Lewitz, Balosie, Wollack, Rayner & Giroux, LLC 
Certified Public Accountants
Newsletter

August 2013
In This Issue
Tax Amnesty Coming Soon
Have You Read Your Form 990?
Sales Taxes Take A Holiday
Effects Of The Supreme Court Decision
Connecticut Tax Amnesty

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Connecticut's two-month tax amnesty program starts September 16, 2013. The program significantly reduces penalties and interest for eligible taxpayers. The Department of Revenue Services has not yet released forms to apply for amnesty, but delinquent taxpayers should begin preparing their late returns to be sure they will be able to take advantage of the program.
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What Does Form 990 Say About Your Organization?
 
If you are involved with a not-for-profit organization, when was the last time you took a close look at its Form 990?  This is the information return that exempt organizations with gross receipts normally over $200,000 file with the IRS.  A short version, Form 990-EZ, can be used by smaller organizations. By law, the completed form is available to the general public and is published on various sites on the Internet.  Therefore, it is not only critical that this form be technically accurate, but that it also portrays your organization and its activities in the proper light.  Some of the things to watch for are as follows:
  1. Is your Organization's mission statement and important activities listed in Part I?
  2. Does Part III properly explain your Organization's accomplishments in sufficient detail for the reader to evaluate how successful it has been?
  3. Do the answers to the questions in Part VI indicate that your Organization is properly managed or does it indicate a need for the Board to adopt new policies?
  4. Is the revenue that is related to your Organization's exempt purpose reported in the proper section of Part VIII?
  5. Does the statement of functional expenses in Part IX correctly list expenses as either for program services, management or as fundraising?  Are these amounts appropriate given the nature of the Organization?
  6. Do the amounts reported on the balance sheet in Part X indicate that the Organization may not be fully utilizing its assets, or are its liabilities so large that they may threaten the Organization's existence?
  7.  Is Schedule O being utilized to explain unusual features of the Organization or provide other information that would help the reader better understand its activities?
Form 990 is an extremely complex return to prepare.  If it is not completed correctly it may not only deter potential donors, but could result in an IRS audit and even jeopardize the Organization's tax exempt status. 
 
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 Connecticut Sales Tax Holiday

 

Shoppers will have a holiday from sales tax on clothing and footwear from Sunday, August 18th through Saturday, August 24th.  This covers individual items costing less than $300, but does not include certain items such as clothing designed for athletic activities, jewelry, handbags, or luggage.  This is especially important for shoppers since the sales tax exemption for clothing costing less than $50 was repealed starting July 1, 2011 and is not scheduled to be restored until June 1, 2015.  More information is available in the CT DRS publication IP 2012(12)

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What Striking Down DOMA means For Connecticut Citizens
 
The Supreme Court struck down the Defense of Marriage Act on June 26, 2013, but the full impact of this is still subject to some speculation.  The IRS issued a statement that it will move swiftly to provide revised guidance in the near future, but such guidance has not yet materialized.
 
Since Connecticut is one of the states that recognizes same sex marriage, this decision affects not only married gay couples, but also their employers. Employee benefit plans must now treat same sex couples the same as heterosexual couples for such things as providing health insurance coverage, making distributions or rollovers from retirement plans, requiring a spouse's approval for plan loans and alternate beneficiaries, and providing COBRA rights to spouses.
 
While married same sex couples will be afforded the same treatment as other couples under federal tax laws going forward, their right, or requirement, to amend previously filed income and estate tax returns is not as clear.  Some professionals have suggested filing amended returns when there is a benefit to the taxpayers, but waiting for more IRS guidance when the outcome would result in increased taxes.
 
The Supreme Court decision opens up many tax and estate planning opportunities for same sex couples. The ability to take advantage of spousal exemptions and the portability of a deceased spouse's unused exclusion can significantly reduce estate taxes for wealthy couples. Filing a joint federal personal income tax return will reduce some couple's income taxes, but others may find that the "marriage penalty" will actually result in a bigger tax bite.  Taxpayers should obtain professional advice to determine what they need to do to avail themselves of these opportunities.
 
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A word of caution: this is a brief summary and does not include all of the details that may impact your individual situation. Please contact us if you would like more information.

 

About Lewitz, Balosie, Wollack, 

Rayner & Giroux, LLC

 

Our five partners have over 160 years of combined professional experience.  We provide accounting, tax, and financial services to individuals, businesses, nonprofit organizations, estates, and trusts.  Our services include tax return preparation, software consulting, and compilations, reviews, and audits of financial statements.  We have been located in the shoreline community of Old Saybrook, Connecticut for over 50 years.  Feel free to contact us if we can be of service.  We can be reached at 860-388-4451.

 

 

 

IRS Circular 230 Disclosure

 

To ensure compliance with requirements imposed by the Internal Revenue Service, we inform you that any tax advice contained in this communication, unless expressly stated otherwise, was not intended or written to be used, and cannot be used, for the purpose of (i) avoiding tax-related penalties under the Internal Revenue Code or (ii) promoting, marketing or recommending to another party any tax-related matters addressed herein.