FIN 48 from different perspectives
Financial Accounting Standards Board Interpretation No. 48 (FIN 48), Accounting for Uncertainty in Income Taxes, is intended to substantially reduce uncertainty in accounting for income taxes. Its implementation and infrastructure requirements, however, generate a great deal of uncertainty. This feature provides an overview of FIN 48, addresses some of its federal and international tax issues, as well as issues arising at the state and local level.
Overview of FIN 48
FIN 48 was issued July 13, 2006, and is effective for all entities - taxable as well as tax-exempt - that issue GAAP financial statements for fiscal years beginning after Dec. 15, 2006. SEC registrants, however, must disclose the effect of FIN 48 earlier due to SEC's Staff Accounting Bulletin No. 74. Returns that have been filed, or should have been filed, in all jurisdictions in which a company has a taxable presence are subject to FIN 48 rules.
FIN 48 is expected to increase transparency in financial statements with respect to tax matters. That transparency should enhance relevance and comparability in financial reporting. FIN 48 accomplishes its goal through several steps:
FIN 48 identifies the "tax position" in an income tax return and provides guidance on determining the unit of account. Preparers of financial statements should consider the level at which an entity accumulates tax return information and the level at which an entity expects tax authorities to address tax issues upon exam. Sometimes the unit of account may be determined at a consolidated group, other times the unit of account may be determined at an individual company level. Since this determination is a facts-and-circumstances-driven decision, good documentation of the facts and conclusions is important.
The second step in recognition is the identification of a tax position. A tax position refers to a position taken in a previously filed tax return or a position expected to be taken in a future tax return that is reflected in measuring current or deferred income tax assets and liabilities for interim and annual periods. FIN 48 indicates that a tax position also includes, but is not limited to, the following:
Decisions not to file tax returns
Allocations or shifts of income between tax jurisdictions
Characterizations of income
Decisions to exclude types of income from tax returns
Decisions to classify transactions, entities, or other positions as tax-exempt
This broad definition of a tax position necessitates a system of data gathering, analysis, and verification that may be above and beyond the systems currently in place.
Initial recognition of the financial statement effects of a tax position occurs when the identified tax position has a "more-likely-than-not" probability - a more than 50 percent chance - of being sustained on examination. The concept of "being sustained" means making it through to the final level of appeal or litigation on the tax position's technical merits, assuming the examining jurisdictions have full knowledge of all facts and circumstances.
Tax positions contained in filed returns must be considered until all of the respective statutes of limitations have closed with respect to that return. In many jurisdictions, the statutes of limitation do not apply if a return has not been filed. Therefore, there may be no limit to the number of open years in which a tax position must be evaluated.
Should a tax position meet the more-likely-than-not threshold, it is subsequently measured as the largest amount of tax benefit that is greater-than-50-percent likely of being realized upon settlement. Measurement includes a consideration of different probabilities and outcomes, using the best information available as of the reporting date. The reporting date is the date of the entity's most recent statement of financial position. Appendix A of FIN 48 illustrates the charting methodology of the "cumulative probability of occurring." That framework identifies the possible outcomes, the probability of each possible outcome, and the cumulative probability of the outcomes.
Subsequent recognition, derecognition, and measurement of unresolved tax positions must occur at each balance sheet date. Considerations include the factors initially underlying the sustainability assertion and the measured amounts of the recognized tax benefit. Subsequent developments in relevant sources of authorities should be considered. A different assessment must be supported by changed law or circumstances.
A new area of consideration is interest and penalties. FIN 48 requires the accrual of interest and penalties that would be assessed under relevant tax law if the uncertain tax position is not sustained. Interest will start to accrue for financial statement purposes in the period it would begin to accrue under applicable tax law. The interest expense recognized is the amount determined by applying the applicable interest rate under law to the difference between the tax positions recognized in the financial statements and the amounts previously taken, or expected to be taken, in a future tax return.
Keep in mind, there is a difference between tax positions that can be taken on a return and those contemplated in FIN 48. Thus, there is a FIN 48 gap. Treasury Circular 230 and AICPA Statements on Standards for Tax Services No. 1 establish a one-in-three likelihood of a tax position being sustained on its merits for the purpose of signing a return. That 33.3 percent confidence level is different than the 50 percent-plus confidence level for financial statement recognition under FIN 48. That gap is one of the circumstances to which the interest and penalties provisions of FIN 48 applies. A lower level of confidence in a tax position is possible, however, if appropriate disclosure is made with the return.
FIN 48 adds a number of qualitative and quantitative disclosures. One item that FIN 48 requires to be disclosed is an entity's policy on classification of interest and penalties accrued within the income statement. Total penalties included in the statement of operations for the period also must be disclosed, as well as interest and penalties recognized in the statement of financial position.
Another required disclosure is a tabular presentation that reconciles the total amounts of unrecognized tax benefits at the beginning of the period and the end of a period. That table must include the following:
Gross amounts of changes in unrecognized tax benefits as a result of tax positions taken in prior periods
Gross amounts of changes in unrecognized tax benefits as a result of tax positions taken in the current period
Amounts arising from decreases in unrecognized tax benefits due to settlements with tax authorities
Reductions in the amount of unrecognized tax benefits as a result of the lapse in applicable statutes of limitations
In addition, an entity must disclose the total amount of unrecognized tax benefits that would affect the effective tax rate if the benefits were recognized. A description of the tax years that remain open by major tax jurisdictions must also be disclosed.
The last detailed disclosure required is of positions for which there is a reasonable possibility that the total amounts of unrecognized tax benefits will significantly increase or decrease within 12 months of the reporting date. Details should include the following:
Nature of the uncertainty
Nature of the event that could occur
An estimate of the range of the possible change or a statement to the effect that a range cannot be estimated
FIN 48 provides direction on the proper classification of recognized and unrecognized tax benefits. There will be differences between the tax position amounts taken on an entity's tax return and those taken in the financial statements. A financial statement liability is expected from the unrecognized tax benefits, interest, and penalties. If that liability is expected to be paid within one operating cycle, it should be classified as a current liability. Otherwise, it might be classified as a long-term liability. Liabilities arising from unrecognized tax benefits cannot be commingled with deferred tax balances.
Some of the unrecognized tax benefits may affect the tax bases of assets and liabilities included in deferred taxes. FIN 48 can create or modify the temporary differences that form the basis of the deferred tax balance. Interest arising from unrecognized tax benefits may be reported as interest expense or as a component of income tax expense in the statement of operations. Penalties arising from unrecognized tax benefits may be classified as income tax expense or another appropriate expense account. As previously noted, the policy regarding those classifications must be disclosed.
The Federal and International Tax Perspective
One of the most intimidating federal tax concerns with FIN 48 is IRS access to tax work papers. The regulation, for all intents and purposes, imposes a documentation standard that provides a blueprint to each entity's uncertain tax positions, effectively structuring an audit plan for the agency. The IRS has the right to request and receive tax accrual work papers, but current policy is to only ask for work papers in select circumstances involving tax positions regarded as tax shelters or certain listed transactions. There has been some discussion at the IRS about changing that policy. Some experts argue the level of transparency established in FIN 48 effectively shifts a significant portion of the burden and cost of IRS income tax examinations to the taxpayer. There is also the fear that the threshold for tax return positions will effectively become the 50 percent level instead of the 33.3 percent threshold detailed in Circular 230 §10.34(a).
FIN 48 also has created some debate about the nature and extent to which tax professionals can provide an entity with tax advice concerning uncertain tax positions. Internal entity employees are excluded from the application of Circular 230 by §10.35(b)(2)(ii)(D), but external tax practitioners must consider how the Circular 230 rules apply to their activity with respect to client tax provisions. For external tax practitioners, a properly worded engagement letter - as encouraged by Circular 230 §10.33 - steers the nature and extent of advice away from a "covered opinion," as described in Circular 230 §10.35(a)(2). There are a few carve-outs under Circular 230 that effectively limit the applicability of the covered opinion rules to advice rendered in connection with uncertain tax position recognition and measurement matters as described in FIN 48.
Another difficulty is auditor involvement in FIN 48 determinations. Auditor independence expectations may limit the extent to which an auditor can provide assistance in the determination of the tax provision. There are a number of process and control considerations, too. Sarbanes-Oxley imposed significant internal control expectations on SEC registrants; AICPA's Statement on Standards for Tax Services No. 9 will require systems of quality control over internal tax functions and external tax practices when finalized; and the IRS is expected to strengthen Circular 230 rules for tax practitioners. There is a clear trend toward enhanced transparency, reporting, and control over tax matters. FIN 48 provides an incentive to develop best practices with respect to tax provisions and to get the systems in place to make the process efficient and auditable.
International Tax Issues
The area of tax provisions for foreign investments has been problematic for the past few decades of globalization. Challenges encompass language, law, country cultures, corporate cultures, currencies, processes, and technology. Many global companies have made significant gains in implementing global enterprise reporting systems, unfortunately, many of the systems did not contemplate the multiple "sets of books" necessary for U.S. tax provisions. Consider that a foreign subsidiary could have the following sets of books:
Foreign country GAAP in foreign currency
Foreign country national or federal tax in foreign currency
Foreign country state or territorial tax in foreign currency
U.S. GAAP in foreign currency
U.S. GAAP in U.S. dollars
U.S. tax in foreign currency
U.S. tax in U.S. dollars
Sarbanes-Oxley encouraged SEC registrants to develop systems of internal control, many of which have been extended to the tax function in general and the tax provision process. Nonregistrants, however, may lag behind in the development of global tax reporting systems. The best multinational enterprise reporting and internal control systems will be challenged to provide the raw data and home-country tax law necessary to determine the identification of uncertain tax positions, recognition threshold, measurement of uncertain positions, and the infor-mation necessary for full disclosure and presentation as detailed in FIN 48.
The international reporting and control aspects are surely significant, but pale in comparison to recognition and measurement of international tax matters in the tax provision. Consider an issue like transfer pricing. For the last decade, CPA firms have been encouraging clients to complete their contemporaneous transfer pricing studies. Guess what? Transfer pricing is one of the most significant multinational "tax positions" to consider. If transfer pricing studies are in order, multijurisdictional recognition and measurement steps will be easier. Without adequate transfer pricing documentation, recognition and measurement in multiple currencies, languages, and jurisdictions may be very difficult. Another sticky area is global treasury management. Many multinationals use sophisticated cash-netting programs to manage cash. Many of those cash flows have tax implications in different jurisdictions. Most notable are the inadvertent triggering of dividend recognition.
Implementation and Operating Challenges
Entities should develop a FIN 48 implementation strategy as soon as practicable. If a strategy is not already in development, the following are some considerations.
Form of Tax Advice and Documentation Standards - A variety of professional standards, laws, and regulations address how tax professionals approach the provision of tax advice. But the common factor among them all is good documentation and good documentation techniques. Control systems need to provide reasonably standardized formats for gathering tax information that cover tax return preparation, compliance with laws, and tax provision preparation. The use of a standard format will enhance review, efficiency, and analysis. A format like the IRAC (Issue/factual development, Rule, Application, Conclusion) memo method is well-established. The use of Tables of Authority and Case Books also will help the level of documentation and the development of research and writing techniques.
Another imperative is a globalization of the tax function. Some entities will need to substantially improve the tax function to accommodate the global reach of FIN 48. A mix of internal development, outsourcing, and co-sourcing can provide the right global mix of skills, knowledge, cultural diversity, and best practices to optimize the effectiveness of the global tax function and its cost to the entity.
Tax Provision Systems, Policies, and Procedures - Each entity needs to assess existing policies and procedures with respect to the tax provision process as part of the strategy development process necessitated by FIN 48. Some companies will need to redesign data-gathering systems, analytics, and documentation standards. Critical items will be foreign subsidiary data gathering and analysis processes, and the general tax provision infrastructure. Enterprise reporting systems and high-end tax preparation and provision systems struggle with constant tax law changes across many jurisdictions. The likelihood of happiness with an out-of-the-box solution is remote. Many companies will need to co-develop a tailored system with their external advisers.
One good way to check system design is to draft the disclosures and footnotes and work backwards through the data gathering and analysis system to make sure the process delivers the information that is needed for the financial statements.
FIN 48 Implementation - Some FIN 48 tasks can be started while developing some of the more difficult data gathering systems. A good first step is to identify the units of account while establishing the standards for documentation. The first pass at implementation can be a review of existing differences already captured by the current FAS 109 processes for each unit of account. Note that not all tax positions are uncertain. There are many highly certain tax positions for which an entity would not devote additional analytical time. The existing differences that are uncertain can serve as a test for the new two-step FIN 48 process of recognition and measurement, and the related documentation process.
A second step is to look at the expanded definition of tax positions for each unit of account. That task will help determine what tax positions exist and are not already included in the provision. Subject those tax positions to the two-step process.
An additional step to consider is a review of the current tax planning ideas, reorganizations, and acquisitions in process or in consideration for the effect of FIN 48.
For SEC registrants, FIN 48 implementation, hopefully, is well under way. For other companies, developing an implementation strategy now is vital. Waiting until the year-end financial statement process of Dec. 31, 2007, could be an expensive mistake.
The State and Local Tax Perspective
(Bhogal and Melinson)
The primary purpose of FIN 48 is to eliminate the diverse accounting practices that have resulted in inconsistencies in the criteria used to recognize, derecognize, and measure benefits related to income taxes. The implementation of FIN 48 is intended to increase the relevance and comparability in financial reporting of income taxes because tax positions accounted for in accordance with SFAS 109 will be evaluated using consistent criteria.
FIN 48 can be challenging to comply with, especially for enterprises that conduct business in numerous states. These organizations are required to evaluate each uncertain tax position based on laws, regulations, administrative rulings, and case law for each state and local jurisdiction. For example, an enterprise that conducts business in 45 states may be required to evaluate each potential uncertain tax position in all 45 states, plus applicable localities.
Common Uncertain Tax Positions
There are many state and local technical issues that need to be considered by multijurisdictional enterprises when analyzing uncertain tax positions pursuant to FIN 48. Some of them include nexus, business and nonbusiness income, apportionment, unitary filing, special purpose entities, related-party expense add-backs, carryover and limitations of tax attributes, and intercompany accounting.
Nexus - FIN 48 states that the term "tax position" also includes the decision not to file a tax return. For a state to impose a tax on an out-of-state enterprise, there must be "substantial nexus" with the state.1 Some of the nexus-related issues an orgaization may need to consider in the context of FIN 48 include economic nexus, agency nexus, affiliate nexus, Public Law 86-272, and telecommuting.
The Supreme Court ruled in 1992 that substantial nexus meant having a physical presence within the state, at least for sales and use taxes.2 However, in two recent cases, the highest tax courts in New Jersey and West Virginia held that physical presence is not required to meet the substantial nexus requirement for corporate income taxes.3 The courts in both cases held that "economic nexus" is sufficient for a state to impose an income tax on an out-of-state enterprise with no physical presence in the state. States may assert that an economic nexus exists for out-of-state enterprises that have customers in their state from which they derive income, even if they do not have a physical presence in that state.
The activities of an in-state representative may cause an agency nexus for a company with no physical presence within that state. For example, a state may assert nexus over an out-of-state computer software company that sells into that state but subcontracts installation and training to an in-state representative.
Similar to agency nexus, the activities of an in-state company may cause nexus for its out-of-state affiliate. For example, an in-state store accepting returns for purchases on behalf of an affiliated out-of-state Internet sales company may cause nexus for the Internet sales entity.4
Public Law 86-272 is a federal law that prohibits states from imposing an income tax on a company for which activities in the state are limited to solicitation for sales of tangible personal property.5 Training, installation, collection of debt, and any other activities not classified as solicitation may cause nexus for state income tax purposes.
Companies permitting or requiring personnel to work at their home, rather than in a company office, will generally cause income tax nexus.6 An exception may exist for salesmen, whose activities may be protected under Public Law 86-272.
Business/Nonbusiness Income - Enterprises should analyze potential uncertain tax positions with respect to business vs. nonbusiness income designations, particularly when related to significant transactions, such as the sale of a business entity or division. In general, business income - though the definition varies among states7 - is apportioned among the states in which the enterprise conducts business. Alternatively, nonbusiness income, which generally includes all income other than business income, is allocated to a specific state, based on the enterprise's commercial domicile or situs from which the property was disposed. Such distinction between business income and nonbusiness income could allow enterprises to arrange their transactions to take advantage of the multijurisdictional tax laws and tax rates. Tax courts throughout the country, including Pennsylvania, have decided numerous cases on the issue of business vs. nonbusiness income.
Apportionment - Different issues may arise related to the sales, property, and payroll apportionment factors, but the sales factor is often the most important. This is due to the increased weight of the sales factor relative to property and payroll factors in many jurisdictions, and the complexity of issues. For example, states vary regarding how to source services. Methods include the predominant state cost of performance; a pro-rata approach based on either a cost of performance or time-based allocation formula; or market-based sourcing. Thus, even if a multistate service firm files in a consistent manner in all states, the firm may still have uncertain tax positions. Other examples of common sales factor issues include dock sale treatment, as well as throwback and throw-out rule application. New Jersey's throw-out rule, for example, can be particularly burdensome.
Unitary Filing Method - Enterprises conducting business in more than one state could possibly file income tax returns using various different filing methods, such as separate company reporting, nexus combination, and unitary reporting. Pennsylvania is a separate company reporting state with respect to the Pennsylvania Corporate Net Income Tax. Pennsylvania taxpayers are not given the option to file a nexus combination report or a unitary report. Some states - Virginia, for example - give enterprises the option to file a nexus combination return, which includes only those entities that have nexus in that state. Other states mandate unitary reporting. A unitary group usually consists of affiliated entities, which may include numerous lines of business, acting as one integrated business or unit. The guidelines covering whether affiliated enterprises constitute a "unitary group" can differ by state. States may challenge an enterprise's position to treat an affiliated group or separate lines of businesses as unitary or not unitary. Some states, such as New York, can challenge an enterprise's position to file as a separate entity and invoke "forced combination" powers if the jurisdiction believes the enterprise's income is distortive on a separate company basis.
Special Purpose Entities - Paragraph 4 of FIN 48 states that the term "tax position" includes "an allocation or a shift of income between jurisdictions." A common tax planning strategy is to shift income between jurisdictions through the use of special purpose entities, such as an intangible holding company. Even though an enterprise may have valid business reasons for using a special purpose entity, states may question the business purpose or substance of the company. Some states may assert an economic nexus in these situations, as described above, or challenge an intellectual property company's royalty rate or transfer pricing study.
Related-Party Expense Add-Backs - Several jurisdictions, including New Jersey, require enterprises that have intercompany transactions to add back to income specific intercompany expenses paid to affiliates. However, there may be statuary exceptions. For example, a New Jersey taxpayer is not required to add back intercompany expense paid to its affiliate if it can establish by clear and convincing evidence, that the adjustment is unreasonable.8 In a recent Alabama decision, the taxpayer was not required to add back the royalty expenses it had paid to its affiliates. The court held that the requirement would be unreasonable because the taxpayer's arrangement had a business purpose, economic substance, and was not abusive.9
NOL Carryover and Limitation of Tax Attributes - Internal Revenue Code §381 and §382 govern the carry-over and limitation of tax attributes in certain corporate acquisitions for federal income tax purposes. Some state and local jurisdictions do not conform to IRC §381 and §382. New Jersey, for example, respects IRC §381 and §382 for net operating losses, but only to the extent that the enterprise that generated the net operating loss survives in the acquisition, merger, or liquidation.10 If the entity that generated the net operating loss is liquidated or merged out of existence, the net operating loss does not carry over to the surviving corporation.
Intercompany Accounting - Some organizations use push-down accounting or charge management fees to source expenses to affiliated companies. These issues have limited relevance for financial statement and federal income tax purposes, when reported on a consolidated basis. However, there can be significant separate company income tax implications. Some states, especially those with authority similar to IRC §482 to reallocate items of income and expense, may challenge the amounts allocated.
Analyzing the Effects
Companies must analyze whether the filing positions related to the issues described above, among other issues, result in uncertain tax positions. In addition to this technical analysis, many firms may need to consider several other issues when analyzing the effects of FIN 48:
Determining what taxes should be included under FIN 48 may seem obvious, since FIN 48 is applicable to income taxes only, but that may not be so simple. For example, the Pennsylvania capital stock/foreign franchise tax is based on both book income and net worth. Companies need to determine if that tax should be excluded from FIN 48 analysis, since this tax is generally not considered an income tax, or should the tax be bifurcated so that only the book income portion of the tax is included. Most practitioners would agree that the net income portion of the Philadelphia business privilege tax should be included under FIN 48, but companies need to figure out if the gross receipts portion of the business privilege tax should be excluded. The Philadelphia net profits tax should be included, most would argue, since it is an income tax paid at the entity level, but one could also argue that the net profits tax could be excluded under the premise that the tax is imposed on an aggregate of partners rather than on the entity.11 Then there are the gross receipts taxes to consider, such as the Ohio commercial activities tax, Delaware gross receipts tax, and Pennsylvania local business privilege or mercantile taxes. These are not new questions, since FIN 48 is an interpretation of SFAS 109, but the imposition of FIN 48 may again bring these topics to the forefront. At the outset of any FIN 48 implementation project, clarify with the appropriate audit firm which taxes will be included.
All positions open under a statute of limitations must be considered under FIN 48. Statutes of limitations differ by state, but one important common rule is that if no return was ever filed then there is no limitation for assessments.
Companies that have incurred federal consolidated losses should not overlook the potential effect of FIN 48. Many states have loss carry-forward limitations that differ from federal rules. Also, profitable, separate companies may have uncertain state or local tax positions.
S corporations, limited liability companies, and partnerships that issue GAAP financial statements and engage in business within the City of Philadelphia need to consider the net income portion of the Philadelphia business privilege tax at a minimum. Note, Philadelphia has a six-year statute of limitations for returns with substantial understatements as well as extremely high interest and penalty rates.
Nonprofit entities need to consider unrelated business income tax issues, as well as potential uncertain tax positions claimed by for-profit subsidiaries.
There has been discussion regarding whether the IRS will request FIN 48 workpapers as part of an audit, and that same concern exists at the state level. This is magnified by potentially diverse state policies. Controversy may arise in the future between companies and state auditors who request FIN 48 state and local tax work papers, which would essentially provide an audit roadmap.
Similar to Sarbanes-Oxley before it, FIN 48 requirements can be a challenge for companies to implement. Firms should try to extract as much positive benefit as possible out of the process. For example, FIN 48 provides an opportunity to educate employees and consultants on the firm's historical business and tax operations. The process may also lead to remedial actions to limit future FIN 48 disclosure requirements. Examples include voluntary disclosures, private letter ruling requests, and restructurings.
FIN 48 is not a "once and done" analysis, as enterprises must continue to analyze tax positions on an ongoing basis. State tax law or policy changes may result in subsequent recognition, derecognition, or change in measurement of a tax position taken in a prior period.
1 Complete Auto Transit Inc. v. Mississippi, 430 U.S. 274, 279 (1977).
2 Quill Corp. v. North Dakota, 540 U.S. 298 (1992). The U.S. Supreme Court ruled that an enterprise must have physical presence for use tax purposes, but did not comment on whether the physical presence is also required for other taxes.
3 Lanco Inc. v. New Jersey Division of Taxation, 908 A.2d 176 (Oct. 12, 2006); MBNA America Bank v. West Virginia, 604 S.E.2d 226 (Nov. 21, 2006). On March 9, 2007, both cases were appealed to the U.S. Supreme Court.
4 Borders Online Inc. v. California State Board of Equalization, 129 Cal. App. 4th 1179 (Cal. Ct. App. 2005). This was a sales tax case, but the same issues could apply to income taxes.
5 15 U.S. §381.
6 Matthew D. Melinson, CPA, "Who Gets the Tax when Telecommuting?" Pennsylvania CPA Journal, Fall 2005.
7 In Pennsylvania, business income is defined as income arising from transactions and activity in the regular course of the taxpayer's trade or business, including income from tangible and intangible property if the acquisition, management or disposition of the property constitutes an integral part of the taxpayer's regular trade or business operations.
8 N.J. Rev. Stat. §54:10A-4.4(c)(1)(b).
9 VFJ Ventures Inc. v. Alabama Department of Revenue, No. DV-03-3172 (Jan. 24, 2007).
10 Richard's Auto City Inc. v. New Jersey Division of Taxation, 659 A.2d 1360 (1995).
11 D.H. Shapiro vs. City of Philadelphia, 409 Pa. 253, 185 A.2d 529 (1962).
By Edward R. Jenkins Jr., CPA, Narjit S. Bhogal, CPA, and Matthew D. Melinson, CPA
Summer 2007, Pennsylvania CPA Journal
Reprinted with permission
Edward R. Jenkins Jr., CPA, is managing member of Jenkins & Co. LLC in Spring Grove. He is also a member of the Pennsylvania CPA Journal Editorial Board and the Federal Tax Committee. He can be reached at email@example.com.
Narjit S. Bhogal, CPA, is a tax manager with Exelon Corp. He can be reached at Narjit.Bhogal@exeloncorp.com.
Matthew D. Melinson, CPA, is a director in the state and local tax practice of SMART Business Advisory and Consulting LLC, and is a member of the Pennsylvania CPA Journal Editorial Board. He can be reached at firstname.lastname@example.org.