Tax Update: January 2019

TRENDING IN TAX

Post-tax reform: Obtaining capital gain treatment on sale of patents
Clarity on how capital gain treatment is available on the sale of patents, in certain scenarios.

Opportunity zones and the ripple effect on credits and incentives
In the rush to take advantage of the qualified opportunity zones program, taxpayers may overlook the benefits of state and local tax credits.

California reverses position on limited partnership tax and filings
The California Franchise Tax Board ruled that limited partnerships disregarded for federal income tax purposes are not subject to minimum tax or filing requirements.

Retailers must be mindful of gift card tax pitfalls
Retailers should assess gift card procedures including an annual review of reporting, sales tax, unclaimed property and more.

 

 

Source: RSM US LLP
Used with permission as a member of the RSM US Alliance
https://rsmus.com/what-we-do/services/tax/additional-tax-resources/tax-ideas-insights.html

Disclaimer

At Insero, we make it our business to stay abreast of the latest trends and technical updates in accounting, tax, and audit; and we understand how important timely updates are to our clients. As a member of the RSM US Alliance, we also have the benefit of access to the resources and subject matter experts of RSM US LLP (formerly known as McGladrey LLP). This includes regular updates on the latest federal, state, and international tax news as well as updates pertaining to the Tax Cuts and Jobs Act. We hope that you find these informative and useful, and invite you to reach out to us if you have any questions.

Insero is separated from other CPA firms by our client service model which offers you year-round interaction and proactive advice from your client service partner. Yes, we’re sticklers about deadlines and compliance, but among our larger objectives is to help clients with tax management. So we keep an eye on federal, state, local, and international tax laws, including those which are pending and alert you to changes and help you respond in a timely way.

Tax Update: December 2019

TRENDING IN TAX

Top 5 reporting and withholding actions to take before year-end
There are five key actions to take now to prepare to file information returns in January to ensure compliance with FATCA. From reviewing your structure to evaluating your 1099 and 1042 processes, conducting a self-assessment to identify and remediate gaps in your processes for complying with reporting and withholding requirements before year-end ensures that you file accurate and complete returns and do not under or over withhold taxes next year.

Regulations on acquired corporate life insurance policies
Favorable rule for corporate stock acquisitions where life insurance contracts are less than 50 percent of the target corporation’s assets. This exception applies upon the acquisition of any interest in a C corporation. It thus applies to an interest acquired via a tax-free reorganization structured as a stock acquisition. It does not, however, apply to an acquisition made via a tax-free reorganization structured as an asset acquisition.

 

op 5 reporting and withholding actions to take before year-end

 

Source: RSM US LLP
Used with permission as a member of the RSM US Alliance
https://rsmus.com/what-we-do/services/tax/additional-tax-resources/tax-ideas-insights.html

Disclaimer

At Insero, we make it our business to stay abreast of the latest trends and technical updates in accounting, tax, and audit; and we understand how important timely updates are to our clients. As a member of the RSM US Alliance, we also have the benefit of access to the resources and subject matter experts of RSM US LLP (formerly known as McGladrey LLP). This includes regular updates on the latest federal, state, and international tax news as well as updates pertaining to the Tax Cuts and Jobs Act. We hope that you find these informative and useful, and invite you to reach out to us if you have any questions.

Insero is separated from other CPA firms by our client service model which offers you year-round interaction and proactive advice from your client service partner. Yes, we’re sticklers about deadlines and compliance, but among our larger objectives is to help clients with tax management. So we keep an eye on federal, state, local, and international tax laws, including those which are pending and alert you to changes and help you respond in a timely way.

The 1,099 Hassles of 1099s

The 1,099 Hassles of 1099s

Preparing and filing 1099s is one of those IRS requirements that can really annoy accounting teams, requiring far more hours and effort than they can afford to give to such a mundane task. While there probably aren’t quite 1,099 hassles to 1099 preparation, it certainly can feel like it when you’re scrambling to get them all prepared and filed on time.

 

The many challenges associated with 1099s include:

  • Identifying contractors

    If your business or nonprofit hires independent contractors, freelancers, or vendors, and you pay them more than $600 in business-related payments, then you need to prepare and file IRS Form 1099-MISCs for them. That may sound simple enough, but there are lots of caveats, including that 1099s are only needed for provision of services, not goods, and are only for business services, not personal ones. Then, too, if the contractor provides materials as well as services, you have to separate the two.

 

  • Collecting W-9s

    You need to collect Form W-9, Request for Taxpayer Identification Number (TIN) and Certification, from all of your qualifying providers. It makes a lot of sense to get this upfront, but for various reasons that’s not always possible. Even if you have a good process in place to request the W-9 in a timely manner, some contractors are slow to provide it or don’t fill it out correctly, leading to last-minute requests and corrections.

 

  • Avoiding errors

    Contractors need to update their W-9s every year; if you rely on last year’s, the information may be out of date. As mentioned, even when you receive an up-to-date W-9, the contractor might make mistakes, so you have to ensure that the official name and the taxpayer information number (TIN) listed on the W-9 are correct. If you have to make corrections after filing, the IRS imposes penalties that get more painful the longer it takes for you to recognize the error.

 

  • Meeting deadlines

    The end of the calendar year is an especially busy time, and unfortunately it happens to be the exact time when 1099 demands hit. Organizations have to send 1099s to recipients by January 31 of the year following provision of services, and a copy also has to go to the IRS by February 28. Just to make things a little harder, individual states may have additional requirements and different deadlines for reporting and filing 1099s.

 

Reduce your 1099 struggles

Because preparing and filing 1099s is such a tedious process, many organizations are choosing to outsource the function. If you want to discuss 1099 filing requirements or explore the possibility of outsourcing the function, contact Insero & Co., a public accounting firm with decades of experience working with both nonprofits and businesses. Together, we can explore ways to streamline your accounting functions, so your employees can spend more time on business-critical tasks.

 

 

The 1,099 Hassles of 1099s

Tax Update: November 2019

TRENDING IN TAX

IRS proposes regulations for the switch from LIBOR
Guidance would facilitate transitions of existing debt and derivatives to alternative benchmark rates without creating taxable exchanges.
Replacing a key benchmark interest rate, the London Inter-Bank Offered Rate (LIBOR) is a stated goal of financial regulators. LIBOR rates are quoted for many different currencies, including U.S. dollars, and are referenced in lending and derivative transactions throughout the world. Trillions of dollars of transactions are based, in whole or in part, on U.S. dollar LIBOR.

EU’s VAT action plan ‘Quick Fixes’
More than $750bn VAT revenue has been lost across the EU over a 5-year period from VAT fraud and more significantly to noncompliance.
U.S. businesses with operations and transactions across the European Union (EU) are required to comply with EU VAT rules and regulations.  U.S. businesses that, directly or through subsidiary operations, are involved in the movement of goods across EU borders will be impacted by these upcoming changes. Failure to comply can lead to penalty exposure and further scrutiny by the tax authority.

 

IRS proposes regulations for the switch from LIBOR

 

Source: RSM US LLP
Used with permission as a member of the RSM US Alliance
https://rsmus.com/what-we-do/services/tax/additional-tax-resources/tax-ideas-insights.html

Disclaimer

At Insero, we make it our business to stay abreast of the latest trends and technical updates in accounting, tax, and audit; and we understand how important timely updates are to our clients. As a member of the RSM US Alliance, we also have the benefit of access to the resources and subject matter experts of RSM US LLP (formerly known as McGladrey LLP). This includes regular updates on the latest federal, state, and international tax news as well as updates pertaining to the Tax Cuts and Jobs Act. We hope that you find these informative and useful, and invite you to reach out to us if you have any questions.

The Dos and Don’ts of IRS Audits

The Dos and Don’ts of IRS Audits

Every year the Internal Revenue Service audits a number of U.S. businesses. Knowing how to prepare for and handle an audit can minimize stress and even provide opportunities to improve company operations. In some cases, audits may even lead to smaller tax bills.

 

Tips for an IRS business audit

Regardless of the type of IRS audit you and your business is involved in (correspondence, office or field audit), the best way to deal with an audit is to know what to do and not to do. Consider the following:

 

  • Be professional

    •  Do: Auditors have a job to do, and it’s in your best interest to show them respect. If you’re called to their office, show up on time, dress appropriately and have requested documents in hand. If auditors visit your place of business, encourage staff to answer questions honestly and completely. Within reason, it’s acceptable to ask for more time to locate a particular record. If you can’t find supporting documentation, say so.
    •  Don’t: Avoid arguing with the auditor. Ask for clarification if needed, but don’t question every document request. If you disagree with the auditor state your case and understand you have appeal rights should the disagreement become costly.

 

  • Be organized

    •  Do: If you keep business records on a computer, know how to create and print easy-to-follow reports. Prepare for the audit by laying out checks, invoices and other records in a logical fashion.
    •  Don’t: Dump a box of receipts into an auditor’s lap. The easier it is for an auditor to find what they need, the shorter the time period required to complete the audit. Remember, the longer an auditor spends with your records, the more likely he or she will find something amiss.Also keep in mind that it’s rarely a good idea to create records during an audit. Exceptions may be if you’re honestly trying to reconstruct transactions from memory or your records don’t exist (for example, after a natural disaster or fire). IRS agents are often suspicious of hastily prepared documents that smell of wet ink.

 

  • Be honest

    •  Do: Make a straightforward effort to justify deductions. If you can’t locate a specific record, look for alternative ways to support your tax return. For example, if you’re claiming a deduction for depreciation but can’t locate the paperwork, redo the calculation for the auditor. A vendor, landlord or mortgage company may have copies of pertinent records if yours have gone missing.
    •  Don’t: Never create numbers that can’t be corroborated or reasonably explained.

 

  • Ask for help

    •  Do: Get an expert in your corner if you’re facing an audit.
    •  Don’t: Ignore your need for help. Remember, auditors conduct audits all the time. This is a rare event for you. Too many businesses provide more information than is needed, opening themselves for a higher tax bill. Make sure this is not you!

 

For U.S. businesses, tax audits are a fact of life. By knowing what to expect, you can be prepared if the IRS comes knocking. contact us for assistance.

As always, should you have any questions or concerns regarding your tax situation please feel free to contact us.

 

The Dos and Don'ts of IRS Audits

 

As always, we hope you find our tips and news for businesses valuable, and look forward to receiving your feedback. Companies focused on growth have sought the help of Insero & Co. for more than 40 years. During that time they have consistently experienced the peace of mind that comes from knowing their CPA firm takes the concept of integrity seriously. Should you have any questions, please contact us directly.

Employee Benefits Update April/May 2019

This issue’s topics include:

Proposed IRS regs liberalize rules for hardship withdrawals

How hard should a hardship be to justify a hardship withdrawal from a 401(k) plan? Proposed IRS regulations could, according to the agency itself, enable eligible plan participants “to access their money more quickly with a minimum of red tape.” This article provides a short summary of several key provisions of the detailed proposed regulations. A sidebar looks at different ways employers might respond to the changes.

Read More

Fiduciary liability
First Circuit shifts burden of defending a fiduciary breach claim

A recent ruling could set the stage for a definitive U.S. Supreme Court opinion regarding retirement plan fiduciaries’ liability on the subject of monitoring plan expenses. The U.S. Court of Appeals for the First Circuit’s ruling in Brotherston v. Putnam Investments shifts a key aspect of the burden of proof of a fiduciary breach from the plaintiff employees to the plan sponsor defendant. This article reviews the case and the court’s decision.

Brotherston v. Putnam Investments, No. 17-1711, October 15, 2018 (First Cir.)

Read More

Have you outgrown the need for matching 401(k) contributions?

Administrating a retirement plan is an evolving process. For example, many plan sponsors provide matching contributions on participant 401(k) plan deferrals without realizing there’s an alternative: making substantial nonelective contributions instead of matching contributions. It’s not a strategy that will work for all employers, but there is nothing to lose — and perhaps much to gain — by at least considering it.

Read More

Take a close look at your plan expense categories

Keeping a sharp eye on your 401(k) plan’s expenses — a fundamental duty of fiduciaries — can require the use of a magnifying glass, at least metaphorically speaking. Take the case of what’s paid out of retirement plan investment funds, as opposed to paid directly by the plan or the company as the plan sponsor. Individual pieces can be measured in basis points (hundredths of one percent), but they add up. This article briefly explains some common contributors to a plan’s gross expense ratio and how even small distinctions can substantially affect participant investment returns over time.

Read More

Compliance alert

This feature lists a few key tax reporting deadlines for April and May.

Read More

 

As always, we hope you enjoy this edition of our newsletter and we look forward to receiving your feedback. Should you have any questions regarding the information contained in the attached materials or our Employee Benefit Plan Services, please feel free to contact me directly.

Want to learn more?

Join our Employee Benefit Plan Resources group on LinkedIn for more frequent updates on recent developments and best practices and discuss related topics with your peers.

Join the Group

LinkedIn button to join Insero's Employee Benefit Plan Resources Group on LinkedIn

Employee Benefits Update February/March 2018

This issue’s topics include:

Identity theft threat puts plan participants and sponsors at risk

News of commercial database hackings involving millions of people’s personal information seems commonplace. While many of these stories focus on bank and credit card accounts, many plan sponsors and participants don’t realize that 401(k) plan assets may be at risk — which can be a problem not only for participants, but sponsors as well. While no sponsor wants to see participants sustain financial hits, this article covers when, depending on how a cybertheft unfolds, sponsors could be left holding the bag. A sidebar offers tips for avoiding being a victim of fraud.

Read More

Fiduciary rule’s tortured path to implementation

What this means for plan sponsors
Controversy, complicated legal wrangling and legislative maneuvering have been swirling around the Department of Labor’s “fiduciary rule” governing financial advice given to retirement plan participants. Delays, modifications, phased effective dates, and the involvement of the Securities and Exchange Commission have left confusion and headaches in their wake. This article briefly reviews what plan sponsors need to know.

Read More

Tax cut law a mixed bag for retirement plan sponsors

Despite early indications that Congress was prepared to do much more, the Tax Cuts and Jobs Act (TCJA) that was passed in December largely left retirement plans unscathed, save for changes pertaining to plan loans and IRA conversions. This article reviews areas that are affected, as well as what could be ahead.

Read More

2017 vs. 2018 retirement plan limits

This chart contains updated retirement plan limits for 2018.

Read More

Compliance alert

This feature lists a few key tax reporting deadlines for February through April.

Read More

As always, we hope you enjoy this edition of our newsletter and we look forward to receiving your feedback. Should you have any questions regarding the information contained in the attached materials or our service offerings, please feel free to contact me directly.

Want to learn more?

Join our Employee Benefit Plan Resources group on LinkedIn for more frequent updates on recent developments and best practices and discuss related topics with your peers.

Join the Group

LinkedIn RBG-01-01

Employee Benefits Update: Year End 2017

This issue’s topics include:

Deciding what to do with orphaned 401(k) plan accounts

Sponsors of qualified retirement plans with orphan accounts need to consider whether such accounts are a problem. This article examines the state of orphan accounts and why the way plans charge administrative fees can help determine whether it’s beneficial to keep them in the plan. A short sidebar discusses the plan sponsor’s fiduciary duty to all plan participants, whether they’re active employees, former employees who have moved on to other jobs, retirees or beneficiaries.

Read More

How high can you go?

Participants willing to accept higher default deferral rates

It’s generally accepted that a 3% deferral rate won’t get many employees where they need to be financially as they approach retirement. Most employees will need a figure closer to 10%, yet 3% has traditionally been the most common default deferral rate used by plans that auto-enroll participants. This article highlights why this is changing.

Read More

Reimbursement road map for sponsor services

When retirement plan sponsors perform administrative services on behalf of the plan, they can be reimbursed by the plan for those services. This brief article examines why meticulous expense documentation is essential and reviews a recent case on the subject.

Read More

Why adding a Roth 401(k) option could boost employee savings

A decade after they first became available, Roth 401(k) plans are now offered by many employers. Employees are also getting on board — particularly the younger ones — even without fully understanding how they work. This article looks at the pluses and minuses of Roth 401(k)s compared to traditional 401(k)s and Roth IRAs and reviews some data that highlights how employees are reacting to the Roth 401(k) option.

Read More

Compliance alert

This feature lists a few key year-end tax reporting deadlines.

Read More

As always, we hope you enjoy this edition of our newsletter and we look forward to receiving your feedback. Should you have any questions regarding the information contained in the attached materials or our service offerings, please feel free to contact me directly.

Want to learn more?

Join our Employee Benefit Plan Resources group on LinkedIn for more frequent updates on recent developments and best practices and discuss related topics with your peers.

Join the Group

LinkedIn RBG-01-01

Employee Benefits Update: October/November 2017

This issue’s topics include:

Staging a comeback

Stable value funds are back in the spotlight

It’s been awhile since stable value funds reigned as a top investment choice for 401(k) plan participants. Very low prevailing interest rates and a booming stock market have diminished their status. Although no one is predicting they’ll unseat target date funds as the top investment election for retirement investors, stable value funds have staged a bit of a comeback recently. This article explores just what’s behind the renewed interest.

Read More

Are you going to file Form 5500 on time?

Play it safe and avoid penalties

Missing filing deadlines for Form 5500, Annual Return/Report of Employee Benefit Plan, for retirement and health and welfare plans can be extremely costly. The best way to avoid trouble is to ensure that meeting filing deadlines never falls between the cracks. This article summarizes the penalties for delinquent filing of Form 5500 and whether plan sponsors can use the DOL’s Delinquent Filer Voluntary Compliance Program.

Read More

Target date fund labels can obscure their investment strategy

The proliferation of target date fund (TDF) varieties can bewilder many plan sponsors. One survey found that, while 65% of plan sponsors consider investment performance the most important selection criterion when choosing a TDF, 54% aren’t confident about how to benchmark the TDFs against others in the marketplace. This article examines how to compare competing TDFs by segmenting them into logical categories.

Read More

GAO report: Some plan designs may reduce retirement savings

Retirement plan sponsors have ways to limit their outlays for very young employees, and those that move to other employers soon after coming on board. The General Accountability Office (GAO) recently analyzed those plan design opportunities, and is sounding alarm bells. This short article highlights the GAO’s concerns that these options can reduce employees’ ultimate retirement savings potential.

Read More

Compliance alert

This feature lists a few key tax reporting deadlines for October and November.

Read More

As always, we hope you enjoy this edition of our newsletter and we look forward to receiving your feedback. Should you have any questions regarding the information contained in the attached materials or our service offerings, please feel free to contact me directly.

Want to learn more?

Join our Employee Benefit Plan Resources group on LinkedIn for more frequent updates on recent developments and best practices and discuss related topics with your peers.

Join the Group

LinkedIn RBG-01-01