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Tag Archive for sales tax consultant

How CPAs Can Thrive Because of ObamaCare

By Andrew Johnson

Gun shops have reported that sales of guns are skyrocketing. They call President Obama the greatest gun salesman who ever lived. To people who fashion themselves “defenders” of the Second Amendment, President Obama’s calls for a “thoughtful” discussion on a reduction in “gun violence,” is really the sounding of an alarm. (Full disclosure: friends have labeled me “Second Amendment Man” — maybe a not-so-subtle hint that it’s ok if I talk about something else once in a while?). But anyway, for those people, the (knee-jerk?) response has been to head to the gun shop and get more guns before it’s illegal. In fact, for good or bad, depending on your point of view, the President has made a huge difference (if not a reduction) in the supply of guns. At least in the short term, business has been great for gun shops. They can thank President Obama for the boost.

Ask Not What You Can Do For ObamaCare, Ask …

For purposes of this article, let’s not get bogged down in a debate over whether the Patient Protection and Affordable Care Act is good or bad policy. Full disclosure: I don’t believe ObamaCare is good for our country or for businesses that create jobs that allow folks to provide for themselves and their families. But for now, it is the law in our great nation and we have to deal with it ourselves and help our clients deal with it too. Well, here’s one way we can help our clients.

The Wall Street Journal had a fascinating opinion piece about “Going Protean” recently. Paul Christiansen writes: “How big can a company get with just 50 employees? We’re about to find out. Thousands of small businesses across the U.S. are desperately looking for a way to escape their own fiscal cliff. That’s because ObamaCare is forcing them to cover their employees’ health care or pay a fine—either of which will cut into profits and stymie future investment and growth.”

The 50-employee limit before the federal health care law kicks in is bound to have an effect on how companies structure themselves. It will likely force companies near that threshold to examine exactly what is their core competency and then to outsource all other functions. I think of it like a roster for a football team. If you are limited to 50 by league rules, then you have to decide how many running backs you can keep, how many kickers, who can contribute on special teams and play other positions, who you want to keep because they are developing stars, etc. You really have to be strategic.

Paul continues: “‘Going protean’ offers a better strategy for many businesses. Owners of protean companies create a core of strategic employees who manage the big-picture elements of the enterprise—the culture, business model, product mix, vision, strategy, etc. This core then outsources the business tasks to other corporations.

“Non-core tasks could include things like accounting, marketing, product development, manufacturing, IT, PR, legal, finance, etc.”

So there you have it. We, as CPAs, can help companies survive and thrive, even in this environment as businesses face potentially devastating, government-imposed costs. We can help them stay focused on strategy, vision, product mix, and profits by outsourcing their non-core functions.

As companies look to work with the rules they’ve been given, “going protean” may be the only solution they have. CPAs are in a perfect position to help here. Most CPA firms can handle any of the accounting functions for their clients. Most CPA firms can handle all of their client’s federal or state income tax compliance. As ObamaCare is fully phased-in, the 50-man roster will become a huge issue. Each of the 50 slots at a company will be extremely valuable. CPA’s can help clients free up one or more of those valuable 50 slots.

Gun shops can thank the President for the temporary shot in the arm boosting their business. Perhaps, before all is said and done, CPAs will look back on ObamaCare as the “CPA Full Employment Act.”

Most CPA firms do not perform sales tax compliance. This is where we shine. This is how we mesh so well with other CPA firms. PJCo is a registered CPA firm but we do not perform any of the traditional CPA firm functions. We limit our practice to state and local tax consulting and sales tax compliance. We can work with CPAs and help their clients outsource the sales tax compliance function. Working together we can help our client free up one or more of those valuable 50 slots.

“Words Have Meaning — Especially Statutory Words”

By Michael J. Fleming

One of my mentors constantly reminds me that, “We are accountants; words have meaning.” My immediate response is to usually think that, “if we were not accountants would words not have meaning?” However, once I get past my sarcastic thoughts, I realize that he is challenging us to be more precise and succinct in our writing and to not just read surface meanings but to really analyze the words for alternative meanings. Looking for alternative meanings is especially important when it comes to state tax audit defense. Since you can’t change the facts, you sometimes have to change the argument.

This concept was illustrated quite pointedly in the recent decision of Van Horn v. Alabama Department of Revenue, Alabama Department of Revenue, Administrative Law Division, No. S. 12-863, January 3, 2013. In this case, the taxpayer or his employees traveled throughout AL to take photographs which were later developed at the home office and sent to customers by common carrier. The taxpayer also made in-person phone calls. The DOR examiner assessed the taxpayer for the local taxes based on the sales and photographing visits. The administrative law judge agreed that it could be argued that the taxpayer had purposely availed himself of the economic market and met the conditions of Quill. However, Quill did not apply because the DOR had not updated its regulations concerning local nexus. Basically the only activity that mattered was solicitation and the taxpayer actually traveled into four jurisdictions to solicit sales. However the Administrative Law Judge (ALJ) found that this was still not enough to create nexus. His reasoning was that the statute read “salesmen” while in the taxpayer’s case there was only one “salesman”. He clarified that since the state only used the plural form, the regulation anticipated multiple sales people and therefore the taxpayer did not have nexus.

Words have meaning! In this case the state failed to update its language to be more encompassing and capture the implications of Quill as well as using only the plural form of a word. What great illustrations! We don’t suggest taking this approach when doing tax planning but when you find yourself in an audit situation having someone who can think outside the box is invaluable. My mentor constantly forces us to do so.