May, 2015 | RKL LLP
Posted on: May 28th, 2015

U.S. Supreme Court Ruling Means Tax Relief for Marylanders Doing Business in Multiple States

A recent Supreme Court ruling could mean tax relief for Maryland residents who do business in other states.

A recent Supreme Court ruling could mean tax relief for Maryland residents who do business in other states.

Maryland residents who do business in other states can now receive full tax credit for those activities, thanks to a recent United States Supreme Court ruling.

The U.S. Supreme Court’s May 18, 2015, ruling in Comptroller of the Treasury of Maryland v. Wynne upheld the Maryland Court of Appeals decision that a resident owner of a flow-through business entity may apply the credit for income taxes paid to other states against both Maryland state-level and state-administered, county-level personal income taxes.

This ruling is significant because it is a rare move by the U.S. Supreme Court to weigh in on state tax policy and defend the rights of Maryland taxpayers who previously were only able to claim a portion of taxes paid in other jurisdictions against their home state taxes.

In the past, Marylanders who paid income taxes stemming from business operations to other jurisdictions were entitled to a credit for these taxes, but only as an offset to the state-level income tax and not for the county portion of income tax administered by the state of Maryland.

This legal saga began in 2011 when taxpayers asked the Howard County Circuit Court to intervene, contending they should be allowed a credit for taxes paid to other jurisdictions that also extends to the county portion of their income tax.

In its review of Comptroller v. Wynne, the U.S. Supreme Court applied the “internal consistency test” to determine that the tax scheme discriminated against interstate commerce by taxing individual taxpayers on all of their income without a credit for taxes paid to other states, while taxing non-residents on their income sourced to Maryland.

Examples of activities that would be eligible for such a credit include:

  • Extensive traveling as an employee to jurisdictions that do not have a reciprocal withholding agreement with Maryland (such as New Jersey or New York)
  • Ownership of an interest in a pass-through entity, such as an S corporation, a limited partnership or an LLC, that does business in multiple jurisdictions, including Pennsylvania

Recommended Steps

After the initial ruling of the Maryland Circuit Court in favor of the petitioner, many taxpayers filed protective appeals to keep the statute of limitations open for their returns. The Maryland statute of limitations for filing amended returns and refund claims runs three years from the date the original tax return was filed or two years from the date the tax was paid, whichever is later.

Now that the matter is resolved by the highest court, Marylanders who are partners in partnerships or shareholders in S corporations that are taxable in other jurisdictions (especially in high-tax jurisdictions like New York, New Jersey, Massachusetts and California) may wish to consider filing protective refund claims with the Maryland State Comptroller in order to preserve their rights to refunds.

RKL will continue to monitor tax law cases for outcomes and decisions that affect our clients. If you have any questions regarding this decision or want to discuss potential refund opportunities, please contact your RKL advisor or contact one of our local offices.

frank tobias PA budget state taxesContributed by Frank J. Tobias, CGFM, a principal in RKL’s Tax Services Group. He specializes in the area of multi-state planning and compliance with extensive experience in all areas of Pennsylvania taxation. Frank brings a well-rounded perspective on state and local tax issues with his experience in both public accounting and his previous professional experience overseeing the administration of PA Corporation taxes for the PA Department of Revenue.

Posted on: May 26th, 2015

RKL Appoints Leader of New Business Risk Services Practice

Hoffacker leads RKL's Business Risk Services  practice.

Hoffacker leads RKL’s Business Risk Services practice.

PRESS RELEASE

LANCASTER, PA (May 26, 2015) – Reinsel Kuntz Lesher LLP (RKL), Certified Public Accountants & Consultants is growing its services aimed at assisting companies in managing  and mitigating risk with the establishment of its new Business Risk Services Practice. The firm is also pleased to announce that Marcia R. Hoffacker, CIA, CFE, CRMA recently joined RKL as its Business Risk Services Practice Leader.

Under Hoffacker’s leadership, the practice will include new services including internal audit and risk management and will expand RKL’s existing fraud and forensic accounting services. The new practice further grows the firm’s robust Business Consulting Services Group which provides specialized expertise in areas such as business valuation, mergers and acquisitions, succession planning, business litigation and fraud and forensic accounting.

Hoffacker brings more than 18 years of combined audit, fraud and risk management experience in private industry and public accounting. She has extensive experience in business risk identification, evaluation and management; fraud prevention, detection and investigation; and internal audit services. She holds multiple professional designations including Certified Internal Auditor (CIA), Certified Fraud Examiner (CFE) and Certified in Risk Management Assurance (CRMA).

Prior to joining RKL, Hoffacker spent nine years as Senior Director of Internal Assurance and Compliance for a Fortune 250 Company. Prior to that, she was a Senior Manager of Business Risk Services for an international public accounting firm. She earned a Bachelor’s of Science degree in accounting from Pennsylvania State University and resides in Palmyra.

Learn more about RKL’s expanded Business Risk Services.

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Posted on: May 18th, 2015

Beyond Compliance: Three Ways to Leverage Your Accountant as a Strategic Partner

Beyond Compliance: Three Ways to Leverage Your Accountant as a Strategic PartnerTax returns have been filed, and last year’s financial paperwork is in order. Now is a perfect time to take a moment and evaluate the services provided by your accountant. Many business owners might not know that they can receive value beyond compliance from this relationship. There are a few key components to discuss with your accountant to ensure that you are on the same page when it comes to your business goals.

  1. Strategies to boost financial performance. Your accountant should be well aware that the overall goal is to increase shareholder value. Thanks to the forecasting tools they use and financial analyses they regularly perform, accounting professionals are able to understand the important data and track historical trends that can help business owners take the long view of their operations. Be sure to discuss with your accountant possible ways to enhance value and chart a course for your company’s future growth.
  1. Assistance to overcome financial obstacles. You are not alone when it comes to financial decision-making for your company. Remember, your accountant is there to provide guidance when concerns or problems arise. Turn to them when issues like performance, level of risk, new initiatives and unplanned growth present challenges to your business. In times of uncertainty, your accountant can conduct a variety of studies or analyses that give you the information you need to resolve a problem, whether it be general operation or cash flow issues.
  1. Know the competitive landscape and impact of operational decisions. In order to build a successful business, you have to know what you are up against. Your accountant can conduct a competitive analysis of nearby and similarly-sized companies, as well as trends that appear in your industry or geographic footprint. As a result of this valuable information, you may wish to change some or all of your operations. This is another area where your accountant can provide value and insight by quantifying the financial impact of significant changes or business moves, including your company’s ability to meet its debt covenants.

It is important to have an accountant who is more than just a number cruncher – you want a proactive partner to help ensure your company’s profitable future. Your accountant likely has years of experience and perspective that can benefit your business, and it is important to tap into that. Getting your accountant on the same page and developing a collaborative relationship can help simplify your life as a business owner, and allow you reap benefits far beyond a yearly tax return.

RKL’s tax, accounting and business consulting professionals help business owners address issues, take on challenges and achieve new levels of success. Want to know more about how we can help you? Contact one of our office locations today.

gretchen_2Contributed by Gretchen G. Naso, CVA, MBA, a principal in RKL’s Business Consulting Services Group. A Certified Valuation Analyst, Gretchen has extensive experience in general and family limited partnerships and valuations for financial reporting, purchase price allocation and gifting and estate tax purposes.

Posted on: May 1st, 2015

Fisher Named Managing Partner of RKL’s Reading Office

audit manufacturing distribution reading pa

Steven E. Fisher

PRESS RELEASE

WYOMISSING, PA (May 1, 2015) – Reinsel Kuntz Lesher LLP (RKL), Certified Public Accountants & Consultants, today announced that Steven E. Fisher, CPA, has been named Managing Partner of its Reading office. He succeeds in this role Charles M. Fabian, CPA, who remains a partner in the firm’s Tax Services Group.

As Managing Partner, Fisher will be responsible for the daily operations of the firm’s Reading location. He remains a partner in RKL’s Audit Services Group, where he serves the accounting and auditing needs of commercial clients, including private equity and venture capital-backed companies. He will also continue to serve as the leader of the firm’s Manufacturing and Distribution Industry Group. Fisher joined RKL in 2011 with more than 20 years of public accounting experience, including nine years at an international accounting firm.

“Steve has been a key contributor to a number of firm initiatives, and his professional expertise and industry specialization make him a valuable asset to RKL,” said Edward W. Monborne, CEO of RKL. “His team-focused leadership style and commitment to our continued growth and success make him the perfect choice to lead our Reading office.”

Fisher has previously served as a board member of the United Way of Berks County, which included roles on the Finance and Audit Committees and the Annual Campaign Cabinet, as well as leadership of the Pacesetter Campaign. He also previously served as a board member of the Greater Reading Chamber of Commerce and Industry and is involved with its Family Business Alliance initiative. He serves as a board member and treasurer of the Tulpehocken Youth Organization. He received his Bachelor’s degree with honors in Accounting from Penn State University, and is a member of the American and Pennsylvania Institutes of Certified Public Accountants.

Fabian remains a key member of the firm’s Tax Services Group, where his primary focus is helping clients increase bottom line results through the delivery of services focused on business strategy, operational effectiveness and organizational development. He joined RKL in 1986 and has over 30 years of public accounting experience in the fields of audit, tax and consulting.

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