News Archives

Mitigate the risks: Tips for dealing with tariff-driven turbulence

News|April 11, 2025

President Trump’s “Liberation Day” announcement of global tariffs caught businesses, as well as foreign countries and worldwide financial markets, off guard. While the president has long endorsed the imposition of tariffs, many businesses expected him to take a targeted approach. Instead, Trump rolled out a baseline tariff on all imports to the United States and higher tariffs on certain countries, including some of the largest U.S. trading partners. (On April 9, Trump announced a 90-day pause on some reciprocal tariffs, with a 10% baseline tariff remaining in effect for most countries and a 145% tariff on imports from China.)

The tariff plan sent businesses, both large and small, scrambling. Even companies accustomed to dealing with tariffs have been shaken because this round is so much more extensive and seemingly subject to change than those in the past.

Proponents of tariffs say they can be used as a negotiating tool to get other countries to lower their tariffs on U.S. imports, thereby leveling the global trade playing field. They also argue that if domestic and foreign companies relocate to the United States, it’ll create jobs for Americans, fuel construction industry growth and provide additional tax revenue.

Since more changes are expected as countries and industries negotiate with the administration for reduced rates and exemptions, some degree of uncertainty is likely to prevail for at least the short term. In the meantime, businesses have several areas they should focus on to reduce the tariff hit to their bottom lines.

1. Financial forecasting

No business should decide how to address tariff repercussions until they’ve conducted a comprehensive financial analysis to understand how U.S. and retaliatory tariffs will affect costs. You might find, for example, that your business needs to postpone impending plans for capital asset purchases or expansion.

Modeling, or scenario planning, is often helpful during unpredictable periods. Begin by identifying all the countries involved in your supply chain, whether you deal with them directly or through your suppliers, and the applicable tariffs, whether you’re importing or exporting goods.

You can then develop a model that projects how different sourcing scenarios might play out. The model should compare not only the costs of foreign vs. domestic options but also the resulting impact on your pricing, labor costs, cash flow and, ultimately, profitability. This information can allow you to build contingency plans to help reduce the odds of being caught flat-footed as new developments unfurl.

Modeling can provide valuable guidance if you’re considering reshoring your operations. Of course, reshoring isn’t a small endeavor. Moreover, U.S. infrastructure may not be adequate for your business needs.

Manufacturers also should note the shortage of domestic manufacturing workers. According to pre-tariff analysis from the National Association of Manufacturers, the U.S. manufacturing industry could require some 3.8 million jobs by 2033, and more than 1.9 million may go unfilled.

2. Pricing

Perhaps the most obvious tactic for companies incurring higher costs due to tariffs is to pass the increases along to their customers. It’s not that simple, though.

Before you raise your prices, you must take into account factors such as your competitors’ pricing and how higher prices might affect demand. The latter is especially critical for price-sensitive consumer goods where even a small price jump could undermine demand.

Consumers have already been cutting back on spending based on rising fears of inflation and a possible recession. Price increases, therefore, are better thought of as a single component in a more balanced approach.

3. Foreign Trade Zones

You may be able to take advantage of Foreign Trade Zones (FTZs) to minimize your tariff exposure. In these designated areas near U.S. ports of entry, a company can move goods in and out of the country for operations (including assembly, manufacturing and processing) but pay reduced or no tariffs.

Tariffs are paid when the goods are transferred from an FTZ into the United States for consumption. While in the zone, though, goods aren’t subject to tariffs. And, if the goods are exported, no tariff applies.

Note: Trump already has narrowed some of the potential benefits of FTZs, so avoid making them a cornerstone of your tariff strategy.

4. Internal operations

If your company’s suppliers are in high-tariff countries, you can look into switching to lower-cost suppliers in countries that have negotiated lower tariffs.

You may not be able to escape higher costs stemming from tariffs, but you can take steps to cut other costs by streamlining operations. For example, you could invest in technologies to improve efficiency or trim worker hours and employee benefits. You also should try to renegotiate contracts with suppliers and vendors, even if those relationships aren’t affected by tariffs. Such measures might make it less necessary to hike your prices.

You can control your overall costs as well by breaking down departmental silos so the logistics or procurement department isn’t making tariff-related decisions without input from others. Your finance and tax departments need to weigh in to achieve the optimal cost structures.

5. Tax planning

Maximizing your federal and state tax credits is paramount in financially challenging times. Technology investments, for example, may qualify for Section 179 expensing and bonus depreciation (which may return to 100% in the first year under the upcoming tax package being negotiated in Congress). Certain sectors may benefit from the Sec. 45X Advanced Manufacturing Production Credit or the Sec. 48D Advanced Manufacturing Investment Credit. Several states also offer tax credits for job creation, among other tax incentives.

This may be a wise time to consider changing your inventory accounting method, if possible. The last-in, first-out (LIFO) method assumes that you use your most recently purchased materials first. The cost of the newer, pricier items is charged first to the cost of goods sold, boosting it and cutting both your income and taxes. Bear in mind, though, that LIFO isn’t permitted under the International Financial Reporting Standards and is more burdensome than the first-in, first-out method.

6. Compliance

Regardless of the exact percentages of U.S. and retaliatory tariffs, you can count on tighter scrutiny of your compliance with the associated rules and requirements. These probably will become more complicated than they’ve been in the past.

For example, expect greater documentation requirements and shifting rules for identifying an item’s country of origin. The higher compliance burden alone will ramp up your costs — but the costs of noncompliance could be far greater.

Stay vigilant

The tariff landscape is rapidly evolving. You need to monitor the actions by the Trump administration, the responses of other countries and how they affect your business operations. You may have to pivot as needed to keep costs low (by reshoring or switching to suppliers in low-tariff countries). If you don’t have the requisite financial expertise on staff to keep up with it all, we can help. Contact us today about how to plan ahead — and stay ahead of the changes.

Beneficial ownership information reporting requirements suspended for domestic reporting companies

NEWS|March 19, 2025

The twisty journey of the Corporate Transparency Act’s (CTA’s) beneficial ownership information (BOI) reporting requirements has taken yet another turn. Following a February 18, 2025, ruling by a federal district court (Smith v. U.S. Department of the Treasury), the requirements are technically back in effect for covered companies. But a short time later, the U.S. Department of the Treasury announced it would suspend enforcement of the CTA against domestic reporting companies and U.S. citizens. Here are the latest developments and what they may mean for you.

Latest announcement

On March 2, the Treasury Department stated the following in a press release: “The Treasury Department is announcing today that, with respect to the Corporate Transparency Act, not only will it not enforce any penalties or fines associated with the beneficial ownership information reporting rule under the existing regulatory deadlines, but it will further not enforce any penalties or fines against U.S. citizens or domestic reporting companies or their beneficial owners after the forthcoming rule changes take effect either. The Treasury Department will further be issuing a proposed rulemaking that will narrow the scope of the rule to foreign reporting companies only. Treasury takes this step in the interest of supporting hard-working American taxpayers and small businesses and ensuring that the rule is appropriately tailored to advance the public interest.”

The reinstatement

On January 23, 2025, the U.S. Supreme Court granted the government’s motion to stay, or halt, a nationwide injunction issued by a federal court in Texas (Texas Top Cop Shop, Inc. v. Bondi). But a separate nationwide order from the Smith court was still in place until February 18, 2025, so the reporting requirements remained on hold. With that order now stayed, the new deadline to file a BOI report with the U.S. Treasury Department’s Financial Crimes Enforcement Network (FinCEN) is technically March 21, 2025.

Reporting companies that were previously given a reporting deadline later than this deadline are required to file their initial BOI report by the later deadline. For example, if a company’s reporting deadline is in April 2025 because it qualifies for certain disaster relief extensions, it’s allowed to follow the April deadline rather than the March deadline.

Important: Due to ongoing litigation in another federal district court (National Small Business United v. Yellen), members of the National Small Business Association as of March 1, 2024, aren’t currently required to report their BOI to FinCEN.

BOI requirements in a nutshell

The BOI requirements are intended to help prevent criminals from using businesses for illicit activities, such as money laundering and fraud hidden through shell companies or other opaque ownership structures. Companies covered by the requirements are referred to as “reporting companies.”

Such businesses have been reporting certain identifying information on their beneficial owners. FinCEN estimated that approximately 32.6 million companies would be affected by the reporting rules in the first year.

Beneficial owners are defined as natural persons who either directly or indirectly 1) exercise substantial control over a reporting company, or 2) own or control at least 25% of a reporting company’s ownership interests. Individuals who exercise substantial control include senior officers, important decision makers, and those with authority to appoint or remove certain officers or a majority of the company’s governing body.

For each beneficial owner, under the requirements, a reporting company must provide the individual’s:

Name,
Date of birth,
Residential address, and
Identifying number from an acceptable identification document, such as a passport or U.S. driver’s license, and the name of the issuing state or jurisdiction of the identification document.

A reporting company also must submit an image of the identification document.

BOI reporting isn’t an annual obligation. However, companies must report any changes to the required information previously reported about their businesses or beneficial owners. Updated reports are due no later than 30 days after the date of the change.

Stay tuned

The temporary stay of the injunction in the Smith case applies only until the U.S. Court of Appeals for the Fifth Circuit rules on FinCEN’s appeal of the lower court’s original injunction order in that case. The appeal was filed on February 5, 2025. Additional challenges are also proceeding in other courts. It’s also possible that Congress will pass legislation to repeal the BOI requirements.

Meanwhile, the March 2 Treasury announcement appears to ease compliance concerns for domestic companies. However, FinCEN will continue to enforce requirements for foreign reporting companies. Contact us if you have questions about your situation.

BOI Reporting Deadline Set for March 21, 2025: What Businesses Need to Know

News|February 19, 2025

FinCEN has confirmed that mandatory beneficial ownership reporting (BOI) requirements are back in effect, with a new deadline of March 21, 2025, which must be met to avoid penalties of $591/per day for companies.

The recent court ruling in favor of the DOJ/FinCEN in the Samantha Smith case means the Corporate Transparency Act (CTA) is fully enforceable again, with no active injunctions blocking its implementation.

What This Means for Firms and Filers:

BOI reporting is mandatory again—compliance is required to avoid penalties of $591 per day.
No further delays or broad exemptions—nearly all small businesses are required to file barring rare cases.

How We Can Assist:
If you have not yet filed your BOI report and would like our assistance, please contact us or reply boi@wcscpa.com. We use FincenFetch, a specialized filing tool, to streamline the process. This platform securely collects the necessary information, enabling our firm to complete your report on your behalf.

President Trump’s tax plan: What proposals are being discussed in Washington?

News|February 7, 2025

President Trump and the Republican Congress plan to act swiftly to make broad changes to the United States — including its federal tax system. Congress is already working on legislation that would extend and expand provisions of the sweeping Tax Cuts and Jobs Act (TCJA), as well as incorporate some of Trump’s tax-related campaign promises.

To that end, GOP lawmakers in the U.S. House of Representatives have compiled a 50-page document that identifies potential avenues they may take, as well as how much these tax and other fiscal changes would cost or save. Here’s a preview of potential changes that might be on the horizon.

Big plans

The TCJA is the signature tax legislation from Trump’s first term in office, and it cut income tax rates for many taxpayers. Some provisions — including the majority affecting individuals — are slated to expire at the end of 2025. The nonpartisan Congressional Budget Office estimates that extending the temporary TCJA provisions would cost $4.6 trillion over 10 years. For context, the federal debt currently rings in at more than $35 trillion, and the budget deficit is $711 billion.

In addition to supporting the continuation of the TCJA, the president has pushed to reduce the 21% corporate tax rate to 20% or 15%, with the goal of generating growth. He also supports eliminating the 15% corporate alternative minimum tax imposed by the Inflation Reduction Act (IRA), signed into law during the previous administration. It applies only to the largest C corporations.

Regarding tax cuts for individuals beyond TCJA extensions, Trump has expressed that he’s in favor of:

Eliminating the estate tax (which currently applies only to estates worth more than $13.99 million),
Repealing or raising the $10,000 cap on the deduction for state and local taxes,
Creating a deduction for auto loan interest, and
Eliminating income taxes on tips, overtime and Social Security benefits.

Finally, he wants to cut IRS funding, which would reduce expenditures but also reduce revenues. Without offsets, these plans would drive up the deficit significantly.

Possible offsets

The House GOP document outlines numerous possibilities beyond just spending reductions to pay for these tax cuts. For example, tariffs — a major plank in Trump’s campaign platform — may play a role.

The GOP document suggests a 10% across-the-board import tariff. Trump, however, has discussed and imposed various tariff amounts, depending on the exporting country. The 25% tariffs on Canadian and Mexican products, which were imposed earlier, have been paused until March 4. An additional 10% tariff on Chinese imports took effect on February 4.

In addition, Trump said tariffs on goods from other countries, including the 27-member European Union, could happen soon. While he maintains that those countries will pay the tariffs, it’s generally the U.S. importer of record that’s responsible for paying tariffs. Economists generally agree that at least part of the cost would then be passed on to consumers.

The House GOP document also examines generating savings through changes to various tax breaks. Here are some of the options:

The mortgage interest deduction. Suggestions include eliminating the deduction or lowering the current $750,000 limit to $500,000.

Head of household status. The document looks at eliminating this status, which provides a higher standard deduction and certain other tax benefits to unmarried taxpayers with children compared to single filers.

The child and dependent care tax credit. The document considers eliminating the credit for qualified child and dependent care expenses.

Renewable energy tax credits. The IRA created or expanded various tax credits encouraging renewable energy use, including tax credits for electric vehicles and residential clean energy improvements, such as solar panels and heat pumps. The GOP has proposed changes ranging from a full repeal of the IRA to more limited deductions.

Employer-provided benefits. Revenue could be raised by eliminating taxable income exclusions for transportation benefits and on-site gyms.

Health insurance subsidies. Premium tax credits are currently available for households with income above 400% of the federal poverty line (the amounts phase out as income increases). Revenue could be raised by limiting such subsidies to the “most needy Americans.”

Education-related breaks are also being assessed. The House GOP document looks at how much revenue could be generated by eliminating credits for qualified education expenses, the deduction for student loan interest and federal income-driven repayment plans. The GOP is also weighing the elimination of interest subsidies for federal loans while borrowers are still in school and imposing taxes on scholarships and fellowships, which currently are exempt.

The hurdles

Republican lawmakers plan on passing tax legislation using the reconciliation process, which requires only a simple majority in both houses of Congress. However, the GOP holds the majority in the House by only three votes.

That gives potential holdouts within their own caucus a lot of leverage. For example, deficit hawks might oppose certain proposals, while centrist members may prove reluctant to eliminate popular tax breaks and programs.

Republican representatives of all stripes are likely to oppose moves that would hurt industries in their districts, such as the reduction or elimination of certain clean energy incentives. And, of course, lobbyists will make their voices heard.

Stay tuned

The GOP hopes to enact tax legislation within President Trump’s first 100 days in office, but that may be challenging. We’ll keep you apprised of important developments.