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SHOP FLOOR WALKS
You wouldn't believe it, but your shop floor talks! Take a walk through your operations and see what it has to say. Are machines running? Are people standing? Is material flowing? These are just a few indicators that processes and systems are not working up to their potential.
Contact your UHY professional today.
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ARCHIVE
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 Fifth Circuit RULES that a partner cannot deduct expenses reimbursable by the partnershipBy Tim Darmafall, CPA
Recently, the US Court of Appeals for the Fifth Circuit ruled in McLauchlan v. Commissioner, 5th Cir., Case No. 12-60657, that a law firm's partner could not deduct various business expenses incurred personally because they were reimbursable by the firm pursuant to the partnership agreement. The expenses which were reimbursable by the partnership included reasonable travel, client maintenance and development, interoffice travel, automobile lease and rental expenses, meals and entertainment, and continuing education.
The court's reasoning behind the decision for disallowing the reimbursable expenses was based on the fact that by allowing the taxpayer to deduct the expenses, it would "otherwise allow a taxpayer to convert an expense of the partnership into one of his own by simply failing to seek reimbursement".
Many times partners incur expenses on behalf of the partnership. The above case highlights that the language in the partnership agreement regarding expense reimbursement will determine whether the partner is allowed to deduct the expense incurred on their personal tax return or whether the partner must seek reimbursement from the partnership for the expenditure.
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 www.uhy-us.com.
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SUPREME COURT RULES THAT SEVERANCE PAYMENTS ARE SUBJECT TO FICA TAXES
By Emily Cody, CPA
A prior news alert discussed the status of the Quality Store case and the potential for refund claims pending the Supreme Court ruling on the case. The opportunities for tax savings presented in that article are no longer available based on the latest Supreme Court decision.
On March 25, the US Supreme Court, by unanimous decision, held that severance payments made to employees (not tied to state unemployment benefits) whose employment was involuntarily terminated are subject to tax under the Federal Insurance Contributions Act (FICA). (See United States v. Quality Stores, Inc., U.S., No. 12-1408, 3/25/14). The Supreme Court opinion states that employers cannot rely on an amendment to the withholding provisions in the Tax Code to exclude supplemental unemployment compensation benefits (SUB) from the definition of wages subject to FICA. This Supreme Court decision reverses the ruling issued in 2012 by the Court of Appeals for the Sixth Circuit which held that the severance payments were not 'wages' for FICA purposes and that employers were entitled to a refund of the FICA taxes mistakenly paid.
Many employers have filed or were planning to file protective refund claims with the IRS for FICA taxes previously paid on these types of payments. The expiration for the statute of limitations for all quarters of 2010 was April 15, 2014 but because the decision of the Court of Appeals is no longer relevant, there is no basis for the protective claims to be filed. If an employer has previously filed protective refund claims for FICA taxes paid in earlier years on SUB payments, the IRS will now deny such claims in accordance with this Supreme Court ruling.
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 www.uhy-us.com.
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MICHIGAN UNEMPLOYMENT INSURANCE AGENCY MANDATES ELECTRONIC FILING OF WAGE AND TAX REPORTS
By Susan Wagner
Effective the first quarter of 2014, the Unemployment Insurance Agency (UIA) will neither mail nor accept a hard copy of Form UIA 1028, "Employer's Quarterly Wage/Tax Report", from employers identified as having more than five employees. Starting with the first quarter filing due on April 25, 2014, it is a requirement that the contribution and wage information be filed electronically for employers with more than five employees. Interest and penalties will be assessed to those not filing by electronic submission.
In order to file electronically, an employer must have established a Michigan WAM account at www.michigan.gov/uia. If you have additional questions, 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 www.uhy-us.com.
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LOCAL GOVERNMENTS CONTINUE TO FACE FALLING REVENUES
By Ed Plawecki
Local municipal governments in Michigan hurt deeply during the recent recession find their revenues lagging former collection levels. The major source of income for most municipalities is property tax revenue which has dropped approximately 32% since 2007. In addition, a significant decline in state revenue sharing has stretched most local governments to the breaking point as they continue to strive to provide necessary services to the public.
Issues concerning employee annual health care costs, pension liabilities and retiree health care obligations, coupled with new reporting standards for local governments' statement of net position (also known as balance sheet), will continue to add to the stress cities are facing until new sources for funding can be identified and established.
Challenging times call for practical solutions. Our firm's public sector division is a well-recognized group of professionals with vast experience in servicing the unique requirements of its governmental clients. You can reach a member of the firm's National Government Practice in Farmington Hills 248 355 1040 or Sterling Heights 586 254 1040, or visit us on the web at www.uhy-us.com.
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SPECIAL ANNOUNCEMENTS
Connie Ku Elected to Treasurer of the Asian Pacific American Chamber of Commerce
Connie Ku, principal of UHY LLP and APACC member of more than seven years, has been elected to treasurer of the Asian Pacific American Chamber of Commerce (APACC). The Chamber was established in the year 2000 and is headquartered in Troy, Michigan. APACC is governed by an 18-member Board of Directors and the operations and programs are supported by membership dues and financial contributions. Their membership is comprised of Fortune 500 corporations, multi-ethnic private business enterprises, small businesses, and corporate professionals in a broad spectrum of industries. APACC is an organization that represents Asian Pacific American businesses that have origins that are either Asians, Pacific Islanders and Subcontinent Asian Ancestry, which includes persons from Burma, Thailand, Malaysia, Indonesia, Singapore, Brunei, Japan, China, Taiwan, Laos, Cambodia, Vietnam, Korea, The Philippines, US Trust Territory of the Pacific Islands, Guam, Samoa, Macao, Hong Kong, Fiji, Tonga, Kiribati, Tuvalu, Nauru, Northern Mariana Islands, India, Pakistan, Bangladesh, Sri Lanka, Bhutan and Nepal.
"I see APACC as the organization that connects the East and West, nurtures adventures into unfamiliar territories and provides opportunities for global success and prosperity," said Ku. "I look forward to being the treasurer of APACC and am grateful for the opportunity to give back to my community and contribute to global integration."
Connie Ku joined UHY LLP in 1999. She is a member of the Audit and Assurance Department where she manages a group of professionals devoted to providing comprehensive tax, audit and business consulting services to companies in a variety of industries. She is also a leading member of the firm's China group. Ku has a Master of Arts degree in Accountancy from Southern Illinois University at Carbondale and Bachelor of Arts degrees in International Accounting and Finance from the International School of Shanghai University. She is also a licensed CPA in the State of Michigan.
Congratulations, Connie!
Experienced Recruiting Update
UHY wishes to connect with top talent in our Michigan market. We are always on the lookout for professionals with experience in Tax, Audit, Attest, Finance, Fraud and Forensics, Litigation Support and Business Advisory. Be sure to visit our careers page for the most up-to-date career listings or contact Amanda Sheets at asheets@uhy-us.com to learn how we can help you take charge of your career path now.
Do you know a CPA who would like to learn more about the firm and our culture? Please feel free to pass along Amanda's contact information.
Current Michigan openings include:
Sterling Heights
Tax Manager
Tax Senior
Audit Senior
Forensic Accountant
Farmington Hills
Tax Senior
Tax or Audit Accountant (Spanish speaking skills desired)
Sterling Heights or Farmington Hills
Director of Litigation
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Published by UHY LLP News.
Copyright � 2013 UHY LLP. All rights reserved.
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.
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