Lawsuits brought against credit unions for violations of the ATM-fee disclosure provisions in the Electronic Funds Transfer Act (EFTA) have increased recently. The EFTA requires both an external notice physically located on the machine as well as a notice on screen informing ATM users of fees charged for transactions.

In the past few years there have been numerous instances of lawsuits filed by individuals who travel around the country, looking for ATMs without the required notice and taking photos of the machine as evidence for their lawsuit, some reaching class action status. A number of these lawsuits have been dismissed because the credit union was able to show undisputed evidence that an unknown third party had removed its posted notice illegally. Some of the suits though, have been settled by credit unions.

Currently, there is a bill the House, H.R. 4367, which is an attempt to address these nuisance lawsuits. The bill would change the EFTA so that ATMs would only be required to display the disclosures on the ATM screen and would remove the requirement for physical fee notices on the machines themselves.

It is good practice to periodically check all ATMs to make sure the required physical disclosures are attached to the machines.

Albin, Randall & Bennett is proud to serve the credit union industry. For more information or to discuss the fee disclosure requirements, please contact Cheri or Holly.

There is no hiding the fact that tax season is full of long days, hard work and numerous deadlines. Finding ways to offset the stress is imperative to surviving tax season and ARB has perfected this notion by motivating and celebrating throughout those long couple of months.

The 2012 tax season started off on a fun note with our dealer group attending the 55^th annual New England International Auto Show premier night where we enjoyed socializing with industry leaders, fantastic food and drink displays and of course the opportunity to view the newest models of imported and domestic vehicles. For car lovers like us, it was a great way to kick off the season!

A tax season wouldn’t be the same at ARB without some friendly competition and a fantastic idea from our Wellness Committee. This year we split up the firm into three teams to compete in a pedometer challenge. The challenge kept the firm active and reminded us each day of the benefits to maintaining a healthy lifestyle during a very hectic time. Amazingly, we walked 21,404,150 steps or 10,702 miles. Congratulations to the PeDominators for walking right past the competition!

While the Wellness Committee is busy keeping our health in check, the ARB Fun Committee is busy finding ways to….well, have fun! From celebrating the opening day of the Red Sox season by wearing our Red Sox gear and enjoying a hot dog feast complete with Sea Dogs biscuits and Cracker Jacks, to an afternoon ice cream party, to providing a masseuse to “work the kinks out”, having a good time seems to be around each corner to motivate us through the season.

Last night we gathered at Bayside Bowl in Portland for our annual after tax season event. We were lucky to be joined by our 2012 tax season interns who helped us achieve yet another successful tax season. Finding great interns to join our team and help us achieve success during our busy time is a huge reward for ARB. The Recruiting Committee looks forward to connecting with students and professors again during the upcoming 2012 recruiting season!

Please contact us if you or anyone you know wants to join our team!

Because construction is a labor intensive industry, low productivity rates can result in substantially diminished profits. While some construction productivity variables can’t be controlled, others can be managed by implementing certain strategies.

Focus on Planning and Communication

Wasted labor hours and lost equipment time drain productivity and profits. Contractors can minimize the effects of these factors by focusing on planning both before and during a project. Initial plans should incorporate the budget for the project, along with anticipated production rates, materials, and number of workers. Once work begins, it will be important to minimize the hours that crews are left waiting for materials and equipment to do their work. Plans for a project may need to be revised when supply bottlenecks and other issues arise that threaten to reduce productivity.

Regular communication between supervisors and workers regarding the work that must be accomplished on a project can help reduce down time. Crews should be aware at the start of every day what their goals are and what steps they need to take to achieve those goals.

Review and Measure After Each Project

Going over recently completed projects with foremen and project managers provides an opportunity to identify what worked well and what did not. An in-depth review of a project can provide information that can serve as a blueprint for future projects. If a project came in on time and within budget, the factors that contributed to the successful result can be discussed. For projects that lost money, it’s critical to identify the source of the problems. Review the estimate to determine if it was too low and look to see if labor or material costs spun out of control. Getting a handle on what went wrong will suggest steps that can be taken to prevent similar problems on future projects.

More effective use of labor and faster completion of projects can lead to lower costs and greater profitability. Time spent on project planning and communication, coupled with review and measurement of results upon completion, will be time well spent.

There is a new opportunity of which every dealer should be aware. Especially given the various manufacturers charge to require dealers to renovate existing facilities to comply with image requirements. New IRS Temporary Regulations clarify for dealers whether a building expenditure is a capital improvement or a repair expense. Consequently, many costs incurred in a facility upgrade can now be treated as repairs and maintenance expense instead of as a capital expenditure. That is a big deal, especially when dealers are spending hundreds of thousands of dollars or even millions of dollars to comply with factory requirements. As you can imagine, there is a significant cash flow advantage to expensing some of these costs versus capitalizing them for up to 39 years. These new rules are especially advantageous in situations where dealers are upgrading a facility for an existing franchise.

The Temporary Regulations also changed how the disposition of structural components of a building are treated for income tax purposes. Prior to the temporary regulations, if a dealer renovated an existing building, they were not allowed to write off the remaining basis of the structural component being renovated. In other words, you had to continue depreciating the asset over its original asset life, even though it did not exist any longer. Now dealers can write these structural components off once the renovation is completed. Even if you did not do a cost segregation study and cannot specifically identify the cost of these components, you can estimate the cost and do an allocation for the remaining basis of the component and write it off. Once again, that will most likely be a significant cash flow benefit for many dealers, especially those that did not do cost segregation studies on their original buildings.

That is not all though. Even if you did your renovation within the last 10 years you can take advantage of these new rules. You can file a Form 3115 and and go back and write off the components that were demolished or abandoned and claim a refund for any taxes you paid.

Consider the following examples:

Example 1: You are a Chrysler dealer and you are required to put the “Chrysler arch” on the front of your building. The cost of the arch is $200,000. Your CPA might treat this as 39-year property, which means you will get very little depreciation each year, about $5,000. Instead, you should be depreciating that upgrade like you do a sign. In other words, you should treat it as 5-year property. In 2011 that would have meant you could have expensed 100% of the cost. What does that mean for you? Assume you have a combined federal and state income tax rate of 40% and that your floorplan lending rate is 4.50%. The present value tax benefit to you of treating this asset as 5-year property instead of 39-year property is $40,000. Most dealers I know would gladly put an additional $40,000 of cash in their pocket for no additional effort.

Example 2: You are a Toyota dealer and you are required to put new siding on your building to match the manufacturer’s image color. The cost of the new siding is $350,000. Again, your CPA might treat this as 39-year property, which would result in about $9,000 of depreciation per year. Instead, you could have treated this as maintenance, similar to painting your building. What is the benefit to you? Assuming again that you have a 40% combined tax rate and that your floorplan rate is 4.50%, the present value tax benefit is almost $70,000. Again, not a bad benefit!

Example 3: You are a Honda dealer and are required to substantially renovate your existing facility that is 10 years old. You spend $2,000,000 on the renovation. As part of the renovation you demolish or abandon $900,000 of the original building. Under the old rules you would have been required to continue depreciating the costs of these structural components over the remaining 39 years. Your deprecition deduction would have been $23,000 per year. Under the new rules you can write off the entire $900,000. What is the net present value of this benefit? Approximately $180,000!

Care should be taken when applying these new rules, as the facts and circumstances of each situation dictate the income tax treatment. You should work with a qualified Albin, Randall & Bennett dealership professional to determine the proper treatment for your situation. Please do not hesitate to contact Bart Haag at (207) 772-1981 to discuss the opportunities that await you.

According to the 2011 Bank and Credit Union Satisfaction Survey, which surveyed 8,000 consumers and was conducted by Prime Performance, consumers are more satisfied with their credit union from over a year ago.  In a competitive market, credit unions have sought ways to retain membership and improve consumer satisfaction. 

Consumers ranked credit unions higher than banks in a variety of areas. First and foremost, consumers appreciate the loyalty they receive from a credit union.  Among young and older generations alike, more consumers appreciate their credit union because they feel it provides exceptional service with a more personal experience when compared with banks.  This foundation has helped many credit unions throughout this tough economic time.  Overall, 90% of consumers surveyed stated they were satisfied with their credit union and 84% said they would not switch to another institution according to the survey.  Banks continue to struggle with winning customer trust and loyalty and are viewed as putting institutional interests ahead of the consumer.

Consumers also feel their credit unions have the most competitive fees in the industry.  Through various pricing strategies, credit unions can overcome obstacles they face from bigger banks with their fees. 

In comparison to the industry, credit unions continue to provide a safe haven for members and exceptional services.  With few problems and complaints from customers, heightened overall satisfaction, and high recommendation rates, credit unions seem to be the focal point in the financial industry.  If credit unions stick to their roots, they can only look to improve themselves in the foreseeable future.

Albin, Randall & Bennett is proud to serve the credit union industry. Contact Cheri Walker or Holly Ferguson to discuss strategies for remaining competitive while maintaining lower fees.

Manufacturing – The foundation of the economy. A strong economy needs a solid foundation, which has traditionally been, and will continue to be the manufacturing industry. Although the end consumer may have shifted from primarily domestic to a combination of domestic and global, the manufacturing industry itself has adapted and survived in a changing environment. 

The State of Maine is a key example of how manufacturing is an important component of the economy. Since Maine first became a state it has supported itself through manufacturing. Maine’s identity has come from being a natural resource based economy, which has strengthened its manufacturing sector. Maine has always been notorious for its production of lumber, shipbuilding, shoe making, and textile manufacturing. 

Today Maine continues to be identified as a manufacturing state with manufacturers ranging from traditional shipbuilding and paper manufacturing to aerospace, bioscience, food, and plastics/composites, just to name a few. As a matter of fact Maine is the second largest paper producing state by volume in the United States. Maine also has some of the last American made shoe manufacturers. While some may question the future of the American manufacturing industry, manufacturing is alive and continues to have a valuable presence in Maine.

The manufacturing industry makes a vital contribution to Maine’s economy by employing a large workforce. Despite Maine’s high unemployment rate, Maine manufacturers continue to seek qualified workers to fill open positions.  As the industry has adapted to technological changes, the jobs have become more high tech requiring a skilled workforce. The jobs are available, but the challenge is finding the workers with the appropriate skills.

As people continue to question the survival of the American manufacturing industry, I have no doubt that Maine’s economic foundation will continue to be manufacturing. Maine has all the right assets to continue to prosper through manufacturing; our hardworking people, educational institutions to train the next generation of workers, our natural resources, and a strong reputation for product quality. Through hard work and innovation Maine’s manufacturing will continue to be celebrated for generations to come.

Albin, Randall & Bennett is proud to be part of Maine’s manufacturing tradition.  Please contact Holly Ferguson to discuss how your company can be more financially successful and tax efficient.

With all that is going on in the economy, it comes with no surprise that employee fraud is on the incline.  For auto dealers, one area of high fraud can be found within your own parts department.  Yes, that is correct.  Your parts department can easily be infiltrated with fraud due to the vast quantity of inventory you hold.  While stealing tires may be hard, smaller, less expensive items can be an area of prime interest for someone looking to steal. 

Do not think your dealership is immune.  Employees across the board have devised plans that allow them to sell inventory while pocketing the change.  There are some simple ways you as a dealer can look to decrease the fraud potential in your dealership:

• Increase internal control through the use of periodic audits.  Sampling certain inventory areas of high interest/sales volumes could help detect fraud. 
• Ensure that deposits are made daily to prevent an employee from stealing cash.  This person should be separate of the person who counts the cash. 
• Dealers can also set up a system that has the employee print an invoice to a separate person who is in charge of handling cash. 
• You can also set up a way to track discounts separately of regular sales.  Taking discounts is an easy way to commit fraud, and management should monitor these discounts closely. 
• Require approval of any returned items before issuing a refund.

These minor internal control modifications along with your system in place can help reduce the chance of thousands of dollars walking out the front door.  Even though it may not prevent all fraud, it can help reduce fraud and hopefully keep your employees honest.

On a side note, a simple way to improve inventory is to hold off from ordering special parts that may sit on your shelf and hurt your overall financials.  Look to send back inventory in a timely manner if you find that there is no potential to sell the inventory in the foreseeable future. 

Please contact one of our dealership specialists if you have specific questions or would like more information.

Before you pull a bucket loader up to the back door and cart everything off to the nearest landfill, please check our record retention guideline. 

It’s the time of year for clearing out last year’s files to make room for the new year, and many of you already have a back room full.  It may be a good idea to destroy some documents, but please be careful which items you remove, and consider whether those documents should be shredded before they leave your custody. 

Any documents with confidential company or personnel information, particularly social security numbers, should be destroyed with care.  If you don’t have the capacity to shred all the documents yourself, consider hiring a specialty company to perform this function.  Do a little research to make sure the document destruction company has a good reputation before you hire them.

Remember, you may want to get out from under all that paper, but it pays to be careful with your company’s historical records. 

Photo courtesy of office.microsoft.com/en-us/images/

Congress and the President have teamed up to increase opportunities for our military veterans to obtain employment.  Now, more than ever, people are looking for employment.  The Vow to Hire Heroes Act was passed to expand job credits to employers who hire out-of-work veterans. 

The law, which was signed on November 21, 2011, allows employers to take a credit of $2,400 when hiring a veteran who has been unemployed for at least a month.  Employers who hire a veteran who has been unemployed for at least six months can take a $5,600 credit.  Finally, the credit per worker jumps to $9,600 when hiring an unemployed veteran with a service-connected disability.  This credit is expected to expire at the end of 2012.

The credit is available for those who begin work for an employer after November 21, 2011.  Furthermore, the credit is also available to tax-exempt employers.

To qualify for the credit, employers must complete IRS Form 8850 and submit it to the state unemployment agency for certification no later than 28 days after the date the new hire begins employment.

While the credit is appealing, one should not hire based solely on the credit.  The credit is merely an incentive to hire an unemployed veteran who is qualified for the position. 

Contractors can also breathe easier because new legislation eliminates a controversial rule that required federal, state, and local governments to withhold three percent of certain payments to contractors for goods and services.  This law, which was scheduled to take effect in 2013, has now been repealed. 

Have you ever considered an Employee Stock Ownership Plan (ESOP)?  While there is much to learn about them, they may be the solution to any cash woes that you may be facing.  This article will detail some of the benefits of an ESOP and could help boost your bottom line.

An ESOP is one of several qualified employee retirement plans that is available to employees.  The key difference is that they are set up to invest in the company versus in someone else.  The hopes of it are that if your employees are invested into the company, they will want to boost revenues for their own benefit as well.  It’s a win-win situation!

You may be wondering, how do they work?  It is simple.  The dealership must first establish a trust fund that makes annual contributions to the fund allowing the company to purchase stock.  Second, the ESOP will allocate shares to individual employees who are invested in the ESOP plan. 

The main advantage of an ESOP is that it allows an owner to sell company shares to employees; in return, it is reinvested in a portfolio, which allows you as an owner to retain control of the business.  Most importantly, it can allow you to avoid taxes indefinitely!

Through the ESOP, there is the option to provide a tax-saving exit for you as an owner.  ESOPs are designed to invest mainly in the stock of the sponsoring employer.  A newly formed ESOP can borrow money from the corporation or a commercial lender.  For tax purposes, the ESOP must retain at least 30 percent of the company stock. 

Over time, the contributions made to the plan will pay both the principal and interest on the loans.  Since the contributions are deductible, the company is able to deduct both principal and interest.  This is an advantage to the company.  More importantly, the owner can elect to defer the federal income tax bill on the profit selling shares.  In order to qualify, you must reinvest the sale proceeds from the stock in “qualified replacement securities.”  The deferred gain from this sale will help reduce the tax basis you have in it. 

Indirectly, employees are stockholders through the ESOP. If an employee leaves, they are allowed to cash in their shares and have them repurchased by the ESOP. 

As an owner, you may be wondering, will I lose control of my business?  No, you have control over the amount of shares that are sold so it is still in your best interest.  Simply put, it allows business owners to trade their company stock for investment securities while potentially eliminating your federal income tax bill!

Please contact Albin, Randall & Bennett if you have questions or would like more information.