Year-End Tax Tips and Reporting Checklist - Tax Reporting Checklist

One of the most important ways you can lower accounting and tax fees is being proactive in providing year end information to your CPA.  The following is a checklist of important year end items:

Has this information been reported?

•    All in-house payroll
•    Voided checks
•    Employee pension information
•    Group term life adjustments
•    Tax deposits made for an amount other than the amount on the deposit notice
•    Tip allocations for TEFRA
•    Compensation adjustments paid to employees that need to be included on employee Form W-2 (i.e., charitable contributions, union dues)
•    Other amounts in Form W-2, Box 14
•    Any premiums for health and accident insurance paid by an S corporation on behalf of 2 percent shareholders/employees
•    Taxable cash and non-cash fringe benefits (i.e., personal use of a company car)
•    Third-party sick pay insurance benefits
•    Educational assistance reimbursements
•    Any dependent care services provided to employees under an employer-sponsored program
•    Identification numbers for every tax agency

Has this information been verified?

•    Employees’ names and addresses
•    Employees’ social security numbers (SSNs)
•    1099 payees’ SSNs or taxpayer ID numbers
•    Identification numbers for state and local agencies on each return

The items in these lists may seem basic, but year after year, we see that not reporting or providing inaccurate information for one or more of these items results in some of the most commonly made mistakes and creates time consuming work for the CPA; which can be avoided

 

Year-End Tax Tips and Reporting Checklist - Retirement Plans

If you are considering starting a retirement plan for your employees, doing so before the end of the year will enable you to write off some of the setup expenses, as well as enjoy the tax advantages of any plan contributions. However you do not have to start contributing until next year.

http://retireplan.about.com/od/howtobegin/a/start.htm

Year-End Tax Tips and Reporting Checklist - Transportation Benefits

It appears the current levels for transportation fringe benefits will expire in several days [at the end of 2013]. Thus the new transportation limits for 2014 would decrease from $245 per month to $130 per month for mass transit benefits and increase from $245 per month to $250 per month for qualified parking. However, Congress could make changes in the New Year, and current levels could be reinstated retroactively to January 1 as it has done many times. But for now we should assume no change in the law.

Year-End Tax Tips and Reporting Checklist - Tips vs. Service Charges

Businesses with tipped employees need to be aware of the IRS’ intent to enforce the taxability of tips and service charges. A tip is subject to special withholding rules, while a service charge is treated as any other taxable wage. Service charges should be characterized as wages and not included with tips when calculating the FICA tip credit.

New requirements for Small Business under The Employer Mandate of the Affordable Care Act

The Employer Mandate of the Affordable Care Act was extended to 2015 this past July.  However, the Department of Labor requires that a new form be sent to all employees by October 1, 2013. 

If your company has revenue greater than $500,000 and has one or more employees, a required form titled “Notice to Employees of Health Insurance Marketplace Coverage Options” must be sent to each employee which must include an analysis of whether the employer's health plan meets the "Minimum Value" and is "affordable" as defined in the IRS code. 

If you have any questions, please call our office

Man Sentenced for Dumping Dirt at Feet of IRS Officers

U.S. Magistrate Judge Thomas D. Thalken sentenced  Walter M. Trizila, age 45, to a three-year term of probation last Thursday, following a misdemeanor conviction for assault, resisting or impeding a federal officer.

 

According to prosecutors, Trizila encountered several IRS officers who were trying to seize a dump truck owned by his employer and became confrontational with them.  He then entered a front-end loader vehicle, scooped a full load of dirt into the bucket and drove directly at the IRS officers. Trizila stopped the front-end loader vehicle just short of striking an IRS officer, after which he dumped the entire load of dirt at the IRS officers’ feet and in front of the dump truck that the officers were trying to seize.

 

Is Your Company Leaving Tax Deductions on the Table?

If your company participates in a manufacturing or production process, you might be leaving money in the table

There is a deduction for the sale, lease/rental or license of production activities, officially called the “domestic production activities deduction”.  It is also called the “Section 199” or “DPAD”.  The deduction is the lesser of 9% of net qualified production activities income, 9% of taxable income or 50% of W-2 wages paid by the company to domestic production employees.  The deduction cannot reduce net income below zero, but it can be used against the AMT.  However many states including California, New York and Oregon do not allow the deduction.

The deduction is limited to production activities in the US and is available for the following:

(1)  Oil & gas production

(2)  Agricultural processing (i.e. farmers) including cooperatives

(3)  Manufacturers

(4)  Construction

(5)  Engineering

(6)  Architecture

(7)  Computer software production

(8)  Motion picture production

(9)  Music production

The following example was used in a Congressional hearing defines what is and is not a qualified domestic production activity:  “Suppose you are a baker and in the business of producing donuts. Some of the donuts you sell retail directly to the consumers, and some you sell in bulk to hotels and restaurants. The production costs of the donuts sold at retail do not qualify for the deduction, while the costs associated with the wholesale sales to the hotels and restaurants do”.

The deduction is not limited to just the manufacture or producer, but is also available to companies who outsource the manufacturing or production.  However only one company can take the deduction.  In this case, things can get a bit complicated for the company that takes the deduction and must provide documented proof of the following:

(1)  A statement that explains the basis for the taxpayer's determination that it had the benefits and burdens of ownership in the year or years under examination

(2)  A certification statement, using an IRS form, signed by both companies

If you have already taken this deduction or thinking you should, be warned this is an area the IRS loves to audit.

Please call this office if you wish more information

 

 

THE IRS TARGETS MIDDLE-MARKET COMPANIES; WHAT THEY NEED TO KNOW

Because of the IRS’ new responsibility to enforce the employer mandated health care provisions of the ”Affordable Care Act” and other issues,  it appears the IRS is going to start targeting  Middle Market companies for audit.   

The audits will be performed by the Large Business International Division (LB&I Division) which is responsible for audits of the Fortune 1000 companies.  However the LB&I Division is also responsible for audits of companies with assets of $10 million to $100 million which is the typical size of companies considered to be midsized.  Because of limited resources and the historical focus on the Fortune 1000 there has been lighter coverage of middle-market in the past.  But no more, attention, resources and expertise are being shifted to the middle-market sector. This means more middle-market companies will be audited.

Normally middle-market companies do not have the same resources as the Fortune 1000 and are not as aware of IRS audit procedure or their rights as a taxpayer.   Many have an outside CPA that prepare the tax return and advise the owner or officers of tax and accounting issues.  However they will be faced with seasoned IRS auditors who are used to have immediate access to records and the tax professional during the audit.  This can cause significant issues during the audit for the owner and officer of the middle-market company.  Thus the middle-market company, as with all taxpayers, should assess their resources to see what is need to be prepared and which audit defense resources can be utilized.

The time to prepare for an audit is not when you get the audit notice, but when your tax return is prepared.   So if you have not thought of the possibility of being audited, this is a good time to have a conversation to see what needs to be done.  Normally, if a company is prepared for an audit before they receive the audit notice, an audit should never be a problem.

MANDATORY HEALTH INSURANCE WILL BEGIN IN 2014

Beginning in 2014 the Patient Protection & Affordable Care Act (the health care legislation sometimes known as Obama Care) will impose the new requirement that U.S. persons, with certain exceptions, have minimal, essential health care insurance.

A minimum essential health care policy is one in which the insurer pays 60% of the average medical expenses incurred by an average person over the course of one year.

How this will affect your family will depend upon a number of issues:

Already insured - If you will already be insured through an employer plan, Medicare, Medicaid, the Veterans Administration, or a private plan that provides minimal, essential care, then you will not be subject to any penalties under this new law.

Exempt from the mandatory insurance requirement - The following individuals will be exempt from the insurance mandate and will not be subject to a penalty for being uninsured:

·    Individuals who have a religious exemption

·    Those not lawfully present in the United States

·    Incarcerated individual

·    Those who cannot afford coverage based on formulas contained in the law

·    Those who have income below the federal income tax filing threshold

·    Those who are members of Indian tribes

·    Those who were uninsured for short coverage gaps of less than three months

·    Those who have received a hardship waiver from the Secretary of Health and Human Services, who are residing outside of the United States, or who are bona fide residents of any possession of the United States.

Cannot afford coverage - Individuals and families whose household income is between 100% and 400% of the federal poverty level will qualify for a varying amount of subsidy to help pay for the insurance in the form of a Premium Assistance Credit. To qualify for that credit, the insurance must be acquired from an American Health Benefit Exchange operated by the individual or family’s state, or by the Federal Government. These exchanges are scheduled to be up and running as of October 1, 2013, and the policies purchased through them will be effective as of January 1, 2014.

It is important to note that the subsidy is really just a tax credit based upon family income. It can be estimated in advance and used to reduce the monthly insurance premiums; it can be claimed as a refundable credit on the tax return for the year; or it can be some combination of both. However, it is based upon the current year’s income and must be reconciled on the tax return for the year. If too much was used as a premium subsidy, it must be repaid. If there is excess, it is refundable.

If household income is below 100% of the poverty level, the individual or family qualifies for Medicaid.

Penalty for noncompliance - The penalty for noncompliance will be the greater of either a flat dollar amount or a percentage of income:

·    For 2014, $95 per uninsured adult ($47.50 for a child) or 1 percent of household income over the income tax filing threshold

·    For 2015, $325 per uninsured adult ($162.50 for a child) or 2 percent of household income over the income tax filing threshold

·    For 2016 and beyond, $695 per uninsured adult ($347.50 for a child) or 2.5 percent of household income over the income tax filing threshold.

Flat dollar amounts - The flat dollar amount for a family will be capped at 300% of the adult amount. For example, the maximum in 2016 for a family will be $2,085 (300% of $695). The child rate will apply to family members under the age of 18.

Overall penalty cap - The overall penalty will be capped at the national average premium for a minimal, essential coverage plan purchased through an exchange. This amount won’t be known until a later date.

If you have any questions as to how this new insurance requireme

GET CREDIT FOR GENERATING YOUR OWN HOME POWER

Through 2016, taxpayers can get a 30% tax credit on their federal tax returns for installing certain power-generating systems in their homes. The credit is non-refundable, which means it can only be used to offset a taxpayer’s current tax liability, but any excess can be carried forward to offset tax through 2016.

Systems that qualify for the credit include:

·    Solar water-heating system - Qualifies if used in a dwelling unit used by the taxpayer as a main or second residence where at least half of the energy used by the property for such purposes is derived from the sun. Heating water for swimming pools or hot tubs does not qualify for the credit. The property must be certified for performance by the Solar Rating Certification Corporation or a comparable entity endorsed by the state government where the property is installed.

·    Solar electric system - Qualified system that uses solar energy to generate electricity for use in a dwelling unit located in the U.S. and used as a main or second residence by the taxpayer.

·    Fuel cell plant - This is a fuel cell power plant installed in the taxpayer’s principal residence that converts a fuel into electricity using electrochemical means. It must have an electricity-only generation efficiency of greater than 30% and generate at least 0.5 kilowatt of electricity. The credit is 30% of qualified fuel cell expenditures but limited to $500 for each 0.5 kilowatt of the fuel cell property’s capacity to produce electricity.

·    Qualified small wind energy - A wind turbine used to generate electricity for use in connection with a dwelling unit used as a main or second residence by the taxpayer

·    Qualified geothermal heat pump - Must use the ground or ground water as a thermal energy source to heat the dwelling unit or as a thermal energy sink to cool the dwelling unit, and must meet the Energy Star program requirements in effect when the expenditure is made. The dwelling unit must be used as a main or second residence by the taxpayer.

 

Other aspects of the credit:

·    Limited carryover - The credit is a non-refundable personal credit, which limits the credit to the taxpayer’s tax liability for the year. However, the portion of the credit that is not allowed because of this limitation may be carried to the next tax year and added to the credit allowable for that year. Thus, the credit carryover is available through 2016 (the final year for the credit).

·    Installation costs - Expenditures for labor costs allocable to onsite preparation, assembly, or original installation of property eligible for the credit, as well as for piping or wiring connecting the property to the residence, are expenditures that qualify for the credit.

·    Swimming pool - Expenditures that are for heating a swimming pool or hot tub are not taken into account for purposes of the credit.

·    Newly constructed homes - The credit can be taken for newly constructed homes if the costs of the residential energy-efficient property can be separated from the home construction and the required certification documents are available.

Certification - A taxpayer may rely on a manufacturer's certification that a product is a Qualified Energy Property. A taxpayer is not required to attach the certification statement to the return on which the credit is claimed. However, taxpayers are required to retain the certification statement as part of their records. The certification statement provided by the manufacturer may be a written copy of the statement that is posted on the manufacturer’s website with the product packaging details in printable form or in any other manner that will permit the taxpayer to retain the certification statement for tax recordkeeping purposes.

Installation costs - Costs for labor allocable to onsite preparation, assembly, or original installation of the residential energy-efficient property are includible.

If you have questions about how you can benefit from this credit, please give this office a call.

Documenting Charitable Contributions

In recent years Congress has passed stringent recordkeeping rules for charitable contributions and harsh penalties fir understating taxable income.  The following recordkeeping rules, though not all-inclusive, should be a good guideline.  .

Cash Contributions - Cash contributions include those paid by cash, check, electronic funds transfer, or credit card (see special requirements for payroll cash contributions). You cannot deduct a cash contribution, regardless of the amount, unless you can document the contribution in one of the following ways.

1. A bank record that shows the name of the qualified organization, the date of the contribution, and the amount of the contribution. Bank records may include:

(a)  A canceled check

(b)  A bank or credit union statement, or

(c’)  A credit card statement.

2. A receipt (or a letter or other written communication) from the qualified organization showing the name of the organization, the date of the contribution, and the amount of the contribution.

As a result, if you drop cash into a church collection plate each week at a worship service, you cannot legally deduct that donation on your tax return. The same goes for dropping a cash donation into the Christmas kettle. Instead, you should write a check to the charitable organization of your choice and put the check into the collection plate, or make other arrangements with the organization for giving your tax-deductible contribution to ensure that a bank record, receipt, or letter is provided.

Payroll Contributions - For contributions made by payroll deduction, you must keep:

1. A pay stub, W-2 form, or other document provided by your employer that shows the date and amount of the contribution, and
2. A pledge card or other document prepared by or for the organization to which you are donating that shows the name of this organization. If the employer withheld $250 or more from a single paycheck, the pledge card or other document must state that the organization does not provide goods or services in return for any contribution made to it by payroll deduction. A single pledge card may be kept for all contributions made by payroll deduction, regardless of the amount, as long as it contains all of the required information.

If the pay stub, W-2 form, pledge card, or other document does not show the date of the contribution, you must also have another document that does show the date of the contribution. If the pay stub, W-2 form, pledge card, or other document does show the date of the contribution, you need not keep any other records except those described in (A) and (B).

Non-Cash Contributions - Non-cash contributions include the donation of property, such as used clothing or furniture, to a qualified charitable organization.

Deductions of Less than $250 - If you claim a non-cash contribution of less than $250, you must get and keep a receipt from the charitable organization showing:

1. The name of the charitable organization,
2. The date and location of the charitable contribution, and
3. A reasonably detailed description of the property that was donated.

 

You are not required to have a receipt if it is impractical to get one (for example, if the property was left at a charity’s unattended drop site). However, you still must document the contribution as described above.

Deductions of at Least $250 but Not More than $500 - If you claim a deduction of at least $250 but not more than $500 for a non-cash charitable contribution, you must have and keep an acknowledgment of the contribution from the qualified organization. If the contributions were made in more than one donation of $250 or more, you must have either a separate acknowledgment for each or one acknowledgment that shows the total contribution. The acknowledgment(s) must be written and should include the following:

1. The name of the charitable organization,
2. The date and location of the charitable contribution,
3. A reasonably detailed description (but not necessarily the value) of any property contributed,
4. Whether or not the qualified organization gave you any goods or services as a result of the contribution (other than certain token items and membership benefits), and
5. If goods and/or services were provided to you, the acknowledgement must include a description and good faith estimate of the value of those goods or services. If the only benefit received was an intangible religious benefit (such as admission to a religious ceremony) that generally is not sold in a commercial transaction outside the donative context, the acknowledgment must say so and does not need to describe or estimate the value of the benefit.

Deductions of over $500 but Not over $5,000 - If you claim a deduction of over $500 but not over $5,000 for a non-cash charitable contribution, you must get and keep the same acknowledgement and written records as for contributions of at least $250 but not more than $500 (as described above).

In addition, the records must also include:

1. How the property was obtained (for example, by purchase, gift, bequest, inheritance, or exchange).
2. The approximate date the property was obtained or, if you created, produced, or manufactured the item, the approximate date the property was substantially completed.
3. The cost or other basis, and any adjustments to the basis, of property held for less than 12 months and, if available, the cost or other basis of property held for 12 months or more. This requirement, however, does not apply to publicly-traded securities. If you are not able to provide information on either the date the property was obtained or the cost basis of the property, and there is reasonable cause for not being able to provide this information, a statement of explanation must be attached to the return.

Deductions over $5,000 - Because of special rules related to contributions over $5,000, please call this office for documentation requirements of the particular contribution before making the contribution.

Out-of-Pocket Expenses - If you render services to a qualified organization and have unreimbursed out-of-pocket expenses related to those services, the following three rules apply.

1. You must have adequate records to prove the amount of the expenses.
2. You must get an acknowledgment from the qualified organization that contains:
a. A description of the services provided,
b. A statement of whether or not the organization provided you with any goods or services to reimburse you for the expenses incurred,
c. A description and good faith estimate of the value of any goods or services (other than intangible religious benefits) provided as reimbursement, and
d. A statement that the only benefit received was an intangible religious benefit, if that was the case. The acknowledgment does not need to describe or estimate the value of an intangible religious benefit.

3. The acknowledgement must be obtained before the earlier of the following:
a. The date of filing the return for the year in which the contribution was made, or
b. The due date, including extensions, for the return.

Car Expenses - When you claim expenses directly related to the use of your car to provide services to a qualified organization, you must keep reliable written records. Whether the records are considered reliable depends on the facts and circumstances. Generally, your records will likely be considered reliable if made regularly and/or near the time the expense was incurred. The records must show the name of the organization being served and the date each time the car was used for a charitable purpose. If the standard mileage rate of 14 cents per mile is used, the records must show the miles driven for the charitable purpose.

If you deduct actual expenses, the records must show the costs of operating the car that are directly related to a charitable purpose. General repairs and maintenance expenses, depreciation, registration fees, or the costs of tires or insurance cannot be deducted.

Vehicle Donations - When the deduction claimed for a donated vehicle exceeds $500, IRS Form 1098-C (or another statement containing the same information as Form 1098-C) furnished by the charitable organization must be attached to your filed tax return. Without the 1098-C or other statement, no deduction is allowed. When the charity sells the vehicle, Form 1098-C (or other statement) must be obtained within 30 days of the sale of the vehicle.

CAUTION: With the exception of vehicle contributions, charitable gift acknowledgements must be obtained before the earlier of the following:

1. The date on which your return was filed for the year in which you made the contribution, or
2. The due date, including extensions, for filing the return.

If you have questions regarding charitable recordkeeping or what is deductible as a charitable contribution, please give our office a call.

SUPREME COURT’S DOMA RULING HAS IMPORTANT TAX IMPLICATIONS

Some of the implications of the Supreme Court’s DOMA ruling are obvious, while others are not.  For starters, same-sex married couples will now be able to make decisions regarding filing a joint return that were previously denied them.  In an odd way this is going to bring equality in the tax code.  Before the court’s ruling, a same sex couple was required to file single, however in tax resolution cases when one person owes back taxes, the IRS treated the couple as married if they lived in community property states like California.  The ability to pay by the delinquent partner was increased by 50% of the income and assets of the other partner

The distinction between married and unmarried status is pervasive in federal tax law, even though the code does not define such terms as husband, wife or married.  The issue comes into play in connection with income tax rates, the treatment of capital losses, credits for the elderly and disabled, taxation of Social Security benefits, and a number of other provisions.

Marital status also plays a key role in the estate and gift tax laws and in the part of the tax code dealing with taxation on the sale of property.  For estate tax purposes, property transferred to one spouse as the result of the death of another spouse is deductible for purposes of determining the value of the decedent’s estate.  In the case heard by the court, U.S. v. Windsor, Windsor owed more than $363,000 in federal estate tax on her wife’s estate, since she was not covered by the spousal deduction. She would have owed zero estate tax with the benefit of the spousal deduction.

Moreover, gifts from one spouse to another are deductible for purposes of the gift tax, and gifts from one spouse to a third party are deemed to be from both spouses equally. Transfers of property from one spouse to another or to a former spouse if the transfer is incident to a divorce are permitted without any recognition of gain or loss. These provisions permit married couples to transfer substantial sums to one another, and to third parties, without tax liability in circumstances in which single taxpayers would not enjoy the same privilege. 

Another implication is the IRS will have their hands full processing mountains of amended tax returns; amending returns from same sex couples who originally filed single.

 

THE INTERNET TAX, THE GOOD, BAD AND UGLEY

Part II

In my last blog on this issue I give a general over view of the federal Marketplace Fairness Act, also referred to as the internet sales tax bill, and of the “Sales and Use Tax” law.  At that time the bill passed the US Senate and was working its way through the US House of Representatives.  Recently the Speaker of the House, John Boehner (R-OH), referred the bill to the House Committee on the Judiciary and the Committee Chairman, Bob Goodlatte (R-VA), announced his committee will not take up the bill.  So at this point it looks like the bill will die in committee and it is not something we need to worry about.  I will keep you up to date if things change.

However this does not relieve the small business owner from being concerned about sales tax in other states.  The current law requires a business to collected sales tax in other states if there is a business presence in those states.  A business presence is not only established by having a physical office or store but a business presence can also be established by other means, like print advertising or establishing a business relationship with a independent repairman to service warranty claims.

If you sell a product or service out of state, I encourage you to have a review of your potential sales tax liability to see if you have or have not a business presence out of state.

If you have any questions, please call this office to see if you have any reason for concern

WEEKEND VULNERABILITY AND PATCH REPORT

June 2, 2013

The following software vulnerabilities and updates were announced by Citadel Information Group.  They strongly recommend that readers update their computers and take other action as indicated.  This is from an e-mail received from Stan Stahl, Ph.D. [www.citadel-information.com] and posted with his approval.

Important Security Updates

Dropbox: Dropbox has released version 2.0.22 of Dropbox. Updates are available from within the program or download from the Dropbox website. 

RoboForm: Siber Systems has released version 7.8.9.5 of Roboform. Updates are available from within the program, look for the "Check New Version" button on the Options menu or from the Roboform website.

Yahoo! Browser for Android: Yahoo! has released version 1.4.5 of its browser for the Android. Updates are available through the device.

Current Software Versions

Adobe Flash 11.7.700.202 [Windows 7: IE9, Firefox, Mozilla, Netscape, Opera]

Adobe Flash 11.7.700.202 [Windows 8: IE]

Adobe Flash 11.7.700.202 [Macintosh OS X: Firefox, Opera, Safari]

Adobe Reader 11.0.03

Dropbox 2.0.22 [Citadel warns against relying on Dropbox security. We recommend files containing sensitive information be independently encrypted with a program like Axcrypt; encryption keys be at least 15 characters long; and the Dropbox password be at least 15 characters long and different from other passwords.]

Firefox 21 [Windows]

Google Chrome 27.0.1453.94

Internet Explorer 10.0.9200.16521 [Windows 7: IE]

Internet Explorer 10.0.9200.16519 [Windows 8: IE]

Java SE 7 Update 21 [Citadel recommends removing or disabling Java from your browser. Java is a major source of cyber criminal exploits. It is not needed for most internet browsing. If you have particular web sites that requires Java, Citadel recommends using a two-browser approach to minimize risk. If you normally browse the Web with Firefox, for example, disable the Java plugin in Firefox and use an alternative browser - such as Chrome, IE9, Safari, etc - with Java enabled to browse only the sites that require it.]

QuickTime 7.7.4

Safari 5.1.7  [Windows]

Safari 6.0.4 [Mac OS X]

Skype 6.3.0.105

Newly Announced Unpatched Vulnerabilities

None

For an updated list of previously announced Unpatched Vulnerabilities, please see the resources section of Citadel's website.

For Your IT Department

Cisco Nexus 1000V: Secunia reports at least 6 unpatched vulnerabilities in Cisco's Nexus 1000V switch. No official solution is currently available.

Novell Client: Secunia reports 2 separate unpatched vulnerabilities within Novell's Client; one refers to the VERIFY_KEY and the second refers to REQUEST_REPLY. No official solution is currently available.

VMware ESX Server: Secunia reports a partial fix to address two vulnerabilities in VMware's ESX Server, reported in versions 4.0 and 4.1. Apply the patch if available.

If you are responsible for the security of your computer, Citadel's Weekend Vulnerability and Patch Report is for you. We strongly urge you to take action to keep your workstation patched and updated.

If someone else is responsible for the security of your computer, forward our Weekend Vulnerability and Patch Report to them and follow up to make sure your computer has been patched and updated.

Vulnerability management is a key element of cyber security management. Cyber criminals take over user computers by writing computer programs that "exploit" vulnerabilities in operating systems (Windows, Apple OS, etc) and application programs (Adobe Acrobat, Office, Flash, Java, etc). When software companies find a vulnerability, they usually issue an update patch to fix the code running in their customer's computers.

Citadel publishes our Weekend Vulnerability and Patch Report to alert readers to some of the week's important updates and vulnerabilities. Our focus is on software typically found in the small or home office (SOHO) or that users are likely to have on their home computer. The report is not intended to be a thorough listing of updates and vulnerabilities.

Copyright © 2013 Citadel Information Group. All rights reserved.

THE INTERNET TAX, THE GOOD, BAD AND UGLEY

Part I

 

There is a lot of discussions concerning the “Internet Tax” as passed by the US Senate.  Unfortunately, much of the conversation about the tax is not completely accurate.  I am not necessary taking a position on the “Internet Tax”, but we need to have a correct idea as to what the issues are.  Thus I over the next several weeks, as part of my blog, I am going to have weekly updates about the tax.  I will explain what the tax is all ablaut and how it could affect all Taxpayers. 

Most people are aware of sales tax which is dictated by each state’s “Sales Tax” law; there are 50 states, thus 50 different laws, many are not in conformity.  In California, sales tax is only charged on the sales of merchandise; however New York also charges tax on services.  Some states charge tax on the delivery of merchandise, but other states do not.  Creating and mailing invoices by a billing company is not taxable in California but it is in New York. There are some states that do not have a sales tax.  Currently, sales tax is imposed only on where the product is sold and if the seller has a business presence in the same state.  If the purchase occurs over the internet and the seller does not have a business presence in the state the purchase occurred, then sales tax is not charged.

Most people on the other hand are not aware that states that have a “Sales Tax” also have a “Use Tax”.  “Use Tax” requires the purchaser to pay a tax for using the product in the state when tax is not charged.  Consequently if sales tax is collected no use tax is required, if no sales tax is collected, then use tax is required.  States that have a sales tax requires the individual to report purchases where no sales tax is paid and remit use tax on those purchases.  Many times this is done on the individual’s state’s income tax return.  On the California personal income tax return (from 540) this is reported on line 95 of page 2, for New York, it is line 59, page 3.  However most people do not understand this and thus it is ignored.  Even many professional tax preparers are not aware and do not understand “Sales and Use Tax” laws.

Even though the above is a brief explanation of the “Sales and Use Tax” laws, as you might gather it can be difficult to totally understand and to administer.  The sad truth is “brick and mortar” business are losing sales to large internet sales companies like Amazon who do not collect sales tax, thus the purchaser can buy product at a perceived discount.  It is not uncommon for a person to go into a “brick and mortar” business try on clothes or look at products they wish to purchase, then go home and buy clothes or products over the internet.  This has resulted in many “brick and mortar” business to go out of business.  Many Borders book stores have closed their doors.  This is especially hard on small business. The states also lose a lot of tax revenue this way.   The “Internet Tax” is an attempt to correct this.  However is it a good, bad or just ugly like many of our tax laws are.

 

My future Blog posts will closely look at the proposed law and the changes that are proposed as it goes through the sausage mill in congress.

 

 

WEEKEND VULNERABILITY AND PATCH REPORT

May 26, 2013

The following software vulnerabilities and updates were announced by Citadel Information Group.  They strongly recommend that readers update their computers and take other action as indicated.  This is from an e-mail received from Stan Stahl, Ph.D. [www.citadel-information.com] and posted with his approval.

Important Security Updates

Apple QuickTime: Apple has released version 7.7.4 of QuickTime to fix at least 12 vulnerabilities, some of which are highly critical.  Updates are available from within the program or Apple's website. 

Google Chrome: Google has released version 27.0.1453.93 of Chrome. Updates are available through the browser or Google's website. See unpatched vulnerabilities below in versions prior to 27.0.1453.93.

Current Software Versions

Adobe Flash 11.7.700.202 [Windows 7: IE9, Firefox, Mozilla, Netscape, Opera]

Adobe Flash 11.7.700.202 [Windows 8: IE]

Adobe Flash 11.7.700.202 [Macintosh OS X: Firefox, Opera, Safari]

Adobe Reader 11.0.03

Dropbox 1.6.11 [Citadel warns against relying on Dropbox security. We recommend files containing sensitive information be independently encrypted with a program like Axcrypt; encryption keys be at least 15 characters long; and the Dropbox password be at least 15 characters long and different from other passwords.]

Firefox 21 [Windows]

Google Chrome 27.0.1453.93

Internet Explorer 10.0.9200.16521 [Windows 7: IE]

Internet Explorer 10.0.9200.16519 [Windows 8: IE]

Java SE 7 Update 21 [Citadel recommends removing or disabling Java from your browser. Java is a major source of cyber criminal exploits. It is not needed for most internet browsing. If you have particular web sites that requires Java, Citadel recommends using a two-browser approach to minimize risk. If you normally browse the Web with Firefox, for example, disable the Java plugin in Firefox and use an alternative browser - such as Chrome, IE9, Safari, etc - with Java enabled to browse only the sites that require it.]

QuickTime 7.7.4

Safari 5.1.7  [Windows]

Safari 6.0.4 [Mac OS X]

Skype 6.3.0.105

Newly Announced Unpatched Vulnerabilities

Google Chrome: Secunia reports at least 27 highly critical unpatched vulnerabilities in versions prior to 27.0.1453.93 of Google's Chrome. No patches are available at this time. Update to version 27.0.1453.93 of Chrome. 

For an updated list of previously announced Unpatched Vulnerabilities, please see the resources section of Citadel's website.

If you are responsible for the security of your computer, Citadel's Weekend Vulnerability and Patch Report is for you. We strongly urge you to take action to keep your workstation patched and updated.

If someone else is responsible for the security of your computer, forward our Weekend Vulnerability and Patch Report to them and follow up to make sure your computer has been patched and updated.

Vulnerability management is a key element of cyber security management. Cyber criminals take over user computers by writing computer programs that "exploit" vulnerabilities in operating systems (Windows, Apple OS, etc) and application programs (Adobe Acrobat, Office, Flash, Java, etc). When software companies find a vulnerability, they usually issue an update patch to fix the code running in their customer's computers.

Citadel publishes our Weekend Vulnerability and Patch Report to alert readers to some of the week's important updates and vulnerabilities. Our focus is on software typically found in the small or home office (SOHO) or that users are likely to have on their home computer. The report is not intended to be a thorough listing of updates and vulnerabilities.

Copyright © 2013 Citadel Information Group. All rights reserved.