Con artists trick New Yorkers

Scammers Manipulate Caller ID Systems to Pose as NYS Tax Department Representatives

Con artists trick New Yorkers by placing Tax Department numbers in caller ID systems.

The New York State Department of Taxation and Finance today alerted taxpayers to the latest tactics being used by con artists. Scammers are cloning the Tax Department’s fraud hotline phone numbers so they appear on a taxpayer’s caller ID, giving the impression that these bogus calls are legitimate ones from the agency.

If either of the following Tax Department numbers appears on a caller ID system, it’s an immediate signal that the caller is a scam artist: 518-457-5181 or 518-457-0578. These phone numbers are for taxpayers making incoming calls to the Tax Department.

The Tax Department doesn’t use these numbers for outgoing calls.

New York State Commissioner of Taxation and Finance Jerry Boone said, “Many of the imposters who call demand payments on iTunes gift cards and other reloadable debit cards, which are obvious red flags. I urge every New Yorker to remain vigilant for signs that a call could be a scam.”

If you’re unsure a caller claiming to be from the Tax Department is legitimate, contact the Tax Department call center at (518) 457-5434. A live representative will be able to verify any tax issues that you may have.

You can also protect yourself from con artists by creating an Online Services (OLS) account directly with the Tax Department at www.tax.ny.gov. This will allow you to confirm any outstanding tax liabilities and manage your tax matters securely online. If a caller is telling you something that doesn’t match up with your OLS account, this could be a warning sign.

If you believe that you’ve been contacted by someone attempting a scam, or you or a client have been the victim of fraud or identity theft, visit the Tax Department’s Report fraud, scams, and identity theft webpage to learn how to report it. The Tax Department takes this type of illegal activity seriously, promptly reviews each complaint, and takes corrective action when appropriate.

 

 

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Janover partner Arthur Radin pens article for the June 2016 issue of the CPA Journal

Sustainability Assurance Reporting A Nascent Niche, Likely to Grow

Arthur J. Radin, CPA

The use of sustainability reports for public and private companies has blossomed in the last few years. Reports run from as few as five to more than 250 pages and generally have pretty pictures, lots of verbiage as to the company’s intentions, improvements from previous years, and a future commitment to be a good corporate citizen. They indicate room for improvement and management’s intent to improve. As sustainability reporting becomes more widespread, it will increasingly encroach on territory long considered within the remit of CPAs.

Elements of Sustainability Reporting

Advocates for sustainability reporting—who have become increasingly numerous and vociferous in recent years—use many different terms, such as sustainability; good citizenship; environmental, social and governance (ESG); environmental responsibility; and responsible investing. The terms are not quite equivalent, but all address the same general concepts.

One key concept in sustainability reporting is that of stakeholders. Stakeholders include anyone currently doing business with the company or using its products, anyone living in communities where the company operates, and anyone who might be affected by the company in the future. The breadth of this definition, however, raises the question of its usefulness. Companies generally limit their reporting to investors, suppliers, employees, customers, neighbors, and governments, all of whom clearly have a “stake” in the company. Issues such as greenhouse gas emissions (GHG), however, clearly have an effect beyond those parties.

Another significant issue is “materiality,” or what is material to a stakeholder and which stakeholders are material to the company. Many sustainability reports discuss how the company has determined what is material, normally not in a quantitative manner. Because stakeholders can be defined as anything from a small number of people to all living things, materiality is an open issue, and debate as to standards continues.

Sustainability reports themselves differ significantly in quantity of statistics. Some give percentages showing improvements, such as “our use of water for each dollar of sales was down 3.7%.” Others have tables going back many years, indicating in detail the quantitative improvements being made. The reports may also

address good citizenship, covering many areas that do not directly affect environmental sustainability, such as employee diversity, community involvement, human rights, women’s empowerment, charitable giving, or indigenous rights. Many also have a governance section indicating the appropriateness of their corporate controls. As with most corporate reporting, the reports are very upbeat.

Standards of Sustainability Reporting

There are a number of published standards for sustainability reports, generally referred to as “frameworks.” The Global Reporting Initiative (GRI) Sustainability Reporting Guidelines is the most commonly used. The GRI is based in Europe and has partnered with many companies and the major accounting firms. In the United States, the Sustainability Accounting Standards Board (SASB) provides standards for specific industries. In addition, at least nine other organizations have published their own sustainability frameworks.

In this author’s view, the GRI’s guidelines are the most comprehensive, with 150 different disclosures required for complete conformity. Some companies list all of them and disclose whether or why any are omitted; others just list those they are following. The companies listing the requirements give interactive cross-references to the information, including, in some cases, the Form 10-K, Proxy Statements, and similar documents. The GRI’s website indicates which companies currently use its framework.

There is no legal requirement for a sustainability report in the United States; the pressure comes from various stakeholders. In addition, some investment analysts believe very strongly in ESG issues and will only recommend investment in a company with an appropriate ESG profile. Various consumer and environmental not-for-profit entities have also sprung up that follow sustainability reporting and criticize companies that do not meet their standards. Companies themselves claim that sustainability reporting helps them monitor and measure their efforts. Furthermore, it is believed that, should an issue arise for a company from an ESG failure, the goodwill emanating from such a report could help defuse negative publicity.

CPA firms seeking future growth should investigate the niche.

Assurance of Sustainability Reporting this area.

To evaluate the current use of assurance reports, this author selected and read the sustainability reports of 55 large international public companies. Of these, 20 had independent assurance reports. The assurances were equally divided between accountants (including consulting divisions) and nonaccounting firm assurance consultants. Most tellingly, there was no consistency as to the form of the assurance reporting.

All of the reports save one gave negative assurance, all roughly equivalent to those in the AICPA attest standards. One report by a non–Big Four accounting firm gave an audit opinion. Certain companies that did not have an independent assurance report had a report from an internal committee or a reference to the various consultants they had used.

The assurance reports included a variety of information, under a variety of standards:

• While there are at least 11 different frameworks, the only one frequently referred to was GRI.

• A few reports referred to internal standards, which were generally available somewhere on the company’s website.

• While many of the websites were well organized, others were quite difficult to use, making it hard to find the assurance reports.

• Some reports gave assurance that the reported GRI level of assurance was appropriate; others did not.

• Some specified exactly which statistics they were giving assurance on; others only offered very generalized assurance.

• There was a wide variety of information reported as to independence, impartiality, and competence, as well as materiality.

• Improvements from previous years and suggestions for the future were included in some reports.

• Some gave outlines of the work performed, including sample size, locations visited, and interviews; others indicated limitations as to the procedures performed.

The state of this reporting is reminiscent of financial statement audit reporting a century ago, when audit reports were highly inconsistent and included such items as subjective judgements, suggestions to management, and thanks to the client’s staff for its assistance. In a similar vein, it is clear that in some of the reports examined by this author, the assurer did not independently verify the results presented.

Nevertheless, proper sustainability assurance reporting is within the capabilities of any experienced auditing firm. While some areas, such as GHG, may require specialized knowledge, such knowledge can be obtained via specialist partners. There are several continuing education courses devoted to sustainability (e.g., from SASB) that can expand one’s knowledge base.

The Market for Sustainability Services from CPAs

Sustainability reporting is going to continue to grow, and CPA firms seeking future growth should investigate the niche. While there are many objections to the various issues of reporting, frameworks, and investor usefulness, as well as the dogmatic beliefs of sustainability advocates, some form of sustainability reporting is here to stay, and auditors at all levels of the profession should get involved.

Arthur J. Radin, CPA is a partner at Janover LLC. He is also a member of The CPA Journal Editorial Board.

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Protecting Americans from Tax Hikes Act of 2015

Last month, the Protecting Americans from Tax Hikes Act of 2015 became a law on December 18, 2015.  The law provides a (i) permanent extension of various tax provisions, including the research tax credit, enhanced Sec 179 expensing, and the American Opportunity Tax Credit, (ii) five-year extension of bonus depreciation through 2019, and (iii) two-year extension for Sec 108 exclusion and mortgage insurance premium deduction, among others.

The following is a list of affected tax provisions for individuals and businesses.  Please refer to the table attached for the general effective dates for tax provisions added, amended or repealed by the law.

  1. Extenders for Individuals
    1. Permanent Extensions
      1. Charitable distributions from IRAs – The law permanently allows for individuals age 70 ½ and older to direct up to $100,000 from individual retirement accounts to a qualified charitable organization and exclude this amount from gross income.  Any amount distributed to a qualified charitable organization goes to satisfy your required minimum distribution.
      2. Enhanced American Opportunity Tax Credit (AOTC) – This enhanced version of the Hope Scholarship Credit is available at an increased level of $2,500, with adjusted gross income (AGI) phase-out amounts to $80,000 (single) and $160,000 (married filing jointly).
      3. Qualified Conservation Contributions – The law permanently allows conservation easement deduction up to 50% of AGI.
      4. Transit Benefits Parity – The law permanently extends parity among transit benefits, such as van pool benefits, transit passes and qualified parking.
      5. State and Local Sales Tax Deduction – The law permanently allows the election to claim an itemized deduction for state and local general sales taxes, in lieu of deducting state and local income taxes .
      6. The child tax credit, available up to $1,000 for qualifying dependents under age 17, may be refundable to the extent of 15 percent of the taxpayer’s earned income in excess of $3,000.
      7. Enhanced Earned Income Tax Credit – The law makes permanent the increase ($5,000) in phase-out amount for joint filers.
      8. Teachers’ Classroom Expense Deduction – The law permanently extends the above-the-line deduction for elementary and secondary–school teachers’ classroom expenses.
    2. Two-Year Extensions for Individuals
      1. Mortgage Debt Exclusion – The law excludes from income the cancellation of mortgage debt on a principal residence of up to $2 million ($1 million for a married taxpayer filing a separate return) through 2016.
      2. Mortgage Insurance Premium Deduction – This measure treats mortgage insurance premiums as deductible interest that is qualified residence interest subject to adjusted gross income phase-out.
      3. Qualified Tuition/Related-Expenses Deduction – The law extends the above-the-line deduction for qualified tuition and fees for post-secondary education.
      4. Residential Energy Property Credit – The law extends the residential energy property credit, i.e. 10% of qualifying property expenditure for adding insulation, energy efficient exterior windows and energy efficient heating and air conditioning systems.
    3. Miscellaneous Provisions
      1. Improvements to Sec 529 Plan – The purchase of computer equipment and technology with a distribution from a Code Sec. 529 plan is permanently considered a qualified expense.
      2. ABLE program – The law removes the prior law requirement that ABLE accounts may be established only in the state of residence of the ABLE account owner
  2. Extenders for Businesses
    1. Permanent Extension
      1. Research Credit – The law permanently extends the R&D credit. Additionally, effective for 1/1/2016, qualifying small businesses (average $50 million or less in gross receipt for the most recent three years) may claim the credit against AMT liability and the credit can be utilized by certain small businesses ($5 million or less in gross receipt) against the employer’s 6.2% payroll tax liability, up to $250,000 per year.
      2. Sec 179 Expensing – The new law permanently sets the Code Sec. 179 expensing limit at $500,000 with a $2 million overall investment limit before phase out (both amounts indexed for inflation beginning in 2016). Also made permanent is the special rule allowing off-the-shelf computer software to be treated as Code Sec. 179 property and the ability of a taxpayer to revoke a Sec. 179 election without IRS consent.
      3. 15-year straight-line cost recovery is allowed for qualified leasehold improvements, restaurant property and retail improvements, rather than 39-year cost recovery.
      4. 100-Percent Gain Exclusion on Qualified Small Business Stock – The 100-percent exclusion allowed for gain on the sale or exchange of qualified small business stock ($50 million or less in aggregated gross assets) held for more than five years by non-corporate taxpayers is made permanent.
      5. Reduced Recognition period for S corp Built-in Gains tax – The law reduced the recognition period in which S corp may be subject to built-in gains tax from 10 years to 5 years.
      6. Various others: Employer wage credit for employees who are active duty members of the uniformed services, treatment of certain dividends of Regulated Investment companies, Subpart F exception for active financing income, minimum low-income housing tax credit for non-federally subsidized buildings, military housing allowance exclusion for determining a low-income tenant, RIC Qualified Investment entity treatment under FIRPTA, charitable deduction for contributions of food inventory, tax treatment of certain payments to controlling exempt organizations, basis adjustment in stock when an S corporation makes charitable contributions of property.
    2. Five-Year Extensions for businesses
      1. Bonus Depreciation – The law extends bonus depreciation (additional first-year depreciation) under a phase-down schedule through 2019: at 50 percent for 2015-2017; at 40 percent in 2018; and at 30 percent in 2019. It also continues the election to accelerate the use of AMT credits in lieu of bonus depreciation and increases the amount of unused AMT credits that may be claimed in lieu of bonus depreciation. Additionally, the law modifies bonus depreciation to include qualified improvement property, and permits certain trees, vines and plants bearing fruits or nuts to be eligible for bonus depreciation when planted or grafted. Certain longer-lived and transportation property may qualify for an additional one-year placed in service date. Also, related bonus depreciation is increased by $8,000, unadjusted for inflation, in computing the first-year depreciation for passenger autos. Unlike Code Sec. 179 expensing (above), only new property is eligible for bonus depreciation.
      2. The law also extended the New Markets Tax credit and Work Opportunity Tax credit
      3. Look-through treatment for CFCs – The law extends the look-through treatment for payments of dividends, interest, rents, and royalties between related controlled foreign corporations under the foreign personal holding company rules.
    3. Two-Year Extensions for Businesses
      1. Extension of credit for energy-efficient new homes – The provision extends through 2016 the tax credit for manufacturers of energy-efficient residential homes. An eligible contractor may claim a tax credit of $1,000 or $2,000 for the construction or manufacture of a new energy efficient home that meets qualifying criteria.
      2. Extension of energy efficient commercial buildings deduction – The law extends the above-the-line deduction for energy efficiency improvements to lighting, heating, cooling, ventilation, and hot water systems of commercial buildings.
      3. In addition, the law extended the following tax provisions until the end of 2016: Indian employment tax credit, railroad track maintenance credit, mine rescue team training credit, qualified zone academy bonds, three-year recovery period for certain race horses, seven-year recovery period for motorsports entertainment complexes, accelerated depreciation for business property on an Indian Reservation, election to expense mine safety equipment, special expensing rules for certain film and television productions and live theatrical productions, IRC Sec. 199 deduction for Puerto Rico, empowerment zone tax incentives, economic development credit for American Samoa and moratorium on medical device excise tax.
      4. Also, the following energy credit provisions are extended: credit for alternative fuel refueling property, Credit for 2-wheel plug-in electric vehicles, second generation biofuel producer credit, biodiesel and renewable diesel incentives, production credit for Indian coal facilities, credits with respect to facilities producing energy from certain renewable resources, Special allowance for second generation biofuel plant property, special rules for sales/dispositions to implement FERC, excise credits for alternative fuels, credit for new qualified fuel cell motor vehicles
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Tax Alert: 2015 “extenders” legislation does more than just extend tax breaks

The tax deal signed December 18, 2015 makes many breaks permanent, moving beyond the usual year-end extender package.  The lapsed provisions not only are revived for 2015, but many of them are also enhanced for future years.  There are permanent breaks for individuals, such as the tax free direct payout from IRAs to charity.  Businesses will also see some favored tax provisions permanently extended, such as $500,000 cap on expensing business assets.  Other tax breaks are temporarily extended.  See attached and speak to your tax advisor at Janover LLC for further clarification.

Tax and Appropriations Bill Signed Into Law

On Friday, December 18, both houses of Congress passed, and the President signed one of the most consequential pieces of tax legislation in some time. The final legislation is H.R. 2029, the “Consolidated Appropriations Act of 2016.”

The bill extends various expired tax provisions, “extenders,” in three ways. There are some provisions which have been extended permanently, a second group that has been extended for five years (2015-2019), and a third basket that have been extended for two years (2015-2016).

The following are some of the highlights of the tax extender sections of H.R. 2029 (Division Q – Protecting Americans from Tax Hikes Act of 2015 – The PATH Act):

Research & Development Tax Credit (Section 121 of PATH Act)

  • Makes the credit permanent.
  • For tax years beginning after December 31, 2015, the Act adds provisions of significant value to eligible small businesses.
    • Provides for eligible startup companies (defined as those with gross receipts of less than $5,000,000, and no gross receipts prior to the 5 taxable years ending in the tax year) to utilize the credit against payroll withholding taxes.
      • The credit would be utilized in the first calendar quarter following the quarter in which the entity return is filed.  Amounts not utilized can be carried forward to the subsequent quarter.
      • Utilization against payroll withholding tax is limited to $250,000. Excess credit can be carried forward for utilization against future years’ income tax liability.
        • Amends IRC 38(c)(4)(B) and adds the R&D credit as a specified credit, thereby allowing eligible small businesses to utilize the credit against AMT. For this section, an eligible small business is one whose average gross receipts for the prior three years do not exceed $50,000,000.
        • While earlier, proposed legislation included provisions that would eliminate the Traditional credit method and increase the Alternative Simplified Credit (ASC) percentage from 14% to 20%, the PATH Act does NOT eliminate or modify calculation methods.

Work Opportunity Tax Credit (Section 142 of PATH Act)

  • The credit is extended for five years, including employees hired through December 31, 2019.
  • For employees hired after December 31, 2015, the Act adds a new targeted employee group: long-term unemployed individuals.
    • New hires will qualify for this category if they are in a period of unemployment lasting at least 27 consecutive weeks, and received unemployment compensation during any part of that unemployment.

Section 179 Property (Section 124 of Path Act)

  • Makes the limitations of $500,000 and $2,000,000 permanent.
  • Eliminates exclusion of air conditioning and heating units for tax years beginning after December 31, 2015.

The PATH Act also extends the New Markets Tax Credit and bonus depreciation (though with phase-outs) through December 31, 2019. Bonus depreciation has been extended for property placed in service through 2019.  The bonus percentages are 50% for 2015 – 2017, 40% for 2018 and 30% for 2019.  Also, the Act extends qualified leasehold property, restaurant property and retail improvement property to be 15-year property. Several other incentives, including energy credits, are extended through December 31, 2016.

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Mel Kendrick: sub-stratum

Janover LLC is proud to support Mel Kendrick and his art work – “Mel’s works must be seen in person to appreciate the evolution of his art. The Chelsea gallery area, the Highline, and Hudson River Park are an added treat, particularly around sundown” said H. Steve White, Principal at Janover LLC.

David Nolan Gallery is pleased to announce Mel Kendrick: sub-stratum, the artist’s sixth exhibition at the gallery since 2003. On view from October 22 through December 5, the exhibition will include a group of new freestanding cast concrete sculptures, as well as cast paper drawings and a mahogany wall sculpture. Read more.

 

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Lawrence Yeshiva is named National Blue Ribbon School

Janover is proud to share the news of Rambam Mesivta, a high-performing Jewish academy for boys in Lawrence. The school was named a National Blue Ribbon School by the U.S. Department of Education.  It is the only school on Long Island to be given this award this year.   335 public and private schools have received the award this year by the U.S. Secretary of Education, Arne Duncan.  The award is based on a school’s overall academic excellence or progress in closing achievement gaps among student subgroups. To view the article click here.

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Can a taxpayer assign income to someone else?

Gross income is taxed to the person who earns it by performing services, or who owns the property that generates the income. Under the assignment of income doctrine, a taxpayer cannot avoid tax liability by assigning a right to income to someone else. The doctrine is invoked, for example, for assignments to creditors, family members, charities, and controlled entities. Thus, the income is taxable to the person who earned it, even if the person assigns the income to another and never personally receives the income. The doctrine can apply to both individuals and corporations.

A taxpayer cannot assign income that has already accrued from the property the taxpayer owns, and cannot avoid liability for tax on that income by assigning it to another person or entity. This result often applies to interest, dividends, rent, royalties, and trust income. The doctrine applies when the taxpayer’s right to income is practically certain to occur. Once a right to receive income has certainty, the taxpayer who earned it or otherwise created that right will be taxed on the income.

Similarly, under the anticipatory assignment of income doctrine, a taxpayer cannot shift tax liability by transferring property that is a fixed right to income. However, a taxpayer can assign future income by making an assignment of property for value or a bona fide gift of the underlying property.

The doctrine does not apply if a right to income is sold or exchanged for value. If a gift of income-producing property is made, income earned after the date of the gift is taxed to the donee of the gift. If a taxpayer assigns a claim to income that is contingent or uncertain, the assignee of the right is taxable on income that the assignee collects on the claim. If a taxpayer transfers appreciated property prior to a sale or exchange, the appreciation is income to the person owning the property at the time of the sale or exchange.

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New York State Sales and Use Tax

Effective September 1, 2015

The following list includes the state tax rate combined with any county and city sales tax currently in effect and the reporting codes used on sales tax returns.

New York City comprises five counties. These counties are also boroughs whose names are more widely known. The counties, with borough names shown in parentheses, are Bronx (Bronx), Kings (Brooklyn), New York (Manhattan), Queens (Queens), and Richmond (Staten Island).

To download or print the list, please click here.

 

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Supreme Court Announces – Same Sex Marriage is a Right

Last Friday morning, June 26, 2015, the US Supreme Court announced their 5-4 decision on marriage equality – Same-Sex Marriage is a Right.  Their ruling on Obergefell v. Hodges (No. 14–556. Argued April 28, 2015—decided June 26, 2015; part of several appeals cases consolidated into one):

Justice Kennedy wrote the majority opinion.  Saying that gay and lesbian couples have a fundamental right to marry, he wrote “No union is more profound than marriage…In forming a marital union, two people become something greater than once they were.”

Though this ruling supports a national position on marriage, its sentiment is not on the difference between traditional marriage and same-sex marriage, but from the perspective and in the name of dignity.  While dignity is not (as a word) in the US Constitution, the concept is in the underlying spirit of the Bill of Rights and Justice Kennedy has often referenced the intrinsic value of dignity on many of the Court’s rulings.  Whether or not the Court majority based its reasoned decision on a fundamental belief that the Fourteenth Amendment does not allow discrimination between spouses based on sex, marriage will now be defined across the land without reference to gender, invalidating nearly half of our states’ marriage laws.  This will result in the recognition of same-sex marriages in all fifty states, maybe not immediately, and certainly not without substantial protest in various parts of our country. 

From an income tax, gift and estate tax perspective, as well as from the perspective of all of the 1,138 rights, privileges and protections now afforded married couples under federal statute(s), the same state-level rights and protections will eventually be granted to all married residents in every state.  This uniformity in treatment will allow all married families to make similar choices in estate planning and gifting, in matters of family building that won’t require double-adoption, equal protection for veterans’ benefits, spousal retirement and Social Security benefits under the VA, ERISA and SSA respectively.  It’s simply a matter of time before there are no differences under the law.

If you have any questions about how this ruling might affect you or you are ready to begin planning for your family, retirement or estate, please contact your trusted advisor.

 

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NYS Department of Taxation and Finance Alert

Announcement from NYS Department of Taxation and Finance Identity Verification Program

Dear Clients and Friends:

The New York State Department of Taxation and Finance has announced that, effective June 25, 2015, it will be changing its bank accounts for receiving various types of tax payments.

This ONLY impacts electronic payments that have been set up to automatically be withdrawn by New York State. Naturally, if you pay by check or credit card this has no effect.

 What you should do:

If your bank account from which tax payments are made has no “debit blocks” (to prohibit unauthorized vendors from taking funds), you are NOT AFFECTED by this notice and no action is needed.  Your banker can usually confirm if there are debit blocks on your account, and a phone call to them is typically all that is needed to determine if they exist.

If you have a debit block on your account, and have set an exception for New York State taxes, you will need to coordinate with your bank so that the new NYS bank account information corresponding to the information shown at the website linked below can become the new exception by June 25, 2015.

This affects electronic payments of individual, corporation, LLC, sales taxes and other types as well.  Please see the following link for a full list of taxes affected.

 http://www.tax.ny.gov/pay/all/debit.htm

 If you have any further questions, please feel free to call us.

Sample Notice that is being sent out by New York State

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