Industry Insight
August 2009
Seminar Scheduled on “Arkansas Sales and Use Tax for Manufacturers”
During the 2009 87th General Assembly, the State Chamber/AIA was instrumental in getting a tax reduction passed and signed into law that lowered the sales tax that manufacturers pay on energy costs by three-fourths percent. The $10 million reduction went into effect on July 1st.
The National Business Institute is sponsoring a seminar on “Arkansas Sales and Use Tax for Manufacturers,” which will cover the sales tax reduction and other issues, from 8 a.m. to 4:40 p.m. on Tuesday, September 22nd at the Statehouse Convention Center in Little Rock.
Scheduled presenters for the seminar are: Martha G. Hunt, Arkansas State Revenue Department Legal Counsel, Arkansas Department of Finance and Administration; Michael O. Parker, Dover Dixon Horne PLLC, and James M. Saxton, Friday, Eldredge & Clark, LLP.
This basic-to-intermediate level program is appropriate for CPAs, general accounting, accounts payable, accounts receivable, tax, finance managers, controllers, financial directors and vice presidents, enrolled agents, and other tax specialists. The program will also benefit attorneys who want to better understand the impact of sales and use taxes on their Arkansas manufacturing clients.
The seminar outline will include:
* Introduction and Overview
* Manufacturing Machinery and Equipment Exemption (Manufacturers’ Exception)
* Legislative, Judicial and Regulatory Developments
* The Manufacturing Process and Related Purchases
* Services to Machinery and Equipment (and Other Taxable Services)
* Sales and Use Tax Issues Involved in Plant Construction
* Industrial Development Incentives
* Sales by Manufacturers
* Administrative Compliance, Audits, Hearings, Appeals and the Taxpayer Bill of Rights (and Practice Tips)
Sales and use tax is one area that is often overlooked when it comes to finding cost-efficient ways to run a manufacturing business. Now you can provide your business with sure-fire ways to minimize tax exposure and take advantage of sales and use tax exemptions unique to the manufacturing field.
This seminar will provide you with the information you need to find some of the “buried” savings that are often missed. Review recent legislative developments affecting manufacturers and target some of the areas of sales and use tax exposure for manufacturers. You’ll also take a close look at manufacturing exemptions, as well as administration, compliance and audits. The program also includes an overview of miscellaneous tax issues, such as bad debts and cash discounts. Don’t miss this opportunity to reduce your tax liability and to uncover “buried” tax provisions, which will help to reduce expenses through the latest tax-saving techniques.
5 Benefits of attending
• Explore recent legislative developments and how they impact you.
• Put together an action plan for minimizing sales and use tax exposure.
• Find out how manufacturing exemptions can work to your advantage.
• Get practical tips for administration, compliance and audits.
• Learn how to respond to tax issues such as bad debts, cash discounts, and county taxes.
The seminar qualifies for continuing education credits on a number of different levels. The cost is $339 for the first registrant and $329 for each additional registrant.
For additional information or to register, call 1-800-930-6182 or click here and go to Seminars
Obama, Emanuel Want "Card Check" to Wait for Healthcare Reform
The Hill reported that AFL-CIO Secretary-Treasurer Richard Trumka said that President Obama and White House Chief of Staff Rahm Emanuel "have indicated that they will not bring up 'card check' legislation until after healthcare reform is done in Congress." Trumka, "the expected incoming president of the influential union, pledged during a web chat on the liberal blog firedoglake that organized labor would work to pass healthcare reform in order to move onto one of its top priorities, the Employee Free Choice Act (EFCA). 'The President and Emanuel have both said they don't intend to bring Employee Free Choice Act up until Health Insurance Reform is done,' Trumka wrote on the blog, ‘which gives us an additional reason to do Health Insurance Reform now!'"
In other card check news, Bloomberg News reported, "Senator Arlen Specter, the self- described 'decisive vote' on a union organizing bill stalled in Congress, reversed his position and said he will support efforts to bring the so-called card-check legislation to a vote." Specter said "he expects a vote to occur on a 'modified' Employee Free Choice Act, which would make it easier for workers to form a union." The senator "dealt the bill a blow in March when he said he is likely to be the 'decisive vote' blocking the Democratic-led legislation." Since then, Specter has "switched parties and held talks with other senators to rework the bill so that it can secure the 60 votes needed to overcome Republican opposition."
No matter when the card check bill may come up for a vote or what position Sen. Specter takes on the legislation, we need all Arkansas businesses to stay active during the remainder of this congressional recess (through September 4). Please contact Coalition Coordinator Sarah Beth Turner at (501) 975-8344 or e-mail her at info@yoursecretballot.com for additional information or to become a part of the coalition against EFCA.
Seventeen States Report Declines in Unemployment
The AP reported, "A rebound in the auto industry and federal stimulus money helped lower unemployment rates in many of the 17 states that reported drops in July -- a hopeful sign after only five states had seen their jobless rates dip in June." But the Labor Department report Friday "showed that joblessness remains widespread as 26 states reported higher unemployment rates." Fifteen states and the District of Columbia "are suffering from unemployment rates above 10 percent. Michigan's rate was 15 percent in July, down from 15.2 percent in June -- the first time any state's jobless rate had topped 15 percent since 1984. The states with the next highest jobless rates in July were: Rhode Island, at 12.7 percent; Nevada, 12.5 percent; California, 11.9 percent; and Oregon, also at 11.9 percent. Four reached state record highs: Rhode Island, Nevada, California and Georgia. But the report also showed that 21 states added jobs last month, compared with only 10 in June."
U.S. Manufacturing Contraction Continues to Ease
The Wall Street Journal reported, "The decline in the U.S. manufacturing sector continued to ease in July as factories boosted output, an early sign that manufacturers and the overall economy are likely to grow in the third quarter." An increase in "new orders and production -- and a slight improvement in employment -- propelled the Institute for Supply Management's manufacturing index to 48.9 last month, up from 44.8 in June." Some analysts viewed the report "as the latest sign that the economy has turned around." Still, the industries "that tend to be leaders in recession recovery -- housing and automobiles -- are struggling and could continue to weigh on demand." The employment component of the index "rose to 45.6 from 40.7 last month, but some members cautioned that more layoffs were on the horizon."
The AP reported, "The Institute for Supply Management's better-than-expected report, improving manufacturing data overseas and a surprise jump in U.S. construction spending in June, helped push stock markets higher." Following last week's report that the U.S. economy "shrank less than expected in the second quarter, many economists believe the longest recession since World War II may be over, though any recovery will be subdued." The ISM report "mirrored improving readings on the industrial sectors in China and Europe, helping send global stock markets mostly higher." The pace of "decline in manufacturing has been slowing since the index hit a 28-year low of 32.9 in December."
Euro-Zone PMI Shows Economic Stability in August
The AP reported, "Further evidence emerged Friday that the 16 countries using the euro are on the verge of growing again following the most savage recession since the Second World War." Financial information company Markit said "mounting optimism helped its composite purchasing managers' index...for the euro zone rise by a record three points in August to 50." Markit "suggested the services sector is nearly growing again." Its PMI "swelled to 49.5 in August from 45.7 in July. And the manufacturing sector looks to be on the mend too - its PMI increased to 47.9 from 46.3." The data comes "just a week after the surprising news that the recessions in Germany and France, the euro zone's two largest single economies, have ended. Both posted modest 0.3 percent increases in output in the second quarter." Despite the "clearly improving picture, analysts cautioned about expecting too much of a rebound in growth."
Bloomberg News reported, "The euro advanced for a fourth day against the dollar, its longest run of gains since June, after German services and French manufacturing unexpectedly expanded in August." The "16-nation currency climbed to the strongest level in two weeks against the dollar and erased losses versus the yen after Markit Economics said an index of the German services industry grew for the first time in a year, adding to signs the recession is easing." An index "of the German services industry rose to 54.1 this month from 48.1 in July" and the "French manufacturing index increased to 50.2 in August from 48.1 in the prior month."
Left Apparently Raising Doubts Regarding Healthcare Reform
The Washington Post reported, "Through most of the summer, opposition to President Obama and his health-care initiative has come almost entirely from the right. In the past week, however, the president has been trying to tamp down a noisy uprising on the left." The "immediate cause for the rebellion is growing concern among Obama's progressive allies that he is prepared to deal away the public insurance option to win passage of a health-care bill." From "liberal commentators to progressive bloggers to grass-roots activists who went door to door during the campaign, there has been a chorus of concerns raised about Obama -- on health-care strategy, and on the deals he and his team have struck with the health-care industry." A look "at public polling offers some perspective on the current clamor from the left. Obama is still highly popular among liberals, but there has been some falloff, although precisely how much and for what reason are not clear."
Meanwhile, the New York Times reported, "Senate Democrats said Sunday that they were fleshing out plans to pass health legislation, particularly the option of a new government-run insurance program, with a simple majority, instead of the 60 votes that would ordinarily be needed to overcome a filibuster." The Democrats said "they were increasingly confident that they could legislate creation of a public plan in a way that would withstand challenges expected from Republicans." Proponents of "a public plan say it would drive down costs because it would not have a profit motive and would have lower overhead costs and lower executive salaries than private insurance companies." In the last week, Democrats "have begun to talk openly of using a procedure known as budget reconciliation to pass a health bill in the Senate with a simple majority, assuming no Republican support.
NFIB Comes Out Against Healthcare Reform Plans
The Washington Times reported that the National Federation of Independent Businesses (NFIB), "the largest lobbying group for small-business owners," has come out against current healthcare reform legislation, saying that "small-business owners should worry about the bills' requirement that employers provide health insurance, and about higher taxes on the wealthy to pay for the proposed benefits." The NFIB "also says the House reform bills wouldn't be effective in decreasing insurance costs."
According to the Times, the Obama Administration's "hopes of bringing small-business lobbyists into its camp" have been "dashed" with NFIB's opposition. The Administration aimed "to divide the business community" with the support of small business, as "the U.S. Chamber of Commerce and other organizations that represent larger businesses are opposing the president's healthcare drive."
White House Expects Deficit to Reach $9 Trillion in Next Decade
The new deficit projections from the White House led all three network newscasts Tuesday night, and have dominated front pages across the country.
ABC World News reported that the new numbers are "huge...virtually impossible to grasp. The White House said [Tuesday] the deficit this year is going to balloon to a record 1.6 trillion. That is trillion with a t, dollars. That's more than triple last year's deficit, and it's not going to get much better. Congress expects the deficit to explode to a total $7 trillion over the next decade. The White House number is even higher. They expect $9 trillion over 10 years."
The CBS Evening News said that "the deficit for this year alone will hit a record high as the government spends -- $1.6 trillion more than it takes in. Unemployment, now 9.4 percent, is expected to continue rising to 10 percent before starting to decline slowly next year. And the White House expects the economy to shrink this year by 2.8 percent."
NBC Nightly News said that "the Administration's latest estimate puts the deficit $2 trillion higher than originally predicted, more than $9 trillion over the next ten years, making the President's health care push that much harder." Added NBC, "The White House, of course, says the way to get these deficits under control long term is to get control of health care costs."
The Los Angeles Times, for example, said that the "wave of bleak news about the stagnant economy promises to give opponents of...Obama's expansive domestic agenda more ammunition to argue that this is an inopportune time to enact overhauls of the nation's healthcare and energy policies." The Times added that "Republicans and other critics of Obama's call for expanded health insurance for all Americans, as well his advocacy of a 'cap-and-trade' program to limit greenhouse gas emissions, contend that those goals should be set aside in a time of limited economic growth."
USA Today said that the new figures "could threaten...Obama's agenda, complicate 2010 congressional campaigns and set up big political battles over government spending." Republicans "seeking to gain seats in next year's congressional elections outlined likely campaign themes shortly after the projections were released." House Republican leader John Boehner said, "Today's reports confirm what the White House has been trying to hide: The Democrats' out-of-control spending binge is burying our children and grandchildren under a mountain of unsustainable debt."
The New York Times noted that "Peter R. Orszag, the president's budget director," wrote on his agency's website "that rising deficits make an overhaul of the health care system essential, since the government's ballooning costs for Medicare and Medicaid are 'the key driver of our long-term deficits.'"
The Washington Post reported, "As president, Obama has called for maintaining some of the Bush policies that have fueled the deficit-- he would extend some of the Bush tax cuts beyond their 2010 expiration date, for example." However, "in light of the new deficit figures, Orszag hinted -- without offering details -- that Obama may revisit some of those decisions when he submits his next budget in February." Said Orszag, "Whatever their cause, the administration is very concerned about those out-year deficit figures...and getting those deficits under control is a top priority of this administration."
API Report: Climate Bill Will Cut Refinery Output
A Greenwire story appearing on the New York Times website reported the American Petroleum Institute claims that "the major climate bill moving through Congress could reduce U.S. refining output and thereby increase reliance on imported refined products like gasoline."
The API report says that the House version of the climate change bill would "lead to significant gains in non-US refinery capacity, investment and employment at the expense of the US refining sector," and would "impose major costs on refiners that would lead to sharply lower investment in coming decades. As a result, U.S. refining throughput...could fall as low as 12 million barrels per day in 2030, compared with 16.4 million without the bill." By 2030, the US "could rely on imports to meet as much as 19.4 percent of its demand for refined fuels, compared with a forecasted 9.6 percent without the measures." API President Jack Gerard said in a statement, "Climate legislation should not come at the expense of US economic and energy security."
According to API, Bloomberg News reported, "the legislation 'inequitably distributes free emission allowances' away from the refining industry," and "will discourage refiners from running plants at full capacity."
The Wall Street Journal noted the API study assumed that nuclear power or other new technologies would not be widely deployed, and that there would be no international carbon credit trading system in place.
Four Democratic Lawmakers Suggest Abandoning Climate Change Efforts
Bloomberg News reported, "The U.S. Senate should abandon efforts to pass legislation curbing greenhouse-gas emissions this year and concentrate on a narrower bill to require use of renewable energy, four Democratic lawmakers say." Senator Blanche Lincoln of Arkansas described "doing both of them together" as "too big of a lift," and added, "I see the cap-and-trade being a real problem." According to an official at Dow Chemical Co., "which supports the measure," this "resistance by Lincoln and her Senate colleagues undercuts President Barack Obama's effort to win passage of legislation that would cap carbon dioxide emissions and establish a market for trading pollution allowances." Peter Molinaro, the head of government affairs for Dow Chemical, "who is based in Washington," said, "In this town if you split two measures, usually the second thing never gets done."
Auto Industry Braces for Sales Slump as "Cash For Clunkers" Ends
The AP reported, "Now comes the hard part for the auto industry - luring customers without big Cash for Clunkers discounts." While Cash for Clunkers "may have proved there are still car buyers out there, it is unlikely the heavy demand will last." Cash for Clunkers "proved far more popular than anyone imagined.
Through Monday, dealers reported selling 625,000 vehicles in just a month with the rebates." But Cash for Clunkers "had its complications: Congress had to race to approve $2 billion more for the program after the first $1 billion quickly ran out. Dealers complained the government was slow to reimburse them for deals they made on new sales."
Hours "before the Monday night deadline for Cash for Clunkers sales, the government gave dealers an extension, until noon Tuesday, to file the paperwork to get repaid." For the auto industry, "coming off the program could be like a letdown after a sugar high."
Contracting Opportunities for Minority-Owned, Small Businesses
Commerce Secretary Gary Locke and Small Business Administrator Karen Mills announced a government-wide plan that includes federal agency procurement officials holding or participating in more than 200 events over 90 days (beginning August 18) to share information on government contracting opportunities, including those available under the American Recovery and Reinvestment Act.
“Small and minority-owned businesses must play a significant role in our efforts to restore economic growth. Small businesses employ half of the nation’s private sector workforce; create a large share of the Nation’s new jobs; and introduce many groundbreaking ideas into the marketplace,” President Barack Obama said. “It is essential that we provide our Nation’s small businesses with maximum practicable opportunity to participate in Federal Government contracting.
“In order for the Federal Government to better meet or exceed the goal of 23 percent of prime contracts for small businesses, Vice President Biden and I have tasked Small Business Administrator Karen Mills and Commerce Secretary Gary Locke with leading a federal government-wide initiative to increase outreach,” Obama continued. “Over the course of the next ninety days agency officials will take an important step forward by holding or participating in more than two-hundred events focused on sharing information on government contracting opportunities.”
As part of the Commerce-SBA initiative, over the next 90 days:
? Federal agency procurement officials will hold or participate in more than 200 events to share information on government contracting opportunities, including those available under the American Recovery and Reinvestment Act.
? SBA and Commerce will expand their outreach to fellow contracting officials across the federal government, passing along best practices for outreach and education to every agency to ensure they have the tools they need to meet their annual contracting goals.
? Locke and Mills will promote small business contracting opportunities in remarks, events and discussions with small business groups across the country, including minority, women and veteran groups.
Beyond the next 90 days, Commerce and SBA will support, monitor and track the impact of these efforts going forward to help ensure the Administration is maximizing opportunities for small businesses.
Small business owners can find out about federal contracting opportunities by clicking here. Local Commerce and SBA officials are also available in local offices across the country to assist small businesses interested in contracting opportunities. Contact information for local offices can be found here and here.
