Reform of Michigan’s Unclaimed Property Act (UPA) – and the way in which this obscure law is administered – has long been a focus of the Michigan Chamber. Compliance with the UPA is a significant hidden cost of doing business and Chamber members particularly dislike the state’s continued use of contingency-fee paid auditors!
Tax Policy & Finance
Unclaimed property is any financial asset that has been left with a “holder,” such as a bank, insurance company or other business or organization and has gone unclaimed beyond the dormancy period. Examples of unclaimed property include uncashed payroll checks, inactive stocks, dividends, checking and savings accounts as well as many other property types.
This past year has continued to provide updates to Michigan's Unclaimed Property laws. These two legislative changes provide holders significant benefits:
The new exemption is complicated and even counterintuitive.
First, the exemption applies only if more than 50% of the personal property (measured by cost) at your location is used either for industrial processing or in direct integrated support of that processing.
Second, even if you pass that 50% hurdle, only new property (in service in 2013 or later) and old property (in service at least 10 years old as of 2016) will be exempt. Anything in the middle will be taxed.
Personal property tax reform was assured with last August’s state-wide referendum. Now that the political campaign is over, the sound-bite style of describing the new law has died down.
You will soon need to apply this complicated set of new rules to your company’s tax filings. Let’s see how the reality of this new law differs from the sound bites you’ve heard this year.
Sound bite #1: All personal property will be exempt from tax.
No matter what department you work for within a business, the finance and accounting functions touch every aspect of your role and the organization. For employees that do not work directly in the finance function, it can sometimes be challenging to understand how the financial and accounting concepts and policies affect their daily tasks and department goals.
Michigan business entities, as well as individuals, may have significant known and unknown liability for use tax on purchases subject to the sales tax, but where payment of the sales tax cannot be proven. This is due to the Andrie Michigan Supreme Court use tax decision.
Seller paper, SBA financing and buyer cash often comprise the three major components of a business purchase. However, what happens when a really good buyer (as perceived by the seller) wants to buy the business, but a gap persists between what the buyer is willing to pay and what the seller will take?
Under the above scenario (which is fairly common), a business broker or other facilitator must get creative in conceiving other sources of payments to the seller which are palatable to the buyer. Let’s discuss some to them…
Every employer must have an I-9 Employment Eligibility Verification Form completed for every employee who they employ in the US. This requirement only applies to workers hired since November 7, 1986. This form applies to all persons who work in the US, regardless as to the country from which they are paid (i.e. a German citizen working in the US, but paid in Germany, requires an I-9). The I-9s are completed but are kept with the employer until an appropriate US government agent requests to see them.
Last time we discussed the fact that since the Great Recession, commercial banks have become asset-based lenders. This is a negative development to the business seller since most business sales require a buyer to pay a premium over asset value. Sellers correctly expect to be compensated in the purchase price for goodwill, also referred to as enterprise value and unflatteringly as blue sky or air ball.
With all of the hullabaloo of the Affordable Care Act (ACA), it can be easy to forget about HIPAA and COBRA. With recent changes, more enforcement and larger penalties, letting ACA eclipse HIPAA and COBRA can be a costly mistake to make. After years of experience, people often forget how important it is to remain in compliance with HIPAA and COBRA and that the same simple steps may also make ACA compliance easier and more efficient.