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**What's New**
Is Today a Good Day to go Bankrupt?
[December 2008]
When to
file for protection under the Bankruptcy Code is a difficult
question to answer, but in this case, timing is important.
Tax Update for 2008
[December 2008]
This is the
time of the year that lends itself to tax
planning particularly due to changes passed by
Congress this year and anticipated changes in
2009 from newly elected President Barack Obama
and the Democratic controlled Congress. This
article addresses some notable planning
opportunities.
IRS offers web-based courses on the new Form 990
[November 2008]
The IRS has
created a series of tax courses that can help
tax-exempt organizations maintain their exempt
status and meet filing requirements. They have
added new mini-courses on the redesigned IRS Form
990.
FASB Proposes Change to Going Concern Assumption
[October 2008]
The
Financial Accounting Standards Board has issued a
proposal that would set forth management’s
responsibility to consider all available information
about the future to evaluate a reporting entity’s
ability to continue as a going concern. The proposal
would also require certain disclosures when there is
substantial doubt as to an entity’s ability to continue
as a going concern, even if management’s plans alleviate
that doubt. If adopted, the new standard would apply to
businesses and nonprofit organizations. The effective
date is likely to be during 2009.
OIG Updates Compliance Guidance
for Nursing Facilities
[October 2008]
The Supplemental
Compliance Program Guidance for Nursing Facilities
appears to respond to the government’s focus on quality
of care. While voluntary, the guidance is clearly a
warning.
IRS Eliminates Advance Ruling
[September 2008]
The IRS
has issued temporary Income Tax Regulations which eliminate
the advance ruling process for section 501(c)(3)
organizations. Transition rules apply to organizations that
have previously received advance rulings.
Connecticut Charities can Reduce Audit Fees
[August 2008]
Tight budgets call for creative ways to save money. Audit
fees should not be immune to such fiscal scrutiny. Indeed,
while the auditor should never compromise his or her audit
standards, all audits should be performed as efficiently as
possible. Luckily in Connecticut, charities have the ability
to reduce audit fees and still comply with the state’s
registration requirements.
FY09 Medicare rates for Connecticut
SNFs
[August 2008]
The Centers for Medicare
and Medicaid Services (CMS) has published a final rule that sets
forth the factors to be used to compute Medicare rates for
Skilled Nursing Facilities effective October 1, 2008. Based
upon the rule we have estimated the rates for Connecticut SNFs and published our findings.
Employees vs. Independent
Contractors-Tax Concerns
[July 2008]
We have reason to believe
that the IRS may soon implement a special program designed
to ensure that employees are not misclassified as
independent contractors. Depending on the facts and
circumstances the law imposes varying levels of financial
obligations on employers who misclassify workers. The
obligations can be significant if the IRS finds that the
misclassification was intentional.
CMS Proposes Major Change in
Medicare SNF Rate Formula
[May 2008]
On May 1, 2008, CMS issued a
proposal that would change Medicare payment rates of skilled
nursing facilities effective October 1, 2008. Among other
things, the proposal includes a recalibration of the
case-mix indices used to establish the 53 different payment
rates under the prospective payment system. If adopted, all
Connecticut SNFs would be affected.
Employment Taxes and the Trust Fund Recovery Penalty
[April 2008]
In light of the troubled
economy, rising unemployment, the sub-prime lending fallout,
and recent business failures, we thought that it was an
opportune time to remind employers of what could happen if
one fails to pay the IRS employment taxes withheld from
employees.
FASB
Issues Guidance on Reporting and Disclosure of
Restricted Funds
[March 2008]
Recently the Financial
Accounting Standards Board published a Proposed Staff
Position on the net asset classification of
donor-restricted endowment funds of nonprofit organizations. This article outlines
some of the highlights of the FASB’s position.
IRS Issues New Guidance on
Like-Kind Exchanges:
[February 2008]
Section 1031 of the Internal
Revenue Code provides that no gain or loss is recognized on
the exchange of property held for productive use in a trade
or business or for investment if the property is exchanged
solely for property of like-kind that is to be held either
for productive use in a trade or business or for investment.
The IRS recognizes that many taxpayers hold dwelling units
primarily for the production of current rental income, but
also use the properties occasionally for personal purposes.
A newly issued revenue procedure provides taxpayers with a
safe harbor under which such a dwelling unit will qualify as
property held for productive use in a trade or business or
for investment under section 1031 even though a taxpayer
occasionally uses the dwelling unit for personal purposes.
Non-Profit Governance and Ethical Practice
[November 2007]
A new guide for charities and foundations
from the Panel on the Nonprofit Sector
DSS Audit Tool
[August 2007]
We understand that the
Connecticut Department of Social Services has created an
audit checklist to evaluate compliance with Section 6032 of
the Deficit Reduction Act of 2005 and Provider Bulletin
2007-41. The Act requires providers that receive at
least $5 million in Medicaid reimbursement to document their
policies for detecting and preventing fraud, waste and
abuse. Provider Bulletin 2007-41 calls for providers
to, among other things, reference certain statutes and
regulations in their employee policies. Elements of
the audit checklist, as we understand it, are incorporated
in the attached memorandum.
Final FY08 SNF PPS Rates for
Connecticut
[August 2007]
On August 1, 2007, CMS issued the
final rule to update the SNF Prospective Payment System
(PPS). Based upon the final rule, we have prepared and
enclosed the RUGs rates for Connecticut SNFs.
IRS Publishes Twenty-One Examples of
Political Activities
[June
2007]
The Internal Revenue
Service recently published Revenue Ruling 2007-41, giving
guidance to nonprofit organizations concerning political
activities. Among other things the ruling outlines
twenty-one factual situations that may be applied when
evaluating compliance. The ruling is a “must read” for all
nonprofit organizations.
Proposed FY08 SNF PPS Rates for
Connecticut Not All Good News
[June
2007]
A few
weeks ago CMS issued a proposed rule associated with the SNF
Prospective Payment System (PPS). If adopted, the rule would
update PPS payment rates for FY08. The purpose of this
memorandum is to provide information on how the proposed
rule, if finalized in its current form, would impact
payments to Connecticut nursing facilities.
Health and Human Services Reporter Spring 2007
[May 2007]
The Spring
2007 edition of the Health and Human Service Reporter is now
available on our website. The following were some of the
articles covered in this editions: Rules for Deducting
Charitable Contributions, Amendment to Long-Term Care
Benefits, Pension Protection Act of 2006, DSS Increases
Burial Allowance, and Reliance on Third Party to Pay
Employment Taxes.
Credit for Federal Telephone Excise
Tax Paid
[April
2007]
This year,
taxpayers will find an extra line on their tax return for a
one-time payment available by the IRS. Individuals,
businesses, and tax-exempt organizations are eligible for
the Telephone Excise Tax Refund (TETR) which is designed to
credit or refund the tax paid for long-distance telephone
service between March 1, 2003 and July 31, 2006.
Organizational Governance and the
Independent Auditor
[April
2007]
With
respect to audits of financial statements, the Auditing
Standards Board recently published new standards associated
with auditor communications. Among other things this
article outlines how the new standards affect those charged
with governance and the importance of two-way communication
between the auditor and members of an organization’s
governing body. Organizations, whether for-profit or
nonprofit, are better served if management as well as those
charged with governance have a clear understanding of their
auditor’s responsibilities.
Embezzlement Prevention and Detection
for Small and Mid-size Businesses and Tax Exempt
Organizations
[March
2007]
Embezzlement prevention and
detection is not an exact science. All your best efforts
may not prevent it and if it occurs it might not be detected
for years! Nevertheless, it would be imprudent to rely on
your instincts or hope that it will never happen to your
organization. And, although you may not have the resources
of a large business, there are indeed certain important yet
inexpensive steps you can take to reduce your risks.
Health and Human Services Reporter
Winter 2007
[January 2007]
The Winter 2007 edition of the Health and
Human Service Reporter, our quarterly newsletter, is now
available on our website.
The Health and Human Services Reporter can be viewed on the
News page of the website.
New IRS Web-based Workshop For
Nonprofits
[January 2007]
The IRS has published a
new Internet-based version of its exempt organizations
workshop covering tax compliance issues facing small and
midsized tax-exempt organizations. The workshop, entitled
Stay Exempt—Tax Basics
for 501(c)(3)s , consists of interactive modules
on tax-exempt status, unrelated business income, employment
issues, Form 990, and required disclosures, with links to
related forms and IRS publications.
Medicaid Commission Issues Final
Report
[January 2007]
In 2005 the Medicaid Commission was
established to, among other things, offer recommendations on
the future of the Medicaid program. Its final report was
issued on December 29, 2006. The report makes
recommendations on the future of the Medicaid program
designed to ensure its sustainability. Taken as a whole,
the recommendations promote Medicaid’s long-term fiscal
sustainability, while emphasizing quality of care. Key
principles include recognizing the long-term value of
investments in quality, supporting state flexibility, and
changing how beneficiaries partner with the Medicaid program
by encouraging personal responsibility for health care
decisions and promoting and rewarding healthy behaviors.
From the provider’s perspective, the report presents forward
thinking ideas and opportunities.
IRS Guidance for Holiday Gift Giving
[December 2006]
In light of the season and in view of your
desire to comply with the law, we thought it wise to share
with you once again some of the highlights associated with
guidance issued by the Internal Revenue Service in
connection with gifts to employees. In general, the
guidance covers the circumstances under which such gifts are
includable in the employees’ gross income and reportable on
their forms W-2.
Highlights From a Presentation
Affecting Connecticut Nursing Facilities
[November 2006]
The following summarizes certain important
points expressed by representatives of the Department of
Social Services during a presentation that occurred on
November 16, 2006.
IRS Guidance on Change in
Classification
[November 2006]
Under the Pension Protection Act of 2006,
distributions from IRAs to supporting organizations, as
described in section 509(a)(3), are not excludable from the
IRA holder’s income. In addition, distributions from
private foundations to certain supporting organizations
described in section 509(a)(3) are not qualifying
distributions and may be taxable expenditures for the
private foundation. For this reason, organizations
currently classified as supporting organizations, as
described in section 509(a)(3), may wish to seek
reclassification under section 509(a)(1) or (2). The IRS
recently published guidance on the procedures to seek a
reclassification. The guidance is reproduced here.
Organizations should consult with a qualified tax advisor
before they seek reclassification. You may direct questions
to Vincent Ruocco, LLC, CPA at 203.932.2931 or
vruocco@artcpas.com
IRS Guidance Regarding Appraisal
Requirements for Non-cash Charitable Contributions
[November 2006]
IRS Notice 2006-96, released in October,
provides temporary guidance on the new definitions of
“qualified appraisal” and “qualified appraiser” for purposes
of substantiating deductions for charitable contributions of
property. The notice also provides guidance associated with
new penalties for appraisals that result in substantial or
gross valuation misstatements. This information may be
useful for both donors as well as charitable organizations.
Questions may be directed to Vincent Ruocco, LLC, CPA at
203.932.2931.
OIG Annual Report FY04 and FY05
[October 2006]
Recently, the Office of Inspector General (OIG)
issued its Annual Report on State Medicaid Fraud Control
Units. The report covers two fiscal years from October 1,
2003 to September 30, 2005. Among other things, it
describes a series of examples involving Medicaid fraudulent
activities, the types of providers involved, and the
penalties imposed. It’s a must read by all
compliance officers.
The Domestic Production Activities Tax
Deduction
[October 2006]
The purpose of this article is to provide
information about the tax benefits available under Section
199 of the Internal Revenue Code. Section 199 allows a
special tax deduction to qualified taxpayers involved in
certain domestic production activities.
New Tax Law Affects Charitable Giving
[October 2006]
The recently enacted Pension Protection Act
of 2006 contains a package of provisions to help prevent
abuse in the charitable sector and provide additional tax
incentives for Americans to give more resources to the
charitable community. The following provides a brief
overview of those provisions.
Connecticut Medicare Rates for FY07
[August 2006]
In July, 2006, CMS issued the
final rule to update the SNF Prospective Payment System
(PPS). Based upon the final rule, we have prepared and
enclosed the RUGs rates for Connecticut SNFs.
Health and Human Services Reporter
[July 2006]
We have added a new section to our website
that includes the articles from our quarterly newsletter.
The Health and Human Services Reporter can be viewed on the
News page of the website.
Personal Needs Allowance Increase for
Residents of Long Term Care Facilities
[July 2006]
The State of Connecticut Department of Social
Services has issued a reminder that personal needs
allowances of Medicaid recipients who reside in long term
care facilities will increase every July 1st, by the cost of
living adjustment afforded to Social Security recipients.
Read the article to find out about other increases as well.
Federal Energy Related Tax Incentives
[July 2006]
This article is a brief summary of The Energy
Tax Incentives Act of 2005, which contains a series of
federal tax benefits to encourage conservation and fuel
efficiency by individuals and manufacturers.
Available Seminars
[June 2006]
This new section of the website
offers a variety of seminar topics.
In addition to
meeting with clients, we also offer our services to trade
shows, conferences, and company events. For a list of
seminar topics, please see our SERVICES page.
Sample Conflict of Interest Policy
[June 2006]
Adoption of a
conflict of interest policy is not
required to obtain tax-exempt
status. However, by adopting the
sample policy or a similar policy,
conflict of interest policies help
to ensure that no person benefits
inappropriately from any
transactions in which the
organization is involved. The
following is a sample conflict of
interest policy.
Guidance for Vehicle Donation Programs
[June 2006]
The Internal Revenue Service recently issued
a publication that provides guidance for charities operating
vehicle donation programs. Among other things, the guidance
warns that a penalty applies if a charity knowingly
furnishes a donor with a false or fraudulent acknowledgment
for a vehicle contribution deduction of more than $500, or
knowingly fails to furnish an acknowledgment with the
required information.
Panel on the Nonprofit Sector
Supplemental Report
[April 2006]
Last June we posted the Panel on the
Nonprofit Sector report. Due to the complexity of the issues
it was considering and the short time available, the Panel
and Work Groups continued to analyze additional areas
related to transparency and accountability. This work led to
recommendations in nine different areas, which are presented
in this supplemental report.
What You Should Know About Outsourcing
Payroll
[April 2006]
Many employers outsource some of their
payroll and related tax duties to third party payroll
service providers. This can be a sound business practice;
however it is important to know your tax responsibilities as
an employer. This article contains helpful information on
how to protect yourself and your business.
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