“SALT” – It’s more than a Grain: State and Local Tax

cfoNavigating the patchwork of laws and regulations that govern state and local taxes is never an easy task. Timothy J. Hilligoss, Shareholder – International Accounting, Practice Leader for Asia, and Bryan D. Powrozek, Senior Accountant – SME, both of Clayton & McKervey, P.C., analyzed and discussed important state and local tax (“SALT”) issues affecting all business at the last quarterly CFO/Controller Roundtable. The presentation and discussion touched on a variety of different SALT topics including:

  • Nexus
    • What is Nexus?
    • Tracking Nexus
    • PL 86-272
    • Franchise Taxes
    • Click Through Nexus
  • Audits
    • Sales & Use

Year-End Reporting Requirements

Margaret Amsden, CPA, MST | Shareholder - Tax ServicesAs we approach the end of 2014, following are some items you should consider with regard to year-end reporting for your business.

Form W-2

Employers must file Form W-2 for wages paid to each employee subject to income, Social Security, or Medicare tax withholding. Some items that are frequently missed in the process of year-end preparation of Form W-2 are noted below:

The Affordable Care Act

Employers are required to report the total cost of health care coverage on the W-2 form. In 2012, this reporting became mandatory for all employers with more than 250 W-2 forms. This reporting requirement will continue until further guidance is issued. Reporting does not affect tax liability and is for informational purposes only.

Cha-CHING! States Turn to Transfer Pricing to Raise Revenue

Alex Martin | Principal - Transfer Pricing ServicesNew Multistate Tax Commission Initiative Includes Engaging Outside Economic Consulting Firms

The Multistate Tax Commission (“MTC”) unveiled a new Arm’s-Length Adjustment Service that would enable states to conduct transfer pricing audits with support from specialist economist firms. The nine states investing in the MTC program include Alabama, the District of Columbia, Florida, Georgia, Hawaii, Iowa, Kentucky, New Jersey and North Carolina[1]. The proposed four-year charter period is expected to start shortly after MTC meetings in July 2015. This program represents a significant commitment of states’ resources in an area expected to raise substantial revenue.

Michigan Personal Property Tax Reform – Passage of Proposal 1

Margaret Amsden, CPA, MST | Shareholder - Tax ServicesMichigan voters gave final approval August 5, 2014, to a plan that will phase out Personal Property Taxes (“PPT”) that small businesses and manufacturers pay on business equipment. The reform makes the following changes to the future reporting of PPT:

  • All business owners with personal property having a Combined True Cash Value of less than $80,000 as of January 1, 2014, will be eligible for an exemption from the PPT. Combined True Cash Value is the market value of all personal property owned, leased, in the possession of or controlled by the owner or related entity within a local tax collecting jurisdiction.

5 Things You Need to Know about the AICPA’s Financial Reporting Framework for Small and Medium Sized Entities

Timothy Finerty, CPA | Shareholder - International Assurance, Practice Leader for Mexico & Latin AmericaIt’s been a little over a year since the AICPA issued the Financial Reporting Framework for Small and Medium Sized Entities (“FRF for SMEs”) as an alternate reporting option to Generally Accepted Accounting Principles (“GAAP”) financial statements. We have seen multiple clients switch to this framework in order to have more relevant financial statements for the users, without the needless complexity that often comes when small and medium sized businesses are forced to follow the complex requirements of US GAAP.

The future of International Financial Reporting Standards in the United States

Julie Killian, CPA, CGMA | Principal - Assurance ServicesThe Securities and Exchange Commission says IFRS Adoption in the US is unlikely

Based on recent discussions at the Securities and Exchange Commission (SEC), US public companies will not be required to adopt International Financial Reporting Standards (“IFRS”) any time soon. Some of the key issues contributing to this are the undefined role of the US Financial Accounting Standards Board (FASB) in the global accounting standard setting process, the focus of the SEC on other required rule making such as Dodd-Frank, difficulties finding stable sources of funding to assure the International Accounting Standards Board’s (IASB) independence, and questions about the ability of the IASB to provide timely interpretive guidance and react to changes needed to respond to changes in the economic environment. However, among standard setters at the FASB and SEC there continues to be a long-term vision of a single set of high-quality, globally accepted accounting standards.

Protect Yourself from Tax Return Theft

Tood Goodman | Technology Operations AdministratorIdentity (“ID”) theft is one of the most rampant and fastest-growing crimes today. The Federal Trade Commission (FTC) consistently reports ID theft as the top consumer complaint it receives. The IRS also reported ID theft criminal investigations jumped 66% from 2012 to 2013.

In recent years, a twist on ID theft has really come into its own: Tax Return theft. Most often, victims discover when they try to e-file that a return has already been filed under their Social Security Number (“SSN”). From here, it’s a long and laborious process to report the fraud, get records straightened out, and ultimately receive your rightful refund.

IRS Changes the Streamlined Filing Compliance Procedures and Offshore Voluntary Disclosure Program

Sarah Russell, CPA, MBA | Shareholder - International Tax | Clayton & McKervey, P.C.Earlier articles have focused on the filing requirements for US persons with foreign bank accounts or other foreign financial accounts. If you have such accounts which have not been properly disclosed, consider participation in the IRS Streamlined Filing Compliance Procedures for Non-Resident, Non-Filer Taxpayers (Streamlined Procedures) or the Offshore Voluntary Disclosure Program (OVDP).

These programs are not new, however, On June 18, 2014, the IRS announced substantial changes to both programs. Effective July 1, 2014, the IRS made it easier for individuals to qualify for the new Streamlined Procedures. Before these changes, taxpayers had to enter the OVDP or submit through the $0 penalty Streamlined Procedure. However, taxpayers only qualified for the Streamlined Procedures if they met all of the following criteria:

Clayton & McKervey, P.C. Announces Two Additions to Management Team

CPA firm Clayton & McKervey, P.C. is pleased to announce the additions of Elizabeth (Beth) Butchart and Greg Schulte to the management team.

Supporting the Clayton & McKervey, P.C. goal of being a global resource for our clients, these professionals will continue to support the firm’s mission of providing specialized accounting, auditing, and tax services to growth driven, middle market companies who compete in the global marketplace.

“We are excited to see these talented young professionals continue to grow in their careers. Beth and Greg are great individuals who will no doubt be valuable future leaders of the firm,” said Kevin McKervey, President of Clayton & McKervey, P.C.

Clayton & McKervey, P.C. Announces Sarah Russell Named Shareholder

Sarah Russell, CPA, MBA | Shareholder - International Tax | Clayton & McKervey, P.C.Sarah E. Russell, CPA, MBA, has been promoted to Shareholder – International Tax at Clayton & McKervey, P.C., an accounting, tax and business advisory firm.

As a new member of the ownership team, Sarah will continue to support Clayton & McKervey’s mission to provide specialized accounting, auditing, and tax services to privately held, middle market companies that compete in the global marketplace.

“Sarah is a key point person for international tax strategies in this organization,” said Kevin McKervey, President of Clayton & McKervey, P.C. “She has the depth and range of knowledge to meet the needs of globally minded companies with international tax consulting and compliance – whether those companies are coming to the United States or expanding to other parts of the world.”