Monthly Archives:' November 2014

Kennedy Sutherland LLP to Present at San Antonio CPA Society

Kennedy Sutherland LLP attorneys will present at the San Antonio CPA Society Luncheon on Wednesday, December 3rd at 1:30 pm at 901 NE Loop 410,  Ste 420, San Antonio, TX. At the luncheon Patrick J. Kennedy, Jr., William D. Sutherland, VI, and Patrick J. Kennedy, III, from the firm, will join James W. Carter of Drought Dought & Bobbit LLP to present on new market tax , federal tax, non profit tax and historic tax credits.

To register for this class, please contact the San Antonio CPA Society directly at, (210)828-2722 or toll free (888)828-8680.  


Part 1 – Disclosing Taxpayer Information: A Guide for the Wary Accountant

Includes a discussion of the regulations related to client confidentiality, proper disclosure of taxpayer information and practical methods of responding to legal requests for taxpayer information correctly, efficiently and cost-effectively

Part 2 – Structuring and Organizational Issues for Nonprofits

Includes a discussion of structuring and organizational issues faced by nonprofit entities as a result of partnerships, mergers or joint ventures with other nonprofit and for-profit entities, or when utilizing affiliates to obtain government program funding. Discussion of the potential impacts these decisions can have on nonprofit status is also included.

Part 3 – The Importance of Subchapter S Election Audits: Shareholder Succession, Inadvertent Termination and Traps for the Unwary

Includes a discussion of the importance of annual reviews of Subchapter S elections, including common issues that may lead to an inadvertent termination and curative measures upon discovery of an issue.

Part 4 – Financing Opportunities with Federal and State Tax Credits: A Brief Survey of the New Markets Tax Credit and the Federal and Texas Historic Tax Credits

Includes a discussion of various federal and state tax credits including how businesses can leverage both the New Markets Tax Credit program and the federal and recently enacted Texas Historic Tax Credit.

Learning objective(s):

Part 1 – Audience members should be able to identify and correctly respond to requests for confidential taxpayer information. In addition, cost effective measures for response will also be discussed.

Part 2 – Attendees should have a basic understanding of issues presented by partnerships, mergers and joint ventures between nonprofit entities or with for-profit entities. Attendees will also be presented with an overview of issues faced by nonprofits seeking government program funding through affiliate structures. Big picture organizational issues as well as information reporting will be discussed.

Part 3 – Attendees should be aware of common issues that may lead to inadvertent terminations and how to avoid such issues through close monitoring of S corporation shareholder groups and stock transfers.

Part 4 – Attendees should have a basic understanding of the various opportunities to use tax credits as a financing vehicle for projects and should be able to identify potential opportunities where New Markets Tax Credits or Historic Tax Credits may benefit their clients.

Organizations Urge CRA Guidance for HTC Investments

On November 4th, several organizations wrote to the OCC, FDIC, and FRB urging guidance for HTC (Historic Tax Credit) Investments. In the letter, a diverse group of 168 organizations asked that proposed changes be included in the Community Reinvestment Act (CRA) Questions and Answers document language that expands and clarifies the circumstances in which a federal Historic Tax Credit (HTC) investment qualifies for CRA credit. The organizations who signed onto the letter support the position taken in the joint letter submitted by the National Trust for Historic Preservation, the Historic Tax Credit Coalition, the National Main Street Center, Inc. and the National Trust Community
Investment Corporation which asked that HTC transaction eligibility would be automatic for projects in low- and moderate-income (LMI) areas that are designated economic development districts and have support from the local redevelopment agency.

“The HTC program has rehabilitated nearly 40,000 historic structures, leveraged almost $110 billion in private investment, created 2.4 million jobs and generated $36.5 billion in state, local, and federal tax receipts. National Park Service data indicate that 84 percent of all HTC transactions between 2001 and 2013 have been located in LMI census tracts. These repurposed buildings are also often located in downtown development districts in urban and Main Street communities across the country. The underserved credit areas where historic properties are found are the communities CRA was intended to assist” the letter states.

Further the letter stated, “In addition to their location in LMI neighborhoods, HTC projects are also catalytic, with a documented ability to attract additional private investment that can help stabilize or revitalize LMI areas. We have seen this first hand in the areas where we live and work. We have also seen how historic rehab supports the creation and growth of small businesses. Most HTC transactions are small, generating less than $1 million in credits. They are most often sponsored by small businesses and, particularly in a Main Street context, provide space for independently-owned local businesses.”

Kennedy Sutherland Urges Congress to Extend NMTC Program

Yesterday, the San Antonio law firm of Kennedy Sutherland LLP urged Congress to extend the New Markets Tax Credit (NMTC) program by signing onto the New Markets Tax Credit Coalition letter. The letter, strongly urged the 113th Congress to extend the New Markets Tax Credit (NMTC) program before adjourning this year.  Along with 1,500 organizations, including businesses, nonprofits and investors, we believe the economic activity spurred by NMTC investments has generated enough tax revenue to cover the cost of the program and has. The program has created over 550,000 jobs in severely distressed communities with unemployment rates at least 1.5 times the national average or with poverty rates of at least 30 percent.

Read Letter

SEC Alert on Social Media

The SEC’s Office of Investor Education and Advocacy issued an Investor Alert to create awareness of fraudulent investment schemes that may involve social media. U.S. retail investors are increasingly turning to social media (Facebook, YouTube, Twitter, LinkedIn and other online networks) for information about investing. Whether it be for research on particular stocks, background information on a broker-dealer or investment adviser, guidance on an overall investing strategy, up-to-date news, or to simply discuss the markets with others, social media has become a key tool for U.S. investors.

While social media can provide many benefits for investors, it also presents opportunities for fraudsters. Social media, and the Internet generally are an attractive play ground for criminals as it lets fraudsters contact many different people at a relatively low cost. It is also easy to create a site, account, email, direct message, or webpage that looks and feels legitimate – and that feeling of legitimacy gives criminals a better chance to convince someone to send them money. Also, with anonymity it can be difficult to track down the true account holders that use social media and hold them accountable.

The alert recommends: 1) to be wary of unsolicited offers to invest; (2) look for “red flags,” e.g., offers that sound too good to be true or that “guarantee” returns; (3) look for “affinity frauds,” which are “investment scams that prey upon members of identifiable groups, such as religious or ethnic communities, the elderly or professional groups;” (4) exercise privacy and security settings; and (5) ask questions and investigate investment opportunities thoroughly. The alert also describes common investment scams that have used social media and the internet to gain traction, including “Pump-and-dump” schemes, fraudulent “research opinions” or “investment newsletters,” high-yield investment programs, and offerings that just fail to comply with applicable registration provisions of the federal securities laws.

Cybersecurity Assessment Observations Released

On November 3, the Federal Financial Institutions Examination Counsel (FFIEC) released its cybersecurity assessmentDuring the summer of 2014, FFIEC piloted a cybersecurity assessment at more than 500 community institutions to evaluate the institutions’ preparedness to mitigate cybersecurity risks. The assessment supplemented regularly scheduled exams and built upon key supervisory expectations contained within existing FFIEC information technology handbooks and other regulatory guidance.

The Cybersecurity Assessment found that the level of cybersecurity inherent risk varies
significantly across financial institutions.Today’s financial institutions are critically dependent on IT to conduct business operations. This dependence, coupled with increasing sector interconnectedness and rapidly evolving cyber threats, reinforces the need for engagement by the board of directors and senior management, including understanding the institution’s cybersecurity inherent risk; routinely discussing
cybersecurity issues in meetings; monitoring and maintaining sufficient awareness of threats and vulnerabilities; establishing and maintaining a dynamic control environment; managing connections to third parties; and developing and testing business continuity and disaster recovery plans that incorporate cyber incident scenarios. As a result, the FFIEC also recommended that financial institutions of all sizes participate in the FS-ISAC as part of their process to identify, respond to, and mitigate cybersecurity threats and vulnerabilities. The FS-ISAC is a non-profit, information-sharing forum established by financial services industry participants to facilitate the public and private sectors’ sharing of physical and cybersecurity threat and vulnerability information.

SBA Notice on Electronic Signature Acceptance

Recently, the Small Business Administration (SBA) issued a procedural notice highlighting the acceptance of electronic signatures in its 7(a) and 504 Loan Programs, effective January 1, 2015. Electronic signatures meeting the requirements of the notice will now be treated as equivalent to handwritten signatures. The notice, which further explains the requirements, is intended to encourage more lenders and agencies to accept electronic signatures.

The announcement comes weeks after Chairman Sam Graves (R-MO), of the House’s Small Business Committee, introduced legislation intended to “streamline and simplify the loan application process.” Congressman’s Grave’s proposed legislation,The Small Business Loan Simplification Act of 2014 (HR 5599), was intended to statutorily bring the SBA up-to-speed with technology already being used by private lenders and other federal agencies. Rep. Steve Chabot (R-OH), Rep. David Schweikert (R-AZ), Rep. Richard Hanna (R-NY), Rep. Tim Huelskamp (R-KS), and Rep. Chris Collins (R-NY) were original co-sponsors.

Agencies Propose Rule for Loans in Flood Areas

On October 30, The Office of the Comptroller of the Currency (OCC), Board of Governors of the Federal Reserve System (Board), Federal Deposit Insurance Corporation (FDIC), the Farm Credit Administration (FCA), and the National Credit Union Administration (NCUA) (collectively, the Agencies) issued a proposed rule to amend their regulations regarding loans located in special flood hazard areas to implement certain provisions of the Homeowner Flood Insurance Affordability Act of 2014. Specifically, the proposed rule would establish requirements in connection with the escrow of flood insurance payments;  provide certain borrowers with the option to escrow flood insurance premiums and fees; and eliminate the HFIAA requirement “to purchase flood insurance for a structure that is part of a residential property located in a special flood hazard area if that structure is detached from the primary residential structure and does not also serve as a residence.” Comments on the proposed rule are due by December 29, 2014.