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March 26, 2015

 

For the second year in a row, CBIZ Minneapolis has been named one of the 100 Best Companies to Work For by Minnesota Business magazine. This award honors companies that set the standard for employee well-being.

The “100 Best” were selected by an independent research firm employing various research techniques – including  an anonymous online questionnaire filled out by the employees of each company – to determine which companies in Minnesota excel in the areas of work environment, employee benefits, and overall employee happiness.

We could not receive this honor without the amazing, talented and caring CBIZ Minneapolis employees. We appreciate all their hard work and dedication. You cannot be the “Best” without the best – we truly have the best.

For more information on the award and to view the other honorees, please visit the 100 Companies to Work For page.




March 18, 2015

For the first time in history, on March 13, 2015, the Minnesota Department of Revenue annouced that they will no longer examine if an individual's CPA or attorney resides in Minnesota as a factor in determining residency.

Minnesota, like most states, has had a set of rules to determine if you are required to file as a Minnesota income tax resident and pay income tax on 100 percent of your income in Minnesota. There are two tests that they use to determine residency:  

  • The 183 Day Rule.  If you have an abode (a place you stay regularly) in Minnesota and are in Minnesota (physically present) 183 days or more in a calendar year, you are automatically a Minnesota resident for income tax purposes.
  • The Intent Factor Test for Permanent Residency. Minnesota has a number of factors they look at, up to 26,  to decide if a Taxpayer had the intent to leave Minnesota.  They included on this list things like: where your CPA is located, your attorney is located and where your bank accounts are located. As of March 13, 2015, Minnesota will no longer consider those three items as factors to your intent to leave the state of Minnesota for income tax purposes.

This is great news for business owners and individuals who travel often, as well as for those that have trusted advisers outside of Minnesota.

If you have further questions regarding Minnesota residency, feel free to contact our Residency Tax expert  Robert Karon at rkaron@cbiz.com.




March 12, 2015

The Australian Taxation Office (“ATO”) recently published Practice Statement Law Administration (“PS LA”), online guidance for safe harbors regarding the simplification of transfer pricing record keeping. The PS LA explains the Australian Commissioner will not review a taxpayer’s transfer pricing records beyond confirming the taxpayer’s eligibility if certain safe harbor requirements are met.

The guidance provides safe harbors to the following:

Safe harbor conditions for Small (non-distribution) taxpayers:

  • Consolidated turnover is not greater than AUD 25 million; 
  • Has not incurred 3 or more consecutive years of losses;
  • Has no intercompany transactions with entities in “specified countries” (countries considered “high risk”);
  • Has not restructured in the year;
  • Has no intercompany transactions involving royalties, research and development, and license fees and arrangements;
  • Not classified as a distributor; and
  • No more than 15% of total turnover is comprised of “specified intercompany services” (services considered “high risk”).
  • Safe harbor conditions for Small-to-medium sized distributors:
  • Turnover for the distributor is no greater than AUD 50 million and has an operating margin of at least 3% on a 3-year basis;
  • Has no intercompany transactions with entities in “specified countries;”
  • Has not restructured in the year; and
  • Has no intercompany transactions involving royalties, research and development, and license fees and arrangements.

Safe harbor conditions for Low-risk intragroup services:

  • The markup on low-risk service revenue is at least 7.5% or the markup on low-risk service expense is no more than 7.5%; and
  • One of the following conditions is met: (1) No more than AUD 1 million of absolute intercompany services or (2) Greater than AUD 1 million of absolute intercompany services, with service expense comprising of no more than 15% of total expense and the service revenue comprising of no more than 15% of total revenue;
  • Has not incurred 3 or more consecutive years of losses;
  • Has no intercompany transactions with entities in “specified countries”;
  • Has not restructured in the year; and
  • No more than 15% of total turnover is comprised of “specified intercompany services.”

Safe harbor conditions for Low-level intragroup loans:

  • Australian group has a combined borrowed and loan amount of AUD 50 million or less;
  • The interest rate paid on the amounts borrowed is not more than the variable Reserve Bank of Australia indicator lending rate for “small business; variable; residential-secured; term loans”;
  • Has not incurred 3 or more consecutive years of losses;
  • Has no intercompany transactions with entities in “specified countries” (countries considered “high risk”); and
  • Has not restructured in the year.

However, there are certain limitations to the safe harbors. Any taxpayer paying or receiving royalties or license fees are excluded from the safe harbor. Furthermore, the distribution safe harbor applies to the whole group. Specifically, the whole group’s main activity must be classified as a distributor and the distribution segment cannot be segmented. Finally, safe harbor for interest only applies to inbound interest expenses (there is no safe harbor for outbound interest revenue).

If you have further questions regarding transfer pricing or safe harbors, feel free to contact our Transfer Pricing expert Josh Finfrock at jfinfrock@cbiz.com.




March 5, 2015

A common mistake (often most applicable with small businesses) is the issuance of a Form W-2 to a partner in a partnership. Surprisingly, tax advisors continue to see partners treating themselves as employees. Today, more small businesses are offering profits interest as a form of compensation to their employees at all levels, which terminates the employee status in the eyes of the IRS.

When an employee becomes a partner, payroll withholding becomes his or her own financial burden and filing obligation. Previously responsible for withholding and remitting the employment taxes of that employee, the employer must now report guaranteed payments on Schedule K-1 to the partner as opposed to issuing a W-2. Through his or her receipt of a profits interest, the partner is now responsible for making quarterly estimated payments to the IRS.

Both partners and employees should be aware of these changes when capital or profits interests are awarded as a form of compensation. If you are a partner and have received a W-2, you should consult with your tax advisor for the appropriate steps to correct your filing and withholding obligations for 2015.

If you have further questions regarding partnerships, please feel free to reach out to me (samurphy@cbiz.com) or one of my colleagues.




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