies on which there is broad agreement.

Senate Finance Committee Chairman Ron Wyden, an Oregon Democrat, said other lawmakers had mentioned the tax issue to him— and that so far, he has been focused elsewhere.

“Right now, I think that’s the last thing that Congress needs to get involved in with the issues that are front and center,” said Senator Richard Burr, a North Carolina Republican. “The economy, the war, Ebola. I think to even suggest that members of Congress should spend their time on this is misguided attention on their part.”

The lack of movement on the tax issue doesn’t mean the NFL is out from under the eye of Congress. The indictment of Minnesota Vikings running back Adrian Peterson for child abuse and the release of a video showing former Baltimore Ravens player Ray Rice hitting his then-fiancee drew attention from the public and politicians to violence off the playing field.

Tax Code

At Congress’s disposal to seek change in the NFL are hearings, press releases and its authority over the league’s antitrust exemption.

“These exemptions should depend on the leagues acting consistent with its public trust— complying with ethical and legal standards and accountability to fans,” Senator Richard Blumenthal, a Connecticut Democrat, said Wednesday as he proposed a plan to make the antitrust exemption renewable every five years instead of indefinite.

In response to the controversy about the league’s handling of domestic violence cases, the NFL hired Cynthia Hogan, a former aide to Vice President Joe Biden, as senior vice president for public policy and government affairs.

Under section 501(c)(6) of the tax code, “professional football leagues” are treated like trade associations. To the Internal Revenue Service, the NFL and the U.S. Chamber of Commerce are equivalent.

NFL Teams

The individual teams are taxable entities. Only the league office is tax-exempt, which means that it doesn’t pay corporate income taxes on money it receives.

According to the NFL’s most recent tax filing, for the year ending March 31, 2013, the league took in $327 million and spent $318 million. The National Hockey League and the Professional Golfers Association of America are also tax exempt.

Senators Tom Coburn, an Oklahoma Republican, and Angus King, an independent from Maine, introduced legislation last year to repeal the NFL’s tax break. The change would generate about $100 million for the government over the next decade, according to the congressional Joint Committee on Taxation.

King said successful sports leagues that can afford to pay high executive salaries—NFL Commissioner Roger Goodell was paid $44 million, according to the league’s most recent tax filing—shouldn’t benefit from a tax break.

‘Real Scrutiny’

“It’s something that needs some real scrutiny; it doesn’t make sense,” King told reporters this week. “I’ve got taxpayers in Maine who are paying more taxes because the NFL isn’t paying the taxes they ought to be paying. It’s a question of equity.”

Representative Dave Camp, a Michigan Republican and chairman of the House Ways and Means Committee, proposed repealing the tax exemption earlier this year as part of a broad revamp of the U.S. tax code. That measure hasn’t advanced in Congress.

‘We’re Done’

This week, Senator Maria Cantwell, a Washington state Democrat, proposed repealing the tax exemption to punish the NFL because the Washington Redskins refuse to change their name, which is offensive to many Native Americans. “We’ve seen no actions from these guys, and so we’re done,” she said.

Other Democratic lawmakers, such as Representative Janice Hahn of California and Senator Cory Booker of New Jersey, have questioned the tax-exempt status.

Still, they haven’t built wide support, even among Democrats who have been seeking populist momentum before the November election.

Senator Charles Schumer, a New York Democrat, wouldn’t comment on the issue. Senator Patty Murray, a Washington state Democrat, is focused more on how the league handles domestic violence charges against players than on the tax break.

“The NFL needs to take responsibility here and do the right thing,” she said.

Congress plans to leave Washington this week and return after the Nov. 4 election. Then, lawmakers will have a compressed session in which they’ll address time-sensitive issues and leave the nation’s capital in time for Christmas—and the end of the NFL regular season.

The Coburn-King bill is S. 1524.




Grandfather Represents Self in Tax Court and Wins


Sometimes a grandfather knows best, even when the disagreement involves the Internal Revenue Service.

In a case decided earlier this month in Tax Court, a taxpayer, James Roberts, claimed dependency head of household filing status on his 2012 return, along with the Earned Income Tax Credit, the child tax credit and dependency exemptions based on his relationship to his three grandchildren.

The IRS contested the filing status, the EITC, the child tax credit and the exemptions, and assessed an accuracy-related penalty. At trial, the IRS conceded the accuracy-related penalty.

During January 2012, Roberts’ daughter and her two children became homeless. A third child was born that March. In order to help his daughter and her children, Roberts entered into an agreement with Tammy Moody whereby he and his three grandchildren would reside with Ms. Moody at her apartment.

The agreement stated in part: “This is an agreement between Tammy Moody and [James Roberts]. [James Roberts] agrees to pay 75 percent rent and utilities and bear full cost of meals, etc.”

Both Roberts and Ms. Moody signed and dated the agreement.

Roberts and his two grandchildren moved into the apartment in January 2012, joined by the third grandchild in March. Roberts complied with the agreement to provide rent, utilities and meals. They lived in the apartment until October 2012. During the time they were there, Roberts’ daughter also lived in the apartment and provided nonmonetary care for the three children. Ms. Moody also provided care for the children when Roberts and his daughter were not at the apartment, with Roberts reimbursing Ms. Moody for any expenses she incurred in caring for the children.

The Tax Court, in T.C. Summary Opinion 2014-88, found that Roberts qualified for the deductions, credits, and filing status.

The IRS conceded that Roberts’ grandchildren met both the relationship test and the age requirement for the dependency exemption, but contested the “same principal place of abode as the taxpayer for more than one-half of such taxable year” requirement. Based on its findings of fact, the court found that Roberts established this requirement.

Likewise, the court found that the grandchildren did not provide over one-half of their own support for the 2012 tax year, and therefore they constituted qualifying children for the year. Therefore, Roberts was entitled to the dependency exemptions for his three grandchildren for 2012. The same requirement under Section 152(c) of the Tax Code qualified the children for Roberts to take the EITC and child tax credit.

To qualify for head of household, which provides a special tax rate, the taxpayer must have maintained as his or her home a household that was the principal place of abode for at least one dependent for more than one-half of the taxable year. The Tax Court found that Roberts satisfied this requirement because he maintained a household and the three grandchildren were his dependents for 2012. Thus, he was entitled to head of household filing status in calculating his tax liability for 2012.




Crain's 2013 Nonprofit Executive Compensation Survey

Every two years, Crain’s compiles a database of compensation of the top executives at selected Southeast Michigan nonprofits. This year’s review focused on compensation data for calendar 2012, which is the most recent available, given that nonprofits can get extensions of up to 11 months after the close of their fiscal year to file their 990 tax forms.

Our criteria for inclusion in the database:

  •  501(c)(3) nonprofits with total revenue of $20 million or more
  •  The largest grant-making and fundraising foundations
  •  Hospitals and health systems
  •  Smaller organizations that in our judgment merited inclusion, such as well-known civic and business organizations
  • or smaller nonprofits whose CEOs earned compensation commensurate with their peers at larger nonprofits.

Published here are some of the top-paid executives in those categories.

Top-Paid Nonprofit Executives









Base pay



Arts and culture




Graham Beal, Detroit Institute of Arts




Ron Kagan, Detroit Zoological Society




Anne Parsons, Detroit Symphony Orchestra




Ritschard Homberg, Detroit Educational Television Foundation




Patricia Mooradian, The Edison Institute Inc. (The Henry Ford)








Business and civic organizations




Doug Rothwell, Business Leaders for Michigan




Sandy Baruah, Detroit Regional Chamber




Mark Tomlinson, Society of Manufacturing Engineers




George Jackson, Detroit Economic Growth Corp./Growth Assoc.




Larry Alexander, Detroit Metro Convention & Visitors Bureau








Fundraising foundations




W. Clark Durant, The New Common School Foundation




Susan Burns, St. John Providence Health System Foundation




Thomas Stevick, Eastern Michigan University Foundation




Melinda Conway Callahan, Crittenton Hospital Medical Center Foundation




Paul Miller, Presbyterian Villages of Michigan Foundation








Grant-making foundations




Richard Rapson, The Kresge Foundation




Ira Strumwasser, Blue Cross Blue Shield of Michigan Foundation




C. David Campbell**, McGregor Fund




Mariam Noland, Community Foundation for Southeast Michigan




Carol Goss***, The Skillman Foundation








Health care




Thomas Fleszar, Delta Dental Plan of Michigan




Judith Persichilli, Trinity Health




Daniel Loepp, Blue Cross Blue Shield of Michigan




Nancy Schlichting, Henry Ford Health System/Foundation




Eugene Michalski, Beaumont Health System








Social services




Michael Brennan, United Way for Southeastern Michigan




Mark Stutrud, Lutheran Social Services of Michigan




Mark Lit, Jewish Community Center of Metropolitan Detroit




Reid Thebault****, YMCA of Metropolitan Detroit




John Thorhauer, United Methodist Retirement Communities












Lincoln Smith, Altarum Institute




Kevan Lawlor, NSF International




Jane McNamara, GreenPath Inc. (dba GreenPath Debt S­­­olutions)




Louis Glazer, Michigan Future Inc.




Kathleen Zaracki, National Assoc. of Investors Corp. (dba Better Investing)




*Total compensation includes benefits, deferred and other types of compensation. **C. David Campbell died in July 2014. His sucessor has not yet been named. ***Carol Goss retired at the end of 2013. Tonya Allen is president and CEO. ****Reid Thebault retired in May; Scott Landy is now president and CEO.



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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