The VanderBloemen Group LLC has begun publishing / distributing memos dealing with current tax and financial issues affecting both businesses and individuals.

These publications will be sent out periodically as new updates are available and we believe they can be very beneficial to both your business and your individual needs.

We hope you enjoy reading the attached and future memos. If at any time, you should have any questions about anything that is contained within these publications, please do not hesitate to contact us.

VanderBloemen Publications

IRS Adjusts Tax Rate and Deduction Levels for 2015

The Internal Revenue Service announced the annual inflation adjustments for tax year 2015 for more than 40 tax provisions, including the tax rate schedules, and other tax changes.

Washington. D.C. (October 30, 2014) By Michael Cohn

The Internal Revenue Service announced the annual inflation adjustments for tax year 2015 for more than 40 tax provisions, including the tax rate schedules, and other tax changes.

Revenue Procedure 2014-61 provides details about these annual adjustments. The tax items for tax year 2015 of greatest interest to most taxpayers include the following dollar amounts:

The tax rate of 39.6 percent affects singles whose income exceeds $413,200 ($464,850 for married taxpayers filing a joint return), up from $406,750 and $457,600, respectively. The other marginal rates—10, 15, 25, 28, 33 and 35 percent—and the related income tax thresholds are described in the revenue procedure.

The standard deduction rises to $6,300 for singles and married persons filing separate returns and $12,600 for married couples filing jointly, up from $6,200 and $12,400, respectively, for tax year 2014. The standard deduction for heads of household rises to $9,250, up from $9,100.

The limitation for itemized deductions to be claimed on tax year 2015 returns of individuals begins with incomes of $258,250 or more ($309,900 for married couples filing jointly).

The personal exemption for tax year 2015 rises to $4,000, up from the 2014 exemption of $3,950. However, the exemption is subject to a phase-out that begins with adjusted gross incomes of $258,250 ($309,900 for married couples filing jointly).

It phases out completely at $380,750 ($432,400 for married couples filing jointly.) The Alternative Minimum Tax exemption amount for tax year 2015 is $53,600 ($83,400, for married couples filing jointly).

The 2014 exemption amount was $52,800 ($82,100 for married couples filing jointly). The 2015 maximum Earned Income Credit amount is $6,242 for taxpayers filing jointly who have 3 or more qualifying children, up from a total of $6,143 for tax year 2014. The revenue procedure has a table providing maximum credit amounts for other categories, income thresholds and phaseouts.

Estates of decedents who die during 2015 have a basic exclusion amount of $5,430,000, up from a total of $5,340,000 for estates of decedents who died in 2014.

For 2015, the exclusion from tax on a gift to a spouse who is not a U.S. citizen is $147,000, up from $145,000 for 2014.

For 2015, the foreign earned income exclusion breaks the six-figure mark, rising to $100,800, up from $99,200 for 2014.

The annual exclusion for gifts remains at $14,000 for 2015. The annual dollar limit on employee contributions to employer-sponsored healthcare flexible spending arrangements (FSA) rises to $2,550, up $50 dollars from the amount for 2014.

Under the small business health care tax credit, the maximum credit is phased out based on the employer’s number of full-time equivalent employees in excess of 10 and the employer’s average annual wages in excess of $25,800 for tax year 2015, up from $25,400 for 2014.

Details on these inflation adjustments and others not listed in this release can be found in Revenue Procedure 2014-61, which will be published in Internal Revenue Bulletin 2014-47 on Nov. 17, 2013. The pension limitations for 2015 were announced last week.

Stephen C. VanderBloemen, the managing partner of The VanderBloemen Group, has been selected by the US Department Of Justice as the Monitor for Miron Construction

Stephen C. VanderBloemen, the managing partner of The VanderBloemen Group, has been selected by the US Department Of Justice as the Monitor for Miron Construction as part of the non-prosecution their agreement with Miron to assure they are in compliance with the terms of the agreement currently and moving forward.

Federal prosecutors name monitor for Miron Construction


Following a criminal investigation into Miron Construction Co.'s billing practices, a federal prosecutor has announced that a Wisconsin construction accounting executive will monitor the company.

Stephen C. VanderBloemen, the managing partner of The VanderBloemen Group, will immediately begin monitoring Miron, a Town of Menasha business, to ensure it no longer overbills school districts. The announcement was made Monday by James L. Santelle, U.S. Attorney for the Eastern District of Wisconsin.

"We welcome the appointment of Mr. VandenBloemen," Miron officials said in a statement. "We look forward to working with him and are certain that, once engaged, he will verify the transparency and best practices adopted by Miron."

The agreement between federal prosecutors and Miron centered around construction projects at five schools from 2003 to 2008, during which Santelle's office said Miron intentionally inflated its employees' wages when billing school districts and transferred costs from less profitable projects to unrelated ones so both appeared profitable.

"Miron systematically and intentionally added not only overhead costs, but also a hidden profit 'multiplier' totaling up to an additional 45 percent," Santelle said in the announcement.

Miron said it was surprised and disappointed with Santelle's latest announcement because it included accusations that were not part of the non-prosecution agreement.

"Miron and the government agreed on a statement of facts. Nowhere within it is there mention of a hidden profit multiplier, let alone one of 45 percent," the company said in its release Tuesday. "Nor does it state that school districts were intentionally and systematically overbilled hidden profits."

The April agreement states that Miron included overhead and other expenses in its labor charges by applying a markup above the laborers' costs. Miron President David Voss directed project cost estimators to apply a percentage modifier to the projected labor costs, which was not disclosed to the school districts, the agreement states.

Monitor to oversee operations for three years

Miron agreed to pay $4 million and asked for an appointed monitor to assure clients that they "are in compliance currently and moving forward," Tim Kippenhan, vice president and chief operating officer, told Post-Crescent Media in April. Kippenhan said the company changed its practices in 2008 to provide transparency to customers, but denied overbilling was ever an issue.

"There was never a characterization of overbilling in any of the agreements," Kippenhan said. "The large thing to take away from the agreement is we did not include labor billing rates in contracts. That was a contractual issue, not an overbilling issue."

The $4 million payment to the U.S. will be distributed to the five school districts: the Unified School District of De Pere, D.C. Everest Area School District, Marathon School District, Waunakee Community School District and Abbotsford School District.

As part of the agreement, VandenBloemen will have access to Miron's records and can interview any employees and make personnel decisions regarding those responsible for the misconduct. Miron must compensate VandenBloemen and anyone he hires as part of the monitoring process during his three-year appointment.

VandenBloemen has 43 years of public accounting experience, the majority of which specifically focused on construction contractors and suppliers and construction industry associations. His group has earned a national reputation for excellence and provides a wide range of services to contractors, including assistance with project estimating, contract management and accounting. The VanderBloemen Group has offices in Waukesha, Mayville, Fond du Lac and Juneau.

Better practices policy increased transparency

Miron officials said that since the company changed its policies in 2008, there have not been any accusations of overcharging school districts.

Currently, Miron is working on an addition and renovation to Menasha High School. District Superintendent Chris VanderHeyden said he has no complaints with the company's work.

"The allegations were brought up from something that happened in the past, and they've taken action to correct that. We have no concerns," VanderHeyden told Post-Crescent Media on Tuesday. "From our perspective, we trust Miron."

The district has not taken any special oversight measures for the project, but has a business manager who regularly oversees such projects.

"We're involved in checking the numbers," he said. "Not that we don't trust or mistrust Miron, but we don't just take their word either. That's just business."

— Ariel Cheung: 920-993-1000, ext. 430, or; on Twitter @arielfab


The Managing Member and staff at G.M HIETPAS CPA, LLC are pleased to announce a merger with THE VANDERBLOEMEN GROUP, a CPA and Business Advisory firm with specialization in the Construction Industry, located in Waukesha, WI, effective January 1, 2014. The three existing Hietpas offices’ will operate under THE HIETPAS GROUP name and will remain at the current G.M. HIETPAS CPA, LLC firm locations in Fond du Lac, Mayvi/le and Juneau WI. Founder Gilbert M. Hietpas of G.M. HIETPAS CPA, LLC will be joining partners Stephen C. VanderBloemen, Jonathan E. Hilgendorf, John P. VanderBloemen and Eric J. Carlson of The VanderBloemen Group. Stephen C. VanderBloemen will serve as the Managing Partner of the combined firms.

See this news release for more information.

The Affordable Care Act

ACA - What Clients Should Know Now...

About three years ago, President Obama signed the comprehensive Patient Protection and Affordable Care Act, and for many there remain more questions than answers.

While some components of the ACA are already in place, several major requirements still loom ahead for businesses, as well as individuals and it is likely that some will be turning to their accounting professionals such as The VanderBloemen Group for advice in navigating the complexity of the act.

The federal health law's individual mandate remains controversial as the October start date approaches for enrolling in new online marketplaces.  Individuals who don't get insurance through work will shop for insurance on these websites for policies that will take effect in January.

As stated for months, the mandate, which requires most people to obtain health insurance or pay a tax penalty, remains under attack by conservatives. In July, the Republican-led House voted to delay the mandate, although the measure is not likely to get a vote in the Democratic-controlled Senate.  As part of our efforts to stay aware of the ebbs and flows of this mandate, the follow questions and answers were recently covered by the Henry J. Kaiser Family Foundation (

The Henry J. Kaiser Family Foundation, a nonprofit, nonpartisan health policy research and communication organization, recently addressed some of the questions and answers about the mandate.

What is the individual mandate?

The individual mandate is a provision of the federal health law that requires you, your children and anyone else that you claim as a dependent on your taxes to have health insurance in 2014 or pay a penalty. That coverage can be supplied through your job, public programs such as Medicare or Medicaid, or an individual policy that you purchase. The health law is setting up online health insurance marketplaces, also known as exchanges, to help you shop for plans.

Where did the idea of the mandate originate?

The origins of the individual mandate have been controversial.  Many Democrats who support the law suggest it was originally a conservative idea developed in 1989 by the Heritage Foundation's Stuart Butler to counter liberals' efforts to establish a single payer system and impose a mandate on employers to provide insurance. Several years afterward, Republicans used the individual mandate in a bill they offered as an alternative to Bill Clinton's proposal to overhaul health insurance. The mandate also was incorporated as part of the Massachusetts overhaul of health insurance in 2006 under then-Gov. Mitt Romney.

Who is affected by the mandate?

The mandate is aimed at some of the 57 million people younger than 65 who now do not have insurance. The Congressional Budget Office estimates that in 2014 nearly three out of five Americans will have coverage through an employer-provided plan and 12 percent through Medicaid and the Children's Health Insurance Program, federal-state programs that provide insurance to lower income Americans. If you have insurance in either of those ways, you are not affected. If you are in Medicare, you also meet the requirement.

Are there any exceptions to the mandate?

Yes, the government has identified exemptions. Individuals who cannot afford coverage because the cost of premiums exceed 8 percent of their household income or those whose household incomes are below the minimum threshold for filing a tax return are exempt. People experiencing certain hardships, including those who would have been eligible for Medicaid under the health law's new rules but whose states chose not to expand their programs, also are exempt.

Other exempt groups include prisoners, Native Americans eligible for care through the Indian Health Care service, immigrants who are in the country illegally, people whose religion objects to having insurance coverage, members of a health care sharing ministry and individuals who experience a short coverage gap of less than three consecutive months.

CBO estimates that in 2016, after the major provisions of the health law are implemented, 24 million people will be exempted from the mandate's penalties.

Why is there a mandate anyway?

The health law was designed to extend insurance to nearly all people, including those who have medical conditions that require expensive care and are often denied coverage today. But to pay for their care, insurance companies need to have a large enrollment of consumers, especially young and healthy people who use fewer services. The mandate was adopted to guarantee a broad base.

How do I satisfy the mandate?

Health coverage provided through a job-based plan (including COBRA or a retirement plan), policies that you bought for yourself or your family, Medicare (and Medicare Advantage), Medicaid, CHIP, some Veterans Administration health programs or TRICARE coverage for members of the military and their dependents will satisfy the mandate.

If you are uninsured or thinking about switching plans, you can shop for coverage through the online marketplaces beginning Oct. 1. These marketplaces will operate in every state and the District of Columbia and will alert people with lower incomes that they are eligible for Medicaid. The marketplaces will also offer tax subsidies to help reduce the cost of premiums if your income is less than 400 percent of the federal poverty level ($45,960 for an individual and $94,200 for a family of four in 2013) and cost-sharing subsidies that will substantially reduce the deductibles, copayments, coinsurance and total out-of-pocket spending limits for people with incomes up to 250 percent of the federal poverty level ($28,725 for an individual and $58,875 for a family of four in 2013).

Although the law takes effect Jan. 1, the initial enrollment period continues through March 31. Since people are exempted for a short coverage gap - less than three months - individuals that obtain coverage before the end of March will be exempt from the payment for that period.

How do I report my coverage or exemptions to the government?

You will not have to report your coverage or exemptions until you file your 2014 income tax return, which won't be due until April 15, 2015. Insurance providers will also be required to help their clients report their health coverage. The Internal Revenue Service says it will put out details later about how the reporting will work.

If your income is so low that you do not file a tax return, you are exempt from paying the penalty.

What happens if I don't get coverage?

If you do not have the minimum level of coverage and do not qualify for an exemption, you must pay a penalty to the IRS at the end of the tax year. The penalty for the first year is up to $95 per adult and $47.50 per child, or 1 percent of family income, whichever is greater.

The fine, however, increases over time and in 2016 will be as much as $695 per adult and $347 per child (up to $2,085 for a family) or 2.5 percent of family income, whichever is greater.  The amount you owe will be pro-rated to reflect the number of months you were without coverage.

CBO estimates that 6 million people, about 2 percent of the population, will be assessed a penalty in 2016.

How do I apply for an exemption?

If you are seeking an exemption for incarceration, membership in an Indian tribe or health care sharing ministry, you can apply through the health insurance exchanges or make a claim when you file taxes, according to a final rule issued by the U.S. Department of Health and Human Services. If you are claiming economic hardship or a religious exemption, you must get an exemption certificate from the online insurance exchange. If you are claiming that coverage is unaffordable, you are in the United States without proper documentation or have a coverage gap of less than three months, you can make the claim when you file your 2014 taxes in 2015.

What were the issues in the Supreme Court challenge?

Opponents of the law argued that forcing individuals to buy insurance was unprecedented and could lead to much greater federal intrusions against individual freedoms. Supreme Court Justice Antonin Scalia, in fact, asked during the arguments on the law if such a provision meant the government could force Americans to buy broccoli. Supporters countered that the mandate was part of a long tradition of Congress regulating business trade under the Commerce Clause of the Constitution. In the suit brought by 26 states, the Supreme Court allowed the mandate to stand because a majority of justices, in an opinion written by Chief Justice John Roberts, said it was a tax and Congress has the power to impose taxes.

Democrats later adapted the concept and pushed it as part of the congressional debate over the Affordable Care Act, despite President Barack Obama's initial reluctance to embrace it. Whatever their prior views, most conservatives opposed the health law's version of the mandate, and Butler made a spirited argument that the current mandate is not what he was endorsing years ago.

Key Upcoming Deadlines…


October 1st – Open enrollment for health insurance coverage through the Health Insurance Marketplace begins

October 1: SHOP Marketplace opens enrollment for employers with 50 or fewer full-time equivalent employees

October 1: Employers must provide a notice of coverage options to each employee


Individuals and employees of small businesses gain access to coverage on the Health Insurance Marketplace

SHOP Marketplace opens to employers with 50 or fewer full-time equivalent employees

Individual mandate for health coverage

Medicaid expansion


January 1: Employer “play-or-pay” mandate Employer information reporting to the IRS on employee coverage


All SHOP exchanges will open to employers with up to 100 FTEs


States may open exchanges to businesses with more than 100 employees


40 percent excise tax on high-cost health plans

Why a Valuation is Needed for a SBA 7(a) Loan

Several years ago the Small Business Administration (SBA) included provisions in its Standard Operating Procedures (SOP) that required an independent business valuation (appraisal) from a qualified source under certain circumstances for SBA loans, including SBA 7(a) loans.

The Small Business Administration (SBA) has long been a source for small businesses financing needs and has recently played an increasingly important role during challenging economic conditions in assisting entrepreneurs in receiving secured loans to get their company up and running.  These funds have been used for the financing of a business, capital expansion or real estate.

The SBA offers several loan programs including General Small Business Loans (“7(a)” loans), Microloan Program loans, Real Estate & Equipment Loans (CDC 504 loans) and disaster loans.

The 7(a) Loan Program is different from traditional loans offered by lenders and other SBA loan programs because the 7(a) is a multi-purpose business loan (i.e. can fund working capital needs, be used to refinance debt, purchase equipment or inventory or construct leasehold improvements) in which the SBA guarantees a portion of the loan made by a Lender and is often a good fit for those businesses with less established credit histories looking to borrow up to $5,000,000. The Lender initiates the loan to a small business and, if the SBA agrees to guaranty the loan, the Lender funds and services the loan.

Several years ago the Small Business Administration (SBA) included provisions in its Standard Operating Procedures (SOP) that required an independent business valuation (appraisal) from a qualified source under certain circumstances for SBA loans, including SBA 7(a) loans.

When addressing your financing needs, your lender will assist you in determining the best SAB loan program for you to pursue.  Whether or not a business valuation will be required when pursuing the designated SBA loan program, your lender will consider the following points when evaluating the need for a valuation and whether or not the provisions of the SBA SOP apply:

  • Is it a 7(a) guaranteed loan?  If it is not a 7(a) loan, the SOP does not apply.
  • Is it a debt refinancing? If the original debt being refinanced was originally used to finance a change in ownership, a valuation is required.
  • Does the transaction involve a change in ownership (sale of the company)?  If it does not, a valuation is not required.
  • Are the buyer and seller closely related (family members or partners)?  If the buyer and seller are closely related a valuation is required.
  • What is the total amount being financed as computed by totaling all financing from all sources and subtracting the appraised value of real estate and/or equipment being financed from the total amount being financed from real estate?  If the result is greater than $250,000 a valuation is required.

The primary purpose of a business valuation for a SBA loan is to independently determine if the acquisition price of a business is reasonable.  SBA valuations are different because they must focus on:

  • The historical performance of a business with its current owner(s) NOT the buyer's projections.
  • They must meet the requirements of SBA's current Standard Operating Procedures (SOP), so the valuation expert must be familiar with the SOP.
  • The valuation expert must be engaged and paid directly by the lender to ensure independence.
  • SBA valuations generally involve the sale of the assets of a business in a change of ownership, so the valuation must be performed under those assumptions.

Small, owner-operated businesses are different than larger companies. Obviously, they are smaller (revenue, assets, employees, locations, territories, etc.) and they operate according to a unique agenda set by their owner(s). Although general valuation concepts and theories still apply, the data and methods used in a valuation of such businesses must be relevant and adapted to accurately value a small business.  Unfortunately, many valuation firms apply the same data and methods they use for larger companies in an effort to reduce costs or time.

Once it is determined a valuation is needed, what makes it independent and who is a qualified source?

  1. To be independent the appraiser/valuation expert must be engaged and paid directly by the lender.
  2. The report must be prepared for the lender.
  3. The cost of the valuation may be passed on to the buyer.
  4. The appraisal report must include the appraiser’s/valuation expert’s:
    1. Opinion of value.
    2. Qualifications and signature certifying the information contained in the report.
    3. A qualified source of valuations is defined as either:   
      1. A licensed Certified Public Accountant (CPA) that performs the valuation in accordance with the Statement on Standards for Valuation Services (SSVS) published by the American Institute of CPA’s (AICPA); or
      2. An individual holding one of the following designations:
        1. i.    Accredited Senior Appraiser (ASA) from the American Society of Appraisers
        2. ii.    Certified Business Appraiser (CBA) from the Institute of Business Appraisers
        3. iii.    Certified or Accredited Valuation Analyst (CVA or AVA) from the National Association of CVA’s.

When contemplating financing needs and in advance of discussion with financing institutions,  reviewing the above and following the guidelines, you can be determine whether or not a valuation will be required for a particular SBA loan.

If one is needed, follow the guidelines above to ensure obtaining the independent valuation from a qualified source such as The VanderBloemen Group and feel free to contact us with any questions you may have.

Ideas for tax planning as 2013 begins to wind up

Despite all the recent tax law changes, most taxpayers aren't aware of the steps they should take between now and the end of the year to improve their position.