Christine E. Cox, CPA joined Echelbarger, Himebaugh, Tamm & Co., P.C. (EHTC) as a Staff Accountant in the Assurance Department in September 2016 and was promoted to Senior Accountant in 2019. Prior to EHTC, Christine completed a tax internship in Traverse City, MI, where she worked on the preparation of 1099 forms and individual income tax returns. She also has over ten years of experience in finance and accounting, having worked for community financial institutions as a personal banker, and a waste hauling/environmental services company, acting as an Accounting Clerk and Assistant to the Financial Administrator. Christine graduated from Ferris State University with a Bachelor's of Public Accountancy and is a member of the Michigan Association of Certified Public Accountants (MICPA). She obtained her Certified Public Accountant (CPA) license in 2020.
News & Articles
In normal market conditions, people who've been unemployed due to an economic slump are generally eager to take a job when the economy perks up. But times are far from normal in many places and industries. One of the most pressing concerns employers face today is labor quality and availability, according to findings from The CFO Survey for the first quarter of 2021. (See "CFOs Disclose Top Concerns and Employment Outlook" at right).
The IRS uses "Collection Financial Standards" to help determine a taxpayer's ability to pay a delinquent tax liability. Allowable living expenses include those that meet the test of being necessary to provide for a taxpayer's (and his or her family's) health and welfare, as well as his or her ability to produce income.
The IRS allowable living standards are designed to incorporate necessary items including a category for out-of-pocket health care expenses and an allowance for cell phones.
Higher costs may be allowed by the IRS if a taxpayer can prove that these amounts are inadequate.
Here are four categories showing the basic amounts allowed by the IRS in calculating delinquent tax payment amounts (effective April 26, 2021):
1. Food, Clothing and Miscellaneous Items
National monthly standards have been established for five necessary expenses of food, housekeeping supplies, apparel and services, personal care products and services, and miscellaneous items.
|Monthly Expense||One Person||Two Persons||Three Persons||Four Persons*|
|Food (includes food at home and food away from home)||$400||$724||$838||$955|
|Housekeeping supplies (includes laundry and cleaning supplies, stationery supplies, postage, delivery services, miscellaneous household products, and lawn/ garden supplies)||$41||$76||$69||$79|
|Apparel/ services (includes clothing, footwear, material, patterns and notions for making clothes, alterations and repairs, clothing rental, clothing storage, dry cleaning and sent-out laundry, watches, jewelry and repairs to watches and jewelry)||$92||$150||$191||$259|
|Personal care products/ services (includes products for the hair, oral hygiene products, shaving needs, cosmetics and bath products, electric personal care appliances, and other personal care products)||$42||$76||$72||$89|
* For each additional person, add $341 to the four-person total allowance
2. Health Care
National out-of-pocket health care standards have been established for out-of-pocket expenses including medical services, prescription drugs, medical supplies, eyeglasses, contact lenses, etc. This monthly amount is allowed per person in addition to what is paid for health insurance.
Monthly Out-of-Pocket Health Costs
Under age 65
65 and older
3. Housing and Utilities
The monthly standards for housing and utilities are determined on a local basis. The amounts allowed for a particular area and family size cover a taxpayer's primary residence. They include mortgage or rent, property taxes, interest, insurance, maintenance, repairs, gas, electric, water, heating oil, garbage collection, telephone and cell phone.
As you might expect, the allowances vary widely across the nation. Here are some examples:
Family of 1
Family of 2
Family of 3
Family of 4
Family of 5 or more
|Chicot County, Arkansas||$ 1,004
|Marin County, California||$3,332||$3,914||$4,124||$4,598||$4,672|
|Honolulu County, Hawaii||$2,457||$2,886||$3,041||$3,391||$3,445|
|Cook County, Illinois||$1,882||$2,210||$2,329||$2,597||$2,639|
|Anne Arundel County, Maryland||$2,073||$2,435||$2,566||$2,861||$2,907|
|Carson City, Nevada||$1,490||$1,750||$1,844||$2,056||$2,089|
|Merrimack County, New Hampshire||$1,839||$2,160||$2,276||$2,538||$2,579|
|New York County, New York||$3,073||$3,609||$3,803||$4,240||$4,309|
|Polk County, Oregon||$1,592||$1,870||$1,970||$2,197||$2,232|
|Aiken County, South Carolina||$1,216||$1,428||$1,505||$1,678||$1,705|
|Briscoe County, Texas||$1,053
|Juneau County, Wisconsin||$1,274||$1,497||$1,577||$1,758||$1,787|
Transportation standards for taxpayers with a vehicle consist of two parts:
- Nationwide amounts for monthly loan or lease payments — called ownership costs.
- Additional amounts for monthly operating costs, which include repairs, maintenance, insurance, fuel, registration, inspection, parking and tolls.
There's also a single nationwide public transportation allowance.
|Monthly Transportation Allowances|
|National Public Transportation — Fares $217|
|National Vehicle Ownership Costs||$533 for 1 car||$1,066 for 2 cars|
|Operating Costs by Area||1 Car||2 Cars|
|Northeast Region including ME, NH, VT, MA, RI, CT, PA, NY, NJ,
except the following cities:
|Midwest Region including ND, SD, NE, KS, MO, IL, IN, OH, MI, WI, MN, IA, except the following cities:||$201||$402|
|South Region including TX, OK, AK, LA, MS, TN, KY, WV, VA, MD, DC, DE, NC, SC, GA, FL, AL, except the following cities:||$224||$448|
|West Region including NM, AZ, CO, WY, MT, NV, UT, WA, OR, ID, CA, AK, HI, except the following cities:||$242||$484|
The market approach, whereby appraisers use comparable "guideline companies" to help them estimate the value of a private business, has become a long-standing valuation touchstone.
Two primary valuation methods are categorized under the market approach:
1. Guideline public company method. Here, appraisers identify companies with stock (or partnership interests) that are actively traded in the public markets, such as the AMEX or NYSE. Then they calculate key financial variables, using the stock price and a variety of pricing multiples such as price-to-revenue, price-to-net income and price-to-book.
Financial variables may be calculated for a variety of time periods, such as next year's forecasted performance, the preceding 12 months, or an average of the last five years. The appropriate pricing multiple depends on case specifics and is a matter of the appraiser's professional judgment.
The subject company's fair market value equals the pricing multiple times the subject company's financial variable (for example, revenues, net income or book value). Because the guideline public company method is based on individual stock prices, under certain circumstances it generates a minority, marketable basis of value.
2. Merger and acquisition (M&A) method. For guideline transactions under this method, appraisers analyze sales of entire public or private businesses. So this technique typically generates a controlling, marketable basis of value.
Because private businesses aren't required to disclose sales to the SEC, finding out their details can be difficult. Fortunately, appraisers have access to several proprietary databases (such as DealStats, Done Deals and BIZCOMPS) that they can use to identify and analyze private deals.
Once appraisers have identified a relevant sample of potential guideline transactions, they calculate pricing multiples relative to key financial variables. Fair market value is a function of the pricing multiple and the subject company's financial metric (say, last year's revenues or book value).
Deciding Which Way to Go
The availability of transaction data is a key determinant of whether an appraiser uses the market approach. Pure players (companies that focus on a single target market or offer a limited menu of products) may be hard to come by in the public markets -- especially in industries dominated by conglomerates. And some industries lack a meaningful sample of M&A transactions, particularly those involving small niche participants.
In general, the guideline public company method makes more sense if the subject company is large enough to consider going public and when valuing a minority interest in a going concern business. Using this method to value a controlling interest may require subjective adjustments for control.
Conversely, the M&A method is generally more appropriate when valuing controlling interests. But, with proper adjustments and analyses, it can be used to value minority interests.
Other disadvantages of the M&A method are:
Transaction databases provide limited information about guideline companies.
Details provided are unverified.
The sales price may include buyer-specific synergies and undisclosed terms (such as installment sales, employment contracts and noncompete agreements).
One common valuation mistake that may occur under the market approach is failing to adjust the financial statements of the subject company or the guideline companies to ensure accurate comparisons.
For example, nonrecurring items and discontinued operations may need to be eliminated. Or, for comparative purposes, appraisers may need to rectify accounting inconsistencies, say, for depreciation or inventory methods. Ideally, appraisers make these adjustments before selecting guideline companies and computing pricing multiples.
Inconsistent terminology may also lead to problems. Slight differences in the ways databases or appraisers define terms such as "cash flow" or "earnings" can trigger significant valuation differences. It's imperative to understand how each database defines variables as well as what's included (or excluded) in the selling price.
An Accurate and Defensible Valuation
The market approach has intuitive appeal: The value of an investment should be comparable to similar investments in the marketplace. But finding a reliable sample of comparable transactions isn't as easy as it appears, especially for small niche players. An experienced valuation pro knows the tricks to applying the market approach to derive accurate and defensible valuations. EHTC has a team dedicated to provide the appropriate valuation method to you.
EHTC is a dedicated, full-service CPA firm in West Michigan that focuses on helping clients to achieve their full potential through comprehensive accounting, finance and tax services. We are a local firm with large firm resources, using a team approach to proactive client service that helps our clients gain a competitive advantage through our ability to develop strategies and present realistic solutions that build value.
Not all employers are bound by the recordkeeping and reporting requirements established by the Occupational Safety and Health Administration (OSHA). Generally, an employer must have more than 10 employees to be subject to those legal obligations, unless OSHA specifically instructs you otherwise.
Your company also must be in an industry that's considered hazardous, such as manufacturing, construction, utilities, agriculture and wholesale trades. Examples of non-hazardous industries include retail, financial services, and real estate. OSHA classifies industries using the Census Bureau's North American Industrial Classification codes. If you're uncertain about your status regarding OSHA, contact the agency.
Reporting requirements can vary by each business establishment — defined as "a single location where business is conducted or where services or industrial operations are performed." That means if you have multiple locations with varied functions, it's possible that one location is subject to OSHA recordkeeping (maintaining an OSHA log) and reporting requirements, and another isn't.
OSHA "General Duties Clause"
Beyond administrative requirements, all employers large enough to be subject to regulations specific in the Occupational Safety and Health Act (regardless of industry) are covered by the law's "general duties clause." This clause specifies that employers must give employees a place to work "free from recognized hazards that are causing or likely to cause death or serious physical harm."
Also, 28 states have their own laws and regulations governing occupational health that might be more stringent than OSHA's. Perhaps you operate in one of them.
If you're subject to OSHA's recordkeeping and reporting requirements, how does COVID-19 fit into that picture? According to OSHA, the following conditions must be met before you are required to record an employee COVID-19 case:
Most basic: The employee's ailment is, indeed, proven to be COVID-19,
The case "involves one or more of the general recording criteria" laid out in OSHA regulations, including, for example, that the condition can't be remedied with basic first aid procedures, and
The disease was contracted in conjunction with the employee's work.
Determining What's "Work-Related"
OSHA concedes that "in many instances, it remains difficult to determine whether a COVID-19 illness is work-related, especially when an employee has experienced potential exposure both in and out of the workplace." With that challenge in mind, OSHA has laid out some "enforcement guidance" for its investigators to determine violations applicable to COVID-19 cases.
Here are three highlights included in that guidance:
A discussion of the reasonableness of the employer's investigation into work-relatedness. "Employers, especially small [ones], should not be expected to undertake extensive medical inquiries, given employee privacy concerns."
An examination of the evidence available to the employer. Employers shouldn't be penalized for good-faith determinations when limited evidence was at hand to draw an accurate conclusion about whether a COVID-19 case was work-related.
A look at how available evidence is interpreted.
The OSHA enforcement guidance offers several illustrations of evidence that is likely to lead to a reasonable conclusion that a COVID-19 case was work-related. One example is when several employees who work closely together all come down with COVID-19 and there's no alternative explanation. Another involves the employee whose job duties "include having frequent, close exposure to the general public in a locality with ongoing community transmission."
Recordable vs. Reportable
As with other workplace-related illnesses and injuries, a work-related COVID-19 case may be "recordable" (and thus logged), but not "reportable" — that is, promptly reported to OSHA. To be recordable, an illness or injury must be too serious to be remedied with basic first aid and involves time away from work. COVID-19 cases often fit that description.
To be reportable, the case either involves in-patient hospitalization or, in the ultimate example, death. However, that standard isn't as clear-cut as it might appear with COVID-19. That's because to meet the "reportable" standard, the hospitalization must occur within 24 hours of the incident. In the COVID-19 case, the incident is exposure to the SARS-CoV-2 virus that leads to the disease. It's unlikely that someone who is exposed to the virus one day would be hospitalized within 24 hours.
You'd also need to know that the employee was hospitalized and that the COVID-19 case was work-related. Knowing both promptly may be improbable. However, as soon as you do determine that the case was work-related, you've got 24 hours to report it to OSHA.
When an employee dies of a confirmed COVID-19 case, and the death occurs within 30 days of exposure to the virus, you have an eight-hour window to report it to OSHA from the time you know "both that the employee has died, and that the cause of death was a work-related case of COVID-19," according to a Q&A provided by agency.
A Little PerspectiveOSHA's enforcement guidance — and common sense — indicate that proper recording and reporting take a back seat to a basic concern for employee health. "In all events," the guidance states, "it is important as a matter of worker health and safety, as well as public health, for an employer to examine COVID-19 cases among workers and respond appropriately to protect workers, regardless of whether a case is ultimately determined to be work-related."