KatzAbosch Raises Awareness for Client, The Children’s Guild, Through Fundraiser with GiftCards.org

KatzAbosch is pleased to announce a fundraising campaign for client, The Children’s Guild, through GiftCards.org. The fundraiser will begin on January 20, 2015 and run for 45 days to end on March 6, 2015. KatzAbosch will raise funds by way of asking our associates, friends and family to turn in any gift cards, gift card balances and store credits to Giftcards.org. The gift cards and store credits will be turned into cash to be given to The Children’s Guild. The funds collected will go toward improving programs for special education, group living, treatment foster care and family mental health services in Maryland. The firm hopes to also raise awareness for the mission of the The Children’s Guild to teach children the values and life skills necessary for a successful life, one filled with caring, contribution and commitment, empowering each child with the vision to see, the courage to try and the will to succeed through a process of adult and organizational transformation.

If you would like to help a child in need through the support of The Children’s Guild, please visit our website: http://giftcards.org/childrens-guild. KatzAbosch will also take collections of gift cards and store credit on the following days to be processed for cash donation to The Children’s Guild. This is a tax-deductible donation.

• February 6, 2015
• February 20, 2015
• March 6, 2015

“We are very excited for the opportunity to help our client (The Children’s Guild) in raising money for their mission. The work that The Children’s Guild has done for children in the community is remarkable and unique.  It is really a place where children in need can thrive and build skills for a better future,” says Kelly Ernest, Marketing Manager, at KatzAbosch. “We hope to raise a sizable donation to help them continue their amazing efforts and build a better world for our children of tomorrow.”

About The Children’s Guild

The Children’s Guild is a nonprofit, child-serving organization dedicated to serving children and adolescents with trauma disorders, who have been traumatized by life experiences or who have autism spectrum disorder and/or multiple disabilities in Maryland and Washington D.C. Founded in 1953, The Children’s Guild has become one of the largest providers of special education, group living, treatment foster care and family mental health services in Maryland.

The Children’s Guild programs are guided by Transformation Education (TranZed), an organizational philosophy that fosters a culture of flexibility. This culture creates management and staff who are agile thinkers. This assures children are treated as individuals and taught the way they learn best.

About KatzAbosch

Founded in 1969, KatzAbosch is one of the largest CPA and business consulting services in the Mid-Atlantic region. As a regional accounting firm, our mission is to provide the highest quality accounting, tax, financial and management consulting services to our clients. We understand the needs and challenges of our clients and we have made it our obligation to create, grow and protect asset value. KatzAbosch is consistently named a Best Accounting Firm to Work For in Accounting Today and as one of the Top Workplaces in The Baltimore Sun. Our firm is also ranked among the Top 15 Largest Accounting Firms in the Baltimore Area by the Baltimore Business Journal and among the Top 200 Accounting Firms in the U.S. by Inside Public Accounting.

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Client Spotlight: BridgeEdU Expanding and Showcasing New Website Design

KatzAbosch client, BridgeEDU, has recently updated their website.  BridgeEdU is a unique first year college program that combines core academic courses, real-world internships and service experiences, with the coaching to help students succeed in academics and life. BridgeEdU Scholars will have the opportunity to earn 20+ transferable college credits. Our curriculum focuses on courses necessary for your degree such as writing, communications, and math. Your professional internships will be matched to your interests, and they will be integral to the BridgeEdU experience. Throughout the year, you will work in an environment rich with resources to develop the skills that will lead to timely college completion.

The new website includes a YouTube video, mobile-responsiveness and long-scrolling design where content is more organized and in a much easier format to digest.  BridgeEDU has also created a multi-media blog.  Check the blog out here.

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The SALT Shaker: New Tax Credit for 2015 – Endow Maryland

Commencing in 2015, contributions to Qualified Community Foundations will qualify for a 25% Maryland tax credit. There are 14 charities in Maryland that qualify for the tax credit program. Donations to any of these 14 charities will qualify for a 25% Maryland tax credit that can be used to reduce income tax.

The 14 charities can be found at this link – http://www.mdcommunityfoundations.org/. The total annual amount of credit available is $250,000 and approval from the Maryland Department of Housing and Community Development must be obtained to claim the credit.

The KatzAbosch SALT Group can help you determine if this charitable giving would make sense for you. Please contact the KatzAbosch SALT Group if you have any questions regarding SALT issues.

KatzAbosch
9690 Deereco Road, Suite 500
Timonium, MD 21093
410.828.2727

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KatzAbosch Announces That Linda J. Lang Has Joined The Firm

KatzAbosch is pleased to announce that Linda J. Lang has joined the firm as Government Contracting Advisor effective January 5, 2015. Linda will provide a specialized list of consultative services to include, but not limited to, proposal review and analysis, assistance with proposal preparation, contract maintenance, GSA scheduling, small business reporting, contract administration, and training. She has spent over 25 years as a government contractor for large and small businesses in the Baltimore and DC Metro areas, where she specialized in both contracting and subcontracting. Linda’s experience working alongside government contractors such as Northrop Grumman, Lockheed Martin, Boeing, Innoplex and TASC has positioned her as one of the most sought-after experts in her industry.

She earned her M.S. in Business Finance and Management from Johns Hopkins University and her B.A. in Business from University of Maryland. Linda has extensive experience with in-house teaching and program specific training on topics to include compliance training in exports and organizational conflicts of interest. She is a member of National Contract Management Association (NCMA) and Armed Forces Communications & Electronics Association (AFCEA). Linda practices her craft through her business philosophy to develop profitable relationships for everyone. During her free time, she enjoys boating, watersports, outdoor hiking and football.

“Linda’s ability to manage complex projects coupled with her commitment to the ever-changing government contracting industry very much align with the firm’s mission to provide exceptional service to our clients, and we are delighted to welcome her to our senior team,” said CEO, Mark Cissell.

About KatzAbosch

Founded in 1969, KatzAbosch is one of the largest CPA and business consulting services in the Mid-Atlantic region. As a Maryland accounting firm, our mission is to provide the highest quality accounting, tax, financial and management consulting services to our regional clients. We understand the needs and challenges of our clients and we have made it our obligation to create, grow and protect asset value. KatzAbosch is consistently named a Best Accounting Firm to Work For in Accounting Today and has been named a Top 200 Accounting Firms in the Nation by Inside Public Accounting for 2014. Our firm is also ranked among the Top 15 Largest Accounting Firms in the Baltimore Area by the Baltimore Business Journal and as a Top 100 Workplace in Baltimore by The Baltimore Sun.

For more information, contact: Kelly Ernest, 410.307.6388 or kernest@KatzAbosch.com.

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KatzAbosch Client, BITHENERGY, Partners with Columbia Association (CA) on New Energy Project

Columbia Association (CA) has taken a significant stride in using clean energy and reducing its carbon footprint by partnering with BITHENERGY and SunEdison on a cutting-edge project.
Each year for the next 20 years, CA will be purchasing 2,500 megawatt-hours of solar electricity generated from approximately 2 megawatts of a new 10-megawatt solar farm being built off Route 32 near Interstate 70, in western Howard County. This 2-megawatt portion of the farm is a total of 12 acres, equivalent to nine football fields of solar panels.

The energy produced will provide enough clean, renewable power to meet the needs of two of CA’s fitness facilities – Columbia Athletic Club and Columbia Gym – the equivalent of nearly 25% of CA’s total electricity consumption each year. The project also will eliminate about 1,000 metric tons of carbon dioxide emissions associated with CA’s operations.

“We are delighted that the Columbia Association will benefit from the clean, renewable energy that will be generated from our 10-megawatt solar power plant that is being built in Howard County,” said Robert Wallace, president and CEO of BITHENERGY. “Our engineering staff has worked diligently over the last few years to make the Nixon Solar Farm a model solar energy project that simplifies the process by which governments, nonprofits and commercial businesses seamlessly benefit from robust renewable energy options. Once completed, the Nixon Solar Farm will be the largest solar power plant in Howard County and one of the largest in the state of Maryland.”

A video about CA’s solar farm project can be seen at www.youtube.com/watch?v=adbAYx58shg.

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Contractor Business Systems

Finalized in 2012, the “Business Systems Rules” outlined mandatory requirements for certain contractor business systems, further defined as (1) accounting and billing; (2) estimating; (3) purchasing; (4) material management; (5) government property; and (6) earned value management. Applying only to contracts awarded after May 18, 2011, the DOD Federal Acquisition Supplement (DFARS) 242.70 specified requirements for each system, and established financial penalties for instances of noncompliance qualifying as “significant deficiencies.” There has been a lack of clarity in how these business systems are analyzed by the government, and in many cases, significant business systems have not been reviewed for many years.

The matter at hand, has prompted the issuance of a proposed rule to amend DFARS aspiring to improve the backlogged audit situation and increase effectiveness of auditing contractors’ accounting systems, estimating systems, and material management and accounting systems.

Note: These proposed rules are not applicable to all contractors, generally will not be applicable to small businesses unless contracts exist which are covered by Cost Accounting Standards.

The proposed rule issued on July 15th, 2014 places the responsibility on the individual contractors to demonstrate compliance with DFARS systems criteria related to the contractors accounting systems, estimating systems, and material management and accounting systems. Simply stated, contractors’ will now perform self-evaluations and hire an independent CPA of their choosing to perform an audit on such criteria. Additionally, the contractor is responsible for disclosing any significant deficiencies discovered during these evaluation engagements. Contracting officers and government auditors will then review the results of the independent CPA audits and self-evaluations.

The proposed rule is not without significant controversy, and in August 2014, the DOD held a public meeting. Questions included in the public meeting were items such as whether or not the Defense Contract Audit Agency (DCAA) would provide an audit program to CPA’s, or if DCAA would be performing re-audits after CPA reports are submitted. DCAA indicated they would provide feedback on a CPA’s audit program, and indicated they do not intend to perform re-audits. Questions have also been raised regarding the level of access provided to government auditors, and expected increased costs as a result of the rule. Needless to say, the proposed rules have several glitches to be improved upon.

Katz Abosch will provide further updates as appropriate and when available.

For more information, contact Josh Sutherland, CPA.

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Year-end Holiday Giving: What You Need to Know

With the holiday season upon us, many of you give generously to your favorite charities and we applaud your efforts. However, to ensure that your donations are tax deductible, there are a number of important points to keep in mind.

Rules for Charitable Contributions of Clothing and Household Items

Household items include furniture, furnishings, electronics, appliances and linens. Clothing and household items donated to charity generally must be in good used condition or better to be tax deductible. A clothing or household item worth over $500 does not have to meet this standard if you include a qualified appraisal of the item with your return.

To be deductible, you must generally get a receipt from the charity showing the date and place of the contribution and a description of the property. However, for gifts under $250, if it is impractical to obtain a receipt (e.g., goods are delivered to an unattended drop site) a receipt is not required if you have written records with the same information as required for gifts over $500 (as described below).
If the gift is worth $250 or more, you must get a written acknowledgment from the charity that includes a description of what was donated and when, and a statement either that no goods or services were rendered in return for the donation or describing and valuing what the charity provided in return. The acknowledgment must be obtained by the time the tax return for the year of the donation is filed or due, whichever comes first.

If the amount of your deduction for all similar non-cash contributions (such as clothing, jewelry, furniture, electronic equipment, household appliances) is over $500, you must keep written records that (1) indicate the appropriate date each non-cash item was acquired, (2) include a reasonably detailed description of the donated property along with its condition, (3) estimate the purchase price of the item, (4) describe its current retail (usually second-hand or thrift-store) value, and (5) explain how this value was determined (e.g., from the Salvation Army’s online donation guide). If the amount of your deduction for all similar non-cash contributions is over $5,000, you’ll generally need to have the items appraised by a qualified appraiser.

Guidelines for Monetary Donations

You must have a bank record or a written statement from the charity to deduct any donation of money, regardless of amount. The record must show the name of the charity and the date and amount of the contribution. Bank records include canceled checks, and bank, credit union, and credit card statements. Bank or credit union statements should show the name of the charity, the date, and the amount paid. Credit card statements should show the name of the charity, the date, and the transaction posting date.

Donations of money include those made in cash or by check, electronic funds transfer, credit card, and payroll deduction. For payroll deductions, you should retain a pay stub, a Form W-2 wage statement or other document furnished by your employer showing the total amount withheld for charity, along with the pledge card showing the name of the charity.

These requirements do not change the long-standing requirement that you must obtain an acknowledgment from a charity for each deductible donation (either money or property) of $250 or more. However, one statement containing all of the required information may meet both requirements.

Other Important Reminders

Other important reminders to keep in mind while planning your holiday and year-end charitable giving include the following:
•Qualified Charities. It is important to check to see if the charity is eligible to receive tax-deductible donations. “Select Check,” a searchable online tool available on IRS.gov, lists most such eligible organizations. In addition, churches, synagogues, temples, mosques and government agencies are eligible to receive deductible donations, even if they are not listed in the tool’s database.

•Year-end Gifts. Contributions are deductible in the year made. Thus, donations charged to a credit card before the end of 2014 count for 2014, even if the credit card bill isn’t paid until 2015. Also, checks count for 2014, as long as they are mailed in 2014.

•Itemize Deductions. For individuals, only taxpayers who itemize their deductions on Form 1040 Schedule A can claim deductions for charitable contributions. This deduction is not available to individuals who choose the standard deduction.

•Special Rules for Cars Boats, and Airplanes. The deduction for a car, boat or airplane donated to charity is usually limited to the gross proceeds from its sale. This rule applies if the claimed value is more than $500. The organization must give you Form 1098-C or a similar statement that you can attached to your tax return.Please give us a call if you have any questions or need further information,
Very truly yours,

Your trusted advisors at KatzAbosch

Copyright © 2014 Thomson Reuters/Practitioners Publishing Company. All Rights Reserved. Practitioners Tax Action Bulletins®, Five-Minute Tax Briefing®, Tax Action Memo®, and National Tax Advisory® are registered trademarks used herein under license. For subscription information, call (800) 431-9025. This publication is designed to provide accurate information on the subject matter covered. The publisher is not engaged in rendering professional advice or service. If such expert assistance is required, the services of a competent professional should be sought.

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KatzAbosch Has Been Selected as one of The Baltimore Sun’s Top Workplaces

Baltimore, MD. – December 5, 2014 – KatzAbosch is pleased to announce that it has been selected as one of The Baltimore Sun‘s Top Workplaces.

On Sunday, December 7th, The Baltimore Sun is publishing “The Baltimore Sun Top Workplaces”– a list of the best places to work in the Baltimore metro area. KatzAbosch has been named for the past three years consecutively. KatzAbosch attributes the award to the many professional perks we offer to help our employees grow such as:

• A great work/life balance.
• A high-tech education facility with training that exceeds professional requirements.
• Every employee has an office; no cubes.
• High-tech paperless office environment.
• Work from home options.
• Performance evaluations that provides timely career development.
• Coaching/mentor program that enhances career paths.
• Diverse clients for a better learning experience.
• Extensive research resources to ensure quality and efficiency.

“We are honored to have been selected for the award, particularly as the judges were our employees,” said Mark Cissell, President and CEO.

The Top Workplaces are determined based solely on employee feedback. The employee survey is conducted by WorkplaceDynamics, LLP, a leading research firm on organizational health and employee engagement. WorkplaceDynamics conducts regional Top Workplaces programs with 40 major publishing partners across the United States. Over the past year, more than 5,000 organizations and 1 in every 88 employees in the U.S. have turned to WorkplaceDynamics to better understand what’s on the minds of their employees. Through its workplace improvement offerings, WorkplaceDynamics provides solutions, training and tools to help clients improve their workplace. For more information about the Top Workplaces lists and WorkplaceDynamics, please visit www.topworkplaces.com and www.workplacedynamics.com.

About KatzAbosch

Founded in 1969, KatzAbosch is one of the largest CPA and business consulting services in the Mid-Atlantic region. As a Maryland accounting firm, our mission is to provide the highest quality accounting, tax, financial and management consulting services to our regional clients. We understand the needs and challenges of our clients and we have made it our obligation to create, grow and protect asset value. KatzAbosch is consistently named a Best Accounting Firm to Work For in Accounting Today and has been named a Top 200 Accounting Firms in the Nation by Inside Public Accounting for 2014. Our firm is also ranked among the Top 15 Largest Accounting Firms in the Baltimore Area by the Baltimore Business Journal.
For more information, contact: Kelly Ernest, 410.307.6388 or kernest@KatzAbosch.com

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The SALT Shaker: U.S. Supreme Court Hearing – Comptroller vs. Wynne

On Wednesday the Supreme Court hearing for the Wynne’s was held. Quick reminder – this case involves offsetting the Maryland Piggyback taxes with taxes paid to other states. This is an interesting case when you look beyond the details. The real issue for the court to decide is which is more important – states’ rights or the Commerce Clause in the Constitution. The decision could have an impact well beyond Maryland taxes.

I read the transcript from the hearing and based on the questions asked by the justices, there seems to be a lean towards the taxpayers. The Maryland Solicitor General represented Maryland; the justices interrupted him many times to challenge what he was saying. Several justices asked pointed questions that seemed to indicate they disagree with the Maryland position, particularly Chief Justice Roberts. The court has until the end of the current term in June to make a decision, so we will not know for sure until then.

Please contact the KatzAbosch SALT Group if you have any questions regarding Maryland tax filings, or any other SALT issues.

The SALT (State and Local Tax) Shaker is prepared by Andy Bareham, CPA, MST, Chair of the KatzAbosch SALT Group.

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Are Your Medical Records Safe?

By Nathalie Griffin-Ames, CPA



According to Redspin, a leader in healthcare IT security, a total of 804 large breaches of protected health information affecting over 29.2 million patient records were reported to the secretary of Health and Human Services between August 2009 and December 2013.
The 2013 statistics reported by Redspin are alarming:

• Over 7 million patient health records were breached
• There was a 137% increase in the number of patient records breached vs. 2012
• 83% of patient records breached resulted from theft
• 22% of breach incidents resulted from unauthorized access
• 35% of incidents were due to the loss or theft of an unencrypted laptop or other portable electronic device

Medical record protection is an important part of today’s medical practice. Although the switch to electronic record keeping has many advantages, it also entails many new risks. The reasons that so many medical records are at risk include:

• Hackers – the number of attacks on hospitals, private clinics and medical practices has substantially increased to where it accounted for 33% of all medical record theft in 2013.
• Lost or stolen electronic devices
• Failure to delete – equipment used by medical practices are being discarded without fully deleting the sensitive information they contain.
• Third-party error – many healthcare organizations outsource medical record storage and management to third-party vendors, but in some cases these vendors are not qualified to secure this information.
• Open Wi-Fi networks that are not properly secured
• Insider access –examples include employees that leave a file open on their computer or allow an unauthorized person to view a medical record.
• The ‘Cloud’ – more healthcare organizations are moving their patient health records to the cloud. However, very few are confident that they can protect this information from thieves.

How Can You Protect Your Medical Records?
Security tips to combat some of the risks listed above include:

• Install USB locks on computers, laptops and other mobile devices to prevent unauthorized data transfer.
• Install Geolocation tracking software on mobile devices, which allows for tracking, locating and wiping a mobile device of all data in the event it is lost or stolen.
• Encrypt all mobile devices and USB drives that will be used remotely and that contain sensitive data. Even if you allow employees to use their own tablets, laptops and/or smart phones, you should require encryption.
• Turn all computers completely off when not in use, even if you have installed full-disk encryption. Most leading encryption products are configured so that once the password has been entered, the laptop is unencrypted and unprotected until it is booted down. Simply putting the laptop in “sleep” mode does not cause the encryption protection to kick in.
• Educate your employees about security awareness. Discourage them from downloading applications and free software that may contain malware, turning off security settings and not encrypting data in transit or at rest, as these are all behaviors that put you at risk. Provide frequent IT security awareness training for your staff.
• Before disposing of equipment, including copiers, smart phones, laptops and ultrasound machines, wipe hard drives of all data.
• Implement Electronic Protected Health Information (EPHI) security – As electronic medical records are being accessed more frequently from mobile devices, the risk of contamination from a virus increases significantly and makes investing in a proactive data management strategy even more critical.
• Conduct an Annual HIPAA Security Risk Analysis – periodic risk analysis is a requirement of the HIPAA Security Rule, and practices should plan and budget for it in advance. Assess security risk by identifying real vulnerabilities and developing a solution to those vulnerabilities. It is recommended that healthcare organizations engage in ongoing vulnerability scanning and remediation by implementing a monthly or quarterly test schedule.
• Ensure your business associates are effectively safeguarding your electronic medical records.

Nathalie Griffin-Ames, CPA, is a Manager at KatzAbosch. She can be reached at ngriffinames@katzabosch.com.

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Retirement Plan Compliance Being Scrutinized by The IRS

The IRS is scrutinizing retirement plans with participant loan balances.  The IRS is concerned that Plans have not been following, or are abusing, the rules for loans from retirement funds. As a result, the Employee Plans Compliance Unit (EPCU) sent out letters to Form 5500-EZ filers identified in their records as having participant loans in excess of $50,000 per participant.  The project is intended to ensure sponsors are complying with participant loan limits, and that income tax is paid on excess amounts, and that Plans then correct the underlying procedures allowing this to happen.   Failure to comply does carry the risk that the Plan may lose its tax-favored status. Participant loans must meet the following standard requirements:

• The Plan must allow for participant loans.
  
• Loans must have a legally enforceable agreement stating the date of the loan, the amount, a reasonable interest rate, and the repayment schedule. The maximum loan amount is 50% of the vested account balance or $50,000, whichever is less.  An exception exists for situations where the vested account balance is less than $10,000.
  
• Generally, the participant must make payments at least quarterly of principal and interest.
• Generally, the loan must be paid back in 5 years or less, however there are exceptions if the loan is for a main home or if the participant is performing military service during the 5 year period of the loan.
  

If these rules are not followed, then the loan may be considered to be a “deemed taxable distribution”.  If the Plan has not followed these rules, options may exist for voluntary correction programs.  The IRS is also looking at loan balances in larger plans. More information can be found at http://www.irs.gov/Retirement-Plans/Form-5500-EZ-Excess-Participant-Loans-Project. If you have any questions, or if you need help in reviewing your Plan’s compliance, please contact Janet Cookson at jcookson@katzabosch.com, Josh Sutherland, CPA at jsutherland@katzabosch.com, or Katie Fortwengler, CPA at kfortwengler@katzabosch.com.

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Contractor Alert: Maryland Sales and Use Tax Exemption on Qualifying Energy Equipment

The Maryland sales and use tax does not apply to the sale of geothermal, residential wind energy, or solar energy equipment.

This exemption includes the sale of equipment and other material that is attached, applied, fabricated, or assembled that is used to comprise a complete energy system.  However, material such as sand, gravel, or grout is not considered equipment or a component of equipment.  As a result they are not exempt from the tax.

Vendors do not need to collect sales and use tax on the sale of qualifying equipment.  Instead, they should receive a signed statement from the buyer certifying the equipment purchased is qualifying geothermal, residential wind energy, or solar energy equipment.  The vendor should retain the statement with the record of sale.

If sales and use tax was mistakenly paid on the sale of a qualifying item, the payer of the tax may apply for a refund. The KatzAbosch SALT team would be happy to help with refund applications.
Please contact the KatzAbosch SALT Group if you have any questions regarding the sales and use tax exemption on qualifying energy equipment.

The SALT (State and Local Tax) Shaker is prepared by Dan Bottner, Member of the KatzAbosch SALT Group.

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KatzAbosch Celebrates 45 Years in Business This October

Founded in 1969, KatzAbosch is one of the largest certified public accounting and business consulting firms in the State of Maryland. Our professional and support personnel offer a full range of client services to our clients.

However you’ve come to know us — either as Katz & Abosch, KA&W, KAWG&F or simply KatzAbosch — we are committed to providing the highest quality accounting, tax, and consulting services. We place great emphasis on continuing education and our professional personnel members often exceed professional educational requirements.

Any changes that have taken place in the company have been movement forward, including adaptation to changing markets and environments as well as integration of new technologies and financial best practices. Our firm is, and always has been, an example of what every middle-market accounting firm wishes to be.

As stated  by current CEO and President Mark R. Cissell, CPA , “Alvin Katz and John Abosch built this firm on their expertise, strong ethics, and keen business savvy…” The firm continues to thrive and grow through respect for, and understanding of, these bedrock principles.

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Contractor Alert: Maryland Sales and Use Tax Exemption on Qualifying Energy Equipment

The Maryland sales and use tax does not apply to the sale of geothermal, residential wind energy, or solar energy equipment.

This exemption includes the sale of equipment and other material that is attached, applied, fabricated, or assembled that is used to comprise a complete energy system.  However, material such as sand, gravel, or grout is not considered equipment or a component of equipment.  As a result they are not exempt from the tax.

Vendors do not need to collect sales and use tax on the sale of qualifying equipment.  Instead, they should receive a signed statement from the buyer certifying the equipment purchased is qualifying geothermal, residential wind energy, or solar energy equipment.  The vendor should retain the statement with the record of sale.

If sales and use tax was mistakenly paid on the sale of a qualifying item, the payer of the tax may apply for a refund. The KatzAbosch SALT team would be happy to help with refund applications.

Please contact the KatzAbosch SALT Group if you have any questions regarding the sales and use tax exemption on qualifying energy equipment.

The SALT (State and Local Tax) Shaker is prepared by Dan Bottner, Member of the KatzAbosch SALT Group.

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Retirement Plan Compliance Being Scrutinized by The IRS

The IRS is scrutinizing retirement plans with participant loan balances.  The IRS is concerned that Plans have not been following, or are abusing, the rules for loans from retirement funds. As a result, the Employee Plans Compliance Unit (EPCU) sent out letters to Form 5500-EZ filers identified in their records as having participant loans in excess of $50,000 per participant.  The project is intended to ensure sponsors are complying with participant loan limits, and that income tax is paid on excess amounts, and that Plans then correct the underlying procedures allowing this to happen.   Failure to comply does carry the risk that the Plan may lose its tax-favored status.

Participant loans must meet the following standard requirements:

• The Plan must allow for participant loans.
• Loans must have a legally enforceable agreement stating the date of the loan, the amount, a reasonable interest rate, and the repayment schedule. The maximum loan amount is 50% of the vested account balance or $50,000, whichever is less.  An exception exists for situations where the vested account balance is less than $10,000.  
• Generally, the participant must make payments at least quarterly of principal and interest. 
•  Generally, the loan must be paid back in 5 years or less, however there are exceptions if the loan is for a main home or if the participant is performing military service during the 5 year period of the loan. 

If these rules are not followed, then the loan may be considered to be a “deemed taxable distribution”.  

If the Plan has not followed these rules, options may exist for voluntary correction programs.  The IRS is also looking at loan balances in larger plans.

More information can be found at http://www.irs.gov/Retirement-Plans/Form-5500-EZ-Excess-Participant-Loans-Project. 

If you have any questions, or if you need help in reviewing your Plan’s compliance, please contact Janet Cookson at jcookson@katzabosch.com, Josh Sutherland, CPA at jsutherland@katzabosch.com, or Katie Fortwengler, CPA at kfortwengler@katzabosch.com.

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KatzAbosch Client - BITHENERGY Joins the Latest Round of Contract Awardees for Department of Defense MATOC Project

BITHENERGY, Inc. Of Baltimore, Maryland is selected to support a $7 billion renewable and alternative energy power production federal energy contract.

BITHENERGY, Inc., a leading provider of innovative energy engineering solutions, has been awarded an energy contract that will support a $7 billion renewable and alternative energy power production initiative for the Department of Army. This Multiple Award Task Order Contract (MATOC) has been designated as the key contractual vehicle to be used to diversify the energy production alternatives for military installations throughout the world.

BITHENERGY was chosen as one of the eleven small businesses in the nation that are qualified to bid on future individual solar technology project task orders. The renewable energy work on these contracts will support the Army in meeting its congressionally mandated energy goal of 25 percent production of energy from renewable sources by 2025, and improving installation energy security and sustainability. The U.S. Army Energy Initiatives Task Force (EITF) and the U.S. Army Corps of Engineers, Engineering and Support Center, Huntsville, established the $7 billion MATOC primarily to use for Power Purchase Agreements involving renewable or alternative energy projects greater than 10 megawatts.

Chief Executive Officer Robert L. Wallace stated, “Our selection as one of the MATOC awardees is a potential game-changer for our company. For seven years we have been successfully providing energy management information systems, smart grid solutions, and renewable energy services to our clients in state and local government as well as in universities and healthcare institutions. Our selection to the MATOC contract now provides us an exciting opportunity to provide these and other services in support of our nation’s war fighting effort throughout the world. In some small way we hope this work will supplement the efforts of our brave women and men who put their lives on the line for us each and every day. I believe that this energy diversification effort will not only save our nation money but will provide a more secure environment for our soldiers. We are humbled to be a part of this effort.”

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KATZABOSCH.COM HAS A NEW LOOK

KatzAbosch is proud to announce that our website has undergone a facelift effective October 2014! The firm has enacted new efforts to implement a cleaner, streamlined and more user-friendly web aesthetic. New photography conveys a team environment where all departments communicate and collaborate on new and existing client engagements. The services pages have also been built out and are more organized and easy to access. In addition to some of the cosmetic website updates, the firm hired local public relations company DAASN to apply stronger SEO tactics and keyword implementation to targeted industry niches on the backend. Furthermore, the firm is continuously involved on social platforms that help drive web traffic as well.

“We have added 60 pages to the website, particularly in our services areas, in order to showcase our breadth and depth of business solution offerings,” says Kelly Ernest, Marketing Manager, at KatzAbosch. “Our firm is unique in that we provide a customized business solution through our vast list of service offerings and specialized expert human capital. I think the website now helps to convey this message. In addition, through our SEO campaigns, we have started to see an uptick in page views and website engagement.”

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KatzAbosch Client Spotlight on ThermoChem Recovery International, Inc.

Headquartered in Baltimore, MD, ThermoChem Recovery International, Inc. (TRI), among other activities, provides steam-reforming gasification technologies serving as the foundation for state-of-the-art integrated biorefinery facilities, and has most recently been focused on technologies related to the conversion of municipal solid waste into jet and diesel fuels.  TRI’s technologies and processes are modified and researched at their pilot plant in Durham, North Carolina, where the Company has been successful in demonstrating its various current capabilities for over 5 years.  TRI has been actively building a partnership with Fulcrum Bio Energy in regards to certain U.S. Government programs and U.S. military requirements, and the article linked below highlights the scope of these activities.  For more information on TRI, check out their website here. U.S. Navy, DOE, USDA Award $210M for 3 Biorefineries and Mil-spec Fuels

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Save the Date!

A Discussion on Managing Retirement Plans for Optimal Business Operations 11/4 11:30  KatzAbosch Learning Center, 9690 Deereco Road, Suite 405, Timonium, MD 21093   Presented by Gregory Lowe, CFP (R), Vice President & COO of Lowefs and Pam Walker, President of Coastal Pension Services.  Takeaways will include: Top 10 plan mistakes and DOL audit targets An update on the restatement for pension act Fee transparency Fiduciary liability and the process needed to ensure confidence Open arch 401k plans vs. packaged plans Example of common plan designs Lunch will be provided by KatzAbosch.  For more information, contact Kelly Ernest at kernest@katzabosch.com. For a full list of upcoming KatzAbosch events, click here.

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Inspired by a Real Client Scenario: Government Contracting Small Business Accounting and Finance Groups – Making a Shift From Cost Center to Strategic Department

The accounting and finance group of a small business is typically highly regarded by ownership for the work it accomplishes, but at the same time, ownership often questions the high costs of accounting and administrative functions.   A long-time client of mine has told me that “Accountants come in after the battle is over, and stab the wounded”.  Obviously, this viewpoint is that accountants are focused on the past, and our industry continues to try and change that perspective.  Ownership and senior management frequently list growth and profitability among key metrics, but don’t receive timely and detailed information to assess progress towards these goals. There are multiple ways to structure a small business accounting and finance group for a government contractor, although most of our clients have elected a structure such as the following: 1-3 people with responsibility for transactional processing (billing, disbursements, etc), general accounting, reconciliations and analysis, payroll, human resources, benefits, retirement plan administration, contract compliance and financial reporting.  These individuals are also typically involved in other related functions, such as banking, receivables collections, cash flow forecasting, borrowing negotiations, pricing and proposal assistance, leasing, hiring, general office management, and other ad hoc special projects.  My experience is that the person or persons in this role often feel overwhelmed, stressed, and unable to focus on the “big picture”.  The day-to-day tasks and projects are such that the individuals do not have sufficient time to focus on important business objectives and metrics.  A business entity with these issues should consider the following to begin to switch the focus from historical recording to value reporting: Take the time to document process and procedure.  Our experience indicates that when this is done, efficiencies can be generated through elimination of unnecessary or duplicate steps, identification of automation solutions, or identification where responsibilities can be shared.  At the same time, opportunities for better data accumulation may be created. Review the accounting system for its continued use.  Frankly, I’m not an opponent of QuickBooks, but recognize that reporting needs and contract requirements, along with growth, may cause QuickBooks to become an obstacle rather than a tool.  Many clients struggle to streamline payroll, billing and contract reporting because of a lack of automation between time entry, payroll, other expenses, and billing modules.  It is crucially important that a government contractor can, with minimal manual manipulation of data and spreadsheets, identify, review, and report on data (i.e. hours by personnel and labor category, costs by contract, funded values, backlog, etc). If appropriate, look at automation opportunities for standard accounts payable/vendor invoice and credit card processing and recording.  As the saying goes, there is probably an app for that… Now that you have freed up time:  Develop a monthly schedule requiring the following: Billings completed by the 3rd business day after the close of the billing period (increase cash flow). Bank reconciliations completed by the 5th business day after the end of the month. Accounts receivable to be analyzed weekly, with involvement of operational personnel to ensure issues can be identified. Monthly review of gross profit by contract versus anticipated profit by contract at the time of the proposal or of the last revision. A major issue we see frequently is that personnel may change, cost inputs may change, hours may not be worked, and management does not become aware until months afterwards.  Hours, costs, and revenues should be reviewed in detail each cycle. Establish a budget and a financial plan for each year, and use it to assess financial performance.  Involve department heads in the monthly review, and provide them with data on results and hours and projects.  Budget a set amount of profit, and reserve for it, don’t spend it on potentially luxury positions or assets.  Understand what costs are fixed and which are variable; establish a mechanism to ensure they stay that way. Involve accountants in lease versus buy decisions, and in projections of costs and revenues under potential assumptions for new business or hires. Continuously evaluate pricing strategies – are profit assumptions holding true?  How can the process be improved?  Have you had a professional review the assumptions and calculations? Schedule monthly meetings between the accounting team and management and operations teams to ensure all are aware of possible transactions, proposals, contract issues, new contracts, new hires, large transactions, etc.  In our experience, this transition will take some time, but will result in a group more focused on goals aligned with organizational objectives of growth and profitability.  For more information, please contact Josh Sutherland at jsutherland@katzabosch.com or 410.307.6536. Josh Sutherland, a Principal with KatzAbosch, joined the firm in 2008. He is a past Co-Chair of the firm’s Accounting and Auditing Committee, and current Co-Chair of the firm’s Government Contractor Services Group and specializes in the not-for-profit and government contracting industries.

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