Tax Reform and Your Business

Tax Reform and Your Business

The first few months of the year are typically a great time to gather financial documents and receipts to prepare for the impending tax season and the year ahead. This year, the Tax Cuts and Jobs Act (TCJA) that passed in late December, has business owners caught off guard.

It is no surprise that the Internal Revenue code and the enormous amount of regulation involved in tax law is confusing and intense. At Tax Crisis Institute, it is our goal to help our clients sort through the complicated waters of tax law. If you have been paying attention to the news lately, you have most likely heard details on tax reform.

According to the Joint Committee on Taxation, the overall tax plan will positively impact economic growth over the course of ten years. The committee believes the government will see increased revenue from taxes, even at the proposed lower rates, due to the increased economic activity.

The Tax Foundation ran analysis that showed, “the plan would significantly lower marginal tax rates and the cost of capital, which would lead to a 3.7 percent increase in GDP over the long term and 2.9 percent higher wages.” It also states that “the plan would result in the creation of roughly 925,000 new full-time equivalent jobs, while increasing the after-tax incomes by 4.4 percent in the long run, meaning families would see an after-tax income boost of 4.4 percent by the end of the decade.”

But what does all of this mean? Here is a summary of what experts believe the tax reform bill will mean for businesses!

What We Know About Tax Reform and Your Business

  • Pass-through business entities will have access to a new 20 percent reduction. 
    • This appears to be great news for business owners, but due to some of the limitations, the degree of how much it will help a business will vary greatly. People who are self-employed should be able to access this deduction, along with people involved in partnerships and S corporations.
    • This deduction phases out for business owners with incomes greater than $157k (single filers) and $315k (joint filers). This phase out may force some small business owners with higher earnings to move to a C corporation, where tax laws may be more beneficial.
  • The corporate tax rate structure will go to one 21 percent bracket.
    • This will reduce taxes for several companies. In addition, C corporations with average gross receipts for the last three years that total more than $5 million or more can opt for cash accounting. The ceiling for gross receipts has been moved to $25 million.
  • The alternative minimum corporate tax is gone.
    • This complicated tax law being gone should make preparing taxes more cut and dry for companies.
  • More section 179 business expenses will be deductible in the year they incur.
    • This will provide a huge amount of relief for companies that invest significantly in equipment that helps them stay competitive in their field.

What This Means 

The Economy

Most economists believe the tax reform bill will boost the United States economy, but the size and length of the economic boost is unknown. The Joint Committee on Taxation believes the bill will boost the size of the US GDP by 0.8 percentage points over the course of the first 10 years the bill is in place.

American Households

Most American taxpayers will see a tax cut from the bill. The Tax Policy Center estimates the average American will see a tax cut of $1,610 in 2018. About 80 percent of people can expect a tax cut in year one of legislation. However, as with all tax issues, different income levels will reap different benefits.

Businesses

The biggest significance in the tax reform bill is geared towards benefits. The federal corporate tax rate has been cut from 35 percent to 21 percent. This should, in theory, help boost business profits and incentivize businesses to make the United States their home.

The Federal Deficit

The “static” score of the bill, which is the projected debt added when economic growth is not factored in, shows that the federal deficit will increase around $1.5 trillion in the 10 years following the bill’s implementation.

Tax Crisis Institute Is Here To Help

Tax Crisis Institute is your leader and expert in tax relief services. Whether you are struggling to understand the implications of tax reform for your business, or you’ve found yourself in debt to the IRS or state government, we are here to help!

Our team of experts has decades of experience, and will use their knowledge to help you find relief from all of your tax woes. Tax liens, wage levy, and back taxes can feel incredible overwhelming and horrible. Let Tax Crisis Institute help you through your tax season, and help you get back on your feet!

Don’t just take our word for it, read what our satisfied clients have to say about TCI!

In my 20 years’ experience dealing with the IRS, I have run across countless tax professionals who hold themselves out to be competent to deal with tax collection problems. Not one in a thousand has the knowledge or practical experience to get the job done. Dana Ronald is one of the rare few with the experience, the knowledge, and courage needed to challenge the IRS on behalf of his clients.

As the Executive Director of the Tax Freedom Institute, I am proud to have Dana as a member of my organization. I have complete confidence in his ability to handle even the toughest tax case.

Daniel J. PillaExecutive Director Tax Freedom Institute

There was no “easy” solution to my particular situation with regard to my debt to the IRS. The debt I owed spanned several years and since I earn a generous income, the IRS was threatening to garnish my wages so severely that my career was in serious jeopardy. I endured many months of sleepless nights and anxiety concerning this matter. Dana Ronald resolved this matter for me very impressively. Even more impressive was the professionalism exhibited by Mr. Ronald and his staff throughout the entire process. I would like to thank Mr. Ronald for his efforts on my behalf and a job very well done. Thanks for giving me my life back!

CFHenderson, NV

Tax Crisis Institute is our hero. We were absolutely overwhelmed by our tax problem. My wife nearly had a nervous breakdown and was under a psychiatrist’s care.

Dana Ronald settled our back taxes for cents on the dollar and saved our house. We would not be where we are today without him.

CP & DP

I was near suicide. I literally had gone out into the hills behind my house to blow my brains out. The gun misfired. My son found me and took the gun out of my hands as I was about to try again.

We owned our house clear and the IRS said they were going to seize it. Tax Crisis Institute not only saved the house, but negotiated a settlement to clear off the tax liens.

JT

Dana, you are right. I hate to open these things. Even the mailman apologizes for the delivery!

Thank you for all of your work. You have made our lives free again! It’s nice to be normal.

The school year is flying by already. It’s almost Christmas. We will really enjoy the holidays!

T.P.

Miracles do happen! I owed the IRS over $900,000 in back payroll taxes. My electrical contracting business was virtually shut down. Dana Ronald of Tax Crisis Institute settled my IRS taxes for $3,500. Remarkably, he made the same settlement for the Employment Development Department for the $70,000 I also owed them. My business is now thriving and I have a happy future.

B.H.

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