Tax and Finance Management

Facts About the Section 199 Tax Deduction

OMA Connections Partner, GBQ Partner LLC, indicates that the Section 199 deduction, also referred to as “the domestic production deduction,” or the “domestic production activities deduction” or “the manufacturers’ deduction” is often overlooked.  Here’s more from GBQ.

“Work Opportunity Tax Credit” Filing Extended

The IRS has recently granted an extended deadline to eligible employers who are planning to claim the Work Opportunity Tax Credit (WOTC).  Employers now have until June 29, 2016 to file a form necessary to claim the credit for certain eligible workers.

The Protecting Americans from Tax Hikes Act of 2015 (the PATH Act) extended the WOTC through 2019.  The credit is for employers that hire individuals who are members of a “target group.”  The PATH Act also expanded the credit beginning this year to apply to employers that hire qualified individuals who have been unemployed for 27 weeks or more.

Read more from OMA Connections Partner, Clark Schaefer Hackett.

Ohio 19th in State & Local Tax Rates

According to recently released data from the Tax Foundation, Ohio’s combined state and local tax rate is 7.14%.  That ranks us 19^th among the states (higher ranking = lower rates).

The highest rate in the land?  Tennessee at 9.46%.  The lowest?  Alaska at 1.78%.

The foundation calculates a population-weighted average of local sales taxes as of January 1, 2016 in an attempt to give a sense of the average local rate for each state.

New Form 1095-C Due to Employees by March 31, 2016

OMA Connections Partner, RSM, reminds us:  “Employers with at least 50 full-time or full-time equivalent employees are required to provide a new Form 1095-C for 2015 to each employee by March 31, 2016. The form contains information about the employee’s enrollment in the employer’s health plan. If the employer’s health plan is self-insured, the form also reports coverage information for the employee’s spouse and dependents. The form may be furnished to employees by hand delivery, first-class mail or electronic delivery. If an employer wishes to use the electronic-delivery method, it must first obtain affirmative consent from the employee.

“Employees use the information on the forms as supporting documentation when completing their individual income tax returns. However, the IRS has indicated that individuals may file their 2015 income tax returns prior to receiving Form 1095-C.

“Employers are also required to submit Forms 1095-C to the IRS by May 31, 2016 (if filed on paper) or by June 30, 2016 (if filed electronically). Employers face penalties of up to $500 per employee for failing to furnish the form to its employees and the IRS.”

FASB’s New Lease Requirement Standards Could Impact Your Financial Statements

OMA Connections Partner, Clark, Schaefer, Hackett, reports that the Financial Accounting Standards Board (FASB) has issued its long-awaited update revising the proper treatment of leases under U.S. Generally Accepted Accounting Principles (GAAP).   This will affect companies that lease real estate, vehicles, construction and manufacturing equipment, and other assets. The standard requires these businesses to recognize most leases on their balance sheets, potentially inflating their reported assets and liabilities.  Read more here.

OMA Provides Insight to 2020 Tax Policy Study Commission

The General Assembly’s 2020 Tax Study Policy Commission held a hearing this week focused on tax expenditures.  Tax expenditures are revenues that the state forgoes due to tax exclusions, credits and deductions.

OMA tax counsel, Mark Engel of Bricker & Eckler, provided a historic review of Ohio business tax policy and OMA’s perspective on tax expenditures.

In his testimony Mr. Engel explained how tax carve outs and credits taken against the commercial activity tax (CAT) have more than doubled from $300 million to more than $600 million since the CAT’s enactment in 2005.  He said, “The erosion of the tax reform legislation, in the form of carve-outs, exclusions, and ear-marks, reduces certainty, creates disparity by selecting winners and losers, renders the tax code more complicated, and reduces transparency as it becomes more difficult to determine who is entitled to which exclusions.”

His testimony also supported the tax policy and principles of the manufacturing exemption to the sales and use tax:  “The taxation of business inputs should be avoided because doing so leads to multiple levels of taxation and economic disadvantages.”  You can read all of Mr. Engel’s testimony here.

Eligible Businesses Can Claim Research Credit to Offset Alternative Minimum Tax

If your business is working to create new or improved products or processes, and has historically been susceptible to the alternative minimum tax, 2016 may just be a game changing year for your research credit.  Read more from OMA Connections Partner, Tax Credits Group.

Bill to Eliminate Sales Tax on Temp. Employment Services Gets More Support

This week, the House Economic and Workforce Development Committee heard more proponent testimony for House Bill 343, which would eliminate sales tax on temporary employment services.  NFIB and the Associated Builders and Contractors offered their support of the bill.

This is sound policy.  Use the easy email tools at the OMA Manufacturing Advocacy Center to ask House committee members to advance the bill.

OMA Testifies on Ohio Tax Policy

OMA tax counsel, Mark Engel of Bricker & Eckler, testified this week before the House 2020 Tax Committee, which is charged with taking a long-term view of Ohio tax policy and opportunities to improve it.

Reflecting on tax policy reforms of the past few years, Engel said:  “Major tax reforms approved by the Ohio General Assembly in 2005 and additional reforms from 2011-2015 have led to significant improvements to a tax system that was for many years widely regarded as outdated. Reforms included reducing overall tax rates, eliminating tax on investment, broadening the tax base, providing more stable and predictable revenues, and simplifying compliance.

“The elimination of the tangible personal property tax, the corporate franchise tax, and the estate tax has strengthened the competitiveness of Ohio’s tax system. So has the reduction of the personal income tax rate as well as the creation of a broad-based, low-rate commercial activity tax.”

He reviewed Ohio’s mix of business taxes and urged caution in paying for lowering one type of tax by raising another.  He also called for elimination of the sales tax on employment services and on industrial janitorial and maintenance services.

FASB’s Technical Agenda for 2016

Upcoming changes to the accounting standards might affect the information you report on your company’s financial statements, including how it’s presented and what details are disclosed.

The Financial Accounting Standards Board (FASB) establishes the standards for public and private companies to follow when they issue financial statements in accordance with U.S. Generally Accepted Accounting Principles (GAAP).

Here’s an overview from OMA Connections Partner, Clark, Schaefer, Hackett, of what the FASB is currently working on.