Tax law is ever changing. Each year, it’s something your company needs to watch carefully, but this year it’s even more important as Congressional leaders gear up for a potential overhaul of the federal tax code.
It’s vital to view your company’s tax planning and preparation as a year-round venture rather than something you only address in the new year or spring. Changes happen frequently, and so should your planning.
Thousands of Pages of Tax Law
The U.S. tax code is thousands of pages long and fairly incomprehensible to anyone but accountants and other tax experts. Even business leaders, as savvy as you are, may find reading the tax code as insightful as reading Homer’s Odyssey or Iliad in the original Greek.
Not only that, but the tax code never used to be thousands of pages long. In fact, it was only a couple dozen pages long at one point.
The U.S. tax code is the most complex in the world, chock full of perks to special interests and social engineering. It is incomprehensible, and often produces unjust results. In 1913, our entire tax law was 27 pages. It’s now over 4 million words, 9,000 bloated pages. From 2001-2012 alone, there were 4,600 changes, more than one a day…Individuals spend 6.1 billion hours a year doing their tax filings, the equivalent of a year’s work for 3 million full-time workers.
The U.S. tax code has gone through endless revisions over the years and will likely go through endless more. So how are you supposed to manage your business and also stay on top of so many revisions to the tax code? Many small business owners struggle to do so.
Changes on the Horizon
Tax law changes every year, and some years more than others. It’s impossible to accurately predict what will change from year to year, but it is possible to predict periods when there could be dramatic changes.
This year, or the next year or two, could see dramatic changes to tax laws as a result of shifts in the political landscape. Leadership in the White House and Congress has been waiting years to enact major changes and now, potentially, has the political clout to do it.
While we have seen hints of what changes could be on the horizon, we don’t yet have a clear picture of what they may be, although it’s a fair bet that the changes could be significant.
Meanwhile, plenty of changes are already going into effect just in the usual course of business, including changes to filing deadlines, expense deductions and partnership audit rules.
For example, small- to medium-sized business (SMB) leaders subject to the alternative minimum tax (AMT) rule can now offset the AMT with tax credits for research and development.
Organizations, particularly in construction, software, manufacturing, wine, aerospace subcontracting, boat building and biotech, can qualify for this credit if they have engineers, scientists or product development personnel on staff. Other qualifications include software that is innovative and can be commercially sold.
Get Help with Ever Changing Tax Law
With tax codes changing every year, it’s hard for anyone but a tax professional to keep up. Some years, however, see more changes than others, and we may see significant changes in the next year or two.
Sifting through the IRS website for updates to the tax code takes time out of your already busy schedule. Both you and your business are much better served if you get help with tax planning so you can focus on running your business.
If you have any questions about your taxes, Avitus Group has accounting and tax experts waiting to speak with you. Give us a call anytime.