Important Change: When are Corporate/Partnership Tax Returns Due?
Do you take notice when it comes to new California tax laws and updates? Here is one that taxpayers and tax preparers alike will want to pay attention to.
Assembly Bill No. 1775: Updated Due Dates for Corporate and Partnership Tax Returns
Signed by Governor Brown in September 2016, a recent change to California tax law revolves around due dates for corporate and partnership returns. As the bill text explains, for tax years beginning on or after January 1, 2016:
- Partnerships need to file an informational tax return on the 15th of the 3rd month (changed from the 15th day of the 4th month).
- LLCs classified as partnerships need to file a return of taxes due and payable on the 15th day of the 3rd month (also changed from the 15th day of the 4th month)
- S Corporations need to file a tax return on the 15th day of the 3rd month (resulting in no change)
- Taxpayers subject to the Corporation Tax Law that aren’t S Corporations need to file a return by the 15th day of the 4th month following the close of its taxable year (changed from the 15th day of the 3rd month)
Rainmaking- It's Hard Asking People For Money
Ask people some of their least favorite things to do (at least professionally) – and you’re likely to get some familiar responses – public speaking, firing an employee (or a client), getting into confrontation, and selling! And selling professional services often tops that list – even for salespeople.
When I was in high school, I worked at an ice cream shop. What a great job. I got to serve ice cream, make sundaes and banana splits, shakes, and ice cream cakes and pies. I was on the giving end of happiness. And people on the other side of the counter were happy to be there. I didn’t have to worry about selling much because people were already in the store to be happy! But one day our store manager asked us all to attend a sales training seminar. I was 18 and remember the pitch like it was yesterday – it was called SMASH – “Sell More and Sell High” –and they were talking about ice cream. What did they want us to do as high schoolers pitching ice cream? Turn a single scoop into a double, or a small shake into a large shake. Ask customers if they wouldn’t rather have a waffle cone for a small extra charge. Inquire about upcoming birthdays and sell a cake or pie. So, even in the ice cream store, where happiness was already built in and people already were going to buy something, there was an opportunity to offer them more happiness, and more profit for the store. Maybe that’s when I truly became an entrepreneur!
Sales Tax Non-Compliance: What's Your Exposure?
An entrepreneur’s dream is to start her own business and witness it grow. First, she wants to see it grow locally. And then, she may see it grow statewide. Whether the company is a small retail operation or a cutting edge technology company, the next step up may be overwhelming as the business begins to operate across state lines. At that point, there are many strategic and tactical issues including hiring employees or contractors operating in other states, or the maintenance of inventory. These can lead to nexus, or taxable presence. And now the company has potential filing issues, for state unemployment, state income tax and sales tax. Many of these items are initially overlooked and can cause significant exposure- even for small start-up companies.
Example:
Let’s follow the life of ABC Company. It is based in Florida, and it is sending sales people to Texas and California. As a result they are generating sales in these other states and the company is growing. Everyone is happy; they are beginning to see a profit. However, the company is likely overlooking one key issue, which can be a very big deal- sales tax. They may not realize that they have not been collecting and remitting state sales tax in California or Texas. To make matters worse, those sales people may have territories that include other neighboring states as well. The company may not worry about it initially, but the Departments of Revenue (DOR) in these states will think otherwise.
Next, a few things can happen: the company can take action and be proactive or they can wait until the states find them. Let’s examine the alternatives.
Online Sales Tax Review: What Do You Need to Know?
Have you been keeping up with the online sales tax debate? Are you curious which pieces of internet sales tax legislation are still circulating in Congress? Here’s a quick summary of the current bills we’ve been watching, and the pros and cons for each one.
The Marketplace Fairness Act of 2015
Unveiled in March 2015, this version of the Marketplace Fairness Act is similar to its 2013 predecessor with a few notable changes, requiring out-of-state companies to collect sales and use tax just like local businesses already do.
Pros
- It has a small seller exception (it does not apply to small businesses selling less than $1 million online).
- It creates an environment where the states would ultimately have to become more uniform in order to participate, thus creating some simplification.
Cons
- The implementation dates are confusing.
- It relies too heavily on Streamlined Sales Tax states.
- Conforming of non-Streamlined Sales Tax states would take a long time, and it’s unlikely there would ever be true conformity.
- It requires internet sellers to do a lot of research into sales and use taxes for online customers.
- It doesn't address more complicated matters such as re-sales, audits, etc.
This new legislation massively expands the authority of states’ tax collection.
RAINMAKING- A MARKETER IN AN ACCOUNTANT'S BODY
Have you ever taken one of those personality tests like the Myers Briggs, or DISC that help to nicely or neatly (maybe?) put you in a perfect little box? They can tell you whether you’re an introvert or an extrovert, or feeling vs. thinking, or any number of other things about how you’ll get along with certain other personality types. I have a love/hate relationship with those tests. Why? Because I’m convinced that I’m pretty close to the middle on most of the categories, and so I see them as a challenge. “Ha, you little test with 100 questions – you think you know me! Have at it!”
For instance, most of the time, I really enjoy being with other people and I get energy from being in networking situations - an extrovert! My husband will tell you that I love to accept a microphone and speak in front of a crowd – an extrovert! These are good qualities to have if you want to talk about your business, and build a pipeline of referral sources and clients. They need to you know you’re out there. Yet, in the next breath, I could tell you that one of my favorite things is to hang out with a glass of wine and a book on a Friday night – an introvert? And yes, after a speaking engagement, I’d love to just run a nice hot bath and soak alone and not do it again for a few days. A long walk in the park with my dog is my idea of a good time too. Introvert?
FOCUS ON WYOMING
Vast plains and the Rocky Mountains paint the landscape of Wyoming, the Cowboy State. Its famed Yellowstone National Park, a nearly 3,500 square mile wilderness area, is home to hundreds of animal species (i.e., bears, wolves, bison, elk and antelope), dramatic canyons, alpine rivers, lush forests, hot springs and gushing geysers, its most famous geyser being Old Faithful. Yellowstone was the nation’s first national park and the first national monument was Devil’s Tower. Known for its backcountry skiing areas, forested trails and Snake River is Grand Teton National Park.
Just a few of the ways to explore Wyoming’s natural lands is to enjoy a sightseeing tour, soak in a hot spring or watch the wildlife. Yellowstone Lake offers plentiful fishing and boating during the warmer months.
Due to its sparse population, Wyoming lacks any major professional sports teams. However, college (e.g., the University of Wyoming) and high school sports are popular in the state. Rodeos and Rugby are also popular sporting events in Wyoming.
Rainmaking - Practice What You Preach!
A colleagu
e asked me the other day how my Rainmaking program was going. And the answer was, unfortunately, “It’s going well, but not taking off as quickly as I’d like it to.” After thinking about it, I got mad at myself and decided to shift the conversation to “It’s going amazingly well – thanks for asking!” The conversation needed to be reframed in order to honor the dream and the encouragement I’ve received from my friends and colleagues. So, thank you!
If you’re a frequent reader of this blog, you’ll know that most of the time it centers on practical tips and articles about multistate tax issues – my primary business. But, if you search “Rainmaking” within the blog, you’ll also know that I’m following a long-time dream to share the experiences and knowledge of building a successful consulting practice with fellow CPAs and other service providers who want to fill their pipelines. So, for several months at the beginning of the year, we featured weekly or bi-weekly posts on the Rainmaking topic as well. And then…it became much more sporadic. Ultimately, it’s been quite a while since we've dedicated a post to Rainmaking. So, this blog is a refresh!
Why Should Businesses Be Cautious of the New Sales Tax Bill?
As we shared last week, Congress recently introduced two new online sales tax bills: Sensenbrenner's H.R. 5893, which would make it harder for states to impose sales tax, and Goodlatte’s Online Sales Tax Simplification Act of 2016, which would make it much easier.
Goodlatte’s State Tax Clearinghouse
One concept in Goodlatte’s sales tax bill that’s worth exploring more is the clearinghouse concept.
According to the proposal, “A state may impose a sales, use or similar tax on a seller, or impose on a seller an obligation to collect such a tax imposed on a purchaser, with respect to remote sale of a product or service only if —
- The State is the origin State for the remote sales (where the company had the most employees during the previous calendar year);
- The tax is applied using the origin State’s tax base applicable to non-remote sales; and
- The State participates in the State tax clearinghouse.”
Online Sales Tax Debate- Still Going On?
For several years, the online sales tax debate has been tossed around Capitol Hill, but has gained little traction in Congress. However, two new bills introduced recently add some new fodder for discussion. One bill makes it harder to impose sales tax, while the other makes it much easier. Will either pass?
No Regulation Without Representation
Representative Jim Sensenbrenner, a republican from Wisconsin, introduced a new bill to Congress in July that would prevent states from taxing any seller lacking a physical presence. This bill is called the No Regulation Without Representation Act of 2016 (H.R. 5893).
Under this bill, unless the person is physically present in a given state during the relevant tax period, a state may not obligate a person to:
- Collect a sales, use or similar tax
- Report the sale
- Assess a tax on a person
- Treat the person as doing business in a state for purposes of such tax
Nexus News: The Latest from Ohio and South Carolina
As lawmakers continue to debate how to make online sales tax feasible for the whole country, the issue of nexus continues to reign supreme for states attempting to increase their revenue from internet retailers. The latest in nexus news comes out of Ohio and South Carolina, two states that recently released details about how nexus is defined in their states.
Ohio's Statutory Changes to Nexus
Earlier this month the Ohio Department of Taxation released statutory changes that broaden how the state defines "substantial nexus," which means out-of-state retailers could be held responsible for the state’s sales and use tax.
Similarly to Washington State, which expanded the definition of nexus last fall, Ohio’s update includes click-through and affiliate nexus provisions. Read more
