KCMA Applauds Positive Step Forward by Commerce on Unfairly Traded Cabinet Imports from Malaysia and Vietnam

A Transparent Supply Chain Will Benefit Domestic Manufacturers and U.S. Cabinet Workers

Reston, Virginia: 5 April 2024—Today, the Kitchen Cabinet Manufacturers Association is announcing that the U.S. Department of Commerce has taken a positive step forward to stop unfairly traded Chinese cabinet and components parts being moved through Malaysia and Vietnam, circumventing the anti-dumping and countervailing duty orders on wooden cabinets, vanities and components thereof (“WCV”) from China.

The Commerce Department just proposed plans to create a certification process, that will disrupt the flow of finished and unfinished Chinese cabinet components parts being completed in Malaysia and Vietnam before being sent to the U.S. market. As part of the proposed process, both importers and exporters will be required to certify that each shipment of cabinets from Malaysia and Vietnam does not contain finished and/or unfinished Chinese cabinet components, including the doors, drawer faces, and frames.

“Today’s announcement by the U.S. Department of Commerce is a great step forward as we work to ensure that all cabinets and components flowing through Malaysia and Vietnam are manufactured there, not in the People’s Republic of China” remarked KCMA CEO Betsy Natz.

“On behalf of KCMA member companies, let me commend the U.S. Department of Commerce for their continued efforts to enforce these orders and create a chain of custody to stop the cheating” concluded CEO Natz.

Commerce has provided interested parties an opportunity to submit comments on the proposed certification process on April 19, 2024, and to submit rebuttal comments on April 26, 2024. Commerce intends to issue its final scope ruling on June 14, 2024.

In April 2020, in response to petitions filed by KCMA to combat unfairly traded imports from China, the U.S. Department of Commerce issued antidumping and countervailing duty orders on wooden cabinets, vanities and components thereof (“WCV”) from China. The relief provided by these orders to the domestic industry was being eroded by WCV that were made in China and then transshipped through Malaysia and Vietnam to the United States. In April 2022, the KCMA requested that the Commerce Department conduct scope inquiries and anti-circumvention proceedings to address this problem and protect tens of thousands of American cabinet jobs.

As we move forward, KCMA will continue our work to fight for fair trade and ensure that domestic cabinet manufacturers are competing on level playing field.

By |2024-04-08T10:36:13-04:00April 8th, 2024|Categories: Articles|

Baltimore bridge collapse to cause logistics headaches, not supply chain crisis.

By David Lawder, additional reporting by Daniel Burns and David Shepardson in New York; Editing by Stephen Coates and Josie Kao

WASHINGTON, (Reuters) – The catastrophic bridge collapse that closed the Port of Baltimore to ship traffic on Tuesday is causing some logistics headaches, but is unlikely to trigger a major new U.S. supply chain crisis as competing East Coast ports are poised to handle more cargo, economists and logistics experts say.

With six people presumed dead after a container ship collision destroyed the Francis Scott Key Bridge, it remained unclear how long the span’s twisted superstructure would block the harbor’s mouth.

But port officials from New York to Georgia were busy fielding queries from shippers about diverting Baltimore-bound cargo from containers to vehicles and bulk material.

“We’re ready to help. We have ample capacity to absorb any surge in container traffic,” Port of Virginia spokesperson Joe Harris told Reuters.

The Norfolk-based port is expected to be a major beneficiary due to its proximity to Baltimore, but ports in Savannah and Brunswick, Georgia, also were poised to absorb some traffic, a spokesperson for the Georgia Ports Authority said.

U.S. Transportation Secretary Pete Buttigieg told MSNBC on Wednesday that while there were many ports on the East Coast, “there is no substitute for the Port of Baltimore being up and running,” as it is the top U.S. port for vehicle imports and exports, including farm and construction machinery.

Treasury Secretary Janet Yellen said a federal supply chain task force was meeting on Wednesday to assess the port’s closure but said the Biden administration “will do everything as quickly as we possibly can” to reopen it.

Supply chain experts say U.S. port infrastructure is more resilient than during 2021 and 2022, when they were understaffed and clogged with ships and containers, spiking prices and contributing to inflation as Americans binged on goods purchases during the COVID-19 pandemic.

“The collapse of the Francis Scott Key Bridge in Maryland is another reminder of the U.S. vulnerability to supply-chain shocks, but this event will have greater economic implications for the Baltimore economy than nationally,” Ryan Sweet, chief U.S. economist at Oxford Economics, wrote in a note.

“We don’t anticipate that the disruptions to trade or transportation will be visible in U.S. GDP, and the implications for inflation are minimal,” he added.


The impact on the Port of Baltimore’s more than 2,000 workers who load and unload cargo vessels could be significant if the closure lasts more than a few days.

The dockworkers are day laborers, said Scott Cowan, head of the International Longshoreman’s Association Local 333 in Baltimore, meaning they only work when there is cargo to be moved. He estimated there might be about a week’s work clearing the existing inventory at the port.

After that, the workers could lose a collective $2 million a day in lost wages, he said.

The port directly generates, opens new tab over 15,000 jobs, with an additional 140,000 jobs dependent on port activity, according to Maryland Governor Wes Moore’s office.


One area of concern is higher shipment costs for imported cars and trucks and for exports of farm tractors and construction equipment as Baltimore is the largest U.S. port for “roll-on, roll-off” vehicle shipments, with over 750,000 cars and light trucks handled by state-owned terminals in 2023, according to Maryland Port Administration data.

Ford Motor Co (F.N), opens new tab and General Motors (GM.N), opens new tab said they would reroute some affected shipments but the impact would be minimal, while Volkswagen (VOWG_p.DE), opens new tab is unaffected because its new Sparrows Point vehicles terminal is located at a former steel mill site on the bridge’s Chesapeake Bay side.

The risk of car price spikes is further dampened by a recovery in automotive inventories to their highest level since May 2020, after being drawn down sharply during the pandemic. The industry’s inventory-to-sales ratio is near its 32-year-average of 1.96 to 1 according to Census Bureau data, and sales incentives have risen in recent months as high interest rates dampen demand.


Ryan Peterson, founder and CEO of logistics platform Flexport, said that with Baltimore handling only 1.1 million twenty-foot equivalent containers last year – ranking 12th in the U.S., any impact on container rates and shipping costs from the disruption would be far less than increases caused by cargoes diverted from the Suez Canal because of attacks on Red Sea shipping by the Houthi militant group in Yemen.

But the port outage could contribute to a shift of container traffic to West Coast U.S. ports that was already underway over the past several months because of the lack Asian shippers’ access to the Suez route and reduced capacity in the Panama Canal due to low water levels. Peterson said the potential for an East Coast longshoreman strike in late September – at the height of Christmas-season imports – also has some shippers considering West Coast shipments.

“East Coast volumes are down and there is the ability for those ports to flex up to handle this,” Peterson said.

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By |2024-04-08T09:26:56-04:00April 8th, 2024|Categories: Articles|

What is the Corporate Transparency Act?

The Corporate Transparency Act (CTA) was enacted back in 2021, but few businesses have considered whether they’ll be impacted. Now that the law is officially in effect (as of January 1, 2024), small business owners now need to ensure compliance.

An estimated 32 million businesses will now need to report detailed information about their operations. However, in a survey of its members, the NFIB found that 90% have never heard of these new requirements. This article will outline critical information you need to know.

What is the goal of the Corporate Transparency Act?

The CTA was passed to tackle money laundering, tax fraud and other unlawful activities. Specifically, it targets “non-employer firms,” or entities that have no employees, according to Thomson Reuters. The reasoning is that many “bad actors” have concealed their ownership of corporations, LLCs and similar entities in the U.S. to cover up fraud, financing of terrorism and more.

As a result, many small business owners who have “one-person operations” will need to provide greater transparency into business operations by reporting Beneficial Ownership Information (BOI).

What is a Beneficial Ownership Information Report and who needs to file it?

Millions of small businesses will need to file a BOI Report with the U.S. Department of Treasury’s Financial Crimes Enforcement Network (FinCEN). Specifically, companies created or registered to do business before January 1, 2024, will have until New Year’s Day 2025 to file their initial BOI report, according to the FinCEN.

However, entrepreneurs who created or registered their businesses in 2024 can wait until receiving actual or public notice that their creation or registration is effective to file their BOI report. They will technically have 90 calendar days to file. Any company created on or after January 1, 2025, will need to file their reports within 30 calendar days of receiving actual or public notice that the business is effective.

Both domestic and foreign companies need to file, according to Thomson Reuters, with reporting companies typically including:

  • Limited liability partnerships
  • Limited liability limited partnerships
  • Business trusts
  • Most limited partnerships created by filing with a secretary of state or similar office.

Companies stared within the U.S. and required to file a BOI are called “domestic reporting companies,” while entities created in foreign markets but registered to do business in the U.S. are called “foreign reporting companies.”

Domestic reporting companies created before January 1, 2024, have to provide information about the company and its beneficial owners. Any domestic reporting company created on or after January 1, 2024, needs to provide information about the company, its beneficial owners and company applicants.

Which companies are exempt from filing a BOI report?

Exempted companies include securities issuers, domestic governmental authorities, banks, and others that don’t fall into the above categories. “Large operating companies” are also exempted from filing BOI reports, according to Wolters Kluwer. These are entities that:

  • Employ more than 20 full-time employees in the U.S.
  • Have an operating presence at a physical U.S. office
  • Have filed a federal income tax or information return in the U.S. for the previous year, with more than $5 million in gross receipts or sales

What information needs to be reported?

Primary company details:

  • Full legal name
  • Any trade or “doing business as” names
  • Current street address of principal place of business
  • Jurisdiction of formation
  • Taxpayer identification number

Beneficial owner and company applicant details:

  • Full legal name
  • Date of birth
  • Current residential street address
  • Unique identifying number and the issuing jurisdiction from a current U.S. passport, state or local ID document, driver’s license or a foreign passport and an image of the document from which the unique identifying number was obtained

Who is a “beneficial owner” and “company applicant”?

beneficial owner is anyone who either exercises substantial control over the reporting of the company or who owns at least 25% of ownership interests. A company applicant is someone who directly files the document that creates the domestic reporting company and oversees the filing of the document. Company applicants can only be an individual who directly files the document to create the business entity — or files for the entity to do business in the U.S. The company applicant also can be the person primarily responsible for directing or controlling the filing.

Both beneficial owners and company applicants must report their information directly to FinCEN.

What happens if BOI report information is wrong or needs to be updated?

If information in a report is inaccurate, a new report must be filed within 30 calendar days. The same guidelines apply if existing information needs to be updated. For example, if a beneficial owner’s address has changed, or there has been a legal name change, the BOI report may need to be updated. It also would need to be updated if a company’s main headquarters changes.

 Where can I go for more information and support?

The U.S. Chamber of Commerce encourages small business owners to consult lawyers or tax and accounting specialists if they need help filing their BOI reports.

By |2024-04-02T13:05:01-04:00April 2nd, 2024|Categories: Articles|

2024 Still a strong year for Multi–Family Housing

This year, new supply is expected to surge 53% year over year

Metrics Monitor

Multifamily Supply Glut Heads Toward Steep Drop-off

In 2023, nearly 440,000 new multifamily units were delivered, according to research by Newmark. This year, new supply is expected to surge 53% year over year—and then plummet by 42% in 2025. That’s still higher than the historical average, but projected supply delivery in 2026-27 won’t recover to even recent pre-pandemic levels. And lending conditions crimped by 2023 bank failures and the ensuing financial market turmoil have made it harder for developers to secure financing for new projects. At the same time, rising material costs and labor shortages have increased construction costs, which can deter new projects as margins compress.

This increased supply has softened rents, but despite vacancy rates above pre-pandemic averages in 2024, demand will keep average occupancy above 94%, according to CBRE. With new housing starts not happening at the scale necessary to meet long-term demand, we believe that the supply gap, along with stronger rent growth generated in 2025-26, will lead to new investment opportunities.

U.S. Multifamily Supply

Source: Newmark research, RealPage

multi-family housing chart
By |2024-03-18T13:24:03-04:00March 18th, 2024|Categories: Articles|

US Homebuilders Say Things Are Looking Up for ‘24

IWF Logo

By: Warren Shoulberg

The construction industry still has a long way to go to get back to its boom days but new data suggests builders are getting more optimistic.

Increasing consumer demand coupled with small drops in mortgage rates are all pointing in the same direction for US homebuilders: Up.

New statistics from the National Association of Home Builders (NAHB)/Wells Fargo survey released for January show sentiment for homebuilders climbed by the most it has in nearly a year. The gauge jumped seven points, the association said. “Lower interest rates improved housing affordability conditions this past month, bringing some buyers back into the market after being sidelined in the fall,” NAHB chair Alicia Huey said in a statement. “Single-family starts are expected to grow in 2024, adding much-needed inventory to the market.”

Mortgage rates remain at elevated levels, but they are starting to recede from their October 2023 peak of nearly 8% and in some cases are down to near 7%. The group sees expected housing sales increasing by 12 percentage points, the most since mid-2020 when the pandemic first took hold of the U.S. economy. Even with the rise the index is still below pre-pandemic levels.

Bloomberg, in reporting these numbers, said some builders are cutting back on price cuts. While 31% of builders surveyed said they were lowering prices, that was the lowest share since last summer. The average cut was 6%, consistent with previous months. Builders were most optimistic in the South and West as buyer traffic rose to four-month highs across the nation.

By |2024-03-05T15:12:27-05:00February 26th, 2024|Categories: Articles|

Have Building Material Prices Peaked?

January 17, 2024 | IWF News |  Warren Shoulberg

New data from the Producer Price Index suggests that costs are coming down on things like softwood lumber as part of an overall decline in material costs.

The wild ride up in construction materials in 2023 may have peaked as the year ended and going into 2024 we could see some declines in those costs, new statistics indicate. 

An analysis of the Producer Price Index by the Associated Builders and Contractors organization shows encouraging news for builders going into the new year. “Construction input prices declined for the second straight month in November,” ABC’s chief economist Anirban Basu said in a statement. “While much of the recent decline is due to record domestic oil production and the resulting precipitous decline in gas and diesel prices, other commodities like iron and steel and lumber products are currently more affordable than they were at the same time last year.”

Softwood lumber prices dropped by almost 6% in November and have declined by nearly 20% versus the same period a year ago. Construction input prices overall decreased 0.3% in November.

Prices of materials going forward, according to Basu in the statement, are equally as encouraging. “This is a welcome development for an industry still dealing with extraordinarily elevated financing costs and rising labor costs due to ongoing worker shortages.”

By |2024-03-05T15:11:54-05:00January 17th, 2024|Categories: Articles|

The Executive Candidate Interview…Be Prepared! (Part 2)

By: Rick Mohrman

Executive Recruiter Rick Mohrman has over eighteen years’ experience at Brooke Chase Associates in retained search placement of executives, where the firm works extensively with clients and candidates to structure and prepare for the interviewing process.

In part one of this series, we looked at the need for companies to thoroughly prepare for Executive Interview.  Now we’ll discuss the candidate’s preparation.  Remember that we used the analogy of courtship – you’re seriously exploring a potential partnership and the “fit” – compatibility, unity of purpose, and commitment.  And again, we’ll highlight the advantages of working with an executive recruiter.

The Need to Prepare

Just as it’s ill-advised for a company’s interviewers to “wing it” in an executive interview, preparation by the candidate is critical to a successful outcome.  Only through careful thought and planning will you arrive at the interview confident that you will not only communicate clearly, intelligently, and effectively, but learn what you need to know to make informed responses and decisions.

Remember, you are the product being promoted – not just your skill set but your personal “brand” and reputation as a professional.

Candidate Prep

Do Your Homework

The candidate must demonstrate that they’ve taken the process seriously and have thoroughly researched the company – its people, product, market, culture, and the objectives of the role.  Online resources abound, but don’t overlook the simple step of actually looking at the product and talking to a salesperson.

Of course, working with an executive recruiter who has established a working relationship with the company is most helpful in gaining insight into the stated objectives, the reporting structure, and the culture.

Prepare Your Questions

You can’t learn everything you need to know through research beforehand, but asking great questions in the interview demonstrates your ability as much as the answers you give.  The specific role and opportunity will guide you in formulating your questions, some of a technical nature and some regarding the company’s structure and culture.

Just as you would if meeting with a potential client, ask what the company’s needs are, what the role’s objectives are, and most importantly, how success in this role will be measured.

Don’t be afraid to ask this question toward the end of the interview, “Is there anything in my background or anything we’ve discussed today that would prevent us from moving forward?”  This is your opportunity to overcome objections, or simply to clarify misunderstandings.  In any case, the interviewer will respect your willingness to address issues.

Prepare Your Presentation

Create a brief presentation summarizing your background, experience, and your fit for the role.  Outline how you would “hit the ground running” with a 30-60-90-day plan.  Demonstrate that you are thinking as a true business partner and not just a functionary.  Don’t make it too complicated or lengthy – ask if you will have the opportunity to make your presentation and be flexible to fit the format and agenda of the interviewer(s).  Having something that you can leave behind is a good option.

Be Prepared to:

Establish Rapport

Just as interviewers should set the tone of welcoming, relaxed professionalism, the candidate should meet that with a personable, outgoing approach to everyone they meet.  Smile, make eye contact, and look for common ground to connect with people.

Answer Questions

Be prepared to answer questions about yourself and your experience, not least of which is “Why are you interested in this opportunity?”  Your motivation is important, certainly not your dissatisfaction with your current position or, “I need a job,” but “This is what excites me about your firm and this opportunity, this is what you’re looking to accomplish, and I can do it for you.”

Anticipate questions about not only the hard skills needed, but the leadership, management of others, relationship building, and cross-functional interaction, both within the organization and with customers and/or vendors.

Be direct in answering questions and don’t digress into long-winded stories.  Be prepared to use specific examples, including metrics wherever appropriate.  Make sure your answers and the examples you use fit the question being asked.  “This was the situation, this was the course of action, these were the results.”

If relocation is involved, be prepared to discuss what would be involved, in particular any family considerations that would affect the move.

Go with the Flow

Be prepared to be flexible if the schedule and/or agenda is adjusted on the fly.  Be aware of the interviewer’s manner, style, and priorities and adapt.  If you’re working with a recruiter, it may be possible to have an agenda beforehand.

Focus on Opportunity, Not Compensation

While compensation is important, your primary focus should be on the opportunity and your fit for the role.  If an interviewer asks for your expectations, you can simply state that if you are their chosen candidate for the position, you will consider any appropriate offer.  By the way, the advantage of working with an executive recruiter is that he/she will act as an intermediary, establishing compensation expectations up front.

Discuss Relo

If applicable, you should be prepared to discuss relocation, including your knowledge of or questions about the area, family considerations, plans to sell and buy a home, and timeline.  Of course, the details of relo plans become more relevant the further along you are in the interviewing process.

Be a Closer

Ask if there is anything in your background that would prevent you from moving forward in consideration.  Be prepared to clarify and address any questions or concerns.

Thank the interviewer, express your appreciation and excitement for the opportunity, and ask what the next steps are.  Exchange contact info where appropriate and remember to send a follow-up “thank you” email.


 The executive interview is a company’s investment of time and money in you.  Make sure that you are well prepared to demonstrate that it was a worthwhile investment.  Don’t be a “tire kicker”!  This is also your investment in your career and future growth.  The well prepared candidate will come away from the interview, whatever the outcome, having established good rapport and relationships with the interviewers, having learned what they need to know to make sound decisions, and having promoted their personal “brand” as a professional.

By |2024-03-05T15:11:24-05:00January 15th, 2024|Categories: Articles|

The Executive Candidate Interview…Be Prepared! (Part 1)

By: Rick Mohrman

Executive Recruiter Rick Mohrman has over eighteen years’ experience at Brooke Chase Associates in retained search placement of executives, where the firm works extensively with clients and candidates to structure and prepare for the interviewing process.

It’s a new year and companies are busy putting their 2024 plans to work, not least of which are plans for executive hires.  In a two-part series we’ll talk about Preparing for the Executive Interview on both sides of the table, the company, and the candidate.  We’ll also highlight how working with an executive recruiter can be to your distinct advantage throughout the process.  This first article addresses the company’s side – structuring, previewing, formatting, and setting the right tone.

The Need to Prepare

The executive interview is a little like courtship.  This is beyond casual dating.  It carries the intent to form a partnership and requires thoughtful interaction to discover the potential for “fit” – compatibility, unity of purpose, and a commitment to each other.

Both parties have to be fully engaged in the process – the interview is a two-way street, and for it to have real value as an effective means of communication and discovery, preparation by both the interviewer(s) and candidate is essential.

Company Prep

Preview the Candidates

Get familiar with candidates’ work history and accomplishments prior to the interview.  Review their resume and, even more important, any background an executive recruiter may have provided, either orally or in a write-up.  Previewing candidates allows the interviewing team to highlight any particular area of questioning that is relevant to the individual candidate’s background.

At Brooke Chase, along with an oral presentation and review of candidates, we provide our clients with a fact sheet that includes details not usually found in a resume.  This enables an effective and efficient use of time. Interviewers come in familiar with a candidate’s background and focused on their structured format and follow-up questions pertinent to the individual candidate, rather than having to cover the basics of work history in the interview.

Structure the Interview

Companies conducting interviews for an executive role bring varying degrees of interviewing expertise to the process.  Whatever their level of experience, interviewers need the structure of a set of predetermined, topic-specific questions appropriate to the role being filled.

Following a standard format from candidate to candidate allows the interviewing team to make a direct comparison of the candidates’ strengths and weaknesses and avoids the “gut feel” decision making based solely on subjective biases.  “Winging it” is never a good strategy.

While cultural and personality fit are truly important in selecting the best candidate, questions that address those issues should be defined and included in the standard list of interview questions.

Reviewing the candidates with an executive recruiter who has conducted face-to-face interviews is a real benefit in filling in the “gaps” in the interview structure.  We provide insight and perspective gained from our interaction with the candidate, enabling interviewers to tailor their structure to address specific hard and soft skills.

Interview Format

This prepared and structured approach is important no matter which interview format a company utilizes.  In the one-on-one format, each interviewer should have a specific area and set of questions to cover, and a “round-up” should be held upon completion so interviewers can share their results with each other.

In the panel format, one person should be appointed as the moderator, asking questions and allowing other members of the panel to pose follow-up questions that are topic specific.  The moderator’s job is to make sure the conversation stays on point and follows the schedule.

In some cases, companies have asked Brooke Chase to act as the interview moderator, especially when they are conducting a panel interview with multiple team members.  This allows interviewers to focus on the candidate’s answers, make notes, and pose follow-up questions.  It also provides a third-party “referee” who will keep the interview and discussion on track with agenda and time schedule.

Set the Tone

Interviewers must always remember that it’s a two-way street – candidates are interviewing them and, in a sense, the company, as well as being interviewed for the position.  In this setting, the interviewers are brand ambassadors, presenting the company’s culture and opportunity.

Be welcoming and personable.  Make each candidate feel important by giving them your full attention, making good eye contact, and keeping the atmosphere relaxed but professional.  And a little humor goes a long way when asking follow-up questions, even the tough ones, without making the candidate feel they are under the spotlight of an interrogation room.

Final Round – Roll out the Red Carpet

Setting the tone goes beyond being cordial in the interview.  Making the candidate feel truly welcome becomes even more important in the finalist round interviews.  If relocation is involved, this is especially critical, not only for the candidate but for their spouse and family.

Invite the spouse to accompany the candidate and arrange a time to meet them socially (include your spouses if appropriate).  Put them in contact with a trusted realtor to get their housing preferences, school requirements, and schedule a tour of the area.  You are welcoming them to a new community, home, and “family”.

Get and Give Feedback

Getting feedback from a candidate is important in several ways.  A company needs to know how the candidate processed the information learned during the interview, how that affected their motivation to move forward in the process, and what adjustments might be made in the interview format and structure.

The company should also be prepared to give feedback, emphasizing the candidate’s strengths, and noting areas of question or concern.  Never burn bridges!  Remember that you want to leave a favorable impression on the candidate regardless of the outcome of the interview.

Again, having an executive recruiter as your partner is most helpful in that it allows both candidate and company to give candid feedback to an intermediary who is skilled in communicating positives and negatives in an acceptable manner.


Successful companies carefully strategize, plan, allocate resources, and execute to achieve their goals.  Why would they invest any less in the hire of a key executive who will help them achieve those goals?  Identifying a slate of motivated and qualified candidates is only the first step in beginning the “courtship” process.

Interviewers should invest in familiarizing themselves with the candidates, structuring and formatting the interview, setting the tone of warm welcome, preparing to be brand ambassadors, and providing objective feedback.  Yes, it’s an investment of time and requires the discipline to follow the structure laid out.  But isn’t the reward of a successful hire worth it?

By |2024-03-05T15:11:02-05:00January 15th, 2024|Categories: Articles|

IRS Delays $600 Form 1099-K Reporting Threshold

Businesses and individuals concerned about the confusing 1099-K reporting requirements can breathe a sigh of relief: On November 21, 2023, the IRS announced that the deadline for the new $600 reporting threshold won’t go into effect for the 2023 tax year — and it’s expected to increase the threshold less than expected for 2024. Here’s what third-party settlement organizations and taxpayers need to know.

Changes to the Reporting Threshold

Third-party settlement organizations must report payments in a trade or business to the IRS and recipients. This is done on Form 1099-K, “Payment Card and Third-Party Network Transactions.” Examples of third-party settlement organizations include Venmo and Cash App, as well as gig economy facilitators, such as Uber, Lyft, Etsy and TaskRabbit.

The American Rescue Plan Act of 2021 lowered the minimum threshold to file Form 1099-K for a taxpayer from $20,000 of reportable payments made to the taxpayer and more than 200 transactions to $600 (the same threshold applicable to other Forms 1099) starting in 2022. In late 2022, the IRS temporarily delayed the reduced threshold for the 2022 tax year.

Following additional feedback from taxpayers, tax professionals and payment processors, it’s been delayed again for 2023, and the IRS is planning for a threshold of $5,000 for 2024. This will give taxpayers more time to prepare their systems and procedures for when the $600 1099-K threshold is scheduled to go into effect in 2025.

“Taking this phased-in approach is the right thing to do for the purposes of tax administration, and it prevents unnecessary confusion as we continue to look at changes to the Form 1040. It’s clear that an additional delay for tax year 2023 will avoid problems for taxpayers, tax professionals and others in this area,” said IRS Commissioner Danny Werfel.

Looking Ahead

The lower threshold for filing 1099-K forms will mean many participants in the gig economy will receive these forms for the first time. The IRS estimates that the reduced threshold, if it had gone into effect in 2023, would have resulted in the distribution of 44 million 1099-Ks sent to many taxpayers who wouldn’t expect one and might not have a tax obligation. This could have caused significant confusion among individuals and businesses.

Important: The 1099-K reporting requirements don’t apply to personal transactions, such as birthday or holiday gifts, sharing the cost of a car ride or meal, or paying a family member or another person for a household bill. These payments aren’t taxable and don’t require 1099-Ks. However, the sale of goods and services, including selling used personal items — such as clothing, furniture and other household items — could generate a Form 1099-K for many people, even if the seller doesn’t have a tax liability from those sales.

Members of Congress have introduced bills to raise the threshold back to $20,000 and 200 transactions, but there’s no guarantee that they’ll pass. In addition, taxpayers should generally be reporting income from their side employment engagements, whether it’s reported to the IRS or not. For example, freelancers who make money selling products on Etsy or driving for Uber should have been paying taxes all along. However, Congress and the IRS have said this responsibility is often ignored. In some cases, taxpayers may not even be aware that income from these sources is taxable.

In the meantime, businesses should prepare in 2024 to minimize the tax consequences of the gross amount of Form 1099-K reportable payments. And taxpayers should review gig and other reportable activities to ensure payments are recorded accurately. Payments received in a trade or business should be reported in full so that workers can withhold and pay taxes accordingly. If you receive income from certain activities, you may want to increase your tax withholding or, if necessary, make estimated tax payments or larger payments to avoid penalties.

In addition, taxpayers who haven’t been reporting all their income from gig work may not have been documenting expenses that result in deductions. It’s important to start doing so now to minimize the taxable income recognized due to the gross receipts reported on Form 1099-K. The IRS is likely to take the position that all of a taxpayer’s gross receipts reported on Form 1099-K are income and won’t allow deductions unless the taxpayer substantiates them. Deductions will vary based on the nature of the taxpayer’s work.

For More Information

The expanded 1099-K reporting requirement is complex and will affect many businesses and individuals. “The IRS will use this additional time to continue carefully crafting a way forward to minimize burden,” said Commissioner Werfel. Contact your tax advisor for questions about your Form 1099-K responsibilities.

By |2024-03-05T15:10:15-05:00January 9th, 2024|Categories: Articles|

Cash Management in a Cyclical Industry

Eight strategies for boosting profits, cutting costs, and reducing risk.

Sound cash management practices are essential for any business. However, businesses in a cyclical industry have unique issues that require special diligence.

A cyclical industry—like construction, airlines, oil and gas—is sensitive to the business cycle, meaning its revenue is generally higher in periods of economic prosperity and lower in periods of economic downturn.

“Cyclical industries need to plan meticulously for downturns, ensuring they have adequate cash reserves, whereas noncyclical industries may have more consistent revenue flows,” says Jack McCullough, president of the CFO Leadership Council. “Feast or famine is a reality, more so in cyclical industries.”

Consider these eight strategies for cutting costs, saving money and reducing risk—some of which might be useful for noncyclical businesses as well.

  1. Plan for the Worst

Eric Kraft, Dallas/Fort Worth commercial banking executive for First Horizon Bank, says conducting a strategic planning session at least once a year is important for all businesses and critical for a cyclical business. Companies should produce an operating plan, complete with financial projections, that considers three potential outcomes: a best-case scenario, when the economy performs well and all other factors fall into place; a worst-case scenario, when the economy falters; and a likely scenario, when things go as expected.

The cyclical companies that do the best job of planning are able to withstand difficult economic times. One best practice is to invite employees from several organizational layers to take part in the early-stage planning sessions. “Front-line employees can offer significant insight into customers’ and suppliers’ operating resilience,” Kraft says. “The companies that fail at planning don’t get the right people in the room, or they don’t allow them to freely share their thoughts.”

He recommends having a third-party consultant supervise the planning process, so the business owner is freed up to take part in the planning.

  1. Cushion Yourself for Downturns

Companies in cyclical industries should have significantly greater capitalization and liquidity than companies that don’t cycle often; they should position the company during peak times to allow a cushion for downturns, according to Kraft.

“You need to be able to withstand these downturns and absorb losses for a certain period of time without materially cutting your fixed overhead,” he says. “If you find yourself in a situation where you need to cut costs, there are only so many levers you can pull, like laying off employees. We saw that in the pandemic, where restaurants closed locations and then when business returned, they weren’t able to get their employees back.”

When asked their priorities for 2024, more than half (51%) of midmarket business leaders put growth at the top in a recent WSJ Intelligence survey. Growth, like customer experience and increasing operational efficiency—ranking second and third, respectively—hinges on effective cash management.

  1. Reduce Balance Sheet Leverage

Cyclical companies should generally have lower balance sheet leverage. “When they do borrow, it’s prudent to shorten the term of the debt to a period that is well less than the useful life of the underlying asset. By doing this, they will deleverage more quickly, relieving interest costs and creating the potential to refinance in a downturn,” Kraft says.

  1. Factor in the Changing Interest Rates

Dana Moore, director of treasury management sales for First Horizon Bank, says companies should reevaluate the value of their cash in light of recent interest rate increases.

“Prior to the recent rate hikes, we were in an ultralow interest rate environment for over a decade. Debt was cheap and invested cash earned less than 1%. During this period, businesses lost discipline around cash management because the time-value of money was almost irrelevant. Now is the time to revisit that discipline; this higher interest rate environment creates opportunities to apply idle cash to pay down revolving credit or park in short-term investments,” she explains. “The markets right now are offering extremely favorable interest rates for liquid instruments, so companies are really missing out on an income opportunity or a savings opportunity if they are not using their cash in the most effective way.”

  1. Use Lines of Credit as a Buffer

A line of credit should be used as a buffer during downturns, not as a primary source of funding, McCullough says. “It’s essential to avoid maxing it out; instead, maintain a balance to ensure availability during unexpected challenges,” he cautions. “Regularly review the terms and conditions of the credit line to ensure they remain favorable and meet the company’s needs.”

  1. Consider Purchasing Cards

Moore notes that businesses may not realize the benefits of using purchasing cards, which are payable in full each month and available to commercial entities. “These cards usually have larger credit limits and are best used to pay suppliers,” she says. “The suppliers receive their money in a timely manner, while letting the company extend those payables up to an additional 45 days.”

  1. Keep on Top of Cash Management

McCullough says some of the most common mistakes he sees among cyclical businesses are not diversifying revenue sources, overextending during peak times and neglecting to regularly revise and update financial forecasts.

“To avoid these mistakes, companies should maintain a conservative financial stance, regularly review their cash flow projections and aim for flexibility in both operations and financial commitments,” he says.

  1. Focus on Business Efficiency

Cash management cycles have changed considerably over the past five or six years, Moore says. “When people started to work from home during the pandemic, everyone was forced to become more nimble,” she says. “Businesses moved from paper to electronic transactions to be more effective—for both receivables and payables. Traditionally, cash management has been about accelerating receivables and delaying payables to the extent possible, while having visibility into the organization’s cash flow. The next evolution is to use advancing technology to take on the more mundane accounting tasks, freeing staff to perform higher-value functions. It’s time to embrace cash management again as part of the strategic business plan.”

Brooke Chase Associates, Inc. was not involved in the creation of this content.

By |2024-03-05T15:09:30-05:00January 9th, 2024|Categories: Articles|
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