Business Archives - Page 33 of 34 - Whalen & Company, CPAs

Hearings Taking Place on Legislation to Simplify Ohio’s Municipal Income Tax System

rlewis on May 7, 2013

Proponents Emphasize the Goal Is to Reduce the Cost Burden on Small Businesses

Proponents and opponents of legislation seeking to establish a uniform, cost-effective set of rules and regulations governing the municipal income tax system are expressing their views before Ways and Means Committee members of the Ohio House. Hearings are continuing during the week of May 6.

House Bill 5, the latest legislative effort to simplify the state municipal income tax system, was introduced in January. It has support from business groups, including the Ohio Society of CPAs, a coalition of organizations and individual taxpayers. They contend that the administrative burden and costs for many Ohio businesses impedes them from creating more jobs across Ohio.

Ohio is just one of a few states in which municipalities impose an income tax on individuals and businesses. Those businesses must track and comply with as many as 600 different sets of tax ordinances, depending on where they conduct business.

The proposed legislation would establish a more uniform municipal tax code that all municipalities assessing a tax on businesses or individuals would follow, including a uniform definition of income, withholding, penalties and interest, and all related rules and regulations other than tax rate and reciprocity rate.

The bill creates the Municipal Tax Policy Board charged with creating a uniform form. It may also recommend rules. The board will be comprised solely of seven city representatives with no business or taxpayer representatives.

Five of the seven members are required to be local tax administrators. Of the two remaining members, one must be an employee of the Regional Income Tax Authority (RITA) and one must be an employee of the Central Collection Agency (CCA). Both RITA and CCA are agencies that currently collect municipal taxes for a number of cities and villages throughout Ohio.

In addition to unifying some of the definitions for income and deductions, the bill also requires not counting anything less than a half-day as a workday for income tax purposes. It also would expand the number of days that someone must work in a community before he or she is liable for any income tax there. Currently, the threshold is 12 days per year. The proposal would expand that to 20 days.

Opponents, largely from cities, insist that the cost of compliance with the current municipal tax laws is overstated. Proponents contend that Ohio’s current municipal tax system presents compliance problems for individual and business taxpayers, costs existing employers resources that could be redirected to growing their businesses and creating more jobs, and puts Ohio at an economic disadvantage for attracting new employers.

The proposed legislation does not call for a centralized collection system, nor is it looking to reduce the amount of tax that individuals and businesses must pay.

BWC, Governor Propose $1 Billion Rebate to Employers

rlewis on May 7, 2013

Proposal Includes Tripling Safety Grants and Lower Rates from Modernizing Operations

The Ohio Bureau of Workers’ Compensation (BWC) and Governor John Kasich have proposed that the BWC give back $1 billion to private employers and local governments in the form of rebates. The proposal also triples investments in worker safety grants and lowers all rates by modernizing workers’ comp operations. The $1.9 billion proposal is made possible by larger-than-expected fund balances at BWC generated by strong investment management.

The $1 billion in rebates equals about 56 percent of the most recent annual premium of the approximately 210,000 private and public sector employers. The BWC would send the rebates to employers by check.

The rebate proposal is expected to be submitted to the BWC Board of Directors for approval at its meeting in late May. The proposed rebates will apply to employers who are in discount programs as well as those who are not.

According to the proposal, companies and government employers that pay premiums into the state fund for injured workers and have up-to-date policies are eligible for a rebate of 56 percent of what they were billed for their last policy year. In addition to the rebates, the bureau wants to require employers to pay premiums upfront instead of after a coverage period.

The proposed switch to prospective premium payments requires legislative approval, which the bureau hopes to gain this year. The switch would not go into effect until 2014 at the earliest.

The bureau wants to give employers a credit equal to their previous six months’ premium as part of the transition to a new payment system. To do so, the BWC would issue a credit to employers totaling $900 million to help offset the costs associated with the transition. The switch would lead to rate reductions of two percent for private employers and four percent for public employers.

Along with the request for rebates, the proposal also increases the Ohio’s Safety and Wellness Grant Program from $5 million to $15 million. The state’s program has proven effective. In companies receiving grants, claims frequency has decreased 66 percent and claims costs per full time employee has decreased 86 percent.

Furthermore, the proposal lowers rates 2 percent for private employers and 4 percent for public employers by modernizing BWC’s payment system.

Details on the proposal are still being finalized. All three elements would be funded from BWC’s net assets, which have grown to $8.3 billion and are far in excess of the target funding ratio of assets to liabilities established by the BWC board in 2008.

The revived research credit can still reduce your 2012 tax bill

mnarog on April 4, 2013

For many years, the research credit (also commonly referred to as the “research and development” or “research and experimentation” credit) has provided an incentive for businesses to increase their investments in research. But the credit expired at the end of 2011.

The American Taxpayer Relief Act of 2012 (ATRA) extends the credit to 2012 and 2013. You can use the credit for virtually any research that benefits your business. Wages for researchers, the cost of research supplies and the cost of computer licensing for research purposes are all expenses that may qualify for the credit.

The credit is generally equal to a portion of qualified research expenses. It’s complicated to calculate, but the tax savings can be substantial. If you think you may qualify, please contact us for assistance. There’s still time to claim the credit for 2012.

Image courtesy of www.freedigitalphotos.net.

How Does the Recent Supreme Court Ruling on the Affordable Care Act Affect Your Business?

mnarog on August 15, 2012

The United States Supreme Court recently upheld the constitutionality of the Affordable Care Act (reported in the July Insight). While the November elections could have an impact on whether the provisions of this law are actually implemented, here are some things your business should be doing or preparing for.

Effective this year, employers with 250 or more employees in 2011 must report the cost of health insurance coverage in box 12 of the employee’s W-2.

If you are a sole proprietor or own a business with no employees, the impact, starting in 2014, will be the same as on individuals. You must have health coverage by 2014 or pay a penalty. The top penalty for individuals, once fully phased in, is $695 or 2.5 percent of the amount of household income above the threshhold – whichever is greater.

Also starting in 2014, companies that employ an average of at least 50 full-time employees during the preceding calendar year will have to pay penalties if they don’t offer health care coverage for their full-time employees or offer minimum essential coverage that is unaffordable. Penalties amount to a maximum of $2,000 for each full-time employee in excess of 30 full-time employees who are certified to the employer as having purchased health insurance through a state exchange. There are no penalties if part-time employees are not offered coverage. In addition, these employers must file an information return that reports the terms and conditions of the health care coverage provided to the employer’s full-time employees. Information included is:

Certification that the employer offers full-time employees and their dependents the opportunity to enroll in minimum essential coverage under an employer sponsored plan.
The number of full-time employees for each month during the calendar year.
Name, address and social security number for each full-time employee employed during the calendar year and the number of months each was covered under the plan sponsored by the employer.

Also effective in 2014, employers with more than 200 full-time employees must automatically enroll full-time employees in health insurance coverage. The employee will then have the option to opt out.

And what about tax credits?

Since 2010, businesses with fewer than 25 full-time equivalent employees have been eligible for a tax break if they covered at least half the cost of health insurance.

The companies must have fewer than 10 full-time equivalent employees and average salaries of $25,000 or less. Currently, that full credit is 35 percent of the company’s contribution toward an employee’s insurance premium.

As the size of the business and average wage amount goes up, the tax credit goes down. The credit is completely phased out when a company hits 25 full-time equivalent employees or $50,000 in average salaries.

In 2014, the state-based Small Business Health Options Program Exchanges will be open to small businesses. Getting insurance through those exchanges could bump the maximum tax credit to 50 percent of a company’s contribution. However, the credit will be available for only two years after the exchanges are implemented.

Category: Business

News & Tech Tips

The revived research credit can still reduce your 2012 tax bill

How Does the Recent Supreme Court Ruling on the Affordable Care Act Affect Your Business?