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It seems like a simple question: How many full-time workers does your business employ? But, when it comes to the Affordable Care Act (ACA), the answer can be complicated.

The number of workers you employ determines whether your organization is an applicable large employer (ALE). Just because your business isn’t an ALE one year doesn’t mean it won’t be the next year.

50 is the magic number

Your business is an ALE if you had an average of 50 or more full time employees — including full-time equivalent employees — during the prior calendar year. Therefore, you’ll count the number of full time employees you have during 2016 to determine if you’re an ALE for 2017.

Under the law, an ALE:

• Is subject to the employer shared responsibility provisions with their potential penalties, and
• Must comply with certain information reporting requirements.

Calculating full-timers

A full-timer is generally an employee who works on average at least 30 hours per week, or at least 130 hours in a calendar month.

A full-time equivalent involves more than one employee, each of whom individually isn’t a full-timer, but who, in combination, are equivalent to a full-time employee.

Seasonal workers

If you’re hiring employees for summer positions, you may wonder how to count them. There’s an exception for workers who perform labor or services on a seasonal basis. An employer isn’t considered an ALE if its workforce exceeds 50 or more full-time employees in a calendar year because it employed seasonal workers for 120 days or less.

However, while the IRS states that retail workers employed exclusively for the holiday season are considered seasonal workers, the situation isn’t so clear cut when it comes to summer help. It depends on a number of factors.

We can help

Contact us for help calculating your full-time employees, including how to handle summer hires. We can help ensure your business complies with the ACA.

Understand the Tax Consequences of a Sale

As the school year draws to a close and the days lengthen, you may be one of the many homeowners who are getting ready to put their home on the market. After all, in many locales, summer is the best time of year to sell a home. But it’s important to think not only about the potential profit (or loss) from a sale, but also about the tax consequences.

Gains

If you’re selling your principal residence, you can exclude up to $250,000 ($500,000 for joint filers) of gain — as long as you meet certain tests. Gain that qualifies for exclusion also is excluded from the 3.8% net investment income tax.

To support an accurate tax basis, be sure to maintain thorough records, including information on your original cost and subsequent improvements, reduced by any casualty losses and depreciation claimed based on business use. Keep in mind that gain that’s allocable to a period of “nonqualified” use generally isn’t excludable.

Losses

A loss on the sale of your principal residence generally isn’t deductible. But if part of your home is rented out or used exclusively for your business, the loss attributable to that portion may be deductible.

Second homes

If you’re selling a second home, be aware that it won’t be eligible for the gain exclusion. But if it qualifies as a rental property, it can be considered a business asset, and you may be able to defer tax on any gains through an installment sale or a Section 1031 exchange. Or you may be able to deduct a loss.

Learn more

If you’re considering putting your home on the market, please contact us to learn more about the potential tax consequences of a sale.

Now that the April 18 income tax filing deadline has passed, it may be tempting to set aside any thought of taxes until year end is approaching. But don’t succumb. For maximum tax savings, now is the time to start tax planning for 2016.

More opportunities

A tremendous number of variables affect your overall tax liability for the year. Starting to look at these variables early in the year can give you more opportunities to reduce your 2016 tax bill.

For example, the timing of income and deductible expenses can affect both the rate you pay and when you pay. By regularly reviewing your year-to-date income, expenses and potential tax, you may be able to time income and expenses in a way that reduces, or at least defers, your tax liability.

In other words, tax planning shouldn’t be just a year-end activity.

More certainty

In recent years, planning early has been a challenge because there were a lot of expired tax breaks where it was uncertain whether they’d be extended for the year. But the Protecting Americans from Tax Hikes Act of 2015 (PATH Act) extended a wide variety of tax breaks through 2016, or, in some cases, later. It also made many breaks permanent.

For example, the PATH Act made permanent the deduction for state and local sales taxes in lieu of state and local income taxes and tax-free IRA distributions to charities for account holders age 70½ or older. So you don’t have to wait and see whether these breaks will be available for the year like you did in 2014 and 2015.

Getting started

To get started on your 2016 tax planning, contact us. We can discuss what strategies you should be implementing now and throughout the year to minimize your tax liability.

Tax Day is right around the corner. Have you filed your federal tax return yet? The filing deadline to submit 2015 individual federal income tax returns is Monday, April 18, 2016, rather than the traditional April 15 date. Washington, D.C., will celebrate Emancipation Day on Friday, April 15, which pushes the deadline to the following Monday for most of the nation. The deadline will be Tuesday, April 19, in Maine and Massachusetts, due to Patriots' Day.

Fortunately, there's still time to take steps to reduce your 2015 federal tax liability. Here are five last-minute ideas for individuals and small businesses.

1. Individuals Can Choose to Deduct State and Local Sales Taxes

Congress recently made permanent the option to claim a federal income tax deduction for general state and local sales taxes as opposed to deducting state and local income taxes. The option is now available for 2015 and beyond. This is good news for individuals who live in states with low or no personal income taxes, as well as for those who owe little or no state taxes.

If you choose the sales tax option, you can use a table provided by the IRS to calculate your sales tax deduction. Your deduction will vary based on your state of residence, income, and personal and dependent exemptions.

If you use the IRS table, you can also add on actual sales tax amounts from major purchases, such as:

• Motor vehicles, including motorcycles, off-road vehicles, and RVs,
• Boats,
• Aircraft, and
• Home improvements.

In other words, you can deduct actual sales taxes for these major purchases on top of the predetermined amount from the IRS table. Alternately, if you saved receipts from your 2015 purchases, you can add up the actual sales tax amounts and deduct the total if that gives you a bigger write-off.

2. Qualified Individuals Can Make Deductible IRA Contributions

If you haven't made the maximum deductible traditional IRA contribution for the 2015 tax year, you can still make a contribution between now and the tax filing deadline and claim the resulting write-off on your 2015 return. The maximum deductible contribution for 2015 was $5,500 per taxpayer — or $6,500 if you or your spouse was age 50 or older as of December 31, 2015.

However, there are a couple of catches. First, you must have enough 2015 earned income from jobs, self-employment or alimony received to equal or exceed your IRA contributions for the 2015 tax year. If you are married, either spouse (or both) can provide the necessary earned income.

Second, deductible IRA contributions are gradually phased out if your income was too high last year. (See "Ground Rules for Deductible Contributions to Traditional IRAs" at right.) Fortunately, the phaseout ranges are much higher than they were a few years ago.

3. Business Owners Can Establish SEPs

If you work for your own small business and haven't yet set up a tax-favored retirement plan for yourself, you can establish a simplified employee pension (SEP). Unlike other types of small business retirement plans, a SEP can be created this year and still generate a deduction on last year's return.

Important note. If you are self-employed and extend the filing deadline for your 2015 Form 1040 until October 17, you'll have until that late date to take care of the paperwork and make a deductible contribution for 2015.

The deductible contribution to a SEP can be up to 20% of your 2015 self-employment income or up to 25% of your 2015 salary if you work for your own corporation. The absolute maximum amount you can contribute for the 2015 tax year is $53,000. If you have the cash on hand to fund a SEP contribution, the tax savings can be substantial.

For example, if you're self-employed and in the 28% federal income tax bracket, a $30,000 SEP contribution could lower your 2015 federal income tax bill by $8,400 (plus any state income tax savings). In many cases, the tax savings could fund a big chunk of your contribution.

Establishing a SEP is simple. Your bank or financial adviser can help you complete the required paperwork. But don't jump the gun if your business has employees. Your SEP will likely have to cover them and make contributions to their accounts, which could be cost prohibitive. Your tax and financial advisers can help you decide whether establishing a SEP is a smart move for your business.

4. Small Business Owners Can Claim Section 179 Deduction for Real Property Expenditures

Section 179 provides a federal income tax break that allows eligible small businesses to deduct the entire cost of qualifying asset purchases (including software) in the year they're placed in service (rather than depreciating them over their useful lives). Real property improvement costs have traditionally been ineligible for the Sec. 179 deduction. But there's an exception for qualified real property improvements placed in service in tax years beginning in 2015.

You can claim a Sec. 179 deduction for real property expenditures of up to $250,000 for:

• Interiors of leased nonresidential buildings,
• Restaurant buildings, and
• Interiors of retail buildings.

The Sec. 179 allowance for real estate had previously expired at the end of 2014, but recent legislation made it permanent for 2015 (and beyond). Additional rules and restrictions may apply, so consult your tax adviser before claiming Sec. 179.

5. Businesses Can Take Advantage of Favorable Provisions in Tangible Property Regulations

In general, IRS regulations require most tangible property costs to be capitalized and depreciated over their useful lives, rather than deducted in the tax year that they're placed in service. But there are a few taxpayer-friendly exceptions, including:

• Small businesses can elect to immediately deduct items costing up to $2,500 that would otherwise have to be capitalized and depreciated over a number of years. The deduction allowance was increased to the current $2,500-per-item amount by IRS Notice 2015-82. Previously, the allowance was only $500. Larger businesses that have an applicable financial statement for the 2015 tax year (generally, those required to file Form 10-K with the SEC and those with audited financial statements) can deduct items costing up to $5,000. The election to take advantage of these deduction allowances can be made with the 2015 return or form for your business.
• Expenditures for incidental materials and supplies can be deducted in the year they're paid or incurred. These expenditures include noninventory items: 1) worth $200 or less, or 2) with useful economic lives of 12 months or less.

Consult with a Tax Pro

These are some of the more common last-minute tax-saving maneuvers that individuals and small business owners can take before Tax Day. As always, your tax professionals can advise you on the optimal tax-saving strategies for your specific situation.

Yes, the federal income tax filing deadline is slightly later than usual this year — April 18 — but it’s now nearly upon us. So, if you haven’t filed your return yet, you may be thinking about an extension.

Extension deadlines

Filing for an extension allows you to delay filing your return until the applicable extension deadline:

• Individuals — October 17, 2016
• Trusts and estates — September 15, 2016

The perils

While filing for an extension can provide relief from April 18 deadline stress, it’s important to consider the perils:

• If you expect to owe tax, keep in mind that, to avoid potential interest and penalties, you still must (with a few exceptions) pay any tax due by April 18.
• If you expect a refund, remember that you’re simply extending the amount of time your money is in the government’s pockets rather than your own.

A tax-smart move?

Filing for an extension can still be tax-smart if you’re missing critical documents or you face unexpected life events that prevent you from devoting sufficient time to your return right now. Please contact us if you need help or have questions about avoiding interest and penalties.

Starting a new business is an exciting time. But before you even open the doors, you generally have to spend a lot of money. You may have to train workers and pay for rent, utilities, marketing and more.

Entrepreneurs are often unaware that many expenses incurred by start-ups can’t be deducted right away.

How expenses are handled on your tax return

When planning a new enterprise, remember these key points:

• Start-up costs include those incurred or paid while creating an active trade or business — or investigating the creation or acquisition of one. Organizational costs include the costs of creating a corporation or partnership.
• Under the federal tax code, taxpayers can elect to deduct up to $5,000 of business start-up and $5,000 of organizational costs. The $5,000 deduction is reduced dollar-for-dollar by the amount by which your total start-up or organizational costs exceed $50,000. Any remaining costs must be amortized over 180 months on a straight-line basis.
• No deductions or amortization write-offs are allowed until the year when “active conduct” of your new business commences. That usually means the year when the enterprise has all the pieces in place to begin earning revenue. To determine if a taxpayer meets this test, the IRS and courts will generally ask: Did the taxpayer undertake the activity intending to earn a profit? Was the taxpayer regularly and actively involved? Has the activity actually begun?

An important decision

Time may be of the essence if you have start-up expenses that you’d like to deduct this year. You need to decide whether to take the elections described above. Recordkeeping is important. Contact us about your business start-up plans. We can help with the tax and other aspects of your new venture.

Tax-advantaged retirement plans allow your money to grow tax-deferred — or, in
the case of Roth accounts, tax-free. But annual contributions are limited by tax law, and any unused limit can’t be carried forward to make larger contributions in future years. So it’s a good idea to use up as much of your annual limits as possible. Have you maxed out your 2015 limits?

April 18 deadline

While it’s too late to add to your 2015 401(k) contributions, there’s still time to make 2015 IRA contributions. The deadline is April 18, 2016. The limit for total contributions to all IRAs generally is $5,500 ($6,500 if you were age 50 or older on December 31, 2015).

A traditional IRA contribution also might provide some savings on your 2015 tax bill. If you and your spouse don’t participate in an employer-sponsored plan such as a 401(k) — or you do but your income doesn’t exceed certain limits — your traditional IRA contribution is fully deductible on your 2015 tax return.

Evaluate your options

If you don’t qualify for a deductible traditional IRA contribution, see if you qualify to make a Roth IRA contribution. If you exceed the applicable income-based limits, a nondeductible traditional IRA contribution may even make sense. Neither of these options will reduce your 2015 tax liability, but they still provide valuable opportunities for tax-deferred or tax-free growth.

We can help you determine which type of contributions you’re eligible for and what makes sense for you.

Every tax season, taxpayers have to be on the lookout for con artists looking to run tax scams. With a variety of tactics at their disposal, these criminals find ways to get your personal information and look to turn it into cash. Let's take a look at five of the most common tax scams that the IRS has highlighted in recent warnings to taxpayers.

1. Identity theft
The most insidious tax scam involves thieves stealing your personal information and using it to file false tax returns on your behalf.  Often, the scam goes unnoticed until you later file your legitimate tax return and the IRS informs you that a return has already been filed. The IRS has issued about 1.5 million personal identification numbers aimed at helping victims of identity theft, and it has also started a pilot program in some states that allows people to get PINs even if they haven't been victimized. For most taxpayers, though, the best defense is to protect your personal information as well as you can.

2. IRS impersonation
Some scams involve threatening emails or phone calls from people purporting to work for the IRS, saying that you could be arrested, have your license revoked, or even get deported if you don't agree to comply with their demands. The IRS reminds taxpayers that it will never call to demand immediate payment, ask for credit or debit card numbers over the phone, or threaten to bring in law enforcement officials.

3. Caller ID spoofing
One tool that many criminals have in their arsenal of tricks is the ability to have your caller ID system display what appears to be a legitimate IRS toll-free customer service number. These scams often involve robo-calling systems and can include a combination of tactics, including related emails and phone calls purporting to be from other organizations like police or DMV. The IRS advises that if you're ever uncertain, hang up and then call the IRS back at 1-800-829-1040 FREE. That way, a real IRS representative can confirm whether there's a legitimate issue.

4. Bogus charitable organizations
The end of the year brings a big uptick in charities asking for donations, and criminals have discovered that many people are willing to part with their money for what they think is a good cause. Earlier this year, four charities claiming to raise money for cancer victims were accused of fraud, with the FTC alleging that donors were taken for $187 million over a five-year period. Often, such charities have convincing names, but it's important to go further to check that these organizations are legitimately registered with the IRS as tax-exempt non-profit organizations. This IRS website will let you enter the name of a charity to verify whether it's legitimate and is still eligible to receive tax-deductible contributions.

5. Tax preparer phishing
Not all scammers target individual taxpayers. In one scam, criminals send out emails to accountants and other tax preparation professionals, telling them that they need to update their information in order to keep using the IRS e-services portal. In the process, the con artists hope that unsuspecting accounts will provide their usernames, passwords, and electronic filing identification numbers. That information in turn can help the criminals impersonate tax preparers and seek to get personal information from clients and other individual taxpayers.

Doing your taxes is hard enough without having to worry about tax scams. With plenty of crooks out there, you can't afford to let up your guard. Knowing the tactics they use can help you avoid getting scammed. Filing your taxes early, with a reputable preparer can also help avoid these scams. 

 

To help protect consumers from telemarketing fraud and educate the public about the differences between legitimate and fraudulent telemarketing practices, in 1995 the Federal Trade Commission (FTC) issued the Telemarketing Sales Rule (TSR). The TSR essentially spells out who and when telemarketers can call and certain things they must say. The rule has been amended several times. And now it's been amended again. Here are the details, including some important background information to help you comply with the FTC's latest requirements.

How Does the TSR Currently Restrict Telemarketers?

The TSR contains several provisions to combat telemarketing fraud. Specifically, the rule:

• Requires disclosures of specific material information, such as details about cost, quantity, offer restrictions and refund policies,
• Prohibits misrepresentations to induce consumers to buy goods or services or make donations,
• Limits when telemarketers may call consumers,
• Requires transmission of Caller ID information,
• Prohibits abandoned outbound calls (subject to a safe harbor),
• Bans unauthorized billing,
• Sets payment restrictions for the sale of certain goods and services, and
• Requires that specific business records be kept for two years.

The TSR has been updated several times. For example, in 2003, the FTC amended the TSR to prohibit telemarketers from calling consumers who have put their phone numbers on the National Do Not Call (DNC) Registry. In another significant amendment, the TSR was expanded to cover solicitations of charitable contributions by for-profit telemarketers. In 2008, the FTC changed the rule to restrict the use of prerecorded messages in telemarketing calls. In 2010, the rule was further amended to address deceptive and abusive debt relief services.

Telemarketing activities may also be regulated by state laws. The FTC and Federal Communications Commission have collaborated with local governments to create a unified national system enabling "one-stop" service for consumers and businesses seeking to comply with the requirements.

Important note: Compliance is serious business. Any business that violates the TSR is subject to civil penalties of up to $16,000 per violation. In addition, violators may be subject to nationwide injunctions that prohibit certain conduct. They also may be required to pay redress to injured consumers.

Are Your Promotional Campaigns Covered by the TSR?

If your telephone marketing campaigns involve any calls across state lines, you may be subject to the TSR's provisions. These campaigns may include outbound telemarketing calls your sales reps make or calls you receive in response to advertisements.

The TSR defines telemarketing as, "A plan, program, or campaign . . . to induce the purchase of goods or services or a charitable contribution" involving more than one interstate telephone call. The TSR also covers calls made from outside the United States if they're made to consumers in the United States.

Some types of businesses aren't covered by the TSR — even though they often engage in telemarketing activities — because they're not regulated by the FTC. Specific exempt entities include:

• Banks, federal credit unions, and federal savings and loans,
• Common carriers, such as long-distance telephone companies and airlines, and
• Not-for-profit organizations.

Businesses that contract with an exempt entity to provide telemarketing services generally must comply with the TSR, however.

Some types of calls also aren't covered by the TSR, regardless of whether the entity making or receiving the call is covered. Examples generally include unsolicited calls from consumers or calls placed by consumers in response to a catalog or direct mail campaign. But upselling — when a telemarketer tries to sell additional goods or services during a single phone call, after an initial transaction — are typically covered by the TSR, even if the initial transaction is exempt.

What Changes Has the FTC Recently Made?

In 2013, the FTC proposed a new set of amendments to the TSR. After a public comment period, the agency has approved final amendments that ban four types of payment methods:

1. Remotely created checks,

2. Remotely created payment orders,

3. Cash reload mechanisms, and

4. Cash-to-cash money transfers.

These methods are favored by fraudsters because they aren't subject to federal laws that protect consumers who use credit or debit cards. In addition, these transactions may be difficult to reverse. For example, once a fraudster anonymously picks up cash from a cash-to-cash money transfer, it's usually irretrievable.

"Con artists like payments that are tough to trace and hard for people to reverse," said Jessica Rich, Director of the FTC's Bureau of Consumer Protection. "The FTC's new telemarketing rules ban payment methods that scammers like, but honest telemarketers don't use."

Some people mistakenly believe that the TSR amendment restricts newer technology-based payment methods, such as authorized online payments from a consumer's bank account or the use of digital checks created with smartphones. That's untrue. The FTC took care to draft its amendments to specifically target the ways scammers exploit novel payment methods that reputable telemarketing companies don't use.

In addition to banning these fraud-prone payment methods, the amended TSR expands the existing restrictions on charging advance fees for recovery services to cover losses both in prior telemarketing and non-telemarketing transactions. Often these advanced fees are associated with deceptive telemarketing practices. And the amended rule clarifies that you must include a description of the goods or services purchased when you tape-record a consumer's "express verifiable authorization" of the charges.

The amendments also make it harder to contact consumers on the National DNC Registry. Here's a summary of the major changes:

• If a consumer's number is on the DNC Registry, the revised rule expressly states that sellers or telemarketers have to demonstrate they have an existing business relationship with the person or have the person's express written agreement to get calls.
• The amended TSR illustrates the kind of burdens that would illegally interfere with a consumer's right to be placed on a seller's or telemarketer's entity-specific do not call list. Examples of impermissible burdens include harassing consumers who make such a request, hanging up on them, requiring the consumer to listen to a sales pitch before accepting the request or requiring the consumer to call a different number to submit the request.
• The revised rule specifies that if a seller or telemarketer doesn't get the information needed to place a consumer's number on their entity-specific do not call list, the business is disqualified from the safe harbor for isolated or accidental violations.
• The amended TSR emphasizes that it's illegal for multiple entities to split the cost of accessing the National DNC Registry.

How Can You Remain TSR-Compliant?

To keep your sales and marketing operations TSR-compliant, you may need to review your current policies and procedures, as well as conduct additional training for your employees. Consult with your professional advisers for more detailed information on the TSR. The latest round of changes will generally go into effect 60 days after the amended rule is published in the Federal Register. However, the payment method prohibitions become effective 120 days later.

 

Like business executives, you may have expertise in marketing, production and sales. Yet the short and long-term profitability of your company relies on strategic planning that looks at marketing, production and sales from several different angles.

Successful companies rely on outside business expertise to help with these issues and more. You want to work with a veteran business consultant who knows taxes, capital planning, and other aspects of business operations -- an expert who can give you:

•  CFO-level business advice.
• Interim CFO/Controller/Treasurer services .
• Profit improvement and turnaround services.
• M&A and investment banking services.
• Strategic business plans, forecasts and budgets.
• Balance sheet, debt and capital planning.
• Solutions to complex business problems.

Contact us. We can provide the knowledge of our industry consultants -- as well as the resources of the rest of our staff -- to help your company grow and prosper.