Avoiding Tax and Legal Missteps: 4 Takeaways
On September 20, Peterson Sullivan and Schwabe, Williamson & Wyatt partnered to host a seminar titled Avoiding Tax and Legal Missteps for the Construction Industry. Below are some of the key takeaways to consider:
#1: Claim Preservation and Accounting Backup—Justifying Quantum
When claims arise on construction projects—for scope disputes, changed work, changed conditions, delay or acceleration, cumulative impacts, defective specifications, etc.—the contractor will have an obligation to prove not only entitlement for the claim, but also the “quantum,” i.e., how much is due.
The contractual and statutory obligations on contractors to prove quantum are only getting more onerous, and only some costs are recoverable. Create a strategy to preserve claims and prove quantum through pre-contract agreement on labor rates, equipment rates and associated markups. Be diligent about cost coding and preserving source documentation.
Presented by Ryan Dumm.
#2: The Construction Industry and the Underground Economy—How the Big 3 State Agencies Collaborate to Ensure Compliance With State Laws
Managing the tax compliance function is key to minimizing audit findings should you receive that letter notifying you of an audit. Rachel Le Mieux discussed how the Construction Underground Economy Advisory Committee was created to work with taxing agencies targeting the construction industry Companies should be diligent in documenting and record keeping to minimize state tax risks.
Presented by Rachel A. Le Mieux
#3: Business Succession and Estate Planning: Two Sides of the Same Coin
For construction business owners, business and family matters are often intertwined, complicating both. M. John Way discussed how effective business succession and estate planning requires early and coordinated planning to be effective. Key to this process is an unbiased evaluation of the business, its value and who should lead it in the future, as well as what roles family members will play, how much money will be needed in the future and the potential impact on taxes. Once these issues are determined, customized succession and estate plans that work together and reflect the owner’s wishes can be created.
Presented by M. John Way
#4 Keep Calm and Mostly Carry On—How Construction Contractors Can Adopt the FASB’s New Revenue Recognition Standard
The Financial Accounting Standards Board is bringing U.S. company revenue recognition policies in line with the international financial community. Dan Case explained the background behind the FASB’s new revenue accounting standard, new terminology, and how the new approach compares to the percentage-of-completion method for contractors. The discussion covered timing of the change, how to reflect it in financial statements, additional disclosures, and thoughts about internal changes your company should consider.
Presented by Dan Case