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Bill Hesch is founder of William E. Hesch CPAs.

A Cincinnati accounting firm that has been around for more than three decades is merging into a larger local firm.
William E. Hesch CPAs, based in Oakley, signed a letter of intent at the end of August to merge into Blue Ash-based MMB CPAs and Advisors. The deal is slated for completion Nov.1.

Bill Hesch, founder and owner of his namesake firm, sold it to create a clear succession plan for the company, he told me. Hesch had been looking for 10 years for a successor.

“I’m trying to provide continuity for my clients and wanted to find a good fit,” he said. “I have a small firm with a personal touch, and that’s what I loved about MMB. They have a good firm and have the big-firm experience, which I have.”

Hesch and MMB connected because he had interviewed a job candidate who instead joined MMB earlier this year, returning to where he had previously worked. That candidate, Kevin Krieg, told the people at MMB that Hesch was seeking a merger to create a succession plan. They contacted Hesch, and both sides found a good fit.

“We had very good organic growth and were looking to take the next step through a strategic acquisition,” Adam Hines, an MMB member-owner, told me.

Adam Hines is a member-owner at MMB CPAs & Advisors.

They also found alignment in the way they served clients.

Hesch, 72, founded his firm in May 1993, working out of his apartment. His two employees, Carrie Carroll and Cathy Henry, have worked with him virtually from the beginning and will join him in making the move to MMB. The firm focuses on tax preparation, tax consulting and business consulting.

Hesch said he has no plans to retire yet. He also still runs a law firm that provides estate planning and related services. He has four attorneys and three clerks.

Hesch has been in the accounting business since 1980, when he joined then-Big Eight accounting firm Touche Ross. He became a partner there and managed the tax department in the Cincinnati office. But the firm merged in 1989 with Deloitte Haskins & Sells, which had a much larger tax department. Hesch decided a couple of years later to become CFO for one of his clients, Squeri Food Service.

He stayed there two years before launching his own firm.

His firm grew over the years and reached $1 million a year in revenue within 10 years, Hesch said. It’s maintained that level.

Hesch becomes a member and part-owner of MMB as part of the merger, he said.

Merger comes as MMB experiences rapid growth, plans office move

The deal furthers MMB’s growth track, Hines said. MMB has grown on its own at a 60% clip over the past three years and increased its number of people, too.

MMB has 14 people, a number that will rise to 17 when the Hesch deal is completed, Hines said,
“We thought our clients would benefit from us adding someone who has served his clients well and offers some additional services,” Hines said. “And this gives us economies of scale as well.”

MMB has about 1,000 clients and will add 300 with the addition of Hesch, Hines said.

MMB has grown so rapidly that it’s moving its office, Hines said. It’s in about 2,500 square feet in Blue Ash Place now at 4340 Glendale Milford Road near Summit Park. It plans to move into 4,500 square feet in the Pfeiffer Woods building on Pfeiffer Road, about a mile east of its current location, later this year.

MMB was founded 10 years ago by John Michel, Kurt Marty and Mike Bain. The latter retired in 2020 and Hines became a member-owner.

The firm focuses on tax consulting and serves companies in a variety of industries, including financial services, alternative energy, real estate, manufacturing, hospitality and professional services.

The Hesch deal is just the latest in a recent spate of Greater Cincinnati CPA firm mergers and acquisitions. Barnes Dennig is merging Indianapolis-based Greenwalt CPAs into its operation in a deal that takes effect Jan. 1, 2025, and Hamilton-based Kirsch CPA Group selling to its employees.

Ohio Homebuyer Plus Accounts
Ohio has introduced a new program to assist Ohio residents in purchasing a home through tax advantaged savings accounts offering above-market interest rates.  The program is called Ohio Homebuyer Plus, and the accounts can be opened at any participating financial institution.  Here is a link to the list of participating institutions: https://tos.ohio.gov/homebuyerplus/fis 

To qualify for the program, you must be an Ohio resident that is at least eighteen years old.  Your primary residence must be in Ohio.  The account proceeds may only be used towards the down payment or closing costs of a primary residence in Ohio.

The interest rates paid on Ohio Homebuyer Plus savings accounts vary from institution to institution and is also a function of current yields and interest rates and the balance of the account.  As of August 20, 2024, Ohio is paying an additional 2.59% in interest on top of the APY paid by the financial institution.  For specific rates, Ohioans should contact their local financial institutions.

The account must maintain a balance of at least $100 and cannot exceed a balance of $100,000.  The balance of the account must be used within five years of opening.  It is currently unclear what will happen if the balance is not used within that time frame to purchase a home.  The Ohio Revised Code leaves that up to the Ohio Tax Commissioner to decide through rulemaking.  Nothing has been decided to date.

The interest income earned on these accounts will be taxable at the federal level but deducted on the Ohio tax return.  Additionally, the contributions to the account are deductible on the Ohio tax return of the contributor.  The deduction limit is $5,000 per year total between the interest income and the contributions.  There is a $25,000 lifetime maximum.  

A married couple could double the deduction & savings benefits by each having an Ohio Homebuyer Plus account. The limits above are per individual person limits, meaning a married couple could each have their own accounts and enjoy a deduction of up to $10,000 and a lifetime maximum of up to $50,000.  An account for each spouse would also allow the accountholders to save twice as much in these high earning accounts, up to $200,000.

This deduction opportunity applies to not only the account holder, but also certain family members of account holders.  Specifically, parents, grandparents, siblings, spouses, and stepparents of account holders may contribute to their family member’s savings account and receive an Ohio tax deduction for it.  Funding the Homebuyer Plus accounts of another will result in a taxable gift, and you should consult your tax advisor before making transfers to the account of a relative.  

This provides an excellent strategy for state tax savings and setting family members up for success in the process of purchasing a home.  If a family member would not be able to take advantage of the tax savings provided by funding an account like this, but would still like to contribute, it may be wise to gift the cash outright to the accountholder, who could then contribute it directly to the account.  Either way, this would still be a taxable gift (but unlikely in and of itself to result in a reportable gift) but would allow the accountholder to take advantage of the Ohio tax deduction for the related contribution.

There is limited funding available for this program, so it is important to act as quickly as possible.  Many Ohioans have already taken advantage of the above market interest offered by the state and the tax savings that follow.  

The US Tax Court on October 18, 2023, handed an unfavorable decision to the Estate of James A. Caan, believed to be the famous Hollywood actor who died July 6, 2022.  Caan held a non-tradeable partnership interest in his IRA.  The IRA custodian, UBS, pursuant to its custodial agreement, required an annual valuation of that interest so that it could meet its reporting requirements to the IRS (Form 5498).  When Caan failed to provide such a valuation, UBS distributed the partnership interest to Caan and reported that on a 2015 Form 1099-R.  Caan liquidated the partnership interest outside of the IRA and attempted to claim non-taxable rollover treatment by contributing the cash to a new IRA (the new custodian was Merrill Lynch) more than one year later (i.e., not within the 60-day window for rollovers).  The IRS denied a favorable private letter ruling (requested by Caan seeking a waiver of the 60-day window), citing that the partnership interest itself was required to be transferred to Merrill for the rollover rule to be applicable.  That proved to be a $1.5M income hit for Caan.
 
In our practice, we have found that abiding by custodial agreements is challenging for clients who choose to hold non-traded financial instruments inside an IRA.  The challenges stem from clients not wanting to pay for annual valuation reports, and when required minimum distributions are at issue, there may be insufficient liquidity in the IRA.  Sometimes producing the valuation report itself is a challenge insofar as recalcitrant CFOs of these non-public entities who do not want to share financial information with their investors.            

On July 4, 2023, Ohio Governor Mike DeWine signed House Bill 33, the state’s biennial budget bill, into law. This law enacts multiple changes to Ohio’s tax structure, including changes to the Commercial Activity Tax (“the CAT”), a reduction in the personal income tax, changes to municipal tax filings, and a resident credit for pass-through entity taxes paid to other states. The changes are generally effective for tax years beginning on or after Jan. 1, 2023.

Prior to House Bill 33 being signed into law, taxpayers with gross receipts less than $150,000 were exempt from filing and registering for the CAT. For tax years beginning in 2024 taxpayers with taxable gross receipts under $3,000,000 will be exempt from the CAT. The exclusion increases from $3,000,000 to $6,000,000 for tax years beginning in 2025. The tax rate of 0.26% continues to apply to Ohio taxable gross receipts above the respective exclusion amounts. Notably, House Bill 33 did not remove the filing and registration requirement for taxpayers with over $150,000 of taxable gross receipts. Therefore, taxpayers with gross receipts in excess of $150,000 and below the exclusion amount will still be required to file $0 returns. We are awaiting guidance from the Ohio Department of Taxation to see if administrative relief will be available for taxpayers in this situation.

House Bill 33 reduced the number of personal income tax brackets from four to two. Taxpayers with Ohio taxable income under $26,050 will pay $0 in tax. For tax year 2023, taxpayers with income over $26,050 will pay $360 on the first $26,050 of income and will be subject to tax at a rate of 2.75% for income between $26,050 and $100,000, a rate of 3.688% on income between $100,000 and $115,300, and a top rate of 3.75% for income over $115,300. For tax years beginning in 2024, the 3.688% bracket is eliminated and the top rate reduced to 3.5% such that taxpayers with income over $100,000 will be subject to tax at a rate of 3.5% on income exceeding $100,000. The tax rate on business income passed through to individuals remains at 3% after the $250,000 exclusion.

H.B. 33 reduces the late filing penalty from $150 to $25 for municipal income tax filings and requires the penalty to be abated or refunded on a taxpayer’s first late filing once the return is filed. The law also extends the extended due date of municipal net profits tax returns from Oct. 15 to Nov. 15. Finally, the law allows a modified apportionment formula to reduce compliance costs of employers with remote or hybrid employees. The taxpayer may elect to apportion any property, payroll, or sales attributable to that employee to a designated location owned or controlled by the taxpayer or the taxpayer’s customer. This change applies only to the net profits tax and does not impact the employer’s withholding requirements.

In an effort to limit double taxation on Ohio resident owners of pass-through entities, H.B. 33 allows for a resident to claim a resident credit for pass-through entity taxes paid to another state while requiring an addback of those taxes deducted on an individual’s federal adjusted gross income. The provision is effective for tax years ending on or after Jan. 1, 2023; but taxpayers are allowed, at their election, to apply these provisions for tax years ending on or after Jan. 1, 2022, through the filing of an originally filed or amended return.

Social media/update webpage/OSCPA magazine
 Hanna Hauer has been promoted to Senior Associate effective immediately.  Hanna started as an intern with MMB in the summer of 2021 and joined MMB as a full-time associate upon her graduation from Indiana University’s Kelley School of Business in the spring of 2022.  Throughout her tenure at MMB, Hanna has provided exceptional client service and has been a thought leader among her peers. She is currently sitting for the Ohio CPA examination.