News and Analysis
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
From OMA Connections Partner Clark Schaefer Hackeet (CSH): “The change from 50 percent deductibility of entertainment costs to those costs being completely non-deductible falls under Internal Revenue Code (IRC) Section 274. The confusion about the change in this section involves how it impacts the deductibility of business meals with clients, customers and business partners. …
“Pending guidance from the IRS, we would like to advise you to separate meals with customers, clients and other business partners where business is discussed during the meal, into a separate general ledger account. Do not include these meals with entertainment costs like hockey tickets, golf, or show tickets. Also, do not combine these types of meal expenditures with travel-related meals, or in-house employee meals or meals associated with conventions or trade associations. If the costs are tracked separately in your system, it will be easier to apply the correct deductibility rule once we obtain the clarity needed.”
Read the entire post from CSH here. 7/30/2018
OMA Connections Partner Plante Moran has created an interactive online tax reform playbook that enables users to take a detailed look at the tax reform opportunities and challenges most likely to impact them.
Use the playbook to prepare your business for 2018 and beyond. 8/2/2018
The U. S. Chamber has compiled state by state impacts of the recent wave of tariffs.
Here are its calculated risks to Ohio, labeled “very significant damage.” 7/26/2018
June 30 marked the end of the state’s 2018 fiscal year. This week Governor Kasich’s administration deposited $657 million of excess funds into the state’s budget stabilization fund.
The balance in the state’s savings account now sits at $2.7 billion. Ohio lawmakers are constitutionally required to run a balanced budget and Senate President Larry Obhof issued a statement touting the benefits of responsible budgeting and conservative policies.
Budget Director Tim Keen said in a press release, “The fiscal condition of the state is strong. We finished the year with a larger ending balance than planned due to state spending that came in below projections and income tax revenues that came in above projections. This makes it possible … to make a deposit into the Budget Stabilization Fund.”
The budget director also noted that when the Kasich administration came to office in 2011, it inherited a depleted reserve fund of only 89 cents. 7/12/2018
With the recent Supreme Court ruling that overturned the physical presence standard for sales and use tax, many businesses wonder how this will affect them, if at all.
In this FAQ, OMA Connections Partner, Clark Schaefer Hackett, addresses the most common questions and answers. 7/9/2018
The Gateway Modernization Project has transformed the Gateway into a more user-friendly, reliable, and secure portal.
Information around the site is consolidated, making the most important information easier to find.
Pre-populated information and fewer required clicks reduce the time it takes to complete a transaction in the Gateway, resulting in more efficient and simplified filing processes. The Gateway also houses PDF versions of transaction confirmations and receipts that are easy to access and print.
The modernized Gateway’s Help Center houses hundreds of how-to articles, video tutorials and FAQs to assist users in completing their transactions on the Gateway. In addition, Gateway users now have the ability to request help or ask a question 24/7 by using the system’s online help case functionality. 7/4/2018