To clarify, for purposes of this article we are not talking about the phone book. Instead, we are talking about a generally accepted standard for audits that goes by many names including Government Auditing Standards, Generally Accepted Government Audit Standards, GAGAS, and the Yellow Book.
The Yellow Book was actually created by the Government Accountability Office as a guide for their own auditors. In 1984 the Single Audit Act was passed by Congress with the purpose of reducing the number of audits that federal grant recipients had to endure. Before this Act, it was common that a grant recipient was audited by various auditors in a short time span. Through this process, generally accepted government auditing standards became synonymous with the Yellow Book.
Do Yellow Book standards apply to your organization? Well, that depends. The Yellow Book has to be required by something external to it. It may be called forth by law, policy or your organization’s bylaws. However, even if not required to, some auditors prefer to follow GAGAS when performing government program audits.
What does my organization need to know? In the end, it remains your responsibility (not the auditor’s) to determine whether or not your organization is subject to a Yellow Book audit. Ensure that you are familiar with your policies, grants and contracts to ensure that you are meeting government auditing standards, and if you have questions about where to look or what to look for, feel free to contact one of the Bergan Paulsen team members.
Thursday, January 12, 2012
Monday, January 9, 2012
Form 1099 Filing Requirements
The Internal Revenue Service requires nonprofit organizations to issue a Form 1099 for each person to whom you paid at least $600 during the year. Payments include rents, services (including parts and materials), prizes and awards, other income payments, medical and health care payments and gross proceeds to an attorney. This is required whether these payments are spread out over the course of the year or are paid in one lump sum.
Exceptions
This form is generally not required to be issued to incorporated businesses. However, payments made corporations for medical and health services and attorney fees must be issued whenever payments exceed $600.
Rents and Medical and Health Care Payments
Rents include real estate rentals paid for office space (unless paid to a real estate agent), and machine rentals (for example, renting a bulldozer to level your parking lot).
Medical and health care payments include payments to each physician or other supplier or provider of medical or health care services. The exemption from issuing a 1099-MISC to a corporation does not apply to payments for medical or health care services provided by corporations. However, you are not required to report payments made to a tax-exempt hospital or extended care facility or to a hospital or extended care facility owned and operated by the United States, a state, the District of Columbia, or any of their political subdivisions, agencies, or instrumentalities.
Required information
In order to file an accurate 1099, the following information must be obtained:
Penalties
The penalty for failure to file Form 1099 can be as much as 50% of the amount paid for services. The responsibility for filing the Form 1099 is on the organization paying for the services. It is the responsibility of the individual/business receiving the Form 1099 to handle it properly on their income tax return.
New Form 990 Filing Thresholds
Required to File: If gross receipts are: And if total assets are:
Form 990-N Normally less than $50,000. N/A
Form 990-EZ Greater than $50,000 and less than $200,000 Less than $500,000
Form 990 $200,000 or greater $500,000 or greater
These filing requirements have changed significantly from prior years. Allow the staff at Bergan Paulsen to assist you in determining which form your organization may be required to file. Our team of experts can review your information to determine if you should issue Form 1099, and what Form 990 must be filed. In addition, we can prepare and file your 1099s and 990.
Related Articles: Information Returns (W-2s & 1099s) - Are You Complying?
Exceptions
This form is generally not required to be issued to incorporated businesses. However, payments made corporations for medical and health services and attorney fees must be issued whenever payments exceed $600.
Rents and Medical and Health Care Payments
Rents include real estate rentals paid for office space (unless paid to a real estate agent), and machine rentals (for example, renting a bulldozer to level your parking lot).
Medical and health care payments include payments to each physician or other supplier or provider of medical or health care services. The exemption from issuing a 1099-MISC to a corporation does not apply to payments for medical or health care services provided by corporations. However, you are not required to report payments made to a tax-exempt hospital or extended care facility or to a hospital or extended care facility owned and operated by the United States, a state, the District of Columbia, or any of their political subdivisions, agencies, or instrumentalities.
Required information
In order to file an accurate 1099, the following information must be obtained:
- Name as shown on income tax return
- Business name, if different
- Type of organization
- Address
- Taxpayer Identification Number
Penalties
The penalty for failure to file Form 1099 can be as much as 50% of the amount paid for services. The responsibility for filing the Form 1099 is on the organization paying for the services. It is the responsibility of the individual/business receiving the Form 1099 to handle it properly on their income tax return.
New Form 990 Filing Thresholds
Required to File: If gross receipts are: And if total assets are:
Form 990-N Normally less than $50,000. N/A
Form 990-EZ Greater than $50,000 and less than $200,000 Less than $500,000
Form 990 $200,000 or greater $500,000 or greater
These filing requirements have changed significantly from prior years. Allow the staff at Bergan Paulsen to assist you in determining which form your organization may be required to file. Our team of experts can review your information to determine if you should issue Form 1099, and what Form 990 must be filed. In addition, we can prepare and file your 1099s and 990.
Related Articles: Information Returns (W-2s & 1099s) - Are You Complying?
Thursday, January 5, 2012
Get to know MORE about Al Laird
We caught Al literally as he was heading out the Bergan Paulsen door. As Al reflects on his career and gears up for retirement, we chatted with him about how the accounting industry has changed over the years and what advice he has for new comers. Best of luck to you, Al, and thanks for your insight!
What are some of the more important leadership lessons you’ve learned in your career?
My attitude has always been that if someone is working, I am working too. I have made it a habit to work alongside my employees to ensure they know that if they are working late for a client, I will be right there with them!
What advice would you give someone getting out of school right now?
I would advise them to try public accounting first. I think it’s much easier to go from public to private accounting rather than vice versa.
What is the biggest change that you’ve seen in an auditor’s job over the years?
When I first started everything was done by hand and today we are nearly paperless! I used to keep the old work papers in the basement of our office and after so many years, it got to the point that I felt comfortable throwing them out. When the company came to shred them, they weighed the paper and it was 3 tons of accumulated work!
Biggest change to how Co-ops and Agribusiness entities work?
Today they are much larger organizations and with that growth have come a better caliber of employees.
What should Agribusinesses look for when choosing a CPA firm?
I think experience and expertise in your industry is important. I would also recommend really understanding both the history of the firm and the history of the people within the firm.
Why accounting? What brought you to this career and what do you like most about it?
I can’t remember a time when I ever wanted to be anything different. I have always enjoyed math, always wanted to be an accountant and I’ve enjoyed every step of my career.
Why BP? What differentiates this firm for you?
This firm has always taken a very client-centric approach. Everyone thinks more about clients than themselves and there is a general understanding that when a client succeeds, we succeed. And, I would say they take the same approach with employees.
What are some of the more important leadership lessons you’ve learned in your career?
My attitude has always been that if someone is working, I am working too. I have made it a habit to work alongside my employees to ensure they know that if they are working late for a client, I will be right there with them!
What advice would you give someone getting out of school right now?
I would advise them to try public accounting first. I think it’s much easier to go from public to private accounting rather than vice versa.
What is the biggest change that you’ve seen in an auditor’s job over the years?
When I first started everything was done by hand and today we are nearly paperless! I used to keep the old work papers in the basement of our office and after so many years, it got to the point that I felt comfortable throwing them out. When the company came to shred them, they weighed the paper and it was 3 tons of accumulated work!
Biggest change to how Co-ops and Agribusiness entities work?
Today they are much larger organizations and with that growth have come a better caliber of employees.
What should Agribusinesses look for when choosing a CPA firm?
I think experience and expertise in your industry is important. I would also recommend really understanding both the history of the firm and the history of the people within the firm.
Why accounting? What brought you to this career and what do you like most about it?
I can’t remember a time when I ever wanted to be anything different. I have always enjoyed math, always wanted to be an accountant and I’ve enjoyed every step of my career.
Why BP? What differentiates this firm for you?
This firm has always taken a very client-centric approach. Everyone thinks more about clients than themselves and there is a general understanding that when a client succeeds, we succeed. And, I would say they take the same approach with employees.
Tuesday, January 3, 2012
Information Returns (W-2s & 1099s) - Are You Complying?
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| Request a completed W-9 form to verify 1099 recipient information. |
The IRS has increased penalties for information returns (W-2s and 1099s). Penalties may be assessed for missing/incorrect taxpayer identification number (TIN), untimely filing, or using an incorrect media or format. These penalties can quickly add up to thousands of dollars.
Bergan Paulsen advises that you verify W-2 and 1099 recipient information before the returns are prepared. You may request the information by mail or electronically by sending the 1099 recipient a W-9 form to complete and return. In the case of a W-2 recipient, a W-4 should already be in their personnel file. The payee may also be contacted by phone for their information.
All communication methods must state that the recipient provide an accurate TIN number for reporting purposes or they may be subject to backup withholding. You, as the employer or payor, should document and retain the solicitations to ensure a reasonable cause defense on a penalty notice.
How do I prepare the recipient section of my 2011, 1099 forms correctly?
A business EIN must be used for a partnership, corporation, or non-disregarded Limited Liability Company (LLC). A Social Security number (SSN) must be used with an individual name (in the first name line). A Sole Proprietor must always provide his/her individual name. A Sole Proprietor may provide his/her Doing Business As (DBA) name (in the second line) in addition to the required individual name together with the matching SSN.
How is a Name/Taxpayer ID (TIN) number mismatch identified?
A Name/TIN combination is incorrect if it does not match, or cannot be found, on IRS or Social Security Administration files. For example, a Name/TIN mismatch occurs when an individual name is submitted with a TIN not associated with the individual name provided. A TIN is not interchangeable with different names.
IRS Taxpayer Identification Number (TIN) Matching
TIN matching is a pre-filing e-service that allows authorized payers the opportunity to match 1099 payee information against IRS records prior to filing information returns. The interactive TIN matching will accept up to 25 payee TIN/Name combinations on screen while bulk TIN matching will allow up to 100,000 payee TIN/Name combinations to be matched via a text file submission. You may register for this service at the e-services section on the IRS website.
Due Dates to Remember:
2011 W2 Forms :
- January 31, 2012 Provide W2s to employees
- February 29, 2012 Paper W2 & W3 forms due to the Social Security Administration
- April 2, 2012 e-filed W2 & W3 forms due to the Social Security Administration
- January 31, 2012 Provide 1099s to recipients
- February 29, 2012 Paper 1099 forms due to the IRS
- April 2, 2012 e-filed 1099 forms due to the IRS
Related Article: Form 1099 Filing Requirements
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