Posts by Joe Popp, JD, LLM:
Ohio Reports $2.8B In Unclaimed Funds
Businesses are required to report unclaimed funds to the state of Ohio every year. Oftentimes, these unclaimed funds could be in the form of uncashed checks, rent or utility deposits that were never deposited or savings accounts that may have been forgotten, for example.
Businesses are responsible for notifying account holders of their unclaimed funds by using the official Notice of Unclaimed Funds form (also known as the OUF-8), though it’s not uncommon for these notices to fall through the cracks.
In 2015, Ohio is reporting that there is $2.3 billion in unclaimed funds to be collected in 2015. So far this year, Ohioans have received $34.4 million with an average claim of $2,100. In 2015, Ohio citizens claimed about $76 million in unclaimed funds.
Not sure if you have a forgotten checking account? Or was there a deposit that never made it to the bank? Check to see if you can make a claim for some of these unclaimed dollars, visit the Department of Commerce website or call the state agency.
By Joseph Popp, JD, LLM (Dublin office)
Want to learn more about unclaimed funds? Check out these posts:
The Affordable Care Act (ACA) has put a lot of stress on business owners over the last couple years, and 2016 will be no exception. However, if you look closely, you might be able to uncover areas of opportunity. Here are three points all business owners should know to avoid penalties:
- Large employers (50+ full time employees) have to worry about large employer reporting and potential pay or play penalties (roughly $2,000 per employee annually).
- All employers need to avoid excise taxes for discrimination and violating the ACA’s “all or nothing” mandate. These are business busters – $100 per employee, per day for noncompliance – meaning you could owe the government as much as $36,500 per employee, per year! Excise taxes can be triggered by continuing to do things you’ve always done, such as offering reimbursement arrangements to your employees.
- Employers also have the opportunity to review their insurance options and compensation structure. SHOP, drop, roll (“traditional” insurance), self-insure, private exchange and models like reference-based pricing are all options to explore. Dropping insurance can often actually result in less expenses and improved benefits for the employers and employees alike. In some industries this can also be a deterrent to competing businesses that are trying to recruit your workforce.
Don’t wait any longer. Work with an ACA expert who can help you determine the best option for your business while helping you identify areas of opportunity and risk. To learn more, listen to our podcast, “Unsuitable on Rea Radio.” Episode 5, “Don’t Get Burned By Obamacare,” covers this topic in more detail. Check it out at www.reacpa.com/podcast.
This article was published in the November 6, 2015 issue of Columbus Business First – Ask The Expert.
By Joseph Popp, JD, LLM (Dublin office)
Want more articles about Obamacare? Check these out:
This article was published in the July 2015 issue of Columbus Business First – Ask The Expert.
Identity theft and tax fraud are problems that show no signs of stopping. This year, in an attempt to provide an added layer of protection, taxpayers in Ohio had the opportunity to get up close and personal with the Ohio Department of Taxation’s (ODT) newest fraud safety measure – the Identification Confirmation Quiz.
While you may have heard your friends and family comment (perhaps unfavorably) about this added step, government officials have said that the quiz helped thwart countless attempts to steal refund checks from Ohio taxpayers this year. During the 2014 tax season, fraudsters pocketed more than $250 million worth of taxpayer refunds, prompting the need for additional safety measures. Due to its success, the ODT expects the quiz to become a mainstay of your tax prep routine.
But just because tax season is over, doesn’t mean you should let your guard down – quite the contrary. When it comes to protecting your identity, you must remain vigilant. Whether you are aware of it or not, criminals are still looking for ways to steal your personal identification information for a myriad of uses.
Do you know what to do if your ID is compromised? Visit www.reacpa.com and click on the “Tools” button in the top navigation bar. From there, you can read our compilation piece How to Recover from Identity Theft & Refund Fraud for more insight and information that can help you recover from identity theft and tax fraud.
The United States Supreme Court upheld a key provision of the Affordable Care Act Thursday after the justices released its 6-3 ruling on King v. Burwell, which will leave the law in tact in its current form. The four-word statutory passage – “established by the State” – stood at the heart of the case and the nine justices set to deliberate the interpretation of these words.
If taken literally, they would have rendered Obamacare immobile in many states. However, the judges opted to look beyond these words and interpret them in light of the rest of the law – which left healthcare subsidies intact for individuals and families throughout the nation.
Read Also: Obamacare: Discrimination Is Not An Option
“This case is about whether the Act’s interlocking reforms apply equally in each State no matter who establishes the State’s Exchange,” according to the official Opinion of the Court, which points to the provision that allows the federal government to establish a state’s exchange if the state fails to establish its own.
After much deliberation, the court found that phrase in question should be interpreted in context. According to the court’s formal opinion, the law “allows tax credits for insurance purchased on any Exchange created under the Act. Those credits are necessary for the Federal Exchanges to function like their State Exchange counterparts, and to avoid the type of calamitous result that congress plainly meant to avoid.”
“We don’t look at four words, said Justice Elena Kagan. “We look at the whole text, the particular context” to gain “an understanding of the law as a whole.”
The Right Decision?
Was the decision of our nation’s highest court the right one? Well, as always, it depends who you’re asking.
Certainly, for those who will retain their health care as a result of the Supreme Court’s decision, the outcome was optimal. But if you’re a business owner, you may not agree with the ruling.
What is clear is that (at least for now) Obamacare is here to stay. Business owners and professional service providers must continue to work to understand it and to identify the best way to work in tandem with its multitude of provisions.
To learn more about your responsibilities under the Affordable Care Act, email Rea & Associates.
By Joseph Popp, JD, LLM (Dublin office)
Are You Prepared To Pay? Obamacare’s Shared Responsibility Provision
Health Insurance Options: Shop, Drop, or Self-Insure?
How Will ACA Federal Exchange Premiums Affect Ohio Small Businesses And Consumers?
If you aren’t already aware, Amazon is in the process of bringing three of its data centers and a distribution center to Ohio. And yes, the company’s decision to open up shop in the Buckeye State is expected to boost the state-wide economy and add about 1,000 jobs to the ranks. But what is generating the most excitement these days (at least throughout Ohio’s retail industry) is the company’s new responsibility to collect sales tax from our state’s shoppers.
Traditional retailers anticipate this move will effectively level the playing field, helping encourage the growth of the state’s locally-owned businesses. Amazon, however, appears to be unaffected by the possible repercussions of adding sales tax to customer’s invoices as its focus seems to have shifted from a superior price point strategy to high efficiency and extra speedy service. [SPOILER ALERT: Drone delivery appears to be imminent!] According to reports, the online giant continues to move forward with initiatives that promise even speedier delivery – further cutting the time it takes for a product to hit the customer’s front porch after the order was placed. The company is also exploring ways to keep the cost associated with such speed minimal – information from the US Patent and Trademark Office reveals the company’s desire to “dominate the skies.”
Ohio-Based Amazon Shoppers Begin Paying Sales Tax
Paying taxes on your purchased items is not a new phenomenon. In fact, you’re probably not too shocked to see the roughly 7 percent (based on your county) charge permanently affixed to the bottom portion your receipts whenever your purchase a variety of products from a local brick-and-mortar shop. Until June 1 though, Ohio residents didn’t see this charge when purchasing products from Amazon, simply because the online retailer wasn’t required to make those living in the Buckeye State pay these taxes.
In Ohio, only vendors with a physical presence in the state, such as a storefront, warehouse, factory or call center, must charge sales tax to in-state customers. Otherwise, it’s up to individual taxpayers to report and pay the taxes when filing their annual tax returns, which is a relatively uncommon practice.
“The Ohio Department of Taxation has estimated that Ohio will lose out on about $400 million in unpaid sales or use tax on unpaid sales or use tax on so-called remote sales this year,” reported The Columbus Dispatch. “More than 5 million Ohioans filed tax returns for 2012. Of those, a little more than 50,000 paid a total of $3 million in taxes due on Internet or mail-order purchases. Retail groups and analysts welcomed the news that Amazon will start collecting taxes.”
Ohio Taxpayers Still On The Hook For Other Purchases
It may seem like it’s too soon to start thinking about your 2015 tax return, it’s actually a great time to start collecting information you will need to complete your paperwork early next year. For example, while you won’t need to collect your Amazon receipts anymore, you may have to keep tabs of your Etsy habit (for example) to help make calculating your 2015 use tax as simple as possible.
Email Rea & Associates to learn more about use tax.
By Joe Popp, JD, LLM (Dublin office)
We find ourselves, once again, at the end of another income tax season. A time of year that many American taxpayers (and accountants) hold dear. We, however, know that while tax season may be “officially” over, there is still plenty of tax work to be done.
The first four months of the year is a busy time for accountants and, because we work closely with so many small businesses all year long, we are acutely aware of how much stress you are under to meet your first quarter obligations. This is why, instead of rushing just to get your taxes filed and out the door ahead of the April 15 deadline, we frequently recommend that our clients file for a tax extension.
Unfortunately, there are some pretty nasty rumors going around about tax extensions. Hopefully, I will be able to debunk some common tax extension myths while helping those who opted to extend their deadline sleep a little better tonight. Check out the slideshow and get the facts about tax extensions!
The Truth About Tax Extensions – Created with Haiku Deck, presentation software that inspires
Filing a tax extension increases your chance of an audit.
First and foremost, your chance of being audited by the IRS does not increase simply because you chose to file a tax extension. In fact, in the event that you are chosen to undergo an audit, you will be able to go into the process with more confidence. Tax extensions can be great for businesses that were simply overwhelmed by other critical responsibilities during the first quarter of the year. When you give yourself the luxury of filing an extension, you give yourself more time to compile all the files and information necessary to make tax return prep as seamless and thorough as possible.
Tax extensions burden accountants.
On the contrary, fling an extension not only gives your accountant extra time to check and double check the work, it gives them the added time needed to provide better service. For example, we pride ourselves on our work ethic, attention to detail and client service – especially during busy season. However, as trusted financial advisors, we are able to better serve our clients better when we have a chance to help them understand the opportunities they qualify for and how they can use certain tax strategies to help plan for the future. Believe me when I tell you that we do not look at extensions as burdens.
There is nothing to gain by filing a tax extension; it’s just a way to prolong the inevitable.
Filing a tax extension not only gives you more time to file your return with the IRS and the state, it effectively stalls some of your other looming deadlines as well. For example, a tax extension can award you more time pay your profit sharing plan, defined benefit, or your SEP IRA as part of your retirement plan contribution, which is an excellent short- and long-term benefit! Once your extension has been filed, you will have more time to file your retirement plan contribution, all while claiming the deduction in your prior year’s return.
Email Rea & Associates to learn more about the benefits of filing income tax extension with the IRS and the state.
By Joe Popp, LD, LLM (Dublin office)
The IRS recently made the road on which business owners must travel to comply with final tangible property regulations a little less bumpy. Currently, most businesses that buy, depreciate, or repair property were required to file Form 3115 basically telling the IRS that the business had changed its accounting methods to comply with the new IRS rules and safe harbor, regardless of whether the change actually impacted their income.
Today, now that Revenue Procedure 2015-20 (15-20 relief) is in effect, small business taxpayers have the option of foregoing that extra paperwork. This relief removes the requirement to file a 3115 or statement with the tax return just to tell the IRS that you are making the changes. But, is that a good idea?
The main reason that you might still want to file a 3115 is if you have favorable tax adjustments from the past that you can harvest and take on your tax return this year. Filing the form is the only way to get at those. You also waive the audit protection for prior years that would be available with filing the 3115. But, you do get to save some money on tax prep fees and paperwork.
Here’s a brief “true-or-false” quiz to help you decide what to do. Of course you have to be eligible for the 15-20 relief, so the eligibility statements must be true. You should also consider filing a 3115 if you answer false to the later items.
- True or False? Your small business’s assets total no more than $10 million or, over the last three years, your gross receipts have totaled no more than $10 million. (only need one of these to be true).
- True or False? You will not file Form 3115 for any other business activity or any other change in accounting method for the year.
- True or False? You get no benefit (or you don’t care about the benefit) from harvesting favorable 481(a) adjustments as a result of partial dispositions made in previous years.
- True or False? You don’t care about prior year audit protection.
- True or False? You believe that adequate records will otherwise be maintained with regard to what you have done (and are going to do) to protect against an audit. For example, if you have chosen not to do repair X, Y and Z because of your obligation to list it on Form 3115, will you continue to maintain that information in the event an audit were to occur?
Better Safe Than Sorry
Because it’s the only way to harvest prior year benefits and because most taxpayers desire the audit protection on these issues for prior years, we will likely continue to file Form 3115 for many of our clients.
Email Rea & Associates to learn more about Revenue Procedure 2015-20 and to find out if the new simplified method of reporting property changes is right for you.
By Joe Popp, JD, LLM (Dublin office)
Suspecting, and then confirming, that you’ve had your identity stolen is a nightmarish scenario. It combines one of your worst fears, losing your wallet or purse, with all of the work of replacing the things that were lost. It can be so overwhelming you might be wondering: “Where do I even start?”
An increasing number of identity thefts are first identified when a thief attempts to file a tax return on your behalf and claim a federal or state tax refund. To help you navigate some of the issues you may be confronted with, we recently released a compilation of documents and resources.
The documents that are included are intended to help you navigate some of the issues you may be confronted with if you find that you’ve been an identity theft and fraudulent tax return victim.
Beat The Identity Thieves
The guidance includes a variety of valuable information for those who have been (or suspect they’ve been) a victim of identity theft and refund fraud. The following is a brief synopsis of information included in this guide.
The IRS has provided a short list of items for you to complete, which is substantially similar to the items the Federal Trade Commission (FTC) covered in its longer, checklist-style guidance.
- The primary item to complete for the IRS is Form 14039 which initiates the IRS fraud protection procedures.
- Also included is a form letter, one of several, the IRS may send to a taxpayer if tax return fraud is suspected to be occurring on the account.
- The IRS has published a number of articles related to identify theft and how to protect yourself. A master page with links to all these topics is included in this packet. You may also check out some of our recent articles on the topic, which can be found in the “Related Articles” portion of this post.
The process of reporting fraud in Ohio is similar to the IRS procedures.
- Ohio also sends form letters to the taxpayer.
- Ohio recently added an identity quiz for roughly 50 percent of taxpayers requesting a refund. This letter simply asks the taxpayer to complete a quiz specifically used to prove their identity. Note: This request doesn’t indicate that your identity has been stolen (unless you haven’t filed your tax return for the year yet).
- If the Ohio Department of Taxation suspects fraudulent activity on the account, the taxpayer will receive a second letter that will indicate these suspicions.
- Ohio includes an affidavit (Form IT TA) that must be filled out to initiate their protection procedures, similar to Federal.
The FTC is the primary federal government agency dealing with identity theft.
- The FTC has put together a very detailed, checklist to help you with the identity theft process. The guidance includes information on most forms of identity theft – of which tax identity theft is just one. While this may be more information than you need, if the fraud has gone beyond your tax returns and includes false credit activity (or you are concerned this may happen), this guide will be very useful for you.
- The guide includes a wealth of information, such as sample letters and a variety of websites and contact information to relevant organizations that can help you. It also guides you through the process of making a police report in response to the theft of your personal information. Check it out here.
- Note: The IRS and the FTC generally do not share data with each other. Therefore if you have completed the IRS identify theft notification procedures, don’t assume that the FTC, credit bureaus, etc., are also aware of your situation.
Check Your Mail, Not Your Caller ID
Remember, the first contact taxpayers will have with the IRS regarding any issue will be in the form of an official mailed letter – not a phone call. These scammers appear to be determined to steal your money and/or your identity and reports of these types of scams continue to be on the rise. By educating yourself, your friends and your family, you are taking a proactive stance against these criminals.
If you would like to learn more about how you can protect yourself against, and recover, from Identity Theft & Refund Fraud, click here to view our compilation of documents and resources. You may also email Rea & Associates for more information.
Did you get hit with the “shared responsibility payment” for not carrying health insurance on yourself or your family members in 2014? If so, you’re not alone.
Americans who were unaware of (or who simply didn’t understand) the fees they would be subjected to as a result of not carrying health insurance coverage may have been equally surprised to learn that the open enrollment period to obtain coverage for 2015 closed last month – meaning that even if they wanted to avoid the fees next year, they were out of luck. Fortunately, the Centers for Medicare & Medicaid Services (CMS) realized this dilemma and took steps to create a special enrollment period to allow individuals and families in this bind to secure 2015 health insurance coverage through the federal marketplace. This will be a big help to those who may have found out that they were eligible for premium subsidies to help pay for insurance – a little too late. The new open enrollment period is March 15, 2015, through April 30, 2015, and is only available for individuals and/or families that:
- Are not currently enrolled in federally-facilitated coverage for 2015,
- Had to pay an individual mandate on Form 1040 of their 2014 tax return, and
- Live in a state with a federally-facilitated exchange (Ohio residents qualify. Those who do not live in Ohio may click here for a full list of other qualified states).
According to CMS, eligible enrollees also must “attest that they first became aware of, or understood the implications of, the Shared Responsibility Payment after the end of open enrollment in connection with preparing their 2014 taxes.” “We recognize that this is the first tax filing season where consumers may have to pay a fee or claim an exemption for not having health insurance coverage,” sad CMS Administrator Marilyn Tavenner in a press release. “Our priority is to make sure consumers understand the new requirement to enroll in health coverage and to provide those who were not aware or did not understand the requirement with an opportunity to enroll in affordable coverage this year.” Note that even if you don’t qualify for this open enrollment, there are a number of qualifying events that let you sign up for coverage on the exchange any time of year. If you want to know whether you qualify for subsidies to help shoulder the burden of health insurance, click here. Or you can email Rea & Associates for any Affordable Care Act questions.
By Joseph Popp, JD, LLM (Dublin office)
If you are one of the millions of people who love to browse and buy online, it may shock you to learn that the Ohio Department of Taxation is looking at you to declare and pay a little more when you go to file your 2014 tax return. From gifts to grocery shopping, many of us use the ease of online shopping to snag a good deal and avoid the hassle of braving the brick-and-mortar shops – especially during the holidays, but sometimes that convenience might come at a price.
Were you charged sales tax for that pair of shoes you bought last October or those books you had shipped to your house in June? If the company you made purchases from doesn’t have facilities in the state or a law that requires it to collect sales taxes for your state, then it’s likely you owe use tax to Ohio – and you have to report your use tax on Line 19 of your Ohio Form IT 1040.
Use Tax Is Not A New Tax
Declaring and paying sales and use tax on your state tax return is not a new responsibility. The Ohio Department of Taxation states that “in transactions where sales tax was due but not collected by the vendor or seller, a use tax of equal amount is due from the consumer.” In Ohio, the use tax rate is the same as sales tax rate you would have paid if sales tax was correctly charged by the vendor. This is usually the place of purchase (or your home address for shipments from outside Ohio). You can read Ohio’s use tax law in its entirety here.
As a courtesy, Amazon provides a brief explanation of the consumer’s responsibility to pay use tax on its website. Because Amazon suspects its customers aren’t keeping a file of receipts, the online retailer provides customers with the option to create and download an Order History Report, which compiles your download, shipment, return and refund activity and can be used to help calculate use tax.
But your Amazon purchases aren’t the only ones to consider when you sit down to file your tax return this year. Other popular online retailers and groups, including Etsy, are also depending on their consumers to pay use taxes on the products they sell. So make sure you take a second look at that packing slip and receipt.
Little Box, Big Pause
While the responsibility of paying use tax isn’t new, this is the first year taxpayers in Ohio are required to certify their use tax claim before filing their return with the state. If you didn’t shop online or make a “sales tax-free” purchase, you should have nothing to worry about – simply check the box and continue on. On the other hand, if you did partake in online retail therapy in 2014 and don’t have your receipts handy, you may have to pause your tax preparation to give yourself a little more time to find out what you owe.
To find out more use tax, email Rea & Associates.
By Joe Popp, JD, LLM (Dublin office)