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In This Issue
Your BRC Team
 
Meet Susan Freeman - visually. It is usually Susan who answers the phone when you reach out to one of our Triad offices in Greensboro or Winston-Salem. Susan enjoys spending time with grandbabies, private time reading her latest novel and interacting with clients and friends of BRC everyday! She thoroughly enjoys the friendships she has made in her role, receiving great pleasure in helping others in any way she can!
Noteworthy Links
How CFOs Can Curb Insurance Costs 
Why Society Needs More Accounting Education
Average U.S. Retirement Age Rises to Age 62
Six Techniques for Building a Strategic Finance Department
Experience & Stability
Helping clients navigate challenges and maximize opportunities since 1947... Our privilege and pleasure.
Super Foods for Super Performance: Pumpkins
Like advisors, not all foods were created equally, some just deliver more...
Why They're Super

This hearty, fiber-rich squash is packed with beta-carotene (converted to vitamin A in the body), which reduces the risk of developing lung cancer. The antioxidant activity of this vitamin combined with potassium, which may help prevent high blood pressure, makes it a nutritional superstar.

How to Enjoy Them 
If you prepare a whole squash, toast the seeds for a delicious snack containing heart-healthy fats. The sweet taste and moist texture makes it ideal for desserts. 
-ABCNewsHealth 
May 30, 2014 
IRS Audits Continue to Decrease
It has been estimated that IRS audits have been decreasing overall in recent years. The Head of the IRS, John Koskinen, is now publicly acknowledging in press conferences and testimony to Congress that the agency will audit fewer returns this year. 

  

This decrease is true for both individuals and businesses. Last year .96% of individuals were audited - the lowest since 2005. This translates to one out of every 104 filed returns, with only one out of 417 of these filed returns being selected for face-to-face examinations. This decrease was also apparent in examinations of businesses, where audit rates for partnerships, S corporations and regular corporations of all sizes fell in 2013.

It appears that budget cuts will cause individual audit rates to fall in 2014 - across all levels of income. Commissioner Koskinen says that the agency will end up doing approximately 100,000 fewer audits this year, decreasing the individual exam rate to about 0.80%. 
 
Wealthy Americans historically are the likeliest to be audited. The IRS started a "Global High Wealth Industry Group" a few years ago to audit high-wealth individuals more efficiently. While the Service will continue to audit higher-income taxpayers, where greater than 5% of filers with incomes of $1 million or more encountered a revenue agent in 2013, even those filers will experience fewer audits.

The same goes for examinations of businesses. Audit rates for partnerships, S corporations and regular corporations of all sizes fell in 2013 and are projected to decline in 2014 as well. The Service has also delayed an enforcement initiative to match sales income reported on 1099-K forms with sums listed on business returns.

The IRS is seeking an additional $475 million for enforcement next year. However,it is projected that any increase they might receive would be small. This combined with the fact that newly hired agents have to be trained to be effective means that 2016 is the earliest that IRS can turn around falling audit rates. 
 
-John Robinson, CPA, Senior Manager
Identity Theft is Trending Upward
Identity Theft Increased Over 66% and Tops the IRS's "Dirty Dozen" List of Scams Again
by Tracey Flynn Martin, CPA, Partner
 
Identity theft happens when someone steals your personal information and uses it without your permission. Unfortunately it has become big business. According to Monica Hamilton, marketing director at cybersecurity firm McAfee Inc., the number of malicious programs written to steal your information has grown exponentially to an estimated 130 million from about 1 million in 2007. Identity theft is a serious crime that can wreak havoc with your finances, credit history, and reputation - and can take time, money, and patience to resolve. 

The IRS launched 295 new identity theft and refund fraud investigations during the 2014 tax-filing season. In fiscal year 2013, the IRS initiated 1,492 investigations, a 66 percent increase over the 898 investigations reported in fiscal year 2012. IRS Commissioner John Koskinen has said "Identity theft is one of the fastest-growing crimes nationwide, and refund fraud caused by identity theft is one of the biggest challenges facing the IRS". Tax fraud through the use of identity theft topped the IRS's "Dirty Dozen" list of scams for 2014, as it did in 2013 and 2012. 

Often, a scammer uses a taxpayer's personal information, such as his or her name, Social Security number, or other identifying information, to fraudulently file a tax return and claim a refund. For example, this happened this past filing season to over 100 physicians in North Carolina when they received a letter from the IRS advising them of possible fraud or their tax advisor called them to say that the electronic submission of their income tax return was rejected because someone had already filed a return using their Social Security number.
Unfortunately, legitimate tax filers usually don't know that their SSN is being misused until the IRS notifies them about the problem.

If you find yourself the victim of identity theft, take the following steps:
  • Contact the IRS through its identity theft website or by phone at 1-800-908-4490 immediately.
  • Check your credit reports for any unauthorized activity. One credit report can be attained annually from each of the three national credit bureaus at www.annualcreditreport.com.
  • Ask any of the three national credit bureaus for a fraud alert.
  • Consider a security freeze to stop access to new credit in your name. Security freezes can be attained free online by NC residents.
  • File an ID theft complaint with the Federal Trade Commission, especially if there's been suspicious activity on your credit report.
Payroll Service Scams
Be Vigilant in Selecting and Monitoring Payroll Service Providers
by Kyle Corum, CPA, CFE, Manager
 
A recent payroll service fraud case we were brought into highlighted the importance of reminding you to be vigilant not only of your internal controls, but also related to the payroll service itself.

Companies seeking payroll service providers to help streamline processes and/or save costs should also be cautious in carefully vetting services for legitimacy. When vetting prospective payroll service providers' qualifications and capabilities, consider the following questions:
  • Are they recognized company? 
  • Do they have a long history of implementing high ethical standards?
  • Do they have a service auditor's report, also known as a SOC-1 report? 
  • Can the service integrate with my accounting system to reduce manual entries and time?

Payroll service providers transmit payroll tax information on a company's behalf, but the company is still responsible for the payments to be on time. As part of your internal controls process, you should monitor your tax accounts (both State and Federal) on a regular basis to ensure your tax deposits are being made by the required dates. You can monitor your accounts online using the following web addresses and setting up your own account. 


Tax Talk
Keeping up with the code... Below are updates some of the professionals on our team on some items they wanted to make you aware of....

Real Estate Loss - Heads Up from Judy Hernandez, CPA Tax Manager

Did you know that a foreclosure on a rental home triggers a write off of suspended passive losses on the property? Treated as a disposition of the property, the foreclosure frees up any suspended losses in the home that had been not been recognized in prior years as a result of passive loss rules if the home is the entire rental activity of the person with property being foreclosed. These previously unrecognized losses are fully deductible and can be used to offset any gain from the foreclosure. The losses are made available even if the debtor is unable to pay the debts owed and able to forgo being taxed on the debt canceled in the deal.

Estate Tax Elections and Installments - Heads Up from Christina Chong, CPA, Manager

If you want the opportunity to pay federal estate tax in installments, be sure to file on time. The Tax Court considers late filed elections invalid. If greater than 35% of an estate's value consists of closely-held business interests, federal estate tax on that part related to business can be deferred up to five years. It must then be repaid in up to 10 installments. The estate will only be charged a 2% interest rate on the first $580,000 of deferred tax. However, this advantage is forgone if the 706 is not timely filed. This does not change by letters being sent to the IRS stating that the estate intends to pay in installments.

It is important to pay the installments on time. Otherwise, you could receive a letter from the IRS with an accelerated bill for the remaining estate taxes due. You could risk being forced to sell part of the assets in the estate to pay the taxes.

Increase in Payroll Tax - Heads Up from Mike Atkins, CPA, CFP, Manager

Higher FUTA taxes may be in the cards for 2014. Companies in states that have outstanding loans from the federal jobs fund, that haven't been repaid by November 19th, will have their 5.4% credit against FUTA reduced. This means employers in Indiana and South Carolina will encounter a 1.5% FUTA credit cut. (This means up to $105 extra tax for each employee.) Firms in North Carolina, as well as eleven other states (Arkansas, California, Connecticut, Georgia, Kentucky, Missouri, New Jersey, New York, Ohio, Rhode Island and Wisconsin) and the Virgin Islands can expect a 1.2% credit cutback. This translates to up to $84 more in tax per employee. Delaware firms will see an increase of up to $63 per employee - a .9% reduction.

REMINDER: 2014 BRC Programs! Save the dates!
BRC Privately Held Business Forums - [ongoing quarterly meetings]

Triad: Tues. Sept. 23, 2014 / (ongoing meetings to follow each first Tuesday of the first month of every quarter)

From family-owned businesses to entrepreneurial start-ups to mature companies in traditional industries, privately held companies today face increasingly complex challenges in the quest to grow in size and profitability. In these quarterly forums, we will be focusing on the issues most relevant to privately held businesses. Whether you attend to discern a new way of looking at a challenging issue, determine actionable ideas for ways to capture opportunities, network with others in similar situations or a myriad of other reasons, we look forward to seeing you!

BRC Not-for-Profit Board Seminars

Triad: Tues., Oct. 21, 2014

Triangle: Thurs., Oct. 23, 2014

Whether interested in maximizing your board's effectiveness through a greater understanding of financial statements or tax forms, attaining a better understanding of your fiduciary responsibilities or networking with other influential leaders on not-for-profit boards with the desire to make a difference, this program has something for you. Advising and serving over 140 not-for-profit entities, this program was client-requested and developed with client input.

BRC Financial Symposiums

Triad: Mon. Oct. 27, 2014

Triangle: Thurs., Oct. 30, 2014

This past December, we conducted full day 8 hour CPE workshops in the Triad and Triangle. Well-received, with participant ratings of 4.8/5.0 and 4.9/5.0, we plan to hit it out of the park again with knowledgeable presenters and relevant topics - delivering high value CPE.

There will be more to come on these programs... Mark your calendars and make plans to attend now! All programs above qualify for CPE credit.

-Paula McMillan, CPA, Director of Marketing & Practice Development

Bernard Robinson & Company | (336) 294-4494 | pmcmillan@brccpa.com |
1501 Highwoods Blvd, Ste 300
Greensboro, NC 27410

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