The SALT Shaker

Sales/Use Tax on CPA Firm Services

Currently in Maryland 12 specific services are subject to sales/use tax.  A bill has been proposed that would greatly expand the number of services subject to tax.  Two of these new services – cited below – will directly impact our practice:

11-101(m)

 (19) A tax preparation service

 (30) A management, a management consulting, a public relations, or ANY other business consulting service

 Almost every year this type of legislation is presented and thus far has been defeated.  The difference this year is that the legislation is sponsored by the powerful Chair of the House Ways and Means committee. I am concerned this bill will not “die in committee” as it has done in past years.

Additionally, the Governor’s Budget contains a new sales/use tax on “digital downloads.” There is a clause in this bill which could extend this new tax to e-filing of tax returns and CPE webcasts.

The state is looking for new revenue sources and they believe one of them could be the service economy. I try to not get worried about proposed legislation because the political world is too unpredictable but this may be the year some of these things become law.  Stay tuned.

The SALT Shaker is prepared by Andy Bareham, Chair of the KatzAbosch SALT Group

KatzAbosch hosted a breakfast meeting for the Maryland Chapter of CFMA on February 8.  The room was packed and in attendance were many influential people from the construction world including business owners, CFO’s and insurance and bonding specialists.  Zafar Farooqi from Capital Construction Consultants, Inc gave an excellent presentation on Construction Contract Claims.  It was evident from the group discussion that claims are more prevalent than ever in the current economic climate. After a brief instruction of claims certification and providing proper notice, the group greatly benefited from the case studies and graphic analysis describing delay impact claims, their cause, effect, and most importantly the recovery.

submitted by: Anita M. Sheckells, CPA, CCIFP

One of the region’s leading certified public accounting, tax and consulting firms, KatzAbosch, announced today that Scott Mattingly, CPA, CFP has been named a member of the Board of Directors of The Babe Ruth Birthplace Foundation, Inc. and Sports Legends Museum at Camden Yards. The Babe Ruth Birthplace Foundation is a nonprofit organization dedicated to preserving and celebrating the legacy of Maryland’s rich sports heritage. The Foundation owns and operates both Sports Legends Museum at Camden Yards and the Babe Ruth Birthplace.

Members of the Board of Directors contribute to the Museum’s mission by providing cultural and educational experiences through dynamic exhibits and programs. Members strive to increase community outreach while preserving and commemorating local and regional sports teams as well as individuals.

Mattingly says he is thrilled and honored to serve on the Board and to be able to contribute to the museum. He looks forward to continuing to build and enhance the Museum as the premier destination for sports enthusiasts for many years to come.

KatzAbosch is proud to announce that SmartCEO Magazine will be honoring our very own Arlene Ciroula as Smart COO of the Year at their SmartCXO Awards on March 22^nd.

Chief Operating Officers nominated for this award had to demonstrate the following:

• leadership by creating and communicating the strategy and mission of the company to all staff members
• implementation of coaching and recognition programs to align the staff with the company’s goals
• effective management of staff levels, expectations and knowledge
• prioritization of customer, employee and company requirements
• efficient oversight of an organization’s performance.

This is a huge honor for Arlene and our firm.

KatzAbosch is proud to announce that three of the firm’s managers, Andrew L. Bareham, CPA, MST, Kristin N. Hucht, CPA, and Josh A. Sutherland, CPA have been promoted to Principals.

Being promoted to Principal is a huge honor within the firm. The role of a Principal is a high-level technical position that includes managing several ongoing jobs while communicating with shareholders, as well as managers and supervisors. It is their responsibility to monitor budgets, oversee the job process, and complete final reviews.

This promotion rewards managers who go above and beyond standard expectations. It is another example of KatzAbosch’s commitment to its staff by encouraging upward movement within the firm. KatzAbosch has been recognized as a “Best Accounting Firm to Work For” by Accounting Today magazine for the past 3 years in a row, as well as having earned several regional “best employer” awards, including “Healthiest Employer” by the Baltimore Business Journal, and “Baltimore’s Top Workplaces” by the Baltimore Sun.

The SALT Shaker

During 2011, a growing number of businesses were subjected to state tax audits. The state governments are starved for revenue and they realize the business community is a fertile source for unreported tax revenue, particularly sales/use tax.  Our experience representing clients in audits has shown that many businesses have misconceptions regarding the sales tax.  Consider the following questions with regard to your business:

• Does your business have a Maryland sales/use tax account? (If not, you are more likely to be audited by the state)
• Have you paid sales/use tax on all of your purchases of tangible property?
• Do you buy property over the Internet from out-of-state vendors?
• Do you either charge sales tax on all of your customer sales or collect an exemption certificate?
• Is your business ready for a Maryland sales tax audit?

The answers to these questions are crucial when the state of Maryland selects your business for audit.  The SALT Group at KatzAbosch is experienced at helping businesses ensure their readiness for state auditors.  We can review your records looking for compliance with state regulations and search for potential refund opportunities. Based on our recommendations, businesses are able to significantly reduce their exposure to audit assessments.

Please contact the KatzAbosch SALT Group if you want to reduce potential audit assessments.

The SALT Shaker is prepared by Andy Bareham, Chair of the KatzAbosch SALT Group