Income & Franchise Taxes
Grant McCarthy Group is uniquely qualified in the income/franchise tax area based on the significant income/franchise tax expertise of its professionals derived from law firm, accounting, governmental and in-house experience. Our ability to provide comprehensive multistate corporate income tax advice in connection with both routine and complex issues is enhanced by our knowledge of and experience with federal income tax principles and concepts.
Audit Strategy and Defense
In the current environment, states are aggressively pursuing corporate income/franchise tax audits, and scrutinizing corporate structures and transactions with greater sophistication. Our experience tells us that a quick, efficient resolution of a corporate tax audit is usually beneficial to our clients and their shareholders.
To assist our clients in meeting the challenges in the state/local audit environment, we work closely with our clients to:
- Understand the issues involved in their income/franchise tax audits;
- Assess the exposures and other risks at hand;
- Develop and deliver appropriate responses to the auditor’s inquiries;
- Identify offsetting tax saving opportunities; and
- Negotiate with the auditors to achieve a favorable resolution of the case.
Our results stem from our knowledge of state/local audit practices and procedures, a hands-on approach and longstanding working relationships with state/local taxing officials.
Identifying and Securing Refunds
To bridge the gap that may result from the increased complexity of the tax laws and the pressures on the corporate compliance function, we assist clients in:
- Reviewing current/prior filings to identify refund opportunities;
- Quantifying and prioritizing such opportunities;
- Preparing refund claims;
- Working collaboratively with state auditors to secure the refunds; and
- Improving internal reporting processes to minimize future reporting errors.
Structural and Other Business-Related Planning
In the current state and local tax environment, it is imperative that corporations consider both business and tax implications when changing their corporate structure. In this regard, we assist clients in:
- Streamlining/rationalizing their corporate structures;
- Determining the state/local tax effect of proposed changes to their corporate structure;
- Developing state and local tax planning consistent with their business strategies; and
- Implementing changes to corporate structures.
As a result of recent regulatory changes and increased scrutiny, corporate tax accounting processes have become extremely complex and time consuming. At Grant McCarthy Group we assist resource constrained corporate tax departments by:
- Developing and implementing processes to assist in the identification, recognition, and measurement of uncertain tax positions;
- Preparing technical and quantitative analysis to support positions;
- Meeting with independent auditors to review technical positions; and
- Assisting in the preparation of quarterly and annual provisions including current and deferred tax calculations and rate reconciliations.
Credits and Incentives
States and local jurisdictions often encourage economic development for specified locations and industries by offering tax credits and other incentives, including economic development zone benefits, statutory credits, negotiated incentives, and hiring and training grants. Companies that are eligible for credits and incentives often miss such opportunities because identifying the available programs, navigating the labyrinth of eligibility requirements, and completing the necessary paperwork to claim and track benefits can be complex and time-consuming. To ensure that our clients receive the benefits to which they are entitled, Grant McCarthy Group works to explore the availability of credits and incentives when clients are:
- Relocating or expanding operations;
- Acquiring, merging or consolidating operations;
- Entering new industries or markets;
- Building new facilities;
- Refurbishing existing facilities;
- Purchasing new equipment;
- Conducting research and experimentation activities;
- Hiring new employees; and
- Training new and existing employees.
Companies that have undertaken such activities in previous periods may also be eligible for benefits. In addition to identifying potential or existing credits and incentive opportunities for our clients, we work closely with them to:
- Quantify potential benefits;
- Compare benefits arising from credits and incentives available for multiple locations; and
- Maximize benefits available through careful step-by-step planning.
To this end, we assist our clients with (i) gathering information necessary for determining eligibility and quantifying potential benefits, (ii) filing all forms necessary to secure potential credits and incentives, and (iii) conducting periodic reviews to ensure that our clients continue to receive benefits in future periods. As with Grant McCarthy Group’s other service offerings, in the credits and incentives area, we customize our approach to fit the needs of each client. In this regard, we find that some of our clients ask us to handle discreet projects and answer periodic technical questions while others prefer to use Grant McCarthy Group as an extension of their internal tax departments.
Reverse Income Tax Audit
In these difficult economic times it can be very difficult for companies to ensure proper tax compliance across multiple states and jurisdictions. Grant McCarthy Group performs reverse income and franchise tax audits to identify, quantify, and document opportunities for refunds of income and franchise taxes with respect to any potential overpayments in this area. Our reverse income tax audit process identifies significant refund claims and develops sustainable filing positions for the future.
Our reverse income and franchise tax audit is performed in an efficient manner according to the following steps:
- Initial Scoping and Analysis;
- Quantification and Documentation;
- Refund Filing and Verification; and
- Post Audit Recommendations.
Grant McCarthy Group’s reverse income tax audit team is highly qualified with a broad range of experience from public accounting firms, law firms, in-house corporate tax departments, and state revenue departments.
We will use our experience to identify potential refund opportunities and solve disputes that may arise with states’ taxing authorities.
State NOL Tracking for Annual Compliance and ASC 740 Valuations
Looking for a clearer way to manage, forecast and value your State NOL asset?
Our Microsoft Access© database provides for a wide array of state rules regarding carryback and carryforwards. This includes California and Illinois suspensions and the potential for additional carryforward years, limitations and state AMT carry forwards. The application will track and consolidate state NOLs in a given forecast or planning scenario that can be compared against a base case or another scenario. NOLs are carried in the database either on a Pre or Post apportioned basis depending upon the requirements of the state to which they apply. Reporting features include system pdf reports or export reports to Excel© for further analysis, valuation reserve review, pivot table reporting or exporting for use in tax compliance software.
General Technical Assistance
We regularly provide clients with technical assistance in all areas of state and local tax and are available to answer day-to-day questions.