Nick Magone, CPA, CGMA, CFP®

3 reasons you shouldn’t talk to the IRS yourself if you owe back taxes

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If you owe money to the IRS, it might sound like common sense to try to tackle your tax problem on your own. However, one of the worst things you could do is talk to the IRS directly without proper representation.

As an expert tax resolution firm, we encourage all readers facing a tax problem to contact us for a free consultation.

The IRS is not on your side and their primary goal is to collect the taxes they believe you owe. In this article, we give you 3 reasons why talking to the IRS directly could get you into deeper trouble.

1. You have rights.
Contrary to popular belief, you DO have rights as a taxpayer that you probably don’t even know exist. One is the right to representation. If an IRS revenue officer or revenue agent calls or “visits” you, did you know you are under no obligation to answer any of their (very intrusive and condescending) questions? Politely respond by asking for their contact information, explaining that you’re in the process of hiring a professional to represent you and that this person will contact them directly. A CPA or Enrolled Agent that deals with IRS problems for a living knows the “ins” and “outs” and how to deal with the IRS so that your rights are protected. A tax resolution specialist also knows how to get you the lowest possible settlement allowed by law. Generally, our clients never meet or speak with the IRS once we’re on the scene.

2. Answering questions can dig you into a deeper hole.
If you are being audited or about to be, the IRS will ask you about 50 very intrusive questions in your initial interview. How you answer these questions will dictate the fate of your case.  Having a tax resolution specialist conduct these meetings WITHOUT you is the best course of action we can recommend. Half of the referrals to the IRS’s criminal investigation division come from that “nice” auditor sitting across the table at the audit.

3. They won’t tell you about all your settlement programs and options. The just want their money.
If you owe between $10,000-$25,000+, the IRS has many NEW flexible programs under their Fresh Start Initiative available to taxpayers. These include Offer in Compromise, Partial Pay Installment Agreements, Payment Plans, Penalty Reduction, and Currently Not Collectible Status to name a few. Each carries with it its own unique process, procedures and qualifications.  Having an experienced tax pro in your corner ensures you are taking advantage of the best options available to you.

One last thing….

Ask yourself this question: Would you go to court without a lawyer?

If you answered “yes” hopefully you know the law inside and out concerning your case, but if representing yourself doesn’t seem like a great idea it’s best to hire somebody who is well versed in the subject matter. Well, it’s the same thing with the IRS. Having someone who knows how to negotiate the IRS’s maze of rules, regulations and the 74,000 pages of the Tax Code and deal with the IRS may be the best money you’ve ever spent.

If you want the help of an expert tax resolution professional who navigates the IRS maze for a living, reach out to our firm at (973) 301-2300. We’re happy to schedule a no-obligation confidential consultation to explain your options to permanently resolve your tax problem.

The rise of technology: What it means for today’s — and tomorrow’s — CFOs

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Organizations of all sizes are realizing the benefits of a digital transformation, and they’re turning to CFOs to adopt and develop critical technology-related skills. Once considered a numbers-only role, CFOs are now balancing traditional fiscal responsibilities with the increasing demand for data-driven analysis. As technology continues to steer change in the business environment, CFOs are playing an instrumental role in the success of a company’s digital initiatives.

A broader range of expertise
According to the Grant Thornton 2019 CFO Survey, 95% of finance executives report that the CFO of the future must possess increased levels of technology expertise, including data analytics. In fact, 55% identified data analytics as the number one skill they want to develop within the finance function, followed by:

  • Business strategy (40%)
  • Operations management (36%)
  • Technology acquisition (34%)
  • Innovation/entrepreneurship (32%)

In this digital era, CEOs look to their CFOs to lead the way. Finance teams are the go-to for delivering analytics and insights that support strategy and decision-making to help organizations identify new market opportunities, uncover trends, develop smarter forecasts for business planning and more. In the long run, organizations that embrace the digital will have the insights to bring innovative ideas to market before the competition. And the more time devoted to harnessing data and interpreting analytics, the greater the asset CFOs can be to their organizations.

Talking numbers
According to the study, finance teams are bumping up their use of emerging technology functions in the following areas:

  • Accountants payable/receivable (46%)
  • Financial reporting and control (44%)
  • Financial planning and analysis (43%)
  • Budgeting and forecasting (42%)
  • Corporate development/strategic planning (41%)

Going forward, executives plan to expand their strategic use of technology, especially in terms of financial planning and analysis (30%) and financial reporting and control (28%).

Future-proofing your CFO career
For finance professionals who want to achieve long-term success, Grant Thornton recommends adopting the following guidelines:

  • Identify processes that would benefit from automation and digitization. Partner with C-suite peers to determine which opportunities could offer the most value.
  • Shift your mindset to machine-first. Automate manual or low-level work, so employees can take on more strategic roles. Make sure you provide them the training to do so.
  • Implement better communication. How does finance interact with other business functions? Seek out new processes to ensure open lines of communication and mutual respect for each department’s needs.
  • Align investments. Determine how to measure the effectiveness of your digital transformation initiatives. How do technology investments link to your business investments and your ROI?
  • Create a culture of innovation. Give employees the tools to create and thrive in a digitally-aligned workforce.

CFOs: Rising to the occasion
Organizations aren’t just looking at data as a strategic asset, they’re executing strategies that leverage data to improve their business outcomes. And CFOs are at the forefront, driving initiatives to improve the bottom line.

Charitable giving in 2019: How nonprofits can motivate donors to continue giving

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For nonprofit organizations, last year’s Tax Cuts and Jobs Act is certain to impact giving levels beyond simply 2019. With less incentive to give, will donations decline and impede the important work that nonprofits like yours set out to do?

Under new regulations, the U.S. standard tax deduction has increased across the board, leading to an anticipated reduction in taxes and less need for itemization. This can have two potential impacts on giving:

  • If people have more money, they’ll give more.
  • If people can’t write off their donations, they won’t give as much.

America’s altruism is being put to the test.

Getting a pulse on your donor base
According to the Why America Gives Report, nearly half of U.S. donors planned to donate more money to charity in 2018 compared to 2017, including 74% of households with an annual income of $100-$150K, and 85% of households with $150K+.

Yet that same studied revealed that 42% would definitely/probably donate less if they knew they were getting less of a tax incentive. And 10% of Americans reported that they planned to reduce their giving, admitting that a write-off is their primary reason for donating to charity.

Strategic opportunities for nonprofits
A recent GuideStar webinar shared tips and opportunities that nonprofits can leverage to help motivate donors to maintain generous levels of giving regardless of tax incentives:

  • Focus on individuals rather than large corporations, and provide a personalized giving experience that makes them feel like a valued part of your mission.
  • Learn what pulls at their heartstrings. Donors are following their hearts, not their pocketbooks. What issues encourage them to take action?
  • Invest in tools to diversify your approach, such as online fundraising software. Donors of all generations expect you to have an online presence, making it easier for them to give.
  • Empower donors. Give them options to make monthly donations, create birthday fundraising campaigns or earmark donations for specific projects.
  • Maintain control over your online data. Online software should capture donor information, so you can use it to establish trust and build long-term relationships.

Want to attract higher-value donors? Data is the key
Marketing drives brand awareness and donations. And the more you know about your donors, the better the marketer you’ll be. How do they get their news? Do they prefer Facebook or Twitter? Do they have kids? Reach out and get better acquainted with them. Survey them. Set up one-on-one calls. Thanks to technology, new tools and AI, today’s marketers are more sophisticated than ever before, and you can use these resources to better know, target and reach your donors.

Online fundraising platform Classy offers these marketing strategies to get you started:

  • Eliminate barriers. It’s vital that your marketing and development teams work together for the success of your organization.
  • Understand donors’ communication preferences. Use marketing channels that will drive the highest response rate, not simply what’s most convenient for you.
  • Automate to help nurture donor engagement. But don’t let technology replace personal relationships. The value of one-to-one conversations will never go away.
  • Integrate your offline and online appeals. The USPS has proposed to increase the cost of first-class stamps by 10% and marketing mail (bulk rates), by 2.4%. By adding an online component to an offline campaign, you can cut costs while working to reach your goals.
  • Cultivate a network of social champions. The Why America Gives Report reveals the best way to reach social media audiences is through relatable champions of their causes. If your organization doesn’t have a social media presence, you won’t get too far this year without one.

Unlocking the value of recurring donors
Classy reports that recurring donors are over five times more valuable than one-time donors. These are people who want to see change happen and want to be a part of it. The takeaway? Don’t fear asking for more.

  • Use multiple channels for outreach. Data shows that charities are not reaching out enough. You need to treat recurring donors differently than one-time donors and communicate more frequently than a monthly transactional email.
  • Share the impact of their recurring gifts. If someone is making the decision to support a mission on a monthly basis, they want to learn about the impact of their gifts.
  • Prioritize personal relationships. These are the people supporting your cause. Even if it’s just with a subset of your recurring donor base, develop a personal relationship to help deepen their desire to give.

It’s too soon to tell how new tax regulations have influenced the generosity of your donors. Your best defense against donor attrition is a strong, coordinated offense.

8 ways to cut costs and boost your small business bottom line

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They say little things mean a lot. And relatively small expenses can add up to a huge amount of money your small business could be wasting. By cutting costs, you can help enhance your bottom line in several ways. Here are 10 ideas for various types of businesses to consider:

  1. Improve cash flow. If your business is seasonal, ask your biggest vendors to let you stock up now but pay when customers buy. Also, check into renegotiating your leases to pay only those nine or 10 months out of the year when you experience the greatest number of sales.
  2. Investigate new products. For the next few weeks, have your customer service staff keep a list of products (or services) that customers would have bought if you offered them. Then calculate how much revenue you would have earned by stocking the three most requested items.
  3. Reduce waste. Ask your production foreman to estimate how much you spent in the last six months on lost production, manufacturing errors, injuries and re-works. Then, calculate how much extra you would have made by paying your crew a small percentage of the materials waste reduction and hourly pay required to fix mistakes.
  4. Do some purging. Ask your plant foreman to give you a list of equipment that’s idle most of the time. Calculate how much you would save in insurance, carrying charges, property taxes, income taxes, maintenance and storage space by getting rid of it.
  5. Solicit innovative ideas. Ask everyone who performs day-to-day work in your business — delivery people, administrative assistants, customer service personnel, production employees —  to write down five ways your company could save money or expand sales. You may be surprised by the great ideas you receive.
  6. Renew old acquaintances. Send letters or emails to lapsed customers. Thank them for their past patronage and ask them to come back. Track how many call to reinstate their accounts.
  7. Reassess priorities. Rank your customers by revenue. Then figure out how much more money you’d make by transferring your time and money from servicing the lowest-producing 80% to “wowing” the top 20%.
  8. Cut back on overtime. Ask your payroll manager to give you a list of employees who were paid overtime last year. Initiate a bonus to departments who get their work done on time without incurring any expensive overtime.

Think of what you can do with the savings from just these quick ideas. It will motivate you to do even more to improve your company’s bottom line.

 

Is the NJ brain drain dooming your organization’s future workforce?

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Sure, the taxes may be high, but by and large the Garden State is an opportunity-filled place to live and work — especially for NJ-based companies that require a wide range of skill sets across their workforce.

But when we’re the only state losing 20,000+ students annually to out-of-state colleges, what’s the impact on future hiring? This so-called “brain drain” — high school students heading across state lines for their higher education — has been going on for decades. Combine that with the mass exodus of more than 500,000 millennials, and you don’t have to be an economist to predict the looming impact on the state’s labor pool — talent shortages, skilled positions going unfilled and costly retention issues as employees realize who’s in the driver’s seat.

This phenomenon is also expensive from a tax standpoint. New Jersey spends roughly $19,000 per student on K-12 education, landing it at the top of the list for per-pupil spending. That’s a steep investment in a future workforce that’s not guaranteed to stick around.

Why are so many students choosing to attend college elsewhere?
One reason is proximity, according to Joyce Strawser, Ph.D., dean of the Stillman School of Business at Seton Hall University. She says, “It’s so easy for a NJ high school graduate to enroll in a great university located within a two- to two-and-a-half-hour drive. That student may likely feel that he or she has the best of both worlds — the exciting opportunity to live and learn in another state, while maintaining the safety net of being a short drive or train ride from home.”

On the positive side, Strawser feels that the issue speaks to the quality of graduates the state produces. “Our high school students are academically competitive — attractive candidates who are heavily recruited by nearby colleges and universities.”

Shifting the tide to in-state higher education
In-state colleges are the first line of defense in attempting to reverse the talent exodus. And many, including Seton Hall, are getting creative in raising their profiles among high school students, moving beyond the typical “Open House” and hosting high-interest programs that bring these students to campus.For example, Strawser’s Stillman School hosts a half-day visit for Bridgewater-Raritan High School students twice a year — and has seen enrollments from that school district increase significantly as a result. Stillman also presents an annual “Strictly Business” program, a half-day immersive introduction to programs, faculty and students, during the New Jersey Education Association Convention.  “Because many of our high schools do not hold classes during the NJEA event,” she says, “it’s a convenient time for NJ students to visit our campus.”

Future-proofing your NJ workforce
If you’re planning on remaining an NJ-based company, now’s the time to think proactively about the future of your workforce. Though you can’t control where students choose to attend college, you can take steps like these:

  • Benchmarking —Examining both industry-specific and general market data can help you ensure your compensation and benefit packages are competitive or better.
  • Succession planning — Identify mission-critical roles across your organization and the skills necessary to succeed in them, then map out (or recruit, if you don’t find any) potential candidates to develop.
  • Organizational soul searching — What would it take to become known as an employer of choice? Whether that’s reinforcing your commitment to social responsibility, improving organizational culture or raising your profile by engaging a strategic PR firm, these tactics don’t yield results overnight. Start now so you’re positioned for success.

With so much home-grown talent and potential, it’s a tough loss to see other states — and their business communities — reap the benefits of NJ’s educational system. Our state is a difficult enough place to do business without the added stress of a workforce lacking the skills we need to remain competitive.

 

 

 

Seeking a digital transformation? CFOs believe it’s worth the investment

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The role of the CFO has evolved considerably in the last decade. Thanks to the continuing intersection of most finance and IT departments, today’s CFOs have digital technology on their minds — in a more strategic sense. Many are finding themselves in a unique position to leverage digital technology to accelerate organizational initiatives and facilitate change across many areas of the business. And as a result, we’re seeing CFOs take a greater interest in technology investments and OK’ing the necessary spending to make them happen.

It’s not about keeping pace; it’s about staying ahead
Last year’s CFO Insights on New Technologies from Grant Thornton and CFO Research finds that 69% of CFOs plan to increase the money spent on technology investments that accelerate business change. As the study suggests, the adoption of new technology correlates with the immediate value it can bring to an organization — including better data quality, more streamlined reporting, optimized processes and reduced costs.

While the near-term objective is to optimize business processes, the ultimate goal for any technology investment is to improve the customer experience — with services that set your organization apart from the competition. So it makes sense that 41% of CFOs now say their companies’ upcoming digital investments are meant to help them overtake their competition through differentiation.

CFO analytics anxiety
Despite their plans to adopt new technology, the study also pinpoints one major concern: overall readiness. Almost 90% of CFOs feel they’re lacking much-needed skills in data analytics, and three quarters recognize their need to improve, while also securing leadership talent and finding adequate staff to fill day-to-day finance functions.

When it comes to staff readiness, CFOs are also considering the future once automation technology becomes common practice. Fifty-two percent would prefer to retrain existing staff, compared to 20% who would recruit new talent or 17% who would opt to outsource the work.

Outsourcing can offer CFOs a competitive edge — giving companies more time to focus on their strengths and high-value strategic tasks rather than the day-to-day number crunching. From bookkeeping, payroll and bill paying to audit assistance, a third-party team can handle finance-related tasks at every level, providing the technology and processes so CFOs can focus on bigger goals. Whether outsourced or in-house, the consensus is clear: new technology can support smarter decisions and drive more strategic efforts for the greater good of a company.

Find out how Magone & Company can help your organization operate more efficiently with the right technology, data and controls. Give us a call today at (973) 301-2300.