Tax savings may be available to security dealers and systems integrators in the American Jobs Creation Act of 2004, according to Michael Miller, treasurer of the National Burglar and Fire Alarm Association (NBFAA), Irving, Texas.
His company, Moon Security Services Inc., Pasco, Wash., of which Miller is vice president and co-owner, saved $3,300 through the law last year in equipment and guard work. Because the tax rate increases from the present 3 percent to 9 percent in future years, he expects those savings to grow.
“If we do the same volume, which basically we will, in a few more years, we’re talking about a $10,000 credit,” he pointed out. “We were able to count some of our guard work involved with new construction. It wouldn’t fit if it was a manufacturer’s site.”
Miller asked Mitch Reitman, the NBFAA’s CPA, to review the act. Reitman confirmed that it contains many provisions that affect security dealers and systems integrators. Reitman wrote that the provisions include:
- An increase in the deduction for expensing certain equipment used by a business;
- An increase in the number of shareholders of a subchapter S corporation;
- The ability of the IRS to use private debt collection agencies; and
- A tax rate decrease for the value of certain new construction.
“You need to get to your own CPA so you can make sure that you do it right,” he suggested. He also emphasized that the NBFAA staff cannot provide more information because each company’s qualifications for the tax savings vary.
“It was kind of interesting because our local homebuilders association was not necessarily aware of it either,” Miller related. “The biggest issue is that if you first look at it, you won’t think it applies to the alarm companies; it probably applies to the builders.
“So I had to make sure that I was pushing a little bit to have people dive into it a little bit more,” he recalled. “That would be the biggest issue people will have is that skepticism that it might not apply to them.
“You need to go to your CPA because it’s a cockamamie way they did it,” Miller maintained. “Otherwise, they may not recognize it as something that can be available to us. We’re a subcontractor basically to the contractor, so there’s some qualifications that have to be met.”