The Affordable Care Act Survives Yet Another Supreme Court Challenge
Jun 22, 2021
Last week, the U.S. Supreme Court ruled once again on the constitutionality of the Affordable Care Act (ACA) rejecting arguments that the ACA was unconstitutional under Congress’ taxing power. Last year, the Supreme Court heard testimony in California v. Texas which focused on whether the ACA’s individual mandate to maintain health insurance was beyond Congress’s powers given that it no longer raises tax revenues and, if so, whether other parts of the law would need to be struck down along with the mandate. This case marked the third time the court had heard a significant challenge to the law.
Justice Stephen Breyer delivered the 7-2 opinion which stated the individuals that brought the lawsuit challenging the ACA’s individual mandate did not have the standing to challenge the law: “ we conclude the plaintiffs in this suit failed to show a concrete, particularized injury fairly traceable to the defendants’ conduct in enforcing the specific statutory provision they attack as unconstitutional,” wrote Breyer.
What does this mean?
The Supreme Court upheld the ACA, including its many tax provisions.
Protective claims
If you filed a protective claim in hopes the Supreme Court would rule the ACA, and its many tax provisions, retroactively unconstitutional, these protective claims are no longer valid. Protective claims are filed to preserve the taxpayer’s right to claim a refund when that right is contingent on future events and may not be determinable until after the statute of limitations expires.
If you have questions regarding your individual circumstance, please contact your William Vaughan Company representative or call our office at the number below.
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wvco.com | 419.891.1040
Categories: Tax Compliance
Managing Cash Flow After Disruption
Jun 09, 2021
COVID-19 has fundamentally changed the way in which businesses operate. From remote working to labor shortages, businesses have been forced to think innovatively to survive in a post-pandemic world. Revenue and cash flow have no doubt been a point of unease. During a recent WVC survey, more than 50% of respondents noted their number one concern being cash flow and access to capital. In a time of crisis, the focus is less on revenue and profits and more on liquidity and cash flow. In a distressed organization where resources are likely constrained, time is better spent on developing an accurate cash flow.
William Vaughan Company has developed a 13-week cash flow forecast tool for businesses to assess short-term cash demands. This model offers the most granular view into the money moving in and out of a business which means any short-term planning shortfalls can be addressed immediately. Click here to download.
Here are some best practices for cash flow forecasting business owners should consider if and when they find themselves in a crisis:
- Take control – Prioritize your expenses from critical to nonessential. With precise insight into your cash peaks and valleys, it’s easier to prepare contingency plans ahead of projected pinch points.
- Let the data drive decisions – Short-term cash flow forecasting should be driven by your data. Critical decisions can be made effectively with the numbers at hand. Most importantly, the 13-week cash flow is an objective, repeatable model that can eliminate false optimism among leadership.
- Communicate – Use this as an opportunity to create an open dialogue between management and other key team members. In addition, it can also help expedite key decisions for your lenders.
- Think outside the box – Think about other financing opportunities. This will also identify fixed versus variable expenses in which you can build scenarios from the model and “stress test” it against various conditions.
As businesses begin the long road to recovery, thinking strategically and taking action to minimize negative impacts will decide who remains competitive. Cash flow forecasting is just one of the many tools business owners can use to ensure their sustainability. With a thoughtful approach, you will gain the visibility needed to potentially right the ship.
How we can help
Don’t go at it alone! If you’re not sure how to assess your current environment and need guidance on utilizing cash flow forecasting, contact a William Vaughan Company advisor today!
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wvco.com | 419.891.1040
Categories: Uncategorized
The Price of Falling Victim to Ransomware: Colonial Pipeline Forced to Pay $5 million ransom – could you be next?
May 17, 2021
By now, most of you have felt the impact of the recent ransomware attack on The Colonial Pipeline causing skyrocketing gas prices and even leaving some gas stations with shortages. Colonial Pipeline paid a pretty penny to resume operations by forfeiting $5 million to a well-known hacker group called Darkside. This is yet another example of a high-profile cyberattack.
Companies of all sizes are at risk of falling victim to cybercriminals. In late April of this year, Apple disclosed a third-party service provider had been attacked and cybercriminals were demanding $50 million in return for controls. The hackers behind the Colonial Pipeline have already attacked 3 additional companies only after collecting on the Colonial Pipelines ransom. The 3 companies were smaller in size and spread across the world – 1 in the United States, 1 in Brazil and, 1 in Scotland.
While Colonial Pipeline and Apple both experienced ransom attacks (cybercriminals deploy malicious software encrypting files on a computer system and then demand a ransom to be paid to restore the data), they were two completely different types of which exposures cybercriminals are now leveraging to ensure their payout:
- Critical Infrastructure – Colonial Pipeline carries nearly half of the fuel supply on the East Coast meaning holding such a critical company at ransom to resume operations is a ruthless approach to ensuring a ransom will be paid. Cybercriminals are now turning their attention to critical infrastructure as prime targets.
- Third-Party Targeting – Apple was not held at ransom within their own network, but at a third-party supplier of proprietary parts. Due to weaknesses within the third-party suppliers’ network, hackers used the vulnerability to their advantage. Knowing the third-party provider would not have the capital to pay combined with the proprietary data at stake, hackers knew Apple would forfeit the ransom.
It is imperative companies of all sizes assess their networks for weakness. A cybercriminal does not care if your business cannot survive after paying a ransom. They are looking for a quick payout. Many companies rely on third-party IT security professionals to help fill skills gaps to mitigate risks. There is no better time to ensure your company, big or small, has the right measures in place to keep your capital safe and secure.
How we can help
WVCT is here to help you assess your IT risks and support your overall security plan. To schedule a meeting today, connect with our Risk Services Practice Leader below.
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Tiffany Pollard, CISA
Tiffany.pollard@wvco.com
wvco.com | 419.891.1040
Categories: Risk Services
Capitalizing on the R&D Tax Credit For Manufacturers
Apr 28, 2021
While the Research and Development (R&D) Tax Credit has been around for some time, it remains one of the best opportunities for manufacturing and distribution companies to minimize their tax liability and leverage an immediate source of cash. The credit was designed to provide a tax incentive for U.S. companies to increase spending on research and development in the U.S.
How to qualify
What constitutes as R&D is much broader than manufacturers realize. Applying to not only the development of products, but also activities and operations, such as new manufacturing processes, environmental improvements, software development, and quality enhancements. The R&D credit is available to any business that incurs expenses while attempting to develop new or improved products or processes while on U.S. soil. A four-part test has been established to help manufacturers determine if they qualify:
- An activity that creates a new or improved business component of function, performance, reliability, or quality;
- Technological in nature and related to physical or biological science, engineering, or computer science;
- Intended to discover information to eliminate uncertainty in capability, method, or design;
- An activity that includes a process of experimentation, or evaluating one or more alternatives to achieve a result. This might include modeling, simulation, or systematic trial-and-error.
How to claim the credit
Since the credit may be claimed for both current and prior tax years, manufacturers should document their R&D activities to ensure they are positioned to claim the credit in both situations. You will be required to factually provide the number of qualified research expenses (QREs) paid with documentation such as payroll records, general ledge expense detail, project lists, and notes, etc. Qualified research expenses are defined as:
- Wages paid to people directly working on, supervising, or directly supporting the development process
- Supplies used or consumed during the development process
- Contract research expenses paid to a third party for performing qualified research activities on behalf of the company
- The cost of cloud service providers or leasing computers used in research activities
It is important to note that research doesn’t have to lead to a successful product or process for the expenses to count. Even if the project or research failed, you can still claim the credit.
Additional tax benefits
- Alternative Minimum Tax – Eligible small businesses with an average of $50 million or less in gross receipts over the past three years may claim the federal R&D tax credit against their alternative minimum tax liability beginning in 2016.
- Payroll Tax – Eligible startups can use the credit to offset payroll withholding taxes. Startups using the provision must have gross receipts of less than $5 million and no gross receipts prior to the five taxable years ending in the then-current tax year. The credit towards payroll withholding taxes is limited to $250,000 in one year, but companies can carry forward excess credits to apply to future payroll withholding taxes.
How we can help
For more information about R&D credits or reducing your company’s risk of facing penalties, contact our Manufacturing & Distribution Practice Leader below.
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Robert Bradshaw, CPA
Manufacturing & Distribution Practice Leader
bob.bradshaw@wvco.com | 419.891.1040
Categories: Manufacturing & Distribution, Tax Planning
SBA Announces Restaurant Revitalization Fund Registration & Application Date
Apr 27, 2021
Today, the SBA announced it will open registration for the Restaurant Revitalization Fund (RRF) on Friday, April 30, 2021, at 9 am ET. Applications will officially be available on Monday, May 3, 2021, at noon ET and will remain open for any eligible entity until the funds are completely exhausted. In order to prepare for the launch of the RRF, the SBA recommends applicants become familiar with the application process by doing the following:
- Register in advance for an account at restaurants.sba.gov. This registration will go live on Friday, April 30, 2021, at 9 a.m. EDT.
- Review the official guidance, program guide, FAQs, and sample application published by the SBA.
- Prepare your required documentation.
- When the portal opens on Monday, May 3rd, 2021 work with your point-of-sale vendor or visit restaurants.sba.gov to submit your application. The SBA noted if you are working with a point-of-sale vendor, registration prior to submitting the application is not required.
The SBA will host two webinars on Tuesday, April 27, and Wednesday, April 28 covering the Restaurant Revitalization Fund program details and how to submit an application. To register for one of the webinars, click below:
While the webinars are limited to the first 20,000 registrants, recordings will be made available on the SBA’s YouTube Channel.
The SBA will be prioritizing funding applications from businesses owned by women, veterans, and socially and economically disadvantaged individuals for the first 21 days. However, all eligible applicants are strongly encouraged to submit their applications as soon as the portal opens. Once the 21 day priority period has passed, all eligible applications will receive funding on a first-come, first-serve basis.
If our team can be of assistance please reach out to us. We will continue to update and monitor this topic as more news is shared.
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Kristin Metzger, CPA
Restaurant Practice Leader
kristin.metzger@wvco.com | 419.891.1040
Categories: COVID-19, Restaurant & Hospitality