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
BUSINESS FORUM
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.
Budgeting for 2013 FUTA Payments
The “standard” current FUTA tax rate is 0.6%. However, the rate could be higher under certain circumstances. When a state lacks the funds to pay UI benefits, as was the case for New Jersey in 2011 and 2012, it may obtain loans from the federal government. If the loan is not repaid within a certain time period, wages paid in that state are subject to higher FUTA tax rates.
In 2011, as a result of the federal loan, the FUTA rate on New Jersey wages was 0.9% instead of 0.6% on wages up to $7,000. Since New Jersey has not repaid its loan from Uncle Sam in 2012; the rate increases from 0.9% to 1.2% retroactively as of January 1, 2012.
The important issue here is that payments so far in the first three quarters of 2012 were only required at the “standard” rate of 0.6%. The difference between 1.2% and the 0.6% that was actually paid plus the fourth quarter at 1.2% is due January 31, 2013 for all of 2012. If you remember getting hit with a large FUTA deposit requirement in January 2012, the 2013 hit will be double since last year you paid for a 0.3% increase over the “standard” rate and in 2012 you are paying a 0.6% increase over the “standard” rate.
This increase should be taken into consideration by businesses in which labor is a major component of cost of goods sold, such as staffing agencies and construction companies, when doing year end budgeting. Make sure you account for this tax payment in your January 2013 cash flow considerations.
Unless NJ repays the loan in 2013, the penalty tax will increase again to 0.9% for 2013. You might want to budget for this in your April, July and October 2013 FUTA payments.
Urbach & Avraham Welcomes Partner Aryeh Levy
Urbach & Avraham, CPAs would like to welcome new partner Aryeh Levy. Aryeh brings with him over 35 years of public accounting experience, as well as a sterling reputation. His specialties include audits, reviews, compilations and other attest engagements including personal financial statements. Those benefiting from his expertise have included, among others, service, distribution, and manufacturing companies, medical practices, health care firms, real estate ventures (including HUD projects), and retirement planners. Aryeh also has extensive experience in tax planning, and return preparation. He handles multi-state corporate tax issues as well as complex individual income taxes including taxation of individuals and businesses operating overseas. He regularly consults on various accounting and tax issues with accounting firms around the world.
Although Aryeh just recently joined the U&A team he is no stranger to us. Jeff and Pamela have known him, both personally and professionally, for over 30 years. We are most fortunate to have him on board.Article Sponsored Find something for everyone in our collection of colourful https://www.swisswatch.is bright and stylish socks. Buy individually or in bundles to add color to your sock drawer!
$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.
The Physician “Megagroup”: Pros and Cons
The constantly evolving healthcare industry has caused many physicians to rethink their practice options. The most common options available today are to stay as is, become an employee of a hospital or healthcare network, or sell the practice to a hospital or healthcare network. There is another option which maybe the best choice for many medical practices: the “megagroup”.
A “megagroup” comprises several independent medical practices (referred to as divisions) that join together and become one larger practice. It can be a single specialty or multispecialty practice, usually staffing at least 30 to 40 physicians. As with most big decisions, there are pros and cons to consider.
A major advantage to joining a “megagroup,” rather than aligning with a hospital or healthcare network, is that you retain a high degree of autonomy while still maintaining, and very often improving, quality of care. It also can improve a physician’s bottom line, as many administrative positions (e.g billing, managed care contracting, human resources, purchasing, information technology, accounting) are centralized in a central business office (CBO). Other advantages include an increased likelihood of recruiting and retaining top physicians, greater access to information technology (IT), improved ability to deal with regulatory pressures, and greater access to bank financing.
There are a number of risks to consider as well. There is typically a large initial capital investment, and joining practices links the physician to the group debt of the “megagroup”. There is also a very considerable time commitment on the part of the founding partners in getting the operation going and keeping it afloat. Finally, if it is unsuccessful, the costs associated with member withdrawal (or even worse, an “unwinding” of the entire “megagroup”) are significant.
Is joining a “megagroup” the right decision for your practice? Call Urbach & Avraham today and let our experienced team of CPAs guide your medical practice in the direction that best suits your needs and aspirations.