Manufacturers and wholesale distributors have been no strangers to supply chain crises over the past several years. Disruptions caused by pandemic-related business shutdowns, the Suez Canal blockage, and the Panama Canal drought have impacted manufacturers, distributors, and other businesses globally. Regional events, including Hurricane Idalia, also have created more localized disruptions.

Yet, another recent incident could also impact some areas of the supply chain. After the Francis Scott Key Bridge tragically collapsed last week, marine traffic around the Port of Baltimore stalled. Ships currently in the port will likely remain in place for the time being, causing delays for goods carried on these vessels. Moving forward, importers should remain vigilant regarding deliveries of cars, light trucks, farming equipment, and construction equipment, all of which arrive in high volume at the Port of Baltimore. Other goods including sugar, gypsum, and forest products could also be affected.

In the short term, it is expected that the port can reopen after the wreckage and debris is cleared. Due to available capacity, it is likely that other East Coast ports will handle the increased volume. This diversion may mitigate significant delays. Fortunately, it is anticipated that the Port will resume full operations within a matter of weeks, despite the bridge being out of service for several years if not a decade.

The bridge closure will likely impact many companies along the East Coast. Many alternative routes have size or material restrictions, which will make large loads or hazardous materials more difficult to transport. Further, companies with warehouses or distribution centers located in or around the Baltimore area may be particularly affected by land-based transportation challenges.

As a result, many currently predict that the most significant impact to the entire supply chain will be cost. Imports may be diverted to other ports, lengthening the transportation time for these goods to reach their destination. Trucking companies may need to prepare for significant delays and lengthened driver times; both the inability to predict new route traffic and the lengthened transportation time will undoubtedly increase costs. Further, some businesses that rely on these goods may increase inventory and will look to increase prices in order to cover heightened carrying costs.

With supply chain disruptions becoming more common, manufacturers and wholesale distributors can take five actions to mitigate their risk:

1. Assess any potential short-term impacts from the Francis Scott Key Bridge collapse. This includes delays related to any imported products as well as delays that your suppliers may experience related to their imports. If you have significant import exposure, consider whether an onshoring option can provide resiliency for your supply chain.
   
   
2. Prepare yourself for cost increases in the short term. As inflation continues at a higher-than-normal pace, businesses must be prepared to ensure they can actively manage their costs to remain profitable and stable. Products not directly impacted by the bridge collapse may also be affected since land transportation is likely to be challenged for some time.
   
   
3. Talk with your suppliers. Even if you do not directly import, consider meeting with critical suppliers to ensure you understand vulnerabilities that can affect your business. Discuss the impact of the Francis Scott Key Bridge collapse on imports as well as their expectations for delivered lead times and costs over the next 12 months.
   
   
4. Continue to re-evaluate your supply chain. Many organizations revisited their supply chain after the pandemic, seeking alternative suppliers and modest levels of inventory after years of a just-in-time approach. If you have not continued to review your supply chain, consider doing so. Ensure that weaknesses are addressed and contingency plans are made in case a key supplier cannot deliver to you for any reason.
   
   
5. Prepare for the unexpected. Over the first quarter of the century, businesses have experienced several unexpected events. Besides the Francis Scott Key Bridge collapse, economic cycles, geopolitical tensions, the pandemic, acts of terror, and weather events have occurred, which are situations that business owners cannot control. Having basic protections, including maintaining adequate cash availability, using a financial budget, and ensuring you have and review timely-prepared, accurate financial statements on a regular basis can help you ensure that you are financially stable and able to weather future issues.

To discuss your supply chain preparedness, financial position, or other aspects of your business, please contact HBK Manufacturing Solutions at 330-758-8614 or manufacturing@hbkcpa.com.     

Have you worked overseas or moved to the U.S. from another country where you duly earned pension benefits or deferred compensation?  Do you also have a tax-free savings account or life insurance policy in a foreign country?  Your answer may be, “Sure, yes, but what does it have to do with foreign trusts?” That’s a valid question. After all, what do trusts have to do with pensions plans? Keep reading to find out more about U.S. taxation of foreign pensions and retirement accounts.

Migration among countries and continents has never been at levels in the history of humanity as high as today. We move seeking a better life, greater opportunities, and more freedom. Amid all this, taxation is not always a priority concern. Hence, tax is sometimes overlooked and falls through the cracks until a next deadline.

Most commonly, taxes on income from the likes of salaries and investments are remembered first. However, in addition to taxes on income items, the IRS requires the disclosure of foreign assets, including foreign pension plans and other deferred compensation arrangements.

Generally, foreign pension and retirement plans, including certain annuity plans, life insurance policies, and other tax-deferred savings accounts are treated as foreign grantor trusts.

What is a Trust?

In her article “Do You Have a Foreign Trust?” recently published in the Naples Daily News, Principal and Chair of the HBK Tax Advisory Group Amy Dalen defined “trust” as “any arrangement where an individual (trustee) holds title to property for the benefit of others (the beneficiaries).” A trust is defined as a “foreign trust” if a court outside the United States exercises primary supervision over the administration of the trust and no U.S. persons are authorized to control all substantial decisions of the trust. Foreign trusts can be grantor and nongrantor trusts. A trust is a grantor trust when a U.S. citizen is treated as the owner of the trust for income tax purposes. A nongrantor trust, on the other hand, is treated as a separate taxpayer from the grantor and beneficiary. The U.S. foreign reporting requirements differ substantially from other foreign trusts when a U.S. citizen is treated as the owner of either type of trust.

Trusts, Pensions, and Taxation

The IRS generally requires foreign grantor trusts to file two forms: Form 3520, Annual Return to Report Transactions with Foreign Trusts and Receipt of Certain Foreign Gifts; and Form 3520-A, Annual Information Return of Foreign Trust with a U.S. Owner. There are significant penalties, a minimum of $10,000, for failing to file complete and accurate Forms 3520 and 3520-A. The IRS can reduce or eliminate the penalty if the U.S. person can demonstrate reasonable cause for failing to file the required form(s).  

Now let’s turn to the role trusts play in defining pension plans. U.S. tax regulations distinguish between qualified and non-qualified pension plans. Consider a 401(k) as a qualified pension plan. Generally, a qualified pension plan is a trust created or organized in the United States and forming part of a pension plan of an employer for the exclusive benefit of their employees or their employees’ beneficiaries.¹ By default, then, foreign pension plans are not qualified because they are not organized in the United States, the most significant difference being that contributions to qualified pension plans are deductible while distributions are taxable².

Therefore, even though a contribution to a foreign pension plan is tax-deferred in a foreign jurisdiction, it could be taxed in the United States depending on the terms of pensions plan scheme. Moreover, since the U.S. person who contributed to the foreign plan is treated as the U.S. owner and beneficiary of a pension plan organized outside of the United States, the pension plan would generally be treated as a foreign grantor trust.

Thus, foreign pensions and other deferred-compensation accounts should be carefully evaluated by a tax advisor, as many plans can be treated as grantor trusts for U.S. tax purposes, bringing on a multitude of additional U.S. foreign reporting requirements. If such additional filings are not timely identified and complied with, the taxpayer may be subject to harsh penalties.

Furthermore, the investments held within a pension plan may also fall under the definition of Passive Foreign Investment Companies (PFICs). These are pooled investments that are registered outside the United States. Thus, in addition to Forms 3520 and 3520-A, the taxpayer might also be required to file a Form 8621, Information Return by a Shareholder of a Passive Foreign Investment Company or Qualified Electing Fund, for each PFIC held in the pension plan. Form 8938, Statement of Specified Foreign Financial Assets, and FinCEN Form 114, Report of Foreign Bank and Financial Accounts might also need to be filed. Each form carries hefty penalties for non-compliance.

It is important to know that the U.S. tax treatment of foreign pension plans can vary from country to country, depending on the tax treaty or social security totalization agreement between the United States and a particular foreign jurisdiction. 

Social Security System and National Pension Schemes

Government-sponsored pensions such as Social Security System or national pension schemes are public pensions. These are usually mandatory for all workers and funded by the employees, their employers, and sometimes governments. There are other characteristics that also need to be evaluated and depend on the country of origination. Where such characteristics exist, it is possible that even government-mandated retirement accounts can be treated as grantor trusts for U.S. tax purposes. However, it is also possible that a foreign government pension would have no specific reporting requirements in the United States until there are distributions. A careful analysis of the pension plan and tax treaty, if such exists between the countries, needs to be performed to determine treatment for U.S. tax purposes.

Employer-Sponsored Pensions

Foreign employer-sponsored pension plans are retirement plans that are established and maintained by employers for the benefit of their employees. The most common type of employer plan is a defined contribution plan. As with a U.S. 401(k) plan, foreign employer pension plans are generally funded by the employees while employer pension contributions may be either mandatory or optional depending on specific pension agreement and foreign country regulations. Unlike contributions to a 401(k) plan, no deduction is allowed for the employee’s portion of foreign pension contribution in the United States; it is treated as additional income for U.S. tax purposes. Furthermore, the employer’s portion of contributions may also be taxable in the United States in the current period.

Additionally, these plans are usually treated as grantor trusts for U.S. tax purposes, and therefore subject to foreign grantor trust treatment and potential PFIC reporting requirements.

Self-Funded Retirement Savings Accounts

Individual retirement accounts and retirement savings accounts are usually funded solely by the taxpayer. In absence of a tax treaty or other IRS-provided guidance, these types of foreign accounts are more likely to be classified as foreign grantor trusts for the U.S. tax purposes.  While this could be a tax-deferred plan in a foreign country, it is generally not in the United States where the foreign grantor trust is deemed an extension of a grantor. Hence, any income and growth in the plan is taxed currently. Just like foreign employer-sponsored defined contribution plans, these plans are subject to a myriad of tax filing requirements in the United States.

Other Financial Assets

Other financial assets that can result in foreign grantor trust treatment include tax-free savings accounts, certain types of life insurance policies, and other deferred compensation plans. If you are planning to immigrate to the United States, we strongly recommend pre-immigration planning to identify your potential U.S. tax reporting requirements. If you are a U.S. citizen or resident who has lived and/or worked in a foreign country, have pension plans or made investments in a foreign country, or even has family in a foreign country, you should speak with a professional familiar with international tax reporting to ensure you are in compliance with the U.S. foreign information reporting requirements.

HBK CPAs & Consultants can help you with planning and tax compliance. Please contact an HBK tax expert team for a consultation.

¹IRC §401(a)

²IRC §§401(a), 402(b)

HBK CPAs & Consultants (HBK) again ranks among the Top 50 U.S. accounting firms according to the latest study by Accounting Today magazine. In its 2024 study, the magazine also recognizes HBK as a “top regional firm,” eighth among firms in the magazine’s “Great Lakes” region, which includes Illinois, Indiana, Michigan, and Wisconsin as well as Ohio.
 
“That accounting is changing fast is something we’re all aware of on a daily basis— the sheer volume of new tools, new challenges, and new opportunities that emerge every day is a constant reminder of it,” the magazine’s editors characterized the preceding year.
 
“The accounting profession as well as the rest of the business world continues to undergo a digital transformation that is already bringing dramatic changes to the way we do business, the way we serve our clients,” noted HBK CEO and Managing Principal Christopher M. Allegretti, CPA. “Remaining relevant as well as competitive requires finding new and better ways to support our clients and their businesses. That we continue to rank among the nation’s largest and most respected accounting firms is testimony to our commitment to that objective.”
 
The annual ranking of the leading national and local firms is based on annual revenue. HBK has been included in the Accounting Today Top 100 for more than a decade.
 
HBK CPAs & Consultants is a multi-disciplinary financial services firm providing small to mid-market businesses and their owners and operators a wide range of financial solutions.

Highlights of the March 2024 edition of the HBK Risk Advisory Services webinar series hosted by William J. Heaven, CPA/CITP. CISA, CSCP, Senior Director, HBK Risk Advisory Services.

Watch on Demand.

Is your company currently managing vendor or third-party risk?

• Only 30 percent of companies are managing risk of at least half of their third-party relationships.
• 77 percent of executives say they need to overhaul their risk management program.
• 71 percent of this webinar’s attendees responded that they are not currently managing third-party risk.
• 52 to 54 percent of cyber breaches are caused by a third party.
• 46 percent of all beaches impact businesses with fewer than 1,000 employees.
• Third-party risk continues to rise:

Email/ phishing/supply chain threats (SolarWinds supply chain hack: hackers made it look like the firm was sending messages to clients that they needed updates and trusting clients accepted them thinking they were legitimate.)

How do vendors rate?

Are they meeting their obligations?

• Contractual
• Security
• Privacy

Attack vectors include:

• Ramsomware is about 25% of breaches
• Undermining code signing, as in supply chain hacking (looks like the information is coming from a trusted source)
• Compromising open-source code (many people are relying on open sources)

Zero-day vulnerability: where the bad guys have access before you notice. Cybersecurity hygiene is the best defense against zero-day vulnerability.

Who owns vendor risk?

There is confusion about responsibility: Cybersecurity is a business-level risk that can result in a tug of war between information security and procurement.

• Procurement is responsible for onboarding new third parties.
• Information security is responsible for data privacy, data protection, and information security protection.
• Express the risks and let procurement make the decision of whether or not to engage the vendor.

Third-party risk management steps:

• Discover: understand how to categorize your vendors.
• Analyze how a vendor will work into your environment. (Triage: a series of high-level questions as to how you will work with a vendor; higher risk based on whether they will take possession of your data or have access to your computer system; determine possible negative impact)
• Based on the analysis, quantify the risk.
• Prioritize which will be the most or least risky vendors.
• Continuous monitoring: most important to security; maintaining an understanding of the risk level of a vendor, whether it’s changing.
• 88 percent of webinar attendees answered they had been impacted by third-party risk.

Third-party risk on the rise

• Text messaging risk has increased.
• Third-party breach costs are rising: by about 25% and getting close to an average of $5 million per breach.
• 54 percent of organizations have experienced a breach due to a third party.
• Almost 60 percent of businesses hit with a cybersecurity breach go out of business within a year.
• Rating vendors provides an opportunity for a new vendor to protect against exposure.
• Vendors doing business in various states must adhere to security and privacy rules in those states.

Information sources:

• International Association of Privacy Professionals
• California Consumer Privacy Act: the regulation in the U.S. that is most often referenced

Where to own the risk?

• Someone has to own it, and not only IT security and procurement
• Educate employees how to take responsibility at the business level

Suggestions

• Establish a program of governance: Put things in place to make people aware of the risks.
• Use IAPP.org to monitor what’s new in terms of risk and privacy.
• Get vendor commitments.
• Sign up with FBI for hacking updates.
• CISA.gov: suggestions for security awareness programs.
• Any program needs the support of and adherence by the company’s highest level of management.

Gaps/mature characteristics

63 percent of webinar attendees responding answered that their gap in performing third-party risk assessment is a lack of personnel; 25 percent said third parties are too difficult to assess.

Biggest gaps:

• Inadequate coverage of third parties
• Assessment backlog
• Lack of design/prioritization (Start with highest risk.)
• Difficulty of assessing vendors

Mature program characteristics:

• Automation: used to continuously monitor
• Assessment exchanges: sharing incident information
• Artificial Intelligence: AI to be available soon to check vendors’ security, but have to be careful about providing data to AI.

If you don’t have a third-party risk management program yet, consider getting something in place.

A Single Audit is required when a non-federal entity expends $750,000 or more in federal awards during its fiscal year. The awards can be direct (straight from the federal government) or indirect (from another non-federal entity). Because it is based on total grant expenses for one year (not per grant), not every company that needs to perform a Single Audit needs one every year. However, increasingly many companies have needed their first Single Audit in recent years, due to increased federal grant funding related to the COVID-19 pandemic.

Following are some key facts about Single Audits, including requirements and changes effective in accordance with the 2024 revision to Government Auditing Standards (also known as the Yellow Book) and the data collection form:

• Non-federal entities, organizations that carry out a federal award as a recipient organization or subrecipient organization, include state and local governments, nonprofit organizations, Native American tribes, and institutions of higher education.

•  In a financial statement audit, the auditor or auditors provides their opinion on whether the financial statements as a whole are presented fairly. The purpose of the Single Audit is to determine if award recipients comply with direct and material compliance requirements for each major program. Federal agencies use Single Audit reports and findings to address problems at the grantee level or to implement changes or improvements to federal programs. It also provides assurance about the recipients’ internal controls over compliance.

• Single audits involve three layers of accounting requirements: Generally Accepted Auditing Standards (GAAS) requirements, Yellow Book requirements, also known as the Generally Accepted Government Auditing Standards (GAGAS), and Uniform Guidance requirements. There cannot be a single audit without the audit also being done under GAGAS. There can be an audit under GAGAS that does not include a single audit.

• The Single Audit Act Amendments of 1996 (Single Audit Act) were enacted to streamline and improve the effectiveness of audits of federal awards expended by states, local governments, and nonprofit entities (referred to as “non-federal entities”), as well as to reduce audit burden. The Single Audit Act requires Single Audits to be conducted by an independent auditor.

• The Single Audit Act gives the Director of the Office of Management and Budget (OMB) the authority to develop government-wide guidelines and policy statements on performing audits to comply with the Act. The most recent OMB regulation issued for this purpose is known as “Uniform Guidance”; it includes uniform cost principles and audit requirements for federal awards to non-federal entities and administrative requirements for all federal grants and cooperative agreements.

• The OMB sets the policy for single audit submissions and their deadlines. The audit package and the data collection form must be submitted to the Federal Audit Clearinghouse (FAC) within the earlier of 30 days after receipt of the auditor’s report(s) or nine months after the end of the audit period, whichever comes first. However, the OMB is waiving the 30-day deadline for 2023 submissions. For 2023 submissions with fiscal periods ending between January 1, 2023, and September 30, 2023, requirement 2 CFR 200.512(1) stating that Single Audits are due to the Federal Audit Clearinghouse 30 days after receipt of the auditor’s report(s), is waived. These audits will be considered on time if they are submitted within nine months after their fiscal period end date.

• As of September 30, 2023, management and governance of the FAC, where federal grant audits are submitted, is transferred from the Department of Commerce’s Census Bureau to the General Services Administration (GSA). As such, the GSA is the new repository for the collection and posting of Single Audit information as of October 1, 2023; it will accept Single Audits with fiscal periods ending 2023 and later. To submit or review a Single Audit, go to the fac.gov homepage and sign in using login.gov. 

• Once you submit a Single Audit package, you cannot make further changes. What you have submitted is what will be available for review via the FAC’s audit search tool.

• On February 1, The Government Accountability Office (GAO) released the Government Auditing Standards 2024 Revision, which replaces Chapter 5 of the 2018 revision with a new Chapter 5 titled, Quality Management, Engagement Quality Reviews, and Peer Review. The 2024 revision also adds application guidance to Chapter 6, Standards for Financial Audits, to provide clarity as to when the concept of reporting key factors in audit matters, previously introduced into the AICPA auditing standards framework, might apply for financial audits of government entities and entities that receive government financial assistance. There are no other changes to the remainder of the Yellow Book.

• Government Auditing Standards 2024 Revision is effective for financial audits, attestation engagements, and reviews of financial statements for periods beginning on or after December 15, 2025, and for performance audits beginning on or after December 15, 2025. A system of quality management for financial reporting that complies with Government Auditing Standards must be designed and implemented by December 15, 2025. An audit organization should complete its evaluation of the system of quality management by December 15, 2026. Early implementation is permitted.

As many donors are tightening their belts, they are looking for ways to differentiate nonprofits. Many rely on rating and information from charity review sites, such as Charity Navigator, Give Well and Guidestar, now known as Candid. 

Candid is about data.

Most of us were familiar with Guidestar because we have used its 990Finder. In 2019, GuideStar merged with Foundation Center to become Candid. Candid itself is a nonprofit and an information service specializing in reporting on U.S. nonprofit organizations. It provides comprehensive data and insights about the social sector: where dollars come from, what dollars go to, and why it all matters.

Candid offers a widely used online profile that can be updated at no cost. When a tax-exempt organization claims its profile and earns a Seal of Transparency, it becomes more visible not just on Candid’s website, but also on more than 200 partner platforms including Facebook, Network for Good, and many donor-advised funds. Candid is not a rating system. Rather, organizations earn Seals of Transparency by contributing information about their mission, staff and leadership, programs, goals, and more.

Seals of Transparency

Candid ratings, or Seals of Transparency, are assigned at four levels: Bronze, Silver, Gold, and Platinum. A Seal of Transparency is a nonprofit’s first step to becoming eligible for Apple Pay for donations. Best practices suggest organizations begin by qualifying for a Bronze Seal and work up through the levels to Platinum. Each level requires the disclosure of additional information. Gold Seal ratings require information from 2022 and 2023; Platinum Seals require at least one submitted metric from 2023. All levels have required information and optional information.

• Bronze: The Bronze Seal provides basic information that allows donors to find your organization. Four pieces of information are required to earn a Bronze Seal:
  • Contact information
  • Donation information
  • Mission statement 
  • Leadership information  

• Silver: The Silver Seal allows organizations to showcase their programs and activities for donors. Three elements are required to obtain a Silver Seal:
  • Program details: name, brief description, and geographic area served  
  • Grant-maker status: Does your organization make grants or donations to others?
  • Branding: logo, tagline, website, and social media account handles 

• Gold: The Gold Seal requires the disclosure of financial information. Two core details are required to secure a Gold Seal:
  • 2022 or 2023 financials: Audited financials are not required; basic financial data can be self-disclosed.
  • Board chair’s name and leadership demographics  

• Platinum: The Platinum Seal allows the organization to showcase itself and its mission-driven goals at a high level. Two key components are required to achieve a Platinum Seal:
  • Strategy and goals: Upload your strategic plan or briefly answer two questions.
  • Metrics: Share at least one impact-based metric from 2023.

Seals expire annually, so information must be updated each year. 

Candid Seals allow organizations to “opt in” and share additional data including:

• Organizational data:
  • Information on the leader, board members, senior staff and staff
  • Equity strategies

• Board leadership practices:
  • Board education and orientation
  • Oversight of the CEO
  • Ethics including conflict-of-interest practices
  • Board makeup and recruitment
  • Formal board assessment measures

• Feedback practices:
  • Collection of constituent feedback

Additional “permanent” documents can also be provided through the Candid Seal process.

What should charities do now?

• Claim your Candid profile if you don’t already have one. If you have one, update your existing profile.

• Review the information necessary for each Seal level and gather current information as needed.

• The information to earn Bronze and Silver Seals is readily available. Earn these to get started and work toward Gold and Platinum Seals.

• Use the many Candid tools available to help gather data. These tools can provide new ways to demonstrate the impact of your organization.

• Finally, obtain the shareable link profile that Candid provides to use in your own development activities.

Want more information? Go to www.Candid.org or www.Guidestar.org.

Why this matters

Organizations build trust and attract funding by being transparent and proving their effectiveness and efficiency. Donors want to be able to gather current information on a nonprofit easily in order to make informed decisions. As opposed to searching through more than 200 platforms, a donor can go to Candid for comprehensive information. 

Watch for the Spring 2024 issue of HBK Nonprofit Solutions newsletter Insights and an article by HBK Principal Sean Kocan, CPA, on Charity Navigator, a platform that assesses and rates the financial health and accountability of charitable organizations.

Join HBK Manufacturing Solutions and special guest Ron Bower, Founder and President of the Brickpath Group and InterviewPath, in a discussion of the interview process. The Interviewing for Results process is a simple, powerful, and proven approach to acquiring the skills required to make the right hiring decisions and avoid costly mistakes, improve your quality of hire, and provide a positive candidate experience.

Watch on demand.

While many industries are struggling to recruit or retain employees, manufacturers’ challenges have been somewhat unique. The gradual retirement of baby boomers is depleting the manufacturing workforce with fewer younger generation workers pursuing trades, including manufacturing labor positions. Over recent years, the challenge has been compounded by workers’ desires for different types of work/life balance, such as flexible work arrangements or remote environments, as well as by other industries offering increasingly competitive pay. Manufacturers have been tasked with finding unique ways to recruit and retain employees, placing a significant focus on offering competitive compensation packages, creating desirable working environments, and providing educational and upskilling opportunities to laborers.

The upskilling need has never been more prevalent. Manufacturers are more rapidly adopting Industry 4.0 technologies that require new skills. Data analytics, computer programming, and maintenance of technology-driven equipment are three skill sets that many manufacturers are adding to their teams.

Earlier this year, Mahoning Valley Manufacturers Coalition (MVMC) announced that the organization, as well as fourteen other training providers in Ohio, were awarded $6.2 million in funds to support Ohioans looking to upskill. MVMC will use these funds for their WorkAdvance program in Youngstown and Warren, Ohio. To learn more about this program, HBK Manufacturing Solutions spoke with Alex Hertzer, Interim Executive Director of MVMC, who shared the following information:

1. What is the WorkAdvance program?
   
   Our local WorkAdvance program is available to workers in Mahoning and Trumbull counties who are interested in a manufacturing career, are motivated to learn new skills, have a high school diploma or GED, and can pass a drug screen. The program offers a paid 3-week training program focused on job readiness, math, manufacturing, and other skills that help workers prepare for a career in manufacturing.
   
   
2. Are there any benefits that WorkAdvance participants receive after they complete the program?
   
   Yes, the WorkAdvance program partners with several manufacturers who typically recruit from the pool of WorkAdvance participants. Manufacturing employer partners are listed on each county’s application website, available here.
   
   Second, WorkAdvance program participants have the opportunity to work with a career coach for twelve months after they complete the program. These coaches are a vital asset to potential job seekers in the manufacturing industry.
   
   
3. Are similar programs available for workers outside of Mahoning and Trumbull County?
   
   Yes, funds for the Individual Microcredential Assistance Program (IMAP) are available to Ohioans statewide seeking eligible credentials. There are a variety of training providers that conduct online or in-person training. Credentials must be short-term, industry-recognized, and technology-focused. A list of training providers with their approved credentials is available at https://workforce.ohio.gov/initiatives/initiatives/imap/for-individuals. MVMC’s WorkAdvance program is just one example of an eligible credential that a worker could earn using the funds awarded, which are from the IMAP program
   
   
4. How do manufacturers benefit from this program?
   
   Manufacturers benefit from this program by having a wider pool of trained candidates for open positions. However, manufacturers do not need to sponsor employees for this program, meaning that employees can pursue this credential on their own. Manufacturers interested in partnering with WorkAdvance can contact MVMC for more information.
   

For more information about the funding available, please contact HBK Manufacturing Solutions at 330-758-8613 or manufacturing@hbkcpa.com or Alex Hertzer at alex@mahoningvalleymfg.com.

Contributing Author:

Alex Hertzer was promoted to Interim Executive Director of MVMC in February 2024 after joining the organization in 2021. Alex most recently served as Senior Project Manager and Assistant Director, where he oversaw membership development and WorkAdvance. He also worked as a plant superintendent before joining the organization.

Rodney C. Smith will serve up to 41 months in prison followed by one year of supervised release for his willful preparation of false tax returns through his tax preparation business. In 2020, the IRS executed a search warrant at Mr. Smith’s business, Xpert Tax Services, in Milwaukee, Wis. At that time, Mr. Smith admitted to IRS agents that he was knowingly violating federal tax laws. (Mr. Smith had been convicted in 2010 of conspiracy to defraud the United States by filing a false tax return.) Mr. Smith defiantly continued to prepare false tax returns for his clients in 2021. Eventually, in October 2023, Mr. Smith pleaded guilty to four counts of aiding, assisting, counseling, or advising the preparation of a false return.

The fraudulent preparation of tax returns included false representations about the client’s dependents, wages, and profits or losses from businesses. The misrepresentations resulted in the taxpayer receiving a refundable earned income tax credit they were not eligible for, hence the receipt of an inflated income tax refund. The estimated loss associated with the preparation scheme was $3.3 million.

Mr. Smith willfully, repeatedly, and fraudulently fabricated income tax returns for the purpose of maximizing his client’s income tax refund. Tax preparers are entrusted to file an accurate income tax return for their clients. Tax preparers are required to be ethical in the preparation of a tax return. When a tax preparer commits such crimes, it is stealing from the government and at the same time betraying the confidence of their clients.

Most preparers are ethical; however, like any other service sector, there are some dishonest preparers who file false and fraudulent tax returns and ultimately defraud their clients. Taxpayers should be cautious when choosing a tax preparer as well as when signing their income tax returns. Understand that as the taxpayer, you are ultimately responsible for all the information reported in your tax return. And remember the adage: “If it sounds too good to be true, it probably is.”

Successful manufacturers must balance countless initiatives and priorities. Customer satisfaction, vendor dependability, production efficiency, employee fulfillment, waste reduction, and profitability are only a few initiatives that manufacturing leaders face. Over the past several years, the alignment of employee skills with company needs has become increasingly important. As manufacturers adopt more advanced technologies, the need for new skill sets from laborers has surfaced. Instead of recruiting new hires, an increasingly challenging endeavor in the current labor market, many manufacturers are choosing to upskill or reskill their current employees.  

What is the difference between upskilling and reskilling? Upskilling improves an employee’s current skillset and knowledge by providing updates or advancements in their knowledge. For instance, a CNC operator may be upskilled by obtaining a CNC certificate. Reskilling allows an employee to learn new skills. This may be critical if a manufacturer is replacing a labor-intensive process with equipment that performs the same job in an automated way. 

For example, someone who manually packaged parts from a production line may be reskilled to learn how to operate and maintain a machine that performs the packaging function.  

In addition to supporting the business’s needs, upskilling and reskilling employees can help a manufacturer maintain their workforce, despite the evolution of the business. Many studies show that investments in employees and their skills can help manufacturers keep employees engaged, thereby reducing turnover.  

Consider the following steps to determine if upskilling or reskilling is right for your manufacturing business:

1. Evaluate the needs of the business. Consider upcoming needs of the business as well, especially those that may require different skill sets.  
   
2. Align the needs of the business with the skills offered by your current employees.  
   
3. Consider gaps between skillsets needed and skillsets demonstrated by your employees.  
   
4. Work with employees to determine where there is interest in upskilling or reskilling to fill these gaps.  
   
5. Consider programs from which employees can obtain upskilling or reskilling.  
   
6. Enroll employees in selected programs and monitor their progress.  

For employers in Ohio, the state’s TechCred program offers eligible Ohio employers reimbursement of up to $2,000 per credential (and $30,000 per funding round) for short-term, industry-recognized, technology-focused credentials or certificates. 

Applications for the current round of funding will be accepted through March 29, 2024, at 3:00 PM.

Employers must have an OH|ID and apply online at https://techcred.ohio.gov/apply. The Ohio Department of Development will score applications and award funding. Considerations for applications include the level of economic distress in the applicant’s region, the balance of awards provided to the region, and the amount that an employer is contributing towards the certificate or certification. 

Employers are encouraged to review eligibility criteria, allowable credentials, training providers, and more information regarding the program by visiting https://techcred.ohio.gov/. 

For more information about Ohio TechCred or to learn about other resources that may help your manufacturing business with upskilling or reskilling employees, contact a member of HBK Manufacturing Solutions at manufacturing@hbkcpa.com or 330-758-8613.