Small Business Taxes & ManagementTM--Copyright 2020, A/N Group, Inc.
For the full text of new Revenue Rulings, Revenue Procedures,
Regulations, etc. go to:
Internal Revenue Bulletins
For a Tax Court Case:
Tax Court Cases
For IRS News Releases (current month):
News Releases and Fact Sheets
For Fact Sheets:
For Letter Rulings and Technical Advice Memoranda:
IRS Written Determinations
For IRS Forms and Publications:
Forms and Publications
May 22, 2020
NewsThe IRS has reported it is aware that individuals may have lost access to the Transcript Delivery Service (TDS). We are currently working to restore TDS access for authorized users. In order to maintain access to TDS, authorized users must be associated to an e-file application with an active EFIN. You can log into your e-Services account to verify and monitor the status of your EFIN. If you need immediate assistance, please contact the e-help Desk at 866-255-0654.
The IRS has announced (IR-2020-100) the 2020 IRS Nationwide Tax Forums will be held virtually in 2020 with a series of live-streamed webinars beginning this July. Tax professionals who register by June 15 at 5 p.m. ET qualify for an Early Bird rate of $240 per person. The standard rate, starting June 16, will be $289. Initial registration for the in-person 2020 forums began in March. Those who have already registered may transfer their registration to the virtual format at no additional cost. Refunds are available for those who choose not to participate.
While still in the earliest of stages, a bipartisan bill has been introduced in the Senate that would extend the 8-week resdtaffing requirement in the Payroll Protection Plan with a 16-week test period. In addition, the list of qualifying expenditures, other than for payroll, has been expanded to include PPE equipment and certain costs to adapt to the new environment (e.g., plastic shields in front of cash registers).
The Financial Accounting Standards Board has affirmed its decision to amend the effective date of Topic 842 to fiscal years beginning after December 15, 2021 for private companies. Topic 842 deals with recognizing lease assets and liabilities on the statement of financial condition for financial presentation purposes.
May 21, 2020
NewsThe Treasury and the IRS have announced they are starting to send nearly 4 million Economic Impact Payments (EIPs) by prepaid debit card, instead of by paper check. EIP Card recipients can make purchases, get cash from in-network ATMs, and transfer funds to their personal bank account without incurring any fees. They can also check their card balance online, by mobile app, or by phone without incurring fees. The EIP Card can be used online, at ATMs, or at any retail location where Visa is accepted. This free, prepaid card also provides consumer protections available to traditional bank account owners, including protections against fraud, loss, and other errors.
Revenue Procedure 2020-32 (IRB 2020-24) provides the 2021 inflation adjusted amounts for Health Savings Accounts (HSAs) as determined under Sec. 223 of the Code. For calendar year 2021, the annual limitation on deductions under Sec. 223(b)(2)(A) for an individual with self-only coverage under a high deductible health plan is $3,600. For calendar year 2021, the annual limitation on deductions under Sec. 223(b)(2)(B) for an individual with family coverage under a high deductible health plan is $7,200. High deductible health plan. For calendar year 2021, a “high deductible health plan” is defined under Sec. 223(c)(2)(A) as a health plan with an annual deductible that is not less than $1,400 for self-only coverage or $2,800 for family coverage, and the annual out-of-pocket expenses (deductibles, co-payments, and other amounts, but not premiums) do not exceed $7,000 for self-only coverage or $14,000 for family coverage.
Buildings are depreciable; land is not. The purchase price of a building must be allocated between the land and the building. In Gary Pinkston and Janice Pinkston (T.C. Memo. 2020-44) the taxpayers owned two rental properties. One of the properties was a condo for which they allocated approximately 1 percent of the total basis to the land, approximately 75 percent allocated to 5-year property and the remainder to residential rental property. Because the condo rental was used on a transient basis, the IRS concluded this was nonresidental real property with a 39-year life. The IRS's allocation of the basis was approximately 11 percent to the land, 3.4 percent to 5-year property, and the remainder to nonresidential real property. Because the value of the property was some $2.7 million, the taxpayer's depreciation deduction for one year dropped from $499,490 to $79,887. The Court agreed with the IRS that its adjustments to the taxpayers' depreciation methods constitute a “change in method of accounting” that results in a section 481 adjustment.
May 20, 2020
NewsAnnouncement 2020-06 provides the Treasury Department and IRS view on how to interpret references in U.S. income tax treaties to the North American Free Trade Agreement (NAFTA) once it is replaced by the Agreement between the United States Canada and Mexico (the USMCA). The announcement provides that once the USMCA goes into force, the IRS and Treasury will interpret any references to NAFTA in a U.S. income tax treaty as a reference to the USMCA.
May 19, 2020
NewsThe Small Business Administration has released Paycheck Protection Program Loan Forgiveness Application.
The IRS announced it is starting to add 3,500 telephone representatives to answer some of the most common questions about Economic Impact Payments. IRS telephone assistance and other services will remain limited, and answers for most of the common questions related to Economic Impact Payments are available on IRS.gov. The IRS anticipates bringing back additional assistors as state and local advisories permit.
Substantiation is key to securing a deduction. In Charles P. Littlejohn and Maxine M. Littlejohn (T.C. Memo. 2020-42) the Tax Court disallowed deductions for two rental properties where the expenses were not substantiated. The Court declined to estimate any expenses because there was insuffiicent basis for making such an estimate. The Court also declined to allow more of a depreciation deduction than that allowed by the IRS because the taxpayers did not substantiate the basis in the property.
Tip of the DayStates looking for money . . . The coronavirus has played havoc on the finances of every state. Revenue is down and costs are up. And this is not going away quickly. Look for states to get more aggressive in aduiting returns and to collect sales and income taxes from out-of-state businesses. They may also put increased emphasis on resident-nonresident issues, and taxpayers claiming residency in another state.
May 18, 2020
NewsUnder the Coronavirus, Aid, Relief and Economic Security Act (CARES Act), employers can defer the deposit and payment of their share of Social Security taxes. The Act also allows self-employed individuals to defer payment of certain self-employment taxes. The IRS created deferral of deposit and payment of employment taxes FAQs to address specific issues related to this topic. You can also find more payroll-related FAQs and information on the IRS Coronavirus and Economic Impact Payments: Resources and Guidance page.
The granting of a conservation easement can result in a substantial charitable contribution, but it has to meet a number of hurdles. In Champions Retreat Golf Founders, LLC, Riverwood Land, LLC, Tax Matters Partner (U.S. Court of Appeals, Eleventh Circuit) the Court reversed and remanded the Tax Court's holding (T.C. Memo. 2018-146) held the deduction was proper if the donation was made for "the protection of a relatively natural habitat of fish, wildlife, or planst or similar ecosystem" or was made for "the preservation of open space . . . for the scenic enjoyment of the general public."
Tip of the DayWorking from home . . . Might want to check your online security--and probably beef it up. If a professional installed the network at your office there was probably much more security designed in than in your home. Add to that the myriad of items linked to your internet--doorbell camera, lights, tv, printer, etc. any one of them could make you vulnerable to a hacker.
May 15, 2020
NewsThe IRS has issued final regulations (T.D. 9897) regarding the treatment of certain interests in corporations as stock or indebtedness under Section 385. The final regulations generally affect corporations, including those that are partners of certain partnerships, when those corporations or partnerships issue purported indebtedness to related corporations or partnerships.
The IRS has issued proposed regulations (REG-104591-18) that provide guidance on Section 162(f), as amended by legislation enacted in 2017, concerning the deduction of certain fines, penalties, and other amounts. This document also contains proposed regulations that provide guidance relating to the information reporting requirements under new Section 6050X with respect to those fines, penalties, and other amounts. The proposed regulations affect taxpayers that pay or incur amounts to, or at the direction of, governments, governmental entities or certain nongovernmental entities treated as governmental entities (nongovernmental entities) in relation to the violation of a law or investigations or inquiries by such governments, governmental entities, or nongovernmental entities into the potential violation of a law.
May 14, 2020
NewsA bill has been introduced in the House (Health and Economic Recovery Omnibus Emergency Solutions Act) intended to provide additional stimulus to the economy as well as other purposes. The bill would remove the limit on state and local taxes, allowing a full deduction. It would also provide benefits to first responders, provide a payroll tax credit for employee benefit expenes, an employee retention credit, a business interuption credit for self-employed individuals, provide for forgiveness for certain SBA loans, remove the limit on excess business losses, and liberalize the carryback of net operating losses. The bill would also provide assistance to agricultural producers.
Sometimes you can claim you "substantially complied" with the IRS requirements. But in other cases only dotting the i's and crossing the t's will work. One of those times is when you're making a charitable contribution. No amount of other documentation can be substituted for a contemporaneous written acknowledgment of the contribution. In Roderick M. Campbell and C. Sandra Campbell (T.C. Memo. 2020-41) there was a issue as to the taxpayer's ownership interest in the items donated to charity. In addition, there were questions about several aspects of the requirements for the property contribution. However, the taxpayers escaped the accuracy-related penalty because the penalty was not properly approved by the IRS.
May 13, 2020
NewsNotice 2020-29 provides for increased flexibility with respect to mid-year elections made under a Sec. 125 cafeteria plan during calendar year 2020 related to employer-sponsored health coverage, health Flexible Spending Arrangements (health FSAs), and dependent care assistance programs. The notice also provides increased flexibility with respect to grace periods to apply unused amounts in health FSAs to medical care expenses incurred through December 31, 2020, and unused amounts in dependent care assistance programs to dependent care expenses incurred through December 31, 2020. Further, the notice provides that the relief provided in Notice 2020-15, regarding high deductible health plans and expenses related to COVID-19, and in the Coronavirus Aid, Relief, and Economic Security Act (CARES Act) regarding a temporary exemption for telehealth services, may be applied retroactively to January 1, 2020.
Notice 2020-33 increases the $500 limit for unused amounts remaining in a health flexible spending arrangement (health FSA) that may be carried over into the following year by making the carryover amount 20 percent of the maximum salary reduction amount under Sec. 125(i), which is indexed for inflation. This calculation had been the basis for the $500 limit under Notice 2013-71, but the $500 limit did not incorporate the indexing. Thus, for 2020, under this new notice the carryover amount will increase to $550. The notice cross references Notice 2020-29 for guidance on how a Sec. 125 cafeteria plan may be amended to allow prospective health FSA election changes for the 2020 calendar year. Notice 2020-29 provides relief in response to the COVID-19 pandemic that, among other things, permits employers to amend Sec. 125 cafeteria plans to provide participants flexibility to change health FSA contribution elections at such times as the employer permits through the end of 2020, provided that any changes are applied only prospectively. Regarding individual coverage health reimbursement arrangements (HRAs), the notice also provides clarification regarding reimbursement for premium expenses occurring prior to the beginning of the plan year (generally addressing the need to pay the premium for January health insurance coverage in December of the previous year).
Tip of the DaySecond nondisclosure agreement? . . . You should have new employees sign nondisclosure and, if appropriate, noncompete agreements when starting employment. But you should also consider signing a second nondisclosure agreement when leaving the firm. The second agreement may just reiterate the provisions in the original, but it could have been some time since the original was signed and the second one will reinforce the first. It will be hard for the employee to argue that he didn't remember the first one or come up with some other excuse for not complying. Another reason is to make sure the agreement covers the current bases. This is especially true for anyone who has accesse to client, customer or patient information, or to any electronic records. Talk to your attorney.
May 12, 2020
NewsIn IR-2020-93 the IRS provided reasons as to why your Economic Impact Payment could be different than what you expected. For one, only children eligible for the Child Tax Credit qualify for the additional $500 payment per child. Children who are age 17 or older won't qualify for the payment. College students will not qualify for the credit even if they are dependents because they're too old and if they're dependents they can't claim the payment on their own. Past-due child support may be deducted from the payment as well as garnishments by creditors if deposited in a bank account. Taxpayers who receive an incorrect amount (e.g., the payment was based on their 2018 return and in 2019 they have an additional child) will be able to claim the additional amount on their 2020 return.
Want to know how much each state has gotten in Economic Impact Payments to date? The IRS has released IR-2020-91 with the number of payments and the total amount of dollars. As of the date the information in IR-2020-91 was calculated, the IRS had sent out 130 million payments in the first four weeks.
Tip of the DayDepressed? . . . More than a few people try to avoid the blues with shopping therapy. Some people associated that with women, but they don't have exclusive rights. Men are frequently guilty. The difference is that think their purchases are justified because they're buying a tool which will save them time or money. Maybe. Maybe not. But under the current economic problems and the uncertainty, resist the urge. Now's the time to conserve cash. No one can tell if we're coming out of this or not and if not when. The same applies to your business.
May 11, 2020
NewsThe IRS wants to speed Economic Impact Payments to entitled individuals. It is urging individuals to use Get My Payment option by noon Wednesday, May 13, for a chance to get quicker delivery. The IRS, working in partnership with Treasury Department and the Bureau of Fiscal Services (BFS), continues to accelerate work to get Economic Impact Payments to even more people as soon as possible. Approximately 130 million individuals have already received payments worth more than $200 billion in the program’s first four weeks. Starting later this month, the number of paper checks being delivered to taxpayers will sharply increase. For many taxpayers, the last chance to obtain a direct deposit of their Economic Impact Payment rather than receive a paper check is coming soon. People should visit Get My Payment on IRS.gov by noon Wednesday, May 13, to check on their payment status and, when available, provide their direct deposit information. The IRS will take your bank account information from your 2018 or 2019 return (if filed), but only if you got a refund for one of those years. If you used your bank account to pay a balance due, the account number will not used for your Economic Impact Payment.
The Internal Revenue Service has updated FAQs #64 and #65 regarding the COVID-19 Employee Retention Credit for how eligible employers treat health care expenses. In addition, the Service has added a new FAQ #79 regarding businesses that repay their Paycheck Protection Program loan by May 14, 2020.
Tip of the DayCasualty losses . . . Personal casualty losses are generally no longer deductible. There is an exception for losses attributable to a Federally declared disaster. In addition, such losses can be taken in the year they occur or, if an election is made, in the prior year. That election could be particularly important if you incur such a casualty in 2020. That's because, for most taxpayers, 2019 is likely to have been a much better year. That means you would have been in a higher bracket and, as a result, taking the loss in 2019 would result in bigger tax savings. You can find a list of all Federally declared disasters at www.fema.gov.
May 8, 2020
NewsNot everyone is entitled to the $1,200 Economic Impact Payment. For example non-resident aliens and anyone who died before receipt of the payment are not entitled. (Resident aliens and U.S. citizens living abroad are entitled to the payment.) The IRS has indicated that if you're the executor of an estate of someone who died, or your spouse died, before receipt, you should return the payment to the IRS. See Question 41 on the IRS's recently updated Frequently Asked Questions page.
The IRS has issued proposed regulations (REG-113295-18) that provide guidance for estates and trusts clarifying that certain deductions of estates and non-grantor trusts are not miscellaneous itemized deductions. The Tax Cuts and Jobs Act (TCJA) prohibits individual taxpayers from claiming miscellaneous itemized deductions for any taxable year beginning after Dec. 31, 2017, and before Jan. 1, 2026. Specifically, the proposed regulations clarify the following deductions are allowable in figuring adjusted gross income and are not miscellaneous itemized deductions:
Finally, the guidance clarifies how to determine the character, amount and manner for allocating excess deductions that beneficiaries succeeding to the property of a terminated estate or non-grantor trust may claim on their individual income tax returns.
Tip of the DaySafe harbor for returning PPP funds extended . . . More than a few businesses believed that the PPP loans were free money. Actually, as part of the loan application you had to certifying in good faith that the loan was necessary because your business was impacted by the COVID-19 virus. The SBA had set a deadline of May 7 for returning funds where a business discovered later they were unable to make that certification. The SBA announced that it has extended that safe harbor for returning the funds to May 14.
May 7, 2020
NewsSection 2202 of the Coronavirus Aid, Relief, and Economic Security Act (CARES Act), enacted on March 27, 2020, provides for special distribution options and rollover rules for retirement plans and IRAs and expands permissible loans from certain retirement plans. One of the most important provisions allows a taxpayer to take distributions of up to $100,000 from a retirement plan or IRA without penalty and pay the tax on the distribution over a three-year period or return the money to the plan and avoid tax. The IRS has posted a webpage containing FAQs at Coronavirus-Related Relief for Retirement Plans and IRAs.
In Notice 2020-32 the IRS held that a taxpayer could not take a deduction for expenses paid for with PPP loans that are forgiven. For example, if your business receives a $50,000 PPP loan and $40,000 is spent on qualifying payroll expenses and that amount is forgiven, no deduction will be allowed. Several members of the House and Senate disagree with this position and claim it is in direct conflict with the intent of the law. Several organizations are also in disagreement with the IRS position.
Tip of the DaySet alerts on your bank account . . . One way to lessen the damage from a hacker or identity theif can be to set alerts on your bank accounts, credit cards, and debit cards. If your bank has alerts you can get a text or email when your credit card is hit for more than a certain amount, say $300. You could do the same for your bank account for the transfer of a similiar amount. It shouldn't take more than a little analysis to find a point below which of your routine transactions occur.
May 6, 2020
NewsVictims of the severe storms, flooding, landslides and mudslides that began on Feb. 5, 2020, in Oregon may qualify for tax relief from the IRS. The President has declared that a major disaster occurred in the State of Oregon. Following the recent disaster declaration for individual assistance issued by the Federal Emergency Management Agency, the IRS announced today that affected taxpayers in certain areas will receive tax relief. Individuals and households who reside or have a business in Umatilla County and the Confederated Tribes of the Umatilla Indian Reservation may qualify for tax relief. For more information, go to IRS announces tax relief for Oregon victims of severe storms, flooding, landslides and mudslides.
The Internal Revenue Service Office of Chief Counsel announced IR-2020-87 the Settlement Days program will continue remotely enabling unrepresented taxpayers to work towards resolving their pending United States Tax Court case despite stay-at-home orders in many jurisdictions. The first two events are for docketed cases with place of trial in Detroit or Atlanta. Future events may be scheduled in other cities throughout the United States.
Tip of the DayPayroll Protection Program . . . Currently, in order for any Payroll Protection Program (PPP) loan to be forgiven in full you must spend at least spend all the funds and at least 75 percent of the amount spent must be on payroll expenses during the 8-week period following receipt of the loan. There are at least two points here. The ink wasn't dry on the CARES Act before potential recipients realized that for any number of reasons their business wouldn't be ready to spend all that money on payroll. There is not talk of modifying the requirements or extending the time period to use the funds. Whether or not that will happen is anyone's guess. You can't plan on it, but you should be alert for the possibility. Second, it might make more sense to keep or rehire staff based on your need rather than the over hire just to have the loan forgiven. It would be tragic to spend the money and discover you need more help and can't get needed funding. Discuss all the implications with your CPA or financial advisor.
May 5, 2020
NewsThe Internal Revenue Service is again reminding Supplemental Security Income and Department of Veterans Affairs beneficiaries to act by Tuesday, May 5 if they didn't file a tax return in 2018 or 2019 and have dependents so they can quickly receive the full amount of their Economic Impact Payment. For more information, go to VA, SSI Recipients with Eligible Children Need to Act by Tuesday, May 5.
The IRS has just released draft copies of Form 941 and the accompanying instructions. When officially released, the new Form 941 is to be used beginning in the second quarter of 2020 and reflects the new credit for qualified sick and family leave wages, the new employee retention credit, the deferral of the employer share of social security taxes and the advance credit for sick and family leave and/or employee retention credit.
The Treasury Inspector General for Tax Admnistration (TIGTA) initiated an audit because it is required to assess the IRS's compliance with the reporting requirements contained in the Improper Payments Elimination and Recovery Act of 2010; Executive Order 13520, Reducing Improper Payments; and the Improper Payments Elimination and Recovery Improvement Act of 2012. The objective of this review was to determine whether the IRS complied with the annual improper payment reporting requirements for Fiscal Year 2019. The Office of Management and Budget has declared the Earned Income Tax Credit (EITC) Program a high-priority program that is subject to reporting in the Department of the Treasury Agency Financial Report. The IRS estimates 25.3 percent ($17.4 billion) of the total EITC payments of $68.7 billion made in Fiscal Year 2019 were improper. TIGTA found the IRS has not reduced the overall EITC improper payment rate to less than 10 percent; however, it has been approved for this exception to the annual reduction target reporting requirement. As an alternative, the Office of Management and Budget advised that a reduction target may remain constant given the complexities of the program, as long as the complexities are clearly explained in a footnote. For Fiscal Year 2019, in response to TIGTA recommendations, the IRS correctly rated the Additional Child Tax Credit (ACTC), the American Opportunity Tax Credit (AOTC), and the Net Premium Tax Credit (PTC) as being susceptible to significant improper payments, i.e. , high risk, similar to the EITC. However, the IRS did not report the Net PTC improper payment estimates in the Agency Financial Report and will begin reporting in Fiscal Year 2020. The IRS estimates that 27.4 percent ($540.9 million) of the total Net PTC payments in Fiscal Year 2019 were improper. In addition, the IRS does not use the tools provided by Congress to the extent possible to address erroneous credit payments. For example, erroneous refund penalties are not being assessed, the majority of taxpayers who are recertified to receive a refundable credit do not meet eligibility requirements, and bans are not being used effectively. Furthermore, limited resources result in the majority of refundable credit claims with income discrepancies not being addressed. Finally, revising the nonwork Social Security Number case selection methodology could increase revenue protected. Our review of Processing Year 2019 tax returns identified that the IRS could have increased the amount of revenue it is protecting by approximately $3.1 million if it included the ACTC in its selection criteria and prioritized its case selection. To see the full report, go to www.treasury.gov/tigta/auditreports/2020reports/202040025fr.pdf.
Tip of the DayStudent debt relief . . . Student debt can represent a huge burden for many individuals and couples. That's particularly important at this time of financial crisis. The CARES Act provides temporary payment relief to borrowers with qualifying federal student loans. Some federal student loans don't qualify. The Federal Trade Commission has released a webpage with general information and links to additional information.
May 4, 2020
NewsThe IRS has posted updated Frequently Asked Questions (FAQs) to IRS.gov providing answers regarding the Employee Retention Credit under the CARES Act. The Employee Retention Credit under the CARES Act encourages businesses to keep employees on their payroll. The refundable tax credit is 50 percent of up to $10,000 in wages paid by an eligible employer whose business has been financially impacted by COVID-19.
Taking the examination for an Enrolled Agent? The IRS has announced that due to the COVID-19 global pandemic, Prometric’s test centers in the United States and Canada are closed through May 31, 2020. If you have a Special Enrollment Examination appointment scheduled in May, you should have received an email informing you that your appointment is canceled. A Prometric representative will try to contact you once by telephone to reschedule your appointment. If Prometric can’t reach you by telephone, they will reschedule your appointment and send you an email confirmation with your new appointment information. If the new appointment date and time does not work for you, you can reschedule your exam. Currently, rescheduling fees are being waived. For more information, go to Special Enrollment Exam Delays and Cancellations.
Tip of the DaySmall business help . . . It's not just the SBA that has business help advice. The Federal Trade Commission has a webpage offering help with respect to the COVID-19 crisis and likes to hundreds of articles, some industry specific, that are of more general assistance. A good starting point is www.ftc.gov/news-events/blogs/business-blog/2020/05/when-economic-impact-covid-19-hits-home?utm_source=govdelivery.
May 1, 2020
NewsPayroll Protection Program loans are loans that may be forgiven if the business meets certain criteria, chiefly spending at least 75 percent of the loan amount on payroll and no more than 25 percent on rent, mortgage interest, and utilities. The CARES ACt provides that any amount forgiven is not income for federal tax purposes. The IRS has just issued Notice 2020-32 which provides that no deduction is allowed for otherwise deductible expenses incurred (e.g., payroll costs, rent) if the payment of the expense results in forgiveness of the covered loan. For example, Madison Inc. secures a loan for $100,000 under the PPP program. Madison spends $90,000 on payroll expense and, as a result, $90,000 of the loan is forgiven. Madison cannot deduct $90,000 of its payroll costs.
In response to the COVID-19 Pandemic and solely to implement the following provisions of the Coronavirus Aid, Relief, and Economic Security Act (CARES Act), until further notice, the IRS is implementing the temporary procedures described for digital transmission of Form 1139 and Form 1045. Section 2303 makes several modifications to net operating losses, including requiring a taxpayer with a net operating loss arising in a taxable year beginning in 2018, 2019, or 2020 to carry that loss back to each of the five preceding years unless the taxpayer elects to waive or reduce the carryback; and providing a carryback for a two-year period of NOLs arising during a taxable year that began in 2017 and ended during 2018; and Section 2305 modifies the credit for prior-year minimum tax liability of corporations, including to accelerate the recovery of remaining minimum tax credits of a corporation for its 2019 taxable year from its 2021 taxable year and to permit a corporation to elect instead to recover 100 percent of any of its remaining minimum tax credits in its 2018 taxable year. The IRS will now accept eligible refund claims Form 1139 to be submitted via fax. For complete details go to Fax Form 11396 and Form 1045 to Claim Quick Refunds.
Revenue Procedure 2020-29 (IRB 2020-21) allows taxpayers to electronically submit requests for private letter rulings and other legal advice. It also allows for electronic signatures on the required documents. The IRS will continue to allow for paper submissions in addition to electronic submissions. This revenue procedure modifies Rev. Proc. 2020-1.
Tip of the DayState penalty rules . . . The IRS is relaxing many of the interest and penalty rules with respect to tax payments and filings after March 15. But many states are taking a different approach. They're extending filing requirements, but not being as generous with regard to penalties and interest. Don't assume that states where you have to file are following the IRS in lockstep. They may not be.
April 30, 2020
NewsDidn't file your tax return on April 15? You're not alone. Some 21 million few returns were filed this year by the deadline compared to last year. By the deadline last year some 137 million returns were filed compared to 116 million this year. The biggest reduction was among professionally prepared returns. Visits to irs.gov was up almost 77 percent.
The IRS has updated its frequently asked questions regarding filing and payment deadlines. The FAQs make it clear that Notice 2020-23, delaying filing and paying many tax forms does not apply to payroll tax deposits or payments. The FAQ also makes it clear that both the first and second quarter estimated tax payments due April 15 and June 15 are due on July 15. The FAQs also clarify that you may still make contributions to your IRA because the actual due date for filing a return is now July 15. Thus, you can still make a contribution for the 2019 tax year. (Be sure to inform the bank or brokerage house the contribution is for 2019.) For the complete FAQ go to Filing and Payment Deadlines.
Tip of the DayRecordkeeping may save thousands . . . Usually we caution individuals and businesses to keep good records for tax purposes. This time those records could be crucial to a forgiveness of a PPP loan. The Treasury has indicated it will audit how the proceeds are used on all loans of $2 miilion or more. On smaller loans, the Treasury will do random audits. If possible, have the funds deposited in a separate bank account. Beyond that make sure you document all your expenses. Save utility bills, rent statements, leases, canceled checks, bank statements tracing any electronic transfers, and other expenses that qualify for loan forgiveness such as health insurance. Talk to your accountant or CPA for other records.
April 29, 2020
NewsThe IRS continues to remind low-income Americans to use the free, online tool Non-Filers Enter Payment Info Here to quickly and easily register to receive their Economic Impact Payment. The IRS has recently released a new Spanish language version of the tool to help even more Americans get their money quickly and easily. For some questions and answers on the Non-Files tool go to IR-2020-83.
The IRS is recalling a significant number of selected employees to deal with the backlog of work that can only be done in an office. It's unlikely they will performing audits since there is more critical work that has been ignored because of the stay at home order.
Tip of the DaySearching for investment income? . . . Interest rates are back down to rock bottom levels. A number of stocks have attractive dividend yields and that's enhanced by the favorable tax rate on qualified dividends. The downside is the risk inherent in stocks. You're not only taking a market risk on the price of the stock, there's always a risk the company could cut or eliminate the dividend. One large, respected aircraft manufacturer may be doing that soon. You can guard against these risks by sticking with companies with good prospects and a sound balance sheet. But there's no guarantee. A bond fund comes with less risk of principal loss, but yields can decline as high yield bonds are replaced by lower yielding ones as they mature. And even bond funds are not without risk of default of one or more issues. Get good advice. And remember, reward almost always correlates with risk.
April 28, 2020
NewsThe IRS has announced that starting April 27, 2020, it plans to have limited staffing in service centers to begin processing previously submitted requests under the Income Express Service (IVES) program. The IRS will not be accepting any new work until it significantly reduces existing inventory. A subsequent update will be provided when new work will be accepted. Due to limited staffing, processing time will be delayed.
Tip of the DayGot your stimulus payment? . . . The IRS has delivered some 88 million Economic Impact Payments in the first three weeks of the program. Sounds impressive, but they're doing the easy ones first. If you filed a tax return for either 2019 or 2018 and provided your bank account number for direct deposit, there's a good chance you already have your payment as a direct deposit. If you used a bank account number only to make payments, you'll either have to provide a number or you'll receive a paper check. Didn't file a return but get social security payments? Once those who filed tax returns get their payments, you're next in line. If you have direct deposit, they should be arriving about now. SSI and veterans benefit recipient non-filers will begin to get payments early next month. To update your information, go to www.irs.gov/coronavirus/non-filers-enter-payment-info-here.
April 27, 2020
NewsThe Treasury Department and IRS issued proposed regulations under the Tax Cuts and Jobs Act (TCJA) that provide guidance for tax-exempt organizations that are subject to the unrelated business income tax with more than one unrelated trade or business on how to calculate their unrelated business taxable income (UBTI). The proposed regulations provide guidance on identifying separate trades or businesses, including investment activities, as well as certain other amounts included in UBTI. Changes under the TCJA require tax-exempt organizations subject to the UBTI tax to compute UBTI, including any NOL deduction, separately for each trade or business. Updates on the implementation of the TCJA can be found on the Tax Reform page of IRS.gov.
The IRS has announced significant enhancements to the "Get My Payment" tool to deliver an improved and smoother experience for Americans eligible to receive Economic Impact Payments. The enhancements, which started last week and continued through the weekend, adjusted several items related to the online tool, which debuted on April 15. The additional changes will help millions of additional taxpayers with new or expanded information and access to adding direct deposit information. For more information, go to IRS Enhances Get My Payment Tool.
Tip of the DayElections on 2019 returns . . . If you haven't filed your 2019 return yet you might want to delay some more. There are some elections and actions you can still take if you have a business where you may be able to take better tax advantage of the economic downturn that will hit most businesses. Not all taxpayers can benefit, but talk to your tax advisor before filing your 2019 return.
April 24, 2020
NewsBoth the House and Senate have passed legislation authorizing additional funds for the small business Payroll Protection Plan (PPP). President Trump is expected to sign the legislation without hesitation.
The IRS has posted new Frequently Asked Questions(FAQs) about Carrybacks of Net Operating Losses (NOLs) for Taxpayers who have had Section 965 Inclusions. It is a follow up to the material on temporary procedures that was issued last week.
On April 9, 2020, the IRS published Notice 2020-23, Update to Notice 2020-18, Additional Relief for Taxpayers Affected by Ongoing Coronavirus Disease 2019 Pandemic. The Treasury Department and IRS are providing additional relief to taxpayers, postponing until July 15, 2020, a variety of tax form filings and payment obligations that are due between April 1, 2020, and July 14, 2020. The IRS is in the process of updating MeF business rules to allow for the relief.
Tip of the DayInsurance caution . . . Cash may be tight--for both businesses and individuals--and defaulting on property and liability insurance and stopping payments or cashing in a whole life policy may seem an easy way to save. But doing so could have unintended consequences. With life insurance cashing out can be a taxable event. How much will depend on the amount and age of the policy. Borrowing on the policy can make sense, but make sure the premiums are paid. Dropping property insurance such as homeowners or insurance on a boat or second home can have other consequences. It's not unusual for a company to reinspect the premises and require upgrades. For example, your coverage lapses for six months and when trying to reinstate the company requires you to abandon an in-ground oil tank. Get good advice before taking action.
April 23, 2020
NewsAnnouncement 2020-05 provides additional guidance on an issue not addressed in 2017 and 2018 IRB guidance on the subject of prematurely deteriorating concrete foundations due to the presence of the mineral pyrrhotite in the concrete mixture used to pour the foundations. Specifically, in response to requests for this additional guidance from Connecticut Members of Congress, the Announcement clarifies the Federal income tax treatment of a payment made by the Connecticut Foundation Solutions Indemnity Company, Inc., an entity organized by the State of Connecticut, to Connecticut homeowners who have not claimed Federal income tax deductions for amounts paid to repair damage to personal residences with concrete foundations that prematurely deteriorated.
The IRS is asking payroll professionals and reporting agents to e-file Forms 941 and other payroll returns as it is not currently processing paper returns and cannot respond to paper correspondence. The IRS has also reported that it is not processing paper tax returns in general because the processing centers have been shut down. Taxpayers who file paper returns shhould expect a two-month wait for their refunds.
April 22, 2020
NewsThe Senate has approved a second round of funding for small businesses. The bill now goes to the House which is expected to pass the legislation and the President is expected to sign. The total amount of funding for small business is $370 billion, with $310 billion for the Payroll Protection Program (PPP), $50 billion for the SBA's Economic Injury Disaster Loan program (EIDL) and $10 billion for small business grants of up to $10,000 for disaster relief. In this round, there are specific set-asides for community banks, credit unions, and community development financial institutions.
The Treasury Department and the IRS have issued guidance that provides relief to individuals and businesses affected by travel disruptions arising from the COVID-19 emergency. Revenue Procedure 2020-20 provides that, under certain circumstances, up to 60 consecutive calendar days of U.S. presence that are presumed to arise from travel disruptions caused by the COVID-19 emergency will not be counted for purposes of determining U.S. tax residency and for purposes of determining whether an individual qualifies for tax treaty benefits for income from personal services performed in the United States. Revenue Procedure 2020-27 provides that qualification for exclusions from gross income under Section 911 will not be impacted as a result of days spent away from a foreign country due to the COVID-19 emergency based on certain departure dates. The IRS has also published an FAQ concerning certain U.S. business activities conducted by a nonresident alient or foreign corporation with respect to the 60 calendar days.
April 21, 2020
NewsThe IRS has issued a special alert for several groups of federal benefit recipients to act by this Wednesday, April 22, if they didn't file a tax return in 2018 or 2019 and have dependents so they can quickly receive the full amount of their Economic Impact Payment. Their $1,200 payments will be issued soon and, in order to add the $500 per eligible child amount to these payments, the IRS needs the dependent information before the payments are issued. Otherwise, their payment at this time will be $1,200 and, by law, the additional $500 per eligible child amount would be paid in association with a return filing for tax year 2020. For people in these groups who have a qualifying child and didn't file a 2018 or 2019 tax return, they have a limited window to register to have $500 per eligible child added automatically to their soon-to-be-received $1,200 Economic Impact Payment. A quick trip to a special non-filer tool on IRS.gov by noon Eastern time, Wednesday, April 22, for some of these groups may help put all of their eligible Economic Income Payment into a single payment. The affected individuals include those with children receiving Social Security and Railroad Reitrement benefits. Individuals with children who receive SSI and VA benefits have slightly more time to add $500 to the automatic payments.
Revenue Procedure 2020-28 provides two tax return filing procedures for certain individuals who are eligible for the economic impact payment under the Coronavirus Aid, Relief, and Economic Security Act (CARES Act), Public Law 116-136, 134 Stat. 281 (March 27, 2020), but are not otherwise required to file 2019 Federal income tax returns. The first procedure is a simplified procedure for eligible individuals who voluntarily wish to file a Federal income tax return only to receive allowed economic impact payments. These eligible individuals are encouraged to use the “Non-Filers: Enter Payment Info Here” https://www.irs.gov/coronavirus/non-filers-enter-payment-info-here tool, available at www.irs.gov/coronavirus, to submit information to the Internal Revenue Service (IRS) to receive their allowed economic impact payment much more quickly than if they filed a paper return. The second procedure accommodates zero AGI electronic filers who utilize tax return preparation software or otherwise need to provide more detail in filing State or local tax returns than that allowed by the simplified procedure.
Tip of the DayQuestions on Economic Impact Payment? . . . You can find many of the answers at Economic Impact Payment Information Center.
April 20, 2020
NewsRevenue Procedure 2020-25 provides guidance allowing a taxpayer to change its depreciation under Section 168 for certain qualified improvement property placed in service after December 31, 2017, in taxable year ending in 2018 or 2019 or 2020 to claim additional first-year depreciation. This revenue procedure also allows a taxpayer to make a late election, or to revoke or withdraw an election, under section 168(g)(7), (k)(5), (k)(7) or (k)(10) of the Code for certain years. Rev. Proc. 2015-56 modified.
Revenue Ruling 2020-08 suspends Rev. Rul. 71-533 pending reconsideration of whether the ten-year limitations period provided by Section 6511(d)(3)(A) of the Code applies to claims for refund or credit of an overpayment resulting from a foreign tax credit (FTC) carryback arising as a result of a net operating loss (NOL) carryback from a subsequent year. As part of this reconsideration, Rev. Rul. 68-150 is also being reconsidered and is suspended with respect to adjustments that arise from a change to the FTC limitation, including as the result of the correction of mathematical errors or the application of an NOL carryback.
The IRS has announced (IR-2020-75 reporting that recipients of VA (Veterans Affairs) benefits will automtically receive the $1,200 Economic Impact Payments.
Tip of the DayMore money on the way? . . . While few things are certain, Congress is working on passing another relief bill that will include more money for the Payroll Protection Program (PPP),
April 17, 2020
NewsThe Small Business Administration (SBA) has reported on its website that it is currently unable to accept new PPP (Payroll Protection Program) loans as it has exhausted the intial $349 billion in funding. There is a bipartisian effort in Congress to get additional funding, but when (or if) that will occur and how much in funds will be available is uncertain at this time.
The Treasury Inspector General for Tax Administration (TIGTA) intiated an audit to provide selected information related to the IRS’s 2020 Filing Season. The overall objective of this review was to evaluate whether the IRS timely and accurately processed individual paper and electronically filed tax returns during the 2020 Filing Season. The report provides a number of statistics and information on the filing season to February 28, 2020 and a comparison to the same time period last year. Of note is that paper returns are down 5.9 percent, practitioner-prepared returns are down 2.2 percent, and the percent of returns filed (versus expected) is up 0.3 percent. The IRS stopped 29,634 fraudulent refund returns in 2020 versus 2,895 in 2019. The total dollar amount of fraudulent refunds stopped was $133,522,995 compared to $12,166,421 last year. To see the complete report, go to www.treasury.gov/tigta/auditreports/2020reports/202045024fr.pdf.
The IRS has reported a 28 percent increase in the use of Free File products for preparing federal income taxes. As of April 10, the IRS received 2.9 million tax returns through the Free File program since January compared with 2.3 million received in the same time period last year. The April 10th year-to-date total already exceeds the 2.8 million filed for all of 2019. For more information, go to IR-2020-74.
The Treasury Inspector General for Tax Administration (TIGTA) has set up a new website specifically for IRS-Related Coronavirus Scams.
Tip of the DayDon't default . . . Cash may be short and you might have to ration every dollar, but get good advice before you walk away from a car or business loan or a mortgage. First, depending the on the wording in the loan and state law, you might not be fully relieved of the liability. For example, you owe $20,000 on a car and it's repossessed by the lender. He sells the car for $12,000. You could still be liable for $8,000. If it's business equipment you may have co-signed for the loan and be personally responsible. Second, even if you're relieved of the $8,000 in our example, that still may be taxable income. And, of course, there's the damage to your credit rating. Get professional advice before acting. Often your CPA can assess the situation. Another point. Leases are often similar. Walk away from the store and you could remain liable for the rest of the lease. Read your rental agreement carefully.
April 16, 2020
NewsThe IRS announced (IR-2020-73) that Suppliemental Security Income (SSI) recipients will automatically receive Economic Impact Payments of $1,200 with no further action required on their part. The IRS projects that payments for this group will go out no later than early May. The IRS also noted that since many benefit recipients typically aren't required to file tax returns, if they have children who qualify, an extra step is needed to add $500 per child onto their automatic payment of $1,200 if they didn't file a tax return in 2018 or 2019. For those who receive Social Security retirement or disability benefits (SSDI), Railroad Retirement benefits or SSI and have a qualifying child, they can quickly register by visiting special tool available only on IRS.gov and provide their information in the Non-Filers section. For more information on this and warnings by the IRS on new scams, go to IR-2020-73.
Tip of the DayScams and more scams . . . Crises seem to bring out the best and the worst in people. This one has already caused severe economic stress and it is likely to get worse before it gets better. There are scams surrounding the $1,200 stimulus checks (give is information and we'll file a claim) intended for individuals as well as scams related to the stimulus programs for small businesses. Applying for the business packages isn't that difficult. You may need some assistance, but your accountant, bookkeeper, or CPA should be able to help. If you do need outside help use someone your familiar with, or, use a CPA. CPAs are licensed by the state and don't want to lose that status. Similarly, if you're having difficulty making a mortgage, car, or other loan payment, talk to the lender as soon as it looks like you're going to have a problem. Waiting until you're behind is not a wise move. They understand the situation and are prepared to help. You shouldn't need professional help.
April 15, 2020
NewsThe IRS has the power to abate interest on late tax payments for any portion of interest attributable in whole or part to the IRS's unreasonable error or delay in performing a managerial or ministerial act. In Ronald M. Goldberg (T.C. Memo. 2020-38) the issue was whether the Form 4549, Income Tax Examination Changes, the IRS prepared and the taxpayers signed was a binding contract between the taxpayers and the IRS. The Form 4549 showed no interest due. But the Court noted the statement on the form is a consent to the immediate assessment of the taxes and penalties shown on the form. Form statement also includes the words "plus additional interest as provided by law". The IRS explanation was that while the taxpayer's consent to the tax and penalties was limited to the about shown on the form, that was not the case for the interest. Rather the interest would be assessed as provided by law. The Court noted the interest is a liability the IRS sought to collect, the Court saw the taxpayer's contract argument as a challenge to the underlying tax liability. The Court found that the execution of Form 4549 did not permanently fix the taxpayer's interest liability at zero. (Note. The facts and arguments here were complex and there were other issues as borne out by the length of the case, 163 pages.)
Tip of the DayNo free lunch . . . Even in this environment, the IRS wants it's share of your income. Those unemployment benefits you may be receiving are taxable. If you've collected the benefits in recent years you probably know that. If you didn't you should be aware of it. You may want to have federal (and state) taxes withheld on the amounts. But consider your situation. You may not be back at work for some time and your income is likely to be much lower than in the recent past.
April 14, 2020
NewsThe IRS has announced that operations to process third-party authorizations are now closed. Please do not fax requests for Centralized Authorization File (CAF) numbers until further notice. The Income Verification Express Service also is temporarily on hold. Possible alternative for tax administration purposes: clients can go to Get Transcript Online, create an account to verify their identities and immediately review or print a tax transcript. Our efforts to protect IRS employees, taxpayers and our stakeholders mean extremely limited services are currently available. The IRS is unable to process paper tax returns, respond to paper correspondence or staff toll-free live service lines. Please use all electronic options available to you on IRS.gov or through your tax software provider. IRS continues urge taxpayers to use electronic options; outlines online assistance.
The IRS has updated the FAQs with respect to filing Forms 1139 and 1045 to claim quick refunds of the credit for prior year minimum tax liability of corporations and net operation loss deductions.
April 13, 2020
NewsThat Revenue Procedure 2020-22 (IRB 2020-18) provides guidance regarding the election under Sec. 163(j)(7)(B) to be an electing real property trade or business and the election under Sec. 163(j)(7)(C) to be an electing farming business for purposes of the business interest expense deduction limitation under Sec. 163(j) of the Code. This revenue procedure allows certain taxpayers to make a late election, or to withdraw an election, under Sec. 163(j)(7)(B) or 163(j)(7)(C), as applicable, on an amended Federal income tax return, an amended Form 1065, or an administrative adjustment request under Sec. 6227 of the Code (AAR).
April 10, 2020
NewsRevenue Procedure 2020-24 provides guidance to taxpayers with net operating losses that are carried back under the CARES Act by providing procedures for:
On April 8, 2020, the IRS issued Revenue Procedure 2020-23, allowing eligible partnerships to file amended partnership returns using a Form 1065, U.S. Return of Partnership Income, by checking the "Amended Return" box and issuing amended Schedules K-1, Partner's Share of Income, Deductions, Credits, to each of its partners. Partnerships filing these amended returns should write "FILED PURSUANT TO REV PROC 2020-23" at the top of the amended return.
Notice 2020-26 grants a six-month extension of time to file Form 1045 or Form 1139, as applicable, with respect to the carryback of a net operating loss that arose in any taxable year that began during calendar year 2018 and that ended on or before June 30, 2019. Individuals, trusts, and estates would file Form 1045, and corporations would file Form 1139.
Tip of the DayDebt and rent relief . . . Whether you're a business or an individual, many banks and other lenders, landlords, insurance companies, etc. are providing financial relief. It some cases it might be outright forgiveness of a liability, such as allowing one or more months of free rent, in some cases the payments aren't forgiven but are to be made up later, such as at the end of the mortgage. Some insurance companies are giving longer grace periods. Sometimes the relief is automatic; others you won't get it unless you ask. One state has mandated insurers doing business in it's state that grace periods for many types of insurance have been extended. Don't assume it's automatic. Talk to the lender, landlord, etc.
April 9, 2020
NewsRevenue Procedure 2020-23 (IRB 2020-18) allows an eligible partnership to file an amended Form 1065, U.S. Return of Partnership Income, and furnish a corresponding Schedule K-1 (Form 1065), Partner’s Share of Income, Deductions, Credits, etc., to each of its partners as an alternative option to filing an administrative adjustment request (AAR). Bipartisian Budget Act partnerships that filed a Form 1065 and furnished all required Schedules K-1 for the taxable years beginning in 2018 or 2019 prior to the issuance of this revenue procedure may file amended partnership returns and furnish corresponding Schedules K-1 before September 30, 2020. The amended returns may take into account tax changes brought about by the CARES Act as well as any other tax attributes to which the partnership is entitled by law.
April 8, 2020
NewsThe IRS is urging taxpayers to be on the lookout for scam artists trying to use the economic impact payments as cover for schemes to steal personal information and money. Remember, the IRS will not call , text you, email you or contact you on social media asking for personal or bank account information--even related to the economic impact payments. Also, watch out for emails with attachments or links claiming to have special information about economic impact payments or refunds.
The IRS is reporting that, for security reasons, it plans to mail a letter about the economic impact payment (the payment of $1,200 per individual) to the taxpayer's last known address within 15 days after the payment is paid. The letter will provide information on how the payment was made and how to report any failure to receive the payment. If a taxpayer is unsure, they're receiving a legitimate letter, the IRS urges taxpayers to visit IRS.gov first to protect against scam artists.
April 7, 2020
NewsTo help people facing the challenges of COVID-19 issues, the IRS through the People First Initiative, will temporarily adjust and suspend key compliance programs. For taxpayers under an existing Installment Agreement, payments due between April 1 and July 15, 2020 are suspended. Taxpayers who are currently unable to comply with the terms of an Installment Payment Agreement, including a Direct Debit Installment Agreement, may suspend payments during this period if they prefer. Furthermore, the IRS will not default any Installment Agreements during this period. By law, interest will continue to accrue on any unpaid balances. For more information, go to Installment Agreement Direct Debit Frequently Asked Questions.
April 6, 2020
NewsThe IRS has announced that the Economic Impact Payment of $1,200 for each taxpayer will be automatically base payments on those who filed a return for 2019, or if none has been filed, based on 2018 returns. For taxpayers who are not required to file a return because they only receive Social Security or railroad retirement benefits, the IRS will base payments on information from Form 1099-SSA or RRB-1099. Receipients wll receive their payments in the same way they receive their refund checks or social security payments. That is, if a bank account has been listed for direct deposit, the payments will be automatically deposited. If not, a paper check will be sent. Taxpayers with dependents who haven't filed a return will get just the $1,200 payment ($2,400 for married) at this time.
April 3, 2020
NewsThe Treasury Inspector General for Tax Administration (TIGTA) initiated an audit to evaluate the IRS's examination and education approach to certain cash-based industries with an emphasis on legal marijuana operations. TIGTA reviewed statistical random samples of marijuana businesses in three States and determined that 59 percent (140 out of 237) of the tax return filings for Tax Year 2016 had likely Sec. 280E adjustments, which when projected over the population totaled $48.5 million in unassessed taxes for Tax Year 2016 or $242.6 million when the results are forecasted over five years TIGTA also estimated the tax impact to comply with Sec. 280E for the same sampled marijuana business taxpayers. When projected to the population, TIGTA estimated a $95 million Federal income tax impact to these taxpayers from the application of Sec. 280E on their Tax Year 2016, or $475.1 million when forecasted over five years. In addition, TIGTA selected a statistically random sample of 90 marijuana businesses that filed State returns for Tax Year 2016 in the State of Washington to determine whether these taxpayers were reporting all of their income in compliance with Sec. 61. TIGTA found that 23 (26 percent) of 90 returns likely have Sec. 61 adjustments involving either underreported income or nonfiling of tax returns. When projected over the population for Washington, the IRS missed the opportunity to address $3.9 million of potential assessments for Tax Year 2016, or $19.3 million when forecasted over five years. Also, the IRS lacks guidance to taxpayers and tax professionals in the marijuana industry. Such guidance would improve awareness of tax filing requirements for taxpayers in this industry, such as the correct application of Secs. 280E and 471(c), which would reduce the burden of tracking inventory for certain small businesses. TIGTA recommended that the IRS develop a comprehensive compliance approach for the marijuana industry, including a method to identify businesses in this industry and track examination results; develop and publicize guidance specific to the marijuana industry, such as guidance on the application of Sec. 471(c) in conjunction with Sec. 280E; leverage publically available information at the State level and expand the use of existing Fed/State agreements to identify nonfilers and unreported income in the marijuana industry; and increase educational outreach towards unbanked taxpayers making cash deposits regarding the unbanked relief policies available. To read the complete report, go to www.treasury.gov/tigta/auditreports/2020reports/202030017fr.pdf
Tip of the DayLet the scammers begin! . . . The IRS is warning about Coronavirus related scams tied to the stimulus payments. And with several programs for small business owners to help them through this crisis expect scammers to offer to obtain loans or grants for you. The loans will go through the SBA or your regular bank and you're unlikely to need help, except possibly from your accountant. If you do need outside help, seek a CPA. They should charge an hourly rate, not a percentage of the loan. And never pay anyone upfront for such work. For many small businesses this is the biggest crisis they will ever face and scammers are ready to take advantage.
April 2, 2020
NewsThe Employee Retention Credit was designed to encourage businesses to keep employees on their payroll. The refundable tax credit is 50 percent of up to $10,000 in wages paid by an eligible employer whose business has been financially impacted by COVID-19. IR-2020-62 provides answers to some of the most common questions regarding the credit including who qualifies for the credit, how it's calculated, etc. The news release also provides links to additional information.
The IRS has released Form 7200, Advance Payment of Employer Credits Due to COVID-19 and the accompanying instructions. Use this form to request an advance payment of the tax credits for qualified sick and qualified family leave wages and the employee retention credit that you will claim on Form 941, 943, etc.
April 1, 2020
NewsNotice 2020-22 (IRB 2020-17) provides a waiver of additions to tax for failure to make a deposit of taxes for employers required to pay qualified sick leave wages and qualified family leave wages mandated by the Families First Coronavirus Response Act (Families First Act) and qualified health plan expenses allocable to these wages. This notice also provides a waiver of additions to tax for failure to make a deposit of taxes for certain employers subject to a full or partial closure order due to the coronavirus disease 2019 (COVID-19) or experiencing a statutorily specified decline in business under the Coronavirus Aid, Relief, and Economic Security Act (CARES Act). This notice applies to deposits of Employment Taxes (including withheld income taxes, taxes under the Federal Insurance Contributions Act and taxes under the Railroad Retirement Act) reduced in anticipation of the credits with respect to qualified sick leave wages and qualified family leave wages paid with respect to the period beginning April 1, 2020, and ending December 31, 2020. This notice applies with respect to deposits of Employment Taxes reduced in anticipation of the credits with respect to qualified wages paid with respect to the period beginning on March 13, 2020, and ending December 31, 2020. This relief ensures that such employers may pay qualified sick leave wages and qualified family leave wages required by the Families First Act or qualified wages under the CARES Act using Employment Taxes that would otherwise be required to be deposited without incurring a failure to deposit penalty.
Copyright 2020 by A/N Group, Inc. This publication is designed to provide accurate and authoritative information in regard to the subject matter covered. It is distributed with the understanding that the publisher is not engaged in rendering legal, accounting, or other professional service. If legal advice or other expert assistance is required, the services of a competent professional should be sought. The information is not necessarily a complete summary of all materials on the subject. Copyright is not claimed on material from U.S. Government sources.--ISSN 1089-1536