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New Sales Tax on
Services Key to State Budget Deal
Initial interpretation of a new tax on services, passed by the State
Legislature in the early morning hours on Monday, October 1, indicates that
CPA services such as tax preparation, accounting and auditing will not
be subject to the new service tax. However, consulting services and
investment advice services are subject to the new tax, both of which may
directly impact the CPA profession. Effective December 1, 2007, the new
service tax will generate an estimated $613.8 million in the portion of
fiscal year (FY) 2008 it will be collected in. Anticipated revenue balloons
to $751 million for the full FY 2009 – clearly a significant portion of the
revenue enhancements contained in the late-night deal. Coupled with an
income tax hike and government reforms, the service tax was part of a
three-fold deal to avert a government shutdown. This
article
provides details on the new tax measure, including a list of taxable
services.
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MBT Update: Legislature,
Governor Approve FAS 109 Fix
During the early morning proceedings today at the Capitol, in addition
to reaching an agreement on the State’s budget, the legislature also
approved House Bill 5104. This bill, signed into law by Governor Granholm,
created a new deduction for businesses that realize an increase in their
deferred tax liability due to the enactment of the new Michigan Business
Tax. According to the Senate Fiscal Agency Analysis, “The deduction would
equal the change in a business’ deferred tax liability during the first tax
period ending on or after July 12, 2007." The business will "claim the
deduction by deducting 4% of this difference during each of the successive
five years beginning with the 2015 tax year, 6% of this difference during
each successive five years beginning with the 2020 tax year, and 10% of this
difference during each of the successive five years beginning with the 2025
tax year.” An example looks to the difference in federal tax law and
Generally Accepted Accounting Principles (GAAP). For instance, assets under
the federal tax law are often depreciated faster than they are under GAAP.
Because businesses might realize an increase in their deferred tax liability
as the result of the MBT, the deduction will reduce the MBT liability and
create an immediate deferred tax asset that would eliminate a potential net
increase in a business’ deferred tax liability, thereby avoiding a decrease
in the business’ book value as stated in its official financial statement.
(Source: Senate Fiscal Agency Analysis of HB 5104, H-6)
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New Online Employer
Identification Number Application Processes Requests in Minutes
Taxpayers can now request an
Employer Identification Number (EIN) through a web-based system that
instantly processes requests and generates identification numbers in real
time, within minutes, says the IRS. Here's how it works: a taxpayer accesses
the Internet EIN system through IRS.gov and enters the required information.
If the information passes the automatic validity checks, the IRS issues a
permanent EIN to the taxpayer. If the information does not pass the validity
checks, it is rejected. The taxpayer then has an opportunity to correct the
information and resubmit the application. When the EIN application process
is complete, a taxpayer has the option to view, print and save his or her
confirmation notice, as opposed to waiting for the IRS to mail it. Third
parties authorized by the taxpayer can also be provided with the EIN, but
the third party cannot view, print or save the confirmation notice. Instead,
the confirmation notice is mailed to the taxpayer. Taxpayers can begin using
the EIN immediately for most business purposes.
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Michigan Still
Accepting E-filed Late Returns, Returns on Extension
The Michigan Department of Treasury reports that more than three million
2006 Michigan individual income tax returns have been filed electronically,
an increase of almost 100,000 from the previous year. Late returns and
returns on extension can be e-filed through October 15, 2007. Previously
rejected returns can be transmitted through October 20, 2007. Updated e-file
information for the 2007 tax year will be published on Treasury’s web site
www.MIfastfile.org
in late October.
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SAS 104-111 Toolkit Now
Available on PCPS Firm Practice Center Site
The Private Companies Practice Section (PCPS)
of the AICPA has developed an online toolkit to help members understand and
implement Statement on Auditing Standards (SAS) No. 104-111 “Risk Assessment
Standards.” SAS No. 104-111 is effective for audits performed on financial
statements for periods beginning on or after December 15, 2006. The complete
toolkit, accessible to PCPS member firms, is available at
www.pcps.org. It includes
talking points, a glossary and a client communication letter, among other
resources. For interested parties, a free FAQ sheet and SAS No. 104-111 Web
Forum Archive are available on that web site.
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Speed Up Your Remote
Connections
Companies interested in opening a document, using an application, or looking
at a database record might benefit from Wide Area Network (WAN)
acceleration. WAN acceleration is for firms with distributed employees, and
it works well in three separate ways, including in a business that has
several offices that link via a private network or via a public network such
as DSL.
To read this article in its entirety and learn much more about developments
in technology, access
Technology and
Productivity Weekly, the MACPA's electronic technology newsletter for
industry professionals, sponsored by Information, Inc.
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