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Episode 15: Post-Election Check-in: Corporate Rate Expectations (Part 2)




Announcer: Welcome to this episode of “60-second Retail” - a BDO podcast keeping you in-the-know on events and trends in retail and consumer products industry impacting your bottom line, in just a few short minutes.

Natalie: Hello, my name is Natalie Kotlyar. I am the National Leader of the Retail and Consumer Products industry group at BDO USA. Welcome to our podcast. In this episode we're speaking with John Marquardt, National Tax Leader for the Retail and Consumer Products Industry Group at BDO.

We are here to discuss what to expect with corporate tax rates post-election and the potential impact this will have on the retail and consumer products industry group.

Welcome John. What are the current expectations for potential corporate tax changes in 2021?

John: Thanks Natalie. Obviously, nobody knows for sure what's going to happen in 2021, but there is certainly a good possibility for additional corporate tax legislation.

This could include an increase to the current corporate tax rate from 21% to something higher.
Recall that prior to the 2017 Tax Act, the rate was 35%, so it was quite a bit higher.

Natalie: So those are really high percentage changes that we've had in the past, and I know it's hard to predict what will happen in the future, but if it should change, what will this mean for corporations in the retail space?

John: That’s a great question.  I think our retailers are really experiencing tough times in 2020 and many of them are generating tax losses in the United States, in particular.

Under current rules, the 2020 tax losses can be carried back for five years, so back to 2015, and they could be carried forward as well.

The rules are already set to change under current law in 2021 and there will no longer be this carryback opportunity.  So careful attention needs to be paid by the tax departments and the tax advisors for retailers to take advantage of what's in place now.

There's really this unique opportunity, if you will, to carry back the 2020 tax losses back to 2015 for cash tax refunds.  Not only is there the opportunity for the refund, but the tax rate, as I just mentioned earlier, was 35% in two of those years, compared to the 21% now.

So, a huge rate difference there that can be taken advantage of and really generate good cash tax refunds for the retailers.

Natalie: Sounds like there is already a complicated tax situation that may become even more complicated, potentially, in the future.  So, I guess our advice to you is make sure you get with your service provider to get it done right.

John thank you again and we look forward to continuing the discussion in our next episode with you.

Announcer: And that concludes this episode of BDO’s “60-second Retail” podcast.  Don’t forget to tune in for the next episode!  To find more information on our hosts, guests, BDO’s services, or listen to previous episodes of “60-second Retail”, please visit www.bdo.com/60-second-retail.
 

 
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