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Wipfli combines our CPA foundation and decades of serving manufacturers to help you thrive in a challenging tax environment.
We don’t just manage compliance — we help you build resilient tax strategies that align with your business goals and drive long-term value. We also closely monitor tax policy changes so that we can deliver comprehensive strategies to help minimize your tax burden and turn complexity into opportunity.
Our tax services for manufacturing businesses include:
Wipfli can help you mitigate risks with real-time, ongoing support for navigating tariff strategy and trade regulation shifts. We provide strategic insights into the growing complexity of global trade, including tariff forecasting, scenario planning and financial modeling, supply chain strategy and USMCA compliance.
Optimize tax strategies with proactive planning, compliance and accounting solutions tailored to your complex business needs. Wipfli’s specialty tax services team applies decades of tax preparation experience to turn your regulatory challenges into opportunities for operational and financial efficiency.
Wipfli helps you navigate evolving tax regulations across jurisdictions to minimize exposure while enhancing compliance. Our solutions, ranging from sales and use tax to property and unclaimed property tax, are designed to reduce liabilities while aligning with strategic business goals.
Seize growth opportunities in international markets with Wipfli. We leverage our industry experience and global network to help you scale with support for international tax compliance, supply chain management, cross-border operations and other critical areas. We’re ready to help you streamline logistics and mitigate risk as you expand your footprint.
Wipfli’s credits and incentives services help manufacturing leaders uncover and capitalize on tax opportunities — including the manufacturing R&D tax credit, hiring incentives, energy credits and capital investment incentives. We help streamline the qualification and application process so that you can maximize your applicable savings.
Manage the challenges of global tax compliance, planning and reporting with Wipfli’s international tax services. We provide strategic services, including transfer pricing, entity structuring and tax efficiency, to help you stay compliant and competitive in international markets.
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Tax treatment for tariffs: How U.S. manufacturing companies should treat tariff costs and IEEPA refund uncertainty under U.S. tax rules
Tariffs are now a seemingly permanent cost consideration for U.S. manufacturing companies sourcing capital equipment and raw materials globally. This means business leaders need to better understand the rules, especially as certain tariff refunds have created additional complications. Misclassification when accounting for tariffs can affect taxable income, timing of deductions and missed opportunities. Keep reading to learn more about how tariffs affect your business from a tax perspective. Tariff costs depend on the nature of the goods From a federal income tax perspective, the proper treatment for tariff costs largely depends upon the nature of the goods on which the tariffs are being charged. That is, in most cases, the treatment of the tariff will follow the tax treatment of the underlying asset or good that is being imported into the United States. Tariffs on capital equipment, raw materials and R&D supplies all have different tax treatments. How tariffs affect capital equipment When a tariff is incurred related to the import of machinery and equipment, the tariff is generally treated as part of the asset’s acquisition costs. The tariff is capitalized into the tax basis of the asset, along with purchase price, freight and installation costs. Once capitalized, the tariff cost would be recovered through the same depreciation methodology as the underlying asset. Most machinery and equipment is depreciated via MACRS over five or seven years. In addition, taxpayers can accelerate the depreciation and cost recovery with tools like 100% bonus depreciation and Section 179 expensing, subject to current law limitations and phase-down schedules. How tariffs affect raw materials and inventory Tariffs assessed on imported raw materials are generally treated as inventoriable costs. That is, the tariff is capitalized into the cost of inventory, along with the purchase price of the raw materials and related inbound freight. The tariff is part of the cost of goods sold and is deducted when the underlying inventory is sold. Some manufacturers expecting tariffs to be levied on their raw materials for the foreseeable future may want to consider the last-in-first-out (LIFO) method of accounting for their inventories: LIFO accounting can be advantageous when costs are rising. But other requirements exist with LIFO, such as book-tax conformity and a requirement to stay on LIFO for at least five tax years. Companies considering LIFO should examine their internal cost accounting systems, for both book and tax purposes, to make sure that the system appropriately captures tariffs. If not, a change in accounting method should be considered prior to adopting LIFO. How tariffs affect R&D supplies Like capital equipment and raw materials, the cost of tariffs on R&D supplies follows the treatment of the cost of the underlying asset or good. As such, if the underlying supplies are materials used in the conduct of research, the tariffs would follow the same treatment. The Tax Cuts and Jobs Act of 2017 (TCJA) differentiated the treatment of domestic and foreign research expenditures for tax years beginning after December 31, 2017. Effective for tax years 2018 and thereafter, the TCJA required research costs to be capitalized and recovered over the applicable period. The recovery period for domestic research expenses was set at five years, with foreign research expenses to be amortized over 15 years. The One Big Beautiful Bill Act (OBBB) gave manufacturers relief for the tax treatment of their domestic research expenditures : For tax years beginning after December 31, 2024, domestic research expenditures are once again deductible as they are paid or incurred. Moreover, a transition rule exists whereby taxpayers can ‘catch up’ their unamortized research expenditures from tax years 2022 through 2024; and small taxpayers are allowed to amend prior years’ returns to deduct the research expenditures otherwise capitalized on the originally filed tax return. For manufacturers using imported supplies in the conduct of research, such as prototype materials, molds or dies and automation supplies, the tariffs will follow the treatment of research supplies or materials. For tax years 2025 and beyond, most manufacturers will choose to deduct their research expenditures, and thereby the related tariff levied on those supplies and materials, as they are paid or incurred. Tariffs may offer a hidden tax benefit for R&D activities Given that the tariff amount follows the treatment of the underlying property, a manufacturer’s inquiry might turn to whether those costs can also qualify for the R&D tax credit . If a manufacturer imports chemicals, prototype materials, or other non-depreciable property that qualify as supplies under Section 41, the tariff embedded in their acquisition cost should generally be included in the amount paid or incurred for those supplies. The tax code focuses on the “amount paid or incurred” for supplies used in the conduct of research. Because the tariff is part of the acquisition cost of the imported supply, the tariff should generally be included in that “amount paid or incurred,” assuming the underlying item is a qualifying research credit supply and is used in the conduct of qualified research. For expensive prototype materials or molds/dies used in the conduct of domestic research, the tariffs levied on those supplies can significantly increase the amount of qualified research expenditures and thereby the tax credit. This rewards companies more when they are increasing their R&D costs. Supreme Court ruling creates ambiguity on accounting for tariff refunds On February 20, 2026, the U.S. Supreme Court ruled in a 6-3 decision that the International Emergency Economic Powers Act (IEEPA) does not give authority to the President to impose tariffs . The majority opinion did not address tariff refunds and the dissenting opinion noted the process is likely to be a “mess.” Significant uncertainty exists, independent of the proper tax treatment of any potential refunds. Only the importer of record is eligible for the refund, but many suppliers passed those costs onto their customers. As a result, many manufacturers will need to look into whether the ruling affects their rights and obligations under contracts with vendors and customers. That is, even if a manufacturer isn’t the importer of record, they may still seek or be legally obligated to a refund from their vendor. It is also important to note that the Supreme Court ruling was limited to tariffs assessed under IEEPA, not section 232 or 301 tariffs . Established tax principles provide a framework for tariff refund scenarios Although some uncertainty remains regarding refund administration and timing, established tax principles provide a framework for addressing several common tariff-refund scenarios. The appropriate treatment generally depends on how the original tariff was treated, whether the related property remains on hand, and when the taxpayer’s right to the refund becomes fixed under its accounting method. Raw materials already sold: A refunded tariff is generally included in taxable income under the tax benefit rule to the extent the earlier inventory or cost-of-goods-sold treatment reduced tax. The inclusion generally occurs when the right to the refund becomes fixed under the taxpayer’s accounting method. Self-employment tax: Some tariff refunds may be taxable for federal income tax purposes without being included in net earnings from self-employment. Raw materials still in inventory: If the goods that generated the refund remain on hand when the refund right becomes fixed, the refund generally reduces the cost or value of inventory rather than creating current taxable income, provided the adjustment is properly treated as an inventory cost adjustment. Capital equipment: A tariff refund tied to capital equipment is generally treated as a basis adjustment under IRC Section 1016 and Treasury Regulation Section 1.1016-3, rather than as a simple tax-benefit-rule recovery. If the asset remains owned and has a remaining adjusted basis, the taxpayer generally reduces the basis and adjusts depreciation prospectively over the remaining recovery period. If bonus depreciation or Section 179 expensing was claimed, the basis decrease may reduce otherwise allowable depreciation in the year the decrease is taken into account. If the asset is fully recovered or was disposed of before the refund right became fixed, the recovery generally is reflected through basis and gain-or-loss mechanics. Taxpayers should coordinate the implementation with their fixed asset specialists. R&D tax credit supplies: If a refunded tariff was included in the cost of supplies used in qualified research, the taxpayer may need to revisit its Section 41 qualified research expense calculation. If the original credit year remains open, the taxpayer generally should recompute the credit by reducing qualified research expenses for the refunded tariff. If the year is closed, the issue is better analyzed under the general credit-recovery rule of IRC Section 111(b), which may increase tax in the refund year to the extent the earlier research credit reduced tax. This approach is similar to the treatment the IRS has applied to Employee Retention Tax Credit recoveries. Read more Tariff refunds for manufacturers: What to do next R&D tax credits can lower your tax bill. Do you qualify? Tariff update: New Section 301 tariffs, Section 232 and more
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Tariff update for manufacturers: What’s the state of tariffs in mid-2026?
For the past year and a half, tariffs have roiled supply chains and forced manufacturers to adjust their business models. But tariff rules are changing: Section 122 tariffs recently ended, but have been replaced by Section 301 tariffs, while Section 232 tariffs also remain in effect. What are the key tariff rules you should know, and how should your business adapt to navigate new tariff changes? Keep reading to learn more. Section 122 tariffs have now ended Section 122, which was a global 10% tariff , has ended as of July 24. These tariffs were imposed by the Trump administration after the Supreme Court ruled the administration’s earlier IEEPA tariffs were illegal. The Trump administration used Section 122 tariffs as a temporary, 150-day bridge to keep tariffs in place while it worked to implement more permanent tariffs under Section 301 (which have now taken effect). Several lawsuits are challenging the legality of the Section 122 tariffs. Should Section 122 tariffs eventually be ruled illegal, businesses could be eligible for refunds on tariff fees. However, until a court rules on Section 122, there is no current pathway for refunds available (which is not the case for the overturned IEEPA tariffs ). New Section 301 tariffs have replaced Section 122 Section 122 tariffs have now been replaced by Section 301 tariffs at a current rate of 10-12.5%. The U.S. government can impose Section 301 tariffs in response to unfair trading practices, as identified during an investigation by the Office of the United States Trade Representative (USTR). Section 301 allows the administration to put tariffs in place indefinitely and at any chosen tariff rate. The Court of International Trade (CIT) has ruled that Section 301 tariffs are legal. The statute gives the U.S. Trade Representative (USTR) authority to take action that is “appropriate and feasible,” which is the mechanism being used to implement different tariff rates. Section 301 tariffs apply to specific countries (or economies in the case of the European Union) that have been investigated and found guilty of one or multiple of these investigations conducted by USTR. Current Section 301 tariffs fall under a forced labor investigation The Section 301 tariff process involves the USTR conducting an investigation into specific trading practices it deems unfair. Currently, Section 301 tariffs are being imposed as part of a forced labor investigation. This investigation has different tariff rates based on three separate tiers, which range from 10-12.5%. The three tiers are: 10%, not inclusive of MFN (most favored nation, which are also known as the general tariff rates) 10% or 12.5%, inclusive of MFN 12.5%, not inclusive of MFN More Section 301 investigations are ongoing, with more tariffs expected soon More tariffs could soon be imposed as a result of additional ongoing Section 301 tariff investigations. Active USTR investigations include industrial excess capacity, pharmaceutical pricing, U.S. tech discrimination, digital service taxes, ocean pollution and trade in seafood, rice and other products. Expect to see a new Section 301 tariff emerge from the industrial excess capacity investigation soon. The administration has also indicated that the excess capacity tariff may stack on top of the Section 301 forced labor tariff on countries the USTR has found guilty of both. USMCA-compliant goods and anything tariffed under Section 232 are exempt from Section 301 The Section 301 forced labor tariff does exclude USMCA-compliant goods, as well as goods tariffed under Section 232. This means that Section 301 tariffs will not stack on top of Section 232 tariffs. Section 232 also supersedes Section 301, so if you have a good that is on a Section 232 list, Section 301 would not apply. For example, a steel bar that is subject to the Section 232 steel tariff would not also have a Section 301 tariff applied. Additional Section 301 exemptions may also apply There are also several additional exemptions from the Section 301 tariffs. To avoid accidentally paying tariffs that you may be exempt from, you need to know: The HTS code for each good you’re importing Which tariff lists those HTS codes are included on The country of origin to determine the tariff rate being paid The administration has the right to make changes and change tariff rates, so once you know which list your goods are on, make sure you pay close attention to any announcements on changes to that list. Additionally, depending on future trade deals that are ratified with the U.S., a country could move from one tier to another tier. For example, a country currently at 12.5% plus MFN could ratify a trade deal with the U.S. to move to a lower tariff rate of 10% inclusive of MFN, or to a different tariff rate entirely. Section 232 tariffs remain active Section 232 tariffs have also been upheld by the CIT and emerge from an investigation process similar to that used for Section 301 tariffs. Section 232 tariffs have been placed on products such as steel, aluminum, automobiles, lumber and more. The tariffs under Section 232 range from 10%-50%, depending on the product. There are additional Section 232 tariffs under investigation in the following categories: industrial machinery and robotics, semiconductors, pharmaceuticals, critical minerals, anthracite coal, commercial aircraft, polysilicon, unmanned aircraft systems, wind turbines and personal protective equipment. Expect new Section 232 tariffs on industrial machinery and robotics The administration has signaled it plans to announce two new Section 232 tariffs on industrial machinery and robotics. As of September 2, 2025, all countries were included in the investigations for these tariffs. The investigations focused on potential national security threats related to imports of robotics and industrial machinery, including several different types of machining centers, equipment, and tool changers. The government may incentivize machine builders to invest in the U.S., with Section 232 tariffs as a component of that domestic machine tool strategy. USMCA negotiations are ongoing, with the U.S. seeking significant changes Six years after the United States-Mexico-Canada Agreement (USMCA) entered into force, the agreement reached a critical milestone. July 1, 2026, marked the start of the required three-party review process among the United States, Canada and Mexico. While Canada and Mexico have advocated for a 16-year extension of the agreement, the United States has pushed for continued periodic reviews and broader renegotiation discussions. Current expectations are that negotiations will continue throughout the remainder of 2026 and likely extend into 2027 before a final agreement is reached. As part of these discussions, the United States is seeking significant changes to the USMCA rules of origin requirements, including a proposal that qualifying products contain at least 50% U.S. content. The administration is also emphasizing stronger North American supply chain sourcing and reducing reliance on Chinese-origin components. Watch for new Section 338 tariffs on Canadian imports Complicating the USMCA negotiations is the news that the administration may impose new Section 338 tariffs on Canada. Announced on July 20, 2026, the tariffs are scheduled to take effect on August 19, 2026, unless modified, suspended or withdrawn prior to implementation. Section 338 of the Tariff Act of 1930 gives the President authority to impose tariffs in response to discriminatory actions against U.S. commerce. The proposed measures would affect approximately $20 billion in Canadian shipments to the United States, representing roughly 5% of Canadian imports into the U.S. The tariffs specifically target products in the alcohol, dairy and automotive sectors, with cheese identified as a key dairy product affected. Notably, products that qualify for preferential treatment under USMCA would not be exempt from Section 338 measures, creating uncertainty for manufacturers and importers that have relied on USMCA to freely move goods throughout North America. Next steps: Adapting your business to meet tariff challenges Tariffs will continue to pose challenges for manufacturers for the foreseeable future. To adapt to this environment, you need to understand how tariffs impact your business , both in terms of your financial forecasts and your global supply chain. The first step here is knowing the HTS codes for everything you import and then reviewing those codes frequently to understand the current tariff rates. This can give you a baseline financial awareness of your tariff costs. You may also benefit from working with a third-party advisor to gain additional insight on how tariffs affect your operations, financials and markets. An advisor can also help you explore creative solutions to thrive even in this complex, fast-changing moment. Read more Tariff refunds for manufacturers: What to do next Manufacturing trends: What 456 leaders say about the industry AI disruption is coming for manufacturing. How should your firm adapt?
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Opportunity Zone updates: New proposed regulations clarify transition rules
Opportunity Zones are entering a major transition period. Recent law changes, including the One Big Beautiful Bill Act (OBBB), have adjusted how the program will work going forward. Now, IRS Notice 2026-40 has provided the IRS’s “roadmap” for the handoff between the old system and the new system. The guidance not only clarifies how existing investments will be treated during the transition but also highlights key planning considerations for investors preparing for the next phase of the Opportunity Zone program. What is the current status of Opportunity Zones? Opportunity Zones are currently in a transition period as the original program approaches key deadlines and a revised framework is set to take effect on January 1, 2027. Investors with existing Opportunity Zone investments usually remain subject to the original rules, including the upcoming recognition of deferred gains, while a new set of tax-deferral, Opportunity Zone tracts and basis-adjustment provisions will govern future investments. What Notice 2026-40 means for Opportunity Zone investments Notice 2026-40 outlines transitional guidance for investments made under the original program before the new Opportunity Zone rules take effect. Note that this is a notice to the proposed regulations and additional guidance will follow once those are released. Here are three key areas the notice addresses: Investments made on or before December 31, 2026. Under the old rules, investors could reinvest eligible profits into a qualified opportunity fund and delay tax — but only up to a point. The notice reiterates that, for many investors, the deferred profit must typically be reported as taxable income no later than the year that includes December 31, 2026. The notice also reiterates that this cannot be deferred any further. However, Opportunity Zone gains recognized by an inclusion event may be eligible for deferral. Investments made on or after January 1, 2027. Starting January 1, 2027, the program continues but works differently. Instead of one shared end date, the new rules generally make the deferred gain taxable at the earlier of when the investment is sold or five years after the investment was made. If the investment is held for at least five years, the rules can provide an additional benefit by increasing the investor’s basis for the investment, typically 10% or 30% for certain qualified rural opportunity fund investments. Property acquired after December 31, 2026, in previously designated Opportunity Zone tracts. The notice signals that forthcoming proposed regulations will include safe harbors permitting Qualified Opportunity Funds (QOF) and QOZBs to keep satisfying location-based tests after a previously designated qualified Opportunity Zone’s (QOZ) designation expires. Projects already operating under a written working-capital plan adopted by December 31, 2026, may be able to treat certain post-2026 purchases as still qualifying if they are made under that plan and meet the notice’s conditions. Generally, the notice requires that 10% be funded to the Qualified Opportunity Zone Business (QOZB) and 5% spent by December 31, 2026. Ordinary business course replacement or modernization may still qualify, but this may not extend to expansion into a new business line or new product line. If tangible property is acquired by the end of the QOZ designation period or qualifies under the working capital or ordinary course replacement transition rules, the QOF or QOZB can keep treating the expired QOZ as a QOZ for the substantial use test through December 31, 2047. What the changes mean for your Opportunity Zone investment As Opportunity Zones transition into this next phase, the rules clearly shift from a one-time deferral incentive to a more measured, rolling framework. For investors, this means 2026 serves as a hard reset on existing deferrals, while shorter, investment-specific timelines will govern new investments. At the same time, the guidance preserves value for ongoing projects by allowing certain pipeline developments and operational replacements to continue qualifying, even as legacy zones phase out. How you can prepare for Opportunity Zone changes Now is the time to start thinking about how these transition rules affect your current QOF and QOZB investments. Whether you’re managing an existing investment, overseeing an active development project or evaluating future opportunities, the transition guidance introduces several planning considerations: Know your potential tax liability: Investors with gains deferred under the original Opportunity Zone program should begin planning for the tax implications of the December 31, 2026, inclusion date. Understanding the potential tax liability now can help avoid cash-flow surprises and provide time to evaluate strategies for funding the resulting tax obligation. Review current projects: Organizations with active Opportunity Zone projects should review existing working capital plans, development timelines and planned property acquisitions. Projects that may rely on the transition relief provisions should confirm they meet the notice’s requirements and maintain documentation supporting continued eligibility. Reassess new investments: For those considering new Opportunity Zone investments after January 1, 2027, it will be important to reassess investment horizons and expected returns under the revised five-year deferral framework. The new rules may create different planning opportunities than the original program, particularly for investors evaluating long-term appreciation and basis step-up benefits. Leverage experienced tax support: Because the transition guidance introduces new compliance requirements and planning considerations, investors, fund managers and project sponsors should work closely with their tax advisors to evaluate how the evolving regulations affect their specific circumstances. Read more: Opportunity Zone tax benefits under OZ 2.0 How the OBBB just changed taxes for real estate investors OBBB Opportunity Zone updates signal major change in 2026
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