CHICAGO, Ill. (August 18, 2015) – As
the economy continues to recover, the construction industry is bouncing back and
realizing more revenue. However, the increase in taxable income, liabilities and
accounts receivable can negatively affect a company’s cash flow. To help
construction companies automate the percentage-of-completion (POC) tax
compliance process, Crowe Horwath LLP, one of the largest public accounting,
consulting and technology firms in the U.S., has introduced the Crowe POC
Construction companies that average more than $10
million in gross receipts are required by the IRS to use a POC accounting method
to calculate taxable income from contracts not completed within the taxable
year. POC is calculated by comparing a contract’s annual costs incurred before
the close of the tax year with the total estimated costs at contract
Selecting the best POC strategies can help reduce current tax
liability through deferrals of taxable income using methods approved by the IRS.
Crowe POC Manager is a web-based solution that takes data from each ongoing
contract and calculates the POC method that generates the best tax deferral.
“Many contractors think the deferral is a short-term benefit that they’ll
just end up paying in taxes the next year,” said Rhonda Huismann, a construction
and real estate tax services partner at Crowe. “But what they don’t realize is,
with a large number of contracts at different stages of completion, they’ll
continue to defer each year. It’s a quasi-permanent benefit as long as they
continue in business.”
Many companies are reluctant to take the time to
select an optimum tax POC method, thinking the benefits don’t outweigh the time
and cost of applying separate methods for book and tax purposes and performing
separate computations on a contract-by-contract basis. Although Huismann added
that what took some taxpayers weeks using Excel models can now be completed in a
few hours with Crowe POC Manager.
Benefits and features of Crowe POC
- Simplified selection of the best tax accounting
- Customized application to any size organization;
- Streamlined processing for a quicker turnaround;
- Automated uploads of client information;
data accuracy and security using a centralized repository;
- Reference to
prior year calculations with secure data retention;
calculations of look-back interest and completion of IRS Form 8697;
- Increased efficiency compared with spreadsheet-based tools; and
- Ease of projecting tax liabilities.
“I’ve yet to see
a situation where we’ve not been able to generate a higher level of deferral for
a contractor after analyzing their optimum methods,” Huismann said. “Larger
deferrals can have a material impact on the cash flows of a company.”
For more information, please visit http://www.crowehorwath.com/POC-NR.
About Crowe Horwath
Crowe Horwath LLP (www.crowehorwath.com)
is one of the largest public accounting, consulting, and technology firms in the
United States. Under its core purpose of “Building Value with Values®,” Crowe
uses its deep industry expertise to provide audit services to public and private
entities while also helping clients reach their goals with tax, advisory, risk
and performance services. With offices coast to coast and 3,000 personnel, Crowe
is recognized by many organizations as one of the country's best places to work.
Crowe serves clients worldwide as an independent member of Crowe Horwath
International, one of the largest global accounting networks in the world. The
network consists of more than 200 independent accounting and advisory services
firms in more than 120 countries around the world.