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February 27, 2014

Are you prepared for a DOL audit? Are your records in good order?  If you are an employer, you need to make sure you are prepared for a review before heading into one.

Do you have good record retention? Ensuring you are adequately organized for what may be an inevitable audit is imperative.

Here are 4 items you may want to consider before you step into your 401(k) annual review:

1. Make sure you never throw away plan documents including the adoption agreement, amendments and summary of plan descriptions.

2. Keep a hold on annual filing reports for at least six years, even electronically filed 5500's. You will also want to keep any supporting materials for contributions, testing results, plan audits, summary annual reports, and distribution records.

3. Maintain participant records during employment and up to six years after their termination.

4. Do not throw away loan records even if you've paid it off. Six years is the minimum length of time you should hold on to them. Filing away all of the above hardcopy items can seem overwhelming in an age where computer files make everything easier to separate into online folders. For your paper documents, make sure you keep one file with multiple sections, and store this file in a place that is readily available to you. Use tabs to organize your materials and label them. For example, a documents tab can hold your tax filings, amendments and/or plan documents. An administrative section can take care of all your past audit results, minutes from past plan reviews, fee benchmarking, etc.

Do not let the U.S. Department of Labor catch you unprepared. Recognize where you may be lacking in your organizational skills, and take steps to improve them this year.

If you have further questions about Employee Benefit Plan Audits, contact Linda Lauer, llauer@cbiz.com or 901.685.5575.      




February 25, 2014
The recent Tax Court decision in Shea Homes, Inc. and Subsidiaries (Shea), et al. v. Commissioner will reshape how some residential developers and homebuilders view application of the completed contract method for recognizing income. Under the completed contract method of accounting, income is recognized upon the completion of the "subject matter" of the contract. A contract is considered complete at the earlier of two tests:
  1. the 95% completion test, or
  2. the final completion and acceptance test

Shea's “subject matter” of the contract extended beyond the individual home and lot and included the larger development, amenities and other common improvements as well. Shea emphasized the features and the lifestyle of its communities to potential buyers as an important element of the development, and it noted the requirements set forth in performances bonds and CC&Rs. Accordingly, Shea computed the 95% completion test by comparing the development’s total direct (representative of the actual “bricks and sticks” costs of home construction) and indirect costs to the development’s total budgeted direct and indirect costs. Under its methodology, Shea deferred income for all homes sold until the development’s incurred cost were equal to or greater than 95% of its budgeted cost.

The IRS argued that “subject matter” of the contract was the individual home and lot, and accordingly, Shea should recognize income as each home was sold. The Court agreed with Shea noting that the IRS analysis of ‘subject matter’ was “simplistic and short sighted,” and did “not acknowledge the complex relationships created by the purchase and sales agreement.”

Residential developers and homebuilders should keep this case in mind, as it will open the door for some tax planning opportunities.

If you have questions about the key provisions of the case and how those provisions will shape taxation, structuring, and financing for residential developments going forward, contact Steve Dunavant, Senior Managing Director, at sdunavant@cbiz.com or 901.685.5575.      




February 20, 2014

The CBIZ Women's Advantage (CWA) has elected Megan Murdock, Practice Development Manager, to the CWA Executive Board. Megan has been the chair of a CWA Business Development Subcommittee for the past year and has been instrumental in planning and promoting our local women's programming.

Her appointment to the National Executive Board is an impression of her leadership and success within our own Memphis office. Megan was named a Memphis 'Woman to Watch' by the Commerical Appeal in 2013. She has been with the Memphis office of CBIZ MHM, formerly Thompson Dunavant PLC, for a total of six years.

 "It is a great honor to have Megan serving on this national board, and we are fortunate to have her as an integral part of our team," said Linda Lauer, CWA Executive Board member and Memphis Leader.

CBIZ Women’s Advantage celebrates the uniqueness of the woman business professional. Interally, we direct the development of our women professionals through focused leadership, mentoring and networking. Externally, we provide women decision makers access to a network of highly skilled, seasoned, professional women to assist their every business need. We are “CBIZ Women Helping Women Succeed in Business.”




February 18, 2014

Telecommunications recovery audit is a service that involves a comprehensive review of your telecommunication expenses, which includes land line, mobile line, data, and network configurations, to identify billing errors, best in class prices, and contract compliance.

What are the advantages of performing a cost recovery audit?

  • First year savings range from 10-40% of telecommunication costs
  • Nearly 100% success rate in finding recovery/or cost savings opportunities
  • No charge for the assessment with payment completely based on your savings
  • No utilization of your staff in the evaluation process
  • Consistent savings year after year

How does it work?

  1. You give your last month’s invoices from the categories you want analyzed.
  2. Our cost recovery experts work offsite to check for billing errors, optimized pricing, etc.
  3. You are notified of the services in which you could be saving money.
  4. You decide what saving opportunities you want to implement into your telecommunication services.
  5. The cost recovery team can handle the rest of the transactions, including any necessary adjustments that need to be made.
CBIZ has been nearly 100% successful in finding recovery and/or cost savings opportunities for every company we have approached. We are able to benchmark pricing using state of the art software, experience and expertise. Our team consists of industry experts who have worked for vendors, including Fortune 100 companies, in each of the cost recovery categories and industries such as healthcare, hospitality, retail, and education.      



February 13, 2014

The Affordable Care Act, which was passed in 2010, included provisions that added a 3.8% Medicare surtax on qualifying net investment income to your tax bill beginning with your 2013 return. The final Regulations Section 1.1411 for this tax were issued in 2013. However, Form 8960, the one page form used to report the calculation of Net Investment Income (NII), was just finalized in January. 

Though we are in the beginning of tax season and final instructions for Form 8960 have not yet been released, it's important to take this tax into consideration, as it applies to taxpayers that exceed certain income thresholds. The lack of full guidance from the IRS on how to complete the required form may mean that tax professionals and their clients will be left to interpret key aspects of the calculation from what information is currently available. The legislation refers to this tax as a 3.8% "Medicare tax" on individuals, estates, and certain trusts, yet it is unrelated to Medicare. For individuals, the tax is equal to 3.8% multiplied by the lesser of Net Investment Income (NII) or Modified Adjusted Gross Income (MAGI) in excess of the following thresholds:

  • $250,000 for married couples filing jointly,
  • $125,000 for married couples filing separately,
  • $200,000 for single taxpayers and taxpayers filing as head of household

The Net Investment Income tax includes:

  • Interests, dividends, annuities, royalties and rents (unless such income is derived in the ordinary course of a trade or business), less allocable deductions
  • Income from a passive activity
  • Income from a trade or business of trading in financial instruments or commodities
  • Net gain (to the extent taken into account in computing taxable income) attributable to the disposition of property other than property held in an active trade or business

If you are an individual subject to the 3.8% Medicare tax, keep in mind that there are potential planning ideas such as examining passive and nonpassive activities, grouping elections for material participation and/or considering the election to become a "real estate professional." These opportunities could provide you some relief by minimizing your tax, which we'll expand upon in a future post.

If you have further questions about this newly implemented tax, feel free to contact Bryan Koch at bkoch@cbiz.com or 901.685.5575.  




February 6, 2014

This week, the CBIZ Women's Advantage second Networking Circles group from the Memphis office graduated from their program. This year-long peer networking and professional development program involves a series of small group meetings and program action items. Seven women participated in the group and all came together for a small graduation luncheon at Interim Restaurant & Bar in East Memphis.

One of the goals of the program is to integrate it with CBIZ's ethical and established business principles, in turn, creating a measurable impact on CBIZ's business development and revenue generation. The first graduating class of Networking Circles participants helped as mentors throughout the second group's program.

Linda Lauer, Executive Board Member of CBIZ Women's Advantage, served as the second group's leader, facilitating the eight sessions throughout the year. Linda is also a Managing Director in the Memphis office of CBIZ MHM, leading the Employee Benefit Plan Audit segment. She'll be a featured panelist at The Daily News' Women & Business Seminar, February 27, 2014 at the Brooks Museum.

CBIZ Women's Advantage celebrates the uniqueness of the woman business professional. Interally, we direct the development of our women professionals through focused leadership, mentoring and networking. Externally, we provide women decision makers access to a network of highly skilled, seasoned, professional women to assist their every business need. We are "CBIZ Women Helping Women Succeed in Business."




February 4, 2014

Josh Finfrock, Senior Manager in our Transfer Pricing division, gives insight into the updated transfer pricing documentation rules affecting qualified French taxpayers.

As part of the Finance Bill for 2014 partially enacted by the French Government, updated transfer pricing documentation rules will affect qualified French taxpayers (including French permanent establishments of foreign companies). As noted in Section L13AA of the French Tax Procedure Code, the updated transfer pricing documentation rules affect French taxpayers that satisfy one or more of the following:

  • Turnover or gross assets equal to or exceeding EUR 400 million;
  • Owns, directly or indirectly, at least 50% of a company that meets the EUR 400 million criteria;
  • More than 50% of the entity’s capital or voting rights are owned, directly or indirectly, by French or foreign entities that meet the EUR 400 million criteria; or
  • Part of a consolidated tax group in France and at least one group company meets any of the above criteria.

These updated rules now require French taxpayers to file transfer pricing documentation within 6 months of filing their tax return, whereas the previous transfer pricing documentation rules only required French taxpayers to provide transfer pricing documentation if requested during a tax audit. When documenting, the qualified French taxpayers will now be required to disclose a detailed summary of the entity and the related affiliates. They will also be required to provide a detailed summary of each intra-group transaction valued over EUR 100,000. French taxpayers that fail to file transfer pricing documentation properly (in proper detail, in a timely manner, etc.) may be penalized up to 5% of the reassessment by the French Tax Authorities.  




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