Archive for June, 2010

2009 Update on Foreign Bank Account Reporting

Wednesday, June 16th, 2010

Did you know that you if you have a foreign account, or signature or other authority over a foreign account you may be required to file a Report of Foreign Bank and Financial Accounts (FBAR)?

Who has to file an FBAR, Report of Foreign Bank and Financial Accounts form number TD F 90-22.1?
Any United States person which includes a citizen or resident of the United States, a domestic partnership, a domestic corporation, and a domestic estate or trust who has a financial interest in or signature authority or other authority over any financial account in a foreign country, if the aggregate value of these accounts exceeds $10,000 at any time during the calendar year.
A single-member LLC, which is a disregarded entity for U.S. tax purposes is considered a United States person for FBAR purposes.  The tax rules concerning disregarded entities do not apply with respect to the FBAR reporting requirement.

What constitutes signature or other authority over an account?
A person has signature authority over an account if the person can control the disposition of money or other property in it by delivery of a document containing his or her signature (or his or her signature and that of one or more other persons) to the bank or other person with whom the account is maintained.  Other authority exists if a person who can exercise power that is comparable to signature authority over an account by direct communication to the bank or other person with whom the account is maintained, either orally or by some other means.

When is the FBAR due?
The FBAR is due by June 30 of the year following the year that the account holder meets the $10,000 threshold. The granting, by IRS, of an extension to file Federal income tax returns does not extend the due date for filing an FBAR. Filers cannot request an extension of the FBAR due date, however, persons with signature authority over, but no financial interest in, a foreign financial account for which an FBAR would otherwise have been due on June 30, 2010, will now have until June 30, 2011, to report those foreign financial accounts.

Contact us or visit the IRS website for more information on filing the FBAR.

Posted in Foreign Accounts, Tax | 4 Comments »

Virginia Tax Incentives for Investment Income from Technology and Science Start-ups

Thursday, June 10th, 2010

The Commonwealth of Virginia has enacted a tax incentive for investment income from technology and science start-ups which exempts from Virginia taxation long-term capital gain and carried interest income from investments in small technology and science start-up companies.  In order to qualify for this exemption a taxpayer must report this income for federal tax purposes in taxable years beginning on or after January 1, 2011 for investments made in small technology or science companies made between April 1, 2010 and June 30, 2013.

For purposes of this exemption, the investment must be made in a company which:

1)      Has annual gross receipts for the most recent fiscal year which are not more than $3 million.

2)      Has its principal office or facility in Virginia.

3)      Is engaged in business primarily in or substantially produces its product in Virginia.

4)      Has not obtained during its existence more than $3 million, in aggregate, equity and debt, not including bank debt, financing.

5)      Is primarily engaged, or is primarily organized to engage in, the fields of advanced computing, advanced materials, advanced manufacturing, agricultural technologies, biotechnology, medical device technology, nanotechnology, or any similar technology related field determined by the Virginia Department of Taxation.

The Virginia Secretary of Technology is also authorized to approve any other business as qualified.

Finally, if a taxpayer has claimed a Virginia qualified equity and subordinated debt investment tax credit in a qualified business, the taxpayer is not eligible for the tax incentive for investment income for technology and science start-ups for the same business.  The Virginia qualified equity and subordinated debt investment tax credit is a credit of up to $50,000.  Eligible taxpayers can claim either the incentive for investment income for technology and science start-ups or the qualified equity and subordinated debt investment tax credit.  Taxpayers should analyze which tax incentive provides the greatest tax benefit based on the facts and circumstances.

If you have any questions regarding the above described tax incentive or the qualified equity and subordinated debt investment tax credit, please call or e-mail Robert Tobey at rtobey (at) kshgs (dot) com.

Posted in State Tax, Tax | 1 Comment »

Changes to SAS 70 Auditing Standard

Thursday, June 3rd, 2010

SAS 70 is an auditing standard put forth by the AICPA that is utilized by auditors for examining internal controls in service organizations. Service organizations include: business process outsourcing (payroll, general accounting), data centers, outsourced IT functions, software providers, claim processors, benefit plan administrators, trust administrators, investment advisors, and billing and collections companies.

As part of its project to converge with International Auditing and Assurance Standards Board (IAASB) standards, the AICPA issued SSAE No. 16, which will be effective for reporting periods on or after June 15, 2010.

The new standards include a number of changes for both auditors and companies obtaining SAS 70 audit reports. Two changes that service organizations should be aware of include:

-       The auditor will be required to document the criteria used when auditing a service providers internal controls.
-       The company will be required to provide a written assertion on the subject matter of the engagement.

If you are a service provider with questions on internal control reports or SAS 70 reports, please feel free to contact Scott McAuliffe, Keiter Stephens’ Principal in charge of Risk Advisory Services, at 804-273-6247 or smcauliffe (at) kshgs (dot) com.

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Posted in SAS 70 | 1 Comment »