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Chloe Humphrey Earns CPA License, Promoted to Manager : Chloe Humphrey Earns CPA License, Promoted to Manager

Chloe Humphrey Earns CPA License, Promoted to Manager

Chloe Doyle Humphrey with Alexander Thompson Arnold CPAs recently passed the Uniform Certified Public Accountant (CPA) Examination, earned her Certified Public Accountant license, and was promoted to manager.

“Chloe has been a tremendous asset to the ATA Team,” said ATA Chief Manager Al Creswell. “She works hard to understand the rules and regulations that affect her clients and provides exemplary customer service. Plus, she understands how important it is to be involved in her community. We are proud of her determination and leadership within our firm.”

Humphrey joined Alexander Thompson Arnold CPAs in May 2007 and became a licensed Certified Public Accountant on June 14, 2013. She is a member of ATA’s Financial Institutions Team and is a recent graduate of Leadership Gibson County. She earned her Bachelor of Science in Business Administration degree in accounting from the University of Tennessee at Martin. Her practice focuses on external audits, loan review, regulatory reporting, HUD audits, consolidated reports, financial statement audits and taxation for financial institutions. Humphrey and her husband Matt live in Greenfield, Tenn. with their daughter, Layla.

The Uniform CPA Examination is one of the nation’s most comprehensive examinations. Sections covered in the test include auditing and attestation, financial accounting and reporting, regulation and business environment and concepts. To be eligible to sit for the exam, candidates must have completed a minimum of 150 semester hours, which include a baccalaureate or higher degree from an academic institution recognized by the Tennessee State Board of Accountancy, with a minimum of 30 semester hours in accounting and 24 semester hours in general business subjects.

Alexander Thompson Arnold PLLC (ATA) is a regional accounting firm that offers a comprehensive array of tax, audit, accounting, and consulting services to businesses and individuals. Founded in 1946, the firm was named the eighth largest accounting firm in the State of Tennessee by American City Business Journals in 2013. ATA has 16 partners, approximately 140 team members, and 10 offices located in Dyersburg, Henderson, Jackson, Martin, McKenzie, Milan, Paris, Trenton and Union City, Tennessee and Murray, Kentucky.

 

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News Tax

2013 Mid Year Tax Update : 2013 Important Tax Developments

2013 Mid-Year Tax Update

This is a summary of the most important tax developments that have occurred in the past three months that may affect you, your family, your investments, and your livelihood. Please call us for more information about any of these developments and what steps you should implement to take advantage of favorable developments and to minimize the impact of those that are unfavorable.

Obamacare

Employer health care reporting and mandate payments postponed until 2015. On July 2, 2013, the Administration announced on the White House and Treasury websites that it will provide an additional year, until Jan. 1, 2015, before the mandatory employer and insurer reporting requirements under the Affordable Care Act (ACA, commonly referred to as “Obamacare”) begin. Since this will make it impractical to determine which employers do not provide minimum essential health coverage, and therefore would owe shared responsibility payments under Code Sec. 4980H for 2014, transition relief is also being extended for those payments. Any employer shared responsibility payments will not apply until 2015.

Health Insurance Exchanges. The Congressional Research Service (CRS) has issued a report outlining the required functions of health insurance exchanges under the ACA. Under the ACA, qualified individuals and small businesses will be able to purchase private health insurance through exchanges set up by states or by the federal Health & Human Services Agency (HHS). The initial open enrollment period for all exchanges will begin on October 1, 2013, and all exchanges are to be operational and offering coverage on January 1, 2014. Exchanges must carry out a number of functions, including determining eligibility and enrolling individuals in appropriate plans. In general, health plans offered through exchanges will provide comprehensive coverage and meet the private market reforms specified in the ACA. To make exchange coverage more affordable, qualifying individuals will receive premium assistance in the form of tax credits. Some recipients of these premium credits also may qualify to receive subsidies to help cover their cost-sharing expenses. The CRS report provides a detailed explanation of these exchanges, coverage offered through them, and the cost assistance features mentioned above.

Health Care Premium Tax Credit. The IRS has issued proposed regulations on the health care premium tax credit, which applies for tax years ending after Dec. 31, 2013. The credit is designed to make health insurance affordable to individuals with modest incomes (i.e., between 100% and 400% of the federal poverty level, or FPL) who are not eligible for other qualifying coverage, such as Medicare, or “affordable” employer-sponsored health insurance plans that provide “minimum value.” It is available for individuals who purchase affordable coverage through “Affordable Insurance Exchanges.” In general, an employer-sponsored plan is not affordable if the employee’s required contribution with respect to the plan exceeds 9.5% of his household income for the tax year. The proposed regulations address (i) minimum value, including the treatment of health reimbursement arrangements, health savings accounts, wellness program incentives, arrangements that reduce premiums, and methods for determining minimum value; (ii) the definition of “modified adjusted gross income” as it comes into play in determining household income for purposes of the credit; (iii) coverage for retirees, newborns and newly adopted children; and (iv) premium assistance amounts for partial months of coverage.

Required employer notice on health care coverage options. Beginning Jan. 1, 2014, individuals and employees of small businesses will have access to affordable health care coverage through a new competitive private health insurance market called the “Health Insurance Marketplace” (the Marketplace). Certain employers must provide written notice to employees about health insurance coverage options available through the Marketplace. A government agency has provided the following guidance on the notice requirement and has issued model notices:

  • Who must provide notices. Notices must be provided by any employers to whom the Fair Labor Standards Act applies. Generally, this means an employer that employs one or more employees who are engaged in, or produce goods for, interstate commerce. For most firms, this rule doesn’t apply if they have less than $500,000 in annual dollar volume of business.
  • To whom must notices be provided. Employers must provide a notice to each employee, regardless of plan enrollment status (if applicable), or of part-time or full-time status. Employers do not have to provide a separate notice to dependents or other individuals who are, or may become, eligible for coverage under any available plan, but who are not employees.
  • Form and content of notice. The notice must be provided in writing in a manner calculated to be understood by the average employee. The notice must include information regarding the existence of a new Marketplace, as well as contact information and a description of the services provided by the Marketplace. In addition, the notice must: (1) inform the employee that the employee may be eligible for a premium tax credit if the employee purchases a qualified health plan (QHP) through the Marketplace, and (2) include a statement informing the employee that if the employee purchases a QHP, the employee may lose the employer contribution (if any) to any health benefits plan offered by the employer, and that all or a portion of such contribution may be excludable from income for federal income tax purposes.
  • Timing and delivery of notice. Employers must provide the notice to each new employee at the time of hiring beginning Oct. 1, 2013. For 2014, a notice is considered to be provided at the time of hiring if it is provided within 14 days of an employee’s start date. For employees who are current employees before Oct. 1, 2013, employers must provide the notice no later than Oct 1, 2013.

Wellness incentives in group health plans. The IRS, acting in concert with other government agencies, has issued final regulations on nondiscriminatory wellness incentives offered in connection with group health plans. Before Obamacare, group health plans and group health issuers were prohibited from discriminating against individual participants and beneficiaries regarding eligibility, benefits and premiums, based on a health factor. However, an exception allowed premium discounts or rebates or modifications to otherwise applicable cost sharing in return for adherence to certain programs of health promotion and disease prevention. The exception allowed benefits, premiums, and contributions to vary depending on the employees’ participation in a wellness program. Obamacare made changes to the rules impacting wellness programs, most notably increasing the maximum financial incentives available to employees who participate in wellness programs. The new regulations provide numerous examples of participatory wellness programs, including a program that reimburses employees for all or part of the cost of membership in a fitness center; a diagnostic testing program that provides a reward for participation and does not base any part of the reward on outcomes; and a program that provides a reward to employees for attending monthly, no-cost health education seminars. They also clarify that participatory wellness programs are permissible as long as they are available to all similarly situated individuals, regardless of health status.

Statutory gaps on indoor tanning tax. The IRS has issued final regulations on the health reform legislation’s 10% excise tax on indoor tanning services provided on or after July 1, 2010. The regulations address practical considerations that may not have been contemplated when the law was drafted. For example, they address prepayments for tanning services and services provided as part of a gym membership. The IRS had previously issued the regulations as temporary regulations. The final regulations adopted the temporary ones with some clarifications.

Retirement Accounts

Individuals’ guarantees of loan to company owned by their IRAs were prohibited transactions. The Tax Court has held that taxpayers’ guarantees of loans to a company, the stock of which was held by their individual retirement accounts (IRAs), to purchase another company’s assets, were prohibited transactions under the tax laws. As a result, their accounts ceased to be tax-exempt IRAs, and the taxpayers were liable for tax on the capital gains realized on the later sale of the company stock. The individuals argued their personal guarantees weren’t prohibited transactions because they covered loans to an entity owned by the IRAs, rather than a loan to the IRAs themselves. However, the Tax Court found that each of the individuals’ personal guarantees of the company loan was an indirect extension of credit to the IRAs, which is a prohibited transaction.

Sixty-day rollover rule waived for individual with medical impairments. There is no immediate tax if distributions from traditional IRAs are rolled over to an IRA or other eligible retirement plan within 60 days of receipt of the distribution. A distribution rolled over after the 60-day period generally will be taxed (and also may be subject to a 10% premature withdrawal penalty tax). However, the IRS may waive the 60-day rule if an individual suffers a casualty, disaster, or other event beyond his reasonable control, and not waiving the 60-day rule would be against equity or good conscience (i.e., hardship waiver). In a recent private letter ruling, the IRS waived the 60-day rollover requirement for a taxpayer who withdrew funds from her IRA and failed to timely roll them over due to medical conditions that impaired her ability to manage her financial affairs.

Taxpayer could undo mistaken Roth IRA conversion. Taxpayers, including married persons filing separately, may convert amounts in a traditional IRA to a Roth IRA, but the conversion is taxable. If the taxpayer had basis in the IRA-i.e., he had made nondeductible contributions to the IRA-the conversion would be includible in gross income only to the extent that the converted amount exceeded his basis. A recharacterization election allows a taxpayer to treat a traditional-IRA-to-Roth-IRA conversion as if it had never been made. This is sometimes done where the value of the assets in the account dropped significantly after the conversion. Normally, a recharacterization must be done not later than Oct. 15 of the year after the year of the conversion. But a taxpayer was able to undo a conversion beyond this deadline where his attorney mistakenly told him he had a large basis (and thus a small taxable amount) when in fact he had a zero basis. The attorney confused the cost of the securities in the account with the taxpayer’s basis in the IRA. The taxpayer got relief from the IRS after seeking it in a private letter ruling.

Payroll Taxes

Additional Medicare tax may warrant withholding or estimated tax adjustments. Individuals with high earned income from wages or self-employment should consider whether they need to adjust their withholding allowances and/or estimated tax to take into account the additional 0.9% Medicare tax that applies for the first time this year.

Effective for tax years beginning after 2012, an additional 0.9% Medicare (hospital insurance, or HI) tax applies to individuals receiving wages with respect to employment in excess of $200,000 ($250,000 for married couples filing jointly and $125,000 for married couples filing separately). The tax is in addition to the regular Medicare rate of 1.45% on wages received by employees. The tax only applies to the employee portion of the Medicare tax. The employer Medicare tax rate remains at 1.45%, and the employer and employee Social Security tax remain at 6.2% on the first $113,700 of wages.

The Medicare tax on self-employment income for any tax year beginning after Dec. 31, 2012, also is increased by an additional 0.9% of self-employment income that exceeds the same thresholds as apply for employees (see above). But the $200,000, $250,000, and $125,000 thresholds are reduced by any wages taken into account in determining the additional 0.9% HI tax on wages.

In the case of employees, the additional 0.9% Medicare tax is collected through withholding on FICA wages (or Railroad Retirement Tax Act (RRTA) compensation) in excess of $200,000 in a calendar year. In addition, employees may request additional income tax withholding (ITW) on wages on Form W-4, and use this additional ITW to apply against taxes shown on their return, including any additional 0.9% Medicare tax liability. To the extent not withheld, the 0.9% additional Medicare tax must be included when making estimated tax payments.

Employers must withhold the additional Medicare tax from wages in excess of $200,000 regardless of filing status or other income. The additional withholding applies in the pay period in which the employer pays wages in excess of $200,000 to an employee, and the employer need not notify the employee that additional withholding has commenced.

Some taxpayers should consider having more income tax withheld if they have not had enough Medicare tax withheld. Keep in mind that the additional 0.9% Medicare tax will not be withheld by an employer unless the employee has received more than $200,000 of wages from that company. Thus, an employee who begins working for a new employer midway through the year, and who expects to exceed the $200,000 threshold only after taking into account wages from all employers during 2013, could wind up having too little withheld.

An employer must begin withholding the additional Medicare tax once an employee’s wages are over the threshold, even if the employee may not ultimately be liable for this tax. This could occur, for example, if one spouse earns $250,000, the other spouse isn’t employed, and they file a joint return. Although the employer must withhold on the employed spouse’s wages to the extent they exceed $200,000, the couple wouldn’t actually be liable for the additional Medicare tax because their wages won’t exceed the applicable $250,000 threshold. Thus, at year-end, the couple will wind up having overpaid $450 in Medicare tax (.9% of $50,000). This couple can adjust their W-4 withholding downward to account for the excess $450 withheld for Medicare tax.

Impact of Inflation on Taxes

Impact of chained CPI on social security and taxes. A government official explained how using chained consumer price index (CPI) for benefit programs and the tax Code would affect taxpayers, social security recipients, and government revenues. In general, chained CPI grows at a slower pace than standard CPI by fully accounting for a consumer’s ability to substitute between goods in response to changes in relative prices. A switch to chained CPI would result in smaller annual cost-of living-adjustments for social security benefits and would affect a number of inflation-adjusted tax provisions. These items include the personal exemption, the standard deduction, and the income thresholds for the individual income tax brackets and for numerous other deductions, exclusions, and tax credits. If the change to chained CPI goes through, annual increases to these various tax-related amounts would be lower than under the current standard CPI for providing inflation adjustments. As a result, the government would pay out less benefits and take in more revenue if chained CPI is implemented.

Inflation adjustments for health savings accounts. The IRS has provided the annual inflation-adjusted contribution, deductible, and out-of-pocket expense limits for 2014 for health savings accounts (HSAs). Eligible individuals may, subject to statutory limits, make deductible contributions to an HSA. Employers as well as other persons (e.g., family members) also may contribute on behalf of an eligible individual. Employer contributions generally are treated as employer-provided coverage for medical expenses under an accident or health plan and are excludable from income. In general, a person is an “eligible individual” if he is covered under a high deductible health plan (HDHP) and is not covered under any other health plan that is not a high deductible plan, unless the other coverage is permitted insurance (e.g., for worker’s compensation, a specified disease or illness, or providing a fixed payment for hospitalization). For calendar year 2014, the limitation on deductions is $3,300 (up from $3,250 for 2013) for an individual with self-only coverage. It’s $6,550 (up from $6,450 for 2013) for an individual with family coverage under a HDHP. Each of these amounts is increased by $1,000 if the eligible individual is age 55 or older.

Maximum auto/truck values for cents-per-mile valuation. The IRS has released the 2013 maximum fair market values for employer-provided autos, trucks and vans, the personal use of which can be valued for fringe benefit purposes at the mileage allowance rate. An employer must treat an employee’s personal use of an employer-provided auto as fringe benefit income and value it using one of several methods. One of the permitted methods allows an employer to value personal use at the mileage allowance rate (56.5 cents per mile for 2013). However, this method may be used only if the auto’s fair market value does not exceed $12,800, as adjusted for inflation. The inflation-adjusted figures for vehicles first made available to employees for personal use in 2013 are $16,000 for autos (up from $15,900 for 2012) and $17,000 for trucks and vans (up from $16,700 for 2012).

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Employee Newsletter News

IRS Voluntary Correction Program : The Voluntary Correction Program (VCP) to correct a retirement plans more serious failures.

IRS Voluntary Correction Program

The Voluntary Correction Program (VCP) is available to correct a retirement plan’s more serious failures — specifically plan document failures — as well as certain demographic and operational failures that cannot be corrected under the Self-Correction Program (SCP).

With Revenue Procedure 2013-12, the IRS has streamlined the application procedure and improved the filing process for submitting corrections under VCP.* VCP is not available if a plan sponsor has been notified by the IRS that the plan is subject to an audit or if the plan is already being audited.

Document Failures

One of the most common qualification failures that can be resolved under VCP is a failure to timely restate or amend a plan document for legal and regulatory changes. This is known as a nonamender failure. The IRS has a six-year remedial amendment (restatement) cycle for preapproved plan documents (prototype and volume submitter plans) and a five-year restatement cycle for custom designed plans. The categories of required changes include:

Preapproved Document Restatement

Restatement involves adopting a new plan document in accordance with the IRS%u2019s remedial amendment period. For preapproved plans (prototype and volume submitter plans), the most recent restatement incorporated changes made by the Economic Growth and Tax Relief Reconciliation Act of 2001 (EGTRRA). The deadline to restate an EGTRRA preapproved defined contribution plan was April 30, 2010. (The deadline for an EGTRRA preapproved defined benefit plan was April 30, 2012.)

The next restatement cycle for preapproved plans is known as the Pension Protection Act of 2006 restatement. The cycle is expected to begin in 2014 and end sometime in 2016 for defined contribution plans. The IRS will announce the exact dates in early 2014. Defined benefit plans are about two years later.

Individually Designed Document Restatement

Individually designed plans (custom designed plans) also need to be restated on a regular basis. These plans are on a five-year restatement cycle. The last digit of the employer’s EIN (Employer Identification Number) determines the plan’s restatement year. (EINs with a last digit of 3 or 8 are being restated in 2013.) Defined contribution and defined benefit plans are on the same cycle.

Interim Amendment

This type of amendment is required by legal or regulatory changes that impact the plan document. Recent interim amendments include changes required by the Pension Protection Act of 2006 (PPA); the Heroes Earnings Assistance and Relief Tax Act of 2008 (HEART Act); and the Worker, Retiree, and Employer Recovery Act of 2008 (WRERA). Generally, interim amendments must be made by the later of the last day of the plan year or the due date of the sponsoring employer%u2019s tax return for the tax year the change became effective. Sometimes a new law or regulation requires that an amendment be completed by the end of a specific plan year or by a certain date.

Discretionary Amendment

Employer-level changes, such as amending a plan to allow in-plan Roth conversions or participant loans or adding a hardship withdrawal provision, require discretionary amendments. Generally, discretionary amendments must be made by the end of the plan year in which the amendment becomes effective

If a restatement or an amendment is not made in a timely fashion, the plan is out of compliance with the Internal Revenue Code. To bring it back into compliance, the plan must be submitted to the IRS under VCP along with the applicable fee. Keep in mind that if a plan is not in compliance and it is audited, the resulting fee under the Audit Closing Agreement Program (Audit CAP) will be substantially higher than the VCP fee.

Standard VCP Fees

Number of Plan Participants

Fee

20 or fewer

$750

21-50

$1,000

51-100

$2,500

101-500

$5,000

501-1,000

$8,000

1,001-5,000

$15,000

5,001-10,000

$20,000

More than 10,000

$25,000

Standard Fees

When plan sponsors file under VCP, they are required to pay a fee based on the number of participants in the plan (as reported on the plan’s most recently filed annual Form 5500). The IRS provides exceptions to the standard fees for correcting certain mistakes. When one of the following is the sole plan failure, the correction qualifies for the corresponding reduced fee:

– Interim or discretionary amendment failures submitted during the plan’s current remedial amendment period: $375

– Nonamender failure submitted within one year of a remedial amendment period deadline: 50% of the standard fee

– Certain plan loan failures affecting no more than 25% of the participants: 50% of the standard fee

– Required minimum distribution (RMD) operational failure under Section 401(a)(9) affecting 50 or fewer participants: $500

– 403(b) plan failure to timely adopt a written plan document prior to December 31, 2009: 50% of the standard fee if the VCP submission is made prior to December 31, 2013

* Revenue Procedure 2013-12 requires all VCP submissions to include completed Forms 8950 and 8951.

Please contact Jerry Smith at 731.642.0771 for more information.

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Employee Newsletter News Tax

Roth IRA Conversion – Transfer or Rollover : Under ATRA, Roth Conversion could be Transfer or Rollover

Roth IRA Conversion: Transfer or Rollover?

Under the American Taxpayer Relief Act of 2012 (ATRA), an in-plan Roth 401(k) conversion now may be made as a transfer rather than as a rollover. This new provision means there does not need to be a distributable event for participants to move pretax 401(k) contributions into a Roth account with the same plan.

In-plan Roth Rollover

The Small Business Jobs and Credit Act of 2010 (SBJCA) created the in-plan Roth conversion, which permits 401(k) plans (and other “applicable retirement plans”) that have Roth account provisions to allow participants (or surviving spouses) to convert non-Roth accounts to Roth accounts within the 401(k) plan. Note that since funds are not distributed from the plan, the income taxes due as a result of the conversion must be paid from a participant’s other assets.

There are some restrictions, however. The in-plan Roth rollover conversion is available only to participants who are eligible for a distribution from the plan. Thus, participants are not eligible to convert elective deferrals, safe harbor 401(k) contributions, qualified nonelective contributions (QNECs), or qualified matching contributions (QMACs) to a Roth account until they reach age 59 1/2. And employer matching and nonelective contributions cannot be converted unless the plan has an in-service distribution provision.

In-plan Roth Transfer

By adding the in-plan Roth transfer, ATRA eliminated the requirement that participants must have a distributable event to move pretax amounts into a Roth 401(k) account. Amounts in non-Roth accounts can now be converted by transfer. As with any Roth conversion, participants who transfer pretax amounts to after-tax Roth 401(k) accounts must pay federal income tax on the transferred amount in the year the conversion occurs.

Amending the Plan

In-plan transfers are permitted only when the plan document contains or is amended to provide a Roth elective deferral feature. A plan sponsor cannot add a Roth account feature solely to allow for Roth rollovers or transfers.

Although the new law permits in-plan Roth transfers as of January 1, 2013, at press time, the IRS had yet to issue guidance on this new law change. However, based on established guidance, if a plan sponsor wishes to permit the in-plan Roth transfer, the plan document must be amended by the end of the plan year in which a Roth transfer is first permitted. Therefore, sponsors of calendar-year plans who wish to permit transfers this year will need to amend their plan by December 31, 2013. Prior to amending their plan, employers wishing to add this feature should draft a board resolution.

Note: Separate recordkeeping of each transfer is needed for reporting purposes and to track the five-year recapture tax rules.

Please contact Jerry Smith at 731.642.0771 for more information.

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News Tax

IRS Requires EIN Updates : All EIN Information Must Be Updated with IRS

IRS Requires EIN Updates

The IRS has revised the regulations that require all taxpayers with employer identification numbers (EIN) to update their information with the IRS. The new regulations will take effect on Jan. 1, 2014 and apply to all entities or persons possessing an EIN.

EINs are issued by the IRS to basically all businesses, governmental entities and certain individuals for tax filing & reporting. This regulation will allow the IRS to determine the true responsible party for the EIN and prevent unnecessary delays in resolving tax matters.

The IRS has already updated Form SS-4 for new EIN applicants and will publish a form for those with current EINs once the regulations are finalized.

If you have questions about the EIN updating regulations, please contact us.

 

More EIN Update Information:

TD 9617: Updating of Employer Identification Numbers

Authenticated U.S. Government Information: REG%u2013135491%u201310

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News

Alexander Thompson Arnold CPAs Celebrates Team Achievements : ATA Team Members Recognized for Promotions and Passing the CPA Exam

Alexander Thompson Arnold CPAs Announces Team Member Achievements

February 19, 2013
Alexander Thompson Arnold CPAs is proud to announce its team members who have earned promotions and have passed the Uniform CPA Examination.
“ATA’s mission is to help our clients succeed. Our team members continually excel in the accounting industry and provide the highest quality accounting and auditing services to our clients,” said Al Creswell, CPA and Chief Manager, Alexander Thompson Arnold CPAs. “It’s an honor to recognize these individuals for their determination and leadership within our firm.”
These individuals were recently promoted:
  • Scotty Alsup, CPA, CBA (Dyersburg, Tenn.) and Jay Davis, CPA (Union City, Tenn.) have been promoted to Senior Manager
  • Beth Bartlett, CPA (Dyersburg, Tenn.) is now Manager
  • Mitzi Travis, CPA (Jackson, Tenn.); Trenton Duncan (Union City, Tenn.); and Bill Parnell (Milan, Tenn.) have been promoted to Senior Accountant

 

These individuals have recently passed the Uniform CPA Exam:
  • Mitzi Travis (Jackson, Tenn.)
  • John Young (Dyersburg, Tenn.)
  • Sara Mitchell Pope (Martin, Tenn.)
  • Ben Woods (Union City, Tenn.)

 

The Uniform CPA Examination is one of the nation’s most comprehensive examinations. Sections covered in the test include auditing and attestation, financial accounting and reporting, regulation and business environment and concepts. To be eligible to sit for the exam, candidates must have completed a minimum of 150 semester hours, which include a baccalaureate or higher degree from an academic institution recognized by the Tennessee State Board of Accountancy, with a minimum of 30 semester hours in accounting and 24 semester hours in general business subjects.
Alexander Thompson Arnold PLLC (ATA) is a regional accounting firm that offers a comprehensive array of tax, audit, accounting, and consulting services to businesses and individuals. Founded in 1946, the firm was named the eighth largest accounting firm in the State of Tennessee by American City Business Journals in 2013. ATA has 16 partners, approximately 140 team members, and 10 offices located in Dyersburg, Henderson, Jackson, Martin, McKenzie, Milan, Paris, Trenton and Union City, Tennessee and Murray, Kentucky.
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News

AICPA Summary of US Office of Management and Budget Proposed Broad Revisions to OMB Circular A-133 : AICPA Governmental Audit Quality Center Summary of OMB Proposed Guidance

AICPA Governmental Audit Quality Center Summary of OMB Proposed Guidance

Released January 31, 2013

The federal government spends more than $600 billion annually in the form of grants and cooperative agreements. The U.S. Office of Management and Budget (OMB) and the federal agencies have been talking for some time about how grant policies can be reformed to increase the efficiency and effectiveness of federal programs, as well as to eliminate unnecessary and duplicative requirements and focus in on areas that emphasize achieving better outcomes at a lower cost. OMB’s issuance of the Proposed Guidance is the culmination of the information gathering process that began when OMB issued the Advance Notice on this topic area in early 2012.

The Proposed Guidance document is over 200 pages long and the GAQC will be analyzing it in much greater detail over the next several weeks. In the meantime, the following describes some of the key areas of change covered in the Proposed Guidance:

Single Audit Threshold for Audit Proposed to Increase to $750,000. Entities that expend less than $750,000 in federal awards would not be required to undergo a single audit. This would represent an increase from the current $500,000 threshold for single audits which was established in 2003. The Proposed Guidance states that any entity that falls below the $750,000 threshold must make records available for review or audit by appropriate officials of the Federal agency, pass-through entity, and the Government Accountability Office.

Changes to teh Major Program Determination Process – Type A/B ThresholdThe OMB is proposing to “tinker” with several key provisions of the major program determination process. For example, the minimum threshold for the Type A/B program determination would be revised from $300,000 to $500,000.

Changes to the Major Program Determination Process – High-Risk Type A Programs. The criteria for Type A programs to qualify as high-risk are being revised such that for a Type A program to be designated as high-risk it must have, in the most recent period, failed to receive an unqualified opinion; had a material weakness in internal control; or had questioned costs exceeding five percent of the program’s expenditures.

Changes to the Major Program Determination Process – Type B Programs. The criteria for Type A programs to qualify as high-risk are being revised such that for a Type A program to be designated as high-risk it must have, in the most recent period, failed to receive an unqualified opinion; had a material weakness in internal control; or had questioned costs exceeding five percent of the program’s expenditures.

Percentage of Coverage Changes. The percentage of coverage required in a single audit is proposed to be reduced from the current 50% (normal) and 25% (low-risk auditees) to 40% (normal) and 20% (low-risk auditees).

Criteria for Low-Risk Auditee Status. The criteria for low-risk auditee status has been revised. For example, it would now more clearly include data collection form submission within required timeframes as a criteria and adds a criteria that the auditor did not report a substantial doubt about the auditee’s ability to continue as a going concern. It also removes the previous options for waivers in this area.

Reduction in Types of Compliance Requirements to be Tested. The Federal Register notice indicates that OMB is also proposing that the number of types of compliance requirements to be tested in a single audit be reduced from the current 14 types of compliance requirements to 6 types of compliance requirements. Those requirements include: (1) Activities Allowed or Unallowed and Allowable Costs/Costs Principles (the Proposed Guidance does note that this requirement could include some testing of Period of Availability and Matching); (2) Cash Management; (3) Eligibility; (4) Reporting; (5) Subrecipient Monitoring; and (6) Special Tests & Provisions. The proposal would permit the federal agencies to request that certain of the deleted types of compliance requirements be added to the Special Tests & Provisions requirement for programs where they could be considered essential to the oversight of the program. The Federal Register notice states that this change is not reflected in the draft proposal but would be implemented through the first OMB Compliance Supplement to be issued after the proposed change becomes final.

Findings.More detail will be required to be reported in auditor findings. However, the questioned cost threshold for reporting will be increased from $10,000 to $25,000.

Streamlining of Related Circulars and Guidance. The proposal streamlines eight existing OMB Circulars into one document including Circular A-133 and the various Cost Principles. Additionally, the Proposed Guidance would consolidate the cost principles into a single document with limited variations by type of entity. OMB states that the Proposed Guidance will supersede the following OMB Circulars:

  • A-21, Cost Principles for Educational Institutions
  • A-87, Cost Principles for State, Local, and Indian Tribal Governments
  • A-89, Federal Domestic Assistance Program Information
  • A-102, Awards and Cooperative Agreements with State and Local Governments
  • A-110, Uniform Administrative Requirements for Awards and Other Agreements with Institutions of Higher Education, Hospitals and Other Nonprofit Organizations
  • A-122, Cost Principles for Non-Profit Organizations
  • A-133, Audits of States, Local Governments and Non-Profit Organizations
  • It will also supersede those sections of A-50, Audit Follow-Up, related to Single Audits

Indirect Costs and Time and Effort Reporting. A number of changes are being proposed in these complex areas that the GAQC will be analyzing over the upcoming weeks to determine any impact on auditors performing single audits.

Administrative Requirements. A number of changes are being proposed in this area as well. The GAQC will be analyzing this area within the Proposed Guidance over the upcoming weeks to determine any impact on auditors performing single audits.

The ATA Team will keep you informed as more information is available on this Proposed Guidance. If you have questions, please let us know.

Categories
News Tax

Individuals Can Start Filing Taxes January 30 : January 30 Starts the 2013 Tax Filing Season

January 30 Starts the 2013 Tax Filing Season

 

Beginning Wednesday, Janurary 30, individuals can start filing their 2012 taxes.  However, the IRS has announced delays for returns that contain more than 30 other forms, because the forms must be updated and systems for processing them tested.  A date will be announced when returns containing these forms will be accepted, but that date will probably be late February or sometime in March.

 

IRS form that 1040 filers can begin filing in mid-February

Taxpayers using this form can begin filing their tax returns in mid-February after the IRS updates its processing systems.

  • Form 8863 Education Credits

 

List of IRS forms that 1040 filers can begin filing in late February or into March 2013

The following tax forms will be accepted by the IRS in late February or into March after updating forms and completing programming and testing of its processing systems. A specific date will be announced in the near future.

  • Form 3800 General Business Credit
  • Form 4136 Credit for Federal Tax Paid on Fuels
  • Form 4562 Depreciation and Amortization (Including Information on Listed Property)
  • Form 5074 Allocation of Individual Income Tax to Guam or the Commonwealth of the Northern Mariana Islands
  • Form 5471 Information Return of U.S. Persons With Respect to Certain Foreign Corporations
  • Form 5695 Residential Energy Credits
  • Form 5735 American Samoa Economic Development Credit
  • Form 5884 Work Opportunity Credit
  • Form 6478 Credit for Alcohol Used as Fuel
  • Form 6765 Credit for Increasing Research Activities
  • Form 8396 Mortgage Interest Credit
  • Form 8582 Passive Activity Loss Limitations
  • Form 8820 Orphan Drug Credit
  • Form 8834 Qualified Plug-in Electric and Electric Vehicle Credit
  • Form 8839 Qualified Adoption Expenses
  • Form 8844 Empowerment Zone and Renewal Community Employment Credit
  • Form 8845 Indian Employment Credit
  • Form 8859 District of Columbia First-Time Homebuyer Credit
  • Form 8864 Biodiesel and Renewable Diesel Fuels Credit
  • Form 8874 New Markets Credits
  • Form 8900 Qualified Railroad Track Maintenance Credit
  • Form 8903 Domestic Production Activities Deduction
  • Form 8908 Energy Efficient Home Credit
  • Form 8909 Energy Efficient Appliance Credit
  • Form 8910 Alternative Motor Vehicle Credit
  • Form 8911 Alternative Fuel Vehicle Refueling Property Credit
  • Form 8912 Credit to Holders of Tax Credit Bonds
  • Form 8923 Mine Rescue Team Training Credit
  • Form 8932 Credit for Employer Differential Wage Payments
  • Form 8936 Qualified Plug-in Electric Drive Motor Vehicle Credit

If you have questions about how this effects you, please call. Our partners and staff are here to help.

Categories
Healthcare News Tax

Businesses to Provide Health Care Benefits Information : Provide Health Care Benefits Information on W-2

Businesses to Provide Health Care Benefits Information

Under the Patient Protection and Affordable Care Act, employers that sponsor group health plans, along with their insurers, must provide health plan participants and beneficiaries with clear and understandable information about their plans so that they can make informed decisions when choosing coverage. Below, we discuss what this new “Summary of Benefits and Coverage” (SBC) disclosure may mean for you.

For employer-sponsored group health plans, the insurance issuer is required to provide the SBC to the sponsoring employer. The employer and the insurer are responsible for providing the SBC to plan participants and beneficiaries. In the case of a self-insured group health plan, the plan administrator must provide the SBC to participants and beneficiaries.

An SBC generally is not required for standalone dental and vision plans, health flexible spending arrangements (FSAs), and health savings accounts (HSAs). Health reimbursement arrangements (HRAs), however, are subject to the SBC rules.

When Disclosures Are Required

You generally must provide enrolling or re-enrolling employees and beneficiaries with the SBC beginning on the first day of the first open enrollment period or first plan year that begins on or after September 23, 2012. Thus, for most employers, initial SBCs are required for the 2013 open enrollment period. The SBC also must be furnished to COBRA beneficiaries during the open enrollment period. Your insurer should make the appropriate SBC(s) available to you.

Employees and beneficiaries entitled to special enrollment rights (for example, under HIPAA) must receive the SBC within 90 days after enrollment. Plans and insurers that automatically renew coverage, rather than requiring re-enrollment, must furnish the SBC no later than 30 days prior to the first day of the new plan or policy year. You also must provide the SBC to employees and beneficiaries who request the SBC or summary information about health coverage as soon as is practicable but no later than seven business days following receipt of the request.

The SBC should be a part of any written application materials. A separate SBC must be provided for each benefit package option (e.g., PPO versus HMO) you offer employees. However, you may, but don%u2019t necessarily have to, furnish an SBC for each coverage tier (for instance, self-only or family coverage) or cost-sharing selection (such as deductibles, copayments, and coinsurance) under a benefit package.

SBC Content

Basically, the SBC should contain uniform definitions of standard insurance and medical terms; a description of coverage, including cost sharing for each category of benefits; any exceptions, reductions, and limitations on coverage; coverage examples of common benefit scenarios; a statement that the SBC is only a summary and that the plan or policy controls; contact information for questions and obtaining a copy of the plan documents, insurance policy, certificate or contract of insurance; and an Internet address (or similar contact information) for obtaining a list of network providers, prescription drug coverage information, and the insurance and medical terms glossary. The DOL has a sample SBC on its website.

Failure to comply with the SBC requirements can result in a daily penalty of up to $1,000 per willful failure, per participant and an excise tax of $100 per day for each participant who should have received the SBC.

Please call the ATA Team to help answer any questions.

Categories
News

Phillip Creswell Named Partner With ATA

Phillip Creswell Named Partner with Alexander Thompson Arnold CPAs

Al Creswell and the team at Alexander Thompson Arnold, PLLC CPAs are pleased to announce that Phillip Creswell has been named partner with the firm. You are invited to join the celebration at a Christmas Open House and Reception honoring Phillip and Katie Creswell on December 20 from 4 to 6 p.m. at 624 East Reelfoot Avenue, Union City.
“Phillip has been an asset to Alexander Thompson Arnold CPAs since he joined the firm in 2004,” said Alfred H. Creswell, CPA, chief managing officer for Alexander Thompson Arnold PLLC. “He has an excellent reputation in the community and has worked hard to develop his skills as an accountant and a leader. We are proud to welcome him as partner and look forward to a bright future together.”
A graduate of the University of Tennessee at Martin, Phillip joined the firm in 2004 and has devoted his career to governmental auditing, financial statement preparation, and tax issues and preparation. Because that is his primary focus, he is able to understand challenges facing governments and make timely, pertinent recommendations for improvement. His experience compliments his work on the firm’s audit watch task force, whose mission is to examine and improve our audit processes and deliverables. He also serves on the firm’s information technology committee and strategic planning committee and is a member of the American Institute of Certified Public Accountants and Tennessee Society of Certified Public Accountants.
As an active member of the community, Phillip is a member of the Union City Athletic Booster Club, Union City Rotary Club and Union City Jaycees. He is the finance committee chairman for First United Methodist Church in Union City, a financial advisor for the Alpha Tau Omega Fraternity Board of Trustees, and treasurer for the Union City Youth Athletic Alliance. He is also past president of the Obion County UT Alumni Association. He and his wife, Katie, have a son, Preston. Phillip is the son of Al and Michelle Creswell.
“Growing up with Alexander Thompson Arnold CPAs, I learned from an early age that ATA is a company that works hard for its clients,” said Phillip. “I’m honored to continue the tradition that Dad and the other ATA partners have established. The focus on customer service and professional excellence is what makes ATA such a great company. I am honored to be named partner. I am especially glad to have this opportunity in my hometown.”
Please join us in congratulating Phillip!