Proactive vs. reactive

It’s time to make your move — to start
your offensive against upward-spiraling
health care costs. As an employer, you can empower your employees to live
healthier, happier lives today and reap an
immeasurable return on your investment
tomorrow.

“The ultimate goal of every employer
should be to have healthy employees,” says
Rachel Sapoznik, president and CEO of
Sapoznik Insurance. “Healthy employees
have stronger loyalty, morale, attendance
and productivity. Simply stated, healthy
employees equal a healthy business.”

Smart Business spoke with Sapoznik
about how employers can take a proactive
health care strategy to maintain and, in
some instances, improve the health of their
employees and businesses.

What trends do you see in health care?

Throughout the country, we are seeing a
trend toward patient education and an
emphasis on consumer awareness and
accountability. Work places, realizing the
power of a proactive approach, are offering educational opportunities like health
fairs, stress management workshops,
ergonomics training, nutrition workshops
and health-minded newsletters.

Employers are also creating incentives
for employees that take greater responsibility for their health. Some are going beyond the traditional programs that include
nutrition and smoking-cessation seminars.

Companies can now set up worksite
kiosks that can measure blood pressure
and body fat, and track employee activity
with pedometers worn throughout the day
and uploaded via computer. All of this generates an atmosphere that promotes fitness, gives employees a chance to track
and compare their own progress, and even
qualifies them for rewards and incentives
like store discounts, trips — or even cash.

What impact will wellness education have on
employees?

As a result of a more proactive focus on
health care through education and employee accountability, employees will become more involved consumers of health care.
This shift toward consumerism will push
employees to understand their health care
situation and take more responsibility for
their actions. The goal is to make employees wiser consumers.

Many people will spend weeks researching a new car before making a purchase.
They’ll compare prices and study which
dealerships will offer the best pricing. The
focus is on making employees realize that
health care decisions affecting them and
their families deserve the same kind of
research and attention. Employers want
their employees to become more involved
participants in the health care process.

What is the benefit of a shift toward consumerism in health care?

Well-informed employees make better
choices when it comes to health care and
lifestyle. Empowered health care consumers will be able to make decisions
based not only on costs but also on the outcomes of specific medical procedures. Employees who choose generic alternatives of
prescription drugs can help contain skyrocketing prescription drug costs. Patients
that can select the hospitals with the best
recovery outcomes can reduce the length of their hospital stay and shorten their
recovery time.

Consumerism provides cost savings to
both employees and employers and a significant return in terms of illness prevention. The positive impact of the medical
expenses that don’t occur due to preventive care are not measurable but represent
real dollar savings for employers and
employees.

What role is technology playing in this shift
toward consumerism?

Technology is playing a huge role in the
shift toward consumerism in health care,
particularly when it comes to tracking and
transparency of costs. This transparency
creates a more consumer-driven approach
by allowing patients to select the service
providers with the best outcomes and documenting the costs for those services.

Carriers are migrating into member ID
cards featuring magnetic strips that record
data in real time. This tracking method
helps identify usage patterns, procedure
outcome results and costs for treatment
across entire networks. In turn, this will
help members become much more effective consumers of health care. Members
can predict what they will need to pay and,
over time, will be able to better manage
their health care budget dollars.

Why is it crucial that employers start taking a
proactive approach right now?

Employees are a company’s number one
asset. By investing in your employees’
health and helping them make wiser health
care decisions, you are benefiting them,
their families and your company.

A push toward education, prevention and
consumerism is the first step in a proactive
solution to reduce your company’s future
costs of health care today.

RACHEL SAPOZNIK is president and CEO of Sapoznik
Insurance. Reach her at [email protected] or (877) 948-8887.

Road to wellness starts at the fair

You’ve posted the fliers, presented the
seminars and offered the incentives.
But do you really know if your employees are healthy? And better yet, do
they know if they’re healthy?

“It’s not that people don’t care or don’t
have access to wellness information,” says
Sandra Corcia, an agent with Sapoznik Insurance. “They just don’t know how they
measure up, and they sometimes don’t
have the time to get their annual checkups. Effective workplace health fairs offer
on-site screenings and practical solutions
to increase employee wellness and curtail
the rising cost of health care.”

Smart Business spoke with Corcia about
the role of health fairs in promoting
employee health and wellness.

How can agencies ensure that health fairs
have high value for employers?

Employee benefits agencies can offer
turnkey solutions for planning and executing workplace health fairs. Through their
unique partnerships in the health care
industry, they can create on-site events
where employees can access screenings
and information. Employees can receive
tests for cardiovascular health, cholesterol,
blood pressure, hypertension, osteoporosis and more. Depending on their health
needs, individuals may choose to learn
about topics such as cardiovascular health,
diabetes, hypertension, stress management or workplace ergonomics.

Health fairs can involve a number of
health and wellness participants ranging
from doctors to chiropractors to local hospitals to insurance carriers. These on-site
programs deliver an added level of awareness. The goal is to inform and educate
employees within the workplace so that
they and their families can live healthier
and happier lives.

How do health fairs benefit employees?

When you deliver a health solution to the
workplace, you leverage a key opportunity
to capture employees’ interest in health.
Although magazines, TV and the internet
hold overwhelming amounts of health information, employee health fairs make
the advice personal.

Health fairs can save lives. Employees
that only visit the doctor if they feel really
sick and never go in for wellness checkups
can be ticking time bombs. With the aid of
health care screenings, individuals may
find out that they have elevated cholesterol
levels, a form of heart disease or be developing the early stages of diabetes. These
test results give employees an opportunity
to prevent tragedy through healthy lifestyle
changes.

Once employees realize they have a
health issue, resources at a health fair can
educate them on how to address the health
problem. Doctors, physical therapists,
dietitians and other health care professionals can coach employees on weight loss,
exercise and other lifestyle choices.
Whether dealing with executives or blue-collar workers, employees welcome
reminders that help them keep track of
their overall health.

Through these events, people can also
collect relevant information to share with
their family and raise the level of interest in
health and wellness within their home. By
creating a platform for wellness at the
worksite, an employer can have a positive
impact on the health of entire families.

How do employee health fairs control health
care costs?

Healthy employees equal a healthy business. Better health reduces absenteeism
and time off and increases productivity and
morale. When an employee benefits
agency coordinates a workplace health
fair, the pros are enormous and the cons
are minimal for a business. The company
only has to provide the space, and the
employees just need to show up for about
20 minutes.

If the screenings during those 20 minutes
reveal elevated blood sugar levels that
indicate intervention is necessary to avoid
diabetes, those minutes were well spent.
The benefits of health fairs are immeasurable. How do you measure the impact of a
heart attack or diabetes that never occurs?
The benefits to the employee are priceless,
and the health savings to a company can
be huge.

Cardiovascular claims cost thousands of
dollars. Treatment for diabetes includes
medication, insulin and blood sugar monitors.

Health fairs can help your company control long-term costs by reducing claims
experience. One of the major contributing
factors that drives up health care premiums are claims. Reducing these claims can
keep business’s health premiums from skyrocketing.

How can employee health fairs contribute to
ongoing workplace wellness?

Offering workplace health fairs generates
goodwill, improves morale and gives
employees a sense of well-being knowing
that their employer cares about them and
their families. These events emphasize the
importance of health and wellness and preventative checkups. The ultimate goal is to
influence corporate culture through education and create a defined awareness for
prevention.

SANDRA CORCIA is an agent with Sapoznik Insurance. Reach
her at (877) 948-8887 or [email protected].

Pay now or pay later

Buyers beware: purchasing an existing
company could include acquiring
state tax liabilities from the former owner. Although most contracts give buyers the ability to sue for restitution of state
taxes paid, it’s best to take a proactive
approach before the deal closes. After a
sale, it may prove difficult to even find the
previous owner, let alone recover damages.

“It’s amazing that even sophisticated venture capitalists and investment bankers do
not spend enough time during the due diligence process to review the potential state
tax implications of a pending deal,” says
Mike Goral, principal, State and Local Tax
Practice at Berenfeld, Spritzer, Shechter &
Sheer. “In many cases, state tax liabilities
can dramatically transform a profitable
transaction into a money-losing endeavor.”

Smart Business spoke with Goral about
state tax issues in mergers and acquisitions
transactions and how buyers can avoid
successor liability for state taxes.

What is successor liability?

Many states, including Florida, impose an
obligation to ensure that prior-year state
taxes are not avoided through ownership
change. States often have statutory authority to seek prior-period taxes from either
the seller or buyer of the company. Often,
the buyer is the owner of the company at
the time of a state audit. As a result, that
owner gets stuck with the tax bill.

Some states have statutory authority to
only impose successor liability for sales or
use taxes, while other states have expanded their authority to include other business
taxes. Therefore, it is imperative to perform
a thorough review of any potential state tax
obligation for multiple state business taxes
before the transaction is completed.

In many cases, a company may be in
compliance for taxes in its home state but
has failed to file for state taxes in other
states. Many factors can lead to this situation. For instance, people may not realize
that state tax liabilities can be imposed in
another state for commission-based independent contractors that market the company’s product. Also, states can impose
taxes when company employees attend local trade shows. Finally, some states
impose taxes on certain services performed within their state.

Will the statute of limitations restrict the
maximum amount of successor liability?

If the seller has been filing tax returns
during the period covered by the statute of
limitations, then the tax liability will be
confined to only those years. In most
states, this is the most recent three-year
period. However, if no return has been filed
for a given state, there is no limitation of
liability.

Moreover, the state taxing authority will
have the authority to go back to the first
year business was conducted in the state
and impose tax, interest and penalties for
all prior years. The interest and penalty liabilities can, in some cases, exceed the
underlying tax liability. If taxes have not
been reported in multiple states, then the
potential state tax liabilities can easily
exceed the federal tax obligation that is
often more carefully reviewed.

What steps can a potential seller or buyer
take to avoid successor liability?

A potential seller of a business should perform a nexus study to determine if
there are state tax liabilities outside the
company’s home state. A nexus study is an
analysis to determine whether or not a
company has exceeded some minimum
threshold such as hiring independent contractors, attending trade shows, performing services or otherwise having some
form of physical connection with the jurisdiction. Nexus thresholds are different for
sales/use tax versus an income tax. This
requires an independent analysis of nexus
for the various taxes imposed by a state or
local jurisdiction.

Performing a nexus study will demonstrate to potential buyers that the management team understands the importance of
state tax compliance. This may also help
the seller obtain offers closer to their asking price, since there are no contingent
state tax liabilities.

Potential sellers or buyers of a company
also can obtain a tax clearance certificate,
or a similar document, from the state taxing authority. This document provides
some assurance that taxes have been paid.
States usually will hold the buyer harmless
for any prior-period tax liability if they
received a tax clearance certificate.
Naturally, only those states where the company has been filing tax returns can produce a tax clearance certificate. If sufficient notice is given, a superficial audit can
also be conducted in some states to provide greater assurances.

Potential buyers should include a thorough due diligence of the target company,
including a state tax review. If contingent
state tax liabilities are discovered, then
they can negotiate with these states to mitigate the potential state tax liability. In
many cases, penalties can be waived
entirely and tax and interest can be negotiated for prior tax periods beyond the
statute of limitations period. Absent such
assurances, potential buyers should set
aside funds in escrow until all contingent
state tax liabilities have been extinguished.

MIKE GORAL, J.D., LL.M., is a principal, State and Local Tax
Practice with Berenfeld, Spritzer, Shechter & Sheer Certified
Public Accountants & Consultants. Reach him at (954) 728-3761
or [email protected].

Beyond the quote

More with less. Every day you look
for ways to maximize productivity
and minimize cost within your organization. When you’re partnering with
a great agent, he or she is working alongside you to maximize the value and minimize the administration of your benefits
plans.

“What makes an agent great is not just
delivering a quote to you,” says Betty
Goodman, an agent with Sapoznik Insurance. “The agent-client relationship has
evolved into much more. An employee
benefits agent should be a company’s top
ally in identifying ways to reduce expenditure and maximizing the health of your
employee base. An agent should embrace
your corporate philosophies and become
an extension of your company.”

Smart Business spoke with Goodman
about how to identify a great agent who
will add value to your business.

What are some of the key attributes to look
for in an insurance agent?

Look for an educator. You should choose
an agent who can educate your employees
on plan decisions and will truly take the
time to provide valuable information to
your employees. Your company needs to
work with an agent who will be able to
relay new rules for health savings accounts
or provide insight as to which plan works
best for a certain situation. Your agent
should be able to guide employees on plan
decisions, such as explaining why it is
important to sign up for a certain line of
coverage. And your agent should educate
employees on correct usage of the plans,
such as the use of urgent care facilities.

Also, seek out an advocate. Make sure
your agent is an independent agent who is
not affiliated with any of your carriers.
Working with an exclusive agent can lead
to conflict-of-interest issues and disadvantages. Your company should look for an
independent broker/agent who can objectively evaluate the different insurance and
plan designs and help you decide on one
that will best fit your needs. Remember,don’t just look for a broker — search for an
unbiased adviser.

Why is it important to choose an agent who
will partner with your HR department?

In today’s marketplace, your agent must
become much more than a rate negotiator.
An agent should be able to educate, give
advice and solve problems so that your HR
department can concentrate on its core
duties. The scope of HR departments
includes hiring, training, disciplining and
many other responsibilities. The additional
pressures of open enrollment periods coupled with the long and arduous negotiation
process can bring an HR department’s productivity to a halt.

Decision-makers must look for an agent
who has the desire and the ability to take
on the day-to-day activities of administering employee benefits for the company.
Look for an agent who will take charge and
handle that difficult claim issue on behalf
of your employee. Remember that your
agent must be willing to function as an
extension of your HR department in order
to make it run more efficiently and to help
employees maximize the benefits from
their insurance.

What impact does your broker have in terms
of the negotiation process?

Traditionally, a broker simply supplies
you with a quote for a given line of coverage, such as health, life or disability insurance. If the broker only works with a single
insurance company, you will need to contact many different brokers to find the best
option. But if you partner with independent
brokers, they can use their reputation and
negotiating ability to obtain quotes from
multiple carriers. This can greatly simplify
the insurance decision-making process.

Also, strong brokers and agents can negotiate rates on your behalf that can result in
huge savings over the course of the year.

Another point to keep in mind is the
agent’s ability to renegotiate favorable contracts, particularly during renewal times.
Companies that achieve reduced rates during their first year often can be jarred by
high increases in rates in the following
year. Your agent plays a key role during
these renewal periods. Your agent should
act as your strongest ally during this intricate negotiating process.

How can businesses determine if an agent is
a good fit?

A good indication of whether an agent is a
good fit is to evaluate the work performed
before and during your company’s open
enrollment period. It’s essential to remember that a great agent’s work begins after
open enrollment. Use this time as your
barometer to track their performance. The
agent must work to ensure that there are no
errors on the applications, that ID cards
and policies match up and that dependents’
Social Security numbers are included.

A good insurance agent should have the
infrastructure to support all of these important activities for you throughout the year,
so your staff members can focus on your
core business and do more with less.

BETTY GOODMAN is an agent with Sapoznik Insurance. Reach
her at (877) 948-8887 or [email protected].

Proactive vs. reactive

It’s time to make your move — to start
your offensive against upward-spiraling
health care costs. As an employer, you can empower your employees to live
healthier, happier lives today and reap an
immeasurable return on your investment
tomorrow.

“The ultimate goal of every employer
should be to have healthy employees,” says
Rachel Sapoznik, president and CEO of
Sapoznik Insurance. “Healthy employees
have stronger loyalty, morale, attendance
and productivity. Simply stated, healthy
employees equal a healthy business.”

Smart Business spoke with Sapoznik
about how employers can take a proactive
health care strategy to maintain and, in
some instances, improve the health of their
employees and businesses.

What trends do you see in health care?

Throughout the country, we are seeing a
trend toward patient education and an
emphasis on consumer awareness and
accountability. Work places, realizing the
power of a proactive approach, are offering educational opportunities like health
fairs, stress management workshops,
ergonomics training, nutrition workshops
and health-minded newsletters.

Employers are also creating incentives
for employees that take greater responsibility for their health. Some are going beyond the traditional programs that include
nutrition and smoking-cessation seminars.
Companies can now set up worksite
kiosks that can measure blood pressure
and body fat, and track employee activity
with pedometers worn throughout the day
and uploaded via computer. All of this generates an atmosphere that promotes fitness, gives employees a chance to track
and compare their own progress, and even
qualifies them for rewards and incentives
like store discounts, trips — or even cash.

What impact will wellness education have on
employees?

As a result of a more proactive focus on
health care through education and employee accountability, employees will become more involved consumers of health care.
This shift toward consumerism will push
employees to understand their health care
situation and take more responsibility for
their actions. The goal is to make employees wiser consumers.

Many people will spend weeks researching a new car before making a purchase.
They’ll compare prices and study which
dealerships will offer the best pricing. The
focus is on making employees realize that
health care decisions affecting them and
their families deserve the same kind of
research and attention. Employers want
their employees to become more involved
participants in the health care process.

What is the benefit of a shift toward consumerism in health care?

Well-informed employees make better
choices when it comes to health care and
lifestyle. Empowered health care consumers will be able to make decisions
based not only on costs but also on the outcomes of specific medical procedures. Employees who choose generic alternatives of
prescription drugs can help contain skyrocketing prescription drug costs. Patients
that can select the hospitals with the best recovery outcomes can reduce the length
of their hospital stay and shorten their
recovery time.

Consumerism provides cost savings to
both employees and employers and a significant return in terms of illness prevention. The positive impact of the medical
expenses that don’t occur due to preventive care are not measurable but represent
real dollar savings for employers and
employees.

What role is technology playing in this shift
toward consumerism?

Technology is playing a huge role in the
shift toward consumerism in health care,
particularly when it comes to tracking and
transparency of costs. This transparency
creates a more consumer-driven approach
by allowing patients to select the service
providers with the best outcomes and documenting the costs for those services.

Carriers are migrating into member ID
cards featuring magnetic strips that record
data in real time. This tracking method
helps identify usage patterns, procedure
outcome results and costs for treatment
across entire networks. In turn, this will
help members become much more effective consumers of health care. Members
can predict what they will need to pay and,
over time, will be able to better manage
their health care budget dollars.

Why is it crucial that employers start taking a
proactive approach right now?

Employees are a company’s number one
asset. By investing in your employees’
health and helping them make wiser health
care decisions, you are benefiting them,
their families and your company.

A push toward education, prevention and
consumerism is the first step in a proactive
solution to reduce your company’s future
costs of health care today.

RACHEL SAPOZNIK is president and CEO of Sapoznik Insurance. Reach her at [email protected] or (877) 948-8887.

Protect your wealth

One of the best ways to save thousands
of dollars in taxes is to craft a strategic estate plan. Customized to meet your needs, it will ensure that the people
and organizations that you choose as beneficiaries receive the maximum benefit from
your assets.

“It’s very important to have an estate
plan to avoid the inordinate additional
cost of dying without a will or revocable
trust,” says Greg Tait, senior partner with
Berenfeld, Spritzer, Shechter & Sheer.
“Without an estate plan, there can be extra
legal costs involved, assets may not be
transferred to the intended beneficiaries,
and there may be a much higher tax due
on the transfer of the estate.”

Smart Business spoke with Tait about
how to create an effective estate plan.

Who needs to have an estate plan?

People with assets in excess of $1 million
should have an estate plan. The current tax
law allows estates valued up to $2 million
at the date of death to fall under the estate
tax exemption. But after 2010, the law is
planned to revert back to the old rules, and
estates in excess of $1 million could be
subject to estate tax.

There’s a great deal of publicity about the
very wealthy needing to have estate plans.
But it’s just as important and often more
essential that owners of smaller estates do
this type of tax planning, because these
individuals often need to retain income-producing assets during their lifetime to
maintain their lifestyles.

What are the components of the estate planning process?

The first part of estate planning is to recognize potential estate tax problems. Many
times, a review should be done. Consideration should first be given to how
clients want their estate ultimately distributed and in what manner. Family members
are usually considered first, and that
always creates a question of how best to provide for them. Clients might also have
intentions of donating to charity, which has
significant estate tax implications.

The second step is to determine exactly
which assets the clients own and how they
are titled. Some of these assets can be
given away during their lifetime, while still
allowing clients to maintain their lifestyle.
Other assets, such as a vacation home, a
piece of land or a business, may need special consideration during the planning
process. It’s also important to identify the
beneficiaries of insurance policies and
retirement plans to avoid distributions that
are contrary to client goals. All of these
issues — plus many others — need to be
considered.

After initial planning is completed, clients
should work with a competent estate planning attorney to draft the plan. A legal professional must ensure that the estate plan
complies with the law and provides for a
very clear understanding of how the estate
is to be administered. Other professionals,
such as life insurance agents, should also
be brought into the process.

During the creation of the estate plan, all
the professionals should be working
together for the good of the client.

What are some strategies that could be
included in a smaller estate plan?

One idea is a qualified personal residence
trust (QPRT). With this technique, a residence can be transferred to family members at substantially less than fair market
value. The property owner makes a gift of
the remainder interest in the property to a
trust, and the remainder beneficiary receives the property title at the end of a
fixed number of years.

Another technique is a charitable remainder trust (CRT). This tax structure allows
individuals to contribute appreciated
assets to a trust. This provides for a current
charitable deduction while the trust can
then sell the assets with no income tax
imposed.

This creates a larger benefit for the
income beneficiaries. The trust beneficiaries receive income off the assets during a
certain number of years. At the end of this
time period, the assets are transferred to a
charity. This allows people to maintain an
income stream but also to honor a charity
with their money in the future.

Why is it important to tailor estate plans to fit
the needs of the specific individuals
involved?

Every estate and every person is different, so every estate plan needs to be custom-crafted to meet specific individuals’
needs. There is never a one-size-fits-all
estate plan. A number of different planning
techniques can be used that may or may
not make economic sense for different
people.

Effective estate planning comes down to
collaborating with professionals who want
to get to know clients and work with them
to determine what will best serve their
needs.

GREG TAIT is a senior partner with Berenfeld, Spritzer, Shechter
& Sheer Certified Public Accountants & Consultants. Reach him
at (954) 370-2727 or [email protected].

Have you received credit?

Detailed tax law can seem like an intimidating way for the government to take
more profits. But if you overlook the fine points, you could miss out on tax credits that actually reduce your tax burden.

“Corporate income tax has always been a
complex area,” says Madeline Elias, tax
principal with Berenfeld, Spritzer, Shechter
& Sheer. “With all the new tax legislation
and an increase in Internal Revenue Service
(IRS) scrutiny, an increased awareness of
the tax law is required.”

Smart Business learned from Elias about
two key areas for tax reduction opportunity: the R&D credit and the federal telephone excise tax credit/refund.

What is the R&D tax credit?

On Dec. 20, 2006, President George W. Bush
signed the Tax Relief and Health Care Act of
2006. This act extends and enhances the
research and development credit for expenses incurred in 2006 and 2007. The new
enhancements make the credit, which has
been part of tax law since 1981, more attractive and beneficial to taxpayers.

The 2006 act continues the definition of this
tax credit as equal to 20 percent of the “incremental” research spending in excess of a
base amount. The alternative incremental
research credit (AIRC) method also continues but is modified to provide higher credits
to encourage companies to spend more on
research. The AIRC benefits taxpayers that
have high fixed base percentage or new companies with an assigned fixed base percentage.

What is the addition to the R&D tax credit?

Most importantly, it includes a new alternative simplified credit (ASC) that a taxpayer
may use with the proper election. The basic
ASC would be 12 percent of the taxpayer’s
research spending in the current year in
excess of 50 percent of the average research
spending in the three preceding tax years.

Why is this addition beneficial?

The new ASC is attractive for several reasons.

  1. The burden to obtain documentation
    or reconstruct information to compute the
    fixed base percentage from a base period is
    not required.

  2. The credit may be larger than under
    the other methods for taxpayers with an
    increasing amount of research expense.

  3. The research spending would not have
    to exceed the gross receipts threshold necessary under the AIRC method.

  4. The ASC can provide a credit for taxpayers that are reducing their research
    spending compared to prior years.

How can companies determine the best way
to receive the R&D credit?

To identify the optimal regime for your
company, you need to calculate each credit and compare the results with the help of
an expert corporate tax adviser. The
research credit has complex computations
due to various regulations, affiliate group
rules and industry specifications. Many
states with permanent credits generally
conform to the federal rules, but some of
these states may not adopt the act’s
changes. Therefore, proper calculations
and judgments are required for tax return
preparation as well as for financial statement implications.

What is the federal telephone excise tax
credit/refund?

On May 25, 2006, the U.S. Treasury
Department announced it was conceding
the legal dispute over the federal excise tax
on long-distance telephone service. The
IRS will follow the holdings of various
cases that held that a telephonic communication for which there is a toll charge that
varies with elapsed transmission time and
not distance (time-only service) is not taxable toll telephone service.

The Department of Justice will issue
refunds of tax on applicable long-distance
service. Refund claims will cover all excise
tax paid by the taxpayer on long-distance
service billed between Feb. 28, 2003 and
Aug. 1, 2006.

How can corporate taxpayers calculate their
telephone credit?

When calculating their refund, corporate
taxpayers can only count expenditures
made directly to the telephone companies
and not those paid by another taxpayer.
However, the paying taxpayer may claim
the refund and the other taxpayer may
have the opportunity to negotiate for a portion of the refund.

Taxpayers may use one of two refund calculations. (1) calculate the actual amount
of long-distance federal excise tax paid
based on the phone records for the 41-month period or (2) use a formula based on
the April and September 2006 telephone
records. The formula is meant to provide
business taxpayers a less burdensome
option for claiming a refund.

Why should companies make sure to take
advantage of these two credit opportunities?

These opportunities can directly reduce
your 2006 corporate tax expense on a dollar-for-dollar basis.

MADELINE ELIAS is a tax principal with Berenfeld, Spritzer,
Shechter & Sheer Certified Public Accountants & Consultants.
She is a corporate tax specialist with expertise in Sarbanes-Oxley,
mergers and acquisitions, U.S. and international tax planning.
Reach her at (954) 728-3752 or [email protected].

Peace of mind

You want to always provide for your
family, so you have a generous life
insurance policy. But have you considered long-term disability insurance?

“Nine years ago, my husband was diagnosed with cancer and was unable to continue working at his professional job,” says
Griselle Farbish, an agent with Sapoznik
Insurance. “At the time, I was at home with
three small children. If my husband hadn’t
had disability insurance, our family’s
expenses would have depleted our savings
in two to three months.” Fortunately,
Farbish’s husband had the foresight to
carry sufficient disability insurance, and
the family was able to maintain its lifestyle
and care for him until he passed away.

“I am passionate about letting people
know this insurance is just as important as
health insurance,” Farbish says. “The coverage costs pennies when it’s done under a
group policy and can save families from
disrupting their lifestyle when a bread-winner becomes disabled.”

Smart Business spoke with Farbish about
the significance of long-term disability insurance for employers and their employees.

What is long-term disability insurance (LTD)?

Long-term disability insures a portion of a
person’s income by paying a percentage of
his or her paycheck if the person becomes
disabled. Employees with LTD coverage
who become disabled receive this benefit
until they are no longer disabled or they
reach the age of 65. Individuals are considered disabled if they are not able to perform
the duties of their job or are unable to continue to earn a large percentage of their
income. Three out of 10 workers between
the ages of 25 and 65 will become disabled
due to an accident or illness that keeps them
out of work for three months or longer.

What are the key things you should tell
employees about LTD?

Studies show that one out of seven people who become disabled are disabled for
five or more years, and more than 90 percent of those disabilities happen outside of
work. Over half of all personal bankruptcies and mortgage foreclosures are due to
a disability. Premiums paid in by the employee result in nontaxable income pay-outs at the time the benefits are received.

Who should consider LTD and at what age
should individuals enroll?

A very common misconception about
LTD insurance is that healthy people don’t
need this type of coverage, according to
financial and insurance experts. It’s important for people to remember that anyone
under the age of 40 is four times more likely to become disabled than to die, according to insurance industry statistics. With
that in mind, all employees who are eligible
for LTD should seriously consider enrolling
as soon as possible.

What are the most common causes of disabilities?

A lot of people associate disability with
workplace injuries, but in reality, most
accidents occur outside of the workplace.
Accidents related to cars, motorcycles,
home repairs or vacations are all covered
under long-term disability.

Illnesses such as cancer, heart disease
and diabetes are also major causes of long-term disability. Arthritis, back pain, lifestyle choices and even obesity are also
common causes of disabilities.

Why should employers offer long-term disability to their employees?

LTD helps employers complete their
existing employee benefits package. Working with a qualified insurance broker can
help employers ensure they offer the
appropriate benefits and understand the
true function of each type of insurance. By
offering this benefit on a voluntary basis,
the employer doesn’t have to incur any
additional costs.

Also, an employer who offers LTD could
see a reduction of workers’ compensation
claims. If employees have LTD and hurt
themselves on Sunday, they are less likely to
come in on Monday and claim a workplace
injury. LTD gives employees the correct
insurance vehicle for non-job-related injuries.

Is medical underwriting necessary for LTD?

Individuals in group LTD policies do not
need medical underwriting to be insured up
to the amount guaranteed at the time the
policy is issued. This means there is no need
to undergo medical physicals or testing
before you are approved for coverage.

Why should individuals have LTD in addition
to life insurance?

We often consider the need for some type
of life insurance coverage way before evaluating the benefits of LTD. In fact, research
suggests that about 90 percent of
Americans have some type of life insurance, while only about 35 percent have
long-term disability coverage. Over the
past 20 years, deaths due to cancer, heart
attack, and stroke have decreased overall
nationwide. But these illnesses that used to
kill, now disable, so it’s increasingly important to invest in a secure future with LTD
coverage.

GRISELLE FARBISH is an agent with Sapoznik Insurance.
Reach her at (877) 948-8887 or [email protected].

Compliance to a T

What you don’t save can hurt you.
Most companies fall under mandatory requirements regarding document retention and data preservation for
their business operations. In order to avoid
serious compliance issues, businesses
should develop and follow a document
retention policy.

“All businesses need to be in compliance
with IRS document-retention requirements,” says Robert Moody, partner at
Berenfeld, Spritzer, Shechter & Sheer. “Also,
companies need to make sure they follow
data-preservation rules for applicable legislation, such as HIPAA or Sarbanes-Oxley.”

Smart Business spoke with Moody about
how to develop proper document-retention
and data-preservation procedures.

What types of documents and data do companies need to retain?

When business professionals think about
data retention, they need to look at it as communication preservation. This goes beyond
just traditional documents or e-mail messages. Any form of correspondence may
need to be saved, including voicemail, e-mail,
text messages, IM, databases and faxes.

How can businesses ensure record management compliance?

The key to compliance is developing a
comprehensive document-retention policy
that follows regulatory and statutory
requirements and makes solid business
sense. Data storage and management is
very expensive, so it’s reasonable to dispose of some data as part of normal business procedures. Establishing and following a sound data-preservation policy gives
companies the ability to get rid of unnecessary data without fear of retribution.

Issues with noncompliance usually arise
for two main reasons. One reason is that
many companies have a document-retention policy, but their employees don’t follow it. If a company goes into litigation,
the fact that employees didn’t follow internal policies will raise red flags. Although
the noncompliance could have been done
with innocent motives, not following established procedures would make parties appear guilty. Another type of issue
occurs when individuals act in bad faith.
This means that they dispose of documents without a solid business case for
getting rid of them. Having a policy that
states that e-mail more than 90 days old
will be deleted makes sense in terms of
maintaining storage capacity. Randomly
destroying e-mails and other communications that could provide evidence of
wrongdoing is not justifiable in a business
sense.

What are the components of an effective
records-management program?

An effective document-retention program requires a multi-part analysis across
the entire organization. To start, businesses
need to determine what data they have and
what workflow is associated with that
data. Once members of the organization
have an understanding of the types of communication, they can determine what
makes business sense to keep and to
destroy.

Each type of communication needs to
have a corresponding retention process in
place that meets regulatory, statutory and
legal requirements. After compiling a document-retention policy, companies should
have their lawyer review it to check that it
meets compliance standards.

Who should collaborate in developing this
program?

A document-retention and data-preservation program really needs to begin with a
C-level mandate that defines what this program should accomplish and establishes it
as a priority. Once the process starts, different people can be involved in various
stages of the process. But to make sure the
program successfully reaches completion,
one or two people need to champion the
cause throughout the entire process.

After executives set the framework, IT professionals could help with identifying and
organizing the types of communication. Both
IT and HR staff members could help map the
corresponding workflow connected with
each form of correspondence. For the business analysis, the department heads could
offer their input on what makes sense to
keep or to destroy. And both HR team members and either internal or external legal
council should review the document to
ensure it meets statutory and legal standards.

How can retention procedures be successfully implemented?

The key is to act in good faith once a procedure is created. Individuals can only
demonstrate good faith by their actions. This
includes following established procedures
under normal circumstances and being
extremely careful to preserve every type of
data if litigation ensues. Complete data
preservation includes suspending the use of
their computer until the IT department can
properly preserve the usage data. Having a
third party review the policy and implementation can also help protect an organization
from problems. External audits and accountability prevent situations where a single
employee has to step forward and say that
procedures aren’t being followed correctly.

ROBERT MOODY is a partner with Berenfeld, Spritzer, Shechter
& Sheer Certified Public Accountants & Consultants. Reach him
at (954) 370-2727, (954) 854-6004 or [email protected].

Are employees prepared?

As a business owner, you must
regard each day as an opportunity
to take care of current situations and prepare for future circumstances
regarding your company and employees.
One very significant decision that you,
as an employer, can make today is
whether to offer group life insurance.
This choice can make a major impact on
the future of your employees and their
families.

“Life insurance is a gift,” says Denise
Katz-Aronoff, agent at Sapoznik Insurance. “Sufficient life insurance coverage
ensures that employees and their loved
ones have the finances available in case
of tragedy.”

Smart Business discussed with Katz-Aronoff how life insurance coverage is a
significant employee benefit that increases employee loyalty and peace of
mind.

Should the worst happen to an employee,
spouse or child, how can you as an employer be there for them?

Life insurance offered by an employer
can make a huge difference to the beneficiaries of an employee. It can mean the
difference between losing a home,
affording a college education or simply
maintaining a standard of living.

How can life insurance complete an
employee’s benefit package?

Life insurance is the most valuable
income-replacement tool for your
employees and their families. This type
of coverage replaces employees’ income
and helps beneficiaries with their most
immediate financial needs and obligations, including mortgage payments, living expenses, unpaid medical bills and
even funeral costs.

As an employer, offering group life
insurance enables your employees to
purchase life insurance on their spouse
and on children as well. In today’s society, most families are dual-income households. You have the opportunity to provide your employees with group life insurance that doesn’t require medical underwriting with a guarantee issue amount.
This means that employees don’t need to
undergo medical exams or physicals to
determine eligibility and assures that all
employees can obtain coverage.

When should your employees consider life
insurance coverage?

Life insurance should be a part of
every employee’s benefit package and
should be considered from the very
first time the employee becomes eligible. If you currently offer life insurance, it’s important to encourage all
employees and their dependents to
enroll. Obtaining coverage through the
employer helps employees gain access
to qualified insurance professionals
who can answer their questions and
guide them in their decisions.

What life-changing events can have the
biggest impact on life insurance coverage?

Employers should encourage their
employees to consider their current and
upcoming life events when they sign up for
life insurance. There are several events
that trigger the need to revaluate coverage.

Marriage — In today’s world, most
households rely on two incomes to make
ends meet. Losing one of those incomes
can have an immediate impact on a family’s living standards.

Purchasing a home — With the proper life insurance policy, you can protect
your home and family by having enough
income to avoid losing your investment.

The birth of a child — You don’t want
the loss of a parent to compromise a
child’s future opportunities — from diapers to college and everything in-between.

Career advancements — As your
earnings rise, so should your level of life
insurance.

What is the right amount of life insurance
for employees?

When estimating coverage, employees
should identify their current and future
obligations. These should include all
monthly expenses such as food, mortgage or rent payments, health insurance,
utilities, car payments and education
fees.

Next, employees should calculate the
savings resources that their beneficiaries will be able to access. These could
consist of savings accounts, 401(k)
plans, investments, retirement plans and
spouses’ income.

Finally, subtract the current and future
obligations from the available savings
resources. This should give employees a
preliminary understanding of the
amount of life insurance they need. The
rule of thumb is that you need 2 to 10
times your annual earnings.

Since all employees have different
financial responsibilities and circumstances, determining exactly how much
life insurance to purchase can be challenging. An experienced insurance agent
should be able to guide you through the
process to determine which products
and coverage amounts best fits your
company’s and your employees’ needs.

DENISE KATZ-ARONOFF is an agent at Sapoznik Insurance.
Reach her at (877) 948-8887 or [email protected].