NJBIZ tax planning panel digs into vital issues as 2022 closes out

As the year winds down and the calendar gets set to flip to 2023, the Nov. 29 NJBIZ Tax Planning Panel Discussion came at a critical time as business owners navigate a litany of tax issues.

The virtual panel, moderated by NJBIZ Editor Jeffrey Kange, featured a group of tax experts, including Joe Andolino, tax director, Smolin, Lupin & Co.; Andrea Diaz, partner, SKC & Co. CPAs; Charles Rosenberg, vice president, Intac/FuturePlan; and Peter Ulrich, director, Corporate Group, Gibbons PC.

After introductions and a round about the current trends they are seeing and questions they are receiving, Kanige asked about how businesses should be approaching the tax season.

“When I work with my clients, the first thing is put together a wish list,” said Diaz. “What can you smartly invest in your company that will either help you generate revenue, increase efficiencies, decrease future expenses? If you were to think of your business operating perfectly in a perfect world, what does that look like to you? And then, what do you need to implement to get there?”

“Sometimes people can take bad debt deductions. They should be looking at their outstanding receivables,” said Ulrich. “Maybe they can write some off.”

“This is a very good time to forecast and a very good time to look at your strategic plan and to interweave tax with it,” said Andolino.

“We don’t have any deadlines. We don’t have to write a check before the end of the year,“ said Rosenberg. “The Secure Act actually made it much better for our industry that allows us to go into next year.”

Clockwise from top left, NJBIZ Chief Editor Jeff Kanige, Andrea Diaz, partner, SKC & Co. CPAs; Joe Andolino, tax director, Smolin, Lupin & Co.; Charles Rosenberg, vice president, Intac/FuturePlan; and Peter Ulrich, director, Corporate Group, Gibbons PC take part in the NJBIZ Tax Planning virtual panel discussion Nov. 29, 2022. – NJBIZ

From there, Kanige moved the discussion to state tax credit programs and offerings.

“Is that factoring into the calculations of the people you’re dealing with?” Kanige asked.

Andolino referenced the New Jersey Manufacturing Voucher Program. “The good thing to me is that New Jersey’s thinking about manufacturing again,” said Andolino. “And that’s a very good thing for New Jersey businesses because of the opportunities.”

Diaz said she is hearing buzz about that program from her clients but noted that the requirements are tough. “They are being pretty strict on which companies are eligible and they really only want companies that are already constituted as manufacturing companies,” she explained. “So, for instance, a lot of taxpayers … manufacture and then they wholesale. So, they may be currently listed as a wholesaler instead of a manufacturer. But they’re manufacturing the product that they wholesale. So, are they going to be eligible for this program? We’re unsure.”

Ulrich noted that the New Jersey Economic Development Authority, which oversees the program, has a good website and resources available, adding that applicants may need materials from accountants to complete the process.

“If you fit within the situation, it could be very well worth it,” said Ulrich.

Andolino said the current tax structure does benefit companies that make things in New Jersey and export them.

“I don’t want to say that New Jersey is a tax haven,” Andolino joked. “I don’t think anybody would ever say that. But under a given set of circumstances, if you make widgets in New Jersey and you’re well-advised and you sell them outside of New Jersey for the most part. While your stated rate of tax may be pushing 11, your effective rate may be much lower. And as long as you’re not doing business in those other states, it may not be a bad place to be.”

He believes that the state could be doing a better job of advertising that.

Replay: NJBIZ Panel Discussion: Tax Planning

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After a segment on retirement plans, where the panelists advised small business employers to set up their own before a state-mandated program takes effect, the conversation moved to interest rates.

“Do the rising interest rates change calculations, as far as you’re concerned, beyond just paying taxes?” Kange asked.

“Absolutely,” said Diaz, noting that she is going through balance sheets with clients.

“These are the discussions we’re having,” Diaz explained. “If you have low interest rates on some of these things, just keep them. Because it doesn’t seem that interest rates are decreasing any time soon. And the likelihood that they will continue to increase, it seems probable.”

“I don’t see interest rates going down anytime soon,” said Andolino. “So, this is a real problem.”

The group then discussed dealing with the state government and whether issues had improved since the pandemic. The panelists mostly agreed that things have gotten a little better, but still not great with many challenges remaining.

Kanige then shifted the conversation to 2023.

“Are there changes that you know are coming or suspect might be coming that businesses should be dealing with?” Kanige asked. “Whether it has to do with higher interest rates, a recession coming up, or different kinds of policies coming out of state and federal government, what should people be thinking about going into 2023?”

“Many of the 2017 changes in the last administration are going to expire absent congressional renewal,” said Andolino. “And given the state of affairs in Washington, if we can’t even get a simple R&D expense extended. And I don’t know that we can’t, but we haven’t. Are we to expect that tax rates will go up?”

“From an estate planning perspective, now is a great time to make use of that lifetime gift state exemption,” said Ulrich.

He added that he did not expect a lot of new legislation in the next year or two. “I don’t know that Congress has the appetite,” said Ulrich.

“I didn’t foresee anything getting passed prior to and certainly not post-election,” said Diaz.

From there, the panel took some audience questions on topics, such as R&D credits, business expenses, the CARES Act, details on the proposed state-mandated retirement plan, the future of the tax planning business, and much more.

Kanige then offered the panelists a chance to offer their final thoughts.

Ulrich said that we live in a complex society with complex tax laws that require some work. He urged people to not run away from it. “The best clients are listening to us,” said Ulrich. “They’re following us. They’re following up. They’re taking notes and they come back to us. So, you do need to be engaged.”

“There’s a lot of opportunities available. And in my experiences, a lot of business owners miss those opportunities by not, as Peter just said, being engaged, by not asking for the right help,” said Rosenberg. “It’s really a detriment to your own future by not doing the right research and having the right people on your team.”

Diaz said that most entrepreneurs are inherently curious and urged them to maintain that curiosity by keeping informed and reading and asking questions. “They want others to succeed,” said Diaz. “They know how tough the road is. And it’s not an easily paved road. I would say continue to reach out to the professionals. I will always offer to be a resource to anybody who needs it and just keep educating yourself.”

Andolino closed by agreeing with the group about interacting with clients, noting that he learns so much from his clients. “So, the more time I spend with them, the more I listen, the more I take notes and think about, the more opportunities arise,” said Andolino. “So, I would just second that interaction, whether it’s personal, Zoom, phone call, whatever.”