Alerts & Bulletins
Congress Imposes a 2% Excise Tax on Certain Foreign Contracts
On January 29, 2013, the Federal Acquisition Regulation (FAR) Councils partially addressed the contractual implications of the James Zadroga 9/11 Health and Compensation Act of 2010 (P. L. 111–347), which was signed into law and effective on January 2, 2011. Section 301 of the law amends the Internal Revenue Code of 1986 by adding Section 5000C, Imposition of tax on certain foreign procurements (26 U.S.C. §5000C). This new section imposes on any foreign person that receives a specified Federal procurement payment a tax equal to 2 percent of the amount of such specified Federal procurement payment. Additionally, the law stipulates. Read More.
State Taxation of the Government Contractor
The United States has steadily evolved into a multistate, service-based economy, and the roles of many industries have followed the same path. This is particularly true of government contractors, which tend to do business in more than one state, and thus are typically subject to corporate income/franchise tax in multiple states. In the present economy, states are striving to tax more revenue; however, each state still faces two important limitations on the amount of revenue it may tax. First, a business must have a sufficient contact in a particular state, known as “nexus” to be subject to taxation. Second, in. Read More.
Document Travel Costs
Recently, we have seen an increase in auditors questioning travel costs. The auditors do not believe that the travel costs are properly documented in accordance with the Federal Acquisition Regulation (FAR). In this article, we will discuss the two most common deficiencies that the auditors have cited. First is compliance with FAR 31.205-46(a)(7), which states that: Costs shall be allowable only if the following information is documented – (i) Date and place (city, town, or other similar designation) of the expenses; (ii) Purpose of the trip; and (iii) Name of person on trip and that person’s title or relationship to. Read More.
New Employer Securities Clearance Costs (ESCC) Tax Credit
Beginning in 2013, Maryland individuals and corporations are eligible to claim a nonrefundable income tax credit against Maryland income taxes for qualified expenses incurred to (1) obtain federal security clearances and (2) construct or renovate certain sensitive compartmented information facilities (SCIFs). The available ESCC tax credit depends on the amount of eligible expenses and costs incurred. Credit for Security Clearance Administrative Expenses The maximum credit is $100,000 per taxpayer. Examples of qualified security clearance expenses include: Administrative expenses such as processing application requests for security clearances for Maryland employees (wages and salaries for employees are not eligible) Employee trainings in. Read More.
IRS Issues Final Report on College and University Compliance Project
As part of its College and University Compliance Project in 2008, the Internal Revenue Service (IRS) sent questionnaires to 400 randomly-selected colleges and universities. Based upon questionnaire responses which indicated potential noncompliance in the areas of unrelated business income (UBI) and compensation, the IRS selected 34 schools for examination. More than 90% of the examinations have been completed, and the IRS has issued the long-awaited final report. Highlights from this report are summarized below. Underreporting of Unrelated Business Taxable Income Examinations resulted in increased UBI totaling $90 million for 90% of the colleges and universities. Primary reasons for this increase. Read More.
American Taxpayer Relief Act Shapes 2013 Cost-of-Living Adjustments
In October 2012, the Internal Revenue Service (IRS) released the 2013 cost-of-living adjustments for retirement plans. The IRS waited to release most other amounts until the fates of many expiring or expired tax provisions were settled. The American Taxpayer Relief Act of 2012 (“ATRA” or the “Act”), signed into law on January 2, 2013, extends or makes permanent many provisions, and the IRS has since released the remaining inflation-adjusted amounts for 2013. Individual Income Taxes Ordinary income tax rates (except for the 15% rate) were scheduled to increase in 2013, but ATRA makes 2012 rates permanent for most taxpayers. The. Read More.
Survey: Local Governments Face Challenges in Downturn, Look Cautiously to Recovery
A recent study conducted by Cherry Bekaert compared data aggregated from 200 government operational and financial leaders throughout the Southeast. The 2013 Cherry Bekaert Local Government Benchmarking Survey captured information on significant trends, timely issues and future concerns for government entities in a wide range of sizes, types and localities. Survey results showed a trend toward strengthening entities, while also displaying concern for continued recovery in coming years. Respondents show that, generally: Salaries are trending up, while staffing cuts are trending down Intergovernmental dependency is a here-and-now disclosure issue Social media is becoming more and more a part of everyday. Read More.