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SHARED SERVICE AND OUTSOURCING
Are you considering outsourcing a number of your back office functions and unclear on how to execute? A trusted advisor can help you gain a better understanding of the value and pinpoint if it's the right direction for you.
Contact your UHY professional today.
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ARCHIVE
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 IDENTITY THEFT SPIKES FOR HEALTH CARE PROFESSIONALS
By Kathy Crockett, CPA
Medical and dental practitioners are currently the target of choice for identity thieves. Recent articles in The Journal of the American Medical Association, Businessweek, and The Washington Post highlight the alarming increase of health care professionals that have been victimized this year by identity theft used to fraudulently obtain federal and state tax refunds. One of the warning signs is to watch for federal or state "personal" tax inquiries containing the business address vs. personal address. Identity thieves are using the business address of medical professionals to file false tax returns in the hopes of intercepting refund checks.
If you believe you've been the victim of identity theft, there are a few steps you can take: contact the IRS Identity Protection Specialized Unit, report incident to the Federal Trade Commission, file a report with your local police department, contact major credit bureaus (Equifax, Experian, TransUnion), freeze your credit files, and close any accounts that have been tampered with or opened fraudulently.
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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| JUNE 30 FBAR FILING DEADLINE: ARE YOU READY?
The due date to submit your 2013 Report of Foreign Bank and Financial Accounts (FBAR), FinCEN 114, formerly Form TD F90-22.1, is quickly approaching! The US Treasury Department has mandated electronic filing of the FBAR form and will not accept paper copies. The 2013 FBAR form is required to be electronically submitted no later than the June 30, 2014 filing deadline. An extension of time for filing the form is not available. The FBAR filing requirement is separate from your individual income tax return. Click here for the electronic filing website.
FILING REQUIREMENTS FOR PERSONAL ACCOUNTS
Any US person is subject to the FBAR filing requirements. A US person is defined as a citizen, green card holder, resident alien, domestic business entities, domestic trusts and domestic estates. Resident aliens using a tax treaty or closer connection test to claim nonresident status are required to file the FBAR. Individuals who are nonresident for the full calendar year are not required to file. Part year US residents are required to file the FBAR.
An individual must file the form if they have foreign financial account(s) which in aggregate exceeds $10,000 at any time during the calendar year. Each account must be reported even if an individual account does not have a value of more than $10,000. An individual must also file to report signature authority over foreign accounts.
FILING REQUIREMENTS FOR SIGNATURE AUTHORITY
The US Treasury regulations for filing Form 114 affects individuals with signature authority over accounts in which they have no financial interest. In addition to signature authority on a foreign account, individuals who can directly deliver instructions to the financial institution that controls the disposition of money, funds or other assets held in a financial account are required to report the account on their personal form.
Individuals who are employees of a US company and have signature authority over a foreign subsidiary's foreign accounts (and no financial interest) must report the account on their personal Form 114, Part IV. The US corporation can no longer include the signature authority for the foreign subsidiary's foreign accounts in the corporate consolidated report.
If you have signature authority on company accounts that are unable to be reported by the company, these accounts should be listed in your personal FBAR form. Contact your employer for the account information to report.
PENALTY FOR FAILURE TO REPORT
Failure to report a foreign bank or financial account is a criminal offense. A civil penalty of up to $10,000 can be assessed for non-willful failure to report a foreign financial account. The maximum civil monetary penalty for willful failure to report a foreign financial account is the greater of $100,000 or 50% of the balance of the account at the time of the violation. Willful violations may also be subject to criminal penalties including imprisonment of not more than five years. The IRS has discretion when imposing penalties and can differ depending upon the taxpayer's facts and circumstances.
The IRS is currently in talks with banks around the world and foreign governments for information on accounts held by US taxpayers and they are actively enforcing these rules. The IRS has an Offshore Voluntary Disclosure Program (OVDP) for prior year unreported accounts.
An individual with unreported accounts can contact us for referral to a criminal defense attorney who can advise on the options available under the OVDP.
If you have questions or need assistance filing your 2013 FBAR by the June 30 deadline, 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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| QUARTERLY ACCOUNTING & SEC UPDATE
We are pleased to send you our recap of SEC, FASB, and other industry requirements that may affect your company soon. We believe our insights will benefit you, your audit committees, CFOs and senior management.
If you'd like to discuss any of these topics, 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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| ANOTHER MICHIGAN CITY PONDERS BANKRUPTCY?
By Ed Plawecki
The financially stressed city of Flint may soon be facing the prospect of being the second major city in Michigan to file for Chapter 9 municipal bankruptcy protection. A retiree lawsuit recently filed to stop the city from enacting proposed health care benefit cuts may push the city into insolvency.
In 2011, Flint was placed by the state under emergency management control when they had approximately $150 million in long-term debt and $900 million in unfunded liability for retiree health care costs.
The burden impacting local communities for unfunded retiree benefits related to pensions and health care known as "other post-employment benefits" (OPEB) continue to grow to a level that has overwhelmed local municipal budgets.
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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| FASB Releases Private Company Alternative for Common Control Leasing Arrangements
By Gene Kazmierczak
Private business owners who own the building or property their company uses routinely set up separate legal entities to own these buildings and properties that are then leased to the operating company. The reasons for setting up separate legal entities can vary, but a majority of benefits seen from this action are for tax purposes, estate planning and liability protection issues. In some cases, these separate lessor entities are required to be consolidated with the operating company as variable interest entities (VIE) under accounting standards. The cost to consolidate these lessor entities into the financial statements of the operating company can be significant, and many users of the financial statements have stated that the costs outweigh the benefits of consolidation.
In 2012 the Financial Accounting Standards Board (FASB) established the Private Company Council (PCC) to help address issues, such as those noted above, to better serve the needs of private company financial statement users, preparers and practitioners. On March 20, 2014 the PCC issued new guidance relating to the consolidation of lessor entities in common control leasing agreements. This new guidance is a continuation of efforts by the FASB and PPC to address the cost and complexity of accounting matters related to private companies and at the same time provide useful information to the users of private company financial statements.
The new guidance allows the lessee entity to elect an accounting alternative to not apply VIE guidance to a lessor entity. This alternative can be applied if certain characteristics exist in the relationship between the lessee and lessor entities-there is common control, an executed lease agreement is in place, substantially all activity is related to leasing activity, and the lessee explicitly guarantees or provides collateral for any lessor obligation related to the leased asset. Under the new guidance the lessee would not be required to provide the standard VIE disclosures, rather the lessee would instead make certain disclosures related to the exposures of the lessee related to providing financial support to the lessor.
This new amendment will be effective for annual periods beginning after December 15, 2014; however, early adoption is permitted. 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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| PLANNING TIPS FOR SOCIAL SECURITY SURVIVORS
By Tim Darmafall, CPA
Generally, when one thinks of Social Security, they tend to look at it as a government-run savings program. While many of the characteristics of Social Security are very similar to a pension, one aspect, survivor benefits, has a few wrinkles that need to be carefully evaluated to maximize the benefit.
Social Security payments can be an important element in determining the ongoing cash flow for a surviving spouse, who can be entitled to receive the amount to which the deceased spouse had earned. This amount will be 100 percent of the deceased's benefit, if taken after the surviving spouse reaches his or her full retirement age, which is age 66 for those born between 1943 and 1954. In these days when women are increasingly likely to be entitled to Social Security benefits on their own, taxpayers need to develop a strategy to coordinate and maximize these distinct payouts.
The benefits of a surviving spouse are based on the insured worker's primary insurance amount which is the monthly payment being received on the date of death. To be eligible for the surviving spouse benefit, the survivor must be at least age 60 (age 50 if disabled) and must have been married to the deceased for at least nine months before death occurred, or be the parent of the insured's child. Remarriage of the survivor can cause cancelation of benefits in certain instances so be aware of that fact.
Ultimately, if one postpones the collection of Social Security until full retirement age, it allows the beneficiary an annual increase of 8 percent in the amount received. Surviving spouse benefits reflect delayed credits, meaning that if the deceased spouse had deferred taking Social Security, the higher benefit will be passed on to the surviving spouse.
Below is an example of this hypothetical situation:
David and Susan are married. David's full retirement age is 66. At age 66, David has a $2,000 benefit based on his historical earnings record. If David delays receiving his benefit, he receives an 8 percent annual credit, so at 67 his annual benefit goes up to $2,160. If he passes away at 67, Susan will receive the full $2,160 annual benefit.
One can elect to collect Social Security before full retirement age, but the benefits received will be at a reduced amount. Age 62 is the earliest age to collect on your own benefits, but the benefit is reduced by 25 percent. A surviving spouse is able to collect a reduced benefit as early as age 60, however, the benefit is cut by 29.5 percent. The wrinkle for a surviving spouse is that they have the option to switch between their own benefit and the surviving spouse benefit, whichever is larger. This option to convert can be a great financial planning tool that is not available to those taking spousal benefits before full retirement age. Postponing the greater of the two payouts is a strategy utilized to optimize payouts.
Below is an example of this hypothetical situation:
Susan is a 62-year-old widow with her own benefit of $1,100 and a survivor's benefit of $2,000. Susan could file a restricted application to take her own reduced benefit of $825 and convert to a survivor's benefit of $2,000 at age 66.
If the payouts between the deceased and surviving spouse are close to the same amount, that could play out as follows: Stacy is a 60-year-old widow with her own benefit of $1,900 and a survivor's benefit of $1,700. She could apply for the reduced survivor's payout of $1,216 then at age 66 convert to her own benefit of $1,900 or, by waiting, receive even more benefit by virtue of delayed credits. One should be aware that an earnings test is applied to a survivor's benefit, and a person collecting before full retirement age will have payouts decreased. The excess earnings threshold before benefits are decreased in 2014 is $15,480.
The general trend recently has shown that the number of people taking Social Security benefits at the earliest possible moment is decreasing, which is a positive trend in light of advanced life expectancies for both men and women. Decisions regarding when to begin receiving Social Security benefits have an impact on not only the individual, but also the surviving spouse. If an individual decides to collect Social Security as early as possible, they can miss out on opportunities available if they had waited until full retirement age. When an individual wants to minimize the risk of outliving your benefits, they would want to delay receiving benefits as long as possible. If an individual satisfies their life expectancy, waiting to claim benefits usually results in the optimal payout.
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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| EVENTS CALENDAR
Save the date! More UHY events are just around the corner...
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SPECIAL ANNOUNCEMENTS
Careers
Are you ready to take charge of your career path? Be sure to visit our careers page for the most up-to-date career listings or contact Amanda Sheets at asheets@uhy-us.com or 586 843 2560. Current Michigan openings include:
- Tax accountant, 4-9 years of experience, CPA required
- Audit accountant, 5-9 years of experience, CPA required, SEC experience a plus
- Audit accountant, 4+ years of experience working with municipalities
- Forensic accountant and auditor, CPA or CFE desired
- Director of litigation, testifying experience required
- Investment banking analyst
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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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