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Alexis Nash

In the past, the IRS has issued warnings about these schemes and the potential consequences to businesses if the claims are denied. Since these companies continue the aggressive marketing tactics, the IRS recently issued another warning which provides additional information. Included are details on signs of aggressive marketing, details on how promoters lure victims, and steps on how taxpayers can protect themselves.

On March 8, 2023, the Biden Administration released the proposed Budget of the U.S. Government – Fiscal Year 2024. The document outlines the President’s spending priorities for the coming year, details policy objectives, and detailed descriptions of how the changes will impact each Department, starting with Agriculture and concluding with the Social Security Administration. Buried deep in the long document are important updates and changes to the Internal Revenue Code (IRC) including tax incentives, tax rates, and the addition/extension of certain tax benefits.

The Research & Development (R&D) tax credit can provide significant savings to businesses conducting eligible activities. It has become an attractive tax incentive as over the last 15 years the number of companies claiming the credit has almost doubled. It may come as no surprise that the opportunity to deduct eligible expenses in the year incurred is one compelling reason. Unfortunately, changes made in the Tax Cuts and Jobs Act (TCJA) now require eligible research expenses claimed under Section 174 need to be capitalized and amortized. In other words, taxpayers can no longer capture immediate savings. Concurrently, businesses are also required to make a change of accounting method to comply with these new rules.

The 2023 filing season for Georgia state income taxes officially began on February 1. While returns are being accepted for last year, there are several new tax credit programs in effect for 2023 and beyond. In addition to updates for the standard deduction and online sellers, new tax credits are available for donations supporting various programs. This includes the Qualified Law Enforcement Donation Credit, Qualified Foster Child Donation Credit, and the Georgia Heart Hospital Program.

Extra fees that businesses pass on to consumers, like convenience, processing, and service fees, may now be subject to sales tax in certain states. These fees are a way to recoup the costs of doing business without increasing the prices of goods and services. If businesses fail to properly account for the sales tax implications of extra fees, it could unknowingly violate state sales tax rules. Affecting Atlanta area companies, Georgia and South Carolina recently issued guidance to help businesses better understand state and local sales tax compliance requirements.

The temporary 100 percent business meal deduction expires on December 31, 2022. The incentive allows business taxpayers to completely deduct the full cost of business-related meal and beverage purchases made in a restaurant. The deduction is especially beneficial to law firms that rely on these interactions for business development and networking activities. Starting on January 1, 2023, the eligible deduction amount will revert to 50%.

Earlier this month, President Biden signed the Inflation Reduction Act (Act) into law. It was a significant step forward in accomplishing the Administration’s climate change agenda. Passed through the Senate budget reconciliation process, it’s much less expensive than the non-starter Build Back Better Act but includes several provisions which originated with that legislation. Still, it is the single biggest climate action bill to date with additional measures to lower healthcare costs. Controlling two highly volatile cost centers – healthcare and energy – is the central focus and is expected to help control inflationary pressures.

New equipment, machinery, new office furniture, business vehicles, and updated computer software are items that most businesses invest in from time to time. Since these can be expensive purchases, most will plan before buying by carefully crafting the annual budget to ensure enough capital is available. Although there are many considerations that must be made prior to asset acquisition, it is important not to forget about taxes. When making a large investment the last thing any business wants to do is pay more in taxes than is necessary.

When an issue arises with a tax return filing, processing, or other concern, many will turn to the IRS to help with questions, address issues, and resolve outstanding situations. This has been a realistic expectation of the agency, but since the pandemic, it has all changed. The combination of staffing shortages, lack of modern technology, and previously existing backlogs, means it will be some time before the agency is operating normally. However, recent reports suggest the IRS has made notable progress in certain areas.

Many Atlanta families and high net worth individuals invest significant time uncovering strategies designed to limit federal and state income taxes due. Tax planning focuses on reviewing tax law changes, updates to incentives and deductions, and other changes in areas where savings may be present. Although these activities are most common at year-end, many will make it a regular focus throughout the year.