The cap amount for purposes of the sales tax exemption for sales or uses of electronic news services that occur from June 1, 2019, to May 31, 2020, is: $3,441. The new cap amount is an increase from last year’s amount of $3,285. Background The Tax Law provides an exemption from sales and use taxes for certain electronic news services. One of the conditions for the exemption is that the service must be sold at or below a cap amount. The cap amount is 300% of the annualized average daily newsstand price of the three newspapers with the largest total paid national daily circulation. The Tax Department must determine the cap amount annually by April 1 of each year, based on the prices charged for the three newspapers as described above, during the first week of January of each year. The cap amount will then apply for the succeeding twelve-month period beginning on June 1 and ending on May 31. For more information, see TSB-M-12(1)S, Sales and Use Tax Exemption for Electronic News Services and Electronic Periodicals. Note: An N-Notice is generally issued to announce a singular event, such as an update to a previously issued tax form or instruction, or to announce a new due date for filing returns and making payments of tax because of a natural disaster. The department does not revise previously issued N-Notices.

The Research & Development Tax Credit is a federal benefit (also available in many states) that was enacted to promote growth, innovation, and inspire advancements in all areas and facets of business. The credit is an undoubtedly beneficial incentive for businesses large and small. However, many companies are hesitant to take advantage of the credit for fear of a possible IRS audit. This is a common misconception. Taking a research credit on a timely filed return, including extension, does not increase your audit risk. Recent IRS statistics indicate that approximately .9% of all Corporate tax returns and .2% of pass-through (S-Corp and Partnership) tax returns are audited annually. When a return is selected, it can be for a variety of reasons including random selection. If a tax return is selected for review by the IRS, agents generally will focus on the most material items included on a return. The research credit tends to be one of the most material and effective items used by taxpayers to lower effective tax rates.

As such, properly detailed documentation goes a long way toward the sustainability of the credits claimed, which minimizes time, effort, and stress under IRS audit. Working with a qualified, ethical firm with integrity can abate many issues that could arise during an audit. Companies need to select a provider that can ensure the highest standard of documentation prepared during the study. Learning what to expect and how to be prepared in the event of an audit is highly recommended.

published by KBKG