A MARYLAND ACCOUNTING FIRM

As a Maryland Accounting Firm we deliver top level service to both individual and business clientele. Throughout our years in business, we’ve had the good fortune to work with, and develop growth for individuals and businesses in a number of different industries.

A MARYLAND ACCOUNTING FIRM

As a Maryland Accounting Firm we deliver top level service to both individual and business clientele. Throughout our years in business, we’ve had the good fortune to work with, and develop growth for individuals and businesses in a number of different industries.

A MARYLAND ACCOUNTING FIRM

As a Maryland Accounting Firm we deliver top level service to both individual and business clientele. Throughout our years in business, we’ve had the good fortune to work with, and develop growth for individuals and businesses in a number of different industries.

A MARYLAND ACCOUNTING FIRM

As a Maryland Accounting Firm we deliver top level service to both individual and business clientele. Throughout our years in business, we’ve had the good fortune to work with, and develop growth for individuals and businesses in a number of different industries.

A MARYLAND ACCOUNTING FIRM

As a Maryland Accounting Firm we deliver top level service to both individual and business clientele. Throughout our years in business, we’ve had the good fortune to work with, and develop growth for individuals and businesses in a number of different industries.

Sunday 2 November 2014

KatzAbosch Celebrates 45 Years in Business This October

Founded in 1969, KatzAbosch is one of the largest certified public accounting and business consulting firms in the State of Maryland. Our professional and support personnel offer a full range of client services to our clients.

However you’ve come to know us — either as Katz & Abosch, KA&W, KAWG&F or simply KatzAbosch — we are committed to providing the highest quality accounting, tax, and consulting services. We place great emphasis on continuing education and our professional personnel members often exceed professional educational requirements.

Any changes that have taken place in the company have been movement forward, including adaptation to changing markets and environments as well as integration of new technologies and financial best practices. Our firm is, and always has been, an example of what every middle-market accounting firm wishes to be.

As stated  by current CEO and President Mark R. Cissell, CPA , “Alvin Katz and John Abosch built this firm on their expertise, strong ethics, and keen business savvy…” The firm continues to thrive and grow through respect for, and understanding of, these bedrock principles.

Maryland - Cash Investments and Tax Credits Add up to Business Success for Cybersecurity Companies


The Internet Age has changed the business environment in the world. For instance, Silicon Valley in California has become the home to many high-tech business giants. New businesses attracted to Silicon Valley have brought high-paying jobs and with the jobs comes tax revenue for the state. With the changeover from a manufacturing economy to a digital economy, the states want to attract new age businesses that employ highly paid professionals and the tax base that comes with this industry.

Recognizing the positive impact having a high-tech industry centered in your state can bring, Maryland is offering incentives for Cybersecurity companies that locate here. With its close proximity to Washington DC and a highly educated workforce, Maryland has the perfect combination of factors for rapid growth of the Cybersecurity industry. Recognizing the benefits of Maryland, the federal government has made Fort Meade, Maryland a hub for Cybersecurity and is looking for other locations in the nearby Maryland suburbs to establish relationships with Cybersecurity businesses. Many of the federal government agencies that are focused on Cybersecurity are centered in Maryland including NSA, U.S. Cyber Command and the National Institute of Standards and Technology, making this area one of the fastest growth areas in the country for the industry.

With the rapid expansion of Cloud Computing and the steady stream of new “Bugs,” everyone is worried about their online security. Both government and commercial businesses need help with protecting their computer operations and are seeking qualified consultants. Like other states, Maryland has developed Cybersecurity experts, education and training programs, technology, products, systems and infrastructure. These programs are specifically tailored to the needs of the emerging Cybersecurity industry.

The states are fighting to attract these types of businesses to their state because of the good jobs and tax revenue that comes from this new age business model. Recently Maryland lured a Cybersecurity company - Luminal - to relocate to the state with several cash and tax credit incentives. The incentive package included a $600,000 investment by the state in the company and tax credits. These incentives helped the company secure a new round of market investments so the company can move up to the next level of growth.

 Beginning in 2014, Maryland began offering a tax credit to Cybersecurity companies. The Maryland Cybersecurity Tax Credit is based on new investments in the Maryland-based company. The investors do not get the tax credit, because the Maryland lawmakers wanted the incentive to stay in Maryland. Instead the tax credit is given to the Cybersecurity company. The tax credit is equal to 33% of investments in the Qualified Maryland Cybersecurity company. The credit can be up to $250,000 per investor and 15% of the program appropriation. The tax benefit is realized in one of three ways - reduce the income tax obligation of the company or reduce the owner’s tax bill or the company can get the credit in cash if there is no tax obligation. The details as to what is a qualified Cybersecurity company are extensive. In summary it is a Maryland-based, small non publicly traded company that does specific activities and has a qualified investor, who leaves the investment in the company for a period of time.

In late 2013, the Maryland Department of Business and Economic Development began accepting applications for the first year of the state’s CyberSecurity tax credit. When the state’s fiscal year ended June 30, 2014, a little over $1 Million of credits had been issued to three qualified companies based on 15 investments in these companies. The state budgeted $3 Million for the credit and only one-third of the money was claimed. There were several reasons suggested why some of the state money was left on the table such as the short six-month period for applying for the credit, the strict qualification requirements and the fact that the credit dollars must remain in Maryland. For the new year starting July 1, 2014, state officials are hoping more businesses will be attracted to apply for the credit and other incentives offered to businesses. The Maryland Business and Economic Development officials are working on ways to bring new investments to the state by actively courting Cybersecurity companies with cash investments of state dollars and tax credits. The state is hoping the creativity of the investment market will find new ways to entice investors into the Cybersecurity industry and overcome the rule about the investment remaining in Maryland.

 It is pretty obvious that Cybersecurity will be a high priority for government agencies and businesses for the foreseeable future. The almost daily news reports about high profile digital “breakins” will ensure this industry enjoys above average growth and business success. Cybersecurity companies should make sure they take advantage of the government incentives - such as the Maryland tax credits and cash investments - to improve their bottom line and add to their growth factor.

Andy Bareham, a Principal with KatzAbosch, joined the firm in 2008. He has more than 25 years of tax experience with a focus on helping businesses with state tax matters. He is a member of the firm’s Tax Department and is chair of the firm’s State and Local Tax group. Andrew speaks frequently on state tax topics such as planning strategies, audit and appeals representation and compliance issues. For more information, please contact Andy at abareham@katzabosch.com or 410.307.6442. www.katzabosch.com

Saturday 1 November 2014

Contractor Alert: Maryland Sales and Use Tax Exemption on Qualifying Energy Equipment

The Maryland sales and use tax does not apply to the sale of geothermal, residential wind energy, or solar energy equipment.

This exemption includes the sale of equipment and other material that is attached, applied, fabricated, or assembled that is used to comprise a complete energy system.  However, material such as sand, gravel, or grout is not considered equipment or a component of equipment.  As a result they are not exempt from the tax.

Vendors do not need to collect sales and use tax on the sale of qualifying equipment.  Instead, they should receive a signed statement from the buyer certifying the equipment purchased is qualifying geothermal, residential wind energy, or solar energy equipment.  The vendor should retain the statement with the record of sale.

If sales and use tax was mistakenly paid on the sale of a qualifying item, the payer of the tax may apply for a refund. The KatzAbosch SALT team would be happy to help with refund applications.

Please contact the KatzAbosch SALT Group if you have any questions regarding the sales and use tax exemption on qualifying energy equipment.

The SALT (State and Local Tax) Shaker is prepared by Dan Bottner, Member of the KatzAbosch SALT Group.

Retirement Plan Compliance Being Scrutinized by The IRS


The IRS is scrutinizing retirement plans with participant loan balances.  The IRS is concerned that Plans have not been following, or are abusing, the rules for loans from retirement funds. As a result, the Employee Plans Compliance Unit (EPCU) sent out letters to Form 5500-EZ filers identified in their records as having participant loans in excess of $50,000 per participant.  The project is intended to ensure sponsors are complying with participant loan limits, and that income tax is paid on excess amounts, and that Plans then correct the underlying procedures allowing this to happen.   Failure to comply does carry the risk that the Plan may lose its tax-favored status.

Participant loans must meet the following standard requirements:
  • The Plan must allow for participant loans.
  • Loans must have a legally enforceable agreement stating the date of the loan, the amount, a reasonable interest rate, and the repayment schedule. The maximum loan amount is 50% of the vested account balance or $50,000, whichever is less.  An exception exists for situations where the vested account balance is less than $10,000.  
  • Generally, the participant must make payments at least quarterly of principal and interest. 
  •  Generally, the loan must be paid back in 5 years or less, however there are exceptions if the loan is for a main home or if the participant is performing military service during the 5 year period of the loan. 
If these rules are not followed, then the loan may be considered to be a “deemed taxable distribution”.  

If the Plan has not followed these rules, options may exist for voluntary correction programs.  The IRS is also looking at loan balances in larger plans.

More information can be found at http://www.irs.gov/Retirement-Plans/Form-5500-EZ-Excess-Participant-Loans-Project

If you have any questions, or if you need help in reviewing your Plan’s compliance, please contact Janet Cookson at jcookson@katzabosch.com, Josh Sutherland, CPA at jsutherland@katzabosch.com, or Katie Fortwengler, CPA at kfortwengler@katzabosch.com.