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

March 2014
In This Issue:
Telefile
Federal Single Audits
IRA Rollovers
50% Penalty Possible
Business Entity Tax
Telephone Scams Continue
IRS Employee Charged With Embezzlement
Connecticut
Business
Telefile


The Department of Revenue Services now requires businesses to pay their taxes electronically, but recognizes that not all people are comfortable paying through their computer. As an alternative, there is a toll-free filing option for the following tax returns:
  • CT-WH
  • CT-941
  • OS-114
  • OP-210

The toll-free number is 855-665-9471. Detailed instructions  are available on the DRS Website.

 

The Telefile system provides a confirmation number as verification of the completion of the filing.

 

New Federal Single Audit Threshold


Entities receiving federal funding will have a new threshold to meet before they are required to have a federal single audit.  The amount has been increased from $500,000 to $750,000 and is effective for years beginning on or after January 1, 2015.
There are more changes involving federal funding and audits. The full federal register is available HERE .

 

 

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 IRA Rollovers: One Per Year

 

There are strict compliance rules with IRAs, and taxpayers need to be mindful of them.  The Tax Court recently ruled (TC Memo 2014-21) that the one nontaxable rollover per year rule applies to all of the taxpayer's IRAs together.  Therefore, if a person has multiple IRA accounts, they will not be allowed the 60-day rollover from more than one account in 365 days starting with the first withdrawal. This is a departure from the previous interpretation that each account was allowed a separate rollover. The solution: be sure that any time you move IRA funds from one account to another that you use direct trustee-to-trustee transfers.

 

Train at the Station   
  
 Failure To Take RMD Could
Result In 50% Penalty

 

Another set of compliance rules surrounds the necessity to take a Required Minimum Distribution (RMD) from retirement plans. In general, the first RMD must be taken by April 1st of the calendar year following the year in which the participant attains age 70 1/2. The second RMD must be taken by December 31st of that same year and continue each year thereafter. The penalty for missing any one of those RMDs is 50% of the amount not taken.

 

While the RMD is calculated on each retirement account separately, taxpayers can withdraw the RMD for their IRAs from any combination of their IRA accounts so long as the required amount in total is taken.  However, if the taxpayer has a non-IRA retirement plan also, the RMD must be calculated separately on that account and withdrawn from that account only.

 

Due to erroneous financial advice, a taxpayer with both IRAs and a non-IRA plan withdrew his entire RMD from just the IRAs. When the error was discovered, the taxpayer withdrew the RMD from his non-IRA plan, but it was past the 60-day period when the taxpayer could return the excess distribution to his IRA. In Letter Ruling 201406023 the IRS waived the 60-day limit because the taxpayer relied upon erroneous financial advice, and allowed him to replace the excess to his IRA.

Steam Train #2   
  
 Filing Changes For The
Connecticut Business Entity Tax

 

Connecticut's Business Entity Tax is now payable biennially. The tax is due by the 15th day of the fourth month after the end of the entity's fiscal year every other year. The first periods covered by this change are the calendar years 2013 and 2014 which will be due by April 15, 2015.  The tax remains at $250. See DRS  SN 2013(1) for more details.

Essex Steam Train Engine
  
  
 Telephone Scams Continue

 

The IRS is warning taxpayers that scammers have been phoning victims claiming that they owe money to the IRS and that it must be paid promptly through a pre-loaded debit card or wire transfer. If someone unexpectedly calls claiming to be from the IRS and threatens police arrest, it really isn't the IRS calling. If you receive such a call you should phone the IRS directly at 800-829-1040 to determine if you have a payment issue. The IRS also does not initiate contact with taxpayers by email or text messages. 

 

 

Steam train wheels
  
  
 IRS Employee Charged
With Embezzlement

 

Yetunde Oseni, a 37-year old secretary working for the IRS is alleged to have used an IRS issued credit card to purchase over $8,000 worth of personal items, including Omaha steaks, romance novels, movie videos, and Pampers. Oseni apparently created fake invoices to conceal the misappropriations. The theft was discovered by the Treasury Inspector General for Tax Administration during a routine audit.

  
Above photographs were taken at the Connecticut Valley Railroad State Park in Essex, Connecticut

 

LBWR&G Sign
 

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.