New Jersey’s TrumpCare Nullification Act

On Thursday, the same day that 15 Republican US Senators unveiled a secret proposal to modify federal health care taxes, legislators in New Jersey filed a bill to nullify the effects of that possible change. The bill is known as the “TrumpCare Nullification Act” by creating the New Jersey Affordable Health Care Fund. Details are listed in this Insider NJ article.

The New Jersey Affordable Health Care Fund is designed to add a state tax on the wealthy in the amount of repealed federal taxes that would be saved. The money would then be allocated to those low income individuals who would lose health coverage under the cutbacks to Medicaid under the federal plan.

The key to understanding TrumpCare is to recognize that it really is not a health care reform plan. It is a tax reallocation plan. It cuts taxes for the wealthy and makes up for the loss of tax revenue by cutting Medicaid funding for the poor. I covered five key provisions of the Republican Senate bill in a blog post yesterday.

New Jersey’s proposal is a simple and direct plan to address the negative effects of TrumpCare here in New Jersey. estimates that the number of people would double in the congressional district of Tom MacArthur, one of the few New Jersey congressmen who support the Republican proposals. As of yesterday, my own Republican Congressman Frank LoBiondo was still leaning toward a “no” vote and both New Jersey Senators oppose the Republican proposals.

New Jersey and other coastal states are likely to continue to move apart from the federal government on key issues like taxes, health care, immigration and human rights. Health care taxes could be the first battle line actually tested.

Representative Holly, one of the bill’s sponsors wrote “Contrary to President Trump and Republican members of Congress, New Jersey residents believe that health care should not be regarded as a luxury in this country. Our state cannot – and will not – allow irresponsible decisions at the federal level to cause its most vulnerable residents to lose access to high-quality, affordable health care.”

5 things we know about the Republican health care reform plan

We know more about the Republican plan to reform national health care policy now that the Senate has released its ‘secret’ plan. These are a few things that are all but certain at this point:

  1. Obamacare will not be repealed or replaced. Both the House and Senate reform bills keep most features of the prior law in effect and actually expand on these provisions.
  2. Tax penalties associated with health plans will be removed. 
  3. The poor will be hurt. Massive changes to Medicaid will hurt access to health care for the poor.
  4. The rich will benefit. The reform measures focus on huge tax cuts for high income individuals and businesses. The Republican proposals as written are more focused on these tax cuts than on reforming health care.
  5. The plan will change before passage. Both political parties want health care law reform this year but the currently proposed bills will need to be modified before passage.

There are still many more things we don’t know, but now we can finally put some financial planning strategies into motion to best prepare for the changes ahead.

Need more information? Please let me know how to reach you for a free consultation. I serve clients across the country by phone or Skype or can meet in person in the Philadelphia region. Your contact information is not shared with anyone.

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Small business online security update

I attended another online security program last week at the New Jersey CPA convention. This remains a topic of major concern for all types of technology users. My focus is on practical solutions for small business user issues. Yesterday an alarming show on National Public Radio reinforced the conclusion that these online security problem issues will get worse for us before they get better. This should prompt us to re-examine our own security protocols

What if we assume that all of our online data security has already been breached and all of our online data is already available to potential hackers? The simple question that remains is what can we do as technology users to ensure our own security in an environment of ongoing online security breaches?

The combination of secure password management plus second factor authentication remains the best available solution.

I asked a question at the NJCPA seminar about the current thinking on random password generators and password management systems like Lastpass.  This approach remains the #1 way to ensure the use of unique randomly generated long passwords for each online service that we use. This is the best way to ensure primary access (username and passwords). It’s effectiveness, however is based on out ability to keep a single master password secure. That is a significant issue since the ability to remember a master password without recording it can still be a challenge.

I first reviewed Lastpass in 2012 for the NJCPA technology blog and found it to be an effective solution for small business users.

Online security can be further enhance y using two factor authentication (2FA). One of the simplest and most effective is Yubikey. The video below introduces the product. The cost is about $50 to $100 per user. Unlike other solutions, this is a one time cost, not a subscription.

Small businesses should use more than one Yubikey to protect from the possibility of loss of a user’s key. One person businesses can incorporate a trusted adviser’s key into their own account in the event that a key is lost or destroyed. A CPA or other adviser working remotely can use the combination of the client’s verbal password plus his own 2FA to remotely deactivate the 2FA in the client’s account in the event of an emergency.

Other methods of 2FA are bio-metric scanning (fingerprints or facial recognition) or smartphone text message codes.

In summary, the combination of Lastpass plus Yubikey remains an effective, most secure and cost-effective approach to small business online security. While I am aware that there are similar products in the marketplace, these are the market share leaders and so I choose to focus my recommendations and reviews on these name brand solutions.

I strongly recommend that a review of security protocol should be included in all personal financial planning and small business accounting engagements. I would  be pleased to discuss these issues as they relate to your small business.

Need more information? Please let me know how to reach you for a free consultation. I serve clients across the country by phone or Skype or can meet in person in the Philadelphia region. Your contact information is not shared with anyone.

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How will you fare under the Senate health bill?

Summary of Senate health bill’s effect on small businesses:

  1. eliminates requirement to be insured
  2. protects insurers in the marketplace
  3. shifts but retains tax credits
  4. lowers the number of people eligible for free or reduced price coverage
  5. cuts taxes for the wealthy
  6. suspends the ‘Cadillac Tax’
  7. strips federal funding from Planned Parenthood
  8. is surprisingly light-weight; only about 145 pages
  9. is not a repeal of Obamacare but instead mostly strengthens and builds upon it.
  10.  places restrictions on abortion coverage (changed definition of qualified plan and elimination of small employer credit)
  11.  liberalizes withdraws from Health Savings Accounts
  12.  removes employer taxes for not providing health insurance
  13.  includes option for a work required for non-disabled medicaid recipients
  14.  adds a $5,000 federal filing fee for a qualified small business health plan that possible bypasses state regulation?

This is not meant to be a complete analysis. Clearly there are portions of the bill outside of my area of practice that I do not understand. This post is based on the draft version published today; certainly there will be changes as this moves along.

In short, if a version of this bill becomes law then I see a lot of financial planning opportunities for small business owners under the health care reform proposal.

Need more information? Please let me know how to reach you for a free consultation. I serve clients across the country by phone or Skype or can meet in person in the Philadelphia region. Your contact information is not shared with anyone.

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Outrage over Senate’s health care reform bill spreads

US Senator Bob Menendez from New Jersey joined with many health care advisers, including myself, in expressing his outrage over the secretive process used to draft the replacement bill for health care reform that is apparently designed to hide the details from public scrutiny.

I’ve been an advocate of health care reform and an active participant in the public policy process from a small business perspective for more that 30 years that span several changes in political leadership. My comments on health care reform and tax policy are quoted in The Wall Street Journal, Money Magazine and other public media. I offered support that was requested by the Republican Congress led by Newt Gingrich in the early 1980s. I was aware that someone with a “Office of the President of the United States” registered internet domain address periodically read my blog on health care reforms for small business during the Democratic-led years around 2012. In late 2015 the National Federation of Independent Businesses asked me to write a letter in opposition to portions of the Affordable Care Act in preparation for a meeting with Senator Menendez and others. Clearly the heath care reform measures of the past thirty plus years have been developed through bipartisan open public policy. As for me personally, I’ve demonstrated the ability to work with both political parties as part of the public lawmaking process. That is not true today. Never in all these years have I felt like such an outsider to the health care reform process as today. Like most of America, I don’t know what’s in the hidden legislation and I must presume, as Senator Menendez does, that there are sinister reasons why this small group of Republican Senator’s are acting in secret.
This is Senator Menendez’ message:

Dear friends,

As I send this note to you, 13 Republican men are meeting behind closed doors, secretly writing a healthcare bill – a bill that will impact every American and one-sixth of our nation’s economy.   I haven’t seen their plan and I know you haven’t either.  Because there hasn’t been a single public meeting or hearing to discuss it.   

It’s pretty clear why Senate Republicans are hiding their plan to gut the Affordable Care Act from the American people.  They are ashamed of it.  Because if it’s anything like the House Republican bill that passed earlier this year, it’s going to be mean-spirited and devastating for our families – stripping health insurance from millions of people.  

Sadly, that’s what we expect.  I’ve forcefully denounced the House Republican bill, or AHCA, as I believe it is cruel and won’t improve anyone’s healthcare. 

Here’s what we know about it, by the numbers:

A 60-year-old in Monmouth County who makes $20,000 a year would see premiums rise to $9,660 from $960, according to the Kaiser Family Foundation. That’s an increase of over 900%!

Under the House Republican healthcare proposal, 95% of New Jerseyans wouldn’t get a tax cut, but the wealthiest FIVE PERCENT would receive a total of $13 billion in tax cuts over 10 years. New Jersey Policy Perspective explains that, “the wealthiest 1 percent of New Jersey taxpayers would receive 73 percent of the tax cut. These taxpayers, with an average annual income of $2.9 million, would receive an average tax cut of $23,000 a year.”

The House Republicans’ bill proposes ending federal funding for the ACA’s expansion of Medicaid, which would force New Jersey taxpayers to fork over nearly $27 billion more a year in taxes to cover the increased costs of covering 552,000 New Jerseyans with Medicaid.

The latest estimates are that through Medicaid cuts and the loss of health insurance subsidies, 540,000 New Jerseyans would lose their health insurance under the House Republican bill.

54,000 New Jerseyans with jobs tied to Medicaid and tax credits could lose their job if the House Republicans’ healthcare bill were to become law.

The massive funding cuts to healthcare and New Jerseyans losing their health insurance would translate to $6.6 billion in lost economic activity in the state of New Jersey alone.

Ten out of 12 New Jersey members of the House of Representatives, both Republicans and Democrats, agree that the House Republican bill is too mean for New Jersey, and voted against it. 

…So, what happens next? 

In just seven days, Republican leaders in the Senate expect us to vote on a bill that we haven’t even seen! This is a bill that would completely upend 1/6th of our economy, and impact the lives of millions of Americans. 

That’s the number of public hearings Senate Republicans have told us we should expect on their bill. Keep in mind that when Democrats passed the Affordable Care Act in 2009, we had held 53 bipartisan meetings, hearings, briefings and roundtable discussions in the Finance Committee alone.  

Twenty hours.  That’s how long we will be allowed to debate the Republican health care bill when they bring it to the floor.  Think about that – less than one day will be spent debating a bill that will affect every American for years to come.  When we finally brought the Affordable Care Act to the floor, both Republicans and Democrats spent 25 straight days debating it in front of the American people. 

The secret process Senate Republicans are using to jam this bill through is absurd and completely unacceptable.  The fear is real – they want to bring the bill to the floor, rush it in the dark of night, for a simple reason – they are ashamed of it.   I’m proud of work we did to expand health insurance coverage to millions, and provide necessary protections for working families and those with pre-existing conditions. I will be fighting to protect your healthcare with everything I’ve got.


U.S. Senator Bob Menendez

My criticism here is not based on the content of the secret Republican health care bill or its potential effect on the nation. We don’t even know that yet. This criticism is simply focused on the point that secretive lawmaking is an unacceptable process for the United States of America.

I strongly suspect that when we do see the details of this secret Senate project it will become clear that the focus of the bill is a wealth transfer from the poor to the rich and that it is not actually a proposal to fix the health care system. Nothing from any source suggests that Republican leadership has the motivation to address the real problem with heath care that we’ve known for decades: the price of health care is too high relative to the rest of the economy. Only cost controls and rationing will fix our health care problem. Republicans won’t implement these types of forced cost reductions or health care rationing across society but they will try to force it for the poor. The only question is whether we allow it.



CPA-prepared financial statements

A question came up from a small nonprofit business client yesterday for the second time this month. The request was to produce a financial statement for the client’s Treasurer. I found myself thinking about the best words to use to clarify my position. I want to help by making this an easy and seamless process for them but I am bound by specific requirements that we have not yet addressed.

Both the former Treasurer and the incoming Treasurer made requests for different types of financial reports. The in-house bookkeeper doesn’t have any need to understand the difference between reports that she generates with my assistance and reports that I could produce in response to her boss’s request. My job is simply to fulfill the information request as allowed within the boundaries of my work.

Perhaps my best response is: “I am pleased to help your organization with financial statements. However, I must follow the standards established by my profession. Our current engagement agreement does not meet these standards. Let’s discuss how to proceed.”

Of course I understand that clients don’t care about CPA professional standards. That’s my burden. I must bridge the gap between what the client wants and what the profession demands in the easiest and most efficient manner.

The requirements for CPA-prepared financial statements are listed here in an AICPA document known as “AR-C Section 70”  Perhaps the most value I can provide for many small business clients may be to show them when these requirements do not apply. We can avoid these additional requirements when I am engaged to:

  • prepare financial statements only for tax returns
  • audit, review or compile financial reports
  • assist with the instruction or operation of the in-house bookkeeping or accounting system to manually or automatically generate financial reports
  • Show how to produce financial reports within QuickBooks or other software
  • provide litigation support
  • provide personal financial planning

A small business client’s need for financial statements can often be covered by one of these exceptions, saving both time and money. It is worth spending the time to plan our work accordingly. The details should be clarified in a written agreement that makes sense to the the small business client’s key personnel and, when necessary, documents our understanding of how we met the requirements for CPA-prepared financial statements.

I am please to discuss how your organization can most effectively meet the need for CPA-prepared financial statements. Just make a call or submit an online inquiry below.

Need more information? Please let me know how to reach you for a free consultation. I serve clients across the country by phone or Skype or can meet in person in the Philadelphia region. Your contact information is not shared with anyone.

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Five Ways I Support the Paris Accord

A large majority of Americans support the goals of the Paris Accord. A fewer number, like me, take this support a step further by stating that the Paris Accord represents the most significant action that humankind has taken to preserve life on planet earth. We notice that the level of support for voluntary international efforts to cut carbon emissions seems skewed toward those with higher levels of education and financial resources. In contrast, it has been widely reported this week that the president of the United States has responded to a core group of low-information voters in his decision to withdraw our federal government’s support from the Paris Accord. Thankfully many of our state and local governments, along with most major United States corporations, will resist the president on this blunder and will continue to work toward achieving the goals of the Paris Accord through programs designed to reduce worldwide carbon emissions. Today the state of Hawaii officially became the first to officially announce its support the international agreement.

That leaves the question of “what can I do, as an individual, to support this most important issue of our generation?” Besides the steps we may take to reduce our own carbon footprint, what can I do to extend and amplify the impact of my environmental convictions?

This list includes five things that are working for me and perhaps they con work for you too.

1. Take control and redirect federal tax payments – The minority resistance to the Paris Accord is, first and foremost, a financial issue. Money talks. It is our personal responsibility as individuals to support or reject the financial priorities of the United States. The federal government has announced plans to reduce payments to support the arts, parks, environment and social services while increasing its spending on war machines. The federal government’s revenue sources are expected to shift from high income individuals and corporations to middle income people. That means that you and I are footing more of the bill for these twisted priorities. If you don’t support the federal government’s priorities, the president loudly affirms your right to reduce or even cease your tax payments to the federal government. He points out that while this is not easy to accomplish, the tools and “know how” are available to anyone who develops an understanding of tax law and uses strong tax advisers. By reducing your federal tax burden, you free up cash flow that can be redirected into your own priorities including having an impact on reducing worldwide carbon emissions. I admit to having a personal advantage in this field. Having been trained in tax law and gaining experience of 30 years helping clients reduce their tax burden, I find it relatively easy to eliminate my federal tax obligations and redirect that money to more sustainable causes that support my values. Yet these same strategies are available to anyone who wishes to act with the same level of conviction. I find a growing number of people asking for help and advice on reducing their federal taxes so that they can redirect money to causes they support. Let’s hope the trend continues.

2. Invest in a healthy environment – Changing our carbon-producing habits will cost a lot of money. In fact, it will be the largest investment pool that we have We must look at this expenditure as an investment in our future. My own investment activity focuses on developing a sustainable seafood industry in New Jersey where my primary role is to match investors with fishermen and aquaculturists who plan to expand in the conditions of a clanging climate. Some clients are expanding their investment in renewable energy. I caution clients to be careful when making these investments because there are plenty of scammers trying to take advantage of those who support clean energy investment.

3. Join an environmental organization – Gain strength in numbers by acting through an organization. Every community has environmental organizations packed with knowledgeable and effective members. My involvement as treasurer for the Delaware river Greenway Partnership has led to deeper personal relationships with leaders of The Nature Conservancy, Partnership for the Delaware Estuary, the NJDEP, Rutgers University and many others. Those relationships help me to learn better ways to be effective in supporting an environment-friendly agenda. I discussed resistance strategies planned by nonprofit organizations in this blog post last December. We will likely see and expansion of these activist tactics among nonprofit board leadership, especially in response to the president’s executive order last month that allows religious nonprofit organizations to participate in political protest activities with non-tax dollars. Environmentally focused nonprofit organizations now enjoy additional financial leverage in opposing the president’s actions without risk of losing their IRS sanctioned nonprofit status.

4. Support community fundraisers – I’m hosting two marina barbecue/lecture fundraising events this summer to raise awareness of environmentally sustainable aquaculture here on the Delaware Bay in the middle of the global sea level rise hotspot. My goal is to spread the word that a growing number of shoreline communities are already flooded and what we are doing to respond to the threats. I see many more events with a climate change focus scheduled this summer in the middle Atlantic region. It is clear that our communities are determined to get the word out on the importance of continuing our climate change. All we need to do is get out and show our support.

5. Learn more about climate science – It was clear this past week that those with the loudest opinions on climate change know the least about the physical sciences. Ignorance is bliss; at least until they eventually begin to really notice that the planet is dying! There are many great books on the topic; “Eaarth”, “Storms of my Grandchildren”, “Bottomfeeder” and “The World is Flat” are a few of the early classics that still serve as a great introduction to the issues. I’ve also found a handful of online courses through and directly through universities to be extremely valuable. The ability to access top universities and professors studying climate change issues around the world make this an especially attractive option. My total investment in five online college courses amounts to less than $1,000 and less than 10 hours per week so this approach is both an affordable and practical.

Through direct personal action individuals can overcome the error of the president of the United States and a small group of his followers. We can reduce the effect of carbon emissions and make planet a safer place for our grandchildren.

CPA services for nonprofits: a comparison of service and cost

Nonprofit organizations in the United States are sometimes required to engage a Certified Public Accountant (CPA) to prepare financial statements for presentation to state regulators and to the public. The specific requirement varies by state and depends primarily on the size of the nonprofit organization. Three levels of financial statement services offered by CPAs: Audits, Reviews, and Compilations. This article summarizes each type with an emphasis on showing the difference in service and cost.


An audit provides the highest level of assurance of an organization’s financial statements.  An audit provides assurance in the form of the CPAs opinion that an organization’s financial statements are free of material misstatement and are fairly presented based upon the application of Generally Accepted Accounting Principles. The audit process includes discussions with management, confirmations with outside parties, testing selected accounting transactions, examining supporting documents, completing physical inspections, sampling inventory testing and evaluating the internal control system of the organization’s accounting systems. Audits can cost more than 4 percent of a small nonprofit organizations annual revenue.


A review provides limited assurance of an organization’s financial statements.  A review consists primarily of inquiries and analytical procedures designed to conclude that the financial statements present a reasonable basis for expressing limited assurance that no material modifications are necessary and that the statements are  in conformity with generally accepted accounting principles.  Reviews are designed to determine whether the financial statements make sense to readers. A review is commonly used when the nonprofit organization needs some assurance about their financial statements, but not the higher and more expensive level of assurance provided by an audit. Reviews are typically priced at half the price of an audit.


A compilation provides no assurance on an organization’s financial statements.  When preparing a compilation, the CPA takes financial data that is provided by the nonprofit organization and puts the financial statements in a format that complies with Generally Accepted Accounting Principles.  There is no testing of data or analytical procedures performed during a compilation. Compilations may be priced at less than one percent of a nonprofit organization’s total annual budget so this is the most easily affordable CPA service.

Requirements vary from state to state and a CPA must meet the requirements established for audits, compilations and reviews in your state. Generally a CPA who practices in one state can perform these services in another state through a licensing process known as reciprocity.

Statements on Standards for Accounting and Review Services are issued by the American Institute of Certified Public Accountants Accounting and Review Services Committee.

The cost of CPA services for nonprofits is rising due to costs and requirements of a procedure called “peer review”. There are fewer CPAs willing to offer these services to small nonprofits now due to the extraordinary cost of peer review.

If your nonprofit organization is unsure of the best type of CPA service or simply wants to check its own services, I would be pleased to offer a complimentary discussion. My services typically focus on meeting legal requirements with greatest efficiency and lowest cost for small nonprofit organizations.

Need more information? Please let me know how to reach you for a free consultation. I serve clients across the country by phone or Skype or can meet in person in the Philadelphia region. Your contact information is not shared with anyone.

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A Crime Against Humanity

There is a concept in the law known as “last clear chance”. This means that even if you didn’t create a problem, you are still liable if you had the last clear chance to avoid a catastrophe but chose to not do so. For example, if you are driving down the highway and see a child walk onto the roadway. You had plenty of time to brake but you chose not to because the child should not have been on the highway and you are late for work. Obviously, you are liable for the child’s death even though you are not responsible for the child being on the road.

We see another example in the news today. If the majority of the world’s scientists are right, then the Paris Accord was our last clear chance  to avoid catastrophic loss to humanity. We won’t have proof for another decade or so. If events unwind anything like most scientists predict, then I would like to see Trump convicted for this crime against humanity. Clearly he had plenty of reasonable information and chose to ignore all of it in favor of appeasing his minority low-information political base. There’s no other way to look at it; that’s a crime against humanity.

I don’t claim to be an expert on climate science but I’ve taken five college level online courses in the past few years by a range of top universities around the world. I do know that the public – especially the low-information Trump voters – doesn’t have any real base to even form a useful opinion. That, of course, is why governments rely on experts. The overwhelming majority of experts in this field share the same opinion on the necessity of the Paris Accord. Trump ignored the experts for purely political and economic reasons. If mass suffering follows then it is directly a result of Trump’s crime against humanity.

Fixing TurboTax Returns

I support TurboTax users who prepare their own ta returns and covered this topic last in a February blog post titled “Support for TurboTax Users“. This is not a common service offered by CPAs or professional tax preparers but it works for me simply because I often wind up developing a work relationship in other areas. At this time of year, it is common for accountants to receive requests to fix errors caught by IRS, the state or local tax authorities. I am working on two of these TurboTax correction cases today.

Clients are often surprised that the cost of fixing a TurboTax return is often more than having the return correctly professionally prepared in the first place. The reason is simple: fixing a tax return is a three step process that involves more work, more know-how, and more technology that simply preparing an original tax return.

The first step is to import the TurboTax data into a professional tax software and check for errors. Past experience indicates a strong possibility that new errors will be detected.

The second step is to adjust the tax return. This involves a working knowledge of tax laws and the objection of the tax authority.

The third step is to resubmit and get an acceptance of an amended tax return. An open unresolved tax return can grown into a serious headache.  The goal here is to get the matter closed.

New clients who haven’t used a tax professional often say that they are completely unaware of the fees charged for professional representation. Of course it depends on the issues, the complexity and the number of tax returns involved but I typically handle routine tax audit responses for $400 to $500 to fix TurboTax returns.

It make sense to combine this effort with some tax planning to reduce taxes next year. The savings from this combined effort can more than make up for the cost of the amended tax return.