Joint ventures offer several potential advantages. They enable smaller construction companies to take on large projects while dividing the contractual and financial risks of such projects. Further, those projects could be in geographic locations that you otherwise would not be able to access. A joint venture can also enable you to increase your bonding capacity, provide an opportunity to learn about more sophisticated technologies, and access other contractors’ relationships.
Many business owners know that when they acquire another business entity that they will be assuming any potential tax liabilities of the acquired business, known as, “successor liability.” But Texas laws also allow for successor liability even if you purchase some — but not all — of another company’s assets. It is therefore important to make sure that you are aware of these laws, and how to avoid the most common pitfalls.
Not-for-profit organizations (“NFPs”) may not realize that operating outside their home state may create regulatory and tax compliance responsibilities. States have a vested interest in making sure that NFPs are operating for their intended charitable purposes, and are not fraudulently soliciting its residents for donations.
In the wake of the recession, states and municipalities are seeking to boost revenue by prioritizing the collection of taxes from out-of-state companies. Some states have even created new departments devoted exclusively to finding out-of-state companies that should be paying taxes but are not. For example, the Texas Comptroller’s Office has a department focused on such companies, known as the Business Activity Research Team, or “BART.” States are also taking advantage of cross-border agreements with other states’ departments of revenue to share information and are collaborating with federal customs agents. While it may be difficult to determine whether your activity in other states triggers a tax liability (i.e., if you have “nexus”), ignorance is no defense and the penalties for noncompliance can be steep, making this a critical issue for small businesses.
Topics: Manufacturing & Distribution
The Texas Comptroller's Office is offering taxpayers a sales tax holiday between 12:01 A.M. on Saturday, April 23, and midnight on Monday, April 25, for purchases of certain emergency preparation supplies. During the sales tax holiday, those items may be purchased tax-free without limit and with no need for an exemption certificate.
Topics: Accounting Tips
Does your company operate in multiple states? If so, you may owe state and local taxes to some of those states, even if you do not realize it. While it may be difficult to determine whether your activity in other states triggers a tax liability, ignorance is no defense, and the penalties for noncompliance can be steep, making this a critical issue for small businesses.
The following list identifies the eight states offering an amnesty program in 2015, the amnesty period duration and the percentage of penalties and interest that would be waived:
1. Arizona: 9/1/2015 – 10/31/2015 (100% penalty/100% interest)
2. Indiana: 9/1/2015 – 11/16/2015 (100% penalty/100% interest)
3. Kansas: 9/1/2015 – 10/15/2015 (100% penalty/100% interest)
4. Louisiana: To be determined but before the end of 2015 (33% penalty/17% interest)
5. Maryland: 9/1/2015 – 10/30/2015 (100% penalty/50% interest)
6. Missouri: 9/1/2015 – 11/30/2015 (100% penalty/100% interest)
7. Oklahoma: 9/14/2015 – 11/13/2015 (100% penalty/100% interest)
8. South Carolina: TBD
Taxpayers should be careful before moving forward with an amnesty request. On one hand, these programs generally only last for a few months so it is important to act quickly. Some states will even impose greater penalties on taxpayers who fail to take advantage of their amnesty program. On the other hand, states typically require full payment of any amount due, so taxpayers should consider whether they can afford to make such potential payments (some states offer installment payment plans). Similar relief may be available under a voluntary disclosure agreement, minimizing the benefit of an amnesty program.
Under the right circumstances, amnesty programs offer great benefits to taxpayers who have not previously been in proper compliance. Please contact Jon Wellington at LGT for more details at (214) 461-1430 or firstname.lastname@example.org.
A recent court decision could allow auto dealers and other taxpayers who perform installation services to increase their cost of goods sold deduction (“COGS Deduction”) for Texas franchise tax purposes, thereby reducing their future franchise tax liability and also presenting a refund opportunity.
If you have not paid all of your Texas sales and use taxes, chances are, the Comptroller’s Office will let you know about it. However, when you pay too much sales and use tax, no one is going to tell you. To identify overpayments and seek reimbursements, companies should consider conducting a “reverse audit,” whereby it audits its own records looking for overpayments of sales and use taxes.
Take Advantage of Tax Exemptions
While many companies have sales and use tax compliance systems in place to prevent overpayment of sales and use tax, such systems need to be frequently reviewed to ensure that they are working properly. Business expansion or downsizing, employee turnover, or even just human error can compromise the safeguards you have in place, resulting in overpaying sales and use tax.
The majority of overpayments come from unclaimed tax exemptions. With a combined sales tax rate in Texas typically exceeding 8%, it can be well worth your time to ensure that you are claiming all of the exemptions that you are entitled to receive. For example, manufacturers are exempt from sales tax imposed on their manufacturing equipment and related replacement parts and utilities. Beginning in 2014, Texas also offers an exemption for certain research and development expenditures.
1. All Texas 2014 state, local city, county and special purpose sales/use reports, including monthly, quarterly and annual reports, for month or year-end December 31, 2014 must be mailed and post marked on or before January 20, 2015.