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| Issue: # 7 | January 22, 2013 |
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All of us at R.S. Abrams & Co., LLP would like to wish you a Happy New Year! It is that time of the year when we issue our updated "New Developments, Year End Update and 1040 Considerations" for the year 2013. This brochure discusses the current changes affecting school districts, local governments, and not-for-profit organizations in the areas of accounting, auditing, tax, and legislative issues.
Below is a list of some of the most talked about topics affecting 2013. For details on the these topics and more please visit our website at www.rsabrams.com where a full electronic version of our "New Developments, Year End Update and 1040 Considerations" brochure can be found. |
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New "Piggybacking" Law - Exceptions to Competitive Bidding
On August 1, 2012, General Municipal Law (GML) 103 was amended to include subdivision 16 and is scheduled to expire five years from that date. The new subdivision authorizes local governments to make certain procurements through the use of other governmental entities contracts. Purchases include apparatus, materials, equipment and supplies and the related installation, repair and maintenance services. |
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Deposit Placement Programs
On July 18, 2012, Governor Cuomo signed into law Chapter 128 of the Laws of 2012 which authorizes local governments to invest in a shared Federal Deposit Insurance Corporation (FDIC) insurance program offered by participating banks. Local governments may authorize their designated banks to arrange for the redeposit of the local government's funds in one or more banking institutions, for the account of the local government, through a deposit placement program. |
Property Tax Cap Carryover
School Districts
An allowance to carryover any unused amount of tax levy limit up to 1.5% of the prior year's tax levy limit. For example if a District's total taxes levied (including exclusions) is less than the calculated tax levy limit (not including exclusions), then the District will have a carryover (a carryover will not be available until the 2013-2014 school year).
An allowance to adjust the levy limit upward, based on a growth factor calculated by the NYS Commissioner of Taxation and Finance, to account for physical and quantity growth in the property tax base. The quantity change factor is to be calculated no later than February 15th for the coming school year.
Local Governments
An allowance to carryover any unused amount of tax levy limit up to 1.5% of the prior year's tax levy limit. For example if a local government's total taxes levied (including exclusions) is less than the calculated tax levy limit (not including exclusions), then the local government will have a carryover (a carryover will not be available until the 2013-2014 fiscal year).
An allowance to adjust the levy limit upward, based on a growth factor calculated by the NYS Commissioner of Taxation and Finance, to account for physical or quantity growth in the property tax base. |
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Accounting for Defiency Notes
On February 16, 2012, Chapter 386 of the Laws of 2010 was amended to include Section 29.20 which permits municipalities and school districts to issue deficiency notes. During any fiscal year if there is a deficiency in any fund or funds arising from revenues being less than the amount estimated in the budget for the fiscal year, a deficiency note may be issued to finance the deficiency. However, the deficiency note issued may not exceed five percent of the annual budget. |
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Form W-2 Reporting for Employer-Provided Health Coverage
The Affordable Care Act instituted changes to the Form W-2 reporting requirements with regards to employer sponsored health coverage. Beginning with Form W-2 for the 2012 tax year, employers are required to report the total value of an individual's employee health benefits on their Form W-2 , in Box 12, code DD, Cost of employer-sponsored health coverage. This reporting is for informational purposes only and does not affect the employees' tax liability. Reporting is optional for tax year 2012 for small employers, until further notice. Small employers are those that issued less than 250 Form W-2s in the prior year. The IRS issued Notice 2012-9, on January 3, 2012, which provides interim guidance, including a question and answer section, on how to report, what coverage to include, and how to determine the amounts to report. |
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IRS Form 1099 Miscellaneous Form Reporting
In general, Form 1099-MISC must be issued to all persons where payments for rents or services (including parts and materials) prizes and awards and other income payments are $600 or more. Generally payments to a corporation do not have to be reported on Form 1099-MISC Attorneys and medical and healthcare providers are issued a Form 1099-MISC regardless of the type of entity ($600 or more threshold still applies). |
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Retirement Contribution Plans Update
The 2012-2013 Teachers' Retirement Systems (TRS) employer contribution rate is 11.84%. The 2013-2014 TRS rate is estimated to be between 15.50% and 16.50% of payroll. The 2012-2013 regular pension contribution rate for Employees' Retirement Systems (ERS) is 25.2% for Tier 1, 23.1% for Tier 2, 18.5% for Tier 3 and Tier 4, 15% for Tier 5, and 10% for Tier 6. The 2013-2014 ERS regular contribution rate is 28.5% for Tier 1, 26.1% for Tier 2, 20.9% for Tier 3 and Tier 4, 16.8% for Tier 5, and 11.4% for Tier 6.
The Police and Fire Retirement System regular pension contribution rates for 2012-2013 for Tier 1 is 12.8%-26.1%, Tier 2 is 11.2%-25.4%, Tier 3 is 11.2%-24.2%, Tier 5 is 7%-20.5%, and Tier 6 is 2.9%-14.9%. For 2013-2014, regular pension contribution rate for Tier 1 is 14.2%-29.6%, Tier 2 is 12.4%-28.8%, Tier 3 is 12.4%-27.5%,Tier 5 is 7.6%-23%, and Tier 6 is 2.6% -16.3%. Each percentage in the tier is determined based upon the various retirement plans related to that tier. |
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GASB Update
GASB Statement No. 65, Items Previously Reported as Assets and Liabilities
In March 2012, GASB issued Statement No. 65, Items Previously Reported as Assets and Liabilities, which is effective for periods beginning after December 15, 2012. The objective of this Statement is to provide financial reporting guidance to properly classify the financial statement elements, deferred inflows and deferred outflows. Certain items previously reported as assets and liabilities are reclassified as deferred inflows of resources or deferred outflows of resources under this Statement.
GASB Statement No. 66, Technical Corrections, an Amendment of GASB Statements No. 10 and No. 62
In March 2012, GASB issued Statement No. 66, Technical Corrections, an Amendment of GASB Statements No. 10 and No. 62, which is effective for periods beginning after December 15, 2012. This Statement was issued to rectify contradictory guidance from the issuance of GASB Statements No. 10 and No. 62.
GASB Statement No. 68, Accounting and Financial Reporting for Pension Plans - an Amendment of GASB Statement No. 27
In June 2012, GASB issued Statement No. 68, Financial Reporting for Pension Plans - an Amendment of GASB Statement No. 27, which is effective for fiscal years beginning after June 15, 2014. This Statement addresses how state and local governments should account for and report their costs and obligations related to pensions excluding other post-employment benefits (OPEB). The administration of the pension plans such as Employees' Retirement Systems (ERS) and Teachers' Retirement Systems (TRS) will be responsible for obtaining an actuarial valuation and providing the information to the local government for reporting. |
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R.S. Abrams & Co. is an accounting firm with extensive experience auditing school districts, boards of cooperative educational services, not-for-profits, and state & local governments. We also provide tax and accounting services to individuals, partnerships and corporations across the country. Our firm has been in business for over 75 years and provides auditing services in Nassau, Suffolk, Westchester, Rockland and Dutchess counties. | | |
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Disclaimer
The information contained in this newsletter is provided for informational purposes only, and should not be construed as legal advice on any subject matter. The Firm provides legal advice and other services only to persons or entities with which it has established an attorney-client relationship. No recipients of information from this newsletter, clients or otherwise, should act or refrain from acting on the basis of any information included in this newsletter without seeking appropriate legal or other professional advice on the particular facts and circumstances at issue from an attorney licensed in the recipient's state. The content of this newsletter contains general information and may not reflect current legal developments. The Firm disclaims all liability in respect to actions taken or not taken based on any or all of the contents of this newsletter. |
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Our firm has two locations in Islandia and White Plains, New York and the single most important factor in our firm's success over the past 75 years has been our uncompromising commitment to the highest standards of quality and professionalism. Should you have any questions for us, please don't hesitate to contact us at (631)-234-4444.
Sincerely, R.S. Abrams & Co., LLP |
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