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Decanting the 4 Secrets of International Growth for Wineries

Key takeaways:

Utilizing IC-DISCs is a savvy strategy for U.S. wineries aiming to expand internationally, offering significant tax benefits, and supporting cash flow management.

Successful international expansion requires understanding and navigating local regulations and choosing the appropriate business structure or appropriate method of entering a foreign market that will sustain company growth and provide necessary flexibility.

Advanced technologies and innovative practices can help wineries enhance production efficiency, market analysis, and intellectual property management.

You have invested time, energy, and meticulous care into crafting your wine. As a result, you have steadily increased your brand recognition and revenue. With a solid domestic footprint in place, you start the process of building your international presence.

That’s when you run into some new challenges: Cost. Compliance. Taxes. Understanding the complexities of structuring your business and strategic tax planning are crucial as your winery expands its reach to a larger global and more diverse audience.

To get the most from your winery’s international expansion, here are four key strategies to keep in mind:

1. Decreasing Your Tax Burden on International Sales

One of the primary considerations for wineries expanding internationally is the strategic formation of an IC-DISC (Interest Charge Domestic International Sales Corporation). This tax vehicle can significantly benefit U.S. exporters by reducing tax burdens on export income. By establishing an IC-DISC, your winery can enjoy deferred tax payments and lower rates on dividend distributions, which are vital for managing cash flow and reinvesting in growth.

Wineries with substantial international sales should consider an IC-DISC strategy. While the setup involves initial costs and compliance, the long-term tax savings make it an attractive option. Careful planning and advice from tax professionals with specific knowledge of the wine industry can help you maximize the benefits.

2. Navigating International Compliance and Business Structuring

Expanding into international markets requires more than just tax planning — it demands a comprehensive understanding of the local compliance and business environments. Your winery must adhere to various regulations, from local business laws to specific wine industry standards, which can differ significantly by country.

Choosing the appropriate business structure or method of entering a foreign market is pivotal. Whether establishing a direct presence through subsidiaries or leveraging partnerships, your winery must assess its operational scale and strategic goals. For smaller wineries, direct export might be feasible. Larger operations might benefit from a more established local presence, which can facilitate deeper market penetration and brand recognition.

3. Leveraging Technology and Innovation

Incorporating technology and innovation has become an increasingly important competitive advantage in the wine industry. From production techniques to supply chain management, technology can streamline your operations and enhance quality control across borders.

Advancements such as artificial intelligence (AI) offer new ways to analyze market trends and consumer preferences, enabling wineries to adapt strategies dynamically. For instance, AI is transforming the way sommeliers select and pair wines. Additionally, AI-powered systems can examine the chemical and sensory attributes of wines, recommending ideal conditions and components to achieve a specific flavor profile. This leads to time savings, minimizes waste, and provides winemakers the flexibility to explore novel mixtures and styles.

The use of AI and Generative AI (GAI) in wine inventory, selection, and pairings is growing increasingly popular. Companies that consider how to capture these business processes — and do so tax efficiently — may reap the rewards of increased profitability.

4. Building a Responsive and Agile Business Model

For wineries operating internationally, quickly adapting to new opportunities and challenges is critical. This includes being responsive to market demands, regulatory changes, and competitive pressures. Developing an agile business model allows for rapid adaptation and decision-making, enabling you to take advantage of emerging trends and mitigate potential risks.

Tax and accounting firms can assist wineries in building responsive models that quickly adapt to market demands and regulatory changes. In addition, helping wineries know when and how to upscale from one operating model to another is often critical. Strategic advisory services can help your winery anticipate shifts in the international landscape and adjust your strategy effectively, reducing risks and capitalizing on new opportunities.

Taking Your Winery to the World Stage

For wineries looking to expand internationally, a strategic approach to tax planning, compliance, and business structuring is essential. By leveraging tax strategies like IC-DISCs, ensuring compliance with local regulations, adopting innovative technologies, and developing an agile business model, you can enhance your competitiveness and position your wine for growth in the global marketplace.

How MGO Can Help

MGO can provide your winery with guidance on setting up an IC-DISC. Our tax professionals are well-versed in the complexities of international tax law, helping you enhance tax savings and manage compliance risks. Our team can also advise you on optimal business structures, market entry strategies like importing or licensing, and adherence to international standards.

With our global reach and local knowledge, MGO equips your winery with the insights needed to establish and maintain a compliant international presence. Reach out to our team today to learn more.

Update: How the Latest Ruling on Farhy v. Commissioner Could Affect Your Penalty Assessments

Executive Summary

In April 2023, the U.S. Tax Court made news when it ruled in favor of businessman Alon Farhy, who challenged the Internal Revenue Service (IRS)’s authority to assess penalties for the failure to file IRS Form 5471.
IRS Form 5471 is the Information Return of U.S. Persons With Respect to Certain Foreign Corporations.
In May 2024, the U.S. Court of Appeals for the D.C Circuit reversed the Tax Court’s initial ruling — underscoring the significance of context in assessing penalties for international information returns.

UPDATE (May 2024):

Recent developments in the Farhy v. Commissioner case have captured significant attention in the tax and legal sectors. On May 3, 2024, the U.S. Court of Appeals reversed the Tax Court’s initial decision, highlighting the importance of statutory context in penalty assessments for international information returns. This ruling emphasizes the need for a closer examination of statutory language, altering perspectives on penalty applicability for non-compliance.

The implications of this case extend to taxpayers and practitioners, as detailed in analyses by MGO (see below). The decision underscores the need for meticulous compliance practices and adept navigation of the complexities of U.S. international tax law, along with a deep understanding of judicial interpretations of tax regulations.

MGO’s professionals are well-positioned to assist clients in navigating the complexities arising from the recent Farhy v. Commissioner decision. With a comprehensive understanding of the changing landscape in penalty assessments for international information returns, we provide guidance to help companies adapt to new judicial interpretations and maintain compliance with evolving tax regulations.

ORIGINAL ARTICLE (published June 8, 2023):

On April 3, 2023, the U.S. Tax Court came to a decision in the case Farhy v. Commissioner, ruling that the Internal Revenue Service (IRS) does not have the statutory authority to assess penalties for the failure to file IRS Form 5471, or the Information Return of U.S. Persons With Respect to Certain Foreign Corporations, against taxpayers. It also ruled that the IRS cannot administratively collect such penalties via levy.

Now that the IRS doesn’t have the authority to assess certain foreign information return penalties according to the court, affected taxpayers may want to file protective refund claims, even if the case goes to appeals — especially given the short statute of limitations of two years for claiming refunds.

Our Tax Controversy team breaks down the Farhy case, as well as what it may mean for your international filings — and the future of the IRS’s penalty collections.

The IRS Case Against Farhy

Alon Farhy owned 100% of a Belize corporation from 2003 until 2010, as well as 100% of another Belize corporation from 2005 until 2010. He admitted he participated in an illegal scheme to reduce his income tax and gained immunity from prosecution. However, throughout the time of his ownership of these two companies, he was required to file IRS Forms 5471 for both — but he didn’t.

The IRS then mailed him a notice in February 2016, alerting him of his failure to file. He still didn’t file, and in November 2018, he assessed $10,000 per failure to file, per year — plus a continuation penalty of $50,000 for each year he failed to file. The IRS determined his failures to file were deliberate, and so the penalties were met with the appropriate approval within the IRS.

Farhy didn’t dispute he didn’t file. He also didn’t deny he failed to pay. Instead, he challenged the IRS’s legal authority to assess IRC section 6038 penalties.

The Tax Court’s Initial Ruling

The U.S. Tax Court then held that Congress authorized the assessment for a variety of penalties — namely, those found in subchapter B of chapter 68 of subtitle F — but not for those penalties under IRC sections 6038(b)(1) and (2), which apply to Form 5471. Because these penalties were not assessable, the court decided the IRS was prohibited from proceeding with collection, and the only way the IRS can pursue collection of the taxpayer’s penalties was by 28 U.S.C. Sec. 2461(a) — which allows recovery of any penalty by civil court action.

How This Decision Affects Your International Penalty Assessments

This case holds that the IRS may not assess penalties under IRC section 6038(b), or failure to file IRS Form 5471. The case’s ruling doesn’t mean you don’t have an obligation to file IRS Form 5471 — or any other required form.

Ultimately, this decision is expected to have a broad reach and will affect most IRS Form 5471 filers, namely category 1, 4, and 5 filers (but not category 2 and 3 filers, who are subject to penalties under IRC section 6679).

However, the case’s impact could permeate even deeper. For years, some practitioners have spoken out against the IRS’s systemic assessment of international information return (IIR) penalties after a return is filed late, making it impossible for taxpayers to avoid deficiency procedures. The court’s decision now reveals how a taxpayer can be protected by the judicial branch when something is deemed unfair. Farhy took a stand, challenged the system, and won — opening the door for potential challenges in the future.

It’s uncertain as to whether the IRS will appeal the court’s decision. But it seems as though the stakes are too high for the IRS not to appeal. While we don’t know what will happen, a former IRS official has stated he expects that, for cases currently pending review by IRS Appeals, Farhy will not be viewed as controlling law yet.

The impact of the ruling is clear and will most likely impact many taxpayers who are contesting — or who have already paid — IRC 6038 penalties. It may also affect other civil penalties where Congress has not prescribed the method of assessment in the future.

How You Should Respond to the Court’s Decision

You should move quickly to take advantage of the court’s decision, as there is a two-year statute of limitations from the time a tax is paid to make a protective claim for a refund. It’s likely this legislation wouldn’t affect refund claims since that would be governed by the law that existed when the penalties were assessed. Note that per IRC section 6665(a)(2), there is no distinction between payments of tax, addition to tax, penalties, or interest — so all items are treated as tax.

If you’ve previously paid the $10,000 penalty, it’s important to file your protective claim now, unless you’ve entered into an agreement with the IRS to extend the statute of limitations, which can occur during an examination. Requesting a refund won’t ever hurt, but some practitioners believe the IRS may try to keep any penalty money it collected, even if the assessment is invalid — because, in its eyes, the claim may not be. Just know, you can file your protective claim for a refund, but may not get it (at least not any time soon).

The Farhy decision could likewise be applied to other US IRS forms, such as 5472, 8865, 8938, 926, 8858, 8854. Some argue the Farhy decision may also be applied to IRS Form 3520.

How MGO Can Help

Only time will tell if the court’s decision will open the government up to additional criticisms for other penalty assessments. If you have paid your penalties and are wondering what your current options are, MGO’s experienced International Tax team can help you determine if you’re eligible to file a refund claim.

6 Financial Strategies to Hit a High Note with Your International Tour

Key Takeaways:

International touring is experiencing a significant resurgence following the challenges of the COVID-19 pandemic, presenting lucrative opportunities for music artists to expand their reach globally.
However, navigating the financial landscape of international tours involves addressing complex challenges — including understanding tax implications across borders and managing soaring production and travel costs.
To maximize profitability and minimize financial risks, artists should take strategic steps, such as meticulous tour itinerary planning, thorough contract reviews by financial and legal professionals, and strategic budgeting to optimize expenses.

If you’re a music artist, it’s hard to look back on 2023 and not want to head out on tour in 2024. After the COVID-19 pandemic put a serious damper on touring, the concert business has come roaring back to life.

In 2022, the top 100 worldwide tours grossed an (at the time) record-setting $6.28 million. Then along came 2023, which — led by the highest grossing global concert tour of all time, Taylor Swift’s Eras Tour, and Beyoncé’s blockbuster Renaissance World Tour — blew 2022 out of the water, grossing an astronomic $9.17 billion.

With both attendance and average ticket prices up, more artists are seeing the value of touring around the globe. But amidst the excitement for international tours also lies a maze of financial considerations. Understanding and strategizing around these intricacies is essential to maximize your earnings.

Six Strategic Financial Tips to Maximize Your International Tour Profitability

For musicians and managers, it’s crucial to get a handle on all touring costs — factoring in local pricing and taxation — and how they will impact your net earnings.

To increase the likelihood of financial success and minimize surprises, take these steps:

1. Prepare for tax implications across borders

When you embark on an international tour, taxation is not confined to a single jurisdiction. Every country, region, and municipality you visit becomes a potential tax obligation with varying rates, regulations, and exemptions. Many countries also require non-resident entertainers to pay withholding taxes on income earned within their borders.

Furthermore, the existence of income tax treaties between countries adds another layer of complexity. These treaties aim to prevent double taxation and often provide relief for touring artists. However, navigating these treaties requires careful consideration and knowledge in international tax law.

The bottom line: Understand what your tax obligations will look like before you head out on tour.

2. Plan your tour itinerary with local costs in mind

When mapping out your tour, think beyond venues and audiences. Consider both the tax implications and the regional pricing dynamics (production costs, hotels, labor, etc.) of each destination.

You should also map out an efficient tour route that minimizes transportation costs. Lock in inflexible dates like festivals first, then route other dates logically. Avoid crisscrossing to reduce travel, and analyze the various costs of transportation such as renting tour buses compared to repeated flights.

3. Have a financial professional review your contract

While it’s standard to have a lawyer review a contract, you should also have your touring contract reviewed from a financial perspective.

Consult experienced professionals who can arm you with firsthand knowledge of the touring process and insights from countless past negotiations. They can assess whether your rate accounts for all overhead costs like production, transportation, personnel, etc., so you get the monetary return you deserve.

You also want professionals on your side who are familiar with income tax treaties and local regulations to minimize tax liabilities and maximize earnings as you perform in different jurisdictions.

4. Budget to keep your travel costs in check

While international tours can be a major moneymaker, international production and shipping costs have soared. Additionally, travel costs like plane tickets, baggage fees, gas, visas, accommodations, and ground transportation for you and your team can really cut into your profitability.

Jeremy Young, senior director of sales for Cast & Crew Live Entertainment, notes: “We’ve noticed from the payroll coming in from tours of all sizes, that their international tours seem to be shorter than they were prior to COVID. This is most likely attributed to the demand domestically still being very high, along with increasing (international) travel costs and other logistical obstacles created by the pandemic.”

The scale of your show affects staffing needs like dancers, audio/lighting engineers, and security. Hiring multi-disciplined staff who can fulfill several roles can save on flights, hotels, per diems, and salaries. You can also consider hiring local crews in each city (while still accounting for visas/work permits).

The key to managing travel costs is proper planning and budgeting to keep your expenses from exceeding your earnings.

5. Maintain a meticulous record of your expenditures

Touring expenses can add up quickly, but they can also provide valuable tax deductions down the line. From meals to marketing, keep detailed records of all your expenditures — and where you spent them.

Recording expenses in accounting software helps to better track and manage data. Understanding deduction rules in each jurisdiction can help minimize your tax burden.

Insider Tip: The Internal Revenue Service (IRS) recently announced plans to conduct audits on corporate jet usage, particularly focusing on personal use, as part of a broader effort to ensure high-income groups fulfill their tax responsibilities. As you plan your global itinerary, stay informed about potential tax implications related to personal use of corporate jets or similar assets that could impact eligibility for certain business deductions.

6. Be mindful when monetizing your merchandise

Merchandise sales can be a lucrative revenue stream for touring artists — with many artists making a high percentage of their income from merch. But to get the most from your merchandise, you need to think strategically.

Here are a few areas to consider:

Shipping – The decision whether to ship merchandise ahead of you or have it fulfilled at your destination country depends on several factors — including logistics, costs, fees, convenience, and risk management.
Pricing – When determining pricing for your merchandise, consider factors such as production costs, shipping expenses, and local pricing dynamics. Research pricing trends in each international market and adjust prices accordingly to reflect local demand and purchasing power.
Taxes – Before selling merchandise in each international destination, familiarize yourself with local regulations and tax laws governing merchandise sales. Different countries may have varying requirements for business permits, sales taxes, and import/export duties.

Orchestrating Your Financial Success

Embarking on a global tour is exciting, but not without its financial challenges.

Consulting with professionals before heading out on your tour can help you avoid potential pitfalls. Appropriate planning, record keeping, and a savvy strategy can minimize taxes and better position you and your team to maximize take-home profit.

At MGO, our International Tax and Entertainment, Sports, and Media (ESM) teams are dedicated to helping artists like you navigate the financial complexities of touring. With our knowledge and guidance, you can harmonize your strategies so your international tour hits all the right notes—both artistically and financially. Reach out to us today to learn more.

Is Your Company at Risk for Transfer Pricing Penalties?

Key Takeaways:

The IRS has intensified enforcement of transfer pricing regulations, significantly increasing potential penalties.
Organizations can reduce exposure to transfer pricing penalties by ensuring adequate documentation and applying global transfer pricing policies consistently.
In cases where penalties are imposed, businesses can seek penalty abatement by demonstrating reasonable cause and good faith, substantial compliance with transfer pricing rules, and leveraging effective representation from knowledgeable tax advisors.

The Internal Revenue Service (IRS) implemented transfer pricing penalties to ensure the intercompany pricing reported on your income tax return is determined in a manner consistent with the arm’s length standard.

Until recently, penalty assessments were rare — not because improper transfer pricing between related parties was rare, but because IRS examiners tended to accept inadequate documentation. That leniency appears to be a thing of the past.

The IRS has indicated it will focus on applying Internal Revenue Code (IRC) Section 6662 penalties where proper documentation is lacking. This trend warrants serious attention if your company engages in cross-border transactions.

Imposing Transfer Pricing Penalties

The IRS can impose penalties when allocations under Section 482 result in substantial or gross increases in taxable income or where there are substantial or gross valuation misstatements concerning the transfer prices themselves.

These penalties can be severe, ranging from 20% to 40% of the tax underpayment, depending on the degree of non-compliance and the taxpayer’s disclosure of relevant information.

Historically, you could avoid these penalties by demonstrating you had reasonably used a transfer pricing method outlined in Section 482 or another method to more reliably determine transfer prices. Taxpayers must also provide contemporaneous documentation within 30 days of a request from the IRS.

The IRS’s Shift Toward Increased Penalty Assertion

The IRS Advisory Council’s 2018 Report noted that, although some transfer pricing documentation quality possibly fell short of the Section 6662 requirements, the IRS had not consistently asserted the penalty. Since then, the IRS has produced guidance addressing common flaws in transfer pricing documentation and best practices, and the agency is now expressing a renewed commitment to applying penalties more frequently and vigorously.

Holly Paz, commissioner of the IRS Large Business and International Division, spoke at several tax practitioner events in late 2022 — including the AICPA’s National Tax Conference, the American Bar Association Section of Taxation’s Philadelphia Tax Conference, and a Bloomberg Tax event. During these events, Paz noted the IRS has had success in litigating transfer pricing cases and is taking a closer look at economic substance and sham transactions — even in cases with transfer pricing documentation — to determine where it is appropriate to assert penalties.

Mitigating Exposure to Transfer Pricing Penalties

In 2020, the IRS published Transfer Pricing Documentation Best Practices Frequently Asked Questions (FAQs). These FAQs point to several features of proper documentation IRS agents look for when determining whether the agency should audit an organization’s transfer pricing methods.

Incorporating these features into your documentation may help reduce your risks:

Sensitivity analysis – Assess the impact of removing a comparable company from the dataset and determine if such removal alters your position relative to the arm’s-length range. Evaluate how different profit-level indicators might change the results.
Segmented financial data analysis – Examine if the segmented financial data accurately reflects the arm’s-length nature of the intercompany transaction. Detail the methodology used in constructing this data.
Profit allocation in intercompany transactions – Analyze profit distribution among entities in the transaction. Ensure equitable economic outcomes for all parties, not just the tested party.
Description of risks and related-party allocations – Describe associated risks in each intercompany transaction. Explain how profits and losses are allocated among related parties.
Atypical business circumstances – Identify any unusual business conditions affecting the intercompany transaction. Discuss challenges in the economic analysis due to specific business results for the year.

To navigate this heightened scrutiny, taxpayers must take a proactive approach to document pricing transfer decisions. Steps you can take to avoid commonly seen inadequacies include:

Providing a detailed description of your business and industry to help IRS agents understand operations and the larger marketplace in which you operate.
Avoid using a checklist format. Instead, opt for a comprehensive analysis linking facts to the analysis. Base the analysis on well-supported facts, avoiding broad assumptions about the business.
Ensure consistency in risk allocation with intercompany agreements. Align risk allocation with the comparable companies used in the economic analysis, and clearly explain any adjustments made to comparable companies for risk considerations.
Prepare a best method selection analysis that justifies rejecting alternative methods for analyzing the intercompany transaction and provides a rationale for the chosen method.
Clearly outline any adjustments to comparable data, such as working capital or location savings adjustments.

If you believe you have valuation misstatements or understated income tax in previously filed returns, it’s not too late to correct them. Filing a qualified amended return before the IRS contacts you about a transfer pricing audit is a defense against penalties. However, you must pay all taxes associated with the amended returns.

Seeking Penalty Abatement

In instances where penalties are assessed, it may be possible for taxpayers to seek abatement by demonstrating high-quality transfer pricing documentation. You may have a reasonable chance of having penalties abated if you:

Demonstrate reasonable cause and good faith. Establish that the underpayment was due to reasonable cause, and you acted in good faith.
Substantial compliance. Show that, despite any errors, you substantially followed the transfer pricing rules.

How We Can Help

The resurgence of transfer pricing penalties is an opportunity to reassess your transfer pricing strategies and compliance mechanisms.

For personalized guidance and assistance navigating these complexities, contact MGO today. Our team of professionals is equipped to help you mitigate risks, confirm compliance, and effectively manage any disputes with tax authorities. Act now to safeguard your business against the pitfalls of transfer pricing penalties.

10 Vital Tax and Accounting Tips for Artists and Creators

This article was created in collaboration with HUG, a global community for artists and art lovers.

Executive Summary:

Implementing basic accounting practices and understanding tax implications can help individuals working independently in creative fields gain clarity, meet obligations, and maximize income.
Separating business and personal finances, tracking income and expenses, and budgeting for estimated taxes can help creators be proactive in their financial planning.
Creators earning income across state lines or internationally need to be aware of varying taxation requirements in different jurisdictions.

Today’s artists need to view themselves as both businesses and creatives. Whether you are a painter, digital artist, photographer, website designer, YouTuber, Instagrammer, or any type of artist, creator, or influencer, understanding and managing your financial obligations is a crucial aspect of sustaining a thriving career.

Here are 10 tips to help you meet your tax reporting responsibilities and get the most from your hard-earned income:

1. Separate Your Finances

To make your accounting more efficient and streamline the tax-filing process, it is a smart idea to separate your business and personal finances. Designate a dedicated business account to track income and expenses related to your artistic endeavors. This separation not only simplifies tax reporting but also enhances financial clarity, making it easier to assess the overall health of your creative enterprise.

Tip: Establish a separate account for business transactions, or multiple business accounts to allocate money for categories such as expenses, taxes, and savings.

2. Record All Transactions

Sometimes it can be challenging to determine what constitutes income. That’s why it’s important to track everything. Gifts received by sponsors are often taxable, especially if they are products in exchange for services (e.g., promotion of product). “Donations” from various fundraising activities like Kickstarter are also considered revenue. On the other hand, crypto and non-fungible tokens (NFTs) are considered property. Selling them usually generates a capital gain or loss.

Tip: Log all payments and gifts received, even if you are unsure, so your tax preparer can report appropriately.

3. Track Your Expenses

Creators and artists can benefit from various tax deductions tailored to their industry. Deductible expenses may include art supplies, equipment, software subscriptions, professional development, and even a portion of your home used as a dedicated workspace. While expenses should not be excessive, any “ordinary and necessary” expenses of your craft can be deducted.

Tip: Save receipts and track expenses in real-time using a spreadsheet, app, or software for easy recording and reporting.

4. Consider Forming an Entity

Creators who run their own business are often independent contractors. Consider setting up an entity for the business — which can help protect your personal assets from your business assets and offer tax savings. S Corporations and LLCs are common for smaller businesses. For larger businesses where investors are coming in, C Corporation may make sense.

Tip: Do some research or talk to a tax professional to find out if setting up an entity makes business and financial sense for you.

5. Explore Credits You May Be Eligible For

Artists also may be eligible for various tax credits that can help offset their tax liability. Research and Development (R&D) credits can be applicable to certain creative processes, rewarding innovation in your artistic pursuits. For instance, software development is considered to be R&D for income tax purposes.

Tip: Consult a tax professional about ways to maximize credits and minimize your tax liability.

6. Don’t Overlook State and Local Taxes (SALT)

Beyond federal taxes, SALT significantly impact overall tax liability. When selling art online (whether physical or digital), be mindful of sales tax requirements, which are determined by local laws. Whether revenue is from “tangible” versus “intangible” products (physical objects versus services, ideas, software, etc.) can dictate where taxation occurs — affecting if your income is subject to sales tax or not.

Tip: Stay informed about varying tax rates, and be cautious of sales and use tax implications tied to transmitting creative art across state lines.

7. Plan for Estimated Taxes

As an independent contractor with variable income streams, you should plan for estimated taxes to avoid financial surprises. These quarterly payments encompass income taxes on your profits plus the self-employment tax (covering Social Security and Medicare). For those earning up to $160,200 in net income, the self-employment tax rate currently stands at 15.3%. The silver lining is that you can deduct half of this self-employment tax when filing your income taxes.

Tip: Set aside a portion of your income for estimated tax payments, ensuring proactive financial planning throughout the year.

8. Report Global Income and Claim Foreign Tax Credits

United States (U.S.) citizens or residents earning abroad must report all worldwide income to the Internal Revenue Service (IRS). If you’re earning income in or from foreign countries, it’s crucial to understand foreign tax credits, filing requirements, and deductibility in various jurisdictions. Every tax jurisdiction may have a different method to tax your creation; and different tax implications may arise based on where brands and intellectual property are created and protected.

Tip: Work with a tax professional to evaluate the potential benefits of foreign tax credits for non-U.S. income.

9. Learn Your Options for Transferring Wealth

Digital assets such as domain names, electronically stored photos, and videos to email and social media accounts all have value. When transferring these as gifts or bequests, there may be tax implications that can be circumvented if the transfer is appropriately structured or organized.

Tip: Consider trusts and estate planning for more tax-efficient wealth transfer.

10. Adapt a Business Owner Mindset

As an artist, embracing a business owner’s perspective is essential for long-term success. Understanding basic financial statements like balance sheets and profit and loss (P&L) statements allows you to gauge profitability, identify your most valuable revenue sources, and streamline your efforts. Elevating your financial literacy empowers you to make more informed decisions — which can lead to greater freedom and flexibility in your artistic career.

Quick Tip: Learn to read a balance sheet and create a basic P&L statement for a clearer financial picture.

Integrate Financial Management into Your Creative Journey

Effective financial planning is like a great work of art — every brushstroke matters. By taking these steps today you can better position yourself to continue pursuing your creative passion tomorrow.

Need a hand with taxes and accounting for your creative venture? Our Entertainment, Sports, and Media practice works with a diverse range of artists — from musicians to photographers to online creators — and our International Tax and State and Local Tax teams can provide guidance to help you address areas like sales tax or foreign tax credits. Reach out to MGO today.

Top Strategies to Help Your Entertainment, Sports, and Media Clients Manage Global Income and Taxes

Executive Summary:

Agents and managers can help globally earning clients like professional athletes, musical artists, and entertainers strategically manage finances and taxes across borders to maximize earnings.
For U.S. citizens and residents earning money abroad, key areas for advisors to address include endorsement deals, royalties, foreign properties, foreign tax returns, and tax structuring that considers foreign investments.
For foreign (non-resident) athletes, artists, and entertainers performing in the U.S., considerations include but are not limited to U.S. taxable income, withholding rules, tax status, Central Withholding Agreements (CWA), and tax treaties.

As an agent or manager for athletes, artists, and entertainers, many of your clients likely earn income across borders as they perform worldwide. Strategically managing their finances and taxes is crucial to maximize earnings. Proper planning can help reduce tax burdens and avoid double taxation across jurisdictions. This allows your clients to focus on their careers while you may finesse your assistance to them in optimizing their income with guidance from tax professionals.

Understanding key tax considerations can enable you to put frameworks in place to mitigate your clients’ liabilities. For clients who are citizens or residents of the United States earning money abroad, all worldwide income must be reported to the IRS. However, foreign countries also tax income earned by non-residents. Assessing relevant tax treaties and structuring contracts in an appropriate manner can lead to more advantageous tax treatment.

When your clients have income from various sources both from inside and outside the United States, proactive tax planning is key. Common international income types to consider include:

Salaries from foreign leagues and tournaments
Performance fees from concerts and festivals
Royalties
Endorsements and sponsorships
Bonuses and prizes from international tournaments
Merchandise sales
Other income earned while playing or performing overseas

How these income types are classified and sourced impacts tax liabilities. Consulting tax professionals before your clients sign any deals allows for upfront planning that can keep more money in your clients’ pockets.

5 Key Considerations for U.S.-Based Athletes, Artists, and Entertainers Earning Income Abroad

If you are an advisor to musical artists, professional athletes, film actors, or other performers who are U.S. citizens, residents, or green card holders with foreign income sources, here are five important areas to address:

Endorsement Deals – How will the construction of a contract impact tax treatment abroad? Will the income be considered U.S. or foreign sourced? What are some ways to proactively plan for potential tax savings?

Royalties – Can royalties be classified differently if content is published while clients are abroad? How are royalties affected by collaborations with international artists? Is it considered U.S. income if royalties are received while playing or performing abroad?

Foreign Properties – What are the tax rules surrounding your clients purchasing or renting homes abroad (rules may vary by country)? Did you know that foreign rental income may need to be disclosed on a U.S. tax return? How do investments in foreign countries get reported and taxed?

Foreign Tax Returns – When is return filing required for extended stays abroad? Can foreign taxes be credited (and is the credit dollar-for-dollar)? What should be expected for payments received as a contractor versus as an employee? Which expenses are deductible in each country? For example, are agent fees, travel expenses, and entertainment deductible?

Foreign Tax Structuring – Is it better to withhold taxes on gross revenues or after deductible expenses? How do local, state, and regional (provincial, cantonal, district, county) taxes factor in?

With these areas addressed upfront, you can maximize income and minimize overall tax burdens for your clients as opportunities arise.

5 Top Considerations for Foreign Domiciled Athletes, Artists, and Entertainers Performing or Playing in the U.S.

If you are an advisor to athlete, artist, and entertainer clients who are not residents or citizens of the U.S. but earn income in this country, areas that could have an impact on your clients’ taxes include (but are not limited to):

U.S. Taxable Income – Is U.S.-sourced income taxable? What types of income may this include? Is there a requirement to file a U.S. federal income tax return? Is there an income threshold that must be met?

Withholding Rules – What are the withholding rules surrounding payments to foreign athletes, artists, and entertainers?

U.S. Tax Status – How is U.S. tax status determined — residency for income tax and domicile for transfer tax? How is taxation affected with or without a Social Security Number (SSN) or Individual Taxpayer Identification Number (ITIN)?

Central Withholding Agreements (CWAs) – A CWA is a tool that can help entertainers and athletes who don’t live in the U.S. by having U.S. income tax withheld based on the non-resident’s income. Is a CWA beneficial for the individual’s situation?

Tax Treaties – Does the individual’s home country have a tax treaty with the U.S.? How does it impact tax liabilities?

Evaluating options surrounding tax statuses, withholding approaches, and applicable treaties can mitigate liabilities and optimize tax treatment for your foreign clients.

Work with Tax Professionals to Help Your Clients Maximize Global Income

As an agent or manager navigating global income for your clients, working with experienced tax professionals is key. Advisors can assess your clients’ situations across jurisdictions to put frameworks in place reducing liabilities and avoiding double taxation. With the right global tax strategy tailored to each client, you can position them to pursue worldwide career opportunities with maximum income and minimum taxes.

Need help navigating the world of international tax for athletes, artists, and entertainers? We have experienced professionals dedicated to both international tax and entertainment, sports, and media (ESM) ready to answer all your questions. Reach out to our International Tax Team today.

Secure your Supply Chain for 2023 and Beyond

Executive Summary

Recent global events have emphasized the need for reviewing and strengthening the supply chain for manufacturers from both an operational and cost savings perspective.
A “China Plus One” strategy is a good start but may prove inadequate depending on the nature of a disruption.
Supply chain backup plans need to be agile, flexible, and built with contingencies for undetermined issues.

Raising prices may address some concerns but also causes customer issues and is not a long-term solution.

During the COVID-19 pandemic, organizations across different trades and industries faced a number of operational obstacles caused by supply chain disruptions. From economic uncertainty, to labor shortages, to rising costs, leaders had to find alternatives to create an agile and adaptable framework for this ever-changing market. With the global tax overhaul where juristidictions are racing for the middle and not the bottom, companies are faced with continuous change.

Our International Tax and Transfer Pricing leaders have developed methods and problem-solving techniques for local and global networks. These approaches help businesses address their supply chain challenges, as well as give guidance on how to continually evaluate and adjust their strategic initiatives while considering tax and transfer pricing risks in their supply chain decisions. The proverbial tax tail should not wag the dog but it should not be ignored either. Companies should consider performing transfer pricing analyses to determine how to allocate the financial impact of the changes to the supply chain among related entities and ensure appropriate remuneration to those entities involved in supply chain initiatives for their respective functions performed and risk incurred in the process.

In this article, we will answer three of our most-asked questions and provide the necessary steps to transform and optimize supply chains amid constant uncertainty — now and in the future.

#1: Can adopting the “China Plus One” strategy diversify my supply chain?

In recent years, most U.S.-based businesses and consumers have learned that global supply chains have become too dependent on China. Prior to 2020, business leaders had already begun shifting away from China in the wake of the previous administration’s tariff challenges, intangible property (IP) disputes, and the ensuing trade war. Factory and port shutdowns in China in the early days of the pandemic and the issues that have followed were wakeup calls for those that hadn’t implemented alternative sources of supply. An enduring lesson of the past few years is that sole sourcing from any vendor or vendors in one location comes with a high-risk level. In renewing the supply chain, companies must consider the economic climate, the political environment, the ease of doing business, and personnel availability. Tax and transfer pricing is generally not in the forefront nor should it be. But giving it some thought after consider the already mentioned items may pay significant dividends.

Building redundancy into the supply chain at different tiers and maintaining inventory levels have become necessary steps for international manufacturers.The China Plus One strategy has been on the radar of companies that operate in China for several years, but the need to diversify supply chains is now a priority, with many manufacturers actively pursuing supplementary sourcing from another country in Southeast Asia. However, the supply chain crisis of the past two years shows this strategy may also be failing. As long as the goods produced are an ocean away from the markets that consume them, uncertainty from various disruptive factors can lead to shortages, higher costs, lower revenues, and customer dissatisfaction.

Actions moving forward:

Along with decoupling from China, truly de-risking the supply chain comes down to three factors:

Optionality

Redundancy

Market proximity

While fully onshoring production and supply sources may not be operationally, economically, or logistically feasible, the supply network is less risky when it is closer to the market where it is widely consumed.

Consider engaging or contracting new stateside suppliers and local manufacturers to better serve the U.S. market. You should also review your supply base for any overreliance on a single source or geography. After that, you can research the best options to decrease the distance between where your products are produced and purchased. Insourcing, onshoring, nearshoring and acquisitions are all viable options. The approach that makes sense for your business must consider cost, capacity, quality, control, and reputation. Regardless of your approach, the goal should be to improve supply chain resilience and flexibility so you can better manage disruptions.

#2: Does having a back-up plan reduce supply chain disruptions?

Preparation and readiness may help with how your company fares during industry interruptions. A back-up plan should have built-in agility so it can be adapted and activated quickly based on a variety of external factors.

In recent years, manufacturers learned static backup plans were not adequate to address rapidly changing global conditions. These backup strategies were not agile enough to be effective amid complex disruption. Consequently, manufacturers were challenged to get the level of service they needed from existing suppliers or quickly identify new suppliers, resulting in processes that simply were not feasible from an implementation or sustainable cost standpoint.

Backup plans are a necessity, but they’re generally based on known risks. As global supply chains grow more intertwined and the universe of uncertainty expands, new risks and variables come into play. You can’t just plan for one contingency; you need to weigh the possible outcomes for multiple options across different scenarios. Changes in manufacturing locations and sourcing strategies aren’t the only scenarios worth evaluating, nor is resilience to disruption the only outcome worth measuring. For example, if you’re considering expanding into a new market or adding to your product mix, those strategic adjustments should be factored into your supply chain model and assessed for plausibility. Tax liabilities, trade compliance risks, and total cost to serve are no less critical considerations than deliverability or lead times.

The reality is you cannot prepare for every contingency, so scenario planning needs to evolve to detect signals of disruption earlier and enable greater agility in supply chain decision-making when the unexpected occurs. For example, if your company is planning on vertical integration thath will be the cause of significant in-country hiring, you must assess the benefits of employment credits and incentives that can help reduce overhead costs.

Actions moving forward:

Review your supply chain model to:

reflect current constraints;

incorporate points of vulnerability; and
conduct a scenario planning exercise to address a specific problem or inform your next strategic move.

Ideally, you should simulate multiple scenarios to pressure test the supply chain, anticipate issues, and chart the best path forward when disruption hits. Scenario planning should become a regular business practice so you can quickly respond to unforeseen events.

#3: Will raising prices offset the increasing costs of materials and logistics?

Although raising prices is not the only way to successfully reduce costs, there are some tradeoffs that will have to be considered. Higher costs are an unfortunate reality for most manufacturers in the current supply chain environment. Because cost reductions are not easy to accomplish, many companies are shifting their focus to cost containment within areas of their supply chains that they can control. Higher costs are a sure way of reducing taxable income and where possible, selectively deciding where the spend will occur in the supply chain may not reduce the impact of inflation or costs being spent – however it may impact the amount of tax dollars being spent. Tax, like all other costs, is an expense that should be viewed and considered for cost reduction measures.

For example, intercompany movements are often rife with inefficiency or seldom get the level of scrutiny they deserve. If parts and finished goods are shipped intercompany, ask why: Is there a value add, is it because your business has always done it that way, or is it an enabling factor to hedge against process inefficiencies? If your global supply chain is failing to consistently meet the needs of local markets, does the original rationale for keeping production and sources of supply at a distance still stand? Or would it be beneficial to establish a near or local market capability? Using models like a contract manufacturer can be a quicker way to further evaluate whether it makes sense to establish an in-house capability.

It’s also a good time to revisit lean initiatives that you may have previously dismissed or deprioritized—though be cautious of prioritizing efficiency at the expense of resilience. And beyond your own four walls, there are a few foundational measures of good supply chain hygiene that may help with cost takeout:

Shift from transportation spot rates to contract rates to stabilize pricing.
Ensure you have contracts with alternate suppliers; don’t rely on a single source.
Encourage your customers to optimize order volume for full truck or container loads through more rigorous enforcement of transactional service standards.

These measures may help manage costs to some degree but are unlikely to completely offset them. By raising prices, you will more than likely create frustration and confusion among your customers. However, if you find yourself absolutely needing to raise prices, it’s better to be upfront and honest rather than taking a below-the-radar approach.

Another way to address rising costs, rather than passing additional costs onto all your customers, is to consider segmenting them and developing pricing strategies based on level of priority.

Actions moving forward:

Perform an in-depth analysis of your customer base and product suite to understand the most and least profitable segments. Consider implementing a price segmentation strategy that shifts the heaviest burden of cost increases to your least profitable customers. Also, take a close look at your least profitable product segments and how they line up with cost distribution. Do you have slow-moving SKUs driving a disproportionate amount of costs? It may make sense to rationalize them.

We can help strengthen your supply chain

Now is the perfect time for manufacturers to gain competitive advantage by optimizing production and delivery processes and prioritizing long-term spending goals. Our International Tax and Transfer Pricing and Management Advisory practice leaders are ready to assess your current supply chain, identify potential points of weakness, adjusting transfer pricing policies, and assist you in implementing strengthening procedures. Reach out to our team to learn how we can reduce your risk and power production.

Navigating Turbulent Times for Global Supply Chain Management

Executive summary

Many international companies are struggling with their supply chain management amid external factors playing out on the global stage.
To mitigate the challenges, you should be aware of the current trends in supply management as well as strategies to improve your resilience and flexibility.
Current trends include AI and automation, supply chain as a service, circular supply chains, risk management and stability, and sustainability.
Diversifying your supply chain and creating a backup plan can help you remain agile.
Know the tax implications of your supply chain.

The last two years have seen major disruption in supply chain management — and throughout 2023, that turbulence is expected to continue. The freight supply and demand equation was a common issue during the pandemic and recovery period. We’re now seeing how the Russian-Ukraine conflict is reshaping the global supply chain for many companies. And amid all the economic uncertainty, supply shortages, and rising costs, the U.S. and EU (European Union) have been heavily investing in infrastructure, putting even more pressure on China with the U.S.-imposed tariffs’ strenuous implications.

While managing your supply chain is currently a challenge, you’re not completely at the mercy of these external factors which are generally outside of your control. There are strategies to mitigate the impact to your supply chain: your goals should be to both improve your supply chain resilience and flexibility to allow you to better manage the disruptions — those foreseen and unforeseen.

Our International Tax team breaks down some of the current trends and strategies to be aware of.

Trends in supply chain management

Some of the main trends in supply chain management include artificial intelligence and automation, supply chain as a service, circular supply chains, risk management and stability, and an increased focus on sustainability. Now, more than ever, mid-market multinational companies must be strategic. These additional constraints cause strain on these companies that are being forced to pivot to address these issues among additional disruption.

Odds are, you’ve been rethinking the way you currently manage your supply chain — because the global situations aren’t changing. The China tariffs are unlikely to disband soon, and there seems to be no end in sight to the Russia-Ukraine conflict.

Diversifying your supply chain

Many agree that the global supply chain was too dependent on China, and now companies are considering breaking away from the Asia Pacific region to look at the Mexican maquiladora or IMMEX programs. Both these programs are, for all intents and purposes, synonymous, save for one detail: the IMMEX added shelter companies as a modality. Under this shelter program, companies may set up operations in Mexico without establishing a legal Mexican entity.

These programs have been in existence since the 1960s, so they’ve proven their worth — however, they don’t work for everyone, so it’s worth perusing other options. It’s important to remember that sourcing from vendors in only one location, regardless of where that location is geographically, is accompanied by elevated risk.

To mitigate this, you should not only diversify your supply chain but also create redundancies to avoid a single point of failure. In addition, bringing your sources of supply closer to where you operate also reduces the opportunity for risk. Engage with new suppliers and manufacturers in the Americas, for instance, and analyze your current suppliers to see if there is any one region you rely on more heavily already, then minimize the distance between your production and purchasing — without, of course, sacrificing quality, cost, control, and reputation. By optimizing your global footprint, you can maximize your production opportunities, minimize risk, and scout new vendors and locations for future efficiency.

Devising a backup plan for supply chain disruptions to address multiple contingencies

At the end of the day, we know that no matter how sophisticated or agile your supply chain backup plan is, external factors — which are never static — can affect things in unexpected ways. With rapidly and ceaselessly changing global conditions, there’s no way to account for everything you could encounter.

But there are ways to prepare. Plan for multiple contingencies, weighing their outcomes. Don’t forget to think broadly and for new opportunities — for example, if you’re looking at expanding into new markets or territories or want to add a new product line, you must assess their plausibleness under a variety of conditions (and not just logistical conditions, like lead times and delivery … but also tax liabilities and compliance, too).

Keep your supply chain planning agile and ready to evolve by reviewing its current model and updating it to ensure it reflects the restraints and vulnerabilities you’re presently dealing with. By making a step-by-step plan — for multiple scenarios — you can chart your path forward, regardless of what unfolds on the global stage in these uncertain times.

How MGO can help

Knowing the tax implications of your supply chain is crucial to your global success, and our experienced International Tax team can help you navigate the supply chain turmoil — no matter how turbulent. By reviewing your current supply chain model to determine where your processes can be strengthened and made more efficient, as well as pinpointing your vulnerabilities, we can help you hone your supply chain’s true potential while safeguarding it against whatever comes next.

About the authors

John Apuzzo is the leader of our International Tax Practice. He supports public and private companies, and high-net-worth individuals, as they conduct business on the global stage. His passion for developing optimal tax strategies helps his clients reinvest in their businesses and enjoy the wealth they have worked so hard to earn.

Mandy Li is a transfer pricing partner and provides strategic and tactical transfer pricing solutions to public and private multinational organizations. She supports highly complex global engagements, with an emphasis on transactions moving to and from the China region.

10 Things Government Contractors Need to Know About Tax Reform

The $1.5 trillion new tax law represents the most sweeping change to tax code in a generation. Tax reform of this magnitude will have broad implications for government contractors. While accountants and tax departments wade through the 185-page legislation, here are the top 10 things government contractors need to know:

1. The corporate tax rate was permanently reduced from 35 percent to 21 percent.

The top corporate tax rate has been permanently reduced from 35 percent to a flat rate of 21 percent, beginning in 2018. Unlike all other provisions in the new law, including tax breaks for individuals, the new corporate tax rate provision does not expire.

2. There’s a tax break for owners of pass-through entities.

The new law provides owners of pass-through businesses — which include individuals, estates, and trusts — with a deduction of up to 20 percent of their domestic qualified business income, whether it is attributable to income earned through an S corporation, partnership, sole proprietorship, or disregarded entity. Without the new deduction, taxpayers would pay 2018 taxes on their share of qualified earnings at rates up to 37 percent. With the new 20 percent deduction, the tax rate on such income could be as low as 29.6 percent. It should again be noted that certain service industries are excluded from the preferential rate, unless taxable income is below $207,500 (for single filers) and $415,000 (for joint filers), under which the benefit of the deduction is phased out.

3. There might be huge tax benefits to changing your company’s current choice of entity.

Taxpayers should consider evaluating the choice of entity used to operate their businesses. The 21 percent reduced corporate tax rate may increase the popularity of corporations. However, factors such as the new 20 percent deduction for pass-through income, expected use of after-tax cash earnings, and potential exit values will significantly complicate these analyses. The potential after-tax cash benefits ultimately realized by owners could make choice-of-entity determinations one of the most important decisions taxpayers will now make.

4. There have been significant changes to the international tax system.

In connection with these changes, some U.S. shareholders who own stock in certain foreign corporations will have to pay a one-time “transition tax” on their share of accumulated overseas earnings. Other changes include a “participation exemption,” which is a 100 percent dividend-received deduction that permits certain domestic C corporations to receive dividends from their foreign subsidiaries without being taxed on such dividends when certain conditions are satisfied. There is also a new requirement that certain U.S. shareholders of controlled foreign corporations (CFCs) include in income their share of the “global intangible low-taxed income” of such CFCs. Finally, there are new measures to deter base erosion and promote U.S. production.

5. The corporate AMT and DPAD are dead, but Research Tax Credits live on.

The law repeals the Section 199 Domestic Production Activities Deduction (DPAD) and the corporate Alternative Minimum Tax (AMT) for tax years beginning after 2017. The Research Tax Credit was retained and is now more valuable given the reduction of the corporate tax rate from 35 percent to 21 percent.

6. They’ve scrapped NOL carrybacks and limited the use of carryforwards.

Previously, businesses were able to offset current taxable income by claiming net operating losses (NOLs), generally eligible for a two-year carryback and 20-year carryforward. Now NOLs for tax years ending after 2017 cannot be carried back, but can be indefinitely carried forward. In addition, NOLs for tax years beginning in 2018 will be subject to an 80 percent limitation. Companies will have to track their NOLs in different buckets and consider cost-recovery strategy on depreciable assets in applying the 80 percent limitation.

7. Tax reform’s impact on accounting methods may change when revenue is recognized, but new provisions could also lead to temporary and permanent tax benefits.

Under the new law, accrual basis taxpayers must now recognize income no later than the taxable year in which such income is taken into account as revenue in an applicable financial statement.

However, new provisions also provide favorable methods of accounting that were not previously available. That, coupled with the reduction in tax rates, creates a favorable and unique environment for filing accounting method changes.

There are many method changes still available for the 2017 tax year. Taxpayers should evaluate current accounting methods to identify any actionable opportunities to accelerate deductions and defer income for the 2017 tax year, which could result in significant tax savings.

8. There are new rules for bonus depreciation and full expensing on new and used property.

The new tax law allows a 100 percent first-year deduction — up from 50 percent — for the adjusted basis of qualifying assets placed in service after Sept. 27, 2017, and before Jan. 1, 2023, with a gradual phase down in subsequent years before sunsetting after 2026. The definition of qualifying property was also expanded to include used property purchased in an arm’s-length transaction. Businesses should pay close attention to any qualifying asset acquisitions made during the fourth quarter of 2017, as the full expensing can be taken on the 2017 return if the property was acquired and placed in service after Sept. 27, 2017.

Additionally, under new tax law, taxpayers may now deduct up to $1 million under Section 179 for properties placed in service beginning in 2018 — double the previous allowable amount. The phase-out threshold is increased to $2.5 million and will be indexed for inflation in future years and the types of qualifying property has been expanded.

9. The availability of the cash method of accounting expanded for small businesses.

Beginning in 2018, the average annual gross receipts threshold for businesses to use the cash method increases from $5 million to $25 million. Additionally, small businesses who meet the $25 million gross receipts threshold are not required to account for inventories and are exempt from the uniform capitalization rules. The $25 million is indexed for inflation for tax years beginning after 2018.

10. Now is the time to assess total rewards strategies.

Tax reform significantly impacts various components of an employer’s total compensation program — namely the expansion of the $1 million deduction cap on pay to covered employees; disallowed deductions for transportation fringe benefits provided to employees; income inclusion for employer-paid moving expenses; further deduction limitations on certain meal and entertainment expenses; and a two-year tax credit for employer-paid family and medical leave programs. As the IRS releases guidance, employers must immediately modify their payroll systems to reflect tax reform changes impacting individual taxpayers.

For more information about the impact of tax reform on the Government Contracting industry, please reach out to us.