Getting the skinny on a big fat tax bill: Chamber hosts workshop in Willmar to help businesses understand new tax bill
WILLMAR — With about 35 days to read and comprehend the nearly 500-page new federal tax bill, accountants and CPAs can be forgiven for not knowing everything that's in it.
And with additional adjustments expected in the law, some of those changes could change again.
During a workshop Friday morning in Willmar, a panel of five financial experts had a crowd of about 90 people listening to every word they said while presenting an overview of the new bill.
Hosted by the Willmar Lakes Area Chamber of Commerce, the information was especially geared toward business owners.
The new bill is "a game changer for the small businesses in our community," said James Ruff, from James M. Ruff Inc.
The bill lowers tax rates for corporations from 35 percent to 21 percent, and includes a new 20 percent deduction on pass-through businesses.
Among the long list of intricate and complicated details, there are new interest expense limitations, changes in business depreciation schedules and interest on debt, and limits on deductions for some service businesses — including law firms and accounting offices.
Ruff advised business owners to "do your homework and stay close to your accountant" as more details of the bill are analyzed for individual business situations.
"It's a complicated tax bill," said Joel Gratz, from Christianson CPAs and Consultants, who confessed that he has not "read every page" of the bill, but said teams of employees in the local firms are working through the document to help clients make business plans now that could impact the taxes they pay next year.
"We've done our absolute best job to try to put together things that will help you all," Gratz said of the Friday presentation, which included a slide show that's available on the Chamber's website at willmarareachamber.com.
He said businesses "don't have to worry today" about some of the changes, which won't come into play until the 2019 taxes.
But he said the new bill has generated many questions from clients and that making plans now will help businesses be poised to take advantage of the positive financial aspects and prevent making costly mistakes going forward.
In response to corporations getting a 21 percent flat tax, Gratz said small businesses like S-corporations, sole proprietorships or partnerships were given a new tool that's called a qualified business income deduction.
One business owner asked if they should consider changing their business structure to improve their tax advantage.
Gratz advised not to make a change until after a business assessment is done.
There is one major issue in the bill regarding cooperatives that could affect farmers that the panel agreed will likely be changed.
Under the new law, farmers who sell crops to coops will get a significant tax break versus selling it to a private company, which could create an unfair trade advantage but be a boon for farmers.
"It's an enormous opportunity for many people in our area," Gratz said. "But it's almost too enormous."
Because the change will likely entail action by Congress to fix the unintended consequences — that fix could take a while, Gratz said.
Minnesota's tax law is currently not in compliance with the federal law.
Rep. Dave Baker said he believes the Legislature will take action this session to get the state tax laws to "conform as much as possible" with the federal bill.
He said the Senate Tax Committee will be meeting Feb. 13 in Willmar, where that topic could be discussed.