The clock is ticking as two local nonprofits battle for the Harding, Shymanski & Company Division title in the inaugural Brackets for Good Louisville competition. Bridgehaven Mental Health Services and Heuser Hearing & Language Academy are raising awareness and funds for their organizations. They have survived three rounds of competitive fundraising to compete for the Division Championship and a chance to win the ultimate $10,000 Brackets for Good Tournament Championship donation.
Now in its tenth year, the McGladrey Manufacturing and Distribution Monitor has been helping industry executives make informed decisions based on information gathered from companies across the country and around the world. This survey will assess manufacturer and distributor business conditions, global growth efforts, innovation practices, and the data security environment. This invaluable resource enables industry executives to make informed strategic and tactical decisions based on a detailed analysis of data from private and closely held companies. We encourage you to participate and have your voice heard. The 2015 McGladrey Manufacturing and Distribution Monitor will be open until April 23, 2015.
If you have questions or need assistance with the survey, please contact Brant Kennedy, CPA at 800.880.7800 ext. 1425.
Posted March 2, 2015 on Indiana Department of Revenue website.
Tax season is underway. Many taxpayers are concerned about recent security hacks and the potential for customer identity information to be stolen. Once identity thieves have someone’s information, it’s hard to say what they’ll do with it.
One way identity thieves use victims’ identities is to file fraudulent tax returns requesting refunds in the victims’ names. By filing a fake tax return using a real identity, thieves potentially can siphon money from the state.
AND, they don’t just use victims’ identities to file a fake return in one state—they might use the same taxpayer’s identity information to file a tax return in every state!
That’s why the Indiana Department of Revenue puts so much effort into its identity protection program.
The department has special security features in its tax processing system. These security features make up the department’s identity protection program. The program specifically looks at the identity information in each tax return, making sure each taxpayer is who he says he is.
To protect taxpayers’ refunds, some taxpayers are asked to complete an Identity Confirmation Quiz. Those selected will receive a letter from the department.
The letter first asks the taxpayer to confirm that the letter recipient’s name and address information matches an Indiana tax return he recently submitted. If a taxpayer receives this letter and the identity information is not correct or he did not submit an Indiana tax return, he should not complete the quiz, but rather follow the letter’s instructions to contact the department.
The quiz contains four short questions, which only the person asked to complete the quiz would be able to answer. It is taken on a secure website hosted by the department or over the phone. It should take no more than two minutes to complete.
Remember, electronically filed tax refunds process in 10-14 business days. Those selected to complete the Identity Confirmation Quiz receive a letter within the 10-14 day timeframe. After successful quiz completion, returns are processed within 7-10 days.
The department works diligently to process returns accurately and securely. Increased security features are meant to protect taxpayer identities with as little refund delay as possible.
Deadline extended to April 30 for WOTC employers to submit Form 8850
The IRS recently issued Notice 2015-13 to provide transition relief to employers claiming the section 51 Work Opportunity Tax Credit (WOTC). Many of the provisions of the WOTC were retroactively extended by the Tax Increase Prevention Act of 2014 for one year through Dec. 31, 2014. The WOTC allows employers a credit for a portion of wages paid to certain new employees who are qualified veterans or members of disadvantaged groups.
Before an employer can claim the credit, it must obtain certification that an individual is a member of a targeted group. To obtain this certification, an employer must (1) complete a pre-screening notice for each individual on or before the day the individual is offered employment and (2) submit Form 8850 “Pre-Screening Notice and Certification Request for the Work Opportunity Credit” to a State employment security agency known as a Designated Local Agency (DLA) no later than the 28th day after the individual begins work. Since the WOTC was retroactively extended to apply to 2014, employers needed relief from this 28-day submission requirement in order to claim any credits retroactively available.
For more information, read the full article or contact Kathy Ettensohn, CPA, MST or Mike Vogel, CPA at 800.880.7800.
The Internal Revenue Service is warning return preparers and other tax professionals to be on guard against bogus emails making the rounds seeking updated personal or professional information that in reality are phishing schemes.
Specifically, the bogus email asks tax professionals to update their IRS e-services portal information and Electronic Filing Identification Numbers (EFINs). The links that are provided in the bogus email to access IRS e-services appear to be a phishing scheme designed to capture your username and password. This email was not generated by the IRS e-services program. Disregard this email and do not click on the links provided.
Phishing made this year’s Dirty Dozen list of IRS tax scams. The full list is available on IRS.gov.
It is important to keep in mind the IRS generally does not initiate contact with taxpayers by email to request personal or financial information. This includes any type of electronic communication, such as text messages and social media channels. The IRS has information online that can help you protect yourself from email scams.
On February 18th, the IRS issued Notice 2015-17 providing transition relief from the 4980D excise tax for small employers who reimburse or pay individual insurance premiums for their employees. Employers with fewer than 50 employees have transition relief through June 30, 2015.
In addition, the notice clarifies the application of compliance with Affordable Care Act (ACA) market reforms when a 2-percent shareholder and non-shareholder employees are reimbursed individual insurance premiums. For more information, contact Michele Graham, CPA at 800.880.7800.
The Brackets For Good Louisville 2015 tournament presented by Bingham Greenebaum Doll LLP last week announced the pairings of 64 Louisville area nonprofits. Harding, Shymanksi & Company, P.S.C., is proud to be a division sponsor for this inaugural tournament. The division includes 16 nonprofit organizations who will compete to win a $10,000 grand prize donation. Organizations will receive one point for every dollar they raise through the online competitive giving campaign in hopes of advancing to the championship round.
The first round of the competitive giving campaign begins February 27th and runs through March 6th. First round pairings in the Harding, Shymanski & Company division are:
For more information, visit Brackets for Good Louisville.
The Brackets For Good 2015 Tournament is presented by Bingham Greenebaum Doll LLP and is also sponsored by Sam Swope Auto Group, America’s Window, Valeo Financial Advisors, Louisville Business First, Bloomerang, Candido and WDRB FOX41.
The IRS has recently targeted accrued bonuses in its examinations. Accrued bonuses have been disallowed if payment is contingent upon the employee remaining employed at the time of payment in the following year, with the bonus being forfeited back to the company if the employee leaves prior to payment.
Generally, for accrual basis taxpayers an accrued bonus is deducted in the current year if it was earned by year-end and paid within the first two and a half months of the following year. The IRS’s position is that the “All Events Test” is not met with regard to the stipulation that the employee must remain employed at the date of payment. This is forcing many taxpayers to implement or revise their bonus plans or file accounting method changes for previous year audit protection. If changes are not made to company plans, significant deferral of year-end bonus deductions could occur.
For an accrual basis-taxpayer to deduct accrued bonuses, the following four conditions must be met:
The IRS has emphasized that employers must consider the elimination of any risk of forfeiture of the accrued bonuses to ensure meeting condition 1 above.
To avoid losing a deduction for accrued bonuses, it is recommended to formalize and document the policy for payment and deduction of bonuses. The recommendation is to include in the policy an indication that the bonus will be paid to employees employed with the company on the date that bonus amount is determined or on the last day of the tax year.
If your company does not wish to pay employees terminated prior to the date of the bonus payment, a plan could be written to pay the entire amount calculated for the bonus and reallocate any forfeited amounts to the others still employed on the date of payment. Another option is to authorize a minimum bonus pool prior to year end in an amount that is reasonably expected to be paid to qualifying employees.
For more information contact Aaron Wilzbacher, CPA at 800.880.7800 ext. 1322 or awilzbacher@hsccpa.com. To read the January/ February issue of our Manufacturing Newsletter, click here.
A recent Indiana Tax Court decision could ultimately impact all Indiana companies and contractors entering into real property improvement agreements. The Indiana Tax Court has ruled against the distinction between the sales tax treatment of time and material and lump-sum contracts in Lowe’s Home Centers, LLC v. Indiana Department of State Revenue (IN Tax Ct. Dec. 19, 2014).
The issue was whether Lowe’s properly self-assessed and remitted use tax on construction materials used in its real property improvement contracting work. Lowe’s served as general contractor on home improvement work, such as new roof and kitchen cabinet installation, where it routinely furnished customers with both construction materials (typically pulled from inventory) and labor. Relying on tax regulations promulgated in the 1980s, the Department assessed Lowe’s sales tax on the retail cost of the materials it claimed should have been collected from Lowe’s customers.
The court dismissed the Department’s position that under the construction contracts, customers of Lowe’s were purchasing materials separately from the labor, causing the contractor to act as a retail merchant of the materials. The court agreed with Lowe’s that its customers were purchasing a completed improvement. Title to the construction materials was deemed to have passed once they were installed, at which point, they lost their identity as tangible personal property, having been converted to real property. Thus, Lowe’s did not transfer tangible personal property to its customers.
The court invalidated those portions of Indiana Tax Regulations that provide that when a contractor enters into a time and material contract with its customer, it owes no use tax on the materials because its customer owes sales tax on the materials supplied. These regulations also provide that when a contractor uses a lump-sum contract, it is required to self-assess and remit use tax on the construction materials supplied.
Although the court found the Lowe’s contracts to be lump sum in nature and not time and material as asserted by the Department, the court did not base its decision on this distinction. The court went as far as to state that in this instance, the Department had created an artificial distinction between time and material and lump-sum contracts to convert a contractor’s use tax liability into a sales tax liability on the materials’ higher price. The court said that because Indiana Code section 6-2.5-3-2(c) does not impose use tax liability contingent upon the type of contract a contractor uses, that distinction as contained in 45 I.A.C. 2.2-3-9 and 45 I.A.C. 2.2-4-22 is invalid.
The Department can appeal the Tax Court’s decision to the Indiana Supreme Court, so it remains to be seen whether time and material contracts for real property improvements are truly a thing of the past. Until the legal challenges have run their course, there will be a degree of uncertainty with regard to these contracts in Indiana.
Please contact Aaron Wilzbacher, CPA or John Rittichier, CPA at 800.880.7800 with questions.
The following memorandum contains important information regarding upcoming reporting requirements related to the Affordable Care Act (ACA) or ObamaCare. The only employers that should be concerned with this memo and the detailed information within it are the following types of employers:
The Affordable Care Act created new reporting requirements under Internal Revenue Code (Code) sections 6055 and 6056. Under these new reporting rules, certain employers discussed above must provide information to the Internal Revenue Service about the health plan coverage they offer (or do not offer) to their employees.
The additional reporting is intended to promote transparency with respect to health plan coverage and costs. It will also provide the government with information to administer other ACA mandates, such as the large employer shared responsibility penalty and the individual mandate. While this reporting is not due until January 2016 for the 2015 year, it is essential that employers make plans to start tracking information in January 2015 to capture all relevant information needed to fulfill the reporting requirements.
On March 5, 2014, the Internal Revenue Service (IRS) released two final rules on these reporting requirements:
The Section 6055 final ruling (Forms 1094-B and 1095-B) requires applicable small employers (an employer with less than 50 full-time-equivalent employees) who provide self-insured plans to employees to report information on that coverage to the IRS and covered individuals. Employers will have to file form 1094-B and 1095-B to report information on each full-time employee.
The Section 6056 final ruling (Forms 1094-C and 1095-C) requires applicable large employers (an employer with at least 50 full-time-equivalent employees) to report to the IRS and covered individuals information on the health coverage offered to full-time employees. Employers will have to file form 1094-C and 1095-C to report information on each full-time employee.
Below is a chart summarizing the filing requirements based on the size of the employer. For purposes of these filings, a small employer is one with less than 50 full-time employees (including equivalents) and a large employer is one with at least 50 full-time employees (including equivalents) during the preceding calendar year.
Reporting of Health Coverage for Issuers and Self-insured Plans (Code § 6055)
The ACA requires every health insurance issuer, sponsor of a self-insured health plan, government agency that administers government-sponsored health insurance programs and any other entity that provides minimum essential coverage (MEC) to file an annual return with the IRS reporting information for each individual who is provided with this coverage. Related statements must also be provided to individuals.
The IRS will use the information from the returns to implement the ACA’s individual mandate (that is, the requirement that individuals obtain acceptable health insurance coverage for themselves and their family members or pay a penalty).
The information that will need to be captured regarding each covered employee along with family members who have coverage under the self-insured plan relating to Code Section 6055 (Form 1095-B) consists of:
Applicable Large Employer Health Coverage Reporting (Code § 6056)
Applicable large employers are required to file information returns with the IRS under IRS Section 6056. Applicable large employers are those with 50 or more full-time employees during the previous year. Employers file forms 1094-C and 1095-C to report information on each full-time employee whether the employee is participating in an employer-sponsored group health plan or not. Employees must also be provided with a statement of this data by January 31st each year for the prior year.
The information that will need to be captured regarding each covered employee along with family members who have coverage under the self-insured plan relating to Code Section 6056 (Form 1095-C) consists of:
Please contact your payroll processor, Human Resources department, or your insurance provider for more information on how to start accumulating this data beginning in January 2015.