The Four Principles of Change Management

Preface: “You must welcome change as the rule, but not as your ruler.” – Denis Waitley

The Four Principles of Change Management

No organization can afford to stand still. There are always new challenges to meet, and better ways of doing things. However, every change you need to make should be planned and implemented with care, otherwise it could end up doing more harm than good!

That’s where change management comes in. It’s a structured approach that ensures changes are implemented thoroughly and smoothly – and have the desired impact.

In this article, we explain how you can enact positive and productive change in your organization using four core principles of successful change management.

Leadership Workshop September 27th | In Tides of Change Management, Don’t Forget Your OARS!

Sauder & Stoltzfus and Koble Systems invite you to join Steve Erb, MBA, and McKenzie Walker, Psy.D. from True Edge Performance Solutions on September 27th. Get ready to enhance your leadership skills! Learn how to reduce conflict, have more effective discussions and move your transformation initiatives forward!

• What is Change Management, and why is it so important?
• What are the pitfalls, and why is there resistance to change?
• What are techniques to be more effective in leading change and transformation in your organization?

Breakfast is included. Seating is limited.

Click here for details and to register   

The Speculative Risks of the IRS Employee Retention Credit

Preface: The four most expensive words in the English language are, ‘This time it’s different.’ –Sir John Templeton

The Speculative Risks of the IRS Employee Retention Credit

Credit: Donald J. Sauder, CPA | CVA

The Employee Retention Credit is an IRS tax credit that gives businesses substantial relief measures for Pandemic Era financial business challenges. With the Employee Retention Credit eligibility, employers can obtain up to $26,000 of tax credit per employee. The Employee Retention Credit is also not taxable because it is a credit, making it duly appealing. Although the Employee Retention Credit applies to wages and benefits disbursed between March 2020 and December 2021, the IRS is giving businesses until April 15th, 2025 to submit their tax data for tax credit refunds. Those extra months are raising growing and valid concerns for a Pandemic Era stimulus plan that has generated a staggering amount of misleading marketing to businesses. Who qualifies? Even start-ups.

The ease of obtaining this tax credit has also resulted in some fascinating economic data. According to reports from Danielle DiMartino Booth from Quill Intelligence, who talks with clients and business owners daily, the employee retention credit data research leads to several surprising conclusions. While the Employee Retention Credit has resulted in a cottage industry of consultants marketing services to work on obtaining the $26,000 per employee credit for businesses, most companies who needed the money obtained it quickly previously.

The Employee Retention Credit is the worse kept secret in ongoing American stimulus packages. Employee Retention Credit payments were expected to peak in December of 2022 at $25.0 billion in stimulus for the month. Yet it continues. For June 2023, $29.0 billion was paid out to business owners, and for July 2023 another $33.0 billion. This is the annualized basis of more than $400.0 billion of business stimulus on an annualized basis. So, is this the reason why service spending is strong during the summer of 2023 because business owners are spreading the cheer while bilking Uncle Sam for up to 1.5% of GDP stimulus on an annualized basis?

The IRS is now pleading with the business community to not apply for the ERC unless you qualify.

Quoting Journal of Accountancy -

The IRS and Treasury are looking at new ways to fight rampant fraud in employee retention credit (ERC) claims, including possible congressional action to move up the claim filing deadline and stricter oversight of tax preparers, IRS Commissioner Danny Werfel said Tuesday at a special roundtable session of tax professionals in Atlanta.

Werfel stated that, having cleared the backlog of valid ERC claims, the agency is intensifying compliance work and putting in place additional procedures to deal with fraud in the program.

According to Werfel, the IRS has increased audit and criminal investigation work on these claims, looking into both promoters and businesses filing dubious claims. The IRS has trained auditors to examine the claims that pose the greatest risk of fraud, and the IRS Criminal Investigation division is identifying promoters of fraudulent claims, he said.

“The further we get from the pandemic, we believe the percentage of legitimate claims coming in is declining,” Werfel said. Instead, the IRS is receiving more and more questionable claims, which the IRS is addressing by intensifying its compliance work, he said.

Businesses typically can file claims for the ERC until April 15, 2025. But those extra months are raising concerns for a credit that has generated a staggering amount of misleading marketing, Werfel stated.

Promoters making aggressive marketing claims are likely taking clients from tax professionals who are handling ERC claims correctly, Werfel said. The IRS advises businesses to work with a tax professional rather than rely on the word of promoters.

“Hard-working tax professionals who play by the rules see their clients go elsewhere, lured by false promises and wild exaggerations,” Werfel said.

Further, the chances are rising above 80% that avaricious business owners who have obtained this tax credit have an audit challenge ahead, and should be prepared to repay the entire credit. If you have obtained the employee retention credit, you may want to keep your cash reserves strong for years, because in a moment of greatest financial vulnerability, the IRS could ask for the proceeds back. []

How Taking a Vacation Improves Your Well-Being

Preface: “Make your vocation your vacation.  That is the secret to success.” – Mark Twain

How Taking a Vacation Improves Your Well-Being

Making sure your employees regularly take time off is key to creating a more sustainable workplace. Research shows that taking time off benefits employees in three ways: 1) Mentally. Taking a vacation provides greater opportunity for rest and better sleep (both quantity and quality), which can help unclutter your mind to boost creativity. 2) Body. Relaxing on vacation can reduce the levels of your stress hormones and allow your immune system to recover, making you less prone to get sick. 3) Soul. While it sounds hokey, answers to life’s big questions — like “What do I really want?” or “What’s most important to me?” — are more likely to come to us when there is some space and stillness………

…………We all know that taking vacation is good for you, but it’s less clear that both employers and employees understand exactly just how good it is for you, given that every year more than half of Americans give up paid time off. According to the U.S. Travel Association, in 2018, this amounted to 768 million days of unused vacation time, with more than 30% of it forfeited completely. Add to this, the fact that over 50% of managers feel burned out, taking vacation (and actually unplugging) has never been more important.

How Taking a Vacation Improves Your Well-Being


Estate and Income Tax Planning – Gift Tax Exclusions

Preface: I believe the Bible is the best gift God has ever given to man. – Abraham Lincoln

Estate and Income Tax Planning – Gift Tax Exclusions

Maybe you’re like most people, you don’t like to think about planning your estate. But, it’s an important part of ensuring the financial security of your loved ones. One of the more common tools used in estate planning — and one to which everyone should at least give careful consideration — is a program of making gifts. A carefully planned gift-giving program can reduce the amount of your estate that is subject to tax while still passing on wealth.

The 2017 Tax Cuts and Jobs Act doubles the basic exclusion amount for purposes of federal estate and gift taxes and the exemption amount for purposes of the generation-skipping transfer (GST) tax from $5 million to $10 million, before adjustment for inflation, for the estates of decedents dying and gifts and generation-skipping transfers made after 2017 and before 2026. For the estates of decedents dying and gifts made in 2023, the basic exclusion amount is $12.92 million, with a corresponding applicable credit amount of $5,113,8004. The maximum estate and gift tax rate is 40 percent.

Absent the immediate financial needs of a gift recipient, the main motivation for making large gifts during your lifetime rather than waiting to pass on your wealth at death is to remove the future appreciation from your eventual taxable estate. There is a certain degree of risk in this strategy since your donee receives a tax basis equal to what you paid for the asset while your heirs will receive a stepped-up tax basis equal to the asset’s value at your date of death. As a result, the loss of stepped- up basis and higher future tax rates on capital gains may diminish the benefits of current gift giving. Nevertheless, the planning consensus is that getting future appreciation out of a taxable estate still trumps worries about any potential tax issues for your donees if and when they eventually sell the gifted assets.

You can give away up to an “annual exclusion amount” per recipient per year free of gift tax and free of any future offset against any exclusion amount used to lower future gift or estate taxes. For 2023, the annual exclusion amount is $17,000.

 There is a great deal of flexibility in the types of property that can be gifted. Gifts that qualify for the $17,000 annual exclusion can be made in money, property, such as stocks or bonds, or even a life insurance policy, so long as the recipient has the present right to possess or use the property. The gift may be in trust if the terms of the trust give the recipient the immediate right to the property or income from the property.

 You can give up to $34,000 per recipient per year if you are married and your spouse consents to “split” your gifts. This is useful for spouses who do not own an equal amount of property. The spouse with less property can consent to gifts made by the wealthier spouse, thereby effectively doubling the amount that the wealthier spouse can give away tax free. To take advantage of “gift splitting,” both spouses must be U.S. citizens or residents. The consent must be given on a gift tax return, so a return must be filed even if no gift tax is due. Don’t underestimate how an annual gift-giving plan using only the $34,000 split gift exclusion per donee can facilitate the tax-efficient transfer of family wealth.  

As noted above in discussing large gifts, but equally applicable to smaller gifts, it is important to remember that when you make a gift, the recipient must take your basis in the property. This means that if the recipient sells the property, any gain on the sale will be measured using what you paid for the property, not what the property was worth when he or she received it. In contrast, if property is transferred to another at your death through your estate (and whether or not estate tax is owed), the recipient can use the value of the property at that time to measure any gain on the sale of the property. Consequently, choosing the right property to achieve your goals is an important aspect of any gift-giving program.

Another way to further the financial security of others without incurring gift tax is by payment of medical and educational expenses. You can pay an unlimited amount for these expenses tax free so long as the payments are made on behalf of the done and are paid directly to the medical services provider or educational institution. The person you benefit does not need to qualify as a dependent for tax purposes. Any medical expenses, however, must not be reimbursed by insurance, to either you or to the beneficiary.

If used properly, a program of gift giving can benefit everyone involved. If you have any questions about the best way of using gifts as part of your overall financial plan, please call us for a referral to an estate planning expert.