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12/19/2017

Tax Reform Success- Conference Vote today

Both "passthrough" and C-corps see tax relief

As the tax reform conference report comes for a vote in Congress this week, ACEC has reported that engineering firms have been excluded from the definition of a service‚Äč business, allowing the "passthrough" S Corporations and LLC's to see tax relief along with the C-Corporations. Thank you to ACEC Ohio members for your grassroots effort to inform your congressional member about the impact of the tax reform bill on your business. Click here for: Tax Reform Summary

Please see below from Steve Hall, Vice President Government Affairs at ACEC:

The House and Senate are poised to vote this week on the final version of HR 1, the Tax Reform and Jobs Act, and the measure is expected to pass and be signed into law by the President.  As you know from prior outreach, the most significant challenge we faced at the start of the tax reform process was the exclusion of engineering "passthrough" firms (together with other service-related industries, such as doctors and lawyers) from the proposed tax benefits in the House and Senate versions of HR 1.  While we were generally satisfied with the treatment of engineering firms organized as C corporations (which will qualify for the new 21 percent corporate rate), denying tax relief to passthrough firms (S corporations, partnerships and LLCs), which represent the majority of our industry, was something we simply couldn't support.

As the blog entry from the Wall Street Journal indicates below, I'm pleased to report to you that we met with success last Friday evening, where we learned that the limitations applied to service-related passthrough firms would not apply to engineering firms; in other words, under the new law engineering passthrough firms will be able to fully utilize the new 20 percent deduction in the same manner as other non-service passthrough industries. 

This is another example of where grassroots engagement played a critical role in our success, and I wanted you to know how much we appreciated your help.  We will have complete coverage of this issue in Last Word this week, including a summary of what will be the first major re-write of the tax code in over 30 years, but I wanted to share this with you now and take the opportunity to say -- thank you!

Steve


www.wsj.com/livecoverage/tax-bill-2017

A Win For Engineers and Architects

Engineers and architects got a late win in the tax bill when they were exempted from the definition of service businesses.

Why does that matter?

It matters because service businesses can't get the full 20% deduction for other pass-through businesses if their owners have more than $157,500 of individual income or $315,000 for married couples.

The change, spelled out in the conference report's explanation, means architects and engineers will be treated more like manufacturers than like lawyers and consultants.

Richard Rubin


Advancing the Business of Engineering