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Volume 5, Issue 7, July 2007

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After All, It's Your Money...

At Kemper CPA Group LLP, we understand the importance of money. We also understand the impact value has on your buying decisions. Right now, it seems as if everything we purchase, whether that is a gallon of gas, a loaf of bread, or a pair of shoes, costs more than it used to. You might wonder whether the value of those items has increased along with the cost. We all work very hard for our money, after all, and it would be nice to know that the things we buy will work hard as well.

One thing to be certain of is that the partners and staff at Kemper CPA Group LLP will work hard to ensure we provide value to you when you purchase our services.

What does that mean?

It means we will work hard to meet your needs in as efficient a manner as possible. We will use our time wisely, while maintaining high moral, ethical and professional standards, and we will keep your best interest in mind. We are honored that you have placed your trust with us, and we will try to reward that trust with the service you deserve.

After all, it’s your money!

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Small Business and Work Opportunity Tax Act of
2007 – Incentives for Small Businesses

The Small Business and Work Opportunity Tax Act of 2007 (2007 Small Business Tax Act), signed into law on May 25, 2007, contains a number of tax incentives aimed to ease the burden of an increased federal minimum wage on small businesses.

The following are among the act’s provisions:

Section 179 Expensing – Small business tax expensing is extended through 2010 and indexed for inflation. The base $100,000 limit ($112,000 with the inflation index for 2007) increases to $125,000 for tax years beginning in 2007 through 2010. For qualifying property placed into service in tax years beginning in 2007, the investment limitation is retroactively increased to $500,000 (from $450,000 in 2007) for tax years from 2007 through 2010; the $500,000 limitation is indexed for inflation after 2007 and before 2011.

Work Opportunity Tax Credit – The Work Opportunity Tax Credit (WOTC), which is designed to entice employers to hire workers from economically-challenged areas, has been extended through August 31, 2011; it had previously been set to expire on December 31, 2007. Additionally, new guidelines expand the population of veteran and high-risk youth groups who qualify for the WOTC, effective May 26, 2007.

FICA Tip Credit – The credit for FICA tax paid by employers whose employees receive tips is also impacted by the act. The new law provides that the FICA tip credit (Sec. 45B Credit), will still be based on the lower minimum wage of $5.15 per hour, instead of the new minimum wage, scheduled to increase to $7.25 over the next two years. Therefore, the increase in minimum wage will not reduce the amount of the tip credit.

Family Business Tax – Beginning in tax years after December 31, 2006, married couples who run an unincorporated business together and file a joint return can choose not to be treated as a partnership for federal tax purposes. The provision only applies when both individuals participate in the venture, and there can be no other individuals involved.

S Corporation Package – Intended to help small businesses retain their S corporation status, a number of S corp changes are included in the act. The package contains provisions that affect the treatment of: passive investment income, the partial sale of a qualified subchapter S subsidiary (QSub), interest deducted by electing small business trusts (ESBTs), the reduction of earnings and profits (E&P), and banks that operate as S corps.

The certified public accountants and consultants at Kemper CPA Group LLP are available to answer any questions you might have about the impact of the Small Business and Work Opportunity Tax Act of 2007 on your specific tax situation. Contact us today.

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Tax Exempt Organizations: Free Online Workshop

Small and mid-size tax exempt organizations can now take advantage of a free online workshop, recently launched by the IRS. The workshop, Stay Exempt – Tax Basics for 501(c)(3)s, designed to educate users about the tax compliance issues that tax exempt organizations commonly face, covers the following five areas:

Tax-Exempt Status

Unrelated Business Income

Employment Issues

Form 990

Required Disclosures

The program allows users to go back to and review each of the areas as many times as necessary, and the sections do not have to be completed in any particular order. The workshop’s website, www.stayexempt.org, also contains an informative resource library and FAQ page, and users who utilize the program can print out a certificate of completion.

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Innocent Spouse Relief Form Revised

IRS Form 8857, Request for Innocent Spouse Relief, has been redesigned. The revised version of the form combines two old forms, Form 8857 and Form 12510, Questionnaire for the Requesting Spouse, into one streamlined form. The new form is designed to help eliminate the follow-up letters normally sent by the IRS, and although it asks more questions initially, it is also designed to be more readily understood and to provide more information about the process.

Normally, when spouses file a joint return, they are jointly and individually responsible for any tax due; however, when one spouse feels that the other is solely responsible for the debt, he or she can file for Innocent Spouse relief and, under some circumstances, be relieved of the tax liability. Additional information about Innocent Spouse relief is available in the “Tax Information for Innocent Spouses” section on the IRS website.

Should you have any questions about Innocent Spouse relief or Form 8857, our certified tax professionals can help. Contact your local Kemper CPA Group LLP office for more information.

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Loose Change

The July/August 2007 issue of the “Loose Change” Newsletter includes the following articles:

Contact Kemper Capital Management LLC for all of your investing needs.

Investment advisory services offered by KCPAG Financial Advisors LLC, a registered investment advisor. Securities officered through Securities America, Inc., a registered broker/dealer. Member NASD/SIPC. Thomas A. Moore, John D. Porter, Shawna D. Horne, Jeffery C. Holt, CA insurance Lic. #0E38034, Jessica Daugherty, Joseph M. Mendes, CA Insurance Lic. #0C62535, Gregory Meador, Marcia Elder, Registered Representatives. Insurance services offered through KCPAG Insurance Services LLC. Kemper Capital Management LLC and its subsidiaries are not affiliated with Securities America.

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Portable Data Storage: Secure It!

Thanks to the ease of use and widespread availability of portable data storage devices, like USB flash drives, it is now easier and more convenient than ever to transport large amounts of data. Unfortunately, what makes a USB flash drive so convenient – its compact size and ability to hold large amounts of data – also makes it dangerous, as many people are just a misplaced sports coat or purse away from the loss of a considerable amount of valuable financial data.

Recently, our offices have seen an increase in the use of USB flash drives for the transportation of tax information and company books, and many of the data storage devices we have seen contained data that was not secured through the use of a password or proper data encryption. The information required to complete your tax forms, such as names, addresses, social security numbers, and financial account numbers, in the hands of the wrong person can result in an identity theft nightmare. Further, if the drive also contains payroll information for your employees, and it is lost or stolen, you may be held liable for damages your employees incur as a result of the misuse of their personal data.

In order to protect your business, your employees, and yourself, data contained on a portable USB flash drive should always be password protected, encrypted, and backed-up elsewhere. USB flash drives with built-in security features are generally more adaptable for use in transporting data, as the encryption software resides on the drive, not on an individual workstation or network.

If you would like additional information about the use of a secure USB flash drive, or if you have any questions about portable data storage, contact Kemper Technology Consulting today.

Kemper Technology Consulting
Robinson, IL
618-546-5633
www.kempertc.com

Evansville, IN  •  Indianapolis, IN  •  Paducah, KY  •  Effingham, IL

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Please be advised that, based upon current Internal Revenue Service (IRS) rules and standards, the advice herein is not intended to be used, nor can it be used, as the sole basis for decisions. Additional issues may exist that could affect the treatment of the individual transactions, and this narrative does not provide a conclusion with respect to all such issues.

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