Q3 Tax Update for Technology, Clean Technology, Life Sciences, and Communications and Media Companies

In this third quarter update, we cover some of the most important tax issues for companies in the technology, clean technology, life sciences, and communications and media industries and touch on what your organization can do to stay ahead of them.

State Amnesty Programs

Recently, a number of states enacted tax amnesty programs while a few more have pending legislation to adopt amnesty programs. These programs provide a good opportunity for companies to address their tax exposure in states where they may not have been filing tax returns. Each program is different in size, scope, and eligibility requirements.

As we’ve mentioned before, many states have changed their laws to generate income tax revenue from companies that historically haven’t been subject to tax in the specific state. With these changes, many companies have unknowingly become subject to income tax or sales tax in other states. These amnesty programs provide a great opportunity for companies to address any delinquent state tax filings they may have.

No More Free Lunch?

The IRS recently released its priority guidance plan for 2015–2016, highlighting the areas where the IRS feels it’s important to issue guidance on specific topics. One topic to be addressed is the taxation of employer-provided meals. This issue carried over from last year but remains a concern among employers that offer the perk to their employees. The IRS is considering issuing new guidance that would mean that free (or subsidized) meals should be part of an employee’s compensation. If treated as compensation, employers and employees could be subject to additional tax.

This issue is fairly common in the technology industry as employers use the perk to attract and retain employees. We’re aware that the IRS has been challenging the issue on audits. If and when the IRS releases further guidance, we’ll provide further updates.

Change in Tax Return Deadlines

Recently, President Barack Obama signed into law the Surface Transportation and Veterans Health Care Choice Improvement Act of 2015, which included a number of tax changes. The legislation adjusted tax return deadlines for partnerships, S corporations, and C corporations.

Under the new law, calendar year-end partnerships and S corporations are required to file by March 15. A calendar year C corporation is required to file by April 15. Filing extensions remain available. There’s an odd quirk for C corporations with tax years ending June 30: The current filing date (September 15) remains in effect until tax years beginning after December 31, 2025. Read our Alert on the topic for more details.

New Transfer Pricing Requirements

Large multinational enterprises—specifically those with more than 750 million euro in annual revenue—will soon be subject to new country-by-country reporting requirements effective January 1, 2016. These new requirements are an outcome of the base erosion and profit shifting (BEPS) project, aimed to prevent large multinational enterprises from artificially relocating profit to low- or no-tax jurisdictions when their operations say otherwise.

To learn more about these new requirements and how your company can prepare, read our Alert for more details.

New Cost Sharing Ruling

The Tax Court recently ruled that the 2003 IRS cost sharing regulations were invalid. It concluded that stock-based compensation costs aren’t required to be included in certain cost sharing arrangements. If you have a qualified cost sharing arrangement, you may want to review the impact this ruling could have on your US taxes and consider whether to file a protective IRS refund claim.

For more information see our Alert on this topic.

Reminder: New ACA Reporting Requirements for 2015

The new 2015 reporting requirement for employers under the federal Affordable Care Act (ACA) requires data collection each month of 2015 in order to be able to accurately report appropriate information to the IRS and to covered employees. While many companies utilize third-party payroll, they should confirm that the providers will be able to report the required information. Before year-end, companies should:

  • Be aware of the new ACA reporting requirements
  • Understand the plan for preparing Forms 1094-C and 1095-C
  • Review systems to confirm they’re capturing the necessary data

Read this Alert detailing potential penalties for failing to file information.

We're Here to Help

Moss Adams continuously reviews the regulatory and tax landscape for technology, clean technology, life sciences, and communications and media companies. For more information about any of the issues discussed above, or for insight on how they may impact your business, contact your Moss Adams professional.