Blog

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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