Costs used to develop internal use software will remain ineligible for the R&D tax credit. The internal use software will now be defined as software developed primarily for the use of day-to-day operations, human resources and financial management. Conversely, software that will be eligible as non-internal use is:

• Software commercially sold, leased, licensed or otherwise marketed to third parties.
• Software which allows the taxpayer to interact, initiate functions or review data on the taxpayer's system.

For help determining if your software projects are eligible for the R&D tax credit, contact your tax professional at UHY LLP in Detroit 313 964 1040, Farmington Hills 248 355 1040 or Sterling Heights 586 254 1040, or visit us on the web at www.uhy-us.com.

Many customer-related intangible assets will not meet these criteria for the accounting alternative because they are capable of being sold or licensed. Customer-related intangibles such as mortgage servicing rights, commodity contracts, core deposits and customer information will continue to be identified separately. However, intangible assets based on the value of existing customer relationships would likely meet the criteria for the accounting alternative.

Companies that elect this accounting alternative are required to also elect the accounting alternative for amortizing goodwill (ASU No. 2014-02 Intangibles - Goodwill and other: Accounting for Goodwill), which was issued in February 2014 allowing companies to amortize goodwill. This accounting alternative does not apply to publicly-traded companies or nonprofit organizations. Companies that decide to elect this alternative may benefit from the simplified accounting as well as have a reduction in costs associated with the complex calculations of determining intangible assets separate from goodwill. The accounting alternative is effective for fiscal years beginning after December 15, 2015; however, early adoption is permitted as soon as the first transaction within the range of the alternative takes place provided the financial statements have not yet been made available for issuance.

To stay up-to-date on the latest FASB activities, contact your accounting professional at UHY LLP in Detroit 313 964 1040, 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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By Sue Wagner

The Department of Treasury has announced that it is providing an "offer in compromise" program beginning Jan. 1, 2015. The program allows for a taxpayer to submit an offer to lower the amount of a tax liability for less than the full amount due. A tax liability includes the tax and any related interest and penalty. A summary of the official guidelines, "Guidelines for Offer in Compromise Program, 12/16/2014", is as follows:

To submit an "offer in compromise", one or more of the following grounds must exist:

The taxpayer has received an offer in compromise from the IRS for the same tax periods for which the taxpayer is requesting state relief. Only tax debt for individual income tax or for corporate income tax is eligible for compromise under this ground.

• A doubt as to the collectability of the tax debt exists.
• The taxpayer must show both the amount offered is the most that can be expected to be paid or collected from the taxpayer's present assets and income; and
• The taxpayer does not have reasonable prospects for acquiring increased income or assets that would enable the taxpayer to pay a greater amount of the tax debt than the amount offered, within a reasonable period of time.       
•  A doubt as to the liability of the tax debt exists. 
• Based on a review of the evidence provided by the taxpayer, Treasury must determine that the taxpayer would have prevailed in a contested case if the taxpayer had appealed the assessment.

• The offer must be submitted using Form 5181.
• A non-refundable payment of $100 or 20 percent (whichever is greater) of the offer must be made. The payment will be applied toward the outstanding tax debt.
• Submission of the offer does not suspend interest or penalties from accruing.
• All of the following statements must be true:
• The taxpayer must have been assessed for the tax liabilities;
• Opportunities to contest the tax debt and appeal an assessment must have expired;
• The taxpayer must have filed returns for all taxes for all outstanding periods;
• The taxpayer cannot have open bankruptcy proceedings; and
• The taxpayer must agree to all the conditions of the offer, as stated in Form 5181.

• Acceptance is conveyed by the Department of Treasury sending the taxpayer a letter of acceptance.
• Rejection of the offer primarily results when the taxpayer has not followed the submission process, provided correct documentation or made false statements. If rejected, an independent administrative review of the rejection is available upon request by the taxpayer.
• Any compromise is subject to continuing review by Treasury. The Department may revoke an accepted compromise if any of the following occurs:
• Concealed property or income belonging to the taxpayer, the estate of the taxpayer, or any other person liable for the tax;
• The taxpayer intentionally misled the Department by withholding, destroying, falsifying documents submitted or made false statements, relating to the estate or financial condition of the taxpayer to induce a compromise; or
• The taxpayer fails to comply with any of the conditions that were part of an accepted offer or fails to file required returns or pay tax liabilities after an accepted compromise within 20 days after Treasury issues a notice and demand to the person stating that the failure to comply with the conditions of the accepted offer in compromise or the continued failure to file the required returns or pay the tax may result in the revocation of the compromise.
• Note: If a revocation is determined, Treasury will send a letter revoking the offer and reinstating the uncompromised tax debt. 

By Chris Peterson, CPA, CFE, CIA

Today, electronic banking transactions via the Automated Clearing House (ACH) network are commonplace for even the smallest businesses. As the volume of ACH transactions increases, so does the likelihood of fraud.

Fraud schemes involving electronic payments are often very complicated. Once an ACH fraud scheme is discovered, fraudsters often disappear in cyberspace leaving behind few, if any, tracks to follow. These attacks are commonly called, "account takeovers".

While some ACH fraud is committed from external sources (hackers, phishing emails, etc.), other fraud may be the result of information obtained from a paper check. The bank account and routing numbers on the bottom of a paper check may be all a fraudster needs to buy goods from online merchants that offer "electronic debit" or "e-check" payment options. An ill-placed sticky note on someone's desk or computer with passwords or other confidential data can be the "keys to the vault" for an ACH fraudster.

What can a business do to protect itself? Don't try to reinvent the wheel; many banks offer security tools to prevent unauthorized ACH transactions. One popular tool is commonly called "positive pay". A business using positive pay provides the bank with a register of authorized ACH debits; the bank will only clear preauthorized payments from the list. There is also a "reverse positive pay" program, where the bank allows the business to review and make decisions about ACH debits posted to their account the previous day.
 

Another simple method for combating ACH fraud is to segregate business bank accounts by the nature of the disbursements (general checking, payroll and ACH). ACH transactions can then be confined to a single account where only enough funds are held to cover the planned daily transactions.

• Bolster online security measures. Use dedicated computers for online banking; disconnect them from internal networks. Block access to social networking sites and other risky web sites that may contain malware (malicious software) designed to capture login and password information.  
• Use strong passwords (multiple letters, numbers, characters and capitalization) that are unique from the users other passwords. Ensure that secure passwords and ID tokens are changed periodically. Always make changes after an employee is terminated. 
• Require segregation of duties for ACH transactions; don't let one individual have reign over electronic disbursements. Ideally, one person creates the ACH payment file, which another person reviews and approvals before transmitting it to the bank. Each day, have an independent person monitor and reconcile ACH activity posted to the bank.
• Review online banking information about any failed log in attempts since the prior successful login.

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Over 30 interns and new staff from UHY LLP Michigan's practice volunteered their time to mentor students at Burton International Academy, a Detroit public school, educating grades kindergarten-four. UHY made this happen by teaming up with Beyond Basics, a local 501c3 nonprofit organization working to improve literacy and raise reading proficiency in inner city schools.

"The children of Burton International Academy were thrilled to interact with interns from UHY in our Beyond Basics rooms. Creating ways for engagement such as this has a lasting impact on these children. We applaud UHY for understanding the importance of community engagement and making it a priority in their intern program," said Karen O'Keefe, Beyond Basics' director of partnerships and development.

Volunteers read stories to kindergarten students, helped first and second graders read and write stories, or read along with third and fourth graders. Those from UHY who participated truly enjoyed the experience. Volunteers were overwhelmed by the abilities and enthusiasm of these students and were thankful for the time they were able to spend with them. "Working with the students was a great opportunity. They were very excited to read their favorite books, and seeing the students trying their hardest to read along shows that Beyond Basics is working hard to help them succeed", said UHY intern, Julia Basso.

Work done by this organization and its volunteers has been proven to have a huge impact on the direction and education of these impressionable young minds - especially with 47% of adults in Detroit being considered functionally illiterate. 

 "UHY and Beyond Basics have been working together in Detroit Public Schools for a few years now. Each time we connect with the organization and they set up mentoring opportunities for us, it is a rewarding experience and allows our staff to step back and embrace it knowing that they are making a difference in these students lives," said Rina Henning, recruiting manager.
 

UHY Cares Holiday Fundraising Campaign Raises Nearly $20,000 For Several Local Families In Need

Careers At UHY

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 248 204 9482. Check out some of the current opportunities in our Michigan offices: 

• Audit manager, 7+ years of experience
• Audit senior accountant, 5-7 years of experience, CPA required, working with municipalities a plus
• Audit senior staff accountant, 2-4 years of experience
• Tax manager, 7-10 years of experience
• Tax senior accountant, 5-7 years of experience, CPA required
• Director of litigation, testifying experience required