Archive for February, 2012

New Limits Allow Higher Contributions

Saturday, February 25th, 2012

New 401K LimitFor those focused on saving for retirement, the recent increase in the defined contribution plan limits are great news. For defined contribution plans like 401(k) and 403(b), the maximum employee deferral has increased by $500 this year to $17,000, (up from $16,500 in 2011).  The “catch-up” contribution for participants age 50 and older remains unchanged at $5,500 for tax year 2012.

IRA contribution limits

The annual contribution limits for individual retirement accounts (IRAs) remain unchanged. Individuals age 50 or older before the end of 2012 may contribute up to $6,000 to a traditional or Roth IRA. You can split contributions between a traditional and a Roth IRA, but the combined limit is $6,000. Note that your annual income determines eligibility for a Roth IRA. See irs.gov for additional details.

And don’t forget that there’s still time to make 2011 IRA contributions. You have until April 17, 2012!

Legal Disclaimer: This article is intended for informational purposes only and by no means should replace or substitute other legal documents (governmental or non-governmental) reflecting similar content or advice. If you have any questions concerning your situation or the information provided, please consult with an attorney, CPA or HR Professional.

Dirty Dozen Tax Scams for 2012

Saturday, February 25th, 2012

Dirty Dozen Tax ScamsIR-2012-23, Feb. 16, 2012

WASHINGTON –– The Internal Revenue Service today issued its annual “Dirty Dozen” ranking of tax scams, reminding taxpayers to use caution during tax season to protect themselves against a wide range of schemes ranging from identity theft to return preparer fraud.

The Dirty Dozen listing, compiled by the IRS each year, lists a variety of common scams taxpayers can encounter at any point during the year. But many of these schemes peak during filing season as people prepare their tax returns.

“Taxpayers should be careful and avoid falling into a trap with the Dirty Dozen,” said IRS Commissioner Doug Shulman. “Scam artists will tempt people in-person, on-line and by e-mail with misleading promises about lost refunds and free money. Don’t be fooled by these scams.”

Illegal scams can lead to significant penalties and interest and possible criminal prosecution. The IRS Criminal Investigation Division works closely with the Department of Justice to shutdown scams and prosecute the criminals behind them.

Here are the top three from the Dirty Dozen tax scams list for 2012:

Identity Theft

Topping this year’s list Dirty Dozen list is identity theft. In response to growing identity theft concerns, the IRS has embarked on a comprehensive strategy that is focused on preventing, detecting and resolving identity theft cases as soon as possible. In addition to the law-enforcement crackdown, the IRS has stepped up its internal reviews to spot false tax returns before tax refunds are issued as well as working to help victims of the identity theft refund schemes.

Identity theft cases are among the most complex ones the IRS handles, but the agency is committed to working with taxpayers who have become victims of identity theft.

The IRS is increasingly seeing identity thieves looking for ways to use a legitimate taxpayer’s identity and personal information to file a tax return and claim a fraudulent refund.

An IRS notice informing a taxpayer that more than one return was filed in the taxpayer’s name or that the taxpayer received wages from an unknown employer may be the first tip off the individual receives that he or she has been victimized.

The IRS has a robust screening process with measures in place to stop fraudulent returns. While the IRS is continuing to address tax-related identity theft aggressively, the agency is also seeing an increase in identity crimes, including more complex schemes. In 2011, the IRS protected more than $1.4 billion of taxpayer funds from getting into the wrong hands due to identity theft.

In January, the IRS announced the results of a massive, national sweep cracking down on suspected identity theft perpetrators as part of a stepped-up effort against refund fraud and identity theft. Working with the Justice Department’s Tax Division and local U.S. Attorneys’ offices, the nationwide effort targeted 105 people in 23 states.

Anyone who believes his or her personal information has been stolen and used for tax purposes should immediately contact the IRS Identity Protection Specialized Unit. For more information, visit the special identity theft page at www.IRS.gov/identitytheft.

Phishing

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.

It is important to keep in mind the IRS 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 that can help you protect yourself from email scams.

Return Preparer Fraud

About 60 percent of taxpayers will use tax professionals this year to prepare and file their tax returns. Most return preparers provide honest service to their clients. But as in any other business, there are also some who prey on unsuspecting taxpayers.

Questionable return preparers have been known to skim off their clients’ refunds, charge inflated fees for return preparation services and attract new clients by promising guaranteed or inflated refunds. Taxpayers should choose carefully when hiring a tax preparer. Federal courts have issued hundreds of injunctions ordering individuals to cease preparing returns, and the Department of Justice has pending complaints against many others.

In 2012, every paid preparer needs to have a Preparer Tax Identification Number (PTIN) and enter it on the returns he or she prepares.

Signals to watch for when you are dealing with an unscrupulous return preparer would include that they:

  • Do not sign the return or place a Preparer Tax identification Number on it.
  • Do not give you a copy of your tax return.
  • Promise larger than normal tax refunds.
  • Charge a percentage of the refund amount as preparation fee.
  • Require you to split the refund to pay the preparation fee.
  • Add forms to the return you have never filed before.
  • Encourage you to place false information on your return, such as false income, expenses and/or credits.

For advice on how to find a competent tax professional, see Tips for Choosing a Tax Preparer.

The remaining 9 scams are:

  • Hiding Income Offshore
  • “Free Money” from the IRS & Tax Scams Involving Social Security
  • False/Inflated Income and Expenses
  • False Form 1099 Refund Claims
  • Frivolous Arguments
  • Falsely Claiming Zero Wages
  • Abuse of Charitable Organizations and Deductions
  • Disguised Corporate Ownership
  • Misuse of Trusts

To see the complete article for the full details on these scams, click here.

Legal Disclaimer: This article is intended for informational purposes only and by no means should replace or substitute other legal documents (governmental or non-governmental) reflecting similar content or advice. If you have any questions concerning your situation or the information provided, please consult with an attorney, CPA or HR Professional.

Payroll Tax Cut Extended to the End of 2012

Saturday, February 25th, 2012

Tax Cut ExtendedIR-2012-27, Feb. 23, 2012

WASHINGTON — The Internal Revenue Service today released revised Form 941 enabling employers to properly report the newly-extended payroll tax cut benefiting nearly 160 million workers.

Under the Middle Class Tax Relief and Job Creation Act of 2012, enacted yesterday, workers will continue to receive larger paychecks for the rest of this year based on a lower social security tax withholding rate of 4.2 percent, which is two percentage points less than the 6.2 percent rate in effect prior to 2011. This reduced rate, originally in effect for all of 2011, was extended through the end of February by the Temporary Payroll Tax Cut Continuation Act of 2011, enacted Dec. 23.

No action is required by workers to continue receiving the payroll tax cut. As before, the lower rate will have no effect on workers’ future Social Security benefits. The reduction in revenues to the Social Security Trust Fund will be made up by transfers from the General Fund.

Self-employed individuals will also benefit from a comparable rate reduction in the social security portion of the self-employment tax from 12.4 percent to 10.4 percent. For 2012, the social security tax applies to the first $110,100 of wages and net self-employment income received by an individual.

The new law also repeals the two-percent recapture tax included in the December legislation that effectively capped at $18,350 the amount of wages eligible for the payroll tax cut. As a result, the now repealed recapture tax does not apply.
The IRS will issue additional guidance, as needed, to implement the newly-extended payroll tax cut, and any further updates will be posted on IRS.gov.

Legal Disclaimer: This article is intended for informational purposes only and by no means should replace or substitute other legal documents (governmental or non-governmental) reflecting similar content or advice. If you have any questions concerning your situation or the information provided, please consult with an attorney, CPA or HR Professional.

Knowledge Luncheon – How to Get the Most for Your Business When You’re Ready to Sell

Saturday, February 11th, 2012

Sunbelt Midwest Presents…

Knowledge Luncheon – February 22nd, 2012 from 11:30 a.m. – 1:30 p.m.

  • Increase your knowledge on how to raise the value of your business
  • Learn more about the tax consequences of selling a business
  • Get free advice on how to make your business more attractive to prospective buyers
  • Q&A after each presenter

We know how busy you are so we’ve scheduled monthly lunch events that you can attend at your convenience.  RSVP at least one day in advance and we’ll provide a light lunch and important knowledge related to buying and selling businesses.  Simply check www.sunbeltmidwest.com for upcoming event topics that suit your interests.  Our local network of professionals including CPAs, attorneys, business owners and friends look forward to sharing experienced knowledge and lunch with you.

Event Host:

Matt Schroder
Sunbelt Business Brokers
1300 Goward Street, Suite 6300
Minneapolis, MN 55413
Phone:  612-751-6868

Guest Presenters:

Dan Freeman, DS&B – Certified Public Accountants, Consultants & Advisors
Kevin Koepke, Koepke Law, Ltd.

Sunbelt Midwest Team

The next Knowledge Luncheon is being held at:
Star Bank – Eden Prairie
250 Prairie Center Drive
Eden Prairie, MN 55344-7819

Also co-sponsoring this event:

Koepke Law Ltd
DS&B
Inner Circle
InterActive Circle

Profiles:

DS&B – Certified Public Accountants, Consultants & Advisors

Daniel Freeman
222 S. 9th Street, Suite 3000
Minneapolis, MN 55402
Phone: 612-630-5049
dfreeman@dsb-cpa.com

Innovation.  Not the typical term used to describe the Art of Accounting.  However, Dan is not your typical accountant.  Dan has gained 25 years of hard-nosed business experience managing over 900 employees as the Chief Financial Officer of a restaurant management company, business planner for a real estate and development company, and performing consulting services, audits, financial strategy, and litigation support for various clients.

As an advisor to all phases in the business life cycle, Dan has helped many clients through multi-generational transitions, succession planning, buy/sell agreements and acquisitions.

Dan has extensive industry knowledge spanning many client groups including: retail, restaurants, manufacturing, distribution, construction and real estate development.

Koepke Law, Ltd.

Kevin Koekpe
3161 Fernbrook Lane N
Plymouth, MN 55447
Phone: 763-201-1201
kkoepke@koepkelaw.com

Kevin Koepke, an attorney for the past 20 years, is the founder and owner of Koepke Law, ltd.  Koepke Law is a Twin Cities law firm that works extensively in the areas of business sales, shareholder succession, litigation, mediation, buy-sell agreements and banking.

The firm’s team of attorneys and paralegal are committed to providing efficient legal services that are timely and cost-effective.

Sunbelt Business Brokers

Matt Schroder
Licensed Business Broker
Minnesota and Wisconsin
Phone: 651-288-1629
mschroder@sunbeltmidwest.com

Matt is a top producer at Sunbelt, where he has been helping people buy and sell business for ten years.  He is a skilled negotiator, drawing on many years of experience in the business world.  Matt effectively uses his knowledge to educate clients and guide them through the sales process.  He is a licensed business broker in both Minnesota and Wisconsin.

Matt specializes in valuing business and putting together transactions that make it to the closing table.  His effective skills have earned him several Sunbelt Broker of the Year awards.  He has been involved in over 100 transactions in Minneapolis and St. Paul area and has sold both franchise and privately held businesses.

Prior to joining the Sunbelt team, Matt owned his own sales and distribution company.  As a business owner, he worked with numerous small business owners.  His diversified background includes extensive sales, marketing, financing and management experience.

Matt is licensed to sell businesses in both Minnesota and Wisconsin.  He is a member of Sunbelt Midwest, with two offices in the Twin Cities of Minneapolis/St. Paul, helping people buy and sell businesses in Minnesota and the greater Midwest area.

To Attend:

Register online at www.sunbeltmidwest.com or by contacting Andrea Rogge at 612-238-1288 or arogge@sunbeltmidwest.com.

Stay updated on this and other events by visiting www.sunbeltmidwest.com where you an register online for this and other upcoming events.

 

Legal Disclaimer: This article is intended for informational purposes only and by no means should replace or substitute other legal documents (governmental or non-governmental) reflecting similar content or advice. If you have any questions concerning your situation or the information provided, please consult with an attorney, CPA or HR Professional.