Streamlining Dealership Operations: Leveraging Software to Stay Ahead in the New Year

/in , , /by

As dealerships face mounting pressure to improve efficiency, adapt to customer expectations, and stay competitive, 2025 offers a fresh opportunity to leverage software solutions that streamline operations across all facets of the business. Whether you specialize in automobiles, agricultural equipment, heavy equipment, RVs, or motorcycles and power sports, the right software tools can transform your dealership’s performance, enhance customer satisfaction, and boost profitability.

Here are key ways dealerships can utilize software to stay ahead in the new year:

1. Enhanced Inventory Management

Keeping track of inventory is a critical challenge for dealerships, particularly those managing large-scale operations with diverse product lines. Advanced dealership management systems (DMS) now integrate real-time inventory tracking, providing complete visibility into available stock, reorder levels, and sales trends.

For automobile dealers, software can ensure popular models are always in stock while identifying slower-moving vehicles. Agricultural and heavy equipment dealers benefit from tools that track large machinery availability, while RV and power sports dealers can better manage seasonal inventory. Cloud-based systems also allow teams to access data from anywhere, improving coordination across locations.

2. Optimized Customer Relationship Management (CRM)

In today’s competitive market, building strong relationships with customers is essential. CRM software tailored for dealerships helps manage customer data, track interactions, and personalize communications.

For example:

  • Auto dealerships can use CRM tools to send targeted promotions for trade-ins or vehicle upgrades.
  • RV and power sports dealers can use reminders to follow up with customers before camping or riding seasons.
  • Agricultural and heavy equipment dealers can automate maintenance reminders to keep their customers’ machinery in top shape.

Integrating CRM with marketing tools enhances lead generation, customer retention, and sales conversion rates.

3. Streamlined Service Department Operations

Service departments are vital revenue drivers, but inefficiencies can lead to lost profits and dissatisfied customers. Modern service management software allows dealerships to schedule appointments, track repairs, and provide real-time updates to customers.

  • Auto dealers can streamline oil changes and recalls with automated scheduling.
  • Agricultural and heavy equipment dealers can track complex repairs for machinery with detailed service histories.
  • RV and motorcycle dealers can simplify warranty claims and ensure parts availability with inventory integrations.

These systems not only boost productivity but also enhance the customer experience, building loyalty and trust.

4. Data-Driven Decision Making

Dealerships generate massive amounts of data every day. Advanced analytics software turns this data into actionable insights, enabling smarter decision-making.

  • For automobile dealerships, data can reveal which models are selling fastest and which promotions drive the most traffic.
  • Agricultural and heavy equipment dealers can monitor seasonal demand to prepare for peak sales periods.
  • RV and power sports dealers can use analytics to optimize pricing and identify emerging customer preferences.

Real-time dashboards ensure dealership managers have access to the latest performance metrics, making it easier to adjust strategies as needed.

5. Digital Sales and Financing Solutions

More customers are shopping online, even for large purchases like vehicles and equipment. Dealerships that invest in digital sales platforms stand to gain a significant competitive edge.

Online sales tools now integrate with dealership websites, enabling customers to browse inventory, apply for financing, and even complete purchases from their homes. For example:

  • Auto dealers can offer virtual test drives and online credit applications.
  • RV dealers can use 3D visualizations to showcase features of luxury models.
  • Heavy equipment dealers can enable remote quotes and sales for fleet buyers.

By simplifying the buying process, dealerships can attract more customers and close deals faster.

6. Compliance and Security Tools

With evolving regulations and increasing cyber threats, dealerships must prioritize compliance and data security. Specialized software ensures adherence to regulatory requirements and protects sensitive customer and financial data.

  • Heavy equipment and agricultural dealerships can manage environmental regulations and emissions standards.
  • Auto dealerships can comply with FTC Safeguards Rule updates, ensuring data protection in financing operations.
  • RV and power sports dealers can implement secure payment gateways to prevent fraud.

Investing in compliance software helps avoid costly fines and builds customer confidence in the dealership’s operations.

7. Integrated Accounting and Tax Management

Software that integrates accounting and tax management streamlines back-office operations, helping dealerships maintain financial health.

  • Automating payroll, accounts payable, and accounts receivable reduces manual errors.
  • Tax management tools ensure dealerships take full advantage of available credits and deductions.
  • Reporting features simplify compliance with state and federal tax regulations.

By reducing administrative burdens, dealerships can focus on core operations and strategic growth.

In 2025, dealerships across industries face a rapidly evolving landscape where efficiency and customer satisfaction are paramount. Leveraging software solutions tailored to your dealership’s unique needs can streamline operations, improve decision-making, and enhance profitability.

At Brady Martz, we specialize in helping dealerships navigate industry challenges with strategic financial and operational insights. Contact our team today to learn how we can support your success in the year ahead.

Kickstarting 2025: Tax Strategies for Dealerships to Maximize Early-Year Savings

/in , , /by

As the calendar turns to 2025, dealerships across industries—whether you specialize in automobiles, agricultural equipment, heavy equipment, RVs, or motorcycles and power sports—have a unique opportunity to optimize their financial strategies for the year ahead. With ever-changing tax regulations and the challenges of a competitive marketplace, proactive tax planning is essential. By leveraging available deductions, credits, and other tax-saving opportunities, dealerships can minimize liabilities, improve cash flow, and reinvest in growth.

Here are key tax strategies tailored to dealerships of all types to help kickstart financial success in 2025:

1. Maximize Section 179 Deductions and Bonus Depreciation

Dealerships, regardless of their specialty, can benefit significantly from Section 179 and bonus depreciation. These provisions allow businesses to deduct the full cost of qualifying equipment, technology, and other capital investments in the year they are purchased and placed into service.

For auto dealerships, this could include IT infrastructure upgrades or new service equipment. Agricultural and heavy equipment dealers may invest in advanced diagnostic tools or large-scale machinery for service operations, while RV and power sports dealers might focus on improving showrooms or maintenance facilities. Early planning ensures these purchases meet tax qualification standards.

2. Take Advantage of Industry-Specific Tax Credits

As industries evolve, so do the tax incentives tailored to them. For example:

  • Automobile and RV Dealers: Federal tax credits for electric and hybrid vehicles, as well as EV charging infrastructure, are valuable opportunities.
  • Agricultural and Heavy Equipment Dealers: Tax incentives often exist for energy-efficient upgrades to equipment or facilities, such as solar panel installations or eco-friendly lighting.
  • Motorcycle and Power Sports Dealers: Consider exploring credits related to energy-efficient transportation or community safety initiatives.

These incentives not only reduce tax burdens but also demonstrate a commitment to innovation and sustainability.

3. Review Inventory Accounting Methods

Managing inventory effectively is critical across all dealership types. The choice between Last-In, First-Out (LIFO) and First-In, First-Out (FIFO) accounting methods can significantly impact taxable income, particularly in industries with fluctuating inventory costs or supply chain challenges.

Automobile, agricultural, and heavy equipment dealers, in particular, should revisit their inventory valuation strategies to align with current market conditions. Proper planning in this area can uncover opportunities for tax savings and improved cash flow.

4. Leverage Hiring Incentives and Payroll Tax Credits

Staffing remains a critical challenge for dealerships, but hiring incentives and payroll tax credits can provide financial relief. Programs such as the Work Opportunity Tax Credit (WOTC) offer credits for hiring veterans, long-term unemployed individuals, or other qualifying workers.

These credits apply to all dealership sectors and can help build a stronger, more capable workforce while reducing tax liabilities.

5. Plan for State and Local Tax (SALT) Changes

State and local tax (SALT) regulations impact all dealerships, with varying requirements for property taxes, sales taxes, and other obligations. Agricultural and heavy equipment dealers often face unique challenges in states with special rules for machinery sales, while RV and motorcycle dealers may contend with differing local sales tax rates.

Staying informed about these changes can help dealerships avoid surprises and minimize liabilities.

6. Optimize Deductions for Interest and Lease Costs

Many dealerships rely on loans and leases to finance inventory or maintain facilities, making interest and lease costs a significant expense. Recent tax law updates have placed caps on interest deductions, so dealerships need to work closely with their tax advisors to ensure compliance and identify opportunities to maximize these deductions.

Whether you’re financing an auto showroom, a heavy equipment lot, or an RV service facility, proactive planning can yield substantial savings.

By implementing these tax strategies, dealerships of all kinds can capitalize on early-year opportunities to reduce liabilities and reinvest in their businesses. The key is to stay informed about regulatory changes, partner with experienced advisors, and take a proactive approach to tax planning.

At Brady Martz, we understand the unique needs of dealerships across industries and can help you navigate the complexities of tax regulations while maximizing your financial potential. Contact us today to learn how we can help your dealership thrive in 2025 and beyond.

Financial Transparency for Non-Profits: Best Practices for Building Donor Trust

/in , , /by

Trust is the cornerstone of any successful nonprofit. Donors want to know their contributions are being used effectively to further your mission, and financial transparency is key to earning and maintaining their confidence. By openly sharing your financial practices and demonstrating accountability, your organization can strengthen donor relationships and foster long-term support.

Here are the best practices for ensuring financial transparency and building donor trust:

1. Publish Clear and Detailed Financial Statements

Providing easy access to your organization’s financial information is one of the most effective ways to demonstrate transparency. Donors appreciate when nonprofits share detailed annual reports, audited financial statements, and IRS Form 990s.

Tips for effective reporting:

  • Break down your revenue sources and expenditures in an easy-to-understand format.
  • Use visual aids, such as charts and infographics, to illustrate key financial data.
  • Publish these documents on your website and include links in donor communications.

2. Clearly Define How Donations Are Used

Donors want to see the tangible impact of their contributions. By specifying how funds are allocated—whether toward programs, administrative expenses, or fundraising efforts—you can reinforce trust.

Best practices:

  • Include examples of programs or initiatives funded by donations.
  • Share success stories and outcomes tied directly to donor support.
  • Create a “Where Your Money Goes” page on your website to provide transparency.

3. Adopt Ethical and Accountable Practices

Financial transparency isn’t just about sharing numbers—it’s also about ethical stewardship of resources. Nonprofits should implement strong internal controls and financial oversight to ensure funds are used responsibly.

Key steps:

  • Develop and enforce a conflict-of-interest policy for board members and staff.
  • Conduct regular internal audits to review financial practices.
  • Maintain detailed documentation for all financial transactions.

4. Engage in Regular Communication with Donors

Consistent and open communication with donors is essential for maintaining trust. Beyond thanking donors, keep them informed about how their contributions are making an impact.

Ways to communicate:

  • Send quarterly updates or newsletters with financial highlights and program updates.
  • Host annual donor meetings or webinars to discuss financial performance and goals.
  • Provide donors with opportunities to ask questions and offer feedback.

5. Utilize Technology for Transparency

Digital tools and platforms can make it easier for nonprofits to be transparent and accessible to donors. From donor portals to real-time impact tracking, technology enables organizations to share their financial health more effectively.

How to leverage technology:

  • Use donor management software to track and share donation data.
  • Implement crowdfunding platforms that display fundraising progress in real time.
  • Create dashboards or online reports that highlight your organization’s financial health.

6. Comply with Legal and Regulatory Requirements

Adhering to all legal and regulatory standards is non-negotiable for nonprofits. Compliance not only protects your organization but also reassures donors that you’re operating ethically and transparently.

Essential compliance practices:

  • File your IRS Form 990 annually and make it publicly available.
  • Stay up to date on state and federal nonprofit reporting requirements.
  • Ensure proper documentation for restricted and unrestricted funds.

7. Showcase a Strong Governance Structure

Board members play a critical role in ensuring financial transparency and accountability. A well-informed and active board demonstrates your organization’s commitment to ethical practices.

What to emphasize:

  • Regularly review and approve budgets and financial reports with the board.
  • Include financial experts on the board or advisory committees.
  • Publicly share the names and roles of board members to reinforce credibility.

8. Conduct Third-Party Audits

Third-party audits provide an impartial evaluation of your organization’s financial health and practices. Sharing the results of these audits can enhance trust among donors and stakeholders.

Key benefits:

  • Identifies areas for improvement in financial management.
  • Validates the accuracy of your financial statements.
  • Builds confidence among donors, partners, and the community.

9. Highlight Transparency in Fundraising Campaigns

Transparency should extend to your fundraising efforts. Be clear about campaign goals, intended uses of funds, and progress toward meeting targets.

How to build transparency into campaigns:

  • Include specific funding goals and timelines in your appeals.
  • Share updates on fundraising progress through social media or email.
  • Report back to donors after the campaign to show the impact of their contributions.

Why Transparency Matters

Financial transparency goes beyond compliance—it’s a way to honor the trust your donors place in your organization. When you openly share how funds are managed and demonstrate the impact of their contributions, you create a culture of accountability that inspires continued support.

At Brady Martz, we understand the importance of transparency in nonprofit operations. Our team of experts is here to help you strengthen financial practices, meet compliance requirements, and build donor trust. Let us help your organization thrive while making a lasting impact.

The Road Ahead: Key Trends Transforming Auto Dealerships in 2025

/in , , /by

The automotive industry continues to evolve at a rapid pace, and dealerships are no exception. As consumer preferences shift and new technologies reshape the market, dealerships must adapt to stay competitive. From digital innovations to sustainability initiatives, 2025 promises to be a transformative year for the industry. Let’s explore the key trends shaping the road ahead for auto dealerships.

1. The Rise of Electric Vehicles (EVs)

Electric vehicles are no longer a niche market—they’re becoming a central focus for automakers and dealerships alike. With government incentives, improved battery technology, and growing consumer interest, EV sales are expected to surge in 2025.

What this means for dealerships:

  • Expanded EV Inventory: Dealerships will need to stock a broader range of EV models to meet demand.
  • Charging Infrastructure: On-site EV charging stations will become essential to attract and retain customers.
  • Educating Buyers: Sales teams must be well-versed in EV technology, tax incentives, and maintenance requirements to address customer questions and concerns.

2. Digital Retailing Takes Center Stage

The shift toward online shopping isn’t limited to retail—it’s redefining how customers buy cars. Digital retailing tools allow consumers to browse inventory, apply for financing, and even complete purchases entirely online.

How dealerships can adapt:

  • Enhance Online Presence: A seamless, user-friendly website is crucial for showcasing inventory and streamlining the buying process.
  • Offer Virtual Showrooms: Use augmented reality (AR) or 360-degree videos to let customers explore vehicles from the comfort of their homes.
  • Leverage E-Signature Tools: Simplify paperwork by enabling customers to sign documents electronically.

3. Subscription and Car-Sharing Models Gain Traction

As ownership models evolve, more consumers are exploring alternatives like subscription services and car-sharing programs. These options offer flexibility and convenience, especially for urban customers.

What dealerships should consider:

  • Partner with Subscription Services: Collaborate with manufacturers or third-party providers to offer subscription packages.
  • Expand Fleet Management: Manage vehicles for short-term rentals or car-sharing programs.
  • Educate Customers: Highlight the benefits of these models, such as lower upfront costs and access to multiple vehicle types.

4. Sustainability as a Selling Point

Environmental concerns are influencing car buyers’ decisions more than ever. Dealerships that prioritize sustainability will stand out in a competitive market.

Sustainability strategies for dealerships:

  • Energy-Efficient Facilities: Incorporate solar panels, LED lighting, and energy-saving HVAC systems in showrooms.
  • Recycling Programs: Offer incentives for customers to recycle old car batteries, tires, and parts.
  • Green Branding: Highlight eco-friendly initiatives in marketing campaigns to appeal to environmentally conscious buyers.

5. Data-Driven Decision Making

In an increasingly competitive landscape, data is becoming a critical asset for dealerships. Insights from customer preferences, market trends, and operational performance can guide smarter business decisions.

Key applications of data:

  • Personalized Marketing: Use CRM tools to target customers with tailored offers based on their buying history.
  • Optimized Inventory Management: Analyze sales trends to stock the right vehicles at the right time.
  • Enhanced Customer Experience: Use feedback and data analytics to refine the sales and service process.

6. After-Sales Services as a Revenue Driver

As vehicle sales face tighter margins, after-sales services like maintenance, repairs, and extended warranties are becoming a significant revenue stream for dealerships.

How to maximize after-sales opportunities:

  • Promote Service Packages: Offer prepaid maintenance plans or bundled service contracts to encourage customer loyalty.
  • Invest in Technology: Use diagnostic tools and predictive analytics to identify service needs before they arise.
  • Enhance Customer Communication: Use email or SMS reminders to notify customers about upcoming maintenance or service offers.

7. The Role of Artificial Intelligence (AI) in Dealerships

AI is transforming how dealerships operate, from customer interactions to inventory management. By automating routine tasks and providing valuable insights, AI can improve efficiency and profitability.

AI applications in dealerships:

  • Chatbots for Customer Support: Answer common questions and schedule test drives or service appointments.
  • Predictive Sales Tools: Identify potential buyers and recommend vehicles based on preferences and past behavior.
  • Dynamic Pricing Models: Adjust pricing in real time based on market demand and competitor activity.

Embracing Change for a Competitive Edge

The auto dealership industry is entering a pivotal moment, driven by innovation, sustainability, and changing consumer expectations. By staying ahead of these trends and embracing new strategies, dealerships can position themselves as leaders in a rapidly evolving market.

At Brady Martz, we understand the unique challenges facing dealerships today. Our team of experienced advisors can help you navigate these trends, optimize your financial strategies, and plan for long-term growth. Contact us today to learn how we can help drive your success in 2025 and beyond.

Charitable Gift Acknowledgements: Ensuring Compliance and Building Donor Trust

/in , , /by

As we kick off 2025, now is the ideal time for non-profits to reflect on the success of their year-end giving campaigns and focus on fostering strong donor relationships in the new year. Properly acknowledging charitable gifts is not only a way to express gratitude but also a crucial step in maintaining IRS compliance and setting the stage for ongoing donor support.

Why Gift Acknowledgements Matter

Charitable gift acknowledgements serve two vital purposes: they convey your appreciation to donors and satisfy IRS requirements for contributions of $250 or more. Without accurate documentation, donors may lose their tax benefits, and your organization could attract unwanted scrutiny. Timely and personalized acknowledgements demonstrate professionalism, build donor trust, and encourage continued generosity.

Key Elements of a Charitable Gift Acknowledgement

To ensure compliance, each charitable gift acknowledgement should include the following components:

  • Your organization’s name as the recipient.
  • The donation amount (or a description of non-cash gifts).
  • A statement noting whether goods or services were provided in exchange for the gift (or a description of any benefits received).
  • The date of the contribution for donor records.

Example:
“Thank you for your generous contribution of $500 on January 5, 2025, to [Your Organization]. No goods or services were provided in exchange for this donation, allowing it to be fully tax-deductible.”

Best Practices for January and Beyond

  • Streamline the Process: Leverage donor management tools to automate acknowledgements and ensure all contributions are recognized promptly.
  • Respond Quickly: Send acknowledgements within a few days of receiving a donation, particularly as donors prepare for tax season.
  • Personalize Your Message: Include a note about how the donation supports your mission in 2025 to create a meaningful connection.
  • Prepare for Tax Season: Anticipate donor requests for duplicate acknowledgements and have a system in place to respond efficiently.

Trends to Watch in 2025

As donor expectations evolve, consider implementing digital acknowledgements, visual impact reports, or storytelling elements in your communications. Highlighting how contributions make a tangible difference can foster deeper engagement and inspire continued giving throughout the year.

Final Thoughts

Charitable gift acknowledgements are more than a legal requirement—they’re an opportunity to strengthen donor relationships, reinforce your mission, and set the tone for a successful year. By focusing on accuracy, timeliness, and personalization, your organization can build trust and inspire generosity in 2025 and beyond.

For more guidance on charitable gift acknowledgements or non-profit financial compliance, the team at Brady Martz is here to support your organization’s success. Let’s make 2025 a year of impact!

Expected New Reporting Requirements for the Research Credit on Form 6765

/in , /by

ARTICLE | December 18, 2024

Authored by RSM US LLP

Executive summary: Proposed Form 6765 will require taxpayers to substantially change approach to Research Credit claim reporting

The IRS has released a new draft Form 6765, Credit for Increasing Research Activities, that would require taxpayers to report additional pertinent information in order to claim the Research Credit on future tax returns.

Most noteworthy changes surround business component reporting that could complicate the process for taxpayers in claiming the Research Credit due to the information required to be reported by business component. With the Business Component Detail reporting to become mandatory beginning in tax year 2025, taxpayers should begin preparing for such changes now.

Proposed Changes to Form 6765

On Sept. 15, 2023, the IRS first provided a preview of proposed changes to certain sections of Form 6765, Credit for Increasing Research Activities, to request feedback from stakeholders before the formal draft release process. On June 21, 2024, the IRS released the revised draft Form 6765 following public comment on the preview of the proposed changes.

The IRS claimed the proposed changes to the Research Credit form are intended to provide taxpayers with a consistent and predefined format for reporting credit claims and to improve the information received for tax administration. Because the Research Credit is frequently reviewed upon examination, the item can consume significant resources for both taxpayers and the IRS.

The most significant change to the proposed Form 6765 is the addition of a new Business Component Detail section for reporting quantitative and qualitative information for each business component included in the credit claim (the new “Section G”). The Business Component Detail section will require taxpayers to provide a substantial amount of information that has not been previously required to claim the Research Credit, hence the concern among stakeholders as to the additional burden this will place on taxpayers with legitimate Research Credit claims.

Examples of the new qualitative information required include the business component type and the information sought to be discovered by the research activities. Yet the burden of additional quantitative reporting could be even more onerous, as taxpayers will be required to report qualified research expenditures (e.g., qualified wages, contract research costs, supply costs, and computer rental costs) by business component within the claim.

Among other adaptations to the form, the IRS added a new Section E with five questions seeking miscellaneous information intended to address consistency requirements in the credit calculation. Examples of such miscellaneous information include the number of business components generating the qualified research expenditures (QRE), the amount of officers’ wages included in the credit claim, and whether the taxpayer acquired or disposed of any major portion of a trade or business in the tax year, among other information.

With the revised draft issued in June 2024, the IRS then made further changes to reduce the new information to be reported on the form and to thus “alleviate taxpayer burden.” However, the vast majority of the additional information required by the new draft Form 6765 did not change, and thus it would appear that taxpayers will need to adapt to these substantial form changes for future tax years. The most notable changes to the updated draft form are summarized below:

  • Section G will require taxpayers to report 80% of total QREs in descending order by the amount of total QREs per business component, but no more than 50 business components.
  • For tax years after 2024, Section G will be optional for Qualified Small Business (QSB) taxpayers, as defined in section41(h)(1) & (2), who claim a reduced payroll tax credit; or taxpayers with QRE of $1.5 million or less, and $50 million of gross receipts or less (determined at the controlled group level) that are claiming a Research Credit on an original filed return.

Furthermore, Section G will be optional for all filers for tax year 2024; Section G will be effective for tax year 2025 and future tax years.

The Importance of Business Components

With the addition of the Business Component Detail section to Form 6765, it would appear that the IRS is hoping to obtain more transparent information with tax return filings in terms of how taxpayers are determining the business components and the associated qualifying research costs for which they are claiming the section 41 credit.

Section 41(d)(2)(B) defines a “business component” as any product, process, computer software, technique, formula, or invention which is to be held for sale, lease, or license, or used by the taxpayer in a trade or business of the taxpayer.

The determination of business components and qualifying research activities have been found at the center of recent case law. Section 41(d)(1)(C) requires that substantially all research activities must constitute elements of a process of experimentation for such activities to meet the definition of qualifying activities for purposes of the Research Credit. Reg. section1.41-4(a)(6) defines “substantially all” as meaning 80% or more. As such, for a business component to qualify for the credit, at least 80% of the research activities must relate to a process of experimentation.

In Little Sandy Coal Company, Inc. v. Commissioner of Internal Revenue, No. 21-3145 (7th Cir. 2023), the US Court of Appeals for the Seventh Circuit held that the taxpayer’s activities failed to meet the substantially all rule under section 41(d)(1)(C), as 80% or more of the taxpayer’s activities for its business components did not consist of a process of experimentation. Had the taxpayer differently identified its business components, the taxpayer could have possibly met the substantially all requirement based upon the courts’ interpretation of the rule.

Furthermore, in Leonard L. Grigsby et al. v. The United States, No. 22-30764 (5th Cir. 2023), the court’s ruling partially focused on the taxpayer’s inability to define a valid business component for the research credit. While the taxpayer had originally defined its business components for the credit as “products,” the IRS argued that the oil refineries and flood control systems built under contract by the taxpayer would not be considered a “product” of the taxpayer. When the taxpayer rebutted that the business components were construction processes, the court noted that the taxpayer had failed to identify even one new or improved process.

Therefore, taxpayers should consider carefully how they define business components within their Research Credit claims, especially when considering the increased reporting requirements proposed by the draft Form 6765. If taxpayers do not ensure that business components as reported on the draft Form 6765 meet the substantially all rule under section 41(d)(1)(C), this could create a significant area of risk upon exam.

Washington National Tax takeaways

Since the June 2024 release, the IRS has not provided any further official updates. However, the IRS is expected to release new instructions for the Form 6765 in the near future. The IRS noted that they will provide certain guidance within the updated instructions, such as clarifying information for the reporting of officers’ wages, controlled group reporting and business component descriptive names.

While the revised draft Form 6765 reduced the additional information required to be reported from the original draft form, the changes to the information required to claim a Research Credit could significantly increase the burden of reporting on taxpayers. Taxpayers claiming a Research Credit should remain aware of these changes that would be implemented and required for claims filed for tax year 2025 and after.

Taxpayers should also carefully evaluate whether the new Section G is optional for them, in which case they could avoid the most burdensome changes proposed in the updated Form 6765 when such changes likely become mandatory in tax year 2025.

RSM US may assist taxpayers in determining which elements of the draft Form 6765 they will be required to complete. If new Section G is not optional for a specific taxpayer, RSM may also assist with determining the most streamlined approach to the new reporting requirements.

This article was written by Christian Wood, Marisa Slabbert and originally appeared on 2024-12-18. Reprinted with permission from RSM US LLP.
© 2024 RSM US LLP. All rights reserved. https://rsmus.com/insights/tax-alerts/2024/new-reporting-requirements-research-credit-form-6765.html

RSM US LLP is a limited liability partnership and the U.S. member firm of RSM International, a global network of independent assurance, tax and consulting firms. The member firms of RSM International collaborate to provide services to global clients, but are separate and distinct legal entities that cannot obligate each other. Each member firm is responsible only for its own acts and omissions, and not those of any other party. Visit rsmus.com/about for more information regarding RSM US LLP and RSM International.

The information contained herein is general in nature and based on authorities that are subject to change. RSM US LLP guarantees neither the accuracy nor completeness of any information and is not responsible for any errors or omissions, or for results obtained by others as a result of reliance upon such information. RSM US LLP assumes no obligation to inform the reader of any changes in tax laws or other factors that could affect information contained herein. This publication does not, and is not intended to, provide legal, tax or accounting advice, and readers should consult their tax advisors concerning the application of tax laws to their particular situations. This analysis is not tax advice and is not intended or written to be used, and cannot be used, for purposes of avoiding tax penalties that may be imposed on any taxpayer.

Promoters Offering Tribal Tax Credits at Up 40% Discount

/in , /by

ARTICLE | December 18, 2024

Authored by RSM US LLP

Executive summary

Various promoters have offered to sell taxpayers “Tribal Tax Credits” under the Indian Self-Determination and Education Assistance Act at 60 cents on the dollar. The allure of saving 40% on cash tax payments is compelling. However, the promoters have not provided the legal mechanisms behind such credits to allow us to endorse the opportunity or even verify the program actually exists. Taxpayers should reach out to their advisors to discuss all the risks and concerns when approached by promoters of tax credits.

Several promoters have reached out taxpayers offering to sell them Native American Tax Credits (NATCs) at significant discounts. The NATCs are an instrument proposed by various financial promoters purported to reduce taxes paid by 40% with direct payments to the IRS from qualifying tribal entities by the US Treasury Department. However, the promoters have not provided a legal basis on the mechanics of the program or even been able to cite to the legal authority for the existence of the program.

The promoters of the NATC program provide to the taxpayer a sales contract with a registration number. Taxpayers are then provided with instructions that indicate that the taxpayer should claim the “tax credit” on Form 1040, schedule 3, Part I, line 6z or other nonrefundable credit. Some promoters even suggest that clients can get a refund of unused credits.

The promoters indicate that they are working with White River Energy Corp (White River) which was allegedly granted five billion in NATCs to sell to the public, with future opportunities to sell another $59 billion in NATCs. The supporting documentation and legal authority provided by the promoters either contain vague statements on the right for tribes for self-governance or cite to bills that were not passed into law. In White River’s Form 8-K dated April 29, 2024, they indicated that they have a legal opinion in support of the NATCs. The SEC filing goes on to state that “White River considers the contents of this legal opinion a trade secret and only plans to disclose it to selected prospective purchasers of material amounts of these Credits and certain other representatives under a mutually executed Non-Disclosure Agreement.” In addition, White River’s Form 10-Q dated Dec. 31, 2023, indicates that the company has a law firm also pursuing a private letter ruling with the IRS. To date, neither the private letter ruling, nor the tax opinion, have been provided to RSM US.

The main statutory support for NATC comes from the Indian Self-Determination and Education Assistance Act (“The Act”). The Act references to specific grants that may be given to applicable tribal governments out of funds appropriated by US Treasury Department. See 25 USC section 5322. However, the Act does not appear in the Internal Revenue Code. The Act also makes no mention of tax or tax credits. Instead, the Act allows the transfer of grants to tribal governments for the strengthening or improvement of tribal governments; the planning, training, and evaluation of other activities to enter into self-determination contracts (defined in 25 USC 5321); and the acquisition of land in connection with the previous items.

Promoters advertise that Native American Tribes may monetize federal income tax credits by having Treasury grant tax credits as a conveyance to raise capital for programs that benefit the tribe. However, there is no direct legal foundation for this mechanism in the Act, nor in the final rules implementing the Act. Additionally, promoters advertise a discount of 40 cents on the dollar for these investments, meaning one would only need to pay tribal governments 60% of the tax credit they would claim, realizing a 40% gain in this transaction. The presence of a 40% discount normally indicates a higher risk profile for these credits than other transferable federal income tax credits, such as energy credits under the Inflation Reduction Act or the Low-Income Housing Tax Credits which generally have a discount of 5-20%. Additionally, there are no regulations implementing the use of these credits, nor detailing procedures for claiming these credits. Calls with the US Treasury Department, IRS Office of Chief Counsel, and other divisions of the IRS cannot confirm the existence of the program or that NATCs exist at all.

Washington National Tax takeaways

Promoters have not provided the legal mechanisms behind NATCs to allow us to endorse the opportunity or even verify the program actually exists. Please consult your tax advisor if you are approached regarding the purchase of NATCs to discuss tax risks and concerns about investing in this opportunity.

This article was written by Christian Wood, Niven Hemraj and originally appeared on 2024-12-18. Reprinted with permission from RSM US LLP.
© 2024 RSM US LLP. All rights reserved. https://rsmus.com/insights/tax-alerts/promoters-offering-tribal-tax-credits-discount.html

RSM US LLP is a limited liability partnership and the U.S. member firm of RSM International, a global network of independent assurance, tax and consulting firms. The member firms of RSM International collaborate to provide services to global clients, but are separate and distinct legal entities that cannot obligate each other. Each member firm is responsible only for its own acts and omissions, and not those of any other party. Visit rsmus.com/about for more information regarding RSM US LLP and RSM International.

The information contained herein is general in nature and based on authorities that are subject to change. RSM US LLP guarantees neither the accuracy nor completeness of any information and is not responsible for any errors or omissions, or for results obtained by others as a result of reliance upon such information. RSM US LLP assumes no obligation to inform the reader of any changes in tax laws or other factors that could affect information contained herein. This publication does not, and is not intended to, provide legal, tax or accounting advice, and readers should consult their tax advisors concerning the application of tax laws to their particular situations. This analysis is not tax advice and is not intended or written to be used, and cannot be used, for purposes of avoiding tax penalties that may be imposed on any taxpayer.

Navigating Government Budget Cuts: Strategies for Fiscal Responsibility in 2025

/in , , /by

As we step into 2025, many government agencies are faced with the challenging task of managing budget cuts while maintaining essential services. Whether due to shifting economic conditions, changes in federal or state funding, or a need for fiscal discipline, agencies must find ways to optimize their resources without compromising their ability to serve the public.

In a time of budget reductions, it’s crucial for government entities to embrace fiscal responsibility, ensure efficiency in their operations, and prioritize key initiatives. At Brady Martz, we understand the pressures that come with budget cuts, and we’re here to provide guidance on how agencies can navigate these challenges and remain effective stewards of taxpayer dollars.

Here are some practical strategies for government agencies to implement in 2025 to manage budget cuts and maintain fiscal responsibility.

1. Conduct a Comprehensive Budget Review and Reforecasting

The first step in managing budget cuts is to conduct a thorough review of your agency’s existing budget. This review should focus on identifying areas of inefficiency, redundancies, and non-essential expenses that can be reduced or eliminated. A comprehensive budget reforecast will also help agencies adjust to any changes in funding or revenue projections.

Key Actions:

  • Assess your agency’s major expenses and identify areas for cost-saving without impacting core services.
  • Collaborate with department heads to ensure that essential services remain adequately funded while non-essential programs are scaled back.
  • Use data analytics to track spending patterns and make informed decisions for the upcoming fiscal year.

2. Prioritize Core Services and Programs

In times of budget cuts, it’s important to focus on what matters most—ensuring that critical services and programs continue to meet the needs of the public. Prioritizing the most essential services will help agencies make difficult decisions about where to allocate limited resources.

Key Actions:

  • Identify programs that directly impact public safety, health, education, and welfare, and ensure they receive priority funding.
  • Assess programs and services that can be scaled back, outsourced, or eliminated without compromising their overall impact.
  • Communicate with stakeholders and the public about the necessity of these prioritization decisions, ensuring transparency in the process.

3. Embrace Technology to Increase Efficiency

One of the most effective ways to combat budget cuts is to leverage technology to streamline operations and improve efficiency. Many government agencies are already adopting digital solutions to enhance their internal processes, from financial management to citizen engagement.

Key Actions:

  • Implement automation tools for repetitive administrative tasks to free up resources for more critical functions.
  • Invest in cloud-based solutions to reduce the costs associated with on-premise IT infrastructure and improve flexibility.
  • Use data analytics to enhance decision-making and optimize resource allocation across departments.

4. Engage in Collaboration and Shared Services

Collaboration and shared services can provide significant cost savings while ensuring that essential services are still delivered. By working with other local or state agencies, governments can pool resources, share expertise, and reduce the need for duplicative efforts.

Key Actions:

  • Explore opportunities to collaborate with neighboring agencies or municipalities on joint projects, such as purchasing, maintenance, or shared infrastructure.
  • Establish intergovernmental agreements for services that can be shared, such as technology support, human resources, or legal services.
  • Focus on building partnerships with nonprofit organizations and community groups to expand service delivery without increasing costs.

5. Enhance Transparency and Accountability

During times of budget cuts, transparency and accountability are essential to maintaining public trust. Government agencies must demonstrate their commitment to responsible fiscal management by clearly communicating how budget reductions will be handled and how funds are being allocated.

Key Actions:

  • Regularly update the public on budget adjustments and financial performance through easily accessible reports, dashboards, and town hall meetings.
  • Involve citizens in the budgeting process by seeking input on program prioritization and cost-saving measures.
  • Maintain open channels of communication with employees to ensure they understand the rationale behind budget cuts and the steps being taken to minimize impact.

6. Monitor and Evaluate Financial Performance Regularly

Ongoing financial monitoring is crucial to ensure that your agency is staying on track with its budget goals. Regular evaluations of financial performance help identify any discrepancies early on and allow for course corrections before issues become more significant.

Key Actions:

  • Conduct monthly or quarterly budget reviews to track spending and adjust projections as necessary.
  • Use performance metrics to evaluate program effectiveness and ensure that resources are being allocated to achieve the best outcomes.
  • Engage external auditors to assess financial statements and ensure compliance with accounting standards and budgetary regulations.

How Brady Martz Can Help

At Brady Martz, our Government Niche team is well-versed in the unique financial challenges faced by government agencies. We can assist with budgeting strategies, compliance, and efficiency measures to help your agency maintain fiscal responsibility and optimize resources during times of budget cuts.

Our Services Include:

  • Budgeting and Forecasting – Helping agencies develop and revise budgets based on current financial realities and future projections.
  • Audit and Assurance – Providing independent audits and reviews to ensure your agency is adhering to best practices and legal requirements.
  • Financial Consulting – Offering advice on technology implementation, process improvements, and shared services for cost-saving and efficiency.
  • Transparency and Reporting – Assisting with the development of clear, understandable financial reports for public communication.

Conclusion

Navigating budget cuts is never easy, but with careful planning and a commitment to fiscal responsibility, government agencies can continue to provide vital services to their communities while remaining financially sustainable. By embracing technology, prioritizing core services, and ensuring transparency, agencies can manage budget reductions effectively and position themselves for success in 2025.

If your agency needs support with navigating budget cuts or optimizing financial operations, contact the Brady Martz Government Niche team today. We’re here to help you achieve fiscal responsibility and deliver results for your community.

Contact Us
Visit our Government Industry page to learn more about how Brady Martz can help your agency navigate budget challenges and plan for a sustainable future.

GASB 101: Understanding the New Standard for Accrued Compensated Absences

/in , , /by
The December 31, 2024, reporting deadline for GASB Statement No. 101 has passed, marking an important start to the new year. For government agencies preparing for audits and financial reporting in 2025, now is the perfect time to focus on ensuring compliance and building a strong foundation for success in the year ahead.

GASB Statement No. 101, issued by the Governmental Accounting Standards Board, addresses Compensated Absences and officially took effect for reporting periods beginning after December 15, 2023. This new standard introduces critical updates to how liabilities for employees’ earned leave are recognized and measured.

At Brady Martz, we understand the complexities of implementing new standards. While the December 31, 2024, deadline marked the first reporting cycle under GASB 101, the new year provides an opportunity to refine processes, address challenges, and establish strong compliance practices for the future.

What is GASB 101?

GASB 101 replaces previous guidance under GASB Statement No. 16, offering a clearer and more consistent approach to measuring liabilities for compensated absences, including:

  • Vacation leave
  • Sick leave
  • Paid time off (PTO)
  • Other forms of compensated absences

The key improvement is GASB 101’s “single comprehensive model,” which ensures all types of leave are measured uniformly.

Key Changes Under GASB 101

Government entities must focus on the following:

1. Recognition of a Liability:

  • A liability is recorded for compensated absences when earned by an employee and unused as of the reporting date.
  • This applies to unconditional leave (available regardless of conditions) and conditional leave (subject to specific criteria, like sick leave).

2. Measurement of the Liability:

  • The liability is measured using the employee’s current pay rate at the financial statement date.
  • Factors like leave caps and forfeiture policies must also be considered.

3. Streamlined Approach:

  • GASB 101 unifies the reporting process across all leave types, minimizing inconsistencies.
  • The model applies to leave accrued under individual policies or collective bargaining agreements.

4. Enhanced Disclosures:

  • Financial statements must clearly disclose information about compensated absences, including leave types, measurement methods, and key assumptions.

Why It Matters in 2025

While the December 31, 2024, reporting deadline has passed, 2025 audits and financial reporting will reflect the first full year under GASB 101 compliance. Agencies must ensure proper implementation to avoid reporting errors and compliance issues.

Key reasons to act now:

  • GASB 101 may increase reported liabilities depending on current leave accrual practices.
  • Auditors will expect robust tracking systems and processes that align with the new standard.
  • Proactive measures can simplify year-end reporting and reduce last-minute adjustments.

How to Get an Early Start on Compliance

Use the early months of 2025 to strengthen your processes and ensure long-term compliance:

1. Evaluate Policies and Agreements:
Review leave policies and collective bargaining agreements to fully understand how compensated absences are earned, accrued, and forfeited.

2. Assess Leave Tracking Systems:
Ensure systems can accurately track leave balances, including conditional leave that requires eligibility adjustments.

3. Analyze Financial Impact:
Work with financial experts to reassess liabilities under GASB 101 and determine any necessary adjustments for upcoming reports.

4. Update Reporting Processes:
Enhance financial statement disclosures to meet GASB 101 requirements.

5. Collaborate with Auditors:
Engage auditors early to confirm your compliance approach and address potential challenges before year-end.

Brady Martz: Your Partner in Compliance

At Brady Martz, we specialize in helping government agencies navigate complex accounting standards like GASB 101. Our Government Niche team offers tailored support for:

  • Policy and system evaluations
  • Liability calculations and impact analysis
  • Enhanced reporting and disclosures
  • Audit preparation and compliance reviews

Start 2025 on the Right Foot

The new year is the perfect time to refine your processes and ensure compliance under GASB 101. By taking proactive steps now, your agency can approach 2025 audits with confidence.

If you need assistance, contact the Brady Martz Government Niche team. We’re here to guide you every step of the way.

For more information, visit our Government Services page or reach out directly to discuss your agency’s needs.

Government Accountability and Transparency: How to Build Public Trust Through Reporting

/in , , /by

In today’s rapidly evolving landscape, public trust remains at the heart of effective government operations. As we kick off 2025, the focus on accountability and transparency in public sector reporting has never been greater. As agencies prepare their financial statements and reports for the year ahead, now is the perfect time to strengthen practices that enhance public confidence and demonstrate responsible use of taxpayer dollars.

At Brady Martz, we understand the challenges government entities face when balancing compliance, transparency, and resource management. Below, we outline key steps to improve reporting, foster accountability, and build stronger relationships with the communities you serve.

Why Accountability and Transparency Matter

In an era marked by increasing public scrutiny and demand for open government, transparency is essential for:

  • Demonstrating responsible fiscal management
  • Reinforcing public confidence in government operations
  • Meeting evolving regulatory requirements and audit standards

Government agencies are accountable for ensuring every dollar is spent appropriately, and clear reporting allows stakeholders to see how decisions align with public priorities. As we step into 2025, timely, accurate, and accessible reporting will set a strong tone for the year ahead.

Key Areas of Focus for Transparent Reporting

Comprehensive Financial Statements
Accurate and detailed financial reporting is the foundation of transparency. Agencies should ensure their year-end reports provide:

  • Clear breakdowns of revenues, expenditures, and outstanding liabilities
  • Explanations for significant variances and changes in financial position
  • Compliance with updated standards, such as GASB 101 on compensated absences

Timely submission of financial statements and audits helps instill confidence in your processes, ensuring a strong start to the year.

Performance Metrics and Reporting
Beyond financial statements, the public is increasingly interested in performance outcomes. Agencies can enhance trust by:

  • Reporting on key performance indicators (KPIs) tied to public programs and initiatives
  • Sharing measurable results that highlight progress toward strategic goals
  • Using plain language to make performance reports more accessible to all stakeholders

Leveraging Technology for Open Data
Digital platforms allow governments to share data in real-time, making information more transparent and easier to access. Agencies can adopt:

  • Open data portals to share budgets, spending, and project updates
  • User-friendly dashboards to visualize financial and operational performance
  • Secure systems that maintain data integrity while increasing transparency

Stakeholder Engagement
Trust is built through open communication. Governments can strengthen relationships with their communities by:

  • Hosting public meetings or webinars to discuss financial reports and budgets
  • Inviting feedback on proposed projects and fiscal priorities
  • Providing annual summaries of key achievements and challenges

Adherence to Compliance and Audit Standards
Regular audits and adherence to evolving accounting standards are critical to accountability. Agencies should stay current with regulations, including GASB updates, and ensure:

  • Audit readiness with accurate, well-documented financial records
  • Transparent disclosures on liabilities, risks, and operational challenges

Looking Ahead to 2025: Prioritizing Public Trust

Government agencies face increasing pressure to operate efficiently, accountably, and transparently. Heading into 2025, organizations that prioritize clear communication, reliable reporting, and proactive community engagement will be better positioned to foster public trust and confidence.

At Brady Martz, we specialize in helping government entities meet their accountability and transparency goals through expert financial reporting, audit preparation, and strategic guidance. Whether you’re finalizing year-end reports or planning for the year ahead, our Government Niche team is ready to support your success.

Build Trust Through Better Reporting

Transparency isn’t just about compliance; it’s about building meaningful connections with the communities you serve. As you embark on 2025, let Brady Martz help you develop reporting practices that ensure accountability, demonstrate stewardship, and strengthen public trust.

To learn more about our services, visit our Government Services page or contact us today.