Day: December 8, 2022

Proponents Celebrate Successful Advocacy Push for Cliff-effect Legislation

By
Daily News

SPRINGFIELD — On Wednesday, the Food Bank of Western Massachusetts, Springfield WORKS, and the Western Massachusetts Economic Development Council (WMEDC) hosted a celebration and press event for the cliff-effect pilot program included in the state’s economic-development bill in October.

Representatives from those organizations joined legislators in discussing the $1 million pilot program, which will mitigate the unintended consequences of the so-called cliff effect, which occurs when household earned income increases just enough that families precipitously lose eligibility for public-assistance supports like food, childcare, and housing services, resulting in lower income overall and weakened economic stability.

The three-year pilot program will utilize a monetary support to provide 100 households throughout the Commonwealth with benefits tailored to fill the gap created by the cliff effect as they work toward economic independence from public benefits programs.

Rick Sullivan, president and CEO of the WMEDC, noted that people will always make the best financial decision for their family. However, “if they went into the workplace and took a minimum-wage job for a few hours, or perhaps took a job promotion, their benefits began to almost automatically decline. There’s no incentive to work.”

The cliff-effect legislation, which was introduced seven years ago, is an effort to hold people harmless for moving up in the workplace.

“This is not charity work. This is not a handout. This is a hand up,” Sullivan went on. “It recognizes the importance of every individual in our region because if they’re doing better, then everyone is doing better, including the businesses.”

In short, the cliff effect discourages individuals from advancing in their careers for a higher wage due to the sudden loss of critical services, which ultimately leads to a decline in the standard of living, keeping individuals and families stuck in a cycle of poverty.

“Almost every public benefit we have, whether it’s childcare, housing, food vouchers, or direct financial assistance, is predicated upon income reporting and income requirements,” state Sen. Eric Lesser said. “And if you’re a dollar over — if you’re a cent over — the income threshold, almost all of it turns off automatically. What that means is, over time, people have to decline work, decline promotions. If they go from $15 an hour to $17 an hour, and it triggers losing their housing voucher, the logical and necessary decision is to decline that raise.”

Laura Sylvester, Public Policy manager at the Food Bank of Western Massachusetts, noted that “many of the households who receive emergency food at any of our 164 independent, local member food pantries and meal sites are directly impacted by the cliff effect. Fear of losing benefits prevents people from advancing in their careers, keeping them trapped in a cycle of poverty. It is a major cause of food insecurity and economic instability.”

Advocates for the legislation hope it’s a meaningful first step toward addressing the cliff effect on a much broader scale in Massachusetts.

“This pilot is a tremendous victory for workers and families throughout the Commonwealth,” said Anne Kandilis, director of Springfield WORKS. “To create economic opportunity, we must remove obstacles for people as they work to earn a livable wage by making sure that we do not strip away public benefits too rapidly.”

Children’s Advocacy Center Awarded Grant from Massachusetts Bankers Assoc.

By
Daily News

GREENFIELD — The Massachusetts Bankers Assoc. (MBA) awarded the Children’s Advocacy Center of Franklin County and North Quabbin (CAC) a $5,000 grant, thanks to a nomination from Greenfield Cooperative Bank.

The MBA Charitable Foundation awarded 52 grants, totaling $162,000, to nonprofits over eight geographic regions across the Commonwealth. Member banks were asked to nominate deserving organizations in their community.

“GBC has been with us from day one and have continued to support us when we needed it most. They have been a true community partner,” said William Benson, president of the CAC.

CAC Executive Director Irene Woods added that “the Children’s Advocacy Center of Franklin County and North Quabbin is so honored to receive the MBA award. This award will allow us to meet the mental-health needs of children that have experienced sexual abuse and have had their worlds turned upside down by trauma. Not only has the Greenfield Cooperative Bank provided financial support to the Children’s Advocacy Center since we came to Franklin County in 2015, but they have also served on our board of directors. With this support, we have served over 500 children and their families in Franklin County and the North Quabbin area.”

Amherst Area Chamber Announces Kwench Juice Café Ribbon Cutting

By
Daily News

AMHERST — The Amherst Area Chamber of Commerce invites the public to a ribbon cutting at Kwench Juice Café, located at 19 North Pleasant St. in Amherst, on Friday, Dec. 9 at 12:30 p.m. Attendees can enter a raffle for a $50 Kwench gift certificate and a $50 Amherst Area Gift Card, and sample some of Kwench’s fresh offerings between noon and 1 p.m.

Kwench Juice Café offers a selection of menu items made with nutritious, locally sourced ingredients, including freshly prepared juices, smoothies, and acai bowls, all served in a welcoming atmosphere in downtown Amherst featuring local art. The business is women-owned, Pacific Islander-owned, LGBTQ+-owned, and Asian-owned.

“We are excited to show the Amherst community our passion and spread love through fresh nutritious juices and foods,” co-owners Chandra Hart and Janice Samson said.

Women of Impact Class of 2022 to Be Celebrated Tonight

By
Daily News

SPRINGFIELD — Tonight, BusinessWest will host its fifth annual Women of Impact Gala at the Sheraton Springfield, located at One Monarch Place.

BusinessWest has long recognized the contributions of women within the business community and created the Women of Impact awards in 2018 to further honor women who have the authority and power to move the needle in their business, are respected for accomplishments within their industries, give back to the community, and are sought out as respected advisors and mentors within their field of influence.

The class of 2022 features Latoya Bosworth, program officer at Mass Humanities; Sr. Mary Caritas of the Sisters of Providence; Jodi Falk, executive director of Rachel’s Table; Anika Lopes, Amherst town councilor and president of Ancestral Bridges; Laurie Raymaakers, president of J.L. Raymaakers & Sons Inc.; Hilda Roqué, executive director of Nuestras Raíces Inc.; Ashley Sullivan, president of O’Reilly, Talbot & Okun; and Aelan Tierney, president of Kuhn Riddle Architects. Their stories are told in the Oct. 31 issue of BusinessWest and at businesswest.com.

Beginning at 6:30 p.m. tonight, a livestream of the event will be available at businesswest.com/womenofimpact.

The event’s presenting sponsors are Country Bank and TommyCar Auto Group, and the supporting sponsors are Comcast Business, Granite State Development Corp., and Smith Executive Education.

Meg Sanders Infuses Energy, Innovation into Canna Provisions

By
Meg Sanders
Cover Story Women in Businesss

Grass-roots Effort

 

‘Buy Weed from Women.’

That’s what is printed on the back of the coat

Meg Sanders

Meg Sanders

was wearing as she led BusinessWest on a tour of Canna Provisions’ Holyoke dispensary recently.

Those words cover a lot of ground. They’re a request, as well as a statement. They’re also an operating philosophy. And in some respects, they constitute hope for what people will be able to do more easily in the future.

Indeed, buying weed from women — as in women who own or co-own the dispensary in question — is not something easily done. The startup and operating costs for such an operation are extremely high and, for many people — and most women — simply prohibitive. And once one is in, it’s a challenge to stay in.

Sanders, CEO of Canna Provisions, is one of the rare exceptions.

She shifted her career from compliance in financial services to compliance in cannabis while living in Colorado at the time the industry was simply exploding and turning into what she called ‘the wild west.’ She is now a prominent player in the not-so-wild but very intriguing Western Mass. market, overseeing, with her partner, Erik Williams, two dispensaries (the other is in Lee) and a cultivation facility in Sheffield.

Moving forward, she envisions one more dispensary in Western Mass. — she and Williams are looking at several options for acquisition — and the buildout of another manufacturing facility in Lee. And from a bigger-picture perspective, Sanders is looking to hone a business model that will create more profitability in an industry where only a third of all busnesses are profitable.

“ I still believe the best thing in cannabis still has not been invented. We find new cannabinoids every single day; there are new ways to consume this product, new delivery methods, new formulations. Those are all really important parts of where this industry is going. Science is in it, and I am psyched to see the products we come up with to help people.”

When asked about what separates those who are profitable from those who are not, Sanders said it comes down to being smart — with everything from which products (and how much inventory) are carried to the training and development of employees.

“We invest in humans, and we train them,” she said, adding that people are the biggest and most important investment for a company in this sector.

It’s an investment she takes very seriously, and it’s one of the many reasons why she believes Canna Provisions is successful and on the cutting edge when it comes to everything from how products are displayed and sold in the dispensary to how employees are trained, groomed for advancement, and ultimately retained (more on all that later).

“I’m really proud of it — I think it’s the coolest dispensary in America,” she said of the Holyoke facility as she led the tour. “And I’ve been into a lot of them.”

Canna Provision’s dispensary in Holyoke

Meg Sanders says Canna Provision’s dispensary in Holyoke has been designed to resemble an art gallery — and even features works from local artists.

And as she surveys the scene, at that Holyoke location and within the broad cannabis industry, Sanders, who has been quoted in publications ranging from the Wall Street Journal to Northeast Leaf, sees a number of converging forces and trends, but especially innovation, the sector’s deep impact on the local economy and the local landscape, cannabis playing a growing role in the health and wellness of people of all ages, and the promise of much more of all of that in the future.

“Cannabis is a giant vote for freedom — it’s a giant vote for ‘you know what’s best for your body; it’s not the government’s job to tell you what to put in it, on it, any of that,’” she said. “From everyone that I know that uses cannabis, customers I talk to every day, their life is better. A recent study showed that 60% of Millennials use cannabis for wellness, and when you ask them to define ‘wellness,’ it was stress, relaxation, sleep, and anxiety. The fact that people look at cannabis as wellness is huge.

“And I still believe the best thing in cannabis still has not been invented,” she went on. “We find new cannabinoids every single day; there are new ways to consume this product, new delivery methods, new formulations. Those are all really important parts of where this industry is going. Science is in it, and I am psyched to see the products we come up with to help people.”

The wording on the back of Meg Sanders’ jacket

The wording on the back of Meg Sanders’ jacket is both a request and a bit of hope for what people will be able to do more easily in the future.

For this issue, BusinessWest talked at length with Sanders about her business, her industry, the words printed on the back of her jacket, and what she expects to come next with all of the above.

 

Joint Ventures

That aforementioned tour of Canna Provisions came the Wednesday before Thanksgiving. It was late morning, just before noon, and the traffic in the store was still relatively light, with a handful of customers exploring the myriad product options or talking to customer-service providers, both behind the counter and on the floor.

But Sanders was expecting a huge day because cannabis, in her estimation, is becoming a growing part of Thanksgiving, especially to contend with the week’s large doses of stress.

“People will be in to get their coping mechanisms and their celebratory pieces so they can deal with Uncle Bob, who might be talking politics at the Thanksgiving table,” she explained. “We all have families, and they’re all very interesting and come with a lot of stuff; this is one way to cope, and it’s not new.”

Meanwhile, she was expecting even bigger crowds for the upcoming Black Friday and the holiday season in general. And such expectations, born from experience in both Colorado and this market, are evidence of the growing influence of cannabis — on the economy and in people’s lives.

Turning back the clock nearly 15 years, Sanders, as noted earlier, was working for a small financial-services company handling a few dozen traders when she approached a friend who was getting in on the ground floor of the exploding cannabis scene in the Centennial State and asked if he could find a place for her.

“I had definitely hit a glass ceiling — there was nowhere else to go and no more money to be made there,” she recalled. “That was happening at the exact same time as this brand-new industry was starting to explode; I reached out to my friend who was creating this cannabis business and said, ‘I’d love to help you guys; what can I do?’

“It took a while for us to find the right place, but I went basically from compliance in the financial industry to compliance in cannabis, and that’s how I got started,” she went on, adding that she became increasingly more involved and eventually become CEO.

Sanders would eventually exit that company — primarily because its board wanted to focus solely on Colorado, while she had larger aspirations for the venture — and work, along with Williams, as a consultant to states, municipalities, and individual businesses as they entered the cannabis business.

“We were helping companies and state regulatory bodies and local governments come up with ordinances that made sense, regulatory frameworks that made sense, and helping people get licensed all over, from Florida to Illinois to Nevada — everywhere,” she recalled. “And then, Massachusetts legalization happened, and we were intrigued by the model in that it wasn’t going to be this massive gaming of the system in a limited-license structure, where if you know the governor, or have the right lobbyist, or if you make donations to the right legislators, you get a license.”

Sanders and Williams eventually consulted for a venture called Canna Provisions and were invited to become part of its operations team. They became CEO and COO, respectively, and guided the company as it gained just the second license issued by the state for a standalone dispensary in Lee, right behind Caroline’s Cannabis in Uxbridge — where she bought her jacket from owner Caroline Frankel. The Holyoke facility, located on Dwight Street in a former paper mill, opened in July 2020, at the height of the pandemic.

In her role, Sanders is involved in all aspects of the business, obviously, but devotes much of her time to staff development and that broad term ‘culture.’

‘At Canna Provisions, we really believe that we’re not just growing plants and growing a business, we’re growing humans,” she explained, adding that the company invests considerable amounts of time, money, and energy to train and develop employees, and then give them opportunities to do different things and advance within the company.

Canna Provisions invests heavily in employee training and development

Meg Sanders says Canna Provisions invests heavily in employee training and development — and the customer experience.

She said she’s currently serving as a facilitator and working with a group of seven employees at the company on a course of leadership training.

“I’m reinforcing my skills by teaching them their skills in hopes of growing humans to become better leaders, which creates happier employees,” she told BusinessWest, adding that most all of these employees have experience in business and customer service but are new to this industry.

“We work really hard to train employees, we spend a lot of money training them, and it’s ongoing,” she went on. “We’ve been told multiple times by people from this industry, and also not from this industry, that they’ve never been to a company that invests so much in training, and they appreciate it.”

 

Down to an Art

While Sanders is certainly well-known within the industry and probably recognized by many she encounters (especially when she shows her ID), she still calls what she does ‘secret shopping.’

These are regular visits to dispensaries across this region and beyond, during which she is always looking at the product mix, the presentation, the staff, and how they interact with customers — all with an eye toward making her own operations better and her own employees ever more responsive to what clients want and need.

“I shop everybody — everybody,” she said, “so that we’re more accurate in our differentiation. I’m able to see what competitors around us are doing, and I can say, ‘that’s one business model — it’s not a bad business model, it’s just not my business model.’”

“We’ve been told multiple times by people from this industry, and also not from this industry, that they’ve never been to a company that invests so much in training, and they appreciate it.”

These secret shopping excursions are just a small part of a broad operating formula aimed at continuous improvement, setting the bar higher, and then clearing that bar.

Sanders believes Canna Provisions does all this in all aspects of its business — from product selection to presentation, but especially with how those on the floor and behind the counter interact with and effectively serve customers, some of whom may suffer from what she called “dispensary phobia,” and a fear of going inside.

And this is a product of all that intensive — and expansive — training that Sanders talked about earlier.

“People have to be on point because your customers expect a certain level of service — they have to know the products,” she said. “It’s training and role playing and practicing and coaching on the floor — teaching them to be more aware of the people who are in front of them.

“This is not a cheap spend, “she went on. “Our average ticket here in Holyoke is close to 100 bucks a pop. When I’m spending $100 or $200 at a location, I do have a bit of expectation to be treated well.”

Overall, she likened the cannabis-buying experience, at least at her dispensaries, to jewelry shopping in many respects, from the high cost of the products to the way that many customers need guidance, or education, on what they’re buying.

Overall, Sanders believes she and Williams have created a different kind of cannabis experience in their locations. The one in Holyoke resembles an art gallery in the way products are displayed, and there are even works of art on the wall. Meanwhile, it pays homage to the property’s roots as a paper mill by putting some of the equipment and office furniture to work in displays.

 

Impact Statement

As she talked about the broad influence that cannabis has had on the local landscape, and will continue to have moving forward, Sanders again flashed back to the early days in Colorado, which came in 2009, the middle of what became known as the Great Recession.

“They just ran with cannabis, and it was crazy,” she said of the rapid growth of the industry and its impact on real estate, cities, towns, and individual neighborhoods. “And this started right after that massive crash and its impact on real estate and mortgages … it was a nightmare. But in Colorado, the opposite happened because all these growers, all of these dispensaries, ended up leasing more than 1 million square feet of warehouse space that had been off the tax rolls for years, just in Denver.

“So, it immediately just infused the city with vibrancy, and it happened all over,” she went on. “It was just one of those interesting economic moments where Colorado did not feel that economic downturn, the bottom dropping out, nearly as much as other states; it was fascinating. And then we kept adding all these jobs, and we kept adding jobs, and building, and then science was involved; the industry just came a long way really fast.”

It continues to grow and evolve, and now, much of what was seen in Colorado is being experienced in other states and other region, including Western Mass., she said, adding that cannabis is having a profound impact on communities like Holyoke and Lee, where she has chosen to put down roots, especially the former.

Indeed, this was a city that rolled out the red carpet for this industry, with its former mayor, Alex Morse, jokingly — although it was no joke — wishing it to become known as Rolling Paper City, a twist on its original nickname, Paper City.

Few actually call it that, but Sanders said there is no disputing the profound impact that cannabis has had in this city, where hundreds of thousands of square feet of unused or underused former mill space has been converted into dispensaries and cultivating facilities.

“Bringing more people to Holyoke is the goal for all of us,” she said. “And I think Holyoke and its bones often get overlooked; I’m so excited that there’s a new art gallery opening on High Street, that there’s several restaurants that we frequent and another new restaurant going in across the way. We have Gateway City Arts, which does concerts all the time. So, there’s momentum, and we’re hoping to be a part of that and help a city that’s been struggling for a long time.

“Together, we’re all going to make Holyoke a better place, with more jobs, more places to live, more restaurants to go to, more shopping, art,” she went on. “I absolutely love this town, and that’s why we came here and spent $1 million to open this dispensary.”

Looking ahead, Sanders wants to see a day when more women can become business owners in this sector.

“It’s very much a closed door, and the numbers are actually going down, which is unfortunate,” she said, noting, again, the sky-high costs of opening and then operating a business in this sector, and the challenge to turn a profit when 70 cents of every dollar earned is returned to the government in taxes.

“Through initiatives at the state level and maybe even at the federal level with safe banking and other things they’re talking about, we need to give minorities and women an opportunity to win alongside all the rich, white money,” she told BusinessWest. “As a female leader in this space, I am super proud to be in this space as a leader and an owner, and I would say it’s one of my biggest motivators to talk about this and do something about it.”

 

George O’Brien can be reached at [email protected]

Professional Offices Are Changing into Something More Comfortable

By
Ken Albano says businesses need to balance
Features Special Coverage

Dressing Down

Ken Albano says businesses need to balance

Ken Albano says businesses need to balance what works for employees with a certain level of professionalism.

If it wasn’t clear before, you know office-attire norms are shifting when the rules for dress-down Friday have to change.

That’s exactly what happened at MP CPAs in Springfield, one of many companies with a rule that, with a donation to a charitable cause (in this case, a $5 donation that the company matches), employees may wear jeans and other attire typically deemed too casual for the office.

“But we changed it slightly because of what ended up happening,” said Melissa English, senior tax manager. Specifically, “COVID came, and our dress-code policy went out the window.”

With jeans and other casual attire now acceptable all week, she explained, “for an incentive for people who want to contribute to charity, Fridays are now our ‘wear what you want’ day. Anything goes. There’s no dress-code policy on Fridays if you pay in.”

Flip flops on Friday? Sure, go for it.

“I started 21 years ago with the firm, and no matter what, whether you were in the office, with a client, whatever, you made sure you were professionally dressed,” English told BusinessWest. “Then, over time, it gradually did loosen up a little bit. It became a little more … business casual. When you went to a client, you still had to dress up. But in the office, you were allowed to have professional pants on but maybe not necessarily a suit and tie, just a button-down shirt, stuff like that.”

“I want to be comfortable when I’m working, and I think a lot of people feel that way. I think you’re more productive if you’re comfortable throughout the day. So I do think it was already moving toward business casual, but COVID definitely pushed it.”

If anything, the pandemic, and especially the summer of 2020, only accelerated that trend, she went on. As one of the first businesses back in Monarch Place, at a time when the downtown towers seemed nearly empty, it was easy to relax the dress code.

“At that point, it was wear whatever you wanted. You could show up in your pajamas; it didn’t matter,” she joked. “It was very casual. We had no dress-code policy whatsoever; we were wearing shorts all summer.”

What happened next — and this was something BusinessWest heard multiple times for this story — was that employees liked dressing down. And employers listened.

“Even after COVID, to try to get back to professional dress, I don’t think it’s going to happen,” English said. “For me personally, I want to be comfortable when I’m working, and I think a lot of people feel that way. I think you’re more productive if you’re comfortable throughout the day. So I do think it was already moving toward business casual, but COVID definitely pushed it.

Melissa English

Melissa English says workers have shown they can be both comfortable and productive at work.

“I do know a lot of businesses feel the same way,” she added. “A lot of the businesses we go to now are casual to business casual. You don’t see many people wearing suits and ties anymore. I think it’s more acceptable now, especially after COVID.”

As a law firm with five offices, Bacon Wilson’s workplace policies are generally driven by the main office in Springfield, Managing Shareholder Ken Albano said.

“We have a policy that’s been tweaked over the years. Now, business casual is acceptable throughout the firm. You don’t have to wear a sport coat. Corduroys, a gray sweater, and a button-down shirt — that’s my dress today. That’s deemed acceptable; I’d call that country casual or business casual. Wearing a sport coat every day is no longer required.

“That said, we’ve got old-school people here who just can’t change,” he went on. “They come to work in a suit every day. Even given the opportunity to loosen up their attire, they stick to it, especially some of the older guys in the Estate Planning department who meet clients daily and like to wear a suit and tie when they sit down with clients.”

He agreed that employees returning from long stretches of remote work, where they could get their job done in pajamas some days, grew to enjoy the comfort of casual dress, and the firm’s policy preserves elements of that while stressing appropriate wear.

“For a law firm of this size,” Albano said, “we try to be as flexible as we can without taking it too far away from the professional setting we’re trying to establish for our clients.”

 

Loosening Up

Casual dress has long been the norm in technology workplaces, and that revolution eventually spread to other, more traditionally formal workplaces in fields like law, accounting, and insurance. The shift toward a more casual dress code reflects, in one sense, a desire by employees to embrace comfort and individuality — and, over the past couple of years, a recognition by employers that comfortable employees are happier and, in many cases, just as productive as before, if not moreso.

Sue Cicco

Sue Cicco

“As we have instituted our new hybrid workplace approach, which balances in-person collaboration with personal flexibility to best meet the needs of our employees and customers, we’ve seen this level of comfort continue, and I believe it’s here to stay.”

Sue Cicco, head of Human Resources & Employee Experience at MassMutual in Springfield, told BusinessWest that the firm has continually evolved its culture to reflect the changing world, prioritizing diversity, equity, and inclusion; offering a flexible workplace; and, yes, moving away from exhaustive dress codes.

“In 2015, we instituted a two-word dress code: ‘dress appropriately,’” she explained. “This simplified guidance was rolled out as the company sought to reflect the more innovative and open workplace that was building, and was aimed at trusting and empowering employees while enabling them to be comfortable and express themselves.”

Those we spoke with, however, kept coming back to the importance of dressing for one’s audience and setting. For example, Albano said, a litigator would never appear in court in anything but formal attire. “The dress code is normally what you expect to see in front of a judge. You don’t show up in jeans and sneakers in a court of law; that never changes.”

Tanzi Cannon-Eckerle, chief legal and administrative officer at the Royal Law Firm in Springfield, agreed.

“In the courtroom, the attire has not changed since we stopped wearing the wigs,” she said, adding that law schools across the country instill in students the importance of formal attire. “Courtroom decorum won’t change, nor, in my opinion, should it change.”

In the office, however, she has seen some movement toward more casual dress. “But what might be considered lax for one person might be different for someone else. When meeting clients, you’re still wearing blazer and slacks or a cardigan and slacks. Or you have on a suit. In that setting, I believe you’re supposed to dress toward a more professional level.”

Before returning to Royal, Cannon-Eckerle worked as director of Human Resources for Auxiliary Enterprises at UMass Amherst, a tenure that spanned much of the pandemic.

“They decided to bridge the gap between frontline workers and C-suite folks and make business casual mandatory,” she recalled. “I was still wearing suits every day; they actually pulled me aside and said, ‘you need to relax a little bit and try for a more approachable persona in the workplace.’”

Tanzi Cannon-Eckerle

Tanzi Cannon-Eckerle says being overdressed and underdressed in certain settings are equally problematic.

She recognizes that a college campus during a pandemic is a different situation than a law firm, but stressed that all professional settings should strive for certain minimum standards.

“At the end of the day, there’s a baseline: you’ve got to be clean, your clothes can’t be wrinkled, and it has to make sense for the room,” she told BusinessWest. “I love to dress up; if I could, I’d wear a wedding dress once a week. But I’m pretty sure I’d be reprimanded by the judge. So, you don’t dress to stand out, but to fit in and make people at ease with you. You don’t want people looking at your clothes instead of you, ogling what you’re wearing and not listening to what you’re saying.”

English said it’s important to know one’s audience in choosing what to wear.

“People can be comfortable and productive, so does it really matter how somebody looks if they’re getting the job done even better than they did before? So I think employers are now more accepting,” she noted. “In the employers we talk to, so many now are going to casual to business casual, and everybody seems to be accepting of it.

“But, again, no matter what, it’s still knowing your audience. You might have that one client that you know dresses up all the time. Well, maybe you need to dress up a little bit more for that client because you want them to take you seriously, and sometimes you have to look the part.”

Albano said job seekers need to be careful with accessories like tattoos and piercings; both are fine at Bacon Wilson, as long as visible tattoos aren’t offensive and piercings aren’t too numerous.

Sneakers and flip flops are a hard no, but jeans are fine on occasional charity days, when, like at MP CPAs, employees can pay $5 to dress down a bit. “That’s always a positive thing,” he said.

 

Lessons Learned

Looking forward, Cicco said employers and employees both learned something about each other during the pandemic, and those lessons will inform dress codes at countless companies in the future.

“As much as we were apart while working remotely during the pandemic, we also became more personally acquainted with one another,” she said. “We were welcomed into each other’s homes as we took Zoom calls from our living rooms with family members and even pets debuting in the background, and with that came a different level of familiarity that further empowered people to dress how they felt most comfortable.”

Therefore, “as we have instituted our new hybrid workplace approach, which balances in-person collaboration with personal flexibility to best meet the needs of our employees and customers, we’ve seen this level of comfort continue, and I believe it’s here to stay.”

English said the managers at her firm have had meetings and talked to consultants about what’s happening throughout the industry and how it informs the dress code moving forward.

“Because we are so casual now, should we go back to a more business casual? What we came up with is the term ‘smart casual.’ You can come in the office in jeans and a polo, whatever, but if you know you are going to go out to a client, then you need to dress in more of a smart casual. You need to be able to dress up and be presentable and make a good impression.”

Having been a business owner and manager as well as a lawyer, Cannon-Eckerle’s take is that, “if you walk in the door and the first thing people think about is what you’re wearing, you might have to rethink it. But if you’re clean and pressed and not wearing a T-shirt that’s flipping the bird, most likely you’re OK.”

In short, read the room.

“Because of COVID, things have changed, and I think people have been more open to someone’s style, open to the fact that dress is part of their personality,” she added. “But that doesn’t mean you can be disruptive in the workplace.

“And, as attorneys, they pay you a hefty hourly rate. If you roll in with sweatpants and flip flops, that isn’t professional. What we see as professional may be changing, but not in all industries, I think.”

As Albano put it, “you don’t want someone to turn their head and say, ‘oh my God, what are you wearing?’ We’re trying to be flexible and make it a healthy work environment, but also a professional setting.”

 

Joseph Bednar can be reached at [email protected]

UMassFive Charts a Course for Continued Growth, Expansion

By
Rich Kump, president and CEO of UMassFive Federal Credit Union.
Banking and Financial Services Special Coverage

Points of Interest

Rich Kump, president and CEO of UMassFive Federal Credit Union.

Rich Kump, president and CEO of UMassFive Federal Credit Union.

Richard Kump says he’s disappointed by — but quite philosophical about — recent statistics showing that credit unions are not faring as well as they have historically when it comes to customer satisfaction.

“For just about our entire existence, credit unions have always outperformed banks, particularly the big banks, but just a few years ago, credit unions dipped in our satisfaction rating compared to particularly the national and multi-regional banks,” he said, adding that there’s an obvious reason why.

“It used to be that satisfaction was coming into the branch, being met with a smiling face that was empathetic and there to help — that in-face, smiling employee,” he explained. “Now, satisfaction is defined a little differently; it’s defined by speed: ‘how quickly can I accomplish this?’ The Bank of Americas, the Wells Fargos … their ease of use has surpassed that of credit unions and small community banks.”

Getting up to speed — figuratively but also quite literally — is one of the broad strategic objectives identified by Kump, president and CEO of UMassFive College Federal Credit Union, and other members of the leadership team at this 55-year-old institution.

Others include everything from territorial expansion — Springfield and Westfield are among the areas at or near the top of a list of potential landing spots — to continued growth of an already dynamic niche in lending for solar-energy installations; from the building of a new and more highly visible branch in Hadley and consolidation of other facilities into the headquarters building in that town to the possible creation of an insurance agency to be operated by the credit union.

“Most of our members have Amazon — with one click, you can purchase something. And that’s what they expect from us, being able to accomplish whatever their need is quickly and without friction.”

In a wide-ranging interview, Kump, a 20-year veteran at UMassFive who took the helm in 2019, touched on these and many other points. Overall, he said the institution, which now boasts more than $625 million in assets, is in what he called a controlled growth mode, anxious to take advantage of opportunities that have arisen in recent years, including ongoing consolidation in the banking industry, advancing digital technology, and changing needs among customers — on both the consumer and commercial sides of the ledger.

Such opportunities enabled UMassFive to essentially triple the projected profits for what was expected to be a lackluster 2022, he explained, and these same forces, in addition to those aforementioned goals for expansion, are providing reasons for optimism as the calendar turns to 2023.

 

Developing a Game Plan

Kump, who grew up in New York, has been a lifelong, and extremely avid, Yankees fan.

The wall across from the desk in his office tells the story.

There, one will find a framed picture of Bucky Dent’s famous (infamous to Red Sox fans) home run in that one-game playoff back in 1978. It’s signed by both Dent and the Red Sox pitcher who threw the pitch, Mike Torrez, and Kump notes with regret that the signatures are fading.

As is the autograph of Don Larsen on a framed photo from his historic perfect game in the 1956 World Series against the Brooklyn Dodgers that sits just below the Dent picture. There’s other Yankee memorabilia on his wall, including a group of perhaps the four greatest players from that franchise — Babe Ruth, Lou Gehrig, Joe DiMaggio, and Mickey Mantle.

While the Yankees have always been a passion for Kump, or a “great failing,” as he called it, credit unions have essentially been his career. Prior to arriving at UMassFive, he worked at St. Mary’s Bank in Manchester, N.H. — founded in 1909, before such institutions were called credit unions — and, later, Cathedral Credit Union in Manchester.

UMassFive has developed a strong niche in the financing of solar-installation projects.

UMassFive has developed a strong niche in the financing of solar-installation projects.

With that background, he’s well-versed in what credit unions have been historically, and what has long differentiated them from banks, especially the larger ones — a high-touch operating philosophy and a strong focus on customer service.

These days, though, Kump is more focused on what credit unions can be — and must be — to continue to thrive and grow in a changing financial-services landscape.

And here, as noted, speed is an important part of the equation.

“While overall satisfaction with any local institution is high, this is a world of digital transformation and how quickly you can get your organization to deliver what the consumer is expecting,” he explained. “Most of our members have Amazon — with one click, you can purchase something. And that’s what they expect from us, being able to accomplish whatever their need is quickly and without friction.

“And that has been our focus on improving the member relationship,” he went on, adding that UMassFive is responding with online appointments, online loan applications that are simpler and what he described as ‘frictionless,’ the ability to join the credit union digitally — “that’s our primary branch; that’s how we serve” — fraud-prevention efforts, and other measures.

“We want to make the processes as simple and easy as they can be because that’s what the consumer is demanding today,” he explained, adding that this mindset will be applied to every aspect of the business, from credit cards to those loan applications.

And while improving its speed and ability to serve customers in the manner they are now demanding, UMassFive is moving forward aggressively on a number of other fronts, said Kump, including territorial expansion, new branches, and better, more effective use of its facilities.

Several of these goals are coming together in the planned move of the flagship branch inside the headquarters building off Route 9 in Hadley to a new building to be constructed just down the road at the border between Hadley and Amherst on the site of an auto-parts store.

The move will give UMassFive much greater visibility, said Kump — the current headquarters building is a few hundred yards from the street and behind other buildings — and it will also enable the credit union to consolidate spaces and ultimately save money.

“Branches are now less a transaction center and more of an advisory center. The things people want to come in for are lending — we do a ton digitally, but for loans, people still like to come in, especially on the commercial side — as well as investments and wealth management. Those are things people like to do in person.”

Elaborating, he noted that the credit union outgrew its headquarters building, which opened in 2001, several years ago, and has been leasing additional space in Hadley for its operations center, an expensive undertaking that ultimately led to the development of plans to build a new and much larger headquarters.

By moving the flagship branch to another location on Route 9, the credit union can now scrap those plans in favor of a far-less-expensive option: a new branch building. He added quickly that this new plan wouldn’t be possible if not the arrival of remote work forced by the pandemic.

“What we learned during COVID is that we don’t need to have everyone on-site,” he explained. “Other than our retail staff, we probably have 80% of employees on some type of telecommuting status, either hybrid or fully remote. With that, coupled with the move of our flagship branch and opening up that space, we’ll be able to bring the employees from our operations center over here and not have to lease space. And we’ll have the staff on site all under one roof and not have to worry about building a new headquarters building.”

 

Branching Out

Beyond Hadley, UMassFive is looking to add some new branches in the coming years and expand its footprint across this region, said Kump, adding that the leadership team has identified several different potential target areas.

At the top of the list is Springfield. UMassFive has one location in the city, in the rehabilitation facility at Mercy Medical Center, a branch that counts both medical-center employees and area residents as members. To attract more members, additional sites are being eyed, he said, adding that the Sixteen Acres neighborhood is a preferred landing spot.

Meanwhile, credit-union leaders are also taking a hard look at Westfield, a large community that boasts a state university and thus resembles, to some extent, the Five College area that UMassFive has long called home.

“Many of the demographics are similar to who we serve best,” he said of the Whip City and the surrounding area. “So that is a logical place for us to go.”

While expansion and additional branches are in the business plan, UMassFive will look for measured, controlled growth, Kump said. “At $625 million in assets, we’re not at a size where we can put up a branch every year. Break-evens on branches seem to be running seven or eight years now, so we need to careful with our expansion.”

Meanwhile, any new branches will be smaller in size than what has been built historically, simply because fewer customers come to such facilities and technology, such as ITMs, has changed how service is provided, and thus they require smaller staffs, said Kump, adding that the nature of the business conducted inside is changing as well.

“Branches are now less a transaction center and more of an advisory center,” he explained. “The things people want to come in for are lending — we do a ton digitally, but for loans, people still like to come in, especially on the commercial side — as well as investments and wealth management. Those are things people like to do in person.”

Another strategic objective at UMassFive is growing the commercial side of the ledger, said Kump, adding that, over the past decade or so, the credit union has built what he called a “commercial infrastructure” of products and services. With that infrastructure now in place, the credit union will work to build its portfolio of clients, he said, adding that there are new products planned as well, as well as a commercial credit card.

“For the first 50 years of our existence, it was consumers only — individuals and their families,” he told BusinessWest. “And what we found is that some of those consumers also own businesses, and in the past, we had to turn that business away. A number of years ago, we committed to the local business community, and we want to grow that side of the business.”

One segment of the commercial market that UMassFive is dominating — basically because few other institutions have considered it worthy — is solar energy.

Indeed, since 2017, the credit union has written more than $100 million in loans for residential solar projects, said Kump, adding that it has partnered with the Clean Energy Center to connect low-income households with solar air-source heat pumps.

“It’s a huge niche, and it’s mostly ignored by other financial institutions — when it comes to the true residential solar loan, I know of just one other institution in Western Mass. that offers it,” Kump explained, adding that the biggest reason why is that such offerings amount to unsecured loans, and few banks and credit unions have an appetite for such lending.

UMassFive has the expertise — its chief commercial officer is certified in commercial solar lending — and a track record of success in this realm that it’s looking to build upon.

“We find that they perform as well as equity loans,” he said, adding that, while the market for such loans has softened recently because the tax credits for such installations have diminished, their eligibility requirements have expanded to include nonprofit institutions such as churches, as well as municipalities.

“We were an early adopter, we understand the industry, we know how it works, we support that industry, and it’s a big piece of who we are,” he said, adding that the clean-energy portfolio extends beyond solar and into energy-efficiency projects, both residential and commercial, such as those administered by Mass Save.

 

Bottom Line

As he surveys the banking and financial-services landscape, Kump sees plenty of challenges ahead — from projections of a further slowing of the economy to rising interest rates in the housing market and growing competition for customers in this sector.

But he also sees opportunities for institutions that have the ability to adapt and respond to changing customer needs in a proactive, forward-thinking manner.

That has been the MO at UMassFive for more than a half-century now, and it is the pattern that will continue into the future.

 

George O’Brien can be reached at [email protected]

HCC MGM Culinary Arts Institute Marks Five Years at New Location

By
Warren Leigh, co-chair of the HCC Culinary Arts program.
Education Special Coverage

What’s Cooking?

 

Warren Leigh, co-chair of the HCC Culinary Arts program.

Warren Leigh, co-chair of the HCC Culinary Arts program.

 

Restaurant work is not easy.

Maureen Hindle knows that, having graduated from Holyoke Community College’s (HCC) Culinary Arts program in 2013 and working as a sous chef before returning to work in the HCC program about seven years ago as a lab technician.

“It’s a challenging industry, but it’s all passion-based, and I think that’s a huge thing,” she said. “Our students come here because they have a passion for cooking, and they want to grow that, and this is a good place to do that. And we wouldn’t continue to work in the industry in some capacity if we didn’t love it as well.”

By ‘we,’ she meant the team at the HCC MGM Culinary Arts Institute, which occupies the first two floors of the Cubit building in downtown Holyoke. The $7.5 million, 20,000-square-foot, state-of-the-art facility opened in January 2018, so it will soon mark five years of growth and innovation, which included weathering the pandemic.

Chef and Professor Warren Leigh, who co-chairs the Culinary Arts program, said he’s surprised enrollment isn’t even higher, given the opportunities available in a restaurant industry that’s crying out for workforce help.

“Our students come here because they have a passion for cooking, and they want to grow that, and this is a good place to do that. And we wouldn’t continue to work in the industry in some capacity if we didn’t love it as well.”

“They can’t find employees,” he told BusinessWest. “Nobody knows why we’re not packed to the gills; we should be turning students away, but it’s not happening. Every industry is looking for employees, and especially hospitality. Most all the restaurants are hiring for some position.”

The fall enrollment numbers were encouraging, however, and spring looks strong as well, perhaps because more students are hearing about the needs in a field where pay typically starts in the high teens per hour and can move quickly into the twenties as they move into higher responsibilities. “There is that ability to grow, so you’d think they’d be busting down the doors here.”

Degree programs at the center have been described as ‘stackable.’ Students can choose a one-year certificate program in culinary arts, and if they want to go further, they can enter the associate-degree program and essentially build on what they started.

With that associate degree, a student could transfer to, say, Johnson & Wales, the Culinary Institute of America (CIA), or any college that offers a four-year program in the culinary field. But most of the time, they don’t pursue more education, because of the career opportunities already open to them.

Briana Marizan

Briana Marizan says instructors consider the unique qualities each aspiring chef brings to the program.

“Most of the time, they want to get their degree and go to work. That’s what we see,” Leigh explained. “The question is always, are you getting your money’s worth for this? Compared to other four-year schools and culinary schools, community colleges are inexpensive — a great value. And what we’re seeing is the students who have the associate’s degree tend to wind up in supervisory positions.

“The students who do the two-semester certificate and stick with it also end up moving fairly quickly, but most of the supervisors out there who are alums have associate degrees,” he went on. “That doesn’t mean if you don’t have an associate degree, you won’t get a supervisor’s job. Some of those have made it to some level of supervision, absolutely.”

At a time when career stability is important to so many, enrolling in the Culinary Arts Institute is certainly an attractive option.

 

Heating Up

The institute represents a big step forward in the realm of workforce development within the culinary-arts field, both locally and regionally, a segment of the economy that was already growing and now faces even greater pressure to retain workforce in the post-pandemic era, beset by the Great Resignation at the same time when most people have returned to their old dining-out habits.

“Every industry is looking for employees, and especially hospitality. Most all the restaurants are hiring for some position.”

There has a been a culinary-arts program, in one form or another, at HCC for about 35 years, though the program was more hospitality-related than culinary-focused years ago. It has had several homes over the years, none of them large or particularly well-equipped.

The facility at the Cubit, however, features a fully equipped demonstration kitchen; a production kitchen set up European-style, with the student chefs facing each other and communicating with each other as they work together to prepare a meal; two teaching kitchens; a bake shop; classrooms; a student lounge; and an 80-seat dining facility to host events. As a broad hospitality program, it also maintains a hotel lab with a mock front desk and bedroom.

Hindle, whose role includes food ordering, making sure classes run smoothly, supporting the students and instructors, and more, has seen the program and its physical home evolve since she graduated more than a decade ago, and she’s beyond impressed.

Chef Warren Leigh speaks with students at the start of a class.

Chef Warren Leigh speaks with students at the start of a class.

“It’s incredible. We went from one and a half kitchens to five. So that in itself is huge growth for us,” she said. “But seeing the students able to use this equipment, versus what we had when I was a student, it’s just incredibly beneficial to them because this is what they’re using in the industry. We’re not shoving six students around a range. In fact, this is better than they would see in most industry kitchens; they can learn on the best equipment possible.”

Briana Marizan is one of those current students, working toward her associate degree.

“I came here because I want to be a chef. I want to perfect my craft and then move up,” she said, adding that instructors are sensitive to the learning and work styles of each student. “Each chef brings something unique to the table, and they teach us not only what works best for them, but also what might work best for us.”

As part of its mission to support the region’s hospitality industry, the institute also regularly runs free, eight-week line-cook training and certification courses. Participants learn all the essential competencies they need to become successful line cooks: knife skills; how to prepare stocks, soups, sauces, desserts, poultry, fish, and meat; culinary math and measurements; moist- and dry-heat cooking methods; as well as workplace soft skills, such as building a résumé and presenting themselves at job interviews.

Maria Moreno Contreras, a culinary instructor who was administering a midterm test to one of those classes the day BusinessWest visited, said some participants are already in the industry and want to upgrade their skills, while others are exploring a possible new career in a high-demand field.

“With the non-credit training, many of them getting ready to get a very entry-level job, or it’s exploratory to see if they even want to go there,” Leigh said. “Their endgame is to get a job — but that’s everyone’s endgame here.”

 

Rolling Along

Five years since opening its new headquarters, HCC’s Culinary Arts program is evolving in some intriguing ways. For instance, it was awarded a $147,000 Skills Capital Grant by the state to purchase a truck that will be used as a mobile kitchen for community outreach and education.

“The mobile kitchen has nothing to do with raising income,” Leigh said, noting that it’s not going to set up on the corner and sell tacos. The main purpose is to engage the community while giving students experience in food-truck operations.

According to the award letter, HCC will use the $147,000 to purchase and outfit a mobile food lab that will support both credit and non-credit culinary-arts programs and also incorporate other areas of study, including nutrition, health, business, and entrepreneurship. HCC’s grant application notes that residents of Holyoke face a high level of food insecurity and that downtown Holyoke has been identified as a ‘food desert.’

Maureen Hindle

Maureen Hindle says the state-of-the-art facilities are a far cry from what she used as a student more than a decade ago.

“HCC will deploy the truck to bring food to neighborhoods of downtown Holyoke,” HCC wrote in its application. In addition, the college plans to connect this project to its downtown Freight Farms initiative with a focus on basic nutrition, local produce, and healthy eating.

Leigh envisions using the mobile food lab to engage community partners such as the Holyoke Boys & Girls Club and area food pantries. Students will meet with representatives from area organizations to create menus based on ingredients of their choice or what might be seasonally available.

Food trucks are one way to enter the industry more inexpensively than opening a brick-and-mortar restaurant, he added, citing the example of HCC culinary arts alumna Nicole Ortiz, who wrote a letter in support of the grant and started her own culinary career with her Crave food-truck business. She now also runs Crave restaurant on High Street in Holyoke.

Leigh also said the institute is working with Holyoke Medical Center on putting together some professional development for nurses and nutritionists, planning to package it as a non-credit course with possible grant support.

The facility also recently partnered with the Boys & Girls Club by helping lay out its new kitchen and hosting the club’s eighth-graders at the Cubit.

“We’re trying to be a community partner,” Leigh said, adding that the school started preparing Thanksgiving to-go packages — everything but the turkey for a family of four — to raise money for the President’s Student Emergency Fund at HCC, which assists thousands of students with basic needs.

The program is reaching out to the community in other ways as well, such as a plan to offer professional-development opportunities for culinary-arts teachers in several vocational and technical schools in the region. “It would clearly cost less than at Johnson & Wales or CIA,” he noted. “But maybe we can get grant funding for it.”

At the same time, Leigh and his team are trying to be more purposeful in recruitment, an ongoing effort, as he said, to get the HCC MGM Culinary Arts Center “packed to the gills.”

“We’re trying to tag-team a faculty member and an admissions person and go to those six or eight voke-tech schools, and we’ll try to do the same with the non-culinary students at the other high schools,” he said. “They might only hear about Johnson & Wales and CIA, where the price starts at $50,000 or $60,000.”

With the need for culinary talent more critical than ever before, and the cost of a community-college education within reach for most, he hopes HCC has a winning message for those young people.

As Hindle said, the work isn’t easy, but it’s a field where those with a passion can thrive.

 

Joseph Bednar can be reached at [email protected]

Legislation Continues to Impact Strategies for Individuals, Businesses

By Contributor
tax planning 2022
Banking and Financial Services Special Coverage

Year-end Tax Planning

By Kristina Drzal Houghton, CPA, MST

tax planning 2022

As another tumultuous year draws to a close, both individuals and small-business owners are advised to assess their current tax situation, with an eye on maximizing available tax breaks and avoiding potential tax pitfalls. Planning should be based on the latest laws of the land.

Just look at the significant legislation enacted in recent years. Following the massive Tax Cuts and Jobs Act (TCJA) of 2017, the Coronavirus Aid, Relief, and Economic Security (CARES) Act addressed various pandemic-related issues in 2020. In quick succession, the Consolidated Appropriations Act (CAA) extended certain CARES Act provisions and modified others, while the American Rescue Plan Act (ARPA) created even more tax-saving opportunities in 2021.

This series of new laws culminated in the Inflation Reduction Act (the IRA), passed in August 2022. The IRA, which is generally effective next year, includes several provisions that could have a big tax impact on individuals and business entities.

Kristina Drzal Houghton

Kristina Drzal Houghton

“We still might not be done. More proposed legislation has been introduced in Congress. If another new law featuring tax provisions is enacted before 2023, it may require you to revise your year-end tax-planning strategies.”

And we still might not be done. More proposed legislation has been introduced in Congress. If another new law featuring tax provisions is enacted before 2023, it may require you to revise your year-end tax-planning strategies.

 

BUSINESS TAX PLANNING

 

Depreciation-based Deductions

As we head into year-end, a business may benefit from one or more of three depreciation-based tax breaks: the Section 179 deduction; first-year ‘bonus’ depreciation; and regular depreciation. In consideration of this, consider the following:

Place qualified property in service before the end of the year. If your business does not start using the property before 2023, it is not eligible for these tax breaks.

Section 179 deduction: under Section 179 of the tax code, a business may ‘expense’ (i.e., currently deduct) the cost of qualified property placed in service any time during the year. The maximum annual deduction for 2022 is $1.08 million and is phased out on a dollar-for-dollar basis when total additions exceed $2.7 million. Be aware that the Section 179 deduction cannot exceed the taxable income. This could limit your deduction for 2022.

First-year bonus depreciation: the TCJA authorized a 100% first-year bonus depreciation deduction through 2022. This includes used, as well as new, property. Be aware that most states do not allow this special bonus depreciation.

Regular depreciation: if any remaining acquisition cost remains, the balance may be deducted over time under the Modified Accelerated Cost Recovery System (MACRS).

If you buy a heavy-duty SUV or van for business, you may claim a first-year Section 179 deduction of up to $25,000. The ‘luxury car’ limits do not apply to certain heavy-duty vehicles.

The first-year bonus depreciation deduction is scheduled to phase out over five years, beginning in 2023. Take full advantage while you can.

 

Business Meals

Previously, a business could deduct 50% of the cost of its qualified business entertainment expenses. However, the deduction for entertainment costs, including strictly social meals, was eliminated by the TCJA beginning in 2018.

The ARPA doubles the usual 50% deduction for allowable meals to 100% for food and beverages provided by restaurants in 2021 and 2022. This tax break is not expected to be extended.

 

Business Repairs

As more remote workers return to your regular workplace, the business may need to fix up the place. While expenses spent on making repairs are currently deductible, the cost of improvements to business property must be capitalized.

When appropriate, complete minor repairs before the end of the year. The deductions can offset taxable income in 2022.

As a rule of thumb, a repair keeps property in efficient operating condition, while an improvement prolongs the life of the property, enhances its value, or adapts it to a different use. For example, fixing a broken window is a repair, but the addition of a new wing to a business building is treated as an improvement.

 

State Income Taxes

Many states, including Massachusetts, have enacted so-called ‘work-arounds’ whereby flow-through entities such as Subchapter S corporations and partnerships can elect to pay the state tax at the entity level on behalf of the shareholders. The benefit comes from reduced federal taxable income flowing to the shareholder, which serves to circumvent the $10,000 cap for state and local taxes when calculating itemized deduction, which is discussed later. Most states do not give a dollar-for-dollar credit for the tax paid by the entity, but the federal tax benefit is typically larger than the reduced state credit.

The actual benefit will vary for each shareholder or parter and should be reviewed to determine the actual savings. If deemed to be beneficial, don’t miss any deadlines for electing to pay these taxes.

 

Miscellaneous

Stock up on routine supplies (especially if they are in high demand). If you buy the supplies in 2022, they are deductible in 2022 — even if they are not used until 2023.

If you accrue in 2022 but pay year-end bonuses to employees in 2023, the amounts are generally deductible by an accrual-basis company in 2022 and taxable to the employees in 2023. A calendar-year company operating on the accrual basis may be able to deduct bonuses paid as late as March 15, 2023 on its 2022 return.

Keep records of collection efforts (e.g., phone calls, emails, and dunning letters) to prove debts are worthless. This may allow you to claim a bad-debt deduction.

 

INDIVIDUAL TAX PLANNING

Itemized Deductions

Due to several related provisions in the TCJA, generally effective for 2018 through 2025, more individuals are claiming the standard deduction in lieu of itemizing deductions.

Make a quick analysis of your situation. Depending on the results, you may decide to accelerate certain expenses into 2022 or postpone them to 2023.

For instance, you may want to ‘bunch’ charitable donations in a year you expect to itemize deductions. (There is more on charitable deductions below.) Similarly, you might reschedule physician or dentist visits to provide the maximum medical deduction. The deduction for those expenses is limited to the excess above 7.5% of your adjusted gross income (AGI). If you do not have a reasonable shot at deducting medical and dental expenses in 2022, you might as well postpone non-emergency expenses to 2023.

Note that the TCJA made other significant changes to itemized deductions. This includes a $10,000 annual cap on deductions for state and local tax (SALT) payments and suspension of the deduction for casualty and theft losses (except for qualified disaster-area losses). Since a repeal or modification of this cap is unlikely for 2022, wait to pay state estimates or real-estate taxes until January 2023 if they are not due in December.

The standard deduction for 2022 is generally $12,950 for single filers and $25,900 for joint filers.

 

Charitable Donations

If you still expect to itemize deductions in 2022, you may benefit from contributions to qualified charitable organizations made within generous tax-law limits.

Consider stepping up your charitable gift giving at year-end. As long as you make a donation in 2022, it is deductible on your 2022 return, even if you charge the donation by credit card as late as Dec. 31.

Note that the deduction limit for monetary contributions was increased to 100% of AGI for 2021, but the limit reverted to 60% of AGI for 2022. Nevertheless, this still provides plenty of flexibility for most taxpayers. Any excess may be carried over for up to five years.

Furthermore, if you donate appreciated property held longer than one year (i.e., it would qualify for long-term capital-gain treatment if sold), you can generally deduct an amount equal to the property’s fair market value (FMV). But the deduction for short-term capital-gain property is limited to your initial cost. Your annual deduction for property donations generally cannot exceed 30% of your AGI. As with monetary contributions, any excess may be carried over for up to five years.

The CARES Act established a maximum deduction of $300 for charitable donations by non-itemizers in 2020. The special deduction was then extended to 2021 and doubled to $600 for joint filers. As of this writing, this tax break is not available in 2022.

 

Electric Vehicle Credits

The IRA greenlights tax credits for purchasing electric vehicles and plug-in hybrids over the next few years. But certain taxpayers will not qualify. Map out your plans accordingly.

Notably, the IRA includes the following changes:

The credit cannot be claimed by a single filer with a modified adjusted gross income (MAGI) above $150,000 or an MAGI of $300,000 for joint filers.

The credit is not available for most passenger vehicles that cost more than $55,000, or $80,000 for vans, sports utility vehicles, and pickup trucks.

The vehicle must be powered by batteries whose materials are sourced from the U.S. or its free-trade partners and must be assembled in North America.

The current threshold of 200,000 vehicles sold by a manufacturer is eliminated.

In addition, the IRA authorizes a credit of up to $4,000 for used vehicles if you are a single filer with an MAGI of no more than $75,000, or $150,000 for joint filers.

 

Residential Energy Credits

The IRA generally enhances the residential energy credits that are currently available to homeowners. Under the new law, you may benefit from two types of residential energy credits:

1. The 30% ‘residential clean-energy credit’ can generally be claimed for installing solar panels or other equipment to harness renewable energy like wind, geothermal energy, and biomass fuel. This credit, which was scheduled to phase out and end after 2023, is preserved at 30% from 2022 through 2032 before phasing out.

2. The 30% ‘non-business energy property credit’ can generally be claimed for up to $1,200 of the cost of installing energy-efficient exterior windows, skylights, exterior doors, water heaters, and other qualified items through 2032 before phasing out. For 2022, the credit remains at 10% with a maximum of $500.

 

Miscellaneous

Pay a child’s college tuition for the upcoming semester. The amount paid in 2022 may qualify for one of two higher education credits, subject to phaseouts based on your MAGI.

Avoid an estimated tax penalty by qualifying for a safe-harbor exception. Generally, a penalty will not be imposed if you pay 90% of your current year’s tax liability or 100% of your prior year’s tax liability (110% if your AGI exceeded $150,000).

Minimize the kiddie-tax problem by having your child invest in tax-deferred or tax-exempt securities. For 2022, unearned income above $2,300 that is received by a dependent child under age 19 (or under age 24 if a full-time student) is taxed at the top tax rate of the parents.

Empty out flexible spending accounts (FSAs) for healthcare or dependent-care expenses if you will forfeit unused funds under the ‘use-it-or-lose it’ rule. However, your employer’s plan may provide a carryover to 2023 or a two-and-a-half-month grace period.

Make home improvements that qualify for mortgage-interest deductions as acquisition debt. This includes loans made to substantially improve your principal residence or one other home. Note that the TCJA suspended deductions for home-equity debt for 2018 through 2025.

If you own property damaged in a federal disaster area in 2022, you may qualify for quick casualty loss relief by filing an amended 2021 return. The TCJA suspended the deduction for casualty losses for 2018 through 2025, but retained a current deduction for disaster-area losses.

 

FINANCIAL TAX PLANNING

Capital Gains and Losses

Frequently, investors ‘time’ sales of assets like securities at year-end to produce optimal tax results. It is important to understand the basic tax rules.

For starters, capital gains and losses offset each other. If you show an excess loss for the year, it offsets up to $3,000 of ordinary income before being carried over to the next year. Long-term capital gains from sales of securities owned longer than one year are taxed at a maximum rate of 15% or 20% for certain high-income investors. Conversely, short-term capital gains are taxed at ordinary income rates reaching as high as 37% in 2022.

Review your investment portfolio. If it makes sense, you may harvest capital losses to offset gains realized earlier in the year or cherry-pick capital gains that will be partially or wholly absorbed by prior losses.

 

Net Investment Income Tax

Investors should account for the 3.8% tax that applies to the lesser of net investment income (NII) or the amount by which MAGI for the year exceeds $200,000 for single filers or $250,000 for joint filers. The definition of NII includes interest, dividends, capital gains, and income from passive activities, but not Social Security benefits, tax-exempt interest, and distributions from qualified retirement plans and IRAs.

Make an estimate of your potential liability for 2022. Depending on the results, you may be able to reduce the tax on NII or avoid it altogether.

 

Required Minimum Distributions

As a general rule, you must receive required minimum distributions (RMDs) from qualified retirement plans and IRAs after reaching age 72 (recently raised from age 70½). The amount of the distribution is based on IRS life-expectancy tables and your account balance at the end of last year.

Arrange to receive RMDs before Dec. 31. Otherwise, you will have to pay a stiff tax penalty equal to 50% of the required amount (less any amount you have received) in addition to your regular tax liability.

Do not procrastinate if you have not arranged RMDs for 2022 yet. It may take some time for your financial institution to accommodate these transactions.

Conversely, if you are still working and do not own 5% or more of the business employing you, you can postpone RMDs from an employer’s qualified plan until your retirement. This ‘still working exception’ does not apply to RMDs from IRAs or qualified plans of employers for whom you no longer work.

 

Installment Sales

Normally, when you sell real estate at a gain, you must pay tax on the full amount of the capital gain in the year of the sale.

If you sell it under an arrangement qualifying as an installment sale, the taxable portion of each payment is based on the gross profit ratio, which is determined by dividing the gross profit from the real-estate sale by the price.

Not only does the installment sale technique defer some of the tax due on a real estate deal, it will often reduce your overall tax liability if you are a high-income taxpayer. That is because, by spreading out the taxable gain over several years, you may pay tax on a greater portion of the gain at the 15% capital-gain rate as opposed to the 20% rate.

If it suits your purposes (e.g., you have a low tax year), you may ‘elect out’ of installment sale treatment when you file your return.

 

Estate and Gift Taxes

During the last decade, the unified estate- and gift-tax exclusion has gradually increased, while the top estate rate has not budged. For example, the exclusion for 2022 is $12.06 million, the highest it has ever been. (It is scheduled to revert to $5 million, plus inflation indexing, in 2026.)

In addition, you can give gifts to family members that qualify for the annual gift-tax exclusion. For 2022, there is no gift-tax liability on gifts of up to $16,000 per recipient (up from $15,000 in 2021). The limit is $32,000 for a joint gift by a married couple.

You may ‘double up’ by giving gifts in both December and January that qualify for the annual gift-tax exclusion for 2022 and 2023, respectively. The IRS recently announced that the limit for 2023 is $17,000 per recipient.

 

Miscellaneous

Watch out for the ‘wash sale’ rule that disallows losses from a securities sale if you reacquire substantially identical securities within 30 days. Wait at least 31 days to buy them back.

Contribute up to $20,500 to a 401(k) in 2022 ($27,000 if you are age 50 or older). If you clear the 2022 Social Security wage base of $147,000 and promptly allocate the payroll-tax savings to a 401(k), you can increase your deferral without any further reduction in your take-home pay.

Weigh the benefits of a Roth IRA conversion, especially if this will be a low-tax year. Although the conversion is subject to current tax, you generally can receive tax-free distributions in retirement, unlike taxable distributions from a traditional IRA.

Skip this year’s RMD if you recently inherited an IRA and are required to empty out the account within 10 years. Under new IRS guidance, there is no penalty if you fail to take RMDs for 2021 or 2022. The IRS will issue final regulations soon.

If you rent out your vacation home, keep your personal use within the tax-law boundaries. No loss is allowed if personal use exceeds 14 days or 10% of the rental period.

Consider a qualified charitable distribution (QCD). If you are age 70½ or older, you can transfer up to $100,000 of IRA funds directly to a charity. Although the contribution is not deductible, the QCD is exempt from tax. This may improve your overall tax picture.

 

Conclusion

This year-end tax-planning article is based on the prevailing federal tax laws, rules, and regulations. Of course, it is subject to change, especially if additional tax legislation is enacted by Congress before the end of the year.

Finally, remember that these ideas are intended to serve only as a general guideline. Your personal circumstances will likely require careful examination. Consult with your tax adviser.

 

Kristina Drzal Houghton, CPA, MST is a partner at the Holyoke-based accounting firm Meyers Brothers Kalicka, P.C.; (413) 536-8510.

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