Tax Department Heroes: Cash Saving Opportunities

It’s official; the U.S. economy, if not the world economy, is in a recession.

As usually happens during economic downturns, companies turn to the Tax Department for cash. No, it’s not because we are hoarding cash in barrels out back. Often, it’s because the newly enacted stimulus law involves taxes. Plus, savvy companies know Tax Departments can be a source of strategic opportunities to recover and save cash. In this article, we provide a list of places to explore as you’re turning over stones to help save cash for your company.

We have indicated the stones to look under by name or high-level description only. They might not apply to all companies and situations. Additional research or consultation with your advisors should be performed to confirm your business qualifies.

Recent stimulus:

  • EIDL (Economic Injury Disaster Loan Program) grants and loans (CARES Act)
  • PPPL (Paycheck Protection Program loans) (CARES Act)
  • Other business loan programs under the CARES Act
  • Deferral of payments on pre-existing SBA loans (CARES Act)
  • Delayed tax filings and payments (IRS)
  • Delayed payroll tax payments (CARES Act)
  • COVID-19 related sick leave (FFCRA)
  • NOL carrybacks (CARES Act)
  • AMT credit (CARES Act)
  • Increase in the cap on IRC Sec. 163(j) interest deductions (CARES Act)
  • Qualified improvement property (e.g. subject to 15 years depreciation) (CARES Act)
  • Payroll tax credits on retained employees (exclusion applies with the PPPL) (CARES Act)
  • Increase in the cap on charitable contribution deductions (CARES Act)

Preexisting laws:

  • Accounting methods
  • Capitalization policies
  • Treatment of customized or internally developed software
  • Enhanced charitable deductions for food donations
  • Research and development – have conversations with heads of different teams to learn about new activities
  • Tips credit for restaurants and other industries with tipped staff
  • Tax incentives such as work opportunity credits
  • Legal entity structure
  • Revenue recognition – take another look at large contracts and accounting’s policies
  • Analyze entries in select GL accounts
  • Evaluate fixed assets for:
    • Items that can be re-categorized or split into shorter-lived assets
    • Items that can be written off or down
    • Items that can be expensed
    • Items that can begin depreciating
  • Acquisitions:
    • Payroll taxes
    • Workers compensation rates
    • Goodwill – basis and release
    • Basis in liabilities (some liabilities do not follow GAAP, such as deferred revenue, which is based on anticipated cost of generating revenue)
  • Federal and state items subject to carryforward limitations to ensure proper treatment – if the rules are unclear, do not make assumptions, there may be resources to help you determine proper treatment such as Congressional intent, jurisdiction manuals, and instructions for returns from the year the law went into effect
    • NOLs
    • AMT credits
    • R&D credits
    • Excess charitable contribution deductions
    • Nonrefundable incentives
  • Foreign taxes, direct and indirect
  • Evaluate sales tax for:
    • Machinery and equipment used in manufacturing
    • Rate adjustments if you use a blended sales tax rate based on “to go” sales
    • Exempt or zero-rated items
  • Property tax:
    • Assessed values
    • Special rules and rates for specific assets, such as machinery and equipment
    • Property no longer in the company’s possession
    • Payment deferrals
  • Excise taxes – state and federal
  • Unclaimed property
  • Timing of tax prepayments – penalties and interest may be outweighed by the company’s need for or return on/cost of cash

G&A driven:

  • Renegotiate rates with external service providers
  • Opportunities for automation
  • Reevaluate the in house to outsourced work mix
  • Seek experts working on contingency to find opportunities to recover cash or capture future savings, such as through credits
  • Reevaluate capital spending plans
  • Reevaluate tools and the department’s use of them
  • Reassess priorities
  • Implement KPIs for performance optimization and ROIs to control costs and focus efforts
  • Implement project management processes and tools
  • Implement policies, procedures, and protocols to standardize processes and increase efficiency

Let us know how it goes. You can share your recommendations with us by sending an email to

Happy hunting!

Ashby Walters is Executive Director and cofounder of TaxForward and Future Tax Leaders. She has served as head of or leader in tax for Peet’s Coffee, Inc., Quizno’s, Staples, Dish Network, and other companies. Over her 20-plus year career, Ashby has helped organizations from Fortune 200 companies to start-ups, save more than $200 million in cash taxes, millions in G&A, and thousands of production hours collectively.

Doing the Math on Unemployment Benefits

With nearly 10 million people registering for unemployment in a two-week period, we decided to look at unemployment benefits and how much they’ll cover in the upcoming weeks.

Unemployment benefits vary by state. Generally, they are a percentage of a person’s wages and limited to a certain number of weeks – usually 26 – and do not start until seven days after a person files for benefits. Once a recipient’s allotted benefits run out (i.e. are paid out over the maximum number of weeks), they might not be eligible to receive unemployment benefits for a while.

Excluding expanded benefits under the stimulus package, Massachusetts offers the highest weekly unemployment benefits at $823 for up to 30 weeks; Mississippi offers the lowest weekly benefits at $235 for up to 26 weeks – not enough to keep a single adult over the U.S. poverty guideline of $12,490 ($25,750 for a family of four according to the U.S. Department of Health & Human Services). Georgia offers the shortest benefit period at 20 weeks.

Using, as an example, Colorado, whose weekly maximum unemployment benefit of $561 exceeds even California’s weekly maximum, unemployment pays no more than 60% of a recipient’s earnings. A person must earn $4,000 monthly, or $48,000 annually, to receive an average monthly benefit of $2,431 – the maximum benefit in Colorado – a $1,569 hole. (We’re comparing gross numbers because both amounts are subject to income tax.) Add on the monthly cost of COBRA – which averaged $610 per month for individual plans in 2019 according to the Kaiser Family Foundation ($1,749 for families, both figures include 2% administrative fees) – and, in a state where half the population earned more than $68,811 in 2018, $5,734 monthly, according to the U.S. Census Bureau, an additional $1,200 might not be sufficient to keep the unemployed in their homes if this continues over a protracted period.

Increasing weekly unemployment benefits by $600 will raise the maximum monthly benefit to $5,031. Anyone earning less than $60,000 annually – less than half Colorado’s working population in 2018 – will receive more in benefits through July 31, 2020, than they had been earning monthly. All others will receive less than they earned.

Ashby Walters is Executive Director and cofounder of TaxForward and Future Tax Leaders. She has served as head of or leader in tax for Peet’s Coffee, Inc., Quizno’s, Staples, Dish Network, and other companies. Over her 20-plus year career, Ashby has helped organizations from Fortune 200 companies to start-ups, save more than $200 million in cash taxes, millions in G&A, and thousands of production hours collectively.

Good News for Wallets, and Your Stress Levels

To help add a little optimism to people’s day, we’ve gathered recent good news on ways to conserve cash and time, relieve some of the stress some of us might be feeling right now, and possibly make it to the other side a little stronger than you were before.  Following are highlights with links to more information.

  • Tax filing and payment deadlines:
    • April 15, 2020, federal tax payment and filing deadlines have moved to July 15, 2020
    • States and municipalities are moving direct and indirect tax payment and filing deadlines
    • The deadline for 2019 IRA and HSA contributions has been moved to July 15, 2020
  • The stimulus payments to individuals (up to $1,200 per individual and $500 per child):
    • Based on the 2019 return if filed, 2018 return if not filed, or Social Security Administration data if neither were filed (the IRS has also indicated it will provide a way for you to be counted if you’re not required to file or haven’t filed your returns)
    • Estimate the size of your payment here.
  • Unemployment expansion under CARES Act:
    • High level, the new law allows states to provide:
      • Unemployment benefits to self-employed and 1099 workers.
      • An additional $600 / week through July 31, 2020,
      • An additional 13 weeks of benefits, and
      • Benefits for the first seven days of unemployment.
    • A lot of the details of the CARES Act, such as how the self-employed can apply for unemployment benefits, are still being worked out. Continue to check back with the appropriate state agencies for updates.
    • Colorado’s Department of Labor and Employment has published a great chart on how to access benefits under the recent stimulus package
  • Paying personal debts:
    • Forbearance available for federally backed mortgages on single (up to 180 days x 2) and multifamily (up to 30 days x 3) residences – currently, how this amount is repaid, lump sum at the end of the period or tacked on to the end of your loan – is up to your lender
    • The CARES Act and some states have issued temporary moratoriums on foreclosures and evictions
    • Payments and interest accruals on student loans held by the federal government are suspended through September 30, 2020.
  • Paying business debts (subject to approval by the program administrator):
    • Emergency grants of up to $10,000 to SBA Economic Injury Disaster Loan (EIDL) applicants within three days of the EIDL application
    • Paycheck Protection Loans (PPLs) that may be forgiven to the extent used for payroll, interest on covered mortgages, rent, and utility payments by June 30, 2020, subject to a downward adjustment by formula for reductions in force or payroll as of that date
    • Expanded access to SBA EIDLs, reduced by PPL
    • $500B designated for loans, loan guarantees, and other investments for passenger air carriers, cargo air carriers, businesses critical to maintaining national security, and other large businesses meeting eligibility and other requirements
  • Other CARES Act tax-bits:
    • NOLS:
      • 2018-2020 NOLs may be carried back up to five years
      • NOLs may fully offset 2019 and 2020 taxable income
      • Noncorporate taxpayers may deduct certain excess business losses back to 2018
    • Interest deductible under IRC Sec. 163(j) has been increased to 50% in 2019 and 2020
    • Accelerates access to refundable AMT credit
    • QIP depreciable life reduced to 15 years back to 2018
    • Deferred tax and penalty free early “coronavirus-related distributions” from qualified retirement plans
    • Employer payroll and self-employment tax payments delayed
    • Refundable tax credit on retention of employees during COVID-19 closures
    • Charitable contributions:
      • A limited ($300) above the line deduction
      • Raised the income cap, increasing the amount that may be deducted
    • Temporary exception from excise tax for distilled spirits used for hand sanitizer products
  • Paid sick leave (Families First Coronavirus Response Act):
    • Up to two weeks for COVID-19 care, capped at $511/day
    • Up to 12 weeks to care for children whose schools or childcare centers were closed due to COVID-19, capped at $200/day
    • Employer and employment exclusions apply
    • Includes part-time employees and contractors
  • If you can furlough an employee instead of laying them off, you might want to consider this as some of the stimulus is linked to employment
  • The details of “stay in place” or equivalent orders differ by jurisdiction – from covered business (such as hotel stays) to fines (as much as $5,000) – check before entering a new jurisdiction
  • Health Insurance:
    • If you’re looking for health insurance, here are tips from members of Lew’s List
    • Insurance companies are required to cover COVID-19 healthcare costs and provide testing free. Some states have more expansive coverage rules.
    • A special open enrollment period was not approved by the Trump Administration but, on March 31, it indicated it was considering alternatives
  • If you’re recently unemployed, contact us. We might be able to put you in touch with a hiring manager, recruiter, or contracting agency.
  • Opportunities: Remember, a lot of opportunities exist in this market