Tax and Finance Management

At a Glance: Beer Taxes by State

The beer industry is a key segment of Ohio’s food and beverage production, which provides around 60,000 jobs across the Buckeye State. According to the Beer Institute, “Taxes are the single most expensive ingredient in beer, costing more than the labor and raw materials combined.”

The Tax Foundation recently published this updated study examining beer taxes in all 50 states. Ohio imposes a relatively smaller tax burden on beer (18 cents a gallon) than many other states. 7/6/2023

RSM: Another Rate Hike Coming This Month

OMA Connections Partner RSM says recent economic reports show a much more resilient economy than expected. “Barring any shocks from the payroll and inflation reports later this month, we expect the Fed to hike its policy rate one more time, in July, to bring the rate to 5.5%,” the firm writes. 7/6/2023

FAQs on Section 174 Capitalization Uncertainty

With so many questions about capitalization of research and experimental (R&E) costs under Internal Revenue Code Section 174 and the 2017 federal tax law, OMA Connections Partner CliftonLarsonAllen has published seven FAQs. These FAQs provide more insight on the issue and its long-term impact. 7/5/2023

Tax and Finance Roundup: Manufacturing Slowdown Continues

• Manufacturers across much of the U.S. reported slowing activity in June. The Manufacturing Outlook Index published by OMA Connections Partner RSM is now in its 14th consecutive month of negative values.
• The most effective way to mitigate the risk of fraud at your business is by taking these key steps, writes CliftonLarsonAllen, an OMA Connections Partner.
• OMA Connections Partner William Vauhan has published this insight into Ohio’s Regional 166 Direct Loan Program, which provides low-interest financing to manufacturers for eligible projects.
• Here’s the latest guidance from the IRS on the monetizing federal energy credits, as reported by RSM.
• When dealing with accounting rules for mergers and acquisitions, there are three important questions to ask, writes OMA Connections Partner Clark Schaefer Hackett.
• OMA Connections Partner Schneider Downs has published this guidance on determining the best time to sell or exit your business.
• OMA Connections Partner GBQ Partners has been working to help clients communicate with federal representatives about the negative impacts of the R&D capitalization rule.

Finally, the Tax Foundation has published this list of noteworthy tax changes in several states, including some of Ohio’s neighbors. 6/29/2023

Evaluating Business Strategies During a Slowdown

In the face of a possible economic downturn, manufacturers should consider strategies to insulate themselves from risks, writes OMA Connections Partner HBK. The firm recommends considering actions such as investing in Industry 4.0; identifying tax-related opportunities; and considering M&A plans. Read more. 6/21/2023

Time Is Running Out on Employee Retention Credits

OMA Connections Partner William Vaughan reports that time is running out for business owners to claim the Employee Retention Tax Credit, established under the federal CARES Act. Eligibility is determined by meeting one of two tests. See them here. 6/22/2023

OMA Examines Tax Provisions in Senate Budget

This week, the OMA Tax and Finance Committee held its Q2 meeting, sponsored by OMA Connections Partners Fifth Third Bank and Schneider Downs.

Members heard from state Rep. Bill Roemer (R-Richfield), chairman of the House Ways and Means Committee. Roemer covered a range of committee priorities, including property tax modifications (proposed in House Bill 1) and a bill to simplify municipal income tax filings and reduce compliance costs (House Bill 121).

Experts from OMA Connections Partner GBQ Partners and Bricker Graydon, the OMA’s general counsel, highlighted the tax proposals in FY2024-25 state budget. (See this slide presentation.) Here are some of the noteworthy changes in the Senate-approved budget:

• Instead of reducing Commercial Activity Tax rates and minimums by 25% across the board — as proposed in the original draft of the Senate Finance Committee’s plan — the budget approved by the full Senate provides about $700 million in CAT relief that would be limited to smaller companies.
  • The Senate’s budget would significantly narrow the CAT’s base, defeating the original purpose of the CAT — a more manufacturing-friendly tax that imposes a single low rate of 0.26% on business’ in-state gross receipts above $1 million. Under the Senate-approved language, it’s estimated that after two years, 90% of CAT filers would no longer be paying the tax, shifting the full burden to larger businesses, like manufacturers.
• The Senate-approved budget would expand the House’s personal income tax relief provision by providing nearly $1.5 billion in cuts over two years. This would be accomplished by reducing the number of income tax brackets from four to two, 2.75% and 3.5%. While Ohio would move closer to a flat tax, the brackets would no longer be indexed to inflation.
• The final Senate budget does not include the House’s bonus depreciation language.

The OMA Tax and Finance Committee is scheduled to meet again October 25. 6/15/2023

Ohio’s May Revenue Improves Odds for Tax Relief

Ohio’s May revenue report shows another month of healthy tax receipts — and the excess revenue likely ensures that significant tax relief will be included in a final version of the FY2024-25 state budget.

As this infographic illustrates, Ohio’s May tax revenue was $214.1 million (8.4%) above the forecast, due mostly to the personal income tax. For the fiscal year to date, total tax revenue has exceeded estimates by $840.7 million (3.3%). 6/12/2023

Webinar: Understanding Section 174 Amortization

On Wednesday, June 21, OMA Connections Partner HBK will host a special webinar to examine Section 174 of the federal tax code, as changes to the amortization of certain expenses have affected the R&D credit and other aspects of businesses’ tax returns. The webinar will provide an update on federal legislation to repeal or delay the amortization requirement. Learn more and register. 6/15/2023

Senate Budget Proposes Significant Tax Relief

In its version of the state’s FY2024-25 budget (House Bill 33), the Senate has proposed the following tax changes:

• Expand the House-approved income tax relief plan by reducing the number of tax brackets from four to two, 2.75% and 3.5%. This would move Ohio closer to a flat tax, but the brackets would no longer be indexed to inflation.
• Reduce by 25% the Commercial Activity Tax rates and minimums. This would be phased in over two years.
• Create a new expanded sales tax holiday to replace the current back-to-school tax holiday. It would be used when there’s more than $50 million in excess state revenue.

The full Senate will vote on the budget in mid-June. Meanwhile, House Speaker Jason Stephens (R-Kitts Hill) has said little regarding the Senate’s tax changes, telling Gongwer News Service that Ohio continues to be in a “once in several decades cycle, from a fiscal standpoint, to invest in the future.” 6/7/2023