Weaver: Beyond the Numbers

Direct pay permits, which allow taxpayers to pay sales tax directly to the state rather than sellers, are becoming more common. Many businesses see direct pay as an essential element to the management of their state and local tax obligations, however there are still many questions. How do direct pay permits work and how are they best utilized?

Key Points:

1. Direct pay allows qualified buyers to pay taxes directly to the state comptroller rather than to the seller

2. Offering direct pay for customers can generate significant long-term tax savings

3. Holders of direct payment permits may issue blanket exemption certificates in lieu of paying taxes when purchasing, leasing or renting taxable items

On the latest “Weaver Beyond the Numbers,” host Tyler Kern talked to Weaver’s Mayur Naik, Partner, State and Local Tax Services and Shane Stewart, Partner-in-Charge, State and Local Tax Services to explored how direct pay can simplify sales taxes.

“It's a mechanism that's offered by a lot of the states that allows a taxpayer or purchaser to pay the tax directly to the state instead of paying to their vendor,” said Naik.

Naik added that once a system is in place, direct pay can generate significant tax savings, and a well-designed process can provide granular reporting about the tax status of each item purchased.

Stewart further explained there’s not enough knowledge surrounding direct pay and his goal has also been raising awareness. “Many businesses are not aware these programs exist. We’re just trying to get the word out, so taxpayers know that this is not burdensome. It's not administratively challenging to maintain compliance in this space and there are professionals on our team who specialize in helping clients manage and fully utilize their direct pay permits,” said Stewart.

With Weaver’s experience in dealing with complicated state and local tax issues along with a deep understanding of the direct pay permitting and compliance process, the team is equipped to make sure your business is minimizing its tax liability.

Subscribe and listen to future episodes of Weaver: Beyond the Numbers on Apple Podcasts or Spotify.

Governments today are focused on the fundamentals and understand that their constituents are looking for results. Now is the time to align actions to the mission and begin looking at performance metrics that elevate the organization. The stakes couldn’t be higher with new funding opportunities available at every level of government.

Local governments often hold the key to making lasting impacts in their communities. But how can the programs they implement become more effective?

Adam Jones, State Government Practice Leader with Weaver, talks with two tenured government advisors, Aaron Howard, President and CEO, Mass Ingenuity, and Todd Hoffman, Partner, Government Consulting Services, Weaver. With decades of experience helping governments with strategic planning and business process improvement, Todd and Aaron discuss the actions government agencies do that drive performance, best practices that impact success, and fundamentals of results.

Today’s government workforce is mission-driven, which is why they work in the public sector. They are also data-driven and look to analytics to support growth and improvement. “With [an] emphasis on mission-driven priorities and a focus on data, government can be better,” said Howard.

The management of large-scale, complex grants requires a fresh approach and effective way to manage risk and report results, particularly in such high visibility/high accountability environments. The key to success is applying a balanced approach to people, processes and technology to track and demonstrate results.

In terms of data, all three men agreed that metrics have to start with a core question, why am I measuring this, and why does it matter? “Metrics are more and more important. It’s what individual constituents are looking at to ensure that where dollars are spent, they are getting the right outcomes,” said Hoffman.

Organizational charts have historically been used to describe an agency’s operations; however, these charts typically illustrate siloed and hierarchical functional groups without explaining the organization from an operational process perspective. Successful organizations are moving beyond the standard, flat organizational chart to develop a process-oriented view of workflows and performance measures, including who owns each core process’ measurements of success.

Aaron Howard is the President and CEO of Mass Ingenuity, an organizational development and enterprise performance management firm specializing in integrating people, processes, and technology for government agencies. Todd Hoffman is a partner in Weaver's Government Consulting Services practice and has 34 years of consulting experience, successfully delivering results in state and local government.

Our nation faces high inflation and an uncertain post Covid economic recovery. However, the government sector is flush with cash and funding for infrastructure improvements and capital programs approaches historic levels. Nearly a year ago President Biden signed the Bipartisan Infrastructure Law,” a once-in-a-generation investment in our nation’s infrastructure and competitiveness”. Millions, billions and yes, even trillions are spent and allocated by the government for the business of running the country.

How do government agencies respond? What really happens with all that money and how are government leaders managing the influx of funds, making sense of constituent needs, and achieving their goals – all while maintaining transparency and accountability?

In the podcast, “Weaver Beyond the Numbers: The Business of Government,” host Adam Jones, Weaver’s State Government Practice Leader, chatted with Todd Hoffman, Partner, Government Consulting Services, to discuss large-scale infrastructure funding and some of the challenges facing state and local governments.

Jones noted that the contents of President Biden’s Bipartisan Infrastructure Bill, provides state and local governments with billions in long-due funding needed to create meaningful change for their constituents. Hoffman agreed saying that the bill is large-scale and takes into account multiple factors. There is an objective behind the effort and now is the ideal time for organizations to prepare their business case around priority projects with the goal of maximizing this opportunity.

“When you look at our nation as a whole — we've underinvested in infrastructure spending; on roads, bridges, power systems, rail, broadband, water systems and public transportation over the years. We have an aging infrastructure,” said Hoffman.

He also mentioned the goal for many organizations is to modernize practices in IT, human resources, governance while creating a results-oriented approach in support of that change.

Jones and Hoffman further explored:

1. The emergence of the need for more transparency around federal funds

2. How broadband is particularly unique area in money allocated for infrastructure

3. The four pillar approach to management

“We’ve been through some interesting times in the last few years as a nation and, if we think about it, Government has been at forefront of the efforts as the community is looking to for solutions and support,” said Hoffman. “Because of this, there is a strain on the employee base. Where we help is in providing ways to prioritize projects and develop business cases for the additional funding support.”

Collaboration and relationship building are key comports to better problem solving in these times. There is power in the collective and when organizations think ways to improve delivery of services they can get better solutions when pulling in others. Hoffman went on to say, “What you’ll find is there is a lot of overlap in what teams and departments are trying to accomplish and through collaboration you can identify those things and find common solutions. Collaboration equals better problem solving.”

Todd Hoffman is Partner, Government Consulting Services, for Weaver and has 34 years of consulting experience successfully delivering results in state and local government.

In this episode of Weaver On-Chain, Weaver’s Tim Savage and Kristine Cranley, Director of Business Development at PM Squared Financial, discuss the quickly growing bitcoin mining industry in Texas.

Kristine walks through the idea behind bitcoin mining on stranded natural gas resources. “With stranded natural gas bitcoin mining, the miners are able to take generators and transform waste gas into power by planting data boxes on the oil fields. For the oil fields, it’s a new stream of income for them. They’re selling the natural gas for less than market prices, but they’re not having to do the mitigation. Some oil fields are looking for permitting and need to have a plan for mitigation.” In these situations, bitcoin mining not only facilitates mitigation, operators are able to monetize these resources that would otherwise be flared and wasted. Bitcoin mining also offers a third benefit of methane and carbon emission reduction as generators reduce emissions by up to 65%.

Bitcoin mining is also happening on a commercial level. Several public companies operate large scale mining facilities in rural Texas. These mining companies create local jobs, bring tax revenue to local jurisdictions, and help stabilize the electric grid by offering consistency with energy production and consumption. However, mining is broadly misunderstood by the wider public. Kristine comments on the importance of “educating people on the way bitcoin mining is at the service of Texas energy both on-grid and off-grid. With on-grid mining, bitcoin miners are a buyer of last resort. They’re able to purchase the energy that may not have a use in the middle of the night, but at the same time bitcoin miners can turn off in an instant if there’s a need in order to shore up the strength of the grid.“

While more people are gaining an understanding of the use cases of bitcoin, there is often still a disconnect with how mining and energy consumption is a critical aspect in the bitcoin ecosystem. Currently, the broader narrative is that bitcoin mining is a waste of energy. However, the truth is the opposite. While running the bitcoin network does consume energy, that energy is converted into the bitcoin monetary network, establishing a base layer of value as long as the network is operating. The accountability mechanisms between miners, nodes, and transactional users combined with assets that are characterized by strong monetary properties and perfect scarcity are interesting considerations to those who are entering the digital assets space.

Information presented is for educational purposes only and does not intend to make an offer or solicitation for the sale or purchase of any securities. Past performance is not indicative of future results. Investments involve risk and unless otherwise stated, are not guaranteed. Please consult with a qualified financial adviser before implementing any strategy discussed here.

While remote work might seem like a fantastic way to build a company and retain employees, some unintended consequences come with it. In this episode of Location Cubed, Weaver's Howard Altshuler, Partner-in-Charge, and Rob Nowak, Partner, talk about the strategies and dilemmas companies face in undertaking remote work.

Often, when a company changes location, there is an incentive behind the relocation, whether in the form of a tax break or cheaper real estate. But with the increase in the number of remote workers, local businesses experience fewer economic benefits as the result of such a move. Suppose a company relocates to Lower Manhattan with half of its employees working from the office and the other half working remotely. In that case, the remote workers would not be spending as much time or money in Lower Manhattan as those who go to the office. . Nowak admitted, "That's gotta be a problem."

In a more localized example, Altshuler recalled that a North Dallas area is being demolished and rebuilt. Goldman Sachs will be a prime tenant, bringing in upwards of 2500+ jobs to the company and receiving tax incentives as a result. But do we want these workers to be remote?

"You want those 2,500 or 5,000 people, whatever the number is, coming in every day, spending money in your district…going out to lunch, going out to dinner, going to events, otherwise providing some economic stimulus to the area," said Nowak. But this issue is not often discussed. Altshuler agreed, "But you're not hearing anything about that."

From company executives, however, there are more and more calls to bring people back into the office. Altshuler said, "There are a lot of reasons for that. Culture is probably the biggest." But how do companies incentivize this? Altshuler continued, "I think, obviously, the first thing is to lead by example.” If company executives start going into the office, people are likely to follow, and having a company culture where people want to be is also a huge incentive.

Weaver’s Rob Nowak and Howard Altshuler put aside the comedy this week to talk about serious matters: the devastating effects of Hurricane Ian and other natural disasters.

A natural disaster, like Hurricane Ian, devastates the surrounding community, infrastructure and real estate due to the damage caused. Still, time and time again, resiliency brings these devastated communities back together.

“Think about other natural events,” Altshuler says. “Probably our most traditional risk management and aversion people would say, maybe we shouldn’t rebuild. But that never seems to happen. People want to stay there, and I get that.” Nowak notes that the U.S. has a storied history of building back stronger after such disasters.

According to Nowak, humans are competitors who refuse to let situations get the best of them. “You can always point to natural disasters or events that have occurred that do not stand in the way of progress. We always rebuild.”

When a disaster strikes, so do opportunities. The opportunity exists not only to rebuild lost homes but replace old infrastructure with newer and better ones. Altshuler says now is the time to learn from the results of Ian and create long-lasting buildings and infrastructure in a proactive manner that leaves the U.S. better prepared for the future. Finding the balance between making things resilient and practical will make the new path safe and cost-beneficial.

Resiliency is more than how a community responds to a natural event; it’s how it prepares for an event that hasn’t occurred. Prevention is critical, and Altshuler notes several regions in the U.S. are taking measures to prevent the next disaster. “For example, what’s known as the Ike Dyke, just recently got approved by congress. They’re going to build a dyke across the front of Galveston Bay. Hurricane Ike, fifteen years ago, came up through Galveston Bay and caused a lot of damage. Building the Ike Dyke will help in the future, but it will cost thirty-four billion dollars to build it.” The cost-benefit may not prove out in terms of the money it took to prevent the disaster, but it may reduce the rippling economic effects of such a disaster.

Subscribe to the Location Cubed podcast on Apple Podcasts and Spotify for the next episode of this series.

Learn about upcoming real estate webinars and subscribe to Weaver’s event invite list.

©2022

Weaver’s bad boys of Tax Services, Rob Nowak and Howard Altshuler, are back with more real estate insights. And guess who just got back from a trip to the Big Apple? Yup, Altshuler, that traveling rascal, returned from a trip to NYC and Weaver’s new Times Square location, and he had plenty to report to Nowak.

The Big Apple is back, Altshuler is pleased to say. “As everyone is probably aware, we merged with a firm in New York in April of 2022 as we continue expanding our footprint there, meeting people, and creating what I like to call Weaver brand ambassadors.”

Weaver's expanded presence in New York means increased awareness of their advisory services for clients in the area. Altshuler says, "The folks in New York are reaching out and working with the advisory teams in Texas, California, and other locations to provide advisory services to clients and people in New York that wouldn't have been on our radar in the past."

Altshuler notes that, unlike trips to NYC during the pandemic, people are out and about and restaurants are crowded. “I can feel the city’s pulse, whereas the last few times I’ve gone, I didn’t have that feeling.”

City life isn't the only thing returning to more normal conditions in NYC. Altshuler says that's also reflected in the real estate market. "It seemed like I was going underneath a construction scaffold everywhere I walked. A lot of development is happening, and many redevelopments are going on." But this good news comes with a caveat. While areas like Grand Central Station were bustling with real estate activity, Altshuler says other regions, like the garment district and neighborhoods without a significant transportation hub and few residential buildings, didn't appear to have as much activity.

Listener, be warned. If you tune in with an appetite, Altshuler satisfied Nowak's cravings for New York City cuisine by describing the various restaurants and eateries he managed to fit into his visit.

In March of 2022, the Security Standard’s Council released version 4.0 of its Payment Card Industry Data Security Standard (PCI DSS.) Weaver’s IT Advisory Services’ Kyle Morris, Senior Manager, and Brittany George, Partner, spoke to Tyler Kern about the new standard and what people need to know.

PCI DSS 4.0 applies to entities storing, processing, and transmitting cardholder data or could affect the security of cardholder data. Kyle said this includes merchants who sell goods and services and get paid with a credit or debit card, like a Visa or Mastercard as well as service providers and other entities that support these merchants. “So, that can affect many different types of organizations.”

Version 4.0 came out this past March, but the new standards do not take effect until March 31, 2024. This will give merchants and service providers time to prepare for the latest compliance standard. There is also a transitional period, said Kyle. “Entities will have another year on top of 2024, to March 31, 2025, to implement some of the new requirements going into place.”

“You can opt-in early for version 4.0,” Brittany said. “It is fine for organizations that are ready to do that. It is actually considered a best practice.”

What are some of the changes in the latest version? “One key difference is the approach to implementing PCI,” Brittany said. “We currently have the defined approach, the traditional method of implementing the requirements as stated. Version 4.0 will introduce the customized approach, which is an alternative way of implementing the requirements.”

This customized approach offers the ability to implement the controls in an advanced way, for example through machine learning. “Organizations, including many or our clients, have been asking for this for years, especially those who have been on the leading edge of technology,” Kyle said.

In March of 2022, the Security Standard’s Council released version 4.0 of its Payment Card Industry Data Security Standard (PCI DSS.) Weaver’s IT Advisory Services’ Kyle Morris, Senior Manager, and Brittany George, Partner, spoke to Tyler Kern about the new standard and what people need to know.

PCI DSS 4.0 applies to entities storing, processing, and transmitting cardholder data or could affect the security of cardholder data. Kyle said this includes merchants who sell goods and services and get paid with a credit or debit card, like a Visa or Mastercard as well as service providers and other entities that support these merchants. “So, that can affect many different types of organizations.”

Version 4.0 came out this past March, but the new standards do not take effect until March 31, 2024. This will give merchants and service providers time to prepare for the latest compliance standard. There is also a transitional period, said Kyle. “Entities will have another year on top of 2024, to March 31, 2025, to implement some of the new requirements going into place.”

“You can opt-in early for version 4.0,” Brittany said. “It is fine for organizations that are ready to do that. It is actually considered a best practice.”

What are some of the changes in the latest version? “One key difference is the approach to implementing PCI,” Brittany said. “We currently have the defined approach, the traditional method of implementing the requirements as stated. Version 4.0 will introduce the customized approach, which is an alternative way of implementing the requirements.”

This customized approach offers the ability to implement the controls in an advanced way, for example through machine learning. “Organizations, including many or our clients, have been asking for this for years, especially those who have been on the leading edge of technology,” Kyle said.

A lot is going on in the single-family rental market. Howard Altshuler explains that it is one of the hottest market trends in the past couple of years. With housing affordability getting tougher and tougher, there is an obvious need for single-family rentals. “People don’t want to live in a rental when they’re thirty-five years old, they want to have a house. But, if you can’t buy a house, what’s your next best thing? You rent a house.”

Altshuler says another factor driving up single-family home prices are rental companies buying homes to rent out. With their additional resources, they can afford to outbid traditional home buyers, which leaves a lot less inventory for those who are looking to purchase. Rob Nowak points out that even though this practice is occurring, the rental companies often plan single-family home rental communities.

Single-family rental is a broad strategy to bridge the gap between traditional apartment renting and single-family home ownership. Altshuler says, “I’ve talked to several people who have a dozen or more houses, and they rent them out to people under that program where, ultimately, they’re intending for them to build up equity. What happens is there is that pride of ownership; even if you’re still renting it. By slowly building up the equity, the renters tend to take care of the lawn and fix things on their own. It becomes a little better economically for the investor as well.”

As interest rates rise, the ability of a future homeowner to afford a monthly mortgage makes renting a single-family home an economically attractive proposition. Nowak says, “A single-family rental continues to bridge the gap as interest rates go up because I have my heart set on being in a single-family home; it’s the right thing for myself and my family. It’s hard to get them started and settled in a geography and then uproot them and move them to a new geography outside where that typical multi-family asset would have been.”

Subscribe to the Location Cubed podcast on Apple Podcasts and Spotify for the next episode of this series.

Learn about upcoming real estate webinars and subscribe to Weaver’s event invite list.

©2022