Ohio Tax Update: State Offers Dollar-for-Dollar Tax Credit for Scholarship Fund Donations

Dec 14, 2022

Starting with the 2021 tax year, the state of Ohio began offering dollar-for-dollar tax credits to individuals who donate to an Ohio-certified scholarship granting organization, or SGO. Defined by the state, SGOs are organizations exempt from federal taxation under section 501(c)(3) of the Internal Revenue Code, that prioritize awarding academic scholarships for low-income students to attend primary and secondary schools (K-12), and that receive certification from the Office of the Ohio Attorney General.

Individuals that donate to an SGO can expect to receive a tax credit equal to 100 percent of their contribution (up to $750,) while married couples could receive up to a $1,500 credit. In addition to claiming the state tax credit, eligible charitable contributions can also be claimed on federal income tax returns if the taxpayer opts to itemize their deductions.

Currently, there are 25 certified SGOs in the state of Ohio, all of which are listed on the Ohio Attorney General’s website.

“This is a very easy credit for Ohio taxpayers to take advantage of,” says William Vaughan Company Tax Partner, Sandi Towns. “Those who have donated to Ohio-certified SGOs in 2022 need simply include their proof of donation letter(s) with other tax documents given to their accountants.”

Says Towns, “William Vaughan Company’s tax team will continue to monitor this and other tax credit updates, however I urge anyone wishing to take advantage of these credits to contact their accountant in order to determine which credits make the most sense for their specific tax and financial situation.”

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Sandi Towns, CPA/PFS, CFP®
Tax Partner
sandi.towns@wvco.com

Categories: Tax Planning

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IRS Tax Update: Filing Deadlines Extended to February 15, 2023 for Hurricane Ian Victims

Oct 04, 2022

On September 29th, the IRS announced Hurricane Ian victims in the state of Florida will now have until February 15th, 2023, to file various federal returns.

The tax relief measure applies to businesses and individuals operating and residing in areas designated to receive disaster relief from FEMA. Those eligible must also have had a filing deadline of September 23rd, 2022, or later. In other words, any business or individual in the state of Florida that filed to extend their 2021 federal tax returns out to October 17th, 2022, will now have until February 15th, 2023, to file any returns or taxes.

For businesses, the extension relief will also apply to quarterly payroll and excise tax returns normally due on October 31, 2022, and January 31, 2023. For individuals, the tax relief applies to any quarterly estimated income tax payments due on January 17, 2023. Additionally, penalties on payroll and excise tax deposits due on or after September 23, 2022, and before October 10, 2022, will be abated as long as the deposits are made by October 10, 2022.

The IRS will automatically apply this relief measure to taxpayers with a record of address in the disaster area, meaning there is no need to contact the agency directly. However, if an affected taxpayer receives a late filing or payment notice (that had an original or extended filing, payment, or deposit due date falling within the postponement period,) the taxpayer should call the number listed on the notice as soon as possible to abate the penalty.

For more information on the tax relief measure or to see if you qualify, contact your trusted team of tax professionals at William Vaughan Company as we continue to monitor IRS updates and the situation in Florida.

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wvco.com

Categories: Other Resources, Tax Compliance, Tax Planning

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5 Tips for Building Culture in a Disconnected Workspace

Aug 30, 2022

With the labor shortages and hiring challenges facing employers nationwide, now more than ever, companies are beginning to put their “office culture” under a microscope. But what exactly does that mean, and how important is workplace culture in relation to employee retention?

We sat down with Aaron Swiggum, managing partner at William Vaughan Company to learn what innovative techniques his leadership team has initiated within the firm to create a culture that keeps talent motived and engaged: Give your team the trust and flexibility to work remote.

“At William Vaughan Company, we give our employees the option to work from home or at any of our three offices, depending on the needs of their schedule,” said Swiggum. “To support our staff working remotely, we offer a take-home technology package fully equipped with monitors, docking stations and the like to ensure their success while off-campus.”

Create space for connections within the office.
Meanwhile, for those working on-site, Swiggum has repurposed unused office space into multi-person, collaboration rooms where our team can work together, bounce ideas off each other, and grow together as professionals. Expanding opportunities for engaging connection beyond just the traditional “water cooler” chat is crucial for the ever growing, virtual workspace.

Keep an eye on corporate culture trends to stay ahead of curve.
Corporate cultures at companies like Google and Facebook typically come to mind when you think of progressive work environments and trendy perks. But you don’t have to be a tech giant to incentivize your team. William Vaughan Company noticed what those companies were doing, then polled our team to see which perks would be most beneficial to them. “We’ve increased our maternity leave, added paternity leave for new dads, and created wellness programs that encourage healthy habits during our busiest, and often most stressful, times of the year.

Reimaging what teambuilding looks like.
Modeled after the esteemed, Seattle Fish Market, William Vaughan Company launched a program known as “Fish Groups” which aims to connect 7-8 team members who may not normally work together. Each group meets off-campus periodically throughout the quarter, allowing for deeper connections to form between colleagues that may have only previously communicated via email.

Define your core values and stick to them.
Of all the core values that define William Vaughan Company, “work hard, play hard,” “family,” and “community” are the pillars upon which we’ve built our culture. “We pride ourselves on having created a work environment where our team can have fun, participate in community service activities, and at the end of the day, feel secure about putting their families first,” Aaron says.

Although “culture” has become somewhat of an overused buzzword today, William Vaughan Company knows how important building and maintaining a positive and engaging work environment can be. According to Aaron, “when your team feels valued and supported, that directly translates into the work they’re doing for the clients. And ultimately, our goal is to help our clients and their businesses succeed, so we have to start by creating a space for our internal team to be successful.”

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wvco.com

Categories: Other Resources

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Canada’s New Digital Sales Tax

Jan 10, 2022

Written by: Brian Morcombe, Partner & Indirect Tax Practice Leader, BDO Canada – 2021

On July 1, 2021, new rules came into force that will significantly impact non-resident vendors and online platform operators. Specifically, the changes require certain non-resident vendors and operators of online platforms to register for, collect, and remit goods and services tax (GST)/harmonized sales tax (HST) on:

• sales of digital products and services provided to Canadian customers;
• goods supplied through fulfillment warehouses located in Canada and made by non-resident vendors directly through websites; and
• supplies made via short-term accommodation platforms.

Here’s what you need to know about Canada’s new digital sales taxes.

Supplies of digital property and services

What are the new rules?

Non-resident vendors supplying digital property and services to consumers in Canada are required to register for and collect GST/HST on these taxable supplies to Canadian consumers. An example is Netflix which, prior to July 2021, may not have been viewed as carrying on business in Canada and was not required to register for GST/HST. Under the new rules, Netflix is required to register to collect tax from customers in Canada that are not registered for GST/HST, putting Netflix on equal footing with Canadian resident streaming service vendors already required to collect tax from customers.

A consumer includes persons not registered for GST/HST (persons registered for GST/HST are not considered consumers for the purposes of the new rules). Operators of third-party distribution platforms making these types of supplies are also required to register. A simplified registration and remittance framework is available to these registrants that are not otherwise carrying on business in Canada.

The new requirements apply to non-resident vendors and distribution platform operators whose revenue from taxable supplies of property and/or services exceed, or are expected to exceed, C$30,000 over a 12-month period.

Can ITCs be claimed?

A condition of the simplified framework is that non-resident vendors and distribution platform operators using the simplified registration framework are not able to claim input tax credits (ITCs) to recover any GST/HST paid on expenses they incur related to their Canadian sales.

Goods supplied through fulfillment warehouses and through websites

What are the new rules?

Distribution platform operators are required to register to collect and remit GST/HST under the general regime (as opposed to the simplified framework discussed above) on sales of goods located in warehouses in Canada if the sales are made through that platform by non-registered vendors. Non-resident vendors using Canadian fulfillment warehouses to sell in Canada without the use of a distribution platform are also required to register for and collect GST/HST under the general regime. Fulfillment businesses in Canada are required to notify the Canada Revenue Agency of their activities and maintain certain records related to non-resident clients.

Lastly, non-resident vendors that make sales to consumers in Canada using their own website are generally also required to register for GST/HST under the general regime. GST/HST registration and collection is required where qualifying supplies, including those made through distribution platforms by non-registered third-party vendors to purchasers in Canada that are not registered for the GST/HST, exceed or are expected to exceed C$30,000 in a 12-month period.

Can ITCs be claimed?

Vendors that are registered under the general regime, as opposed to the simplified framework, will generally be eligible to claim ITCs in respect of GST/HST incurred in the course of their commercial activities.

Short-term accommodation platforms

What are the new rules?

GST/HST applies to all supplies of short-term accommodation (generally a residential complex or unit supplied for periods of less than 30 days and for more than C$20/day) supplied in Canada through an accommodation platform, such as Airbnb. If the property owner is registered for GST/HST, the owner continues to be responsible for collecting and remitting the GST/HST from its guests. If the property owner is not registered for GST/HST, the accommodation platform operator must collect and remit the GST/HST on that property owner’s supplies of accommodation to consumers.

Can ITCs be claimed?

Non-resident accommodation platform operators that are not considered to be carrying on business in Canada and are making supplies to consumers (as opposed to GST/HST registered persons) use the simplified registration framework, resulting in no entitlement for ITCs. Accommodation platform operators that are resident in Canada are required to register under the general regime and are able to claim ITCs where all conditions are met.

What about provincial sales tax (PST)?

If all of this sounds familiar, it should. Quebec introduced digital sales tax provisions aimed at non-residents of Canada that are not registered for GST/HST and Quebec sales tax (QST), defined as foreign specified suppliers, as well as specified digital platform operators on Jan. 1, 2019, requiring them to become registered for QST. Beginning Sept. 1, 2019, this QST registration requirement was broadened to include residents and non-residents that are registered for GST/HST but not registered for QST (i.e., Canadian specified suppliers).

Impacted vendors are required to register for QST under the simplified framework where sales exceed C$30,000 to individual consumers in Quebec in the preceding 12 months and relate to intangibles (like software and digitized products) and services. Canadian specified suppliers are required to collect QST on goods as well as intangibles and services. Like the new GST/HST simplified framework, Quebec restricted input tax refunds on vendors using its simplified framework.

Effective Jan. 1, 2020, Saskatchewan introduced rules targeting non-residents making e-commerce sales to purchasers in the province. Online marketplace facilitators and online accommodation platforms are now required to register and collect PST on electronic distribution services that are delivered, streamed, or accessed through an electronic distribution platform (e.g., website, internet, portal, or gateway) and online accommodation services that are delivered or accessed through an online accommodation platform, respectively.

British Columbia expanded its PST registration requirements to include Canadian sellers of goods, along with Canadian and foreign sellers of software and telecommunication services. These new provisions come into force on April 1, 2021.

Lastly, Manitoba recently released legislation taxing certain digital sales of goods and services effective Dec. 1, 2021. The following vendors will be caught in the new rules and will be required to register for, collect and remit Manitoba retail sales tax (RST):

• online marketplaces on the sale of taxable goods sold by third parties via their online platforms;
• online accommodation platforms on the booking of taxable accommodations in Manitoba; and
• audio and video streaming service providers on the sale of streaming services (by virtue of being included as telecommunication services).

Given the different approaches taken by the federal government and each of the provinces when taxing digital property and services, vendors and platform operators will need to gain a strong understanding of the requirements in each jurisdiction to prevent costly errors. If you need assistance navigating these rules, please contact your WVC advisor

Categories: Uncategorized

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Navigating LIFO Inventory Methods During Global Supply Chain Disruptions

Dec 20, 2021

State of the Global Economy
The same issues have been covered in the news cycle for months; supply chain malfunctions, production shortages, inflation, increased tariffs… all the reasons why businesses are facing heightened costs of resources this year. COVID-19-related disruptions have affected distributors and manufacturers worldwide, with gradual increases in the consumer prices index every month since the third quarter of 2020 (apart from May ‘21.) Numerous products including crude oil and petroleum products, natural gas, leather, lumber and wood, chemicals, and metal products have all seen substantial inflation (from 25% – 200%) in the last twelve months.

As costs go up, one tax leveraging option for those required to maintain inventories is the LIFO (last-in, first-out) inventory method. By using LIFO, goods sold throughout the year are deemed to come first from any goods purchased or produced during that year, then from the beginning inventory. As a result, inflation on items in the ending inventory is already included in the cost of goods sold, which may result in a lower taxable income.

LIFO Snapshot
LIFO is an alternative inventory valuation method, used by companies during periods of increased inflation to defer significant taxation. When adopting a LIFO inventory method, taxpayers can measure the effects of inflation on their internal and external prices by assuming the most recently purchased items are being sold first. This is achieved through an “inventory price index computation method,” using indexes published by the Bureau of Labor Statistics.

First, the taxpayer must ascribe value to all inventory (including beginning inventory) at cost. Then, say the LIFO method was adopted in the tax year 2020, the taxpayer should value all inventory at cost, ratably, for 2020 through 2022 and account for any necessary adjustments. In theory, the result of those adjustments would reflect the impact of inflation on company inventory and would then be deducted from taxable income and removed from the balance sheet.

It is required all taxpayers adopting the LIFO method for tax purposes, apply a LIFO computing method to book income. Additionally, all financial statements issued by the taxpayer must reflect computation under a LIFO method. To adopt LIFO, taxpayers must attach Form 970, Application to Use LIFO Inventory Method, to their federal income tax return.

Considerations
Adopting a LIFO inventory method may not benefit all taxpayers. Companies considering the use of a LIFO method for the 2021 tax year should first perform a cost-benefit analysis in order to answer the following questions:

As always, our team of advisors is available to help you determine the best approach for your given situation.

Categories: COVID-19, Manufacturing & Distribution

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