Tuesday, May 24, 2011
You never know who you will meet at a PKF Conference...
This past week at the PKF Management Conference, Charles met Joe Thiesmann (former Redskins QB)!
Saltmarsh's Relay For Life Team
Looks like a great time was had by all who participated in this years' Relay for Life! Congrats Team Saltmarsh!
Audit girls take-on Warrior Dash
The other weekend, some of our Audit girls completed the first Warrior Dash in Mountain City, Georgia. The Dash consisted of an extreme run and 11 obstacles to complete that included: the Muddy Mayhem, Great Warrior Wall, Warrior Roast and the Menacing Minefield.
Great job girls!
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| Diane, Jen, Laura (Saltmarsh Alum) and Angelika after the Dash |
Great job girls!
Friday, May 20, 2011
Revenue Pharmaceutical Manufacturers or Importers of Branded Prescription Drugs – IRS Offers Dispute Resolution Process for the Preliminary Fee Calculation for the 2011 Annual Fee
On May 2, 2011, the IRS issued rules (Rev. Proc. 2011-24), which provide an exclusive process available to covered entities, which are certain manufacturers and importers of branded prescription drugs, to dispute the 2011 preliminary fee calculation and obtain any change to data that would be reflected in the final fee allocation. In order to participate in the dispute resolution process, a covered entity must submit a written error report to the IRS that is postmarked no later than June 1, 2011.
On May 16, the IRS was scheduled to mail a preliminary fee calculation to the taxpayers and taxpayers will have until June 1, 2011 to dispute the calculation.
The nondeductible annual fee on branded prescription drugs was enacted by the Patient Protection and Affordable Care Act as amended by the Health Care and Education Reconciliation Act (the Acts). The aggregate annual fee will be $2.5 billion for 2011, increases to $4.1 billion for 2018, and decreases to $2.8 billion for 2019 and later. The aggregate annual fee will be allocated by the IRS to each covered entity based upon its proportionate share of branded prescription drug sales incurred during the preceding calendar year. Covered entities with branded prescription drug sales that are $5 million or less are exempt from this fee.
The fee will be calculated based on the proportion of each covered entity’s sales to any specified government programs which are: the Medicare Part D program, the Medicare Part B program, the Medicaid program, and any program under which branded prescription drugs are procured by the Department of Veterans Affairs, Department of Defense, and TRICARE retail pharmacy program.
IRS Notice 2011-9 asked taxpayers to submit a Form 8947 to the IRS by February 11 to provide data on branded prescription drugs, orphan drugs, and rebates. The Notice 2011-9 also provided methodology and the approach for the preliminary 2011 fee allocation to each covered entity.
Accounting Implication:
In December 2010, the FASB has issued Accounting Standards Update (“ASU”) No. 2010-27, Other Expenses (Topic 720): Fees Paid to the Federal Government by Pharmaceutical Manufacturers. This ASU provides guidance on how pharmaceutical manufacturers should recognize and classify in their income statement fees mandated by the Acts.
The amendments in this ASU specify that the liability for the fee should be estimated and recorded in full upon the first qualifying sale with a corresponding deferred cost that is amortized to expense using a straight-line method of allocation unless another method better allocates the fee over the calendar year that it is payable. The annual fee should be presented as an operating expense.
The amendments in this ASU are effective for calendar years beginning after December 31, 2010, when the fee initially becomes effective.
Tax Implications:
An entity’s portion of the annual fee is not tax deductible. The branded prescription drug sales do not include sales of any drug or biological product with respect to which a tax credit was allowed for any taxable year under IRC Section 45C.
If you require any assistance with the filing of written error report, Form 8947, or identification of Section 45C credit opportunities, please contact Saltmarsh, Cleaveland & Gund, (850) 435-8300.
Timelines Table:
February 11, 2011 (December 15 of each year in subsequent years):
IRS Notice 2011-9 asked taxpayers to submit a Form 8947 to the IRS by February 11 to provide data on branded prescription drugs, orphan drugs, and rebates.
May 16, 2011:
IRS will mail preliminary calculations to taxpayers
June 1, 2011:
If taxpayer believes that preliminary calculation contains error, it must make written error report to IRS postmarked by June 1 for claim to be considered.
August 15, 2011:
The IRS will mail final fee calculations to taxpayers by August 15 after making any necessary adjustments
September 30, 2011:
The payment of the fee from each taxpayer will be due no later than September 30.
© 2011 EisnerAmper LLP
On May 16, the IRS was scheduled to mail a preliminary fee calculation to the taxpayers and taxpayers will have until June 1, 2011 to dispute the calculation.
The nondeductible annual fee on branded prescription drugs was enacted by the Patient Protection and Affordable Care Act as amended by the Health Care and Education Reconciliation Act (the Acts). The aggregate annual fee will be $2.5 billion for 2011, increases to $4.1 billion for 2018, and decreases to $2.8 billion for 2019 and later. The aggregate annual fee will be allocated by the IRS to each covered entity based upon its proportionate share of branded prescription drug sales incurred during the preceding calendar year. Covered entities with branded prescription drug sales that are $5 million or less are exempt from this fee.
The fee will be calculated based on the proportion of each covered entity’s sales to any specified government programs which are: the Medicare Part D program, the Medicare Part B program, the Medicaid program, and any program under which branded prescription drugs are procured by the Department of Veterans Affairs, Department of Defense, and TRICARE retail pharmacy program.
IRS Notice 2011-9 asked taxpayers to submit a Form 8947 to the IRS by February 11 to provide data on branded prescription drugs, orphan drugs, and rebates. The Notice 2011-9 also provided methodology and the approach for the preliminary 2011 fee allocation to each covered entity.
Accounting Implication:
In December 2010, the FASB has issued Accounting Standards Update (“ASU”) No. 2010-27, Other Expenses (Topic 720): Fees Paid to the Federal Government by Pharmaceutical Manufacturers. This ASU provides guidance on how pharmaceutical manufacturers should recognize and classify in their income statement fees mandated by the Acts.
The amendments in this ASU specify that the liability for the fee should be estimated and recorded in full upon the first qualifying sale with a corresponding deferred cost that is amortized to expense using a straight-line method of allocation unless another method better allocates the fee over the calendar year that it is payable. The annual fee should be presented as an operating expense.
The amendments in this ASU are effective for calendar years beginning after December 31, 2010, when the fee initially becomes effective.
Tax Implications:
An entity’s portion of the annual fee is not tax deductible. The branded prescription drug sales do not include sales of any drug or biological product with respect to which a tax credit was allowed for any taxable year under IRC Section 45C.
If you require any assistance with the filing of written error report, Form 8947, or identification of Section 45C credit opportunities, please contact Saltmarsh, Cleaveland & Gund, (850) 435-8300.
Timelines Table:
February 11, 2011 (December 15 of each year in subsequent years):
IRS Notice 2011-9 asked taxpayers to submit a Form 8947 to the IRS by February 11 to provide data on branded prescription drugs, orphan drugs, and rebates.
May 16, 2011:
IRS will mail preliminary calculations to taxpayers
June 1, 2011:
If taxpayer believes that preliminary calculation contains error, it must make written error report to IRS postmarked by June 1 for claim to be considered.
August 15, 2011:
The IRS will mail final fee calculations to taxpayers by August 15 after making any necessary adjustments
September 30, 2011:
The payment of the fee from each taxpayer will be due no later than September 30.
© 2011 EisnerAmper LLP
Wednesday, May 18, 2011
New Employee - Whitney Harrington
On Monday, Whitney Harrington joined the Pensacola office. Whitney is a recent graduate of UWF, where she received her Bachelor’s Degree in Accounting. She will be joining our team of Financial Institution Auditors and we are happy to have her. She will be sitting upstairs in the audit department, next to Brad Mostert.
Welcome Whitney!
Welcome Whitney!
Monday, May 9, 2011
IRS Provides Guidance on 100% Bonus Depreciation
On March 29, 2011, the IRS released Rev. Proc. 2011-26 providing much-needed guidance on 100% bonus depreciation and associated issues. This effectively clarifies a number of issues including two which may be of interest to our clients: the ability to elect alternative 50% bonus depreciation; and the ability to depreciate components of self-constructed property.
Background
The Obama Administration’s Tax Relief, Unemployment Insurance Reauthorization, and Job Creation Act of 2010 (“the Act”) granted an additional 100% first-year depreciation for certain “qualified property” acquired or placed in service after September 8, 2010 and prior to January 1, 2012. The prior definition of “qualified property” remained intact – generally as acquired and placed in service after December 31, 2007 and prior to January 1, 2013 with original construction commencing with the taxpayer.
The Rev. Proc. provides much-welcomed guidance, inter alia, on self-constructed property in the context of 100% bonus depreciation; and on the ability to elect 50% bonus depreciation in lieu of 100% bonus depreciation or standard statutory depreciation deductions.
Self-Constructed Property
In general, for 100% depreciation purposes, self-constructed property is acquired when significant construction begins. Even if the construction of a property begins before the September 9, 2010 eligibility date, specific components of the project, with a proper election, may be eligible for 100% bonus depreciation if the component’s self-construction began or acquisition occurred after September 8, 2010.
Election of 50% Bonus Depreciation
Prior to the issuance of Rev. Proc. 2011-26, there was no ability to elect 50% bonus depreciation rather than 100% depreciation due to no affirmative guidance. For eligible property, taxpayers either opted for 100% bonus depreciation or elected out of the bonus depreciation regime entirely.
Fortunately, the new guidance permits taxpayers to elect – if preferable due to their particular tax positions – 50% bonus depreciation instead of 100% bonus depreciation. Because this has been released very close to the April 15, 2011 tax return filing deadline, taxpayers who have already filed their 2010 returns may opt for 50% bonus depreciation on an amended return filed prior to next year’s return or file an automatic accounting method change for either the first or succeeding years.
If the taxpayer elected out of bonus depreciation for a class of property, the taxpayer may revoke the election by June 17, 2011 or, if later, by the time it files next year’s tax return.
If you have any questions about this Alert, please contact Saltmarsh, Cleaveland & Gund (850) 435-8300.
© 2011 EisnerAmper LLP
Background
The Obama Administration’s Tax Relief, Unemployment Insurance Reauthorization, and Job Creation Act of 2010 (“the Act”) granted an additional 100% first-year depreciation for certain “qualified property” acquired or placed in service after September 8, 2010 and prior to January 1, 2012. The prior definition of “qualified property” remained intact – generally as acquired and placed in service after December 31, 2007 and prior to January 1, 2013 with original construction commencing with the taxpayer.
The Rev. Proc. provides much-welcomed guidance, inter alia, on self-constructed property in the context of 100% bonus depreciation; and on the ability to elect 50% bonus depreciation in lieu of 100% bonus depreciation or standard statutory depreciation deductions.
Self-Constructed Property
In general, for 100% depreciation purposes, self-constructed property is acquired when significant construction begins. Even if the construction of a property begins before the September 9, 2010 eligibility date, specific components of the project, with a proper election, may be eligible for 100% bonus depreciation if the component’s self-construction began or acquisition occurred after September 8, 2010.
Election of 50% Bonus Depreciation
Prior to the issuance of Rev. Proc. 2011-26, there was no ability to elect 50% bonus depreciation rather than 100% depreciation due to no affirmative guidance. For eligible property, taxpayers either opted for 100% bonus depreciation or elected out of the bonus depreciation regime entirely.
Fortunately, the new guidance permits taxpayers to elect – if preferable due to their particular tax positions – 50% bonus depreciation instead of 100% bonus depreciation. Because this has been released very close to the April 15, 2011 tax return filing deadline, taxpayers who have already filed their 2010 returns may opt for 50% bonus depreciation on an amended return filed prior to next year’s return or file an automatic accounting method change for either the first or succeeding years.
If the taxpayer elected out of bonus depreciation for a class of property, the taxpayer may revoke the election by June 17, 2011 or, if later, by the time it files next year’s tax return.
If you have any questions about this Alert, please contact Saltmarsh, Cleaveland & Gund (850) 435-8300.
© 2011 EisnerAmper LLP
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