Sign our Guestbook
CLICK HERE to see State Income Tax Monitor
CLICK HERE to see Sales & Use Tax Monitor
CLICK HERE to see Tax Incentives Alert
Managing Systems Installation, Compliance Is Real Juggling Act
Plan for prioritization but also plan for tax staff working long hours
The reality of installing a new tax system is that company management will probably not authorize additional staff so that your time is focused exclusively on the new platform. Your tax pros are going to get extra work, not extra bodies.
Sales & Use Tax Monitor spoke with two state tax leaders about juggling normal compliance duties with the goal of a seamless software transition.
Hallmark Cards Inc./Kansas City, Mo. is in the midst of a 3 1/2-year system changeover to SAP from Oracle. The company has asked Tax Manager Vernon Clements and four other staffers to devote 50% of their time to the project during a particularly intensive, six- to nine-month stage of the implementation right now.
Destination-Based Sourcing For SSTP Is Again In Flux
Complaints lead to 3 new alternatives with origin-based elements
If your corporate tax staff assumes you have a good handle on destination-based sourcing in Streamlined Sales Tax Project states, it may be time to think again.
In response to extreme hemming and hawing from states that didn't realize how much work was needed to convert from origin-based sourcing, the SSTP is once again considering changing its ground rules to buy time.
During a recent SSTP meeting in Dallas, a dominant topic of discussion was three different proposals that each include some form of origin-based sourcing. However, using a single rate rather than assigning the right local rate would probably represent a simplification, from a corporate perspective.
Is Audit Of Sales To Govt.Agencies Redundant?
Argue they were reviewed once
Suppose your company sells products or services to government agencies or colleges that themselves are audited by the state Revenue Department, with part of the review focusing on whether adequate sales tax was paid or use tax remitted. A corporate taxpayer might argue during its own audit or voluntary compliance review that the state already has the proof it needs of your company's proper tax compliance.
Most state agencies, colleges and universities are regularly audited or self-assess for tax purposes. Asking your company's auditor to rely on a copy of that agency audit sure sounds better than chasing down paper copies of receipts, POs or invoices on those transactions.
FIN 48 Delay For Private Entities Raises New Challenges
Which entities can postpone, what ripple effect would they start?
FASB has decided to postpone the effective date for private companies and pass-throughs to meet the terms of Interpretation No. 48, better known as FIN 48. Such entities now will have until periods starting after Dec. 15, 2007 to comply with the standard for accounting for uncertain positions on state and federal income tax returns.
Potentially, this raises some thorny issues for corporate tax professionals that don't appear to have been thoroughly hammered out during FASB hearings. For example, if a private company or pass-through previously had financial results consolidated into a related corporation's numbers on a FIN 48-compliant basis, has that entity in effect already adopted FIN 48? What can a public or private company that already meets the terms of FIN 48 do about a business entity in which it holds a minority interest, if that entity wants to delay its compliance?
"I'm sure some of these issues will be controversial, and the board [FASB] may have to give further thought," said Paul Glotzer, a FASB project manager assigned to FIN 48 who stressed that his viewpoints were personal and not policy.
Data May Not Be Best Way To Tell Apportionment Story
Narrative about unique circumstances can improve your odds
U.S. corporations have a lousy track record when it comes to successfully selling state revenue agencies on their alternative income apportionment proposals. With history against you, it's smart business to thoroughly strategize your proposal, to emphasize what has worked for fellow taxpayers and discard what hasn't.
Not only is it a mistake to dump reams of data, analyses and ratios on a state staffer's desk, it also is a mistake to emphasize numbers over your company's story, said Margaret Wilson, assistant general counsel for state and local tax at Verizon Communications/Basking Ridge, N.J.
"Everyone likes to point to Hans Reese and how much the standard application was off," she said, referring to the landmark 1931 U.S. Supreme Court ruling involving a business that had 388% of its income in a state apportioned for taxation. "But, I think you can't get overly hung up on the numbers.
"Often, a taxpayer will put together some nice numbers with percentages showing distortion," bundle it into a thickly impressive alternative apportionment proposal, "and it gets rejected. You really need to tell the story."
Congress Asked To Reform Withholding On Mobile Staff
Bill seeks 60-day standard
Business interests have managed to again get their proposal for a uniform, 60-day de minimis rule for state withholding taxes before Congress. Whether Congress is inclined to act is yet to be proven.
House Bill 3559 from Rep. Hank Johnson, D-Atlanta and Rep. Christopher Cannon, R-Utah, was assigned to the House Commercial and Administrative Law Subcommittee. It has yet to undergo a committee hearing or vote.
As with a version pushed by the Council on State Taxation/Washington last year, the bill would require that a traveling employee be physically present more than 60 days in a calendar year before companies would have to withhold tax. Otherwise, wages and other remuneration such as stock options would be taxable in the employee's home state.
Incentives Other Companies Get Become More Transparent
Variety of reports, Web portals let you research specific awards
From Tax Incentives Alert
Increasingly as skeptical legislatures demand greater cost-benefit accountability with corporate tax incentives, companies are able to learn specific deals that others have cut with a particular state.
These insights can be found by digging through annual or scheduled reports from development and revenue agencies, mandated by lawmakers responding to citizens irate over corporate giveaways. A little detective work reveals not only the name of the company and amount of the credit, exemption or grant; but also often the jobs and investment promised and how close that company is to meeting its promises.
Say you're an expanding company that now knows the details of the package landed two years ago by a competitor in the state whose site tops your list. How should you put that information to work for you? You want to leverage your intelligence and negotiate incentives that are at least as generous as what your competitor got, but you also must be careful about coming across as heavy-handed.
Forge Relationships With Property Tax Exemptions In Mind
Personal ties with govt. people can make or break an incentive
From Tax Incentives Alert
The old adage that it's not what you know, it's who you know is far from trite when it comes to negotiating property tax exemptions or abatements with local and state governments.
While corporate tax specialists sometimes forget it, staff in the assessor's office are not always the enemy. They can sometimes work near-miracles unclogging logjams involving government offices and elected officials that might bring a project and the associated property tax exemption crashing to a halt.
"Having good rapport with local people can go a long way," said Sam Kinslow, director of the real property group at consulting firm Advantax Group/Houston.
Kinslow can cite numerous examples where a close relationship with a "gatekeeper" in the assessor's office has worked to his advantage. One such case took place in Oklahoma.
Texas State Official Seems Leery Of Property Tax Aid
Schools must defend awards
From Tax Incentives Alert
School districts in Texas whose grants of property tax incentives to companies have been largely ignored by state government are suddenly coming under tougher scrutiny.
Recently, state Comptroller Susan Combs sent letters to 38 school boards asking for copies of signed incentive agreements, original estimates of incremental tax benefits and revenue concessions, subsequent project-impact analyses, and any assignments of their interest in tax benefits to other parties. Ten of them have responded.
Under terms of a state law passed last summer, Combs' office must use the data gathered to produce a report to the Legislature before it next meets in early 2009, covering jobs and capital investment committed and actually created, median wages of new jobs, foregone property taxes and other key data from the so-called Chap. 313 program.