A Sharp, Pointy Pencil

Posted on 02/18/2012 by Administrator

Back to the Basics… PLUS.

As a CPA, my business rests on the tip of a sharp, pointy pencil. Despite a plethora of tech-tools, there is something about picking up a pencil that connects my brain to a spreadsheet, and gets my investigative thinking in gear. I do have three additional tools-of-the-trade that I couldn’t be without. These tools range from mundane to ‘sexy’ and I can no longer imagine working with clients without them…

1) A four column pad of paper. This type of pad inspires my creativity. Researching a tax issue using a four column pad gives my brain time to catch up and process the facts.

2) Tablet. A tablet offers extraordinary internet flexibility anytime I’m away from my desk,  and can even connect from my tablet back to my office computer via a ‘cloud’ app. My personal preference? After using both the iPad and the ASUS Android-based tablet, the ASUS was my clear winner. Why?

  • It hooks securely to an optional keyboard
  • It provides ports for a regular SD card (memory card for storage data), a 2 GB mini SD card, and a USB port for flash-drives
  • It contains 2 cameras

3) Smartphone. I use the Android-based Samsung Galaxy. I have a love / hate relationship with my smartphone, as I’m sure many of you do, too. I appreciate the ever-present connectivity to the internet, but I find it takes a lot of discipline to ‘un-plug’ myself from this addictive tool when I need to switch gears at home to down-time.

There are many other work-related tools I use in the course of a day, or while working on a tax project, but the tools I listed here can (and do) run my business with me.

What about you? What can’t you work without???

Sam

PS. Here’s a special tech-tool shout-out to an old reliable: PowerPoint, which helped me immensely at the recent MACPA CPE Mega Conference for Industry…


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What Gets Governor Snyder Excited?

Posted on 02/10/2012 by Administrator

QUOTE OF THE DAY

“I’m a CPA. For me to get excited about a budget is easy.”

- Gov. Rick SNYDER as he began his Fiscal Year (FY) 2013 budget presentation before a joint session of the House and Senate appropriations committees.

Yes, CPA’s are a very special breed of people. Not everyone can get excited about completing a budget, or a tax return or a balance sheet. But WE can!

Nothing quite satisfies a CPA as finalizing a tax return – getting your client’s signature and putting your name on it – knowing you have looked at each and every number on the forms for accuracy, deductibility, credit worthiness.

Pushing the ‘SEND’ button to transmit that return to the authorities, and helping your client recover overpaid taxes.

Finding an unusual credit lurking on a form that you have never used before, successfully employing it and making the day for your client!!  Yes, for me to get excited about a budget is easy!

Sam

REMINDER: Property tax payments and filing of 1099 reporting to IRS are due the end of February

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SUPERBOWL Monday: It’s Halftime in Michigan!

Posted on 02/05/2012 by Administrator

As Clint Eastwood said in his now-famous “It’s Halftime in America” commercial:

“All that matters now is what’s ahead. How do we come from behind? How do we come together? And how do we win?… It’s Halftime, America. And our second half is about to begin.”

Well, it’s definitely the second half here in Michigan. With the new Corporate Income Tax structure in place, and the new Property Tax structure in the wings, we are all set to move our state forward. These new laws are going to bring Michigan back… they are lowering the burden of tax on all businesses, and everyone will benefit.

It’s Halftime in MICHIGAN!


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Better Than the Beach…

Posted on 02/02/2012 by Administrator

The MACPA is going… tropical?

JOIN ME at the Winter CPE Mega Conference for Industry on February 16, and I will help you get a head start on tax planning under the new Corporate Income Tax rules. My “CIT – 40 Days In” session clears up emerging (or lingering) problem areas with the CIT, while providing all attendees with a margarita and Jimmy Buffet music. Or, maybe, just some good solid tax info you can take back to the beach – er, office.

Click HERE for Event Brochure

The CIT - 40 Days In

WINTER CPE MEGA CONFERENCE FOR INDUSTRY
Thursday, February 16, 2012
MSU Management Education Center, Troy, MI

Who Should Attend:
Business & industry professionals

Recommended CPE Credit:
8 hours (includes Accounting & Auditing and Ethics)

Program Perks:
Continental breakfast, am/pm refreshments, group luncheon, cyber cafe and course materials/supplies

Program Attire:
For your comfort, casual attire is welcome. We recommend using the “layered method” to give you flexibility to adjust to the room temperature.

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Confused? MI Business Tax Will Do That To You…

Posted on 01/17/2012 by Administrator

While Lansing decides exactly what the new MI Business Tax Law means, I can offer you a quick overview of its current interpretation. The MI Business Tax Notice created considerable confusion among tax practitioners when it was announced in November, and  many unintended consequences have been uncovered. Clarification is on the horizon… until then, CLICK this LINK to meet the MBT.

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Software as a Service #SaaS Is it taxable or what?

Posted on 07/24/2011 by Sam Hodges

This is turning into a huge issue and most people don’t even know about it.

Let’s look back at an example and I’ll show you what I mean.  I have a small company that processes payroll including checks and deposits for 10 small companies.  My clients would fax in their hours and all of my payroll clerks perform all of the duties manually with calculators and check registers.  For this service my company charges a fee.

Most states would agree that this is a “service” and if they don’t tax this type of service – it wouldn’t be subject to sales / use tax.

Now let’s say I hired a professional that created a website that would allow my clients to directly enter their hours and my website would perform all of those duties I used to have several clerks perform.  The same thing is being done.  It is just being done a little differently.  My clients ‘log-on’ to my site using their browser.  They don’t have download any software or anything.  I am saving a lot of money by not having all of those clerks – but I am paying my web professional very well.

 

Is this a service or now is it the licensing of software?  Would you say this is any different than before?

 

Does it matter where my server is?

What if my company is in Ohio but my clients are in Michigan and Indiana?

 

I can tell you what Michigan Department of Treasury thinks – They are looking through your web browser to the server where ever it is and saying YOU ARE LICENSING THE USE OF SOFTWARE AND SUBJECT TO TAX!!!  Even if your users are located in different states – MICHIGAN WANTS IT ALL!!!! At 6% no less.

 

If you want to know how to defend against this – you better have your ducks in a row and make sure you know what kind of agreement you are signing – License Agreement or Per User Fee

 

 

 

Posted in Sales and Use Tax | Tagged , , , , , , , , | 2 Comments

Michigan Disconnects from Multistate Tax Compact Apportionment

Posted on 05/31/2011 by Sam Hodges

Taxpayers Must Use the Single Factor Sales Apportionment

Public Act 40 of 2011, signed May 25, 2011 and retroactive to January 1, 2011, provides that taxpayers subject to the Michigan business tax, the corporate income tax, the franchise tax on financial institutions, or the personal income tax are required to apportion or allocate their income according to the state law provisions and not the Multistate Tax Compact provisions. Previously, taxpayers could choose to apportion or allocate their income under either the applicable state law or the Multistate Tax Compact provisions. The Multistate Tax Compact provides for an equally weighted apportionment factor consisting of property, payroll, and sales. Michigan law requires apportionment based on a 100% sales factor.

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Michigan Corporate Income Tax – Michigan’s New Budget

Posted on 05/31/2011 by Sam Hodges

Michigan’s new Governor has unveiled one of the most profound budget for all to see.  As he said in his campaign, I will repeal the convoluted Michigan Business Tax and replace it with a simple, corporate income tax at a flat 6%.

Being a man of his word, that is just what he has proposed.  However, in order to pay for the much needed business relief which reduces the State’s revenue by $1.8 Billion, the two largest adjustments that will hit most seniors living in Michigan is the taxation of Pensions (whether Public or Private) and the modifications to the Homestead Property Tax credit.

We did a brief analysis of these changes and the tax effect is roughly 2% or approximately $250 for a single individual with $12k in pension and $15k in SS.  If you include the credit effect which is refundable the result is slightly below 2% but the overall reduction in cash back to the taxpayer is approximately $450. (?)  Well, that definitely would mean those seniors would bear some pain – the least of which who could afford it.  Unfortunately.

I haven’t seen the numbers to find out what is being projected to be income from this adjustment (pensions) but it appears to us that a better way to handle the generation of revenue is for those individuals that are getting the new jobs and working for the new companies that are going to be coming to Michigan because of the now extremely favorable tax climate, making money, would be a little better able to pay.  I don’t know if that means a 1/2% increase in the rate or a 3%.  What I do know is those on a fixed income with increasing medical costs and food costs (generally referred to as inflation) but on a fixed income may or may not have an ability to make more money to offset the increase.

Food for thought.

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Michigan Corporate Income Tax

Posted on 01/28/2011 by Sam Hodges

Michigan has drafted the “New Business Tax” and it is titled – “Michigan Corporate Income Tax”.  Well, that isn’t exactly new.  Michigan had a corporate income tax until 1975 when they installed the new and improved Single Business Tax – whereby they combined 7 different taxes – including the corporate income tax.  Everyone loved it – now they only had to calculate one tax!  Well, since it was easily modified and what legislature could leave anything alone.  Now it looks like we are going back to several different taxes – starting with the Corporate Income Tax.

MCL 208.xxxx will be the cite and it contains a significant amount of information not too dissimilar to the Michigan Business Tax.  Although it is not clear, the tax appears to apply to tax years 2012.

Chapter 1 – Definitions

Chapter 2 – Nexus – retains $350k benchmark at 6% of apportioned Corporate Income

Chapter 2A – Insurance Companies

Chapter 2B – Financial Institutions (Banks)

Chapter 3 – Apportionment

Chapter 4 – Small Business Credit – ONLY ONE CREDIT

Chapter 5 – Administration – estimated payments etc.

For more information – contact us at (248) 327-6430 or Sam.Hodges@HodgesLLC.com

Posted in Administration, Income/Franchise Tax, Michigan, Michigan Business Tax, Single Business Tax | Tagged , , , , , , | Leave a comment

Tax Opinions – Do you have yours ready?

Posted on 01/20/2011 by Sam Hodges

The Michigan tax landscape is about to change and for good reason.  However, taxpayers will still be liable for the MBT for 2008, 2009, 2010 and presumably 2011 until the changes take effect.  That means taxpayers taking positions had better have all of their ‘t’s crossed and their ‘i’s dotted or their going to be surprised when Lansing comes knocking – and they are already sending out invitations – you could be next to the dance.

What you should have in your files should support your tax filing positions – for UBG Unitary Business Group and Apportionment at a minimum.  They need to outline who, what, where and why – the companies should/should not be included in UBG or how the sales are sourced and arrived at – AND they should include the language of an opinion.

If you don’t have these in your files – you should contact us right away.

The standards for the opinions are (from a recent Forbes Magazine article by Robert Wood in CA)

Opinion Standards. Tax opinion standards vary, but generally conform to one of the following choices:

  • Not frivolous = There’s a 10% to 20% chance your argument will prevail.
  • Reasonable Basis = There’s a roughly one in three chance you’ll win.
  • Substantial Authority = There are cases both ways, but there’s probably about a 40% chance you’ll win.
  • More Likely Than Not = The odds are better than 50% that you’ll win.
  • Should = It’s about 60% likely that you’ll win.
  • Will = Your tax treatment is nearly assured.

If you need assistance or want more information please call us at (615) 669-3637

Posted in Administration, Income/Franchise Tax, Michigan Business Tax, Sales and Use Tax, Single Business Tax | Tagged , , , , , , , | Leave a comment