Richey, May & Co. Mortgage Banking Products    
  
   
   
  Mortgage Banking Products

Mark-to-Market Review

Mortgage bankers and brokers are subject to what is called the mark-to-market rules for their inventory of mortgage loans held for sale at the end of any tax year. Many taxpayers are not in compliance with these rules and have not had the proper counseling from an expert in the area of mortgage banking taxation. In order to be in compliance, taxpayers must analyze their ending loan inventories and method of accounting for mortgage loans held for sale to determine the net effect on their taxable income and apply to the IRS to change their method of accounting to follow the mark-to-market rules. In changing to the mark-to-market method of accounting, taxpayers not only decrease their risk of tax adjustments upon an IRS audit, but also may reduce their overall income tax liabilities.

Multi-State Tax Planning

Multi-state tax planning is a must for corporations, S corporations, and partnerships doing business in multiple states. Our engagement team performs a complete analysis of the taxes imposed by the states with a particular focus on the nature of the company's activities in the states, including the following:
  • Taxes Historically Paid
  • Nexus Analysis
  • Composite vs. Pass Through Reporting
  • Types of Taxes
  • Tax Credits
  • Tax Compliance Requirements
  • Allocation & Apportionment Alternatives
  • Estimated Tax Requirements
  • Business License Requirements
These services involve strategies for reducing a taxpayer's income and franchise tax liabilities by reviewing the filing alternatives allowed by the states and determining the optimal filing position that will save the taxpayer money. The engagement team will advise the client of any potential tax savings by the means of restructuring entities, property ownership, company policies, and taking advantage of tax credits and business incentives. In addition, the engagement team will report any instances of noncompliance or errors that it finds during the review to ensure proper compliance in the future.

Multi-state tax planning is critical for mortgage bankers and brokers that have significant growth in the use of net branches and similar structures. For other companies, the Internet has changed corner stores into .com companies with no state borders. The state taxation of net branches and Internet sales creates confusion and uncertainty. State income tax compliance has become more of a burden on taxpayers due to the growing complexity of the rules and the lack of uniformity between the states. Many businesses find themselves moving into new states to expand business and market share. Many small and medium-sized companies do not have the infrastructure to handle this increased burden and therefore often incorrectly report income, overpay taxes, and loose valuable tax credits and business incentives.

Mortgage Banking - Net Branch Taxation

Many mortgage bankers and mortgage brokers have successfully expanded their market share and customer base by using the net branch structure. This has rapidly increased the complexity of compliance in the following areas:
  • State Income Tax
  • Payroll Tax
  • Property Tax
  • Federal Income Tax
  • HUD Requirements
  • Business Licenses
  • Franchise Tax
  • Sales/Use Tax
Our engagement team's expertise in this industry provides clients with the knowledge and resources to review their current policies and procedures for net branches and compliance with the Federal and state tax laws. Our team will assist in creation or modification of existing policies and procedures that create unacceptable risk to the client and help restructure the business to minimize all state and local taxes.

Many mortgage banking companies that have grown their business through net branching do not have the internal infrastructure or expertise to handle the additional compliance and tax planning that comes from entering multiple states and having multiple entities. This service is provided to these companies as a solution to this problem.