Newsletters for January 2012
CHS Meeting 2011: Success!
By: Gardiner Thomsen CPAs | email
We would like to take a moment to thank all of you who came out to see us in our hospitality room at last year’s CHS Meeting in Minneapolis. We had over 100 attendees, and gave away American Express® gift cards, golf balls and the grand prize: a Kindle Fire E-reader. We hope you will join us for 2012’s meeting in our hospitality room, and thank you again for helping us make this year’s meeting a great success!
New Staff in Our Tax Department
By: Gardiner Thomsen CPAs | email
Please welcome Cristina Bucksbaum to our Des Moines tax department staff. Cristina has 15 years of experience in the tax world, and joined Gardiner Thomsen on January 11th, 2012. Her experience covers a wide variety of tax issues and we are pleased that she joined our firm.
A Word About Forms
By: Charles L. Telk Jr., CPA, Partner | email
Forms 1096 and W-3: These are the transmittal forms that you send to the IRS or SSA accompanying your 1099 and W-2 forms each year. Typically, they are not due until the end of February, at the earliest, depending on the number of W-2s and 1099s you file, and the media with which you file them.
Please note: while many taxpayers issue W-2s and 1099s to recipients by the end of January, and then immediately send their 1096s and W-3s to the IRS or SSA, you should consider filing these documents closer to their respective due dates.
The reason the government has allowed time between when these sets of forms are due to the recipient and when they are due to the government is so the recipient has a chance to examine their reporting forms and point out any errors to you, presumably before you have filed these documents with the government.
If you haven’t yet filed forms 1096 or W-3 with the IRS or SSA, it will be easier to fix a mistake on them without the need to file amended returns. However, if you have already filed forms 1096 or W-3 with the government, and there are errors on those forms, then you will also have to file amended reports which can be complicated and time consuming. So, file those 1096s and W-3s closer to their due date to avoid potential amended return filings.
Forms W-9 and W-4: As the 2011 filing season concludes, now would be a good time to examine your member and vendor files for updated and legible W-9 forms. Remember that a W-9 form is the document you need in order to first determine if a 1099 should be issued, and then to obtain the necessary information to properly fill out form 1099. It would be beneficial at this time to update your employee’s W-4 forms as well.
Cooperative Tax Credits
By: Charles L. Telk Jr., CPA, Partner | email
We want to be certain that you are taking full advantage of the many tax credits available to cooperatives. We are also taking steps to improve our communication with you regarding these credits. Following are some of the credits that our clients may qualify for:
• Federal and State (particularly Iowa) Fuel tax credits
• Ag Chem Security Credits
• Employment Credits: HIRE, Work Opportunity
• Research and Development
• Small Producer Ethanol Credits
If you have questions about any tax issues, tax credits, or whether or not your organization may qualify for any tax credit that you have heard about, please call me at our Des Moines office at 515 270-1446.
Cooperative Trends 2011-2012
By: Gardiner Thomsen CPAs | email
What we’ve seen in 2011:
- Most clients were more profitable in 2011 compared to 2010, and many reported record earnings. Higher commodity prices along with increased or steady grain and agronomy volumes meant sales dollars were also considerably higher in 2011.
- A range of margins in 2011: averages slightly higher than 2010; some of the best grain margins ever; agronomy margins as good as or better than past years and closer to historical averages.
- Excellent fall fertilizer season increased volumes, gross margins, and local savings.
- With higher grain prices, producers sold and storage income decreased, while a shorter, drier harvest season led to substantially lower and more “normal” grain drying revenues.
- With higher commodity prices, borrowing was up, contributing to increased interest expense.
- “Speed and space” construction continued. Many clients built grain storage at multiple locations.
- The increased presence of OSHA, and the costs associated with compliance.
- Increased use of accelerated depreciation rules to reduce current income tax liabilities, as well as more clients allocating the gross domestic production deduction (Section 199) to patrons as part of their year-end patronage allocations.
- Bigger, stronger balance sheets.
What we expect to see in 2012:
- Continued investments in grain and fertilizer facilities, the shuttering of inefficient/ineffective facilities, and increased OSHA compliance costs
- Less aggressive book depreciation, continued aggressive use of bonus depreciation, and increased use of non-qualified patronage allocations
- A slow-down of member equity revolvements/retirements, and the re-balancing of member equity and permanent equity (retained earnings)
- Use of Section 199 as a means of enumerating the member (allocating the deduction to the member)
- Continued efforts to mitigate price risk in agronomy
- More joint ventures, strategic alliances, and ramping up of merger talks again
- More difficulty in finding and retaining experienced staff (management, grain, agronomy, feed, energy and accounting)
- More fraud, larger companies, more employees, less loyalty, more perceived opportunity and rationalization
