Tuesday, June 5, 2018

GDPR can have an impact on U.S. accountants

The European Union’s General Data Protection Regulation takes effect Friday, and it could affect accountants and auditors, along with their clients, in the U.S.

Under the GDPR, any company that gathers, monitors or manages the personal information of EU residents will need to make drastic changes in how it gets and stores the data. Companies in both Europe and the U.S. have been blitzing consumers in recent weeks with emails about new user agreements and privacy policies, while some U.S. businesses have announced they will need to exit the European market.

“There’s a lot of U.S. companies that are selling goods and services to individuals in the EU, and there are many dotcom companies and ecommerce companies that have a global footprint and are selling to people all over the world, even if their employees and infrastructure are all in the United States,” said Jeffrey Sanchez, security and privacy managing director at the global consulting firm Protiviti. “Certainly GDPR applies to those organizations. GDPR also applies to other brick and mortar companies that are selling goods and services, whether it’s airplane parts, construction equipment, or a variety of finished products in Europe, where GDPR is going to apply. The reach of GDPR is very broad. One of the biggest changes between the previous privacy legislation and GDPR is that GDPR applies to any company, regardless of where they’re physically located if they’re selling goods and services to people inside the EU.”

Even though the deadline for complying with the new rules is supposed to be Friday, May 25, 2018, many businesses in the U.S. are only now hearing about the new rules, and their accountants can help them get up to speed and audit their compliance.

“Accountants play lots of different roles,” said Sanchez. “If you talk about accountants that play an internal audit role or advisory role, we see in many companies internal audit playing a key role of assisting the organization with their implementation of GDPR. For example, one of the requirements of GDPR is to develop an inventory of all the processing activities. It’s called a Record of Processing Activities, or a ROPA. Internal audit and the accounting people who generally make up an internal audit function are uniquely positioned to be able to assist the organization with developing that because internal auditors generally have a very broad understanding of the organization. They’re very process oriented and they have the skill sets and tools to do data flow maps. I think internal audit in particular is very well suited to helping an organization to go through this process.”

He also sees a role for internal audit in evaluating whether a company is complying with GDPR. “It’s not unlike auditing other regulations, going through and assessing is the company following its policies and procedures,” said Sanchez. “I think those are all activities that internal audit or accountants working in a business consulting advisory type of model are very well suited for assisting organizations.”

Accountants might even be able to help with all those emails that have been hitting inboxes recently. GDPR requires a lawful basis for processing of personal data by companies, and in many cases companies have been updating their privacy agreements while notifying customers about the changes.

“Organizations that are subject to GDPR, those that are offering goods and services into Europe, are going through and revamping their privacy policies,” said Sanchez. “That’s why you see all these companies releasing new privacy statements and privacy policies in the last couple of weeks. One of the requirements of GDPR is that organizations have to have a legal basis for processing. That means that there has to be a legitimate reason why the organization is allowed to use and process the personal data on the European data subjects, so we also see a lot of activity with organizations going through and updating consent language, or documenting other legal bases of processing if they’re not using consent as the basis of processing. I think that’s something accountants can help organizations update their legal basis of processing and assist with the documentation associated with that activity.”

Some of the main requirements of GDPR include the right to access, which gives people the right to obtain their data and to know how it’s being handled; the right to rectification, allowing citizens to amend and correct their personal data; and the right to erasure, also known as the right to be forgotten, permitting subjects to request deletion of their related personal data.

Ready or not, the GDPR takes effect Friday, so companies are scrambling now to comply as best they can.

“The European privacy authorities have all said there’s not going to be an extension,” said Sanchez. “One of the privacy authorities stated that companies have had two years to implement this. That was their two-year grace period, and there’s not going to be any additional grace period, but I think what we’re seeing in reality is many companies are not going to be 100 percent compliant by the deadline, so this exercise of obtaining compliance is going to be an ongoing activity.”

Many businesses in the U.S. have never heard of GDPR or only heard about it recently, so it’s not surprising the level of preparedness is low in this country.

“My experiences with companies in the United States is the awareness started ramping up in late 2017,” Sanchez said Thursday. “Starting in early 2018, we saw the acceleration of awareness, and companies are trying to rush through this. But still a lot of organizations aren’t going to be compliant by tomorrow, and we’re expecting to see the activity of organizations that are getting to compliance continuing for many more months.”

Businesses not only have to worry about their own compliance with the new data privacy rules, but how well their business partners are complying as third parties who handle their customers’ data.

“The data controller is the organization that receives the data from the individual, but all of the data processors, which could be vendors to the data controller, all have to comply as well,” said Sanchez. “One of the things we’re seeing now as well is every company is sending letters to every one of their vendors asking them about their compliance with GDPR, asking them to sign privacy addendums. You can imagine all of the different companies and all of the different vendors — we’re talking about millions of these requests going around right now — asking organizations to describe their controls or commit to comply with GDPR. That effort alone is going to take a lot of time to evaluate all those vendor relationships. That’s definitely one I’m seeing go past the deadline for many companies.”

However, companies that decide to ignore the new requirement could find themselves facing heavy penalties. “The fines are enormous,” said Sanchez. “The European authorities have the ability to fine up to 4 percent of global revenue. The maximum fine is the greater of 20 million euros or 4 percent of global revenue. That gets people’s attention. That can be a big number, and we do expect to see the European authorities open investigations and actively enforce compliance. That’s one of the things where there’s a little bit of wait and see as to what happens starting tomorrow. The European authorities have hinted that they’re intending to actively enforce GDPR.”

GDPR Misconceptions

Robert Cattanach, a partner at the international law firm Dorsey & Whitney and a former trial attorney at the Justice Department, has been closely watching developments with the GDPR and believes there are many misconceptions with it.

“Some common misperceptions being heard around the U.S. and Canada include:

"If I don’t have operations in Europe, it doesn’t apply. Wrong. Any U.S. company offering goods or service to EU residents — i.e., anyone with a website — is likely required to comply," Cattanach said in a statement.

“If I am covered by the GDPR I have to appoint a Data Protection Officer (DPO) in the EU. Wrong. A U.S. company’s obligation to appoint a DPO, or even a designated representative, is a complex and highly fact-depedent analysis,” Cattanach said.

"If I am not covered by GDPR I don’t have to update my Privacy Policy. Wrong. A lot has happened in the U.S. since companies started adopting boilerplate Privacy Policies without really understanding what they were committing to do, and not to do," Cattanach said. "Regardless of whether you are covered by GDPR, basic principles of good information governance mandate a careful look at your privacy policy and terms of use on your website. The biggest risk: overstating who you share your data with. Virtually all websites employ third-party data analytic services, which often open the door to opaque gathering,mining, and trading of a person’s data in ways the website owner may not understand at all — and often conflicts with commitments made to customers and website visitors.”


"If I’m a small to medium-sized U.S. company, there’s virtually zero chance of any enforcement action against me so i can just wait until we understand better how it’s all going to work. Maybe — maybe — right. EU regulators will likely target the larger companies, especially U.S. tech companies, at first but GDPR allows private citizens to lodge complaints, and even bring class actions," Cattanach said. "All it will take is one disgruntled customer or employee whistle blower to spotlight someone who thought they could fly below the radar for a few years. If your appetite for risk is voracious, you might avoid detection for a while. But if you completely ignore GDPR and get caught, the financial exposure to penalties and long-term scrutiny could be breathtaking.”

Sunday, May 27, 2018

Cómo Miami se convirtió en la capital de la clase media de América Latina

Mientras muchos inmigrantes llegan a Estados Unidos a pie por la frontera con México, otros, con más recursos se instalan en la ciudad más hispana del país en busca de seguridad y prosperidad.
Desde hace años, Miami es un paraíso de sol, playa, fiesta y compras. Pero la capital más latina de Estados Unidos no sólo atrae a turistas, sino también a latinos profesionales y pudientes que buscan proteger sus inversiones y una vida tranquila.
Mientras miles de inmigrantes pobres tratan de cruzar a Estados Unidos por la frontera sur de México, otros, mucho más pudientes, llegan a Miami sin atraer tanta atención mediática y sin tanta polémica.
Armados con permisos de trabajo, con mayor formación que los latinos que llegan a pie por la frontera, con altas expectativas y deseos de avanzar, muchos de ellos llegan a Miami y compran casas con piscina, jardín y acceso a buenas escuelas.
Mientras el candidato republicano a la presidencia Donald Trump promete construir un muro a lo largo de la frontera con México, apenas se habla de los migrantes que llegan a Miami, una metrópolis de 2,5 millones de habitantes, en la que casi el 70% de la población es hispana.
El español se habla en casi todas las partes y la mayoría lo asume sin verlo como un problema.
Puente entre culturas
Juan Pablo Restrepo es de Colombia. Vive con su mujer y su hijo cerca a la playa. Trabaja de curador musical en Mood Media, una compañía que suministra música que se escucha en los comercios en todo el país.
"Miami es muy atractivo para los latinoamericanos. Pueden estar en Estados Unidos, con todas su ventajas, pero al mismo tiempo mantener su raíces culturales", dice Restrepo a BBC Mundo.
"También es un puente entre ambas culturas, la anglo y la hispana. Si vas a otros lugares en el país, sientes mucho más las tensiones raciales y culturales".
Restrepo es parte de la diáspora latina que ha convertido Miami en la ciudad de Estados Unidos con el mayor porcentaje de residentes nacidos fuera del país, cerca de un 51% de la población, según Guillermo Grenier, profesor de Sociología de Florida International University.
"Los cubanos comenzaron a llegar (después de la Revolución) en 1959 y después de eso fueron llegando latinos desde diferentes países", dice Grenier.
En los últimos años han seguido a los cubanos cerca de 100.000 latinoamericanos de ingresos medios desde Colombia, Argentina, Venezuela y Brasil, entre otros, dice el sociólogo a BBC Mundo.

"Si eres un empresario de América Latina puedes venir a Miami, porque tienes una audiencia, un mercado. Puedes hacer cinco llamadas en español y establecer la infraestructura para tu negocio", añade, y subraya que cerca del 25% de los negocios en el estado de Florida son de propiedad de inmigrantes latinoamericanos.

IRS provides info on tax reform changes to moving, mileage and travel expenses

The Internal Revenue Service offered information Friday about changes from the Tax Cuts and Jobs Act on the rules for moving expenses, vehicle expenses and unreimbursed employee expenses, along with higher depreciation limits for some vehicles.

The TCJA, the tax overhaul that Congress passed last December, suspends the deduction for moving expenses for tax years beginning after Dec. 31, 2017, until Jan. 1, 2026. During that suspension period, the IRS won’t allow deductions for use of an automobile as part of a move using the mileage rate listed in Notice 2018-03. However, the suspension doesn’t apply to members of the armed forces on active duty who move because of a military order related to a permanent change of station.

Unreimbursed employee expense deduction

The new tax law also suspends all miscellaneous itemized deductions subject to the 2 percent of adjusted gross income floor. The change has an impact on expenses such as uniforms, union dues and the deduction for business-related meals, travel and entertainment that the employer isn’t reimbursing.

That means the business standard mileage rate listed in Notice 2018-03, which was issued before the tax overhaul passed, can’t be used to claim an itemized deduction for unreimbursed employee travel expenses in taxable years starting after Dec. 31, 2017, and before Jan. 1, 2026. The IRS issued revised guidance on the matter Friday in Notice 2018-42. It supersedes the earlier notice and includes info about the update to the standard mileage rates, along with details about the suspension of the deduction for operating a vehicle for moving purposes.

2018 standard mileage rates

In Notice 2018-03, which the IRS issued earlier this year, the standard mileage rates for use of a car, van, pickup or panel truck for 2018 remain:

- 54.5 cents for every mile of business travel driven, a 1 cent increase from 2017.

- 18 cents per mile driven for medical purposes, a 1 cent increase from 2017.

- 14 cents per mile driven in service of charitable organizations, which is set by statute and remains unchanged.

The standard mileage rate for business comes from a yearly study of fixed and variable costs of operating an automobile, while the rate for medical purposes depends on variable costs.

Taxpayers can opt to calculate the actual costs of using their vehicle instead of using the standard mileage rates.

A taxpayer can’t use the business standard mileage rate for a vehicle after using any depreciation method under the Modified Accelerated Cost Recovery System or after claiming a Section 179 deduction for that vehicle, however. On top of that, the business standard mileage rate can’t be used for more than four vehicles simultaneously.

Increased depreciation limits


The new tax law ups the depreciation limitations for passenger automobiles that have been placed in service after Dec. 31, 2017, for purposes of calculating the allowance under a fixed and variable rate plan. The maximum standard automobile cost can’t exceed $50,000 for passenger automobiles, trucks and vans that have been placed in service after Dec. 31, 2017. Prior to the change, the maximum standard automobile cost was $27,300 for passenger automobiles and $31,000 for trucks and vans.

Tuesday, May 22, 2018

La Bolsa de Nueva York nombra a su primera presidenta

NUEVA YORK. La Bolsa de Nueva York (NYSE) estará presidida por una mujer por primera vez en sus 226 años de historia.

Stacey Cunningham se convertirá en la 67ta persona que ocupa la presidencia de la entidad, explicó la compañía matriz del NYSE, International Exchange Inc., al diario The Wall Street Journal el lunes en la noche. En la actualidad, es directora de operaciones del NYSE Group.

Esto significa que las dos bolsas más conocidas del mundo estarán encabezadas por mujeres. Adena Friedman asumió el mando del índice tecnológico Nasdaq a comienzos de 2017.

Cunningham asumirá el cargo el viernes en sustitución de Thomas Farley, que dirigió al NYSE desde noviembre de 2013.

Ella Inició su carrera en la bolsa neoyorquina como becaria en 1994. En declaraciones al Wall Street Journal dijo que le "gustó el lugar desde que entró” y que ahora está “emocionada de dirigirlo”.

Históricamente, la industria financiera ha estado dominada por hombres y ha lidiado con sus propios problemas de acoso sexual.

El mes pasado se anunció que la estatua "Fearless Girl" _de una niña de pie con los brazos sobre la cintura que se ha convertido en un símbolo global de destreza empresarial femenina_ será cambiada del lugar que está ahora frente al "Charging Bull" _el conocido toro de bronce que está sobre la calle Wall Street_ a una nueva locación ante el NYSE.

Tax know-how and CPA credential rank high for financial advice

Tax knowledge is considered to be the most important factor when choosing a financial advisor, according to a new survey, which also found the CPA credential to be the one most associated with financial advice.

The survey, from 1st Global, a wealth management firm that works with CPAs, found that 66 percent of affluent and emerging affluent consumers view tax knowledge as the most important factor when choosing a financial advisor. In addition, 47 percent of the respondents associated the CPA designation with financial advice, the largest of any designation included in the study. For the study, 1st Global and PopResearch polled 300 respondents with $150,000 or more in assets.

The report, “Investors, CPAs and Tax-Focused Financial Advice,” found that even though 53 percent of the survey respondents currently work with a CPA or accountant, tax-aware advice is still a key concern for them. Tax-optimized investing (58 percent), estate tax planning (45 percent) and tax burden reduction (45 percent) ranked as the top three specialties the investors who were surveyed said they seek when choosing a financial advisor.

The respondents were asked about other credentials as well, including Certified Financial Planner (CFP), Chartered Financial Analyst (CFA), Chartered Financial Consultant (ChFC), Certified Investment Management Analyst (CIMA) and Personal Financial Specialist (PFS), but the CPA came out on top. “CPAs were ranked first,” said 1st Global president David Knoch. “They actually ranked 50 percent higher than CFPs. The survey asked people to see if they could recognize professional certifications and licenses to see if they could associate them with the provision of financial advice. 

The one they recognized the most 47 percent of the time was CPAs. CFAs actually came in second at 40 percent. CFPs were third at 30 percent, and 27 percent of people said they didn’t recognize any of them. And then 7 percent recognized ChFC and CIMA, and only 4 percent recognized the PFS designation, so the CPA designation was the most recognized of survey respondents.”

Trust was considered to be more important to investors than skills or knowledge, with 90 percent of the survey respondents defining a trusted advisor as someone who had their best interest in mind. Only 10 percent named skills or knowledge as important.

“There has been a public policy debate around how financial advisors should practice,” said Knoch. “We don’t often get into the headlines about how financial advisors are compensated and levels of service, and the way to regulate it. It’s usually too boring for anyone to be talking about, but it’s actually been in the headlines more recently. 

The idea of the DOL’s [Department of Labor's] fiduciary rule for financial advisors we think has more investors asking the question, ‘How is my advisor serving me and what is their responsibility to me?’ I think it’s bringing up questions that investors may not have thought to ask.”

Despite growing access to digital interactions and information, face-to-face discussions continued to be important to the survey respondents, with 57 percent ranking face-to-face interactions as very or extremely important to them.

“Well more than half of the survey’s respondents felt like it was either very or extremely important to meet face to face with the person giving them advice,” said Knoch.

The majority of respondents indicated they would discuss investments and long-term financial aspirations with their CPA or accountant, and 74 percent said they were somewhat or extremely comfortable doing that.

The survey also revealed some generational differences, with younger generations seeking financial advice from professionals more than Baby Boomers. More than 60 percent of respondents in Generation X and Generation Y said they have a CPA and a financial advisor. In addition, younger respondents with a CPA were 6 percent more satisfied with their financial advisors.

“Gen X and millennial individuals are much more interested in becoming an educated participant in the process rather than merely delegating,” said Knoch. “The delegation behaviors are actually very boomer like. 

Integration behaviors are much more Gen X and millennial like. That does speak to Gen X and millennials hiring financial advisors more than their boomer counterparts, and in fact some other surveys have shown that to be the case. Gen X and millennials are hiring financial advisors more often than their boomer counterparts.”

CPAs could be losing out by not targeting younger clients with financial advice, according to the survey results, which found many people just doing it for themselves. “It was also interesting in this survey, as we talk about younger clients, of the 31 to 35 age cohort, 64 percent of those who had a CPA also had a financial advisor,” said Knoch. “In fact, out of the entire thing, 38 percent used a CPA, and of those, 56 percent used a financial advisor. 

For those who did not use a CPA, 72 percent of them did not have a financial advisor, so there was a have and have not element here. People who were involving expert professionals in their lives tended to have expert professionals that would help them work on both taxes and investments. They chose not to bring a CPA into their life. They appeared to be much more of a do it yourself-er when it came to getting financial services.”

Many investors are looking for tax-optimized investing strategies, especially in the wake of the new tax law, although the survey didn’t ask specifically about the Tax Cuts and Jobs Act. But there's more opportunity for CPAs to offer such services in the context of the tax overhaul.

“What was interesting in this is that tax-optimized investing was the most selected category that these investors were looking for,” said Knoch. “It was interesting that while they seemed to be seeking tax-optimized advice, you have a number in this group that are not actually hiring CPAs or financial advisors to do that. Therein we think lies a tremendous opportunity for the CPA professionals in America today who may not be serving as financial advisors. 

Frankly speaking, a CPA who is not in the wealth management profession today, this survey is saying clearly right now is the time to start. These people answering this survey, 62 percent, more than any other, agreed that CPAs have the ethical standards and skills needed to serve a family’s needs.”

With 58 percent of the survey respondents seeking tax-optimized investing strategies, Knoch believes American families are looking for these services from CPAs. “For the firms that are already offering wealth management," he said, "we think now is the time to ask the question: ‘Are we playing at our best?’ The demand for these services from CPA firms may never have been higher since CPAs started offering financial services three or four decades ago.”


Friday, April 27, 2018

IRS details new reporting requirements for life insurance

The Internal Revenue Service spelled out new information reporting requirements Thursday for some life insurance contracts under the recently enacted Tax Cuts and Jobs Act.

The new requirements will apply to reportable death benefits paid, along with reportable policy sales, that were made after Dec. 31, 2017. The IRS provided transitional guidance Thursday postponing any reporting under Section 6050Y of the tax code until the final regulations are issued. The transitional guidance gives taxpayers some extra time to satisfy any reporting obligations that could occur before the IRS and the Treasury publish the final regulations.

Information returns have to be filed in the situations below, according to the IRS:

- By anyone who acquires a life insurance contract, or any interest in a life insurance contract, in a “reportable policy sale”;

- By an issuer of a life insurance contract upon notice of a transaction required to be reported above or upon any notice of a transfer of a life insurance contract, or any interest in a life insurance contract, to a foreign person; and

- By any payor of “reportable death benefits.”

A “reportable policy sale” is usually the acquisition of an interest in a life insurance contract, either directly or indirectly, if the acquirer has no substantial family, business or financial relationship to the insured. A “reportable death benefit” is an amount paid when an insured person dies under a life insurance contract that was transferred in a reportable policy sale.

The IRS is asking for public comments on the proposed regulations to implement the new reporting requirements.

Sunday, February 4, 2018

Sueldos en Estados Unidos aumentan a su mayor ritmo en más de 8 años

Los empleadores en Estados Unidos crearon en enero 200,000 puestos de trabajo, una cifra sólida, y los sueldos aumentaron ese mes a su mayor ritmo en más de ocho años, prueba de un mercado laboral con una salud uniforme.

El débil aumento de sueldos ha sido una de las limitaciones más persistentes de la economía durante casi una década. Sin embargo, debido a una falta de trabajadores, los empleadores se han visto obligados a aumentar las pagas. Algunos de los incrementos de enero reflejan aumentos de una sola vez, como el del salario mínimo en algunos estados.

El alza de sueldos deja entrever que los empleadores se disputan a un número limitado de trabajadores. El alza a los sueldos derivada por las rebajas impositivas de los republicanos y los incrementos al salario mínimo en 18 estados posiblemente también impulsaron la elevación de las pagas el mes pasado.

La tasa de desocupación permaneció en 4.1% por cuarto mes consecutivo, el nivel más bajo desde el 2000, dijo el viernes el Departamento de Trabajo en su informe mensual de empleo.

Las cifras dejan entrever una economía con una base firme incluso en su noveno año de expansión, impulsada por el crecimiento económico global y un constante gasto de los consumidores en el país.

El aumento en los sueldos por hora, a la par de una reciente alza de la inflación, incrementa la posibilidad de que la Reserva Federal eleve las tasas de interés de corto plazo con más rapidez en los próximos meses.

La paga por hora promedio aumentó 9 centavos en enero a 26.74 dólares, después de un incremento mayor en diciembre. En comparación con el mismo mes de hace un año, los sueldos aumentaron 2.9%, su mayor cantidad desde que la recesión llego a su fin hace ocho años.

Las contrataciones se dieron en casi todos los sectores. Las compañías de la construcción crearon 36.000 empleos, debido a la demanda de casas nuevas y remodelaciones.

El sector manufacturas generó 15,000 puestos de trabajo y el de salud 26,000. Los servicios profesionales y de negocios, que incluye empleos muy bien pagados en ingeniería y contabilidad, generaron 23,000 puestos de trabajo. Restaurantes, hoteles, bares y compañías de entretenimiento crearon 35,000.