Electronic Check Processing

A federal law that was enacted in response to the September 11, 2001 attacks, known as Check 21, makes it easier for banks to electronically transfer check images instead of physically transferring paper checks. The Check Clearing for the 21st Century Act (Check 21) is designed to foster innovation in the payments system and to enhance its efficiency by reducing some of the legal impediments to check truncation.

The law facilitates check truncation by creating a new negotiable instrument called a substitute check. Substitute checks permit banks to truncate original checks to process check information electronically and to deliver substitute checks to banks that want to continue receiving paper checks. A substitute check is the legal equivalent of the original check and includes all the information contained on the original check. The law does not require banks to accept checks in electronic form nor does it require banks to use the new authority granted by the Act to create substitute checks.

Since the Check 21 law was enacted the popularity of ECC (electronic check conversion) has increased at the point of sale. Electronic check conversion is a process in which your check is used as a source of information for the check number, your account number and the number that identifies your financial institution. The information is then used to make a one-time electronic payment from your account, an electronic fund transfer. The check itself is not the method of payment.

Perhaps now is the time to think about converting the checks you receive to ACH payments. This will provide greater safety, faster turn around and less handling. For more information on ACH and your POS please contact STCR at (607) 757-0181.

Tax Benefits in 2009

On February 17, 2009, the government signed into law the American Recovery and Reinvestment Act of 2009 (ARRA 2009). This economic stimulus package contains over $300 billion in tax relief. Many provisions of the new law enhance or extend existing laws that impact businesses. Popular business provisions are overviewed below.

Perhaps the most significant business extensions are the one-year extension of the 2008 Bonus Depreciation and Section 179 expensing limits. The extension of these two provisions allows businesses to invest in machinery and equipment more freely and to quickly recuperate the cost.
Generally, businesses can elect to expense, rather than depreciate, the cost of used or new tangible personal property put into service during the tax year, up to a specified limit. Prior to 2008, the limit was $125,000 and adjusted annually for inflation. The 2009 inflation adjusted limit was $133,000.

Extended Section 179 places limits on the amount of tangible personal property a business can acquire before the expensing limit begins to phase out. The pre-2008 amount was $500,000 and the 2009 inflation adjusted amount is $530,000. The Economic Stimulus Act of 2008 permitted a one-year enhancement of the Section 179 limits, therefore increasing the expensing limit to $250,000 and the investment ceiling to $800,000. The ARRA 2009 extends this enhancement another year; until December 31, 2009. Without further legislation the Section 179 limits for expensing and investment ceiling will drop back to $125,000 and $500,000 respectively for 2010.

The Economic Stimulus Act of 2008 allowed bonus depreciation for assets placed in service during 2008. Under bonus depreciation, businesses may immediately deduct half of the cost of “qualified property” as a depreciation deduction in the year of the purchase. The balance of the cost is normal depreciable life. “Qualified property” is defined as the purchase of new property (not used) with a recovery period of twenty years or less including most new property other than buildings and their structural components. The ARRA 2009 extends bonus depreciation for another year, ending December 31, 2009.

Another significant change provided by the ARRA 2009 is the special rule for small businesses utilizing net operation loss (NOL) carrybacks. Businesses that gross average receipts of $15 million or less are considered “small businesses” and can elect a longer NOL carryback period for a tax year beginning or ending in 2008. For NOL’s occurring in tax years that begin and end in 2008, ARRA 2009 allows a “small business” taxpayer to increase the carryback period to either three, four or five years. A longer NOL carryback period gives small businesses a greater opportunity to recover taxes paid in earlier years.

Contact your accountant for more information on tax benefits for your store.

POS Tax Changes

Building and maintaining a tax rate within your POS system is an integral part of every store’s sales operations. The POS systems that we sell and support can fulfill a variety of operations to meet our customer’ needs. STCR’s Support Center can provide support for this aspect of your POS system. But there also needs to be some responsibility taken by the retailer for maintaining this rate.

All of our POS systems have the ability to have multiple tax tables to assist with reporting and differing tax needs. They also can, depending on the system settings, be easily changed and manipulated to meet your needs. These systems also have the ability to base the tax on tables that can be created with the POS system itself, depending on your area requirements.

STCR’s Support Center offers services to train customers on utilizing their system to make the setting changes needed or build a tax table using the POS system. STCR also offers training to develop, test and implement tax tables based on the table provided by the state.

It is important for the retailer to know their various tax rates and any changes that are made to them. These can be different depending on state, county, town and other taxes that may apply. As the POS vendor, we can assist you, whether it is providing services or providing training on how to make these changes. Advance notification of these changes will allow more time to ensure that the changes are in place in a timely manner.

Tax rates are an important part of any type of business. STCR’s Support Center is here to ensure that the POS settings are being used and working properly. For more information on your tax tables please contact our Support Center at (607) 757-0181.

A New Look at Organics

Organic farmers and grocery retailers are embracing the idea of lower-cost, private-label products to retain new budget-conscious consumers. Last spring the fourth-largest U.S. food retailer, by sales, expanded its organic brand to 312 items from 150. Last fall the third-largest U.S. food retailer began selling its organic food brands to other retailers.

Store-brand goods accounted for 22.7% of organic food sales for the 52-weeks ending June 13, up from 13.6% for the same period in 2007. In all, private-label organic food sales rose 34% to $1.1 billion. In 2005, organic private-label sales totaled just $166 million.

For years the organic-foods segment logged annual sales gains of 20%-plus, but that growth has slowed. Sales of natural and organic grocery products rose 4.6%, to $18.3 billion, for the 52 weeks ending June 13 from a year earlier.

Slowing demand has pushed even reluctant name-branded organic food companies to offer private-label products. As retailer requests pile up, producers of organic spices, teas and oils have begun selling private-label products.

The lower prices afforded by private-label organics are helping grocers cater to more price-conscious shoppers. While some people have cut back on organics, stores that have significantly expanded store-brand offerings have experienced high single-digit to low double-digit same-store-sales gains.