October, 2016 | RKL LLP
Posted on: October 26th, 2016

RKL Firm Rebrand Video

Over the years, the RKL name has become synonymous with innovation, outside-the-box thinking and cutting edge capabilities. Officially rebranding to the RKL name represents that legacy of excellence, our current wave of innovation and the unlimited possibilities that await all of us.

Moving into the future united under the RKL name, we look forward to expanding that reputation through our entrepreneurial approach and instinct for emerging demand. We have a lot to celebrate at RKL, and the video below demonstrates how our collective values and qualities make a strong foundation for where we’re headed together.

RKL Firm Rebrand from RKL on Vimeo.

Posted on: October 25th, 2016

R&D Tax Credit: Here to Stay and Now Available to More Companies

Find out how your company can benefit from R&D tax creditMany popular tax credits and deductions for businesses have an unstable history, with periodic expirations and last-minute extensions that make tax planning unpredictable from year to year. A prime example of this phenomenon is the Research and Development (R&D) tax credit. This credit is calculated based on a company’s qualified research expenditures.

For more than three decades, the R&D credit was temporary, being renewed (often retroactively) or extended for another year according to the whims of Congress. All of that changed, however, last December when the Protecting Americans from Tax Hikes Act of 2015 became law and permanently established the R&D credit as a tax planning option for eligible businesses. Additionally, Congress removed limitations that previously excluded small or midsized companies from using the R&D credit.

This means that whether your company develops cleaning products or manufactures welding cable, there is now an expanded opportunity for all businesses to take advantage of this tax credit for new product development, product improvements and process improvements.

R&D credit: permanent and expanded

Statistics show that more than $7.5 billion worth of R&D tax credits are claimed each year, but billions are left on the table thanks to previous eligibility limits or misconceptions about the credit’s applicability. Think your company is too small or too new to take advantage of the R&D credit? Think again. Thanks to the PATH Act, more businesses than ever are now able to take advantage of this tax credit.

Previously, use of the R&D credit was limited if a company or its shareholders were subject to the alternative minimum tax (AMT). In such cases, the credit would be limited or would have to be carried forward. The PATH Act addressed this issue by removing the AMT limitation for small businesses. Small businesses (defined by the PATH Act as having an average of less than $50 million in gross receipts over the prior three years) are now permitted to use the R&D credit to offset AMT liabilities.

Additionally, the R&D tax credit is now immediately impactful for start-up companies, defined by the PATH Act as companies with less than $5 million in gross receipts and no more than five years of gross receipts. These qualified entities can now apply the credit against the Federal Insurance Contributions Act (FICA) portion of their payroll taxes up to $250,000.

How can the R&D credit benefit my company?

For businesses who were previously ineligible or could not reliably plan to use the R&D credit, now is the time to revisit this option. Any company working to stay competitive in today’s fast-changing economy is likely developing ways to innovate and improve its products, so let RKL help you determine whether any of those costs can be used dollar for dollar against your tax liability.

For more information on the R&D tax credit or to conduct a study to find out if it’s right for your business, contact Clint M. Rider, CPA, Partner in RKL’s Small Business Services Group at 717.394.5666.

Debra A. Taylor, CPA, Manager in RKL’s Tax Services GroupContributed by Debra A. Taylor, CPA, Manager in RKL’s Tax Services Group. Deb has more than 29 years in tax services specializing in individuals, estates, trusts and small businesses.

 

 

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Posted on: October 12th, 2016

RKL Establishes New Risk Management Entity with Acquisition of GTM Risk Management

RKL has acquired Radnor-based GTM Risk Management, effective Oct. 1, which will operate under the new name RKL Risk Management LLC.Reinsel Kuntz Lesher LLP (RKL), Certified Public Accountants & Consultants, today announced the acquisition of Radnor, Pennsylvania-based GTM Risk Management, which will operate under the new name RKL Risk Management LLC. The transaction, effective October 1, 2016, positions the firm as a leading provider of risk management services for financial institutions, credit unions and businesses in the Mid-Atlantic.

Read the full press release here.

Posted on: October 10th, 2016

Fringe Benefit Changes and Updates for 2016

Get the changes and updates to fringe benefit reporting in 2016 from RKL. With the arrival of fall, employers are certainly looking ahead to calendar year-end deadlines and obligations. One annual year-end task is the accounting for and reporting of fringe benefits, which the IRS considers a form of pay for the performance of services. Examples include, but are not limited to, group-term life insurance, personal use of company vehicles and moving expenses.

Fringe benefits are taxable, unless specifically excluded by law, so it is critical that they are properly calculated and reported on W-2 forms for employees. As always, there are exceptions, particularly as it relates to fringe benefits provided to partners or 2% S corporation shareholders, so it is important to consult with your tax advisor regarding your particular circumstances.

In years past, the RKL team has provided reporting reminders and a primer on basics of fringe benefit reporting. This year, we bring to our readers’ attention a few changes and updates to fringe benefit reporting in 2016.

Transportation Benefits Exclusion Amount Increased

Over the past year, RKL’s tax professionals have discussed several provisions of the Protecting Americans from Tax Hikes (PATH) Act that was signed into law in December 2015. One lower profile change impacts fringe benefits related to employee parking and commuting.

The IRS categorizes parking expenses, commuter highway transportation and transit passes as “qualified transportation fringe benefits,” and provides for a monthly exclusion from income the cost of such benefits.

The PATH Act permanently created parity between the monthly exclusion amount for transit passes and commuter highway transportation, which had previously been $130, and the monthly amount for qualified parking expenses, which was $250 for 2015. This parity was also applied retroactively for eligible employees for calendar year 2015. Your RKL advisor can assist with correctly adjusting taxes if this applies to your specific company situation.

For 2016, the monthly exclusion for both parking and transit is $255.

Taxability of Identity Theft Protection Services

A topic not included in IRS Publication 15-B, “Employer’s Tax Guide to Fringe Benefits,” is identity theft protection services provided to customers or employees. As data breaches become increasingly common, employers are offering services like credit reporting and monitoring, identify theft insurance policies or identity restoration services with more regularity. Though not included in Publication 15-B, the IRS did issue two announcements over the past year to clarify the issue of the taxability of such services.

First, the IRS assured employers and individuals that the value of identity protection services provided after a data breach is not considered taxable. This benefit is not required to be reported via Form W-2 or 1099-MISC. Later, the IRS expanded their stance to include identity protection services provided generally to individuals, not only those compromised by a breach. According to the IRS, whether issued as the result of a breach or not, identity protection services are not considered a taxable benefit for employers or individuals.

The accounting and reporting of fringe benefits is a process unique to each company’s circumstances and specific situation. For additional information on fringe benefits, please visit the two links below from the RKL blog archive:

Please contact your RKL advisor or one of our local offices for clarification as to whether these two areas of change apply to you, or for assistance calculating fringe benefits generally.

Tina Dodson, CPP, EA, of RKL’s Small Business Services Group.Contributed by Tina Dodson, CPP, EA, in RKL’s Small Business Services Group. Tina has more than 18 years’ experience helping small business owners and their management teams meet their financial reporting and individual and corporate tax return preparation needs.

 

 

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Posted on: October 4th, 2016

Unclaimed Property in Pennsylvania: Reportable Sooner and Increased Enforcement

unclaimed property updates in PennsylvaniaBusinesses and organizations that hold financial assets (like uncashed checks or forgotten bank accounts) or certain tangible items (including items left behind in safe deposit boxes) belonging to Pennsylvania residents are likely familiar with their reporting responsibilities under the Commonwealth’s unclaimed property law. In recent years, however, changes were made to this law designed to step up enforcement and increase the amount of property turned over to the Pennsylvania Treasury.

Below, we outline key updates to Pennsylvania’s unclaimed property law that affect both the responsibility of the holder to report property to Treasury and Treasury’s authority to enforce the law and track down reportable property.

Dormancy period reduced

Most significantly for businesses holding unclaimed property, the dormancy period for the majority of property types was reduced from five years to three, effective as of February 10, 2015. The reduction in dormancy period resulted in a one-time cash infusion of more unclaimed property turned over to Treasury, part of the effort to close the revenue gap in the 2014-15 fiscal year budget.

This means businesses and organizations have two less years to hold financial assets that have been lost, forgotten or held without activity by the owner before it is considered dormant and must be remitted to the Pennsylvania Treasury.

In addition to the reduced dormancy period, the updated unclaimed property law also now includes a newly-defined term, “indicated an interest in property,” when describing conduct that would reset the dormancy clock, so to speak. While the concept of activity by the property owner was included in the previous version of the law, it now explicitly defines what types of contact stave off dormancy, such as:

  • A written contact, communication or transaction;
  • A secure or password-protected electronic contact, communication or transaction;
  • A verbal contact, communication or transaction, in which the older takes reasonable action to verify the identity of the owner; or
  • A contact, communication or transaction, which is evidenced by other criteria provided by the State Treasurer.

Another notable addition to items considered unclaimed property is Roth IRAs and similar tax-advantaged accounts. According to the updated law, these types of accounts “not subject to a mandatory distribution requirement are presumed abandoned and unclaimed three years after the owner is age 70½ or three years after he/she has indicated an interest in the property.”

Expansion of audit and enforcement authority

The law expands the State Treasurer’s authority to search for and collect unclaimed property, particularly through the assessment of higher fees and penalties for unreported dormant property.

Treasury is also permitted to use third party auditors to conduct examinations of holder records, and businesses may not question the auditors selected. Furthermore, any work papers resulting from a third party audit must remain confidential according to the law.

Holders are subject to fines and penalties for not reporting unclaimed property, increased from the prior version of the law. Treasury may charge holders:

  • $200 per day for the cost of an audit that reveals reportable property (not to exceed the value of that property).
  • Up to $1,000/day (not to exceed $365,000) for failing, without proper cause, to report and deliver unclaimed property. This penalty starts the day after the report was due and continues until a report is submitted (may be waived for good cause).
  • A reasonable estimate of the amount of reportable unclaimed property, if a holder’s records are inadequate or insufficient to prepare a report.

Noncompliance with Pennsylvania’s unclaimed property law is now even costlier for businesses, so it is critical that they understand responsibilities under the law. Businesses with questions about these changes or those who seek assistance to comply should contact their RKL advisor or one of our local offices.

Lindsey Akers, CPA, supervisor in RKL’s Small Business Services Group Contributed by Lindsey Akers, CPA, a supervisor in RKL’s Small Business Services Group with more than 10 years’ experience helping small business owners and their management teams meet their financial reporting and individual and corporate tax return preparation needs.

 

 

 

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