As featured this week on the Association for Corporate Growth (ACG) National Capital Blog, CB&H’s Scott Moss, Director of the Firm’s Transaction Advisory Services group, outlines the value of sell-side due diligence to both sellers and buyers by assessing a company’s earnings power, ensuring compliance with complex industry-related accounting rules, and preparing the seller for the rigors associated with buy side due diligence.
The sell-side due diligence process enables prospective sellers to examine their businesses from the perspective of a potential buyer. Sellers benefit from a sell-side due diligence process in their ability to identify and address issues that could impact a transaction before they are uncovered by a buyer’s due diligence team. Additionally, this process provides potential buyers access to more credible financial information that can reduce the amount of time needed to successfully close a transaction.
Although receiving a letter or notice from the IRS might seem like a reason to worry, these notices are more routine than many taxpayers realize. Each year, millions of taxpayers receive such a letter from the IRS, and most generally deal with a specific compliance issue. Below are eight steps the IRS recommends taking should you receive a notice.
Recently, we discussed many of the misperceptions associated with unclaimed property obligations and outlined many of the risks associated with the current surge in compliance efforts happening at the state level. As a follow-up to that initial discussion, we’d like to now examine what options you should consider when developing a best practices approach to achieving compliance.
Implementing a best practices approach to managing unclaimed property risk can be a challenge. If you are a first-time unclaimed property reporting entity not under state audit, and you find your company in an initial compliance situation, you should initiate an immediate outreach program. Make an effort to connect with property owners as soon as you identify and quantify your past-due obligations.
As the world’s economy becomes more complex and interrelated, the global accounting community is moving away from the historical cost basis of accounting toward a greater emphasis on fair value. Tasked with creating standards that are both sensitive to current market conditions and sustainable against the test of time, the Financial Accounting Standards Board (FASB) first took note of this trend when they issued FAS 157 – Fair Value Measurement.
FAS 157 represented part of the larger shift in U.S. accounting regulation to recognize and come into closer compliance with international financial reporting standards (IFRS). Many of the guidelines included in FAS 157 either closely or exactly match IFRS provisions. However, by bringing fair value definitions, frameworks, and disclosures to U.S. generally accepted accounting principles (GAAP), FASB introduced one of the most controversial standards in its history.
Followed by over 100 countries, International Financial Reporting Standards (IFRS) are recognized as the worldwide equivalent to U.S. generally accepted accounting principles (GAAP). Nearly all major capital markets have either adopted the IFRS framework or are migrating towards that model within the next few years.
Since 2007, the Securities and Exchange Commission (SEC) has allowed certain foreign issuers to register their financial statements using IFRS without reconciling to U.S. GAAP. The SEC has also outlined a plan that could lead to a requirement for U.S. issuers to comply with IFRS as early as 2014. While the daunting challenge of adopting IFRS is clearly ahead for public companies, private organizations are at a crossroads.
The IRS recently issued correction procedures for sponsors of plans covered by IRC § 409A and 457(f). A document correction program (Notice 2010-6) is intended to encourage plan sponsors to identify and correct provisions of their plans that violate section 409A. These changes could result in penalties up to 20 percent, among other issues.
Relief under the procedures is available if:
All similar plans of the employer are corrected,
Employees and employer sponsor are not under audit,
Failure is inadvertent and unintentional,
Amounts includible in income are properly taxed, and
All information and reporting requirements are met.
“Executing our international strategy is a top priority, and our work continues to intensify in this area,” said IRS Commissioner Doug Shulman. “Every day, we are moving forward in our international compliance efforts. Bringing together our top international personnel in this new group will help us advance our global tax administration efforts and ensure focus and fairness in a critical area for our nation.”
The recently approved 2010-11 South Carolina Budget Bill (the Budget) provides for $4.9 billion in spending and includes several tax incentives and changes. The changes affect corporate and personal income tax, sales and use tax, and the motor fuels tax.
Income Tax
Teaching Supplies and Materials Reimbursement
The Budget provides $275 per certified teacher to reimburse expenses incurred for supplies and materials. Qualified teachers include certified public school teachers, special school classroom teachers, media specialists and guidance counselors employed by a school district or charter school as of November 30. This reimbursement is not considered taxable income.
On July 22, 2010, North Carolina Governor Bev Perdue signed into law legislation, part of the JobsNOW initiative, adding and amending several economic development incentives. The incentives, which include a number of tax rebates and credits, come in addition to tax changes in the recent 2010-11 Budget. Among the changes are extensions to several provisions, including the credit under Article 3J, expansion of covered costs for production companies, plus new incentives for digital media producers and Eco-Industrial Parks.
Growing Businesses Tax Credits
The Article 3J tax credit for growing businesses has been extended two years, now ending January 1, 2013. This credit can be taken against corporate income, personal income, franchise, or the gross premiums taxes. Credits can be claimed for tax years beginning January 1, 2007 and after.
The Secretary has identified over 500,000 potentially noncompliant LLCs. The Bulletin requires the Secretary to notify the LLC at least 60 days prior to assessing the penalty. Any noncompliant LLC will be assessed one penalty for the entire period of noncompliance.
Growing Businesses Tax Credits
