The California Competes Tax Credit Program [Update]
What’s new with the California Competes Tax Credit program? As we explained several months ago, the program had three different application periods for the 2014-15 fiscal year:
- September 29, 2014, through October 27, 2014 ($45 million available)
- January 5, 2015, through February 2, 2015 ($75 million available)
- March 09, 2015, through April 6, 2015 ($31.1 million available plus any unallocated amounts from the previous application periods)
Now that all three application periods have passed and we wait for the State’s office of economic development, Go-Biz, to release data for the upcoming fiscal year, we thought this would be a good time to look at the program and provide a quick update. As we previously explained, “The program was implemented to offer California-based businesses an income tax credit if they’re looking to expand, or for non-California organizations looking to relocate to the Golden State.”Read more
Partnering for Client Success Stories
As a consultant in a very specialized field, people ask me all the time – “How do you get new clients?” The truth is, much of my work comes from referrals from other professionals, like fellow CPAs, bookkeepers, temp-CFOs, and attorneys. Those professionals are the ones in the trenches and they are the ones that will be able to identify situations where their clients are beginning to expand into other states, hire employees outside their home state, or hold inventory or other property in various states. They, like us, are trusted business advisors, looking to add value to their clients’ businesses and are uniquely positioned to identify scenarios where our services can assist their clients.
But we need to be able to help them to know when it makes sense to bring us to the table!
Following are a few questions that we recommend other professionals keep in mind as they assist their clients with financial and legal matters across state lines. To the extent any are strong YES answers, it might be a good time to check in with us at Miles Consulting Group.Read more
A New CA Sales Tax Solution? The Upward Mobility Act
It’s no secret that California’s sales tax system isn’t working. The state currently generates two-thirds of its revenue from income taxes; 65 years ago only 12% came from income taxes and 60% was generated by sales taxes.
About The Upward Mobility Act
Former Assembly Speaker Bob Hertzberg, now a member of the state senate, proposed what he calls the Upward Mobility Act, which focuses on:
- Expanding CA sales taxes to include more services
- Lowering the state’s base rate from 7.5% to 4%
- Getting rid of local add-on taxes
He claims this would, “Generate billions of extra dollars that he says the state could use to fund schools, local government and the university systems while providing tax credits to protect the poor.” He also says this would encourage entrepreneurs by reducing corporate tax burdens on small businesses.Read more
Focus on Illinois
Named after French explorers, “Illinois” is the French spelling of the Illinois and Peoria Indian word “iliniwok,” meaning men or warriors. Illinois is known as the “Land of Lincoln” or The “Prairie State.” The state had two capitols (Kaskaskia and Vandalia) before Springfield was the chosen capital in 1837 by state legislators under the leadership of Abraham Lincoln. In this week’s blog we focus on the Midwest state of Illinois.
Business Climate
Illinois is the fifth largest state in the nation with approximately 12.8 million residents. The strength of the economy in the state is based on professional and business services, education, healthcare, leisure and hospitality services. While the state’s manufacturing industry has declined over the years, it is consistent with national trends. The largest private employers in Illinois are major retailers, large healthcare providers, equipment manufacturers, and nationwide financial service providers. According to the U.S. Bureau of Labor Statistics, Illinois averaged 5.813 million nonfarm payroll jobs and an unemployment rate of 8.4% in fiscal year 2014.Read more
OpenBazaar - A New Wrinkle for Internet Sales Tax Collection?
As we have regularly reported, it’s clear the issue of collecting sales tax from Internet sales is long from resolved. As new versions of the Marketplace Fairness Act surface in Congress to address the issue of sales/use taxes that go largely uncollected, other marketplaces are starting to come to light, such as OpenBazaar, “A completely decentralized online marketplace that links individual buyers and sellers without an organized middleman (think Amazon, but without the intermediary of, well, Amazon).” Not only is Congress not yet ready to deal with our current Internet transactions, but if this kind of marketplace model takes off, they’ll really be scratching their heads!
By using Bitcoins as opposed to a country’s specific currency, OpenBazaar users are able to buy and sell internationally without the government being involved at all. In fact, the program isn’t run by an organization at all; it’s completely open-source, although it’s still in beta.Read more
"Girl Power"
What does 
“Girl Power” have to do with state tax consulting? Well, nothing actually. But every now and then (since this is my blog) I feel that I have the liberty to wax poetic about something that isn’t directly related to my industry. My “girl power” DOES have something to do with being a business owner for 13 years, so I’m comfortable that still have the business angle covered!
I’ve been thinking about gender issues a fair amount lately – maybe more so than usual. I’ve grown up in life and in business where women have been easily half of the workforce. In public accounting, at the staff levels, it seems that women even outnumber the men. But we’ve all read the statistics that still less than 20% of partners in large public accounting firms, CFOs in private industry and CEOs of Fortune 500 companies are women. And while it’s reality – it’s a reality that is still frustrating!
So, why has this bubbled up for me recently? It seems that in the last month or so I’ve tripped over things in the world that still make me shake my head. Here are some examples:
- In Silicon Valley during the months of March & April, we were riveted to the news almost daily watching the Ellen Pao trial related to the lawsuit against her former employer Kleiner Perkins. Kleiner Perkins is the grand-daddy of venture capital firms in the Valley. And Ms. Pao sued the firm for discrimination when she didn’t make partner with the firm. Whether she had a good case or not, or whether it was “win-able” are all items for continued speculation. She didn’t win. But the case aired the dirty laundry of the firm and got the Valley talking about gender equity issues. During the trial, there was testimony about bad behavior and lewd comments by some of her male counterparts. It got me thinking – is there a woman out there who HASN’T been in a situation where there’s been some inappropriate commentary among co-workers? It got me thinking about some of the stories I could tell, and do….occasionally.
- I attended a California conference of NAWBO – the National Association of Women Business Owners last month in Sacramento. We helped to represent the over 1 million women owned businesses in our state alone. It was so empowering to see the women in that room banding together and sharing the issues that are unique to not only entrepreneurship, but also to women owned business. During the conference, we celebrated the association’s 40 year anniversary, and were reminded that our first national President, Susan Hager, founded NAWBO because she couldn’t join the chamber of commerce as a woman business owner. Susan said, “Get a seat at the table or build your own table, and make sure to include other women at that table.” Wow! Thank you to her for getting us our own table. We were also reminded that NAWBO was instrumental in the passage of HR 5050 – the Women’s Business Ownership Act of 1988, which was key in women gaining access to capital. Before the passage of this law, lenders could legally deny a woman access to capital without a male co-signer on a loan. IN 1988!!
- It’s 2015, and women are STILL earning just 78 cents (or less) to the dollar that their male counterparts are earning for the same jobs. Once again….it’s 2015. Why is this still happening? It’s important that we still talk about it and make strides toward closing the gap.
- I presented a webinar on April 30th (Sales Tax Hot Topics for CPAs) http://www.cpaacademy.org/archived_show/a0DC000000dfNBiMAM . It’s a presentation that is always well received and I get a lot of great feedback. This time, one of the attendees sent me a message about the energy in my presentation and my “girl power”. People always tell me I have good energy, but it’s been a while since someone has told me that I have girl power. It gave me a boost. Nevermind that I know my subject matter – I came through with power! And I like that!
In summary, these recent events remind me to be grateful to those pioneering women who laid the groundwork for women entrepreneurs today. And with all respect to my many amazing male colleagues, ladies – let’s not be afraid to flex a bit of girl power now and then!
Washington State’s Solution to Internet Sales Tax
If you’ve been following the Internet sales tax debate, you know that taxing online transactions is one way that lawmakers foresee increasing state revenue. Still, they can’t start collecting online sales tax until Congress passes federal legislation to mandate and enforce a change in procedure for on-line retailers. Or can they?
Legislators in Washington State’s House created a plan that would allow the state to collect tax from online sales. Because Internet shoppers are supposed to be paying use taxes based on sales taxes they don't pay from an online purchase, this legislation could be considered simply enforcing existing law.
Washington’s Five-Point Internet Sales Tax Solution
The plan basically expands the definition of “nexus” to prompt online sales tax collection in five areas.Read more
Focus on New York (and NYC)
This month, we welcome you to the state with the city that never sleeps. New York conjures up images of buildings larger than life, flashing billboards, prestigious universities, American history, and so much more. The state is rich with culture, business, and prosperity.
Business Climate
There’s a lot more to New York State than just New York City. In fact, the state is almost 55,000 square miles and of that area only 470 belongs to New York City. But that relatively small area includes Wall Street, and the nation’s hub of the financial industry.
New York is the home to several financial services corporations, including Morgan Stanley, Citigroup, and Goldman Sachs. In 2012, the securities industry accounted for almost 22% of the city’s total private sector wages. The total wages for the industry were $59.3 billion. Despite the high total wages, only 5% of total private sector jobs came from the securities industry. The average private sector wage in 2012 was $69,200. The average salary (including bonuses) for the securities industry was $360,700, which is over 5 times larger than the private sector average. Of course they are being taxed heavily as well, with 16% of the state’s tax revenue coming from these activities.
Other industries important to New York’s economy include the industrial-commercial, tourism, service, and agricultural industries.
Taxes
New York has an unfavorable tax climate ranking 49th out of 50 states, according to the Tax Foundation’s 2015 State Business Tax Climate Index.Read more
New 2016 R&D Tax Credits? Assembly Bill 437 Introduced
Have you taken advantage of California’s Research Tax Credits before? As it stands right now, this credit reduces income tax for those that paid or incurred qualified research expenses. And you might be surprised to know how many industries and businesses take advantage of the R&D tax credit every year, at both the Federal and State level. Did you know software development, construction, manufacturing, architecture and engineering businesses can qualify? Improvements that expanded the definitions to reward all types of innovation and design work were made over 10 years ago. Now, this law might be improved even further.
California Assembly Speaker Toni Atkins recently introduced a bill that would help businesses - especially small ones - by providing additional benefits to companies with smaller revenues.Read more
Internet Sales Tax News: The Marketplace Fairness Act of 2015
Did you hear the latest in Internet sales tax news? The Marketplace Fairness Act of 2015 was unveiled earlier this month, and it seems to have support from both sides of the aisle. (Ah, yes, but haven’t we heard that before?) The new Act is substantially similar to the 2013 version, but the 2015 version, prohibits states from imposing collection requirements on remote sellers prior to one year after Marketplace Fairness is enacted (versus 180 days), or during the busy holiday retail season between October and December of the first calendar year that Marketplace Fairness Act is enacted.
The legislation would give states the option to require out-of-state businesses to collect and use taxes the same way local businesses do. This would especially impact online sellers and consumers in the form of paying online sales tax.Read more
