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When Wages are NOT FICA Wages
[June 2010]
Recently
a U.S. District Court found that certain severance payments
were not taxable for purposes of FICA taxation. The ruling
conflicts with IRS Publication 15 (Circular E), Employer’s
Tax Guide, wherein it specifically indicates that severance
pay is taxable for FICA purposes.
Employers, Beware of Hidden Limits in
New tax
Credits
[April
2010]
Under the new health care
legislation recently signed into law, certain small
businesses and tax-exempt organizations that provide health
insurance coverage to their employees will qualify for a new
tax credit. The credit is designed to encourage small
employers to begin to offer health insurance coverage to
employees or maintain their current coverage. However, the
law is more complicated than advertised.
Tax Compliance of S Corporations
[January
2010]
In
light of the report and surging federal budget deficits,
S Corporation shareholders may look forward to new
legislation and additional oversight by the IRS.
Accrual basis
taxpayer forced to use cash method of accounting
[December
2009]
The Office
of Chief Counsel of the IRS recently issued a memorandum
that established the timing of a tax deduction for
certain bonuses earned by employees of an accrual basis
corporate employer. In general, the IRS
effectively denied the deduction of an accrual basis
taxpayer’s bonus obligations until the bonuses were actually paid
to the employees.
Connecticut Outlook Revised by Moody's
[October
2009]
Moody's
Investors Service has revised the outlook on the State
of Connecticut's general obligation bonds to "negative."
The negative outlook reflects the choices made to
address the state's biennial 2010-2011 budget gaps as
well as the shortfall for fiscal 2009. According
to the report issued by the rating agency, the magnitude
of the recent actions taken to balance the budget will
likely cause Connecticut to struggle more than other
states to achieve structural budget balance. Read
the full report issued by Moody's.
OIG Study Finds
Medicare Paid Twice for Ambulance Transportation
[September 2009]
The OIG concluded that
the Medicare program paid twice for ambulance
transportation: once to the SNF under the Part A
prospective payment system and again to the ambulance
supplier under Part B. The
government expects
to recover more than $12 million in overpayments.
A win for taxpayers
[August 2009]
Setting aside the contention that single member LLCs
are “disregarded entities” the court ruled that with
regard to the determination of estate and gift
taxes, such entities may be used to secure valuation
discounts which can lower or eliminate all
related taxes.
FY 10 Medicare
Rates for Connecticut SNFs
[August 2009]
On August 1, 2009, CMS
issued its final rule on Medicare payments to skilled
nursing facilities (SNFs), beginning October 1, 2009.
The final rule recalibrates the case-mix adjustments
used to establish each of the 53 different payment
rates. As a result, payments to SNFs would be reduced
nationally by about $1.05 billion in FY 2010.
Connecticut Charities can Reduce Audit Fees
[July 2009]
Tight
budgets call for creative ways to save money. Audit
fees should not be immune to such fiscal scrutiny.
Indeed, while the auditor should never compromise his or
her audit standards, all audits should be performed as
efficiently as possible. Luckily, in Connecticut,
charities have the ability to reduce audit fees and
still comply with the state’s registration
requirements. However, there are tradeoffs.
FASB Issues New Guidance on Nonprofit Mergers and
Acquisitions
[July 2009]
The
Financial Accounting Standards Board (FASB) recently
issued Statement Number 164 to provide guidance on the
accounting associated with a combination of a nonprofit
entity with one or more other nonprofit entities,
businesses, or nonprofit activities. Many mergers and
acquisitions by nonprofit entities do not involve a
payment of consideration. In other words, many mergers
and acquisitions by nonprofit organizations are not fair
value exchanges but rather are nonreciprocal transfers.
The FASB felt that that difference contributed
significantly to the requirement that different
accounting methods apply to a merger of nonprofit
organizations and an acquisition by a nonprofit entity.
The Codification – a major restructuring of U.S. GAAP
[June 2009]
Current U.S.
GAAP is dispersed, unorganized and confusing. However,
things are about to change. Effective July 1, 2009 GAAP, as
it has been known for the last 50 plus years, will be
restructured and codified into a single source called the
“Codification.” On that date the Codification will
supersede all then-existing non-SEC accounting and reporting
standards – if it’s not in the Codification, it will not be
authoritative.
CMS Proposes Major Changes to SNF
Medicare Rates
[May 2009]
On May 1,
2009, CMS issued a proposal that would change Medicare
payment rates for skilled nursing facilities beginning
October 1, 2009. For Connecticut, most rates would
decrease. For FY11, CMS has also proposed the introduction
of RUGS IV along with other changes that would adversely
influence SNF payments.
Ensuring Compliance by Tax Exempt
Non-filers
[April 2009]
Prompted
by the Inspector General, the IRS is planning additional
enforcement initiatives to ensure compliance with filing
requirements by certain nonprofit organizations.
[March 2009]
The
American Recovery and Reinvestment Act of 2009 calls
for changes to the health benefit provisions of the
Consolidated Omnibus Budget Reconciliation Act of
1985, commonly referred to as COBRA. The new law
affects former employees and their families,
employers and others involved in providing COBRA
coverage. Under the new law, eligible former
employees enrolled in their employer’s health plan
at the time they lost their jobs, are required to
pay only 35 percent of the cost of COBRA coverage.
Employers must treat the 35 percent payment by
eligible former employees as full payment, but
employers are entitled to a credit for the other 65
percent of the COBRA cost on their payroll tax
return.
Combating Fraud – Whistleblower
Hotlines
[February 2009]
This article provides
information on whistleblower hotlines and how they can
be designed as effective fraud detection and prevention
tools.
Is Today a Good Day to go
Bankrupt?
[December 2008]
When to file for protection under the Bankruptcy Code is
a difficult question to answer, but in this case, timing
is important.
Tax Update for 2008
[December 2008]
This is the time of the
year that lends itself to tax planning particularly due to
changes passed by Congress this year and anticipated changes
in 2009 from newly elected President Barack Obama and the
Democratic controlled Congress. This article addresses some
notable planning opportunities.
IRS offers web-based courses on the
new Form 990
[November 2008]
The IRS has created a
series of tax courses that can help tax-exempt organizations
maintain their exempt status and meet filing requirements.
They have added new mini-courses on the redesigned IRS Form
990.
FASB Proposes Change to Going Concern
Assumption
[October 2008]
The
Financial Accounting Standards Board has issued a proposal
that would set forth management’s responsibility to consider
all available information about the future to evaluate a
reporting entity’s ability to continue as a going concern.
The proposal would also require certain disclosures when
there is substantial doubt as to an entity’s ability to
continue as a going concern, even if management’s plans
alleviate that doubt. If adopted, the new standard would
apply to businesses and nonprofit organizations. The
effective date is likely to be during 2009.
OIG Updates Compliance Guidance for
Nursing Facilities
[October 2008]
The Supplemental Compliance
Program Guidance for Nursing Facilities appears to respond
to the government’s focus on quality of care. While
voluntary, the guidance is clearly a warning.
IRS Eliminates Advance Ruling
[September 2008]
The IRS
has issued temporary Income Tax Regulations which eliminate
the advance ruling process for section 501(c)(3)
organizations. Transition rules apply to organizations that
have previously received advance rulings.
FY09 Medicare Rates for Connecticut
SNFs
[August 2008]
The Centers for Medicare
and Medicaid Services (CMS) has published a final rule that sets
forth the factors to be used to compute Medicare rates for
Skilled Nursing Facilities effective October 1, 2008. Based
upon the rule we have estimated the rates for Connecticut SNFs and published our findings.
Employees vs. Independent
Contractors-Tax Concerns
[July 2008]
We have reason to believe
that the IRS may soon implement a special program designed
to ensure that employees are not misclassified as
independent contractors. Depending on the facts and
circumstances the law imposes varying levels of financial
obligations on employers who misclassify workers. The
obligations can be significant if the IRS finds that the
misclassification was intentional.
CMS Proposes Major Change in Medicare SNF Rate Formula
[May 2008]
On May 1, 2007, CMS issued a
proposal that would change Medicare payment rates of skilled
nursing facilities effective October 1, 2008. Among other
things, the proposal includes a recalibration of the
case-mix indices used to establish the 53 different payment
rates under the prospective payment system. If adopted, all
Connecticut SNFs would be affected.
Employment Taxes and the Trust Fund Recovery Penalty
[April 2008]
In light of the troubled
economy, rising unemployment, the sub-prime lending fallout,
and recent business failures, we thought that it was an
opportune time to remind employers of what could happen if
one fails to pay the IRS employment taxes withheld from
employees.
FASB Issues Guidance on Reporting and Disclosure of
Restricted Funds
[March 2008]
Recently the Financial
Accounting Standards Board published a Proposed Staff
Position on the net asset classification of
donor-restricted endowment funds of nonprofit organizations. This article outlines
some of the highlights of the FASB’s position.
IRS Issues New Guidance on
Like-Kind Exchanges:
[February 2008]
Section 1031 of the Internal
Revenue Code provides that no gain or loss is recognized on
the exchange of property held for productive use in a trade
or business or for investment if the property is exchanged
solely for property of like-kind that is to be held either
for productive use in a trade or business or for investment.
The IRS recognizes that many taxpayers hold dwelling units
primarily for the production of current rental income, but
also use the properties occasionally for personal purposes.
A newly issued revenue procedure provides taxpayers with a
safe harbor under which such a dwelling unit will qualify as
property held for productive use in a trade or business or
for investment under section 1031 even though a taxpayer
occasionally uses the dwelling unit for personal purposes.
Non-Profit Governance and Ethical Practice
[November 2007]
A new guide for charities and foundations
from the Panel on the Nonprofit Sector
DSS Audit Tool
[August 2007]
We understand that the Connecticut Department
of Social Services has created an audit checklist to
evaluate compliance with Section 6032 of the Deficit
Reduction Act of 2005 and Provider Bulletin 2007-41. The
Act requires providers that receive at least $5 million in
Medicaid reimbursement to document their policies for
detecting and preventing fraud, waste and abuse. Provider
Bulletin 2007-41 calls for providers to, among other things,
reference certain statutes and regulations in their employee
policies. Elements of the audit checklist, as we understand
it, are incorporated in the attached memorandum.
Final FY08 SNF PPS Rates for
Connecticut
[August 2007]
On August 1, 2007, CMS issued the
final rule to update the SNF Prospective Payment System
(PPS). Based upon the final rule, we have prepared and
enclosed the RUGs rates for Connecticut SNFs.
IRS Publishes Twenty-One Examples of
Political Activities
[June
2007]
The Internal Revenue
Service recently published Revenue Ruling 2007-41, giving
guidance to nonprofit organizations concerning political
activities. Among other things the ruling outlines
twenty-one factual situations that may be applied when
evaluating compliance. The ruling is a “must read” for all
nonprofit organizations.
Proposed FY08 SNF PPS Rates for
Connecticut Not All Good News
[June
2007]
A few
weeks ago CMS issued a proposed rule associated with the SNF
Prospective Payment System (PPS). If adopted, the rule would
update PPS payment rates for FY08. The purpose of this
memorandum is to provide information on how the proposed
rule, if finalized in its current form, would impact
payments to Connecticut nursing facilities.
Health and Human Services Reporter Spring 2007
[May 2007]
The Spring
2007 edition of the Health and Human Service Reporter is now
available on our website. The following were some of the
articles covered in this editions: Rules for Deducting
Charitable Contributions, Amendment to Long-Term Care
Benefits, Pension Protection Act of 2006, DSS Increases
Burial Allowance, and Reliance on Third Party to Pay
Employment Taxes.
Credit for Federal Telephone Excise
Tax Paid
[April
2007]
This year,
taxpayers will find an extra line on their tax return for a
one-time payment available by the IRS. Individuals,
businesses, and tax-exempt organizations are eligible for
the Telephone Excise Tax Refund (TETR) which is designed to
credit or refund the tax paid for long-distance telephone
service between March 1, 2003 and July 31, 2006.
Organizational Governance and the
Independent Auditor
[April
2007]
With
respect to audits of financial statements, the Auditing
Standards Board recently published new standards associated
with auditor communications. Among other things this
article outlines how the new standards affect those charged
with governance and the importance of two-way communication
between the auditor and members of an organization’s
governing body. Organizations, whether for-profit or
nonprofit, are better served if management as well as those
charged with governance have a clear understanding of their
auditor’s responsibilities.
Embezzlement Prevention and Detection
for Small and Mid-size Businesses and Tax Exempt
Organizations
[March
2007]
Embezzlement prevention and
detection is not an exact science. All your best efforts
may not prevent it and if it occurs it might not be detected
for years! Nevertheless, it would be imprudent to rely on
your instincts or hope that it will never happen to your
organization. And, although you may not have the resources
of a large business, there are indeed certain important yet
inexpensive steps you can take to reduce your risks.
Health and Human Services Reporter
Winter 2007
[January 2007]
The Winter 2007 edition of the Health and
Human Service Reporter, our quarterly newsletter, is now
available on our website.
The Health and Human Services Reporter can be viewed on the
News page of the website.
New IRS Web-based Workshop For
Nonprofits
[January 2007]
The IRS has published a
new Internet-based version of its exempt organizations
workshop covering tax compliance issues facing small and
midsized tax-exempt organizations. The workshop, entitled
Stay Exempt—Tax Basics
for 501(c)(3)s , consists of interactive modules
on tax-exempt status, unrelated business income, employment
issues, Form 990, and required disclosures, with links to
related forms and IRS publications.
Medicaid Commission Issues Final
Report
[January 2007]
In 2005 the Medicaid Commission was
established to, among other things, offer recommendations on
the future of the Medicaid program. Its final report was
issued on December 29, 2006. The report makes
recommendations on the future of the Medicaid program
designed to ensure its sustainability. Taken as a whole,
the recommendations promote Medicaid’s long-term fiscal
sustainability, while emphasizing quality of care. Key
principles include recognizing the long-term value of
investments in quality, supporting state flexibility, and
changing how beneficiaries partner with the Medicaid program
by encouraging personal responsibility for health care
decisions and promoting and rewarding healthy behaviors.
From the provider’s perspective, the report presents forward
thinking ideas and opportunities.
Highlights From a Presentation
Affecting Connecticut Nursing Facilities
[November 2006]
The following summarizes certain important
points expressed by representatives of the Department of
Social Services during a presentation that occurred on
November 16, 2006.
IRS Guidance on Change in
Classification
[November 2006]
Under the Pension Protection Act of 2006,
distributions from IRAs to supporting organizations, as
described in section 509(a)(3), are not excludable from the
IRA holder’s income. In addition, distributions from
private foundations to certain supporting organizations
described in section 509(a)(3) are not qualifying
distributions and may be taxable expenditures for the
private foundation. For this reason, organizations
currently classified as supporting organizations, as
described in section 509(a)(3), may wish to seek
reclassification under section 509(a)(1) or (2). The IRS
recently published guidance on the procedures to seek a
reclassification. The guidance is reproduced here.
Organizations should consult with a qualified tax advisor
before they seek reclassification. You may direct questions
to Vincent Ruocco, LLC, CPA at 203.932.2931 or
vruocco@artcpas.com
IRS Guidance Regarding Appraisal
Requirements for Non-cash Charitable Contributions
[November 2006]
IRS Notice 2006-96, released in October,
provides temporary guidance on the new definitions of
“qualified appraisal” and “qualified appraiser” for purposes
of substantiating deductions for charitable contributions of
property. The notice also provides guidance associated with
new penalties for appraisals that result in substantial or
gross valuation misstatements. This information may be
useful for both donors as well as charitable organizations.
Questions may be directed to Vincent Ruocco, LLC, CPA at
203.932.2931.
OIG Annual Report FY04 and FY05
[October 2006]
Recently, the Office of Inspector General (OIG)
issued its Annual Report on State Medicaid Fraud Control
Units. The report covers two fiscal years from October 1,
2003 to September 30, 2005. Among other things, it
describes a series of examples involving Medicaid fraudulent
activities, the types of providers involved, and the
penalties imposed. It’s a must read by all
compliance officers.
The Domestic Production Activities Tax
Deduction
[October 2006]
The purpose of this article is to provide
information about the tax benefits available under Section
199 of the Internal Revenue Code. Section 199 allows a
special tax deduction to qualified taxpayers involved in
certain domestic production activities.
New Tax Law Affects Charitable Giving
[October 2006]
The recently enacted Pension Protection Act
of 2006 contains a package of provisions to help prevent
abuse in the charitable sector and provide additional tax
incentives for Americans to give more resources to the
charitable community. The following provides a brief
overview of those provisions.
Connecticut Medicare Rates for FY07
[August 2006]
In July, 2006, CMS issued the
final rule to update the SNF Prospective Payment System
(PPS). Based upon the final rule, we have prepared and
enclosed the RUGs rates for Connecticut SNFs.
Health and Human Services Reporter
[July 2006]
We have added a new section to our website
that includes the articles from our quarterly newsletter.
The Health and Human Services Reporter can be viewed on the
News page of the website.
Personal Needs Allowance Increase for
Residents of Long Term Care Facilities
[July 2006]
The State of Connecticut Department of Social
Services has issued a reminder that personal needs
allowances of Medicaid recipients who reside in long term
care facilities will increase every July 1st, by the cost of
living adjustment afforded to Social Security recipients.
Read the article to find out about other increases as well.
Federal Energy Related Tax Incentives
[July 2006]
This article is a brief summary of The Energy
Tax Incentives Act of 2005, which contains a series of
federal tax benefits to encourage conservation and fuel
efficiency by individuals and manufacturers.
Available Seminars
[June 2006]
This new section of the website
offers a variety of seminar topics.
In addition to
meeting with clients, we also offer our services to trade
shows, conferences, and company events. For a list of
seminar topics, please see our SERVICES page.
Sample Conflict of Interest Policy
[June 2006]
Adoption of a
conflict of interest policy is not
required to obtain tax-exempt
status. However, by adopting the
sample policy or a similar policy,
conflict of interest policies help
to ensure that no person benefits
inappropriately from any
transactions in which the
organization is involved. The
following is a sample conflict of
interest policy.
Guidance for Vehicle Donation Programs
[June 2006]
The Internal Revenue Service recently issued
a publication that provides guidance for charities operating
vehicle donation programs. Among other things, the guidance
warns that a penalty applies if a charity knowingly
furnishes a donor with a false or fraudulent acknowledgment
for a vehicle contribution deduction of more than $500, or
knowingly fails to furnish an acknowledgment with the
required information.
Panel on the Nonprofit Sector
Supplemental Report
[April 2006]
Last June we posted the Panel on the
Nonprofit Sector report. Due to the complexity of the issues
it was considering and the short time available, the Panel
and Work Groups continued to analyze additional areas
related to transparency and accountability. This work led to
recommendations in nine different areas, which are presented
in this supplemental report.
What You Should Know About Outsourcing
Payroll
[April 2006]
Many employers outsource some of their
payroll and related tax duties to third party payroll
service providers. This can be a sound business practice;
however it is important to know your tax responsibilities as
an employer. This article contains helpful information on
how to protect yourself and your business.
Congressional Budget Office Cost
Estimate
[February 2006]
The
Congressional budget resolution for fiscal year 2006 (H.
Con. Res. 95) instructed several committees in both the
House of Representatives and the Senate to recommend
legislative changes that would reduce outlays from direct
spending by about $35 billion over the 2006-2010 period.
That process is known as reconciliation and its results are
embodied in S. 1932. We have attached a summary for your
review.
IRS Announces New Reporting
Requirements for Taxable Payments Under Nonqualified Plans
[February 2006]
Not long ago, Congress enacted legislation to
change the tax attributes of certain so-called nonqualified
deferred compensation plans. Generally, nonqualified plans
are deferred compensation arrangements for employees other
than qualified pension and 401k retirement plans. Part of
the new rules called for certain reporting requirements for
taxable amounts. In that regard, the IRS recently released a
special announcement to employers on how to report such
payments. We have attached the announcement for your review.
FY 07 Midterm Budget Adjustments
[February 2006]
On February 8, 2006, Governor M. Jodi Rell
introduced the FY 2006-07 Midterm Budget Adjustments at a
joint meeting of the Connecticut General Assembly. The
following is a brief summary of major budget policy changes.
Quarterly Federal Tax Developments
[Jan 2006]
Although hurricane-related legislation (the
Gulf Opportunity Zone Act of 2005 and the Katrina Emergency
Tax Relief Act of 2005) dominated the tax news in the last
quarter of 2005, there were many other important tax
developments that may affect you, your family, your
investments, and your livelihood.
IRS Increases User Fees for Nonprofits
[Jan 2006]
In December 2005, the IRS announced increases
in selected user fees including fees for letter rulings and
determination letters for exempt organizations. According to
the IRS, the Office of Management and Budget directed
federal agencies to charge user fees reflecting the full
cost of providing goods or services when the benefits to the
recipient otherwise exceed those received by the general
public. Many IRS user fees had remained unchanged for years.
The IRS stated in its announcement that the new fee
structure will more accurately reflect the resources
expended. Although the fees have increased, the Service
indicates that it will continue to be sensitive to the
financial resources of smaller organizations. For a list of
the changes,
Click here.
Pension Protection Act of 2005
[Dec 2005]
The House Committee on Ways and Means
recently adopted H.R. 2830, the Pension Protection Act of
2005. The proposed legislature, if enacted, would make
significant changes in retirement plans affecting virtually
all employees and employers.
Governor M. Jodi Rell Press Release
[October 2005]
On October 21,2005 Governor M. Jodi Rell gave
a press release expressing her opinion on Legislative
requests for tax returns. "Tax returns are one of the most
personal documents any of us possess," Rell stated.
Events Calendar
[October 2005]
Find out about special events and seminars
that the partners are involved in. Click on the Events
Calendar link to the left to find out about upcoming events
and seminars. Remember to check periodically for updates to
the Events Calendar.
Quarterly Federal Tax Developments
[October 2005]
The following is a summary of the most
important tax developments that have occurred in the past
three months that may affect you, your family, your
investments, and your livelihood.
Warning from the Office of the
Inspector General
[October 2005]
In
September 1999, the Office of Inspector General issued a
notice concerning, among other things, excluded
individuals and entities. More recent events have
indicated to us that with the passage of time providers may
have forgotten about the OIG’s warning. Therefore we have
reproduced excerpts from the notice.
Ceasar Anquillare Named Expert
Financial Advisor
[September 2005]
Ceasar Anquillare, Senior Partner at ART, was
recently announced as the Business Development Consultant
for The Community Bank, headquartered in Bridgeport,
Connecticut.
Nonprofit Links
[September 2005]
View our Links page for a list of informative
websites dedicated exclusively for nonprofit organizations.
Connecticut Medicare Rates for FY06
[August 2005]
In July 2005, CMS issued the final rule to
update the SNF Prospective Payment System (PPS). Based upon
the final rule, we have prepared and enclosed the RUGs rates
for Connecticut SNFs.
Energy Act of 2005
[August 2005]
President Bush recently signed the new Energy
Act of 2005. Find out how making energy saving (and some
energy creating) improvements can lead to new and
substantial tax incentives.
Using Insurance as Compensation- Part
II
[July 2005]
Part II of a multi-part article about how to
use insurance to compensate management personnel. Part I is
also available on our News page.
Like-Kind Exchanges
[June 2005]
This discussion of like-kind exchange rules
will outline how you might be able to dispose of appreciated
property without being taxed on the gain.
Panel on the Nonprofit Sector Report
[June 2005]
The Panel on the Nonprofit Sector has finally
issued its report on how to strengthen the sector's
accountability, transparency, and governance. The report
includes 15 major recommendations that, if implemented,
would have an impact on virtually all nonprofit
organizations that file Form 990 or 990-PF. (NOTE: File is
740k)
Provider Tax- Rebase
[June 2005]
The latest estimates (as of June 21, 2005)
associated with sBH 6940 as amended by HB 7000 and related
nursing facility cost adjustments included in SFY 2006
budget according to the State of Connecticut, Department of
Social Services. The following is both the provider tax
summary and detail by home.
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