Tax and Finance Management

Understanding Qualified Business Income Deduction Eligibility

According to OMA Connections Partner, Clark Schaefer Hackett: “Small business owners received a substantial benefit with the passage of the Tax Cuts and Jobs Act in December 2017. Owners of pass-through entities, including shareholders in S corporations, partners in partnerships and sole proprietors, are now eligible for a 20% deduction on “qualified business income.” Not all income qualifies for the deduction, however. One type of income, guaranteed payments, is not eligible for the deduction. But careful analysis to ensure that items are correctly classified, as well as possible restructuring of this income, could allow organizations to benefit from the new deduction.”

Read more from CSH here. 2/7/2018

IC-DISC after Tax Reform – Still Viable?

The IC-DISC (interest charge domestic international sales corporation) survived the Tax Cuts and Jobs Act of 2017 (TCJA). For those who may not be familiar with the IC-DISC, it is an export incentive for U.S. domestic companies whereby income related to export sales can be taxed at a lower capital gain rate.

OMA Connections Partner, Clark Schaefer Hackett (CSH), commented: “While this is great news for companies that have taken advantage of the IC-DISC in the past, other provisions of the new sweeping tax reform may still impact your IC-DISC starting in tax year 2018. Therefore, it’s very important to include the IC-DISC when you consider the impact of the overall tax reform changes to your company.”

Read more about this from CSH here. 1/26/2018

R&D Tax Credit – Why Didn’t I get my Payroll Tax Refund?

Beginning in 2016, certain eligible small business taxpayers were able to utilize the IRC Sec. 41 Research Tax Credit to reduce a portion of their payroll taxes.

The process required to claim and utilize the offset has led to some confusion. Thus, puzzled taxpayers are now questioning why they haven’t received their payroll tax refund, even though they elected the option on their Form 6765.

The team at OMA Connections Partner, Tax Credits Group, indicates this is one of the most common questions it has addressed this year. They explain it here. 1/31/2018

C corporation? Pass-through? How Tax Reform Could Affect Your Decision

OMA Connections Partner, Clark Schaefer Hackett (CSH) posted: “With all the changes in the taxation of businesses enacted under the 2017 Tax Cuts and Jobs Act (Act), many business owners wonder whether they need to revisit the business entity decisions they made when they organized their businesses. The changes under the new Act that are causing questions about optimal tax entity structure include reduction of the tax rate on C corporations to 21%, introduction of the new 20% deduction on qualified business income from pass-through entities, and the repeal of the corporate alternative minimum tax.”

More on the topic from CSH. 1/31/2018

RS Issues Updated 2018 Withholding Tables

OMA Connections Partner, Clark Schaefer Hackett (CSH), posts: “In the wake of passage of the Tax Cuts and Jobs Act (TCJA) late last year, the IRS has taken one of the first critical steps to institute the law’s overhaul of the federal income tax regime. The IRS has released updated withholding tables that indicate how much employers should hold back from their employees’ paychecks to satisfy workers’ tax obligations. The new tables may provide the correct amount of tax withholding for individuals with simple tax situations, but they’ll likely cause other taxpayers to not have enough withheld to pay their ultimate tax liabilities under the TCJA.”

Read further analysis from CSH about the new tax tables. 1/19/2018

Accounting for Meals and Entertainment Under the New Tax Act

This from OMA Connections Partner, Clark Schaefer Hackett: “… Although we are anxiously awaiting more guidance regarding many provisions of the new law, the accounting for meals and entertainment expenditures is one area where businesses need to take immediate action.”

Here is guidance from CSH. 1/22/2018

Employers Should Be Aware of Significant Changes in New Tax Law

OMA Connections Partner, Calfee, writes: “… the TCJA (Tax Cuts & Jobs Act) … includes several significant changes about which employers should be aware. These changes include the elimination of a tax deduction related to nondisclosure agreements in sexual harassment settlements, a tax credit for providing paid family and medical leave, and changes to employee income tax withholding tables, together with a pending revision of Form W-4. Employers of every size will be affected by these changes, …”

Read more from Calfee. 1/24/2018

New Tax Cuts and Jobs Act Guide Available

The tax advisors at OMA Connections Partner, Schneider Downs, have just compiled a tax reform guide that highlights many of the most impactful changes affecting U.S. individual and business taxpayers. 1/19/2018

New Revenue Recognition Standards Compliance: A White Paper

The complete overhaul of revenue recognition accounting standards has significant repercussions for manufacturing and distribution companies. So, it’s critical to understand these guidelines and the potential business impacts.

OMA Connections Partner, Clark Schaefer Hackett, has compiled a white paper that covers important highlights of the new standards and provides examples of how the new guidance might apply for a manufacturer or distributor.

Download your copy here. 1/22/2018

U.S. Supreme Court Will Take Up Major Sales Tax Case

OMA tax counsel Justin Cook of Bricker & Eckler summarizes the pending case: On January 12, 2018, the U.S. Supreme Court granted a writ of certiorari in State of South Dakota v. Wayfair, Inc. Depending on the Supreme Court’s decision in this case, it could have an enormous impact on businesses nationally. A 1967 U.S. Supreme Court decision prohibited states from requiring sellers to collect and remit use tax on the sale of goods in states where the seller has no physical presence. This “physical presence” standard was affirmed in Quill Corp. v. North Dakota in 1992  and remains the law of the land.

In light of the increasing importance of online sales, South Dakota enacted a statute requiring sellers that derive at least $100,000 in gross revenue from South Dakota sales or that engage in at least 200 South Dakota sales in a calendar year to collect and remit South Dakota use tax, regardless of whether the seller has a physical presence in the state. A number of large online retailers challenged the South Dakota law as unconstitutional, and the Supreme Court will now reexamine the “physical presence” standard.

If the Supreme Court strikes down the “physical presence” standard, states across the country, including Ohio, could require remote sellers to collect and remit use tax in the same manner that sellers operating from a brick and mortar location in the state collect sales tax from customers. Whether Ohio can impose this obligation on remote sellers depends on the Supreme Court’s decision in Wayfair, which will be heard in the upcoming term. 1/18/2018