Author: rqkNKzuuUx67fBmPNyVcMrQX

What’s New for Social Security?
Whether you’re applying for Social Security in the future or currently receiving benefits, there are some important changes to earnings limits, Medicare premiums, and other differences to keep in mind. Ready to learn more? Read on.

Ready for a Cost-of-Living (COLA) increase?

That’s right! Due to an increase in the Consumer Price Index (CPI-W), the Social Security Administration (SSA) has made a 3.2-percent COLA Adjustment.¹

What about Tax Caps?

Employees everywhere will be happy to hear that the cap on wages subject to Social Security withholdings has increased to $168,600.¹

Any change to earning limits?

If a working individual starts receiving Social Security payments before full retirement age, the Social Security Administration will deduct $1 in benefits for each $2 that person earns above an annual limit. In 2024, the income limit is $22,320.¹

During the year in which a worker reaches full retirement age, Social Security benefit reduction falls to $1 in benefits for every $3 in earnings. For 2024, the limit is $59,520 before the month the worker reaches full retirement age.¹

Are Medicare Part B Premiums Affected?

Social Security recipients will see a $9.80 increase in Part B premiums. But first-time enrollees and Medicare beneficiaries who earn $206,000 or more in 2024 may pay a higher premium.²

How much do I need to earn for one Social Security “credit”?

For 2024, you’ll need to earn $1,730 to earn one “credit” toward Social Security and Medicare, up from $1,640 in 2023. What remains the same? You can only earn four credits each year, and you must earn at least 40 credits in order to qualify for benefits.³

For many, Social Security may be an important source of income during their “second act.” If changes to Social Security give you pause or make you question if you are making the most of your benefits, a qualified financial professional may be just the person you need to help you realize your retirement strategy’s full potential.
1. SSA.gov, 2023
2. CMS.gov, 2023
3. SSA.gov, 2023
The content is developed from sources believed to be providing accurate information. The information in this material is not intended as tax or legal advice. It may not be used for the purpose of avoiding any federal tax penalties. Please consult legal or tax professionals for specific information regarding your individual situation. This material was developed and produced by FMG Suite to provide information on a topic that may be of interest. FMG, LLC, is not affiliated with the named broker-dealer, state- or SEC-registered investment advisory firm. The opinions expressed and material provided are for general information, and should not be considered a solicitation for the purchase or sale of any security. Copyright FMG Suite.
February 26, 2024

What Is a Roth 401(k)?

While many people are familiar with the benefits of traditional 401(k) plans, others are not as acquainted with Roth 401(k)s.

Since January 1, 2006, employers have been allowed to offer workers access to Roth 401(k) plans. And starting in 2023, retirement rules were updated to allow more retirement plans the ability to offer Roth contributions.^1,2

As the name implies, Roth 401(k) plans combine features of 401(k) plans with those of a Roth IRA.^3,4

With a Roth 401(k), contributions are made with after-tax dollars – there is no tax deduction on the front end – but qualifying withdrawals are not subject to income taxes. Any capital appreciation in the Roth 401(k) also is not subject to income taxes.

What to Choose?

For some, the choice between a Roth 401(k) and a traditional 401(k) comes down to determining whether the upfront tax break on the traditional 401(k) is likely to outweigh the back-end benefit of tax-free withdrawals from the Roth 401(k).

Please remember, this article is for informational purposes only and is not a replacement for real-life advice, so make sure to consult your tax professional before adjusting your retirement strategy to include a Roth 401(k).

Often, this isn’t an “all-or-nothing” decision. Many employers allow contributions to be divided between a traditional 401(k) plan and a Roth 401(k) plan – up to overall contribution limits.

Considerations

One subtle but key consideration is that Roth 401(k) plans aren’t subject to income restrictions like Roth IRAs are. This can offer advantages to high-income individuals whose Roth IRA has been limited by these restrictions. (See accompanying table.)

	Traditional 401(k)	Roth 401(k)	Roth IRA
Contributions	Contributions are made with pretax dollars	Contributions are made with after-tax dollars	Contributions are made with after-tax dollars
Income Limits	No income limits to participate	No income limits to participate	For 2023, contribution limit is phased out between $218,000 and $228,000 (married, filing jointly), and between $138,000 and $153,000 (single filers)
Maximum Elective Contribution*	Contributions are limited to $22,500 in 2023, ($30,000 for those over age 50)*	Contributions are limited to $22,500 in 2023, ($30,000 for those over age 50)*	Contributions are limited to $6,500 for 2023, ($7,500 for those over age 50)
Taxation of Withdrawals	Qualifying withdrawals of contributions and earnings are subject to income taxes	Qualifying withdrawals of contributions and earnings are not subject to income taxes	Qualifying withdrawals of contributions and earnings are not subject to income taxes
Required Distributions	In most cases, distributions must begin no later than age 73	In most cases, distributions must begin no later than age 73	There is no requirement to begin taking distributions while owner is alive
* This is an aggregate limit by individual rather than by plan. The total of an individual’s aggregate contributions to his or her traditional and Roth 401(k) plans cannot exceed the deferral limit – $22,500 in 2023 ($30,000 for those over age 50).

Source: IRS.gov, 2023

Roth 401(k) plans are subject to the same annual contribution limits as regular 401(k) plans – $22,500 for 2023; $30,000 for those over age 50. These are cumulative limits that apply to all accounts with a single employer; for example, an individual couldn’t save $22,500 in a traditional 401(k) and another $22,500 in a Roth 401(k).⁵

Another factor to consider is that employer matches are made with pretax dollars, just as they are with a traditional 401(k) plan. In a Roth 401(k), however, these matching funds accumulate in a separate account, which will be taxed as ordinary income at withdrawal.

Setting money aside for retirement can be part of a sound personal financial strategy. Deciding whether to use a traditional 401(k) or a Roth 401(k) often involves reviewing a wide range of factors. If you are uncertain about what is the best choice for your situation, you should consider working with a qualified tax or financial professional.

To qualify for the tax-free and penalty-free withdrawal of earnings, Roth 401(k) distributions must meet a five-year holding requirement and occur after age 59½. Tax-free and penalty-free withdrawals also can be taken under certain other circumstances, such as a result of the owner’s death or disability. Employer matches are pretax and not distributed tax-free during retirement. Once you reach age 73, you must begin taking required minimum distributions.
Forbes.com, January 5, 2023
In most circumstances, you must begin taking required minimum distributions from your 401(k) or other defined contribution plan in the year you turn 73. Withdrawals from your 401(k) or other defined contribution plans are taxed as ordinary income, and, if taken before age 59½, may be subject to a 10% federal income tax penalty.
Roth IRA contributions cannot be made by taxpayers with high incomes. In 2023, the income phaseout limit is $153,000 for single filers, $228,000 for married filing jointly. To qualify for the tax-free and penalty-free withdrawal of earnings, Roth IRA distributions must meet a five-year holding requirement and occur after age 59½. Tax-free and penalty-free withdrawals also can be taken under certain other circumstances, such as a result of the owner’s death or disability. The original Roth IRA owner is not required to take minimum annual withdrawals.
IRS.gov 2023

The content is developed from sources believed to be providing accurate information. The information in this material is not intended as tax or legal advice. It may not be used for the purpose of avoiding any federal tax penalties. Please consult legal or tax professionals for specific information regarding your individual situation. This material was developed and produced by FMG Suite to provide information on a topic that may be of interest. FMG Suite is not affiliated with the named broker-dealer, state- or SEC-registered investment advisory firm. The opinions expressed and material provided are for general information, and should not be considered a solicitation for the purchase or sale of any security. Copyright FMG Suite.

February 23, 2024

Change order management: Best practices for construction businesses

As you know, change orders are an inherent part of the construction industry. Alterations to the original design, specifications, execution methods or scope of a job can impact the budget and timeline. And when not discussed and documented properly, they can lead to nonpayment for additional work and legal disputes.

That’s why establishing a standard, comprehensive change order management process is critical to the financial well-being and operational stability of every construction business.

Approved vs. unapproved

Approved change orders, whereby the contractor and project owner formally agree on the additional work and price — and put that agreement in writing — are relatively straightforward to account for in billing and financial reporting.

On the other hand, unapproved change orders call for careful evaluation and documentation until formal approval is obtained. As you may have learned the hard way, a verbal agreement and handshake don’t always guarantee payment.

What’s more, waiting for approval documents before entering change orders into your accounting system could prevent your company from accurately tracking project costs. This may compromise financial reporting, which can in turn negatively impact creditworthiness and internal financial management.

Effective measures

Fortunately, there are a variety of measures that can help you more effectively manage and account for change orders — both approved and unapproved. Here are some to consider:

Review contracts and plans to clarify scope. For every project, or perhaps those of high value or complexity, ask your attorney to review the contract and revise or eliminate clauses that may lead to additional work. During preconstruction, you and your project manager should also review the building plans and clear up any vague or dubious specs or job scope. Both measures will help resolve ambiguities and catch errors or omissions that could lead to contentious change orders later in the job.

Establish formal submittal and approval procedures. Ensure the language of each contract specifies change order procedures, including how costs will be calculated and how the project schedule will be adjusted. Emphasize the need for written documentation and approval. Many construction businesses attach a change order form template and a payment schedule to contracts or project documents.

Keep organized project records. Maintaining thorough documentation empowers your team to evaluate change orders promptly, accurately reflect them in financial statements and take corrective actions when needed. Make sure the documents objectively support why additional work is needed. Any facts or specs mentioned should be verifiable and consistent with the work already performed.

Communicate effectively with all stakeholders. It’s obviously important to maintain an open dialogue with project owners, designers, subcontractors and other partners throughout a job. But this is especially true when a change order arises. After all, no one wants to be the last to know. Raise the issue as soon as possible, discussing the likely impact on costs, productivity, scheduling, and resources such as labor, materials and equipment.

Adjust accounting based on likeliness of approval. Generally, you don’t want to start work on a change order until you have a signed approval in hand. In such cases, the accounting approach usually involves adding costs associated with the change order to the total project costs and increasing the total contract value by the additional amount charged.

However, as you may have experienced, real-world circumstances sometimes force you to move forward on an unapproved change order. If such a change order will likely be approved, you could add the costs to a special asset account until approval is obtained. Another option is to conditionally add the cost to the total project costs and increase the anticipated job revenue by the same amount.

If you believe a change order is unlikely to be approved, you may choose to add the associated costs to the job’s direct costs. Again, careful documentation of the work performed and costs incurred will be imperative, as you may need to undertake legal action down the line.

A business imperative

To be clear, the optimal accounting treatment for each change order will depend on the facts and circumstances involved. We’d be happy to help you properly account for your construction company’s change orders, as well as assist you in improving your change order management procedures.

February 23, 2024
Reimbursement Reality 2024 – Watch our Healthcare Webinar Replay Here
Are you ready for 2024?

Discover how shifts in the health care landscape will impact your practice in 2024 and beyond. In this dynamic presentation, national speaker, trainer and author Elizabeth Woodcock, DrPH, MBA, FACMPE, CPC gives us the lowdown on emerging trends that can pose both opportunities and threats to medical practices in the coming year. You’ll have a front row seat, as Elizabeth shares today’s hot button topics, such as:
- Impactful trends shaping the reimbursement landscape for medical practices
- Reveal of the final Medicare reimbursement for 2024 – which specialties will feel pain, which ones will gain
- Overview of novel opportunities for payment, including caregiver training from Medicare
- Summary of the CPT® changes for 2024, including the most-used office evaluation and management codes
- Tips to avoid the 9% penalty for the 2024 Medicare Incentive Payment System
You’ll walk away from this webinar armed with information and knowledge to understand how your practice can weather the storms and take advantage of the opportunities in the coming year.

Who should watch this webinar?

The Jones & Roth Healthcare Webinar series is designed for Physicians, Practice Managers, Clinic Financial Managers, and HR/Recruiting Managers.

Our Expert Speaker:

Elizabeth Woodcock, DrPH, MBA, FACMPE, CPC
Speaker, Author, Consultant

Dr. Elizabeth Woodcock is the founder and principal of Atlanta-based Woodcock & Associates. She is a Fellow in the American College of Medical Practice Executives and a Certified Professional Coder. In addition to a Bachelor of Arts from Duke University, she completed a Master of Business Administration in healthcare management from The Wharton School of Business of the University of Pennsylvania. She earned her Doctor of Public Health in Health Policy and Management from the Bloomberg School of Public Health of Johns Hopkins University. She currently serves as an Adjunct Assistant Professor at Emory University’s Rollins School of Public Health.
February 13, 2024
How construction company owners can build a succession plan framework

At some time or another, construction company owners must hang up their hard hats. But what will happen to your business when you retire or move on to the next professional opportunity? And what if you suddenly can’t work for an extended period, because of illness or injury? Having a succession plan in place is key to ensuring business continuity.

Even if you’re nowhere near retirement, it’s a good idea to start work on a succession plan early. The best ones often take years to implement.

First steps

Among the best ways to begin building the framework of your succession plan is to determine “what you’ve got.” You know you own a construction business, but how much is it worth and what are its primary value drivers? To determine these things, you’ll need to engage a qualified valuation expert familiar with the construction industry.

In addition, you should clearly outline your goals for retirement or the next stage of life. That is, do you intend to step down altogether or gradually transition to, say, a part-time schedule? Some business owners relinquish ownership but keep a seat on the board of directors.
Be sure to include all stakeholders. Discuss your succession plan with family members and, if appropriate, key colleagues and customers. Give them an opportunity to provide input and listen carefully to what they say.

You’ll also need to choose the best method to transfer ownership of the company. This could occur through a sale, stock gift, buy-sell agreement, trust or other option. Don’t forget to address retirement and estate planning — how will your succession plan help fund your retirement and provide for your family and heirs?

Revised business plan

Another important step is revising your business plan to incorporate an eventual ownership change. A business plan is essentially a baseline for establishing strategic and financial objectives so you can monitor progress toward them.

The plan should also define the responsibilities of each executive and manager. Your construction company’s succession depends on the leadership team’s ability to understand and carry out the objectives of the business plan after you’ve stepped down.

Finally, your updated business plan should include a section on how you intend to go about identifying potential successors who are willing and able to take over — whether they be family members, employees or a third party. Describe how you plan to train and mentor a chosen successor. Training can include industry certification courses, leadership workshops and business management classes. Mentoring typically involves one-on-one meetings and job shadowing.

Professional advisors

A solid succession plan will require the input of outside advisors. Your advisory team should include a CPA, attorney and, as mentioned, a qualified valuation expert. Many contractors also meet with business consultants or brokers, insurance experts and estate planning advisors.
These experts can help you fine-tune the many minute details of your succession plan. When the time comes for you to step down, they can guide you through the execution process to minimize the financial risks and tax consequences of, say, activating a buy-sell agreement.

Very important project

Even the most skillfully constructed building requires regular maintenance and, perhaps, an eventual rehab to preserve it for future generations. So it goes with your construction company’s succession plan.

As mentioned, the earlier you embark on putting together the framework and building out all the key features, the easier time you’ll have completing this very important project. We can assist you in addressing the tax and financial issues involved.

January 18, 2024
QACA – The Other Safe Harbor Plan

With the retirement plan changes initiated by the recently passed SECURE Act 2.0, a plan design type that has been little used in the past is now getting a lot more attention. The Qualified Automatic Contribution Arrangement plan, or QACA, will become more common as new plans established after December 29, 2022 will be required to have an automatic enrollment provision by January 1, 2025.

A prominent design feature for many 401(k) plans is a safe harbor provision that ensures owners or highly compensated employees can contribute the maximum allowed by the IRS from their own compensation. These limits for 2024 are $23,000 for those employees under 50 years of age and $30,500 for those 50 years and over. Having a safe harbor provision where the plan sponsor commits in advance to either a match or flat contribution, known as a non-elective contribution, allows them to take advantage of the safe harbor. A traditional safe harbor plan has a match of up to 4% of employee compensation when the employee contributes up to 5% of their own compensation and conversely the sponsor can do a flat contribution, or non-elective, of 3% of employee compensation to all eligible employees. The sponsor must choose one of these two regimes to be a traditional safe harbor plan. All safe harbor contributions are 100% vested when received by the employees, meaning if they leave from your organization soon after receiving this contribution, they get to take 100% of their contribution with them.

All of this brings us back to the QACA. This is essentially a safe harbor plan with a twist. The big difference between the QACA and the traditional safe harbor plan is that it has an automatic enrollment feature. Otherwise, the two plan types are very similar. The automatic enrollment feature creates slightly more monitoring of employee eligibility so that employees are automatically enrolled when they don’t make an employee deferral election. By having the automatic enrollment, the safe harbor match is reduced from 4% to 3.5%. The safe harbor nonelective remains 3% in the QACA, similar to the traditional safe harbor plan. By having a QACA plan, the safe harbor contributions can be subject to a two year cliff vesting schedule. Another required feature is that employees who are auto-enrolled will have auto escalation of the employee deferrals. The auto enrollment deferral rate starts at 3% of pre-tax compensation and will increase each year by 1% on the enrollment anniversary date until the participant reaches 10% of their compensation. Employees can always opt out of the automatic deferral percentage which will also stop the auto escalation.

A big factor in retirement readiness for employees is just getting them started. The QACA plan structure will get many employees auto-enrolled to start their retirement savings. When employees do get started, they are able to see take home pay isn’t impacted as much as they thought it might be and they see the benefit of an employer contribution. The company benefits from a lower required match, if this is the option selected, and has the employee retention power of a two year cliff vesting of those safe harbor contributions.

With the creation of SECURE Act 2.0, the automatic enrollment requirement for new plans is now part of the required plan design landscape. Plans will have automatic enrollment with a minimum employee deferral rate of 3%. Employees who are auto-enrolled due to not making a deferral election will be auto-escalated by 1% per year up to at least 10%, but not more than 15% of the employee’s compensation. Due to the SECURE Act 2.0 requirement that all new plans effective after December 29, 2022 have automatic enrollment in place as of January 1, 2025, it will benefit plan sponsors with newer plans to convert to a QACA plan so they have the added benefits of a lower safe harbor match cost and two year cliff vesting schedule.

January 17, 2024
Businesses: Do you have to comply with the new corporate transparency reporting rules?
Please Note: It is the sole responsibility of business owners to comply with the Corporate Transparency Act (CTA), including meeting Beneficial Ownership Information (BOI) reporting requirements, the collection of relevant ownership information, and the filing of BOI reports to FinCEN. Jones & Roth will not be filing BOI reports on behalf of clients, and shall have no liability resulting from a business’ failure to comply with the CTA. Businesses face many risks for non-compliance with the CTA, including criminal or civil fines and penalties. If you have questions regarding the applicability of the CTA’s reporting requirements or issues surrounding the collection of relevant ownership information, consider consulting with legal counsel.

Your business may soon have to meet new reporting requirements that take effect on January 1, 2024. Under the Corporate Transparency Act (CTA), enacted in 2021, certain companies will be required to report Beneficial Ownership Information (BOI), providing information related to their “beneficial owners” — the individuals who ultimately own or control the company — to the Financial Crimes Enforcement Network (FinCEN). Failure to do so may result in civil or criminal penalties, or both.

Guidance, information, and updates related to the BOI reporting requirements can be found on FinCEN’s BOI webpage.

Understanding the CTA

The CTA is intended to reduce exposure to serious crimes, including terrorist financing, money laundering and other nefarious activities. But it could also open the door to the inspection of family offices, investment angels and other private individuals who’ve generally been shielded from scrutiny in the past. A business that’s characterized as a “reporting company” has either 30 days, 90 days, or one year to comply with the new rules, depending on the entity’s date of formation.

The CTA’s rules generally apply to both domestic and foreign privately held reporting companies. For these purposes, a reporting company includes any corporation, limited liability company or other legal entity created through documents filed with the appropriate state authorities. A foreign entity includes any private entity formed in a foreign country that’s properly registered to do business in the United States.

The complete list of entities that are exempt from the reporting rules is too lengthy to include here — ranging from government units to not-for-profit organizations to insurance companies and more. Notably, an exemption was created for a “large operating company” that employs more than 20 employees on a full-time basis, has more than $5 million in gross receipts or sales (not including receipts and sales from foreign sources), and physically operates in the United States. However, many of these companies already must meet other reporting requirements providing comparable information.

If an entity initially qualifies for the large operating company exemption but subsequently falls short, it must then file a BOI report. On the other hand, an entity that might not currently qualify can update its status with FinCEN if it later does and obtain an exemption.

Determining who is and isn’t a beneficial owner

Under the CTA, a nonexempt entity must provide identifying information about its beneficial owners. A beneficial owner is defined as someone who, directly or indirectly, exercises substantial control over a reporting company, or owns or controls at least 25% of its ownership interests. An individual has substantial control of a reporting company if he or she:
- Is a senior officer of the company,
- Has authority over the senior officers or a majority of the company’s board,
- Has substantial influence over the company’s important decisions, or
- Has any other type of substantial control over the company.
This generally includes individuals who are directly related to ownership interests in the company, but indirect control may also result in classification as a beneficial owner.

Individuals who aren’t treated as beneficial owners of a reporting company under the CTA include:
- Someone acting as a nominee, intermediary, custodian or agent on behalf of a beneficial owner,
- An employee of the reporting company who has substantial control over the entity’s economic benefits because of his or her employment status (but only if the individual isn’t a senior officer of the entity),
- An individual whose only interest in a reporting company is a future interest through a right of inheritance,
- Any creditor of the reporting company (unless the creditor exercises substantial control or has a 25% ownership interest in the reporting company), or
- A minor child.
However, for minor children, the reporting company must report information about each child’s parent or legal guardian.

Defining company applicants

The CTA also requires reporting companies to provide identifying information about their company applicants. A company applicant is someone who’s:
- Responsible for filing the documents that created the entity (for a foreign entity, this is the person who directly files the document that first registers the foreign reporting company to conduct business in a state), or
- Primarily responsible for directing or controlling filing of the relevant formation or registration document by another individual.
This rule often encompasses legal personnel acting in a business capacity.

Addressing other CTA reporting requirements

The CTA’s reporting requirements are extensive. Specifically, the report to FinCEN must include the following information:
- The legal name of the entity (or any trade or doing-business-as name),
- The address of the entity,
- The jurisdiction where the entity was formed,
- The entity’s Taxpayer Identification Number, and
- The name, address, date of birth, unique identifying number information of each beneficial owner (such as a U.S. passport or state driver’s license number), and an image of the document that contains the identifying number.
FinCEN announced on November 29 that it was amending the BOI reporting rules. Initially, reporting companies had either 30 days or one year from the effective date (January 1, 2024) to comply with the reporting requirements. Now, reporting companies will have 30 days, 90 days or one year from the January 1, 2024, effective date to comply with the reporting requirements.

The deadline to comply depends on the entity’s date of formation. Reporting companies created or registered prior to January 1, 2024, have one year to comply by filing initial reports. Those created or registered on or after January 1, 2024, but before January 1, 2025, will have 90 days upon receipt of their creation or registration documents to file their initial reports. Those created or registered on or after January 1, 2025, will have 30 days upon receipt of their creation or registration documents to file their initial reports. Beneficial ownership information won’t be accepted by FinCEN until the effective date.

After the initial filing, reporting companies have 30 days to file an updated report noting any change to information previously reported. In addition, reporting companies must correct inaccurate information in previously filed reports within 30 days after the date they become aware of the error.

Note that reports filed with FinCEN aren’t available to the general public. However, certain government agencies will have access to the information, including those involved in national security, intelligence and law enforcement, as well as the IRS and U.S. Treasury Department.

What are the penalties for failing to comply with the new reporting rules? An omission or fraudulent report could result in civil fines of $500 a day for as long as the report is missing or remains inaccurate. Failure to comply may also trigger a criminal penalty of a $10,000 fine or even a two-year jail term.

Taking the next steps

What should your company do now to ensure compliance with the BOI reporting requirements under the CTA?

Familiarize yourself with the guidance materials and reporting requirements on FinCEN’s BOI webpage. You can also subscribe to FinCEN news updates to receive immediate email updates.

Evaluate your current situation. If you determine that your business must meet reporting requirements, collect the required information, update and refine internal policies for accurately reporting the data, and establish a system for monitoring the reporting processes.

Consider consulting with legal counsel if you have questions regarding the applicability of the CTA’s reporting requirements and issues surrounding the collection of relevant ownership information.

Also, stay alert and aware to protect yourself against fraud. FinCEN is aware of recent fraudulent attempts to solicit information from individuals and entities who may be subject to BOI reporting requirements under the Corporate Transparency Act. According to FinCEN, the fraudulent correspondence may be titled “Important Compliance Notice” and asks the recipient to click on a URL or to scan a QR code. FinCEN asks business owners and any solicited administrators to not respond to these fraudulent messages, or click on any links or scan any QR codes within them, as FinCEN does not send unsolicited requests.
December 14, 2023
6 ways construction companies can strengthen cybersecurity
Some contractors might assume hackers won’t bother with smaller construction businesses. Sadly, they’d be wrong.

Construction companies tend to have high turnover rates, which means they store lots of personal data on past and present employees. And they usually have access to technical plans and information about building management systems, which can now often be accessed (read: hacked) online.

Perhaps worst of all, many construction businesses have limited IT resources and defenses — so they’re especially vulnerable. Here are six ways to fortify your cybersecurity defenses:

1. Conduct regular cyber risk assessments

Evaluate your systems to determine what kinds of data your staff generates and processes. Also identify where it’s stored. From there, you can implement the latest and optimal protective steps. Because technology changes rapidly — as does the sophistication of cyberattacks — follow these procedures at least annually.

2. Educate employees

Ensure every staff member knows how to properly use technology, handle confidential information and report cyberthreats. Provide targeted training on dangers such as:
- Phishing (socially engineered attempts to fool users into divulging sensitive data),
- Malware (invasive damaging software usually hiding in links or email attachments), and
- Ransomware (a type of malware that captures files and encrypts them, or even locks a device, enabling hackers to demand a ransom for decryption or to unlock the asset).
Cybersecurity training should also occur as part of onboarding, whenever a new device is issued and at least annually as a refresher.

3. Use multifactor authentication

Every one of your construction company’s devices, systems and apps should, at the very least, be password-protected. However, the latest standard is to require multifactor authentication — that is, multiple credentials, such as a password plus a numerical code — to add another layer of security. If your construction company’s employees use personal devices at work, instruct them to use multifactor authentication as well.

4. Keep software updated

As updates and patches are released, be sure they’re immediately downloaded onto your construction business’s systems and devices. And, again, if your workers use personal phones or other devices on the job, train and remind them to check for and download updates as soon as they become available.

5. Erase hard drives before disposal

Laptops, mobile devices, tablets, and even some printers and copy machines hold sensitive data and should be fully wiped before disposal. The same goes for leased equipment before returning it.

6. Look into cybersecurity insurance

This coverage is designed to mitigate losses from a variety of incidents, including data breaches, business interruption and network damage. At a minimum, a policy should cover liability for data breaches involving sensitive customer information, such as credit card numbers and driver’s license numbers.

Like any type of insurance, cybersecurity coverage should be bought only after careful due diligence and within a sensible budget. We’d be happy to help you assess such a purchase or better identify the costs associated with strengthening your construction company’s cybersecurity.
December 12, 2023
IRS delays new reporting rule for online payment processors
For the second consecutive year, the IRS has postponed implementation of a new rule that would have led to an estimated 44 million taxpayers receiving tax forms from payment apps and online marketplaces such as Venmo and eBay. While the delay should spare such taxpayers some confusion, it won’t affect their tax liability or income reporting responsibilities. And the IRS indicated that it intends to begin phasing in the rule in 2024.

The new reporting rule

The rule concerns IRS Form 1099-K, Payment Card and Third Party Network Transactions, an information return first introduced in 2012. The form is issued to report payments from:
- Credit, debit and stored-value cards such as gift cards, and
- Payment apps or online marketplaces (also known as third-party settlement organizations).
If you receive direct payments via credit, debit or gift card, you should receive the form from your payment processors or payment settlement entity. But for years, payment apps and online marketplaces have been required to send Form 1099-K only if the payments you receive for goods and services total more than $20,000 from more than 200 transactions (although they can choose to send you the form with lower amounts).

The form reports the gross amount of all reportable transactions for the year and by the month. The IRS also receives a copy.

The American Rescue Plan Act (ARPA), enacted in March 2021, significantly expanded the reach of Form 1099-K. The changes were designed to improve voluntary tax compliance for these types of payments. According to the IRS, tax compliance is higher when amounts are subject to information reporting.

Under ARPA, payment apps and online marketplaces must report payments of more than $600 for the sale of goods and services; the number of transactions is irrelevant. As a result, the form would be sent to many more taxpayers who use payment apps or online marketplaces to accept payments. The rule change could ensnare not only small businesses and individuals with side hustles but also “casual sellers” of used personal items like clothing, furniture and other household items.

The change originally was scheduled to take effect for the 2022 tax year, with the forms going out in January 2023. However, in December 2022, the IRS announced its first implementation delay and released guidance stating that 2022 would be a transition period for the change.

The agency also acknowledged that the change must be managed carefully to help ensure that 1) the forms are issued only to taxpayers who should receive them, and 2) taxpayers understand what to do as a result of this reporting.

The updated implementation plan

In a November 2023 report, the U.S. Government Accountability Office (GAO) stated that the IRS expects to receive about 44 million Form 1099-Ks in 2024 — an increase of around 30 million. The GAO found, however, that the “IRS does not have a plan to analyze these data to inform enforcement and outreach priorities.”

Less than a week later, the IRS announced a second delay in the rule change, explaining that the previous thresholds ($20,000 / more than 200 transactions) remain in place for 2023. The agency cited feedback from taxpayers, tax professionals and payment processors, as well as the possibility of taxpayer confusion.

It seemed likely confusion would ensue when the forms started hitting mailboxes in January 2024. For example, with forms sent by payment apps or online marketplaces, it’s not clear how taxpayers should transfer the reported amounts to their individual tax returns. The income shown on the form might be properly reported on the recipient’s:
- Schedule C, Profit or Loss from Business (Sole Proprietorship),
- Schedule E, Supplemental Income and Loss (From rental real estate, royalties, partnerships, S corporations, estates, trusts, REMICs, etc.), or
- Appropriate return for a partnership or corporation.
In addition, the gross amount of a reported payment doesn’t include any adjustments for credits, cash equivalents, discounts, fees, refunds or other amounts — so the full amount reported might not be the taxable amount.

Moreover, not every reportable transaction is taxable. If you sell a personal item on eBay at a loss, for example, you aren’t required to pay tax on the sale. If you met the $600 threshold, though, that sale would appear on your Form 1099-K.

Be aware that the IRS isn’t abandoning the lower threshold. In its latest announcement, the agency indicated that a transitional threshold of $5,000 will apply for tax year 2024. This phased-in approach, the IRS says, will allow it to review its operational processes to better address taxpayer and stakeholder concerns.

Advice for Form 1099-K recipients

If you receive a Form 1099-K under the existing thresholds, the IRS advises you to review the form carefully to determine whether the amounts are correct. You also should identify any related deductible expenses you may be able to claim on your return.

If the form includes personal items that you sold at a loss, the IRS says you should “zero out” the payment on your return by reporting both the payment and an offsetting adjustment on Form 1040, Schedule 1. If you sold such items at a gain, you must report the gain as taxable income.

Taxes remain the same

It’s worth repeating that the delay in the implementation of the new Form 1099-K threshold doesn’t affect taxpayers’ obligations to report income on their tax returns. All income is taxable unless excluded by law, regardless of whether a taxpayer receives a Form 1099-K.
November 29, 2023
[Webinar] “A Comprehensive Overview of the Oregon Personal Property Tax Return for Businesses”
Our recent webinar featured guest presenters from the Lane County Department of Assessment & Taxation.

This workshop is designed for Oregon small business owners, and will cover the tax form “Confidential Personal Property Return — Form OR-CPPR (ORS 308.290),” which assesses business furniture, fixtures, equipment, floating property, and leased or rented property. Our expert presenters review the form section by section, so you’ll walk away better prepared to fill out your form when it arrives to you in the mail.

Webinar attendees will:
- Gain confidence as you learn how to fill out the Personal Property Tax Return Form OR-CPPR (ORS 308.290)
- Understand the various sections of the form
- Have an opportunity to ask questions and learn from the experts
Who should view this recording?

Oregon businesses that own taxable personal property (i.e. furniture, fixtures, equipment, floating property, or leased/rented property — including any property not currently used, placed in storage, or held for sale) and have previously used or currently use it in the business to generate income. Personal property does not include property such as inventory, farm machinery/equipment, or any goods, furniture, clothing, tools, and equipment used exclusively for personal use in your home.

Presented by:

The Lane County Department of Assessment & Taxation

Kimberley Westwang
Personal Property Appraiser

Lacey Walton
Personal Property Specialist
November 17, 2023