Waypoints: Ideas and Insights to Navigate Enterprise Complexity

Updated March 12, 2020:

Senate Bill 2563 has been amended and passed by the Senate. It will now make its way through the House. The amended bill increases the minimum amount of incentives in order to qualify as a certified applicant from $1 million  to $5 million. This should significantly decrease the base of affected businesses.

Some of the reporting requirements for certified applicants were also removed, however, the requirements relating to information on a company’s supply chain and its Mississippi vendors remain. The amended bill also eliminates the requirement that the University Research Center (“URC”) performs an economic impact study for each incentive. Instead, the bill now only requires that the Mississippi Development Authority (“MDA”) shares its report with the URC and, upon request, with the Governor, Speaker of the House and President of the Senate.

One of the significant changes made by the Tax Cuts and Jobs Act (TCJA) was to slash the top C corporate tax rate from 35% to a permanent flat 21% effective January 1, 2018. Individual tax rates were also lowered but not permanently with the highest tax bracket dropping from 39.6% to 37%. As a result, some S corporation owners may consider converting their business entity type to a C corporation to enjoy the lower 21% tax rate. This conversion decision should not be based solely on the difference in tax rates. Several factors need to be examined, and unfortunately, there is no "one size fits all" answer.

In the Tax Cuts and Jobs Act of 2017, Congress established an Opportunity Zones program to increase long-term investment in community development programs. Congress hoped by designating the low-income communities as qualified opportunity zones that capital would flow to the communities to develop property and expand business in these areas, which would reduce poverty and increase employment. There are roughly 8,700 opportunity zones throughout the United States.

On June 21, 2018, the Supreme Court of the United States (SCOTUS) issued a landmark ruling in South Dakota v. Wayfair. The case involved whether or not it was constitutional for a state to require an online retailer to collect sales tax on internet sales when there was no physical presence. The Wayfair decision overturned previous rulings by SCOTUS in National Bellas Hess v. Department of Revenue of Illinois (1967) and Quill Corp v. North Dakota (1992), where it was determined that a company must have a physical presence in a state in order for that state to lawfully require the collection and payment of sales tax.

On December 22, 2017, President Trump signed sweeping tax reforms into law. As a result of the new and modified federal provisions, state conformity has become a popular topic of conversation among tax practitioners. Many states will have to make difficult decisions, and several have already started the process.

During the primetime of the 2017 10K filing season, the SEC issued additional guidance and expectations for cybersecurity disclosures. Cyber has been a hot topic for the SEC in the last several years. The financial impact to companies to prevent and then respond to a breach cannot be overstated.

The largest re-write of US tax law in over 30 years is now complete and subject only to the President’s signature. The details are voluminous and initial guidance should appear in the next few weeks. However, as most of these provisions are in effect starting 1/1/18, it is important now to understand the major changes at least at a high level so we can ask the right questions as we engage in end-of-the-year tax planning. Here's a look at some of the highlights in the new tax plan and how they'll affect you:

Over the last week, the pace of work in Congress on tax reform has picked up substantially. The House passed the “Tax Cuts and Jobs Act” last Thursday, and the Senate Finance Committee reported out their version of the bill that evening. After this week’s Thanksgiving recess, the full Senate will begin to consider their bill starting next week. Most, but not all, provisions would be effective in 2018.

The House Ways and Means Committee just released the details of their tax reform bill and will start hearings next week. The Senate Finance Committee will roll out their companion legislation in the next couple weeks.

Many of the provisions are similar to those of the joint framework released in late September. However, now we have more specifics, albeit with many gaps still remaining.

If you’ve never shopped at Ikea yourself, chances are that you know someone who has. And you’ve likely heard a horror story about attempting to assemble one of the furniture giant’s shipped-flat products. (If you still don’t know what I’m talking about, search the Internet for “Ikea assembly horror stories” and you’ll quickly get up to speed on the tragi-comic experiences that so many customers have shared.) Ikea has heard plenty of these stories, too, and a recent strategic move by the company shows that they have listened and adapted.

After fits and starts over the last nine months, a broad tax reform plan is now beginning to emerge between Congress and the White House.

True to its name, an employee stock ownership plan (ESOP) is a type of employee benefit plan, similar in some ways to a profit-sharing setup. The National Center for Employee Ownership (NCEO) estimates that approximately 14 million workers currently participate in an ESOP, making it the most common form of employee ownership in the U.S.

The AICPA has issued a much-anticipated standard on cyber security. The new guidance, referred to as the “Cyber SOC,” creates a process that CPA’s can use to review and report on a company’s cyber security. In the past, organizations relied on various consultants, internal resources, and sometimes just plain luck, to identify and mitigate cyber risks. The Cyber SOC fundamentally changes how cyber threats are evaluated and managed. It allows for an independent, objective look at an organization’s processes, policies and controls around cyber risks.