June 2015 Tax Snacks
Tax Snacks: Bite-size tax news and information on the fly
Forms 5500 must be filed with the Department of Labor by calendar-year entities
The U.S. Commerce Department has a special unit, the Bureau of Economic Analysis (BEA), which is now conducting a mandatory survey of US owned foreign investments and operating businesses. This survey has nothing to do with taxes or accounting, and is not an area in which BNN claims to have expertise or familiarity. However, we are aware of some clients who have received inquiries related to what we speculate is this relatively unknown requirement, so we mention it here, and encourage readers who have foreign investments of any kind to become familiar with these rules.
This survey normally is conducted every five years and formerly was required to be completed by U.S. businesses and persons that received the survey sent by the BEA. This survey now appears to be mandatory whether or not anything was received from BEA (meaning that businesses are required to initiate this on their own), and its original deadline of May 29, 2015 for small filers (fewer than 50 forms) and June 30, 2015 for large filers has been changed to a shared deadline of June 30, 2015 for all filers.
More information on this survey (including descriptions of penalties that can be assessed for non-filing) can be found here.
The Credit for Increasing Research Activities (the so-called “R&D Credit”) reduces the tax burden of individuals and companies that engage in cutting-edge activities. It clearly is used by Congress to encourage and reward certain activities – which is a secondary purpose of tax laws (the first, of course, being to raise revenue). However, if ever there was an example of a poorly-used tool, this is it. Since 1985 this credit has repeatedly expired, only to be renewed fifteen times – usually retroactively after it expired. There rarely is a time when a taxpayer can act in a manner designed to take advantage of this tool when the taxpayer knows with certainty that it will be available. That is the case currently, as the credit expired on 12/31/14. Worse, fiscal-year taxpayers often must file a return for a period that includes several months of R&D credit qualification and several months of its expiration, only to have subsequent law changes outdate a tax return that can only be optimized by filing an amended return (which of course involves additional costs and administrative hassle).
A few weeks ago, the U.S. House of Representatives passed a bill, H.R. 880, that would make the R&D credit permanent (as it effectively has been, albeit retroactively) for years. It is now with the Senate, but because the bill does not include revenue offsets, the White House has indicated it will veto the bill.
It is unfortunate that tax laws are such a moving target, but the smart money is on an alternative bill being approved, perhaps again during the Christmas holiday season, that will revive this credit for 2015.
Disclaimer of Liability: This publication is intended to provide general information to our clients and friends. It does not constitute accounting, tax, or legal advice; nor is it intended to convey a thorough treatment of the subject matter.