Pit & Quarry, November 2015

State Taxation a Washington D C thinktank American businesses shell out more on property taxes than for any other type of state or local taxes Because so many variables enter into the equation it is rare that the assessor and the property owner agree on a value Armed with a few facts about the property battling city hall or in this case the property tax assessor Aggregate producers can save on taxes when they are armed with facts about a propertys value offers the potential for major savings Once reduced the savings generally last year after year Across the line All aggregate producers face an interesting challenge if they do business in more than one state The state the aggregates operation calls home generally wants to tax every dollar of income Every other state where you do business wants to tax income earned in their state Fortunately only rarely does anyone wind up paying tax on the same income twice Rarely is the operational word because the way states handle the problem is not uniform In other words if you do 45 percent of your business in state A and 55 percent in your home state of B that doesnt mean that 45 percent of your operations income will be taxed in A and 55 percent in B Depending on the rules in each state the aggregates operation may wind up paying slightly more or less In fact depending on the rules in each state the operation could wind up paying state tax on less than 100 percent of its income Tax hits Taxes may be inevitable but not deductions This has recently become an issue as the courts weigh in on whether either an individual or a business can deduct the costs related to government enforcement actions Federal tax laws allow for the deduction of any loss sustained during the taxable year and not compensated for by insurance or otherwise Another provision however specifically excludes any fine or similar penalty paid to a government for the violation of any law Criminal fines imposed by a court are clearly not deductible but it is not so easy to categorize the treatment of orders requiring the forfeiture of the proceeds derived from criminal activity Of course the tax code does not always follow the same logic as other areas of the law The issue of taking a deduction for the costs of a settlement is much more important for large incorporated businesses which have paid out billions of dollars in recent cases There has been debate about whether the government effectively subsidizes those payments by allowing for a deduction from income when companies pay large civil settlements Taking advantage While state and local governments have stepped up enforcement ordinances and regulations many have been adding incentive programs to revitalize local economies There are more than 1200 separate state and local initiatives including corporate sales and property tax savings as well as rebates and loans Despite tight budgets most state initiative programs for promoting energy efficiency have survived Best of all some of these are taxable credits That means an aggregates business with a state tax credit but no state tax liability can sell the credit to someone who can use it The increasing financial burden for aggregates operations trying to comply with the growing number of new regulations and the ever more expensive fines penalties and even higher taxes is significant While few government programs on any level come with provisions to help offset their cost our tax laws remain as one avenue of potential savings at least for aggregates producers who seek professional help when battling city hall P Q Mark E Battersby is a freelance writer who has specialized in taxes and fnance for the last 25 years BUSINESS 60 PIT QUARRY November 2015 www pitandquarry com