Employee Tax Party 4/15/10

We couldn't have asked for a more beautiful day.... a great time was had by all!

Everyone enjoyed the Mother's catered food straight from NOLA!

Happy Retirement Barry... Happy B-day Stephanie!

Dealing with Health Care Reform's New Tax Laws: The Health Care and Education Reconciliation Act of 2010

Now that Congress has passed landmark health care reform package, much work needs to be done in dealing with new requirements. While the end result of the legislative process is necessarily health care related, the tax law plays a major role in its implementation. From the tax credits and subsidies used to expand health coverage, to the many penalties, fees and surtaxes designed to pay for it, the Tax Code is front and center.

Two new laws

Health care reform is actually made up of two new laws: the Patient Protection and Affordable Care Act of 2010 and the Health Care and Education Reconciliation Act of 2010. The Patient Protection Act was crafted largely in the Senate and sets out the general framework of health care reform. The Reconciliation Act was prepared in the House to modify the Patient Protection Act, especially in the areas of tax credits and cost sharing for individuals to help make coverage more affordable. Common features to both laws are delayed effective dates for many of the provisions, which make strategic planning all that more important.

New taxes and penalties

Viewing the historic health care reform package from the context of the Tax Code, many new taxes and penalties stand out immediately above the rest. Initially, we would advise taking particular note of the following highlights:

- Individuals who earn more than $200,000 for the year ($250,000 for married couples) will be paying an additional 0.9 percent in Hospital Insurance (Medicare) tax, starting in 2013;
- Individuals whose adjusted gross income for the year exceeds $200,000 ($250,000 for joint filers), whether from wages or otherwise, will also be paying an additional 3.8 percent Medicare tax on net investment income, starting in 2013;
- Employers with 50 or more employees generally will be required to provide a minimum level of health insurance for their employees or pay a penalty per employee, starting in 2014;
- Small employers with no more than 25 employees are entitled to up to a 35 percent tax credit on the cost of providing health insurance for employees, starting immediately in 2010;
- Most individuals will be required to obtain health insurance or be subject to a penalty tax starting in 2014;
- Tax credits to subsidize the cost of health insurance premiums will be available to individuals earning up to 400 percent of the poverty level, starting in 2014;
- Health flexible savings arrangement (FSA) dollars will be limited to prescription medications with some exceptions after 2010, along with placing a $2,500 annual cap on expenses covered under health FSAs, starting in 2013;
- A 40 percent excise tax will be imposed on high-cost, "Cadillac" employer-sponsored health coverage, starting in 2018;
- Fees will be imposed on the pharmaceutical industry and health insurance providers , starting in 2011 and 2014, respectively;
- An excise tax will be imposed on medical device manufacturers after 2012; and
- Limits on tax-subsidized medical expenses will be imposed by raising the itemized medical expense deduction floor for regular tax purposes from 7.5 percent to 10 percent, generally starting in 2013.

Tax incentives

Among a handful of tax incentives provided under the new health-care reform package, two are particularly notable at this time: (1) the ability of parents to cover adult children up to age 27 under their tax-qualified employer-provided health plans, starting immediately on or after March 23, 2010; and (2) the unveiling of a simplified cafeteria plan specifically tailored to small businesses, starting in 2011.

Exchanges

The health care reform package requires each state to establish an exchange by 2014 to help individuals and qualified employers obtain coverage. Coverage will be offered at various levels. Qualified individuals may be eligible for premium assistance tax credits, cost-sharing or vouchers to help pay for coverage through an insurance exchange. An individual's income whether or not coverage is provided by his or her employer will all be taken into account when determining if the individual qualifies for a premium assistance tax credit, cost-sharing or voucher.

IRS guidance

Over the course of the next few months, the IRS and other federal agencies will be filling in details on how to comply with all the provisions under the massive health care reform package. The IRS is expected to issue guidance soon on the provisions with effective dates in 2010 and 2011. This office will be staying on top of all developments, with an eye toward how to best maximize results under the new law for our clients. We are prepared to advise our clients on all compliance rules and tax-reduction opportunities that undoubtedly will arise. In the meantime, if you have any questions about the new law, please do not hesitate to call our office.

Happy 60th Jim!

Last Friday Jim Speed turned 60!

And for his trip to Biloxi.... 60 quarters!With the RAMP department.We hope you had a fabulous milestone B-day!

Suzanne on the news!

Click on this link to see our Suzanne Cox on the news: http://www.myfoxtampabay.com/dpp/consumer/conlaw/0322-when-to-seek-help-with-taxes

Humans During Tax Time

per John Watton...

Suzanne Cox on the News!

If you are in the Tampa Bay area, tune into Fox 13 News tonight to see Saltmarsh's Suzanne Cox being interviewed on Tax tips!

New Employee - Carol Rosenblatt

Carol started with us on Monday, February 15th as a Senior Manager in the Audit Services Department (Pensacola office). Carol is a graduate of FSU, where she earned her Bachelor’s Degree in Accounting and Finance. She is a Florida CPA and has spent the past 16 years working for Deloitte & Touche, LLP in their Audit & Enterprise Risk Services Division out of Tampa, FL. Most recently at Deloitte & Touche, she was a Senior Manager and supervised audits and reviews in industries such as construction, health care and not-for-profits. Carol will be sitting upstairs in the office across from Allison Jones and she can be reached at extension 1072.

Welcome Carol!

Lee Bell quoted in the Tampa Bay Business Journal

Friday, February 19, 2010
Where asset quality diminishes, Patriot Bank shores up holdings
The anatomy of being 'well capitalized'
Tampa Bay Business Journal - by Margie Manning Senior Staff Writer

While asset quality issues rapidly deplete capital at banks throughout Florida, Patriot Bank reversed the trend.
Patriot has raised roughly $3.5 million in additional capital and is nearly halfway to its total goal of $7.5 million, said Larry Starnes, president and CEO. The new capital has propelled the bank into territory regulators consider well capitalized with an 11.76 percent total risk-based capital ratio, compared with 8.14 percent on Dec. 31.
The bank attracted strong investor interest in part because it took aggressive steps to set aside money for loans that it suspected might go bad.
Patriot examined every credit in its portfolio, then hired a consultant to take a second look. A final vote of approval came when state regulators, as well as those from the Federal Deposit Insurance Corp., wrapped up exams at the bank a couple of weeks ago and did not ask Patriot to add anything to its existing reserves, Starnes said.
“The biggest fear people have in investing in community banks is the bank will fail because of loan problems that erode the capital,” Starnes said. But since Patriot already has reserved for expected losses, “what we have now in capital is solid.”
Diversification helps Bay area
Too little capital can be fatal because banks fail when they are in danger of running out of cash to meet their financial obligations. Regulators have closed 16 banks in the United States so far this year, including two in Florida. Last year, 140 banks failed nationwide, 14 of them in Florida.
Thirty-six Florida banks were less than well capitalized as of Dec. 31 and four were considered critically undercapitalized, a report from The Carson Medlin Co., an investment banking firm, said. An increase in nonperforming assets, generally past due loans and foreclosed real estate, ate into capital, the report said.
Statewide, the ratio of nonperforming assets to total assets climbed to 4.31 percent, up from 4.19 percent in the third quarter. The Tampa Bay area fared better than most of the state with an average 3.29 percent ratio of nonperforming assets to total assets in part because the area has a more diversified business base and is less dependent on real estate development than other areas, said Paula Johnannsen, managing director in Carson Medlin’s Tampa office.
Banks statewide were aggressive about moving questionable loans into the nonperforming category in the last quarter of 2009, said Lee Bell, leader of the business advisor group at Saltmarsh Cleaveland & Gund and shareholder in charge of the CPA firm’s Tampa office. Some banks were required to do so by regulators, while others did so in preparation for regulatory exams, Bell said.
Saltmarsh has released its own asset quality report showing the ratio of nonperforming assets to total assets at Florida banks was 5.89 percent as of Dec. 31, down from 6.1 percent on Sept. 30. Bell said the drop reflects the banks that failed and were eliminated from the calculations.
Path to progress
Patriot Bank, established in 2004 with a single office in Trinity, reorganized in April when Larry Starnes was named president and chief executive officer. Starnes, formerly Pasco, Hernando and Citrus counties president of Wachovia Bank, is part of a new management team at Patriot that also includes CFO Tom Wokurka and David Key as chief credit administration and risk officer. The bank now has five offices in Pasco and Pinellas counties.
During 2009, the bank increased its core deposits by 40 percent and its loan portfolio by 27 percent, ending the year with about $133 million in assets. New cash management and checking products produced a bump in fee income, and Starnes expects the first quarter of 2010 will be profitable. The hard work that went into the turnaround has paid off in a successful capital offering, he said.
The bank is offering existing and new shareholders units for $6, about a 40 percent discount to book value. Each unit is made up of one share of common stock and one share of preferred stock. The preferred stock, which pays a 10 percent dividend, can be converted to common stock at any time and automatically converts to common stock if the bank is sold or after five years.
— Margie Manning

New Employee - Wendy Blanchard

Wendy joins us from Lundy Minnich & Linnville. She has been a para-professional with their firm for many years and knows all of their clients. She is sitting in the office next to George Peaden and can be reached at ext. 1098 . Welcome to the firm Wendy!