TAX UPDATE 2019

GEORGE JOHNSON & COMPANY

SUMMER 2019


 

Dear Clients and Friends,

Welcome to our GJC Advisor Summer Tax Update!

In May, we hosted our annual Employee Benefit Plan Client Seminar. For the first time, the seminar was held at the Corner Ballpark (former Tiger Stadium). Norma Sharara of BDO USA, was our keynote speaker who shared current updates including:

Norma EBP Seminar

  • Tax reform and other changes affecting retirement plans in 2019; new IRS procedures for plan corrections, amendments and approvals
  • Fiduciary investment advice rule state of play; current DOL enforcement focus areas; Form 5500 updates
  • PBGC missing participant program for terminating defined contribution plans; new mediation program for defined benefit plans
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Additionally, investment management guest speaker, Corey Voorman of Berndt & Associates, addressed key issues and common questions such as:
  • Are all Target Date Funds created equal?
  • Are your investment options structured specifically for your plan’s participant demographics?
  • Stable Value Vs. Money Market Funds. Which is right for you?
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If you are interested in receiving information from our seminars, contact Rodelyn Frijas at
rfrijas@gjc-cpa.com.  Following the seminar, our accountants continued staff training on reporting updates as it relates to the industries we service. The continued educational programs ensure that we use the most current standards and practices.
In this Tax Update edition, we discuss key issues including:
  • Personal property tax compliance: eight frequently missed issues that can lead to over-payments
  • Eight key tax planning opportunities for 2019
  • Employers may soon receive notices about mismatched names and social security numbers on 2018 Form W-2’s
  • How employers can calculate nondeductible employee parking expenses, and possibly reduce them
  • Deadline approaches for remedial amendments for 403(B) Plans
Read more about our newly appointed Staff Accountants, Alexandra Sippala and Peter Walkuski. We’ve also added Austin Reed and Xavier Robinson as our Summer Interns. Additionally, under Community, we’ve included volunteer service work we have been involved with annually honoring Dr. Martin Luther King, Jr.
We hope you enjoy this edition of the GJC Advisor. As always, if you have any questions, feel free to contact us.
Happy Summer!
GJC
PERSONAL PROPERTY TAX COMPLIANCE: EIGHT FREQUENTLY MISSED ISSUES THAT CAN LEAD TO OVER-PAYMENTS
Understanding and adhering to the multitude of personal property tax compliance obligations throughout the thousands of jurisdictions that assess personal property taxes can be administratively burdensome. A company’s personal property tax liabilities can be impacted if a company is not equipped to navigate the differing rules and opportunities in the jurisdictions in which its personal property is located. The following summarizes the most often overlooked items that result in over-payments of personal property taxes by any organization.
EIGHT KEY TAX PLANNING OPPORTUNITIES FOR 2019

More than a year after sweeping federal and state tax reform was enacted, businesses of all sizes are still wrapping their arms around the changes. Additional guidance and regulations have been issued nearly every month-indeed, change is the new normal. Strategic tax planning now is key to lowering businesses’ total tax liability. Read on for eight top planning opportunities and considerations businesses should review as part of their 2019 strategy.

1. The GILTI, the FDII, and the BEAT
2. Section 199A Deduction
3. Interest Deduction Limitation
4. Economic Nexus/Wayfair
5. Bonus Depreciation
6. Corporate Alternative Minimum Tax (AMT) Rescinded
7. Federal Research Credit
8. Opportunity Zones (O-Zones)
EMPLOYERS MAY SOON RECEIVE NOTICES ABOUT MISMATCHED NAMES AND SOCIAL SECURITY NUMBERS ON 2018 FORM W-2’S

Summary

The Social Security Administration (SSA) recently announced that it is mailing “Employer Correction Request Notices” to employers and third-party submitters with at least one 2018 Form W-2 where the name and Social Security number (SSN) do not match the SSA’s records. The notice informs the employer that corrections are needed. While receiving the notice does not trigger a penalty, employers who fail to correct “no match” situations could owe IRS penalties (since IRS handles Form W-2 compliance). The announcement includes sample notices that are being sent, step-by-step instructions on how to find and resolve errors, and frequently asked questions.

When will the notices be sent?
Starting at the end of March 2019, SSA will mail the notices to employers who filed their 2018 Forms W-2 electronically by the January 31, 2019, due date. In fall 2019, SSA will mail notices to employers who filed the 2018 Forms W-2 on paper or who filed them electronically after January 31, 2019.

HOW EMPLOYERS CAN CALCULATE NONDEDUCTIBLE EMPLOYEE PARKING EXPENSES, AND POSSIBLY REDUCE THEM

Summary
Employer business deductions for qualified transportation fringes ended in 2018. The 2017 tax reform known as the Tax Cuts and Jobs Act (TCJA), P.L. 115-97, amended Sec. 274(a)(4) by eliminating employer business deductions for employee qualified transportation fringe (QTF) benefit expenses, including qualified parking , mass transit and van pool benefits (although such benefits continue to be excluded from employee income).
Increased cost for tax exempt employers started in 2018. TCJA also amended Sec. 512(a)(7) to require tax exempt employers to increase their unrelated business taxable income (UBTI) for such QTF expenses.
How to calculate employee parking expenses was unclear.  These changes were effective for amounts paid or incurred after December 31, 2017, but TCJA did not explain how to determine the amount that is nondeductible or treated as an increase in UBTI. Although the IRS intends to propose regulations under Sec. 274(a)(4) and 512(a)(7) (and under Sec. 6012 for tax exempt employers’ related filing requirements), in the interim, the IRS recently issued Notice 2018-99 (December 10, 2018), providing limited guidance on how to calculate nondeductible parking expenses. Employers may rely on Notice 2018-99 until further guidance is issued.

DEADLINE APPROACHES FOR REMEDIAL AMENDMENTS FOR 403(B) PLANS

Maintaining compliance for 403(b) retirement plans historically has been challenging given the lack of historical regulatory oversight, guidance from the Internal Revenue Service (IRS), and non-profit organizations’ limited resources. But the IRS has taken steps to address this, including publishing a list of providers offering pre-approved prototype plans and creating a remediation period ending in March 2020 for sponsors to self-correct non-compliant plan documents.

Background on 403(b) Compliance and Remediation
In 2007, IRS regulations were updated to require sponsors of retirement plans that fall under the Internal Revenue Code 403(b) to adopt and follow a plan document for their retirement plans as of January 1, 2009. Subsequently, relief was granted to extend this deadline to January 1, 2010. Before this time, many 403(b) plans did not have a plan document outlining specific operational and governing terms of the plan.

SPOTLIGHT

Join GJC in welcoming our newly appointed Staff Accountants and Interns…

Alexandra Sippala has over three years of related accounting experience.  Early this year, Alexandra was originally hired as an Intern with GJC. She graduated from Wayne State University with a Masters in Business Administration, focusing on Accounting. Keeping physically active is important to Alexandra. In her recent past, she was also a personal trainer at ProFitness Studio assisting clients with diet and exercise regimens. Additionally, she has a Bachelor of Biological Sciences majoring in Human Kinetics at the University of Guelph.
Peter Walkuski also started as an Intern with GJC. He graduated from Eastern Michigan University with a Master of Science in Accounting. His previous experience includes an internship as a Tax Accountant. In college, he was the treasurer, founding father and executive board officer for Theta Chi Fraternity. Peter has over three years of related accounting experience. In his spare time, he enjoys playing the guitar, sports and the outdoors.

 

GJC Summer Internships

Austin Reed is currently studying at Eastern Michigan University and is expected to graduate at the end of the year with a BBA in Accounting. He was honored as the recipient of the Emerald Scholarship, which is a 4-year award. He volunteers with the United Way of Washtenaw County in the income tax assistance program. In his spare time, Austin enjoys playing basketball, seeing live music, and trying out new restaurants with friends.

Xavier Robinson is the first to be hired under our HBCU (Historically Black Colleges and Universities) Legacy Internship Program.  He graduated from Florida Agricultural & Mechanical University (FAMU) with a Bachelor of Science in Business Administration, concentrating on Finance and minoring in Economics. Outside of work, Xavier enjoys exploring the city of Detroit, trying out different restaurants, listening to live music and watching movies.
FAMU is one of the largest schools contributing to the HBCU cause. It was established in 1887 and was founded by African Americans. The principal mission is the education of African Americans.

Welcome Alexandra, Peter, Austin and Xavier to 

the GJC Team!

COMMUNITY

Martin Luther King, Jr. Volunteer Service Day 2019

 

At GJC, we are dedicated to serve a positive purpose within our community. As part of our social responsibility for our commitment to community service, we participate in an annual volunteer day. Our largest volunteer event honors the life and legacy of Dr. Martin Luther King, Jr.
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Last January, our team spent the day volunteering different tasks at Forgotten Harvest. The nonprofit’s purpose is to relieve hunger in the Detroit Metropolitan community by rescuing surplus, prepared and perishable food and donating it to emergency food providers.

The GJC Team at Forgotten Harvest, Detroit

We are happy to share that our Quality Control Principal, Michael Nicholas is celebrating 32 years of service with George Johnson & Company. He joined GJC in 1986 and has been a Principal since 1994. Aside from being responsible for managing all facets of audits, reviews, other attestation engagements, and tax return preparation services for our clients, Mike also maintains our quality control standards.  We are fortunate to have him on our team!

This year also marks Gloria Zhao’s 16th year with us. Gloria started in 2002 as a staff accountant and has progressed to Principal in 2007. Among many responsibilities, including managing all facets of audits and reviews for many of our major clients, Gloria also serves as our Certified Fraud Examiner. We are proud to have Gloria on our team!
We appreciate the selfless service Mike and Gloria have provided for so many years. It is the loyalty, hard work and expertise that have helped GJC achieve its present stature.
Congratulations to Mike and Gloria!
We hope that the contents of this issue of the GJC Advisor will provide you with valuable information. As always, if you have any questions or comments, please do not hesitate to share them with our team members.
This general information should not be acted upon without first determining its application to your specific situation. For further details on any article, please contact us.
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GJC is an Independent Member of the BDO Alliance USA