We believe in creating a strong working relationship with our clients to determine their specific accounting and compliance needs.

New Tax Scam Targets Students

By: Linda Fargo, CPA, CGMA- Tax Manager

Just because the tax deadline is a thing of the past (until next April, that is), it doesn’t mean scammers aren’t still out in full force. We have warned many times over that the IRS will not contact you via telephone to discuss any matter. U.S. Mail is their first form of contact. It is important to keep this in mind as bogus phone calls that you could receive from someone claiming to be with IRS become more specific in nature.

The IRS recently warned that scammers are calling college students to demand payment for the “Federal Student Tax.” This tax does not exist. This is a scam.  The phony IRS representative often asks the student to wire money to them immediately, and if they fail to do so, they will be reported to the police.

But students aren’t the only new targets and fresh scams to be reported to the IRS. New tactics seen recently include scammers calling saying they are seeking immediate payment for taxes owed on an iTunes gift card. Or, they solicit W-2 information from those that work in human resource and on payroll for companies. Another scam involves stating the need to verify tax return information over the phone. These new scams present the perfect opportunity to stay vigilant and remember the following in order to protect yourself and your personal information:

The IRS will never:

  • Call and demand payment over the phone.
  • State that local police or law enforcement will become involved if you don’t pay the money they claim you owe.
  • Make you use a certain method to pay for your taxes. Many times scammers claim prepaid debit cards is the way you must pay up.
  • Ask for information such as your credit card or debit number over the phone.

Being vigilant means acting quickly- should you get a call from a scammer, simply hang up the phone right away. Then report the incident to the Federal Tax Commission at www.FTC.gov.

Please contact Holbrook & Manter today for more information on how you can protect yourself from tax scams. We would be happy to assist you.

 

Energy Efficiency Home Builder Credits

By: William Bauder, CPA, CGMA, CITP

If you read Columbus Business First, you probably noticed the article on the front page of the June 10th issue describing challenges home builders are facing in today’s marketplace.  With fewer new homes being built, fewer young people buying homes choosing to rent instead, and shrinking margins, the outlook is bleak for home builders.  However, there are some tax credits available, if you know where to look.

The federal Energy Policy Act of 2005, which had previously expired at the end of 2014, was extended by the signing of the Consolidated Appropriates Act in December 2015 to retroactively extend the bill through December 31, 2016.  The law allows for a rebate up to $2,000 for builders of all new energy efficient homes, including manufactured homes, constructed in accordance with the Federal Manufactured Homes Construction and Safety Standards (FMHCSS).

To qualify, homes must be:

  • Located in the United States;
  • Construction must be substantially completed before December 31, 2016;
  • Homes must meet the energy savings requirements outlined in the statute; and
  • Homes must be acquired from the eligible contractor after December 31, 2013, and before January 1, 2017, for use as a residence.

Site-built homes will qualify for the credit if they are certified to reduce heating and cooling energy consumption by 50% relative to the International Energy Conservation Code (IECC) 2006 and meet minimum standards established by the Department of Energy.

Manufactured homes qualify for the credit if they conform to the FMHCSS and meet the energy savings requirements of site built homes.

If you would like to learn more about this tax credit and how it can help your business, or other ways to use the tax code to your benefit, give us a call, we would be happy to assist you.

Is it Time for Section 199?

The Section 199 tax deduction was first introduced with the American Jobs Creation Act of 2004. It was intended to primarily benefit America’s manufacturing industry. Indeed, sometimes the tax break is called the “manufacturers’ deduction” or the “domestic production activities deduction.” But, helpfully, eligibility for the break is broad enough to include many other types of businesses.

Among the primary requirements for the deduction is that your company regularly perform “qualified production activities.” These are generally defined as tasks related to manufacturing, producing, constructing, growing or extracting property “in significant part” within the United States. If any of that sounds familiar, it may be time for you to check out Sec. 199.

Identifying and gathering

To get started, you’ll need to identify and document your qualified production activities, and then determine how much income you’ve derived from them. Doing so will require gathering gross receipts from the lease, rental, exchange or other transfer of qualifying production property minus out-of-pocket expenses, such as materials costs. Eligible items include tangible personal property, computer software and sound recordings used in qualified production activities.

Having done all of this, you may then be able to claim a deduction equal to 9% of the lesser of either your net income derived from your qualified production activities or your entire taxable income for the year. There is, however, an important caveat: The deduction can’t exceed 50% of the W-2 wages paid to employees during the calendar year that are allocable to domestic production gross receipts.

Crunching the numbers

Let’s take a hypothetical look at the Sec. 199 deduction and how it might benefit a business. Say your company nets $800,000 in taxable income on $4 million in gross receipts in 2016, entirely from qualified production activities. Assuming your W-2 wages paid are adequately substantial, the deduction at the 9% rate will be $72,000, for a federal tax savings of over $25,000 based on a 35% rate. That would presumably be a nice cash flow boost.

Perhaps the biggest challenge of the Sec. 199 deduction, and one that many companies underestimate, is the administrative burden that may be associated with claiming it. You’ll need to meticulously track and maintain documentation for your business’s qualifying production activities.

Getting everything in order

If you’re intrigued by the Sec. 199 deduction, please call Holbrook & Manter.  Not only are the administrative requirements challenging, but the calculations involved often get complex as well. We would be happy to assist you.

H&M Nominated for “Best of Business” Award

The entire Holbrook & Manter team is proud to share that we are a finalist for a Columbus CEO Magazine 2016 “Best of Business” award.

We are nominated in the “Best Accounting Firm” category (less than 20 CPAs) this is category #22 on the ballot. We were honored to be named the winner in this category last year.

The ballot can be accessed here and voting is open through July 15, 2016.

http://www.columbusceo.com/content/topic/events/BOB/best-of-business-vote-now.html

Our team values and appreciates all the hard work each of us provides to support each other, and most importantly, our clients. We are honored to be nominated and appreciate your support.

 

Important Announcement from Allinial Global

Holbrook & Manter, CPAs is honored to be a member firm with Allinial Global. Formerly known as PKF, Allinial Global is a member-based association dedicated to the success of independent accounting and consulting firms. Founded in 1969, this strategic affiliation of legally independent accounting firms has a mission to foster the independence, profitability, and continuous improvement of its members. Allinial Global is based in North America but offers international support by connecting its member firms to providers and global networks of accounting firms worldwide.

Allinial recently announced something that we would like to share with you. They will be joining forces with U.K.-based IAPA International. A letter of intent has been signed by both management teams, creating a combined entity with 300 member firms from 79 countries with annual fee revenue of over $2.6 billion- making it the third largest association of independent accounting and consulting firms in the world. The final details of the proposed merger should be worked out during the latter part of 2016, pending board and membership approval.

This is extremely exciting news that positions Holbrook & Manter to be of even greater assistance to those we work with. “Over the years, Holbrook & Manter’s membership in Allinial Global has truly enhanced our ability to serve our clients .  Their growth, firm management, client service and people resources provide the support that allows our team to focus first on our clients’ needs,” said Bradley Ridge, H&M’s Managing Principal. “The combination of two premier, far-reaching associations will lead to even greater opportunities for serving our clients, especially when it comes to meeting their growing international needs.  We look forward to leveraging the many advantages that the combined organization will provide.”

IAPA is a global association of independent accounting and business advisory firms that aims to support its members in providing their clients with a diverse range of professional and comprehensive business solutions, regardless of sector or location. The international reach of IAPA member firms offers instant access to first-hand knowledge of local regulations, culture and customs – removing potential cross-border uncertainties and increasing the opportunities for real business development. Established in 1979, IAPA comprises over 200 member firms with offices in some 70 countries. Based on the total fee income of its membership IAPA ranks in the Top 10 of associations of independent accountancy firms and has an annual revenue of over $1 billion.

More detailed information about this merger and the power that is it gives us to serve clients not only in the Central Ohio region where we have been doing business for over nine decades, but across the country and the globe will become available in the months to come. We will be sure to keep you posted. In the meantime, to learn more about Allinial Global and IAPA, please visit their respective websites:

www.allinialglobal.com

www.iapa.net

Posted in News

Understanding the Final Overtime Rule

Now that the final Overtime Rule has been announced, it is vital to understand how it will effect employers and workers. Since 2014, the Secretary of Labor has been working to update the overtime regulations to reflect the original intent of the Fair Labor Standards Act. The end goal is to provide better pay to middle class workers and to allow them more free time- creating a culture of work/ life balance

According to the United States Department of Labor, the final rule will accomplish the following:

  • Raise the salary threshold indicating eligibility from $455/week to $913 ($47,476 per year), ensuring protections to 4.2 million workers.
  • Automatically update the salary threshold every three years, based on wage growth over time, increasing predictability.
  • Strengthen overtime protections for salaried workers already entitled to overtime.
  • Provide greater clarity for workers and employers.

It is important to note that the final rule does not present changes to the duties test for executive, administrative and professional employees. The final rule goes into effect on December 1, 2016. Holbrook & Manter is here to help you and your business prepare for these changes. Please contact us today to get started.

For more information on the Overtime Rule, please visit the DOL website here: www.dol.gov/featured/overtime

Depreciation Breaks for your Company’s Real Property

As a business owner, you’ve probably heard plenty about depreciation-related tax breaks. But, often, such discussions focus only on the tax benefits of buying assets such as heavy equipment, office furniture and computers. Don’t forget that the Internal Revenue Code also allows depreciation breaks for a company’s real property.

Section 179

Section 179, for example, allows businesses to elect to immediately deduct (or “expense”) the cost of certain assets acquired and placed in service during the tax year, instead of recovering the costs more slowly through depreciation deductions. However, the election can only offset net income; it can’t reduce it below $0 to create a net operating loss.

Among the assets eligible for this break is qualified real property, which includes qualified leasehold-improvement, restaurant and retail-improvement property. Thanks to the Protecting Americans from Tax Hikes Act of 2015 (the PATH Act), the relatively high annual dollar limits of the election have been made permanent (indexed for inflation beginning this year).

Specifically, for 2016, you can expense up to $500,000 in qualified real property, subject to a phaseout that kicks in at $2,010,000 in purchases. Before 2016, only $250,000 of the $500,000 limit could be applied to qualified real property.

Bonus depreciation

Another important tax break in this area is bonus depreciation, which allows businesses to recover the costs of certain depreciable property more quickly by claiming first-year bonus depreciation. The PATH Act extended it, but only through 2019 and with declining benefits in the later years. For property placed in service during 2015, 2016 and 2017, the bonus depreciation percentage is 50%. It drops to 40% for 2018 and 30% for 2019.

Qualified leasehold-improvement property is generally eligible for bonus depreciation. (Before 2016, such property had to be leased to be eligible for bonus depreciation.) But, before claiming bonus depreciation, see whether you qualify for Sec. 179 expensing. It could provide a greater tax benefit than bonus depreciation. But bonus depreciation could benefit more taxpayers than Sec. 179 expensing, because it isn’t subject to any asset purchase limit or net income requirement.

Accelerated depreciation

The PATH Act also permanently extended the 15-year straight-line cost recovery period for qualified leasehold improvements (alterations in a building to suit the needs of a particular tenant), qualified restaurant property and qualified retail-improvement property. The provision exempts these expenditures from the normal 39-year depreciation period.

This is especially welcome news for restaurants and retailers, which typically remodel every five to seven years. If eligible, they may first apply Sec. 179 expensing and then enjoy this accelerated depreciation on qualified expenses in excess of the applicable Sec. 179 limit.

Real property

It’s only natural to look at the many individual objects used by your business and wonder whether and how you can depreciate them. But don’t forget about the very ground beneath your feet, as well as the walls and structures around you. Real property is depreciable, too

Contact H&M today for more information. We would be happy to assist you.

Happy National Small Business Week!

 

 

By: Molly Pensyl, Business Development Manager 

 

National Small Business Week is a pretty special thing, if you ask us. After all, we have been helping family-owned and closely-held businesses thrive for over nine decades. Many of those we work with fall into the small business category or started out that way and have enjoyed immense growth. Celebrating small businesses is a part of who are as a firm.

Every year since 1963, the President of the United States has issued a proclamation regarding National Small Business Week. The week is designated for recognizing the critical contributions of America’s entrepreneurs and small business owners. In honor of this week (May 1-7, 2016) we wanted to share some interesting facts that drive home the point that small businesses are making a huge impact.

According to the U.S. Small Business Administration, who uses National Small Business week to highlight businesses and entrepreneurs form all across the country, these are important statistics to note:

  • 54% of all U.S. sales come from the 28 million small businesses operating in our country
  • Since the 1970’s, 55% of all new jobs and 66% of all net new jobs in our country have been provided by small businesses
  • The small business sector occupies 30-50% of all commercial space- an estimated 20-34 billion square feet.
  • The number of small businesses in the U.S. has increased 49% since 1992

The SBA shares that the small business sector continues to grow rapidly and the rate for small business failure has declined. We see it every day- the hard work, dedication and passion put forth by business owners. Its inspiring and it deserves more than just a week. Here at H&M, it’s a continuous celebration.

To learn more about National Small Business Week, click here:

https://www.sba.gov/nsbw/nsbw

Ohio’s “Sales Tax Holiday” Likely to Return

The Ohio House has passed legislation that will likely mean the return of the sales tax exemption holiday in August 2016.

The bill now goes to Governor John Kasich, who is expected to sign off on it, making way for the chance at savings for Ohio consumers.

The proposed holiday would take place between the dates of August 5-7 and would offer a break on sales tax for certain clothing and back-to-school items.

In 2015, the tax exemption applied to clothing items prices up to $75 each. For school supplies, the savings applied to items priced at $20 or less.

Learn more about Ohio’s Sales Tax Holiday on the Ohio Department of Taxation website: http://www.tax.ohio.gov/Home.aspx

H&M Continues to Lead Conway Center For Family Business Peer Group

H&M is proud to lead the Finances for Family Business Peer Group for the Conway Center for Family Business. The latest peer group meeting covered the topic of Internal Controls for Family Businesses. H&M principals, Mark Welp & Stephen Smith shared insight with attendees on the topic. The common theme of the discussion was that every business should have controls in place before fraud takes place. Prevention is key.

To learn more about H&M’s Risk Advisory Services, click here: http://www.holbrookmanter.com/risk-advisory.php

To learn more about the Conway Center for Family Business, click here: http://www.familybusinesscenter.com/