Although the SEC has not historically been involved in above-the-line taxes, such as sales taxes, “the times they are a-changin’.” The SEC has sanctioned and fined several companies for failure to properly collect, remit, and/or account for sales taxes.
In one instance a company was fined $200,000 for failure to maintain proper internal controls and books and records relating to sales taxes. The company was found to not have proper controls in place to properly tax and track the transactions in question over a period of several years. As a result the company was found to be in violation of § 13(b)(2)(B) of the Exchange Act.
In another instance, the SEC found that a company had improperly released a reserve related to sales taxes which resulted in a 12% overstatement of income. Further, the company was found to be lacking in the tracking of its exemption certificates, and to not be registered as required in many jurisdictions.
As illustrated by these examples, the penalties for improperly accounting for sales taxes can be more than paying back taxes and related interest. Penalties from taxing authorities and other oversight organizations can be significant. While sales tax audit defense services are often viewed as the first line of defense, there are several ways the public and private companies can become compliant in the areas of sales and use taxes and remediate historical exposures, including:
1. Policies and Procedures Review – Review the company’s current sales tax policies and procedures with an eye toward seeking opportunities for improvement.
2. Voluntary Disclosure Agreements/Amnesties – Historical exposures can be remediated by entering into voluntary disclosure agreements and/or amnesty agreements which may limit the prior periods for which uncollected taxes must be paid, and which waive penalties and/or interest.
3. Nexus Studies and Taxability Matrices – Determine where companies have filing responsibilities and the taxability of various revenue streams to help ensure compliance with applicable sales/use tax laws.
4. Reverse Audits – Not all problems result in underpayments/exposure. Many times when companies do not understand the intricacies of sales/use taxes the results include over payments. Companies can identify overpayments and apply for refunds to ensure they are not paying more than their fair share of taxes.
If you have any questions regarding the above content, please contact Saltmarsh, Cleaveland & Gund (850) 435-8300.
This publication is intended to provide general information to our friends. It does not constitute accounting, tax, or legal advice; nor is it intended to convey a thorough treatment of the subject matter.
This publication has been prepared by EisnerAmper LLP for informational purposes only. These materials do not constitute accounting, tax or legal advice and cannot be relied upon by any taxpayer for the purpose of avoiding penalties imposed under the Internal Revenue Code.
Redistributed by Saltmarsh with permission.
Monday, March 28, 2011
Benefits Alert - Fiduciaries Need to Plan Now to Comply with DOL's Final Regulation on Transparency of Fees and Expenses
Beginning January 1, 2012 (for calendar year plans), the Department of Labor's Employee Benefits Security Administration ("EBSA") will require retirement plans that allow participants to direct the investment of their accounts (typically 401(k) and 403(b) plans) to provide extensive information regarding fees and expenses related to a plan's investment options so that plan participants can more easily compare the costs of various investment options. This annual disclosure must also include performance information for each investment option offered under a plan. Additionally, participants must receive quarterly disclosure of the amounts and nature of expenses deducted directly from their accounts.
The burden of this new and complex set of disclosures will rest with a plan's fiduciaries, who are typically officers of the plan sponsor. The investment of a plan's assets is a fiduciary act governed by the fiduciary standards in ERISA. Plan fiduciaries may allow participants to self-direct investments under ERISA section 404(c), which has always required the disclosure of information about a plan's investments under a participant-directed plan. This requirement has typically been met by making available fund prospectuses (or equivalent information) or information generated by software providers that consolidate such information. Knowledgeable plan participants have been able to make informed investment decisions under the existing regulations; however, EBSA believed that enabling the average plan participant to make informed decisions required the use of standard methodologies when calculating and disclosing fee, expense, and investment return information in order to provide ease of comparison between investments. Consequently, the final regulation requires plan fiduciaries to provide the information discussed below.
Initial and Annual Disclosure
The information below must be given to participants on or before the date they can first direct their investments, and then annually thereafter.
Plan-related information
• General plan information, which consists of information about the structure and mechanics of the plan, such as an explanation of how to give investment instructions, a current list of the plan's investment options, and a description of any brokerage or similar arrangement that enables the selection of investments beyond those designated by the plan.
• Administrative expense information, which is an explanation of any fees and expenses for general plan administrative services that may be charged to or deducted from individual participant accounts (for example, fees and expenses for legal, accounting, and recordkeeping services).
• Individual expense information, which is an explanation of any fees and expenses that may be charged to or deducted from the individual participant's account based on the actions taken by the participant (for example, fees and expenses for participant loans and for processing qualified domestic relations orders).
Investment-related information
• Performance Data: Participants must be provided specific information about historical investment performance. The one-, five-, and ten-year investment returns must be provided for investment options, such as mutual funds, that do not have fixed rates of return. For investment options that have a fixed or stated rate of return, the annual rate of return and the term of the investment must be disclosed.
• Benchmark Information: For investment options that do not have a fixed rate of return, the name and returns of an appropriate broad-based securities market index over one-, five-, and ten-year periods (matching the performance data periods above) must be provided. Investment options with fixed rates of return are not subject to this requirement.
• Fee and Expense Information: For investment options that do not have a fixed rate of return, the total annual operating expenses of the investment expressed as both a percentage of assets and as a dollar amount for each $1,000 invested, and any shareholder-type fees or restrictions on the participant's ability to purchase or withdraw from the investment, must be provided. For investment options that have a fixed rate of return, any shareholder-type fees or restrictions on the participant's ability to purchase or withdraw from the investment must be provided.
• Internet Web Site Address: Investment-related information includes the requirement to provide an internet web site address that is sufficiently specific to provide access to additional information about the investment options available under a plan for those participants who want more detail or more current information.
• Glossary of terms: Investment-related information includes a general glossary of terms to assist participants in understanding the plan's investment options, or an internet web site address that is sufficiently specific to provide access to such a glossary.
Quarterly Disclosure
In addition to the above information, participants must receive statements, at least quarterly, showing the dollar amount of the plan-related fees and expenses actually charged to or deducted from their individual accounts along with a description of the services for which the charge or deduction was made. These disclosures may be (but are not required to be) included in the quarterly benefit statements that are required to be provided to plan participants who participate in participant-directed plans.
Other Requirements
The investment information required under the final regulation must be furnished in a chart or similar format designed to facilitate a comparison of each investment option available under the plan. The good news is that the final regulation includes a model comparative chart that may be used by a plan administrator to satisfy the regulation's requirement that a plan's investment option information be provided in a comparative format. The bad news is that the information required is extensive and plan fiduciaries are going to need to spend a considerable amount time and money if their plan's investment advisor can not produce the information in a compliant format. If requested by a participant, the plan sponsor or plan fiduciaries must also furnish prospectuses, financial reports and statements of valuation of assets held by an investment option under a plan.
Impact on Plan Sponsors and Fiduciaries
This new requirement will create additional work and/or costs for plan sponsors. Plan sponsors and fiduciaries need to begin now in order to identify and quantify all expenses paid from their plan's assets and then decide on a compliant format and medium for communicating this information to plan participants. Additionally, discussions should begin now with the plan's investment advisor or investment provider to determine whether compliant performance data, performance benchmarks, and a glossary of terms will be provided timely for inclusion with the general information required under the final regulation, as well as how such information will be maintained and updated.
The final regulation will become applicable for plan years beginning on or after November 1, 2011. For calendar year plans, compliance will be required on January 1, 2012.
For more information, please contact Saltmarsh, Cleaveland & Gund (850) 435-8300.
This publication is intended to provide general information to our friends. It does not constitute accounting, tax, or legal advice; nor is it intended to convey a thorough treatment of the subject matter.
This publication has been prepared by EisnerAmper LLP for informational purposes only. These materials do not constitute accounting, tax or legal advice and cannot be relied upon by any taxpayer for the purpose of avoiding penalties imposed under the Internal Revenue Code.
Redistributed by Saltmarsh with permission.
The burden of this new and complex set of disclosures will rest with a plan's fiduciaries, who are typically officers of the plan sponsor. The investment of a plan's assets is a fiduciary act governed by the fiduciary standards in ERISA. Plan fiduciaries may allow participants to self-direct investments under ERISA section 404(c), which has always required the disclosure of information about a plan's investments under a participant-directed plan. This requirement has typically been met by making available fund prospectuses (or equivalent information) or information generated by software providers that consolidate such information. Knowledgeable plan participants have been able to make informed investment decisions under the existing regulations; however, EBSA believed that enabling the average plan participant to make informed decisions required the use of standard methodologies when calculating and disclosing fee, expense, and investment return information in order to provide ease of comparison between investments. Consequently, the final regulation requires plan fiduciaries to provide the information discussed below.
Initial and Annual Disclosure
The information below must be given to participants on or before the date they can first direct their investments, and then annually thereafter.
Plan-related information
• General plan information, which consists of information about the structure and mechanics of the plan, such as an explanation of how to give investment instructions, a current list of the plan's investment options, and a description of any brokerage or similar arrangement that enables the selection of investments beyond those designated by the plan.
• Administrative expense information, which is an explanation of any fees and expenses for general plan administrative services that may be charged to or deducted from individual participant accounts (for example, fees and expenses for legal, accounting, and recordkeeping services).
• Individual expense information, which is an explanation of any fees and expenses that may be charged to or deducted from the individual participant's account based on the actions taken by the participant (for example, fees and expenses for participant loans and for processing qualified domestic relations orders).
Investment-related information
• Performance Data: Participants must be provided specific information about historical investment performance. The one-, five-, and ten-year investment returns must be provided for investment options, such as mutual funds, that do not have fixed rates of return. For investment options that have a fixed or stated rate of return, the annual rate of return and the term of the investment must be disclosed.
• Benchmark Information: For investment options that do not have a fixed rate of return, the name and returns of an appropriate broad-based securities market index over one-, five-, and ten-year periods (matching the performance data periods above) must be provided. Investment options with fixed rates of return are not subject to this requirement.
• Fee and Expense Information: For investment options that do not have a fixed rate of return, the total annual operating expenses of the investment expressed as both a percentage of assets and as a dollar amount for each $1,000 invested, and any shareholder-type fees or restrictions on the participant's ability to purchase or withdraw from the investment, must be provided. For investment options that have a fixed rate of return, any shareholder-type fees or restrictions on the participant's ability to purchase or withdraw from the investment must be provided.
• Internet Web Site Address: Investment-related information includes the requirement to provide an internet web site address that is sufficiently specific to provide access to additional information about the investment options available under a plan for those participants who want more detail or more current information.
• Glossary of terms: Investment-related information includes a general glossary of terms to assist participants in understanding the plan's investment options, or an internet web site address that is sufficiently specific to provide access to such a glossary.
Quarterly Disclosure
In addition to the above information, participants must receive statements, at least quarterly, showing the dollar amount of the plan-related fees and expenses actually charged to or deducted from their individual accounts along with a description of the services for which the charge or deduction was made. These disclosures may be (but are not required to be) included in the quarterly benefit statements that are required to be provided to plan participants who participate in participant-directed plans.
Other Requirements
The investment information required under the final regulation must be furnished in a chart or similar format designed to facilitate a comparison of each investment option available under the plan. The good news is that the final regulation includes a model comparative chart that may be used by a plan administrator to satisfy the regulation's requirement that a plan's investment option information be provided in a comparative format. The bad news is that the information required is extensive and plan fiduciaries are going to need to spend a considerable amount time and money if their plan's investment advisor can not produce the information in a compliant format. If requested by a participant, the plan sponsor or plan fiduciaries must also furnish prospectuses, financial reports and statements of valuation of assets held by an investment option under a plan.
Impact on Plan Sponsors and Fiduciaries
This new requirement will create additional work and/or costs for plan sponsors. Plan sponsors and fiduciaries need to begin now in order to identify and quantify all expenses paid from their plan's assets and then decide on a compliant format and medium for communicating this information to plan participants. Additionally, discussions should begin now with the plan's investment advisor or investment provider to determine whether compliant performance data, performance benchmarks, and a glossary of terms will be provided timely for inclusion with the general information required under the final regulation, as well as how such information will be maintained and updated.
The final regulation will become applicable for plan years beginning on or after November 1, 2011. For calendar year plans, compliance will be required on January 1, 2012.
For more information, please contact Saltmarsh, Cleaveland & Gund (850) 435-8300.
This publication is intended to provide general information to our friends. It does not constitute accounting, tax, or legal advice; nor is it intended to convey a thorough treatment of the subject matter.
This publication has been prepared by EisnerAmper LLP for informational purposes only. These materials do not constitute accounting, tax or legal advice and cannot be relied upon by any taxpayer for the purpose of avoiding penalties imposed under the Internal Revenue Code.
Redistributed by Saltmarsh with permission.
Elbert A. Botts Estate donates $1.4 million to Troy University
TROY—The estate of Elbert A. Botts today presented a $1.4 million donation to Troy University which will support the School of Accountancy and geomatics program.
Dr. Jack Hawkins, Jr., Chancellor, expressed appreciation for the gift and said it would help advance two of the University’s strongest academic programs.
“The investment of this bequest reflects the value placed on this university by the Botts family and for that we are grateful,” Dr. Hawkins said.
A native of Pike County, Ala., Elbert Botts attended Troy University (then called Troy State Teachers College) in the 1940s. He went on to open a successful garden center in Augusta, Ga., The Green Thumb West, which he worked at until his death in 1995. He was known both as a civic leader and a statewide pioneer in the horticulture industry.
Botts’ nephews, Richard and Nathan Botts (Director of Financial Institution Services at Saltmarsh), made the presentation to TROY officials during a luncheon ceremony at the University’s Foundation Office.
“Uncle Elbert believed in education and felt that [his college education] allowed him to become as successful as he was,” Nathan Botts said.
“He really thought a lot about the community that he grew up in and thought a lot about education,” Richard Botts said. “This gift is going to a great place and you will do great works with it.”
The donation will support scholarships for future geomatics students, said Dr. Steve Ramroop, director of the Surveying and Geomatics Program, and will allow the program to add new technology and faculty.
“As director, I want to thank the Botts family for this generous gift,” Dr. Ramroop said. “It will support scholarships for students who are committed to success in the program.”
The School of Accountancy will use the gift to fund a professorship in accounting, said program director Dr. Kaye Sheridan.
“We can’t thank [the Botts family] enough for this timely gift,” Dr. Sheridan said. “To have a great program you need great faculty, and this gift will give us an advantage when it comes to attracting great faculty members.”
For more info click here.
Wednesday, March 23, 2011
Important Tax Alert: Requirements for filing 2010 FORM 90-22.1
REPORT OF FOREIGN BANK AND FINANCIAL ACCOUNTS (FBAR)
The purpose of this Alert is to remind you of the requirement to file the 2010 United States (U.S.) Treasury Department Form 90-22.1 for non-U.S. bank and financial accounts if the aggregate value of the financial account(s) exceeds $10,000 at any time during the year.
This updated release covers the final rules released by the Treasury Department’s Financial Crimes Enforcement Network (FinCEN) on February 23, 2011.
Form 90-22.1 is filed separately from your tax return and must be received by the Treasury Department no later than June 30, 2011. The form cannot currently be filed electronically and the sender cannot rely on a postmark date, rather than actual receipt.
The Treasury Department will impose a civil penalty of up to $10,000 on any person who does not comply with the filing requirements, even if the lack of filing is non-willful. For a willful violation, the penalty can be as high as the greater of $100,000 or 50% of the highest amount in the foreign account during the reportable calendar year.
Who Must File?
In general, the form is required to be filed by any U.S. person which has a financial interest in or signatory authority over any foreign financial account.
Reminder: For 2009 and previous calendar years, persons with signature authority over, but no financial interest in, a foreign financial account were granted an extension to June 30, 2011 to file FBARs for those years under Notice 2010-23. Those filing such prior year FBARs can also rely on the guidance in the final rules issued by FinCEN discussed in this letter.
U.S. person: For legal entities, this includes a corporation, partnership, limited liability company, or trust created, organized or formed under the laws of the United States, any U.S. State, the District of Columbia, a U.S. territory or possession, or an Indian Tribe.
Observations:
• For a trust formed under one of the U.S. laws listed above, a filing by the trustee is required even though non-U.S. persons control all of the substantial decisions of the trust, making it a foreign trust for U.S. federal tax purposes under the IRC.
• A foreign corporation that elects to be treated as a U.S. corporation for income tax purposes does not have an FBAR filing obligation, because it was not organized or formed under the laws of the United States.
For individuals, this includes U.S. citizens, lawful permanent residents (green card holders) – even if he or she elects to be treated as a nonresident under an income tax treaty – or persons meeting the substantial presence test for income tax residency under the Internal Revenue Code (IRC).
Observations:
• Nonresident aliens, even those “in and doing business in the United States” during the tax year, do not have a reporting obligation under the final rules.
• A determination of whether a person is a U.S. resident is made without regard to an election by a nonresident alien to file a joint tax return with a U.S. spouse.
• An individual who elects to be treated as a resident for federal income tax purposes is also required to file an FBAR, but only with respect to those foreign financial accounts held during the period covered by the election.
Foreign: An account is not a foreign account under the FBAR rules if it is maintained with a financial institution located in the U.S. For example, if you purchase a foreign security through a U.S. account maintained with a securities broker, you will not have an FBAR filing requirement.
Financial account: This broadly includes any bank, securities, derivatives, foreign mutual fund or other financial instruments account (including any savings and demand deposits, checking accounts, certificates of deposit, or other account maintained with an institution engaged in the business of banking). Financial accounts also include an account with a person that is in the business of accepting deposits as a financial agency (defined as “a person acting for a person as a financial institution, bailee, depository trustee, or agent, or acting in a similar way related to money, credit, securities, gold, or a transaction in money, credit, securities, or gold.”), or a person that acts as a broker or dealer for futures or option transactions in any commodity or is subject to the rules of a commodity exchange or association.
An account with a foreign mutual fund or similar pooled fund which issues shares available to the general public that have a regular net assets value determination and regular redemptions are also reportable.
Observation: Most, if not all, investments in foreign private funds – such as hedge funds and private equity funds – held by U.S. persons do not involve reportable foreign financial accounts, unless a U.S. investor owns greater than a 50% interest in such a fund which itself holds a foreign bank or other financial account. However, the Treasury Department has reserved the right to issue regulations in future on such funds.
U.S. persons do not have an FBAR filing requirement with respect to assets held in an omnibus account (i.e., an account created by a US custodian where cash and securities are pooled in a non-U.S. account to hold assets of multiple investors) which is maintained through a U.S. global custodian bank, unless the custody arrangement permits the U.S. person to directly access its foreign holdings maintained in the account.
Foreign life insurance and annuity policies with a cash value are also covered under the recently revised rules and reportable by the policy holder.
Financial interest in an account: This includes being the owner of record or having legal title, even if acting as an agent, nominee, or in some other capacity on behalf of a U.S. person. A U.S. person also has a financial interest in an account held by a corporation in which that person owns, directly or indirectly, more than 50% of the total voting power or value of shares; a partnership in which the U.S. person owns an interest of more than 50% in the capital or profits; or a trust if the U.S. person is the trust grantor and the trust grantor has an ownership interest in the account for federal income tax purposes (i.e., the trust is a grantor trust); a trust in which a US person either has a present beneficial interest in more than 50% of the assets or from which such person receives more than 50% of the current income. Anti-abuse rules apply when a U.S. person causes an entity to be created for a purpose of evading the FBAR requirements.
Observation: Apparently the beneficiary of a discretionary trust does not have an FBAR filing obligation simply by reason of being a discretionary beneficiary. Further, a remainder interest does not fall within the scope of the term “present beneficial interest” under the final rules, so remainder beneficiaries do not have a filing obligation.
A beneficiary of a trust will not have a filing requirement if the trust, the trustee of the trust, or agents of the trust are U.S. persons who have filed FBARs with respect to the trust’s accounts. The final rules do not address whether a filing requirement exists if a U.S. grantor files the FBAR.
The final rules eliminated the filing requirement with respect to a trust established by a U.S. person for which the U.S. person has appointed a trust protector which is subject to the settlor’s direct or indirect instruction.
Signature or Other Authority: Signature or other authority has been re-defined for individuals only to include the authority of an individual (alone or in conjunction with another) to control the disposition of money or funds or other assets held in the account by direct communication (whether in writing or otherwise) to the institution with which the financial account is maintained.
Officers and employees employed at the organizations listed below do not have to report signature or other authority over a foreign financial account, as long as the officers and employees do not have a personal financial interest in the financial accounts:
• Banks examined by the Office of the Comptroller of the Currency, Board of Governors of the Federal Reserve System, FDIC, Office of Thrift Supervision, or National Credit Union Administration, and federal banking agencies
• Financial institutions registered with and examined by the SEC or Commodity Futures Trading Commission
• An Authorized Service Provider that maintains foreign financial accounts by an investment company that is registered under the Investment Company Act of 1940
• Companies that are listed on a US national securities exchange, whether the company is domestic or foreign.
Observation: Officers and employees of a U.S. subsidiary of a listed company are also covered by this exception, if the U.S. subsidiary is named in a consolidated FBAR report of the parent. However, this exception is not extended to a U.S. subsidiary of a foreign parent listed on a foreign exchange, so voluntary filings by such a foreign parent will not relieve the FBAR filing obligation of the officer or employee of the U.S. subsidiary.
What Must be Reported?
The Treasury Department requires reporting of the highest balance for any account(s) during the year and the address of the foreign bank or other financial institution. (Periodic statements may be relied upon where they are prepared in the ordinary course of business. They may be relied upon if the statements fairly reflect the maximum account value during the year.)
There is more limited reporting for those owning a direct interest or having signature or other authority over 25 or more foreign bank or financial accounts. (Where persons have signature authority over 25 or more accounts, filers are required to provide information identifying the US person(s) having a financial interest in such accounts.) Information that is not required to be reported in these limited circumstances should be maintained for five years, since the Treasury Department or the Internal Revenue Service may request the information within this period.
Officers or employees of a legal entity who file an FBAR because of signature or other authority are not expected to personally maintain the records of the foreign financial accounts of their employer.
Are there any Broad Exceptions to Reporting?
Exceptions apply to accounts of a department or agency of the United States, an Indian Tribe, or any State or political subdivision of a State; an international financial institution of which the U.S. government is a member; U.S. military banking facilities; and correspondent accounts maintained for bank-to-bank settlements.
Participants and beneficiaries in retirement plans under IRC Sections 401(a), 403(a) & (b), including owners and beneficiaries of Individual Retirement Accounts (or Roth IRAs), are not required to file an FBAR with respect to foreign financial accounts held by or on behalf of the retirement plans.
Observation: Trustees and administrators of qualified retirement plans are not exempt from FBAR reporting. FinCEN does not believe that it is appropriate to exempt entities from the FBAR filing requirement based upon their tax exempt status.
Under consolidated reporting, any entity that is a U.S. person and owns directly or indirectly more than 50% of an entity required to file an FBAR can file a consolidated report on behalf of itself and such other entity(ies).
Observation: FinCEN has not decided whether consolidated filing relief should be available to investment funds organized by the same fund manager – i.e., for all foreign financial account information for all funds in the same family – and indicated that such funds may seek specific guidance from the Treasury Department.
Coordination with new OVDI: The final FBAR rules are independent of a second Offshore Voluntary Disclosure Initiative announced by the Treasury Department on February 8, 2011. Apparently late FBAR filings under this program for 2009 and earlier years by those having a financial interest in (rather than just signatory authority over) a foreign financial account – which generally must be made by August 31, 2011 – will not be governed by changes under these new final rules.Â
For further information, please contact Saltmarsh, Cleaveland & Gund (850) 435-8300.
This publication is intended to provide general information to our friends. It does not constitute accounting, tax, or legal advice; nor is it intended to convey a thorough treatment of the subject matter.
This publication has been prepared by EisnerAmper LLP for informational purposes only. These materials do not constitute accounting, tax or legal advice and cannot be relied upon by any taxpayer for the purpose of avoiding penalties imposed under the Internal Revenue Code.
Redistributed by Saltmarsh, Cleaveland & Gund with permission.
The purpose of this Alert is to remind you of the requirement to file the 2010 United States (U.S.) Treasury Department Form 90-22.1 for non-U.S. bank and financial accounts if the aggregate value of the financial account(s) exceeds $10,000 at any time during the year.
This updated release covers the final rules released by the Treasury Department’s Financial Crimes Enforcement Network (FinCEN) on February 23, 2011.
Form 90-22.1 is filed separately from your tax return and must be received by the Treasury Department no later than June 30, 2011. The form cannot currently be filed electronically and the sender cannot rely on a postmark date, rather than actual receipt.
The Treasury Department will impose a civil penalty of up to $10,000 on any person who does not comply with the filing requirements, even if the lack of filing is non-willful. For a willful violation, the penalty can be as high as the greater of $100,000 or 50% of the highest amount in the foreign account during the reportable calendar year.
Who Must File?
In general, the form is required to be filed by any U.S. person which has a financial interest in or signatory authority over any foreign financial account.
Reminder: For 2009 and previous calendar years, persons with signature authority over, but no financial interest in, a foreign financial account were granted an extension to June 30, 2011 to file FBARs for those years under Notice 2010-23. Those filing such prior year FBARs can also rely on the guidance in the final rules issued by FinCEN discussed in this letter.
U.S. person: For legal entities, this includes a corporation, partnership, limited liability company, or trust created, organized or formed under the laws of the United States, any U.S. State, the District of Columbia, a U.S. territory or possession, or an Indian Tribe.
Observations:
• For a trust formed under one of the U.S. laws listed above, a filing by the trustee is required even though non-U.S. persons control all of the substantial decisions of the trust, making it a foreign trust for U.S. federal tax purposes under the IRC.
• A foreign corporation that elects to be treated as a U.S. corporation for income tax purposes does not have an FBAR filing obligation, because it was not organized or formed under the laws of the United States.
For individuals, this includes U.S. citizens, lawful permanent residents (green card holders) – even if he or she elects to be treated as a nonresident under an income tax treaty – or persons meeting the substantial presence test for income tax residency under the Internal Revenue Code (IRC).
Observations:
• Nonresident aliens, even those “in and doing business in the United States” during the tax year, do not have a reporting obligation under the final rules.
• A determination of whether a person is a U.S. resident is made without regard to an election by a nonresident alien to file a joint tax return with a U.S. spouse.
• An individual who elects to be treated as a resident for federal income tax purposes is also required to file an FBAR, but only with respect to those foreign financial accounts held during the period covered by the election.
Foreign: An account is not a foreign account under the FBAR rules if it is maintained with a financial institution located in the U.S. For example, if you purchase a foreign security through a U.S. account maintained with a securities broker, you will not have an FBAR filing requirement.
Financial account: This broadly includes any bank, securities, derivatives, foreign mutual fund or other financial instruments account (including any savings and demand deposits, checking accounts, certificates of deposit, or other account maintained with an institution engaged in the business of banking). Financial accounts also include an account with a person that is in the business of accepting deposits as a financial agency (defined as “a person acting for a person as a financial institution, bailee, depository trustee, or agent, or acting in a similar way related to money, credit, securities, gold, or a transaction in money, credit, securities, or gold.”), or a person that acts as a broker or dealer for futures or option transactions in any commodity or is subject to the rules of a commodity exchange or association.
An account with a foreign mutual fund or similar pooled fund which issues shares available to the general public that have a regular net assets value determination and regular redemptions are also reportable.
Observation: Most, if not all, investments in foreign private funds – such as hedge funds and private equity funds – held by U.S. persons do not involve reportable foreign financial accounts, unless a U.S. investor owns greater than a 50% interest in such a fund which itself holds a foreign bank or other financial account. However, the Treasury Department has reserved the right to issue regulations in future on such funds.
U.S. persons do not have an FBAR filing requirement with respect to assets held in an omnibus account (i.e., an account created by a US custodian where cash and securities are pooled in a non-U.S. account to hold assets of multiple investors) which is maintained through a U.S. global custodian bank, unless the custody arrangement permits the U.S. person to directly access its foreign holdings maintained in the account.
Foreign life insurance and annuity policies with a cash value are also covered under the recently revised rules and reportable by the policy holder.
Financial interest in an account: This includes being the owner of record or having legal title, even if acting as an agent, nominee, or in some other capacity on behalf of a U.S. person. A U.S. person also has a financial interest in an account held by a corporation in which that person owns, directly or indirectly, more than 50% of the total voting power or value of shares; a partnership in which the U.S. person owns an interest of more than 50% in the capital or profits; or a trust if the U.S. person is the trust grantor and the trust grantor has an ownership interest in the account for federal income tax purposes (i.e., the trust is a grantor trust); a trust in which a US person either has a present beneficial interest in more than 50% of the assets or from which such person receives more than 50% of the current income. Anti-abuse rules apply when a U.S. person causes an entity to be created for a purpose of evading the FBAR requirements.
Observation: Apparently the beneficiary of a discretionary trust does not have an FBAR filing obligation simply by reason of being a discretionary beneficiary. Further, a remainder interest does not fall within the scope of the term “present beneficial interest” under the final rules, so remainder beneficiaries do not have a filing obligation.
A beneficiary of a trust will not have a filing requirement if the trust, the trustee of the trust, or agents of the trust are U.S. persons who have filed FBARs with respect to the trust’s accounts. The final rules do not address whether a filing requirement exists if a U.S. grantor files the FBAR.
The final rules eliminated the filing requirement with respect to a trust established by a U.S. person for which the U.S. person has appointed a trust protector which is subject to the settlor’s direct or indirect instruction.
Signature or Other Authority: Signature or other authority has been re-defined for individuals only to include the authority of an individual (alone or in conjunction with another) to control the disposition of money or funds or other assets held in the account by direct communication (whether in writing or otherwise) to the institution with which the financial account is maintained.
Officers and employees employed at the organizations listed below do not have to report signature or other authority over a foreign financial account, as long as the officers and employees do not have a personal financial interest in the financial accounts:
• Banks examined by the Office of the Comptroller of the Currency, Board of Governors of the Federal Reserve System, FDIC, Office of Thrift Supervision, or National Credit Union Administration, and federal banking agencies
• Financial institutions registered with and examined by the SEC or Commodity Futures Trading Commission
• An Authorized Service Provider that maintains foreign financial accounts by an investment company that is registered under the Investment Company Act of 1940
• Companies that are listed on a US national securities exchange, whether the company is domestic or foreign.
Observation: Officers and employees of a U.S. subsidiary of a listed company are also covered by this exception, if the U.S. subsidiary is named in a consolidated FBAR report of the parent. However, this exception is not extended to a U.S. subsidiary of a foreign parent listed on a foreign exchange, so voluntary filings by such a foreign parent will not relieve the FBAR filing obligation of the officer or employee of the U.S. subsidiary.
What Must be Reported?
The Treasury Department requires reporting of the highest balance for any account(s) during the year and the address of the foreign bank or other financial institution. (Periodic statements may be relied upon where they are prepared in the ordinary course of business. They may be relied upon if the statements fairly reflect the maximum account value during the year.)
There is more limited reporting for those owning a direct interest or having signature or other authority over 25 or more foreign bank or financial accounts. (Where persons have signature authority over 25 or more accounts, filers are required to provide information identifying the US person(s) having a financial interest in such accounts.) Information that is not required to be reported in these limited circumstances should be maintained for five years, since the Treasury Department or the Internal Revenue Service may request the information within this period.
Officers or employees of a legal entity who file an FBAR because of signature or other authority are not expected to personally maintain the records of the foreign financial accounts of their employer.
Are there any Broad Exceptions to Reporting?
Exceptions apply to accounts of a department or agency of the United States, an Indian Tribe, or any State or political subdivision of a State; an international financial institution of which the U.S. government is a member; U.S. military banking facilities; and correspondent accounts maintained for bank-to-bank settlements.
Participants and beneficiaries in retirement plans under IRC Sections 401(a), 403(a) & (b), including owners and beneficiaries of Individual Retirement Accounts (or Roth IRAs), are not required to file an FBAR with respect to foreign financial accounts held by or on behalf of the retirement plans.
Observation: Trustees and administrators of qualified retirement plans are not exempt from FBAR reporting. FinCEN does not believe that it is appropriate to exempt entities from the FBAR filing requirement based upon their tax exempt status.
Under consolidated reporting, any entity that is a U.S. person and owns directly or indirectly more than 50% of an entity required to file an FBAR can file a consolidated report on behalf of itself and such other entity(ies).
Observation: FinCEN has not decided whether consolidated filing relief should be available to investment funds organized by the same fund manager – i.e., for all foreign financial account information for all funds in the same family – and indicated that such funds may seek specific guidance from the Treasury Department.
Coordination with new OVDI: The final FBAR rules are independent of a second Offshore Voluntary Disclosure Initiative announced by the Treasury Department on February 8, 2011. Apparently late FBAR filings under this program for 2009 and earlier years by those having a financial interest in (rather than just signatory authority over) a foreign financial account – which generally must be made by August 31, 2011 – will not be governed by changes under these new final rules.Â
For further information, please contact Saltmarsh, Cleaveland & Gund (850) 435-8300.
This publication is intended to provide general information to our friends. It does not constitute accounting, tax, or legal advice; nor is it intended to convey a thorough treatment of the subject matter.
This publication has been prepared by EisnerAmper LLP for informational purposes only. These materials do not constitute accounting, tax or legal advice and cannot be relied upon by any taxpayer for the purpose of avoiding penalties imposed under the Internal Revenue Code.
Redistributed by Saltmarsh, Cleaveland & Gund with permission.
Monday, March 21, 2011
Saltmarsh's Suzanne Cox Gives Tax Advice on Fox 13
Stay tuned for more tax advice from Suzanne Cox, CPA
Quickbooks Tips & Tricks
On-Demand QuickBooks Help!
Don’t wait for an on-site appointment to get the help you need. Expert QuickBooks help is just a phone call away. Our QB Pro-Advisors use Web-Ex technology to remote onto your desktop and assist you with any QB problems or to provide you with one-on-one training. We’re right next door when you need us!
Monthly QB Tips & Tricks:
With QuickBooks 2011 you can invoice multiple customers at one time. Go to Customers>Create Batch Invoices on the grey menu bar. NOTE: You need to make sure your customer information is correct before you batch invoices. On the Batch Invoice screen, select your customers. Click “Next” and enter the invoice information you want to send to these customers. Click “Next” and QB will automatically list them for your review. Select “Create Invoices” and you’re done!
Send us your QuickBooks questions and you may see it in Monthly QB Tips & Tricks!
Don’t wait for an on-site appointment to get the help you need. Expert QuickBooks help is just a phone call away. Our QB Pro-Advisors use Web-Ex technology to remote onto your desktop and assist you with any QB problems or to provide you with one-on-one training. We’re right next door when you need us!
Monthly QB Tips & Tricks:
With QuickBooks 2011 you can invoice multiple customers at one time. Go to Customers>Create Batch Invoices on the grey menu bar. NOTE: You need to make sure your customer information is correct before you batch invoices. On the Batch Invoice screen, select your customers. Click “Next” and enter the invoice information you want to send to these customers. Click “Next” and QB will automatically list them for your review. Select “Create Invoices” and you’re done!
Send us your QuickBooks questions and you may see it in Monthly QB Tips & Tricks!
Wednesday, March 16, 2011
Covenant Hospice's Art of Fashion
Human Resources: Management on the Run
In today’s fast paced world, everything seems to be done on the run. More and more things come in a “drive thru” fashion these days….coffee, food, dry-cleaning, etc. Because many work environments are consumed with hurried meals, discussions and meetings, it makes sense that most managers need to be able to manage on the run. Is this a bad thing? Not necessarily. With the large number of telecommuters and remote offices, managing via phone, Skype or teleconferencing is becoming more common for all of us and something that we need to embrace.
To be an effective manager “on the run”, you need to focus on your communication style and skills. As we all know, e-mail communication can be one of the most misinterpreted communication tools out there. How many times have we heard about people writing e-mails with angry overtones, cutting remarks, or maybe even career-ending humor? Whether the mode of communication is telephone, email or written, your communication should be clear and concise. Don’t leave it up to the recipient to have to interpret your meaning. If you have to explain the meaning of your email-something is wrong. Ensure that the people you work with know your style and what they can expect from you as it relates to your email communication, i.e., I USE ALL CAPS, BUT NO, I’M NOT YELLING AT YOU.
Another way to effectively lead/manage on the run is to state the purpose of a pending meeting, office visit, etc. For an employee, the worse feeling in the world is knowing that their manager is coming to see them or wants a meeting, and they have no idea what to expect or prepare. A great call or meeting always begins with preparation, right? If you leave someone hanging out there with nothing to go on except that you will be in their office at 9:00 am tomorrow, I doubt that “someone” got any sleep that night!
Workforces are becoming more and more mobile every day. It is critical that management styles and communication styles map to this. The way we communicate with all of the tools provided needs to be consistent and concise to avoid any misinterpretation. While you can’t control all interpretations of your message, at the very least you are consistent and everyone knows what to expect.
Excerpts from “Leadership & Management on the Run” by Carol McDaniel
www.hrmouthofthesouth.com
Official Blog of the HR Florida State Council, Inc.
To be an effective manager “on the run”, you need to focus on your communication style and skills. As we all know, e-mail communication can be one of the most misinterpreted communication tools out there. How many times have we heard about people writing e-mails with angry overtones, cutting remarks, or maybe even career-ending humor? Whether the mode of communication is telephone, email or written, your communication should be clear and concise. Don’t leave it up to the recipient to have to interpret your meaning. If you have to explain the meaning of your email-something is wrong. Ensure that the people you work with know your style and what they can expect from you as it relates to your email communication, i.e., I USE ALL CAPS, BUT NO, I’M NOT YELLING AT YOU.
Another way to effectively lead/manage on the run is to state the purpose of a pending meeting, office visit, etc. For an employee, the worse feeling in the world is knowing that their manager is coming to see them or wants a meeting, and they have no idea what to expect or prepare. A great call or meeting always begins with preparation, right? If you leave someone hanging out there with nothing to go on except that you will be in their office at 9:00 am tomorrow, I doubt that “someone” got any sleep that night!
Workforces are becoming more and more mobile every day. It is critical that management styles and communication styles map to this. The way we communicate with all of the tools provided needs to be consistent and concise to avoid any misinterpretation. While you can’t control all interpretations of your message, at the very least you are consistent and everyone knows what to expect.
Excerpts from “Leadership & Management on the Run” by Carol McDaniel
www.hrmouthofthesouth.com
Official Blog of the HR Florida State Council, Inc.
Monday, March 14, 2011
Industry Information: Cost Basis Legislation
Anyone who has sold investments knows that cost basis is important. Certainly, at one time or another most of us have been asked by our professional tax preparer to provide the acquisition date and cost basis on investments sold.
Cost basis is used to determine capital gains (gains) and losses (losses) of an investment for tax purposes. The Emergency Economic Stabilization Act of 2008 included new tax reporting requirements with significant implications for financial advisors and investors. The good news is brokers are now required to keep up with this information for you. The bad news is they will not be required to track cost basis for investments purchased prior to the new legislation.
For the first time, brokers will report the adjusted cost basis of sold securities to the IRS on Form 1099-B. The new requirements are designed to help capture accurate reporting of investors’ gains and losses at tax time. The new reporting requirements are being phased in over the next few years and apply to securities acquired on or after the effective dates as follows:
• Equities bought and sold after January 1, 2011
• Mutual funds, ETFs and DRIP shares bought and sold after January 1, 2012
• Other specified securities bought and sold on or after January 1, 2013
The legislation also requires that the new Form 1099-B indicate if the gain or loss is short-term or long-term, and the amount of any loss disallowed under the wash sale rules. The bottom line is that you will not be required to track basis on new investments. However, your tax preparer may still be calling for basis on purchases prior to the effective dates noted above.
The information and content provided is general in nature and is for informational purposes only. It is not intended, and should not be construed, as a recommendation, or legal, tax, or investment advice, or a legal opinion. You should contact your tax advisor to help answer questions about your specific situation or needs prior to taking any action based upon this information.
Cost basis is used to determine capital gains (gains) and losses (losses) of an investment for tax purposes. The Emergency Economic Stabilization Act of 2008 included new tax reporting requirements with significant implications for financial advisors and investors. The good news is brokers are now required to keep up with this information for you. The bad news is they will not be required to track cost basis for investments purchased prior to the new legislation.
For the first time, brokers will report the adjusted cost basis of sold securities to the IRS on Form 1099-B. The new requirements are designed to help capture accurate reporting of investors’ gains and losses at tax time. The new reporting requirements are being phased in over the next few years and apply to securities acquired on or after the effective dates as follows:
• Equities bought and sold after January 1, 2011
• Mutual funds, ETFs and DRIP shares bought and sold after January 1, 2012
• Other specified securities bought and sold on or after January 1, 2013
The legislation also requires that the new Form 1099-B indicate if the gain or loss is short-term or long-term, and the amount of any loss disallowed under the wash sale rules. The bottom line is that you will not be required to track basis on new investments. However, your tax preparer may still be calling for basis on purchases prior to the effective dates noted above.
The information and content provided is general in nature and is for informational purposes only. It is not intended, and should not be construed, as a recommendation, or legal, tax, or investment advice, or a legal opinion. You should contact your tax advisor to help answer questions about your specific situation or needs prior to taking any action based upon this information.
Wednesday, March 9, 2011
Destin Relay for Life 2011
Fort Walton Beach's Teri Elkins invites you to participate in the Destin Relay for Life 2011, May 6-7th.
Tuesday, March 8, 2011
Baby Girl Jones Shower
Yesterday there was a Mardi Gras themed Baby Shower for Baby Girl Jones. Here are some highlights from the shower:
Deciding who will test which thermometer goes where.
Jason's new bumble bee hat!
David bewildered trying to guess Allison's baby belly circumference...
and so are these guys.
Trying out their new burp pads...
Fore!
Way to represent guys!!!!!
Monday, March 7, 2011
U.S. Treasury: Small Business Lending Fund Benefits Community Banks
Small Business Lending Fund
Enacted into law as part of the Small Business Jobs Act of 2010 (the Jobs Act), the Small Business Lending Fund (SBLF) is a $30 billion fund that encourages lending to small businesses by providing Tier 1 capital to qualified community banks with assets of less than $10 billion. Through the Small Business Lending Fund, Main Street banks and small businesses can work together to help create jobs and promote economic growth in local communities across the nation.
Benefits to the Nation’s Economy
Small businesses play a critical role in the U.S. economy. They are central to creating jobs and restoring our economic prosperity.
The Small Business Lending Fund enables community banks across the nation to help small businesses put Americans back to work.
How the Small Business Lending Fund Works
The Small Business Lending Fund aims to stimulate small business lending by providing capital to participating community banks.1 The price a bank pays for SBLF funding will be reduced as the bank’s small business lending increases.
Because banks leverage their capital, the Small Business Lending Fund could help increase lending to small businesses in an amount that is multiples of the total capital provided to participating banks. These new loans will enable small businesses to grow and create new jobs.
The U.S. Department of the Treasury will provide banks with capital by purchasing Tier 1-qualifying preferred stock or equivalents in each bank.
The dividend rate on SBLF funding will be reduced as a participating community bank increases its lending to small businesses. The initial dividend rate will be, at most, 5%. If a bank’s small business lending increases by 10% or more, then the rate will fall to as low as 1%. Banks that increase their lending by amounts less than 10% can benefit from rates set between 2% and 4%. If lending does not increase in the first two years, however, the rate will increase to 7%. After 4.5 years, the rate will increase to 9% if the bank has not already repaid the SBLF funding.
Thursday, March 3, 2011
Industry Article: Banks May Soon Require New Online Authentication Steps
The Federal Financial Institutions Examination Council is believed to be set to issue new guidelines for transactions.
Computerworld - The Federal Financial Institutions Examination Council (FFIEC) could soon release new guidelines for banks to use when authenticating users to online banking transactions.
The new guidelines will clarify the FFIEC's existing guidelines on the subject and more explicitly inform banks about what they need to do to bolster online authentication, said Avivah Litan, an analyst at Gartner.
Litan and others recently met with the FFIEC's IT subcommittee to discuss the updates. "They have been talking about it and debating it for a while," Litan said. "My understanding is that [the subcommittee meeting] was the last step in the process before they issue the new guidance."
The FFIEC is an interagency council that develops standards for the federal auditing of financial institutions by bodies such as the Federal Reserve System and the Federal Deposit Insurance Corp. (FDIC).
In 2005, it issued a set of guidelines, titled "Authentication in an Internet Banking Environment." They called on banks to upgrade their single-factor authentication processes -- typically based on user name and passwords -- with a stronger, second form of authentication by the end of 2006.
The guidance left it largely up to the banks to choose whatever second form of authentication that they felt was the most appropriate for their needs. The FFIEC listed several available authentication technologies that banks could choose from, including biometrics, one-time passwords and token-based authentication.
Since the guidelines were issued, many banks have added a second authentication layer for users when conducting certain kinds of online transactions. However, in many cases, the added measures have been largely cosmetic in nature and have done little to bolster authentication in the way the FFIEC had originally intended, Litan said.
"Obviously, some of the banks thought that it was enough if they simply added cookies or challenge/response-based authentication," Litan said. "What has happened is that the FFIEC has realized that some banks need to be told in black and white what they need to do."
The FFIEC did not immediately respond to Computerworld's requests for clarification on the purported release of the new guidelines.
News of the proposed revisions come amid growing concerns about the ability of cyber criminals to circumvent the existing authentication mechanisms used by banks for online transactions.
Over the past two years there have been a string of attacks, mostly against small and medium businesses, by cyber criminals using stolen banking credentials to plunder corporate accounts.
Such account takeovers have cost U.S. businesses in excess of over $100 million since 2008, according to the FBI.
Organizations such as NACHA-the Electronics Payments Association, have warned financial institutions about such attackers and said that much of it has resulted from the relative lack of strong authentication procedures, transaction controls and "red flag" reporting capabilities.
Such attacks have also highlighted the need for banks to install stronger transaction monitoring controls and fraud alerting systems analysts have said in the past. It's unclear whether the upcoming FFIEC guidelines will call for such controls though.
Gartner too has warned about how authentication measures such as one-time passwords and phone-based user authentication, once considered among the most robust forms of security, are being increasingly circumvented by cyber criminals.
http://www.computerworld.com/s/article/9206158/Banks_may_soon_require_new_online_authentication_steps?taxonomyId=82
Computerworld - The Federal Financial Institutions Examination Council (FFIEC) could soon release new guidelines for banks to use when authenticating users to online banking transactions.
The new guidelines will clarify the FFIEC's existing guidelines on the subject and more explicitly inform banks about what they need to do to bolster online authentication, said Avivah Litan, an analyst at Gartner.
Litan and others recently met with the FFIEC's IT subcommittee to discuss the updates. "They have been talking about it and debating it for a while," Litan said. "My understanding is that [the subcommittee meeting] was the last step in the process before they issue the new guidance."
The FFIEC is an interagency council that develops standards for the federal auditing of financial institutions by bodies such as the Federal Reserve System and the Federal Deposit Insurance Corp. (FDIC).
In 2005, it issued a set of guidelines, titled "Authentication in an Internet Banking Environment." They called on banks to upgrade their single-factor authentication processes -- typically based on user name and passwords -- with a stronger, second form of authentication by the end of 2006.
The guidance left it largely up to the banks to choose whatever second form of authentication that they felt was the most appropriate for their needs. The FFIEC listed several available authentication technologies that banks could choose from, including biometrics, one-time passwords and token-based authentication.
Since the guidelines were issued, many banks have added a second authentication layer for users when conducting certain kinds of online transactions. However, in many cases, the added measures have been largely cosmetic in nature and have done little to bolster authentication in the way the FFIEC had originally intended, Litan said.
"Obviously, some of the banks thought that it was enough if they simply added cookies or challenge/response-based authentication," Litan said. "What has happened is that the FFIEC has realized that some banks need to be told in black and white what they need to do."
The FFIEC did not immediately respond to Computerworld's requests for clarification on the purported release of the new guidelines.
News of the proposed revisions come amid growing concerns about the ability of cyber criminals to circumvent the existing authentication mechanisms used by banks for online transactions.
Over the past two years there have been a string of attacks, mostly against small and medium businesses, by cyber criminals using stolen banking credentials to plunder corporate accounts.
Such account takeovers have cost U.S. businesses in excess of over $100 million since 2008, according to the FBI.
Organizations such as NACHA-the Electronics Payments Association, have warned financial institutions about such attackers and said that much of it has resulted from the relative lack of strong authentication procedures, transaction controls and "red flag" reporting capabilities.
Such attacks have also highlighted the need for banks to install stronger transaction monitoring controls and fraud alerting systems analysts have said in the past. It's unclear whether the upcoming FFIEC guidelines will call for such controls though.
Gartner too has warned about how authentication measures such as one-time passwords and phone-based user authentication, once considered among the most robust forms of security, are being increasingly circumvented by cyber criminals.
http://www.computerworld.com/s/article/9206158/Banks_may_soon_require_new_online_authentication_steps?taxonomyId=82
Wednesday, March 2, 2011
Tax Information: Going Green Can Save You Money!
Did you know that that going green can save you green $$$ on your income taxes? Energy efficient improvements to your residence such as exterior doors or windows, insulation, heat pumps furnaces, central air conditioners or water heaters can yield up to a $1,500 credit toward your 2010 or 2011 income taxes. Solar or geothermal improvements to your residence can save you even more…up to 30% of the cost of the qualified improvement.
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