Beyond the Bottom Line June 2012
Do You Have Research And Development Activities?
The IRS allows a tax credit for qualifying research expenditures. A credit directly offsets your tax liability, dollar for dollar. You may not think that your company has research and development activities and that the credit is only for high-tech or medical companies, right? WRONG.
Research takes on many different forms and can be found in a variety of industries including Architecture, Chemical, Construction, Electrical Contracting, Engineering, including Electrical, Civil, Environmental and Mechanical, Manufacturing and Software Development.
To qualify for the Research & Development (R&D) Credit, four criteria must be met:
- Is there technical uncertainty?
- Can the business component be developed?
- How can the business component be developed?
- What is the appropriate design of the business component?
- Was a process of experimentation substantially utilized in the development process?
- Was the research or development based on the “hard sciences,” which include the physical or biological sciences, engineering or computer science?
- Was the development activity undertaken for the purposes of developing a new or improved business component?
Please be aware that there are out-of-state boutique firms that are trying to sell their R&D Tax Credit services in the Birmingham area. We strongly encourage you to thoroughly research any firm before contracting with them to perform consulting services.
If you think that your business may have R&D activity, contact Bill Lorimer at (205) 982-5519 or Kim Tarnakow at (205) 982-5529 for a no-fee consultation. We would appreciate the opportunity to learn more about your business!
Alabama Severe Weather Preparedness Sales Tax Holiday
Beginning at 12:01 a.m. (CST) on Friday, July 6, 2012, and ending at 12:00 midnight on Sunday, July 8, 2012, Alabama will hold its first annual sales tax holiday. Shoppers have the opportunity to purchase certain severe-weather preparedness supplies free of state sales or use tax. Some of the exempt items include: batteries, cell phone batteries, cell phone chargers, battery-powered or weather-band radios, flashlights, plastic cloths, duct tape, coolers and can openers. View a quick reference of exempt items…
Retailers are required to participate and may not charge state tax on items that are legally tax-exempt during the Sales Tax Holiday. Although state taxes are waived, local sales and use tax may apply – see list of cities and counties participating in the Severe Weather Prepardness Sales Tax Holiday.
Beginning in 2013, the annual Sales Tax Holiday for Severe Weather Preparedness will be held during the last full weekend of February. For more information, visit the Alabama Department of Revenue’s Website.
Form W-2 Reporting of Employer-Sponsored Health Coverage
The IRS has posted guidance including a chart illustrating the types of healthcare coverage that employers must report on Form W-2 under the Patient Protection and Affordable Care Act (the Act). The Act requires employers (businesses, tax-exempt organizations, and federal, state and local government entities) to report the cost of coverage under an employer-sponsored group health plan.
This W-2 reporting is for informational purposes only and does not mean that the coverage is taxable. The IRS made reporting of employer-provided healthcare coverage on Forms W-2 optional for employers for 2011, but it is required for Forms W-2 issued in 2013 for the 2012 tax year.
However, for certain employers, types of coverage and situations, there is transition relief from the requirement. An employer is not required to issue a W-2 solely to report the healthcare coverage for retirees, employees or former employees to whom the employer would not otherwise provide a W-2.
The value of the health care coverage (both the portion paid by the employer and by the employee) will be reported in Box 12 with Code DD to identify the amount.
BMSS & Employee News
Melanie Shores, CPA and Supervisor, has graduated from the inaugural Alabama Society of Certified Public Accountants (ASCPA) Leadership Academy. The Academy had 33 students and was a year-long program designed to build management and leadership skills through training and projects. Melanie provides tax services to individuals, partnerships, corporations, credit unions, and not-for-profit organizations.
Kate Fluker, CPA and Staff Accountant, was elected Christmas Party Chair of the Birmingham Young CPAs (a chapter of the ASCPA).
Congratulations to Jason Harkins, who is the managing member of our sister company, Payroll & Benefit Solutions. Jason was a finalist in the Birmingham Business Journal’s “CEO of the Year” awards.
Keith Barfield, one of the founding shareholders of BMSS, recently launched his new blog, "Barfield on Tech" with compelling, interesting, and straightforward talk to help technology companies and start-ups sort out the numbers part of the business. Keith has a love of technology and vast knowledge and insight to share. Check out his blog at www.barfieldontech.com.
BMSS Client Survey - BMSS is committed to monitoring the quality of the services we provide to our clients. An anonymous 5-question survey will be emailed to all BMSS clients within the next two weeks. We thank you in advance for sharing your valuable time with us in providing us feedback.
BMSS is competing in the Birmingham Business Journal’s Social Madness Challenge - a media challenge that measures the growth of a company's social presence. From June 1 – 18, we will compete against other local small businesses for votes and an increase in our “followers” on Twitter and LinkedIn and “likes” on Facebook.
Please help BMSS win the Social Madness Challenge:
- Vote for BMSS here.
- Make sure you are connected with BMSS on our social media outlets:
IRS Circular 230 Notice: Federal regulations apply to written communications (including emails) regarding federal tax matters between our firm and our clients. Pursuant to these federal regulations, we inform you that any U.S. federal tax advice in this communication (including any attachments) is not intended or written to be used, and cannot be used, by the addressee or any other person or entity for the purpose of avoiding penalties that may be imposed under the Internal Revenue Code.
Daniel Brock, his wife Carrie and their three children live in Indian Springs and are members of Oak Mountain Presbyterian Church. Daniel is a graduate of Birmingha... read more
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