TIPS FOR FILING HURRICANE SANDY DAMAGE CLAIMS

Because so many consumers experienced claims problems in the wake of Hurricane Katrina and Irene, the CFA urges homeowners dealing with losses caused by Hurricane Sandy to be vigilant with their insurance companies to ensure that that they receive a full and fair settlement.

As consumers prepare to contact their insurance companies in the wake of the storm, the CFA offers the following tips:

AFTER THE STORM

1. Report your claim as promptly as possible as insurance companies generally handle them first come, first serve.

2. Once your claim is reported, be sure to get your claim number and write it down. Insurance company claims departments can locate your file easiest by your claim number.

3.  When the insurance company sends out an adjuster to survey your damage, ask if he/she is an employee of the insurance company or an independent adjuster (I.A.) hired by them. If an independent adjuster, try to secure the name of the actual company adjuster that the I.A. is sending your information to or are they authorized to make claim decisions and payments on behalf of your insurance company.

 

KEEP GOOD RECORDS—Documentation, Documentation

1.  Start a notebook documenting contacts with your insurance company. List the date, time and a brief description of the exchange.

2.  Inventory your damaged possessions.

3.  Obtain a repair estimate from a trusted local contractor. Keep receipts from emergency repairs and any costs you incur in temporary housing. This may be reimbursable under the "Additional Living Expense" portion of your homeowners' policy. 

IF THE CLAIM IS DENIED OR THE OFFER IS TOO LOW

Demand that the company identify the language in your homeowners' policy that served as the basis for denying your claim or offering so little.

HOW/WHERE DO I COMPLAIN

1.       Complain to more senior staff in the insurance company

2.       Complain to your state insurance department.

3.       See a lawyer.

WHAT ISN'T COVERED IN THE HOMEOWNERS' POLICY?

Homeowners' policies do not cover flood, earthquake, tree removal (except when the tree damages the house) or food spoilage from power failures. Some insurers use an "anti-concurrent-causation" clause in their policies that, insurers allege, removes coverage for wind damage if a flood happens at about the same time.

 

For more information contact the Consumer Federation of America.

TAX BREAKS AFTER HURRICANE SANDY

 

While many of us have been consumed by news of the 2012 election, we're all sobered by the devastation of Hurricane Sandy. If you plan to help out, keep in mind some of these tips for making the most of your storm relief donations.

~You can deduct up to 50% of your adjusted gross income for cash gifts to "501(c)(3) organizations" or public charities working on behalf of storm victims.

~If you give more than $250, you'll need a written receipt dated no later than the filing date of your return.

~Gifts of clothing, furniture, electronics, and household items are deductible at fair-market value, such as the price they would bring at a resale shop. Consider buying software, available at any office-supply store, for tracking your gifts and their value. You might be surprised how much you save!

~Congress and the IRS have cracked down on inflated car and truck deductions. If you give away a vehicle, you can deduct its fair market value only if the charity uses it for "exempt" purposes (such as a church using a van to drive parishioners). If the charity sells the vehicle, your deduction is limited to the charity's actual proceeds. If you claim more than $500, you'll generally have to attach a certification to your return that states the vehicle was sold in an arm's-length sale and includes the gross proceeds from the sale.

The IRS cautions all of us to seek out qualified charities, and warns of unscrupulous operators looking to take advantage of our generosity during a time of crisis. The IRS has also issued Publication 3833, Disaster Relief: Providing Assistance Through Charitable Organizations, for those who want to contribute or form a new charity.

WHY I WILL VOTE FOR ROMNEY

A piece of advice my father once gave me was never talk about religion and politics. Later, after I was married he added, "Don't talk about ex-girlfriends in front of your wife." I guess this time I am not going to take my father’s advice.  Maybe I should write a book and call it ‘Advice and Dreams of My Father.’

In my opinion, this is a very important presidential election.  It is a clear choice between government and private enterprise.  My reasons have nothing to do with all those emails I have received about Obama's religion; Reverend Wright, birth certificate, college grades, Chicago politics and on and on and on.  My vote is based on who can run the country best.

Here is my rational

BRINGING THE COUNTRY AND CONGRESS TOGETHER

To correct the economy and for Government to work there must be a compromise between Republicans and Democrats. It appears to me that Romney wins this point.  He has demonstrated his ability as Governor of Massachusetts and he said in the debates that he realizes the importance of compromise.

Obama on the other hand does not seem to be able to bring the parties and Congress together.  He has had four years and we can see the divide. Recently, I was in Washington D.C. and a lobbyist that had been a democratic senator during Bush senior’s presidency said that while he was a senator the Republicans and Democrats would pose in front of the cameras to appease their constituents but the compromise would go on behind the scenes.  If the parties did not get together then the president would work the phones.  He then said "President Obama’s phone has cobwebs." 

My final decision on this point is based on the comments of the famous Washington columnist Bob Woodward in his book The Power of Politics.  Mr. Woodward, who is famous for his reporting of Nixon and Watergate, said that early in Obama's presidency when he was working on this health proposal and then later, and more importantly, when we came close to closing on the government because of reaching the debt maximum, Obama completely shutout any compromise.  It had to be done his way.

Winner - Romney

INCOME TAXES

This is an area of my expertise.  There is no question that our tax system is way too complicated and that much needs to be done to simplify and also make the system fair.  When 47% of the citizens do not pay tax they don't pay attention to what the government spends money on.  That is wrong.  Also, and just as important, we need the tax system to be stable.  This year we have to look at three different options for our clients due to the uncertainty of the 2013 tax rates and the Obamacare taxes.  We need a stable tax code that people can count on.

I also know that high taxes stifle growth.  Every week I talk with several clients that are concerned about how potential taxes will impact them.  I have heard clients say that they are not hiring to keep under the 50 employee Obamacare number.

High tax rates definitely serve as a deterrent to economic growth and employment.  Let me give you an example.  Lets first assume that I am making $250,000 per year so I am in a 58.15% bracket (40% federal, .9% and 3.8% Obama Care Tax, 2.45% Medicare tax and 8% state tax plus another 3% because my income is at a level that I lose some of my personal exemptions and itemized deductions).  Let’s say I have the opportunity to speak at a conference on a Sunday and Monday.  I have to leave on Saturday and return on Tuesday.  For this effort I would receive $2,000 net after expenses.  But wait... I would have to give the government $1,163 which would leave me with $837.  Here is the kicker.  If I am making $250,000 I don't really need $837.  It certainly is not worth it to give up a weekend, be away from my family and have to put up with the stress of travel.  But… speaking at conferences is where we attract new business.  If I am giving over 50% to the government, I am not really interested in working harder for 41.85%.  So if I am not interested in growing my business, I don't need to hire more people.

I was around in the late 1970's when Carter was president and you could be in a bracket as high as 84%!  I saw people and businesses cut back because the after tax reward was a disincentive.

Winner - Romney

IT'S THE ECONOMY STUPID

The above was a popular quote when Clinton was campaigning against then President Bush.  I think it is more important today then back then.  Every day for the past two years our federal government has borrowed over $3.5 billion dollars. Every day!   Let me put that in perspective.  To count that far would take you over 111 years nonstop.  Or to put it another way, if you made $1,000,000 per day, after taxes it would take you close to 10 years to have $3.5 billing dollars. We are borrowing every day and there seems to be no end in sight under Obama.

Romney is a businessman and he has experience turning around a business and the Olympics.  He has a much better resume to fix the problem than Obama. 

Winner - Romney

THE DIRECTION OF OUR ECONOMIC CLIMATE AND FUTURE

I cannot say it any better than the Creighton University economics professor Dr. Earnie Gross. 

U.S. economic competitiveness is in decline. Since 2009, the U.S. ranking has dropped from number 15 to 19 of the 144 nations evaluated by the Fraser Institute. The primary factor damaging the U.S. ranking was the escalating size of the federal government with U.S. federal spending as a percent of the nation's gross domestic product (GDP) climbing from 21.8 percent in 2008 to 24.1 percent in 2012. 

Moreover, between 2008 and 2012, overall private employment declined by 2.5 percent while federal employment increased by 1.2 percent. As the size of the federal government rose, the national debt soared from $9.4 trillion in 2008 to $15.9 trillion in 2012, advancing by about 70 percent as the overall economy expanded by only 9 percent. 

As a result of the massive U.S. debt, Standard and Poor's downgraded U.S. bonds in 2011. But the U.S. Federal Reserve has delayed the "debtageddon" by buying U.S. debt and effectively turning on the dollar printing presses and risking rampant inflation in the years ahead. Moreover, global investors, afraid to invest in stocks, have put their funds in U.S. bonds driving rates lower even with downgrades and the cheaper dollar. 

However, with 300,000 baby boomers retiring each month pushing social security spending and Medicare outlays higher, there will be a day of reckoning for the U.S. taxpayer and bond investor, but no economist knows when that is. However, the sure signal is when bond investors begin abandoning (selling) U.S. debt. This action will send the yield on the 10-year U.S. Treasury bonds skyrocketing. How high could they go? Today's rate of 1.7 percent will surely bounce to something approaching Spain's current 6-7 percent. This will mean more and more federal tax collections will be devoted to the payment of interest.

This has to turn around.  This has happened under the Bush Obama presidencies and Obama has not only NOT fixed the problem, he has made it worse.

Winner – Romney

In summary, without a strong economy eventually everything will suffer.  Changes need to be made now to fix the problem.  If not, we may be looking for Ann Rand’s John Galt. 

 

 

EMBEZZLEMENT #2

A couple of weeks ago I sent out a copy of an embezzlement that was reported. Here is a second one. If you don’t think this could happen in your business you are thinking just like the owners of these two businesses.

Watch for our upcoming “Red Flag Training” webinar on how to spot and to stop employee theft.

STORE MANAGER PLEADS GUILTY TO EMBEZZLING

A former Plattsmouth, Nebraska convenience store manager pleaded guilty Monday in Cass County District Court to stealing $264,000 from his employer.

The 56 year-old man faces one to 20 years in prison for stealing the money in small amounts between July 2007 and November 2011 from the former Lucky’s convenience store. In exchange for his plea, prosecutors dropped a felony charge of misrepresenting sales tax collections.

The Cass County Attorney said the man admitted to investigators that he had taken the money. According to an affidavit filed by an U.S. Secret Service agent, the man said he stole the money by falsifying daily reports to make it seem the store did less business than it actually had.

FEDS FILE SUIT AGAINST THREE COMPANIES OVER ALLEGED MORTGAGE SCAM

Watch out for mortgage scammers! Just like with the scammers who promise to help settle IRS tax bills for pennies on the dollar, there are crooks willing to exploit homeowners with mortgage problems. Check out the article:
Feds file suit against 3 companies over alleged mortgage scam

SOCIAL SECURITY NEEDS MORE THAN JUST A 'TWEAK'

Below is an article that digs into the changes that need to be made to salvage the Social Security system. The understatement of the past two centuries. Click on the link to read the article:Social Security Needs More Than Just a 'Tweak,' Mr. President

IS FISCAL CLIFF ALREADY WREAKING HAVOC?

(CNBC) -- CNBC.com reports that CNBC's Larry Kudlow "thinks the looming 'fiscal cliff' has already started to do serious damage to the economy, and worries the damage could get much worse, with Congress ultimately driving Corporate America right to the edge." According to the story, the threat of the fiscal cliff, "or confluence of tax hikes and spending cuts that could go into effect as soon as January 2013," has hurt new orders for durable goods or long-lasting manufactured goods, which has dropped to its lowest level in 3-1/2 years.

To read the entire article click here: http://www.cnbc.com/id/49201294

RED FLAG TRAINING

It seems that we are seeing more employee embezzlement all the time. If you read the articles, the owner usually says “I would have never thought that this long time employee would have stolen from me." There are some signs that you can look for to spot fraud and there are some systems that you can put in place to keep employees honest. In November we will be doing a webinar, “Red Flag Training”, which will discuss these issues.

The following article is an example out of a local newspaper:

A Lincoln woman pleaded no contest to theft by deception for embezzling from a marketing firm she helped found in 2002. The employee stole $154,937 from a marketing firm between July 2006 and March 19, 2009 according to the Deputy County Attorney. She said the woman who took care of the company's finances used bookkeeping software to write herself checks and make it look as if they were going to creditors. The company's president was a co-worker of the woman for nearly ten years. He discovered the loss when he began to take control of the company's finances.

The Lincoln woman is set for sentencing on the felony charge.

SUPER-LOW INTEREST RATES MEAN BARGAINS FOR SHAREHOLDERS BORROWING FROM THEIR CORPORATIONS

It's the worst of times for savers invested in interest-bearing accounts, but the best of times for qualified borrowers, who are enjoying record-low rates thanks to the Fed's policies. Times can be better still for shareholder-owners of closely held corporations fortunate enough to be sitting on a cash hoard. These shareholder-owners may be in the position to borrow money from their companies at super-low rates without running afoul of the IRS required interest rates.

Today's super-low interest rate environment has produced the lowest interest rates allowable by the IRS rules in recent memory. For example, for the month of October, the short-term and mid-term AFRs are .23% and .93% respectively. The long-term rate is 2.34% for monthly and quarterly compounding, 2.35% for semi-annual compounding, and 2.36% for annual compounding.

Thus, for example, a closely held corporation making a three-year loan to a shareholder-owner could charge just .23% interest on the loan and escape the imputed interest rules. For a mid-term loan of three to nine years, made in October, just .93% interest could be charged, and for a fifteen-year loan, the rate assuming monthly compounding could be 2.36%.

SOMETHING TO THINK ABOUT

This is going to be political so do not look at if you will be offended...

YEAR-END PLANNING: MAKING THE MOST OF QUICK WRITEOFFS FOR CAPITAL GOODS PURCHASES

Although bonus first-year depreciation and more-generous Code Sec. 179 expensing limits have been extended before, another lease on life for these tax breaks is far from certain this time around.

Unless Congress acts, additional depreciation deductions under Code Sec. 168 in the placed-in-service year equal to 50% of the adjusted basis of qualified property won't be available after this year. Also, the Code Sec. 179 expensing limit is set to plummet to $25,000 for property placed in service next year.

The message, businesses planning to purchase machinery and equipment during the remainder of this year or early the next should try to accelerate their buying plans, if doing so makes sound business sense.

THE IMPORTANCE OF ACCOUNTANTS MENTIONED IN THE PRESIDENTIAL DEBATE

Finally us accountants are getting the respect we deserve. President Barack Obama and Republican presidential nominee Mitt Romney traded barbs about tax policy and how they would control the budget deficit, with Romney telling Obama at one point that he might need to get a new accountant.

Later Obama said he wanted to end corporate tax breaks for companies that ship jobs overseas, Romney responded, “You said you get a deduction for taking a plant overseas. Look, I've been in business for 25 years. I have no idea what you’re talking about. I maybe need to get a new accountant.” I wonder what the country's financial situation would be like if us accountants ran the country?

SECTION 179 FOR 2013

As we are doing year end tax planning, the question has come up several times on how to plan for the fast write off of equipment called section 179. It is confusing. The current law is a limit of $25,000 for 2013, but will Congress change this low number. Who knows?

Both the President and Congress have discussed increasing the deduction up to $500,000 with a phase-out starting at $2 million. It appears at the moment that the Democrats are pushing this more than the Republicans, but they have other incentives that may provide small business tax relief similar to the Section 179 deduction.

There is even a chance that it may go to $500,000 from the current $139,000 in 2012. Unfortunatey we will not know until the election is over.

90 DAYS AWAY: FEDERAL TAX HIKE WILL AVERAGE $3,500 PER HOUSEHOLD, STUDY FINDS

The impending "fiscal cliff" continues to dominate the political news media. The AP reports that unless Congress and President Obama agree to change current law, "a typical middle-income family making $40,000 to $64,000 a year could see its taxes go up by $2,000 next year." A new report by the Tax Policy Center finds that nine out of 10 households would be affected by the expiration of current tax rates -- although the top 20% of earners would bear 60% of the overall cost. Across all households, the tax increases would average almost $3,500, according to the study. The AP notes that "economists warn the looming tax hikes, combined with $109 billion in automatic spending cuts scheduled to take effect in January, could throw the fragile economy back into recession."

FEDS NEED 18 PAGES TO DEFINE 'FULL-TIME' FOR OBAMACARE

The IRS just issued regulations on who is considered a “full time employee” for the Patient Protection Act.  Is it any surprise that it took over 18 pages for a law that was over 2,700 pages?