By Don McDougall

The secrets you are not being told – and information you can use

EPAct articles are generally written by companies that have little to no real experience in EPAct  (The Energy policy act of 2005) certifications.  You see quotes and cut and pastes from the IRS, and nice flowery sounding phrases about your savings and your benefits.  All this while most of the authors’ have no real experience and are hoping you will hire them so that they can learn. (Recently, I read a competitor’s newsletter word for word, it copied mine from the previous week, even leaving in a typo or two!)

Why should you care about EPAct?  As a case example, a 200,000 square foot parking garage can provide tax deductions of over $200,000 when you take into account both Abandonment and the EPAct tax deductions.  EPAct limits the tax deduction to the capital cost spent on the project, so a parking garage with it’s lower lighting costs will not always have enough capital costs to meet the full $0.60 per square foot target.

There are five main points to recognize.

(1)    Watts per square foot and controls

(2)    Why you cannot use accelerated depreciation to reduce the cost.

(3)    Abandonment and how it can benefit you

(4)    What about LEDs?

(5)    How does a tax reduction differ from a tax credit

Watts per Square Foot

The table below shows you the targeted watts per square foot you need for both the $0.60 cent reduction, and the lesser reduction that you can also get in case you miss the target.

Simply put, for a Parking Garage on a renovation .180 Watts per square foot will get you $0.60 per square foot, and .225 watts per square foot will get you a $0.30 cent per square foot tax reduction.

Why you cannot use accelerated depreciation to reduce the cost of your lighting project

The primary lighting of a parking garage has a life of 39 years, according to the IRS.  It is referred to as a 1250 category asset.  In order to be able to take advantage of “accelerated depreciation”, the asset MUST have a life of 20 years or less.  The IRS defines this very clearly, you cannot break this rule.  You CANNOT use accelerated depreciation on the general lighting for a parking lot.

Abandonment and how it can benefit you

When you put in new lighting, specifically when you replace the ballast and fixtures,you take out old assets.  These old assets have a 39 year life just like the one you are putting in.  That means that unless they are VERY old they still have a substantial book value.  That residual value, the undepreciated dollars are a business expense. So just like any expenses they result in a tax deduction.

Often the ability to calculate the value of the abandoned assets can seem difficult.  ETS has CPA’s, Attorneys and Certified Engineers on staff and do this every day.

What about LEDs?

LED’s are involving product, and they offer unique opportunity to save money and to add to the greening of a project.

The image below is of a Series 7000 a new product made in the US by TEMPO Industries, they are an old hand at LEDs with a 25 year history.

This product has an L70 rating of 86,000 hours, the instillation costs are 75% LESS than that of a conventional T8 package, with energy savings of 50-60% over those same T8s.

For those of you not really in the lighting industry, this means the effective life of this asset is 86,000 hours and that it is maintenance free.  If you assume the lights are on 24 hours a day, 7 days a week you get a life of 10 years.  No replacement, no maintenance and half off your energy bill, a near prefect product for a parking garage.

This product shows the way things are going  and represents a whole new generation of LED lighting products that are coming down the line..  When you take in to account the lower installation costs much of the net costs between an LED and conventional product simply goes away.

In a nut shell, if you use LED’s you can be assured you will (or should easily) meet your watts per square foot targets easily; and probably at a lower cost then you think.

How does a tax deduction differ from a tax credit?

The EPAct and Abandonment provide tax deductions as their benefit.  You calculate the Net After Tax benefits of a tax deduction by multiplying the total deductions by your tax rate.  So if you have a 30% federal tax rate, and you got $90,000 in tax deduction you have the equivalent of $30,000 in cash.

A pair of case examples:

EXAMPLE ONE

500,000 square foot parking lot

$200,000 in capital costs for new lighting

$300,000 in EPAct deduction

$120,000 in Abandonment.

$320,000 in tax deductions, at a 30% tax bracket this project brought over $100,000 back to the property owner.  (The EPAct Benefits are limited by the capitalized cost, the total benefits are $200,000 + $120,000)

EXAMPLE TWO

1.2 million square foot parking structure with new LEDs

$1.9 million in capital cost

$720,000 in EPAct tax deductions

$500,000 in Abandonment

$1,220,000 in deductions, at a 35% tax rate this client saved $427,000

Summary

In these two examples (real life examples) you can see that EPAct combined with Abandonment provided some significant economic advantages.  You are required to use a certified firm and individuals to prepare the EPAct certifications, that is a whole other article.

Don McDougall

National Director – Corporate Accounts

Cell: 213.280.2266

Email: dmcdougall@engineeredtaxservices.com

http://www.linkedin.com/pub/don-mcdougall/4/844/411

By Don McDougall

by Sarah Warlick

Maybe the post office isn’t the best place for it, but don’t underestimate the importance of having a picture associated with your professional presence. Your website and your social media profiles absolutely need one.

But what if you’re shy? You value your privacy, and your mother repeatedly told you that fools’ names and fools’ faces always appear in public places. Modesty and safety alike demand that you remain veiled in secrecy, cloaked with a classy reticence to show your face in the forum, right? Wrong. Sorry Mom, this is one of those situations when times really have changed.

A social media presence is mandatory for the successful modern professional. Like it or not, it’s a fact. Many of us who are old enough to remember a pre-Internet era, when simply being good at your job was enough to lift you to great heights in the work force, are still resistant to this truth. Though we may participate, we do so grudgingly and half-heartedly, and often draw the line at a picture of ourselves. It’s time to get over it.

Today’s reality is that many people will meet us through our online presence before they meet us in person. There’s a huge upside to this in opportunities to reach vast realms of potential clients and industry peers from whom we can learn, of course. The marketing possibilities are endless, and I’ve never met someone who claims to have learned nothing of value from the Internet. Even so, it’s hard to let go of those lessons about modesty and propriety we learned so long ago. But those standards just don’t serve us well anymore. In fact, not having a picture will cost you a high price.

Let’s say you’re an accountant or an attorney without a picture. You’re smart, you work hard and you contribute meaningfully to your niche. Great. So you tweet into a conversation with deep knowledge and make some important points that impress your followers. Or you submit a well received article to a leading publication. A significant number of the people who read your contributions care enough to want to learn more. What do they do? They Google you. They go to LinkedIn and maybe Facebook or Twitter. They find…a creepy blue-grey silhouette of a gender-neutral humanoid. At that point they do one of two things, neither of which you want. They either forget about you or they assume you are a hideous freak, someone who’s not really a serious presence at all or a spambot. If you have no picture, you won’t be considered legitimate. EEK! That’s not what you intended!

Or perhaps they do manage to remember your name. With no face attached to it, when you’re at the same quasi-social event they don’t connect it to the wonderful insights you shared and thus don’t engage you in conversation, don’t invite you to speak at their next conference and don’t offer you that amazing job you’d give anything to have. Is your loathing for pictures worth it? Probably not.

With picture: interesting new colleague, speaking gig, awesome career move. Without picture: bupkis. You do the math. Not only that, but face it – it’s hard to remember faceless names. At a certain age (mine) a picture is a hugely important visual aid to keeping track of the people you’ve met, or would like to meet. Without a picture firmly in my mind, half the time I can’t remember if you’re the dude who’s widely recognized as the King of the Industry or the guy who held up the line at Whole Foods last week looking for a coupon.

And don’t forget that having a picture on your profile is the very best kind of marketing there is – free. Face, name, contribution. That’s what most people will remember, and probably in that order. Why throw away that opportunity?

Before you snarl and go dig up an ancient New Year’s Eve photo to crop for LinkedIn just to shut me up, listen to this and listen hard: you need a professionally taken picture. It is simply not acceptable to use words like “leverage” and “proficiencies” in your online resume and associate them with a picture that includes:

• Other people’s body parts, even minor ones
• Dirty laundry on the floor
• Cocktails
• Drumsets
• You get the idea

That’s okay for Facebook if you’re comfortable with it, and candid shots of you enjoying your life are more fun for everyone to see. Still, no matter how youthful, thin and hip you may look in that one of you having drinks with Dave Grohl, you may not use it on LinkedIn. Get a photographer.

Only reclusive millionaires get to go through life with no picture. I know this is hard, but perhaps you’ll forgive me when I remind you that you can deduct the cost on your taxes. See? It’s not so bad after all.

Sarah Warlick, is a writer and copy editor at BBR Marketing

bbr marketing

404-423-4433 | bonnie@bbrmarketing.com
__________________________________

www.bbrmarketing.com
www.twitter.com/bbrmarketing
www.facebook.com/BBRMarketing

In addition to energy savings plus the PR benefits of going green, many, many different incentives help building owners upgrade their lighting, HVAC, and building envelope.

But what if there was a federal incentive program that was missed during the design phase? One that you, as a building owner or designer, could still collect on?

EPAct (from the Energy Policy Act of 2005), or 179D, is a widely unknown incentive program created to stimulate investment in energy-saving technologies. The Emergency Economic Stabilization Act of 2008 extended and enhanced this program to promote energy-efficient design practices in the public building space. Because public entities do not pay taxes (schools, federal, state, municipal, civic, correctional, etc), the designers of these buildings (new or renovated) became the tax beneficiary.

With a little accounting and engineering assistance, commercial building owners and public building designers are discovering literally millions of dollars monthly for their energy efficient building renovations and new constructions. 179D helps reduce the ROI of these projects – sometimes by up to 45% – which makes a big difference in moving these projects forward.

But still, over 95% of this program’s potential beneficiaries are missing out!

Commercial buildings (both new and renovated) can claim up to $180,000 for every 100K square feet of building space impacted. These are tax deductions (not credits), which help the owner, tenant, and/or the designer of Public buildings to reduce the costs of energy-efficiency investments. Note that these incentives are available for past projects completed after the beginning of 2006 and future projects through the end of 2013.

Commercial buildings, whether new, recently purchased, retrofitted, expanded, or renovated often qualify when lights, HVAC, and/or building envelope systems have been improved, as compared to the ASHRAE/IES 90.1-2001 building standards. The only gray area is non-profit commercial buildings, which are tax-exempt but are also not public buildings.

Why are 95% not collecting?

These tax incentives must be verified and certified by an independent, unrelated, third party through an engineering analysis. Performance levels for lighting, HVAC, and building envelope are each modeled using Department of Energy and IRS approved software, then benchmarked against ASHRAE 90.1. Under the “Whole Building” method, the building can qualify for up to $1.80 per square foot when all three systems meet or exceed a collective 50% improvement level compared with the standard; however, each system also can qualify individually. Improvements are not compared to the existing systems, but to the ASHRAE benchmark. In short, it does not matter how well or poorly the pre-existing systems had functioned.

By themselves, lighting (and/or HVAC and/or building envelope) can qualify individually for up to $0.60 per square foot. Current guidelines require a 20% improvement in lighting compared to the ASHRAE 90.1-2001 baseline. Individual spaces within a building can qualify and get part of the $0.60 per square foot, depending on the lighting power density in each area; this applies only to lighting.

This means that for each compliant system, there are up to $60,000 in deductions for every 100K square foot building for tax-paying private building owners or for the designers and architects of public buildings.

New buildings, LEED buildings, and Energy Star® certified buildings are all excellent indicators that lighting and other systems will qualify. Other factors include current state/local building codes, and many new technologies employed. The continuous improvement of energy-efficient technologies allows for many more buildings to qualify additional systems, even without having considered 179D during the initial design phase. Keep in mind that the ASHRAE 90.1 baseline is now 11 years old!

For owners, architects, designers, and turnkey installers, the results can appear on your tax return! It’s important to find a reputable provider who has the proper qualifications and experience. An experienced engineering firm is crucial, as this is not an accounting analysis.

A good track record with IRS audit defense, as well as sufficient errors and omissions insurance are also a plus. Some companies also offer free educational programs on the topic (such as ETS) and are accredited by the AIA, USGBC, NCQLP, and NSPE.

If you are a building owner or a designer of public buildings, learning about 179D is like finding free money!

The author: Jim Sorensen is an energy tax specialist with a background in energy efficiency consulting. As director of business development for Engineered Tax Services he writes and presents frequently on 179D among other tax benefits. Connect and follow him on LinkedIn or contact him directly for a list of in-depth educational programs on this topic, jsorensen@engineeredtaxservices.com.

A client with 3 million square feet of properties get $2.9 million in tax deductions all at ZERO cost and NO worries about their current corporate needs for the tax deduction.

ETS has developed  unique partnerships to help our clients reduce their tax liability, we combine three sets of services with a turnkey opportunity for our clients.  As the following case example demonstrates.

A client of ETS’s, who undertook the traditional Cost Segregation service, now has an appetite for tax deductions.

ETS works with REXEL to introduce clients to the concept of having ALL of their lighting upgrades.  REXEL’s lighting group can provide these services nationwide.   REXEL completes the survey of the properties and Identifies the most likely to be good candidates for re-lighting.   Additionally, there is no charge to the client for these services.

Next Acculease set up financing, where the cost of the loan/lease is less than the energy savings provided by the REXEL relighting project.  Where available, the client uses on-bill-financing for the project through the local utility.  In all the cases we have examined Acculease’s rates beat the on-bill-financing.  Additionally ETS’s cost for the EPAct certification can be included in the lease, meaning absolutely ZERO cost to the property owner.

Lastly, ETS provides the EPAct certification and the Abandonment .  The abandonment provided $0.50 in tax deductions, the EPAct an additional $0.60.

The EPAct tax deductions look a LOT like depreciation, except that they may be passed down to the owner of the company AND their tax deductions are NOT subject to AMT.   An added benefit for the property owner/tax payer to be sure.

Additionally the value of the properties have  increased.  The additional cash flow, when the lease is paid off, provide an dramatic enhancement to the property.

A 250,000 property can drop their energy costs by $60,0000 a year.  Meaning an additional $5,000 a month in income and energy costs are just going up.   These benefits will only increase over time.

This program only works, because ETS has designated partners who are proficient in providing these services, you could do it piece meal, but it is a lot harder. ETS brings the whole package of services to your table.

The table below shows the tax benefits.

If you were to look at your portfolio of property owners, or if you are a property owner,  there are millions of dollars in tax benefits available, at no cost to you or the property owner.  Additionally you enhance the value of the portfolio,  reduce both the  need to import  foreign oil and  reduce greenhouse gas emissions.  You can do all of this at zero cost to you or your client.

This article was written by Don McDougall,

National Director – Corporate Accounts

Engineered Tax Services

Cell: 213.280.2266
Email: dmcdougall@engineeredtaxservices.com

http://www.linkedin.com/pub/don-mcdougall/4/844/411

By August Aquila

While I have often said that there is no magic bullet to solve problems,  I may have been mistaken.  Perhaps, there is a semi-magic bullet to help firms improve performance and hence improve profits. It’s call alignment.  There are seven steps in the alignment process that I want to outline for you in this article.

Step 1. Firm Purpose 

All accounting firms, even those that do primarily write-up work, are in the business of making business and financial sense of a changing and complex world. We exist to make our clients’ lives easier. While some would say the purpose of the practice is to make money that is not your primary purpose.  Money is the result of being true to your firm’s purpose.

Step 2.  Firm Values

Firms need to identify the common values under which they operate. The first step is to identify the values that are important to you and your partners. Next define the values and finally, ask everyone in the firm to provide some examples of how they see the values being lived in the firm.  You see what is important in the firm through the accepted behaviors (both good and bad) of the partners and employees.

Step 3.  Firm Vision 

Vision is all about the future. Clients don’t care about what you want to become. For example, firm A wants to become the regional powerhouse in state and local taxes for mid-size manufacturing companies with revenues between $50M and $250M. That’s what they want to be in 5 or 10 years.  Today, however, they are not that powerhouse. Hence a prospect who needs the powerhouse today would not consider firm A as a viable service provider.

Step 4.  Firm Strategy

The strategy tells the firm how and what needs to be done to achieve its vision. For example, firm A above might have a strategy of acquiring the state and local tax expertise rather than developing it internally. Two different approaches to get to the same place.

Step 5.  Objectives and Measures

Strategies don’t mean anything unless you set out initiatives with clear goals and measures. Many firms today will set goals in four areas of the practice ? financial, client, systems and employee growth/learning.

Step 6.  Personal Objectives

This is a critical step in the alignment process.  There is basically one question you need to ask ? “How does what I do help the firm to achieve its strategic objective(s) in one or more of the four areas?”

Step7.  Rewards and Recognition 

Finally, the firm needs to reward its performers more than its non-performers.  If you don’t tie goal attainment on the individual level to compensation and performance bonus you are missing the key ingredient of success.

While the above process is easy to follow, it does take a real commitment from the firm’s leaders to do it and follow through. If you follow this process you will improve performance and ultimately profits.

If you would like more information about this, call me for a free consultation at 952-930-1295 or aaquila@aquilaadvisors.com

By L. Gary Boomer

There are multiple ways to grow your firm, from expanding service lines to mergers and acquisitions.  While these are both viable strategies, it is often easy to overlook opportunities associated with existing services and clients.  Tax planning and compliance is a great example and an area that almost all firms currently provide services.  However, due to the increasing complexity of ever changing legislation at the Federal and State levels plus the importance of international tax; I believe firms often discount the opportunities.  Granted, there is a high degree of complexity and some firms may not have the internal resources or a large enough client base to justify acquiring the capabilities required to offer some of the more sophisticated services related to tax credits (jobs, energy, enterprise zones, etc.) as well as cost segregation.

There is a simple management strategy that is often overlooked when it comes to complexity and many accounting firms get caught in the trap.  In order to break through the ceiling of complexity you must first step back and simplify the approach.  The purpose of this article is to demonstrate a proven process to simplification and allow CPAs and firms to think differently about matching opportunities with capabilities.  By thinking differently, you will probably challenge some of the existing strategies and perhaps even some of the processes that have made you successful.  The old saying that what got you to this level of success won’t get you to the next level is often true when dealing with increased complexity.

We are talking about the development or access to the required capabilities necessary to leverage current and future opportunities.  If you don’t have those capabilities or access to them, your firm will miss opportunities.  If you do have the capabilities, but not the opportunities, you will generally under perform and have trouble retaining and attracting quality talent due to the lack of growth opportunities.  Internal discussions often evolve into the chicken or the egg arguments.

Let’s take one step back from what most firms are doing today and assess how to develop talent and capabilities based upon today’s opportunities.  Most firm’s think in terms of internal resources, especially larger firms, but this may not make the most sense economically.  Think big (10 times) and how you can leverage this opportunity with little or no additional investment in labor or technology!

In our profession, talent provides capabilities and the market provides the opportunities.  Talent is developed primarily with three key components:

1. Self-motivation and life-long learning
2. Access to experts and experience
3. Relationships with peers

This approach may be different than the rugged individual approach many seasoned professionals are accustomed to.  Today, the complexity and breadth of knowledge requires a team approach in order to scale.

Here are some basic questions CPAs and firms should ask when evaluating new or expanded services.

1. Will this service provide value to the client?
2. Who is going to champion this service?
3. Does the champion have the passion, time, team and budget to be successful?
4. Does the firm have the necessary capabilities or should we source with an external expert?
5. Does the firm know how to name, package, brand and price this service?
6. Is there a community of peers we can join in order to accelerate our ability to balance capabilities with opportunities?

The tendency is to short-cut the planning and start charging hours to a project.  This often results in large write-offs and poor client service.  Taking the time to think, plan and grow will increase the probability and level of success.

We can speak to this approach with over 10 years of experience in facilitating communities.  We started with The Boomer Technology Circles and then expanded to The CIO Advantage, The Producer Circle,The CEO Advantage, and The Talent Development Advantage.   This year we are starting The Specialty Tax Circle with Engineered Tax Services, Inc.  This community will focus on tax and energy credits along with cost segregation.  All of these communities provide participants with access to experts and the opportunity to develop peer relationships.  In most communities we ask firms to send two or more participants who act as a team.  This approach bridges gaps between different unique abilities.

From extensive experience, I can say the CPAs and firms that get the most value from communities are those who contribute and provide confidence to their peers.  Learning is a two-way street.  You must be vulnerable to learn and willing to teach.  The communities raise the level of success for all participants.  Also having access to expertise outside of their firm provides great value, even for internal experts.   The exchange among expert peers results in learning, increased confidence and improved clarity. This expertise ranges from technical tax and accounting knowledge to:

• Technology
• Marketing and sales
• HR and team building/management

In the end, it is about you. You have to be motivated and have the passion to succeed.  The participation in a community provides access to experts and peer relationships, accelerate the process and increase the probability of success.  Those with passion succeed while those without passion try.

L. Gary Boomer

Boomer Consulting, Inc.
610 Humboldt St.
Manhattan, KS 66502
785-537-2358

Two recent court cases have had significant impact on the use of cost segregation studies in terms of reclassifying building components for accelerated depreciation.

In the most recent case, AmeriSouth XXXII, Ltd v. Commissioner of Internal Revenue, T.C. Memo 2012-67(“AmeriSouth”), the United States Tax Court denied AmeriSouth XXXII Ltd. over $1,000,000 of accelerated depreciation that had been previously reclassified using a cost segregation study.

The decision should be viewed as a cautionary tale about how trusted advisors in the accounting industry should exercise a high degree of prudence in how they select qualified engineering firms to provide tax studies for their clients.  Ultimately, CPA’s and financial advisors need to be assured through their own proper due diligence that the selected engineering partner is able to justify the results of a study and is prepared to support the reclassifications in the event of an audit. The Amerisouth case potentially also signals greater responsibility to advise clients regarding firms that may inevitably place them at risk due to poor methodology, inexperience or an inability to defend their reports

The facts of AmeriSouth show what could have easily been avoided by a properly conducted and defensible study:

• AmeriSouth purchased an apartment complex in 2003 for $10.25 million.They commissioned a cost-segregation study and through it, attempted to accelerate the depreciation of more than 1,000 building components over five- or 15-year spans, instead of the 27.5 years applicable to rental real estate under the Modified Accelerated Cost Recovery System (“MACRS”). Through its methodology, AmeriSouth deducted $3,029,029 for depreciation in the years 2003–2005.
• When the IRS audited the AmeriSouth partnership returns, they disagreed with AmeriSouth’s treatment of the components and denied $1,079,751 in deductions for those years. The case ended up in Tax Court, where the IRS also argued that AmeriSouth was actually attempting to depreciate some assets it did not own.
• By the time the case was tried, AmeriSouth was in the process of selling the apartment complex that was the subject of the cost segregation study and stopped responding to communications from the court, the IRS, and even its own attorneys. The court allowed the attorneys to withdraw from the case.
• The court analyzed components in each of the 12 categories AmeriSouth had identified for faster depreciation, which included site preparation and earthwork, water distribution systems, sanitary-sewer systems, gas lines, site electric, special HVAC, special plumbing, special electric, finish carpentry, millwork, interior windows and mirrors and special painting.

• Based on its examination of the facts, the court sided with the IRS in all but a handful of instances, holding that most components were structural, integral to the buildings’ operation and maintenance, and therefore depreciable over the life of the building and not the shorter terms classified by the taxpayers.

This case was unique because the property in question was being sold about the time the case was tried and AmeriSouth had simply stopped responding to communications in a way that could have defended positions taken. As a result, AmeriSouth had neither the expertise nor evidence to uphold the study supporting their accelerated deductions.

If AmeriSouth had allowed itself to be properly represented, sufficient evidence could have been provided to refute the judge’s position on many of the disallowances.  Experts in the engineering tax community familiar Hospital Corporation of America v. Commissioner, 109 T.C. 21 (1997)(“HCA”),would have been able to successfully challenge many of the court’s final disallowances of the reclassified components within the study.Unfortunately, several items in the report were overly aggressive and,worse for the taxpayer’s position,was the fact that the report may have included assets not even owned by the property owner. That fact alone could have opened the floodgates to an unusually high level of scrutiny and unprecedented disallowances in some categories that would be defensible under normal circumstances.

Ultimately, the court’s decision was beneficial for the engineering tax industry. Articles subsequent to the memorandum have fueled great concern for the reliability of cost segregation studies. Fortunately, the legitimacy of cost segregation as a tax liability reduction technique has not changed and these tax strategies are still one of the most viable tax treatments for real estate investors, when done properly. But the clear message for the trusted advisor, is the necessity for CPA’s to have a proper RFP (request for proposal) system in place to select qualified engineering partners to provide specialty tax services to their firm’s clients.

The RFP system for engineering tax services should include in its request:
• Verification of corporation engineering licenses
• Verification of employed professional engineers
• Verification of insurance coverage, including Errors & Omissions coverage for gross negligence
• Minimum of 10 references from CPA firms nationally that verify satisfied peer results
• Verification of licensed CPA and/or licensed attorneys for protection from IRS tax controversy
• Verification the engineering firm has successfully defended reports against IRS audits

Michael Daszkal, Managing Partner for a large regional Florida CPA firm, stated, “We as a firm, go through a very through due diligence process when selecting outside consultants who provide specialty tax services for our clients. I anticipate that we as an industry will see more of these court cases until the CPA community as a whole does a better job of managing the RFP process for selecting specialty tax firm. We have a very regimented process for selecting such firms that are approved for our partners to refer to our clients. Realizing that this is an unregulated industry and there are many new firms claiming expertise, we interviewed more than a dozen firms prior to selecting what we considered to be one of the only legitimate firms, Engineered Tax Services. We were able to verify their engineering licenses, their employment of professional engineers, their insurance coverages as well as get peer references. We have been thrilled with the relationship and we are glad we as a firm went through such a rigorous RFP process prior to selecting a firm we felt comfortable referring to our clients.”

Allan Koltin, considered one of the most influential people in accounting by Accounting Today, added that “it is vital that CPA firms be aware that there are great differences in the quality of specialty tax firms and that an RFP process which is managed top down by each firm is critical to assure quality of service and mitigate future risk.”

At this time, we can only speculate on the effect AmeriSouth will have on future inquiries. However, it would be reasonable to hope that those signing returns and advising clients properly investigate outside resources that provide such reports. If the IRS decides to intensify evaluations of cost segregation reports, CPAs would be prudent to expect outside firms to provide audit defense, comply with circular 230 regulations and offer detailed reports using architectural support, including plans, MEPs and “as-builts” to substantiate claims.

Another recent tax court case provides an additional lesson on the importance of CPA’s taking extreme care in selecting specialty tax partners when their clients are purchasing the assets of a business that includes real estate.

When a company acquires part or all of the assets of an existing trade or business, the purchaser’s tax basis is determined by the amount paid for the assets. Both parties in the transaction generally must agree to an allocation of the purchase price among the assets purchased. In Peco Foods Inc. and Subsidiaries v. Commissioner, T.C. Memo. 2012-18 (“Peco”), the Tax Court ruled that a taxpayer who purchased the assets of a business could not retroactively change a purchase price allocation agreed to in connection with the asset acquisition. The court held that even a properly completed cost segregation study could not be used to reclassify assets from real property to personal property after the purchaser and transferor had an enforceable asset allocation agreement in place.

According to tax consulting advisors familiar with the matter in Peco, taxpayers like Peco may be able to draft a purchase agreement that permits the taxpayer to perform a fixed-asset review or cost segregation study after the purchase transaction has been completed.

Gary Boomer of Boomer Consulting recently established The Specialty Tax Circle to address all these issues related to providing quality services in this tax arena. Said Boomer, “We’ve teamed up with Engineered Tax Services to introduce The Specialty Tax Circle in order to help firms improve growth and profitability by leveraging specialty tax services that address issues like this.This group brings together firm leaders who will share best practices and experiences dealing with tax issues that require special attention.” The first meeting is scheduled for June 17-18, 2012, in Kansas City, Mo., and the second in Jan. 15-16, 2013 in Las Vegas.

“This is a great opportunity for our firms to focus on opportunities and share experiences and resources,” said Engineered Tax Services CEO, Julio Gonzalez. “By creating this group, we are giving firms an opportunity to learn from each other and discover how not to repeat the mistakes that were made in the AmeriSouth and Peco cases.”

Taken together, this pair of contentious IRS cases should instill a greater sense of vigilance among CPA’s when researching a suitable specialty tax partner. The consequences of performing adequate due diligence in such cases can make an enormous difference in the final determination of allowable property classification and depreciation.

This article was written by John Cummings, Executive Strategic Officer at ETS, as well as General Counsel for ETS.    John is also a partner at the New Jersey, New York and Florida-based law firm, Nicoll, Davis and Spinella.  Contact John at 561.253.6640.

Engineered Tax Services (ETS) is pleased to announce that John Cummings, General Counsel for ETS, has a newly expanded role of Executive Strategic Officer. In this role John will be focused on improving the company’s overall organization in the areas of operations, human resources and accounting. In addition, he will act as the Energy Department liaison between the sales directors and the engineering executive team. He will ensure that all ETS staff activities are in compliance with Standard Operating Procedures and that all matters impacting sales, revenue, commissions, etc. are operating as outlined in policy and documented as such. He will also be assisting in ensuring a smooth and consistent application of rules and policies between sales directors.

Says Julio Gonzalez, CEO of Engineered Tax Services, “Assuming these roles, John’s function will streamline operations and day-to-day practices in a way that makes everyone’s job a little bit easier, communications a lot smoother between and among departments and team members and thereby create greater efficiency in the work we provide our clients.”

Prior to working with ETS, John founded and was the CEO for several companies including CompuMedical, LLC, where he managed all the company’s corporate matters, ethics and compliance issues and litigation. John had also spent 10 years gaining litigation and transactional experience at a large regional law firm as well as his own firm, representing large insurance carriers in the defense of complex environmental claims as well as automobile, workers’ compensation and products liability claims.

About Engineered Tax Services

Engineered Tax Services (ETS) is the only qualified professional engineering firm that has its own licensed engineers, including LEED Accredited Professionals, as well as tax experts, from CPAs to a former senior IRS executive, on staff. ETS marries the science of engineering with the principles of tax and accounting to arrive at financial solutions that result in increased cash flow, minimized tax payments and maximum return on investment and energy. These IRS-sanctioned services include Energy Tax Credits, Energy Policy Act Certifications (179D Studies), Cost Segregation Studies, Research and Development Studies, Repair and Maintenance Studies, Historic Tax Credits Studies, Engineering Insurance Appraisals, Energy and Carbon Audits. For more information visit http://engineeredtaxservices.com.

On May 17, 2012, The U.S.Navy issued a Bulletin for the Implementation of 179D on its buildings.  Designers looking to increase work and revenue in their firm, should read this article with the view of  assisting the government to upgrade their buildings for energy efficiency.

https://portal.navfac.navy.mil/portal/page/portal/docs/doc_store_pub/ecb2012-04.pdf

Specialty Tax Expert Peter J. Scalise Joins Engineered Tax Services as National Tax Practice Leader and Executive Managing Director

Engineered Tax Services (ETS) is proud to announce that specialty tax expert Peter J. Scalise, B.S., M.S. is now National Tax Practice Leader and Executive Managing Director, serving out of the New York office. Peter has over 15 years of progressive public accounting experience developing and leading multi-million dollar tax practices on both a regional and national level for the global Big 5 CPA Firms.

Prior to joining ETS, Peter developed and led a $ 5.5 million dollar tax consulting practice in the Northeast for a Big 5 firm. Peter is a highly acclaimed thought leader in the fields of accounting and taxation who is well published in the areas of taxation, financial accounting pronouncements and international financial reporting standards. He has successfully advised clients ranging in size from leading middle-market to Fortune 100 companies on the Research Tax Credit, with tax savings ranging from approximately $100,000 to well over $100 million per client.

Peter’s thought leadership in connection to the research tax credit encompasses all aspects, including assistance with technical issues; designing, implementing and defending multi-year look-back research tax credit studies (i.e., both pre- and post-IRS Tier 1 Audit Directive); and the identification of exposure items for purposes of ASC 740 and FIN 48. He has also overseen the automation of clients’ research tax credit information-gathering processes across a diverse group of industries including, but not limited to, Aerospace & Defense; Technology Companies including Software and Electronics; Global Manufacturers; Telecommunications; Transportation; Energy, Natural resources, and Chemicals; Food Science; Life Sciences including Bio-Technology, Pharmaceuticals, and Medical Devices; and Financial Services for 3rd party sale, lease, license, software and internal use software development.

“We are incredibly excited to have Peter as part of the ETS team,” said Julio Gonzalez, CEO. “His experience and knowledge fit perfectly with the exceptional service and ability our clients have come to expect. Peter’s expertise is an outstanding additional service that we are now able to provide our clients from which I know they will see great results.”

About Engineered Tax Services

Engineered Tax Services (ETS) is the only qualified professional engineering firm that has its own licensed engineers, including LEED Accredited Professionals, as well as tax experts, from CPAs to a former senior IRS executive, on staff. ETS marries the science of engineering with the principles of tax and accounting to arrive at financial solutions that result in increased cash flow, minimized tax payments and maximum return on investment and energy. These IRS-sanctioned services include Energy Tax Credits, Energy Policy Act Certifications (179D Studies), Cost Segregation Studies, Research and Development Studies, Repair and Maintenance Studies,  Historic Tax Credits Studies, Engineering Insurance Appraisals, Energy and Carbon Audits. For more information visit http://engineeredtaxservices.com.

Peter’s announcements were also distributed through the industry through the following links

http://www.newswiretoday.com/news/110703/

http://www.onlineprnews.com/news/224615-1335300474-specialty-tax-expert-peter-j-scalise-joins-engineered-tax-services.html

http://www.pressreleasepoint.com/specialty-tax-expert-peter-j-scalise-joins-engineered-tax-services-national-tax-practice-leader-exec

http://www.prhwy.com/news/44631-specialty-tax-expert-peter-j-scalise-joins-engineered-tax-services-as-national-tax-practice-leader-and-executive-managing-directo.html

http://www.widepr.com/press_release/38464/specialty_tax_expert_peter_j_scalise_joins_engineered_tax_services.html

http://www.theopenpress.com/index.php?a=press&id=139088

http://www.free-press-release.com/news-specialty-tax-expert-peter-j-scalise-joins-engineered-tax-services-as-national-tax-practice-leader-and-executive-managing-director-1335294560.html

http://financialservices-cj.blogspot.com/2012/04/google-alert-tax-services_2421.html

http://www.zimbio.com/member/aliceadams/articles/-6CqTh3Z1nh/Specialty+Tax+Expert+Peter+J+Scalise+Joins

http://www.prlog.org/11858113-specialty-tax-expert-peter-scalise-joins-engineered-tax-services.html