November/December 2016

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Magazine of the

New Jersey Society of Certified Public Accountants

Tax Matters The Ever-Changing State of Nexus, p. 4 Overview of the Taxpayer Advocate Service, p. 6 Independent Contractor Versus Employee: It’s Not as Simple as ABC, p. 8 Reverse Sales Tax Audits, p. 10

Nov • Dec 2016



November • December 2016

Ralph Albert Thomas, CGMA Chief Executive Officer & Executive Director rthomas@njcpa.org

features 4

Ellen C. McSherry, CGMA

Chief Operating Officer emcsherry@njcpa.org

Don Meyer

Chief Marketing Officer dmeyer@njcpa.org

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Rachael Bell

Managing Editor rbell@njcpa.org

Elizabeth Quinones Content Specialist equinones@njcpa.org

The New Jersey Society of Certified Public Accountants 425 Eagle Rock Avenue Roseland, NJ 07068-1723 973-226-4494 njcpa.org #njcpamag Read New Jersey CPA digital at njcpa.org/newjerseycpa.

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The Ever-Changing State of Nexus States are trying to come up with new nexus laws to ensure they’re collecting their share of sales tax revenue, especially when it comes to e-commerce.

2 Close Up 2017 Will Bring Changes to the Profession 12 A&A Buzz Lender Update on Loan Covenants: Client Relationships Are Key

Overview of the Taxpayer Advocate Service When a tax issue can’t be resolved with the IRS, this department 14 Best Practices can step in. The advocacy service Five Tips for Collecting provides recommendations and Receivables helps solve clients’ most vexing tax problems. 16 Corporate Finance The CPA’s Role in Business Process Management: How Independent Contractor vs. CPAs Can Deliver Results Employee: It’s Not as Simple as ABC 18 Financial Planning A series of audit tests can help Private Placement Life firms determine the difference Insurance: Another Tool between a contractor and an in the Wealth Manager’s employee. Learn about the cases Toolbox and laws that can teach you how to follow best practices. 20 Forensic File Charitable Planning Upon Divorce: Avoiding Adverse Reverse Sales Tax Audits Tax Consequences This is an audit that clients can actually look forward to! Learn how 22 Small/Sole Practitioner you can spot ways to recover tax Executive Compensation dollars for your clients and avoid in a Closely Held Business: unwanted surprises. Make Sure It’s Not Too Low or Too High

23 Tax Talk Q&A With the Acting Director of the New Jersey Division of Taxation 24 Tech Center Sales Tax Compliance Using Software as a Service 30 Young Professionals Eight Ways to Communicate for Success 31 Legislative Views Pension Payment Legislation Stalls 32 Member Profile He’s the Sports Tax Man Society Pages Get Involved, 26 NJCPA Audit Report, 27 Member Benefits, 27 Classifieds, 28

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New Jersey CPA (ISSN 1534-6692) is published six times per year by the New Jersey Society of Certified Public Accountants, 425 Eagle Rock Avenue, Suite 100, Roseland, NJ 07068. Issue No. 60 Copyright © 2016 New Jersey Society of Certified Public Accountants. Annual membership dues includes $9 for a oneyear subscription to New Jersey CPA magazine. Members may not deduct subscription price from dues. Periodicals postage paid at Roseland, NJ, and at additional mailing office. POSTMASTER: Send address changes to New Jersey CPA, 425 Eagle Rock Avenue, Suite 100, Roseland, NJ 07068-1723. The materials and information contained within New Jersey CPA are offered as information only and not as practice, financial, accounting, legal or other professional advice. The opinions expressed herein are those of the authors and not necessarily those of the New Jersey Society of CPAs. Publication of an advertisement in New Jersey CPA does not constitute an endorsement of the product or service by the New Jersey Society of CPAs.


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2017 Will Bring Changes to the Profession B Y DON MEYER, NJCPA C HI E F M ARK E TI NG O F F I C E R

greatest challenge of the “Thedecade was and continues to

be managing change.” That line was written in 1998 as part of the NJCPA’s centennial chronicle. Clearly, managing change is not a new challenge. 2017 will be no different. Here’s a look at some of the changes on the horizon for CPAs and aspiring CPAs.

New Overtime Rule

The U.S. Department of Labor (DOL)’s final rule amending the requirements for overtime pay is scheduled to go into effect on Dec. 1, 2016, but the U.S. House of Representatives on Sept. 28 voted to delay implementation by six months. (As of this writing on Oct. 1, no further action had occurred regarding the delay. Check njcpa.org/DOL for updates.) The new rule doubles the minimum salary threshold for exemption from overtime from $23,660 to $47,476 annually and raises the exemption level for what are considered “highly compensated employees” from $100,000 to $134,004 annual salary. The DOL estimates that this rule change will directly impact some 4.2 million workers across the United States not currently eligible for overtime and may reclassify an additional 8.9 million salaried workers as nonexempt.

The CPA Exam

A new version of the CPA exam will launch April 1, 2017. The four sections of the exam will remain the same, but the test structure will rely less on memorization and include more questions related to analysis, evaluation and application. The new exam will have an increased emphasis on testing higher order skills such as critical thinking, problem solving, analytical ability and professional skepticism.

The bad news: To accommodate all these changes, the testing time for both Business Environment and Concepts (BEC) and Regulation (REG) will increase by one hour, bringing each of the sections to four hours and the total testing time to 16 hours. Exam costs will increase to reflect the additional time. The good news: Testing windows have been extended by 10 days, giving candidates more options for scheduling exams. Read more at njcpa.org/ cpaexamchanges.

New Jersey Education Requirement

On July 1, 2017, a new regulation goes into effect in New Jersey that impacts the educational requirements for students seeking to become licensed CPAs. The new regulation reinstates the requirement for all candidates that was in place prior to April 2011: 120 credits to sit for the exam, including 24 credits in accounting and 24 credits in other business courses. Read more at njcpa. org/educationrequirements.

such as videos to help CPAs master certain technical tasks. • Blended learning combines multiple delivery methods, such as live instruction and on-demand self-study. CPAs should note that not all states accept all delivery methods allowed by the standards. Before claiming credit, CPAs should check to make certain the new delivery methods are allowed for CPE credit in their states. As of this writing on Oct. 1, these revisions have not yet been adopted by the New Jersey State Board of Accountancy. When and if that happens, the information will be posted at njcpa.org/aboutCPE. To find out more about the changing professional landscape, watch for the January/February issue of New Jersey CPA magazine. The issue is appropriately themed “The Changing Profession: How to Adapt and Prosper.”

CPE Standards

Under new standards issued last summer, CPAs will be able to receive continuing professional education (CPE) credit for instruction received in nano-learning and blendedlearning platforms. The AICPA and the National Association of State Boards of Accountancy (NASBA) changed the standards for CPE providers as well as NASBA’s fields of study document. The changes enable new learning methods that are popular with students: • Nano-learning is delivery of information in 10-minute increments, often covering task-specific topics,

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2016/17 Board of Trustees EXECUTIVE COMMITTEE President – Walter J. Brasch, CPA President-Elect – Edward I. Guttenplan, CPA Secretary – Michael VanderGoot, CPA, CGMA Treasurer – Lynn L. Albala, CPA Immediate Past President – Frank R. Boutillette, CPA CEO & Executive Director – Ralph Thomas, CGMA TRUSTEES Jean I. Abbott, CPA Amy Y. Both, CPA Robert J. Brown Jr., CPA Melanie A. Cobb, CPA Carol Donatiello Iocca, CPA Sarah Krom, CPA Roy H. Kvalo, CPA Stephen O. Richard, CPA William J. Ryan III, CPA Kyle M. Sell, CPA Audrey J. Sherrick, CPA Lorenzo T. Vanore, CPA



The Ever-Changing State of Nexus For CPAs and tax professionals, particularly those specialized in the area of state and local taxes, nexus is a topic that is discussed all too often. Nexus rules have lagged behind the ever-changing economic landscape, but states are beginning to catch up.

By Barry Horowitz, CPA, Yana Abram, CPA, and Zhoudi Tang, CPA WithumSmith+Brown

One of the leading nexus cases is Wisconsin Department of Revenue v. William Wrigley Jr. Co. The state of Wisconsin claimed that the taxpayer was subject to corporate income and franchise tax because the company engaged in more than the solicitation of sales. Consequently, Public Law 86-272, which allows for a taxpayer to engage in the solicitation of sales in a state without subjecting those taxpayers to income tax, did not apply. The U.S. Supreme Court held in favor of the state. With respect to sales and use taxes, Quill Corp. v. North Dakota set the standard for its respective nexus determination. In short, the Quill Corporation sent catalogs into North Dakota, and the state attempted to collect use tax. The U.S. Supreme Court sided with the taxpayer, stating that the taxpayer must have physical presence in order for the state to collect sales and use taxes. The physical-presence determination that was used as the precedent for these and many other nexus cases has since evolved to accommodate changes in the business playing field. Due to a lack of U.S. congressional action on the nexus standard, such as the stalled Marketplace Fairness Act, states have now adopted controversial nexus regulations to collect their share of the pie.

One of the recent attempts to collect sales tax was through a “clickthrough nexus” methodology. New York enacted a click-through nexus law specifically aimed at the online retailer Amazon. New York argued that Amazon, through an affiliate program, effectively created a sales force within the state without having employees physically present. The New York Court of Appeals found the law to be constitutional in levying sales and use tax on the company’s New Yorkbased sales, a decision on which the U.S. Supreme Court denied certiorari. Emboldened by this law, many other states have started to adopt a clickthrough nexus.

Missing Pieces of the Nexus Pie

While the Quill case established a set of standards for determining nexus for sales and use taxes, there is no clear-cut rule for determining nexus for corporate income tax purposes. As a result, states have started applying several new standards, such as economic nexus and factor presence (also known as bright-line nexus). An out-of-state business can establish economic nexus by directing consistent and substantial economic activity to the state or deriving income from a state’s local market. This requirement can be met by making sales to customers in the state or receiving income from intangible property in the state — even if the business has no physical presence in the state. Massachusetts and New York have established thresholds to define substantial economic activity. California and Connecticut have adopted bright-line nexus rules, which

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set forth thresholds for property, payroll and sales within a state. Alternatively, the factor-presence standard was established by the Multistate Tax Commission. It uses certain threshold levels for property, payroll and sales factors that, when exceeded, establish nexus. One of the ways states have avoided the corporate income tax issue is by adopting commercial gross receipts and activity taxes. Ohio was one of the first states to use factor-presence nexus to determine commercial activity tax. California, Colorado, Michigan, New York and Oklahoma have also used factor-presence nexus with their own threshold levels to determine nexus. To take it a step further, New York uses both economic and factor-based nexus rules.

Challenging Quill

Due to budgetary issues, states are facing increasing pressure to collect

tax. The root of their frustration lies with the decision made in Quill. This case is only 24 years old, but the decision was made in an era predating e-commerce. With the continued expansion of e-commerce proving to be a standard business model for the foreseeable future, states are attempting to find ways to attack the Quill decision. In the spring of 2015, Direct Marketing Association v. Brohl featured concurring opinions addressing the new era of e-commerce. Authored by Justice Kennedy, the opinion questioned the validity of applying Quill in today’s economy and noted the burden that the physicalpresence test placed on states. This may be an opportunity for states to present a case that might finally overturn the quarter-century-old decision. Alabama, South Dakota, Louisiana, Tennessee and Vermont have all enacted legislation that challenges the physical-presence requirement of the

Quill case. Colorado and Oklahoma have similarly passed reporting requirements in connection with out-of-state sellers. Online retailers, however, are striking back. Newegg Inc. has brought a suit in Alabama, and Wayfair Inc. in South Dakota, challenging their states’ respective laws. The resolution of these cases is likely to set new nexus precedent in the years to come. Barry H. Horowitz, CPA, MST, is a partner and team leader of WithumSmith+Brown’s tax services state and local tax group. He is a member of the NJCPA State Taxation Interest Group and can be reached at bhorowitz@withum.com. Yana Abram, CPA, is a manager at WithumSmith+Brown and can be reached at yabram@withum.com. Zhoudi Tang, CPA, is a tax senior at WithumSmith+Brown and can be reached at ztang@withum.com.

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Overview of the Taxpayer Advocate Service Hailed as “your voice at the IRS,” the Taxpayer Advocate Service (TAS) acts to ensure problems encountered by individual and business taxpayers that have not been resolved through normal IRS channels are handled promptly and fairly. The TAS also addresses systemic issues — large-scale or “big picture” problems that potentially affect multiple taxpayers.

By Barry S. Kleiman, CPA Untracht Early LLC

The TAS was established in 1996 and acts independently of any other IRS office. The TAS is led by Nina E. Olson, the national taxpayer advocate, who is also responsible for submitting two yearly reports to the House Ways and Means Committee and the Senate Finance Committee. The statute requires that these reports be submitted directly to the committees without any prior review or comment from the Commissioner of Internal Revenue, the Secretary of the Treasury, the IRS Oversight Board, any other officer or employee of the Department of the Treasury, or the Office of Management and Budget. The Annual Report addresses the most serious problems encountered by taxpayers, legislative

and administrative recommendations for solving those problems, and a discussion of the most frequently litigated tax issues. The Objectives Report describes the goals and actions planned by the Office of the Taxpayer Advocate for the coming fiscal year. The most recent Annual Report was submitted in December 2015. A few of the most serious problems Olson identified were reduction of telephone and face-to-face taxpayer service, reductions in staffing of the practitioner priority service phone lines, the burden of IRS user fees when added to the standard costs of compliance, and delay of refunds for victims of identity theft. In the most recent Objectives Report, submitted in June 2016, Olson identified a number of areas of focus, including the implementation of a private debtcollection program, assistance for victims of identity theft, assistance for victims of return preparer fraud, easing the compliance burden imposed by the Foreign Account Tax Compliance Act (FATCA), and migration to online services without compromising face-toface and telephone services.

Taxpayer Bill of Rights

The Taxpayer Advocate Service also

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focuses on protecting taxpayers’ rights. To this end, the IRS has adopted a Taxpayer Bill of Rights (as proposed by Olson) that includes 10 basic rights every taxpayer has when interacting with the IRS. These rights are as follows: 1. The right to be informed. 2. The right to quality service. 3. The right to pay no more than the correct amount of tax. 4. The right to challenge the IRS’s position and be heard. 5. The right to appeal an IRS decision in an independent forum. 6. The right to finality. 7. The right to privacy. 8. The right to confidentiality. 9. The right to retain representation. 10. The right to a fair and just tax system. failed to operate as intended or failed to resolve the taxpayer’s problem or dispute within the IRS.

The Role of the TAS in Resolving Taxpayer Issues

TAS has taken a significant role in resolving the day-to-day issues clients and their advisers face. For a case to qualify for taxpayer advocate assistance and for the TAS to operate efficiently and effectively, you must meet one or more of the criteria outlined below.

Best Interest of the Taxpayer

• The manner in which the tax laws are being administered raises considerations of equity or has impaired or will impair the taxpayer’s rights.

Public Policy

Economic Burden

• The taxpayer is experiencing economic harm or is about to suffer economic harm. • The taxpayer is facing an immediate threat of adverse action, such as a levy issuance. • The taxpayer will incur significant costs if relief is not granted (including fees for professional representation). • The taxpayer will suffer irreparable financial harm or long-term adverse impact if relief is not granted.

Systemic Burden

• The taxpayer has experienced a delay of more than 30 days to resolve a tax account problem. • The taxpayer has not received a response or resolution to the problem or inquiry by the date promised. • A system or procedure has either

• The national taxpayer advocate determines that there is compelling public policy that warrants assistance be offered to an individual or group of taxpayers. To initiate a case with the Taxpayer Advocate Service, taxpayers, or an authorized representative, should complete Form 911, Request for Taxpayer Advocate Service Assistance and mail — or, for a quicker response, fax — the request to a local TAS office. With approximately 2,000 employees, the TAS maintains offices in every state, the District of Columbia and Puerto Rico. You can find a local advocate’s contact information at irs.gov/advocate or in IRS Publication 1546, Taxpayer Advocate Service, Your Voice at the IRS. Affected taxpayers may also call the national taxpayer advocate at 877-777-4778 for additional information and assistance.

A taxpayer advocate will generally respond within one week of receiving Form 911. If a taxpayer meets one or more of the previously discussed criteria, the advocate will work to get the problem resolved. The case will be assigned to one particular advocate, enabling the taxpayer or representative to have one main point of contact throughout the process. The worst thing a taxpayer can do is nothing at all. When in doubt, the taxpayer should ask the Taxpayer Advocate Service for help. The TAS will apply its independent judgment to the issue and make a determination as to what would be the proper outcome. The TAS will then interact with the appropriate personnel at the IRS on the taxpayer’s behalf. While there is no guarantee that the outcome will always be satisfactory, the TAS will at least be forthcoming with an explanation of what is beyond its scope. Remember, the Office of the Taxpayer Advocate is “your voice at the IRS.” Barry S. Kleiman, CPA, is a principal at Untracht Early LLC. He is a member of the New Jersey Society of CPAs Content Advisory Board and the State Taxation and Federal Taxation interest groups. He can be reached at bkleiman@untracht.com.

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Independent Contractor vs. Employee: It’s Not as Simple as ABC Section 19(i)(6)(A), (B) and (C) of the New Jersey Unemployment Compensation Law contains three tests that are applied in determining whether services performed for remuneration are considered performed by an independent subcontractor or by a covered employee. From this statute comes the “ABC” test that the New Jersey Department of Labor uses when it conducts audits of employers.

By Neil Becourtney, CPA CohnReznick LLP

Unless all three of the following tests are met, the individual will be deemed to have provided services as an employee. A. Such individual has been and will continue to be free from control or direction over the performance of such service, both under the contract of service and in fact. B. Such service is either outside the usual course of the business for which such service is performed, or such service is performed outside of all the places of business of the

enterprise for which such service is performed. C. Such individual is customarily engaged in an independently established trade, occupation, profession or business. For the “A” test, the fact that an individual is not supervised or instructed as to his or her working hours is not controlling. Service that the employing unit has the right to terminate at any point in the relationship or to exercise control over the details of the work does not meet this test. “B” is a two-part test, and satisfaction of either part will meet the requirement. Service which is essential to the nature of the business does not meet the first part of the test, regardless of whether any employee performs the same type of service. If there is no fixed place of business, services performed in whole or in part at a temporary worksite or an area where customers or prospective customers are located will not meet the second part of this test. The “C” test is where most auditors focus their attention. To meet this test, the individual’s business activity must exist independently of and apart from

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the particular service relationship. It must be a stable lasting enterprise that will survive termination of the relationship. The test is not merely met because the employer relies on the individual’s own efforts and ability. Some of the elements that the New Jersey Department of Labor (NJDOL) considers in applying this test are an office or business location separate from the individual’s residence, possession of applicable business licenses, a business telephone listing, business cards and stationery, operation of owned/leased equipment and the filing of a federal Schedule C. At various presentations made to the NJCPA State Tax Interest Group, NJDOL speakers have often cited the Carpet Remnant Warehouse Inc. case decided in 1991 as a landmark decision in this area. The issue in this case heard by the New Jersey Supreme Court was whether carpet installers were employees or independent contractors under the ABC test. The Office of Administrative Law determined that the installers were independent contractors; the commissioner of the NJDOL ruled that the installers did not satisfy the ABC test, and the Appellate Division affirmed the department’s finding. Carpet Remnant Warehouse (CRW) had been in business for 20 years when an audit hearing took place in 1988. CRW had experimented with having installers on its payroll, but that practice proved to be unsuccessful because of the seasonal nature of the business. Instead, CRW tapped into a pool of installers that it approved based on qualifications. The CRW case established a benchmark: A service provider could generate no more than 72 percent of its total income from one source, to meet the “C” test for conducting an independently established trade or business. A more recent decision regarding the ABC test was Hargrove v. Sleepy’s LLC, in January 2015. Three plaintiffs who delivered mattresses for Sleepy’s claimed that they had been miscategorized as independent contractors. The plaintiffs had signed an Independent Drive

Agreement, which they asserted was a ruse by the defendant to avoid payment of employee benefits. The CRW case was cited as supporting the plaintiffs’ proposition that the failure to satisfy any of the three ABC tests results in an employment classification. In this litigation, the issue was whether the plaintiffs were employees or independent contractors as submitted to the U.S. District Court for the District of New Jersey. The federal court held that the undisputed facts demonstrated that the plaintiffs were independent contractors. The Court of Appeals filed a petition with the New Jersey Supreme Court seeking to certify the question of New Jersey law. Which test should a court apply to determine a plaintiff’s employment status: The New Jersey Wage Payment Law or the New Jersey Wage and Hour Law? The court responded that the ABC test derived from the New Jersey Unemployment Compensation Law governs whether a plaintiff is an employee or an independent contractor for purposes of resolving a wage-payment or wage-andhour claim. Because of the narrow nature of the ABC test, if the New Jersey Department of Labor reclassifies nonemployee compensation paid to an independent contractor as wages paid by an employer to an employee, those wages may not necessarily apply

for either federal income tax or New Jersey gross income tax purposes. The IRS looks at 20 common-law factors found in Rev. Proc. 87-41. The New Jersey Division of Taxation uses 14 factors as found in N.J.A.C. 18:35-7.1. This situation can produce a hybrid result where for federal and state income tax purposes, the independent contractor relationship applies; yet under the Unemployment Compensation Law, an employeremployee relationship exists. Ordinarily both the employer and the employee make contributions to the unemployment compensation fund, subject to a wage ceiling — the employee’s share being deducted from his or her wages. If the employer fails to deduct the employee’s share of contributions (e.g., independent contractor treatment is reversed on audit), the employer alone becomes liable for those contributions. And like any other taxing authority, audit assessment interest will be charged and penalties may be imposed. Neil B. Becourtney, CPA, is a tax partner at CohnReznick LLP. He is a member of the New Jersey Society of CPAs’ Federal Taxation and State Taxation interest groups and the Content Advisory Board. He can be reached at neil.becourtney@ cohnreznick.com.

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Reverse Sales Tax Audits Audit notices make practitioners cringe, because taxing authorities often find something that the practitioner could not possibly have known without being involved in the client’s day-to-day operations. Performing a reverse sales tax audit provides a great opportunity to avoid surprises and to potentially recover tax dollars for the client. What Is a Reverse Sales Tax Audit?

By Christopher R. Cicalese, CPA Alloy, Silverstein, Shapiro, Adams, Mulford, Cicalese, Wilson & Co.

In a traditional sales tax audit, state auditors are examining the taxpayer for sales and use tax, searching for underpayment of tax. During the audit, state auditors may offset any underpayments of tax with overpayments they find, but they rarely offer refunds in the event of a net overpayment. Reverse sales tax audits are the opposite: Their objective is to find an overpayment of tax. Reverse sales tax audits are typically performed by a tax practitioner who has a range of experience in the client’s industry. The client’s transactions are examined to look for instances when sales or use tax was paid on an exempt item or service. At the conclusion of a reverse sales tax audit, taxpayers can apply

for a refund of the overpayment — or offset any underpayments that the taxing authority finds if the reverse audit is being performed simultaneously with a traditional audit.

Why Perform an Audit?

Typically, a traditional sales tax audit uncovers costly mistakes made by vendors or flaws within a client’s accounting system. Often, taxing authorities find their next taxpayer to audit from a vendor invoice that failed to correctly charge sales tax. Reverse audits provide similar results and give clients the opportunity to have their vendors’ invoices reviewed for accuracy. Providing a sales tax exemption certificate to a vendor does not guarantee that the vendor’s accounting department will appropriately not charge sales tax. At the same time, as the vendor’s accounts receivable department goes through personnel and software changes, there is always the chance that sales tax will be charged in error even if the invoices have been correct for many years. While reviewing a client’s accounting system for overpayment of sales tax, practitioners may be able to identify instances where sales tax was not collected correctly. Although this is not the goal when performing a reverse sales tax audit, it does provide the

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opportunity for a client to correct and improve an issue that will help reduce a possible assessment in a future audit.

Performing an Audit

The beginning of a reverse sales tax audit should be conducted similarly to a taxing authority’s audit. It is important to learn about the client’s business, its flow of transactions and how it operates so that there is a better understanding of how the taxpayer consumes purchases. During the interview stage of the audit, practitioners can often identify major suppliers and large purchases on which to focus particular attention. This process allows practitioners to determine many things, such as whether or not any purchases are being resold to customers, a common sales tax exemption. Fixedasset purchases are usually a major component that taxing authorities focus on and should also be considered during reverse audits.

Perfect Timing for an Audit

The biggest risk in requesting a refund of overpaid tax is the possibility of triggering a normal audit. States are not quick to pay refunds to taxpayers, so applying for a refund of sales tax may put the taxpayer on the state’s radar. To avoid any red flags, the best time to perform a reverse audit is when the taxpayer is about to undergo a sales and use tax audit by the taxing authority. During regular and

reverse audits, the same information is requested and similar steps are performed. While the auditor may find underpayments, the practitioner can find overpayments that can be used to directly offset the auditor’s findings. At the end of the audit, if the overpayments exceed the underpayments, the taxpayer can request a refund knowing that the state just completed a sales and use tax audit with a favorable assessment.

Claiming a Refund

In New Jersey, to claim a refund, the taxpayer must file Form A-3730 within four years of the date the sales tax was paid, which coincides with the statute of limitations for the state. An explanation of claim must be included; be sure to reference the section of the New Jersey Tax Code that covers the exemption if possible. A prime example of an exemption is when a New Jersey taxpayer purchases machinery or equipment for use directly or primarily in the manufacturing of property. Include this explanation on the form along with other details. Provide supporting documentation with the form to substantiate the claim for a refund. In this case, include an invoice showing the purchase of equipment and payment of sales tax.

What to Provide to the Client

report. Within the report, describe the procedures followed and any significant findings. You can include work paper schedules to provide specific findings of the audit. In addition, give recommendations to improve the client’s processes and weaknesses, to provide more value to the client.

Getting Paid

As there is no certainty of finding overpayments, many firms perform reverse audits under a contingent fee arrangement. While this usually is not allowed by the professional standards, the AICPA does permit contingent fees under the circumstance that the “taxing authority has established procedures for substantive review of such refund requests.” In addition to contingent fees, other fee structures can be hourly, flat or hybrid. It is important to note that if the circumstances permit a contingent fee arrangement, the percentage is charged on the net amount of the tax recovered. Christopher R. Cicalese, CPA, MSTFP, is a senior accountant at Alloy, Silverstein, Shapiro, Adams, Mulford, Cicalese, Wilson & Co. He is a member of the New Jersey Society of CPAs. Contact him at ccicalese@ alloysilverstein.com or follow him on Twitter at @AthleteCPA.

As with many client services, it is important to provide clients with something tangible, such as a written

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A&A

buzz

Lender Update on Loan Covenants: Client Relationships Are Key B Y JOSHUA CHANANIE , C PA, SAX LLP

C

PAs play an important role in helping their clients negotiate, secure and comply with financing terms that are most advantageous to their current and future financial needs. One of the most essential services CPAs can provide in this process is to help clients understand the covenants contained within the loan contract and how to meet the compliance requirements. Two prominent banking professionals in the New Jersey lending arena — Lee Ehudin of ConnectOne Bank and Rigoberto Silva of Provident Bank — were asked for their insights into the current loan covenant environment and where it’s headed next. Ehudin was optimistic about the current state of loan covenants, which he said has evolved over the past three to five years. “With the economy seemingly in a better state and most businesses stabilized, the industry has

adjusted the amount of covenants implemented,” he said. The strict loan terms of the not-sodistant past have actually had a positive impact on bankers’ relationships with their clients. “Bankers tend to be more in touch with their clients than ever before, visiting them often, reviewing their cash flows regularly, building relationships and being more involved in their day-today business needs,” Ehudin observed. He did offer some words of caution, however: “While less volatile than five years ago, there is still some uncertainty in the market. Rates may go up, or they may go down. Nobody really knows what the future holds, so realistic assumptions make sense here.” Silva agreed that there is reason to be cautiously optimistic. “All banks have started lending again,” he noted. “Due to increased competition, pricing and terms have become more competitive as well.”

However, he warned: “There may be banks out there that will give a prospect rock-bottom pricing and not include customary terms and conditions to win over that business. It is important for customers to remember who continued to lend during the economic recession. That bank will be more likely to stand by a customer should another event occur.” While the specifics of covenants are always determined on a case-bycase basis, Ehudin explained that a business’s current financial position is still the starting point, and then lenders look for potential growth and areas of improvement. Good banker-client relationships are also key to overcoming issues that arise throughout the loan term. All financial covenants are required to be tested at least annually — more frequently for riskier loans — according to Silva. If a covenant violation occurs, the

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relationship manager will reach out to the customer and/or CPA to discuss the violation. “Communication is key to any good relationship,” he said. “We look to partner with the customer’s CPA and financial consultant to work together to make our customers successful. If the struggle is tied to revenue growth or nonrecurring events, good banks will work with the customer; however, they can do that only if they know ahead of time or at the time these events occur. A covenant modification is something that can be approved; a waiver typically is not.” As the economy improves, Silva predicts there will be more competition from banks to win customers, resulting

in some lenders sacrificing pricing and terms. “However, these banks are the first ones to exit customers when the economy turns soft,” he warned. Ehudin echoed the idea that looser lending terms are a double-edged sword. “As rates stay low and banks chase higher yielding assets in the form of loans, it is inevitable that standards will deteriorate and loans become more covenant light,” he said. “It defines the old adage ‘Be careful what you wish for.’” Ehudin predicts that online lending platforms will also face some troubled waters soon. “Lending is a cyclical business and even more so today with the advent of online lending platforms,” he stated. “Unfortunately, we are

starting to see the cracks form in this new business model as the reality of the risk component in lending cannot be whisked away with technology.” One thing is clear — from originating loan covenants to complying with them — good relationships between clients and their financial professionals are crucial. Just as CPAs work with clients to advise them on lending terms and to facilitate compliance, banking professionals are an essential part of the team, working closely with clients to support and enable their success. Joshua A. Chananie, CPA, is a partner with Sax LLP. He is a member of the NJCPA Nonprofit Interest Group and can be reached at jchananie@saxllp.com.

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NEW JERSEY CPA • NOVEMBER • DECEMBER 2016

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BEST

practices

Five Tips for Collecting Receivables B Y JA IME C AMPBEL L , C PA, T I E R O NE SE RVI C E S, AND B R A D M A R C U S , AT W E L L C O M PA N I E S

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ollections: that mighty bridge between illusion and reality — between how busy we feel and whether we are selling or donating our products and services. Even some billion dollar companies don’t follow best practices consistently. As CPAs, we can guide companies to establish healthy norms to eliminate headaches and help with cash flow. We’ll focus on the two major approaches: proactive procedures and successful collection methods.

Proactive Procedure #1: Use Credit Policies

An astonishing number of companies provide products and services without first establishing a clear policy and standard operating procedure (SOP) around qualifications for a credit arrangement. Establishing SOPs around who gets credit, what terms may be used, and communications (how, when, what) eliminates more than 90 percent of uncertainty. Create those procedures around the general rules, and then you can entertain exceptions if you wish.

Proactive Procedure #2: Use Proper Credit Approvals If your company uses proper credit approvals for new clients, congratulations! But don’t overlook existing customers. Establish a procedure to check on existing customers’ qualifications for credit. Check credit at least annually, ideally far more frequently.

Proactive Procedure #3: Communicate With Clients

Be sure that your new customer onboarding process includes a sitdown to discuss written terms as well as communication requirements and channels. Terms for product-based businesses should include periods of time —

for notification of damage, wrong shipment and returns — and charges for delinquent payment and restocking. A professional services team is typically concerned about selling and delivering services. However, regardless of what policies or exceptions are entertained, other than death or incapacitation, there is zero excuse for not communicating. Make this clear when your company is welcoming a new customer. Be sure to include language indicating that should any invoice be sent for collections, the debtor will be responsible for all fees incurred to collect that debt, including legal. A personal guarantee can be tough to get, but if you get one, make sure the person signing doesn’t put a title next to his or her name. It invalidates the personal guarantee.

Collection Technique #1: Communicate With Clients and Reallocate Risk

“Let’s discuss how you can pay us. I don’t want to send your company to collections, but if you don’t pay the amount due, then you’re going to have to pay it plus the collection fees. What can we create that works for everyone?” Communication is key. Once the payment conversation gets started, payment arrangements can be worked out. The alternatives are nonpayment or costlier options such as litigation. And if this goes on the company’s credit record, future suppliers will know about it. At this point in the game, the risk has shifted to your company. Techniques for reallocating risk include moving from monthly to weekly payments, automatic pulling from bank accounts, automatic charging of credit cards, and nonfinancial methods which, depending on the situation, might include your

work product or other aspects of your original arrangement.

Collection Technique #2: Co-Sourcing, Collection Agency or Attorney?

When the proactive and reactive techniques have not been successful, it may be time to outsource. Collection agencies are renowned for their tenacity. An effective collection agency focuses on first getting the customer to communicate. The best agencies have a network of attorneys across the country and use them when they believe they can go no further. If preserving the relationship is your goal, co-sourcing (also called first-party collections) may offer the best chance. You get the best of both worlds by white-labeling a collections professional. Communications seem like they’re coming from the company, all funds go directly to the company, and the collections professional is very careful to communicate with the creditor and the debtor so no one is ever called who has in fact already paid. The collections professional handles daily tracking. For a more in-depth version of this article, visit njcpa.org/newjerseycpa/novdec16. Jaime Campbell, CPA, MBA, is the chief financial officer of Tier One Services, a fractional CFO and outsourced accounting firm serving $1 million to $20 million businesses. She is a member of the NJCPA Content Advisory Board and several interest groups. She can be reached at jcampbellcpa@ tieroneservices.net. Brad Marcus is a business development account executive with Atwell Companies, an organization providing commercial collections, a credit bureau and co-sourcing.

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WHERE CAN AN AICPA C REDENTIAL TAKE YOUR CAREER NEXT?


CORPORATE

finance

The CPA’s Role in Business Process Management: How CPAs Can Deliver Results B Y SEAN S TEIN S MITH , C PA, R U T GE R S SC HOO L OF BU S I N E S S , A N D M I C H A E L H E R L I H Y, C PA , M C H U T C H I S O N I N C .

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hen business professionals hear the term business process management (BPM), the first thought that usually comes to mind is its relationship to technology. However, BPM initiatives, particularly as they apply to accounting expertise, represent a much larger shift in mindset and practice than simply integrating technology to existing processes. It is imperative to view the idea of process improvement and what it means for the accounting profession from a more comprehensive point of view.

Let’s take a look at two examples of how CPAs can leverage BPM to improve organizational productivity and the flow of information.

senior management is a burdensome process. Every manual iteration is an opportunity for errors and requires an additional review to help offset that risk.

The Opportunity: Monthly Reporting and Analysis

A Possible Solution

An area of frustration and inefficiency in many organizations is the monthly presentation and analysis comparing budgeted/forecasted amounts to actual results. Having to download and/ or export multiple files from multiple systems and then combine them, review the data, and produce a final report for

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Leverage technology and the embedded capabilities of enterprise resource planning (ERP) systems already in use. 1. Identify the reports you need on a monthly basis, what information is actually important to the end users, and when the reports need to be prepared and delivered. 2. Leverage the export capability already embedded within any ERP system and integrate the exporting of information from the ERP into the existing report generation process — that is, have an exported file emailed to accounting whenever the reports themselves are updated. 3. Link those export files — delivered consistently and in whatever format is generated out of the specific ERP in use — to an Excel, Word or PowerPoint presentation. After initial preparation and review by analysts and CPAs, the finalized dashboard can be uploaded and moved in a review queue, which can be accessed anywhere as long as the reviewer is logged into the organization’s virtual private network.

The Opportunity: Intracompany Billing and Revenue

As organizations become more flexible and global, developing relationships, affiliate agreements and joint venture deals is increasingly common. Billings, receivables and intracompany revenues can be a real hassle for CPAs in charge of revenue recognition, reporting or even just the account reconciliations and analysis associated with these agreements.

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Spending time reconciling reports to what is system generated, due to miscoding or missed entries, is not a good use of organizational time and resources.

A Possible Solution

Since most intracompany billings and agreements, or even large customer billings, are contractually driven, developing a standard BPM dashboard for accounting can save time and money. 1. Define what identifying information your group will use for these items: account, division, business unit, etc. 2. Allocate the annual amount that will be invoiced and billed out. Also, add a comment outlining payment terms. 3. In addition to the revenue/receivable coding, indicate how the cash payments should be applied. Is there a

percentage that is coded to some other affiliated area, or does 100 percent get applied against the receivable? 4. Communicate this information to other accounting functional areas, billing and treasury so that you can avoid coding errors and manual correcting entries. 5. Using the information from steps one, two and three, create a simple upload template (possibly a BPMgenerated add-on to existing reports/ templates) that you can refer to each month. This upload sheet will help ensure that you don’t miss these important billings. While this might seem simple and straightforward, many organizations and personnel have not taken the time to map out a process like this. With increased demands for reporting, including consolidated and project-

based, maintaining accurate records of intracompany items is essential. A little bit of preparation and communication can go a long way. Read a more in-depth version of this article at njcpa.org/newjerseycpa/novdec16. Michael J. Herlihy, CPA, CITP, CGMA, is a finance manager with McHutchison Inc. He is a member of the NJCPA Business Valuation Forensic Litigation Services Interest Group and can be reached at mikeherlihy_98@yahoo.com. Sean Stein Smith, CPA, DBA, M.S., MBA, CMA, CGMA, is an assistant professor at Rutgers School of Business, Camden. He is a member of the NJCPA Content Advisory Board and several other committees and interest groups. He can be reached at drseansteinsmith@gmail.com.

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Equal Opportunity Lender


FINANCIAL

planning

Private Placement Life Insurance: Another Tool in the Wealth Manager’s Toolbox B Y EDWARD R. COL L IN S, C F P, AAM S, R F C , ART I SAN W E A LT H M A N AG E M E N T L L C

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hallmark of wealth management is the ability to integrate the disparate practice areas impacting clients’ financial lives into a cohesive plan aimed at assisting clients in working toward their financial goals and objectives. From asset management to estate planning and everything in between, a wealth manager is one who either provides for this integration in-house or coordinates complementary professionals into a network available to meet clients’ needs. The wealth management model seems to be the preferred model sought out by high net worth clients. Their circumstances often push them into a realm of needing advice and counsel beyond the scope of traditional financial planning. This reality also highlights the need for specialized tools to help clients work toward their financial objectives. One such specialized tool is private placement life insurance (PPLI) — an offering that blends risk management and professional asset management.

Traditional cash value life insurance is most often used as part of a plan to mitigate a specific risk or set of risks facing a client. For example, it might be used to pay the final expenses of the decedent or to provide resources for the surviving spouse and family. PPLI is a specialized form of variable life insurance that is not registered with the U.S. Securities and Exchange Commission (SEC) and is available only to high net worth clients. The purchaser of PPLI generally has two goals: meet the specific insurance need for death benefit protection, and accumulate assets. The “private placement” component of PPLI refers to the investible savings portion of the policy. PPLI, like standard variable life insurance, allows for policy owners to make deliberate decisions regarding into which investment vehicles surplus capital will be allocated. Unlike its traditional counterpart, which allows the policy owner to select only those investment options that the insurance company

makes available, PPLI can hold a variety of assets, such as stocks, bonds, hedge funds and other private equity investments with the insurer’s approval. When fully compliant with all applicable tax laws, life insurance (including PPLI) receives advantageous tax treatment. While the assets remain within the life insurance wrapper, policy investments grow free of income tax on an annual basis and, with properly integrated estate planning, ultimately pass to beneficiaries free of income and estate tax at the insured’s death. The compound effect of several features makes PPLI particularly well suited to helping high net worth clients work toward their risk management, investment and estate planning goals: • Negotiated, and often reduced, fees. • Advantageous income and estate tax treatment. • Hyper-focus on accumulation and growth. • Tax-free access to cash value accumulation during insured’s lifetime. • Asset protection capabilities.

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• Liquidity added to the estate at the insured’s death. For individuals to purchase PPLI, they typically must be both an “accredited investor” and a “qualified purchaser” as defined by the SEC. To be labeled an accredited investor, one must earn at least $200,000 per year as well as have a net worth of at least $1 million. To be a qualified purchaser, the individual must medically qualify for life insurance by having a reasonable insurable risk profile. Another attractive feature of PPLI is that it can be structured and routed through an offshore entity. This can provide additional benefits that a

domestic policy may not be able to offer. Premium payments to offshore life insurance affiliates are not subject to U.S. state premium taxes, which generally range from 1 percent to 3 percent. There is also generally more investment flexibility with offshore entities due to the lack of state insurance and SEC and securities-law regulations. Finally, the inherent nature of offshore entities can provide an additional layer of asset protection. Incorporating PPLI as a tool available to your clients within an integrated wealth management plan can legitimately allow investments to

accumulate free of income taxes and pass to beneficiaries free of income and estate taxes, while remaining beyond the reach of creditors and providing a significant death benefit to heirs. However, just as it’s not prudent to use a hammer to drive a screw, you need to understand how this tool works to add value to your clients’ financial lives. Edward R. Collins, CFP, AAMS, RFC, is a founding partner and wealth adviser at Artisan Wealth Management LLC. Contact him at 908-366-7630 or ecollins@artisanwealthmanagement.com.

B:7.25” T:7.25” S:7.25”

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B:5”

New rules around overtime laws under the Fair Labor Standards Act starting on December 1st may impact the way your business clients classify and compensate their employees.

T:5”

S:5”

Family time or overtime.


FORENSIC

file

Charitable Planning Upon Divorce: Avoiding Adverse Tax Consequences B Y CHR IS TOPH ER DEFI LI PPI S, C I TR I N C OO PE RM AN

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awyers set up charitable remainder trusts (CRTs) for high net worth taxpayers, largely because they allow a grantor to engage in charitable giving while taking advantage of income, gift and estate tax benefits. If set up correctly, the CRT is not taxed on income that is accumulated in the trust, the transfer of assets to the CRT is not considered a gift, and the transferred assets are not taxable in the grantor’s gross estate upon his or her death. In most cases, this plays out favorably if there is one grantor. When a CRT is set up by a married couple, however, the outcome can be less certain. Essentially, a CRT pays a fixed dollar amount to the grantor (Charitable Remainder Annuity Trust, CRAT) or a percentage of the value of trust assets (Charitable Remainder Unitrust, CRUT) to one or more noncharitable beneficiaries for life or a specific term of years, and

upon termination, the remainder passes to a charitable beneficiary. In the case of married taxpayers, it is not uncommon to see one CRT established by both spouses. Typically, each spouse will receive equal annual distributions during their joint lifetimes; distributions often go wholly to the survivor upon the death of the first spouse. With the U.S. divorce rate hovering at 50 percent, it begs the question: What happens to a CRT established by both spouses when the marriage ends in divorce? This is a critical question because once a CRT forfeits its classification as a charitable trust, it loses the benefit of its aforementioned income, gift and estate tax advantages. In these situations, the CRT must be divided. This can be accomplished without adverse tax consequences, but tax advisers must be aware of the mechanics in doing so.

Successful CRT Divisions

The IRS specifically provides two examples of successful nontaxable CRT divisions (Rev. Ruling 2008-41). In each example, the original CRT is divided on a pro rata basis into two separate and distinct trusts for the divorcing spouses. Each separate trust incorporates the same provisions as the original trust, though the trusts may have different trustees and the trust assets are invested independently. In private letter rulings (e.g., PLR 200035014), the IRS has stated that the interests of the parties and their “legal entitlements” should not change from the original CRT to the resulting CRTs. This presumes that each beneficiary, after the division of the original trust, will receive a beneficial interest that is identical or at least substantially similar to what he or she would have received before the division.

NEW JERSEY CPA • NOVEMBER • DECEMBER 2016

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A Favorable Outcome

The safest course of action is to put each spouse in the same beneficial and legal position after the division of the CRT as before it. For instance, if the original trust provided the spouses an annual distribution of 5 percent of the value of the assets contributed to the CRT, the resulting trusts after the division should provide distributions of 2.5 percent to each spouse. There is an abundance of private letter rulings pertaining to the division of CRTs upon divorce. Changes to the rights of the parties upon the division of a CRT, such as incongruent resulting CRUT percentages between the spouses, have been deemed acceptable in those rulings. Divorced couples have the added

security of Section 1041(a) of the Code which negates the recognition of gain or loss on a transfer incident to divorce.

Avoiding Unfavorable Results Taxpayers are more likely to see an unfavorable tax result in the course of dividing a CRT when the lifetime beneficial interests of the parties increase as a result of the division, thereby decreasing the value of the charitable remainder. For example, the spouses received a collective total of $10,000 from the trust each year before the division of the CRT, and each spouse receives $20,000 each year post-division. In this scenario, the taxpayers would receive a charitable deduction in excess of

the actuarial value of the charitable remainder trust after the division of the CRT. (None of the successful divisions of CRTs in private letter rulings or revenue ruling examples provided for an accelerated lifetime beneficial interest for the spouses.) The taxability of the division of CRTs is a fairly uncertain and fact-specific area. It is critical for the tax adviser to be aware of the various considerations associated with these divisions to produce the intended tax-neutral result for his or her client. Christopher DeFilippis is an attorney and tax manager with Citrin Cooperman where he advises closely held businesses and high net worth individuals in all aspects of estate, gift and tax trust matters.

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NEW JERSEY CPA • NOVEMBER • DECEMBER 2016

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SMALL/SOLE

practitioner

Executive Compensation in a Closely Held Business: Make Sure It’s Not Too Low or Too High B Y M IT CH EL L FRANKL I N, PH. D. , C PA, M AD D E N SC HO O L O F B U S I N E S S AT L E M OY N E C O L L E G E

C

orporate formation has significant liability issues as well as tax considerations. A key consideration is properly structuring executive compensation to stay out of trouble with the IRS. The IRS aggressively examines C corporations to make sure that shareholder-employees are not overpaid and S corporations to make sure that shareholder-employees are not underpaid. The main concern facing owners of a C corporation is double taxation of dividend income, so it is common practice to pay an inflated salary to disguise the dividend as a taxdeductible payroll expense, reducing taxable income to the corporation and maximizing available fringe benefits. The S corporation attempts to minimize salary and increase non-salary distributions, which are not subject to payroll tax. Reasonable compensation is governed under Reg. Sec. 1-162-7(a), which states that the salary or fringe benefits paid to a shareholder-employee must be reasonable in order to be deductible. As such, the IRS looks at the salary paid to an employee-shareholder and determines if it is reasonable based on the circumstances of the situation. If a shareholder-employee of a pizza shop structured as a C corporation takes $350,000 as an employee salary, is this reasonable? Conversely, if a CPA shareholder of an S corporation takes a $25,000 salary, is this reasonable? Convincing the IRS that a compensation level for an ownershareholder is reasonable can be difficult and controversial if there is not sufficient evidence to support a specific stance. Section 162 states that a deduction for salary can be taken for “all of the ordinary and necessary expenses paid or incurred during the taxable year

in carrying on any trade or business including a reasonable allowance for salaries and other compensation for personal services actually rendered.” To the taxpayer, compliance with Section 162 means that evidence must be provided to demonstrate that salary payments are made purely for services provided to the entity. There are several cases that have been argued to determine reasonableness of compensation. Each case was decided based on a separate series of factors, and these factors historically involve the individual’s role in the company, comparison of similar companies, educational qualifications of the executive, consistency of pay to nonowner employees with similar duties, and the overall condition of the business.

C Corporation Considerations

To successfully defend a position before the IRS, a business must have a clearly documented compensation plan that is formally reviewed and approved by the board and shareholders and applied to all employees in a consistent manner. The plan should have a clear formula that supports salary decisions as well as calculation of any bonuses, which must be fully tied to individual performance. The plan should also clearly specify nonperformance criteria that would justify a higher base salary for similar services performed by a non-owner, such as advanced degrees, certifications or specialties that shareholder-owners may have which other employees performing similar work may not have.

S Corporation Considerations

To prevent the IRS from determining a salary is too low, having data to determine and support a specific salary

as market-appropriate for a job title and duties performed is very important. IRS adjustments to pay back salary that was understated can be very expensive. The increase in salary will generate failure-to-withhold tax penalties as well as penalties for failure to properly deposit taxes. Shareholder-owners of family businesses should also be careful with the titles assigned, as market pay is tied to position. This is often an issue when relatives are given a leadership title with little responsibility, such as children or those who are retired from the entity. Setting salaries of executives can be difficult and complex, and it is a hot area for IRS audits. CPAs need to actively engage their small-business clients in discussion to ensure that the salaries being paid are reasonable for the business entity and adequately supported by and consistent with current case law on the issue. Mitchell Franklin, CPA, Ph.D., is program director and assistant professor of accounting at the Madden School of Business at Le Moyne College. He is a member of the New Jersey Society of CPAs’ Content Advisory Board and can be reached at franklma@lemoyne.edu.

NEW JERSEY CPA • NOVEMBER • DECEMBER 2016

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TAX

talk

Q&A With the Acting Director of the New Jersey Division of Taxation B Y ROS EMARY F. ERVIN, C PA, HU NTE R GROU P C PA LL C

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ohn J. Ficara was recently appointed the acting director of the New Jersey Division of Taxation. Here, he answers questions of interest to tax practitioners heading into the 2017 filing season.

Have you identified any areas of improvement for the division? We are in the process of conducting a comprehensive organizational assessment of the division, which will likely lead to some recommendations for improvement. One specific thing we are currently evaluating is the advisability of creating a separate refund-fraud unit — or, alternatively, a refund-fraud steering/ oversight committee. We made significant advances this past filing season in our ability to detect and stop fraudulent refund claims while expediting issuance of legitimate refunds; however, this is an issue which will become increasingly more complex and challenging in the future and require continuing diligence.

The regulatory environment has been difficult for business. Has consideration been given to targeted incentives? While certain targeted incentives, if developed and administered properly, can be very effective (Research Triangle Park in North Carolina being a prime example), other programs have not been so successful. Targeted tax incentives, which go to specific taxpayers in specified industries or regions for limited time periods, are often useful in serving an immediate need, but they may not always lead to long-term growth. The best solution for growing state economies is broad-based tax reform that more permanently retains and attracts business and is good for the state and local businesses and taxpayers generally.

How is the division managing with fewer resources? We have faced an enormous challenge from the loss of many seasoned employees due to normal attrition. We strive to become more efficient by taking advantage of automation and new technology as it becomes available, prioritizing projects and reallocating resources where they can be most effective, all in a continuing effort to improve productivity and essentially do more with less.

Has the Online Notice Response Service (ONRS) been measured for effectiveness? Are there other automated services or processes in the planning stage? We are pleased with ONRS overall. Taxpayers can upload documents faster and receive email confirmation of submission. In addition to facilitating front-end processing, the system increases transparency and is great for taxpayer confidence. Substantial staffing and workspace efficiencies have been, and will continue to be, realized by leveraging automation.

In representing our clients, we are aware that working together with Taxation and Revenue provides the best outcome. Is there anything specific our members can do to enhance the communication process? Issues should be resolved at the lowest level possible in the division’s chain of command. This will typically lead to the most efficient and effective resolution of issues, because these individuals, more often than not, have the expertise and experience necessary to work through the details and to

resolve disputes. You can see this at the meetings we have with the NJCPA. Inquiries posed by your members are generally addressed by the department managers at each meeting.

The NJCPA has recently taken a more proactive position regarding tax and business issues pending in the New Jersey Legislature. How can we strengthen our impact on important revenue enhancement initiatives? I think the best way to advocate in support of revenue initiatives is to demonstrate how they will facilitate long-term economic growth, making New Jersey more attractive for people, businesses and capital. Input of CPAs to the political process is appreciated because they often understand issues in ways that others don’t.

As a tax attorney and a CPA, do you have any comments for our student members considering taking the CPA exam? It is time and money well spent. The designation is a personal asset that remains with you forever. Consider working for a CPA firm, at least at the beginning of your career. While this will not be the right long-term career choice for everyone, a couple of years of experience there could provide exposure to a broad range of opportunities, which will be helpful in determining your future career path. Rosemary F. Ervin, CPA, is a tax consultant at Hunter Group CPA LLC. She is a member of the NJCPA State Taxation and Federal Taxation interest groups and can be reached at rfe@thehuntergroup.com.

NEW JERSEY CPA • NOVEMBER • DECEMBER 2016

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TECH

center

Sales Tax Compliance Using Software as a Service B Y M A RC D. MINTZ, CPA, M ARC M I NTZ & ASSO C I AT E S L L C

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re you confident that your clients and/or employer are compliant with their sales tax obligations? Consider the following points: • More than 10,000 sales tax jurisdictions exist, as many states allow counties and municipalities to assess their own unique levies. • Taxation of particular goods and services varies state by state. • Nexus (sufficient physical presence) — including shipping, delivery and office locations — must be considered for each transaction. • Various exemptions are provided to purchasers based upon their entity type. • Exemptions are provided to purchasers based upon the nature of an item’s usage. • Sporadic tax holidays reduce or eliminate sales taxes based upon arbitrary date ranges. • Even if a vendor does not charge sales tax, a purchaser may still be liable to remit a use tax. • Digital content often transcends traditional definitions of tangible personal property. • Electronic commerce blurs the geographic lines regarding questions of physical location. Fortunately, there are software solutions that automate the immense compliance obligations that frequently surface in these times when even the smallest of companies engage to offer their products and services to a clientele that is national and even international. At their essence, these sales tax services integrate with your accounting, enterprise resource planning, point of sale and e-commerce systems to automatically calculate the proper amount of sales tax to be collected for each customer, by line item, for every invoice.

In addition to traditional sales and use taxes, these service providers are able to calculate and remit value-added taxes, lodging taxes, tourism taxes, occupancy fees, domestic security fees, tire fees, admission surcharges, excise taxes and communications taxes. Not only do these solutions provide the necessary repetitive tax calculations, some of these service providers also offer turnkey outsourced solutions, which include filing and preparation of returns, timely remittance of payments to tax authorities, electronic processing of exemption certificates and even professional consultations. When deciding on a provider, be certain that the service you select has the necessary application programming interface to connect with the system where your source transactions are being processed. Also make sure the vendor you select has a long history of working with your specific integration. As each sales transaction is processed, your provider will determine if the customer and individual items are subject to tax, make the appropriate calculations, add the proper tax amount to each invoice, and transform your compliance obligations into a more streamlined and much less laborintensive operation. To leverage the full power and efficiencies of these services, it is essential to perform due diligence to ensure all the elements required for your particular compliance issues are available with the services you choose. As with any systems endeavor, establishing a comprehensive implementation plan will lay the foundation for a successful outcome. All these services are rules-based systems which need to know the proper zip codes for sell-to and ship-to locations, the items and services you

are selling, and which customers are tax-exempt. In addition, you need to confirm that you are registered with the proper taxing authorities and have entered your correct account numbers to ensure proper collection and remittance of the appropriate taxes. Once the setup is correct, these online services will perform with robot-like qualities regardless of the number of transactions you process, the number of unique items you sell or the number of taxing jurisdictions you ship to. Selecting a service that balances your feature requirements with a digestible level of complexity at a price point to justify your expenditure is always a challenge. Below are a handful of vendors to assist with your search if sales tax compliance as a service is something that can benefit you or your clients. • Avalara – AvaTax (avalara.com) • Taxify – Soyas (taxify.co) • Wolters Kluwer (salestax.com) • Exactor (exactor.com) • Davo (davotechnologies.com) Marc D. Mintz, CPA, CITP, CGMA, is the managing member of Marc Mintz & Associates LLC, a technology consulting firm that assists businesses with strategic planning and the selection and implementation of information technology systems. A former NJCPA trustee and a past president of the Passaic County Chapter, he currently serves on the Content Advisory Board. He can be reached at marc@marcmintz.com or 973-808-9040.

NEW JERSEY CPA • NOVEMBER • DECEMBER 2016

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SOCIETY

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Get Involved Why and How to Get Involved

in supporting your chapter by volunteering to serve on the board. Work with a diverse team of members who are excited about creating dynamic chapter experiences. To be considered, express your interest to your current chapter board and complete your volunteer profile (njcpa.org/volunteer).

“Volunteering with the NJCPA is the single best thing you can do, period. Meet people with WAY more experience than you have, ask a couple of questions and listen like crazy. Write articles. Volunteer at events. And follow up with the people you meet there.” – Jaime Campbell, CPA Work as a team, build relationships with like-minded people, become a leader, add to your professional profile, and make a difference in the community and the profession when you volunteer with NJCPA.

Build the Future of the Profession

The mission of the NJCPA Scholarship Fund is to attract the best and brightest New Jersey students into the accounting profession, to encourage students from diverse fields to pursue an advanced education in accountancy and to increase awareness about the opportunities provided by a CPA career path. More than 50 scholarships will be awarded in 2017 with your help. • Read and Rank Essays From NJCPA High School and College Scholarship Applicants – Volunteers are needed to read and score essays submitted by high school seniors and college juniors and seniors applying for scholarships. Essays are limited to 500 words. A scoring rubric is provided, and reading can be done in your home or office. High school essay reading takes place Jan. 2–6, 2017, and college essay reading takes place Jan. 16–20. Sign up at njcpa.org/volunteer. • Interview NJCPA Scholarship Candidates – Be part of a team of CPA members that interviews candidates for NJCPA college scholarships. Interview high school seniors on Jan. 14, 2017 (snow date: Jan. 15) at NJCPA in Roseland. Interview college juniors and seniors on Jan. 28 (snow date: Jan. 29) in the MetroPark area. Questions and scoring rubric are provided. You will need to be on-site from 8 a.m. to approximately 4 p.m. Sign up at njcpa.org/volunteer. • Be a Mentor and Make a Difference – CPA members are needed to be mentors for the 2017 NJCPA four-year scholarship recipients, to provide guidance throughout their college careers. Sign up at njcpa. org/mentor.

Support the Community • Toy/Food Drives – Many NJCPA chapters will be hosting toy and food drives at their events and annual tax seminars through November. Visit njcpa.org/chapters for event dates.

Move Up the Leadership Ladder

If a position on an NJCPA appointed committee or the Board of Trustees is on your mind, start connecting with the NJCPA mission as an interest group leader or a chapter board member. • Become an NJCPA Interest Group Leader – Interest group members looking to take a leadership role have one year to prepare as the interest group vice leader. Then they serve two years in the leader role. Leadership training is provided. To be considered, express your interest to your current leader and complete your volunteer profile (njcpa.org/volunteer). • Serve on an NJCPA Chapter Board of Directors – Take the next step NEW JERSEY CPA • NOVEMBER • DECEMBER 2016

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NJCPA Publishes Audit Report The combined financial statements for the NJCPA and affiliates (NJCPA Education Foundation and NJCPA Scholarship Fund) for the year ended May 31, 2016, have been published. The financial results for fiscal 2016 reflect both cyclical fluctuations and the changing landscape of the CPA profession. When compared to last year, the decrease in unrestricted revenues was due primarily to lower educational program volume in the first year of the triennial cycle. In addition, investment performance suffered as a result of turbulence in the global equity markets, offset in part by positive returns across the fixed income portion of the portfolios. Membership dues revenue reflects a relatively stable membership and a small increase in rates (1 to 1.6 percent depending on category). Recruitment of new members trailed an aggressive budget by 350 members, while overall member retention dropped from 92.2 percent last year to 90.6 percent in 2016. Retention of fellow members decreased from 94.7 percent last year to 93.3 percent in 2016. Total members fell slightly from 15,200 at the beginning of the year to 14,700 at year-end. The NJCPA’s net assets decreased approximately $27,000, including unrealized investment losses of $158,000, and compared to a budgeted increase of $19,000.

The NJCPA Education Foundation completed the first year of the new triennial reporting cycle with close to 25,000 registrants and delivered more than 106,000 credit hours of CPE. While cyclical declines were anticipated, attendance was below budget expectations by 8 percent for several reasons, including the removal of the limitation on self-study credits in September 2015. Net assets decreased approximately $303,000, including unrealized investment losses of $51,000, versus a budgeted deficit of $192,000. The NJCPA Scholarship Fund continued to benefit from the strong support of NJCPA chapters, as well as members and their firms and companies. The fund achieved $475,000 in total awards, a small reduction from prior year levels. Nearly 90 eligible students were awarded new scholarships, including awards by three chapters. In addition, 60 students received payments on conditional awards granted in prior years. Temporarily restricted net assets decreased approximately $247,000, including unrealized investment losses of $151,000, versus a budgeted deficit of $128,000. Download the combined financial statements at njcpa.org/about.

and the State Tax Handbook. Visit njcpa.org/marketplace to access the store and the members-only priority code. • Hire tax season help. Reach the most qualified candidates by posting your per diem or permanent job opening in our online job bank: njcpa.org/jobs. You can also search for resumes and pay only for the ones that interest you. • Peer-to-peer collaboration. Members benefit from the knowledge of other tax experts by joining the State Tax or Federal Tax interest group at njcpa.org/groups. Members also have ongoing access to the NJCPA Member Open Forum on Connect (njcpa.org/connect) to discuss and learn from other members about taxation issues. • Latest news about tax issues. Make sure the areas of interest in your member profile (njcpa.org/profile) are up to date in order to receive the most relevant tax articles and information in your customized version of NJCPA Pulse, delivered to your inbox every other Thursday. • Relax after tax season. When busy season ends, find travel deals at njcpa.org/marketplace through Buyer’s Edge, the tri-state area’s premier buying service.

Tax Season Tools at Your Fingertips The NJCPA has the tools and resources that will enable you to approach the upcoming tax season more confidently and with less stress. • CPE courses on relevant tax topics. Tax-related CPE courses can be found by searching on tax topics at njcpa.org/events. Then, keep track of all your CPE credits through the CPE Tracker at njcpa.org/cpetracker. • Tax guides and publications. Members save 25 percent on any of the more than 175 Wolters Kluwer CCH® tax and accounting publications, including U.S. Master Tax Guide, U.S. Master Depreciation Guide, Internal Revenue Code, Income Tax Regulations

NEW JERSEY CPA • NOVEMBER • DECEMBER 2016

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CLASSIFIEDS Mergers/Acquisitions The Marchese Group, a father-son CPA firm in northern NJ, is looking for retirement-minded practitioners grossing up to $150,000 for buyout or merger. This is an opportunity to assure your clients will have exceptional quality service. Please contact ron@tmgcpa.net. Parsippany, NJ. Seize a merger acquisition opportunity with benefits for you. We are looking for firms ranging from $300,000 to $5,000,000 eager to combine forces as we continue to grow across Northern NJ, Westchester and the Hudson Valley region. Goldstein Lieberman & Company is ideally situated to service all types of industries. Visit www.glcpas.com; email me, Phillip Goldstein, CPA, managing partner, philg@ glcpas.com; or call me at 800-839-5767 to have a confidential conversation.

Retirement-minded Bergen County CPA, looking for a CPA to take over my firm. Gross $750K+. Must have strong tax background. Small existing client base is a plus. Excellent opportunity. Reply to File No. 1270. Traphagen & Traphagen CPAs, a well-established firm in Bergen County with diverse client base and credentialed support staff, is seeking small firms and sole practitioners for acquisition or merger. We are looking for firms ranging in size from $300K to $700K. This is an opportunity to align with a quality peer-reviewed firm while continuing to provide your clients with exceptional service. To confidentially discuss this opportunity, please email us at carolynn@tfgllc.com.

Real Estate

Passaic County peer-reviewed firm seeking to associate with compatible firm for future buyout of principal. Principal will remain for up to one and a half years during transition to support and sustain client base; $400-450K. Reply to File No. 1269.

Replies to ads with file numbers should be sent to: File______________________

New Jersey practices for sale: gross revenues shown: Mercer Co. CPA, $485K; S. NJ/DE Valley area CPA, $1.3M; multi-location tax franchise $242K. For more information, call 800-397-0249 or visit www.accountingpracticesales.com.

LLI Advisory Group, a Union County based firm is looking to expand its practice. If you are a retirement-minded practitioner with a practice grossing $300,000 to $800,000 or a sole proprietor looking for a firm to partner with, please contact Spiro Leunes at sleunes@llicpa. com or 908-358-0503. We are a young and entrepreneurial firm with a successful history of mergers and acquisitions.

Classified Advertising

Thirty-story luxury residential building located in the heart of Fort Lee offers commercial professional space at ground level, all with a private front entrance. The building is composed of almost 500 apartments with over 700 residents. The property is in proximity to all major highways and minutes to GWB and New York City. Available spaces range from 650 to 900 square feet, many with private bathrooms. Can be combined to suit. On-site parking available. Call or email Daniel Ortiz at 201-461-3164 or daniel.ortiz@fsresidential.com.

New Jersey CPA Classifieds 425 Eagle Rock Avenue, Suite 100 Roseland, NJ 07068-1723 To see additional classified listings or to place an ad, visit njcpa.org/classifieds.

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Rutgers University business.rutgers.edu/taxmaccy

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January/February – Coming Attractions The Changing Profession: How to Adapt and Prosper • Changes to the CPA Exam Magazine of the

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Jan • Feb 2017

• The CPE Landscape • Embracing and Leveraging Technology • Monetizing/Capitalizing on Change

NEW JERSEY CPA • NOVEMBER • DECEMBER 2016

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YOUNG

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Eight Ways to Communicate for Success B Y B ENJAMIN AS PIR, CPA, E I SNE R AM PE R LLP, AND J E R E M Y I . K AY E , D E L O I T T E

I

n the great “There’s no crying in baseball!” scene from A League of Their Own, Tom Hanks thought he could reprimand the female players in the same way he had dressed-down the male players. Then he adjusted and really began to communicate. If you are guilty of a one-size-fitsall approach, you could be missing as much as 75 percent of your opportunities, according to certified business coach Paul E. Hatrak III, CPA. We recently attended Hatrak’s session “Communicating for Success: Watch Your Language.” These eight takeaways will help you increase your communication success. No crying. Guaranteed. 1. Stand out in less than seven seconds. You have only seven seconds to make a good impression. Then, people start to tune you out. Make yourself unique. 2. Be a helper. When you give your elevator speech, always use the word “help” in the first sentence. People want to know how you can help them. When you tell them up front, your message becomes personal. Your message will be

memorable, and you’ll keep their attention (see #1). 3. Step outside of your comfort zone. The most successful people have repeatedly stepped outside of their comfort zones. Life begins at the end of your comfort zone. Embrace the moment you start to feel uncomfortable. 4. Personalize your communication. There are many types of personalities and communication styles. Hatrak recommends DISC, an assessment tool that helps you build more effective working relationships based on an understanding of different behavioral styles. DISC stands for: • Dominance (sees the big picture, direct). • Influence (enthusiastic, collaborative). • Steadiness (calm, supportive). • Conscientiousness (independent, objective). We are all a blend of the DISC styles, but usually one or two styles stand out. 5. Establish your brand as early as possible. How do you want to be branded in the profession and in your

organization? Once the brand has been established, you can become the go-to person in that area of expertise. 6. Have an owner’s mentality. Whether you are a first-year staff member or a manager, act like an owner. Be invested in your organization’s success — both in the big picture and the details. If you act like an owner, you are more likely to become one. 7. Tell people why you do what you do. Building on the ideas in Simon Sinek’s book (and well-known Ted Talk) Start With Why: How Great Leaders Inspire Everyone to Take Action, don’t start by telling people what you do. Start with why, then move to how, and end with what — and you’ll be in the company of leaders like Apple, Tesla and Google. Instead of saying “We made this spectacular phone by taking new innovative materials in order to make the best customer experience,” the message is better delivered as “In order to make the best customer experience, we used innovative materials to make this spectacular phone.” 8. Know who you are meeting with. Prior to meetings, find out what you can learn about anyone you don’t know. If you don’t, it will be obvious when you go into a meeting unprepared. You’ll shine when you understand motivations, ask the right questions, set strategies and achieve your goals. Benjamin Aspir, CPA, is a manager at EisnerAmper LLP in Iselin. He is a member of the NJCPA Young CPAs Council and the NextGen Writers Pool. He can be reached at benjamin.aspir@ eisneramper.com. Jeremy Kaye is an audit senior assistant at Deloitte in Parsippany. He is a member of the NJCPA Student Programs & Scholarship Committee and was an NJCPA scholarship recipient. He can be reached at jerkaye@deloitte.com.

NEW JERSEY CPA • NOVEMBER • DECEMBER 2016

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LEGISLATIVE

views

TTF and Tax Relief Agreement Signed; Pension Payment Legislation Stalls B Y JEF FREY T. KAS ZERM AN, NJ C PA GOVE R NM E NT R E LAT I O N S D I R E C TO R

I

n October, Governor Christie signed a bipartisan agreement to fund the New Jersey Transportation Trust Fund (TTF) by $2 billion per year for eight years, phase out the estate tax, and provide tax relief for retirees, veterans and lowincome residents. Replenishing the bankrupt TTF will address much-needed repairs and upgrades to the state’s transportation infrastructure. While no one likes to see any kind of taxes raised, the reality is that a hike in the state’s gas tax is the only long-term viable option for ensuring that our roads, bridges and rail systems are repaired and maintained in safe operating conditions. Even with the 23-cent increase, the Garden State’s gas tax, at a total of 37.5 cents, will still be lower than New York’s gas tax of 50.6 cents and only slightly higher than Pennsylvania’s 32.3 cent gas tax. Raising the estate tax exclusion and eventually phasing out the tax, as well as raising the tax exclusions on pension and retirement income, will keep more New Jerseyans — and their income — in the state. For more information on the timing and implementation of each of the provisions in the agreement, visit njcpa. org/advocacy/TTF.

Pension Payment Legislation Stalls

Much to the relief of the NJCPA and most business groups, legislation (ACR109) that would have amended the New Jersey Constitution to require the state to make annual multibillion-dollar public employee pension payments has stalled in the Senate. After passing both houses of the Legislature last year and the Assembly this year, the bill had to pass the Senate

by mid-August to go on the November 2016 ballot as a public question. Although he was the Senate sponsor of the bill, Senate President Stephen Sweeney declined to post the bill for a vote — after wrangling with the governor about gas tax legislation that raised the prospect of cutting the sales tax by a penny, thus reducing future state budgets by up to $900 million annually. The Senate President said it would be fiscally irresponsible to cut the sales tax and pass a constitutional amendment that could cost the state billions. He also noted that the Senate could still pass the bill and have the proposed question on the ballot in 2017. The NJCPA and other business groups opposed the legislation because it would force the state to make multibillion-dollar pension payments

Get Involved: Join a Government Board or Commission

The state of New Jersey has hundreds of boards, authorities and commissions that address just about every public policy issue imaginable. Local and county governments also offer dozens of opportunities to join boards, task forces and commissions that seek the input and expertise of local citizens. Governor Christie’s website has a section for people interested in serving the community by joining a state board or commission. Visit state.nj.us/governor/ admin/bca.html to see a listing of hundreds of boards and commissions. If you see something you like, simply upload your resume. The governor makes appointments to many of these state boards and commissions.

each year no matter their cost and regardless of economic conditions. The NJCPA testified that these increased payments could lead to sharply higher taxes and/or draconian spending cuts to essential services, like school funding and municipal aid. The NJCPA also testified that while we are sensitive to the legitimate concerns of public employees over the fate of their pension plan, the responsible approach is for all interested parties to work together on forging a solution to the pension funding problem. The NJCPA cited the 2015 report issued by the New Jersey Pension and Health Benefit Study Commission as a solid starting point for discussions. Updates on this issue will be posted at njcpa.org/advocacy/pensionpayments.

If you’re more interested in local issues, inquire with your local government officials to find out what types of citizens boards they have available. Most communities have a number of volunteer boards that work on a broad range of issues, such as redevelopment projects, human relations and local history. Contact your mayor’s office, town council members or local school board representatives for more information. You can also contact your county government officials to see what is open on a county level. The NJCPA encourages its members to get active with these boards. Serving on a board is a rewarding way for you to contribute to the community and for the community to recognize the great expertise that CPAs have to offer.

NEW JERSEY CPA • NOVEMBER • DECEMBER 2016

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MEMBER

profile

He’s the Sports Tax Man B Y ELIZABETH QUIÑONE S, NJ C PA C ONTE NT SP EC IAL IS T

A

native of Brooklyn whose grandfather emigrated from Italy — a heritage he takes much pride in — Robert Raiola, CPA, grew up watching and playing baseball. While he admits he didn’t have the chops to play in the big leagues, he was able to capitalize on his love of sports with his current role as director of sports and entertainment at PKF O’Connor Davies. With 20 years of sports and entertainment accounting experience, Robert’s clients include professional athletes, highprofile coaches, broadcasters, models, musicians, entertainers and comedians.

Building a National Following

About five years ago, Robert ventured into new territory by establishing a presence on Twitter as @SportsTaxMan. “Twitter has helped me expand my brand and be a thought leader in the area,” Robert says. National Public Radio (NPR) caught wind of the tax tips and facts he was sharing on Twitter and interviewed him about the tax repercussions athletes would have to consider for certain deals. They ended the podcast with a very appropriate song: “Tax Man” by The Beatles. Media recognition has helped Robert attain more than 52,000 followers on Twitter. But has this translated into more business? “A mother of a second-round draft pick in the NFL said, ‘Based on your Twitter feed, you really know about taxes, and I want to talk to you about representing my son.’ One call and one meeting later, we were hired,” Robert said. “I’ve gotten a bunch of new clients because of my Twitter feed.”

Robert co-authored the book Winning Tax Strategies and Planning for Athletes and Entertainers, published by the AICPA, and has provided sports tax advice and information for ESPN, CBS Sports, Sports Illustrated, the Bleacher Report, Yahoo! Sports, The Washington Post, The New York Times, Bloomberg and local sports news. “People care about who wins and loses [in sports], but they are also interested in athletes’ wages and how they are impacted by taxes in different states,” he says.

Becoming a Trading Card

Robert grew up collecting Topps baseball cards, so imagine his surprise when they reached out to him about creating his own trading card. It was like a dream come true. “Back in January [2016] … they said, ‘We are big fans of your work and we want to feature you on a trading card.’ It was an honor to be part of the [sports card] set. I was flattered,” he says. Robert’s card is part of Topps’ Allen & Ginter line.

the sports industry. For instance, Robert publicly criticized the City of Cleveland for taxing an athlete who did not have physical nexus in the city. “If you’re a player, you really need to have a CPA who is familiar with the tax laws relating to professional athletes,” says Robert. There are other assessments besides income taxes of which athletes need to be mindful. Athletes and entertainers need to understand everything they’re paying for and why they are paying it. “It’s not what you make, it’s what you keep,” he says. Robert enjoys helping clients navigate the murky tax waters and make the best financial decisions. “This is my area. I know it well, and I think I do it well,” he says. “We always hope that we get to enjoy going to work and love what we do. I really have a passion for what I do.”

Advocating for His Clients

For privacy reasons, Robert won’t reveal who his clients are, but he doesn’t shy away from providing commentary on tax issues affecting

NEW JERSEY CPA • NOVEMBER • DECEMBER 2016

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• Follow Robert on Twitter @SportsTaxMan.


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