IRS Look-Up Tool for Economic Recovery Payment

Due to the large volume of electronically filed tax returns that have been rejected, the IRS has finally decided to address the issue. It is awfully nice of them to wait until the very end. After all there are only three weeks left before the April 15^th tax deadline.

What is the issue? It’s simple as with human nature we tend to forgot various details during the course of our busy lives. Many taxpayers do not remember if they received the one-time $250 payment during 2009 from the Social Security Administration, the Department of Veteran’s Affairs, or the Railroad Retirement Board. The result of this has been that they are claiming an incorrect tax credit amount and thus having their tax returns rejected by the IRS.

Starting March 23, 2010 you will be able to go to www.irs.gov to find out if you have received this payment during 2009.

You will need to enter the following information on the IRS website.

• Social Security number
• Date of birth,
• ZIP code from the most recent tax return.

This article was written by Jay Kossen, CPA at Numerico, PC. Click here to view Numerico’s website.

Straight Talk from Gary Field, CPA

Those of you that have been around long enough are no strangers to government attempts to force national health care down your throats. Recall that no sooner was that fine upstanding American Bill Clinton put into office, January 20, 1993, he named our now Secretary of State, then First “Lady” Hillary Clinton to head a task force on national health care reform. Attempts to institute these reforms were abandoned in September 1994. I wrote the following about the then government grab for power;

The combination of the presidential election and legitimate calls for less expensive health care for all has thrown Congress into another feeding frenzy. This time it’s over national health insurance, so hang on to your wallet. Most of Congress supports some form of “pay-or-play: scheme.

Under the “pay-or-play”, employers either provide government determined minimum health insurance or pay a payroll tax to enroll employees in a federal health insurance plan. This would do nothing more than soak employers, taxpayers, and cut the quality of health care. Their proposal would result in throwing money at costly “cures” that are worse than the ailment. The last thing taxpayers need is a new government program twice the size of Medicare.

As an employer, my vote goes to health care for all without government intervention. That would benefit 31 to 36 million Americans currently uninsured. To solve the health care problem, let’s start with a positive logical approach that clearly defines the bigger problems and provides reforms which are not politically motivated.

• Monopolies in the provision of care must be broken to lower costs. Something is wrong with a system that has been pushing up health care costs at an average of nearly 9% a year for the last decade. That’s nearly twice the rate of inflation.

• Participants should share in more of the costs. As a group, we have become health care junkies. We don’t have a truly free market system as long as medical insurance drives demand, and patients are unwilling or unable to learn the true price of services they’re buying.

• The escalating burden of malpractice suits must be stopped. Witness plaintiffs in hot pursuit of Eli Lilley, maker of the anti-depressant drug Prozac: or Upjohn, maker of the popular sleeping pill Halcion and most recently Dow Corning as maker silicone gel breast implants. Forbes magazine labels this litigation cost a “tort tax”. According to a recent article, tort claims cost the country $117 billion dollars in 1987. Medical doctors, faced with the threat of malpractice, have resorted to defensive medicine, particularly in the form of redundant testing.

• The medical profession has to be held accountable and to a higher standard. Although most business people compete on price, doctors rarely do. The absence of effective economic controls, as would naturally occur in a free market, creates anomalies. For example, Detroit’s rate of caesarean birth, which is five times more expensive that vaginal birth, is double that of Minneapolis. For this country as a whole, C-sections have increased 500% in the last two decades. To my knowledge, there’s no medical evidence that can explain this interesting phenomenon. Are Detroit C-section rates higher than Minneapolis’ because C-sections pay better on Medicaid fee schedules when compared to normal deliveries? I have to wonder.

• Since the inception of the Canadian system in 1971, the real cost of per capita health care has gone up and now exceeds that of the largest HMO’s in the U.S.

• The average hospital stay in Canada is 42% longer than in the U.S. Therefore, the system is no more efficient.

• Canadians are flocking to the U.S. to get health care they cannot get at home. In many cases, medial appointments must be scheduled one year in advance. Plan your illnesses carefully!

Other countries that have had a brush with national health insurance are now moving in the opposite direction. The father of Quebec’s health care system now advocates privatization and competition; Sweden is introducing “managed competition” and New Zealand is ending a forty year experiment with socialized medicine by giving people tax incentives to purchase private insurance.

Clearly, national health insurance is an attempt to make the federal government responsible for our well-being. Although there is a mindset that buys into that, I believe they are the minority. Lawmakers encourage our irresponsibility because the platform sells. However, allowing the government to assume responsibility for health care can only end in frustration. The government will simply take increasing levels of control while leaving us with 100% responsibility and accountability for our lives. That is one more reason why as government grows larger, their populations grow more frustrated and unhappy. In fact, government control has culminated in endless taxation, endless regulation, enormous bureaucracy and the lowest level of public service ever experienced.

Congress must learn that solutions to social problems can be found in the tried and proven mechanisms of free market, not by clogging the system with further governmental controls or by bleeding taxpayers through a government-administered national health care plan. I believe my proposal could help us achieve all of our objectives at a much lower cost.

In my opinion, the arguments against national health care haven’t changed much.  What has changed since I wrote this piece 15+ years ago is that the American people have lost their way and greed and impatience have become an even bigger part of our lives. Specifically the American people have become more inclined to let government take more and more control of our individual freedoms and allowed scoundrels, like the “leaders” on Wall Street and the Obama administration pillage the United States Treasury.

While there is no doubt that the health care system needs help, it is still, bar none, the best system in the world. It is equally clear that the current administration with its attitude of “From each according to his ability to each according to his need” is hell bent on forcing national health care down our throats whether we like it or not.

God help America.

This article was written by Gary Field, CPA at Numerico, PC. Click here to view Numerico’s website.

When Opportunity Knocks, Should You Answer?

There is a quote from William James that reads:

“He who refuses to embrace a unique opportunity loses the prize as surely as if he had failed.”

A couple of weeks ago, I received a unique opportunity from Renee Warnimont, the business development officer who supports the Charter One Bank branches in the Downriver communities of Dearborn, Southgate, Taylor and Trenton, Michigan. Each month, Charter One conducts a conference call to discuss relevant topics in the banking industry.  Because February’s call focused on how the state of the economy in Michigan & Ohio is affecting small businesses, Renee offered me the chance to be the only CPA in the State of Michigan to present on the economic and tax issues that are having an adverse affect on small business owners today.

I decided to embrace this unique opportunity even though public speaking is not my expertise. In hindsight this proved to be a tremendous marketing opportunity. Initially, I expected the conference call would only include the branches of the Detroit metropolitan market and Toledo, Ohio. Instead, it turned out that the call included 40 bankers, 6 Regional Directors and the Michigan State Director of Charter One, along with branches representing Akron, Canton, Cleveland, Columbus and Toledo, Ohio. Not only did I have exclusive access to all of these decision makers, but the following week I was able to meet the Michigan State Director for lunch to follow up on the conference call and to provide him with additional information about Numerico, P.C.

In closing, I want to give special thanks to Renee for this incredible opportunity. If you have any banking questions or would like to hear a different point of view regarding the banking industry, you can email Renee at Renee.Warnimont@CharterOneBank.com

This article was written by Jay Kossen, CPA at Numerico, PC. Click here to view Numerico’s website.

Tough Love in Your Business

What do oil and water and family members who are employees in your small business have in common?

They rarely mix and are frequently toxic to the environment.

Although it should be noted that there are of course occasions of success, the most likely outcome is entrenched employees that are nearly impossible to remove, strained relations and uncomfortable holiday dinners. In fact, you could probably make an argument that it is easier to remove a unionized government employee than a family member who is your employee.

I recently read an interesting article that deals with this topic in the New York Times on February 11, 2010, entitled “Fire Your Relatives. Scare Your Employees. And Stop Whining” by Kermit Pattison. (Click here to read).

While some of his suggestions may be too aggressive for your average small business owner, they get right down to my point.

As a business owner you are either in it to win it or you are not.

Which are you?

This article was written by Jay Kossen, CPA at Numerico, PC. Click here to view Numerico’s website.

Is it a Rat Race?

Business is war. It’s a jungle out there. Never give a sucker an even break. Nice guys finish last. It’s a dog-eat-dog world. We’ve all heard at least one of these bits of wisdom in our lives. Some of us even use them on a regular basis to describe business or personal philosophy. Though they are effective and hard-hitting, there’s one basic flaw. Each one of these statements is premised on the idea of business or personal relationships as a fight to the death.

Though the idea of life as an endless struggle or fight for survival is romantically appealing, it’s not very efficient. Those who go through life in this way waste so much energy and time waging short-term battles that they lose the long-term war. In this case, the long-term war is productive change.

Though you can force some productive change through continual frontal assaults, there are more efficient means of accomplishing your objectives. It is shortsighted to handle all challenges with the same tactic. Different situations require different methods. By understanding the environment around the situation, you can use tactics that blend into and solve the conflict harmoniously.

If a conflict is solved in a way that creates discord (future conflict), then the situation hasn’t been resolved. You may think you have come out on top, but the conflict will usually be revisited, with much more intensity. Your short-term gain will produce long-term pain, either for you or for the other parties involved.

A basic law of the universe is that “for every action, there is an equal and opposite reaction”. The universe demands that equilibrium is maintained. Imbalances have a way of righting themselves, with the unknown variable being the time it takes for resolution. If we push a situation toward further imbalance, the time table is accelerated. The greater the imbalance becomes, the greater the force against us.

The principle of avoiding negative conflict, yet accomplishing your objectives, is the essence of a martial art called aikido. In aikido, the aggressor’s strength is never met head-on. Instead, the aikidoist, yields to the force in such a way that it is unable to cause harm and, at the same time, the force is redirected, usually to the opponent’s detriment. This is like redirecting the flow of a river instead of opposing it. Much less energy is expended, equilibrium is maintained, and the objectives are met. This principle works in most every situation.

All things in life have a balance. By approaching all situations in life as confrontations and attacking relentlessly, we eventually, upset many balances. This is not to say that you should never use a direct attack. However, by looking at the environment (which shapes the situation and its outcomes) and considering alternatives, we can accomplish our objectives and maintain a healthy, natural balance.

New Energy Credits Available on your 2009 Michigan Tax Return

There are two new energy credits available to eligible taxpayers on their 2009, 2010 & 2011 Michigan tax returns. I am frankly shocked that these two credits where maintained during the budget cuts that came out of Lansing in October. In fact the state would have been far better off taking the tax monies from these credits and transferring them to its national award wining “Pure Michigan” advertising campaign.

Home Improvement/Appliance Credit

The credit is equal to 10% of EPA energy star certified appliances; the maximum credit is $75 for single taxpayers and $150 for married tax payers. This credit can be claimed on Michigan form 4764.

Energy Cost Recovery Surcharge Credit:

This non-refundable credit is available to both homeowners and renters who pay electric bills and is capped at $9 per meter in 2009. This credit can be claimed on Michigan Schedule 2.

For more information on these credits, including eligibility and income limitations please visit click here to visit the Michigan.gov taxes page.

This article was written by Jay Kossen, CPA at Numerico, PC. Click here to view Numerico’s website.

Employee Time Theft – You Can’t Afford To Ignore It

Do you have an employee who is always late? One who makes or receives personal phone calls daily or one who sneaks out a couple of minutes early on a regular basis? What about an associate that is on their cell phone texting through out the day or who clicks off the computer screen as soon as you walk into their office? If you do you have an employee that is stealing time pure and simple.

Have you ever stopped to consider what these types of employee time theft are costing you? An employee who robs you of 5 minutes per day 5 days per week is stealing the equivalent of approximately 2.8 days per year assuming an 8 hour work day.

If you pay an employee $15 an hour and that employee is stealing 2.8 days per year, it’s costing you $396 per year considering a factor for payroll taxes and employee fringe benefits.

If your employee steals an hour a day 5 days per week the cost of the theft has just skyrocketed to 33 days per year and $4,680 again considering a factor for payroll taxes and employee fringe benefits.

How can you control expensive employee time theft? Clearly state policies in the personnel guide and have employees sign it to be sure they have read the guide and understand the policies. The guide should include policies on personal phone calls, cell phone use, internet use and working hours as well as policy relating to tardiness.

Let your employees know how much you are willing to tolerate—you can disallow personal phone calls except in the case of an emergency. Talk to “tardiness” offenders—tell them their pay will be docked or worse—remind them that everyone in the office is a professional, and professionals don’t punch a time clock. Make it clear that cell phone use of any sort or “surfing the net” will not be tolerated UNLESS it is business related.

The key is to be aware of the situation, bring it to the employee’s attention, specify the ramifications should they fail to modify their activities, and consistently enforce the penalty you have set. If it’s clearly a matter of policy, you take the emotion out of your reaction and simply make a good business decision.

This article was written by Gary Field, CPA at Numerico, PC. Click here to view Numerico’s website.

IRS Proposes New Rules for Tax Preparers

The IRS has recently announced a new set of proposed rules for tax preparers. If enacted, the new rules would become effective January 1, 2011.  According to the proposed rules, all paid tax preparers would be required to:

1. Register with the IRS and obtain a preparer tax identification number. Once a preparer is registered, the IRS will be able to verify that the preparer has filed his or her personal tax returns and business and employment tax returns, along with paying the taxes on those returns. If the paid tax preparer has not filed those returns timely or paid the taxes due, penalties can be imposed by the IRS, including a prohibition on filing tax returns for clients.

2. Submit to a competency test. This rule does not apply to attorneys and certified public accountants that are active and in good standing with their licensing agencies.

3. Obtain continuing professional education. Again this rule does not apply to the attorneys and certified public accountants of Demorest Law Firm, PLLC, or Numerico, P.C. since we have our own requirements from the Michigan Bar Association and the Michigan Association of Certified Public Accountants.

In my opinion, the proposed new rules are long overdue. Currently, only certified public accountants, attorneys and enrolled agents have standards that are implemented by their individual associations. For far too long, tax preparers have been able to put a sign up that says Joe’s Tax Service, yet they were not required to have any formal training, testing or registration requirements. The IRS is beginning to understand the complexities and dangers involved in regulating an industry with certain unregulated components.

Hopefully these proposed regulations will add a serious deterrent to the fraudulent or incompetent preparers that we hear about far too often in stories from individual taxpayers such as “I don’t know why I got such a large refund, my preparer just had me sign the return and I didn’t get all of the reported refund.” “ I didn’t know that I hadn’t been filing returns, I thought my preparer had already filed them.” “What do you mean that I have not paid my employment taxes for my business or filed my employment tax forms? I gave my paid tax preparer access to my Company’s bank account and electronic withdrawals for the employment taxes were taken from my bank account.”

To read the IRS proposed regulations please click here.

How to Succeed Where Others Have Failed

Stop anyone you meet and ask “what’s the biggest mistake a new business owner can make?”  Odds are they won’t know. A more insightful respondent (perhaps one who knows from personal experience) might mention “undercapitalization” or “lack of cash flow”.  They’re usually right. But the truth is, the biggest mistake is usually not one but a combination of the following maladies: “being overly optimistic when projecting revenue”, “having a weak (or nonexistent) business plan”, “pricing problems”, “a failure to seek professional advice”, “rushing to market”, “insufficient experience”… the list goes on.

On the other hand, ask them what makes an entrepreneur succeed, and you should hear statements like “owner’s self-confidence”, ”emphasis on service (quality) rather than price”, “working hard”, ”luck”, “devoting full time to the business”, “industry expertise”, and “making a significant capital investment”…

The point is, to succeed, you need not only the desire, but a well-rounded understanding of the pros, the cons, and how to exploit or avoid them.

A prudent business owner does his homework by considering the possibilities mentioned earlier and determining, in advance of their occurrence, how to avoid the “pitfalls” and ensure success. One of the keys to success is turning to experts for professional advice.

If you make a practice of turning to objective professionals early on in the planning process, you’ll increase your likelihood of finding the avenues which will lead to your success.  For example, a good banker can be very helpful in identifying credit needs, an insurance agent in identifying risks that need covering, an attorney concluding on the appropriate business form (sole proprietor, partnership, LLC and “C or S” corporations) and CPA can advise as to cash flow needs, accounts receivable control, tax planning direction and much, much more. Consider bringing your local banker, insurance agent, attorney and CPA on board sooner than later. By doing so what you will find is you can focus on what you do best – managing your business – knowing you’ve got a team working with you to handle matters outside your realm of expertise.

This article was written by Gary Field, CPA at Numerico, PC. Click here to view Numerico’s website.

Save Yourself

Even smart people make mistakes. Many people who have picture perfect careers are taking photographs with the lens cap on when it comes to their personal finances.

Or, if they have the lens cap off, they are too busy taking pictures to pay enough attention to the subject matter – their personal financial affairs. Either way, the result is – they make mistakes – big mistakes that can cost them a great deal of money.

AMONG THE WORST MONEY MISTAKES IS:

*NOT SETTING GOALS. Rather than saving what is left after paying the bills (which for many may be close to nothing) make a commitment to yourself to save a specific amount of money – and then do it.

The first thing to do is set easily attainable short-term goals that are going to have a positive outcome. For example, decide how much money you want to save in one year and cut it up into bite size pieces.  Allocate a fixed amount of your net income as savings and pay yourself first. Use the remaining cash to figure your personal budget. Be realistic so you don’t fall into the trap of saying “since I can’t save xxx dollars, I might as well not save any…” and “… I don’t know where all my money goes, but I don’t have any left for savings…”

Be successful in reaching your savings goal by creating a workable savings plan. Take your annual savings goal and divide by twelve. Then promise yourself that every month you will save that amount. Allow yourself some flexibility while guaranteeing your success. If you get paid bi-weekly, plan to save an equal amount out of every check, while allowing for minor setbacks – promise yourself you will make up any deficiency from one paycheck by the end of the month – to reach your monthly savings goal.

The key is to set realistic, attainable goals, make them manageable, and keep a promise to yourself. Once you get started on a positive savings trend you won’t want to quit, and before you know it, you will have reached your goal… just in time to set another one.

This article was written by Gary Field, CPA at Numerico, PC. Click here to view Numerico’s website.