Jul 17, 2023
Ohioans can expect significant changes to state tax laws next year thanks to Ohio House Bill 33. The newly passed piece of legislature, signed by Governor Mike DeWine on July 3, 2023, establishes state operating appropriations for fiscal years 2024-2025. This comprehensive legislation also brings several tax advantages specifically designed to benefit Ohio business owners. Taxpayers can expect changes to personal income tax, Commercial Activity Tax, Pass-Through Entity Tax Credits, and Municipal tax.
Personal Income Tax Reductions
The first significant change introduced by House Bill 33 is a reduction in personal income tax rates. The new law establishes two tax brackets based on income levels. If you earn over $26,050, you’ll pay a marginal tax rate of 2.75%. For individuals with income over $100,000, the rate increases slightly to 3.5%. Those earning $26,050 or less will be exempt from paying any income taxes to the state of Ohio.
Commercial Activity Tax (CAT) Exemption
House Bill 33 also brings changes to the Commercial Activity Tax (CAT), affecting businesses in Ohio. CAT is determined based off a business’s taxable gross receipts. The new law significantly increases the annual exemption threshold for businesses. Previously, businesses with taxable gross receipts under $150,000 were exempt from paying CAT. However, under the new law, the exemption amount rises to $3 million for the 2024 tax year and further increases to $6 million starting in 2025. This means that a large amount of Ohio-based businesses will no longer have to pay CAT.
Pass-Through Entity (PTE) Tax Credit
Another important change under House Bill 33 is the introduction of a tax credit for Ohio residents subject to double taxation on pass-through entity (PTE) income. Pass-through entities include businesses like partnerships, S corporations, and limited liability companies (LLCs). Often, individuals earning income from such entities face double taxation, meaning they pay taxes at both the entity level and the individual level. The new law allows Ohio residents to claim a credit on their individual tax returns for PTE taxes paid to other states, helping alleviate the burden of double taxation.
Municipal Tax Changes
Finally, House Bill 33 will enact several changes to municipal taxes in Ohio. Municipal taxes are taxes imposed by local governments, such as cities and towns. The new law reduces fees and penalties for late filing of municipal income tax returns, making it more affordable for taxpayers to comply with local tax obligations. Additionally, the bill extends the due date for filing municipal net profits tax returns from October 15th to November 15th, giving individuals and businesses more time to prepare their tax returns.
Furthermore, House Bill 33 exempts individuals under the age of 18 from Ohio municipal income tax. This means that high school students who have part-time jobs or earn income from other sources will not have to pay municipal income tax in Ohio.
The newly passed bill includes numerous other provisions aimed at providing tax relief for both business and individuals. From baby wipes and cribs, to traffic control services often used by construction contractors, taxpayers can expect additions to the state’s list of tax-exempt goods and services. Businesses with remote or hybrid employees in Ohio can also expect a new option for calculating their municipal net profits tax.
Ultimately, the passage of Ohio House Bill 33 introduces several significant changes to the state’s tax landscape. William Vaughan Company’s tax team will continue to monitor changes resulting from House Bill 33 along with other state and federal tax updates. For both businesses and individuals, understanding tax law is crucial when it comes to making informed financial decisions. Don’t leave your finances up to chance, connect with us today to understand how House Bill 33 may effect your specific situation.
Connect with us.
Jul 05, 2023
William Vaughan Company was recently made aware of a highly concerning scam surfacing in Lucas County. Many local businesses have received fraudulent “Distraint Warrants” in the mail, sent by a fictitious entity called the “Tax Resolution Unit.” While these letters seem to primarily target businesses, a handful of individuals have also received them. In the interest of our community and the individuals we serve, here are some important detail about this distraint warrant scam along with essential tips on safeguarding yourself against such fraudulent activities.
In this distrain warrant scam, individuals and businesses receive official-looking documents in the mail from the Lucas County “Tax Resolution Unit.” The document claims that a Distraint Warrant has been issued against the recipient due to unpaid tax debts. The scammers exploit fear and urgency, attempting to coerce victims into making immediate payments via telephone to a toll-free number. However, it’s crucial to note that Lucas County does not have a Tax Resolution Unit or an office of Public Judgment Records.
How to Protect Yourself:
Verify the source: Take a moment to verify the authenticity of any suspicious document you receive. Contact the relevant county offices or authorities to confirm the legitimacy of the warrant or notification. Don’t hesitate to reach out to our team if you need assistance in this regard.
Exercise caution: Be wary of unexpected or unsolicited communications regarding taxes or debts. Genuine organizations typically communicate through official channels and offer multiple opportunities to resolve any issues. Be skeptical of sudden demands for payment or urgent actions.
Guard your personal information: Under no circumstances should you share sensitive personal or financial information, such as social security numbers, bank account details, or credit card numbers, in response to such requests. Legitimate authorities, like the IRS, will not ask for this information via email or phone. Nor will the IRS take payment by cashier’s check, in the form of gift cards, or wire transfer.
Report the scam: If you receive a suspicious document or believe you have encountered a scam, promptly report it to the relevant authorities. You can report it to the IRS by either calling 1-800-366-4484 or visiting the US Treasury website. Consider calling your local police so it is aware of the scam as often times communities are targeted all at once. Finally, the Federal Trade Commission’s Report A Fraud site is shared with law enforcement across the country. Your report can help bring attention to the scam and prevent others from falling victim.
Spread awareness: Share this information with your friends, family, and colleagues to raise awareness about the scam. Utilize social media, local community groups, or any platform that can reach a wider audience. The more people are informed, the harder it becomes for scammers to succeed.
As trusted tax and business advisors, our clients’ financial well-being and security is our top priority. The “Distraint Warrant” scam targeting Lucas County residents and businesses is an unfortunate reminder of the dangers posed by fraudulent activities. However, by staying vigilant, verifying sources, and reporting suspicious incidents, we can collectively protect ourselves and our community from falling victim to these scams. If you have any concerns or require assistance, please don’t hesitate to contact us.
Connect with us.
Jun 15, 2023
Don’t leave money on the table!
The Employee Retention Tax Credit (ERTC) is a provision established under the CARES Act which has been enhanced by additional legislation and could provide an immense amount of capital to employers. However, time is running out for business owners to claim what could amount to thousands of dollars in tax refunds.
The ERTC is a refundable tax credit employers can claim against certain quarterly employment taxes, equal to a percentage of qualified wages and health insurance costs paid after March 12, 2020, and before September 30, 2021. For 2020, the credit is 50% of qualified payments, up to $10,000 per employee. Simply put, an eligible business has the potential to request refunds of up to $5,000 per employee for 2020. The benefits are even greater in 2021.
But that means in order to claim the credit for those last three quarters of 2020, business owners need to act now. Tax payers have up to three years to amend their quarterly returns. By amending a return, business owners may unlock substantial benefits to support their business’s growth.
For most businesses, eligibility for ERTC for fiscal year 2020 is determined by meeting one of two tests:
- Test 1: A measure of decline in gross receipts. If an employer experiences a significant decline in gross receipts for any calendar quarter, as compared to the same calendar quarter in 2019, they will be eligible for the credit in that quarter. For 2020, this decline is defined as gross receipts that are less than 50% of gross receipts for the same quarter in 2019, and for 2021, this decline is gross receipts being less than 80% of gross receipts for the same quarter in 2019.
- Test 2: A full or partial suspension of operations. If an employer was subject to any full or partial suspension of operations because of government orders related to COVID-19 they could be eligible. These orders could be Federal, State, county, and/or municipality. Even if the business was deemed essential and was not directly affected by such orders, there still could be avenues to be eligible for the credit.
Despite the expiration of the tax credit in September 2021, eligible businesses, companies, and employers have the opportunity to submit documentation and retrospectively obtain reimbursements for the Employee Retention Credit in 2023. In order to accomplish this, business owners are required to complete IRS Form 941-X, which serves as a means to rectify any errors in their initially submitted Form 941. However, it is important to note that this process is only applicable within a three-year timeframe from the original filing of their payroll tax returns.
With the number of ERTC scams on the rise, WVC always recommends that businesses consult with their trusted tax professional to ensure eligibility, understand the specific requirements, and navigate the amendment process successfully. Connect with William Vaughan Company’s ERTC team today to see if your business meets the eligibility requirements – by acting now, you just may position your businesses for a brighter financial future.
Connect With Us.
Mike Hanf, CPA, CGMA
Tax Partner, ERTC Practice Leader
Feb 07, 2023
At the end of last year, the U.S. Department of Agriculture (USDA) announced its plan to launch the Emergency Relief Program (ERP) Phase Two, as well as the new Pandemic Assistance Revenue Program (PARP). These two disaster programs were developed to help offset crop and revenue losses for agricultural producers. Just last month, the USDA announced its Farm Service Agency (FSA) is now accepting applications for both of these programs through June 2, 2023. Below are some of the key details to know before applying. For a full listing of all the guidance and qualifications, visit the USDA’s website.
Emergency Relief Program (ERP) Phase Two
- ERP Phase Two is for producers who didn’t receive assistance from ERP Phase One.
- Eligibility for assistance through this program is based on revenue losses experienced from eligible natural disasters in 2020 and 2021.
- Producers should begin reviewing the following documents in preparation for applying for ERP Phase Two:
- Schedule F (Form 1040)
- Profit or Loss from Farming (or similar tax documents for tax years 2018-2022, representing their applicable Benchmark Year and Tax Year for Disaster Year Revenue)
Pandemic Assistance Revenue Program (PARP)
- PARP provides financial assistance for producers who suffered at least a 15% decrease in allowable gross revenue for the 2020 calendar year, as compared to 2018 or 2019.
- Producers may be eligible for assistance through PARP for a range of agricultural commodities and allowable gross revenue sources.
- Other notable eligibility requirements include:
- Must be a citizen of the United States, a resident alien, a partnership or organization structure organized under state law, an Indian Tribe or Tribal organization, or an eligible foreign person or foreign entity
- Have an average adjusted gross income (AGI) of less than $900,000 for tax years 2016, 2017, and 2018
- Comply with provisions of the “Highly Erodible Land and Wetland Conservation” regulations, often called the conservation compliance provisions.
- Submit a complete PARP application form (FSA-1122) and provide all required documentation.
Applications for each program are due June 2, 2023. Producers can apply for both programs during the same appointment with USDA’s Farm Service Agency (FSA).
For more information, producers should contact their local USDA service center or reference the ERP Phase Two-PARP Comparison Fact Sheet.
Connect With Us.
Jeffery Long, CPA
Jan 17, 2023
In September of last year, Ohio Governor, Mike DeWine, announced training reimbursement grants being made available to ApprenticeOhio sponsors and employers as a result of a federal Building State Capacity to Expand Apprenticeship through Innovation grant that Ohio Department of Job and Family Services (ODJFS) received in 2020.
Sponsors and employers can apply for the grants at Apprentice.Ohio.gov, receiving reimbursement of up to $2,500 per apprentice for up to 10 apprentices to help cover the costs of training and tool allowances.
The applications for reimbursement of costs incurred since July 1, 2022, were originally due by Dec. 31, 2022, but the deadline has been extended until March 31, 2023. According to ODJFS Director, Matt Damschroder, “the program has received 100 applications so far and approved nearly half of them, paying out nearly $900,000.”
To learn more and to apply, visit https://apprentice.ohio.gov/
- Audit & Accounting
- Construction & Real Estate
- Cost Accounting
- Estate Planning
- Fraud & Forensics
- Healthcare & Dentistry
- IT & Risk Services
- Manufacturing & Distribution
- Other Resources
- Restaurant & Hospitality
- Risk Services
- Tax Compliance
- Tax Planning