by TJ SponselMarch 18, 2020

While the impacts of the coronavirus continue to dominate news channels and influence business decisions, our team is available and actively working with clients to persevere through this time of unprecedented uncertainty.

On Tuesday, March 17, Secretary of Treasury Steven Mnuchin announced that the majority of taxpayers who owe 2019 taxes can defer payments for 90 days, until July 15, 2020. This deferral includes a waiver of penalties and interest. However, Mnuchin also stated the return filing deadline remains April 15. This decision is aimed at helping taxpayers manage cash flows during this period. CPAs and their clients across the country are being inundated with questions (externally and internally) as everyone deals with the ongoing economic instability.

At McGuire Sponsel, we understand our role as an advisor to businesses of all shapes and sizes to educate and implement strategies that deliver trusted, proven solutions. McGuire Sponsel assures our alliance partners and clients that we are committed to completing work on time with or without an extension.

Below you’ll find process and procedural practice line updates including how our team is currently executing successful projects while complying with state and federal social distancing measures:

International Tax:

The threat of economic uncertainty is likely to cause multinational organizations to focus on cash tax costs across their group entities. This may force a propensity to shift income from higher tax jurisdictions to lower tax jurisdictions without properly documenting and reporting for any such operational reallocation of income. Doing so will create transfer pricing reporting obligations. Moreover, the parent entity of multinational group organizations may seek to repatriate and redeploy cash for funding operating costs across borders. Doing so will trigger local country withholding taxes that impact the Section 245A dividends received deduction as well as foreign tax credit calculations. Our team can assist with the evaluation and reporting of these cash tax issues, and time remains for us to do so before the revised U.S. payment deadlines.

Cost Segregation and 179D:

Companies looking for cash flow often look at cost segregation and 179D. Acceleration of depreciation deductions can be one of the quickest ways to inject cash flow into a business.  Many companies should reevaluate these services for their 2019 tax return to see if they can unlock additional cash flow.

Many people know that cost segregation and 179D studies require site inspections to complete the study in a quality manner. Even in this time of limited travel, McGuire Sponsel is working to ensure that every company that needs a cost segregation study can have one completed in a timely fashion.

According to the IRS Audit techniques guide on cost segregation, “documentation in a quality study for both new and used properties” includes a site visit to “gain a better perspective and understanding of the design and purpose of the project.” For 179D studies, a site inspection is required to ensure the property can be certified by a qualified individual. In order to complete this portion of our studies, McGuire Sponsel is tailoring solutions to each individual client. Some projects will use virtual inspections, working with a local representative to video conference the inspection of the property. We have a national network of consultants with boots on the ground who can access most locations if a physical inspection is required. In doing so, we are dedicated to adhering to all required curfews, travel restrictions and social distancing.

Research & Development Tax Credits:

This 90-day tax deferral program will allow clients previously limited by filing deadlines, available time/resources, travel restrictions, cash or coronavirus disruptions to pursue valuable 2019 tax breaks such as the Research Tax Credit (R&E Credit). For clients developing new or improved products and processes, the R&E Credit provides annual dollar-for-dollar tax savings.

While McGuire Sponsel’s standard approach to conducting an R&E Credit study is to conduct face-to-face interviews and on-site facility tours, our approach is flexible. R&E Credit studies can be conducted via conference call, videoconferencing and/or email correspondence. And all substantiating information can be collected through secure file-sharing portals. McGuire Sponsel encourages taxpayers to take advantage of this 90-day deferral period and reevaluate the opportunity to pursue and claim the R&E Tax Credit.

With Secretary Mnuchin extending the due date for tax payments, many clients may look at extending returns in the next few weeks. For many clients, extensions mean more time to maximize deductions and credits in 2019. Given the fluidity of the situation, we are waiting on specific guidance on the mechanics of the stated extension of the payment deadline.

Congress is reviewing potential stimuli for the economy. One such stimulus may be a fix to the “retail glitch” error in the Tax Cuts and Jobs Act (TCJA). By extending returns, taxpayers will be able to monitor stimuli to see if they will affect their 2019 returns. McGuire Sponsel will continue monitoring federal developments and will work with you, our partners, to implement impacts on 2019 returns, allowing taxpayers to increase additional liquid capital.

We understand uncertain economic times in March call for uncertain return strategies and execution. McGuire Sponsel is fully committed to our alliance partners and clients to be a trusted resource. While our nation adjusts to our new “temporary” normal, McGuire Sponsel’s commitment to the CPA industry and its clients is unwavering. Whether our teams are working in one of our offices or in our homes, we fully embrace the opportunity to serve you and your clients.