UHY LLP E-Newsletter - October 2012

UHY LLP News Stories - October 2012

In This Issue

New Michigan Employer's Quarterly Wage/Tax Report Simplification

Retirement Year-End Tax Planning Tips

FICA Payments on Severance Pay

Spotlight On

Events Calendar

10/16 BRIC Roundtable

10/25 Construction Outlook

11/1 Manufacturing Outlook

11/13 Health Care Reform Update

12/5 Accounting & Regulatory Update

12/5 Tax Forum

Special Announcements

Recruiting Update

Amy Gallagher Receives Distinguished Leadership Award

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Sterling Heights, MI
(586) 254-1040

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Gifting

The clock is ticking! 2012 may be the final year to take advantage of the $5 million gift tax exclusion.

Contact your UHY professional today.

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New Michigan Employer's Quarterly Wage/Tax Report Simplification

By Danielle Wetzel, CPA

Beginning for the third quarter of 2012, some employers can start to use the new combined UIA 1028. This form is replacing the UIA Form 1020, Employer's Quarterly Tax Report, and UIA Form 1017, Employer's Quarterly Wage Detail Report. It is also replacing UIA Form 1019, Amended Wage Detail Report, UIA Form 1020-R, Reimbursing Employer's Quarterly Payroll Report, UIA Form 1021, Amended Quarterly Tax Report, and UIA Form 1021-R, Amended Reimbursing Employer's Quarterly Payroll Report. This will substantially reduce the number of quarterly forms to be filed by employers.

There are a few changes associated with the new UIA Form 1028 under Public Act 269. One change being the requirement for online filing of quarterly reports. Per Section 13(2), this requirement starts the first quarter of 2013 for employers having more than 25 employees as of January 1, 2013. For employers having more than five but few than 26 employees as of January 1, 2013 the requirement starts the first quarter of 2014. Lastly, employers having less than six employees as of January 1, 2013, the requirement start the first quarter of 2015. Thus, all employers will file electronically by 2015. There will be a hardship exclusion that will be granted for a limited time but eventually that will be phased out.

For employers with 25 or fewer employees, Section 13(3) allows the employer to equally distribute the current year first quarter taxes over the four quarters if the first quarter tax is 50% or more of the previous year starting in 2013. This election to make apportioned payments must be made on the first quarter's payment (Form 1028) and then each quarter's payments must be timely filed in order to avoid interest and penalty. This election can be made simply by checking the "Apportionment of Taxes" box on the new UIA Form 1028.

Remember, penalties for filing UIA 1017 have increased from $25.00 to $50.00 for late reporting if not received within 30 days of the report due date. There is also an additional $250.00 penalty if the report is still not received by the next quarter due date and $250.00 for each quarter it is not received. These changes went into effect beginning with the first quarter 2012 report filing but will apply to the new form as well.

For more information or questions on this topic, please contact your professional at UHY LLP in Farmington Hills (248) 355-1040 or Sterling Heights (586) 254-1040 or visit us on the Web at uhy-us.com.

Retirement Year-End Tax

Planning Tips

By Kim Pomaville, CPA

Under current law, higher-income taxpayers will face not only an increase in income tax rates, but an additional 3.8% surtax on their investment income and gains in 2013 and thereafter. In order to be subject to the surtax, modified adjusted gross income (MAGI) must be greater than $250,000 for joint returns or $200,000 for individuals filing single. Therefore, there are some retirement plan strategies to consider this year that may reduce your MAGI in the future and allow you to cope with the higher rates next year.

Use Roth IRAs instead of traditional IRAs. Unlike distributions from regular IRAs, qualified distributions from Roth IRAs are tax-free thus excluded from modified adjusted gross income.

If you are considering rolling over a traditional IRA, make the rollover to a Roth IRA this year instead of next year. In order to avoid increasing your MAGI in 2013, thus potentially exposing unearned income to the 3.8% surtax, taxpayers who are considering rolling over regular IRAs to a Roth IRA should do so before 2013. As long as it's an eligible rollover distribution, a Roth IRA can accept rollovers from an employer-sponsored retirement plan.

Determine your required minimum distributions. Taxpayers nearing or exceeding their modified adjusted gross income threshold should carefully plan their distributions from qualified plans or IRAs in order to avoid or minimize exposure to the 3.8% surtax. Required minimum distributions are required once an individual reaches 70 �. For those individuals that reach 70 � in 2012, the 2012 required minimum distribution must be taken by April 1, 2013. In addition, the 2013 distribution must be taken by the end of 2013. Therefore an individual would be including two required minimum distributions in their 2013 taxable income and increasing their MAGI as a result, which could lead expose them to the additional surtax that they might otherwise not be subject to. In addition with the in planned increase in the tax rates in 2013, this extra required distribution could be exposed to a higher tax rate than if the distribution was taken in 2012.

The above are just a few strategies that may be considered if you are expecting to be subject to the additional 3.8% surtax and have retirement funds that may be included in your MAGI. These strategies should be discussed with your tax advisor as part of your overall tax planning.

FICA Payments on Severance Pay

By Chris Sislock, CPA

In U.S. v. Quality Stores, Inc. the U.S. Court of Appeals for the Sixth Circuit has affirmed a 2010 lower court decision that severance payments were not subject to FICA taxation. The Sixth Circuit held that the payments made by Quality Stores met the definition of supplemental unemployment compensation benefits (SUB). SUB payments are defined as (1) an amount paid to an employee; (2) pursuant to an employer's plan; (3) because of an employee's involuntary separation from employment, whether temporary or permanent; (4) resulting directly from a reduction in force, the discontinuance of a plant or operation, or other similar conditions; and (5) included in the employee's gross income. Because the payments were considered SUB payments, even though they are subject to income tax withholding, the payments are not considered wages. The Court concluded that because the payments were not wages, that the payments were not subject to FICA withholdings.

While the Sixth Circuit has ruled that SUB payments are not subject to FICA, the Federal Circuit has held otherwise, thus creating conflicting opinions on this topic. It is unknown if the IRS will appeal this decision to the Supreme Court to resolve the conflicting court opinions. But in the meantime, if you have paid any severance pay in recent years, there may be a possible refund opportunity and at a minimum, a protective claim should be filed.

To learn more about this ruling or to find out if you may qualify for a refund, please contact your professional at UHY LLP in Farmington Hills (248) 355-1040 or Sterling Heights (586) 254-1040 or visit us on the Web at uhy-us.com.

Spotlight On...

Petri Dennis Petri, CPA

Partner and UHYI Liaison

Dennis has more than 25 years of experience helping U.S. companies establish structured operations in foreign countries, as well as assisting foreign entities set up business in the U.S. with tax, structure, and strategic planning. As a skilled professional, he brings a wealth of knowledge working with domestic and international organizations in a variety of industries with a specialty in manufacturing and distribution.

Dennis will be joining a panel of international experts at "Climbing the BRIC Wall-Opportunities with Brazil, Russia, India and China", an installment of UHY LLP's international roundtable series, on October 16. He and Bill Kingsley will welcome Melanie Chen from UHY LLP's New York office, as well as four others from UHYI member firms from the BRIC countries. We asked Dennis why UHY has devoted an event focused around the BRIC countries. "The economic growth has decelerated in the BRIC countries due to a slowing global economy but there are still tremendous opportunities to invest as these countries account for more than 25% of global GDP."

Being an International Liaison and leader of the National International Tax Group, Dennis regularly travels the world to present with colleagues from other UHYI member firms on a number of cutting-edge tax topics. As an avid golfer, he is a member at The Golf Lodge at the Quarry (Naples, FL) and Oakland Hills Country Club (Bloomfield Hills, MI). Dennis has also golfed all over the world including Ireland and Scotland. Dennis has been with the firm since 1982 and is a licensed CPA in the states of Michigan, Georgia and Florida.

Dennis can be reached at dpetri@uhy-us.com or 586 843 2520. He is located in the Sterling Heights, MI office.

Events Calendar

10/16 Climbing the BRIC Wall-Opportunities with Brazil, Russia, India and China

Register today for UHY's Climbing the BRIC Wall on Tuesday, October 16, 2012. Please join us on-site or on-line us as we convene a panel of experts to discuss inbound investments into the BRIC countries including a general overview of the business climate and economic conditions, opportunities and potential threats of doing business in the country, tax issues and considerations, pitfalls when starting a business in the country, employment considerations, entity structure and tax planning considerations.

On-site Program On-line Webinar

Eastern Time 7:30AM-12:30PM 8:00AM-11:45AM

Central Time N/A 7:00AM-10:45AM

7:30AM-8:00AM EST Breakfast and Networking

8:00AM-8:15AM EST Opening Commentary

8:15AM-9:00AM EST Brazil: Betina Moreira

9:00AM-9:45AM EST India: Sunil Hansraj

9:45AM-9:55AM EST Refreshment Break

9:55AM-10:40AM EST China: Yong Sun

10:40AM-11:25AM EST Russia: Nikolay Litvinov

11:25AM-11:45AM EST Panel Discussion

11:45AM-12:30PM EST Lunch and Networking

CPE credit will be offered. Pre-registration for this complimentary program is required. Complimentary breakfast and lunch will be provided. Space is limited. Multiple registrations are welcome. To RSVP contact Courtney Gray via email cgray@uhy-us.com or phone 586 843 2633. Please declare either on-site or on-line. Webinar log-in instructions will be released to registered attendees at a later date.

10/25 UHY LLP Annual Construction Outlook

You're invited to UHY's Annual Construction Outlook on Thursday, October 25, 2012 in the Farmington Hills training facility. Join us to learn more about industry trends, bonding update and the latest financial and tax developments.

7:00AM-7:30AM EST Breakfast and Networking

7:30AM-7:40AM EST Opening Commentary

7:40AM-8:10AM EST Legislative Construction Update

8:10AM-8:25AM EST Michigan Update

8:25AM-8:40AM EST Joint Ventures: Accounting Issues

8:40AM-9:00AM EST Joint Ventures: Legal Issues

9:00AM-9:15AM EST Joint Ventures: Bonding Issues

9:15AM-9:25AM EST Break

9:25AM-9:50AM EST Doing Business Outside the U.S.

9:50AM-10:20AM EST Tax Update

10:20AM-10:30AM EST Panel Discussion

CPE credit will be offered. Pre-registration for this complimentary event is required and multiple registrations are welcome. Breakfast will be provided. Please contact Courtney Gray via email cgray@uhy-us.com or phone 586 843 2533 to register.

11/1 UHY LLP Annual Manufacturing Outlook

UHY welcomes you to attend Manufacturing Outlook 2013: An American Renaissance on Thursday, November 1, 2012. Join us either on-site in Farmington Hills or on-line via webcast to learn more about the latest industry trends and rebirth of American manufacturing.

On-site Breakfast Program On-line Webinar

Eastern Time 8:30AM-11:45AM 9:00AM-11:45AM

Central Time N/A 8:00AM-10:45AM

8:30AM-9:00AM EST Breakfast and Networking

9:00AM-9:25AM EST Opening Commentary / What is Driving American Manufacturing?

9:25AM-9:55AM EST Global Manufacturing Economic Forecast

9:55AM-10:20AM EST Shale Oil & Gas Production: A New Chapter in Domestic Manufacturing

10:20AM-10:35AM EST Refreshment Break

10:35AM-11:00AM EST Medical Devices: Bringing Your Products to Market

11:00AM-11:25AM EST Maximizing Momentum for Automotive Suppliers

11:25AM-11:45AM EST Panel Discussion

CPE credit will be offered. Pre-registration for this complimentary program is required and multiple registrations are welcome. Breakfast will be provided. To RSVP contact Courtney Gray via email cgray@uhy-us.com or phone 586 843 2533. Please declare either on-site or on-line. Webinar log-in instructions will be released to registered attendees at a later date.

11/13 Health Care Reform Update

Please join us for this quick hitting, early morning interactive discussion aimed at business owners with 25 or more employees. Tune in as our experts address important aspects of the Health Care Reform Law including legality, tax law changes, Census considerations, employer shared responsibility, and post-election planning opportunities.

Tuesday, November 13, 2012

7:00AM-9:30AM EST

Pre-registration for this complimentary update is required. Multiple registrations are welcome. Please contact Courtney Gray via email cgray@uhy-us.com or phone 586 843 2533 to register. Formal invitation to follow shortly.

12/5 UHY LLP Annual Accounting & Regulatory Update

Save-the-date for UHY's Annual Accounting & Regulatory Update at the MSU Management Education Center in Troy. Join us for this full-day program geared towards CFO's, audit committee members and chairs, to learn more about the latest accounting, regulatory, legal and SEC updates. Topics, speakers and keynote will be announced shortly.

Wednesday, December 5, 2012

8:30AM-6:00PM EST

Pre-registration for this complimentary program is required. Breakfast, lunch and a cocktail afterglow will be provided. Space is limited. Multiple registrations are welcome. Please contact Courtney Gray via phone 586 843 2533 or email cgray@uhy-us.com to register. Formal invitation to follow.

12/5 UHY Advisors Annual Tax Forum

Save-the-date for UHY's Annual Tax Forum at the MSU Management Education Center in Troy. Join us to learn more about the latest tax laws, trends and developments impacting both individuals and businesses. Topics, speakers and keynote will be announced shortly.

Wednesday, December 5, 2012

12:00PM-6:00PM EST

Pre-registration for this complimentary program is required. Lunch and a cocktail afterglow will be provided. Space is limited. Multiple registrations are welcome. Please contact Courtney Gray via phone 586 843 2533 or email cgray@uhy-us.com to register. Formal invitation to follow.

Special Announcements

Recruiting Update

UHY Michigan is actively looking for experienced candidates to fill key positions in our Farmington Hills and Sterling Heights Offices. Please review the openings below and if you know someone who may be interested in any of these roles please reach out to Rina (Madias) Henning, Recruiting Manager, via email rhenning@uhy-us.com or phone 248 204 9331.

Sterling Heights

Tax Managers

Senior Tax Staff

Recruiter with finance/accounting recruiting experience

Audit Seniors (2-5 years experience)

Farmington Hills

IT Audit and Compliance Senior (5+ years Audit and IT controls combined)

Amy Gallagher Receives Distinguished Leadership Award

Amy Gallagher, Principal at UHY Advisors, was honored with the APICS President's Distinguished Leadership Award. APICS (The Association for Operations Management) is the global leader and premier source of the body of knowledge in supply chain and operations management, including production, inventory, materials management, purchasing and logistics.

Since 1957, individuals and companies have relied on APICS for its superior training, internationally recognized certifications, comprehensive resources and worldwide network of accomplished industry professionals. She is Board Member and Vice President of Programs for the Atlanta APICS Chapter. Congratulations, Amy!

Our firm provides the information in this newsletter as tax information and general business or economic information or analysis for educational purposes, and none of the information contained herein is intended to serve as a solicitation of any service or product. This information does not constitute the provision of legal advice, tax advice, accounting services, investment advice, or professional consulting of any kind. The information provided herein should not be used as a substitute for consultation with professional tax, accounting, legal, or other competent advisors. Before making any decision or taking any action, you should consult a professional advisor who has been provided with all pertinent facts relevant to your particular situation. Tax articles in this newsletter are not intended to be used, and cannot be used by any taxpayer, for the purpose of avoiding accuracy-related penalties that may be imposed on the taxpayer. The information is provided "as is," with no assurance or guarantee of completeness, accuracy, or timeliness of the information, and without warranty of any kind, express or implied, including but not limited to warranties of performance, merchantability, and fitness for a particular purpose.

UHY Advisors, Inc. provides tax and business consulting services through wholly owned subsidiary entities that operate under the name of "UHY Advisors." UHY Advisors, Inc. and its subsidiary entities are not licensed CPA firms. UHY LLP is a licensed independent CPA firm that performs attest services in an alternative practice structure with UHY Advisors, Inc. and its subsidiary entities. UHY Advisors, Inc. and UHY LLP are U.S. members of Urbach Hacker Young International Limited, a UK company, and form part of the international UHY network of legally independent accounting and consulting firms. "UHY" is the brand name for the UHY international network. Any services described herein are provided by UHY Advisors and/or UHY LLP (as the case may be) and not by UHY or any other member firm of UHY. Neither UHY nor any member of UHY has any liability for services provided by other members.