Top 10 reasons you should update your estate plan before the end of 2012!

Wednesday, June 6th, 2012

1. Tax exemption is higher now than ever, but not for long.
   The current estate, gift and generation skipping tax exemption is currently $5,120,000 ($10,240,000) per couple. This is higher than it has ever been and is scheduled to drop to only $1,000,000 (only $2,000,000 per couple) in 2013 unless Congress and the President can reach an agreement. This may be a use it or lose it!
2. Your plan may disinherit your spouse!
   Do your current estate planning documents include a formula for determining the amounts passing to heirs or trusts for heirs based upon the exemption? With the currently high exemptions, your plan may disinherit your spouse!
3. Is your business safe from creditors or predators?
   Do you have a succession plan for your business? Does your plan include the use of asset protection trusts funded up to the amount of your exemption to safeguard your business from your heirs’ creditors, spouses and predators?
4. Interest rates are historically low!
   The interest rate that the IRS requires to be used for interfamily loans, sales to family trusts, and other planning techniques is at historical lows. The current required interest rate for a 9 year loan made in June 2012 is only 1.07%.
5. Discounting the value of assets is still available.
   Discounted values for lack of control and lack of marketability for interests in Corporations, Partnerships and LLCs are still available for interfamily transactions. There has been much talk about limiting such discounts, but currently, discounting is still available for planning purposes.  When discounting the value of assets by 33%, the effective interest rate on a note as mentioned in item four above drops to only 0.7%!
6. If you’re feeling generous – there’s no estate or gift tax!
   If you are currently giving or planning to give significant sums of money or assets to your favorite charity, the current low interest rates allow you to help your charity and transfer assets to your heirs with no estate or gift tax. Ask about the use of a charitable lead trust.
7. Consider a Roth IRA conversion for estate tax savings.
   If you have a large IRA or retirement plan as part of your taxable estate, which is in excess of the exemption, you should consider a Roth IRA conversion. This will reduce your taxable estate and provide years of tax free cash flow to heirs.
8. Avoid aggressive taxation on your vacation home.
   Do you have a vacation home outside Florida that will be subject to state estate tax and the costs of an ancillary probate administration in that state? Simple steps can avoid the often very aggressive taxation of these homes.
9. Is your life insurance subject to estate taxes?
   An irrevocable life insurance trust can avoid the estate tax and provide asset protection for your heirs.
10. Do you have a family member who has special health needs?
    You may want to consider unique provisions in your estate planning documents.

Don’t wait until the end of the year to get started.  Do it now!

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John R. Anzivino, CPA is in charge of Kaufman, Rossin’s estate, trust and exempt organization practice. Kaufman, Rossin & Co. is one of the top CPA firms in the state and offers a wide variety of services for high-net worth individuals. John can be reached at janzivino@kaufmanrossin.com

Another IRS email scam

Tuesday, June 5th, 2012

The IRS will never initiate contact via email. If you receive an email claiming to be from the IRS, it is a SCAM!

Below is a screenshot of one of the scam emails being sent.

If you have any concerns or questions, feel free to contact your Kaufman, Rossin professional.

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Scott F. Berger is a tax and accounting services principal at Kaufman, Rossin’s Boca Raton office.  Kaufman, Rossin & Co. is one of the top CPA firms in the country.  He can be reached at sberger@kaufmanrossin.com.

QuickBooks – There’s an app for that too!

Tuesday, May 22nd, 2012

Are you an app lover? Do you use apps for more than just games?

If so, you’ll appreciate that QuickBooks has the capability to integrate with numerous applications to simplify billing, invoicing, customer management, financial management, and mobile accounting. One of our favorite apps is Bill.com.

Bill.com is a paperless bill pay service that integrates with both desktop QuickBooks and QuickBooks Online. If you’re trying to organize payables, gain greater control over cash flow, and gain access to bill pay functions on your smart phone, then this app may be great for you.  Even if your accounting firm pays your bills for you, this app will help you get clear, instant access to your records.

How it works:

• You get a dedicated email address or fax number to send in copies of your invoices. They’re all archived in a secure, web-based portal.
• You can maintain proper internal controls by having separate staff upload, approve, and pay bills.
• Payments are sent via ACH, if accepted by your vendor, or via paper checks.
• If a paper check is required, funds are first transferred to Bill.com.  Then, a check is cut from Bill.com’s account. This lessens your exposure to check fraud.
• Users have access to a cash flow calendar allowing them to easily schedule, postpone, and project expenses.
• All accounting information exports to QuickBooks, eliminating the need for duplicate data entry.
• It works with any computer or mobile device. This provides a great solution for owners who travel frequently and want to stay on top of their expenses or retain the authority to pay bills themselves.

This is a trusted service, recommended by the AICPA’s CPA2BIZ division.  It’s gotten very strong reviews from the QuickBooks community for both its functionality and user support.  A package for up to 5 users is $49.00 per month plus $0.99 for each paper check required.

App savvy professionals can get more information at http://www.bill.com/.

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Meredith Tucker is an accounting services manager at  Kaufman, Rossin’s Boca Raton office, and a QuickBooks ProAdvisor. Kaufman, Rossin & Co., one of the top CPA firms in the country, offers  QuickBooks training and consulting services. She can be reached at mtucker@kaufmanrossin.com.

QuickBooks Tip: Set a closing date password – you won’t regret it!

Tuesday, February 14th, 2012

When can you set a closing date?
You can set a closing date on a daily, monthly, quarterly or yearly basis.

Why do you need a closing date?

• To restrict access to final numbers once a period is closed.
• To prevent staff from adding, editing or deleting transactions after the books are closed.
• To prevent changes to transactions after the information is sent to your accountant.
• To help prevent fraud.

What does a closing date do?

• Warns you when a transaction on or before the closing date is being changed.
• Tracks all changes.
• Prints a closing date exception report.

How do you set a closing date in QuickBooks?

• Login as the Admin.
• Click Company, Set Closing Date to open the Accounting, Company Preferences dialog.
• Click the Set Date/Password button. The Set Closing Date and Password dialog displays.
• Enter a closing date and optional password. You might want to discuss this date with your accountant first.
• Click OK to accept the closing date and optional password.

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Lori Bucci is an accounting services manager at Kaufman, Rossin’s Miami office, and a QuickBooks ProAdvisor. Kaufman, Rossin & Co., one of the top CPA firms in the country, offers QuickBooks training and consulting services. She can be reached at lbucci@kaufmanrossin.com.

What’s New in QuickBooks 2012?

Wednesday, January 25th, 2012

The program enhancements for QuickBooks 2012 can be divided into two areas:

1. Enhancements for the user
2. Enhancements for their accountants

Enhancements for the user are designed to make day-to-day accounting easier and provide better information about your business. We have listed many of the User Enhancements that apply to most versions of QuickBooks below.

• Refresh Excel Data – provides user better integration with Microsoft Excel
• Contributed Reports – allows user to share report templates with other QuickBooks users
• Lead Center – allows user to manage sales prospects within QuickBooks and convert them easily to customers
• Calendar View – allows user to view a calendar layout of a company’s important transactions (invoices, billing, reminders)
• Global To Do’s – allows user more access to and flexibility with their To-Do lists
• Document Center – users can scan and store attached documents
• Memorized Transactions – improved to enable user to select transactions before entry
• Batch Timesheets – allows user to enter the same timesheet information for multiple employees
• Batch Invoicing for Time and Expenses – allows users to invoice several customers for time and expenses at one time
• One Click Transactions – allows users to create a payment or credit memo from the contents of an invoice in one step; also can now pay a bill in one step
• Improved Shipping Manager – allows user to integrate with USPS
• Company File Search – allows users expanded search features
• Integrated Help – provides users enhanced help features
• Improved Condense Data – improves the clean up data/condense data feature
• Easy Setup – provides users with an express start up for new QuickBooks files

If you have any questions or need assistance with QuickBooks, please contact Lisa K. Grossman or any of our QuickBooks ProAdvisors.

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Lisa K. Grossman is an associate principal at Kaufman, Rossin & Co., and a leader in the Firm’s QuickBooks consulting practice. Lisa is a Certified Public Accountant in the state of Florida and a QuickBooks ProAdvisor. Kaufman, Rossin & Co. is one of the top CPA firms in the country. She can be reached a lgrossman@kaufmanrossin.com.

Identity Theft and Tax Fraud – Are You a Victim?

Tuesday, December 6th, 2011

Identity theft and tax fraud are serious problems that continue to increase in number and complexity as each tax season rolls by.  Don’t think you will ever be affected? Accounting Today recently reported that the IRS identified 775,723 tax returns with $4.6 billion claimed in fraudulent refunds, as of April 30, 2011. The good news – the IRS prevented the issuance of $4.4 billion (96%) of those claims which is an increase of 171% over the previous year. Unfortunately, 4% of those victims were not so lucky.

Becoming a victim of identity theft and tax fraud can cause great hardship for you and your family. The Miami Herald recently wrote about a Miami Shores family who are struggling with the IRS to obtain their $8,000 tax refund after falling victim. Indeed, my colleagues and I have witnessed many falsified returns this past tax season, and although the IRS has implemented the IRS Identity Theft Program, there is no quick and easy solution to overcome this unfortunate circumstance.

While there is no guarantee that a thief won’t steal your identity, there are certain precautions you can take to prevent becoming victimized:

• Safeguard your personal information
• Monitor your credit report
• File early
• Respond immediately to IRS notices

If you have questions about preventing identity theft and tax fraud, or if you have already been targeted and need assistance, please contact me at sberger@kaufmanrossin.com or 561.620.1722.

Scott F. Berger is a tax principal at Kaufman, Rossin’s Boca Raton office.  Kaufman, Rossin & Co. is one of the top CPA firms in the country.  He can be reached at sberger@kaufmanrossin.com.

Now is the Time to Update Your Estate Plan with a CLAT

Wednesday, November 30th, 2011

Attorneys Robert Esperti and Renno Peterson define estate planning best as “giving what you have to whom you want, the way you want, and when you want, and if possible, saving every fee and tax possible”.  While the definition above appears concise and simple, estate planning, and more specifically wealth transfer, is potentially a complex undertaking requiring periodic updates to your plan.  As your objectives, family dynamics, property and tax laws, current and projected economic environment, and a host of other factors change, it becomes incumbent to make adjustments to the plan.  As an example, some or all of the following considerations may be important to you, and as they change over time it makes sense to update your plan to more closely align it with your objectives:

• Amount of wealth to transfer
• Married – financially secure or not;  first marriage or not
• Children – adult or minor; financially secure or not; spendthrift or not
• Closely held business(s) – controlling interest or not;  management team in place at death or not; adequate liquidity to both pay estate taxes and provide operating capital
• Charity – benefit many organizations or a couple favorites; establish a legacy or not

It also makes sense to update your plan when an uncommon external opportunity presents itself. We are currently in an exceptionally low interest rate environment.  Certain estate planning strategies provide more favorable results when implemented during a period of low interest rates and the wealth transfer terms can be “locked in” at that time.  A Charitable Lead Annuity Trust (“CLAT”), by design, is an estate planning vehicle that can help an individual with the following profile to maximize their wealth transfer objectives in a low interest rate environment:

1. Charitable intent
2. Desire to maximize wealth transferred to heirs or others at some defined future date
3. Financial situation allows for a portion of  income to be paid to a charitable organization(s) annually for a defined period
4. Pay income tax at or near the highest tax rate

A CLAT, like many estate planning vehicles, is very technical and must be tailored to each individual’s situation. If you would like to learn more about CLATs and how they may benefit your individual situation, please review this PDF presentation or contact me via email or phone at 561.620.1715.

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James Barnett is a manager in Kaufman, Rossin’s Estate, Trust & Exempt Organization department. Kaufman, Rossin & Co. is one of the top CPA firms in the country.  He can be reached at jbarnett@kaufmanrossin.com.

New FDOR Ruling May Mean Sales Tax Relief for Real Estate Held in Separate Entities

Tuesday, November 8th, 2011

The Florida Department of Revenue treats inter-company and other related party use of real estate as a taxable rental for sales tax purposes. This is true even when there is no written lease involved.  This has long been a significant downside of holding real estate in a separate entity which for liability purposes is desirable. A recent ruling issued by the Department may provide relief to such situations. The ruling addressed a lease which contained the following terms:

• No reversionary interest to the owner/lessor;
• Transfer of title by deed to the lessee at the end of the lease term;
• The monthly rent was equal to the monthly payments of principal and interest;
• The lessee had the option of early payoff to accelerate transfer by deed; and
• The lessee bore the risk and benefits of changes in the property value.

The Department ruled that the lease was in substance an installment sale and not a taxable lease for sales tax purposes. Persons with intercompany or other related party use of real property can now consider the option of putting such a lease in place. This will permit the limited liability benefits of owning real estate in a separate entity without creating the downside of a taxable lease for sales tax purposes.

For additional details and stipulations, please click here or contact me at 561.620.1718 or dwagner@kaufmanrossin.com.

Dan Wagner is an associate tax principal in Kaufman, Rossin’s SALT practice.  Kaufman, Rossin & Co. is one of the top CPA firms in the country.  He can be reached at dwagner@kaufmanrossin.com.

Linen Suppliers May Be Eligible for Sales Tax Refund

Thursday, October 13th, 2011

Companies which are in the linen services business, such as those supplying linens to hospitals, nursing homes and resort hotels, may be entitled to a refund of sales tax paid on utilities used in their laundering facilities, according to a recent ruling by the Florida Department of Revenue.

Finding and recovering sales tax refunds can be challenging. We can assist in determining eligibility for this opportunity and help recover the refundable sales tax. If you would like more information or assistance, please contact me at 561.620.1718 or dwagner@kaufmanrossin.com.

Dan Wagner is an associate tax principal in Kaufman, Rossin’s SALT practice.  Kaufman, Rossin & Co. is one of the top CPA firms in the country.  He can be reached at dwagner@kaufmanrossin.com.

Time to turn over a new leaf?

Tuesday, October 11th, 2011

For more than four decades, companies have been battling the IRS about the status of workers – are they employees or independent contractors?  In IRS audits where workers’ status is reclassified, the penalties are steep: you pay from 25% to 100% of the full employment tax liability.   

Many taxpayers have walked a fine line on this issue.  Now there’s a way to come clean — and pay less.  And because more than one IRS initiative is focusing on employee classification, it’s something to consider.

What are the definitions?

The courts have defined employees as workers over which the business may legally control what must be done AND how it must be done.   Independent contractors are workers over which the business controls only what must be done, not how it is accomplished.  The degree of control may include behavioral control, financial control, and the relationship between the parties. 

Who is eligible?

The Voluntary Classification Settlement Program (VCSP) is available only to businesses who are not currently under a related audit by the IRS, the Department of Labor, or the state.  You must have filed all required 1099s for your workers for the past three years. 

How does it work?

At least 90 days before you plan to reclassify your employees, you must complete and submit Form 8952.  The IRS will review it and, if you are eligible, they will contact you to enter into the VCSP Closing Agreement.  You sign the agreement and send it back with the payment.   The workers affected (either a specific class of workers, or all of your staff) must then be treated as employees going forward.

What will it cost?

The participating business must pay 10% of employment taxes calculated using the reduced rates of IRC Sec. 3509 for the compensation paid to the workers being reclassified during the most recently closed tax year. Under Section 3509 , the effective tax rate for compensation up to the Social Security wage base is 10.68% in 2010 (10.28% in 2011) and 3.24% for compensation above the Social Security wage base.

For example, imagine you paid $100,000 to a class of workers in 2010, and filed your VCSP application on 10/1/11. None of them earned more than $106,800, the Social Security wage base for 2010.    Using the amount paid to the workers in 2010 (the most recent tax year), you would pay a VCSP assessment of $1,068:  [($100,000 x 10.68%) x 10%].  You will begin treating these workers as employees the first of next year.

Should I do it?

The decision is yours, and you should consult your tax professional.  Just be aware: the IRS is focusing on this issue, and if it’s found during an audit you could pay much more!

Scott F. Berger is a tax principal at Kaufman, Rossin’s Boca Raton office.  Kaufman, Rossin & Co. is one of the top CPA firms in the country.  He can be reached at sberger@kaufmanrossin.com.