Blog

BiggsKofford Expands with Internal Promotions – Eric Morgan

July 17, 2018 @ 11:13 am

We are thrilled to announce the promotion of Eric Morgan, CPA to Senior Manager, in the firm’s tax department. Morgan joined the firm in August of 2006. Morgan received his undergraduate degree from Brigham Young University and his MBA from the University of Colorado – Colorado Springs. In addition to accounting, Morgan enjoys reading and spending time with his family, as well as tracking sports and current events. “Eric is trusted by his clients and the Partners at BiggsKofford to provide personalized service that is both technically accurate and relevant to our clients’ specific needs,” said Greg Gandy, Director of Taxation at BiggsKofford. “Eric has demonstrated the dedication and loyalty to the firm and our clients that is worthy of the title Senior Manager.” Founded in 1982, Colorado Springs-based BiggsKofford currently employs more than 30 people. BiggsKofford offers integrated business solutions, including tax, attestation, virtual accounting and consulting services. BiggsKofford continues to expand its services to meet the changing needs of over 500 business owners and entrepreneurs in Colorado’s Front Range.

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IRS Making Unannounced Visits

June 6, 2018 @ 1:10 pm

BiggsKofford has become aware of some changes at the Internal Revenue Service that we wanted to pass on to you. Recently, we have noted an increase in the occurrences of IRS field agents appearing at taxpayers’ places of business with no advance notice. In conversing with some of these agents, we learned that the IRS recently changed its posture to give much greater emphasis on in-person contacts with taxpayers. The belief is that the in-person contacts will have a better chance of getting taxpayers’ attention than just sending letters in the mail. The trigger for these visits is if a taxpayer has an outstanding issue, such as unfiled tax returns, balances owed, or notices received that have not been responded to. If you are compliant with your income and payroll tax obligations, then this should not happen to you. You could still be subject to a regulatory audit, but the initial contact for that would be through correspondence in the mail. In the event a revenue agent (or person claiming to be such) appears in your place of business, please be assured that you are not obligated to begin discussing your case with them on the spot. You can ask …

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Warning: New 401(k) Fraud Scheme

May 8, 2018 @ 8:42 am

We recently became aware of a fraud scheme targeting 401(k) plans and wanted to bring it to your attention. In this scheme, a fraudster calls the 401(k) plan custodian or third-party administrator (“TPA”) and impersonates a plan participant. First, the fraudster changes the email address on file so the participant will not receive notice of subsequent changes and then the fraudster requests a loan against the participant’s account. Most TPA’s require some form of identification verification before fulfilling these requests. However, it appears the fraudster has obtained the information necessary to “verify” the participant’s identity from other sources (most likely from a separate data breach, e.g. Equifax). After “verifying” the participant’s identity, the fraudster then directs the loan proceeds to his or her own account via ACH or other electronic transfer. To mitigate the risk of this scheme, we recommend that companies with 401(k) plans contact their 401(k) plan custodian/TPA to ensure controls are in place to: Require that every time a change is made to a participant’s account profile (e.g. email address, physical address, ACH account number, etc.), notification is sent to BOTH the old and the new email address Require authorization from the plan administrator (i.e. the person …

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IRS gives taxpayers relief from erroneous HSA contributions

@ 8:43 am

The Journal of Accountancy recently published an article disussing changes in HSA Contributions.  You can see the article below, or click here to read the original. The IRS announced on Thursday that it is modifying the annual limitation on deductions for contributions to a health savings account (HSA) allowed for taxpayers with family coverage under a high-deductible health plan (HDHP) for calendar year 2018. Under Rev. Proc. 2018-27, taxpayers will be allowed to treat $6,900 as the annual limitation instead of the $6,850 limitation announced in Rev. Proc. 2018-18. The IRS is making the change to allow taxpayers to use the limitation it originally announced in Rev. Proc. 2017-37, which was issued last May. The limitation was revised in Rev. Proc. 2018-18 after the passage of P.L. 115-97, known as the Tax Cut and Jobs Act, which mandated new calculations of various inflation-adjusted amounts, including HSA limitations. After the IRS announced the new lower limit, it heard complaints from individual taxpayers and other stakeholders, including employers and payroll administrators, that the change would be difficult and costly to implement. They also noted that some taxpayers with family coverage under an HDHP had made the maximum HSA contribution for 2018 before …

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Tax Reform Changes effect HSA Limit for Family Coverage

March 12, 2018 @ 9:26 am

The IRS released Bulletin 2018-10 a few days ago.  Most notable is the changes to HSA limit for family coverage.  There has been no change to individual limits. For calendar year 2018, the annual limitation on deductions under Internal Revenue Code Section 223(b)(2)(B) for an individual with family coverage under a high-deductible health plan is $6,850, down from $6,900. A “high deductible health plan” is defined under Section 223(c)(2)(A) as a health plan with an annual deductible that is not less than $2,700 for family coverage, and the annual out-of-pocket expenses (deductibles, co-payments, and other amounts, but not premiums) do not exceed  $13,300 for family coverage. This definition has not changed since the IRS’ previous announcement. You can see the entire bulletin here.  Please feel free to contact us with any questions.

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Tax Cuts and Jobs Act Presentation

January 9, 2018 @ 11:42 am

We would like to thank everyone for coming to our presentation on January 10th covering the Tax Cuts and Jobs Act. If you weren’t able to attend, or if you would like to review the presentation, the slides are available below. Do not hesitate to contact us about questions you have about how this new law will impact you. Tax Cuts and Jobs Act Presentation

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Should you prepay your 2018 property taxes?

December 28, 2017 @ 10:38 am

Our clients have been asking about the possibility of prepaying real estate taxes due in 2018 before the end of 2017.  Thousands of homeowners are rushing this week to prepay their property taxes before the new tax legislation caps the amount of state and local taxes that can be deducted at $10,000. The IRS on Wednesday announced that taxpayers can prepay their 2018 property taxes only if they have already received a tax assessment from their local government and they make payment by the end of the year. Please contact BiggsKofford to review your particular situation prior to prepaying your real estate taxes before year end.

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The Value of Middle Market Bankers

December 4, 2017 @ 3:03 am

See below for a very insightful article by Matthew Keef with Edge Point.  See the original article here. By Matthew Keefe, Managing Director “Do investment bankers add value during an exit process?”  Or, in other words, “Are bankers worth their fee?”  I am confident that countless first-time sellers have wrestled with this question as they began evaluating an exit.  Historically, the answers to these questions were anecdotal.  However, a recent whitepaper by Michael McDonald, an Assistance Professor at Fairfield University’s Dolan School of Business[1] attempted (and succeeded) to be the first to take a more scientific approach to determining if and how an investment banker provides value to a client. The Fairfield University study represents the first comprehensive independent analysis to determine whether or not sellers valued their advisor, and more importantly, what specific actions and counsel the sellers valued the most.  To accomplish this goal, the study used empirical data from 85 business owners who sold their businesses for between $10 and $250 million during the period from 2011 to 2016.  All of the sellers used reputable investment banking firms as advisors and the 85 owners accounted for 24 different investment banks.  (EdgePoint was one of the investment banking firms …

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Tax Reform – Tax Cuts and Jobs Act, H.R. 1

November 7, 2017 @ 3:02 am

The House Ways and Means Committee released draft tax reform legislation on Thursday. The Tax Cuts and Jobs Act, H.R. 1, incorporates many of the provisions listed in the Republicans’ September tax reform framework while providing new details. Budget legislation passed in October would allow for the tax reform bill to cut federal government revenue by up to $1.5 trillion over the next 10 years and still be enacted under the Senate’s budget reconciliation rules, which would require only 51 votes in the Senate for passage. The Joint Committee on Taxation issued an estimate of the revenue effects of the bill on Thursday showing a net total revenue loss of $1.487 trillion over 10 years. The bill features new tax rates, a lower limit on the deductibility of home mortgage interest, the repeal of most deductions for individuals, and full expensing of depreciable assets by businesses, among its many provisions. Lawmakers had reportedly been discussing lowering the contribution limits for Sec. 401(k) plans, but the bill does not include any changes to those limits. The Senate Finance Committee is reportedly working on its own version of tax reform legislation, which is expected to be unveiled next week. It is unclear …

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Initial Overview of Tax Proposal

April 27, 2017 @ 9:00 am

Today the Administration released an initial overview of the upcoming proposal. Our anticipation for today’s release was significantly greater than what details were actually given.  The plan has not yet been released and what was discussed today was simply a broad overview. However, this does give us an initial look of what will come in the following months. Sadly, there has been no specific date given for when actual details will be available.  We will post updates as they come in. In the meantime we’ve assembled the few details currently available. We, like many, have more questions than answers. Take the following for what it is, our summary of the limited information available. 3 tax brackets (but really 4) – No Income brackets yet 0% $0-$24,000 (Possibly for MFJ) 10% 25% 35% Double the current Standard Deduction Eliminate alternative minimum tax Eliminate 3.8% Medicare tax on net investment income Eliminate Estate tax Immediately Remove Eliminate nearly all deductions except: Mortgage Interest Charitable Contributions Retirement Savings Corporate Rate reduced to 15% Possibly on S Corps as well Available to small and medium size business and corporations Rules in place so wealthy people can’t create pass-through to avoid paying higher tax rates …

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Residential Rental Pros and Cons

January 23, 2017 @ 3:24 pm

We regularly have clients ask us about the pros and cons of purchasing rental properties as ways to supplement their income and create long-term investments. Stagnant interest rates on investments and the current real-estate market has pushed many of our clients into this activity. No matter what your reason for considering rental activities you will encounter a laundry list of potential pros and cons related to your taxes at the end of the year.   This is by no means a complete list of the benefits and drawbacks of venturing into rental activities; being a CPA firm, we will focus only on the potential tax impact.  Having a discussion with a Financial Advisor of alternative investments may help you identify if rentals are right for you. If you aren’t a real estate professional there are some pitfalls to be aware of, rental activity is passive and has some loss deduction restrictions. Here are some high points regarding rentals. Pros: Positive cash flow with the potential to offset ordinary income. For most taxpayers, rental properties result in a taxable loss due to the depreciation deduction allowable. If your adjusted gross income (AGI) is lower than 100,000 per year up to 25,000 of …

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Potential Tax Law Changes

January 12, 2017 @ 1:03 pm

Over the next few months you are going to be reading and hearing a lot about potential tax law changes that are being recommended by the new administration. The purpose of this article is to look into the future and determine what the tax landscape might look like by reviewing the tax proposals of President-Elect Donald Trump and also a tax proposals from Speaker of the House Paul Ryan. Before we get into reviewing potential tax law changes, let’s step back and review the life cycle of a tax bill. The part of the government that deals with the introduction of all tax bills is the House of Representatives. All of the bills are drafted and reviewed by legislative committees to include the House Ways and Means Committee. Once a bill has passed the House of Representatives, which requires majority vote, it is sent to the Senate for consideration. In the Senate the bill is reviewed by tax legislation and finance committees. Once the billed has passed the Senate, which also requires a majority vote, it is sent to the President for his signature. With tax law first being introduced by the House of Representatives, most observers feel that attention …

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2017 Standard Mileage Rates

December 15, 2016 @ 8:45 am

Beginning on 1/1/17, the standard mileage rates for cars, vans, pickups, and panel trucks will be 53.5 cents per mile for business miles, 17 cents per mile for medical or moving purposes, and 14 cents per mile for charitable purposes. The business expense rate is down half a cent per mile from 2016, and the medical and moving expense rates are down two cents per mile from the 2016 rates. The charitable rate is set by law and remains unchanged from last year’s rate. The portion of the business standard mileage rate treated as depreciation is 23 cents per mile for 2013, 22 cents per mile for 2014, 24 cents per mile for 2015 and 2016, and 25 cents per mile for 2017. When computing the allowance under a Fixed and Variable Rate (FAVR) plan, the standard vehicle cost cannot exceed $27,900 for autos or $31,300 for trucks and vans. Notice 2016-79, 2016-52 IRB.

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Enterprise Zone Pre-Certification

December 12, 2016 @ 4:24 pm

Are you planning on taking an Enterprise Zone Credit for the 2017 Tax year? Pre-certifying ensures the credits are available when it comes time to file your return. Even if you don’t end up qualifying for any specific Enterprise Zone credits, it’s better to be safe than sorry. The pre-certification process is very simple and we highly recommend pre-certifying by December 31st, 2016 in order to be eligible for 2017 credits if you are located in an Enterprise Zone. Please follow the link below for more information and to complete pre-certification. Do not hesitate to call or e-mail if you have any questions. Click here to complete the pre-certification.

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Upcoming Deadline and Changes for Qualified College Saving Plans Contributions

@ 12:00 pm

Qualified 529 plans are a great way to set money aside for future cost of college while saving money on your taxes; CollegeInvest and Scholars Choice are the two approved Colorado 529 plans that gain the subtraction on a Colorado state return. But, the contribution deadline for the 2016 tax year is approaching very quickly. Be sure to have all contributions in by December 31st or you won’t see the benefit on your 2016 return. Moneys set aside in qualified 529 plans can now be used for more expenses. New legislation now allow funds to be used for computers and related equipment. This will included computers, printers, software, and internet access. If you’re concerned about how to fund a child’s future college expenses, or you simply want to take advantage of the additional deduction 529 plans offer, now is the time to make contributions.

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