News and Analysis
Testifying before a special Tax Expenditure Review Committee, OMA’s Rob Brundrett, Director, Public Policy Services, urged the committee to protect the sales and use tax manufacturing exemption.
“The rationale for these exclusions is simple: The taxes are intended to be imposed upon the final consumption of goods and now, those selected services that are subject to tax. Intermediate transactions prior to the final sale of the product, including the acquisition of machinery and equipment and the raw materials that are incorporated into the final product, are not intended to be taxed,” Brundrett said.
He recommended expansion of the exemption to: 1) temporary workers; 2) industrial janitorial and maintenance services; and 3) certain equipment and supplies used to clean food processing equipment. 4/11/2018
Every year around tax filing day, the website WalletHub ranks the 50 states across the three tax types of state tax burdens — property taxes, individual income taxes and sales and excise taxes — as a share of total personal income in the state.
This year Ohio ranks 11th (highest tax burden) among the states. The total tax burden is 9.48% in Ohio. That is higher than any of our surrounding states. In the Midwest, only Illinois and Minnesota are higher. 4/9/2018
OMA Connections Partner, MCM CPAs and Advisors, advises U.S. taxpayers with 10% ownership in specified foreign corporations that the installment of transition tax is due on or before April 17, 2018 or they lose the right to pay transition tax in installments over 8 years.
MCM wrote: “The Tax Cuts and Jobs Act (“TCJA”) transformed the U.S. corporate income tax system from a worldwide system to one that is more akin to a territorial system. Under the prior system, it was possible for U.S. shareholders to defer U.S. taxation of the foreign profits of foreign corporations. As a result, many U.S. based multinationals, as well as many U.S. individual shareholders, caused their foreign corporations to refrain from repatriating foreign profits.
“To transition from the old worldwide system to the new quasi-territorial system, TCJA also introduced a one-time mandatory transition tax on the previously untaxed income of any “deferred foreign income corporations” (DFICs). …”
Read more about this from MCM here. 4/5/2018
House Bill 525 would double the amount of commercial activity tax (CAT) credits that are available to movie makers, and extend them to Broadway shows. In testimony this week, the OMA’s Rob Brundrett questioned the wisdom of adding yet another credit to the tax, and for doing it for these industries.
“The more credits that are added to the tax the more pressure is on the remaining businesses subject to the CAT. With more exemptions and credits, pressure builds to raise the low rate to make up for the loss in revenue … enacting this credit would have the fourth largest impact to the CAT.
“It is important to understand where CAT exemption savings are invested. Does that money stay in Ohio or does it go to outside interests in New York, California, or some other state? If Ohio is looking to drive business in Ohio it should be creating tax credits for capital projects in Ohio for the benefit of Ohioans.
“These types of projects require investment from local businesses already on the ground, and the business is much less likely to walk away from Ohio at the completion of the credit because it has invested capital in the state,” he testified. 3/22/2018
The much anticipated Tax Expenditure Review Committee released its spring hearing schedule last week. The committee which has met only once last fall is set for its next hearing on April 11.
The committee will be reviewing a variety of tax expenditures including the sales and use manufacturers’ tax exemption. The OMA will be working with the committee to understand how these tax expenditures impact the manufacturing industry.
Members who are interested in participating should contact OMA’s Rob Brundrett. 3/22/2018
This week the OMA Tax and Finance Committee held its first meeting of the year. The committee is chaired by Shay Music, Senior Manager, State Tax Strategy and Operations, from The J.M. Smucker Company.
At the meeting members had a presentation and question and answer session with JobsOhio.
Members also spent time talking through the federal tax reform package and sharing information regarding how the provisions are impacting different manufacturing operations in Ohio. Mark Gaudet, CPA, CFP, of OMA Connections Partner, Clark Schaefer Hackett, led this discussion.
Finally, much of the meeting was centered on potential incentives for capital investment made by manufacturers in the state of Ohio. This discussion focused on the need for state policy to encourage capital investment in Ohio.
Nicholas D’Angelo, Director of Government Affairs, JobsOhio, entertains questions from OMA Tax Committee members.
From OMA Connections Partner, GBQ Partners: “Certain employers that pay family and medical leave to their employees may be eligible to claim a Family and Medical Leave Credit equal to 12.5 percent (or more) of the amount of wages paid to those employees during any period in which such employees are on family and medical leave.”
More here. 3/22/2018
This week the OMA asked Senator Sherrod Brown to support The Consumer Financial Choice and Capital Markets Preservation Act (Senate Bill 1117). The bill would reverse an October 2016 regulatory action by the Securities and Exchange Commission (SEC) that requires money market funds (MMFs) to account for their underlying net asset value (NAV) on a floating basis.
OMA wrote: “… This new SEC rule requires MMFs to account for their underlying net asset value (NAV) on a floating basis, rather from a fixed sum. This rule change has negatively impacted our larger members who issue commercial paper for short term borrowings.
“Prior to the rule change, the Prime MMFs were generally significant purchasers of commercial paper. These purchases provided a competitive market place for short term financing. … Our members have relied on these fixed NAV MMFs as safe, efficient and reliable sources of short-term financing and cash management. … Senate Bill 1117 would revert back to allowing MMFs underlying NAV to be fixed, as it was for 40 years prior to this recent SEC rule.” 3/7/2018
This week the House and Senate unveiled the capital appropriations budget bill. The bill is designed to fund capital improvement projects throughout the state. This year the bill is focused on funding opioid treatment with $222 million for health and human services projects.
Other major funding allocations include $600 million for school construction, $483 million for universities and community colleges, $514 million for local infrastructure projects, $234 million for parks, and $147 million for local community projects.
The budget is expected to quickly move through the legislature and be approved this month. You can view all the projects to be funded in the proposed budget here. 3/1/2018
From OMA Connections Partner, Tax Credits Group: “… most injection molders who are working to develop new or improved products or processes can meet the necessary requirement to claim the R&D credit. … these injection molders also have the opportunity lower their tax bill and use the savings to reinvest into further R&D efforts to keep them competitive in the future–which is basically what the R&D tax credit is all about in the first place.”
Read more from Tax Credits Group here. 2/27/2018