Some businesses are (unpleasantly) surprised when they learn they are responsible for taxes -such as sales and income taxes - in states in which they have no physical presence. What gives rise to liability in these situations is “economic nexus,” which relates to a business’ activity, such as the generation of sales without a physical presence, in a state. Nexus, therefore, can be a hidden trap for businesses with multistate sales and other activities, particularly because what gives rise to nexus is often uncertain and unexplained by a state’s taxing authority.
Michigan Department of Treasury (the “Treasury”) has shed light on what constitutes nexus in Michigan through the issuance of a release that explains the nexus standards for Michigan business taxes. The release (the “Release”) addresses the sales and use tax presumption for out-of-state sellers; the nexus standards for the corporate income tax; and the nexus standards for flow-through entity withholding. Read More ›
On August 2, 2016, the IRS and U.S. Department of Treasury issued highly anticipated proposed regulations concerning the valuation of interests in certain family-controlled businesses for estate, gift and generation skipping transfer tax purposes. The proposed rules would curb the use of most discounts that are applied when valuing intra-family transfers. Read More ›
The IRS recently released proposed regulations regarding the application of Internal Revenue Code Section 409A to nonqualified deferred compensation plans (“NDCP”). The proposed regulations modify and clarify previous guidance. The proposed rules will not be applicable until issued as final, but the IRS explained that taxpayers may now rely on the proposed rules and the IRS will not assert positions that are contrary to the position set forth in them. This summary highlights many of the important issues raised in the proposed rules. Read More ›
Flow-through entities (“S” corporations and most limited liability companies) are no longer required to withhold Michigan income tax on members’ distributive shares. (See Michigan Public Act 158 of 2016). This change is effective for tax years beginning on or after July 1, 2016.
The prior withholding requirements continue in effect for tax years that began before July 1, 2016. Under the prior requirements, flow-through entities had to withhold Michigan income tax from each individual nonresident owner’s reasonably anticipated distributive share of the entities’ taxable income. Accordingly, this change is friendly to Michigan businesses with out-of-state owners. Read More ›
Categories: Employment Tax & Withholding
In 2014, the IRS introduced a new streamlined tax-exempt application that gave certain charitable organizations the opportunity to bypass the longer Form 1023 tax exempt application. Some organizations now can apply for tax-exempt status through the Form 1023-EZ. Benefits of Form 1023-EZ include its shorter length and fewer questions regarding the details of a charity's specific operations. However, there are some restrictions as to whether a charitable organization qualifies to submit a Form 1023-EZ. The IRS has provided an Eligibility Worksheet (pages 11-20 of the Form 1023-EZ instructions) that taxpayers can complete in order to determine if a charity is eligible to use Form 1023-EZ. Read More ›
When working with charities and other nonprofit organizations, two terms are frequently used interchangeably that actually do not mean the same thing. Watch this video to learn the difference between nonprofit and tax exempt.
Generally a Form 990 must be filed by nearly all tax exempt organizations. If you do not know the specific exception as to why you wouldn't have to file a Form 990 then you must file. If you do not file this form on time there could be some very significant financial penalties. Furthermore, the IRS has a revocation program, which means that if you do not file the Form 990 for a certain number of years, then the IRS will automatically, without telling you, terminate your organizations tax exempt status. Learn more in the short video clip below.
Was your tax bill higher than what you had wanted it to be this year? It may be time to consider either changing your business structure or your business operations to be more tax efficient. Learn some quick tips from Attorney Mike Zahrt in the short video below.
What penalties accrue if you don't make the deadline to file your taxes? If you are due a refund, there is no penalty if you file a late tax return; however, if you owe tax you will most likely owe interest and penalties on the tax you pay late. The IRS breaks down two penalties that may apply in this short article titled "Things You Should Know about Filing Late and Paying Penalties."
If you have questions about your taxes please contact one of Foster Swift's knowledgeable tax attorneys.
Sales and Use taxes are basically a 6 percent tax on the sale, use and consumption or storage of tangible personal property in the state of Michigan. Michigan has ramped up its enforcement of these two taxes. In short, Michigan is getting less revenue from its traditional tax basis so the state is really looking to enforce compliance with the sales and use tax more than what they used to. What does that mean for you? It means that you might get audited. Learn more about what you should do if you get audited in the video below.