cluded in H.R.

2775, will create a

framework for formal budget negoti-
ations between the two parties in an
effort to facilitate the vote on gov-
ernment funding now required to oc-
cur by January 15, 2014. Under the
agreement, the negotiators are
charged with making recom-
mendations to Congress for
long-term budget and
deficit-reduction goals sat-
isfactory to both parties.
The One Federal Tax Change
The one federal tax change included
in H.R. 2775 involved the imposition
of a new requirement on the ability of
people to receive premium-assistance
tax credits under Section 1401 of the
Patient Protection and Affordable
Care Act (ACA). This change in ACA re-
quires the Secretary of Health and Hu-
man Services (HHS) to develop proce-
dures to ensure that the State
Marketplace Exchanges created un-
der ACA will effectively verify that in-
dividuals applying for these tax cred-
its, as well as other available and
T
heres still not a great deal of fed-
eral tax news to report given the
extensive time spent by Congress dur-
ing late September and much of Oc-
tober in addressing the funding of
the governments current operations
and extension of the nations bor-
rowing authority. But, for now,
lets look at the short-term
resolution of these two areas.
Government Shutdown,
Debt Ceiling Deal Includes
One Tax Provision
On October 16, 2013, the Senate, by a
vote of 81-18, and the House of Rep-
resentatives, by a vote of 285-144, ap-
proved H.R. 2775. This bill represented
a last-minute agreement between the
Republicans and the Democrats to
fund the U.S. government through
January 15, 2014, and to extend the
governments borrowing authority
through February 7, 2014.
Required Future Negotiations
A separate part of the agreement be-
tween the Republicans and the De-
mocrats in the Senate, but not in-
Government Shutdown,
Debt Ceiling Deal Includes
One Tax Provision
By Bill Olson, Tax Principal & Don Hughes, Tax Manager
8601 Robert Fulton Drive l Suite 210 l Columbia, MD 21046 l 410-423-4800 l Fax 410-381-5538 l www.uhy-us.com
Recovering Costs
Caused by the
Shutdown
By Marlon Bernal, Audit Principal
W
ith the
end of the
gov er nment
shutdown be-
hind us, con-
tractors must
quickly assess
whether and
howto recover any additional costs
that were caused by the shutdown.
Time is of the essence and any un-
justified delay may result in a con-
tractor being denied recovery of
otherwise recoverable costs.
No one is arguing the fact that the
government shutdown materially
impacted government contractors
in a number of ways. Some con-
tractors received suspension of
work orders from their contracting
officers while others were unable to
performbecause of the furloughing
of their personnel and the closing
of government facilities.
Substantially all government con-
tracts provide protection for con-
tractors to recover increased costs
caused by the government shut-
continued on page 2 continued on page 2
the next level of service
For more information,
please contact Jim Peacock
at jpeacock@uhy-us.com
Government
Contractor
Insider
UHY Advisors
Mid-Atlantic MD, Inc.
Tax & Business Consultants
December 2013 Vol. 4 No. 3
UHY LLP brings specialists in government
contracting solutions in accounting and tax
Our firm provides the information in this newsletter as tax information and general business or economic information or analysis for educational purposes, and none of the information contained herein is intended to serve as a so-
licitation of any service or product. This information does not constitute the provision of legal advice, tax advice, accounting services, investment advice, or professional consulting of any kind. The information provided herein should
not be used as a substitute for consultation with professional tax, accounting, legal, or other competent advisors. Before making any decision or taking any action, you should consult a professional advisor who has been provided
with all pertinent facts relevant to your particular situation. Tax articles in this newsletter are not intended to be used, and cannot be used by any taxpayer, for the purpose of avoiding accuracy-related penalties that may be imposed
on the taxpayer. The information is provided as is, with no assurance or guarantee of completeness, accuracy, or timeliness of the information, and without warranty of any kind, express or implied, including but not limited to war-
ranties of performance, merchantability, and fitness for a particular purpose.
UHY Advisors, Inc. provides tax and business consulting services through wholly owned subsidiary entities that operate under the name of UHY Advisors. UHY Advisors, Inc. and its subsidiary entities are not licensed CPA firms.
UHY LLP is a licensed independent CPA firm that performs attest services in an alternative practice structure with UHY Advisors, Inc. and its subsidiary entities. UHY Advisors, Inc. and UHY LLP are U.S. members of Urbach Hacker
Young International Limited, a UK company, and form part of the international UHY network of legally independent accounting and consulting firms. UHY is the brand name for the UHY international network. Any services de-
scribed herein are provided by UHY Advisors and/or UHY LLP (as the case may be) and not by UHY or any other member firm of UHY. Neither UHY nor any member of UHY has any liability for services provided by other members.
those individuals applying for these
tax credits.
To be eligible for the tax credit, a tax-
payer must 1) have household income
between 100 and 400 percent of the
federal poverty line amount for his or
her family size, 2) not be claimed as a
dependent by another taxpayer, 3) if
married, file a joint return, and 4) not
be eligible for minimum essential
coverage under a health plan spon-
sored by the taxpayers employer that
is considered affordable and which
provides minimum value.
down. Whether the work stoppage
was a result of an express suspen-
sionof work order, animpliedor ex-
press government delay, or a con-
structive change, contractors have a
right to recover increased costs.
Contractors must exercise their right
of recovery quicklytypically within
30 days from the end of the work
stoppageor else the opportunity
may be lost forever.
The specific notice requirement for
each contract depends on factors
such as the type of contract and
the nature of the requested ad-
justment. Contractors should im-
mediately reviewtheir existing con-
tracts to identify the relevant
applicable Federal Acquisition Reg-
ulation (FAR) clauses and to under-
stand the corresponding require-
ments for recovery.
The FAR affords contractors the
right to recover increased costs
caused by the government shut-
down. Contractors that are un-
aware of their rights may find
themselves unable to recover some,
or even all, of their costs; so, if your
company has been impacted, make
sure you act, and quickly.
Government Shutdown, Debt Ceil-
ing Deal Includes One Tax Provision
continued from page 1
Contractors must
exercise their right
of recovery quickly.

the next level of service

Recovering Costs Caused
by the Shutdown
continued from page 1
New Property Capitalization
Rules Finalized by IRS
By Randy Respess, Principal
E
ffective for tax
years begin-
ning after Decem-
ber 31, 2013, the
Internal Revenue
Service has issued
newrules govern-
ing the capitaliza-
tion versus expense treatment of costs
of tangible personal property (TPP).
Virtually any business that has TPP
must perform certain steps to comply
with these rules.
1. By December 31, 2013
a. Taxpayers with applicable finan-
cial statements (generally, au-
dited financial statements) must
adopt a written policy about ex-
pensing TPP of $5,000 or less un-
der new safe-harbor rules.
b. Taxpayers with no applicable fi-
nancial statements (this would
include reviews and compila-
tions) must have appropriate ac-
counting procedures in place to
benefit from the safe harbor
rules for expensing units of prop-
erty of $500 or less.
2. For 2014 tax returns, taxpayers
must change their methods of
accounting for capitalization
and expensing of TPP. While of-
ficial guidance is still pending,
we believe these changes of ac-
counting method will need to
be made with the 2014 tax re-
turn filed in 2015. However, the
official guidance may require
that changes of accounting
method be submitted to the IRS
in the first quarter of the 2014
tax year.
Questions? Please feel free to call
me at 410-423-4831 or email me at
rrespess@uhy-us.com.
cost-sharing benefits, are, in fact, eli-
gible for them. The HHS Secretary is
required to report to Congress by Jan-
uary 1, 2014, on the procedures to be
used by the exchanges in verifying this
information. By July 1, 2014, the HHS
Inspector General is required to sub-
mit a report to Congress regarding
the effectiveness of these procedures
for preventing the submission of in-
accurate or fraudulent information by