Personal Liability for Maryland Business Taxes

Unlike most business debts, employees and owners of a Maryland business can have personal liability for the company’s tax debts. Similar to how the IRS pursues responsible persons and owners for payroll taxes, states, including Maryland, also pursue responsible persons and owners for certain state taxes. A person that normally would be protected from business liabilities by a personal liability shield, such as the corporate or LLC entity, will not be able to similarly avoid these tax liabilities.

The state of Maryland will pursue employees, managers, officers, and owners for unpaid taxes. The person does not need to Continue reading “Personal Liability for Maryland Business Taxes”

Pennsylvania Tax Amnesty 2010 Summary

The 2010 Pennsylvania Tax Amnesty officially ended June 18, 2010. If you missed the deadline you may still be able to negotiate payments and reduce your penalties for past due taxes.   For instance, you may be able to use a Voluntary Disclosure Agreement. Please contact my office for more information.

Pennsylvania has joined the parade of states that decided to use a tax amnesty for an immediate boost to their state’s revenue.  The Pennsylvania tax amnesty begins on April 26, 2010 and ends June 18, 2010.  Included in the taxes eligible for amnesty are the corporate income tax, the individual income tax, and the sales and use taxes.  This can be an excellent opportunity for businesses and individuals located outside the state to become compliant with Pennsylvania.

The Pennsylvania tax amnesty relieves the taxpayer of all penalties and half the interest due…  Continue reading “Pennsylvania Tax Amnesty 2010 Summary”

Maryland Sales Tax Audit Defense

With Maryland tax audits increasing, you should ensure your company is prepared. An ongoing, organized approach to preserving necessary documents will streamline a sales tax audit and may even lead to tax refunds. First, beware, a state auditor visiting your office for a sales tax audit isn’t required to keep the focus solely upon sales taxes. A typical audit may cover other area such as your payroll taxes, and information obtained through the audit can lead to income tax adjustments as well. So, while a sales tax deficiency may only cause a minor sales tax adjustment, the revenue and expense information obtained can lead to sizable state income tax adjustments. Further, since states share their income tax adjustments with the IRS, you may trigger a federal income tax audit and adjustment as well. Continue reading “Maryland Sales Tax Audit Defense”

Sales Tax Matrices and Taxability Guides

Your company may need a sales tax matrix or taxability guide to ensure employees know how to fullfill their sales and use tax duties.  Sales and use taxes are inherently complex, in part, because each state’s rules vary.  This leaves many tax departments ill-equipped to adequately maintain every tax and accounting responsibility.  Sales and use tax requirements do not only concern tax departments as accurate reporting can require the efforts of any employee with the ability to pay a bill or issue an invoice. Continue reading “Sales Tax Matrices and Taxability Guides”

Voluntary Disclosure Agreements

Many companies discover they did not file required state tax returns, but they do not know how to address the issue.  States understand that taxpayers often do not uncover income tax or sales tax filing obligations until a potentially large tax bill makes coming forward difficult, if not impossible.  Most states provide voluntary disclosure programs to bring these reluctant, but otherwise law-abiding, taxpayers back into the flock.  The voluntary disclosure programs forgive all but the most recent tax years and reduce or eliminate penalties and interest. Continue reading “Voluntary Disclosure Agreements”

State Tax Nexus Reviews & Studies

Introduction

All states are becoming more aggressive in locating non-filing businesses, particularly those operating largely outside their state. Unfortunately, many businesses first realize their filing obligation to another state when visited by the state’s auditor. An analysis of your company’s connections, or “nexus”, to the states it touches, directly and indirectly, will be beneficial regardless of whether your business is a start-up or established, expanding or contracting.

Each state’s laws for determining whether your company has a filing obligation vary, but all states are limited by the “minimum contacts” standards established under the U.S. Constitution. Adding to many companies’ confusion, there are separate standards applied for sales and use tax nexus and income tax nexus. For instance, a company with a representative in a state may not have an income tax filing obligation but may have a sales tax obligation. Continue reading “State Tax Nexus Reviews & Studies”

Managed Compliance & Effective Tax Rate Agreements

Companies can manage risks, lower use taxes, and reduce tax administrative burdens by using managed compliance and effective tax rate agreements. In an effort to streamline the tax compliance process, most states now allow companies to automate their sales and use tax compliance through tax agreements. These agreements operate on a prospective basis whereby “effective rates” can be assigned to the company’s expense accounts.

The states use numerous names for such agreements, including: managed compliance agreements, formulary sales and use tax agreements, single use tax compliance agreement, negotiated rate agreements, alternative use tax payment methods, simplified procedure agreements, or, as known here in Maryland, effective rate agreements. Regardless of the chosen name, the states use similar processes to form the agreements and the companies often realize fantastic results. Continue reading “Managed Compliance & Effective Tax Rate Agreements”

Find Cash by Recovering Tax Overpayments

In today’s competitive business climate, businesses paying more taxes than necessary do so at their own peril.  But when extra cash is needed, the company can hire tax professionals to recover those overpayments through refunds.

By conducting reverse audits on behalf of companies, I have rarely found a company whose tax department didn’t have some oversights, particularly regarding indirect taxes.  Likely targets for recoverable overpayments include the company’s indirect taxes, such as: sales & use taxes, value-added taxes, and excise taxes.  Certain state-specific taxes are also likely cash sources, such as the Maryland admissions and amusement tax which is levied upon the business not the customer. Continue reading “Find Cash by Recovering Tax Overpayments”

Louisiana Tax Amnesty 2009

Louisiana recently announced a tax amnesty period beginning September 1, 2009 and ending October 31, 2009. The tax amnesty will apply to all taxes “administered and collected by [the Louisiana Department of Revenue], except for motor fuel taxes.” The state will forgive all civil penalties and half the interest otherwise due. Continue reading “Louisiana Tax Amnesty 2009”

2009 Maryland Tax Amnesty Summary

The Maryland Tax Amnesty for 2009 officially ended on October 30, 2009, but if you missed the deadline you may still be able to negotiate payments and reduce your penalties for past due taxes.   For instance, you may be able to use a Voluntary Disclosure Agreement. Please contact my office for more information.

Updated 5/19/2009, Following publication, the Maryland Comptroller’s Office announced early filings and payments will not be eligible for amnesty. The Comptroller’s Office is drafting an official amnesty application. Payments “under protest” for contested liabilities are eligible for amnesty if otherwise meeting the amnesty requirements. To receive notice when the Comptroller issues the amnesty application or further updates, please feel free to e-mail me.

The 2009 Maryland Tax Amnesty bill was signed into law on May 7, 2009, but the Maryland Comptroller’s Office will need to consider certain policy issues regarding its implementation. One obvious question Maryland tax attorneys and tax accountants are asking is, “What if you file prior to the Maryland Tax Amnesty period?”

Continue reading “2009 Maryland Tax Amnesty Summary”