Fake Accounting Invoices Used to Steal Credentials

A recently resurfaced banking Trojan is now being used in a malware/phishing campaign targeting users of accounting services provider Xero. Similar attacks have also been used against users of Intuit and QuickBooks. The goal of these attacks is to gather login details for banking and financial accounts. Here’s how it works, what it looks like, and what do if you get this message:

How it works:

The attack sends a spoofed email message that appears to come from Xero/Intuit/QuickBooks regarding an invoice and attempts to get the recipient to click a link to download the invoice. This link will download a ZIP file which contains another file that appears to be the invoice itself but is actually a malicious JavaScript (.js) file which installs the malware.

What to do:

  • Before clicking any link in an email, hover your mouse over that link and observe where it will take you. Either a pop-up will appear next to the link, or look at the bottom of your email program to see the actual link address. If you don’t recognize the link or it’s slightly altered (for example, intuito.biz instead of intuit.com) from the official site: Don’t click on it!
  • Be cautious around ZIP files, often they are used by malware to disguise contents.
  • If you have already clicked on or opened something suspicious that doesn’t show or do what you expect: run extra malware scans – in addition to your regular anti-virus software, contact your trusted IT advisors to see if further checks are necessary, and take precautions to change your account passwords especially for financial institutions – from another computer!

What Changes Are Coming To Your Social Security and Retirement Plans in 2018?

The Internal Revenue Service (IRS) recently released cost of living (COLA) changes for 2018.  From 401(k) plans to individual retirement accounts to Social Security, the federal government has been busy in recent weeks adjusting numbers for 2018. Whether you’re an employee or business owner, senior management or nonexempt staff, these changes may affect how you approach retirement in the coming months and years.

401(k) elective deferrals:

Employees who participate in 401(k)’s, 403(b)’s and certain 457 plans can electively defer up to $18,500 of compensation in 2018, up from $18,000 in 2017.

Individual Retirement accounts:

Eligible individuals will be able to contribute up to $5,500 to their IRA in 2018, unchanged from 2017.  The deduction phase out at certain AGI levels for individuals covered by employer plans will increase as well as AGI levels for allowable Roth contributions, depending on filing status.

Catch-up contributions:

Eligible individuals age 50 and above may continue to make contributions to IRA’s, 401(k)’s and other savings arrangements in 2018.  The amounts of $1,000 for IRA’s and $6,000 for 401(k)’s, SEP’s, 457’s, and 403(b)’s remain unchanged for 2018.

Annual compensation limits:

The maximum annual compensation counted for an eligible employee participating in 401(k)’s, SEP and certain other qualified plans will increase to $275,000 in 2018, up from $270,000 in 2017.  The total amount that can be contributed will increase from $54,000 to $55,000.

Social security and Supplemental Security Income (SSI):

Social Security and SSI beneficiaries will receive a 2% increase in their benefits in 2018 based on the increase in the Consumer Price Index for the year ending September 30, 2017.  However, beneficiaries having the Medicare Part B premiums deducted from their benefits may see an increase in the amount of monthly premiums by the lesser of $3.00 or their COLA increase in monthly Social Security benefit.

Other Social Security related changes for employees and employers:

The maximum taxable earnings for Social Security taxes will increase to $128,700 in 2018, up from $127,200 for 2017.  The Social Security withholdings will continue at 6.2% on the maximum earnings and the Medicare tax withholding will continue at 1.45% on all compensation.

In 2018 individuals under full retirement age who have filed for Social Security benefits can earn $17,040 per year or $1,420 per month before $1 in benefit will be withheld for every $2 of earnings above these limits.  In the year the individual reaches full retirement age, they may earn $3,780 per month during the months prior to attaining full retirement age

Please contact us if you have any questions on these changes or the new phase out levels.

Charitable Contributions from Your IRA: What You Need To Know

Taxpayers that are age 70 and a half may direct their IRA to make a direct contribution to a qualified charity of up to $100,000.  This contribution counts toward the required minimum distribution.  The advantage to this is that the distribution to the charity is not included in the taxpayer’s adjusted gross income (AGI).  This could further reduce their tax since certain taxes, income and deduction items are directly affected by AGI.  Only an IRA is eligible to make this contribution.  SEP IRA’s and other qualified retirement plans are not eligible.

Congress is currently considering significant changes to the tax code.  One of these changes is to significantly increase the standard deduction amount so that fewer taxpayers will be able to itemize their deduction.  At least one of the proposals also eliminates the state tax deduction from itemized deductions.  If these changes are passed, then the ability to make charitable contributions from IRA’s will be much more valuable for taxpayers aged 70 and a half if Congress does not also make changes to the contribution rules.

Stay tuned to the news and to our blog for updates as Congress works through the proposed tax changes.  If you have any questions, please click the button below to speak with one of our Certified Public Accountants.

Bitcoin: What is it and How is it Reported for Tax Purposes?

Bitcoin has been all over the news recently. Although we hear a lot about it, we are left with numerous questions. What is it, how does it work, and how we deal with it from a tax reporting perspective? Now, other cryptocurrencies are hitting the mainstream. All of this makes us wonder, will these cryptocurrencies continue to shape our future or is all of this a fad that will die down within a year? Jamie Dimon, chairman and CEO of JPMorgan Chase stated in October that “If you’re stupid enough to buy bitcoin, you’ll pay the price one day.” More recently, on December 12th, he stated: “Look, everyone has a personal opinion about Bitcoin. I remain highly skeptical of it. But as I’ve said previously, I’m open-minded to uses of cryptocurrencies if properly controlled and regulated.”

What are Cryptocurrencies?

A cryptocurrency is a digital or virtual currency that uses cryptography for security and is not issued by any central authority. For this reason, it is difficult for governments to manipulate or provide any kind of control or oversight. Bitcoin is by far the most popular cryptocurrency, but there are many other cryptocurrencies that are beginning to gain traction. These include Ethereum, Ethereum Classic, Litecoin, Ripple, and Dash.

How about Bitcoin?

Bitcoin was the first cryptocurrency. It was released in 2009 as an open-source software. It, along with other cryptocurrencies, leverage the use of blockchain, which is a digital ledger in which transactions me in bitcoin or another cryptocurrency are recorded chronologically and publicly.

The market price of a bitcoin remained substantially low until 2013, where it shot up to over $1,000. Since then, market price fluctuated in the $200-$800 until this year, where it hit $10,000 as of a couple of weeks ago, and is trading at $16,000 as of the date of this article. The Winklevoss twins, who many may know from their famous lawsuit against Mark Zuckerburg, recently became the first “Bitcoin Billionaires.”

Tax Reporting for Bitcoin

The IRS has released some guidance for the tax implications of Bitcoin and other cryptocurrencies (virtual currencies) with the release of Notice 2014-21. Within this notice, they state that virtual currencies are treated as property for federal tax purposes. Fair market value must be determined in U.S. dollars and capital gains rules apply if the taxpayer sells or exchanges virtual currency.

However, there has been some debate about the applicability of like-kind exchanges. The IRS has remained silent about 1031 (like-kind) exchanges for virtual currencies. One idea is that Bitcoin for Bitcoin exchanges might qualify, but a Bitcoin for Ethereum trade might not qualify. However, this question might be irrelevant if a new tax bill passes that limits like-kind exchanges to real-estate property.

The payment of virtual currency can also constitute wages if paid to an employee. If an independent contractor receives more than $600 of virtual currency, Form 1099-MISC will be required.

How about Bitcoin Mining?

The use of computer resources to validate transactions and maintain the public Bitcoin transaction ledger (mining), is classified as income at the fair market value of the virtual currency as of the date of receipt. Mining constitutes a trade or business. This can constitute self-employment income if the activity is not undertaken by the taxpayer as an employee.

Stay tuned for updates on this subject and if you have any questions, set up your no-cost consultation or give us a call 704-841-1120.

The Goodwill Rule for SBA Changed: What You Need To Know

As of January 1, 2018, SBA has changed the Business Acquisition Equity Requirements. This requirement is commonly referred to as the “Goodwill Rule.”

Updates are as follows:
  • They eliminated the $500,000 benchmark all together.  
  • They now require that the buyer puts down a minimum of 10% of the Project Costs. (NOTE: This is 10% of the project costs not the purchase price. If working capital is included, along with closing costs and SBA Fees, they have to come up with 10% of everything.)
  • They changed the seller note counting as equity from 2 years standby to standby for the life of the SBA loan.  

You might want to continue preparing your clients for seller notes as most lenders have not figured out how they are going to treat these new rules. After speaking with several lenders recently about this and every lender seems to be scrambling to adapt to this change. Also, your buyers might want the seller to have skin in the game, even if it is not for equity reasons. 

If you have questions regarding the Goodwill Rule, please email Mark Pompeo with Wells Fargo SBA Lending at Mark.Pompeo@wellsfargo.com.

For any additional questions, please contact Saeed Moghadam with our Capital Advisors team. We provide the investment banking function for small to mid-sized companies and help large organizations identify acquisition targets. Our team provides middle market companies with their capital needs, due diligence, buy and sell side searches, in addition to analyzing and approving an overall growth strategy. We have the experience working for the largest banks and CPA firms in the country. Our professionals provide the knowledge of a large firm and the personal attention of a small firm.

Protect Yourself Against The New Tax Refund Scam

The IRS has reported that the number of potential victims impacted by a tax scam has increased from a few hundred to several thousand in just a few days. Putting a new twist on an old scam, criminals are taking taxpayer information, filing fraudulent returns, and depositing erroneous refunds into real taxpayers’ bank accounts. The criminals then contact the victim and use a variety of tactics to attempt to claim the refund.

The scam appears to have originated from tax preparers’ offices, where computers that have been infected with malware provided criminals with access to thousands of consumers’ return data.

“Speed is critical,” the agency said in its advisory. “If reported quickly, the IRS can take steps to block fraudulent returns in a preparer’s clients’ names.”

As tax preparers increase their security settings to protect client tax and financial files, it is important that consumers also protect themselves by knowing identity theft warning signs.

Top Indicators of Tax-Related Identity Theft
  • More than one tax return was filed using your Social Security Number 
  • IRS records indicate you received wages from an establishment at which you never worked
  • You owe additional tax, receive a refund offset notice, or have had collection actions taken against you for a year you did not file a tax return
If you become a victim and notice an erroneous deposit in your account, take the following steps:
  • Contact your tax preparer immediately.
  • Contact the Automated Clearing House (ACH) department of the bank/financial institution where the direct deposit was received and have them return the refund to the IRS.
  • Call the IRS toll-free at 800-829-1040 (individual) or 800-829-4933 (business) to explain why the direct deposit is being returned.
  • Be aware that interest may accrue on the erroneous refund.
  • Communicate with your financial institution and be prepared to close your account, since the information has been accessed by criminals.

You can also access the steps for returning your erroneous refund directly on the IRS website.

Remember: The IRS does not initiate contact with taxpayers by email, text, or social media, or phone calls to discuss your account. If you receive a message, be suspicious!

LBA Haynes Strand is dedicated to alerting the public on any scam or fraudulous attempt to steal identities or gain access to important financial information. If you are interested in automatically receiving updates such as this, please subscribe to our blog.

Scam Alert: QuickBooks & Intuit Phishing Emails

Recently there has been a rise in the number of phishing emails that appear to be sent by QuickBooks and Intuit. These messages state that the customer has a payment due on an open invoice. The balance due on the fake email is a higher amount than the typical cost of the software and any subscriptions offered by Intuit.

3 Common Methods for Phishing:

  • Spoofed Email Address – We have seen fake email addresses such as intuit@hmrsss.com and quickbooks@bostonsat.com.
  • Fake Link – Never click on a link in a suspicious email. These links may take you to a site that asks you to log in, providing hackers with your account information. Use your mouse and hover over the link to see if you can spot a hidden web address that is different than the one on the surface. An example of a message that would be included with a fake link:

       “This invoice notification is being delivered to you by Intuit Invoice Services on behalf of Veri Facts Inc. Click the link above to find an invoice.”

  • Forged Website – Fake websites may appear like real sites by using company logos and images. When visiting financial sites, enter the known address into the browser field manually.

Phishing was listed as one of the top tax scams of 2017 and continues to be an issue.

If you receive these emails – do not click any links! Forward the email to spoof@intuit.com immediately. For more information and to learn steps to protect yourself from a phishing attack, see the Intuit forum article here.

LBA Haynes Strand is dedicated to alerting the public on any scam or fraudulous attempt to steal identities or gain access to important financial information.  If you are interested in automatically receiving updates such as this, please subscribe to our blog.

The Role of the CFO

Over time, the role of the CFO has evolved from transaction oversight to one of strategic importance. The CFO has become a true business advisor which both business owners and senior leaders rely on.

Typically, the CFO will model the owner and leader’s vision into a financial pro-forma to evaluate whether they can and will make the necessary investments (primarily financial and cultural) to achieve their goals.

Business owners need an in-house counselor, who is invested in the financial future of the company, to aid in decision making. The CFO provides resources needed to help make these decisions and “monetize” the company’s vision.

Resources the CFO provides:

Business Planning

  • Provide your business plan with financial rigor

Financial Projections

  • Create a bottom-up forecast and detailed budget with spending plans by department

Rolling Cash Forecasts

  • Enable you to respond, in real time, to emerging business conditions

Annual Operating Budgets

  • Help you keep track of maintenance operations, salaries, and interest payments

3 and 5 Year Plans

  • Forecast expenditures and revenue for three and five year periods
  • Create corresponding strategic goals

Monthly Management Reports

  • Create reports with previous and current financial data


  • Build a financial model to set price

Managing Debt

  • Establish company budget and payment schedule to repay and keep debt low

Mergers and Acquisitions

  • Advise on M&A initiatives
  • Complete business valuation

Equity and Debt Negotiations

  • Restructure your debt to improve liquidity


  • Ensure proper redistribution of your company’s assets and property

With the resources they provide, the CFO is vital to driving business improvement initiatives. Not only do they want to sustain your accounting function, they want to improve it. To learn more about how our CFO Services can help you and your accounting department reach the next level, contact us today!

Fraud Alert: Identity Theft Fraudsters Targeting Small Businesses

In recent years, we have seen a marked increase in the amount of identity theft cases due to our increased use of the internet. Generally, as tax professionals we mainly see the impact on individuals from these schemes. However, there is an surge of small businesses being targeted now.

The Journal of Accountancy recently posted an article regarding this increase. The article highlights signs that you may have been a victim of identity theft and provides information on the ways both the IRS and state tax agencies are working to combat these fraud schemes. To read the full article click here.

LBA Haynes Strand is dedicated to alerting the public on any scam or fraudulous attempt to steal identities or gain access to important financial information. If you are interested learning more, contact us today.

When to Hire a CFO

As your company grows, both in size and revenue, it becomes necessary to have a leader who can manage and think strategically about financial decisions. While CPAs are critical to the success of the organization, they may not have the time to dive in and focus on the financial future of the company. When you hire a CFO you have the opportunity to add value through a variety of resources and collaboration.

Here are a few indicators that it is time for you to hire a CFO:
  • CEO is working more “in” instead of “on” the business
  • Complexity of the business begins to erodes profits
  • Business decisions are hindered by lack of timely financial data
  • An early warning system would have prepared the business for significant up or downturn
  • Lack of planning unexpectedly interrupted cash flow
  • Lead bank is concerned over quality and timeliness of financial reporting
  • The business growth plans include an acquisition strategy
  • Company experiences higher than expected tax liabilities due to lack of tax strategy

The resources the CFO provides can add value to and enhance the strategic direction of the company.

If you are interested in learning more or would like to hire a CFO, contact us today!

The Impact of Increased Take Home Pay on Your Tax Return

What could increased take-home pay mean for your 2018 tax return?

The recent tax reform has instituted a variety of changes in both individual taxes and business taxes starting in 2018. Many Americans can expect a decrease in tax, and with the new federal withholding tables released earlier this year, an increase in take home pay. Less tax and more pay, what’s not to like?

The goal of this change in federal withholding tables was to adjust for the new changes that will impact individual taxpayers. Some of the major changes include a decrease in tax rates, an increase in the standard deduction, and a repeal of personal exemptions.

However, we have found that the change in withholding may not be enough to cover tax liability in many cases. In the past, many relied on Form W-4 without much extra thought to get them close to the amount needed to pay their tax. This year, we suggest analyzing it a little further. Taxpayers may get less of a refund than they are used to or even owe tax in April 2019, even though their tax rate is lower.

Example: Vince is single, has no dependents, and earns $50,000 in wages in 2017. He is paid on a bi-weekly basis. The result is $296 in federal income tax being withheld from each paycheck or $7,707 withheld for the year. Vince’s actual tax liability, including the 2017 standard deduction of $6,350 and exemption of $4,050, is $5,645. This gives Vince a refund of $2,062.

Under the new tax law, assuming the same income, the 2018 standard deduction of $12,000 and no personal exemption, Vince’s tax liability will be $4,370. Due to the withholding changes implemented in February, Vince’s federal income tax being withheld for the year will be $6,247 (The above $296 for two pay periods and the new rate of $236 for twenty-four pay periods). This gives Vince a refund of $1,877.

As you can see above, although Vince’s tax liability decreased $1,275 from 2017 to 2018, he receives less of a refund. This example does not take into account any extraneous circumstances such as investment income, itemized deductions or dependents that many taxpayers have. If Vince has other sources of income and got a smaller refund for 2017, he could owe tax for 2018.

Luckily, the IRS has released a tax calculator to help check how much you should be withholding in 2018. If you are not familiar with how to use the calculator, this video will demonstrate how.

If you identify a needed change in your withholding, please contact your employer to fill out a new Form W-4. LBA Haynes Strand can also provide additional analysis and answer any other questions you might have about this subject.

South Dakota v. Wayfair, Inc. Tax Implications

On Thursday June 21, 2018, the Supreme Court issued its much anticipated opinion in the landmark case of South Dakota v. Wayfair, Inc., fundamentally changing the sales tax landscape in the United States.

The Case

South Dakota enacted a law requiring out-of-state sellers to collect and remit sales tax as if the seller had a physical presence in the state. The law only applied to sellers who, on an annual basis, delivered more than $100,000 of goods or services into the state or engaged in more than 200 separate transactions for the delivery of goods or services into the state.

South Dakota sought to enforce the law against Wayfair, Inc. and other online retailers who exceeded the limits of the law. Each of the retailers had no employees in the state and owned no real estate in the state.

Based on prior precedents (National Bellas Hess, Inc. v. Department of Revenue of Ill., 386 U.S. 753, and Quill Corp. v. North Dakota, 504 U.S. 29), the lower courts ruled that the law was not enforceable due to the lack of substantial nexus* with the state under the “Physical Presence” test outlined in these cases.  That test allowed states to require retailers to collect and remit sales tax if the retailer had a physical presence (e.g., employees or operating an office) in that state. The mere shipment of goods into the state did not satisfy the physical presence test.

The Result

In a 5-4 verdict, the Supreme Court explicitly overruled the prior cases and held that, while physical presence provided substantial nexus, such nexus also included a certain level of business (delivery of goods or services) conducted within the state.

The Court found that, in this case, the nexus is clearly sufficient based on both the economic and virtual contacts the retailers have with South Dakota. The state law applies only to sellers that deliver more than $100,000 of goods or services into South Dakota or engage in 200 or more separate transactions for the delivery of goods and services into the state on an annual basis.  This quantity of business could not have occurred unless the seller availed itself of the substantial privilege of carrying on business in South Dakota.  The retailers are large, national companies that undoubtedly maintain an extensive virtual presence.  Thus, the substantial nexus requirement is satisfied.

The Implications

Will you now be required to collect and remit sales taxes in states to which you deliver goods or services?

South Dakota v. Wayfair, Inc. allows all states to enact laws requiring out-of-state sellers to collect and remit sales taxes on sales to customers in that state provided the law applies a safe harbor to those who transact only limited business in the state.  While South Dakota chose an annual $100,000/200 transaction limit that the Court found sufficient, the Court created a level of uncertainty by leaving it up to the states to decide what safe harbors might be sufficient.  We expect we will see a great deal of activity as various states make their statutes consistent with the court’s ruling so nexus can be asserted.  For states that already have similar statutes in place, it is unclear whether they will set a future date for enforcement or take the position that the statute has been enforceable since it was put in place.

*Nexus – When referring to sales tax, means that a company is connected to a state and because of that connection, a company must collect tax, fill out a tax return, and send the collected tax to a state.

Given that sales tax laws are established on a state-by-state basis, all businesses making sales of goods or services to customers in multiple states should evaluate the impact of the Court’s holding. 

This ruling is just the beginning of the process and over the coming months we will be monitoring which states are adopting these types of nexus rules and when they will become effective. If you would like more information on how this may impact your business, contact us today.