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H&M’s Justin Linscott Attends Hearing in Washington D.C.


By: Justin Linscott, CPA, CFP, CITP, CGMA- Principal

You may remember a blog I wrote on the topic of the possible changes on the horizon for estate and gift taxes. In that post (read it here:)  I mentioned that I would be traveling to Washington D. C. in early December to attend the hearing for Internal Revenue Code Section 2704. I have returned from my trip to the nation’s capital and I am still gathering my thoughts about the proposed regulations issued by the IRS that, if made final, would place major restrictions on estate valuation discounts.

Before I share some specifics about my trip, a reminder from my last blog about Section 2704 and the changes that could be coming that would make it harder for wealthy family and closely-held business owners to transfer assets to family members without paying the proper amount of estate and gift taxes……  IRC Section 2704 was enacted in 1990 and is designed to prevent the reduction of taxes through valuation discount techniques in an attempt to reduce the value of an estate, thus lowering the value of property and assets gifted to taxpayer’s beneficiaries. The new proposed regulations would change the landscape of this tax exercise drastically, no longer allowing for the understatement of the value of assets and interests as they apply to intra-family transfers. IRC Section 2704, as it stands now, only refers to corporations and partnerships. The proposed regulations would broaden the reach and also apply to limited liability companies and other entities and business arrangements.

My visit to D.C. was brief but busy. I walked a great deal and with each step I learned more and more about how these proposed regulations could affect our valued clients. Some occasions simply call for “boots on the ground” learning and this was one of those occasions.

When I say my boots were on the ground, I mean it in a literal sense…. I walked nearly 11 miles through the nation’s capital that day. I started by walking by the White House and then over to the Capital Building. There I met with some congressional aides that I know and we talked about tax policy. Tax is my passion and this was the ideal way for me to start my day. From there, I visited the Ways & Means Room. This is where much of our tax policy is written. My next stop was the IRS building where the Section 2704 hearing was taking place. This hearing was lengthy and interesting and my presence there positions me to better serve our clients should these proposed changes become reality. At the very least, I believe we will see significant  modifications take place. However, the extent of those modifications lies in the hands of the incoming presidential administration, the cabinet and the new treasury department. Should new changes become enacted, as it stands now, nothing will be final for 30 days. So for now, we watch and wait and I keep you posted on any and all new developments.

 As for how my trip wrapped up- after over six hours at the IRS building for the hearing, I made my way to the new Trump Hotel on Pennsylvania Avenue for a bite to eat and then went on to the National Archives to take a look at the Constitution and the Declaration of Independence. My next stop was the FBI Building, which has special meaning to me because my father and my uncle are both retired FBI agents. From there I took in some of the sights and sounds of the holidays in D.C. by witnessing the lighting of the national Christmas tree. My journey continued from with a visit to the Vietnam Wall and the Lincoln Monument and then I ventured across the Potomac River to Arlington National Cemetery to wrap up my day.

While it was the 2704 hearing that prompted my trip to Washington, D.C.- it was very rewarding (and a bit tiring) to also use the day to enjoy all that they city has to offer.  Again, I will keep you posted on 2704. Feel free to reach out to me with any questions you may have. I would be happy to sit down with you and review your estate plan ahead of these proposed changes.

H&M’s Danielle Cottle Contributes to Guide for AccountingWEB

H&M manager, Danielle Cottle, CPA, CGMA recently served as an expert source for an E-Guide published on www.AccountingWEB.com

Written by Deanna C. White, the guide is called, “The Accountants Guide to Advising E-Commerce Clients”. The piece contains testimonials from CPAs who work with e-commerce clients on a regular basis. Look for several quotes from Danielle throughout the guide, which can be downloaded here for free:


As stated on their website: AccountingWEB is the leading online community for CPAs in the United States, providing news, software tools and guidance from top industry voices. We aim to inspire the modern accountant to embrace new ideas, develop, grow and make changes that matter.

Important 2017 Q1 Tax Deadlines

Tax season is upon us. Holbrook & Manter is committed to keeping you informed and compliant in 2017. Please review the important deadlines and information provided below and contact our tax team with any questions you may have.

January 17

  • Individual taxpayers’ final 2016 estimated tax payment is due.

January 31

  • File 2016 Forms W-2 (“Wage and Tax Statement”) with the SSA and provide copies to your employees.
  • File 2016 Forms 1099-MISC (“Miscellaneous Income”) reporting nonemployee compensation payments in box 7 with the IRS and provide copies to recipients.
  • Most employers must file Form 941 (“Employer’s Quarterly Federal Tax Return”) to report Medicare, Social Security and income taxes withheld in the fourth quarter of 2016. If your tax liability is less than $2,500, you can pay it in full with a timely filed return. If you deposited the tax for the quarter in full and on time, you have until February 10 to file the return. Employers who have an estimated annual employment tax liability of $1,000 or less may be eligible to file Form 944 (“Employer’s Annual Federal Tax Return”).
  • File Form 940 (“Employer’s Annual Federal Unemployment [FUTA] Tax Return”) for 2016. If your undeposited tax is $500 or less, you can either pay it with your return or deposit it. If it is more than $500, you must deposit it. However, if you deposited the tax for the year in full and on time, you have until February 10 to file the return.
  • File Form 943 (“Employer’s Annual Federal Tax Return for Agricultural Employees”) to report Social Security, Medicare and withheld income taxes for 2016. If your tax liability is less than $2,500, you can pay it in full with a timely filed return. If you deposited the tax for the year in full and on time, you have until February 10 to file the return.
  • File Form 945 (“Annual Return of Withheld Federal Income Tax”) for 2016 to report income tax withheld on all nonpayroll items, including backup withholding and withholding on accounts such as pensions, annuities and IRAs. If your tax liability is less than $2,500, you can pay it in full with a timely filed return. If you deposited the tax for the year in full and on time, you have until February 10 to file the return.

February 28

  • File 2016 Forms 1099-MISC with the IRS and provide copies to recipients. (Note that Forms 1099-MISC reporting nonemployee compensation in box 7 must be filed by Jan. 31, beginning with 2016 forms filed in 2017.)

March 15

  • 2016 tax returns must be filed or extended for calendar-year partnerships and S corporations. If the return is not extended, this is also the last day to make 2016 contributions to pension and profit-sharing plans.


Mark Rhea Joins the H&M Team

We are happy to welcome Mark Rhea, J.D. to the H&M family. Mark joins us as a Senior Assistant Accountant. He holds a degree in history from Ohio University and a degree in accounting from Franklin University. He is also received his law degree from the University of Toledo. Mark worked for the Franklin County Child Support Enforcement Agency before joining H&M.

Mark has a strong interest in the area of tax and enjoys helping businesses and individuals navigate through their various tax-related needs and challenges.

Mark lives in Powell with his wife, Martha and children, Katie and Matthew. In his spare time he likes watching the Columbus Blue Jackets, cooking and traveling.

H&M Welcomes New Senior Accountant

H&M is pleased to announce the addition of David Herbe, CPA  to our growing team. David holds a bachelor’s degree in accounting from Bowling Green State University. He also went on to earn his Masters of Accountancy from BGSU with a specialization in taxation. David worked for Crowe Horwath LLP before joining the H&M team.

David shares that the element he enjoys most about his job is knowing he is providing a valuable service to businesses and individuals. He looks forward to working with H&M’s many valued clients.

David was raised in Erie, PA. He currently lives in Columbus with his fiancé, Emily. They plan to marry in July 2017. David enjoys playing sports and working out in his spare time. He also loves to spend time with his friends and family.


New Tax Scam Involving Fake CP2000 Notices

By: Molly Pensyl, Business Development Manager

The telephone and email are generally always the communication weapons of choice for tax scammers. They reach out to you via these methods and claim that you owe the IRS money or that the IRS is planning to take legal action against you. Now, we are receiving word that tax scammers are adding U.S. Mail to their arsenal. This is where vigilance becomes very important for taxpayers as to not confuse a piece of counterfeit mail from the IRS with the real thing. Because, as we have told you before- the IRS will always reach out via U.S. Mail in the case of a real issue. Not be telephone, email etc.

The IRS warns that scammers are sending out fake IRS tax bills labeled as CP2000 notices. This scam is not only being circulated in hard copy form through the mail- it can also come to you via email. The IRS shares the following signs that the bill is fake on their website:

  • The CP2000 notices appear to be issued from an Austin, Texas, address;
  • The letter says the issue is related to the Affordable Care Act  and requests information regarding 2014 coverage;
  • The payment voucher lists the letter number as 105C;
  • Requests checks made out to I.R.S. and sent to the “Austin Processing Center” at a  post office box.

What is a CP2000 notice and how you can spot an authentic one? A CP2000 is issued when income reported from third party sources such as an employer does not match the income reported on the tax return. It outlines instructions for the taxpayer regarding what to do in the event that they agree or disagree with what is listed on the notice. Also, a legitimate CP2000 will ask that checks be made out to the United States Treasury, not to a processing center.

No matter how a tax scam finds you or what it asks you to do -if it doesn’t feel right you need to report it. Visit this link to learn more about reporting phishing and online scams to the IRS: https://www.irs.gov/uac/report-phishing

As always, H&M can help walk you through the process and help implement proactive measures to protect you from being a target for scammers. Contact us today for more information.

Changes & Reminders Regarding 1099 & W-2 Reporting

By: Linda Fargo, CPA- Manager

We have important information to share regarding changes to 1099 and W-2 reporting. Please read through this information carefully and contact us with any questions you may have.

Starting this year, 1099s and W-2s must be submitted to the government by January 31.In the past they were required to be issued to the individual by that date but were not required to be sent to the government until the end of February. This had allowed for a little breathing room as well as the ability to make any corrections before submission.

With this change, the penalties for not issuing and/or submitting 1099s and W-2s are becoming more onerous.  A missed form that is neither issued nor submitted would actually result in two separate penalties.  Accordingly,  the following penalties would be double for any required forms that were neither issued nor submitted:

·         $50 per form within 30 days of the 1/31/17 original due date

·         $100 per form between 3/1/17 and 8/1/17

·         $260 per form after 8/1/17

·         $530 per form for an intentional disregard of the rules

·         There are also potential correctness penalties

A more-than-2% shareholder’s health insurance MUST be in box one of the W-2 to be deductible to the business.  This also applies to family members of shareholders.  Included for this purpose – spouse, children, grandchildren, and parents.

To be deductible, the 2% shareholder/partner needs to be reimbursed for the Medicare or other health care premiums they pay personally.  Once reimbursed, these amounts still need to be added to the W-2 or reported as guaranteed payments to the partners.

H&M’s Stephen Smith to Speak at Start-up Event

H&M’s Stephen Smith will serve as a panel expert at a Leadership for Small Business event on Wednesday, December 7, 2016.

The event is presented by The Columbus Chamber of Commerce, Chase, Propel Marketing and the Dispatch Media Group. These events are held quarterly and feature insights and advice from thought leaders on how to set you and your business up for success.

The Columbus Chamber shares the following information about the event, which will be held at Red Brick Occasions in downtown Columbus:

Start Me Up

You’ve got a great idea—whether it is a business, a service, or a product—and you’re ready to get serious about it.

Other than writing a business plan on the back of a napkin, you’re not really sure what to do next.

For this session, we have invited a panel of experts from professional service fields to share insights on common mistakes business owners make early on. From finance, to legal and everything in between, this hour-long session will provide what you need to know before you take the big leap into entrepreneurship.

To learn more about the event, meet the other panelists and the moderator and to register to attend, please visit this link: http://columbus.org/events/leadership-small-business-series-start/

New Overtime Rule Blocked By Judge

The new overtime rule will not take effect on December 1, 2016 as expected. A federal judge has blocked the Obama administration rule which would have extended mandatory overtime pay to more than 4 million salaried workers.

The new rule was issued by the Department of Labor and would have brought the maximum salary number a worker can earn and still be eligible for mandatory overtime pay up to $47,500.

The ruling was made by U.S. District Judge Amos Mazzant who sits on the bench in Sherman, Texas. His motion for a nationwide injunction backs the sentiments of 21 states and many business groups who felt the new overtime rule was unlawful.  Judge Mazzant ruled that the federal law governing overtime does not allow the Department of Labor to determine which workers are eligible for overtime pay based on just salary levels.

While the states and business groups that fought the new rule are pleased with the ruling, the Department of Labor is not.  They are reportedly considering all of their options in light of the new ruling. They can appeal the ruling to the New Orleans-based 5th U.S. Circuit Court of Appeals. We will keep you posted on any and all proceedings and developments.

Employers across virtually every industry have been preparing for the new overtime rule for months. This new ruling brings those preparations to a halt, at least for now. It may also create questions for business owners and their employees. Please reach out to us for any assistance that you may need. We would be happy to help.


Documentation: The Key to Charitable Tax Deductions

By: Carmen George, CPA- H&M Manager

It’s hard to duplicate the good vibes that you get when you do something charitable.  However, that feeling can be squashed a bit come tax time when you realize that you don’t have the proper documentation for the cash you so generously donated to a cause that is near and dear to your heart.  The same goes for physical items that you part with in the name of charity.  Each dollar and every item should be documented.  That documentation is your key to charitable tax deductions.

The exercise of receiving the documentation for your donations is often times very easy.  For example, if you make a cash donation to an organization, they will mail you a receipt of the donation for your records.  Be careful not to mistake it for general mail from the organization and mistakenly throw it away.  If you make the donation online, don’t travel away from the organization’s site without printing your receipt.  When you donate physical items to a charity (clothing, household items, etc.) obtaining documentation of your kindness is simple to do.  The drop off location for the organization will have staff members on-hand to receive your donation and give you a written receipt right there on the spot.  Should you donate at a drop off location that is not manned by staff or volunteers, look for a number to call or a website to visit on the drop off box and reach out to have a receipt sent your way.  Any and all donations must go to a qualifying charitable organization and the written acknowledgement they provide should include the name of the charity, the date of the contribution, a description of the contributed item(s) if a non-cash contribution, the amount of the contribution and a statement that no goods or services were provided by the organization in return for the contribution, if that was the case.

In the case of cash donations, you must have written acknowledgement from a charity for any single contribution of $250 or more.  If your cash donation is below the $250 threshold, your record of this donation can be shown in the form of a bank record such as a cancelled check.  It is important to remember that deductions are not given for donations made to political groups, social groups and individuals.

The value of the items you donate and/or the amount of money you give to a charity comes into play at tax time.  If you claim a deduction of more than $500 in donated property, your accountant will work with you to fill out a Form 8283 to submit with your return.

No matter how often or how you give to charity, keep all of your donation documentation in a safe place.  A folder in a desk or a filing cabinet is always a good idea.  That way, come tax time, you simply have to pull it out and hand it over to your accountant.

We would be happy to assist you with identifying deductions you could be eligible for as they relate to your charitable giving habits.  Contact us today.