Tax and Finance Management

IRS Sheds Some Light on Business Interest Expense Deductions

Here’s a recent post from OMA Connections Partner, Clark, Schaefer, Hackett: “The Tax Cuts and Jobs Act (TCJA) imposes a limit on deductions for business interest for taxable years beginning in 2018. The limit, like other aspects of the law, has raised some questions for taxpayers. In response, the IRS has issued temporary guidance in Notice 2018-28 that taxpayers can rely on until it releases regulations. While the guidance provides some valuable information, it also leaves some questions unanswered.”

Read more from CSH here. 4/30/2018

U.S. Supreme Court Revisits Quill and Physical Presence

OMA Connections Partner, Clark, Schaefer, Hackett (CSH), posts: “On April 17th, the U.S. Supreme Court revisited Quill Corp. v. North Dakota, which held that in order for a state to impose sales tax on an out-of-state seller, the seller must have physical presence in the state. The case is being reviewed again because the recent South Dakota v. Wayfair, Inc. suit is asking that the Quill decision be repealed.

“… The Quill standard has enabled online sellers to forego collecting and remitting sales tax in states where the seller has no physical presence. The potential revenue loss for the states in uncollected sales tax is enormous – in the billions of dollars. …

“It is difficult to predict which way the Court will decide this case. But no matter their decision, it will be binding precedent across the country. Either the physical presence standard will continue to be the law and Quill will be upheld, or the Court will overturn Quill and set forth new nexus standards. A decision is expected sometime in June …”

Read more from CSH about the case here. 4/24/2018

Reporting Unclaimed Funds: What Is Your Responsibility?

All businesses that are located and/or operate in the state of Ohio are required to file an Annual Report of Unclaimed Funds with the division per Ohio Administrative Code Section 169.01.

A few points about businesses’ reporting requirements:

• There are no minimum reportable dollar amounts, except for unclaimed wages less than $50.00.
• Businesses must file a report annually. Businesses not holding any unclaimed funds must still file a Negative (NONE) Report.

Learn more here. 4/25/2018

IRS Blended Tax Rate Guidance for Fiscal Year-end Corporations

OMA Connections Partner, RSM, posted this Tax Alert: “The 21 percent federal corporate tax rate now in effect applies to tax years beginning after Dec. 31, 2017. Previously, the maximum federal corporate tax rate was 35 percent. For a corporation’s fiscal year or companies with tax years that begin before Dec. 31, 2017, but end after that date (an Affected Fiscal Year) – for example, a year beginning Oct. 1, 2017 and ending Sept. 30, 2018, – a blended rate applies.

“The IRS has released Notice 2018-38, explaining how to apply the blended rate under section 15 of the Tax Code, as well as news release IR-2018-99, conveying the basic message that for Affected Fiscal Years, the blended rate applies in lieu of either the new 21 percent rate or the tax rate applicable under old law.”

Read more from RSM here. 4/19/2018

OMA Testifies on “Tax Expenditures”

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

Ohio Ranks 11th in Tax Burden

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

U.S. Shareholders of Foreign Corporations – Transition Tax Due Date Quickly Approaching

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

OMA Questions Movie Tax Credit

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

Tax Expenditure Review Committee Sets Schedule

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

OMA Tax Committee Developing Investment Tax Incentive

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.

If you or someone from your company would like to participate in the OMA Tax Committee, please subscribe here or contact OMA’s Rob Brundrett. 3/22/2018

Nicholas D’Angelo, Director of Government Affairs, JobsOhio, entertains questions from OMA Tax Committee members.