Monthly Archives: November 2015

Passing On Your Digital Assets

We are constantly reminding our clients to plan for the transition of their material wealth, recommending such things as trusts, titling of their assets, gifting, etc. How much attention are we putting toward their digital assets, which can be as important as their physical assets? I attended a session at Princeton University’s reunion weekend on this topic.  It was standing room only!

Passwords are one example of digital assets.  They are the gateway to our material assets such as bank and brokerage accounts stored on a computer or up in the clouds, to be accessed only through knowing the password.  In many cases, you can change your password if you forget it; however, once you are no longer alive or mentally competent, that option may not be available. And if you own BITCOINS, if you forget your password, you lose the investment.

We now have to think about providing for the transfer of digital assets upon death. Typical wills provide for transfer of real and personal property, but are silent about digital property.  Other examples of personal digital assets might include photos, letters, files stored on social media sites.

Businesses also need to address the transfer of digital assets when there is a transition such as a sale of the business or a transfer of ownership to the next generation. Passwords have become so vital to the smooth operation of the majority of today’s businesses.  They need to be both protected and seamlessly transferred when there is a change of ownership.

Keeping track of passwords requires a lot of due diligence.  We are asked to change passwords for security reasons, so the need to update the “inventory” of your passwords is critical. There are programs out there to help organize and protect your passwords.  Just google “recover lost passwords” and you will find a number of sites to help you with the recovery process.

— Eugene Fleishman, CPA, Principal

NYC PRETAX TRANSIT BENEFITS

Starting in 2016, certain New York City employers will be required to offer pre-tax transit benefits.  As part of the Affordable Transit Act signed into law back in October of 2014, New York City employers located within the 5 boroughs with 20 or more full-time employees must offer this benefit.

 

The IRS allows employers to offer the ability to exclude qualified transportation fringe benefits from gross income. The option to provide these benefits is voluntary and not mandated by federal law. Qualified transportation fringe benefits include transportation expenses up to $130 per month which may reduce compensation and not only save employee’s tax but employer’s payroll taxes. For the average New York City commuter, the tax savings would be approximately $400 per year. In addition, employers can expect to save about $120 per year per employee in payroll taxes.

 

The New York City Transit Ordinance removes the voluntary provision and mandates applicable New York City employers to offer pre-tax transit benefits. As stated above, an employer must be located in New York City and have 20 or more full-time employees. A full-time employee is defined as an employee who works (on average) 30 or more hours per week for the employer. Once an employee qualifies for the benefit, they will remain eligible regardless of the weekly hours worked. The law will be enforced by the Department of Consumer Affairs and takes effect January 1, 2016. Companies that do not comply will be subject to a civil penalty. No penalty will be imposed prior to July 1, 2016. Companies that receive a first time notice of noncompliance will receive a $250 civil penalty and will have a 90 day grace period to fix the problem. If after the grace period expires and the employer still does not comply, an additional $250 civil penalty will be issued for every 30 day period in which the employer fails to put a pre-tax transit benefit plan in place.

 

Although the law mandates employers within New York City with more than 20 employees to get plans in place by January 1st of next year, companies that are not located within New York City or have 20 employees are eligible to offer these same types of savings to their employees.   The new law makes commuting more affordable for those employees that have not benefited from pre-tax transit plans. The tax savings for employees and employers alike should make compliance with the new law sensible.

 

–John Rosenberger, CPA, Tax Manager