Tax and Finance Management

Ohio Announces New Tax Amnesty Program

This week the Ohio Department of Taxation (ODT) announced that it will offer a limited-time tax amnesty program beginning January 1, 2018 and ending February 15.

The program is available to eligible taxpayers – both individuals and businesses – with unreported or under-reported tax debts. During the six week amnesty period, taxpayers who fully pay qualifying tax delinquencies will owe no penalties and only half of the interest normally charged.

To help Ohioans determine their eligibility and learn more about the Ohio Tax Amnesty, ODT is launching a statewide awareness campaign and has set up this website. 11/16/2017

Tax Dept. Accepts OMA Request to Improve Mfg. Sales/Use Exemption

This week the Ohio Department of Taxation (ODT) released its latest draft of the Manufacturing Sales and Use Exemption rule review.

Reacting to the previous draft, the OMA working group had advocated for removing this language (4th paragraph, division (B)(1)): “However, the maintain (sic) materials in the same state or form as they are received or measuring raw materials to verify quantities received, does not constitute commitment,” thus arguing for a complete definition of tax exempt materials committed to the manufacturing process.

Responding to the OMA’s comments, ODT agreed to remove the objectionable provision from the draft rule. Keeping that language out of the rule would be a major win for manufacturers. If you and/or your tax expert have comments on this latest draft, or the rule review in general, contact OMA’s Rob Brundrett. 11/9/2017

Subject Matter Experts Summarize House Tax Reform Bill

OMA Connections Partners, Clark Schaefer Hackett and GBQ Partners have taken a look at the version of the sweeping bill to reform the tax code that was released by the House Committee on Ways and Means on November 2, the Tax Cuts and Jobs Act, H.R. 1.

It has been described by the chairman of the House Ways and Means Committee as a starting point for negotiations.

President Trump and GOP lawmakers would like to pass tax reform sooner rather than later. However, before that can happen, a bill would have to be voted on by the full House and the Senate, which is working on its own tax plan.

Here’s a brief rundown from Clark Schaefer Hackett of some of the individual and business provisions in the 429-page bill. Generally, the changes would go into effect after December 31, 2017, but there are exceptions.

Here is the GBQ summary of the bill.

And here is a full section-by-section summary of the bill as published by the House Committee on Ways and Means. 11/6/2017

New IRS Directive Provides Safe Harbor for R&D Tax Credit

OMA Connections Partner, Tax Credits Group (TCG), reports there’s a new favorable change in the area of the R&D tax credit.

According to TCG: “Issued on September 11, 2017, IRS Directive, LB&I Memorandum No: LB&I-04-0917-005, creates a new safe harbor whereby the IRS will accept as sufficient evidence of Qualified Research Expenses (“QRE”) the adjusted ASC 730 financial statement R&D expensed for the credit year.

“The purpose for creating this safe harbor is to address the significant burden that taxpayers and the IRS face in determining the correct amount of R&D credits. The Directive is intended to relieve some LB&I audit resources that have historically been devoted to auditing this area, and to create an efficient manner for determining QRE for applicable taxpayers.”

Read more from TCG here. 11/3/2017

Manufacturers Called to Action on Tax Reform

David Farr, Chairman and CEO, Emerson, Chair of the Board, National Association of Manufacturers (NAM) asks all manufacturers to rally and help push for tax reform. Here are three things to do:

1. Share your story of what tax reform would mean to your workers and your company—and ask your team to do the same. We have made it easy for you and your employees: just answer these key questions here. The NAM can then use those stories to show lawmakers why their support for reform means bigger paychecks, more jobs and more manufacturing in the United States.
2. Engage manufacturing workers. As manufacturing leaders, we need to ensure our employees understand why it’s important that we fix our outdated tax code, and this messaging can help you. We need to articulate the impact that tax reform will have on manufacturers and their families.
3. We need manufacturing employees to call on their members of Congress to act on tax reform without delay. Please encourage the members of your team to reach out to their elected officials by sending them this link to take action on tax reform. When speaking with your employees, ask them to text “ActOnTax” (all one word, no spaces) to 52886 to send a message to their members of Congress to act on tax reform.

As Chairman Farr said in his address to the Economic Club of Minnesota earlier this month, “Securing the future of modern manufacturing means having a tax code that lives up to the realities of the modern world. I hope you are willing to speak out and take a stand.” 10/23/2017

RSM Offers Year-End Tax Planning Guide

OMA Connections Partner, RSM, has prepared a year-end tax planning guide that reflects the tax considerations and developments that it believes may create risk or opportunity for businesses in 2017 and beyond.

RSM indicates the most likely candidates for major tax changes that might be enacted in 2017 or 2018 include:

1. A middle-class tax break, possibly temporary
2. Reduced tax rates for repatriated foreign earnings
3. A possible move towards a territorial tax system for foreign corporate subsidiaries engaged in foreign business activities
4. A corporate rate cut
5. A rate cut for pass-through businesses that would be crafted to exclude personal services income
6. Possible limitations on state and local tax deductions and business interest deductions to help pay for the rate cuts
7. Changes favorable to capital cost recovery, but not as generous as full expensing for all depreciable assets.

Read more from RSM here. 10/25/2017

Centralized Municipal Tax Filing Opens

The Ohio Department of Taxation has opened registration for businesses to ‘opt-in’ for centralized filing and state administration of the municipal net profit tax for the 2018 tax year.

Taxpayers can register at the department’s website either electronically or by filling out and submitting a paper registration form (Form MNP-R).

Businesses that opt-in will have the advantage of filing one municipal net profit tax return that encompasses every municipality in which they are required by law to report. The Department of Taxation will process all the centrally filed returns and distribute tax payments to the appropriate municipalities.

Businesses that operate as a sole proprietor or single-member LLC are not eligible to file with the department, and should continue their current method of filing. 10/19/2017

Testa Testifies at Tax Expenditure Review Committee

This week the General Assembly’s Tax Expenditure Review Committee held its first meeting. The panel was formed through legislation passed in the 131st General Assembly.

Senator Scott Oelslager (R-North Canton) was selected chairman. Other members of the review committee are Senators John Eklund (R-Munson Township) and Vernon Sykes (D-Akron), and  Reps. Tim Schaffer (R-Lancaster), Gary Scherer (R-Circleville), and John Rogers (D-Mentor-on-the-Lake).

Tax Commissioner Joe Testa testified in front of the committee at the initial hearing. He presented a broad overview of Ohio’s tax expenditures. 10/19/2017 

OMA Tax Counsel to Retire

Long time OMA tax counsel Mark Engel, Partner, Bricker & Eckler, participated in his last meeting of the OMA Tax Committee this week. He’ll retire from Bricker at the end of the year.

OMA’s Rob Brundrett, Director, Public Policy Services, who staffs the committee said, “We are truly going to miss Mark. He is well known throughout the state as one of Ohio’s preeminent tax attorneys. The work he did for Ohio’s manufacturers over the years included some of the most impactful tax reforms this state has ever seen, including the elimination of the tangible personal property tax. Mark’s style, knowledge, and wit have made his testimony must-see events at the Statehouse. We certainly wish him well on his retirement.” 10/12/2017

Pictured: OMA’s Rob Brundrett presents a token of appreciation to OMA tax counsel, Mark Engel of Bricker & Eckler.

Understanding the Impact of Proposed Corporate Tax Reform

OMA Connections Partner, Clark Schaefer Hackett (CSH), posted on the Trump administration’s “Unified Framework for Fixing Our Broken Tax Code,” which includes a framework for corporate tax reform.

“Many businesses and their owners are wondering how corporate tax reform could affect them. The framework is a bit sparse on details, but let’s shed some light on those it does include.”

Read the post from CSH. 10/12/2017