News and Analysis
Ohio’s Office of Budget and Management (OBM) this week estimated the state’s looming budget deficit for the coming fiscal year, FY 2021, to be $2.5 billion. OBM Director Kimberly Murnieks announced a number of steps to curb personnel costs, including pay cuts and step freezes. These follow adjustments announced in early May by Gov. Mike DeWine to address the budget shortfall for the current fiscal year, which ends on June 30.
While Gov. Mike DeWine has ruled out an income tax increase, there are increasing concerns that the growing state deficit could result in increased taxes on businesses — or rescinded business tax credits. The OMA will continue to monitor the situation. 6/2/2020
As federal policymakers explore options for a “Phase 4” coronavirus relief plan, the Tax Foundation notes that it’s important to understand how the CARES Act modified tax rules for businesses, including changes to net operating loss (NOL) deduction rules such as NOL carrybacks.
The HEROES Act, recently approved by the U.S. House of Representatives, would limit NOL carrybacks by only allowing firms to carry back losses to 2018 rather than a full five years. The Tax Foundation says this would cut short an important liquidity measure while disrupting firms’ plans. 5/26/2020
During the COVID-19 challenge, OMA Connections Partner Clark Schaefer Hackett recommends businesses develop a rolling 13-week cash flow projection to get a picture of what cash flow looks like today and may look like in the coming weeks. If businesses identify a future cash crunch or shortfall, the firm suggests asking this list of questions to help implement a cash flow plan to maximize liquidity. 5/27/2020
OMA Connections Partner Schneider Downs will host a free webinar Tuesday, June 2, at 1 p.m. (ET) to review “critical considerations for small businesses” during COVID-19. Topics will include recent guidelines for Paycheck Protection Program loan forgiveness; retirement plan contributions and benefits; important tax considerations; and navigating the Main Street Lending program. 5/28/2020
The Federal Reserve has released the legal forms and agreements for eligible borrowers and lenders to participate in the Main Street Lending Program. The Fed has also published instructions for completing the required documents and an updated FAQ overview of the program. You can access the new documents and information here. 5/28/2020
New guidance issued by the U.S. Small Business Administration addresses questions regarding Paycheck Protection Program’s loan forgiveness. Here’s a brief summary by OMA Connections Partner Plante Moran regarding the interim final rule’s main provisions. 5/28/2020
This week OMA led a coalition of business organizations to again defend the Ohio Commercial Activity Tax (CAT). Since 2005, the OMA and like-minded organizations have continually reinforced to lawmakers the importance of keeping the CAT’s competitive attributes: broad-base and low rate.
On Tuesday, May 19, in the House Ways and Means Committee the OMA and others provided interested party testimony on Senate Bill 95 to communicate that “the CAT was created to fix an archaic business taxing system in Ohio that was riddled with exemptions and credits. The old system failed to promote sound tax policy by eroding the tax base and piling disproportionate payments on certain industries.”
The coalition is advocating for the committee remove the CAT credit provisions from Senate Bill 95 in order to protect the tax’s base and rate. Senate Bill 95 authorizes tax incentives for the operators and certain suppliers of a “mega-project” — such as a development project with at least $1 billion in investment or that creates at least $75 million in Ohio payroll. One of the tax incentives is a CAT exclusion for gross receipts of a mega-project supplier from sales to a mega-project operator. 5/21/2020
On May 15, the U.S. Treasury issued the Paycheck Protection Program (PPP) loan forgiveness application (see it here).
OMA Connections Partner Clark Schafer Hackett says this highly anticipated release provides some, but not all, answers to open questions that borrowers have had related to PPP loan forgiveness.
OMA Connections Partner CLA posted this analysis about what they do and don’t like about the issued guidance. 5/19/2020
According to OMA Connections Partner Frantz Ward, in testimony before the Senate Banking Committee on May 19, Jerome Powell, the Chair of the Board of Governors of the Federal Reserve System, promised to have the Main Street Lending Program ready by June 1. Once launched, the program will offer up to $600 billion in loans to small and medium sized businesses struggling to recover from the COVID-19 Pandemic and resulting economic crisis.
The program will launch with some significant changes from the initial proposal made in early April and has been expanded to include three separate lending facilities from the two initially proposed, with loan amounts from $500,000 to $200 million. Read the details here. 5/20/2020
From OMA Connections Partner GBQ: If you were not able to receive a Small Business Interruption Loan under the Paycheck Protection Program, or if you repaid that loan by May 18, 2020, you may be eligible for the Employee Retention Credit.
The Employee Retention Credit is a refundable tax credit against certain employment taxes equal to 50 percent of the qualified wages an eligible employer pays to employees after March 12, 2020, and before January 1, 2021. The maximum credit is $5,000 per employee. More from GBQ here. 5/21/2020