News and Analysis
From OMA Connections Partner Clark Schaefer Hackett (CSH): “The IRS appears to have resolved an ongoing controversy over business meals remaining deductible following the passage of the Tax Cuts and Jobs Act changes in late December 2017. …”
Read more from CSH about the guidance that the IRS has issued. 10/5/2018
The draft looks to update the rule to reflect legislative changes over the years and clarify aspects of the rule with additional examples.
The OMA’s working group on the issue actively participated in the review and drafting of the proposed changes. If you have questions or concerns please contact OMA’s Rob Brundrett. 10/4/2018
The Tax Foundation has recently published its annual ratings of states for tax competitiveness, ranking Ohio among the 10 worst states at 42nd.
Some may question the low ranking since Ohio has made great strides in state tax competitiveness over the past 15 years by abolishing the state estate tax, zeroing out tangible personal property tax, eliminating corporate income tax and lowering personal income taxes.
The Tax Foundation has taken a dim view of gross receipts-based taxes such as the Ohio commercial activities tax (CAT) which applies a low-rate, broad-based tax on all in-state sales (only).
Interested in Ohio tax issues for manufacturers? Register for the upcoming OMA Tax Committee meeting on October 10. You can come in person or join by phone. 9/26/2018
This week the Ohio Department of Taxation announced several proposed changes to the manufacturing sales and use tax rule OAC 5703-9-21. This rule has been under discussion for the past year.
The OMA’s sales and use tax working group participated in stakeholder meetings with the department, and the final draft rule reflects many of the group’s specific recommendations.
The proposed rule is available here. All comments regarding the proposed rule changes should be sent to this public comment email address and to Laura Stanley, Division Counsel, Sales and Use Taxes, by October 1, 2018. Please contact OMA’s Rob Brundrett if you have questions or concerns regarding the updated rule. 9/12/2018
From OMA Connections Partner Clark Schaefer Hackett (CSH): “… arguably one of the most exciting provisions (of the Tax Cuts and Jobs Act) has not received much attention. This is the ability to defer and even permanently exclude certain capital gains when properly invested in Qualified Opportunity Zones.
“… in the past such zones were a bundle of sometimes confusing tax credits and deductions. The new law is unique in a couple of ways: first, the scope is national, with qualified areas in every state (and Puerto Rico), and second, investment is more straightforward … for tax law.
“All that is needed to start is an investor with a capital gain. …”
Read more about opportunity zones from CSH. 9/12/2018
According to a recent Gateway post, from the time the modernized Gateway went live on July 2 through August 29, users have successfully filed more than 1 million transactions, with a total value of nearly $4 billion. This represents an increase of more than 115,000 transactions and $660 million flowing through the Gateway over the same time period in 2017.
Some users have experienced issues, a majority of which are related to accounts of existing users who file on behalf of multiple businesses and who may share log in credentials.
In the modernized Gateway, each username and password is associated with an individual user, not a company or business account, and should not be shared. This aligns with the latest in security best practices and allows for verification of the individual who is filing a transaction on behalf of the business account.
Here’s an FAQ. You can call (866) 644-6468 to speak to a customer service representative. 9/5/2018
The Tax Cuts and Jobs Act includes a provision that allows a 20% deduction for certain pass-through owners. OMA Connections Partner RSM examines recently released guidance from the IRS on this new section of the tax code.
During this recorded webcast, RSM presenters discuss:
- Clarification on the types of businesses that will and won’t qualify for the deduction
- A new “aggregation” regime that can impact the calculation of the allowable deduction
- Computational guidance on issues such as the wage and asset limitation, the treatment of losses, and several other items
- Implications for year-end planning
From OMA Connections Partner Clark Shaefer Hackett: “The impact of the South Dakota v. Wayfair case, which overturned the physical presence standard for sales and use tax nexus, continues to be felt. To help you stay up to date on the changes, we created an Interactive Economic Nexus Policy Map that shows which states have implemented economic nexus thresholds due to the Wayfair decision and the effective dates.
“We also updated our FAQ that addresses the most common questions and answers about the case, and its repercussions.” 8/27/2018
From OMA Connections Partner Clark Schaefer Hackett: “The Tax Cuts and Jobs Act contains a provision under IRC Section 199A that provides a 20 percent Qualified Business Income Deduction to individuals (subject to limitations). But what does this mean at the entity level?
“On August 8, 2018, the IRS issued much-anticipated Proposed Regulations 1.199A-1 through 1.199A-6, clarifying some of the murkier issues in IRC Section 199A. Much of the guidance is meant for individuals subject to the deduction. However, Proposed Regulation 1.199A-6 also contains the provision that Relevant Passthrough Entities (RPEs) must report pertinent Section 199A information to owners on or within Schedule K-1. This information includes each owner’s share of items, such as Specified Service Trade or Business (SSTB) status, Qualified Business Income (QBI), W-2 Wages, and the Unadjusted Basis Immediately after Acquisition (UBIA) of qualified property. Let’s look at each of the required items separately for a few of the issues that can arise.” 8/23/2018
At a press conference on Tuesday, Governor John Kasich announced that his administration was considering a plan that would take $147 million from the projected state surplus to fund the cost of a one-time reduction in the state tax withholding tables.
According to the administration, even after funding the withholding tax table reduction, there would be $68 million in surplus to divert to the ‘rainy day’ fund, pushing that fund to its maximum legal limit.
This is the governor’s second attempt at driving down the withholding tables. In his 2016 State of the State speech he introduced the same idea, which was not acted upon by the legislature. The governor said he would be having conversations with state lawmakers in the near future regarding the proposal.
Two years ago the Kasich administration said that this change would give a person making $60,000 a year, and claiming one dependent, an additional $1.10 per week.
Early reactions from the House and Senate were noncommittal.
Here’s a summary from Hannah News Service. 8/8/2018