Tax law amendments, embezzlement, fraud hot issues this tax season - Ahwatukee Foothills News: Money

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Tax law amendments, embezzlement, fraud hot issues this tax season

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Posted: Thursday, February 14, 2013 10:49 am

Forty nonprofit representatives recently discussed tax law amendments and education on fraud and embezzlement, which targeted private organizations in 2012, according to a BeachFleischman PC shareholder.

Christopher Lutes, accounting and assurance shareholder with BeachFleischman PC, said that fraud and embezzlement should also be on the minds of charitable organizations, along with tax changes.

“Reality is, we keep seeing the same things over and over,” said Lutes on fraud and embezzlement that has plagued charities. “Sixty percent of employees are thinking about stealing.”

Lutes said that charities do not have control over rationalization or pressure but they have control over opportunity and preventable mentions to be taken such as conducting background checks, drug testing, finger printing and credit checks.

One of the attendants at the event hosted by the Arizona Community Foundation at the Debi Bisgrove Community Philanthropy Center, was Bridget Asheim, executive director for HopeKids based out of Phoenix, one out of the three chapters also located in Minnesota and Utah.

“We work with families that have a child with a life threatening illness, so a lot of kids that have cancer, heart transplants, certain genetic disorders,” Asheim said of her charity’s focus.

She said the charity brings a calendar of hope to the children to build memories with their families and to try to make their hospital stay fun with activities such as arts and crafts while they’re receiving treatment.

Asheim also said that HopeKids hosted 200 events in 2012 and served 900 families in Arizona alone.

There are 315 nonprofit and charity organizations in the state of Arizona, 162 of which are located in Phoenix.

BeachFleischman PC accounting firm leadership members from the Phoenix and Tucson offices led the Jan. 24 meeting to educate and confirm changes that will affect charity donors for 2013.

“Not-for-profits are an industry segment that we specialize in ... a lot of them will need audited financial statements, some of them need some tax work done or consulting,” said Eric Majchrzak, chief marketing officer for BeachFleischman PC.

One of Arizona’s largest public accounting firms in the state, BeachFleischman PC employs 24 shareholders, 57 certified public accountants, 130 employees and Majchrzak said that specializations are also in health care, manufacturing and real estate.

Not only has fraud been an issue, but a harsh cut was made to numerous tax acts by Congress; however, seven tax deductions were extended through 2013, among them the American Taxpayer Relief Act “Pease,” which allows charitable transfers made in 2013 to be counted in 2012.

“It extends the ability to roll from an IRA directly over to a charitable organization for two years,” said Karen McCloskey, CPA and shareholder for BeachFleischman PC who specializes in tax planning and strategy as well as tax exempt organizations.

According to McCloskey, “the dollars can be in the taxpayers’ hands” and under the rule for December 2012, two types of people are affected: people who forgot to make their 2012 RMI and people who give more than $100,000 in 2013 to charity.

However, McCloskey said Pease limitations would be the most crucial for not-for-profit organizations, meaning capped itemized deductions would take away the incentive for the public to donate and reduce the ability for charitable organizations to serve their communities.

Leslie Philp is a journalism student in the Walter Cronkite School of Journalism and Mass Communication at Arizona State University.

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