Archive for June, 2014

Supreme Court Obamacare Ruling Provides Religious Exemption To For-Profit Companies

Monday, June 30th, 2014

Obamacare is back in the news as a top story! Why? Because the U.S. Supreme Court ruled today that closely held, for-profit companies can claim religious exemption to avoid providing health insurance coverage for contraceptives.

An Obamacare provision stated that businesses with more than 50 employees must cover preventive care services, including birth control and morning-after pills to female employees. Today’s Supreme Court ruling provides relief for many U.S. for-profit companies by giving way to this religious exemption. Now companies that feel offering health insurance the covers contraceptives goes against their religious beliefs can opt out of providing this kind of coverage. Check out this New York Times article which provides a more in-depth look at the today’s U.S. Supreme Court ruling.  Of course, its too early to tell the practical impact of this decision – insurance companies are free to choose which kind of coverage is covered by their insurance plans, and the relative pricing of those plans, after all.

Obamacare Help

Do you feel like today’s Supreme Court ruling could impact your business and the health insurance coverage you offer to your employees? If it does, and you need help, contact Rea & Associates. Our health care reform tax experts can help you determine how it affects you and your business.

Author: Joe Popp, JD, LLM (Dublin office)

 

Interested in other Obamacare-related blog posts? Check these out:

What You Need To Know About Obamacare Employee Dumping 

Health Insurance Options: SHOP, Drop, Roll, or Self-insure?

How Will ACA Federal Exchange Premiums Affect Ohio Small Businesses and Consumers?

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How Far Back Can The IRS Go For Tax Auditing?

Friday, June 20th, 2014

As a CPA I am frequently asked, “How far back can the IRS look to audit my tax return?” That’s a great question. Can the IRS go back and audit your tax return from five years ago? 10 years ago? 25 years ago? Before you start to panic, rest assured that the IRS has a statute of limitations in place that generally puts a limit on the time allowed to audit you and assess additional tax.

Typically, the statute of limitations is three years for the IRS to include a tax return in an audit. This means the statute of limitations likely ran out on the majority of 2010 returns. The 2010 returns would have been due on April 15, 2011 … three years from that date was April 15, 2014. So most taxpayers are out of the woods for 2010 tax returns and all prior years. This same statute of limitations applies to the taxpayer when they would request a tax refund – you can only go back three years’ worth of returns to request a tax refund.

IRS Statute of Limitations Can Be Extended

But wait, before you start high-fiving everyone around you … that statute of limitations can be stretched out to six years if a substantial error is identified. A substantial error is defined as an omission of 25 percent or more of gross income. This may also apply to basis overstatements whenever property is sold.  Basis generally means the amount of capital investment in a property for tax purposes.

The U.S. Tax Court has given mixed results on whether or not basis overstatements constitute understatements of gross income. The Federal, Washington D.C., 7th  and 10th circuits have ruled in favor of the IRS, supporting the concept that basis overstatements open up the six-year statute. However, the 4th, 5th, and 9th circuits have ruled in favor of the taxpayer, holding that basis overstatements do not constitute substantial understatements of gross income.

When The IRS Statute of Limitations Doesn’t Expire

There are situations when the statute of limitations never expires. The most common is when a return never is filed. The other situation is when the IRS sues for civil tax fraud. Civil tax fraud cases are extremely rare because the burden of proof is so high for the IRS. The older the fraud, the colder the trail gets.

The IRS has stated that it tries to audit tax returns as soon as possible after they are filed. But in my professional experience, most audits are typically of returns filed within the last two years.

If an audit is not finished, the taxpayer may be asked to extend the statute of limitations for assessment of his or her tax return. Extending the statute will allow additional time to provide additional documentation to support a position, request an appeal if there is a disagreement with the audit results, or to claim a tax refund or credit. The extension will also allow the IRS time to complete the audit and provide additional time to process the audit results. It’s not mandatory to agree to extend the statute of limitations date. However, if the taxpayer does not agree, the auditor will be forced to make a determination based upon the information on hand at the time, which may not be favorable.

Tax Audit Help

If you’re concerned you’re at risk of an IRS audit or are looking for some clarity on the IRS statute of limitation for tax auditing, contact Rea & Associates. Our team of Ohio tax professionals can help you determine if you could be facing an audit, and can walk you through the process.

Author: Matt Pottmeyer, CPA (Marietta office)

 

Looking for additional articles about managing your taxes? Check these blog posts out:

What Tax Liabilities Accompany Inherited Real Estate?

What Should You Do After Tax Season?

How Can You Best Prepare For The Upcoming Tax Season?

 

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8 Tips For Crafting A Strong Password

Thursday, June 12th, 2014

eBay Inc. recently recommended its users to change their passwords. Why? If you guessed there was a cyberattack on one of eBay’s databases, you are correct! Cyberattacks have been in the news almost daily, and unfortunately they seem to be increasing in number. While companies are busy trying to stave off any attacks, there are ways you can protect yourself.

Treat Passwords With Care

Like with other items, you should consider your passwords to be sensitive material. Treat them no differently than you treat your credit cards. Make sure your passwords are secure and change them regularly – as often as four times a year, or sooner if you believe it has been compromised.

A standard eight-character password with moderate security can be hacked within two to four hours. In comparison, passwords or passphrases of 12 characters with high complexity would take 17,000 years to breach.

8 Tips To Keep Your Passwords Strong and Safe

Here are eight tips and best practices you can implement to help keep your passwords strong and safe:

  1. Use passphrases instead of passwords or a string of characters and digits. Passphrases can be easier to remember. For example: “Myd0gisSamm@”
  2. Use upper and lower case letters, numbers and special characters in passphrases.
  3. Never use complete words within a passphrase.
  4. Change passphrases routinely.
  5. Never share passphrases with others.
  6. Be cautious of shared computers that do not have current virus detection programs installed on them, such as hotel data centers, publicly used computer kiosks.
  7. Change passphrases after using a shared public access computer.
  8. Use two-step verifications when available.

Password and IT Audit Help

Need some additional advice on how to create strong passwords that will protect you and your business? Contact Rea & Associates. Our IT audit professionals can help you determine where you can strengthen your IT security.

Author: Joe Welker, CISA (New Philadelphia office)

 

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What You Need To Know About Obamacare Employee Dumping

Thursday, June 5th, 2014

You may have heard some buzz lately about the Obama administration and/or the IRS barring employers from “dumping” employees onto the health care exchanges – with some truly severe cash penalties for doing so. But is this really “new” news? What exactly does this mean? It might surprise you to know that employee dumping is not all it seems.

A recent New York Times article explains that “employee dumping” is the practice where an employer drops health insurance coverage to its employees, the employees go to the health care exchange to buy insurance, and then the employer on a pre-tax basis reimburses its employees for their premiums. This “have-your-cake-and-eat-it-too” approach (with various ways to accomplish it) was one of the leading responses to this legislation that Obamacare consultants developed. The administrating agencies (IRS, HHS, DOL) shut this option down when they issues guidance in September 2013. ANY attempt by an employer to pay an employee a pre-tax benefit for health insurance has since then been a very dangerous approach, although some exceptions exist (e.g. retirees only). This current “news” is simply a clarification that these things are indeed busted.

Can You Still Drop Health Care Insurance Coverage?

What if you want to drop your coverage, send employees to the exchange, and then increase their after-tax pay so that they can pay for exchange insurance? That’s OK, it doesn’t conflict with the rules. It’s only pre-tax benefits you should be concerned with.

What if you increase worker pay as I just described, and then the employee sinks that cash into an HSA that they get from a bank (for free)? That gets them a tax deduction (up to certain limits) … is that OK?  Yes! Remember that what the IRS is looking to prevent is employers trying to give pre-tax benefits without offering insurance – that is the “evil” that these regulations are designed to combat. Once the employer pays taxable wages to an employee, the employee is free to use whatever means they have available to be tax efficient.

A Pit Trap For The Unwary

So is “employee dumping” limited to the situation where employers are trying to push tax-free cash to employees? Actually no, and this is why I refer to this as “a pit trap for the unwary.” Dumping also refers to the practice of employers encouraging workers with high medical bills to go to the exchange.

What exactly does this mean? Think of it this way … As an employer, you have an insurance plan that still takes into account the health and claims of your workforce (they still exist). If you can get an employee to the exchange that has $400,000 of medical costs a year, you could potentially save a large sum of money and your employee is not harmed because they can get quality coverage on the exchange for no more than a healthy individual can.

Some companies throw a cash kicker on top for the employee to voluntarily drop coverage (what’s an extra $10,000 in cash if you are saving $100,000+). Everybody wins, right?  Well, not the Exchange. If it’s discovered that you – the employer – are doing this, there are administrative rules in place that can throw that cost back at you. Insurance companies have a duty to report suspected employee dumping, so be careful!

Obamacare Help

Have you considered “dumping” or are you unsure if you’re heading down this path? If so, contact Rea & Associates. Our team of Ohio tax professionals can help you determine what path is best for you to take, as well as help you stay in compliance with Obamacare rules and avoid any pitfalls along the way.

Author: Joe Popp, JD, LLM (Dublin office)

 

Interested in reading more on how Obamacare will impact you and your business? Check out these posts:

Peeling Back The Onion: Answering 3 Popular Obamacare Questions

Health Insurance Options: SHOP, Drop, Roll, or Self-insure?

How Will ACA Federal Exchange Premiums Affect Ohio Small Businesses and Consumers? 

 

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Building Bridges: The Power of Networking

Wednesday, June 4th, 2014

Every day we encounter people for a wide variety of reasons. You could be at the supermarket, or perhaps you’re standing in line for your latte. Or maybe you’re at a local Rotary lunch. Do you ever find yourself looking for business opportunities in the mundane routines in life? Good business people are constantly asking themselves the question “where will tomorrow’s business come from?”

Every Encounter Counts

Every contact you make is a potential opportunity to grow your business. And networking is a critical part of that process. But, what many individuals fail to understand is how a network works. Let’s take the engineering of a bridge for example. A bridge is not constructed through a two-point or three-point connection. The strongest bridges are constructed through a complex network of materials with overlapping points of contact. Those bridges span large areas and allow you to get from one place to another.

Professional networks are similar to a bridge’s network. The best networks are an overlapping of personal and professional lives. They interconnect at many points. The person you meet tomorrow at your child’s school play may not be a client for you, but you may introduce them to someone that can help them and that connection you have provided can then be used for another point of contact.

Networking In Motion

In a couple weeks, I’ll be having breakfast with a former colleague who has just returned to my neighborhood from the West coast. Chances are I won’t have an opportunity to provide services to him in the near future, but by reconnecting, I’m someone he’ll remember. Perhaps he may come across someone who needs services that I can provide.

This whole idea of networking and building bridges may seem like common sense, but it can be so easy to get caught up in the daily routine of life that it can quickly be forgotten. Next time you’re at your son’s baseball game, don’t miss any opportunities to connect with other baseball fans who could be your next customer.

Need Help In Growing Your Business?

If networking doesn’t come naturally to you or you’re unsure about how to grow your business, contact Rea & Associates. Our Ohio business consultants can help you evaluate where you’re at currently and help you determine what you need to do moving forward.

Author: Michaela McGinn, CPA (Dublin office)

 

Looking for more blog posts on how to grow your business? Check these out:

How Can You Build And Develop Your Organization?

What Are 6 Things You Can Do To Improve The Health Of Your Business in 2014?

Why Is A Budget Important To The Success Of My Business?

 

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