2017 Filing Season Due Date Changes (cont. page 3) 1

DOL Changes to the Fair Labor Standards Act (cont. page 2) 1

Retirement Plan Distributions 2

What’s New in Technology for September 2016 3

Firm Announcements 4

Editor: Nikki True

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2017 Filing Season Due Date ChangesBy Jeff Raab

As a provision of the Surface Transportation and Veterans Health Care Choice Improvement Act of 2015, certain due dates for tax returns have been updated effective for 2016 tax returns and the 2017 filing season. Below is a list of the new federal due dates generally applicable for the 2016 tax returns and beyond.

March 15 (Extension until Sept. 15):Form 1065, US Return of Partnership IncomeForm 1120S, US Income Tax Return for S Corporation

April 15 (Extension until October 15, unless noted below):Form 1040, US Individual Income Tax ReturnsForm 1041, US Income Tax Return for Estates and Trusts (extension until September 30)Form 1120, US Corporation Income Tax Return (extension until September 15 until 2026)FINCEN Form 114, Report of Foreign Bank and Financial Accounts

May 15 (Extension until November 15):Form 990, Return of Organization Exempt from Income Tax

July 31 (Extension until October 15):Form 5500 for employee benefit plans

It should be noted that the new rules apply to tax years beginning after December 31, 2015, so they will apply to short-year returns beginning in 2016.

Certi�ed Public Accountants and Business Consultants

QuillThe

Employee Benefit Plan AuditQuality Center Member

Governmental AuditQuality Center Member

Certi�ed Public Accountants and Business Consultants

Certi�ed Public Accountants and Business Consultants

RKO’s Manager in the Nonprofit Department, Rory O’Brion, had a baby girl on August 25. Congratulations to Rory and Abby and his family on the arrival of McKenna Reese O’Brion!

Firm Announcements

RKO welcomes Kristin Starzyk as an Audit Supervisor and Robin Jordan, Brenton Corriveau, and Nick Thompson

as Assistant Accountants.

DOL Changes to the Fair Labor Standards Act – How it Affects You By Megan Story

Announced May 18, 2016, the Department of Labor has made changes to the Fair Labor Standards Act (FLSA) that come into effect December 1, 2016. The objective of the changes is to bring the income threshold to where it would have been, with inflation adjustments, had it not been frozen over ten years ago. According to the DOL, the changes are going to affect over four million workers in the US by more than doubling the threshold from $23,660 ($455 a week) to $47,476 ($913 per week). All employees earning less than $47,476 are non-exempt employees, regardless of their occupation or duties. The thresholds will continue to go up every three years, beginning January 1, 2020. A non-exempt employee must receive one and a half times their regular rate for hours worked over the standard of 40 hours a week. Employers are also going to be liable for the payroll taxes associated with the overtime. The DOL has set other requirements to deem an employee making over $47,476 as exempt. These changes are going to affect both for profit and nonprofit organizations. The pay threshold test and duties test are used to determine if an employee is considered exempt or non-exempt.

The pay threshold looks at highly compensated employees (HCEs) and their exempt status. Any HCE who has annual compensation of $134,004 or more is exempt of the overtime regulations, regardless of their duties. If an employee’s annual compensation fails to meet the $134,004 threshold, the employer is allowed to make a one-time payment to achieve the threshold (payment must be made during the last pay period of the 52-week period or one month after). The one-time payment counts toward the 52-week year, not the calendar year it was paid in.

The duties test addresses salaried and hourly waged employees who are considered EAP (executive, administrative and professional) employees. To classify as an EAP, the DOL looks at the employees “primary duty”, meaning the main or most important duty that an employee performs. First the executive exemption applies to employees who: 1) manage the company or a department within the company; 2) regularly oversee two or more full-time employees (or the part-time equivalent); 3) have the authority to hire and fire, or contribute to the decision to do so.

ManystatesarelikelytofollowtheabovefederalduedatechangesbutmayneedtoenactlegislaHontochangetheirduedates.ManystateshavealreadyenactedsuchlegislaHonbutothers,asofthedateofthisarHcle,havenot.Youshouldconsultwithyourtaxpreparertoconfirmtheduedatesofyourstatereturns.!FormsW2andForm1099-MISC:!PleasenoteduedatesforFormW-2andForm1099-MISC,whenreporHngnon-employeecompensaHon(box7),havechangedstarHngwiththe2016taxyear.!

• NewduedateforfilingwithSSA.Theduedateforfiling2016FormsW-2,W-2AS,W-2CM,W-2GU,W-2VI,W-3andW-3SSwiththeSSAisnowJanuary31,2017,whetheryoufileusingpaperformsorelectronically.!

• Newfilingdate,requiresForm1099-MISCtobefiledonorbeforeJanuary31,2017,whenyouarereporHngnon-employeecompensaHonpaymentsinbox7.!!

DOLChangestotheFairLaborStandardsAct–HowitAffectsYou.ByMeganStory!

AnnouncedMay18,2016,theDepartmentofLaborhasmadechangestotheFairLaborStandardsAct(FLSA)thatcomeintoeffectDecember1,2016.TheobjecHveofthechangesistobringtheincomethresholdtowhereitwouldhavebeen,withinflaHonadjustments,haditnotbeenfrozenovertenyearsago.AccordingtotheDOL,thechangesaregoingtoaffectoverfourmillionworkersintheUSbymorethandoublingthethresholdfrom$23,660($455aweek)to$47,476($913perweek).Allemployeesearninglessthan$47,476arenon-exemptemployees,regardlessoftheiroccupaHonorduHes.Thethresholdswill

conHnuetogoupeverythreeyears,beginningJanuary1,2020.Anon-exemptemployeemustreceiveoneandahalfHmestheirregularrateforhoursworkedoverthestandardof40hoursaweek.EmployersarealsogoingtobeliableforthepayrolltaxesassociatedwiththeoverHme.TheDOLhassetotherrequirementstodeemanemployeemakingover$47,476asexempt.ThesechangesaregoingtoaffectbothforprofitandnonprofitorganizaHons.ThepaythresholdtestandduHestestareusedtodetermineifanemployeeisconsideredexemptornon-exempt.!Thepaythresholdlooksathighlycompensatedemployees(HCEs)andtheirexemptstatus.AnyHCEwhohasannualcompensaHonof$134,004ormoreisexemptoftheoverHmeregulaHons,regardlessoftheirduHes.Ifanemployee’sannualcompensaHonfailstomeetthe$134,004threshold,theemployerisallowedtomakeaone-Hmepaymenttoachievethethreshold(paymentmustbemadeduringthelast

FALL2016QUILL!2017FilingSeasonDueDateChangesByJeffRaab

A AsaprovisionoftheSurfaceTransportaHonandVeteransHealthCareChoiceImprovementActof2015,certainduedatesfortaxreturnshavebeenupdatedeffecHvefor2016taxreturnsandthe2017filingseason.Belowisalistofthenewfederalduedatesgenerallyapplicableforthe2016taxreturnsandbeyond.!March15(Extensionun3lSept.15):!Form1065,USReturnofPartnershipIncomeForm1120S,USIncomeTaxReturnforSCorporaHon!April15(Extensionun3lOctober15,unlessnotedbelow):!Form1040,USIndividualIncomeTaxReturnsForm1041,USIncomeTaxReturnforEstatesandTrusts(extensionunHlSeptember30)Form1120,USCorporaHonIncomeTaxReturn(ExtensionunHlSeptember15unHl2026)FINCENForm114,ReportofForeignBankandFinancialAccounts!May15(Extensionun3lNovember15):!Form990,ReturnofOrganizaHonExemptfromIncomeTax!July31(Extensionun3lOctober15):!Form5500foremployeebenefitplans!Itshouldbenotedthatthenewrulesapplytotaxyearsbeginninga^erDecember31,2015,sotheywillapplytoshort-yearreturnsbeginningin2016.!

(continued on Page 3)

(continued on Page 2)

South Portland 20 Long Creek Drive, South Portland, Maine 04106 (800) 486-1784 • (207) 773-2986South Portland 20 Long Creek Drive, South Portland, Maine 04106 (800) 486-1784 • (207) 773-29862 3

Retirement Plan Distributions: Assistance for Individuals missing the 60-Day Rollover WindowBy Peter Way

In August, the Internal Revenue Service established a procedure designed to assist taxpayers who receive a retirement plan distribution and inadvertently miss the 60-day window to roll the funds into another retirement plan or individual retirement account (IRA).

Prior to this “Revenue Procedure 2016-47”, taxpayers who missed the above time limit would ordinarily be subject to early

distribution taxes. The normal rule is that an eligible distribution from an IRA or workplace retirement plan can only qualify for tax-free rollover treatment if it is contributed to another IRA or workplace plan by the 60th day after it was received. In most cases, taxpayers who fail to meet the time limit could only obtain a waiver by requesting a private letter ruling from the IRS…a process with a high degree of uncertainty.

With the new ruling, a taxpayer who misses the time limit will now ordinarily qualify for a waiver if one or more of 11 circumstances, listed in the revenue procedure, apply to them. They include a distribution check that was misplaced and never cashed, the taxpayer’s home was severely damaged, a family member died, the taxpayer or a family member was seriously ill, the taxpayer was incarcerated or restrictions were imposed by a foreign country.

The revenue procedure includes a self-certification sample letter that can be used to notify the administrator or trustee of the retirement plan or IRA receiving the rollover that they qualify for the waiver.

In most cases, it is anticipated that the IRS and plan administrators/trustees will rely on a taxpayer’s self-certification that they qualify for the waiver. Moreover, even if a taxpayer does not self-certify, the IRS now has the authority to grant a waiver during a subsequent examination.

It should be noted that the IRS encourages taxpayers who choose to transfer retirement plan or IRA funds to another retirement plan or IRA to consider directing the administrator or trustee to make a direct trustee-to-trustee transfer, rather than doing a rollover. This process may avoid some of the delays and restrictions that often arise during the rollover process.

The administrative exemption refers to employees whose primary duty is office or non-manual work directly related to the general business of the operation or the employer’s customers. The employee must exercise discretion or independent judgement in their work. The DOL specifically outlines these academic administrators as exempt: superintendents and any assistants responsible for curriculum, student achievement and teacher programs; the principal and vice principal of a school; the department heads, academic counselors and other employees with similar job responsibilities.

Lastly, the professional exemption applies to learned professionals, employees who have primary duties performing office or non-manual work that requires an advanced knowledge in the field of learning or science. The advanced knowledge must be obtained by a prolonged course of specialized instruction. Examples of learned professionals include: creative professionals (music, writing, acting and graphic arts); teachers (any employee whose primary duty is teaching and they are employed at an educational institution); and law or medicine professionals (must have a valid license or certificate and be engaged in a field that qualifies for professional exemption. Computer professionals (analysts, programmers and software engineers) are also exempt under the exemption. Other types of learned professional’s include: engineers; architects; and various types of scientists and pharmacists.

If you believe that this will affect your business or organization, contact your payroll company, labor law attorney or accountant to address the potential increased costs/changes to your organization. Things you should consider are:

1) How many employees will now be considered non-exempt?

2) How many work more than 40 hours a week?

3) What is the cost going to look like now that they are eligible for overtime?

4) For companies that do not currently track salaried employees’ hours, this might now become necessary, adding an additional cost.

A few ways to address the change in the overtime guidelines: look at increasing employees’ salaries who fall just under the threshold so they qualify as exempt and be clear about defining job descriptions so employees and the DOL are clear on the job specifications and where they fit into the exempt EAPs. Use the change in guidelines/threshold as a way to redistribute responsibilities so they can be most beneficial.

Certi�ed Public Accountants and Business Consultants

QuillCerti�ed Public Accountants and Business Consultants

QuillWhat’s New in Technology for September 2016Update on Chip Card TechnologyBack in October 2015, retailers experienced a liability shift when the onus for absorbing the cost of counterfeit transactions shifted from the banks to the individual merchants if the retailers had not migrated from swipe card systems to the newer EMV technology. Those merchants who installed EMV (chip) technology in their cash register networks by the October deadline were able to continue to enjoy liability protection from the card issuers. The ones who missed the deadline were left to do the best they could – making good on any counterfeit transactions or other thefts from scammers.

In the 10 months that followed this deadline, it has become clear to almost anyone who uses a credit card that the new EMV systems are slower than the swipe format, and that there’s often serious confusion – involving both the consumer and the employee at the cash register. The last few months have shown us the practical shortcomings of the EMV technology and have also underscored the major problems – financial and organizational – that large national retailers have encountered in making the switch.

Some merchants were able to make a fairly smooth transition, but many weren’t. Some of the largest companies installed the new EMV – but not throughout their stores – and others found the process extraordinarily complicated, costly and time-consuming. What seemed like a good move to improve security at the cash register has, in many cases, proven to be a major headache. So where does all this leave us, what solutions do we have and what do the experts predict?

The EMV AdvantageThe point of replacing the traditional swipe credit card payment system was to ramp up security. Swipe systems transmit the same card information over and over again. If cyber crooks intercept the card data, they can use it over and over again to run up fraudulent changes. EMV technology or chip technology transmits one-time/one-use encrypted data and is extremely difficult for scammers to counterfeit. (EMV is named after Europay, MasterCard and Visa, the companies that originally developed the technology.)

Status ReportCredit card companies estimate that a staggering 70 percent or more of all merchants in the United States have NOT adopted the EMV technology, choosing to cope with increased liability rather than deal with implementing a new system. Some are overwhelmed with the costs and the time required to adapt their large-scale systems. Others may have made a business decision to deal with the additional fraud risk rather than see longer lines at the cash register.

SolutionsFor their part, the credit card companies and the hardware makers are working on newer, faster technology. However, any update to existing EMV systems – just like the original rollout in October 2015 – will involve lots of different parties and will be time consuming and potentially costly. Some observers think the EMV woes may deliver an unanticipated boost to the mobile payments industry. Store-specific apps (Starbucks and some fast food chains) on consumers’ cell phones are fast and secure. Other consumers don’t want to load their phone with multiple payment apps and they prefer options like Apple Pay or Android Pay, which have integrated payments with stores’ loyalty programs. In the fast-paced world of payment technology, it remains to be seen who will win market share. As things stand with EMV still evolving, smartphone payment technology may well be emerging as the winner.

2017 Filing Season Due Date Changes (continued from Page 1)

Many states are likely to follow the above federal due date changes but may need to enact legislation to change their due dates. Many states have already enacted such legislation but others, as of the date of this article, have not. You should consult with your tax preparer to confirm the due dates of your state returns.

Forms W2 and Form 1099-MISC:Please note due dates for Form W-2 and Form 1099-MISC, when reporting non-employee compensation (box 7), have changed starting with the 2016 tax year.

• New due date for filing with SSA. The due date for filing 2016 Forms W-2, W-2AS, W-2CM, W-2GU, W-2VI, W-3 and W-3SS with the SSA is now January 31, 2017, whether you file using paper forms or electronically.

• New filing date, requires Form 1099-MISC to be filed on or before January 31, 2017, when you are reporting non-employee compensation payments in box 7.

DOL Changes to the Fair Labor Standards Act – How it Affects You (continued from Page 1)

InAugust,theInternalRevenueServiceestablishedaproceduredesignedtoassisttaxpayerswhoreceiveareHrementplandistribuHonandinadvertentlymissthe60-daywindowtorollthefundsintoanotherreHrementplanorindividualreHrementaccount(IRA).!Priortothis“RevenueProcedure2016-47”,taxpayerswhomissedtheaboveHmelimitwouldordinarilybesubjecttoearlydistribuHontaxes.ThenormalruleisthataneligibledistribuHonfromanIRAorworkplacereHrementplancanonlyqualifyfortax-freerollovertreatmentifitiscontributedtoanotherIRAorworkplaceplanbythe60thdaya^eritwasreceived.Inmostcases,taxpayerswhofailtomeettheHmelimitcouldonlyobtainawaiverbyrequesHngaprivateleperrulingfromtheIRS…aprocesswithahighdegreeofuncertainty.!Withthenewruling,ataxpayerwhomissestheHmelimitwillnowordinarilyqualifyforawaiverifoneormoreof11circumstances,listedintherevenueprocedure,applytothem.Theyincludea

distribuHoncheckthatwasmisplacedandnevercashed,thetaxpayer’shomewasseverelydamaged,afamilymemberdied,thetaxpayerorafamilymemberwasseriouslyill,thetaxpayerwasincarceratedorrestricHonswereimposedbyaforeigncountry.!Therevenueprocedureincludesaself-cerHficaHonsampleleperthatcanbeusedtonoHfytheadministratorortrusteeofthereHrementplanorIRAreceivingtherolloverthattheyqualifyforthewaiver.!Inmostcases,itisanHcipatedthattheIRSandplanadministrators/trusteeswillrelyonataxpayer’sself-cerHficaHonthattheyqualifyforthewaiver.Moreover,evenifataxpayerdoesnotself-cerHfy,theIRSnowhastheauthoritytograntawaiverduringasubsequentexaminaHon.!ItshouldbenotedthattheIRSencouragestaxpayerswhochoosetotransferreHrementplanorIRAfundstoanotherreHrementplanorIRAtoconsiderdirecHngtheadministratorortrusteetomakeadirecttrustee-to-trusteetransfer,ratherthandoingarollover.ThisprocessmayavoidsomeofthedelaysandrestricHonsthato^enariseduringtherolloverprocess.!!What'sNewinTechnologyforSeptember2016Technology:UpdateonChipCardTechnology!

BackinOctober2015,retailersexperiencedaliabilityshi^whentheonusforabsorbingthecostofcounterfeittransacHonsshi^edfromthebankstotheindividualmerchantsiftheretailershadnotmigratedfromswipecardsystemstothenewerEVMtechnology.ThosemerchantswhoinstalledEMV(chip)technologyintheircashregisternetworksbytheOctoberdeadlinewereabletoconHnuetoenjoyliabilityprotecHonfromthecardissuers.Theoneswhomissedthedeadlinewerele^todothebesttheycould–makinggoodonanycounterfeittransacHonsorotherthe^sfromscammers.!

Inthe10monthsthatfollowedthisdeadline,ithasbecomecleartoalmostanyonewhousesacreditcardthatthenewEMVsystemsareslowerthantheswipeformat,andthatthere’so^enseriousconfusion–involvingboththeconsumerandtheemployeeatthecashregister.ThelastfewmonthshaveshownusthepracHcalshortcomingsoftheEMVtechnologyandhavealsounderscoredthemajorproblems–financialandorganizaHonal–thatlargenaHonalretailershaveencounteredinmakingtheswitch.!SomemerchantswereabletomakeafairlysmoothtransiHon,butmanyweren’t.SomeofthelargestcompaniesinstalledthenewEMV–butnotthroughouttheirstores–andothersfoundtheprocessextraordinarilycomplicated,costlyandHme-consuming.Whatseemedlikeagoodmovetoimprovesecurityatthecashregisterhas,inmanycases,proventobeamajorheadache.Sowheredoesallthisleaveus,whatsoluHonsdowehaveandwhatdotheexpertspredict?!TheEMVAdvantageThepointofreplacingthetradiHonalswipecreditcardpaymentsystemwastorampupsecurity.SwipesystemstransmitthesamecardinformaHonoverandoveragain.Ifcybercrooksinterceptthecarddata,theycanuseitoverandoveragaintorunupfraudulentchanges.EMVtechnologyorchiptechnologytransmitsone-Hme/one-useencrypteddataandisextremelydifficultforscammerstocounterfeit.(EMVisnameda^erEuropay,MasterCardandVisa,thecompaniesthatoriginallydevelopedthetechnology.)!StatusReportCreditcardcompaniesesHmatethatastaggering70percentormoreofallmerchantsintheUnitedStateshaveNOTadoptedtheEMVtechnology,choosingtocopewithincreasedliabilityratherthandealwithimplemenHnganewsystem.SomeareoverwhelmedwiththecostsandtheHmerequiredtoadapttheirlarge-scalesystems.OthersmayhavemadeabusinessdecisiontodealwiththeaddiHonalfraudriskratherthanseelongerlinesatthecashregister.!Solu3onsFortheirpart,thecreditcardcompaniesandthehardwaremakersareworkingonnewer,fastertechnology.However,anyupdatetoexisHngEMVsystems–justliketheoriginalrolloutinOctober2015–willinvolvelotsofdifferentparHesandwillbeHmeconsumingandpotenHallycostly.SomeobserversthinktheEVMwoesmaydeliveranunanHcipatedboosttothemobilepaymentsindustry.Store-specific

South Portland 20 Long Creek Drive, South Portland, Maine 04106 (800) 486-1784 • (207) 773-2986South Portland 20 Long Creek Drive, South Portland, Maine 04106 (800) 486-1784 • (207) 773-29862 3

Retirement Plan Distributions: Assistance for Individuals missing the 60-Day Rollover WindowBy Peter Way

In August, the Internal Revenue Service established a procedure designed to assist taxpayers who receive a retirement plan distribution and inadvertently miss the 60-day window to roll the funds into another retirement plan or individual retirement account (IRA).

Prior to this “Revenue Procedure 2016-47”, taxpayers who missed the above time limit would ordinarily be subject to early

distribution taxes. The normal rule is that an eligible distribution from an IRA or workplace retirement plan can only qualify for tax-free rollover treatment if it is contributed to another IRA or workplace plan by the 60th day after it was received. In most cases, taxpayers who fail to meet the time limit could only obtain a waiver by requesting a private letter ruling from the IRS…a process with a high degree of uncertainty.

With the new ruling, a taxpayer who misses the time limit will now ordinarily qualify for a waiver if one or more of 11 circumstances, listed in the revenue procedure, apply to them. They include a distribution check that was misplaced and never cashed, the taxpayer’s home was severely damaged, a family member died, the taxpayer or a family member was seriously ill, the taxpayer was incarcerated or restrictions were imposed by a foreign country.

The revenue procedure includes a self-certification sample letter that can be used to notify the administrator or trustee of the retirement plan or IRA receiving the rollover that they qualify for the waiver.

In most cases, it is anticipated that the IRS and plan administrators/trustees will rely on a taxpayer’s self-certification that they qualify for the waiver. Moreover, even if a taxpayer does not self-certify, the IRS now has the authority to grant a waiver during a subsequent examination.

It should be noted that the IRS encourages taxpayers who choose to transfer retirement plan or IRA funds to another retirement plan or IRA to consider directing the administrator or trustee to make a direct trustee-to-trustee transfer, rather than doing a rollover. This process may avoid some of the delays and restrictions that often arise during the rollover process.

The administrative exemption refers to employees whose primary duty is office or non-manual work directly related to the general business of the operation or the employer’s customers. The employee must exercise discretion or independent judgement in their work. The DOL specifically outlines these academic administrators as exempt: superintendents and any assistants responsible for curriculum, student achievement and teacher programs; the principal and vice principal of a school; the department heads, academic counselors and other employees with similar job responsibilities.

Lastly, the professional exemption applies to learned professionals, employees who have primary duties performing office or non-manual work that requires an advanced knowledge in the field of learning or science. The advanced knowledge must be obtained by a prolonged course of specialized instruction. Examples of learned professionals include: creative professionals (music, writing, acting and graphic arts); teachers (any employee whose primary duty is teaching and they are employed at an educational institution); and law or medicine professionals (must have a valid license or certificate and be engaged in a field that qualifies for professional exemption. Computer professionals (analysts, programmers and software engineers) are also exempt under the exemption. Other types of learned professional’s include: engineers; architects; and various types of scientists and pharmacists.

If you believe that this will affect your business or organization, contact your payroll company, labor law attorney or accountant to address the potential increased costs/changes to your organization. Things you should consider are:

1) How many employees will now be considered non-exempt?

2) How many work more than 40 hours a week?

3) What is the cost going to look like now that they are eligible for overtime?

4) For companies that do not currently track salaried employees’ hours, this might now become necessary, adding an additional cost.

A few ways to address the change in the overtime guidelines: look at increasing employees’ salaries who fall just under the threshold so they qualify as exempt and be clear about defining job descriptions so employees and the DOL are clear on the job specifications and where they fit into the exempt EAPs. Use the change in guidelines/threshold as a way to redistribute responsibilities so they can be most beneficial.

Certi�ed Public Accountants and Business Consultants

QuillCerti�ed Public Accountants and Business Consultants

QuillWhat’s New in Technology for September 2016Update on Chip Card TechnologyBack in October 2015, retailers experienced a liability shift when the onus for absorbing the cost of counterfeit transactions shifted from the banks to the individual merchants if the retailers had not migrated from swipe card systems to the newer EMV technology. Those merchants who installed EMV (chip) technology in their cash register networks by the October deadline were able to continue to enjoy liability protection from the card issuers. The ones who missed the deadline were left to do the best they could – making good on any counterfeit transactions or other thefts from scammers.

In the 10 months that followed this deadline, it has become clear to almost anyone who uses a credit card that the new EMV systems are slower than the swipe format, and that there’s often serious confusion – involving both the consumer and the employee at the cash register. The last few months have shown us the practical shortcomings of the EMV technology and have also underscored the major problems – financial and organizational – that large national retailers have encountered in making the switch.

Some merchants were able to make a fairly smooth transition, but many weren’t. Some of the largest companies installed the new EMV – but not throughout their stores – and others found the process extraordinarily complicated, costly and time-consuming. What seemed like a good move to improve security at the cash register has, in many cases, proven to be a major headache. So where does all this leave us, what solutions do we have and what do the experts predict?

The EMV AdvantageThe point of replacing the traditional swipe credit card payment system was to ramp up security. Swipe systems transmit the same card information over and over again. If cyber crooks intercept the card data, they can use it over and over again to run up fraudulent changes. EMV technology or chip technology transmits one-time/one-use encrypted data and is extremely difficult for scammers to counterfeit. (EMV is named after Europay, MasterCard and Visa, the companies that originally developed the technology.)

Status ReportCredit card companies estimate that a staggering 70 percent or more of all merchants in the United States have NOT adopted the EMV technology, choosing to cope with increased liability rather than deal with implementing a new system. Some are overwhelmed with the costs and the time required to adapt their large-scale systems. Others may have made a business decision to deal with the additional fraud risk rather than see longer lines at the cash register.

SolutionsFor their part, the credit card companies and the hardware makers are working on newer, faster technology. However, any update to existing EMV systems – just like the original rollout in October 2015 – will involve lots of different parties and will be time consuming and potentially costly. Some observers think the EMV woes may deliver an unanticipated boost to the mobile payments industry. Store-specific apps (Starbucks and some fast food chains) on consumers’ cell phones are fast and secure. Other consumers don’t want to load their phone with multiple payment apps and they prefer options like Apple Pay or Android Pay, which have integrated payments with stores’ loyalty programs. In the fast-paced world of payment technology, it remains to be seen who will win market share. As things stand with EMV still evolving, smartphone payment technology may well be emerging as the winner.

2017 Filing Season Due Date Changes (continued from Page 1)

Many states are likely to follow the above federal due date changes but may need to enact legislation to change their due dates. Many states have already enacted such legislation but others, as of the date of this article, have not. You should consult with your tax preparer to confirm the due dates of your state returns.

Forms W2 and Form 1099-MISC:Please note due dates for Form W-2 and Form 1099-MISC, when reporting non-employee compensation (box 7), have changed starting with the 2016 tax year.

• New due date for filing with SSA. The due date for filing 2016 Forms W-2, W-2AS, W-2CM, W-2GU, W-2VI, W-3 and W-3SS with the SSA is now January 31, 2017, whether you file using paper forms or electronically.

• New filing date, requires Form 1099-MISC to be filed on or before January 31, 2017, when you are reporting non-employee compensation payments in box 7.

DOL Changes to the Fair Labor Standards Act – How it Affects You (continued from Page 1)

InAugust,theInternalRevenueServiceestablishedaproceduredesignedtoassisttaxpayerswhoreceiveareHrementplandistribuHonandinadvertentlymissthe60-daywindowtorollthefundsintoanotherreHrementplanorindividualreHrementaccount(IRA).!Priortothis“RevenueProcedure2016-47”,taxpayerswhomissedtheaboveHmelimitwouldordinarilybesubjecttoearlydistribuHontaxes.ThenormalruleisthataneligibledistribuHonfromanIRAorworkplacereHrementplancanonlyqualifyfortax-freerollovertreatmentifitiscontributedtoanotherIRAorworkplaceplanbythe60thdaya^eritwasreceived.Inmostcases,taxpayerswhofailtomeettheHmelimitcouldonlyobtainawaiverbyrequesHngaprivateleperrulingfromtheIRS…aprocesswithahighdegreeofuncertainty.!Withthenewruling,ataxpayerwhomissestheHmelimitwillnowordinarilyqualifyforawaiverifoneormoreof11circumstances,listedintherevenueprocedure,applytothem.Theyincludea

distribuHoncheckthatwasmisplacedandnevercashed,thetaxpayer’shomewasseverelydamaged,afamilymemberdied,thetaxpayerorafamilymemberwasseriouslyill,thetaxpayerwasincarceratedorrestricHonswereimposedbyaforeigncountry.!Therevenueprocedureincludesaself-cerHficaHonsampleleperthatcanbeusedtonoHfytheadministratorortrusteeofthereHrementplanorIRAreceivingtherolloverthattheyqualifyforthewaiver.!Inmostcases,itisanHcipatedthattheIRSandplanadministrators/trusteeswillrelyonataxpayer’sself-cerHficaHonthattheyqualifyforthewaiver.Moreover,evenifataxpayerdoesnotself-cerHfy,theIRSnowhastheauthoritytograntawaiverduringasubsequentexaminaHon.!ItshouldbenotedthattheIRSencouragestaxpayerswhochoosetotransferreHrementplanorIRAfundstoanotherreHrementplanorIRAtoconsiderdirecHngtheadministratorortrusteetomakeadirecttrustee-to-trusteetransfer,ratherthandoingarollover.ThisprocessmayavoidsomeofthedelaysandrestricHonsthato^enariseduringtherolloverprocess.!!What'sNewinTechnologyforSeptember2016Technology:UpdateonChipCardTechnology!

BackinOctober2015,retailersexperiencedaliabilityshi^whentheonusforabsorbingthecostofcounterfeittransacHonsshi^edfromthebankstotheindividualmerchantsiftheretailershadnotmigratedfromswipecardsystemstothenewerEVMtechnology.ThosemerchantswhoinstalledEMV(chip)technologyintheircashregisternetworksbytheOctoberdeadlinewereabletoconHnuetoenjoyliabilityprotecHonfromthecardissuers.Theoneswhomissedthedeadlinewerele^todothebesttheycould–makinggoodonanycounterfeittransacHonsorotherthe^sfromscammers.!

Inthe10monthsthatfollowedthisdeadline,ithasbecomecleartoalmostanyonewhousesacreditcardthatthenewEMVsystemsareslowerthantheswipeformat,andthatthere’so^enseriousconfusion–involvingboththeconsumerandtheemployeeatthecashregister.ThelastfewmonthshaveshownusthepracHcalshortcomingsoftheEMVtechnologyandhavealsounderscoredthemajorproblems–financialandorganizaHonal–thatlargenaHonalretailershaveencounteredinmakingtheswitch.!SomemerchantswereabletomakeafairlysmoothtransiHon,butmanyweren’t.SomeofthelargestcompaniesinstalledthenewEMV–butnotthroughouttheirstores–andothersfoundtheprocessextraordinarilycomplicated,costlyandHme-consuming.Whatseemedlikeagoodmovetoimprovesecurityatthecashregisterhas,inmanycases,proventobeamajorheadache.Sowheredoesallthisleaveus,whatsoluHonsdowehaveandwhatdotheexpertspredict?!TheEMVAdvantageThepointofreplacingthetradiHonalswipecreditcardpaymentsystemwastorampupsecurity.SwipesystemstransmitthesamecardinformaHonoverandoveragain.Ifcybercrooksinterceptthecarddata,theycanuseitoverandoveragaintorunupfraudulentchanges.EMVtechnologyorchiptechnologytransmitsone-Hme/one-useencrypteddataandisextremelydifficultforscammerstocounterfeit.(EMVisnameda^erEuropay,MasterCardandVisa,thecompaniesthatoriginallydevelopedthetechnology.)!StatusReportCreditcardcompaniesesHmatethatastaggering70percentormoreofallmerchantsintheUnitedStateshaveNOTadoptedtheEMVtechnology,choosingtocopewithincreasedliabilityratherthandealwithimplemenHnganewsystem.SomeareoverwhelmedwiththecostsandtheHmerequiredtoadapttheirlarge-scalesystems.OthersmayhavemadeabusinessdecisiontodealwiththeaddiHonalfraudriskratherthanseelongerlinesatthecashregister.!Solu3onsFortheirpart,thecreditcardcompaniesandthehardwaremakersareworkingonnewer,fastertechnology.However,anyupdatetoexisHngEMVsystems–justliketheoriginalrolloutinOctober2015–willinvolvelotsofdifferentparHesandwillbeHmeconsumingandpotenHallycostly.SomeobserversthinktheEVMwoesmaydeliveranunanHcipatedboosttothemobilepaymentsindustry.Store-specific

2017 Filing Season Due Date Changes (cont. page 3) 1

DOL Changes to the Fair Labor Standards Act (cont. page 2) 1

Retirement Plan Distributions 2

What’s New in Technology for September 2016 3

Firm Announcements 4

Editor: Nikki True

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Address Service Requestedwww.rko-cpas.com

South Portland20 Long Creek DriveSouth Portland, Maine 04106(800) 486-1784(207) 773-2986

Certi�ed Public Accountants and Business Consultants

FALL 2016

Certi�ed Public Accountants and Business Consultants

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2017 Filing Season Due Date ChangesBy Jeff Raab

As a provision of the Surface Transportation and Veterans Health Care Choice Improvement Act of 2015, certain due dates for tax returns have been updated effective for 2016 tax returns and the 2017 filing season. Below is a list of the new federal due dates generally applicable for the 2016 tax returns and beyond.

March 15 (Extension until Sept. 15):Form 1065, US Return of Partnership IncomeForm 1120S, US Income Tax Return for S Corporation

April 15 (Extension until October 15, unless noted below):Form 1040, US Individual Income Tax ReturnsForm 1041, US Income Tax Return for Estates and Trusts (extension until September 30)Form 1120, US Corporation Income Tax Return (extension until September 15 until 2026)FINCEN Form 114, Report of Foreign Bank and Financial Accounts

May 15 (Extension until November 15):Form 990, Return of Organization Exempt from Income Tax

July 31 (Extension until October 15):Form 5500 for employee benefit plans

It should be noted that the new rules apply to tax years beginning after December 31, 2015, so they will apply to short-year returns beginning in 2016.

Certi�ed Public Accountants and Business Consultants

QuillThe

Employee Benefit Plan AuditQuality Center Member

Governmental AuditQuality Center Member

Certi�ed Public Accountants and Business Consultants

Certi�ed Public Accountants and Business Consultants

RKO’s Manager in the Nonprofit Department, Rory O’Brion, had a baby girl on August 25. Congratulations to Rory and Abby and his family on the arrival of McKenna Reese O’Brion!

Firm Announcements

RKO welcomes Kristin Starzyk as an Audit Supervisor and Robin Jordan, Brenton Corriveau, and Nick Thompson

as Assistant Accountants.

DOL Changes to the Fair Labor Standards Act – How it Affects You By Megan Story

Announced May 18, 2016, the Department of Labor has made changes to the Fair Labor Standards Act (FLSA) that come into effect December 1, 2016. The objective of the changes is to bring the income threshold to where it would have been, with inflation adjustments, had it not been frozen over ten years ago. According to the DOL, the changes are going to affect over four million workers in the US by more than doubling the threshold from $23,660 ($455 a week) to $47,476 ($913 per week). All employees earning less than $47,476 are non-exempt employees, regardless of their occupation or duties. The thresholds will continue to go up every three years, beginning January 1, 2020. A non-exempt employee must receive one and a half times their regular rate for hours worked over the standard of 40 hours a week. Employers are also going to be liable for the payroll taxes associated with the overtime. The DOL has set other requirements to deem an employee making over $47,476 as exempt. These changes are going to affect both for profit and nonprofit organizations. The pay threshold test and duties test are used to determine if an employee is considered exempt or non-exempt.

The pay threshold looks at highly compensated employees (HCEs) and their exempt status. Any HCE who has annual compensation of $134,004 or more is exempt of the overtime regulations, regardless of their duties. If an employee’s annual compensation fails to meet the $134,004 threshold, the employer is allowed to make a one-time payment to achieve the threshold (payment must be made during the last pay period of the 52-week period or one month after). The one-time payment counts toward the 52-week year, not the calendar year it was paid in.

The duties test addresses salaried and hourly waged employees who are considered EAP (executive, administrative and professional) employees. To classify as an EAP, the DOL looks at the employees “primary duty”, meaning the main or most important duty that an employee performs. First the executive exemption applies to employees who: 1) manage the company or a department within the company; 2) regularly oversee two or more full-time employees (or the part-time equivalent); 3) have the authority to hire and fire, or contribute to the decision to do so.

ManystatesarelikelytofollowtheabovefederalduedatechangesbutmayneedtoenactlegislaHontochangetheirduedates.ManystateshavealreadyenactedsuchlegislaHonbutothers,asofthedateofthisarHcle,havenot.Youshouldconsultwithyourtaxpreparertoconfirmtheduedatesofyourstatereturns.!FormsW2andForm1099-MISC:!PleasenoteduedatesforFormW-2andForm1099-MISC,whenreporHngnon-employeecompensaHon(box7),havechangedstarHngwiththe2016taxyear.!

• NewduedateforfilingwithSSA.Theduedateforfiling2016FormsW-2,W-2AS,W-2CM,W-2GU,W-2VI,W-3andW-3SSwiththeSSAisnowJanuary31,2017,whetheryoufileusingpaperformsorelectronically.!

• Newfilingdate,requiresForm1099-MISCtobefiledonorbeforeJanuary31,2017,whenyouarereporHngnon-employeecompensaHonpaymentsinbox7.!!

DOLChangestotheFairLaborStandardsAct–HowitAffectsYou.ByMeganStory!

AnnouncedMay18,2016,theDepartmentofLaborhasmadechangestotheFairLaborStandardsAct(FLSA)thatcomeintoeffectDecember1,2016.TheobjecHveofthechangesistobringtheincomethresholdtowhereitwouldhavebeen,withinflaHonadjustments,haditnotbeenfrozenovertenyearsago.AccordingtotheDOL,thechangesaregoingtoaffectoverfourmillionworkersintheUSbymorethandoublingthethresholdfrom$23,660($455aweek)to$47,476($913perweek).Allemployeesearninglessthan$47,476arenon-exemptemployees,regardlessoftheiroccupaHonorduHes.Thethresholdswill

conHnuetogoupeverythreeyears,beginningJanuary1,2020.Anon-exemptemployeemustreceiveoneandahalfHmestheirregularrateforhoursworkedoverthestandardof40hoursaweek.EmployersarealsogoingtobeliableforthepayrolltaxesassociatedwiththeoverHme.TheDOLhassetotherrequirementstodeemanemployeemakingover$47,476asexempt.ThesechangesaregoingtoaffectbothforprofitandnonprofitorganizaHons.ThepaythresholdtestandduHestestareusedtodetermineifanemployeeisconsideredexemptornon-exempt.!Thepaythresholdlooksathighlycompensatedemployees(HCEs)andtheirexemptstatus.AnyHCEwhohasannualcompensaHonof$134,004ormoreisexemptoftheoverHmeregulaHons,regardlessoftheirduHes.Ifanemployee’sannualcompensaHonfailstomeetthe$134,004threshold,theemployerisallowedtomakeaone-Hmepaymenttoachievethethreshold(paymentmustbemadeduringthelast

FALL2016QUILL!2017FilingSeasonDueDateChangesByJeffRaab

A AsaprovisionoftheSurfaceTransportaHonandVeteransHealthCareChoiceImprovementActof2015,certainduedatesfortaxreturnshavebeenupdatedeffecHvefor2016taxreturnsandthe2017filingseason.Belowisalistofthenewfederalduedatesgenerallyapplicableforthe2016taxreturnsandbeyond.!March15(Extensionun3lSept.15):!Form1065,USReturnofPartnershipIncomeForm1120S,USIncomeTaxReturnforSCorporaHon!April15(Extensionun3lOctober15,unlessnotedbelow):!Form1040,USIndividualIncomeTaxReturnsForm1041,USIncomeTaxReturnforEstatesandTrusts(extensionunHlSeptember30)Form1120,USCorporaHonIncomeTaxReturn(ExtensionunHlSeptember15unHl2026)FINCENForm114,ReportofForeignBankandFinancialAccounts!May15(Extensionun3lNovember15):!Form990,ReturnofOrganizaHonExemptfromIncomeTax!July31(Extensionun3lOctober15):!Form5500foremployeebenefitplans!Itshouldbenotedthatthenewrulesapplytotaxyearsbeginninga^erDecember31,2015,sotheywillapplytoshort-yearreturnsbeginningin2016.!

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