The Crayon Chronicles

The end of the 2012 calendar tax period is near, and this is the time to get ahead on your company’s year-end income tax work … or, at the very least, assess the potential tax payment pitfalls that may lurk around the corner. Often I receive questions this time of year regarding how to go about planning for your corporate tax liability or inquiring whether or not any tax payments need to be made before year end. In general the IRS requires corporations to pay in its proportionate share of …

If you file a combined Texas franchise tax return for 2012 you are also required to file a Common Owner Information report online.  This new reporting requirement for 2012 doesn’t seem to have been publicized in advance; instead, taxpayers are now receiving notices that their 2012 franchise tax report is not complete because the online Combined Group Common Owner report was not filed.  If you do not file this online report, your account is not considered to be in good standing with the state of Texas until the online filing is complete. …

If you believe recent press articles, Starbucks may be in hot water in Britain! Reuters recently published an article indicating that Starbucks is paying less than their fair share of U.K. taxes. The assertion was based on the fact that Starbucks has been wildly profitable in the U.K. – at least according to what Starbucks is telling inventors.  Their tax returns, on the other hand, apparently present quite a different story – the Company has reported tax losses for at least the past three years. The article has stirred up …

The electronic age is upon us, and the phenomenon of automation is becoming more unavoidable.  Paying your business’s income tax has moved in this direction with the Internal Revenue Service no longer offering companies the ability to make federal tax deposits by paper coupon through financial institutions as of January 1, 2011.  This has tripped up small businesses, which have been accustomed to paying taxes with payment vouchers. It’s time to go electronic — and the process is not as complicated as it may seem.  The IRS has set up …

Over the past few years, many states have started requiring corporations to make their tax return and estimated tax payments via electronic funds transfer (EFT).  Some states send warning notices informing taxpayers that their corporate tax payments need to be made via EFT.  Other states just send out penalty notices when the corporation fails to make a payment by EFT. As a general guide, the following states require EFT payment of corporate tax return amounts liabilities or estimated taxes for taxpayers whose tax payments exceed a certain threshold:  Alaska, Alabama, …

Considering the recent enactment of the Foreign Account Tax Compliance Act (FATCA) in 2010 as part of the Hiring Incentives to Restore Employment (HIRE) Act, last month’s decision by the Court of Appeals for the Fourth Circuit came to a troubling — but, in my opinion, correct – conclusion, at least as it applies to the instant case. Overturning the trial court, the three-judge panel held a taxpayer responsible for information reported in his tax return.  They concluded that a taxpayer who signs a tax return cannot claim innocence for not …

The Internal Revenue Service published new proposed regulations under Internal Revenue Code Section 274, Disallowance of Certain Entertainment, Etc., Expenses.  Treasury Regulation Section 1.274-2(f)(2)(iv), while expanding certain definitions and documentation requirements, does not materially alter the intuitive conclusion that only the taxpayer bearing the ultimate burden for an enumerated expense is impacted by the statutory limitations on deductions. It will, however, likely change the negotiation of contracts between service providers and their clients. Employers with employees who routinely travel in the provision of services to third-party clients, wherein the employer …

Form 5471, titled “Information Return of U.S. Persons with Respect to Certain Foreign Corporations,” is the form a U.S. owner of a foreign corporation uses to report the activity of a foreign entity for a tax period.  In recent years the IRS has beefed up its focus on this reporting requirement and has been asserting massive penalties when the form is filed late or incorrectly. The IRS has the right to assess a civil penalty of $10,000 to $50,000 per Form 5471 that is filed late or deemed to have …

Today I read an article in the New York Times titled “Bad Grades Are Rising for Auditors.” The piece raises a concern I have trumpeted for many years: Audit firms are not immune to quality issues. In the article, author Floyd Norris compares the conduct of an audit with the manufacture of a car.  He aptly points out that consumers will notice inferior quality in a car, but have little ability to evaluate the quality of an audit.  He says: “If a company’s books were actually pristine, so that a …

The pharmaceutical industry’s sales of branded prescription drugs are a multi-billion dollar industry that has recently been thrown a monkey wrench from the U.S. Supreme Court. In June of 2012, the Supreme Court found President Obama’s 2010 Patient Protection and Affordable Care Act (the ACA) to be constitutional. The ACA contains a fee for companies that sell branded prescription drugs registered with the FDA to certain federal agencies. Collected fees are credited to the Medicare Part B trust fund, and the new fee is intended to make drug companies help …