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All of Georgia Now Eligible for Disaster Tax Relief

Hurricane Irma victims in the entire state of Georgia now have until Jan. 31, 2018, to file certain individual and business tax returns and make certain tax payments, the Internal Revenue Service announced today.

This includes an additional filing extension for taxpayers with valid extensions that run out on Oct. 16, and businesses with extensions that ran out on Sept. 15. It parallels relief previously granted to Irma victims throughout Florida and in parts of Puerto Rico and the Virgin Islands, and Harvey victims in parts of Texas.

For taxpayers in Georgia, this relief postpones various tax filing and payment deadlines that occurred starting on Sept. 7, 2017. As a result, affected individuals and businesses will have until Jan. 31, 2018, to file returns and pay any taxes that were originally due during this period.

This includes the Sept. 15, 2017 and Jan. 16, 2018 deadlines for making quarterly estimated tax payments. For individual tax filers, it also includes 2016 income tax returns that received a tax-filing extension until Oct. 16, 2017. The IRS noted, however, that because tax payments related to these 2016 returns were originally due on April 18, 2017, those payments are not eligible for this relief.

A variety of business tax deadlines are also affected including the Oct. 31 deadline for quarterly payroll and excise tax returns. Businesses with extensions also have the additional time including, among others, calendar-year partnerships whose 2016 extensions ran out on Sept. 15, 2017 and calendar-year tax-exempt organizations   whose 2016 extensions run out on Nov. 15, 2017. The disaster relief page has details on other returns, payments and tax-related actions qualifying for the additional time.

In addition, the IRS is waiving late-deposit penalties for federal payroll and excise tax deposits normally due during the first 15 days of the disaster period. Check out the disaster relief page for the time periods that apply to each jurisdiction.

The IRS automatically provides filing and penalty relief to any taxpayer with an IRS address of record located in the disaster area. Thus, taxpayers need not contact the IRS to get this relief. However, if an affected taxpayer receives a late filing or late payment penalty notice from the IRS that has an original or extended filing, payment or deposit due date falling within the postponement period, the taxpayer should call the number on the notice to have the penalty abated.

Individuals and businesses who suffered uninsured or unreimbursed disaster-related losses can choose to claim them on either the return for the year the loss occurred (in this instance, the 2017 return normally filed next year), or the return for the prior year (2016).

The tax relief is part of a coordinated federal response to the damage caused by severe storms and flooding and is based on local damage assessments by FEMA. For information on disaster recovery, visit disasterassistance.gov.

For information on government-wide efforts related to Hurricane Irma, visit www.USA.gov/hurricane-irma.

HLB International Appoints New Member in Palestinian Ruled Territories

HLB International, one of the leading global accountancy networks with presence in 140 countries, continues its growth with the recent signing of a new member firm in Palestinian Ruled Territories – Palestia.

Palestia is based in Ramallah, a Palestinian city in the central West Bank, north of Jerusalem. Established in 2001, the firm provides services in the fields of Audit, Bookkeeping & Accounting, Compliance, Financial Management, Management Consulting Services, Payroll, Risk Management Solutions and Tax & Legal Services.

Omran Nasser, Partner of Palestia commented: “We are very excited to join the HLB network. This will take our practice to the next level and will enable us to better serve our clients and expand our business.”

Palestia will work closely with other HLB members and makes a great addition to our coverage in the region.

The Georgia Retraining Tax Credit

Is your construction company investing in employees through means such as new equipment, new software, or new technology? If so, your company may be eligible for the Georgia Retraining Tax Credit. The purpose of this credit is to encourage employers to continuously invest in their employees via the very means mentioned above – upgrading equipment, acquiring new technology, and even completing ISO 9000 training.

Only eligible programs qualify for the Georgia Retraining Tax Credit. Eligible programs must be designed to enhance quality and productivity or to teach certain software technologies. The retraining tax credit covers expenses incurred as part of the retraining, although the cost of the new equipment, software, or technology itself is not covered. Covered expenses must be approved by the Technical College System of Georgia and include:

  • Cost of instructors
  • Cost of teaching materials
  • Employee wages during retraining
  • Reasonable travel expenses

The retraining credit is a Georgia-only credit that can be used to offset up to 50% of a company’s Georgia income tax liability. The actual credit amount amounts to 50% of the covered retraining expenses up to $500 per full-time employee per program. The maximum annual credit per employee is $1,250. Should the credit not be fully used in one year, the excess can be carried forward for 10 years.

HLB Gross Collins, P.C. has been serving some of the Southeast’s most prominent construction companies for nearly 50 years. Our Construction Practice works closely with clients to ensure they are taking advantage of all available credits and savings opportunities.

A Health Checklist for your Benefit Plan

As we are approaching the end of summer and the beginning of fall planning, have you considered the health of your employee benefit plan in your list of to-do’s? A study published by Fidelity Investments entitled 2017 Plan Sponsor Attitudes, showed that approximately 40% of companies in North America are not confident in their understanding of plan fiduciary responsibilities. However, a continued rise in seeking professional third party assistance to consult on benefit plans design and performance, showed approximately 90% of plan sponsors are considering hiring new retirement plan advisors and implementing plan design changes to meet the ever changing requirements of the Department of Labor (“DOL”) and the 1974 Employee Retirement Income Security Act (ERISA).

So, where does this leave you with your company’s plan and fiduciary responsibilities, as the plan sponsor? Let’s review some of the top areas where you should do a health assessment, to ensure your plan is dotting its I’s and crossing its T’s to a clean bill of health.

Understanding Your Fiduciary Duty

As the plan sponsor, it is your fiduciary duty to be educated on your roles and responsibilities with monitoring the administration of your company’s employee benefit plan.

  • All plan documents are up to date: your adoption agreement, plan document and summary plan description should be reviewed by your ERISA legal counsel to ensure these documents are complying with the latest requirements of the Internal Revenue Service (“IRS”) and the DOL ERISA regulations.
  • Ensure you understand all options established in your plan adoption agreement and plan document, including knowing:
    • When/how employees can enter the plan
    • Types of allowable contributions (Roth, rollovers, etc.)
    • Vesting schedule for participants
    • Employer matching calculation,
    • Safe harbor provisions in your plan, if any
    • Loans provisions: if they are allowed in the plan, the limits on them (number of loans allowed and total balances to be loaned)
    • How/when benefits can be paid from the plan, including when terminated participants can have deemed distributions from the plan through payment of balances remaining <=$5,000 or automatic rollovers of balances <=$5,00
  • Verifying your 3rd party service providers are fulfilling their contractual obligations
    • Are the Form 5500 filings being completed and filed timely (due by July 31st with extension to October 15th)
    • Are all appropriate annual disclosures being provided to all participants in the plan
      • Summary Plan Description
      • Summary of Material Modification
      • Employee plan statements
      • Summary annual reports of the plan
      • Black out notices
      • Auto enrollment forms, as applicable
  • Ensuring timely and consistent contributions are done to the plan
    • DOL rules require that an employer deposit deferrals to the plan as soon as the employer can; however, in no event can the deposit be later than the 15th business day of the following month. Rules about the 15th business day are not a safe harbor for depositing deferrals; rather, these rules set the maximum deadline for remitting contributions. As an exception, the DOL provides a 7-business-day safe harbor rule for employee contributions to plans with fewer than 100 participants
  • Ensure you know your plan Trustee and what rights they have over the plan’s assets. Under ERISA Section 403(a)there are two types of plan trustees
    • Directed Trustee: holds plan assets but does not control them; they act with direction from a named fiduciary (i.e.-plan sponsor or an investment manager). A directed trustee also has fiduciary responsibility and liability for monitoring the timing of deposits, transactions activity, as well as accuracy and compliance with regulations under the DOL and IRS.
    • Discretionary Trustee: has exclusive authority and discretion to manage and control plan assets. A discretionary trustee has fiduciary responsibility and liability for the selection, monitoring, and replacement of plan assets
  • Understand who your parties-in-interest are to the plan and ensure no inappropriate agreements and/or dealings are undertaken to result in a prohibited transaction
  • Verify the plan’s fidelity bond is up to date on coverage
    • The rule under Section 1112 of ERISA is: a Plan’s fidelity bond should cover at least 10% of the total assets balance, as of the beginning of the plan year, with the bond coverage being no less than $1,000 nor more than $500,000, with certain exceptions for amounts greater than $500,000
  • The plan’s fiduciary insurance coverage meets current needs, for those in a named fiduciary role for the plan, as defined under Section 402(a) of ERISA
  • Verifying all recordkeeping is up to date and maintained
  • Ensuring the plan is not committing prohibited transactions and if such are incurred, they are timely addressed through the DOL Voluntary Correction Program. Your plan’s 3rd service provider (TPA) can assist with these calculations and filings

Any further questions or guidance on best practices for employee benefit plan oversight, please contact our ERISA plans segment leader at lmadajewski@grosscollins.com or 678-306-1222

IRS Guidance for Those Affected by Natural Disasters

For September’s National Preparedness Month, the Internal Revenue Service is offering advice to taxpayers who may be affected by storms, fires, floods or other disasters. After the devastation of Hurricane Harvey and with Hurricane Irma threatening parts of the U.S. and Caribbean, the IRS reminds taxpayers that the agency is here to help, including offering a special toll-free number to taxpayers in federally-declared disaster areas that’s staffed with IRS specialists trained to handle disaster-related issues.

Managed and sponsored by the Federal Emergency Management Agency (FEMA) and the Ready Campaign, National Preparedness Month encourages individuals, businesses and organizations to prepare for a variety of disaster and emergency situations.

Create Electronic Copies of Key Documents
Taxpayers can help themselves by keeping a duplicate set of key documents, including bank statements, tax returns, identifications and insurance policies in a safe place. Store them in a waterproof container and away from the original set.

Doing so is easier now that many financial institutions provide statements and documents electronically, and much financial information is available on the Internet. Even if the original documents are only provided on paper, these can be scanned into an electronic format. This way, taxpayers can download them to a storage device such as an external hard drive or USB flash drive, or burn them to a CD or DVD.

Document Valuables
It’s a good idea to photograph or videotape the contents of any home, especially items of higher value. Documenting these items ahead of time will make it easier to quickly claim any available insurance and tax benefits after the disaster strikes. The IRS has a disaster loss workbook, Publication 584, which can help taxpayers compile a room-by-room list of belongings.

Photographs can help an individual prove the fair market value of items for insurance and casualty loss claims. Ideally, photos should be stored with a friend or family member who lives outside the area.

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

Don’t Forget to Update Emergency Plans
Because a disaster can strike any time, be sure to review emergency plans annually. Personal and business situations change over time as do preparedness needs. When employers hire new employees or when a company or organization changes functions, plans should be updated accordingly and employees should be informed of the changes. Make plans ahead of time and be sure to practice them.

IRS Ready to Help
In the case of a federally-declared disaster, an affected taxpayer can call 866-562-5227 to speak with an IRS specialist trained to handle disaster-related issues.

Back copies of previously-filed tax returns and all attachments, including Forms W-2, can be requested by filing Form 4506, Request for Copy of Tax Return. Alternatively, transcripts showing most line items on these returns can be ordered through the Get Transcript link on IRS.gov, by calling 800-908-9946 or by using Form 4506T-EZ, Short Form Request for Individual Tax Return Transcript, or Form 4506-T, Request for Transcript of Tax Return.

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