The Kentucky Finance and Administration Cabinet has announced that the tax amnesty program authorized by the General Assembly in the 2012 legislative session will be held between October 1 and November 30, 2012. The amnesty program will allow people or businesses owing back taxes to pay without fees or penalties. Also, the threat of prosecution will be waived, and only half the interest owed will be due. The program applies to taxes owed to the Kentucky Department of Revenue for eligible tax periods ending after December 1, 2001, and prior to October 1, 2011.  

 

Delinquent taxpayers will be receiving mailed notifications stating the known amount of back taxes and will have until November 30 to apply for amnesty and pay their overdue taxes. If taxpayers fail to take advantage of the amnesty program, penalties and interest will increase. An additional 2 percent interest will be charged on unpaid taxes that are eligible for amnesty. Taxpayers taking advantage of the amnesty program must remain current for the next three years.

 

A website has been created to provide news and information about the program, online payment options, and a way to search for all persons and businesses on the delinquent tax roll (http://www.amnesty.ky.gov/). In addition, a toll-free amnesty hotline has been set up at (855) 598-2937.  

 

Please contact John Rittichier, CPA, at (800) 880-7800 or jrittichier@hsccpa.com for more information.

In a recent survey of manufacturing executives, the Boston Consulting Group found that 37 percent of U.S. firms with current China production plants have either brought that work back to American soil or are strongly considering such a move. Cost was the primary reason survey respondents were making or considering the move back to America. Other concerns of manufacturing executives include product quality and risk of intellectual property theft.

According to data compiled by The Hackett Group, a strategic business advisory firm, the total landed cost for a manufacturing operation in China in 2005 was 31 percent less than a comparable production setting in the U.S. This percentage fell 8 percent to 23 percent by 2010. Based on rising wages, higher shipping costs and other considerations, Hackett forecasts that differential will fall to just 16 percent by 2013.

As manufacturing executives evaluate possible options, nearshoring is becoming a more attractive alternative. Nearshoring involves outsourcing production to relatively close non-U.S. locations (such as Mexico, Canada or Central America). Nearshoring cuts freight costs, shortens delivery timelines, and makes it easier to maintain oversight of product engineering and quality. While China's average production wage of $1.65 to $1.85 per hour is a bit lower than Mexico's $1.85 to $2.25 per hour range, wages in the latter nation are growing at a far slower rate.

Before making the decision to relocate manufacturing operations, do a full circle assessment, including shutdown and startup expenses, as well as a comparison of total landed costs. In addition, discussions of any prospective move should also include the potential effects on product quality, customer support, supplier availability, and overall business growth. Evaluating market goals is also key to success. There's an important distinction between choosing a foreign location to produce goods, versus choosing that same location to produce and sell those same products to international markets.

For more information, click here for McGladrey's full article or contact Scott Olinger, CPA, CPIM, at (800) 880-7800 or solinger@hsccpa.com.

A recent McGladrey white paper article discusses the issue of managing human capital. With the current economic situation in the United States, companies must make difficult decisions involving one of their biggest expenditures: employee compensation. It is important to evaluate the expected length of the recession and also the implications of employment/compensation decisions. The major points of the white paper include:

• Factors driving cost reduction and deferrals,
• Early reduction strategies,
• Layoffs and workforce reductions,
• Alternative work arrangements,
• Rethinking your compensation philosophy,
• The costs of poor decision-making, and
• Communication to your people is critical.

If the time comes to reduce or defer payroll expenses, senior management and owners must know the company's current financial position and have a total compensation philosophy. Early reduction strategies may be trouble-free, but layoffs and a large-scale reduction of benefits can prove to be much more challenging. Consider alternative work arrangements, a redefined compensation philosophy, and the possibility of undesirable results before making any final decisions. Communication to employees is critical during a recession period as well. A balance between financial considerations and your company's human capital philosophy may be difficult to achieve in a cost cutting phase. Proper attention should be given by management, owners, and the board of directors to ensure financial stability and prosperity.  Click here for the full article.

For more information, please contact Scott Olinger, CPA, CPIM, at (800) 880-7800 or solinger@hsccpa.com.