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Dividend payments are suddenly a hot topic with taxpayers, and practitioners may face some complicated explanations and disappointed clients when it becomes clear that some things really aren't dividends for tax purposes -- despite being labeled as such on statements from money market and bond funds and other kinds of investments. CCH's principal analyst for federal taxes, Mark A. Luscombe, J.D., LL.M. and CPA, points out in the latest issue of TAXES: The Tax Magazine that the question of what is and isn't a dividend has not been a critical tax issue since the Tax Reform Act of 1986. But the recently enacted Jobs and Growth Tax Relief Reconciliation Act of 2003 now makes it required knowledge for tax practitioners. Among income labeled as dividends that will not qualify for the new tax-favored treatment are interest payments from money market and bond funds, S corporation distributions to shareholders, most REIT distributions, some dividends from foreign corporations, and retirement account distributions. Many clients seeing the word "dividend" on their statements will think this income is subject to the reduced rates, so be prepared. For more information on how to make the correct determination about dividend income and also on measures already being proposed to ease the confusion, click here for Luscombe's full article. |
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Related Titles to this Article: |
Investments and Taxes: A Practical Guide for Financial Advisors
1040 Preparation
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Your company (or your client's company) may do business in dozens of states although you only collect sales and use taxes in a handful where you have offices or some other physical presence that requires you to comply with sales tax requirements. Yet, some of your customers complain about having to file use tax returns because of purchases they make from you. It could be worth your while from a business standpoint to voluntarily register to collect taxes in those states even though the states can't legally require you to do so -- right? Maybe, but maybe not, according to the tax experts interviewed by CCH's editors for a recent article in Sales & Use Tax Alert. Stepping up to voluntarily register could put you squarely in the crosshairs of overanxious state tax auditors who assume you must have something to hide. Nexus actions could follow and your company's attendance at trade shows, service calls and salesmen visits could all subject you to the full range of penalties, interest and back taxes that the state can throw at you. And what if you want to de-register in that state at some point? What seems so simple on the surface could have serious consequences for tax professionals who don't understand all the potential angles. To read about the plusses and minuses of voluntary registration for sales tax collection in other states from the full article from Sales & Use Tax Alert, click here.
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Related Titles to this Article: |
U.S. Master Sales and Use Tax Guide, 2003 Edition
Sales and Use Tax Nexus: Practical Insights and Strategies
Sales and Use Tax Exemption Certificates, 2003 Edition
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Being prepared is the only way to face a sales tax audit, especially if you know the state is going to use statistical sampling to make the process more manageable, according to Will Yancey, Ph.D., CPA, in CCH's new book, Statistical Sampling in Sales and Use Tax Audits. Yancey advises that you examine your records before the auditor arrives and note any potential problems. Then you should either settle those problems in advance or discuss them with the auditor to work out a solution in a way that builds trust between you and the auditor. You may have accounting error corrections to deal with, duplicate tax accrual errors or erroneous data that could make the statistical sampling process more challenging. Get those issues out in advance and let the auditor know what to expect. At the same time, Yancey advises taking a close look at the sampling methods to make sure the auditor is getting a true reflection of your company's transactions. Are some types of transactions being excluded? If so, are those the kind that might be more likely to result in errors in your company's favor on audit? Yancey takes apart the sampling process and reveals the pitfalls and opportunities that can come from a solid understanding of this complex field. Click here to read a full chapter from the book or click here for a detailed table of contents. |
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Related Titles to this Article: |
Sales and Use Tax Desk Reference Set
Understanding and Managing Sales and Use Taxes
Surviving a Sales and Use Tax Audit
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It's a tough world out there for tax practitioners and firms. Even with the wealth of tax planning opportunities in the recent tax legislation, you can't with complete certainty count on even your most long-standing clients to turn to you for assistance, according to Allan D. Koltin and Tim Noworyta in a recent issue of The Journal of Tax Practice Management. In fact, these two leading consultants on marketing for accounting firms say your best clients may already be the target of another firm. What you need is a marketing plan. Their recent article provides you with a five-step program for getting started on your winning track to keeping your clients while gaining new ones. For example, a Boca Raton, FL, firm is already promoting its ability to help clients with the new tax laws with the following:
- E-mail announcements of tax law changes that were sent May 29.
- A tax law summary mailing to all tax clients.
- Seminars for staff followed by a public tax seminar that was promoted to all names in the five-partner firm's database.
- Tax newsletters bought from an outside firm and personalized for the firm that are sent to 1,000 clients, referral sources and other contacts.
- A letter encouraging year-end tax planning that will go out with the fall issue of the newsletters.
Click here for the full article on making the most of the new tax laws in building your practice.
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Related Titles to this Article: |
Seminar Presentation Kit for the Jobs and Growth Tax Relief Reconciliation Act of 2003
Highlights of the Jobs and Growth Tax Relief Reconciliation Act of 2003
Kess on the 2003 Tax Legislation: Insights and Strategies
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The IRS' proposed 12-month rules for short-term intangibles could bring some nice tax benefits to small businesses, according to a recent article in TAXES: The Tax Magazine written by William J. Cenker and Albert A. Nagy, accounting instructors at John Carroll University in University Heights, Ohio. Under the proposed regs, companies would not have to capitalize prepaid expenses such as insurance payments, inventory purchases and other short-term intangibles even if the benefit of those expenditures comes in the following tax year. Cenker and Nagy point out that small and mid-sized businesses (up to $10 million) can use cash-basis accounting to reap the benefits of this proposed change. Especially for expanding companies, the possible tax savings could be significant. They advise making sure that all contracts for insurance and licenses are reviewed to make sure that benefits begin in the year of payment to keep this opportunity available. There are also potential net operating loss strategies available as well. To get the full story on these proposed regs, click here. |
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Related Titles to this Article: |
U.S. Master Depreciation Guide, 2003
Tax Credits: Fundamentals of Taxation CPE Course (Second Edition)
Corporate Income Tax Refresher Course (2003 Edition)
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In case you missed the June issue of Focus on Tax, we want to remind you that it took a close look at the recent Jobs and Growth tax legislation and how it will affect many taxpayers. We also offered information on college savings plans and strategies, Sec. 1031 like-kind exchanges, financial planning roadmaps, and IRS actions on worthless stock deductions. Click here to see the June issue of Focus on Tax.
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