McKonomics

The McKonomics Blog is Moving to M&A News

In case you haven’t heard, our firm recently started a news blog called McKonly & Asbury News. In addition to our other blogs which are specific to many of the segments our firm serves, this new blog will include more general content including information that would formerly be posted on the McKonomics blog. Take a look at the articles we’ve posted since the beginning of May: 

• Pennsylvania Act 32: What Employers Need to Know
• Clarification Please? The AICPA Clarifies the Requirements for Supporting SSAE No. 16 Assertions
• IFRS: The “Condorsement” Approach
• Register Today for McKonly & Asbury’s Free Fraud Webinar – June 23
• 2011 Business of the Year Awards Nominations (July 7^th Deadline)
• McKonly & Asbury’s Katie Nix Graduates from Leadership Harrisburg Area
• McKonly & Asbury Participates in Employee Exchange Program, Hosts HURST (U.K.) Employee
• Why the High Net Worth Family Should Consider Gifting Now
• What Does an iPad Replace in the Corporate Workplace?
• IFRS: The People Aspect
• The Corbett Budget According to the Fiscal Responsibility Task Force
• The Dirty Dozen Tax Scams of 2011

You can also look up articles by category. The new blog covers content on the following categories:

• Advisory/Consulting
• Assurance & Audit
• Fraud
• General
• News
• Nonprofit
• Press Release
• Tax

In an effort to make this transition process as easy as possible for you, we will automatically transfer your subscription from the McKonomics blog to the McKonly & Asbury News blog. We trust the information provided through the new blog will be just as beneficial as that provided through the McKonomics site.  Additionally, past articles will continue to be on this site for your reference and enjoyment.

If you have any questions or concerns, please don’t hesitate to contact Reed Horanburg at rhoranburg@macpas.com.

 

 

When Should You Keep and Throw Out Tax Documents?

Once your 2010 tax return has been put to bed, you can rest easy until it's time to prepare for filing next year...right? Wrong. Before you turn out the lights, collect all the vital materials from your 2010 return and store them in a safe place. The documents you don't need anymore can be thrown away, after shredding them or destroying them, of course.

In many cases, tax returns are now filed electronically, so that cuts down on the mound of paperwork you've faced in the past. But you still have to keep certain records for a minimum period of time. We're not a "paperless society" quite yet. Also, you must also cope with recordkeeping burdens for the 2011 tax year.

What sort of records are we talking about? It depends on your particular situation, but here are several common areas where record retention is a must. Otherwise, you can run any extraneous papers through the shredder.

Securities: Normally, you're advised to keep records of trading activities and 1099 forms for securities, especially as they relate to the "basis" of these investments.

Two Sets of Burdensome 1099 Rules are Repealed

President Obama has signed a law that repeals two sets of rules that had business owners, company managers and landlords up in arms because of the paperwork nightmare they created. The rules that involved businesses issuing a blizzard of 1099 forms were created by two laws enacted in 2010. Rental property owners had to begin complying with one of the sets of rules this year. The second set for other types of businesses was not scheduled to go into effect until next year. 

The new rules ignited an immediate firestorm of criticism, but repealing them took longer than some expected. 

Thankfully, all the attempted 1099 rule changes have finally been quashed by the Comprehensive 1099 Taxpayer Protection and Repayment of Exchange Subsidy Overpayments Act, which was signed into law on April 14, 2011. 

Not Ready to File Your Taxes?

If you need more time to get your tax information together, don't panic. You can get six additional months to finalize your return by filing Form 4868, Application for Automatic Extension of Time to File by the April 18th tax deadline. Remember, this is an extension to file your return, not to pay your taxes. Getting an extension to file allows you to avoid being hit with a failure-to-file penalty. 

To complete Form 4868 you will need to estimate your tax liability and pay the amount you owe by check, debit card or credit card. 

If your state has an income tax, you will also need to check with your state tax authority to find out how to extend your state return.   

What if you Can't Pay the Tax You Owe? The IRS recognizes that in extreme circumstances, some taxpayers may be unable to pay the full amount of taxes owed by the April 18th deadline. Consult with your tax adviser if you have questions about your situation. 

Here are some possible options. 

• Entering into an installment agreement. Taxpayers owing less than $25,000 in tax, penalties and interest, may be able to enter an installment agreement with the IRS.
• Using a credit card or debit card. The IRS accepts most credit and debit cards.
• Borrowing the money.
• Request additional time to pay. Taxpayers may be able to get an extended time to pay their tax bills in full (60 to 120 days) due to undue hardship. This will generally result in paying less in penalties and interest than paying through an installment agreement.

New IRS Guidance on Reporting of Employer Health Coverage

The IRS issued interim guidance to employers on the informational reporting on each employee's annual Form W-2 that lists the cost of the health insurance coverage they sponsor.  

The IRS emphasized that this new reporting to employees is for their information only, to inform them of the cost of their health coverage. It does not cause excludable employer-provided health coverage to become taxable. Employer-provided health coverage continues to be excludable from an employee's income, and is not taxable. 

The new requirements to provide employees with this information on W-2 Forms stems from the Patient Protection and Affordable Care Act, which was enacted just over a year ago. The interim guidance is generally applicable beginning with 2012 W-2 forms, which would be issued to employees by January 2013. 

Exception to the general rule for smaller employers: Employers that issue less than 250 W-2 Forms in 2011 will not be required to comply before January 2014. 

However, all employers can chose to rely on the guidance for 2011 W-2 Forms, even though it is not required. 

Under the new requirements, an employer must provide written information on W-2 Forms to employees showing them the remuneration paid during the calendar year. This must be done on or before January 31 of the following year (there are different rules if an employee terminates employment during the year.) 

Your Employee Handbook: Include 12 Critical Issues - Important Points to Spell Out

An employee handbook serves as a guide for managers and employees alike. It can help avoid conflict when specific situations arise and head off potential problems before they happen. A good handbook can also create an incentive for employees to make a long-term commitment to your company. 

The following list includes 12 major topics your employee handbook should include: 

Scope of duties and hours. Distinguish between clerical and other positions. For non-professional staff, state normal office hours (such as 9 a.m. to 5 p.m.) and note lunch and break times. 

Company property. Describe your policy for misuse of company property, such as computers, fax machines, copiers, telephones and online services. For example, what is your policy on personal e-mail and what are the consequences for violating it? 

Overtime. Under federal and local laws, payment for overtime is mandatory for some employees. In certain limited situations, "comp" time may be provided in lieu of cash overtime payments. Describe these situations. 

IRS Throws a Lifeline to Struggling Taxpayers - New Help for Taxpayers Who Fall Behind

The IRS recently unveiled a new program to help struggling individual taxpayers and small business owners pay off tax debts and avoid tax liens. 

The new program is the latest in a series of efforts designed to assist taxpayers who can't pay. In 2008, the IRS provided lien relief for individuals trying to refinance or sell their homes. A year later, the tax agency created more flexibility for taxpayers facing payment problems. 

Here's a brief summary of the new five-step program. 

Step #1: Increase the dollar threshold for issuing tax liens.  

The new rules generally prohibit the IRS from filing a lien unless unpaid taxes exceed $10,000. This doubles the previous limit of $5,000, which had been in effect since the mid-1980s. The IRS plans to review the results and the impact of this change in about a year. 

IRS Announces New Effort to Help Struggling Taxpayers Get a Fresh Start

In its latest effort to help struggling taxpayers, the Internal Revenue Service announced a series of new steps to help people get a fresh start with their tax liabilities.

The goal is to help individuals and small businesses meet their tax obligations, without adding unnecessary burden to taxpayers. Specifically, the IRS is announcing new policies and programs to help taxpayers pay back taxes and avoid tax liens.

"We are making fundamental changes to our lien system and other collection tools that will help taxpayers and give them a fresh start," IRS Commissioner Doug Shulman said. "These steps are good for people facing tough times, and they reflect a responsible approach for the tax system."

This effort centers on the IRS making important changes to its lien filing practices that will lessen the negative impact on taxpayers. The changes include:

Business Valuation Building Blocks

I have had the opportunity and pleasure to review many valuation reports with my clients and answer general valuation inquiries from a multitude of other interested individuals. The majority of the questions and my comments during the reviews center on three of the building blocks of valuation: the Standard of Value, the Premise of Value, and the Ownership Interest being valued.

I have found that the end users of valuation services do not fully appreciate the impact that these different building blocks can have on a valuation engagement. Developing a better understanding of these critical valuation building blocks is one of the most important services that I perform for my clients. In this series of articles, we will look at these building blocks in more depth.

Let me take you back in time. If you are like me, you probably have a memory similar to this...It's Saturday and you and your family are going to visit your grandparents for the evening. When you got to their house, you ran up to them, knocked them over with hugs and kisses and then head to the toy room! I always went straight for a gigantic wagon full of wooden building blocks. I toppled it over and began building my tower/castle of doom. What my grand construction was going to turn into was irrelevant because it would be forcibly knocked over scant minutes after I was finished.

Pennsylvania Bonus Depreciation Issue - Big Change for Business

The federal government has provided for the acceleration of depreciation expense on qualified assets for various periods of time since 2001. The main purpose for providing the acceleration of depreciation was to encourage businesses to make investments in their company in an effort to stimulate the economy.

The initial bonus depreciation deduction provided for a 30% deduction to income of eligible assets purchased between September 10, 2001 and September 10, 2004. The bonus depreciation amount was increased from 30% to 50% for assets purchased between May 5, 2003 and January 1, 2005. The second provision of bonus depreciation provided for a 50% deduction to taxable income for assets placed in service after December 31, 2007 and before January 1, 2011. In both instances, the depreciation deduction can be taken on the remaining 50% of the assets value over the useful life of the asset. Finally, the Tax Relief Act of 2010 expanded bonus depreciation to allow for a 100% deduction of qualified assets purchased from September 8, 2010 through December 31, 2011. The 100% bonus depreciation preempts the previous 50% depreciation for assets placed in service from September 8, 2010 through December 31, 2010 as previously provided.