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Please note: Our offices will be closed on July 16 and 17 for Employee Appreciation Days.
Summer hours are in effect: Our offices close at NOON on Fridays from May 17th to July 12th
Please note: Our offices will be closed on July 16 and 17 for Employee Appreciation Days.
November 14, 2011
Colorado's Enterprise Zone program provides tax incentives to encourage businesses to locate and expand in designated economically distressed areas of the state. There are 16 Enterprise Zones and 2 sub-zones in Colorado. The taxpayer must be located in an enterprise zone to take advantage of many of these credits. To view the EZ Map, Click Here.
Here are the available credits:
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TAX CREDIT |
CREDIT AMOUNT |
FORM |
FACT SHEETS |
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Investment Tax Credit |
3% of equipment purchases |
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Job Training Tax Credit |
10% of qualified training expenses |
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New Business Facility (NBF) Jobs Credit |
$500 per new job |
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NBF Ag Processing Jobs Credit |
$1,000 total per new a.p. job |
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NBF Health Insurance Credit |
$200 x 2 years per new h.i. job |
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R&D Increase Tax Credit |
3% of increased R&D expenditures |
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Vacant Building Rehabilitation Tax Credit |
25% of rehabilitation expenditures |
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Manufacturing / Mining Sales and Use |
Expanded S&U tax exemption in EZ |
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Commercial Vehicle Investment Tax |
1.5% of commercial vehicle |
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Contribution Tax Credit |
25% of cash (12.5% in-kind) donations |
If your business will perform an activity on or after January 1, 2012 that will earn an EZ business tax credit, Colorado Revised Statute 39-30-103(7)(a) requires that your business receive pre-certification prior to commencing the activity that will earn the credit. Pre-certification is not required for the Contribution Tax Credit or the Manufacturing/Mining Sales and Use Tax Exemption.
Since pre-certification must be completed before activities are performed (i.e. purchase of equipment), we recommend that all businesses located in an enterprise zone pre-certify by 12/31/2011.
Forms DR0074, DR0076 and DR0077 can be certified electronically through the Colorado Web Portal (Click HERE to access.) Please remember to print a copy of the form before submitting. Upon receipt, an email will be sent approving your certificate, which you also need to print. Both the applicable form(s) and approval email must be sent to the Colorado Department of Revenue upon filing your income tax return.
Once a business has received the final "certified" EZ tax credit form, a business that is claiming an EZ tax credit will be required to file their income taxes electronically, unless the business will experience an "undue hardship because the taxpayer does not have access to a computer, or does not have sufficient internet access, internet capability, or computer knowledge to file income taxes electronically.”
(Effective January 1, 2011)
Colorado House Bill 10-200 sets a temporary requirement that businesses defer claiming an EZ Investment Tax Credit (ITC) that exceeds $500,000 in years 2011, 2012, and 2013. Businesses are “allowed to claim the deferred credit as an ITC carryover for 12 income tax years following the year the credit was originally allowed plus 1 additional income tax year for each income tax year that the credit was deferred.”
Since pre-certification must be completed before activities are performed (i.e. purchase of equipment), we recommend that all businesses located in an enterprise zone pre-certify by 12/31/2011.
The Colorado Office of Economic Development and International Trade (OEDIT) oversees the EZ program as staff for the Economic Development Commission. For more information on the EZ Program, visit the Colorado Enterprise Zone website (www.advancecolorado.com/ez). As your business consultant and tax advisor, we would also be happy to discuss any questions you might have. Call us at (719) 630-1186 or through our Secure Email.
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There is much talk about accountability, especially financial accountability for charitable and other exempt organizations.
Nonprofits need to embrace accountability to protect the organization and its people, to demonstrate openness and forthrightness in external dealings and to support the greater good. Embracing accountability also helps not-for-profits fulfill their fiduciary responsibilities to donors, constituents and the public. But how can nonprofits truly embrace this abstract term?
There can be no accountability without good governance. You must set in place the means and measures to keep your organization in compliance with all applicable laws and rules as well as best practices. And most important, your not-for-profit must keep in line with its mission and guiding principles, including integrity.
Author and nonprofit expert J. Steven Ott describes an organization’s governance as “a product of its purposes, people, resources, contracts, clients, boundaries, community coalitions and networks, and actions as prescribed (or prohibited) in its articles of incorporation and bylaws, state laws and codes, and the IRS codes and rules.”
When it comes to accountability and governance, the buck unquestionably stops with your board. Therefore, it’s critical that you help the board understand its responsibilities and focus its attention on carrying out the not-for-profit’s mission — not the process-oriented details best handled at the staff or committee level.
Keeping the financials spotless is critical. So make sure you conduct regular, board-approved audits that are attested to by the executive director and principal financial manager. Management should present internal financial statements to the board — or its audit or finance committee — and review performance against approved budgets on at least a quarterly basis. In addition, the board should establish and regularly assess financial performance measurements.
Your nonprofit must comply with all legally required reporting procedures — and certain financial practices that may apply to a specific activity. For example, one of your major funders or a national affiliate of your organization might require you to provide key performance indicators or other reports linking operational results with financial information.
As you carry out your initiatives, do so fairly and in the best interests of your constituents and community. Your status as a not-for-profit means you’re obligated to use your resources only toward your mission and to benefit the community that you serve. Programs should be evaluated accordingly, both in respect to the activities and the results or outcomes.
Communication is a big part of accountability. Your annual report, for example, should reflect your mission and summarize the year’s activities. It’s best practice for the report to also provide financial data for the year and other information, such as a list of board members, management staff and other key employees.
As a public document, your nonprofit’s Forms 990 for the previous three years will give your public a good overview of your organization’s exempt activities, finances, governance, compliance and compensation methods.
Your organization’s demonstration of accountability is likely to generate a positive response from your constituents, whether it’s in the form of donations, funding, volunteering or simply spreading the word about the merits of your nonprofit. And that’s the kind of outcome worth pursuing.
September 22, 2011
There have been discussions about separate private company accounting standards for years. Now standard-setters may actually do something about it. The Financial Accounting Foundation (FAF) — parent organization to the Financial Accounting Standards Board (FASB) — will soon decide whether to adopt recommendations made earlier this year by a blue-ribbon panel on standard setting for private companies.
The panel recommended that the FAF establish a separate, private company standards board to develop appropriate exceptions and modifications to U.S. Generally Accepted Accounting Principles (GAAP) that would “better respond to the needs of the private company sector.” The new board would work closely with FASB, and its standards would be incorporated into FASB’s Accounting Standards Codification (ASC).
However, the board would have final authority over all exceptions and modifications. The panel also recommended the creation of a “differential framework” to guide the new board’s standard-setting activities.
In the United States, public and private companies, for the most part, are subject to the same set of accounting standards — GAAP. Public companies are required under SEC rules to prepare audited, GAAP-compliant financial statements. Generally, private companies aren’t legally obligated to follow GAAP, but they may need to do so to satisfy lenders, sureties, venture capitalists or other stakeholders.
Preparing GAAP financial statements can be a challenge for private companies, particularly in the current environment. During the last several years, FASB has been shifting toward a fair-value-based accounting approach. In other words, GAAP increasingly requires companies to report assets and liabilities at fair value rather than historical cost. This trend is increasing the complexity and cost of complying with GAAP, which now demands periodic valuations and impairment testing for many financial statement items.
This type of information is valuable to public company investors, who use it to evaluate the price of securities traded in the stock exchanges or other public markets. But lenders and other users of private company financial statements tend to be less interested in fair value and more interested in free cash flow and a company’s ability to pay its debts. In some cases, GAAP can make it more difficult for these users to get the information they need.
Consider, for example, employee stock options. Historically, these options were reported at their “intrinsic value” — that is, the amount (usually zero) by which the underlying stock’s market value on the grant date exceeded the option exercise price. Several years ago, however, FASB modified its standards to require companies to expense employee stock options based on their grant-date fair value, using one of several option-pricing models.
Valuing options can be complex — especially for private companies with limited trading data. Plus, many lenders view stock options as a noncash expense that has little effect on a company’s ability to pay its debts. So, from their perspective, reporting options at grant-date fair value actually distorts the company’s income. For that reason, they add the expense back into net income when evaluating a company’s financial statements.
Proponents of separate private company accounting standards point to fair value reporting as well as other GAAP provisions that may be irrelevant at best and counterproductive at worst in a nonpublic setting. They include:
As a result, many private companies prepare non-GAAP financial statements — on a cash or income tax basis, for example — while others opt to receive “qualified” opinions from their auditors. Many lenders accept these financial statements or waive certain GAAP requirements because they recognize that compliance can be burdensome and that many GAAP standards lack relevance for private companies.
The concept of separate standards for private companies isn’t without its critics, however. Some opponents argue that financial statements are either correct or they aren’t, and that separate standards will lead to inconsistency and lack of comparability.
They advocate a single set of standards that can be modified, if appropriate, on a case-by-case basis by agreement between a company and its financial statement users. They also contend that, if GAAP standards are overly complex or burdensome, they should be simplified for all companies, both public and private.
The blue-ribbon panel considered several models for addressing the needs of private companies, including a standalone GAAP built from the ground up and several versions of International Financial Reporting Standards (IFRS), including IFRS for Small and Medium Entities.
In settling on U.S. GAAP with exceptions and modifications for private companies, the panel explained that a standalone set of standards could take a significant amount of time to create and could be significantly different from current U.S. GAAP. It also rejected the various IFRS options, noting that “U.S. private companies should not be leading the charge, en masse, to an IFRS-based set of standards before the SEC makes a decision on U.S. public companies…”
The panel concluded that a new board with standard-setting power would be the most effective approach. In the panel’s view, FASB is too focused on public company financial reporting to address the needs of private companies.
The panel noted that FASB’s Private Company Financial Reporting Committee (PCFRC) has submitted approximately 40 recommendation letters since it was formed in 2007. Although FASB has modified some standards, generally by changing effective dates or disclosure requirements for private companies, the panel concluded that many private company stakeholders view the PCFRC’s work as “not being wholly successful because the FASB has not also shown a willingness to consider carefully and approve, where appropriate, the possibility of measurement, recognition, or presentation differences.”
It’s not yet certain how the FAF will respond to the blue-ribbon panel’s recommendations. But there’s widespread support for the panel’s approach among accountants and finance executives, as reflected in the vast majority of nearly 2,000 letters the FAF has received. Keep in mind that the FAF’s decision and ultimate approach may be affected by the SEC’s decision, expected later this year, on whether to adopt IFRS for U.S. companies.
If you own a private company and have questions about how the blue-ribbon panel’s proposed recommendations might affect how you prepare your financial statements, please give us a call. We would be happy to answer your questions.
DATE: Tuesday, December 6, 2011
TIME: 3:00-4:30 p.m.
LOCATION: The FIne Arts Center, Music Room
PRESENTERS:
Judy Kaltenbacher, CPA, Managing Tax Partner
Doreen Merz, CPA,Tax Manager
Jordan Empey, CPA, Supervising Senior Tax Consultant
For more information on this seminar, CLICK HERE
Date and location to be determined.
For more information on this seminar, check back with us.
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June 29, 2011
The Tax Relief, Unemployment Insurance Reauthorization, and Job Creation Act of 2010 provided many answers regarding the estate tax, but, unfortunately, the act created additional questions as well. With certain estate tax law provisions scheduled to expire after 2012, estate planning uncertainty remains. This article explains how making lifetime gifts can take advantage of the current high exemption amount and low tax rate and details ways to add flexibility to an estate plan to prepare for potentially lower exemptions and higher rates in 2013.
In response to rising gasoline prices, the IRS has raised the standard mileage rate for business use of an automobile from 51 cents per mile to 55½ per mile, effective July 1. The medical and moving standard mileage rate is increasing to 23½ per mile, also on July 1.
The new optional standard mileage rates will apply until superseded by future guidance and can be used by taxpayers to calculate the deductible costs of operating an automobile. Alternatively, taxpayers can instead use their actual costs, but must maintain adequate records and be able to substantiate their expenses.
The standard mileage rate for services to charitable organizations is set by statute at 14 cents per mile and remains unchanged.
Click Here to read the IRS Announcement in full
June 8, 2011
Two positive changes are coming to Colorado employers and retail businesses on July 1, 2011: the FUTA tax rate decreases and the state sales tax service fee is restored.
If you are an employer, you should be aware that the Federal Unemployment Tax Act (FUTA) tax rate is decreasing effective July 1, 2011.
FUTA-covered employers currently are assessed a tax amounting to 6.2% on the first $7,000 of wages paid to each employee during a calendar year.
Generally, employers can take a credit against their FUTA tax for amounts paid into state unemployment funds. The credit may be as much as 5.4% of FUTA taxable wages. If an employer is entitled to the maximum 5.4% credit, the FUTA tax rate after credit is currently 0.8%.
On July 1, 2011, the FUTA tax rate is scheduled to decrease to 6.0%. For employers who can take the maximum credit of 5.4%, the FUTA tax rate will decrease to 0.6%.
The Colorado state sales tax Service Fee (also known as the Vendor's Fee) has been restored and the rate is now 2.22%. The fee may be claimed on timely filed and paid sales tax returns submitted on or after July 1, 2011 beginning with sales tax returns for June 2011 and 2nd quarter 2011 due on July 20, 2011.
Businesses with only one location will receive new DR 0100 coupon books in early July. If the new booklet does not arrive in time to prepare and file the return, change the state and district column vendor fee rates on the existing coupon to 2.22% (.0222).
Multiple location retailers, seasonal filers, and annual filers will receive pre-printed forms that will have the 2.22% rate. XML or Excel spreadsheet filers need to verify that their rate for state, RTD/CD/FD/BD has been changed to reflect the service fee change for the June 2011 or 2nd quarter 2011 returns due on July 20, 2011.
April 19, 2011
On April 14, President Obama signed the Comprehensive 1099 Taxpayer Protection and Repayment of Exchange Subsidy Overpayments Act of 2011. The act repeals expansion of Form 1099 reporting under 2010’s Patient Protection and Affordable Care Act and Small Business Jobs Act. This short article explains why the expanded reporting requirements caused an uproar among potentially affected taxpayers, triggering widespread bipartisan support for repeal in Congress.
Businesses across the country, as well as certain property owners, can breathe a sigh of relief. Why? Congress has repealed provisions in last year’s Patient Protection and Affordable Care Act (PPACA) and the Small Business Jobs Act (SBJA) that expanded the mandatory filing of Form 1099. After months of setbacks, President Obama signed the Comprehensive 1099 Taxpayer Protection and Repayment of Exchange Subsidy Overpayments Act of 2011 into law on April 14.
Generally, individuals, businesses and other organizations must fulfill certain information reporting requirements. The purpose is to help taxpayers prepare their income tax returns and the IRS to assess the accuracy and completeness of filed returns.
Issuing a Form 1099 is one type of information reporting. The general requirement is that payments totaling $600 or more in a year to a single payee in the course of the payor’s trade or business must be reported on the form and submitted to the payee and the IRS. However, there are some major exceptions, including payments to most corporations, as well as payments for merchandise and similar items.
The PPACA included a provision that broadly expanded the mandatory filing of Form 1099, beginning for payments made after Dec. 31, 2011. The provision generally would have required businesses to report any payments to vendors that exceeded $600 in a calendar year.
The SBJA introduced another expansion of Form 1099 reporting that took effect for payments made after Dec. 31, 2010. This expansion would have affected taxpayers who receive rental income from a “passive” real estate investment, such as a vacation home. Previously, only taxpayers in the trade or business of rental properties were required to file Form 1099, but, under the new law, the IRS considered taxpayers who own one or more rental properties to be a “business” for Form 1099 purposes.
These expanded requirements likely would have created significant burdens for businesses and many property owners by dramatically increasing the number of necessary filings. In addition, affected businesses and property owners would have been responsible for obtaining taxpayer identification numbers from every payee that required a Form 1099. If a business was unable to obtain this information, it would have been required to withhold federal income taxes from payments to that payee and forward them to the government.
The repeal of the expanded Form 1099 reporting requirements means that businesses and property owners need not worry about drowning in paperwork or risking IRS penalties for failing to file a newly required Form 1099. If you need additional information on when you need to file Form 1099, we’re here to help.
If today's article about 1099 reporting has reminded you that you could use some assistance in the area of bookkeeping for your business, we can help! Stockman Kast Ryan + CO offers a wide variety of services, including assistance with many of your accounting functions, such as bookkeeping, payroll processing and reporting, sales tax returns, accounting systems and much more. For more information, click here.
April 5, 2011
We want our clients and friends to beware of a recent attempt to collect both money and information.
Small businesses across Colorado have received an official-looking letter (with a seal, citing the Colorado Revised Statues, and using attention-grabbing language) telling small business owners they're at risk of becoming "noncompliant" or "delinquent" and offering to file the business' Periodic Business Report with the Colorado Secretary of State for a fee of $225.
Though the majority of entities doing business in Colorado are required to file periodic reports with the Secretary of State’s office, the filing can be completed directly with the Secretary of State’s office, online, and in most cases the fee is merely $10.
Colorado Secretary of State Scott Gessler alerted Colorado businesses and non-profits to this letter issued by Nevada-based Corporate Controllers Unit, Inc. We want to pass on this important information to you.
For the full text of Secretary of State Gessler's Alert, Click here.
To protect your business' identity, the Secretary of State recommends that you subscribe to their email notification service.
