Now is a Great Time to Revisit Your Will

The Tax Cuts and Jobs Act is making a dramatic impact on will drafting. There are many changes, but one of the most impactful is that the estate tax, gift tax, and generation skipping tax lifetime exclusion has been doubled for years beginning in 2018 and ending on December 31, 2025. If your will was drafted before the TCJA was signed into law on December 22, 2017, there is a chance that your estate planning goals will not be accomplished by your current will structure. You may be leaving too much or too little to an intended loved one or charity.

For example, if your will contains a provision leaving your children an amount equaling your available federal estate tax exclusion with your remaining or excess assets going to your spouse, there is a possibility that your spouse will not receive the amount you originally intended her/him to receive when you pass away. This is because the lifetime exclusion amount has increased from $5,490,000 to $11,180,000 per taxpayer. In essence, your children may potentially receive an amount that is twice what you intended when you drafted your will. If your total assets do not exceed $11,180,000, your spouse will not get a dime pursuant to your will.

Photo of paper reading last will and testament with a fountain pen

If you are charitably inclined, there is also a possibility that charities may not receive what you intended under your will. For instance, if your will states that your children will receive an amount equal to your remaining lifetime exclusion and that your remaining wealth should go to named charities, the charities may receive fewer assets (or even nothing), depending on the value of your estate. If the value of your estate is less than $11,180,000, the charities will not get a dime.

As you can see, it is important to meet with your estate planning team regarding your current will to ensure your wishes are still being met under the new law. Insero’s Estates & Trusts Group can work together with you and your attorney to help ensure your wishes are met. Contact us today to learn more about our team and how we can help.

Tax Update: August 2018

Tax Reform
U.S. tax reform international implications
RSM’s Ramon Camacho and Ayana Martinez discuss the TCJA and BEPS with BEPS Global Currents.
Estate planning subsequent to the enactment of tax reform
Estate planning strategies to help minimize future estate, gift and generation-skipping taxes for estates in excess of the exemption. This article explores tips and traps associated with estate planning strategies to consider.

Trending in Tax

Frequently asked questions on country-by-country reporting
A guide for multinational corporations regarding country-by-country reporting questions and base erosion profit shifting. These regulations are based on model legislation from the Organisation for Economic Co-operation and Development (OECD) and are part of the project addressing base erosion and profit shifting (BEPS).

Stock options and section 409A: Frequently asked questions
An explanation of the section 409A considerations that companies need to be aware of when issuing stock options.

Economic Insight 

The Real Economy: Volume 44
In this issue we discuss the growing risk to key industries and the middle market economy. The hit to the economy caused by the taxes on imports and exports will spread asymmetrically across the industrial ecosystems that make up the domestic economy. Based on our conversation with officials in Washington, it is apparent that the middle market will bear a disproportionate burden of adjustments from trade tariffs and should prepare accordingly.

 

two people with laptops, pencils, and paper, planning for tax reform international implications

Source: RSM US LLP
Used with permission as a member of the RSM US Alliance
http://rsmus.com/our-insights/newsletters/tax-digest.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. We hope that you find these informative and useful, and invite you to reach out to us if you have any questions.

Non-Profit Update: July/August 2018

New standards for nonprofits present their own challenges
New standards for nonprofit financial statements and revenue recognition will need to be implemented over the next two or three years.

How IT outsourcing strengthens security for nonprofits
The evolving complexity of strong cybersecurity underscores the value of an outsourcing partner dedicated to keeping cybercriminals out. It often requires just a series of emails to get senior finance executives to begin looking beyond their own IT departments to safeguard their businesses against cyber-hackers.

GDPR enforcement is here…is your organization prepared?
General Data Protection Regulation (GDPR) noncompliance could mean potentially significant fines and penalties. Organizations must know where they stand and how to react before it’s too late. The following infographic provides key insights into GDPR compliance requirements, helping your organization understand critical elements of the regulation.

Nonprofit tax reform resource center
The recently enacted Tax Cuts and Jobs Act has produced widespread tax law changes for exempt organizations. Learn more about the latest updates in our resource center. Our resource center features the latest in developments related to the potential effects of the new tax law for exempt organizations.

 

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 insights for non-profit organizations.

American Heart Association Recognizes Insero for Workplace Health Achievement

Scientific, evidence-based instrument rates and recognizes workplace health programs and workforce heart health

The results of the American Heart Association 2018 Workplace Health Achievement Index were announced today and Insero & Co. CPAs achieved Bronze level recognition for taking significant steps to build a culture of health in the workplace. A full-service public accounting firm, Insero & Co. CPAs has over 130 employees in five locations throughout New York State.

American Heart Association 2018 Workplace Health Achievement Bronze Level Recognition Badge

The American Heart Association created the Index with its CEO Roundtable members, a leadership collaborative of more than 40 CEOs from some of America’s largest companies who are committed to applying evidence-based approaches to improve their employees’ overall health. The Index uses science-based best practices to evaluate the overall quality and comprehensiveness of their workplace health programs. A unique feature of the Index is that it calculates an average heart health score for employees of participating companies that securely submit aggregate health data.

More than 1000 companies completed the Index assessment this year and, of those companies, 75% received either Gold, Silver, or Bronze recognition. Companies receive benchmarking reports, which allow them to identify potential areas of improvement so that they can advance their annual performance and recognition in the Index and help their workforce move toward ideal heart health.

“Insero is partnering with the American Heart Association to create a healthier lifestyle in and out of the workplace,” said Kristi Tarantelli, Recruiting & Employee Relations Specialist for Insero & Co. CPAs. “We are honored to receive Bronze level recognition in our first year of participation, as companies often only achieve completion status in their first year.”

“We see this as evidence of our commitment to wellness. Throughout the year our Wellness Committee is coming up with various initiatives to promote health and well-being including stress management, nutrition, physical activity, and education. In addition to participating in the Index, we also worked with the American Heart Association to launch indoor and outdoor walking paths to encourage our employees to stay active during the work day.”

Insero and the American Heart Association launch walking paths as part of workplace health initiative

The Association’s Workplace Health Achievement Index allows companies to measure the effectiveness of their workplace health programs as well as the overall heart health of their employees. Unlike other existing organizational scorecards, the Index also scores companies on the heart health of their employees based on Life’s Simple 7® – the Association’s scientifically validated definition of ideal heart health. The American Heart Association’s Workplace Health Achievement Index assessment is grounded in data-driven science and a quality improvement framework. According to the Nielsen 2016 Employee Health Survey, robust and comprehensive strategies for wellbeing are associated with positive impacts on employees’ health.

To learn more about working for Insero & Co. CPAs, visit our careers page.

2018 Reader Rankings Names Insero Top Winner in 7 Categories

Rochester’s 2018 Reader Rankings celebration was held on Wednesday, August 1, 2018 at the Joseph A. Floreano Rochester Riverside Convention Center. Leading up to this event, the Rochester Business Journal and The Daily Record spent months collecting more than 3,800 nominations followed by 46,000 votes in 87 different categories including accounting, finance, education, real estate, technology, entertainment, and top employers. This voting process culminated in the celebration event, where the top winners in each category were revealed.

 

“The room was really packed and many local businesses were present,” said Nancy Catarisano, Managing Partner of Insero & Co. CPAs. “It was an exciting evening and I was proud to represent our firm in accepting our awards. It was a privilege to be able to accept these on behalf of everyone on our team.”

Lisa Fitzsimmons and Nancy Catarisano of Insero & Co. display award certificates presented at the 2018 Reader Rankings ceremony in Rochester

Insero & Co. CPAs was recognized at the celebration as Top Winner in 7 categories:

 

Best Accounting Firm

Best Overall Company to Work for (76-250 employees)

Best Company Culture

Best Employee Recognition Program

Most Innovative Workplace

Best Overall Leadership

Best Training Program

 

Insero was also recognized as a Top 8 Winner for Best Forensic Accounting and Insero Wealth Strategies was recognized as a Top 3 Winner for Best Wealth Management. For more information on the awards and winners, click here.

 

“We would like to say thank you to all of our clients, employees, and friends of the firm for taking the time to vote for Insero,” said Catarisano. “We are honored to have such great support in our community.”

2018 Reader Rankings Top Winner Certificates presented to Insero & Co. CPAs by the Rochester Business Journal and The Daily Record

Rochester-based Insero & Co. CPAs is an accounting and business advisory practice with five locations serving New York State. A full-service public accounting firm, Insero provides attest, tax and consulting services to government agencies, colleges and universities, non-profit organizations, and businesses ranging from privately held family businesses to multi-national corporations. These clients represent many industries, including service, manufacturing, distribution, high-tech, telecommunications, education, social services, and real estate. For more information, visit www.inserocpa.com.

Employee Benefits Update August/September 2018

This issue’s topics include:

Charging plan expenses to participants correctly

Shaving a few basis points off plan participants’ annual returns on their retirement plan accounts can put a significant dent in their asset accumulations by the time they’re ready to retire. For that reason, the question of which plan expenses are charged to participants, and which must be borne by the plan sponsor, is a critical issue to resolve correctly. Improperly allocating expenses to participants could be a serious fiduciary breach. This article summarizes the difference between administrative and settlor functions and which can be charged as plan expenses.

Read More

Keep your eye on the ball

Plan forfeitures must match plan document

It’s a routine matter for employees to forfeit retirement plan benefits. Even so, plan sponsors can’t afford to become blasé about it; ERISA demands more than an “easy come, easy go” attitude about the matter. This article reviews how plans can forfeit benefits and when benefits are forfeited. A short sidebar covers what plans can do with forfeited funds.

Read More

New rules affect disability benefit claim denials in retirement plans

Retirement plans (or other ERISA-regulated benefits, including nonqualified “top hat” plans) containing a disability benefit are affected by the new DOL rules that took effect in April 2018. The new regulations, in the works since 2015, pertain to disability claims and the processes governing appeals of a denial of disability benefits. This article reminds sponsors of 401(k) plans and defined benefit pension plans with disability benefits that they have until the end of this year to amend their plans to reflect the new rules.

Read More

Do you know what to do with an SOC report?

Service organization control (SOC) reports come in several varieties. They generally pertain to service organizations, like retirement plan recordkeepers or third party administrators (TPAs). The American Institute of Certified Public Accountants (AICPA) determines the scope of each SOC report. This short article reviews the types of SOCs and the reason for their use.

Read More

Compliance alert

This feature lists a few key tax reporting deadlines for September.

Read More

notebook planning, person writing

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

Audit & Accounting Update: July 2018

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 financial reporting insights. We hope that you find these informative and useful, and invite you to reach out to us if you have any questions.

Substantial accounting changes for nonemployee share-based payments
We have prepared a summary of the accounting changes for nonemployee share-based payments resulting from the issuance of ASU 2018-07. The Financial Accounting Standards Board’s recently updated guidance to align nonemployee share-based payment accounting with employee share-based payment accounting will result in significant measurement changes.

Changes to revenue recognition in the construction industry
Our white paper assists in understanding the application of the new revenue recognition guidance to construction contracts and how a construction contractor could be significantly affected by the new guidance.

Leases: Impact of ASC 842 on the retail and restaurant sector
Our article discusses specific aspects of the new leasing standard that retailers and restaurant operators should consider. To understand these considerations the first step is to understand the full inventory of all contracts that would fall under the new definition of a lease. Understanding the financial reporting and operational impact is imperative also to the middle market.

Monitoring inflation when applying ASC 830
A framework is available to assist in the determination of whether a country’s economy should be considered highly inflationary. The determination of a highly inflationary economy begins by calculating the cumulative inflation rate for the three-year period that precedes the beginning of the reporting period, including interim reporting periods.

accounting achievement aerial

Source: RSM US LLP
Used with permission as a member of the RSM US Alliance
http://rsmus.com/our-insights/newsletters/financial-reporting-insights.html

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 contact us directly.

Tax Alert: U.S. Supreme Court Rules on Wayfair Case

On June 21, 2018, the U.S. Supreme Court issued its decision in South Dakota v. Wayfair, Inc., the most recent and direct challenge by a state to the physical presence nexus standard, adopted/continued in Quill v. North Dakota over 25 years ago.

Their decision eliminated the physical presence requirement for sales tax nexus purposes.  Specifically, the South Dakota law states that remote sellers (those without any physical presence in the state) who have either more than $100,000 of in-state taxable sales of products/services annually or have consummated 200 or more separate transactions annually are required to register with the state and collect and remit sales taxes to South Dakota on those transactions.

It is important to note that the Court did not formally hold that the thresholds in South Dakota’s law are the new standard, or even that there is any standard. The ruling, simply, was that physical presence in a given state is no longer required for a state to require sellers of property and services within that state to collect and remit sales taxes.

Several states, in anticipation of the Wayfair case, had previously adopted economic nexus provisions for sales and use taxes and there are others whose laws are contingent on the decision in the Wayfair case. Some states also had cases pending in their respective courts waiting for the Supreme Court’s ruling to come down.

It is important to remember that the Supreme Court remanded the case back to the lower court for a decision as to the impact of the Commerce Clause (for “undue burden”, etc.) of the Constitution. It is therefore possible that the S.D. law will be modified pending the outcome of that case. If the lower Court finds in favor of S.D., then its statute will likely become the standard for other states to follow. A similar result will occur (although without the protection of a court decision ratifying the Commerce Clause provisions thereby subjecting them to future litigation if another taxpayer decides to challenge them) if the parties settle prior to litigation.

So, what’s next? Good question. It appears that states with laws requiring some threshold level of economic (but not physical) contact before they assert sales tax nexus for a remote seller would not be in violation of the Wayfair decision. That said, there were other provisions in the South Dakota law, namely no retroactive liability and compliance with the Streamlined Sales and Use Tax Agreement which will need to be evaluated on a state-by-state basis.

Accordingly, each state (and locality for that matter) MAY decide to come up with their own economic nexus thresholds, which may or may not comport with the S.D. law. If different, this would potentially open the state to future challenges on the Commerce Clause issue.

As a result of the Wayfair decision, many states are re-evaluating their nexus statutes and Congress has been discussing responses as well.

For businesses no longer protected from sales tax nexus due to this decision, the following are some questions that will need to ultimately be addressed in all the states they sell into, according to the statutes passed (or to be passed) in those states:

Do we meet any of the threshold tests?

Are our services or products taxable?

Are we required to register in each state we sell into?

What are the correct tax rates?

Are there local taxes in addition to state level taxes?

How often must a return be filed and what are the available methods for filing?

When will the first sales taxes be due?

How complete is our system for tracking exemption certificates?

Do we need to purchase a software solution to handle this and, if so, how much will that cost?

Do we need to hire more staff to accommodate this increase in our compliance obligation?

Might we have to collect and remit sales taxes in a state that does not have economic nexus standards currently in place?

Can states make sales tax collection retroactive? Likely not, but one never knows.

As you can see, this issue is very much unsettled at the moment. Following are some actions that businesses should take sooner rather than later:

  • Understand the states and localities that you currently sell into. Make sure that you have some reliable method of capturing the amount of sales and the number of transactions into each state and locality. Shortly, ignorance will not be an excuse for non-compliance in states where you may not have previously been required to file.
  • If your products are for re-sale, be sure that you have updated your Resale Certificates, and that you have a process for doing so periodically.
  • If you have physical nexus in a state and have not been filing there, immediately evaluate the costs of compliance versus continued no compliance. Voluntary Disclosure Agreements may prevent penalties in some cases, and prevent unlimited look back, but you have to go to the state. Once they find you, it’s too late. And states are all on high alert for non-compliance.
  • Monitor the states into which you sell for changes to their nexus legislation.
  • For states where you are currently filing, be sure you actually ARE collecting the correct amount of tax when and where you should, and remitting it on a timely basis.

As always, if you would like to discuss this further, please contact us.

 

Supreme Court of the United States building in Washington, DC, SCOTUS has issued decision in South Dakota v. Wayfair

Disclaimer

Tax Update: July 2018

Trending In Tax

U.S. Supreme Court kills Quill physical presence
Economic sales tax nexus laws permitted by the Court; physical presence sales tax nexus is no longer the Constitutional standard. Writing for the majority, Justice Kennedy, who also sat on the Quill court in 1992, noted that the Quill decision was, “flawed on its own terms,” for several reasons. The Quill decision, “created rather than resolved market distortions,” meaning that sellers essentially could take advantage of a judicially-created tax shelter by limiting physical presence in a state. Similarly, sellers were incentivized by avoiding such physical presence.
Tax Reform
Tax reform, retirement plans and business ownership
Business owners need to consider the impact tax reform has on the benefits of retirement plan contributions. For employees, the differences are typically minimal, however the affect on owners may not readily be seen at first glance. The qualified business income, or section 199A deduction, is a complex change in the tax law that needs substantial further guidance from the IRS—and the details of which are too complex for a discussion here. However, when looked at simply, it provides owners of certain pass-through businesses as well as sole-proprietors a 20 percent deduction against their qualified business income.

remote seller uses laptop to determine sales tax nexus under Quill

Source: RSM US LLP
Used with permission as a member of the RSM US Alliance
http://rsmus.com/our-insights/newsletters/tax-digest.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. We hope that you find these informative and useful, and invite you to reach out to us if you have any questions.