Monday, October 10, 2011

Safeguard Tax Records from Natural Disaster

The 2011 hurricane season is on us, and Ember Accounting encourages individuals and businesses to safeguard themselves against natural disasters by taking a few simple steps.

Create a Backup Set of Records ElectronicallyTaxpayers should keep a set of backup records in a safe place. The backup should be stored away from the original set.

Keeping a backup set of records –– including, for example, bank statements, tax returns, insurance policies, etc. –– is easier now that many financial institutions provide statements and documents electronically, and much financial information is available on the Internet. Even if the original records are provided only on paper, they can be scanned into an electronic format. With documents in electronic form, taxpayers can download them to a backup storage device, like an external hard drive, or burn them to a CD or DVD.

Document Valuables
Another step a taxpayer can take to prepare for disaster is to photograph or videotape the contents of his or her home, especially items of higher value. The IRS has a disaster loss workbook, Publication 584, which can help taxpayers compile a room-by-room list of belongings.

A photographic record can help an individual prove the market value of items for insurance and casualty loss claims. Photos should be stored with a friend or family member who lives outside the area.

Update Emergency Plans
Emergency plans should be reviewed annually. Personal and business situations change over time as do preparedness needs. When employers hire new employees or when a company or organization changes functions, plans should be updated accordingly and employees should be informed of the changes.

Check on Fiduciary Bonds
Employers who use payroll service providers should ask the provider if it has a fiduciary bond in place. The bond could protect the employer in the event of default by the payroll service provider.

IRS Help Available
If disaster strikes, an affected taxpayer can call 1-866-562-5227 to speak with an IRS specialist trained to handle disaster-related issues.  Back copies of previously-filed tax returns and all attachments, including Forms W-2, can be requested by filing Form 4506, Request for Copy of Tax Return.

Alternatively, transcripts showing most line items on these returns can be ordered on-line, by calling 1-800-908-9946 or by using Form 4506T-EZ, Short Form Request for Individual Tax Return Transcript or Form 4506-T, Request for Transcript of Tax Return.

Friday, September 30, 2011

New IRS regulations for Tax Preparers

New IRS regulations require that all paid tax return preparers register with the IRS and obtain a PTIN identification number. Renewals for the 2012 are expected to start in October 2011. In addition, preparers will need to pass a competency test and background check, and take continuing education courses. These new regulations are designed to protect the consumer from using fraudulant tax preparation services, and minimize untrained and incompetent tax preparers.

All tax preparers at Ember Accounting have always registered with the IRS and are required to take continuing education to keep current with tax law.  We are excited for the protections the IRS is putting in place.  When you are ready to complete your personal or business taxes, you can have confidence in Ember Accounting.

Monday, August 29, 2011

The New SBA Woman-Owned Small Business Program Explained

Leveling the Federal Contracting Playing Field

Congress has set a goal to help woman-owned small businesses (WOSBs) gain their share of the federal contracting market.  That is to say, a minimum of 5% of federal contracts should go to WOSBs.  However, WOSBs only received 4% of the $400+ billion contracts awarded annually well shy of the 5% statutory goal.

Some of the industries included in the list are 'Interior Design Services' (541410), 'Environmental Consulting Services' (541620), and 'Business Support Services' (561499).  This article can help you understand this program, or call Ember Accounting (425-373-6210 or  to help you determine if you are eligible and get certified with the program.

In an effort to address this shortfall and create a more level contracting playing field for women-owned small businesses, in late 2010 the U.S. Small Business Administration (SBA) announced the final rule that would implement the  WOSB program. Formally known as the Woman-Owned Small Business Federal Contract Program, the goals of the program were outlined by SBA Administrator, Karen Mills, in the agency’s press release:
Women-owned businesses are one of the fastest growing sectors of the economy…That’s why providing them with all the tools necessary to compete for and win federal contracts is so important. Federal contracts can provide women-owned small businesses with the oxygen they need to take their business to the next level.”
While the WOSB Program was formally launched by the SBA in February 2011, it wasn’t until April 2011 that the federal procurement officials were able to set-aside contracts under the program.
So what is the WOSB Program and how can you take advantage of it? Here’s what you need to know and the steps you need to take to get your business certified to participate!

What is the WOSB Program?
The WOSB Program is a win-win for WOSBs and EDWOSBs (Economically Disadvantaged Women-Owned Small Businesses) and the federal government.  WOSBs now have an opportunity to compete for and win contracts specifically set aside for WOSBs.

There are over 300 industries (PDF) (in the contracting world these are known as NAICS codes) where WOSBs and EDWOSBs have been deemed “underrepresented” or “substantially underrepresented”. Contracting officers can do a WOSB or EDWOSB set-aside contracts in these industries if:
  • There is reasonable expectation that two or more WOSBs/EDWOSBs will submit offers.
  • The anticipated award price of the contract does not exceed $6.5 million in the case of manufacturing contracts and $4 million in the case of all other contracts.
  • In the estimation of the contracting officer, the contract can be awarded at a fair and reasonable price.
Interested bidders can look on the Federal Business Opportunities web site to find federal government solicitations that may be set aside for WOSB or EDWOSBs

Are you Eligible for WOSB/EDWOSB Set-Asides?
To help determine your eligibility for the WOSB program you’ll need to be ask yourself a few eligibility questions:

1. Are you a small business as defined by SBA standards for your industry? –

2. Are you a woman-owned small business (WOSB)?
3. Does your business function within one of the over 300 industries (known as NAICS codes) for the WOSB program?

4. Are you an economically disadvantaged woman-owned small business (EDWOSB)?

There will also be two informational seminars hosted by Ember Accounting to help you understand the program and decide how to best proceed.
Call Ember Accounting (425-373-6210 or to help you determine if you are eligible and sign up for our informative seminar.

Monday, August 8, 2011

Avoid Criminal Charges with the IRS - August 31st Deadline Approaches

UPDATE: Hurricane Irene pushes IRS to extend deadline to Sept. 9th

IRS Reminds Taxpayers that the Aug. 31 Deadline Is Fast Approaching for the Second Special Voluntary Disclosure Initiative of Offshore Accounts

WASHINGTON — U.S. taxpayers hiding income in undisclosed offshore accounts are running out of time to take advantage of a soon-to-expire opportunity to come forward and get their taxes current with the Internal Revenue Service.

The IRS today reminded taxpayers that the 2011 Offshore Voluntary Disclosure Initiative (OVDI) will expire on Aug. 31, 2011. Taxpayers who come forward voluntarily get a better deal than those who wait for the IRS to find their undisclosed accounts and income. New foreign account reporting requirements are being phased in over the next few years, making it ever tougher to hide income offshore. As importantly, the IRS continues its focus on banks and bankers worldwide that assist U.S. taxpayers with hiding assets overseas.

“The time has come to get back into compliance with the U.S. tax system, because the risks of hiding money offshore keeps going up,” said IRS Commissioner Doug Shulman. “Our goal is to get people back into the system. The second voluntary initiative gives people a fair way to resolve their tax problems.”

The 2011 OVDI was announced on Feb. 8, 2011, and follows the 2009 Offshore Disclosure Program (OVDP). The 2011 initiative offers clear benefits to encourage taxpayers to come forward rather than risk detection by the IRS. Taxpayers hiding assets offshore who do not come forward will face far higher penalties along with potential criminal charges.

For the 2011 initiative, there is a new penalty framework that requires individuals to pay a penalty of 25 percent of the amount in the foreign bank accounts in the year with the highest aggregate account balance covering the 2003 to 2010 time period. Some taxpayers will be eligible for 5 or 12.5 percent penalties in certain narrow circumstances.

Participants also must pay back-taxes and interest for up to eight years as well as paying accuracy-related and/or delinquency penalties. All original and amended tax returns must be filed by the deadline.

The IRS has made available the 2011 OVDI information in eight foreign languages for those taxpayers with undisclosed offshore accounts.

Friday, August 5, 2011

Can I deduct state sales tax ?

Can I deduct state sales tax on my federal income tax return?

If you itemize deductions on Schedule A of IRS Form 1040, you are generally able to deduct state and local taxes including income tax, real property tax and personal property tax. For 2011, if it works to your benefit, you can elect to deduct state and local general sales tax in lieu of state and local income tax. One thing to keep in mind: if your total itemized deductions don’t exceed your standard deduction amount (for 2011, as an example, a married couple filing a joint federal income tax return would typically be able to claim a standard deduction of at least $11,600), you generally won’t get any additional tax benefit from deductions you claim on Schedule A.

When claiming a deduction on Schedule A for state and local sales tax, you have two options. You can deduct the amount that you actually paid in sales tax, as evidenced by receipts that you have accumulated showing amounts paid. Alternatively, you can use tables published by the IRS that are based on average consumption in each state, and factor in modified gross income (AGI) and number of exemptions you take. Even if you use the optional tables you’re still generally able to deduct the sales tax on certain specified items, like cars, boats or an airplane.

One caution here: special rules apply to married couples who file separate federal income tax returns. If both you and your spouse elect to deduct state and local sales tax in lieu of income tax, and your spouse elects to use the optional state sales tax tables, you’ll have to use the tables as well.

Things can get a little more complicated if you lived in more than one state during the year or if the sales tax rate for the state in which you live changed during the year. Currently the ability to deduct state and local sales tax in lieu of income tax expires at the end of 2011. And if you’re subject to the alternative minimum tax (AMT), the AMT rules may limit the deductions available to you, including the deduction for state and local taxes.

For additional information, call our office (425-373-6210) and talk to our tax professional, or see IRS Publication 600 State and Local General Sales Tax, and the instructions for IRS Form 1040: Schedule A.

Wednesday, July 20, 2011

Beware of e-Mails Claiming to be from the IRS

We have received notification from the IRS that bogus email scams are resurfacing, including one involving payments allegedly rejected by the Electronic Federal Tax Payment System. The email has a link that may download malicious software.

All unsolicited e-mail claiming to be from either the IRS or any other IRS-related components should be reported to

For more information about how to protect your personal information and what to do if you receive a suspicious IRS-related communication is available on at this LINK

Monday, July 11, 2011

2011 standard mileage rates increase for Business Owners

The Internal Revenue Service announced an increase in the optional standard mileage rates for the final six months of 2011. Taxpayers may use the optional standard rates to calculate the deductible costs of operating an automobile for business and other purposes.
In recognition of recent gasoline price increases, the IRS made this special adjustment for the final months of 2011. The IRS normally updates the mileage rates once a year in the fall for the next calendar year.

"This year's increased gas prices are having a major impact on individual Americans. The IRS is adjusting the standard mileage rates to better reflect the recent increase in gas prices," said IRS Commissioner Doug Shulman. "We are taking this step so the reimbursement rate will be fair to taxpayers."

The rate will increase to 55.5 cents a mile for all business miles driven from July 1, 2011, through Dec. 31, 2011. This is an increase of 4.5 cents from the 51 cent rate in effect for the first six months of 2011, as set forth in Revenue Procedure 2010-51.
While gasoline is a significant factor in the mileage figure, other items enter into the calculation of mileage rates, such as depreciation and insurance and other fixed and variable costs.

The optional business standard mileage rate is used to compute the deductible costs of operating an automobile for business use in lieu of tracking actual costs. This rate is also used as a benchmark by the federal government and many businesses to reimburse their employees for mileage.

The new six-month rate for computing deductible medical or moving expenses will also increase by 4.5 cents to 23.5 cents a mile, up from 19 cents for the first six months of 2011. The rate for providing services for charitable organizations is set by statute, not the IRS, and remains at 14 cents a mile.

Wednesday, May 11, 2011

Opportunity to comment on certain employer provisions of ACA

The IRS just put out the following notice:

The IRS and Treasury Department are seeking feedback from small business owners who employ at least 50 full-time employees on the shared responsibility provisions included in the Affordable Care Act.

Under the Affordable Care Act, employers with 50 or more full-time employees that do not offer affordable health coverage to their full-time employees may be required to make a shared responsibility payment. The law specifically exempts small firms that have fewer than 50 full-time employees. This provision takes effect in 2014.

Additional Links:

If you are interested in submitting coments, there are three ways to submit comments.

  • E-mail to: Include “Notice 2011-36” in the subject line.  
  • Mail to: Internal Revenue Service, CC:PA:LPD:PR (Notice 2011-36), Room 5203, P.O. Box 7604, Ben Franklin Station, Washington, DC 20044.
  • Hand deliver to: CC:PA:LPD:PR (Notice 2011-36), Courier’s Desk, Internal Revenue Service, 1111 Constitution Avenue NW, Washington, DC, between 8 a.m. and 4 p.m., Monday through Friday.

The deadline for comments is June 17, 2011.