Ignoring a tax debt could cost you more than you might think. Approximately 16,000 delinquent New York taxpayers were recently informed that their driving licenses will be suspended if they don’t pay up. Businesses or individuals who owe less than $10,000 will not be affected. New York is following the lead of California, which passed a similar law in October 2011.
Lesson from James Gandolfini’s Estate: Look at the Whole Picture
When it comes to planning an estate, it’s important to look at the whole picture. There was recently a lot of buzz surrounding the will of James Gandolfini, the actor from the Sopranos. The media was quick to point out that Mr. Gandolfini‘s last will and testament exposed most of his $70M to estate taxes. The general reaction was one of criticism at clumsy and ill-advised estate planning. We at Urbach and Avraham don’t believe such a reaction is fair.
The goal of estate planning is not just to save taxes; the goal is to provide for your loved ones in the proper manner. Mr. Gandolfini left 20% of his estate to his wife, who was not the mother of his son. Only her portion was protected from estate tax, the other 80%, of which 30% went to each of his sisters and 20% went to his daughter, was exposed. Often in situations involving stepparents and children of previous marriages, parents are reluctant to leave all their money to a surviving spouse, as they want to ensure that their children won’t have to rely on their stepparent to provide for them. What critics fail to mention is that Mr. Gandolfini utilized an excellent estate planning strategy by setting up an irrevocable life insurance trust for his son. By placing his life insurance into the irrevocable trust, he avoided its exposure to estate taxes. Mr. Gandolfini also wanted to provide for his sisters. The portion passing to his sisters does not qualify for the marital deduction and therefore it is subject to estate taxes.
Urbach & Avraham, CPAs, has over two decades of experience working in conjunction with estate attorneys to guide individuals with their estate planning needs. We always take into careful consideration each family’s unique dynamics and needs. Contact us today for a free consultation and for a recommendation for a suitable estate attorney.
Fraud: It’s More Common than You Think
Fraud is a shockingly common problem for businesses. According to a 2012 study performed by the Association of Certified Fraud Examiners (ACFE), the average business loses approximately 5% of its gross revenue to fraud schemes each year. Business owners would be wise to realize that financial fraud may be happening right now in their company, perhaps even perpetrated by their most trusted employee. Potential fraudsters are often people of good character who are experiencing intense financial pressure. They are usually aware of the threshold amounts that require higher level approval for fund disbursement, and are cognizant as well of the amounts that internal and external auditors are likely to flag for review. Thus, they are confident that their fraud will go undetected. What’s a business owner to do? The first step is to be aware of the most common fraud crimes. They include:
- Billing Fraud – creating false vendors, submitting personal invoices for payment
- Check tampering- stealing blank checks or diverting checks to a personal account
- Skimming- accepting payments from a customer and failing to report them
The next step is to perform a risk assessment. This involves a review of current internal controls and the ranking of potential vulnerabilities to fraud. These vulnerabilities should be addressed by eliminating the temptation and opportunity for fraud, as well as ensuring prompt detection of fraud, should it occur. The changes made should be revisited on an ongoing basis and reassessed for effectiveness.
Factors that can further enhance fraud prevention include stricter due diligence and control procedures. Business owners should be aware that their conduct plays an important role as well, setting the “tone at the top”. Creating a strict code of conduct that is adhered to by all establishes a low-tolerance atmosphere that keeps fraudsters at bay. Setting up a whistleblower telephone hotline is another prevention practice worth considering.
If fraud is detected, it is essential to seek assistance of an experienced fraud investigator. The expert may choose to conduct the investigation with oversight from general counsel or outside attorneys.
Urbach & Avraham specializes in risk assesment. Our fraud team, which includes several Certified Fraud Examiners, is ready to help you prevent and identify fraud in your business. Contact us today for a free consultation to assess your company’s needs.
NJ Employer Contribution Deadline Arriving Soon
Beginning 2012, employers no longer receive an annual paper Notice of Employer Contribution Rates. Instead, the notice is now accessible through the Tax Web Enabled System (TWES). As a result of this change, it’s urgent that you check your TWES account as soon as possible. The new rates were posted as early as July 18, and there’s a 30 day deadline (from the date of “mailing”) to make a voluntary contribution. In many circumstances a voluntary contribution represents an excellent opportunity to reduce labor costs. For more information regarding TWES check out our blog at: Set Up TWES Account.
The unemployment expense is a substantial component of your labor cost. Staffing agencies should give it careful attention. If you wish to make a voluntary contribution to your reserve balance you have 30 days from the date of your notice to do so. In addition, we suggest that you verify the amount of the employer contributions and the benefits charged to your account. Report any discrepancies to the NJ Dept. of Labor.
If you would like assistance in determining if a voluntary contribution will save you money, please do not hesitate to contact us. We will provide you with an illustration of the benefits which you stand to reap from making such a contribution. You will be able to weigh the considerations and act accordingly.
Tax Tips for Families with Special Needs Children
Parents of a special needs child face many challenges, not the least of which is the high costs of providing care. Unfortunately, many are unaware that they may be eligible for several tax benefits that can offset some of those expenses. This can result in hundreds, if not thousands of dollars in tax savings. The following are a few key benefits:
- School Expenses – Ordinarily costs related to providing for a child’s education are not deductible. Not so, however, with special needs children. The unreimbursed cost of attending a “special school” for a neurologically or physically handicapped individual is deductible as a medical expense. The only stipulation is that the principal reason for enrolling in that school must be to alleviate the handicap through the school’s resources. The deductible expenses associated with the special school include amounts paid for lodging, meals, transportation, as well as the cost of ordinary education that is incidental to the special services the school provides.
- Conferences and Seminars- Parents and guardians of special needs children often attend medical conferences and seminars to educate themselves about their child’s disability. Provided the conference deals specifically with the child’s medical condition, the cost of the conference is deductible as a medical expense.
- Earned Income Tax Credit- The earned income tax credit, a credit designed to encourage the economically disadvantaged to work. It can amount to as much as $6,044 in 2013. The amount of this credit rises incrementally with the number of children one claims. Normally there is an age limit to qualify for this credit, but not for severely disabled children. They can be claimed as “qualified children” even into adulthood.
Payroll Cards Under Investigation by N.Y. Attorney General
If your company uses payroll cards to compensate its employees, watch out. New York Attorney General Eric Schneiderman has launched an investigation into companies that pay hourly employees by depositing payroll onto pre-paid cards. Why the concern? Payroll cards, like debit cards, typically have fees associated with inquiries, card replacement, ATM withdrawals, or inactivity. Schneiderman’s concern is that the fees associated with these cards may be insufficiently disclosed or excessive and that the fees reduce employees’ take home pay. Payroll cards can raise a host of legal issues for the employer as well. For example, federal law prohibits mandatory use of the cards as a condition of employment. It has been reported that many employees have been forced to accept the card. It would be highly advisable for employers to seek competent counsel to ensure their compliance before it’s too late.