DEWINE SIGNS STATE BUDGET; SIGNIFICANT TAX INCREASES FOR AGENTS AVERTED

This morning, Gov. DeWine signed the state’s two-year operating budget into law. Of importance to agents is that the language that would have resulted in a significant tax increase for many members was NOT included in final bill, as the final budget largely restored the Business Income Deduction (BID) that allows pass-through entities to deduct up to $250,000 of their business income from Ohio income tax liability. Additionally, a flat, three percent tax on all business income above the $250,000 remains intact.

The BID was a big sticking point in budget negotiations, and a 17-day extension was passed on June 30 to allow more time for negotiations on this and a number of other issues. Notably, the final budget language does eliminate BID eligibility for lawyers and lobbyists. With this change coming at the last minute, the potential ramifications of this language on agencies that employ Ohio-licensed attorneys is still being determined.

BACKGROUND ON THE BID

The business income deduction (BID) that was created a few years ago to level the playing field for pass-through entities (sole proprietors, LLPs, LLCs, S-corps) that pay both the commercial activity tax (CAT) and income tax. The BID was first established in 2013 and finalized in 2015. It has been in place in its current form just since Tax Year 2016. In 2016, the Ohio General Assembly instituted the final version of the BID allowing pass-through entities to deduct up to $250,000 of their business income from Ohio income tax liability. Additionally, a flat, three percent tax on all business income above the $250,000 was implemented.

The majority of OIA member independent insurance agencies are set up as pass-through entities. It is also important to note that more than 80% of our members employ less than 10 people, and these independent insurance agencies survive on small margins.

OHIO HOUSE PROPOSED CHANGES TO BID

The Ohio House’s version of the state budget reduced from $250,000 to $100,000 the maximum deduction and eliminated the three percent flat rate to pay for a 6.6 percent across the board income tax reduction. The House has proposed making these changes retroactive to January 1, 2019, potentially subjecting taxpayers to fines and penalties on estimated payments they have already made.

OHIO SENATE PROPOSED CHANGES TO BID

The Ohio Senate’s proposed state budget restored the BID to $250,000, but proposes the elimination of the three percent flat tax rate beginning in 2020.  OIA is grateful to the Senate for their support in keeping the threshold at $250,000 and not making the elimination of the three percent flat tax rate retroactive.

OIA ADVOCATES AGAINST BID CHANGES

In June, OIA leaders and members of OIA’s Advocacy and Political Committee from around the state met with Ohio policymakers to advocate on issues like the proposed changes to the BID. OIA members shared their perspective and advocated against this tax increase that would have resulted in a negative impact on many OIA members and their clients.

OIA also engaged in a number of meetings on this issue with a coalition of associations that also opposed these tax changes. In late June, OIA signed onto a letter that was sent to Ohio’s leaders urging them to keep Ohio business taxes stable and to continue to support small business owners in their efforts to reinvest in their business by preserving the BID.

OIA greatly appreciates all the time that members took to educate legislators on the importance of the preservation of the BID. Ultimately, the removal of the BID language is a huge win for Ohio agencies.

Stay tuned for further details on the state budget in the coming days.


Also see: 

Interim State Budget Passed; BID Tax Issue Still Undecided

Ohio House Passes State Budget With Significant Tax Increase For Small Businesses


Interim State Budget Passed; BID Tax Issue Still Undecided

With a deal not reached on the two-year state operating budget by the June 30th deadline, the Ohio General Assembly sent an interim state operating budget to Gov. DeWine for approval last night. While state operations will remain funded for the next 17 days, OIA remains concerned about significant changes that have been proposed to the Business Income Deduction (BID) via the state budget that would result in significant tax increases for many OIA members. The BID allows pass-through entities to deduct up to $250,000 of their business income from Ohio income tax liability. Additionally, a flat, three percent tax on all business income above the $250,000 exists.


Background on the BID

The business income deduction (BID) that was created a few years ago to level the playing field for pass-through entities (sole proprietors, LLPs, LLCs, S-corps) that pay both the commercial activity tax (CAT) and income tax. The BID was first established in 2013 and finalized in 2015. It has been in place in its current form just since Tax Year 2016. In 2016, the Ohio General Assembly instituted the final version of the BID allowing pass-through entities to deduct up to $250,000 of their business income from Ohio income tax liability. Additionally, a flat, three percent tax on all business income above the $250,000 was implemented.


The majority of OIA member independent insurance agencies are set up as pass-through entities. It is also important to note that more than 80% of our members employ less than 10 people, and these independent insurance agencies survive on small margins.


Ohio House Proposed Changes to BID

The Ohio House’s version of the state budget reduced from $250,000 to $100,000 the maximum deduction and eliminated the three percent flat rate to pay for a 6.6 percent across the board income tax reduction. The House has proposed making these changes retroactive to January 1, 2019, potentially subjecting taxpayers to fines and penalties on estimated payments they have already made.

Ohio Senate Proposed Changes to BID

The Ohio Senate’s proposed state budget restored the BID to $250,000, but proposes the elimination of the three percent flat tax rate beginning in 2020.  OIA is grateful to the Senate for their support in keeping the threshold at $250,000 and not making the elimination of the three percent flat tax rate retroactive.

OIA has been engaged in a number of meetings on this issue with a coalition of other associations that also oppose these tax changes. Last week, OIA signed onto this letter that was sent to Ohio’s leaders urging them to keep Ohio business taxes stable and to continue to support small business owners in their efforts to reinvest in their business by preserving the BID.

With a looming state budget deadline of June 30th and no agreement reached between the Ohio House and Ohio Senate on a final two-year operating budget, the Ohio Senate passed a 17-day interim state budget late Saturday night and last night the Ohio House also agreed to support this extension.

At this time, the tax changes are a major sticking point between the House and the Senate along with education funding and health care changes. With an interim operating budget now in place, more time can now be afforded to continue negotiations on a final two-year state operating budget. Notably, both the House and Senate voted to eliminate the three percent flat rate on income more than $250,000, so it is unlikely to return in the final bill.


OIA will provide an update on the state budget and the fate of the BID as more information becomes available.


Also see: Ohio House Passes State Budget With Significant Tax Increase For Small Businesses


ARLINGTON/ROE PROMOTES CARR, SNIDER AND JOHN TO VICE PRESIDENT

Indianapolis – Jennie Carr, Robin Snider and Terri John have been promoted to vice presidents at Indiana-based Arlington/Roe according to James A. Roe, president and CEO of the company, a managing general agency and wholesale insurance broker. Carr, Snider and John joined the company in 2004, 2010 and 2011, respectively.

Jennie Carr, CIC, AU was named Vice President, Brokerage. She began her Arlington/Roe career in 2004 in marketing and advanced to a commercial underwriter position and later to senior broker. Jennie is an active participant in Indiana Young Agents and gives her time, energy and leadership in service to advance the careers of future agency leaders. She is a member of the WSIA Education Committee. Jennie graduated from Indiana University with high honors. She earned the Associate Underwriter (AU) designation in 2010 and the Certified Insurance Counselor (CIC) designation in 2011.

Robin Snider, AU, was named Vice President, Healthcare and Human Services and Standard Small Business. She had most recently served the company as practice leader of the healthcare and human services group and the standard small business team after joining Arlington/Roe in 2010. Her previous experience includes business and sales management, underwriting and account management on both the retail and carrier side. She has also served as an elected officer and board member for multiple city/county chamber of commerce board of directors. She is a graduate of Ball State University and holds the Associate Underwriter (AU) designation.

Terri John, ASLI, was named Vice President, Commercial Lines. She joined the company in 2011 as a commercial underwriting associate and advanced to underwriter and broker. She is a graduate with honors of the insurance and risk management program at Indiana State University where she served in several officer roles for Gamma Iota Sigma, the international insurance, risk management and actuarial sciences collegiate fraternity. Terri also had the opportunity to intern in several areas of the insurance industry including an excess and surplus lines company, an MGA/wholesale brokerage and two independent insurance agencies. Terri holds the Associate in Surplus Lines Insurance (ASLI) designation.


About Arlington/Roe 

Arlington/Roe is a family-owned managing general agency and wholesale insurance brokerage headquartered in Indianapolis, Indiana with offices also in Ohio, Michigan, Illinois, Kentucky, Tennessee, Missouri, Minnesota and Wisconsin. Arlington/Roe was founded in 1964. Arlington/Roe’s specialty departments include Aviation, Bonds, Farm, Personal Lines, Commercial Lines (Underwriting and Brokerage), Transportation and Garage, Professional Liability, Workers’ Compensation and Healthcare & Human Services. The company writes in excess of $220 million in annual premium. 


Are You Addressing Environmental Liabilities with Your Clients?

…Because if you’re not, another broker surely will.

Argosy Risk Specialists is here to offer expert guidance in complex environmental matters. By partnering with us, you can help protect your insureds from potential environmental liabilities. Engaging Argosy in the process--as a seamless and collaborative part of your account team, a consultant or as an indirect advisor—allows you to feel confident in addressing this complicated subject, helping to keep your clients and drive new business.    

Argosy is led by Tanya Andolsen, a 23-year veteran and leading expert in the environmental insurance niche, with extensive experience at some of the most trusted organizations in the industry.

“It’s important to me that agents and brokers value the guidance that Argosy Risk Specialists can offer as a trusted partner and resource when it comes to environmental risks,” said Andolsen. “Throughout my career, I’ve encountered too many companies that are uninsured or underinsured for potential environmental liabilities. In most cases it’s because of inadequate counseling or direction from their current agent or broker, merely because the account team lacks the expertise or knowledge on how to even begin addressing the subject with their insureds.”

Andolsen served at AIG Environmental as an underwriter and later as a regional manager, overseeing a team of several environmental risk analysts and loss control consultants. During her years years at AIG, she worked alongside many industry leaders responsible for the development of fundamental coverages and underwriting guidelines that have been the building blocks in the environmental insurance market. Later, she moved to the brokerage side, spending 13 years at Wells Fargo Insurance Services (formerly Wachovia and Palmer & Cay), as a national environmental specialist, working with clients nationwide on a wide range of environmental risk management and insurance placement services.

In 2016, she joined Armada Risk Partners as Senior Vice President and Director of Environmental, where she expanded her portfolio to include Property & Casualty Team Leader.

A native Clevelander, Ms. Andolsen earned an MBA in International Business from Baldwin Wallace University, as well as a BSBA from John Carroll University, with a dual major in Logistics and Marketing and a minor in Communications.

Argosy Risk Specialists is a company partner of Ohio Insurance Agents Association.


ABOUT Argosy

Argosy Risk Specialists is a wholesale insurance broker offering guidance on how to best transfer unique and complex environmental risks. We assist reputable brokers nationwide in the placement of state-of-the-art, creative and relevant environmental insurance programs.

Based in Cleveland, Ohio, our service team offers considerable access to multiple markets, fast response times, and support that goes beyond simple insurance placement.

Learn more at www.ArgosyRisk.com


Knowledge is Power

It may be cliche, but in business it’s the truth. Independent agents need to know what the landscape looks like to stay competitive and keep bringing in new talent. Through IntellAgents, you have exclusive access to data, including salary and benefits information, that can help you make informed business decisions.

We know there are several other organizations that provide national compensation studies, and we also know that those studies do not provide our average agents with information that they can put to use. The unique nature of our insurance marketplace causes those studies to be largely irrelevant when it comes to compensation and productivity.

On a weekly basis, OIA receives calls and questions from members regarding retaining and recruiting talent, and many of those questions relate directly to the compensation and benefits needed to attract quality employees. These types of questions drove us to focus on creating insights that are relevant to our marketplace regarding benefits and compensation.

Considering how competitive the insurance job market is these days, when you identify a potential employee, how much do you need to pay them to compete with other agencies? What benefits are other agencies offering, and how do yours compare? That’s information you can use and our goal is to help you get it.

On January 22nd , we launched our second annual compensation and benefits survey to gather Ohio-specific independent agent data. This is the first step toward being able to supply our members with data they can use. The response so far has been positive, but we need more agencies to participate to make sure we have a relevant data set. We need at least 20 percent participation; once we meet that benchmark, we will be able to tell you what the average compensation and benefits are in your region of the state. We know that there’s no sense in comparing pay in Franklin County to Marion County or any other area of the state. That’s why we need your participation to help us reach our goal and provide relevant information that you can rely on and put to use within your agency.

The survey asks for very specific data such as age and salary of your employees. All responses are kept strictly confidential and are only reported in the aggregate. No one will be able to identify your agency or a specific employee in your agency.

Don’t be left in the dark when trying to attract talent. 

Just for participating in the IntellAgents compensation and benefits survey, we will give you the results, a $150 value, for free. Depending on the size of your agency, the survey will take you between 15 and 30 minutes. We know how busy you are, but what is 30 minutes of your time worth to get information you can’t get anywhere else?

Two things to know before you start: You’ll need your agency’s National Producer Number (NPN) and your individual NPN to answer two questions. You can find both on the National Insurance Producer Registry.

Click here to begin survey!


About IntellAgents, LLC

IntellAgents, LLC is a first-of-its-kind, analytics-driven organization that specializes in actionable insights for independent agents. Founded in 2018 by Ohio Insurance Agents Association, it is the fastest-growing independent insurance data warehouse in the country. IntellAgents products and services are available in Ohio, Delaware, Florida, Illinois, Maryland, Massachusetts, Michigan, North Carolina, and Pennsylvania. Availability in other states will continue to expand throughout 2019.

To find out more about IntellAgents check out intellagents.io

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