Manufacturing Scores a Big Win, But It Takes Work!

April 6, 2016

This is old news by now, but it’s still worth retelling. In the waning days of 2015—on December 18, to be precise—the 114th Congress passed the Protecting Americans From Tax Hikes (PATH) Act, a bill that contained many key tax provisions benefiting manufacturers. Specifically, the bill made permanent several temporary provisions, finally bearing fruit for the number of years the manufacturing community has been advocating for them. Last January, we asked our friend Mitch Klingher, CPA, of Klingher Nadler LLC to report on provisions benefiting the corrugated and paperboard industries. Here are some of the highlights applying to manufacturing and small businesses (see Financial Corner):

Research and development (R&D) tax credit is retroactively restored and permanently extended.
Bonus depreciation and AMT relief are restored—retroactively—and extended to apply to property placed in service before Jan. 1, 2020.
Higher limits on Code Sec. 179 expensing are restored and permanently extended.
Shortened S Corp built-in gains holding period permanently extended (five years generally).
100 percent gain exclusion for qualified small business stock (QSBS) is retroactively restored and made permanent. (If you qualify and can sell stock rather than assets, this is a good break.)

Anyone who has attended the AICC/FBA Washington Fly-In over the past several years will recognize many of these. Why? Because we have consistently advocated for them in each of our congressional visits year after year. Taking a cue from the National Association of Manufacturers (NAM), the corrugated and paperboard industries have urged passage of these provisions to ease the tax burden and instill certainty into the tax code. No business owner can make good business decisions if the tax consequences of those decisions are unknown or may change in the coming year. For this reason, we are happy that congressional leaders have listened to the business community.

“These victories were no accident,” says Jay Timmons, president and CEO of NAM. “This was a phenomenally successful year because manufacturers across the country raised their voices. By bringing people together and telling our stories, we were able to advance our priorities at a time when we faced serious challenges and headwinds.”

This year, AICC and FBA will once again co-sponsor our annual Washington Fly-In, June 6–7 in Washington, D.C. To those of you who have resisted attending the Fly-In, please reconsider. This is an important election year, and each one of us has to get off the fence and stake a claim for the business community. The legislation passed in December was passed because people spoke up. Will you stand up and be counted?