According to a recent article in Accounting Today, all but five U.S. states are operating in deficits, a pressure that will almost certainly lead to state and local tax increases or changes that could affect businesses.

Locally, the City of Albuquerque is forecasting a $54.6 million budget shortfall in FY2011, and the state is wrestling with a current fiscal year gap of nearly $1 billion--close to 12 percent of the current fiscal year budget. Gov. Bill Richardson has proposed temporary tax increases totaling $200 million. He has said taxes on food could be considered. The governor also seeks in the current legislative session to expand a Renewable Energy Production Tax Credit.

Nor are our neighbors in the Southwest immune. Arizona, for instance, in the next fiscal year faces a $2.6 billion shortfall; Colorado $1.8 billion; and Utah $700 million. All of these deficits are on top of sizeable gaps in the current fiscal year.

With so many changes afoot, it's an excellent time to touch base with your financial professionals. If your company or your clients need help anticipating these changes, please contact our Tax Services team today. REDW stays abreast of all the latest news and its implications for many types of businesses across the country.

The information contained in this blog is not intended to be tax advice, is of a general nature, and is based on authorities that are subject to change. Application to your specific situation should be determined in consultation with your tax advisor. IRS Circular 230 Disclosure: Any tax advice in this communication is not intended or written to be used, and cannot be used, for the purpose of (i) avoiding penalties that may be imposed on any taxpayer or (ii) promoting, marketing or recommending to another party any matters addressed herein.

If you are a business taxpayer with total assets in excess of $10 million, you should be aware that the IRS is considering making changes to the rules governing how you report uncertain tax positions. IRS Commissioner Doug Shulman drew attention to these proposed changes in the prepared remarks he recently made at the New York State Bar Association Taxation Section Annual Meeting:

Finally, I want to talk about Transparency….

We have been taking a hard look at transparency regarding business tax issues. Accounting for income taxes and tax risk has changed over the past several years. Accounting for uncertain tax positions is much more articulated now than in the past. And auditing firms are conducting much more extensive reviews of materials used to make decisions on tax reserves reflected in a taxpayer’s financial statement.

Several months ago, I announced that the IRS was studying these changes and was exploring ways to improve transparency regarding material tax issues so that we can achieve the three objectives of certainty, consistency, and efficiency for us and taxpayers.

The IRS is taking a major step towards transparency that I want to announce today related to changes we are proposing to reporting requirements regarding business taxpayers’ uncertain tax positions

The Announcement we are issuing today does two things. First, it describes proposed reporting requirement at the “time-of-filing.” Second, it highlights specific areas where we are requesting public comment and thus serves to further our continuing dialogue with practitioners, business taxpayers, and others regarding how to improve tax administration and compliance regarding many of our nation’s business taxpayers.

If after reviewing the full announcement you want to explore what this may mean for you, please contact REDW's tax services team.

The information contained in this blog is not intended to be tax advice, is of a general nature, and is based on authorities that are subject to change. Application to your specific situation should be determined in consultation with your tax advisor. IRS Circular 230 Disclosure: Any tax advice in this communication is not intended or written to be used, and cannot be used, for the purpose of (i) avoiding penalties that may be imposed on any taxpayer or (ii) promoting, marketing or recommending to another party any matters addressed herein.

There's still a great need for financial assistance to help the victims of the Haiti earthquake. If you're considering making a financial contribution, Congress provided an extra incentive to do so before March 1, 2010:

In a whirlwind procedure, the U.S. Senate by voice vote approved legislation this afternoon to allow taxpayers who make contributions to the Haiti earthquake relief effort between January 12 and February 28, 2010, to take a deduction for those contributions on their 2009 income tax returns.

Those who have already filed their 2009 income tax return may amend to take advantage of the new deduction.

President Obama signed the bill into law one day after it passed the U.S. Senate. If you would like more information about this or any other deductions you can take when filing your 2009 income tax returns, please contact REDW's tax service team.

The information contained in this blog is not intended to be tax advice, is of a general nature, and is based on authorities that are subject to change. Application to your specific situation should be determined in consultation with your tax advisor. IRS Circular 230 Disclosure: Any tax advice in this communication is not intended or written to be used, and cannot be used, for the purpose of (i) avoiding penalties that may be imposed on any taxpayer or (ii) promoting, marketing or recommending to another party any matters addressed herein.

Earlier this week, efforts to extend the short term extension of the federal estate tax failed in the Senate. In a nutshell, this means:

The current tax is a maximum 45 percent on estates worth more than $7 million per couple. It will expire for all of 2010 and be reinstated in 2011 at a rate of 55 percent for estates valued at more than $1 million.
Next year, instead of paying an estate tax, tens of thousands of heirs will pay the lower capital gains rate if they liquidate inheritances.

If you need help deciphering how this impacts your own unique tax situation, please contact REDW's tax team.

The information contained in this blog is not intended to be tax advice, is of a general nature, and is based on authorities that are subject to change. Application to your specific situation should be determined in consultation with your tax advisor. IRS Circular 230 Disclosure: Any tax advice in this communication is not intended or written to be used, and cannot be used, for the purpose of (i) avoiding penalties that may be imposed on any taxpayer or (ii) promoting, marketing or recommending to another party any matters addressed herein.

Early last month, legislation was passed and signed into law extending the period to which net operating losses (NOLs) sustained in 2008 or 2009 may be carried:

As a result, the NOLs incurred in either year (but not both) may be carried back to the fifth taxable year preceding the taxable year in which the NOL was suffered.1 Traditionally, the NOLs may be carried back only two years.

There are a few exceptions written into the new tax law with which companies should be familiar: two that are spelled out in the provisions and one that requires a little more digging into tax law from the 1980s that relates to the RJR Nabisco leveraged buyout and so-called corporate equity reduction transactions, or CERTs.

In order to evaluate your company's ability to take advantage of this and other tax legislation, please contact REDW's tax team.


The information contained in this blog is not intended to be tax advice, is of a general nature, and is based on authorities that are subject to change. Application to your specific situation should be determined in consultation with your tax advisor. IRS Circular 230 Disclosure: Any tax advice in this communication is not intended or written to be used, and cannot be used, for the purpose of (i) avoiding penalties that may be imposed on any taxpayer or (ii) promoting, marketing or recommending to another party any matters addressed herein.