Monthly Archives: July 2017

Paid Family Leave Act:
What New York State Employers Need to Know

New York Employers Must Prepare for Paid Family Leave Act

On July 19, 2017, Governor Cuomo announced final regulations implementing New York’s Paid Family Leave Program.  The program will provide New Yorkers with job-protected paid leave to care for new children, care for loved ones with a serious health condition or to help when a family member is deployed overseas on active duty.

PaidFamilyLeaveStatsGallery01The regulations outline the responsibilities of employers and insurance carriers in implementing the program. Starting January 1, 2018, Paid Family Leave will provide eligible employees with wage replacement and job protection during qualifying family events. Employees are also entitled to be reinstated to their job when their leave ends and to the continuation of health insurance during their leave. Benefits for 2018 are limited to 8 weeks within a 52-week period and increasing to 12 weeks by 2021.

PaidFamilyLeaveStatsGallery04 All private employers with at least one employee (not counting the owner) must secure Paid Family Leave insurance coverage or self-insure in time to provide coverage on January 1, 2018. Paid Family Leave premiums will be funded by employees through payroll deductions. The payroll deduction is based on .126% of an employee’s weekly wage with a maximum deduction of $1.65 per week. Many employers will be faced with paying for insurance coverage on an annual basis in January of 2018. To help employers support the program, payroll deductions can begin in July of 2017 even though coverage does not begin until 2018.New York Employers should consider the impact of the new law and take certain action as soon as possible. Paid Family Leave in New York State is not optional for private employers. Such action includes whether to self-insure or obtain coverage through an insurance carrier; update employee handbooks; revise family leave policies to provide information about the new law; prepare to begin payroll deductions with their payroll provider; and consider how the Family Leave Act will interact with any paid parental leave currently provided.

 

 

You Filed a Tax Extension in April
Now What?

iuYou filed a Federal Form 4868 requesting a six-month extension to file your individual income tax return, you may be wondering what’s next.  Filing the extension on time by April 18th of this year extended the final due date of your tax return until October 16th.  The extension granted you an additional six-months to provide your CPA (hopefully GKG) with your 2016 tax information and documentation so that a complete and accurate tax return can be prepared and filed for you.

Filing that extension in April protects you from  penalties for not filing your tax return timely but it does not alleviate your responsibility to pay income taxes on time.  Filing that tax extension in April does not extend the period of time you have to pay your income taxes, it only extends the time you have to file your tax return but the taxes you owe for 2016 needed to be paid by April 18th.  If you determined that you owed income tax for 2016, the payment needs to  be paid along with the extension in April.  We recommend that 90% of your estimated income tax be paid with your extension.  If you did not submit a sufficient payment with your extension back in April, the IRS will assess interest and penalties for late payment of income tax and can disallow your extension and assess you late filing penalties as well.

Even if you think you might not be able to pay your taxes when your return is finally due in October, you should still file your tax return.  If you can’t afford to pay the taxes you owe at that time, the IRS offers simple installment payment plansif you owe less than $50,000.  The IRS advises to pay what you can with your return and then request an installment plan for the remaining balance. The IRS has made it easy to request the installment plan and taxpayers can set up a monthly payment by completing Form 9465 (Installment Agreement Request) and submitting it with your tax return. You really should involve your CPA in this installment plan request.

Brian Reilly

 

Occupational Fraud and Abuse 2016 Report by the ACFE Summary Findings

occupational-fraudThe Association of Certified Fraud Examiners (“ACFE”) published its annual report on occupational fraud and abuse covering the results from its survey analyzing the results of over 2400 cases of investigated fraud. This 92 page report is accessible online.

ACFE report, based on the surveyed cases, summarizes the:

  • annual per entity revenues loss
  • manner of fraud execution
  • Description of the typical characteristics of employees committing fraud
  • Description of the typical characteristics of organizations victimized by fraud

A summary of some of the salient observations, conclusions and reported losses are presented below. But for CEOs and business owners, the full impact of the dramatic effects of this study can only be appreciated by the deeper understanding of your organizational risk and vulnerability, enhanced by serious discussion with the organizations CPA/Financial Advisor.

  1. For the year, typical business losses were 5% of sales
  2. the average dollar loss per organization was $2.7 Million
  3. median loss per incident was $150,000, with over 20% of incidents resulting in losses of more than $1,000,000
  4. most common form of fraud was asset misappropriation consisting of billing schemes and check tampering
  5. perpetrator took steps to conceal fraud
  6. tips and hotlines are most common form of detection
  7. loses were mitigated when detection methods were more aggressive than passive methods
  8. level of perpetrator authority is related to size of fraud
  9. most frauds originate in bookkeeping and accounting areas
  10. most perpetrators exhibit behavioral warning signs
  11. organizational size is blind to occupational fraud risk

Business owners need to seriously take steps to protect the assets of the business. Any incident can be substantially more serious than it initially appears to be. Ask your CPA/Financial Advisor to provide feedback concerning your specific organization. The amount of the loss may only be the tip of total damages to a vulnerable organization.

Dennis P. Kremer, CPA/ABV/CFF/CGMA, CAA, CFE

Knock Knock. Who’s There? What To Do When Faced with a Business Tax Audit

tax-audit-300x200No matter how accurate you think your accounting records are and how hard you try to follow all the rules, when we get those IRS audit letters in the mail, your stomach still turns from anxiety. The first rule to follow if that audit letter does arrive, is to call your CPA. Most CPAs have managed a number of these audits and know the right procedures to follow and they will protect you and obtain better results than you would on your own.

But for some reason, the same fear does not seem to strike business owners when they receive audit letters for the NYS Department of Taxation and Finance related to sales tax or income tax audits or from the NYS Department of Labor. I believe people look at these audits as nuisance audits. Many times I get the call to help out on these type of audits well after the audit has begun and the client realizes that they are in way over their head and they start to see the negative direction the audit is going.

Taxpayers believe they are fully compliant in these areas and try to save some money by managing the audits themselves. What people do not know is when an auditor sees problems, the look back period could be three years plus, depending on past filings. You should be aware that audit adjustments can result in big tax bills when the auditors extrapolate their findings over the longer periods of time and larger populations of transactions.

So when an auditor makes contact with you, what should be your first step? Immediately send a copy of the audit letter to your CPA. Your CPA will have you sign a Power of Attorney providing them with the right to represent you in that particular matter. From that point on, the auditor will work with your CPA for all their questions and procedures. Your CPA will then review your returns and records carefully looking for possible risk areas. They’ll ask themselves, why was this client selected for audit? Sometimes returns are selected solely on statistical formulas, so there may not be anything wrong with your return. But the Labor and Sales Tax auditors go deep into your accounting records looking for non-compliance in their respective areas. CPAs are very careful to review the information for red flags and to know the problems and the solutions before the auditors review any of it. They are also cautious about not giving auditors anything they did not ask for to ensure they do not expand the scope of their audit.

Another reason your CPA should be part of any audit right from the start is because they speak the same language as the auditor and will be able to manage the auditor’s requests. Often the audit will be held at the CPA’s office so the client never has to interact with the auditor directly.

It is important to know that sometimes an auditor may show up completely unannounced requesting to speak to an owner or accounting personnel. Your best response in that situation is not to speak with the auditor, but to provide your CPA’s contact information to them and advise them that your accountant will be in touch with a Power of Attorney to discuss the matter.

The above rules are simple to follow – if you are contacted by any governmental auditor – do not respond directly – protect yourself by contacting your CPAs.

Wayne L. Martin CPA CGMA