Private equity firms are targeting small manufacturing in increasing numbers, often motivated by portfolio diversification and the bullish outlook on market demands. Recent trends have been towards vertical integration, buying up original equipment manufacturers along with their supply chains to leverage financial resources, mitigate risk, and stay competitive.
Whether shopkeepers are ready to sell, want an exit strategy in place for the future, or hope to stay competitive in a landscape of consolidations, improving the health and efficiency of the enterprise will keep it attractive to both customers and potential investors.
Key Factors to Focus On
- Invest in leadership. The people who monitor and set financial goals, oversee production, and drive market strategy must have the capability to align their departments with company goals and long-term objectives.
- Keep strategic planning at the forefront of management roundtables.
- Update/embrace the use of technology to improve production efficiencies. Have the ability to gather data to enable reliable analysis of past performance to improve future outcomes.
- Document and implement employee training programs that ensure knowledge is passed on from retiring operators to new hires.
- Analyze your customer base and ensure the company is adequately diversified. Would the loss of a few key customers cripple business?
- Understand your financial picture, past and present. Ensure that financial information is current and accurate. GAAP compliant financial statements is a baseline request for all stakeholders in evaluating your business – whether it be internal management, bankers, valuation specialists, or investors.
- Be well versed on what makes your company valuable – shop equipment, plant processes, the customer base, intellectual property, access to suppliers.
- Gain an understanding of alternatives, if considering a sale – would it be a sale of assets or a stock sale? The decision will likely be heavily linked to tax implications and outcomes.
- Surround yourself with the right consultants. Trusted advisors specializing in accounting, tax, valuation, and law are key partners in navigating your business in the direction you choose to take it.
DiSanto, Priest & Co. has advisory teams in tax, financial reporting, and business valuation that can answer questions on how to add value to your enterprise, whether you are motivated to sell or stay competitive. Please call us at (401) 921-2000 or contact us here.
The IRS has released the updated retirement plan contribution limits for 2025, effective as of January 1, 2025. This annual adjustment, designed to reflect cost-of-living changes, provides opportunities for individuals to bolster their retirement savings with slightly higher contribution limits. Here’s a breakdown of the key changes.
401(k), 403(b), and Most 457 Plans
The employee contribution limit for 401(k), 403(b), and most 457 plans will increase to $23,500 in 2025, up from $23,000 in 2024. This $500 increase may seem modest but is a valuable step up, offering employees a chance to put away a bit more in tax-advantaged savings over the coming year.
Catch-Up Contributions for Employees Aged 50 and Over
For individuals aged 50 and older, the catch-up contribution limit remains at $7,500. This means those eligible for catch-up contributions can contribute a total of $31,000 to their 401(k), 403(b), or 457 plan in 2025. This steady limit ensures that older employees still have ample opportunity to maximize their retirement savings.
As part of a change made in the SECURE 2.0 Act of 2022, there is a higher catch-up contribution for employees aged 60, 61, 62, and 63. For 2025 this catch-up amount is $11,250 instead of $7,500.
Individual Retirement Accounts (IRAs)
The contribution limits for Individual Retirement Accounts (IRAs) hold steady at $7,000 for 2025. Although there’s no increase this year, IRAs continue to offer a valuable option for individuals to build tax-deferred (or tax-free, in the case of Roth IRAs) retirement funds outside of employer-sponsored plans.
IRA Catch-Up Contributions
Individuals aged 50 and over can make an additional catch-up contribution of $1,000 to their IRAs, maintaining the total annual IRA contribution limit at $8,000 for this age group. This consistent catch-up provision remains an essential component for those looking to strengthen their retirement savings as they approach retirement.
Saver’s Credit Income Limits
The IRS has also adjusted the income thresholds for the Saver’s Credit, an incentive that provides a valuable tax credit to low- and moderate-income taxpayers who save for retirement. With these thresholds increasing for 2025, more individuals may qualify for this credit, further supporting retirement savings for those in lower income brackets.
What These Changes Mean for You
The 2025 updates reflect the IRS’s commitment to adjusting retirement savings opportunities to keep pace with inflation. For those already committed to retirement saving, the increased contribution limits provide a small but meaningful boost. For those just beginning or resuming contributions, the Saver’s Credit and catch-up provisions offer opportunities to build retirement security.
Remember, the 2025 contribution changes go into effect on January 1, 2025—an ideal time to review and adjust your retirement savings strategy to take full advantage of these updates.
If you have any questions about how these changes may apply to you, please call us at (401) 921-2000 or contact us here.
As part of the Fiscal year 2025 budget recently signed by the governor on July 29, 2024, the Massachusetts personal income tax code now conforms to the Internal Revenue Code as amended as of January 1, 2024.
The following six provisions are new or have been amended as a result of this legislation effective January 1, 2024.
Limitation on Noncorporate Excess Business Loans. Noncorporate taxpayers have been able to benefit from being able to deduct excess business losses up to $250,000, or $500,000 in the case of a joint return, since 2018 (adjusted for inflation). Under the Inflation Reduction Act of 2022, the loss limitation was extended through 2028 for federal tax instead of 2026. This limitation is also extended for Massachusetts personal income tax purposes through 2028 as well.
Change to Eligibility Requirements for Federal Charitable Contribution Deductions. Due to a code update Massachusetts conforms to any federal changes with respect to the charitable contribution deduction. Recent changes impact the eligibility requirements for qualified conservation contributions made bypass-through entities. Unless certain requirements are met, these contributions will not be treated as Qualified Conservation Contributions made bypass-through entities after December 29, 2022.
Repeal of Deduction of Interest and Dividends from Massachusetts Banks. Massachusetts will be repealing the deduction of interest and dividends from banks located in the state. This previously allowed for a deduction of $200 for a joint return or $100 for all other filing statuses. For tax years starting January 1st, 2024, the deduction will no longer be available.
Clarification on the Availability of the Title 5 Credit for Mandated Septic System Repairs, Replacements, Upgrades, or Sewer Connections. This provision provides clarity on what qualifies as eligible repairs, replacements, upgrades, or sewer connections that can be taken as a credit. Note to claim the credit the taxpayer must obtain a verification letter from the city or town in order to claim credit for the year the work was done.
Exemption from Joint Filing Requirement for Certain Married Couples. Amended the rule that a joint return had to be filed in Massachusetts if the couple were to file a joint federal return. If at least one spouse’s Massachusetts gross income did not exceed $8,000, a joint return does not have to be filed. This takes effect for tax year 2024.
Repeal of the Sales Tax Exemption for Certain Publications of Tax-Exempt Organizations. This provision repeals the sale tax exemption for sales of publications of any corporation, foundation, or institution organized under Code § 501(c)(3). This applies on all items except where the publications are produced in accessible format for individuals who cannot read print due to a disability. This is effective September 27, 2024.
Tax Amnesty Program for FY2025. This Act, which runs from November 1st through December 30, 2024, allows taxpayers to file any delinquent tax returns or pay unpaid tax debts with the benefit of penalties such as those for late filing or payment to be waived. During the 60-day period taxpayers can file proper returns but must pay the tax owed in a timely manner. This program will help benefit taxpayers who have not filed or have previously filed incorrect returns to get in compliance. Please review our other blog on this matter for further information.
For more information from the Commonwealth of Massachusetts website, click here.
If you have any questions about how this new legislation may apply to you, please call us at (401) 921-2000 or contact us here.
Massachusetts governor Maura Healey has signed into law the 2025 fiscal year budget which includes a new tax amnesty program set to go into effect in Fiscal Year 2025. This program offers a unique opportunity for taxpayers to clear their outstanding tax debts while avoiding most penalties. Here’s what you need to know about this upcoming initiative.
What is the Tax Amnesty Program?
The tax amnesty program is a 60-day initiative established by the Massachusetts Commissioner of Revenue. The program is designed to encourage taxpayers who have fallen behind on their taxes to come forward and settle their debts. Eligible taxpayers will be able to file delinquent or amended returns to take advantage of the program. This allows taxpayers to pay any outstanding tax and interest in exchange for the commissioner waiving most penalties.
When Does the Program Start?
The program will run from November 1, 2024, through December 30, 2024. This gives eligible taxpayers a short window to take advantage of the program before it expires at the end of the year.
Who is Eligible?
The amnesty program is available to any individual, business, trust, or estate not excluded under Section VII.A. This includes taxpayers who:
- Have failed to file a Massachusetts Tax Return due before December 31, 2024, or have not reported the full amount of tax properly due on previously filed tax returns before 2024-year end.
- Have filed an incorrect or insufficient Massachusetts return or has an assessment issued by the Commissioner of one of the following types:
- An unpaid and self-assessed tax liability before December 30, 2024; or
- A tax liability assessed by the Commissioner that remains unpaid on or before December 30, 2024.
All tax types (including sales, use, meals, and room occupancy) are eligible except for a few types. These include the deeds excise, abandoned bottle deposit, jet fuel excise, paid family and medical leave contributions, underground storage tank delivery fee, and health care coverage penalties.
Taxpayers who are participating in payment agreements currently will also be able to take advantage of the program. Any penalties already associated with the payment agreement plan will not be waived.
What are the Benefits?
Participating in the tax amnesty program can provide significant benefits to taxpayers. Most notably, the program allows taxpayers to pay their outstanding tax debts without incurring the usual penalties, such as late filing and late payment penalties on most types of tax. Note the commissioner does not have the authority to waive interest.
The program also includes a limited look-back period for eligible non-filers who choose to participate. This look-back is limited to a three-year window which means taxpayers who have failed to file or pay taxes that were due before January 1, 2022. Eligible taxpayers will not be required to file or pay any taxes due for periods before January 1, 2022, if they participate in the amnesty program. The Massachusetts DOR will also not initiate any audits for those periods.
Procedures
In general, the DOR will issue letters (Tax Amnesty Eligibility Letter) to eligible taxpayers with existing tax liabilities, interest or penalties. Taxpayers who do not receive the letter will still be eligible if they meet the requirements listed in section III of the program.
All requests must be submitted via the MassTaxConnect portal. The request must be submitted by tax type, and multiple requests can be submitted during the period. Proper documentation, including unfiled tax returns for all applicable tax types, must be submitted electronically.
Limitations
The Amnesty program has a few limitations as to who can participate. This includes taxpayers already in any litigation process with the Commissioner, those seeking refunds of overpayments, taxpayers who submitted fraudulent amnesty requests, those who do not owe any Massachusetts taxes, taxpayers who have already entered into a settlement agreement with the Commissioner, taxpayers who have previously been granted amnesty with respect to the same tax type, or those who are in bankruptcy.
Conclusion
The new Massachusetts tax amnesty program represents a valuable opportunity for taxpayers to resolve their outstanding tax liabilities and avoid most penalties. However, it is important to act quickly, as the program is only available for a limited time during the 60-day window starting November 1st through December 30th. You can read more about the Amnesty program in this article.
If you have any questions about how the amnesty program may apply to you, please call us at (401) 921-2000 or contact us here.
The Internal Revenue Service has announced the increases in the annual gift tax exclusion and the lifetime estate and gift tax exemption for calendar year 2025.
What are Gift Tax Exclusions?
The annual gift tax exclusion allows taxpayers to transfer gifts to unlimited donees without experiencing gift taxes up to a designated annual amount. The lifetime estate and gift tax exemption provides the limit for lifetime gifts as of the date of the gift or date of death before incurring a gift or estate tax liability.
What’s Changing?
For the 2025 tax year, the annual gift tax exclusion is increased by $1,000 to a total of $19,000. The exclusion covers gifts an individual makes to each donee per year. Married taxpayers can combine their gift tax exclusion as they can share their two annual exclusions. As an example, married taxpayers with three children could potentially transfer $38,000 a year to each child or a total of $114,000 without incurring any gift taxes.
The annual gift tax exclusion is also an important consideration for estate planning purposes. Taxpayers can make gifts up to that amount before utilizing any of their lifetime estate and gift tax exemption. The value of any gifts in excess of the annual gift tax exclusion would then be subtracted from the lifetime exemption. As the lifetime exemption gets used over the taxpayer’s lifetime, the amount that can be excluded from the taxable estate upon death also decreases. For 2025, the lifetime exemption will increase by $380,000 to $13,990,000. The total available to a married couple will be $27,980,000 in 2025.
Questions?
If you have any questions regarding estates, gifts, or any topics in this area, give us a call at (401) 921-2000, or fill out our contact form.
In order to enhance transparency in the financial statement presentation and disclosure of supplier finance programs, the Financial Accounting Standards Board (FASB) issued ASU 2022-04, Disclosure of Supplier Finance Program Obligations and related amendments.
Supplier finance programs (AKA structured payables, payables finance, or reverse factoring) allow buyers to offer early payment for goods or services purchased from a supplier by way of an intermediary, which is essentially a third-party lender.
While each of the three parties involved have various motivations for participating in these agreements, the key advantage to a buyer is the ability to obtain extended payment terms and potential monetary benefits passed down to the buyer from the intermediary.
FASB Requires the Following Disclosures
Qualitative Disclosures
- Key terms of the program, including a description of the payment terms (i.e. payment timing and basis for determination).
- Assets pledged as security or other forms of guarantees provided for the committed payment to the finance provider.
- A description of where the obligations are presented in the balance sheet.
Quantitative Disclosures
- Amounts outstanding that remain unpaid by the buyer as of the end of the period.
- Rollforward of obligations stated in the balance sheet. This includes the amount confirmed and outstanding at the start of the period, the amount added during, the amount settled during, and the amount outstanding at period end.
These required disclosures do not impact the recognition, measurement, or financial statement presentation of the obligations covered by supplier finance programs.
The majority of these required disclosures became effective in 2023. Disclosure of the rollforward information described above became effective in 2024.
Questions on Supplier Finance Programs?
Are you looking for more information on supplier finance arrangements, and related tracking and reporting of these programs? If so, you may contact us at (401) 921-2000, or fill out our contact form.
The rules of 401(k) plan eligibility for Long-Term Part-Time employees (LTPT) have significantly changed. This is a result of the SECURE Act of 2019 and SECURE Act 2.0 of 2022. The new rules took effect at the beginning of 2024 and have widened the circle of eligible 401(k) plan participants for many employers. This includes part-time employees on their payroll.
To stay compliant, employers are required to closely scrutinize, and perhaps modify, how payroll and labor hours are tracked. Under the old rules, employees who completed one full year of employment (~1,000 hours of service) were eligible to participate in a 401(k) plan.
401(k) Plan Updates for LTPT Employees
As of January 2024, part-time employees over 21 who work for at least 500 hours over three consecutive years are permitted to contribute to a 401(k). Beginning in 2025, the consecutive annual requirement drops to over two years.
While the rule change will affect many employers, certain exclusions from LTPT qualification do apply. These include:
- Employees covered by a collective bargaining agreement.
- Non-resident aliens who receive no US sourced earned income.
The rules related to employer contributions have not changed. Though free to do so, employers aren’t required to make employer contributions through matching or non-elective contributions for LTPT employees.
Questions?
Need information on whether any of your employees qualify as LTPT, when they become eligible to participate in your 401(k) plan, or related reporting requirements? Call us at (401) 921-2000 or fill out our contact form.
Massachusetts governor Maura Healey has signed into law the 2025 fiscal year budget which includes a new tax amnesty program set to go into effect in Fiscal Year 2025. This program offers a unique opportunity for taxpayers to clear their outstanding tax debts while avoiding most penalties. Here’s what you need to know about this upcoming initiative.
What is the Tax Amnesty Program?
The tax amnesty program is a 60-day initiative established by the Massachusetts Commissioner of Revenue. The program is designed to encourage taxpayers who have fallen behind on their taxes to come forward and settle their debts. In exchange for their participation and compliance, the commissioner will waive most penalties.
When Does the Program Start?
While the exact start date has not been announced, the program is set to run in FY 25 and will end by June 30, 2025. This gives taxpayers a limited window to take advantage of this opportunity.
Who is Eligible?
The amnesty program applies to tax returns due on or before December 31, 2024. The specific tax types, tax periods covered, and applicable look-back periods will be determined by the tax commissioner.
What are the Benefits?
Participating in the tax amnesty program can provide significant benefits. Most notably, the program allows taxpayers to pay their outstanding tax debts without incurring the usual penalties, including late filing and late payment penalties. Note the commissioner does not have the authority to waive interest.
Conclusion
The new Massachusetts tax amnesty program represents a valuable opportunity for taxpayers to resolve their outstanding tax liabilities and avoid most penalties. However, it’s important to act quickly, as the program is only available for a limited time.
If you have any questions about how the amnesty program may apply to you, please call us at (401) 921-2000 or contact us here and stay tuned for more updates as we get closer to the launch of the program.
As part of the budget recently signed by the governor on June 17, 2024, Rhode Island announced legislative changes to several tax laws. The majority of these legislative updates will go into effect on January 1, 2025, and cover a variety of areas.
For pass-through businesses in the State, such as S Corporations and Partnerships, there will be a significant change to the pass-through entity (PTE) credit. The percentage that an owner receives for the tax paid by the entity has been lowered from 100% to 90%. This change aligns with neighboring states’ treatment of similar pass-through credits. Since the pass-through entity tax is elective in Rhode Island, the federal tax savings from the resultant deduction will need to be reevaluated in 2024 to ensure the benefit continues to outweigh the cost.
The Net Operating Loss (NOL) Carryforward period will be increased to 20 years from 5 years. Rhode Island will continue to limit the NOL deduction amount to the federal NOL allowed in that tax year.
For individual tax filers, the Pensions and Annuity Income Modification will increase from $20,000 to $50,000 (or $100,000 for Married Filing Jointly filers). However, the qualifying income thresholds already established will not be impacted.
The $50 fee associated with filing RI Estate Tax returns will be eliminated starting January 2025, along with the $25 application fee for the certificate of exemption for Sales and Use tax for certain Tax-exempt organizations.
Many Rhode Island tax credits have also been extended, clarified, or expanded under the current legislative updates effective July 1, 2024. This includes the popular Motion Picture Production Tax Credit and the Historic Preservation Tax Credit.
If you have any questions about how this new legislation may apply to you, please call us at (401) 921-2000 or contact us here.
On April 23, 2024, the US Department of Labor (DOL) announced changes to changes to overtime salary requirements. These incremental increases to compensation thresholds will determine whether an employee is exempt from federal overtime pay requirements.
The changes take effect on July 1, 2024 and are expected to affect millions of employees previously deemed exempt. The new rules encompass thresholds for both “highly-compensated employees” (HEC’s) and “executive, administrative, or professional” employees (EAP’s).
As of July 1, 2024
- To qualify as an EAP-exempt employee, the threshold increases from $684 per week (or the equivalent of $35,568 annually) to $844 per week (or the equivalent of $43,888 annually).
- To qualify as an HCE-exempt employee, the threshold increases from $107,432 to $132,964 annually.
As of January 1, 2025
- To qualify as an EAP-exempt employee, the threshold increases to $1,128 per week (or the equivalent of $58,656 annually).
- To qualify as an HCE-exempt employee, the threshold increases to $151,164 annually.
In addition, on July 1, 2027, the DOL will adjust the EAP and HCE thresholds every three years. These increases are based on the Bureau of Labor Statistics’ most recently available earnings data.
Depending on the nature of your workforce, preparing for these changes could be challenging and you may have many questions, such as:
- How will this affect company budgets?
- Would targeted salary increases for certain employees to exceed exempt thresholds be more cost effective?
- Are scheduling changes the best way to contain costs?
- How will this be communicated to employees?
Get More Info on the Changes to Overtime Salary Requirements
For detailed information on the DOL’s updated overtime rules and how to manage any potential financial repercussions, call us at (401) 921-2000 or contact us here. We are ready and happy to assist you.