TechTax Q2 2024: Important Tax and Legislative Updates for the Technology Industry

As the technology industry continues to be a driving force in global innovation and economic growth, staying abreast of the latest tax legislation and regulatory changes is essential for businesses. From start-ups and founders to seasoned entrepreneurs, this information will help inform decisions and optimize financial strategies.

R&D Tax Credit: Why Documentation Matters, Especially for Technology Companies

In today’s competitive landscape, technology companies are at the forefront of innovation. Whether developing cutting-edge software, pioneering new hardware solutions, or enhancing cybersecurity measures, these companies continually invest in research and development to stay ahead. The federal research tax credit (also called the Research & Development credit or R&D credit) offers a valuable opportunity to offset some of these costs, fostering further innovation and growth. However, as highlighted in recent cases such as Moore v. Commissioner, the key to securing this benefit lies in documentation.

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Recent Changes to Sales Tax Nexus and the Impact on Technology Companies

As many states shift away from transaction thresholds to define economic nexus, technology companies face new sales tax compliance challenges. The importance of staying informed about the diverse economic nexus laws across jurisdictions cannot be understated as it will help the technology industry manage tax exposures effectively.

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Initial Due Date and Fraud Alert for New FinCEN Reporting Obligation

A new reporting requirement for Beneficial Ownership Information (BOI) went into effect Jan. 1, 2024. Introduced as part of the Corporate Transparency Act and enforced by the Financial Crimes Enforcement Network (FinCEN), this requirement is imposed on an entity-by-entity basis. While some entities are exempt from the reporting requirement, many entities will be required to report.

Many aspects of this new BOI reporting requirement are legal in nature and outside the scope of traditional tax and accounting services. For technology companies with complex capital structures, identifying all potential beneficial owners can be challenging. Thus, consultation with legal counsel is recommended for additional assistance.

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KSM’s tax professionals follow tax legislation across the country. If you have questions about how this or other legislative actions might affect your business, please contact your KSM advisor or complete this form.