8 Tax Reform FAQs for Retailers

The Tax Cuts and Jobs Act, which officially went into effect at the beginning of the year, is the most substantial U.S. tax legislation in decades. However, with such wide-ranging impacts, the significance of tax reform for the retail industry may not be immediately clear.
As we reach the year’s halfway mark and begin to prepare for the 2018 tax season, it’s critical the retail and consumer product companies review what tax reform holistically means to their business.
One frequently asked question concentrates on the reduction in the corporate tax rate. Retailers will be pleased to learn that the new, standing 21-percent rate could result in favorable cash flow, allowing them to invest in employees, omnichannel experiences or even share buybacks, for public companies.
Another common query focuses on accounting method implications, which has resulted in planning opportunities that could mean permanent tax savings for retailers. However, planning has a time limit, and to comply with technical rules for accounting method changes, retailers must begin information gathering early. See BDO’s Summary of Key Tax Reform Implications on Accounting Methods for details.
Still, tax legislation is subject to corrections, and savvy retailers with a comprehensive understanding of tax reform will be best positioned to respond. To illustrate, Bloomberg reports that a group of retailers and restaurants—led by Target, Best Buy and Yum Brands—are pushing for changes to a “retail glitch” that makes much-needed renovations to physical locations costly.
For more FAQs on what the Tax Cuts and Jobs Act means for retailers, read the full study here.
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