TechTax Q3 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.

How Tech Companies Should Navigate the Complexities of Sales and Income Tax

Technology companies face unique challenges when it comes to state tax compliance, often encountering complex regulations that vary by jurisdiction. Not only do sales tax economic nexus rules add layers of complexity for multistate operations, but many states have rigorous tax and regulatory frameworks that require businesses to navigate franchise taxes, employment taxes, and local business taxes as well. Non-compliance can lead to severe penalties, making it essential for technology companies to stay informed, engage professional advisors, and utilize automated solutions to manage their obligations effectively.

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The Evolution of the Employee Retention Credit

The Employee Retention Credit (ERC) program has undergone numerous changes in the past few months, significantly impacting companies that have taken the credit or who are still considering taking it. Recent announcements from the IRS include reopening the ERC voluntary disclosure program, accelerating ERC payments while ramping up audits, and imposing a moratorium on certain ERC claims. These changes reflect increased scrutiny by the IRS and evolving compliance requirements. Technology companies, which were often early adopters of these credits, must stay vigilant as the IRS intensifies efforts to identify ineligible claims and prevent fraud.

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AI-Powered Software: Avoiding Information Security Pitfalls

Artificial intelligence (AI) is revolutionizing how technology companies are solving problems. From improved customer support and personalized user experiences to predictive analytics, product recommendations, and automated workflows, the integration of AI can be a good business decision. But with this integration comes risk. To mitigate, companies are beginning to use industry-accepted frameworks related to AI governance. Standard-setting bodies such as International Organization for Standardization (ISO), National Institute of Standards and Technology (NIST), and HITRUST have created resources to help companies manage the risk of AI.

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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.