Fresh from the IRS

Under the Hiring Incentives to Restore Employment (HIRE) Act, enacted March 18, 2010, two new tax benefits are available to employers who hire certain previously unemployed workers (“qualified employees”).

The first, referred to as the payroll tax exemption, provides employers with an exemption from the employer’s 6.2 percent share of social security tax on wages paid to qualifying employees, effective for wages paid from March 19, 2010 through December 31, 2010.

In addition, for each qualified employee retained for at least 52 consecutive weeks, businesses will also be eligible for a general business tax credit, referred to as the new hire retention credit, of 6.2 percent of wages paid to the qualified employee over the 52 week period, up to a maximum credit of $1,000.

Questions and Answers for:

• Payroll Tax Exemption for Hiring Unemployed Workers
• Business Credit for Retention of Certain Newly Hired Individuals in 2010

HIRE News Releases:

• Form to Claim Payroll Tax Exemption for Hiring New Workers Now Available
• Special Payroll Tax Exemption Form Now Available
• Two New Tax Benefits Aid Employers Who Hire and Retain Unemployed Workers

CVC Investing Showing Growth

by Mark Lennon, Crunchbase

Corporate venture capital has always been dubiously titled ‘dumb money’, supposedly less interested in financial performance and only willing to make bets on strategically aligned startups. 

CVC investing, however, has grown significantly over the past few years and many leading tech companies are diversifying their investments by operating autonomous VC funds that look more and more like traditional private VCs. 

In 2013, both the number and size of CVC investments has continued to rise. In October 2013, 48 venture funding rounds valued at over $719M included CVC investor participation. This represented a 14% participation rate, the highest month in the CrunchBase dataset. Read full article

GAO Says IRS' Internal Controls Could Result in Security Breaches

Neikirk, Mahoney & Smith, an accounting firm based in Louisville, reports that in their most recent audit, the General Accounting Office (GAO) has slammed the Internal Revenue Service, citing ongoing weaknesses in internal controls and management that could result in taxpayer security vulnerabilities.

Citing "serious control deficiencies", the GAO says the corrective actions the IRS has taken have fallen short because of the failure of the IRS to fully address the system enhancements that will be required to fix the problems. System weaknesses cited in the audit include weaknesses in information security, including missing security updates, insufficient monitoring of financial reporting systems and mainframe security, and ineffective maintenance of key application security.

The most frightening aspect of the GAO's report is until the problems are resolved, there is an increased risk that taxpayer data will be vulnerable to "inappropriate and undetected use, modification or disclosure."

From the audit report, the "IRS did not maintain effective internal control over financial
reporting as of September 30, 2014, because of a continuing material weakness in internal control over unpaid tax assessments. GAO’s tests of IRS’s compliance with selected provisions of applicable laws, regulations, contracts, and grant agreements detected no reportable instances of noncompliance in fiscal year
2014.

The material weakness in internal control over unpaid tax assessments was primarily caused by financial system limitations and errors in taxpayer accounts that rendered IRS’s systems unable to readily distinguish between taxes receivable, compliance assessments, and write-offs in order to properly classify these components for financial reporting purposes. These deficiencies necessitated the use of a compensating estimation process to determine the amount of taxes receivable, the most material asset on IRS’s balance sheet.

Through this compensating process, IRS made almost $17 billion in adjustments to the 2014 fiscal year-end gross taxes receivable balance produced by its financial systems. Serious control deficiencies related to unpaid tax assessments are likely to continue to exist until IRS significantly enhances the capabilities of the systems it uses to account for unpaid tax assessments, and improves
controls over the recording of information in taxpayer accounts so that reliable transaction-based balances for taxes receivable can be ultimately recorded in its general ledger system.

However, IRS’s current corrective action plan does not fully address all of the system enhancements needed to accurately classify unpaid tax assessment transactions, and IRS has yet to identify the underlying control deficiencies causing the errors in taxpayer accounts.

During fiscal year 2014, IRS continued to make important progress in addressing deficiencies in internal control over its financial reporting systems. However, GAO identified new and continuing deficiencies in internal control over information security, including missing security updates, insufficient monitoring of financial reporting systems and mainframe security, and ineffective maintenance of key application security, that constituted a significant deficiency in IRS’s
internal control over financial reporting systems.

Until IRS fully addresses existing control deficiencies over its financial reporting systems, there is an
increased risk that its financial and taxpayer data will remain vulnerable to inappropriate and undetected use, modification, or disclosure.

In addition to its internal control deficiencies, IRS faces significant ongoing financial management challenges associated with (1) safeguarding the large volume of sensitive hard copy taxpayer receipts and related information, (2) its exposure to significant invalid refunds from identity theft, and (3) implementing the tax provisions of the Patient Protection and Affordable Care Act. The difficulties confronting IRS in its efforts to effectively manage each of these challenges are further magnified by the need to do so in an environment of diminished budgetary resources.

Read the full audit report here. http://www.gao.gov/assets/670/666863.pdf

Conservative Groups' Lawsuits Against IRS Dismissed

A federal judge has dismissed a pair of lawsuits against the Internal Revenue Service by over 40 conservative groups over the IRS’s handling of their applications for tax-exempt status, according to Michael Cohn in Accounting Today.

Judge Reggie Walton of the U.S. District Court in Washington pointed out in his ruling Thursday that the IRS had changed the way it reviewed the tax-exempt applications and had approved most of the groups, and that federal courts do not allow financial claims against individual defendants in the IRS for constitutional violations.

The lawsuits were filed on behalf of conservative groups such as True the Vote and Linchpins of Liberty by the American Center for Law and Justice.

The IRS has come under fire from conservative groups since last year for using terms such as “Tea Party” and “Patriot” to review applications for tax-exempt status under Section 501(c)4 of the Tax Code. The controversy led to the ouster of the former director of the IRS’s Exempt Organizations unit, Lois Lerner, along with other IRS officials.

The head of at least one conservative organization was dismayed by the dismissal of the lawsuits. “This ruling is offensive to every citizen who believes in equal treatment under the law,” said FreedomWorks executive vice president Adam Brandon in a statement. “It doesn't matter when the IRS bullied conservative groups or if they stopped, the point is that it was done, and the IRS has to be held accountable. Today's decision was the legalization of federal bullying and unchecked discretionary authority, so long as agencies can play the waiting game long enough to correct their misdeeds. The fact that it occurred in the first place was appalling, but the fact that it was excused by the courts was disgraceful."

If you - or someone you know - is considering a filing for tax-exempt status, contact Neikirk, Mahoney & Smith. Neikirk, Mahoney & Smith's tax experts can help you streamline the process and maximize the chances for a prompt approval from the Internal Revenue Service.

Capital Gains for 2014

According to Motley Fool, Clients can avoid paying taxes on long-term capital gains on an asset by either not selling at all or holding onto the property a little longer. You can lower your tax bill by holding the asset for at least 12 months to trigger long-term capital gains rates and not short-term capital gains rates, which are higher. Read the article to know how long-term capital gain taxes will be calculated this year on state and federal levels.
Or if you don't feel like reading something, just call Neikirk, Mahoney & Smith PLLC at 502-896-2999.
-Gary

Lois Lerner Gets Some Payback

In an absolutely hilarious article by Michele Kirk in BizPac Review, conservative activist Jason Mattera recently found himself in a position that a lot of conservative Americans with they could be in as he happened along Lois Lerner walking her dogs.

Unlike a lot of us, though, Mattera had the nerve to say things to Lerner that a lot of us can only fantasize about.

"Mattera brutally pummeled the shamed former IRS director with requests for an apology to conservatives for using the government as a weapon to target them. He taunted her by saying things like “How does it feel to be targeted? You don’t like it do you?”

"Lerner ran for cover to a neighbors house where she knocked, and knocked and begged to come in.

"Oops, it must have been a conservative neighbor because, they wouldn’t let her in!

"When the man of the house finally came around from the back, Lerner told him she had been asking his wife to let her in because the press was bothering her.

"Not hearing what Lerner said to him, the man was still confused."

Mattera explained “She’s trying to get in your house, she doesn’t want to answer questions.”

"The elderly neighbor’s classic response, “I don’t want her in my house.” OUCH!

"Mattera didn’t miss a beat. “I don’t blame you,” he said. “I wouldn’t want her in my house either.”

"Thoroughly scorned, Lerner scurried to another house for cover."

Mattera has a history of ambushing deserving liberals.  His latest book, “Crapitalism” takes them on in writing.

Interesting article from the Old Gray Lady...

"Tax Tactics Threaten Public Funds" says New York Times' Eduardo Porter.

"When the European Commission charged this week that Ireland’s sweetheart tax treatment of Apple amounted to an illegal corporate subsidy, the company said that it had done nothing wrong. Apple executives might have added that whatever they did, they were not alone.

"Corporate tax strategies intended to minimize global taxes, by hook or by crook, are by now standard practice. Google and Facebook move money through Ireland to lower their taxes. Starbucks uses the Netherlands, a practice that is under review by Europe as well."

Here's the rest of the article - definitely worth your time - http://www.nytimes.com/2014/10/02/business/economy/multinational-tax-strategies-put-public-coffers-at-risk.html?ref=todayspaper&_r=0

And if you have questions about this or any tax related issues, call Neikirk, Mahoney & Smith at (502) 896-2999.

#

So we're at war again...

Once again, the United States is flexing its military muscle in the Middle East. With Tomahawk Missiles flying and our unveiling to the world of the amazing F-22 fighter plane, one can't help consider the impact all this might have on domestic markets, i.e. your stock portfolio.

Interestingly, it isn't likely to have much effect at all, according to most pundits, and if it does have an effect, it will likely benefit your portfolio of domestic securities. And the professionals at Neikirk, Mahoney & Smith CPAs want you to get the best advice possible.

According to Mark Arbruster in Inside Investing, "With the stock market at an all-time high, we are frequently asked about the situation in Syria, and whether now might be a good time to beat a hasty retreat from stocks.  To address these concerns, we reviewed historical capital markets performance during times of war."

Certainly worth a read at http://blogs.cfainstitute.org/insideinvesting/2013/09/25/u-s-capital-market-returns-during-periods-of-war/

Mark Suster's Great Piece on Startups

Mark Suster is a successful entrepreneur turned venture capitalist. He joined Upfront Ventures in 2007 as a General Partner after selling his company to Salesforce.com. This is a really good read for anyone considering opening a new business.

Suster says he usually tells people that everything he learned about being an entrepreneur he learned by F’ing up at his first company.

"I think the sign of a good entrepreneur is the ability to spot your mistakes, correct quickly and not repeat the mistakes," Suster said. "I made plenty of mistakes."

Below are some of the lessons Suster learned along the way.  Read more
After reading what Suster has to say, check with the small business experts at Neikirk, Mahoney & Smith. 

2014 Statistics of Income Bulletin is available

WASHINGTON — The Internal Revenue Service today announced that the summer 2014 issue of the Statistics of Income Bulletin is available at IRS.gov. 

The Statistics of Income (SOI) Division produces the online Bulletin on a quarterly basis. Articles provide the most recent data available from various tax and information returns filed by U.S. taxpayers. This issue includes articles on the following topics:

Foreign-Controlled Domestic Corporations, 2011. Foreign-controlled domestic corporations (76,793) accounted for a small share (1.3 percent) of all U.S. corporation income tax returns filed for tax year 2011. Collectively, these corporations produced 16.2 percent ($4.6 trillion) of the total receipts reported by all U.S. corporation income tax returns for the year; however, a small portion of these corporations accounted for most of this amount. 

FCDCs accounted for 14.4 percent ($11.7 trillion) of the total assets reported by U.S. corporations for 2011.  

Municipal Bonds, 2011. The municipal bond market was still dominated by the more than 21,000 tax-exempt governmental bonds issued in 2011, raising $297.3 billion in proceeds for public projects, such as schools, transportation infrastructure, and utilities. Tax-exempt bond proceeds totaled nearly $384.3 billion, accounting for almost all (98.4 percent) municipal bond proceeds for the year.

SOI Bulletin articles are available for download at IRS.gov/taxstats. For more information about these data, write to the Director, Statistics of Income (SOI) Division, RAS:S, Internal Revenue Service, 1111 Constitution Avenue NW, (K-Room 4112), Washington, DC 20224.

If you have any questions, contact Michael Maier at http://nmscpas.com/contact or call (502) 896-2999.

Related Items:          

SOI Bulletin: Summer 2014

Historical Tables and Appendix

Tax Statistics

IRS Issues Alert for Telephone Scams

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 atwww.tigta.gov.
• If you’ve been targeted by this scam, also contact the Federal Trade Commission and use their “FTC Complaint Assistant” at FTC.gov. Please add &quotIRS Telephone Scam&quot 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 www.irs.gov and type “scam” in the search box.

Additional information about tax scams are available on IRS social media sites, including YouTubeand Tumblr where people can search “scam” to find all the scam-related posts.

Weekly Roundup from the Accounting World

Today's Hot Accounting Topics - Inversions (cont.)
Our friends at Accounting Today have posted three related stories dealing with Obama's and congressional liberals' vendetta against accepted and legal businesses they don't like. Rather than paraphrase them, check them out yourself and draw your own conclusions.

1. Obama Won’t Return Donations Stemming From Tax Deals He Dislikes

2. Schumer Seeks Interest Deduction Limits to Slow Inversions

3. Democrats Urge Obama to Deny Federal Contracts to Companies Using Tax Inversions

Accounting For America lending accounting support to small businesses
A new non-profit organization, Accounting For America, modeled after the hugely successful program developed by Teach for America, connects "greenhorn accountants, presumably recent college graduates, with small businesses in desperate need of accounting services," according to the Wall Street Journal. Read More

Accrual Accounting Proposal Meeting Resistance
According to Accounting Today, nearly half the members of the U.S. Senate have signed a letter expressing concern about a tax reform proposal to require the use of accrual accounting and are urging the leaders of the Senate Finance Committee to preserve the option of the cash method of accounting for tax purposes. Read More

Women Are More Successful Than Men at Raising Money Online

Thanks to peer-to-peer crowdfunding websites like Indiegogo and Kickstarter have made the challenge of raising capital more attainable thank traditional financing for small businesses and causes. Interestingly, female business owners are meeting with more success than male business owners.

Accordingly to the Wall Street Journal, "on Kickstarter, where backers make contributions in exchange for rewards, women-led companies account for less than 10% of technology projects. But roughly two-thirds of women-led technology ventures reached their fundraising goals versus just 30% of technology ventures with male founders, according to a new academic study."

"Overall, women are 13% more likely than men to meet their Kickstarter goals, even after controlling for project type, amount being raised and other factors, according to the analysis, which examined 1,250 projects in five categories that sought at least $5,000 between 2010 and 2012." Read More

IRS Says Lost Data on Lerner's Computer is Not Recoverable

(Bloomberg) The Internal Revenue Service told a judge its technicians made repeated futile efforts to save data on a malfunctioning computer hard drive used by Lois Lerner, the former official at the center of a dispute between Congress and the Obama administration over scrutiny of Tea Party groups.

In a series of sworn statements submitted by the IRS in its effort to fend off a lawsuit by the activist group Judicial Watch, government technicians described the step-by-step processes they followed to try to recover the data.

The IRS in June told a congressional committee investigating the agency’s review of Tea Party groups seeking nonprofit status that the hard drive crash on Lerner’s computer prevented it from obtaining much of her e-mail from 2009 to 2011. Read More at Accounting Today

If you'd like to learn best practices for making your business more profitable in a time when it seems like everyone wants a piece of you, contact Neikirk, Mahoney & Smith, a Louisville-based CPA firm that is dedicated to your personal and professional profitability. Call for an appointment today at (502) 896-2999.

Do you know what a tax inversion is?

The president is blaming CPAs for the trend towards corporate tax inversions.

That's is his opinion, I suppose, but in reality it's a technique accountants and accounting firms employ in their efforts to help American companies remain profitable as our tax burden continues to rise at a time when the economy might not have itself back on a sufficiently firm foundation to support continued growth after the worst recession/depression since the 1920s.

So what, exactly, is a corporate tax inversion?

If you don't know, you aren't alone. But suffice it to say that its one of the issues that gets the hackles up of those groups that accuse big corporations of being the "bad guys" when it comes to creating jobs and rebuilding our economy.

According to Investopedia, a corporate tax inversion is the reincorporation of a company overseas in order to reduce the tax burden on income earned abroad.

Corporate inversion as a strategy is used by companies that receive a significant portion of their income from foreign sources, since that income is taxed both abroad and in the country of incorporation. Companies undertaking this strategy are likely to select a country that has lower tax rates and less stringent corporate governance requirements.

President Obama doesn't like the practice. According to Accounting Today, Obama said, “You have accountants going to some big corporations—multinational corporations but that are clearly U.S.-based and have the bulk of their operations in the United States—and these accountants are saying, you know what, we found a great loophole—if you just flip your citizenship to another country, even though it’s just a paper transaction, we think we can get you out of paying a whole bunch of taxes.”

As is so often the case, some are blaming lawyers for the existence of this "profit loophole."

Accounting Today editor Michael Cohn points out that an article in The Wall Street Journal on Wednesday attributed the trend to the legal profession, describing how the international law firm Skadden, Arps, Slate, Meagher & Flom persuaded a number of corporate clients to do inversions, with the help of banks such as J.P. Morgan Chase and Deutsche Bank. So far, many of the deals have occurred among pharmaceutical companies such as AbbVie's recent acquisition of Shire in the United Kingdom. On Wednesday, Walgreen's CEO announced that his company plans to acquire the rest of the European drug store chain Alliance Boots, but its tax address will remain in the U.S. (see Walgreen Stays in U.S. in $15.3 Billion Alliance Boots Deal)

Obama argued that inversions place an unfair burden on other taxpayers. “Well, it’s not fair. It’s not right." Read more

And if you're interested in getting sound tax advice for your business, contact Neikirk, Mahoney & Smith PLLC at (502) 896-2999.

Thomson Reuters Releases Report on IRS Examinations

BY MICHAEL COHN, Accounting Today

Thomson Reuters has released a special report for tax professionals on how to respond to Internal Revenue Service examinations.

The report, Handling the Increasingly Common Automated IRS Examination, examines two compliance programs used by the IRS to address underreporting: the correspondence examination, also known as the “corr exam,” and the automated underreporter, or AUR, program.

In fiscal year 2013, the IRS conducted over 1 million corr exams and closed 4.1 million AUR cases, compared to 344,000 field exams, according to the report.

The report discusses these compliance programs, addresses problems associated with automated examinations, and offers step-by-step guidance on how to respond to a letter or notice from the IRS.

Read more

Are you ready - really ready - to retire?

If you are, please accept a big pat on the back! But if you're like most people, you aren't ready.

Scary thought, huh? A couple or three thousand bucks a month if you've worked hard all your life and less if you haven't. If you're married, you can double it.

You're not going to buy any yachts with that kind of income but you won't starve or waste away on the streets...which is why Social Security is around in the first place. No politician wants to see old folks dying of starvation or malnutrition - kinda ruins the chances of re-election. So we have Social Security.

And it's a darn good thing we have it because we as a culture are pretty bad at saving money these days. And baby boomers like the author are worried.

I was surprised when a close friend was critical of people who draw Social Security retirement. He said it was leeching off working people. I reminded him that was his money, not the "working people's" money. That didn't change his opinion, though. It was too deeply ingrained.

But this is not a debate about Social Security. It's a discussion about your retirement savings and the first thing we should examine is making the determination as to how much money you're going to need. Here's a great retirement planning calculator - along with a library of additional financial calculators - that may help, at http://nmscpas.com/resources.

Accounting Today had an interested article by Michael Cohn  yesterday in which he reports some interesting recent (May 14 - 19, 2014) Harris Poll numbers.

"Three-quarters of Americans are worried about having enough money for retirement, according to a new survey that found three out of 10 Americans are not saving for later years.

"However, 69 percent of the 2,286 adults surveyed by the Harris Poll say planning for retirement is a key priority to them. Only 35 percent say they have faith in Social Security being there when they retire. That figure drops to 27 percent of Millennials and 30 percent of Gen Xers.

"While 39 percent of Millennials indicated they are saving for retirement, 62 percent of Gen Xers and Baby Boomers say they are.  Millennials are also more likely then the three older generations to be saving money for a car purchase (24 percent vs. 11 percent, 10 percent and 15 percent) and a home purchase (24 percent vs. 7 percent, 4 percent and 3 percent).

"About 69 percent of Americans say they are currently putting money toward any savings. One reason for those who aren’t may be that 46 percent of unretired U.S. adults say they live paycheck to paycheck and can't afford to put money in savings. Among those saving, the top goals are rainy-day funds for unexpected costs (65 percent) and retirement (52 percent). Those who are saving are also doing so for other reasons, with 31 percent saving for a vacation.

"Health care is another worry for Americans, with 67 percent saying they worry about being able to afford unexpected health care costs. Among those who are not yet retired, 70 percent of the respondents said they worry about being able to pay for their health care costs when they retire.

Asked about what they would do if a sudden windfall of $100,000 came their way, 57 percent said they would use the money to pay off an existing debt and/or loans, while 42 percent would put the money into a rainy day fund and save for unexpected expenses. One-third (33 percent) of Americans would invest toward their retirement while over one in five would go on vacation (23 percent) or buy a car (21 percent).

Smaller numbers of U.S. adults said they would treat themselves to something they would not normally spend money on (16 percent), donate to charity (16 percent), buy a house (15 percent), pay for their kids' college (10 percent) and go back to school (6 percent).

If you are interested in setting up a retirement plan with the advice of experienced, knowledgeable CPAs, contact Neikirk, Mahoney & Smith. They can help put some reason behind the rhyme.

Check out our new calculators

Should you refinance your mortgage? What type of retirement account should you set up? As accounting professionals, these are some of the questions that are posed to us on a daily basis by our accounting firm's customers and clients. Neikirk, Mahoney & Smith is providing some interactive financial calculators and other tools to assist you with some of the day-to-day questions and concerns that may arise. While these financial tools are not a substitute for financial advice from a qualified professional, they can be used as a starting point in your decision making process.

GAO slaps IRS' internal controls

The Internal Revenue Service is suffering from several new deficiencies in its internal controls, although it has managed to address a number of older problems, according to a new report from the Government Accountability Office.

The report comes in the midst of lingering questions over the IRS’s loss of two years of emails between the former director of its Exempt Organizations unit, Lois Lerner, and people outside the agency, after her computer crashed in 2011. The agency has been struggling with a series of budget cuts in recent years that have negatively affected taxpayer service.
If you have any questions or concerns regarding the status of your own business' internal controls, contact Neikirk, Mahoney & Smith today!

Read more in Accounting Today

Supreme Court decides against unions

Fox News - WASHINGTON –  The Supreme Court, in a 5-4 decision, ruled Monday that public-sector unions in Illinois cannot collect fees from home health care workers who don't want to be part of a union.

The ruling is a setback for labor unions that have boosted their bargaining power -- as well as their bank balance -- in states like Illinois, by signing up thousands of in-home care workers and forcing them to fork over union dues.

The ruling, however, was limited to health care workers and not all private-sector unions. It also stopped short of overturning decades of practice that allowed public-sector unions to pass representation costs to non-members.
Read More

Supreme Court issues pro Hobby Lobby ruling

Fox News -  The Supreme Court ruled Monday that certain "closely held" for-profit businesses can cite religious objections in order to opt out of a requirement in ObamaCare to provide free contraceptive coverage for their employees.

The 5-4 decision, in favor of arts-and-crafts chain Hobby Lobby and one other company, marks the first time the court has ruled that for-profit businesses can cite religious views under federal law. It also is a blow to a provision of the Affordable Care Act which President Obama's supporters touted heavily during the 2012 presidential campaign.

Read More

Accounting News Weekly Wrapup

As we prepare to wrap up the end of Q2 of 2014, here's a recap of the week's top stories and articles.

Businesses are cutting back on supplying cell phones to employees

Do you feel a tad screwed when your employer calls you on your personal cell phone and doesn't offer to reimburse you? Well, get used to it because, according to the Sage Mobile Device Survey, its not happening much these days.
Fewer businesses are supplying their employees with mobile devices this year over last, according to the second annual mobile device survey from Sage, with a little more than half of responding companies (54 percent) giving their staff devices, down from 69 percent in 2013.

Respondents are seeing the positive effects of mobile technology, however, with the biggest impact in customer service, according to 70 percent of the 1,090 U.S. small businesses polled. They also reported devices to be helpful for performing business in bad weather (32 percent), bringing more work to the company (21 percent) and enabling them to conduct meetings remotely (20 percent).

Despite these benefits, most businesses (more than three quarters) report they are not budgeting for mobile devices and instead purchasing them as the need arises. Five percent said that their business sets an annual budget for mobile items and sticks to it and 12 percent set an annual budget and adjust expenditures as needed.
Read More

Congress working to simplify education tax credits

The legislation, H.R. 3393, the Student and Family Tax Simplification Act, emerged from one of the 11 tax reform working groups that Ways and Means chairman Dave Camp, R-Mich., set up last year to study ways to improve areas such as education tax credits. Rep. Diane Black, R-Tenn., chaired the committee’s Education Tax Reform Working Group and she applauded passage of the bill Wednesday.

“It’s a well-known fact that the cost of education is climbing, and that for too many, the ability to save and pay for college without ending up under a mountain of debt is simply out of reach,” Black said in a statement.

Read More

CPA pleads guilty in Madoff corruption scheme

Peter Konigsberg, an accountant and lawyer who provided services to numerous clients of Bernard Madoff’s investment firm, and who was a personal tax and business adviser to Madoff, pleaded guilty Tuesday in a Manhattan federal court to various charges and faces up to 30 years in prison.

Konigbserg pleaded guilty to a three-count superseding information charging him with one count of conspiracy to falsify the books and records of Madoff Securities and to obstruct the administration of the tax laws, as well as two substantive books and records counts. In addition to pleading guilty, Konigsberg has agreed to cooperate with the government in its ongoing investigation of the fraud at Madoff Securities.
Read More

IRS hard drive failure ignites more furor in halls of Congress

(Bloomberg) U.S. lawmakers argued late into the night over a computer hard drive that crashed in 2011, taking the controversy surrounding the Internal Revenue Service to a new level of acrimony.

Republicans said the broken device that belonged to former IRS official Lois Lerner is crucial evidence in their investigation of the agency and said the IRS was covering up its misdeeds. Lerner headed the IRS office that gave extra scrutiny to small-government groups seeking tax-exempt status.

“I’m sick and tired of your game-playing in response to congressional oversight,” Representative Darrell Issa, chairman of the House Oversight and Government Reform Committee, said to IRS Commissioner John Koskinen at a hearing last night.

Read More

AICPA nixes IRS' Voluntary Tax Preparer Program

The American Institute of CPAs has sent a letter expressing strong concern with the Internal Revenue Service’s proposed voluntary certification program for tax return preparers, saying it “would cause significant legal problems that may ultimately frustrate the IRS’s goals, confuse the public, and lead to litigation.”

The AICPA expressed its concerns to IRS commissioner John Koskinen in a meeting and letter last month, but has increased its level of concern in the latest letter (see AICPA Opposes IRS Voluntary Tax Preparer Certification).

In a letter Tuesday to Koskinen, AICPA chairman Bill Balhoff and AICPA president and CEO Barry C. Melancon wrote, “We have repeatedly expressed to you and your colleagues that our members have very significant concerns regarding a voluntary certification program...

Read More

Lerner is alleged to have targeted Sen. Grassley for audit

House Republicans are accusing Lois Lerner, the former director of the Internal Revenue Service’s Exempt Organizations unit, of emailing a colleague about subjecting Sen. Charles Grassley, R-Iowa, the former chairman of the Senate Finance Committee, to an IRS examination.

House Ways and Means Committee chairman Dave Camp, R-Mich., has been among those investigating the scandal that erupted after Lerner revealed that the IRS had been using terms such as “Tea Party” and “Patriot” to screen applications from groups applying for tax-exempt status. 

He revealed a series of emails Wednesday between Lerner and a colleague over an invitation that had been sent to Grassley to speak at a seminar to which Lerner had also been invited to speak. The unidentified group offered to pay for both Grassley and his wife to attend the event. In the email messages, Lerner says...

Read More

Regions Bank hit hard by fraud charges

Regions Bank plans to pay $51 million to resolve charges related to the intentional misclassification of loans and accounting fraud.

The Securities and Exchange Commission said Wednesday it has filed fraud charges against three former senior managers of Regions Bank for intentionally misclassifying loans that should have been recorded as impaired for accounting purposes

The SEC said the scheme resulted in the bank’s publicly-traded holding company overstating its income and earnings per share in its financial reporting.

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IRS apparently ignoring AICPA and proceeds with program

The Internal Revenue Service is moving ahead with a voluntary tax preparer education program after legal challenges derailed an earlier mandatory testing and continuing education program.

The IRS said Thursday that guidance will soon be issued outlining the new voluntary program to encourage education and filing season readiness for paid tax return preparers. The program will be in place to help taxpayers during the 2015 filing season. It does not include a testing component, although the IRS hopes to add it in future years.

“Today we’re announcing a new program that will help taxpayers by improving the tax know-how and filing season readiness of paid tax preparers,” said IRS commissioner John Koskinen in a conference call with reporters. 

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ObamaCare could benefit from tax season enrollment

A new study suggests that tax filing season could be the best time to sign up clients for health coverage under the Affordable Care Act rather than the current open enrollment period.

The study, by Katherine Swartz of Harvard University and John Graves of Vanderbilt University, published Wednesday in the journal Health Affairs, offers strong evidence for why the ACA open enrollment period should be changed to align with tax season. Currently, Americans who are eligible for tax credits for assistance with paying health insurance premiums only have from until February 15 to apply. The open enrollment began last October 1 during a botched rollout that quickly revealed technical glitches in the federal government’s HealthCare.gov health insurance exchange, along with many state-run exchanges.

The study evaluates the misalignment of the financial calendar of average low-income Americans with the open enrollment period for ACA health coverage, along with the impact that financial stress has on purchasing decisions. The researchers used data on Google search engine queries to evaluate when people were using search terms such as “health insurance.”

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Startups concerned about US tax structure

Nearly two times as many startup business owners cite the U.S. tax structure over health care reform as the issue they anticipate having the biggest impact on their business this year, according to a new survey by the payroll technology provider Paychex.

Of the more than 250 business owners surveyed, 47 percent ranked the U.S. tax structure as the top issue affecting their small business, nearly double the number that selected health care reform (25 percent).

Overall government regulation (20 percent), potential government inaction (6 percent), and immigration reform (2 percent) ranked below those among the top issues.

by Michael Cohn, Accounting Today

Exports of unrefined American oil could begin soon

The Obama administration cleared the way for the first exports of unrefined American oil in nearly four decades, allowing energy companies to start chipping away at the longtime ban on selling U.S. oil abroad.

In separate rulings that haven't been announced, the Commerce Department gave Pioneer Natural Resources Co. and Enterprise Products Partners LP permission to ship a type of ultralight oil known as condensate to foreign buyers. The buyers could turn the oil into gasoline, jet fuel and diesel.

The shipments could begin as soon as August and are likely to be small, people familiar with the matter said. It isn't clear how much oil the two companies are allowed to export under the rulings, which were issued since the start of this year. The Commerce Department's Bureau of Industry and Security approved the moves using a process known as a private ruling.

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BMW looking to build new plant; choosing between US and Mexico

MUNICH—German luxury car maker BMW AG BMW.XE -0.13%  will decide before Bavarian summer vacations whether to build a new auto plant in Mexico or the U.S., Chief Executive Norbert Reithofer said on Wednesday.

Speaking at industry event in Munich, Mr. Reithofer said BMW would decide on the location of a second plant to serve the North American market "clearly before the summer break."

Summer school vacations in Bavaria begin on July 30 this year.

BMW said earlier this year that it was considering building a second factory in North America to meet growing demand. BMW delivered about 376,000 vehicles in the U.S. last year, according to Autodata, about 19% of its world-wide deliveries.

It is widely expected that BMW will locate the new plant in Mexico instead of Spartanburg, S.C., an existing factory that builds its X series sport utility vehicles. Earlier this year, the company said it would invest $1 billion over several years in Spartanburg to expand production, including a proposed seven-seat SUV.

by Hendrik Varnholt, Wall Street Journal

Lerner Loses Emails

Disgraced IRS official Lois Lerner and a number of her colleagues have lost their emails. That's right. The emails that congress had subpoenaed some 18 months ago are now mysteriously missing.
Here's what the media has to say about the subject:

Fox News

CNN 
Republican lawmakers are slamming the Internal Revenue Service, with one calling for an immediate investigation, after the agency notified Congress Friday that it was unable to recover former official Lois Lerner’s e-mails from January 2009 to April 2011 because of a computer crash.

The agency made the disclosure in a letter sent to Congressional investigators Friday afternoon, according a statement from Rep. Charles Boustany Jr., R-Louisiana. Read More

Courier-Journal
Nada thing.

Wall Street Journal
From a June 16 letter sent by Cleta Mitchell, attorney for True the Vote, to the Justice Department. TTV sued the IRS over alleged harassment in 2013:

Late Friday, the IRS apparently advised the Ways & Means Committee that the IRS has "lost" Lois Lerner's hard drive which includes thousands of Defendant Lerner's e-mail records. However, several statutes and regulations require that the records be accessible by the Committees, and, in turn, must be preserved and made available to TTV [True the Vote] in the event of discovery in the pending litigation. . . . We are deeply troubled by this news and . . . seek your consent to immediately allow a computer forensics expert selected by TTV to examine the computer(s) that is or are purportedly the source of Ms. Lerner's "lost" emails, including cloning the hard drives, and to attempt to restore what was supposedly "lost," and to seek to restore any and all "lost" evidence pertinent to this litigation. Read More

New York Times
WASHINGTON — Six additional Internal Revenue Service workers lost emails sought by congressional investigators when their computers crashed, investigators announced Tuesday, escalating Republican suspicions that the employees may have been trying to cover up political targeting of Tea Party organizations.

The revelation follows the news last week that Lois Lerner, the former chief of the I.R.S. division that grants tax-exempt status to organizations, had also lost two years’ worth of files when her computer crashed in mid-2011. Together, the growing trail of disappearing records has heightened Republican concerns that the tax agency conducted politically motivated reviews. Read More

CBS News
The Internal Revenue Service says it has lost a trove of emails to and from a central figure in the agency's tea party controversy.

The IRS told congressional investigators Friday it cannot locate many of Lois Lerner's emails prior to 2011 because her computer crashed that year. Lerner headed the IRS division that processed applications for tax-exempt status.

The IRS acknowledged last year that agents had improperly scrutinized applications for tax-exempt status by tea party and other conservative groups. Read More

NBC News
Republican lawmakers called for a new probe of the Internal Revenue Service on Friday after it told congressional investigators that it had lost more than two years of emails from the central figure in a yearlong inquiry into improper IRS reviews of Tea Party tax documents.

House Republicans have already voted to hold Lois Lerner in contempt of Congress for refusing to testify about the special targeting of Tea Party and other conservative groups applying for tax-exempt status.

Lerner was placed on administrative leave from her position as head of the agency's section on tax-exempt organizations in May 2013, after she admitted that the IRS gave special attention to applications for tax-exempt status that included words like "Tea Party" and "patriot." She retired in September. Read More

ABC News
The Internal Revenue Service has lost more emails connected to the tea party investigation, congressional investigators said Tuesday.

The IRS said last Friday it had lost an untold number of emails when Lois Lerner's computer crashed in 2011. Lerner used to head the division that handles applications for tax-exempt status.

On Tuesday, two key lawmakers said the IRS has also lost emails from six additional IRS workers whose computers crashed. Among them was Nikole Flax, who was chief of staff to Lerner's boss, then-deputy commissioner Steven Miller.

Miller later became acting IRS commissioner, but was forced to resign last year after the agency acknowledged that agents had improperly scrutinized tea party and other conservative groups when they applied for tax-exempt status. Documents have shown some liberal groups were also flagged.

Investigators from the House Ways and Means Committee interviewed IRS technicians Monday. The technicians said they first realized that Lerner's emails were lost in February or March — months before they informed congressional investigators, said a statement by two top Republicans on the Ways and Means Committee, chairman Dave Camp of Michigan and subcommittee chairman Charles Boustany of Louisiana. Read More

Neikirk, Mahoney & Smith PLLC won't lose your emails. Call if you have a business accounting question. 502-896-2999 or by clicking here!

Bloomberg BNA Has Nice Offer

Bloomberg BNA is offering a free 7 day trial subscription to their Daily Tax Report. Even if you're already working with the accounting firm of Neikirk, Mahoney & Smith CPAs, you might find this a handy tool. 

Sign up here ->  FREE 7-day trial subscription to the Daily Tax Report and receive a complimentary copy of our highly-anticipated 2014 Outlook: Tax, Accounting and Pensions. This comprehensive report provides an overview of what to expect in 2014 including discussions on international tax, tax legislation, state developments, tax administration, and more!

Returns Are Up, According to IRS

The Internal Revenue Service said Thursday that only three weeks after the opening of tax season, it has already received about one-third of the individual income tax returns it expects to receive in 2014.

The IRS reported that tax season has gone smoothly so far, despite the two-week delay before kicking off tax season on January 31.  The IRS has processed almost 98 percent of the 49.6 million returns received so far. Each week this filing season, the IRS has processed a greater percentage of the returns received than during comparable weeks last year.

For more, check out Michael Cohn's article in Accounting Today. If you need help with preparing your 2013 tax returns, contact Neikirk, Mahoney & Smith PLLC.

Boehner Seeks Contempt Charges Against Lerner

(Bloomberg) House Speaker John Boehner said an IRS official should be held in contempt if she continues to refuse to testify on the agency’s scrutiny of Tea Party groups.

Lois Lerner, who retired from the Internal Revenue Service in September amid the inquiry, exercised her Fifth Amendment right against self-incrimination at a hearing today after 10 questions from Representative Darrell Issa, the Republican chairman of the House Oversight Committee.

“She has to testify or she should be held in contempt,” Boehner, an Ohio Republican, told reporters, adding that he would wait for a report from Issa.

Read more here

Neikirk, Mahoney & Smith PLLC, an accounting firm in Louisville, Ky. keeps up with what's going on in Washington so you don't have to.

In celebration of Small Business Week

Smallbiztrends.com has a running list of national events slated this week and I thought I'd share them today. If you run a small business and you're looking for ways to increase your bottom line, contact Neikirk, Mahoney & Smith PLLC, a Louisville based accounting firm serving American with small business accounting, tax preparation and consulting. Our telephone number is 502-896-2999.

National Small Business Week in the United States runs May 12 – 16, 2014.  This year, like past years, is expected to kick off with a proclamation by the President affirming the country’s commitment to small businesses.

Each year the U.S. Small Business Administration holds a series of national events taking place in Washington and elsewhere, covering important issues such as financing, growth strategies and innovation.

But it’s not just the federal government getting in on the act. States, cities and companies also hold activities, educational events like webinars, and perform special activities in honor of Small Business Week.

So to help you all participate in some way — whether sitting at your computer or out in your local community — we’ve started collecting a list of activities, events, announcements and other information you need to know about Small Business Week.

THIS IS A RUNNING LIST OF SMALL BUSINESS WEEK ACTIVITIES – WE WILL BE ADDING TO IT DAILY!

Monday, May 12

A kick off at Twitter HQ. A kick off event for National Small Business Week will be held at Twitter Headquarters in San Francisco from 7:30 am to 12:00 p.m. Pacific Daylight Time. The event is currently sold out, but you can get yourself on the waiting list here.

Saying Thank You to Guilford’s Small Businesses. Running May 12th through May 18th is an event organization of over 25 non profits to use National Small Business Week as an opportunity to say thank you to all the small businesses in town who support their organizations by “asking all their supporters, board members, staff, and friends to make it a point to do business locally during National Small Business week.”

Tuesday, May 13

Making Kansas City an International Hub. National Small Business Week continues with a series of seminars in Kansas City with discussion on making the city an international trade hub and more. Events will be 8 a.m. to 4 p.m. Central Standard Time at Burns and McDonnell.

Small business discount day. The Greater Philadelphia Chamber of Commerce will sponsor a Discount Day with special deals and offers from participating members of the local organization.

Integrated Marketing TNT Webinar - Join Rajatish Mukherjee, Sr. Vice President of GoDaddy and Raj Nijje, Sr. Director of Product Management of GoDaddy – along with host Brent Leary. They will cover how to enhance your small business’s online presence and get found online.  From 7 to 8 pm Eastern.

Twitter chat on business signage and marketing. Small Business Trends along with sponsor FedEx is hosting an educational chat on May 13, 2014 at 8p.m. EST on Twitter.com, under the hashtag #SMBSignage. Join in and share your marketing tips about creating signs and other marketing.

Wednesday, May 14

Small Biz Success in the Mobile World. Conduit Mobile will host a special summit from 8 a.m.to 1 p.m. EST at the IAC Building in New York City. Discussions will revolve around the small business opportunities created by mobile.

100% Royalty Day.  iStock will give 100% of the sales on May 14 from cash and credit downloads of millions of files to the artists (many of them entrepreneurs) who create the content.  iStock will also pay double royalties to artists on subscription-based downloads of exclusive content.

Webinar on top U.S. cities for small business growth . As part of National Small Business Week, Biz2Credit and Small Business Trends will host a free webinar at 3:00 p.m. EDT which will delve into the best areas of the country to start and expand a company.

Wix and Infusionsoft – Small Business Breakfast.  Wix and Infusionsoft will have their monthly Small Business Breakfast during Small Business Week. Hosted by Ramon Ray, this month’s event brings together small business owners to hear from Emily Miethner, owner of FindSpark and a master of online and offline networking.

PayPal – Engage New York. PayPal and the SBA bring together small business retailers to learn best practices in selling online, online marketing, technology, finance and more. Hosted by small business pundit Gene Marks and Infusionsoft’s Ramon Ray,  this event will be informative, high energy and fun.

Small Business Success Stories.  Four small business owners will share their stories of success. May 14, 6:30 p.m. at the Burton D. Morgan Center for Entrepreneurship Research at the Hudson Library, Hudson, Ohio.

Thursday, May 15

Constant Contact chief speaks. Constant Contact CEO Gail Goodman is scheduled to give a keynote address at 10 a.m. EST in Boston at the Microsoft New England R&D Center. Her topic will be how to forge enduring customer connections.

Webinar on small business follow through. The Greater Philadelphia Chamber of Commerce will sponsor a webinar on small business follow-through with Mark Goulston, M.D, of Heartfelt Leadership from 10 to 11 a.m. EST.

Veterans in entrepreneurship. A special panel on veterans and entrepreneurship will be the highlight of an afternoon of activities in Washington D.C. at the U.S. Chamber of Commerce building from 3 to 8 p.m. EST.

St. Johns County Small Business Expo. Sponsored by Vystar Credit Union, Constant Contact and Microsoft, St. Augustine, Florida’s Business Solutions Unlimited, LLC, will host a free Small Business Expo on May 15, 2014, from 10:00 a.m. to 5:00 p.m., at the St. Johns River State College. Classes on topics ranging from marketing to accounting will be conducted throughout day.

Friday, May 16

Author gives Philly keynote. The Greater Philadelphia Chamber of Commerce will sponsor a keynote address from adjunct professor at Temple University’s Fox School of Business Chris Rabb, author of the book “Invisible Capital: How Unseen Forces Shape Entrepreneurial Opportunity.”  The event will be at Liberty Ball Room at the Independent Visitor Center 8:30 a.m. to 10:00 a.m Eastern Standard Time.

Legal Zoom Small Biz Twitter Chat. Join senior USA Today small business columnist, speaker and best selling author Steve Strauss and LegalZoom for the next in a monthly series of Twitter discussions focused on start-ups, small businesses and entrepreneurship. This months Twitter chat guest, during Small Business Week, is Infusionsoft’s Ramon Ray sharing insights.

Business (E)ssentials Bootcamp Atlanta. Join dozens of small business owners Friday May 16 and Saturday, May 17, 2014; 9:00 a.m. to 5:30 p.m. for two power-packed days where they will develop their own customized Internet marketing and communications plans. Participants will gain essential SEO, CRM and Internet marketing skills.

All Week Long

Google Business Community.  Members who join The google Business Community between May 12 – 16 will get a promotional code from Google for $20 toward Helpouts in areas like online advertising, branding and web design.

Add Your Announcements and Events!

Everyone is welcome to share their own Small Business Week activities, events and announcements.  Email your event or announcement to our tips box:  sbtips@gmail.com.  Or just leave a comment below.  We will add it.

Also, see the Small Business Events Calendar for more.