Access Bernard Robinson & Company's 2015-2016 Tax Planning Guide here!
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New Rules for Partnership Audits by the IRS
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 By Olga Oganesov, CPA, Senior Manager
On November 2, 2015, President Obama signed into law the Bipartisan Budget Act of 2015. Among other provisions, the Act repeals the existing partnership IRS audit rules and replaces them with an audit structure which focuses on the partnership level and is intended to be more streamlined.
Under the old rules, a partnership would be audited and any adjustments would flow through to the returns of the individual partners, who then were responsible for any tax liability and penalty associated with the audit adjustments. Under the new streamlined rules, any adjustments made during a partnership audit will be taken into account at the partnership level (not at the individual partner level) in the year that the audit is completed. Any resulting tax liability or penalty will be calculated at and collected from the partnership. This will eliminate the need to amend the individual partners' tax returns for the partnership adjustments. The IRS will provide regulations and methods of implementation for these new rules.
The streamlined rules are effective for tax years starting after December 31, 2017, subject to certain partnerships being eligible for election out of such treatment. For tax years beginning after November 2, 2015 and before January 1, 2018, partnerships may elect to apply the streamlined rules.
Due to the complexity and changing landscape of these rules, please consult your tax advisor during the upcoming year about any implications these rules may have upon you, your investments, or your business to allow ample time for proper planning and application of such plans.
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The Benefits of an Electronic World
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By Sandy Newell, CPA, Partner
Is your business reaping the benefits of an electronic world?Many of us have moved to an electronic environment for our individual finances. Companies, however, are often reluctant to make the move. Owners and management are concerned with electronic fraud, costs, and changes to the normal flow of the business. These concerns often overlook the advantages provided by an electronic environment. The advantages include: strengthening of internal controls, increased efficiency and productivity, and cost savings.
Internal controls can be strengthened in an electronic environment. First, identifying the areas in which there is a risk for fraud can be easier. Once the risk areas are identified, separation of duties can be used to reduce or eliminate the risks. Duties should be established to ensure that a single person cannot process, authorize, and record a transaction. Electronic tools that can strengthen internal controls include:
- platform banking, which allows for segregation of processing and authorizing transactions
- bank purchasing cards, which provide fraud monitoring controls such as the ability to populate a fraud queue
- electronic receipts and payments to reduce or eliminate fraudulent transactions
- electronic audit trail information, which identifies the employees who entered, approved, or changed transactions
The electronic environment can increase efficiency and productivity by:
- eliminating the need to make paper copies or file paper documents
- automatically notifying employees of items ready for processing
- scanning or printing to a PDF invoices that can be emailed to reduce turn around time
- allowing remote access by employees responsible for approving transactions
- utilizing check scanners or electronic deposits to reduce time spent driving to the bank
Cost savings in the electronic environment can include:
personnel time
postage costs
paper costs
ease in taking advantage of early payment
discounts
In order to reap the benefits of an electronic environment, companies should consult with accounting and technology professionals at the beginning of the process. These professionals can assist the company in ensuring proper internal controls are in place, the proper equipment is purchased, and online security is reviewed and updated on a periodic basis.
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The Marriage of Death & Taxes: Filing Form 706
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By Melissa F. Davis, CPA, Supervisor
If your spouse or family member passed away in 2015, there are important estate and tax filing requirements to consider.
For a decedent's gross estate exceeding more than $5,430,000, Form 706 must be filed by its executor. The gross estate includes the fair market value of the decedent's property or interests in property as of the date of death, plus any reportable gifts made during his or her lifetime. For those estates under this threshold, Form 706 may be required if the decedent is your spouse and has not used his or her excluded amount. If filed on time, Form 706 allows for the transfer of an unused exemption from the decedent to the surviving spouse without being subject to estate tax. This is referred to as the "Deceased Spousal Unused Exclusion" (DSUE) amount. With the maximum estate tax rate now at 40%, this can make a difference in what remains for those left behind.
Form 706 is due nine months after the date of death. If there is a good and sufficient cause, it may be extended an additional six months by filing Form 4768, Application for Extension of Time to File a Return and/or Pay U.S. Estate (and Generation-Skipping Transfer) Taxes. An additional extension is available only if you are an executor who is out of the country. Payment of estate taxes cannot be extended and is due nine months after the date of death.
The cost of complying with filing requirements will depend on the complexity of the estate, which can be affected by probate expenses, required appraisals, and the number and size of assets included in the estate. For specific costs related to the filing of a Form 706, contact an estate tax professional.
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HR Organizational Tips for the New Year
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By Marsha Kunz, Director of Human Resources
Ready or not, the new year is here, along with a whole new to-do list and the challenge of getting and staying organized. Here's a checklist of things to help your human resources department:
- Establish your payroll calendar for the new year, whether you calculate your own payroll or just input information into an online payroll system, so that you are aware when each payroll can be input and pay your employees on time
- Review W-2 information from you or your payroll provider so that the W-2s come out correctly
- Examine your employee handbook to ensure you have policies and procedures in place that your company or the government has established for communicating to employees
- Clean out last year's benefit and benefit invoice files to make way for the new ones (whether you scan into an electronic file system or send files to off-site storage)
- Check I-9 files to see if any are due to be shredded. I-9 forms must be kept the later of three years from date of hire or one year from date of termination. It is best to purge these forms at the appropriate time to avoid confusion with old records during an audit.
- Inspect applications and resumes that you have collected over the last year. If it has been more than one year since applications and resumes were filed with you, you are generally safe to purge them.
Depending on your type of business, the human resources departmental checklist may be longer, but the above pointers should provide a good start.
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Bernard Robinson & Company | (336) 294-4494 | [email protected] |
1501 Highwoods Blvd, Ste 300
Greensboro, NC 27410 |
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BRC Strategy is designed to provide information of a general nature and is not intended as a substitute for professional consultation and advice. The opinions and interpretations expressed should not be construed or used as legal or tax advice, written or otherwise, and cannot be used for the purpose of avoiding any penalties that may be imposed under federal, state or local law.
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Copyright � 2015. All Rights Reserved.
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