Owners, GC’s, and construction managers stake their companies’ reputations and success on the quality of their workmanship and ability to complete jobs on tome and within budget. Success or failure rests squarely with the management team and the subcontractors they hire to complete the job. Total work performed by subcontractors on any constructions job can reach as high as 90%. Just as the management team must survive rigorous interviews and background scrutiny before being hired, so should a key component of the team: the subcontractors. A formal, standardized subcontractor prequalification procedure and annual update of preferred subcontractors are invaluable tools in contractor selection and retention for long-term success and increased profitability. While this article will focus on the evaluation of subcontractors, it’s important to recognize that GC selection can also follow the same types of analysis and evaluation by project owners. Establishing the selection criteria is a cross-departmental strategic issue, with priorities coming from upper management along with input from… read more →
The Florida State Legislature on May 3, 2013 passed Public Private Partnership (“P3″) Legislation that authorizes P3s for certain qualifying projects. The law also includes limitations and specific requirements for this alternative procurement process. This is exciting news intended to spur investment in the State, assist public entities in meeting their project delivery needs, and to create jobs. Key Components The Law, once signed by the Governer, has an effective date of July 1, 2013. Key components of the Law are that it: Establishes an alternative procurement process and requirements for public-private partnerships to facilitate the construction of public-purpose projects. Establishes a New Task Force to recommend guidelines for the Legislature to consider with the objective of creating a uniform process for establishing P3s. Authorizes the use of P3s for purposes of county road projects, and permits, if certain requirements are met, counties to both receive or solicit proposals and enter into agreements with private entities to construct, extend, or… read more →
Dear Client: While I am certain most all of our clients do not have an issue with independent contractors (“IC”), you should know that a voluntary IRS program is closing at the end of this month. This is an area that both the IRS and Department of Labor have pursued. The fundamental issue is whether or not a worker is an employee or is an IC. The latter receives a 1099 and is not subjected to payroll taxes when paid (as is the employee). The IRS program permits more favorable terms that if the business is later audited and found to have employees who were treated as ICs. If you do believe there may be an issue and want to prospectively reclassify workers as employees – call us to discuss this. Taxpayers have until June 30 to apply for the temporary version of the IRS’s “Voluntary Classification Settlement Program” (VCSP). This version of the VCSP temporarily eased the eligibility requirements… read more →
If proposed tax deferments on incomplete projects set to benefit condo developers and contractors are approved, they likely wouldn’t take effect until 2010, according to a tax expert lobbying for the change. The proposed change would allow developers to treat each of their unsold units as a separate building and qualify for deferred tax exceptions already in effect for builders of single-family homes and townhomes. Some following the issue hoped the change would be effective for the 2008 tax year and beyond. But, the likely scenario pushes approval into next year and its implementation into 2010, said accountant Rich Shavell, chairman of the tax advisory group for Associated Builders and Contractors (ABC). The change would be monumental for condo developers and contractors. The Internal Revenue Service currently bases taxes on a percentage-of-completion formula. So, developers and contractors are being taxed for partially completed units yielding no revenue. Developers collect up to 20 percent of a unit’s sale price until it’s… read more →
In May 2006, the IRS issued final regulations under IRC 199, Domestic Production Activities Deduction (DPAD). As a result of comments submitted by CFMA, as well as other industry stakeholders, the final regulations reveal significant changes from prior guidance and liberalize certain important rules. The basic structure of the DPAD is relatively unchanged from the original deduction introduced in the American Jobs Creation Act of 2004 (Pub. L. No. 108-357). As before, the DPAD can lower a contractor’s tax burden, expanding profits and increasing cash flow. For those who qualify, the deduction starts at a transition percentage of 3% for 2005 and 2006, increases to 6% for 2007 through 2009, and peaks at 9% in 2010. Eventually, the deduction will reduce the impact of the corporate income tax for qualifying activities by approximately 3%. This article, the first of a two-part special report, focuses on the final regs and their impact on contractors. It includes a brief overview and a… read more →