GEORGE JOHNSON & COMPANY
Dear Clients and Friends,
Welcome to the spring issue of the GJC Advisor. The GJC team is focused on providing sound financial guidance, value and knowledge to our clients and professional connections to help them manage and grow their businesses. This newsletter is an extension of those goals. This issue offers insight on tax topics that will help keep your financial house in order and build profitability. We also have shared stories about our dedication to the community. We hope you enjoy this edition of the GJC Advisor.
How Tax Law Changes May Impact Charitable Giving
Whether we look at the blueprint for tax reform put forth by Republican House Ways and Means Committee members, the deliberations of the Senate Finance Committee’s bipartisan tax reform working groups or the tax proposals of President Trump, there is a very real possibility that tax rates will be lowered in the near future. While the Internal Revenue Code
(IRC) hasn’t seen a major overhaul since 1986, the tax law as we know it today may not be the tax law next year.
What does this mean for America’s charitable organizations? In a nutshell, charities should encourage donors to contribute before the end of the year to take advantage of more impactful deductions that may not be available if rates are lowered in the future. Accelerating charitable deductions now could be critical to maximize fundraising if near-term tax reforms include a dollar cap on total itemized deductions like charitable donations. Favorable provisions that now allow fair market value deductions for gifts of appreciated property to charity could come under scrutiny as well, further complicating fundraising potential.
Regardless of what unknown tax code changes are on the horizon, encouraging giving nowwhile the outcome is predictable-is imperative.
Below are some of the details of tax changes President Trump proposed during his campaign:
• Lowering the number of tax brackets for married joint filers from seven to three at the following rates
• Capping itemized deductions and increasing the standard deduction Estate tax
IRS Issues 2017 Work Plan for Tax Exempt Organizations
The Tax Exempt and Government Entities division of the IRS issued its FY 2017 Work Plan at the end of September 2016, which builds upon the agency’s 2016 priorities and its mission to work smarter with fewer resources.
This idea of “working smarter” includes targeting audit initiatives so the IRS can focus on organizations where they will be more likely to find noncompliance, as well as provide more information to organizations so they can be compliant. The work plan can also serve as a helpful resource for nonprofits as they begin planning for the new fiscal year. Nonprofits can review the work plan to determine key strategic actions they should take now to prepare for
the possibility of an IRS audit.
In 2016, the IRS launched an effort to use data gathered from the Form 990 series to identify existing and emerging high risk areas of noncompliance. With this initiative, the IRS achieved a change rate of 90 percent when conducting audits in 2016. In other words, 90 percent of its audits identified a discrepancy, and as a result, the organization had to change a position it took on its initial return, which often resulted in additional tax dollars paid to the IRS. Based on the 2016 results, the IRS will continue to utilize data analytics from Form 990 in fiscal year 2017.
George Johnson to the left of Mrs. Ida Austin (seated), along with board members of WSU School of Business
George Johnson delivers Keynote Address at the Richard H. Austin
Lecture Series for Accounting Excellence at the
“Making A Difference” Luncheon
The Richard H. Austin Fund for Accounting Excellence was established at Wayne State University in 1989. The purpose is to increase significantly the number of African Americans who achieve excellence in the accounting profession. The primary objective of the fund is to identify meritorious students in need of financial support to continue their studies.
George is actively involved in the Wayne State University Richard H. Scholarship Fund. In his address at the luncheon in February, George spoke of his history with Richard H. Austin. In 1971, George established his own firm, George Johnson & Company, formed by the merger of two local firms including that of then Michigan Secretary of State, Richard H. Austin: Austin, Washington, and Davenport.
Although financial need is a consideration for the fund, students who exhibit attributes symbolized by Richard H. Austin, are given preference. He was a figure of integrity, commitment, leadership,
community involvement, concern for other people, personal drive and academic achievement.
George Johnson established GJC 45 years ago in the City of Detroit. Since the firm’s inception, commitment to the community has been a central component of our mission. We consistently identify and fulfill avenues to help fellow Metro Detroiters. From our team volunteering in soup kitchens to celebrating Martin Luther King, Jr. Day as an opportunity to serve, we will continue to seek outlets to lend our collective time and talents to enhancing our community.
In January of this year, to honor Martin Luther King, Jr., our team spent the day volunteering at Gleaners Community Food Bank. Alongside serving with several other companies in the Detroit Metropolitan area, 3,406 pounds of food were managed! With the support of the community, Gleaners Food Bank distributes more than 45 million pounds of food to our hungry neighbors in southeastern Michigan, including the 40% of recipients who are children.
The GJC team stops for a photo while working at Gleaners Community Food Bank
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.