Companies and governments underestimate the amount of fraud that goes on. They want to believe that their internal controls are better, their employees are more honest, and their ability to stop fraud is more effective than that of the other companies they read about in the newspaper.

Fraud is often hard to find and may be perpetrated by “trustworthy” employees, those who are necessary for keeping the business running. Those key people who have access to assets and information and the opportunity to steal and cover up fraud.
You should not get caught in the trap of believing your company is much better than average. Proactive fraud-prevention measures are necessary to manage the risk of fraud.

The Schemes
Experts talk about occupational fraud in three general categories: asset misappropriation (theft), corruption, and financial-statement fraud. Asset misappropriation is the internal fraud we hear the most about because it happens most often. Included here are thefts of inventory, money, business opportunities, and anything of value that employees can wrongly divert from the company.

Even though corruption and financial-statement frauds are not as common, the costs to the victims are much greater per fraud scheme. Corruption schemes include bribery and kickbacks, often with vendors and employees colluding to get money, benefits, or favorable terms. Financial-statement fraud includes the manipulation of reports to create a financial opportunity for an individual or entity. For larger entities it is the most costly type of fraud in terms of the dollars lost by victims, but can also be costly in terms of investigative expenses, regulatory actions against those involved, and penalties assessed by the government once the fraud is discovered.

Catching the crooks
Frauds and their perpetrators tend to be uncovered from a tip that leads to an investigation. These probes are important to companies not only to hunt down the corporate thieves but also to send a message to other employees that management is serious about finding and stopping fraud.  Recovery from fraudsters is generally very low.

Companies need to implement their own proactive antifraud measures. This means developing policies and procedures specifically designed to stop fraud and detect fraud, such as designing procedures to avoid the concentration of too much access and authority by a single employee, outlining the chain of command for employees to report suspicions of wrongdoing, and regularly engaging third parties to perform surprise fraud-detection procedures. The effectiveness of those proactive measures needs to be evaluated regularly, with changes made promptly to better prevent and detect fraud.

These efforts need to be aimed specifically at both preventing and detecting fraud. First the company must try to stop fraud by putting controls in place. Then management must work on detecting any fraud that might have slipped through the company’s fraud-prevention procedures.

Is it worth the cost?
Incurring additional costs to shore up operations is unappealing.  The problem, though, is that the right proactive fraud-fighting measures can prevent so much fraud that the investment will often be quickly returned. It’s a hard sell, because so much fraud is unseen and therefore the measurement of the dollars is based on estimates.  There is also the noneconomic cost of fraud—the last thing any company or government wants to see in the local newspaper is an article describing an internal fraud or theft.

The cost and pain of implementing effective antifraud controls may seem high, but the benefits are much greater in both the short and long term. Current regulations and standard financial-statement audits alone have not been enough to quell the tide of employee fraud, as evidenced by the all-too-frequent reports of the discovery of fraud schemes. It is time for companies to be proactive because when it comes to fraud, the best defense is a good offense. 

The new law would allow the IRS to certify that someone has a “seriously delinquent tax debt” over $50,000.  The Treasury Secretary then sends it to the Secretary of State, which can then deny, revoke or limit the subject’s Passport.  What’s a “seriously delinquent tax debt?”
Any debt where there’s a Notice of Federal Tax Lien or a Notice of Levy filed, but excluding:

• a debt that is being paid in a timely manner under an installment agreement, and
• A debt on which collection is suspended because of a pending or requested collection due process hearing (or certain other relief).
• Emergency circumstances or travel for humanitarian reasons could also be excepted.

1. Adjust your withholding. Why wait another year for a big refund? Now is a good time to review your withholding and make adjustments for next year, especially if you’d prefer more money in each paycheck this year. If you owed at tax time, perhaps you’d like next year’s tax payment to be smaller. Use IRS’s Withholding Calculator at www.irs.gov or Publication 919, How Do I Adjust My Tax Withholding?

2. Store your return in a safe place. Put your 2011 tax return and supporting documents somewhere secure so you’ll know exactly where to find them if you receive an IRS notice and need to refer to your return. If it is easy to find, you can also use it as a helpful guide for next year’s return.  For information on our secure E-Access data storage system please contact us.

3. Organize your recordkeeping. Establish a central location where everyone in your household can put tax-related records all year long. Anything from a shoebox to a file cabinet works. Just be consistent to avoid a scramble for misplaced mileage logs or charity receipts come tax time.

4. Review your paycheck. Make sure your employer is properly withholding and reporting retirement account contributions, health insurance payments, charitable payroll deductions and other items. These payroll adjustments can make a big difference on your bottom line. Fixing an error in your paycheck now gets you back on track before it becomes a huge hassle.

5. Prepare to itemize deductions. If your expenses typically fall just below the amount to make itemizing advantageous, a bit of planning to bundle deductions into 2012 may pay off. An early or extra mortgage payment, pre-deadline property tax payments, planned donations or strategically paid medical bills could equal some tax savings. See the Schedule A instructions for expenses you can deduct if you’re itemizing and then prepare an approach that works best for you.

6. Strategize tuition payments. The American Opportunity Tax Credit, which offsets higher education expenses, is set to expire after 2012. It may be beneficial to pay 2013 tuition in 2012 to take full advantage of this tax credit, up to $2,500, before it expires. For more information, see IRS Publication 970, Tax Benefits for Education.

The IRS emphasizes that each household’s financial circumstances are different so it’s important to fully consider your specific situation and discuss your goals, all the options and the tax consequences with your tax advisor before you make any large financial decisions.

This initiative relieves some unemployed taxpayers from failure-to-pay penalties. Penalties are one of the biggest factors a financially distressed taxpayer faces on a tax bill. The Fresh Start Penalty Relief Initiative gives eligible taxpayers a six-month extension to fully pay 2011 taxes. Interest still applies on the 2011 taxes from April 15, 2012 until the tax is paid, but you won’t face failure-to-pay penalties if you pay your tax, interest and any other penalties in full by October 15, 2012.

The penalty relief is available to two categories of taxpayers:

• *Wage earners who have been unemployed at least 30 consecutive days during 2011 or in 2012 up to this year’s April 17 tax deadline.
• *Self-employed individuals who experienced a 25 percent or greater reduction in business income in 2011 due to the economy.

To qualify for this penalty relief, your adjusted gross income must not exceed $200,000 if married filing jointly or $100,000 if your filing status is single, married filing separately, head of household, or qualifying widower. Your 2011 balance due cannot exceed $50,000.
 

Taxpayers who qualify need to complete a new Form 1127A to request the 2011 penalty relief. 

Be sure to let us know if you need help with the penalty relief or if you need more information.

The act extends the 4.2% rate for the employee portion of Social Security tax through the end of 2012. It also extends certain unemployment benefits and blocks a cut in Medicare payments to doctors. The act also repeals earlier-enacted shifts in the timing of corporate estimated tax payments.

A 2% recapture tax enacted in the December legislation that extended the payroll tax cut through Feb. 29, which effectively capped the amount of wages eligible for the payroll tax cut at $18,350, was also repealed by the act.

• Personal exemption amount (now $3,800) and standard deduction amounts
• Various credits and other items also were adjusted
• Contribution limits and other amounts for pension plans retirement accounts were increased for 2012
• The Social Security wage base for 2012 is $110,100.
• The standard mileage rate for business use of an automobile remains at 55½ cents; for medical and moving expenses it decreases to 23 cents per mile

 
Capital Gain and Loss Reporting
Taxpayers will have a new form, Form 8949, Sales and Other Dispositions of Capital Assets, to report gains and losses of certain capital assets. The information on Form 8949 will correspond to the new information being reported on 2011 Forms 1099-B, Proceeds from Broker and Barter Exchange Transactions.  The information from that form will then be transferred to a revised Schedule D.
 
The new form came about due to new asset base reporting requirements being imposed on securities brokerages.
 
Veterans Work Opportunity Credits
The work opportunity tax credit (now called the Returning Heroes and Wounded Warriors Work Opportunity Tax Credit) for businesses that hire certain military veterans is extended. Employers will be eligible for a rather large tax credit for each qualified veteran that they hire after the law’s enactment date (Nov. 21, 2011) and before Jan. 1, 2013.
 
Foreign Asset Reporting
Under the Foreign Account Tax Compliance Act, individuals are required to report interests in specified foreign financial assets when filing their federal income tax returns.  This rule is in effect for interest owned in 2011, but there is also a strange twist requiring the reporting of foreign assets held in 2010 with the 2011 return.
 
Bonus Depreciation                                
The 100% first-year bonus depreciation provision expired on Dec. 31, but 50% bonus depreciation is available for property placed in service in 2012.
 
Estate Tax
Estates of decedents who died in 2010 have until Jan. 17, 2012, to elect not to have the estate tax apply and to have heirs’ bases in assets they inherit determined under the modified carryover basis rules.
 
Voluntary Classification Settlement Program
A new voluntary classification settlement program (VCSP) introduced in September allows businesses to reclassify their workers as employees for federal employment tax purposes for future tax periods while receiving relief for part of the tax liability relating to the past treatment of the workers as non employees.  This is not exactly a good thing, just a gentle reminder that the IRS is really seeking to have employees properly classified.

Congress Passes Temporary Payroll Tax Deal

The President is expected to sign the deal soon.  The Senate will appoint members of a House-Senate conference committee to negotiate legislation to extend both benefits through 2012.

Under the deal, the employee’s share of the Social Security payroll tax will stay at the current level, 4.2 percent of wages, through Feb. 29. In the absence of Congressional action, it would revert to the usual 6.2 percent next month. The government will also continue paying unemployment insurance benefits under current policy through February. Without Congressional action, many of the long-term unemployed would begin losing benefits next month.

In addition, under the agreement, Medicare will continue paying doctors at current rates for two months, averting a 27 percent cut that would otherwise occur on Jan. 1.

The new deal makes minor adjustments to make it easier for small businesses to cope with the tax changes and prevents manipulation of an employee’s pay should the tax cut extension fail to go beyond two months.

 If you have any questions or concerns regarding the continuation of the payroll credit, please give us a call (208) 265-5959.

 http://www.cnbc.com/id/44206921
 
Disclaimer:
This information is not intended to be used as a general guide to investing, or as a source of any specific investment recommendations, and makes no implied or express recommendations concerning the manner in which any client’s account should or would be handled, as appropriate investment strategies depend upon each client’s investment objectives. It is the responsibility of any person or persons in possession of this material to inform themselves of and to take appropriate advice regarding any applicable legal requirements and any applicable taxation regulations which might be relevant to the subscription, purchase, holding, exchange, redemption or disposal of any investments.
 
This information does not constitute a solicitation in any jurisdiction in which such a solicitation is unlawful or to any person to whom it is unlawful. Moreover, this information neither constitutes an offer to enter into an investment agreement with the recipient of this document nor an invitation to respond to the document by making an offer to enter into an investment agreement.
 

• QuickBooks Overview                         

This class is designed for new QuickBooks users.  It will provide an overview of QuickBooks features and functionality with some hands-on training to get you started using the software.  You will get an idea of how this easy to use accounting program can make it a snap to track the finances of a small business and learn how to navigate the various functions, including lists, forms and registers.  Course materials are included.  $99                  

Tuesday & Thursday  -  April 24^th & April 26^th                       

6:00 to 9:00 pm

•  QuickBooks Pro 2011                                     

This fast-paced course for experienced QuickBooks users will give you hands-on and in-depth knowledge of this complete accounting package designed for small business.  Begin by setting up a small company using the Easy Step Interview.  Customize the chart of accounts and other features to suit the business’ unique needs.  Learn basic vendor and customer transactions and how to customize reports.  Prerequisite:  Computer accounting or bookkeeping, and/or QuickBooks experience.  Textbook is included.  $199

Tuesdays & Thursdays  -   May 1^st to May 17^th

 6:00 to 9:00 pm

• QuickBooks Payroll                               

Perform payroll in QuickBooks.  Learn how to set up payroll items, pay employees, track and pay payroll liabilities, process quarterly and annual payroll reports and forms.  Bring your list of “How do I do/fix this?” questions.  Prerequisite:  Prior QuickBooks and payroll experience, or recent completion of QuickBooks Pro class.  $99

Tuesday & Thursday  -   May 22^nd & May 24^th        

6:00 to 9:00 pm

Or call (208) 769-3333

Classes offered at the work force Training Center at the Bonner Mall