March, 2024 | TaxConnections

29 Mar 2024

Important Information Every Tax Professional Should Know When Searching For A Tax Job

What Every Tax Professional Should Know When Searching For A Tax Job

Build A Personal Tax Brand: Secrets To Being Hired For Tax Jobs You Should Learn Now

Many tax professionals lose wonderful opportunities to be considered for the best tax jobs because they do not know how to position themselves to be selected for these roles. This article focuses on my experiences in tax professional search and what I learned from the actions tax professionals took to rise to the top of the profession. If you are thinking about entering the tax profession, or already in the profession and want to know how to be considered for a tax roles, there are steps you need to take. For the purpose of a tax professional audience, I will break this article into five categories: Public Accounting Tax, Corporate Tax, Law Firm Tax, Independent Tax Services, and Government Tax Roles.

In writing this article, understand the information comes from my experience in working on more than one thousand tax searches over thirty years. You learn a lot when you are speaking with tax professionals in private conversations about their experiences working in these uniquely different tax work environments. You will learn what I learned about these vastly different tax environments; you will learn from this article what tax professionals liked working in a particular environment and the reasons why they decided to leave for another work environment.

Public Accounting/Consulting Firm

A public accounting firm is an ideal place for anyone to enter the tax profession. You will learn alot in a small boutique accounting practice or a mid-level to large firm. This is simply a great place to begin building your tax and accounting career. If you are fortunate enough to catch the attention of a mentor to guide you, all the better. This is the ideal environment to enter the tax and accounting profession and begin your tax career.

The greatest amount of turnover in public accounting is at the 3 to 5 years of experience where tax staff/tax seniors want to continue to grow. Many tax staff/tax seniors may want to stay until they make manager before they leave the firm. However, the truth is if someone has decided to stay and make manager in public accounting, compared to a tax staff/tax senior who has combined 5 years of experience in public accounting and a corporate tax environment; the hiring executives in corporations prefer hiring the candidate who has combined public accounting/private industry experience. This is a fact. Ask any corporate tax director and they will tell you the same. My advice to younger tax professionals is to focus on the learning experience, not the title.

If you are in public accounting and want to move to another firm, I would then understand the title is the primary driver for most in an accounting firm. What I would advise key hiring managers in public accounting is the best way to retain your professional staff is to invest in their training and education. For instance, you could train your staff in partnerships by sending them to a high-quality partnership education seminars like taxforums.com. Charles Levun and Michael Cohen are nationally trusted trainers in tax partnerships. They go through multiple case studies in their seminars which are highly rated sessions. They generally conduct annual training seminars on tax partnerships in May and June which you can find here: https://www.taxforums.com/default

Written by Kat Jennings | Posted in Find Tax Advisor • Find Tax Job • Find Tax Professional • Tax Partnership Training

29 Mar 2024

What Is A Foreign Trust?

Explaining a Foreign Trust In Easy-to-Understand Language

In this global economy, it’s becoming increasingly common for U.S. citizens and residents to have financial ties overseas. These financial ties often come in the form of foreign bank accounts, real estate holdings, and trusts.

Foreign trusts in particular are subject to special rules under the Internal Revenue Code (“IRC”). However, understanding what constitutes a foreign trust and its treatment under the IRC can be difficult even for the most seasoned lawyer.

What Is A Trust?

The Internal Revenue Service (“IRS”) defines a trust as “an arrangement created either by a will or by an inter vivos declaration [in other words, a declaration during the life of the person setting up a trust] whereby trustees take title to property for the purpose of protecting or conserving it for the beneficiaries under the ordinary rules applied in chancery or probate courts.”[1]

In the United States, trusts are formed under state law. Thus, the law of the particular state in which the trust has been or will be formed must be consulted for any particulars regarding trust formation and administration. However, below are some general definitions that may prove helpful in the discussion that follows:

“Settlor” or “Grantor”: The “settlor” or “grantor” is the person who creates a trust;[2]
“Trustee”: The “trustee” is the person who holds title to the property in the trust;[3]

“Beneficiary”: The “beneficiary” is the person for whose benefit the trustee holds the property in the trust.[4]

Is A Trust Domestic Or Foreign?

Written by Jason Freeman | Posted in Foreign Trusts

29 Mar 2024

Benefits Of Conducting A Reverse Sales And Use Tax Audit

As companies expand, they become more complex and require more resources to manage. Due to ever-changing tax codes and regulations, sales and use tax compliance can be particularly challenging, and identifying inaccuracies in this area can be difficult. By conducting a reverse audit, you can potentially spot reporting errors and may even reap some financial rewards if the errors are in your favor.

How Can A Reverse Audit Help You?

1. Identify Prospective Overpayments

A sales and use tax reverse audit is an excellent way to identify overpayments, which can occur due to incorrect classification of goods and services, incorrect tax rates, or failure to take advantage of available exemptions. By conducting a reverse audit, businesses can recover the money they are owed, significantly improving their financial position.

2. Mitigate Risk

Non-compliance with sales and use tax laws can result in significant fines, penalties, and damage to a company’s reputation. A sales and use tax reverse audit can help businesses identify areas of non-compliance and take steps to correct them before they become a problem. By proactively addressing these issues, companies can mitigate risks and protect their reputation.

Written by Nicole Brown | Posted in Reverse Sales And Use Tax Audit • TaxConnections • Thompson Tax

28 Mar 2024

ALERT REAL ESTATE DEVELOPERS: Do Not Leave Millions Of Dollars In Federal Tax Credits And Incentives On The Table

There are many developers losing thousands/millions annually simply because they do not request a complimentary consultation on the tax credits and incentives available to them. It is important to find out what is due you as a developer. It may be costing you thousands (and even millions for larger developers) in tax credits and incentives owed to you and your business. Request your complimentary consultation today. It costs you nothing but a little time to find out what is due you; it costs you a lot if you do not ask what credits and incentives are available and due you.

Go to this link to find out what is due to you and your business in tax credits and incentives. While you are building homes, a tax credit and incentive expert will help you build a better financial future.

EPACT §179D TAX DEDUCTION

The Energy-Efficient Commercial Building Tax Deduction applies to expenses incurred for energy-efficient construction or retrofit. If your company owns or leases commercial buildings, including certain residential buildings, you may be eligible to deduct part, or all of the costs, associated with the installation or retrofit. The deduction is available for new construction and existing buildings as well as for tenant-owned improvements and primary designers of government-owned buildings. It is specifically for lighting, HVAC and hot water systems, and building envelope and provides a deduction of up to $1.88 per square foot for projects, placed

in service before 1/1/2023. Starting in 2023, the Inflation Reduction Act increased the tax deduction $2.50-5.00 per square foot for qualifying properties and allows the designers of energy-efficient building owned by non-governmental, tax-exempt entities to qualify, for the deduction.

45L FEDERAL TAX CREDIT

The §45L Federal Tax Credit is an energy-efficiency incentive for residential units that became effective 1/1/2006 with the passage of the Energy Policy Act (EPAct) and is the residential counterpart to §179D. It offers developers a means to offset the costs associated with building energy-efficient single family or multifamily properties. The $2,000 credit provides a dollar-for-dollar offset against taxes owed or paid in the tax year in which the property is sold or leased.

Taxpayers may amend the prior 3 tax years to claim credits. Unused general business credits are carried back one year and then carried forward for up to 20 years. The Inflation Reduction Act extended the 45L tax credit through 2032, and increased the tax deduction to $2,500 or $5,000 per dwelling unit for qualifying properties, which now use Energy Star certification.

Written by TaxConnections Admin | Posted in Federal Tax Credits

28 Mar 2024

Tax Management Tips For Entrepreneurs And Small Business Owner

Have you ever thought about why lots of small business owners always seem to struggle with their money when it’s time to do their taxes? It’s not just about crunching numbers; it’s about mastering the art of tax management. Almost two-thirds of business owners say that federal business income taxes significantly increase their operational workload, showing how common this problem is. It points out a universal struggle which is figuring out the complex tax rules without allowing them to stop your business from growing.

This article will help you in exploring the essential tax management tips that every small business owner and entrepreneur needs to know. From understanding your tax obligations to strategies for lowering your tax bill, we aim to equip you with the knowledge to meet your tax challenges. We’ll cover everything from the importance of choosing the proper business structure to the benefits of working with an experienced tax professional. By the end, you’ll have a comprehensive toolkit to reduce your overall tax burden, streamline your tax preparation, and reinvest in your business.

Understanding The Basics Of Entrepreneurial Taxes For Small Business Owners

Taxes can be a complex affair for small business owners. It’s not just about filing your tax return; it’s about understanding how different elements of the tax system affect your business. From the structure of your small business to identifying deductible expenses, we’ll break down the basics to help you manage your tax obligations more effectively.

Differentiating Business Structures For Tax Benefits

Choosing the right structure is crucial for new business owners. Whether you operate as a sole proprietorship, partnership, LLC, or corporation can significantly affect your tax rate and the amount of tax you pay. Each structure has its tax benefits and liabilities, so understanding which one aligns with your business goals can help lower your overall tax burden.

Written by TaxConnections Admin | Posted in Small Business Owner Tax Tips • TaxConnections

27 Mar 2024

Special Report: California Court Of Appeal On Sales And Use Tax On Cell Phone Sales

In a recent court case, the California Court of Appeal for the Third Appellate District ruled that purchasing “discounted” cell phones bundled with wireless services requires paying sales tax based on the cell phone’s full price.

The case in question, Bekkerman-v-CDTFA, was initiated by consumers who purchased discounted cell phones bundled with wireless services yet were charged tax on the full price of the phones. The consumers argued that the discounted price of the phones should have been used to calculate the sales tax owed.

During the hearing, the court specifically analyzed Regulation 1585. The regulation defines a “bundled transaction” as the retail sale of a wireless telecommunication device that contractually requires the retailer’s customer to activate or contract with a wireless telecommunications service for periods greater than one month as a condition of that sale.

Based upon this definition, the court sided with the CDTFA, holding that the phone’s full price should be used when calculating the sales tax owed. The court reasoned that retailers were effectively selling the phones at a discount to induce consumers to purchase wireless service and that the full price of the phones was, therefore, part of the consideration for the purchase of the wireless service.

This ruling was a significant win for the State and has important implications for California retailers. Retailers must be mindful of the taxation requirements of bundled sales, whether involving cell phones or any other type of products and services, and should seek guidance from a tax professional to ensure compliance with state and local tax laws.

Thompson Tax specializes in sales and use tax across many industries. Contact us today for all of your multistate and local sales and use tax needs. We are your Trusted Tax Advisor.

Have a sales and use tax question? Contact Nicole Brown.

Written by Nicole Brown | Posted in California Taxes • Sales And Use Tax Manufacturing Exemption

26 Mar 2024

Exploring Mexican Business Frameworks | An Investor’s Guide To Legal Corporate Entities

Mexico’s robust economic landscape and hospitable business setting establish an appealing choice for investors aiming to make their mark in the Latin American market. Understanding the various corporate legal entities available in Mexico is essential for making an informed decision when setting up a business from a U.S. and a Mexican perspective.

This article will address the types of Mexican corporate legal entities, namely the Sociedad Anónima, Sociedad de Responsabilidad Limitada, Sociedad Anónima Promotora de Inversión, and Sociedad Civil to guide investors through their characteristics, benefits, and legal requirements.

Sociedad Anónima

The Sociedad Anónima, is the most common corporate entity structure used in Mexico for business purposes. It is designated as “S.A.” for those with fixed capital. This structure is governed by the Ley General de Sociedades Mercantiles (“LGSM”). Depending on its capital structure, it may be identified as “Sociedad Anónima de Capital Variable” or “S.A. de C.V.” or for those with variable capital. Shareholders own its negotiable or non-negotiable shares, representing the company’s stock.

The defining features of a S.A. in Mexico offer a blend of flexibility and structure, catering to a wide range of business needs. These characteristics include:

Written by Stephanie Uribe | Posted in TaxConnections

26 Mar 2024

Challenges of Tax Exemptions

One of several features that make tax systems complicated are the numerous exceptions that pull out from taxation something that is part of the tax base for a particular type of tax. It is probably almost impossible to find any federal, state or local tax that doesn’t have some type of exception. A list of sales tax exemptions produced by the California Department of Tax and Fee Administration (CDTFA) lists 171 sales tax exemptions. All of them need a definition in the statute and often an explanation from the tax agency. This creates a lot of complexity because it is difficult to define most exemptions. For example, if a state wants to exempt food from sales tax but only healthy food, where does a “protein bar” full of sugar and not a natural item fall?

Our federal income tax law has Code sections 101 through 139I listing items of income, such as certain disaster relief payments, fringe benefits and gifts, that are income, but excluded from the measure of taxable income.A 2023 ruling in Iowa caught my attention as an example of the complexities of defining exemptions (Sweat Iowa LLC, No. 346007, 11/14/23). Iowa imposes a 6% sales tax on “enumerated services” which includes “all commercial recreation.” The term “enumerated services” signals that all potentially taxable services are not subject to sales tax. Generally, because a sales tax is imposed on personal consumption, everything that an individual purchases that is not for business use, should be subject to sales tax.

If the law in any state worked that way, the rate would be lower and the tax base broader (and mostly easier to define).For a sales tax (a tax on personal consumption), the only items that should be exempted medical services provided by a medical professional and tuition for a university or professional/job training.

In the Iowa ruling, the question was whether booking services for saunas with “science-backed technology of infrared (IR) and red light therapy(RLT) to optimize health and wellness” is “commercial recreation.”

Written by Annette Nellen | Posted in TaxConnections

22 Mar 2024

Treasury Secretary Yellen Addresses Global Minimum Tax Treatment Of The U.S. Federal-Level R&D Credit Program

On March 21^st, Treasury Secretary Janet Yellen indicated that she was optimistic that the U.S. would be able to maintain the value of its Federal-Level R&D Tax Credit Program that was originally introduced into the U.S. Internal Revenue Code under President Reagan’s Economic Recovery Tax Act of 1981 for companies conducting qualified R&D on U.S. soil, in the face of concerns that the new global minimum tax could compromise it. The Department of Treasury believes it has an opening to negotiate over the tax treatment of the U.S. Federal-Level R&D Tax Credit Program with countries moving ahead with the global minimum-tax agreement reached in 2021 by more than 140 companies under the Organization for Economic Cooperation and Development (hereinafter “OECD”), requiring companies to pay taxes at a minimum effective tax rate of at least 15% no matter where in the world they reside and conduct business. Companies are concerned that if the U.S. Federal-Level R&D Tax Credit Program reduces their effective tax rate below 15%, the requirement for companies to pay that minimum level of tax could essentially negate the benefits of the U.S. Federal-Level R&D Tax Credit.

Senator Todd Young (R-Ind.) challenged Treasury Secretary Janet Yellen on this issue during the hearing, saying President Biden’s administration and countries participating in the OECD agreement would completely “undermine important U.S. tax credit programs” such as the U.S. Federal-Level R&D Tax Credit Program. Senator Todd Young cited comments from the Department of Treasury earlier this week that legislation might ultimately be needed to address this matter.

Written by Peter J. Scalise | Posted in U.S. Federal-Level R&D Credit Program

22 Mar 2024

Grow Your Visibility: A Gift That Keeps Giving To Tax Bloggers

If you are a writer who enjoys publishing articles about tax topics, you will benefit from www.taxconnections.com growing readers of tax content. With constant changes in tax laws going on nationally and internationally, it is a good idea to publish your articles on a platform interested in reading them. Take a look at our site metrics at https://www.taxconnections.com/site-metrics to understand we have the audience interested in reading tax content. Whether you are a neophyte or an advanced writer, you grow your audience through your written publications. This is a fact!

TaxConnections has built an audience of tax professionals who write and provide updates on tax rules and regulations around the world, and taxpayers who want to be informed of tax updates. WE have a captured a audience of readers interested in tax articles. How do you get your articles published and distributed globally on TaxConnections? You simple join as a TaxConnections Member at this link: https://www.taxconnections.com/membership/sign-up and then send a message tous to post your blogs. One of the remarkable assets we provide our bloggers is a special link to all their blogs posted. For example, underneath the photo under every bloggers professional profile page is a yellow circle stating ” View My Blog”. You can see an example on my Professional Page: https://www.taxconnections.com/Kat-Jennings-CEO/12257589/United-States/California/California/profilepage. You can see all of your blogs ever posted and you can go to the bottom of each blog to see how many people have read each blog posted. The information is always there! We have found over time many blogs receive 6000 to 7000 views over a six month period. It is a gift that keeps on giving when you post your blog content on TaxConnections.

Whenever you want to educate your clients, simply send them the link that has every single blog posted and this will educate clients on your expertise, Posting your articles on TaxConnections is a fantastic way to promote yourself and your tax expertise. Tuesday through Fridays, TaxConnections distributes your blogs more than one hundred thousand times weekly, or 5.2 millions distributions of blogs annually. This has a great uplift of your online visibility.

Start Your Membership Here: https://www.taxconnections.com/membership/sign-up

Start Here To Send Us A Message About Your Blog Being Posted: kat@taxconnections.com

Start Growing Your Audience Today

Written by Kat Jennings | Posted in Tax Blogger Distribution Channel

22 Mar 2024

Offsetting Section 174 R&E Software Development Tax Liability With R&D Tax Credits

Section 174 Changes Impact R&D Tax Credits For Software

The new changes to Section 174 have a significant impact on software development costs. For tax year 2022, any cost that has been paid or incurred related to software development is now considered a Section 174 R&E expenditure. This means it must be capitalized and amortized over 5 years (15 years for foreign software development).

Many favorable provisions are made temporary due to the budgeting constraints of Congress, making yearly extensions normal and expected. It is important to note that the research expenses being addressed by this provision in the TCJA are not just the same as those provided for in the R&D tax credit rules. These general research costs are much broader.

If the current unfavorable tax treatment of research expenses does not get fixed, companies could see larger tax bills and therefore need the benefits of R&D tax credits even more.

Which Software Development Costs Fall Under The New Section 174 R&E Amortization Rules?

While guidance related to what costs constitute Section 174 Expenditures is still vague, potential expenditures can include:

Written by TaxConnections Admin | Posted in TaxConnections

22 Mar 2024

Navigating A Sales Tax Audit: A Comprehensive Guide To Protecting Your Business

If you’re reading this, you’ve probably received a letter of audit from a government entity. You’ve also likely now gotten over your initial anxiety and are looking for help with the next steps. You’re in the right place – we’re here to tell you that there’s no need to panic.

So, what exactly is a sales tax audit? And what can you expect?

Definition Of A Sales Tax Audit

A sales tax audit is a rigorous examination conducted by state taxing authorities to review a business’s sales tax returns, financial records, and transactions. The primary objective is to ensure compliance with applicable tax laws and regulations regarding the collection, reporting, and remittance of sales tax.

We know, sounds scary. But we can help you navigate the process successfully. In this guide, we’ll unpack various aspects of sales tax audits, including triggers for audits, documentation requirements, strategies for responding to audit findings, the role of tax professionals, and the possible consequences of an unsuccessful audit.

Here’s what you can discover:

Understanding Sales Tax Audits

Triggers for a Sales Tax Audit
Types of Sales Tax Audits
Common Misconceptions about Sales Tax Audits

Responding To Audit Findings

The Audit Process: From Notification to Resolution: Gain insights into the audit process, from receiving a notification to resolving discrepancies and finalizing outcomes.
How to Handle Audit Findings: Explore strategies for addressing audit findings effectively, including reviewing and collaborating with tax professionals.

What Happens If Your Sales Tax Audit Is Unsuccessful?

An unsuccessful sales tax audit can result in financial penalties, interest charges, additional tax assessments, legal actions, and reputational damage, all of which can have significant consequences for businesses.

Written by Monika Miles | Posted in TaxConnections