Holiday E-Commerce Sales Up, Extensions Sought for Tax Credits and BOI Reporting

[Gene Marks, host]

Hey everybody, it's Gene Marks and welcome to another episode of the Paychex THRIVE Week in Review podcast. Thank you so much for joining me. This is the podcast where we take a few items of news in the past week or so and give you a little bit of updates and analysis on it. So, you ready to go? Let's get to it.

According to a report that just came out on digitalcommerce360.com, it was a pretty good week for Cyber Monday and basically e-commerce sales altogether. U.S. e-commerce sales top $38 billion, according to Adobe Analytics. This is from the five-day stretch from Thanksgiving through Cyber Monday. The e-commerce projections stated that over 70 billion in digital transactions were made over the entirety of Cyber Week.

Comparing, there are two basic numbers that came out from both Adobe and Salesforce. Adobe said on Black Friday sales were 9.8 billion compared to 9.1 billion. And last year Salesforce said Black Friday sales were 16.4 billion, up from 15 billion in 2022. And the same thing …  Cyber Monday also saw increases, as well.

By the way, this whole Black Friday e-commerce sales numbers is kind of a big disparity between Adobe and Salesforce. So, you can't count too much: one says 9.8 billion was cyber Black Friday sales, the other saying 16 billion was sold on cyber Fri, uh, Black Friday. But the bottom line is this: They're up.

It was a good strong start to the holiday season. Consumer spending was up in November, which is good news. And as we are heading through the rest of the holiday season, spending continues to look pretty strong.

My expectations are that we will have a good holiday season, which is great news. But I am still concerned about 2024 and I recently wrote in The Guardian about how the consumer is going to be the biggest issue for small businesses in 2024. Watch consumer confidence, small business confidence, delinquencies on credit cards, delinquencies on auto loans. Keep and pay attention to what the CEOs of the major banks are saying about their consumers, as well as the CEOs of the major retailers, will be saying, because these are the metrics and indicators that will tell us if consumer spending will stay strong or will weaken in 2024.

I do have concerns about it. The consumers have been holding up the U.S. economy, contributing to like 70% of our GDP last quarter. If consumer spending starts tailing off in 2024, that's going to be a big issue for a lot of small businesses.

In Washington, the House passed a bill that has an impact on us this past week. Before they went on recess, and by the way, this is for the CurrentFederalTaxDevelopments.com websites, the House passed the bill before going on recess. It's called H.R. 5119 to Protect Small Business and Prevent Illicit Financial Activity Act. It was passed by a vote of 420 to 1. So, guys, you think there's no bipartisanship in Washington? This definitely had bipartisan support.

This has to do with FinCEN’s requirements on reporting beneficial ownership of your company. Hopefully, you've heard by now that starting in 2024, you're going to be getting a bunch of forms – complex forms – that's going to require you as a business owner to report all the beneficial owners in your business. And this is for any entity that you own. So, you know, if you have three or four or five companies that you're that part of, all this beneficial ownership has got to be disclosed and reported to the government.

And that's like some fairly personal information, you know; social security numbers and tax IDs and all of that kind of stuff. A lot of people are sort of up in arms about that because it is a big privacy concern, but then again, the government says they're doing this to protect against financial fraud and terrorism, as well.

Well, anyway, all of this had to be done by Jan. 1 of 2025. So, you would have all of 2024 to fulfill these paperwork requirements. However, this new bill pushes back the deadline to Jan. 1, 2026. So, it's a year later.

Also, if you if you start a new company during 2024, the original rule was you had to report beneficial ownership within 60 days. Now, they're saying that you have to report it within 90 days. So, it's giving a little bit of a relief to small businesses, considering the reporting requirements. I haven't seen the Treasury's rules and guidance for filling out these forms, but I hear it's quite onerous, so just be aware of that that's out there.

The House did pass this. We'll see if the Senate passes it by the end of the year or sometime after the end of the year. It doesn't have to happen by Dec. 31, and if it does, then it'll give us an extra year to prepare for this reporting requirement.

Finally, as we do all the time, we get to the end of the year, people talk about tax extenders or making some tax changes before the year ends. And of course, this year is no different. In The Hill, there is a report just from a week or two ago that says that Republicans want to see deductions extended for research and development costs, fixed capital investments such as machinery and equipment, as well as interest expense.

You remember, R&D development costs now are no longer deductible in the first year, and the same thing with fixed capital investments like equipment and machinery. You're only deductible the first year of 80%. Then you have to amortize it. It goes down to 60% next year.

So, Republicans want to see that extended or changed, actually. Now, the Democrats, they want big changes made to the child tax credits or the CTC. That is a big part of the White House's agenda, and the White House is leaving open the possibility, according to The Hill, for a deal. They're saying these cuts would be possible if there's a beefed up child tax credit proponent that's also made into law.

A Ways and Means Committee Republican aide told The Hill that no end of year deal on tax extenders have yet been reached, but that the committee was now in a wait-and-see mode if a year-end deal on taxes is reached.

It isn't immediately clear how it would be paid for. Both the Republican and Democratic tax priorities are expensive. I mean, permanently extending the three major business provisions that the Republicans wants would reduce federal tax revenues by about $724 billion over the next decade before adjusting for anything else. So, that's certainly an issue.

According to Adam Rubin, who is an advocate for the Economic Security Project, he says, “I see increasing pressure for a tax deal by year's end, or at least in early January. The White House is making clear that the red line hasn't changed. The path is here for both parties to get what they want.”

So, if you're impacted by the research and development tax deduction or buy property, plant, and equipment tax deduction, as well as the interest expense deduction, you might have some relief. And even if an agreement isn't reached by the end of this year, they could certainly make it in early January and make it retroactive to 2023. So, that remains to be seen.

My name is Gene Marks and you've been listening to the Paychex THRIVE Week in Review. If you have any advice or would like to suggest a guest, please visit us at payx.me/thrive topics.

Thanks so much for listening. Hopefully, you were able to get some good information out of this little segment. We'll be back to you next week with some news that impacts your businesses and some thoughts on how to navigate around that. Again, my name is Gene Marks and we will see you then. Take care.

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