Worcester Jewish Chronicle, May 2010

Being vigilant will help protect your cash

William E. Philbrick, CPA, MST, CVA, CFF

According to the American Bankers Association 2009 Deposit Account Fraud Survey Report check-related losses exceeded one billion dollars in 2008, up slightly from the $969 million reported in 2006. One significant threat is check washing, a low tech way to alter a check you have written, but it’s easy to minimize the risk through some simple steps.

The check washer begins by obtaining your check, usually by theft from neighborhood delivery-and-collection-box units by prying open locks or removing entire units from their metal anchor, stealing mail left in unsecured mailboxes, or waiting until U.S. Postal Service collection boxes fill up on weekends, and then reaching inside to retrieve letters that haven’t dropped down.

Washing a check is a fairly simple process, and checks that lack appropriate security features and are written in standard ballpoint or felt-tip pen make prime candidates for it. 
The check washer removes or alters the payee and/or amount. Often, only the payee is changed, allowing the check to pass by unnoticed when balancing your bank statement.

Many banks and merchants have developed procedures to protect against such frauds. For example, banks may require persons who are not bank account customers to affix their fingerprints to the face of each check they cash. If the check turns out to be a washed check, there is trace evidence. Tellers and clerks generally receive training to spot distinguishable characteristics of washed checks. The training is only effective to the extent it is practiced.

There are a number of steps you can take on your own to minimize you’re your risk.

•  Minimize the number of checks you write. Pay bills online using a secure computer. Use a credit or debit card for purchases and bill payments. Set up automatic payment plans with creditors.
• Only use checks that contain security features, including security ink and chemically sensitive paper. Also, do not have your driver’s license or Social Security number printed on your checks.
• Use pens containing indelible black gel inks that can’t be easily removed with water or chemicals. These special gel pens are readily available at office supply stores.
• Never use an unlocked mailbox for incoming or outgoing mail.
• Don’t put mail in a mailbox overnight or drop it off for pickup on a weekend. Make sure that any mail deposited into a box actually drops down into the box so that no one can reach in and remove it.
• Strictly monitor your bank account activity. Review your bank activity for suspicious transactions as often as possible. Through online banking, you can view most transactions in real-time. View the front and back of cleared checks to verify that both the amount and payee are what you intended.
• Reconcile your bank account statement monthly and address any discrepancies, keeping in mind that most financial institutions will only accept fraud claims within 30 days after a statement has been mailed.
• Don’t leave blank spaces on the payee or amount lines.
• Retain only copies of cancelled checks you may need for documentation purposes and shred originals.
• Follow up on any suspicious or unusual calls and/or notices you receive concerning any payments you have made by check.

In the unfortunate event you become the victim of check washing, take the following steps:

• Report the crime to police, and obtain a copy of your police report and case number.
• Notify your bank, place any necessary stop payments, close compromised accounts, and request a refund of lost funds.
• Notify in writing any vendors or merchants that may have accepted a washed check from your account. Include copies of the police report and notice from your bank that the account has been closed.
• Request confirmations from any vendor or merchant involved that state that you are not responsible for the charges, and retain them for at least ten years.
• Contact each of the three credit reporting bureaus—Equifax, Experian, and TransUnion—and request that they place a fraud alert on your account.

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William E. Philbrick, CPA, MST, CVA, CFF is a Senior Vice President and Director of Taxes and Forensic Services with Greenberg Rosenblatt Kull &Bitsoli, P.C. of Worcester, Mass. He can be reached at wphilbrick@GRK&B.com.

Worcester Jewish Chronicle, January 2010

Don’t Miss the Boat on Important Tax Law Changes

William E. Philbrick, CPA, MST, CVA, CFF

While there is a lot of speculation as to the fate of tax rates for 2011 and beyond, there is certainty in the tax benefits provided for 2009 and 2010 by two important pieces of legislation.

In February, 2009, the American Recovery and Reinvestment Act was signed into law and was followed by the Worker, Homeownership, and Business Assistance Act in November. The first act earmarks nearly $300 billion in tax and relief assistance, while the second act is supposedly revenue neutral by offsetting $21 billion in various provisions and benefits which were slated to expire with a like amount of revenue raisers. Many of the changes are effective retroactively to January 1, 2009.

The number of tax changes and their effects are too many for this article, but we will look at some of the key items. You should consult with your tax preparer to make sure you make the most of the changes you are eligible for.

Inflation adjustments to more than three dozen provisions will result in approximately a 4.5% increase in benefits in adjusted deductions and a similar widening of tax brackets.

The first-time homebuyer credit is extended to April 30, 2010 and you don’t need to be a first-time homebuyer to qualify. A reduced credit is available to persons who lived in their personal residence for any five year consecutive period during the last eight years. The purchase price of the new residence is limited now to $800,000. Exceed the limit and no credit is available. Unlike the original credit, there is no payback provision. The income phase-out provisions have been broadened to $125,000 for single taxpayers and $225,000 for married taxpayers. Previously married couples need to be careful that their particular situation does not taint their ability to qualify for the tax credit.

There is a new American Opportunity Credit to help pay for college in addition to an expansion of the Hope credit for tax years 2009 and 2010. Up to $2,500 of the first $4,000 of qualifying college expenses can reduce income taxes on a dollar for dollar basis. Qualifying expenses now include tuition, books, supplies and materials. Unlike the Hope Credit, the American Opportunity Credit can be used for all four years of college and is refundable up to $1,000. If there is no tax owed, up to 40% can be refundable. The full credit is available for single taxpayers with modified adjusted gross income (MAGI) up to $80,000 and married filing joint taxpayers with MAGI of $160,000. Above these levels, the credit is subject to a phase-out. Which way to go is dependent on each individual situation and requires a careful analysis to maximize the benefit.

Qualified student loan interest may be deducted off the top without itemizing if your MAGI does not exceed certain thresholds. Single filers see the deduction phased out between $60,000 and $75,000, while married filing jointly see the phase-out between $120,000 and $150,000.

The Making Work Pay Credit allows a maximum credit of $400 for singles and $800 for married filing jointly who are reporting wages. The credit is subject to reductions based on income and requires a formula calculation and certain other taxpayers are not eligible such as nonresident aliens and persons claimed as dependents on another tax return. If you fail to claim the credit, don’t expect the government to be notifying you of your lapse.

The Residential Energy Property Credit has been increased to 30% of qualifying costs with a maximum of $1,500 for 2009 and 2010 in total. Be sure the upgrade or replacement meets the federal certification requirements. The credit applies to but is not limited to, insulation materials, exterior windows, exterior doors, certain metal roofs, central a/c, hot water boilers, skylights, natural gas, oil or propane furnaces and electric heat pump water heaters.

Watch for plug-in electric vehicles coming on line in 2010, depending on their specifications, credits may be available from $2,500 to $7,500.

Bonus depreciation has been extended through December 31, 2009 for business property and has been extended in part through December 31, 2010 for certain property with a useful life to 10 years or more, transportation property and certain aircraft.

Write-offs of qualifying equipment have been extended through December 31, 2009 and the maximum amount of the deduction has increased from $125,000 to $250,000.

These are only a few of the many possible benefits you as an individual or business may qualify for 2009 and 2010. Please be sure to consult your tax preparer to maximize your benefits as after 2010, the boat will have sailed without you.

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William E. Philbrick, CPA, MST, CVA, CFF is a Senior Vice President and Director of Taxes and Forensic Services with Greenberg Rosenblatt Kull &Bitsoli, P.C. of Worcester, Mass. He can be reached at wphilbrick@GRK&B.com.