stockman kast & ryan co.

SKR+Co Alert: Payroll Tax Changes

January 17, 2012

Congress extends payroll tax relief – for 2 months

After much debate and political maneuvering, Congress has passed a two-month extension of payroll tax relief. The Temporary Payroll Tax Cut Continuation Act of 2011 will extend through Feb. 29, 2012, the 2010 Tax Relief act provision that reduced the employee portion of the Social Security tax on earned income from 6.2% to 4.2%. The 4.2% rate is limited to remuneration paid in January and February of $18,350 (maximum FICA wage base of $110,100/12 x 2).

The Senate had passed a previous version of the act Dec. 17, but that version couldn’t garner enough votes in the House. In negotiations with Speaker of the House John Boehner, Senate Majority Leader Harry Reid agreed to appoint conferees to work with House conferees on a full-year extension. In addition, the House added language to the Senate’s version of the Continuation act to allow employers to avoid certain compliance challenges that otherwise could result from the temporary extension. 

Read Full Article  

 

 

 

 

2012 Tax Tables

Federal Withholding Tax Tables


 

Colorado Unemployment Insurance Change 

Effective January 1, 2012, the Colorado Unemployment Insurance wage base has incresaed to $11,000 from $10, 000 per employee.


 Please contact us with any questions at (719) 630-1186 or through our Secure Email.

 

 

By Ellen Fisher, CPA, Senior Audit Manager

The Department of Housing and Urban Development (HUD) has made several changes to the reporting requirements for supervised mortgagees. Beginning with HUD Mortgagee Letter 2009-31, supervised lenders were required to submit annual audited financial statements electronically through HUD’s LASS on-line system.

In January 2011, HUD issued Mortgagee Letter 2011-05 that revised the audit reporting requirements for supervised lenders. The revised reporting requirements allow a supervised lender in a parent-subsidiary structure to submit audited consolidated financial statements of the parent company if the parent company executes a written guarantee of the on-going net worth and liquidity compliance of the FHA approved subsidiary. The FHA approved lender is also required to submit their fourth quarter Call Report, a Compliance Report and an Internal Control Report. This Mortgagee Letter still requires submission of audit reports on the LASS system.

In July 2011, HUD issued Mortgagee Letter 2011-25 that further revised the reporting requirements for small supervised lenders and provided a reprieve from the audited financial statements requirement. Supervised lenders with assets of less than $500 million are not required to submit audited financial statements nor an audited computation of net worth. This new exemption for audited financial statements will expire on April 7, 2012 and there has been no guidance regarding what will happen after the expiration date. The lender must still submit their fourth quarter Call Report and Compliance and Internal Control Reports issued by an independent auditor.

HUD has issued Frequently Asked Questions for Mortgagee Letter 2011-25 in which HUD states that supervised lenders with less than $500 million in assets may mail hard copies of the required reports rather than submitting them on the LASS system. This is because the LASS system has not yet been updated to accept submissions under these revised reporting requirements. There are specific requirements for mailed hard copies such as

1) you must submit two copies of each report,

2) you must include a cover letter with the FHA lender/mortgagee identification number that claims the exemption for supervised lenders under the April 7, 2011 waiver, and

3) the FHA lender/mortgagee identification number must be written on the upper right-hand corner of each separate document.

Financial institutions need to engage a CPA firm to perform the necessary compliance and internal control audit procedures and to issue the compliance and internal control reports. The procedures to be performed by the CPA firm and report examples are outlined in chapters 1, 2 and 7 of the HUD Handbook Consolidated Audit Guide for Audits of HUD Programs.

In summary, as it stands right now, if you are an FHA Supervised Lender with total assets under $500 million, there is no financial statement audit requirement for 2011. You are required to submit your fourth quarter call report and both the Compliance and Internal Control Reports as previously discussed. These reports may be submitted via mail which is a significant reprieve from the challenges of the LASS system.

If you have any questions on these reporting requirements, please feel free to contact Ellen Fisher at any time by phone at (719) 630-1186 or email efisher@skrco.com.

 stockman kast & ryan co.

SKR+Co Alert: Credit for Hiring Veterans, Foreign Financial Asset Reporting, & More!

November 28, 2011

 

 

 

 

The VOW to Hire Heroes Act

On November 16, Congress passed the VOW to Hire Heroes Act. A key provision of the act extends the Work Opportunity Credit through 2012 for companies that hire qualified veterans. (The credit is still scheduled to expire at the end of 2011 for other targeted groups.) The act expands the credit by:

  • Doubling the maximum credit – to $9,600 – for disabled veterans who've been unemployed for six months or more in the preceding year, 
  • Adding a credit of up to $5,600 for hiring nondisabled veterans who've been unemployed for six months or more in the preceding year, and
  • Adding a credit of up to $2,400 for hiring nondisabled veterans who've been unemployed for four weeks or more, but less than six months in the preceding year.

To be eligible for the credit, you must take certain actions before and shortly after you hire a qualified veteran. Your tax advisor can help you determine exactly what you need to do.

 

 

Reporting Foreign Financial Assets

 

 

 

The IRS recently released draft instructions for Form 8938, which is the informational filing required by taxpayers with specified foreign financial assets. The instructions are newsworthy in that they come 18 months after the Foreign Account Tax Compliance Act (FATCA) was implemented, and two different draft Forms 8938 were released without instructions.

Taxpayers should note that the reporting requirement is much broader than the Report of Foreign Bank and Financial Accounts (FBAR), so it is possible that individuals who do not have an FBAR filing obligation may be subject to the FATCA reporting requirement. For example, the FATCA reporting requires taxpayers with investments in foreign entities, such as foreign hedge funds and private equity funds to report the existence of these investments.

The penalty for failure to disclose is $10,000. If the failure continues for more than 90 days following the mailing of notification, the penalty could go up to a maximum of $50,000.

We recommend you consult with your tax advisor if there is a possibility that you are subject to this reporting obligation.

 

 

Tax Seminar – 
Last chance to register!

"Understanding Your Individual Tax Return"

DATE: Tues., Dec. 6th
TIME: 3:00-4:30 p.m.
LOCATION: The Fine Arts Center (or SKR, depending on number of registrations)

PRESENTERS:

Judy Kaltenbacher, CPA, Managing Tax Partner

Doreen Merz, CPA, Tax Manager

Jordan Empey, CPA, Supervising Tax Senior

For additional information and to Register, Click Here


 

Buying a Vehicle for your Business?

 

 

 

 

Click Here for information on ways to save when purchasing by year-end.


 

 

 

 

If you have any questions or comments, please feel free to contact us at (719) 630-1186 or through our Secure Email.

 stockman kast & ryan co.

SKR+Co Alert: Tax Brackets, Credits, and other COL Changes in 2012, Plus New Seminar!

November 18, 2011

The IRS' 2012 Cost of Living Adjustments

Recently, the IRS released most cost-of-living adjustments for 2012. With inflation now a little higher than it has been, some amounts that haven’t risen in recent years are increasing for 2012, and others are increasing by larger sums. Still, there are many amounts that will stay the same as they were for 2011. This article provides an overview of important 2012 amounts related to individual income taxes, education- and child-related tax breaks, retirement plans, and gift and estate taxes. 

Full Article

Understanding Your Individual Tax Return

You are invited to our next seminar: "Understanding Your Individual Tax Return."

DATE: Tuesday, Dec. 6, 2011
TIME:  3:00-4:30 p.m.
LOCATION: The Fine Arts Center
PRESENTERS:  
Judy Kaltenbacher, CPA, Managing Tax Partner

Doreen Merz, CPA, Tax Manager 
Jordan Empey, CPA, Supervising Tax Senior
 

 

For additional information and 
to Register, Click Here

Please note: Although this seminar is free,  space is limited so please register today if you plan to attend.

 

Buying a Vehicle for your Business?

It's a good time to shop for a new vehicle. Thanks to the 100% bonus first year depreciation deduction under the 2010 Tax Relief Act, if the vehicle is going to be used for business, there are significant tax advantages to consider. In general, for cars purchased after September 8, 2010 and before January 1, 2012, taxpayers get a depreciation deduction in the initial year equal to 100% of the cost of the new vehicle. 

 

Click Here for more information.


 

If you have any questions or comments, please feel free to contact us at (719) 630-1186 or through our Secure Email.

SKR+Co Alert

Colorado is now requiring pre-certification for all enterprise zones

November 14, 2011

Colorado Enterprise Zones – Purpose

Colorado's Enterprise Zone program provides tax incentives to encourage businesses to locate and expand in designated economically distressed areas of the state. There are 16 Enterprise Zones and 2 sub-zones in Colorado. The taxpayer must be located in an enterprise zone to take advantage of many of these credits. To view the EZ Map, Click Here.

Colorado EZ Tax Credits

Here are the available credits:

TAX CREDIT

CREDIT AMOUNT

FORM

FACT SHEETS

Investment Tax Credit

3% of equipment purchases

DR0074

FYI Income 11

Job Training Tax Credit

10% of qualified training expenses

DR0074

FYI Income 31

New Business Facility (NBF) Jobs Credit

$500 per new job

DR0074

FYI Income 10

NBF Ag Processing Jobs Credit

$1,000 total per new a.p. job

DR0074

FYI Income 10

NBF Health Insurance Credit

$200 x 2 years per new h.i. job

DR0074

FYI Income 10

R&D Increase Tax Credit

3% of increased R&D expenditures

DR0077

FYI Income 22

Vacant Building Rehabilitation Tax Credit

25% of rehabilitation expenditures

DR0076

FYI Income 24

Manufacturing / Mining Sales and Use
Tax Exemption

Expanded S&U tax exemption in EZ

DR1191

FYI Sales 10
FYI Sales 69

Commercial Vehicle Investment Tax
Credit (CVITC)

1.5% of commercial vehicle
purchases

CVITC Application

CVITC Details
FYI Income 11

Contribution Tax Credit

25% of cash (12.5% in-kind) donations

   

 

New EZ Pre-Certification Requirement

If your business will perform an activity on or after January 1, 2012 that will earn an EZ business tax credit, Colorado Revised Statute 39-30-103(7)(a) requires that your business receive pre-certification prior to commencing the activity that will earn the credit. Pre-certification is not required for the Contribution Tax Credit or the Manufacturing/Mining Sales and Use Tax Exemption.

Since pre-certification must be completed before activities are performed (i.e. purchase of equipment), we recommend that all businesses located in an enterprise zone pre-certify by 12/31/2011.

EZ Pre-Certification Details

Electronic EZ Certification Process

Forms DR0074, DR0076 and DR0077 can be certified electronically through the Colorado Web Portal (Click HERE to access.)  Please remember to print a copy of the form before submitting. Upon receipt, an email will be sent approving your certificate, which you also need to print. Both the applicable form(s) and approval email must be sent to the Colorado Department of Revenue upon filing your income tax return.

Electronic Filing Requirement of State Income Taxes

Once a business has received the final "certified" EZ tax credit form, a business that is claiming an EZ tax credit will be required to file their income taxes electronically, unless the business will experience an "undue hardship because the taxpayer does not have access to a computer, or does not have sufficient internet access, internet capability, or computer knowledge to file income taxes electronically.”

EZ Investment Tax Credits Exceeding $500,000

(Effective January 1, 2011)

Colorado House Bill 10-200 sets a temporary requirement that businesses defer claiming an EZ Investment Tax Credit (ITC) that exceeds $500,000 in years 2011, 2012, and 2013. Businesses are “allowed to claim the deferred credit as an ITC carryover for 12 income tax years following the year the credit was originally allowed plus 1 additional income tax year for each income tax year that the credit was deferred.”

Our Recommendation

Since pre-certification must be completed before activities are performed (i.e. purchase of equipment), we recommend that all businesses located in an enterprise zone pre-certify by 12/31/2011.

For More Information…

The Colorado Office of Economic Development and International Trade (OEDIT) oversees the EZ program as staff for the Economic Development Commission. For more information on the EZ Program, visit the Colorado Enterprise Zone website (www.advancecolorado.com/ez). As your business consultant and tax advisor, we would also be happy to discuss any questions you might have. Call us at (719) 630-1186 or through our Secure Email.

 stockman kast & ryan co.

SKR+Co Alert: New Tax Guide & Retirement Seminar Invitation

October 19, 2011

New 2011-2012 Web Tax Guide! 

Our new web tax guide is here! We will keep this informational guide updated on our website through next May, so you can come back to it time and again and can trust that, even with new legislation, this guide will be accurate. Take a look today to take advantage of opportunities before the end of the year! Click Here to view and download the guide.

Retirement Seminar Invitation 

You are invited to our next seminar: "Utilizing Real Estate and Other Alternative Investments in Retirement Plans."

DATE: Weds., Nov. 9, 2011
TIME:  3:00-4:30 p.m.
LOCATION: To be determined*
PRESENTERS:  

Bernie Benyak CPA, CFP, Senior Tax Manager
Trinity Bradley-Anderson CPA, Tax Manager 
 

For additional information and 
to Register, Click Here

*This seminar will be held at our office or the Fine Arts Center, depending on the number of registrations.

 

Please note: Although this seminar is free,  space is limited and time is short so please register today if you plan to attend.

 

Our Next Seminar

Mark your calendar for Tuesday, December 6th, and come to our next FREE seminar: "Understanding Your Individual Tax Return."

More details to follow!


 

 

If you have any questions about these seminars or suggestions of future topics, please feel free to contact us at (719) 630-1186 or through our Secure Email.

SKR+Co Alert

Private companies and GAAP

September 22, 2011

There have been discussions about separate private company accounting standards for years. Now standard-setters may actually do something about it. The Financial Accounting Foundation (FAF) — parent organization to the Financial Accounting Standards Board (FASB) — will soon decide whether to adopt recommendations made earlier this year by a blue-ribbon panel on standard setting for private companies.

The panel recommended that the FAF establish a separate, private company standards board to develop appropriate exceptions and modifications to U.S. Generally Accepted Accounting Principles (GAAP) that would “better respond to the needs of the private company sector.” The new board would work closely with FASB, and its standards would be incorporated into FASB’s Accounting Standards Codification (ASC).

However, the board would have final authority over all exceptions and modifications. The panel also recommended the creation of a “differential framework” to guide the new board’s standard-setting activities.

Public vs. private

In the United States, public and private companies, for the most part, are subject to the same set of accounting standards — GAAP. Public companies are required under SEC rules to prepare audited, GAAP-compliant financial statements. Generally, private companies aren’t legally obligated to follow GAAP, but they may need to do so to satisfy lenders, sureties, venture capitalists or other stakeholders.

Preparing GAAP financial statements can be a challenge for private companies, particularly in the current environment. During the last several years, FASB has been shifting toward a fair-value-based accounting approach. In other words, GAAP increasingly requires companies to report assets and liabilities at fair value rather than historical cost. This trend is increasing the complexity and cost of complying with GAAP, which now demands periodic valuations and impairment testing for many financial statement items.

This type of information is valuable to public company investors, who use it to evaluate the price of securities traded in the stock exchanges or other public markets. But lenders and other users of private company financial statements tend to be less interested in fair value and more interested in free cash flow and a company’s ability to pay its debts. In some cases, GAAP can make it more difficult for these users to get the information they need.

Consider, for example, employee stock options. Historically, these options were reported at their “intrinsic value” — that is, the amount (usually zero) by which the underlying stock’s market value on the grant date exceeded the option exercise price. Several years ago, however, FASB modified its standards to require companies to expense employee stock options based on their grant-date fair value, using one of several option-pricing models.

Valuing options can be complex — especially for private companies with limited trading data. Plus, many lenders view stock options as a noncash expense that has little effect on a company’s ability to pay its debts. So, from their perspective, reporting options at grant-date fair value actually distorts the company’s income. For that reason, they add the expense back into net income when evaluating a company’s financial statements.

Differing viewpoints

Proponents of separate private company accounting standards point to fair value reporting as well as other GAAP provisions that may be irrelevant at best and counterproductive at worst in a nonpublic setting. They include:

As a result, many private companies prepare non-GAAP financial statements — on a cash or income tax basis, for example — while others opt to receive “qualified” opinions from their auditors. Many lenders accept these financial statements or waive certain GAAP requirements because they recognize that compliance can be burdensome and that many GAAP standards lack relevance for private companies.

The concept of separate standards for private companies isn’t without its critics, however. Some opponents argue that financial statements are either correct or they aren’t, and that separate standards will lead to inconsistency and lack of comparability.

They advocate a single set of standards that can be modified, if appropriate, on a case-by-case basis by agreement between a company and its financial statement users. They also contend that, if GAAP standards are overly complex or burdensome, they should be simplified for all companies, both public and private.

The panel’s recommendations

The blue-ribbon panel considered several models for addressing the needs of private companies, including a standalone GAAP built from the ground up and several versions of International Financial Reporting Standards (IFRS), including IFRS for Small and Medium Entities.

In settling on U.S. GAAP with exceptions and modifications for private companies, the panel explained that a standalone set of standards could take a significant amount of time to create and could be significantly different from current U.S. GAAP. It also rejected the various IFRS options, noting that “U.S. private companies should not be leading the charge, en masse, to an IFRS-based set of standards before the SEC makes a decision on U.S. public companies…”

The panel concluded that a new board with standard-setting power would be the most effective approach. In the panel’s view, FASB is too focused on public company financial reporting to address the needs of private companies.

The panel noted that FASB’s Private Company Financial Reporting Committee (PCFRC) has submitted approximately 40 recommendation letters since it was formed in 2007. Although FASB has modified some standards, generally by changing effective dates or disclosure requirements for private companies, the panel concluded that many private company stakeholders view the PCFRC’s work as “not being wholly successful because the FASB has not also shown a willingness to consider carefully and approve, where appropriate, the possibility of measurement, recognition, or presentation differences.”

Widespread support

It’s not yet certain how the FAF will respond to the blue-ribbon panel’s recommendations. But there’s widespread support for the panel’s approach among accountants and finance executives, as reflected in the vast majority of nearly 2,000 letters the FAF has received. Keep in mind that the FAF’s decision and ultimate approach may be affected by the SEC’s decision, expected later this year, on whether to adopt IFRS for U.S. companies.

If you own a private company and have questions about how the blue-ribbon panel’s proposed recommendations might affect how you prepare your financial statements, please give us a call. We would be happy to answer your questions.

 

Seminars & Events Coming Up

"Understanding Your Individual Tax Return"

DATE:  Tuesday, December 6, 2011
TIME:   3:00-4:30 p.m.
LOCATION:  The FIne Arts Center, Music Room
PRESENTERS:
     
Judy Kaltenbacher, CPA, Managing Tax Partner
     Doreen Merz, CPA,Tax Manager 
     Jordan Empey, CPA, Supervising Senior Tax Consultant

For more information on this seminar, CLICK HERE


 

 

"Officer Compensation & Other Nonprofit Organization Issues"

Date and location to be determined.

For more information on this seminar, check back with us.

 stockman kast & ryan co.

Accounting Rules Changes for Patient Service Revenue, Bad Debts and the Allowance for Doubtful Accounts

By Mike Rowe, CPA, Audit Partner

Accounting Standards Update (ASU) No. 2011-07, Presentation and Disclosure of Patient Service Revenue, Provision for Bad Debts, and the Allowance for Doubtful Accounts for Certain Health Care Entities was issued in July and requires health care entities to (1) present the provision for doubtful accounts as a deduction from patient service revenue in the statement of operations, rather than as an operating expense, and (2) provide enhanced disclosures concerning their policies for recognizing revenue and assessing bad debts. 

Governmental hospitals already record the provision for bad debts as a reduction of revenues. Non-governmental hospitals currently reflect the provision for bad debts as an operating expense.
ASU No. 2011-07 will result in non-governmental hospitals reflecting the provision for bad debts in a manner consistent with the existing method for governmental hospitals.

Following is a discussion of the principal amendments to the FASB Codification resulting from ASU No. 2011-07.
divider

FASB ASC 954-605, Health Care Entities – Revenue Recognition

FASB ASC 954-605-45 has been amended to require entities that recognize significant amounts of patient service revenue at the time services are entered without consideration of patients’ ability to pay to present the following as separate line items on the face of the statement of operations.

• Patient service revenue (net of contractual
  allowances and discounts).
• The provision for bad debts.
• The resulting net patient service revenue.

FASB ASC 954-605-50 has been amended to require health care entities to disclose the following information by major payor source of revenue:

• The entity’s policy for assessing collectibility in
  determining the timing and amount of patient
  service revenue recognized as bad debts.
• The amount of patient service revenue (net of
  contractual allowances and discounts) before
  taking into account the provision for bad debts.
divider

FASB ASC 954-310, Health Care Entities – Receivables

FASB ASC 954-310-50 has been amended to require the following disclosures:

• By major payor revenue source, the entity’s policy
  for assessing the timing and amount of
  uncollectible patient service revenue recognized as
  bad debts by major payor source; note that such
  identified sources should be consistent with the
  way in which the entity manages its business
  (e.g., how it assesses credit risk).

• Qualitative and quantitative information about
  significant changes in the allowance for doubtful
  accounts relating to patient accounts receivable;
  such information could include significant changes
  in estimates and underlying assumptions,
  the amount of self-pay write-offs, the amount of
  third-party payor write-offs, and other unusual
  transactions.

divider

Effective Date

For non-public entities, the amendments are effective for the first annual period ending after December 15, 2012, with early adoption permitted. The presentation of the provision for bad debts relating to patient service revenue in the statement of operations should be applied retrospectively to all periods presented. The new disclosures should be made for the period of adoption and subsequent reporting periods (i.e., comparative disclosures are not required for periods before initial adoption).

Questions?

If reading this article gave you more questions than it answered, please contact us and we'd be glad to help you understand what it all means for your healthcare entity.


 

Mike Rowe, CPA, Audit PartnerClick Here for Mike's bio.


Healthcare Accounting Services

Our healthcare industry professionals have significant experience serving healthcare organizations of all sizes in Colorado Springs and throughout Colorado, including urban and rural acute care hospitals, outpatient surgery centers, medical clinics, physician groups and managed care providers.

To learn more about the Healthcare Accounting Services offered by Stockman Kast Ryan + Co., please Click Here.


If you have any questions, feel free to call us at (719) 630-1186 or use our Secure Email.

 

SKR+Co Tax Alert

Estate Tax Uncertainty & Mileage Rate Increases

June 29, 2011

Estate Tax Uncertainty

The Tax Relief, Unemployment Insurance Reauthorization, and Job Creation Act of 2010 provided many answers regarding the estate tax, but, unfortunately, the act created additional questions as well. With certain estate tax law provisions scheduled to expire after 2012, estate planning uncertainty remains. This article explains how making lifetime gifts can take advantage of the current high exemption amount and low tax rate and details ways to add flexibility to an estate plan to prepare for potentially lower exemptions and higher rates in 2013.

Full Article

Mileage Rate Increases Effective July 1st

In response to rising gasoline prices, the IRS has raised the standard mileage rate for business use of an automobile from 51 cents per mile to 55½ per mile, effective July 1. The medical and moving standard mileage rate is increasing to 23½ per mile, also on July 1.

The new optional standard mileage rates will apply until superseded by future guidance and can be used by taxpayers to calculate the deductible costs of operating an automobile. Alternatively, taxpayers can instead use their actual costs, but must maintain adequate records and be able to substantiate their expenses.

The standard mileage rate for services to charitable organizations is set by statute at 14 cents per mile and remains unchanged.

Click Here to read the IRS Announcement in full