Lately, the tax scam & phishing artists have changed tactics.  Whereas before, they always targeted the unsuspecting taxpayer, now they are targeting the tax preparers!  Be sure your tax preparer has proper security in place to protect your identity!

- Trudy

http://www.cpapracticeadvisor.com/news/12046990/new-tax-scam-targets-income-tax-preparers

New Tax Scam Targets Income Tax Preparers

ISAAC M. O'BANNON, MANAGING EDITOR ON FEB 19, 2015

The IRS is warning return preparers and other tax professionals to be on guard against bogus emails making the rounds seeking updated personal or professional information that in reality are phishing schemes.

“I urge taxpayers to be wary of clicking on strange emails and websites,” said IRS Commissioner John Koskinen. “They may be scams to steal your personal information.”

Specifically, the bogus email asks tax professionals to update their IRS e-services portal information and Electronic Filing Identification Numbers (EFINs). The links that are provided in the bogus email to access IRS e-services appear to be a phishing scheme designed to capture your username and password. This email was not generated by the IRS e-services program. Disregard this email and do not click on the links provided.

Phishing made this year’s Dirty Dozen list of IRS tax scams. The full list is available on IRS.gov.

Phishing is a scam typically carried out with the help of unsolicited email or a fake website that poses as a legitimate site to lure in potential victims and prompt them to provide valuable personal and financial information. Armed with this information, a criminal can commit identity theft or financial theft.

If you receive an unsolicited email that appears to be from either the IRS or an organization closely linked to the IRS, such as the Electronic Federal Tax Payment System (EFTPS), report it by sending it to phishing@irs.gov.

In general, the IRS has added and strengthened protections in our processing systems this filing season to protect the nation's taxpayers. For this tax season, we continue to make important progress in stopping identity theft and other fraudulent refunds.

It is important to keep in mind the IRS generally does not initiate contact with taxpayers by email to request personal or financial information. This includes any type of electronic communication, such as text messages and social media channels. The IRS has information online that can help you protect yourself from email scams.

Small Business Financials Blog: Why Would Inventory Value Increase?

Small Business Financials Blog: Why Would Inventory Value Increase?: Article written by EricBank It seems like only awful things can happen to inventory: it breaks, spoils, gets stolen or goes obsolete. A...

Why Would Inventory Value Increase?

Article written by EricBank

It seems like only awful things can happen to inventory: it breaks, spoils, gets stolen or goes obsolete. Accountants are used to marking down inventory value, but it's rather a rare accounting entry that actually increases the value of inventory. In fact, this is only possible to do this if you use international accounting standards, because GAAP doesn't allow for it.

Inventory Valuation

GAAP requires that when your inventory becomes distressed in some way, you write down the value using LCM: lower of cost or market method. Under LCM, the markdown is required when inventory cost is greater than its market price. The markdown must lower the value to no more than its net realizable value -- the amount that the inventory will garner at auction after subtracting the extra costs necessary to prepare and sell the goods. The minimum value of the inventory is the net realizable value less your regular profit margin.

Write-Downs

GAAP is fussy when it comes to writing down inventory value. Specifically, the rules request you use the allowance method. Under this method, you must estimate the value of the inventory losses you anticipate in the next accounting period. At the start of the period, debit cost of goods sold and credit reserve for lost inventory by the amount of the estimated loss. By recognizing the loss at the beginning of the period, you meet the requirements of the matching principle: book expenses in the period that is responsible for causing them. This handles the case where you don't discover inventory damage or theft until a later period. Otherwise, you'd be booking the expense in an incorrect period. Eventually, you'll discover the theft or damage, at which point you debt the reserve account and credit inventory for the loss amount.

Income

The cost of goods sold increases when you write down inventory. An increase in COGS reduces in gross profit, which is equal to sales revenue minus COGS. Of course, this decreases your taxable income, your tax bill and your net income. This is usually considered a desirable outcome. However, if a company uses employee incentives in an effort to maximize income, and an increase in COGS is the last thing the company wants. "Income management" techniques attempt to minimize COGS and maximize net profit. This creates the temptation to ignore distressed inventory. Shocking but true. It also just might be fraudulent.

Recovery

The written-down inventory can occasionally regain value. Imagine that a consumer safety scare causes a drug producer's inventory value to plummet. However, if the scare proves to be unfounded, the inventory value can experience a price recovery. GAAP forbids you from increasing the value of the inventory, whether or not you've marked it down. International financial reporting standards take the opposite approach: you have to mark up inventory that you wrote down when the price recovers, but only as much as the written-down amount. As more and more U.S. companies begin adopting IFRS, the opportunity to mark-up inventory will spread.

Four Tips for Small Business Recruiting

Article written by EricBank

Ask any hiring manager and they'll tell you how hard it is to find top talent. On the surface, this might seem a little puzzling, since currently 5.6 percent of the U.S. work force is unemployed and actively looking for a job. Experts recognize the paradox -- even though there are plenty of job hunters, companies struggle to find and keep the talent they require.

The Challenge

The problem is magnified for small business recruiters, who are competing with mammoth companies like Apple that provide goodies like free meals, on-site medical care, sports facilities, sponsored junkets and free high-tech goodies. Perhaps that's why three out of five managers and owners of small businesses complain that their biggest challenge is finding the right workers.

Nonetheless, some experts have arrived at a startling piece of advice for small businesses contending with recruiting issues: Choose not to compete!

Face reality. Anyone who is looking for the benefits and safety of a mega company is probably never going to be satisfied working at a small business. A better tactic is to appeal to folks with an entrepreneurial spirit and enjoy working at a small venture.

Outsmart the Competition

Here are four steps a business owner can take to outfox competing recruiters:

1. Let recruiting be driven by members of your team

Your loyal employees have a vested interest in growing your company. Ask them for referrals, because if they are top performers, they probably know other talented people who would fit well into your organization. Look at it this way -- they love their workplace and do not want to recruit employees who will pollute the environment.

2. Emphasize the point that your business has a huge potential to grow

Your company offers a lot, even if it is small. Think of the important advantages you provide: you aren't regimented, inflexible or stagnant. That means you offer the perfect opportunity for talented employees to advance as your business grows. Many top performers face the nightmare of devoting several years to a company without accomplishing anything of note. Your selling point is that talented employees will have a major impact on the company.

3. Offer recruits the opportunity for professional growth

Really good performers aren't satisfied with baubles like cut-rate phones and a basketball court. What they really want is to increase their expertise and make valuable contributions. Collect and relate stories of how individuals within your organization have had the opportunity to boost their knowledge and skills. Entice free-thinkers by explaining that you don't straitjacket your workers, you enable them.

4. Never stop recruiting

The competition for top talent never ends, and small businesses should never settle for second-best. Rather, it's important for entrepreneurs to persistently hunt for high-value performers who completely buy into your company's goals and ethos. Ask all your team members to join the recruiting effort and emphasize you commitment to long-term relationships. Even if a prospective employee is not a perfect match at present, you may find a few years down the road that the candidate has exactly the skills you need.

ESOPs for Small Corporations

Article written by EricBank

If you run a small or closely held corporation, you can compensate employees just like the big boys do by setting up an employee stock ownership plan. This is a great way to build employee loyalty without indulging in expensive cash bonuses or raises. An ESOP is one of several ways for employees to receive stock shares from their employers. Other methods include stock options, bonuses, direct purchase and profit-sharing plans. As of 2014, about 7,000 U.S. companies sponsored ESOPs, covering 13.5 million employees and making it the nation's most common type of employee ownership. ESOP's have a number of benefits, but can be expensive to set up and have a few other drawbacks.

Setting up an ESOP

Usually, corporations give, rather than sell, ESOP shares to employees. Regulations require the company to create a trust fund to administer the ESOP. The company can contribute cash or shares to the trust directly, or the trust can borrow money to buy the company's shares and then receive reimbursement from the company. The company takes a tax deduction for contributions to the ESOP. In public companies, ESOP shares give employees full voting rights. However, private companies might limit employee voting rights to only major issues, such as a plant closing.

How ESOPs Work

Each employee in the plan has an individual account that receives shares from the trust. Normally, all full-time employees above age 21 can join the ESOP. Some metric, such as salary and/or seniority, determine each employee's share allocation. Share ownership is "vested" -- employees must remain with the company for a specified number of years, usually between three and six, to gain full ownership of their ESOP shares. Upon separating from the company, the employee takes the vested shares, if publicly traded, or receives the stock's fair market value from the company.

Uses of ESOPs

Frequently, closely held companies set up ESOPs to buy shares from departing owners as a reward for service. An ESOP provides a way to create additional employee benefits and thereby foster loyalty. ESOPs also offer several tax benefits. Corporate contributions of cash or stock to the ESOP are tax-deductible, and when an ESOP trust borrows money to buy shares, the corporation can deduct the reimbursement to the trust of principal and interest. The corporation can deduct the cost of dividends paid on ESOP shares. Employees may qualify for certain tax deferrals when selling ESOP shares and can roll the shares into an individual retirement account tax-free.

ESOP Cautions

Even the simplest ESOP can cost about $40,000 to establish, which might be unacceptably high for a small company. Regulations do not permit professional corporations and partnerships to use ESOPs. S corporations can establish ESOPs but are subject to lower contribution limits. A private company must buy back vested ESOP shares from departing employees, which can be a significant expense, especially in a mass resignation or layoff. Another drawback of ESOPs is that the shares issued to employees dilute the holdings of other shareowners.

Tax Tips for Farmers

Article written by EricBank

In America, there is no small business more respected than the family farm. Yet for some reason, we have devoted very little blog space to the business of farming. We correct that oversight today by summarizing some important tax tips that farmers need to know.

Every State Has Farms

Farming is a big small business, with small family farms in all 50 states. For example, the Farmland Information Center discloses that the 15,000 farms in Arizona occupy more than 26 million acres. Agricultural and dairy farms are distinctive businesses that force farmers to weigh decisions carefully, in part to take tax consequences into account. That's no problems for large corporate farms that hire full-time farm accountants. However, small farms also need to know the tax laws because it can make the difference between a profit and loss for the year, and small farms often don't have a lot of resources to survive losses.

Crop Method of Accounting

Farmers generally use either the cash accounting or accrual accounting method. But did you know that the IRS also allows the crop method of accounting? Under this regime, you can defer recognizing expenses for crops sold in the year after sowing. You deduct all crop production costs, including seedlings and seeds, in the year you sell the crop, not the year you spent the money. That might be good or bad, but is generally helpful if your have a loss in the planting year, because you might avoid cumbersome loss carryover rules. 

Cash Accounting Affects Deductions

If you adopt cash accounting, keep in mind that, according the IRS, your deductions for prepaid expenses are limited to half of your other farm expenses that qualify for deductions. Prepaid expenses include the cost of feed, seed, supplies, fertilizer and any poultry -- usually chicks -- you bought that you were unable to sell. However, you might receive an exception if you had to alter your operating procedures due to unforeseen situations. Another exception is available if your prepaid expenses in the last three years amounted to less than 50 percent of all other deductible expenses in that period. 

Farm Inventory

If you operate a chicken hatchery and utilize accrual accounting, your incubating eggs are part of your inventory. You also include any livestock you want to sell. It's up to you whether to depreciate dairy, draft and breeding livestock or include them in inventory. If you run a fur farm, include the cost of the fur-bearing animals in inventory. Treat your growing crops as inventory, but if you need more than two years to produce finished crops, you can capitalize their costs. For instance, you can capitalize new wine-grape vines since they normally take at least three years to create a usable crop.

Inventory Valuation Methods

Farmers can use the farm-price method, which assigns the cost of each inventory item at its market price minus any selling costs, such as freight, commissions and transportation to market. Ranchers can pick the unit-livestock-price method: You classify your livestock by age and type and then use a standard unit price for each animal within each group. Include in inventory all your raised livestock. You can, however, exclude feed hay from inventory. Exclude sold or lost animals.