The dangers of online shopping during the upcoming holiday season

For today’s consumer, e-commerce has become a convenient alternative to the long lines associated with holiday shopping. Shopping online allows buyers to order goods and have them delivered to their doorstep, all without leaving their home.  As a result, shoppers are beginning to prefer “Cyber Monday” over “Black Friday”. Unfortunately, as the preference for online shopping increases, so to do the risks of identity theft and other cyber-attacks. Identifying the risks and vulnerabilities could limit the damages of fraud you could potentially face.  

What are the risks?

There are several ways others could access your personal information when shopping online. Today’s most common forms of fraud that result from shopping online include:

• Purchasing from phony/bogus websites that offer goods or services that do not exist. You make a purchase from what you think is a legitimate website, only to have the items you ordered never show up and your credit card information compromised.
• Purchasing goods from websites that are not secure web pages. When a website does not have certain firewall and other security capabilities, it allows hackers and cyber attackers to easily access your personal and bank account information.
• Shopping on an unsecured Wi-Fi connection.

Prevention

While knowing the risks is important, preventing them is the most important. Here are a couple steps you could take to avoid damage.  

• Visit Reliable Websites - Only visit websites that can be trusted (that you are familiar with and you deem to be reputable) and ensure the spelling of the web address is correct. For example, there could be a situation where you want to visit “Amazon.com” but accidentally type in “Amzon.com” which could potentially lead you to a phony website designed to make fraudulent sales. 

• Ensure that websites are secure before entering your payment information. You can do so by looking for web addresses that begin with “https://”  or show a “padlock” beside the Web address, which symbolizes that it is a secure website. When checking out on the website, look for reliable card protection services. These include Visa’s “Verified by Visa” and MasterCard’s “SecureCode”.

• Credit over Debit - Be cautious when choosing your method of payment. Shoppers need to be aware of the different risks associated with both credit and debit cards and realize there are certain advantages to using a credit card over your debit card when online shopping. When using a credit card you are spending the card provider’s money as compared to using a debit card, in which case you are using your money. If your debit card information falls into the wrong hands, it is your money that is at risk. In most cases, card providers (debit or credit) will work to rectify the situation for those who fall victim to fraudulent purchases, but if you used a debit card for those purchases you may not have access to those funds until the dispute is settled. If your personal preference is to avoid the use of credit cards, limit the amount of money that is in your checking account.  Minimizing the balance in your account could lower the risk of exposure to fraud when using a debit card.

Identity thieves and cyber criminals will most definitely be aggressive this holiday season. Employing these steps will help make your online holiday shopping experience safer.

Will Heard

Tips for improving your personal net worth

Net worth is simply the total value of all your significant assets minus all your debts. Assets include cash and investments, your home and real estate, and cars -- along with anything else of value that your own. Debts include all the amounts that you owe on these assets and other debts, such as credit cards. 

To improve personal net worth you must first determine where you currently stand. So let’s get started. Write down all your assets, including those items mentioned above, your retirement savings, and anything else of value. Next to each of these assets write down an honest estimated value. After determining the total value of your assets, write down all your debts/liabilities and the amounts you owe on each of them. There are several free online calculators to help you aggregate all your bank accounts/investments and credit cards, which may make this process a little easier. These calculators will also keep up with these accounts in real time so you can perform this calculation more quickly next time.  Two of the most popular are mint.com and Personal Capital.

Now that you know your current net worth, here are some tips to improve it. Keep in mind that these tips will help improve your net worth over time. Remember to set reasonable monthly and annual goals. Think of it like losing weight: losing 20 pounds overnight is an unreasonable expectation... so is doubling your net worth by tomorrow.

Tip 1:   Setup an emergency fund

The general rule of thumb for an initial emergency fund is about $1,000. Depending on your personal situation, you may need a larger amount. This fund is a good idea for several reasons. The cash is there for unexpected expenses and unforeseen events -- rather than having to use a credit card. Remember that using a credit card lowers your net worth, which is counterproductive. If you can’t put away $1,000 immediately, set up automatic transfers to a savings or money market account of whatever amount you can afford each pay period.

Tip 2:   Payoff debt

Begin by paying off the debt account with the highest interest rate and then move on down the line. Credit cards, student loans and car/truck loans (in that order) tend to have higher interest rates. Consolidating debt under a lower interest rate is often a good idea. The will be fewer accounts to keep up with and you will pay less in interest over time.

Tip 3:   Trim down monthly expenses

There are two ways to increase monthly available cash. You can make more money or you can reduce how much you spend. Generally, you have more direct control over how much you spend while you have less direct control over your salary. Evaluate your monthly expenses and determine what conveniences you can reduce  or even eliminate. Start small, such as ordering take-out one less time per week. Again, small adjustments make large improvements.  

Tip 4:   Start investing

One of the easiest ways to invest your money is a retirement plan. Employers often have a 401(k) retirement plan or some equivalent; and most will even match a percentage of whatever amount you contribute to that plan. A best practice is to contribute at least the amount that will max out your employer’s match.  If your employer does not have a retirement plan, open an IRA account with a brokerage firm of your choosing. Generally, you can open an account with small automatic transfers to the account, rather than contributing the large initial amount often required by financial institutions.

These tips will only get you started down the right path for increasing your overall net worth. Please consult with your financial advisor for a more personalized plan to suit your individual/family needs.

Eric Tydings, CPA

Another scam warning from the IRS

The IRS has recently issued a Tax Tip that you need to be aware of.  For a while now, people impersonating IRS agents have been calling our home phones and even our cell phones demanding payments for past due tax bills.  The callers routinely make threats; and when confronted with taxpayer requests for more detail as to the nature of the tax notice these "agents" sometimes get downright belligerent. 

Another, more sophisticated, type of attempt to defraud taxpayers has been identified.  These would-be fraudsters are now issuing phony letters that appear to come from the IRS in an attempt to receive payments.  Here is the link to the most recent IRS Tax Tip on how to spot one of these fake IRS letters.  Always consult your tax advisor before making any payments to the IRS.

Kris Braxton, CPA

Fraud – the Bermuda Triangle

We’ve all heard about the Bermuda Triangle – and all the stories and myths that go along with it. So, as we head into Hurricane Season 2016 it may be timely to discuss another triangle that has just as many war stories – The Fraud Triangle. This one is possibly less well known but can be just as devastating to business owners, if not acknowledged. The good thing is, with the proper attention, the effects can be minimized or avoided altogether.

All businesses can be subject to fraud – some more likely than others. The most likely individuals who will perpetrate a fraud often have multiple parts of the Fraud Triangle in place. So, what is it? The three angles of the Fraud Triangle are: Pressure, Opportunity and Rationalization. The more of these elements that are present in a loosely controlled business environment, the more likely fraud will be attempted against a company. The attached article from the Association of Certified Fraud Examiners further describes and illustrates the operation of the Triangle.

http://www.acfe.com/fraud-triangle.aspx

Please let us know if you have questions or would like to discuss how the Fraud Triangle may apply to you. There are often several simple internal controls that can be implemented to help mitigate this risk. Like a hurricane, proper planning can minimize its disastrous results.

Jay Pease, CPA

IRS warns taxpayers of various scams

The IRS recently issued a warning article describing various scams that criminals are using to attempt to trick taxpayers.  The goal, of course, is to get your money.  You can read the entire article here, but I have pasted the most important parts below.

The Internal Revenue Service today warned taxpayers to stay vigilant against an increase of IRS impersonation scams in the form of automated calls and new tactics from scammers demanding tax payments on iTunes and other gift cards.

The IRS has seen an increase in “robo-calls” where scammers leave urgent callback requests through the phone telling taxpayers to call back to settle their “tax bill.” These fake calls generally claim to be the last warning before legal action is taken. Once the victim calls back, the scammers may threaten to arrest, deport or revoke the driver’s license of the victim if they don’t agree to pay.

In the latest trend, IRS impersonators are demanding payments on iTunes and other gift cards. The IRS reminds taxpayers that any request to settle a tax bill by putting money on  any form of gift card is a clear indication of a scam.

The IRS will never:

• Call to demand immediate payment over the phone, nor will the agency call about taxes owed without first having mailed you a bill.
• Threaten to immediately bring in local police or other law-enforcement groups to have you arrested for not paying.
• Demand that you pay taxes without giving you the opportunity to question or appeal the amount they say you owe.
• Require you to use a specific payment method for your taxes, such as a prepaid debit card, gift card or wire transfer.
• Ask for credit or debit card numbers over the phone.

If you get a phone call from someone claiming to be from the IRS and asking for money and you don’t owe taxes, here’s what you should do:

• Do not give out any information. Hang up immediately.
• Contact TIGTA to report the call. Use their “IRS Impersonation Scam Reporting” web page or call 800-366-4484.
• Report it to the Federal Trade Commission. Use the “FTC Complaint Assistant” on FTC.gov. Please add “IRS Telephone Scam” in the notes.
• If you think you might owe taxes, call the IRS directly at 800-829-1040.

Let's all be careful out there!

Craig Rhinehart

Chief Information Officer

Hiring Generation Y (The Millennials)

With the Baby Boomer generation making its way into retirement, employers are starting to focus on how to recruit and hire the newest generation entering the work force. The next generation includes people born in the early 80s through the late 90s, and almost doubles the size of its predecessor. "Generation Y" has many stereotypes and nicknames given to it - including "The Digital Generation", "The Millennials", and last but not least, "The Entitlement Generation". Although this generation may have already earned a reputation, they show great potential of efficiency and a desire to change and enhance the current work force.

So how should employers go about hiring and training this fickle group of employees? The most apparent and common answer includes using social media and interactive career website pages that do more than list a job title and its responsibilities. Millennials are used to connecting via a service such as Linked-In or Facebook before actually meeting in person, and would rather watch a video of daily work life inside of your business instead of reading a job description. If possible, offer flexibility when describing potential hours and schedules. Finally, advertise a culture of recognition to prospective hires. Generation Y was raised with constant recognition and although it may seem difficult for employers, that same type of recognition will motivate and retain the most talented Generation Y employees.

Dr. Randall S. Hansen (founder of Quintessential Careers) recommends employers offer a culture of constructive criticism and mentoring rather than mostly negative feedback. Millennials respond more to mentor relationships versus a rigid management structure that can seem impersonal and intimidating.

Although stereotypes may be efficient for grouping an entire generation, it goes without saying that each person is unique and is capable of defying his or her generational stereotypes. For some employers, hiring members of Generation Y may seem different from what they are used to, but the employers who embrace the fact that Generation Y has much to offer and is the future of their work-force will be the ones who hire and keep the best and brightest.

James Jordan

Are You Ready for the New Overtime Rules?

Beginning December 1st, 2016, new overtime rules go into effect which could extend overtime eligibility to over 4 million workers in the United States.  Currently, for workers to be exempt from overtime pay, they must pass three tests: 

1. The salary test (be salaried).
2. The salary level test (weekly pay is equal to or greater than $455 per week or $23,660 per year).
3. The duties test (employee performs certain duties). 

The new rules will not change the salary test or the duties test, but will drastically increase the threshold on the salary level test from $455 per week to $913 per week ($47,476 per year).  In addition, the threshold will be adjusted every 3 years.

Come December 1st, if you have an employee whose salary is under $47,476 per year, you will now need to track their hours worked.  If they work over 40 hours in a week they will be owed time and a half overtime pay.  In addition, highly compensated individuals are exempt from overtime pay if their annual pay is over a certain threshold and meet a less stringent duties test.  The new rule will increase the highly compensated individual threshold from $100,000 to $134,000.  Employers need to start thinking now about what they are going to do.

The Department of Labor offers the following suggestions on how to handle the new rules:

1. Increase salaries to the new threshold
2. Keep salaries the same and pay overtime if need be
3. Reduce or eliminate overtime hours
4. Reduce the amount of pay allocated to base salary and account for overtime, as long as the base pay does not go below the minimum (essentially keeping the salary expense the same)
5. Use some combination of the above

In addition to the above, it is also important to know that the new rules allow that 10% of the standard salary level may come from non-discretionary bonuses, commissions, and incentive payments, as long they are paid at least on a quarterly basis.

What should employers do?

First, figure out how many employees will be affected by the new rule.  Ask questions like: 

• Who is salaried and being paid less than the new threshold?  
• How many overtime hours do they work in a typical week?  A year?  
• Are there specific times in the year when more hours are needed?  
• Are there more efficient ways to complete projects to reduce or eliminate the need for overtime? 

Next, employers should consider their options with a cost/benefit analysis.  Ask questions such as:

• Does it make sense to raise employees' salaries to the new threshold and not have to keep track of hours?  
• Would it be better to keep salaries the same, track hours, and pay overtime when they work over 40 hours a week?  
• Does it make sense to hire part-time workers to allow you to eliminate overtime hours?  
• How will this decision affect your bottom-line?  
• How will this decision affect employee morale?  Remember it is not just about the numbers, there is a human element, as well.  Whichever decision chosen may have a positive or negative impact on employee morale.

Finally, create a plan to implement the strategy so you will be prepared for December 1st:  

• How is your organization going to track hours worked?  
• How are you going to carefully budget for overtime hours?  
• If new efficiencies are found, how and when are you going to train the staff? 

In an ever-changing market, it is important for companies to be able to adapt to their surroundings.  Preparation and understanding is the key to adaptation.

See the table below for an overview of changes or visit www.dol.gov

	Current Regulations	Final Rule
Salary Level	$455 per week ($23,660 per year)	$913 per week ($47,476 per year)
Highly Compensated Employee Total Annual Compensation Level	$100,000 annually	$134,004 annually
Automatic Adjusting	None	Every 3 years, maintaining the standard salary level at the 40th percentile of full-time salaried workers in the lowest-wage Census region, and the Highly Compensated Employees total annual compensation level at the 90th percentile of full-time salaried workers nationally.
Bonuses	No provision to count nondiscretionary bonuses and commissions toward the standard salary level	Up to 10% of standard salary level can come from non-discretionary bonuses, incentive payments, and commissions, paid at least quarterly.

Brian Koleszar, CPA

Thinking about Social Security?

Thinking about Social Security?

You’re not alone.  Many people have questions about Social Security -- especially those approaching retirement age.  A recent article from our regular newsletter features many frequently asked questions regarding Social Security, including when and how you can start collecting.  Read more here: FAQs about Social Security Retirement Benefits

Matt Sellers, CPA

Benefits of credit card use

I'm sure you've heard about some of the benefits offered by credit card companies via commercials, junk mail, etc. However you may not realize the full extent of the available benefits and the protection that credit cards can offer. Benefits can be earned on money spent on everyday purchases, and in many cases these benefits are considered non-taxable discounts by the IRS. In addition, the use of credit cards can reduce your personal asset exposure. There are some precautions to take before making the change to using credit cards, but if done properly there are great benefits to be gained.

• Assess your spending - It is extremely important to assess one’s level of discipline in spending before pursuing increased credit card use. Be honest with yourself about your spending habits because only you know how you (and your spouse) approach spending. If there is any doubt, don’t risk getting into credit card debt and instead stay with what works for you now. If misused, the benefits that come from credit card use will be quickly erased by paying credit card interest and fees, so make sure that you always have sufficient funds available to pay your off credit cards accounts in full each month. If you determine that you are sufficiently disciplined and financially sound, then there are a few items to consider in choosing your card and benefit/reward program (see the next bullet).

• Choose your benefits - Before choosing a credit card, check to see where the most benefit will be for you. Points towards travel related costs offer the greatest benefit for many. If you go on vacation every year and stay at the same place, or enjoy staying with certain hotel brands, then choose a card that offers reward points toward your particular hotel taste. If you fly home for the holidays, are planning a trip in the future with substantial airline costs, or you like to travel but are impartial to specific hotels, then consider looking into a card that offers rewards towards flights.  For some, a rewards program that pays cash is the best option.

• Consider the fees - It is important to assess the fees that are associated each card option. There are a number of cards that offer significant benefits with very low fees.  If you choose a card offering 1 point for every dollar spent and your weekly budget for groceries is $200, then you can expect to earn about 10,400 points ($200 x 52 weeks) per year just on groceries. This might not sound like much, but when you actually make a list of all expenses that can be paid by credit card it adds up quickly. Other significant expenses that usually accept credit cards are gas, restaurants, vacation costs not covered by points, cell phones, utilities, home furnishings, etc. Take into account how many points you feel you will generate in one year, see what value those points would get you, then compare that value to the card's annual fee.  In many cases, a couple years of stock-piling points can earn you an entire vacation trip of lodging for a fraction of the actual cost.

• Monitor - Keep in mind that over time companies may change reward policies - such as increasing the number of points or miles needed for certain services. Make sure you stay informed and monitor your reward status as you plan how to use the benefits you have earned. Remember that it doesn’t take more spending to gain the benefit - just a good financial grip on what you already spend and good judgment in assessing the overall benefit.

One additional benefit to using credit cards is that it reduces the risk that your personal bank account will be compromised in everyday spending. When you use a check card or some form of payment that drafts directly from your account, then your personal monetary assets are directly at risk in each transaction. If you use a credit card and do not setup the auto draft feature, then you can confirm each transaction at month end before paying the bill. Usually, the credit card company's money is tied up during the administrative process if there is a fraudulent activity, as opposed to yours.

The use of credit cards is certainly not for everyone.  With prudent use and sound management, however, there are many great benefits to be gained.

Jon Holcomb

Get an Identity Protection Personal Identification Number (IP PIN)

Identity theft is one of the fastest growing crimes nationwide, and preventing tax refund fraud caused by identity theft remains a top priority as one of the biggest challenges facing the IRS. The IRS is focused on preventing, detecting and resolving tax-related identity theft cases as quickly as possible.  The IRS Identity Protection PIN (“IP PIN”) is a 6-digit number assigned to victims of identity theft whose cases have been resolved. The IP PIN allows affected individuals to avoid delays in filing returns and receiving refunds.  Each taxpayer (even those who are not victims of identity theft) can voluntarily be assigned their own IP PIN.  If one person receives an IP PIN, their spouse does not need a separate number in order to file their tax return.  This 6-digit IP PIN can sometimes be confused with the 5-digit E-file PIN; however, they're not the same and are not interchangeable.

As part of a pilot program to help determine taxpayer demand for the IP PIN and the Service's ability to issue the IP PIN to a larger number of taxpayers, the IRS is again offering the IP PIN to all taxpayers who filed their federal tax returns last year from Florida, Georgia and the District of Columbia.  These locations have been chosen for the pilot program since they’ve experienced the highest per-capita percentage of tax-related identity theft.

Taxpayers who wish to take advantage of this pilot opportunity for additional filing protection should visit www.irs.gov/getanippin.  The IRS can’t issue an IP PIN to a taxpayer unless their identity has been verified online, which involves answering a series of questions that in most cases, can only be answered by the taxpayer.  Therefore, your accountant will most likely be unable to obtain the IP PIN alone on your behalf.    

Once issued an IP PIN, taxpayers will need to use it to confirm their identities on ALL federal income tax returns filed during the 2016 calendar year and future tax years. Taxpayers will receive a new IP PIN each December by postal mail.  For your protection, if you e-file your return and your IP PIN is missing or incorrect, the e-filing system will reject your return.  Filing a paper return with a missing or incorrect IP PIN also will result in delays in the processing of your tax return. Please contact us for more information and assistance with applying for your IP PIN.

Kris Braxton, CPA

Applicable large employers - information reporting extension

The IRS has recently provided transitional relief from the information reporting requirements applicable to insurers, self-insuring employers and certain other providers of minimum essential coverage under Code Sec. 6055 and to applicable large employers under Code Sec. 6056 under the Affordable Care Act. 

The deadline for filing Form 1095-B, Health Coverage, and Form 1095-C, Employer-Provided Health Insurance Offer and Coverage has been extended from February 1, 2016 to March 31, 2016. The deadline for filing Form 1094-B, Transmittal of Health Coverage Information Returns, and Form 1094-C, Transmittal of Employer-Provided Health Insurance Offer and Coverage Information Returns, is extended from February 29, 2016 to May 31, 2016 for non-electronic filers and from March 31, 2016 to June 30, 2016 for electronic filers.

Employers and other coverage providers that fail to meet these extended due dates are subject to penalties for failure to timely furnish and file. In view of the extensions provided, the provisions regarding automatic and permissive extensions of time for filing information returns and permissive extensions for furnishing statements will not apply to the extended due dates. However, the IRS will consider the extent to which an employer or other coverage provider files and furnishes these statements when determining whether to abate penalties for reasonable cause. It will also consider whether reasonable efforts have been made to prepare for reporting the required information and the extent to which the employer or other coverage provider is taking steps to ensure it is able to comply with these requirements for 2016.

If you have any questions related to the transition relief or the healthcare mandates, please call our office. We are here to assist you.

Kris Braxton, CPA