Tax and Finance Management

On-Demand Webinar: Year-End Tax Considerations

OMA Connections Partner Clark Schaefer Hackett has made available this on-demand webinar to explore year-end tax strategies and planning for businesses. It includes a regulatory update on IRS rules, as well as a look at how last month’s election may impact future tax policy. 12/20/2022

What’s the R&D Tax Credit Worth to Your Business?

For most companies, the R&D tax credit is worth 7-10% of qualified research expenses. OMA Connections Partner Clarus R+D offers this R&D tax credit calculator, which members can use to see if they qualify for the credit — and to estimate their potential benefit.

Meanwhile, the National Association of Manufacturers has released new analysis revealing that if the federal tax code’s R&D amortization requirement — which took effect this year — is not reversed immediately, the U.S. economy will lose 263,382 jobs and experience an $82.39 billion hit to GDP in 2023. 12/20/2022

Producer Prices Ease; Borrowing Costs Rise

U.S Treasury Secretary Janet Yellen has told the press that the current 40-year-high inflation will be “much lower” by the end of next year. Meanwhile, producer prices for final demand goods and services were still up 7.4% for the 12 months ended in November.

While this is the lowest rate of wholesale inflation since May 2021, the Federal Reserve projects interest rates will keep rising at least through 2023 to combat continued high inflation. The federal funds rate is expected to peak between 5% and 5.5% over the next 12 months.

This week’s 50-basis-points rate hike means the majority of small business loans will hit double-digit interest levels for the first time since 2007, reports say. 12/15/2022

Ohio Tax Collections Outpacing Forecast by $478M

Last month, Ohio’s General Revenue Fund — which funds most state government operations — collected $128.7 million above estimates, according to the latest monthly financial report. For the fiscal year to date, tax revenues have exceeded expectations by $478.5 million (4.3%), with personal income taxes accounting for 55% of the total variance. 12/12/2022

Tax Changes Raise R&D Costs

A recent change in federal law requires companies to amortize or deduct R&D expenses over a period of five years — instead of deducting expenses the same year in which they incurred the expense.

The U.S. is one of only two developed countries requiring amortization, according to the National Association of Manufacturers, which has published this real-world example of the policy’s harmful effects. Visit the NAM’s R&D Action Center to communicate with your federal representatives. 12/13/2022

Economic Barometer: December 2022

• U.S. manufacturing activity last month contracted for the first time since May 2020, according to ISM’s Manufacturing Purchasing Managers’ Index^® — although the data showed continued supply chain improvement.
• OMA Connections Partner RSM forecasts a 65% probability of mild recession over the next 12 months, while predicting a 1% year-over-year rise in U.S. manufacturing output.
• U.S. manufacturing job growth has averaged 34,000 per month this year, according the the Bureau of Labor Statistics. (Employment has expanded in all but three major subsectors, with transportation equipment in the lead.)
• The Business Roundtable CEO Economic Outlook index for Q4 showed a decline of 11 points — continuing a slide that has occurred every quarter this year.
• Americans’ pandemic-era cash pile is shrinking, but economists have varied guesses on when those savings will be exhausted.

Meanwhile, economists say it’s likely any future recession will hit without much warning from industrial production, based on trends from the past 50 years. 12/8/2022

Strategies to Justify Cost Recovery

As costs for labor, raw materials, logistics, and energy remain highly inflated, cost and margin data are critical for manufacturers to justify cost recovery while protecting customer relationships. OMA Connections Partner Plante Moran recommends these four areas of focus. 12/8/2022

You May Still Depreciate 100% If You Act Before Dec. 31

The days of 100% bonus depreciation are numbered. OMA Connections Partner CliftonLarsonAllen has published this guidance to make companies aware that bonus depreciation will start to wind down in 2023. 12/8/2022

Tax Roundup: Unemployment Tax Rates Announced

• Ohio’s unemployment insurance tax rates will range from 0.3% to 9.8% in 2023, according to this update from the Department of Job and Family Services.
• Ohio Tax Commissioner Jeff McClain announced this week that he is retiring effective Dec. 31.
• With the midterms over, the Tax Foundation has published this outlook for federal tax policy.
• There’s still time for eligible employers to claim the federal Employee Retention Credit on amended payroll returns, according to OMA Connections Partner CliftonLarsonAllen.
• OMA Connections Partner Barnes Dennig has published this chart outlining key provisions of the federal Inflation Reduction Act, including the Advanced Manufacturing Production Credit.
• Kiplinger has summarized the Inflation Reduction Act’s electrical vehicle-related tax credits, including the law’s EV sourcing and manufacturing requirements.
• OMA Connections Partner Plante Moran has published this guidance on using R&D payroll tax credits to maximize savings.

Meanwhile, OMA Connections Partner GBQ Partners has published its recommendations on what to do if your CFO or controller leaves. 12/1/2022

On-Demand Webinar: Tax Planning for Manufacturers

OMA Connections Partner HBK has published a recap of its Nov. 16 tax-planning webinar for manufacturers. The summary includes key takeaways regarding business deductions; R&D tax credits; and payroll tax credits. Read the summary or watch the recorded webinar. 11/22/2022