The Newark Star Ledger recently turned to Pamela Avraham of Urbach and Avraham, CPAs for her take on the effects of the 2012 FUTA increase for NJ employers . This FUTA increase is now payable in Jan. 2013 and came as a surprise to many employers. Pamela was quoted in the January 20, 2013 edition, describing the challenge that many staffing agencies face due to the increase. Urbach & Avraham is especially attuned to concerns regarding the FUTA increase, as we service many staffing agencies and small businesses. These firms are going to be impacted more significantly, as they tend to have a larger number of low wage employees.
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NJ Issues Technical Bulletin on Sales and Use Tax for Attorneys
On January 15, 2013, the NJ Division of Taxation issued a technical bulletin on the taxability of purchases made by lawyers and law firms. Lawyers who practice in New Jersey are not liable for collecting sales tax on charges for professional services performed by their practice. They are, however, required to pay sales or use tax on all purchases of taxable tangible property, specified digital products, and certain services used by their firm, unless otherwise exempted by law. Purchases subject to sales and use tax that are common to law firms include: [Read more…] about NJ Issues Technical Bulletin on Sales and Use Tax for Attorneys
Limit on Mortgage Interest Deduction for Married Filing Separate
In an interesting 2012 Tax Court case, Bronstein vs. Commissioner, the strict interpretation of the Section 163 limitation on the mortgage interest deduction for married taxpayers filing separately was brought into question. Faina Bronstein and her husband purchased a $1.3 million home in 2007, taking out a $1 million mortgage. The home was their primary residence. The Bronsteins chose the option of “married filing separate” that year, and Faina deducted all of the mortgage interest paid (which amounted to $50,000). The IRS, using a plain interpretation of the statute, disallowed half of Faina’s deduction. Section 163, the statute governing the $1,000,000 limitation provides that: [Read more…] about Limit on Mortgage Interest Deduction for Married Filing Separate
Pamela Avraham Achieves Fraud Examiner Certification
Congratulations to Partner Pamela Avraham on her well-deserved certification as a Certified Fraud Examiner (CFE). It comes as no surprise that Pamela passed all four sections of the CFE exam on the first sitting, as she has used her forensic skills in preventing and detecting fraud for over 25 years. Clients who have gained from her expertise are from a wide range of industries, including medical and health care practices and staffing agencies.
Pamela has also applied her forensic accounting abilities in the reconstruction of books and records for fiduciaries, and has frequently prepared court accountings for executors, trustees and guardians. Her unique expertise and experience is reflected in the outstanding success of the U&A forensic team.
$788,000 Embezzled from Edison Law Firm’s Trust Funds
In a recent case, two former employees of an Edison law firm embezzled more than $788,000 over 2 years from their firm by improperly writing checks from the law firm’s trust account to themselves as well as to their creditors. One of the conspirators was the secretary who had access to the accounting records, thus she was able to hide the embezzlement by simply changing the payee information in the records. The fact that the embezzlement went on for so long is indicative of weak internal control. A simple reconciliation of the trust account check book would have detected the fraudulent recordkeeping immediately.
Strong internal control is always essential, but particularly when it comes to funds that aren’t privately owned and therefore not as closely monitored, such as an attorney trust fund. Segregation of duties is the cornerstone of any strong internal control, ensuring that no one employee is involved with every part of a transaction. In the above case, however, even though duties were properly segregated, the two workers colluded together. This makes fraud much more difficult to detect. The key is a frequent and ongoing reconciliation of your records. Don’t become a statistic.
Opportunity for Noncompliant U.S. Citizens Overseas to Avoid Penalties
Are you a U.S. citizen living overseas with a foreign bank account? If your accounts hold more than $10,000 in the aggregate anytime during the year, you are required to file an FBAR (Report of Foreign Bank Accounts) by June 30th of the following year. It doesn’t matter whether foreign accounts generate income or not; just owning them, or having signature authority, requires you to file. Failure to file can result in severe civil penalties and potential prosecution followed by a term in federal prison. [Read more…] about Opportunity for Noncompliant U.S. Citizens Overseas to Avoid Penalties