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Telemedicine and Potential Tax Implications

Posted by Admin Posted on Sept 23 2020

It is hard to believe that telemedicine has been a clinical reality for almost 60 years, if you count from the literally space-age technologies NASA developed to monitor astronauts' health in the 1960s.

Now,  telemedicine has both expanded in availability and contracted to a more local level, becoming an important part of many hospitals, home health agencies, private physician practices, as well as our homes. In 2015, according to the American Telemedicine Association, more than 15 million Americans received some type of remote medical care via technologies such as remote monitoring, video conferencing with physicians and smart phone chronic disease management apps. It may be even harder to believe, then, that in those 60 years, the IRS hasn't yet settled on a way to tax telemedicine – a lingering question that exposes the providers exploring it to potential audit and accounting risks.

To date, the IRS has not issued any guidance or rulings regarding telemedicine UBI, specifically. For now, tax-exempt healthcare organizations participating in telemedicine are subject to the IRS rules and principles that apply more broadly to UBI and healthcare activities – some of which, frankly, don't neatly fit, and some of which require careful documentation to avoid triggering UBI status.

Traditionally, the IRS has focused on whether an individual is receiving a healthcare service or an ancillary service. Healthcare services to individuals are considered substantially related to a hospital's exempt purposes. On the other hand, if the service is an ancillary service such as diagnostic lab testing or the provision of pharmaceuticals, then the income is excluded only if the person is a patient of the hospital, and then this is based upon an exception to UBIT for the convenience of the hospital's patients. There are also exceptions for casual sales or services to small hospitals at or below costs.

Interestingly, most of the tax uncertainty of UBI comes not from the definition of "telemedicine" but from the formal definition of "patient." IRS Revenue Ruling 68-376 defines a patient as:

  • A person admitted to a hospital as an inpatient
  • A person receiving emergency or preventive health services from outpatient facilities of a hospital
  • A person referred to a hospital's outpatient diagnostic facilities for a specific diagnostic procedure. The procedure is administered by a hospital-based practitioner affiliated with the hospital.
  • A person refilling a prescription written while in the course of treatment at the hospital
  • A person receiving medical care in a hospital affiliate
  • A person receiving care in his home where the services are rendered by, and under the supervision of, the professional staff of the hospital as an extension of its inpatient and outpatient care

In this current definition, the operative theme appears to be either that the person is or has been physically in the hospital or an affiliate, or that the person is receiving care or treatment by a hospital professional. Therefore, the question becomes whether the person receiving remote care delivered by a hospital physician or hospital professional becomes a patient of the hospital or, more significantly, is the service being provided considered substantially related to the hospital's healthcare mission.

In telemedicine, of course, the entire point is often to deliver care outside the traditional setting.

Given the uncertainty, tax-exempt healthcare organizations must be diligent in documenting how the care provided meets the organization's exempt purpose by:

  • Maintaining detailed medical records
  • Showing how the organization is serving the needs of the community
  • Documenting any direct interaction between physicians and the patient, or Written Treatment consent (provided or secured or authorized)

Another piece of evidence may be whether the malpractice insurance covers the activity.

Further, state-level definitive tax guidance has not been issued in this area. Currently, as the Federal government is doing, states are following traditional rules in regards to UBI. From most states' perspective, if any of the telemedicine activity generates UBI and crosses state lines, the income may require apportionment among the states based on activity in the respective states and the hospital may have to file a tax return in that state. The organization needs to address where the sale of the personal services occurs, where the patient is located, and where the services are being performed. Some states look to where the cost of performance are incurred, and other states look to where the time is spent performing the services in determining if there is nexus and requirements to report items in those states. While the provision of a cyber space consultation may be considered related to exempt purposes, questions could arise as to whether the sale of pharmaceuticals to the out of state patient create UBI and also, whether the sales are subject to sales tax.

The traditional patient and non-patient criteria for determining UBI is dated, both the IRS and the states need to reexamine the definitions of a patient as well as the definition of providing healthcare services.

 

No Information Reporting by Lenders, PPP Loans Forgiven Under CARES Act (COVID-19)

Posted by Admin Posted on Sept 23 2020

The IRS has released an advanced version of Announcement 2020-12 clarifying that lenders that make Paycheck Protection Program (PPP) loans that are later forgiven under the “Coronavirus Aid, Relief, and Economic Security Act” (Pub. L. No. 116-136) (CARES Act) should not file information returns or furnish payee statements to report the amount of qualifying forgiveness.

Announcement 2020-12 [PDF 13 KB] explains that lenders should not file information returns or furnish payee statements under section 6050P to report the amount of qualifying PPP loan forgiveness.

Summary:

In general, a lender subject to section 6050P (referred to as an “applicable entity”) that discharges at least $600 of a borrower’s indebtedness is required to file a Form 1099-C, Cancellation of Debt, with the IRS and to furnish a payee statement to the borrower.

Under provisions of the CARES Act, qualifying small businesses may obtain PPP loans guaranteed by the Small Business Administration (SBA), and such eligible businesses may qualify for forgiveness of indebtedness for all or a portion of the stated principal amount of a covered PPP loan if certain conditions are satisfied. The CARES Act provides that such debt forgiveness is excluded from the borrower’s gross income.  

Under Announcement 2012-12, when all or a portion of the stated principal amount of a covered loan is forgiven because the eligible recipient satisfies the forgiveness requirements under the CARES Act, an applicable entity is not required to file a Form 1099-C information return for federal tax purposes or to provide a payee statement to the eligible recipient as a result of the qualifying forgiveness. The IRS release explains that the filing of such information returns could result in the issuance of underreporter (of income) notices to eligible recipients, and the furnishing of such payee statements to eligible recipients could cause confusion. The IRS states that Announcement 2020-12 is intended to prevent any such confusion.

Higher Penalties For Some Tax Returns Filed After Sept. 14

Posted by Admin Posted on Sept 13 2020

Individuals who owe taxes but have not yet filed for 2019 need to act now to avoid larger penalties that, by law, start after September 14.

The tax deadline was July 15 this year. Taxpayers who submitted an extension have until October 15 to file and do not face the failure to file penalty if they file their taxes by that deadline. But taxpayers need to remember that an extension to file is not an extension to pay. Any taxes they owed after the July 15 deadline are subject to the failure to pay penalty and interest.

Those taxpayers who didn't request an extension, and still owe taxes, face both the failure to file and the failure to pay penalties. They should file now and pay what they can before larger penalties take effect after September 14.

The penalty for not filing a federal tax return by the due date, or extended due date, is generally 5% of the unpaid tax for each month or part of a month that a tax return is late, up to 25% of the unpaid tax. However, if the return is more than 60 days late, a minimum penalty applies. If no return has been filed after 60 days, the minimum penalty that can be charged is $435 or 100% of the unpaid tax, whichever is less. This year, that important 60-day date occurs after Sept. 14. In addition to penalties, interest will also be charged on any tax not paid by the July 15 due date.

Remember, if a refund is due, no penalty is charged on the late return filed by a taxpayer.

Penalty relief may be available

Taxpayers who have not been assessed any penalties for the past three years often qualify to have penalties abated. A taxpayer who does not qualify for the first-time penalty relief may still qualify for penalty relief if their failure to file or pay on time was due to reasonable cause and not willful neglect. By law, interest cannot be abated.

Lean on us for assistance

Schedule an appointment today with one of our tax professionals for assistance and guidance.

Prepare For Natural Disasters As Peak Hurricane Season Nears

Posted by Admin Posted on Sept 13 2020

A well-thought-out emergency preparedness plan is a critical component for surviving natural disasters. Taxpayers, whether individuals, organizations or businesses, should take time now to create or update their emergency plans.

A solid plan includes securing and duplicating essential documents, creating lists of property and knowing where to find information once a disaster has occurred.

Secure key documents and make copies

Taxpayers should place original documents such as tax returns, birth certificates, deeds, titles and insurance policies inside waterproof containers in a secure space. Duplicates of these documents should be kept with a trusted person outside the area of the taxpayer. Scanning them for backup storage on electronic media such as a flash drive is another option that provides security and portability.

Document valuables and equipment

Current photos or videos of a home or business’s contents can help support claims for insurance or tax benefits after a disaster. All property, especially expensive and high value items, should be recorded.

Employers should check fiduciary bonds

Employers who use payroll service providers should ask the provider if it has a fiduciary bond in place. The bond could protect the employer in the event of default by the payroll service provider. 

Rebuilding documents

Reconstructing records after a disaster may be required for tax purposes, getting federal assistance or insurance reimbursement. 

For assistance and inquiries, feel free to schedule an appointment with one of our professional CPAs today.

PPP Loan Forgiveness Application

Posted by Admin Posted on Aug 25 2020
PAYCHECK PROTECTION PROGRAM 

Frequently Asked Questions (FAQs), click HERE
Dear Clients,
 
As we await for Congress to pass the next economic stimulus package, we advise Business owner’s to wait to submit the PPP Loan Forgiveness Application and utilize the 24 week covered-period.  Each borrower has 10 months after the completion of the 24-week covered period to submit the loan forgiveness application to the bank before any payments are required to be made on the loan. 
 
We anticipate the future stimulus package will include revisions to the PPP loan forgiveness program that could potentially simplify the process and potentially grant automatic forgiveness for loans under a certain dollar amount.
 
The Small Business Administration (SBA), in consultation with the Department of the Treasury, is providing guidance to address borrower and lender questions concerning forgiveness of Paycheck Protection Program (PPP) loans.  Below is the FAQ guidance from the SBA released on August 4, 2020.
 
If you have questions, please do not hesitate to contact our office.

Sincerely,

CPA Partners

People With Children Ensured to Receive $500 Economic Impact Payments

Posted by Admin Posted on Aug 23 2020

The IRS has announced it will reopen the registration period for federal beneficiaries who didn't receive $500 per child payments earlier this year.

The IRS urges certain federal benefit recipients to use the IRS.gov Non-Filers tool starting August 15 through September 30 to enter information on their qualifying children to receive the supplemental $500 payments.

Those eligible to provide this information include people with qualifying children who receive Social Security retirement, survivor or disability benefits, Supplemental Security Income (SSI), Railroad Retirement benefits and Veterans Affairs Compensation and Pension (C&P) benefits and did not file a tax return in 2018 or 2019.

The IRS anticipates the catch-up payments, equal to $500 per eligible child, will be issued by mid-October.

"IRS employees have been working non-stop to deliver more than 160 million Economic Impact Payments in record time. We have coordinated outreach efforts with thousands of community-based organizations and have provided materials in more than two dozen languages," said IRS Commissioner Chuck Rettig. "Given the extremely high demand for EIP assistance, we have continued to prioritize and increase resource allocations to eligible individuals, including those who may be waiting on some portion of their payment. To help with this, we are allocating additional IRS resources to ensure eligible recipients receive their full payments during this challenging time."

Used the Non-Filers tool after May 5? No action needed.

For those Social Security, SSI, Department of Veterans Affairs and Railroad Retirement Board beneficiaries who have already used the Non-Filers tool to provide information on children, no further action is needed. The IRS will automatically make a payment in October.

Didn't use the IRS Non-Filers tool yet? Provide information by September 30.

For those who received Social Security, SSI, RRB or VA benefits and have not used the Non-Filers tool to provide information on their child, they should register online by Sept. 30 using the Non-Filers: Enter Payment Info Here tool, available exclusively on IRS.gov. Remember, anyone who filed or plans to file either a 2018 or 2019 tax return should file the tax return and not use this tool.

For those unable to access the Non-Filers tool, they may submit a simplified paper return following the procedures described in this FAQ on IRS.gov.

Any beneficiary who misses the September 30 deadline will need to wait until next year and claim it as a credit on their 2020 federal income tax return.

Those who received their original Economic Impact Payment by direct deposit will also have any supplemental payment direct deposited to the same account. Others will receive a check.

Eligible recipients can check the status of their payments using the Get My Payment tool on IRS.gov. In addition, a notice verifying the $500-per-child supplemental payment will be sent to each recipient and should be retained with other tax records.

Other Non-Filers can still get a payment; must act by October 15.

Though most Americans have already received their Economic Impact Payments, the IRS reminds people with little or no income and who are not required to file tax returns that they remain eligible to receive an Economic Impact Payment.

People in this group should also use the Non-Filers' tool – but they need to act by October 15 to receive their payment this year.

Anyone who misses the October 15 deadline will need to wait until next year and claim it as a credit on their 2020 federal income tax return.

Available in both English and Spanish, the Non-Filers tool is designed for people with incomes typically below $24,400 for married couples, and $12,200 for singles. This includes couples and individuals who are experiencing homelessness. People can qualify, even if they don't work or have no earned income. But low- and moderate-income workers and working families eligible to receive special tax benefits, such as the Earned Income Tax Credit or Child Tax Credit, cannot use this tool. They will need to file a regular return by using IRS Free File or by another method.

Other important notices involving Economic Impact Payments:

Spouse's past-due child support. The IRS is actively working to resolve cases where a portion or all of an individual's payment was taken and applied to their spouse's past-due child support. People in this situation do not need to take any action. The IRS will automatically issue the portion of the EIP that was applied to the other spouse's debt.

Spouses of deceased taxpayers. Upon enactment of the CARES Act, the IRS initially implemented the legislation consistent with processes and procedures relating to the 2008 stimulus payments (which were transmitted to deceased individuals). After further review this spring, Treasury determined that those who died before receipt of the EIP should not receive the advance payment. As a result, the EIP procedures were modified to prevent future payments to deceased individuals. The cancellation of uncashed checks is part of this process. Some EIPs to spouses of deceased taxpayers were cancelled. The IRS is actively working on a systemic solution to reissue payments to surviving spouses of deceased taxpayers who were unable to deposit the initial EIPs paid to the deceased and surviving spouse. For EIPs that have been cancelled or returned, the surviving spouse will automatically receive their share of the EIP.

Unemployment Compensation is Taxable; Withhold Taxes Now to Avoid a Surprise

Posted by Admin Posted on Aug 23 2020

With millions of Americans now receiving taxable unemployment compensation, many of them for the first time, the IRS remindes people receiving unemployment compensation that they can have taxes withheld from their benefits now to help avoid owing taxes on this income when they file their federal income tax return next year.

By law, unemployment compensation is taxable and must be reported on a 2020 federal income tax return. Taxable benefits include any of the special unemployment compensation authorized under the Coronavirus Aid, Relief, and Economic Security (CARES) Act, enacted this spring.

Withholding is voluntary. Federal law allows any recipient to choose to have a flat 10% withheld from their benefits to cover part or all of their tax liability. To do that, fill out Form W-4V, Voluntary Withholding Request (PDF), and give it to the agency paying the benefits. Don't send it to the IRS. If the payor has its own withholding request form, use it instead.

If a recipient doesn't choose withholding, or if withholding is not enough, they can make quarterly estimated tax payments instead. The payment for the first two quarters of 2020 was due on July 15. Third and fourth quarter payments are due on September 15, 2020, and January 15, 2021, respectively. For more information, including some helpful worksheets, see Form 1040-ES and Publication 505, available on IRS.gov.

Here are some types of payments taxpayers should check their withholding on:

  • Benefits paid by a state or the District of Columbia from the Federal Unemployment Trust Fund
  • Railroad unemployment compensation benefits
  • Disability benefits paid as a substitute for unemployment compensation
  • Trade readjustment allowances under the Trade Act of 1974
  • Unemployment assistance under the Disaster Relief and Emergency Assistance Act of 1974, and
  • Unemployment assistance under the Airline Deregulation Act of 1978 Program

Recipients who return to work before the end of the year can use the IRS Tax Withholding Estimator to make sure they are having enough tax taken out of their pay. Available only on IRS.gov, this online tool can help any worker or pension recipient avoid or lessen their year-end tax bill or estimate the refund they want.

In January 2021, unemployment benefit recipients should receive a Form 1099-G, Certain Government Payments (PDF) from the agency paying the benefits. The form will show the amount of unemployment compensation they received during 2020 in Box 1, and any federal income tax withheld in Box 4. Taxpayers report this information, along with their W-2 income, on their 2020 federal tax return. 

13.9 Million Americans to Receive Tax Refund Interest

Posted by Admin Posted on Aug 23 2020

The Treasury Department and the IRS will send interest payments to about 13.9 million individual taxpayers who timely filed their 2019 federal income tax returns and are receiving refunds.

The interest payments, averaging about $18, will be made to individual taxpayers who filed a 2019 return by this year's July 15 deadline and either received a refund in the past three months or will receive a refund. Most interest payments will be issued separately from tax refunds.

In most cases, taxpayers who received their refund by direct deposit will have their interest payment direct deposited in the same account. About 12 million of these payments will be direct deposited.

Everyone else will receive a check. A notation on the check − saying "INT Amount" − will identify it as a refund interest payment and indicate the interest amount.

By law, these interest payments are taxable and taxpayers who receive them must report the interest on the 2020 federal income tax return they file next year. In January 2021, the IRS will send a Form 1099-INT to anyone who receives interest totaling at least $10.

This provision is different from the long-standing 45-day rule, generally requiring the IRS to add interest to refunds on timely-filed refund claims issued more than 45 days after the return due date.

Instead, this year's COVID-19-related July 15 due date is considered a disaster-related postponement of the filing deadline. Where a disaster-related postponement exists, the IRS is required, by law, to pay interest, calculated from the original April 15 filing deadline, as long as an individual files a 2019 federal income tax return by the postponed deadline − July 15, 2020, in this instance. This refund interest requirement only applies to individual income tax filers − businesses are not eligible.

Interest is paid at the legally prescribed rate that is adjusted quarterly. The rate for the second quarter ending June 30 was 5%, compounded daily. Effective July 1, the rate for the third quarter dropped to 3%, compounded daily.

Where the calculation period spans quarters, a blended rate applies, consisting of the number of days falling in each calendar quarter. No interest will be added to any refund issued before the original April 15 deadline.

Working Virtually: Use a Virtual Private Network (VPN) to Secure Remote Locations

Posted by Admin Posted on Aug 04 2020

As more professionals consider teleworking during COVID-19, the IRS and the Security Summit partners have urged professionals to secure remote locations by using a virtual private network (VPN) to protect against cyber intruders.

A VPN provides a secure, encrypted tunnel to transmit data between a remote user via the Internet and the company network. As teleworking or working from home continues during the coronavirus, VPNs are critical to protecting and securing internet connections.

"For firms expanding telework options during this time, a virtual private network is a must have," said IRS Commissioner Chuck Rettig. "We continue to see professionals fall victim to attacks every week. These networks are something you can't afford to go without. The risk is real. Taking steps now can protect your clients and protect your businesses."

Failure to use VPNs risks remote takeovers by cyberthieves, giving criminals access to the professional's entire office network simply by accessing an employee's remote internet.

Professionals should seek out cybersecurity experts if they can afford it. If not, professionals can search for "Best VPNs" to find a legitimate vendor, or major technology sites often provide lists of top services. Remember, never click on a "pop-up" ad marketing security product. Those generally are scams.

The Department of Homeland Security's Cybersecurity and Infrastructure Security Agency (CISA) also encourages organizations to use VPNs. CISA also offers this advice:

  • Update VPNs, network infrastructure devices and devices being used to remote into work environments with the latest software patches and security configurations.
  • Alert employees to an expected increase in phishing attempts.
  • Ensure information technology security personnel are prepared to ramp up these remote access cybersecurity tasks: log review, attack detection, and incident response and recovery.
  • Implement multi-factor authentication on all VPN connections to increase security. If multi-factor is not implemented, require teleworkers to use strong passwords
  • Ensure IT security personnel test VPN limitations to prepare for mass usage and, if possible, implement modifications—such as rate limiting—to prioritize users that will require higher bandwidths.

Working Virtually: Use Multi-factor Authentication to Protect Accounts

Posted by Admin Posted on Aug 04 2020

With heightened threats during COVID-19, the IRS and Security Summit partners have called on professionals to select multi-factor authentication options whenever possible to prevent identity thieves from gaining access to client accounts.

Starting in 2021, all tax software providers will be required to offer multi-factor authentication options on their products that meet higher standards. Many already do so. A multi-factor or two-factor authentication offers an extra layer of protection for the username and password used by professionals. It often involves a security code sent via text.

The public awareness initiative by the IRS, state tax agencies and the private-sector tax industry – working together as the Security Summit – spotlights basic security steps for all practitioners, but especially those working remotely or social distancing in response to COVID-19.

"Cybercriminals continue to find new ways to try accessing professional and personal data. The multi-factor authentication option is an easy, free way to really step up protection of client data," said IRS Commissioner Chuck Rettig. 

Of the numerous data thefts reported to the IRS from professional offices this year, most could have been avoided had the practitioner used multi-factor authentication to protect accounts.

Thieves use a variety of scams – but most commonly by a phishing email – will download malicious software, such as keystroke software. This malware will eventually enable them to steal all passwords from a professional. 

However, with multi-factor authentication, it's unlikely the thief will have stolen the professional's cell phone so they would not receive the necessary security code to access the account. This protects the professional's account information.

Professionals can download to their mobile phones readily available authentication apps offered through Google Play or the Apple Store. These apps will generate a security code. Codes also may be sent to professional's email or text but those are not as secure as the authentication apps. Use a search engine for "Authentication apps" to learn more.

In additional to software accounts, professionals should use multi-factor authentication wherever it is offered. For example, cloud storage providers and commercial email products offer multi-factor protections as do social media outlets. IRS e-Services is an example of an account using multi-factor authentication.

Americans Urged to be Vigilant for Threats During COVID-19 and its Aftermath

Posted by Admin Posted on July 22 2020

The IRS has announced its annual list of tax scams with a special emphasis on aggressive and evolving schemes related to coronavirus tax relief, including Economic Impact Payments.

This year, the list focuses on scams that target taxpayers. The criminals behind these schemes view everyone as potentially easy prey. The IRS urges everyone to be on guard all the time and look out for others in their lives. 

"Tax scams tend to rise during tax season or during times of crisis, and scam artists are using pandemic to try stealing money and information from honest taxpayers," said IRS Commissioner Chuck Rettig. "The IRS provides this list to help raise awareness about common scams that fraudsters use to target people. We urge people to watch out for these scams. We will relentlessly pursue criminals trying to steal your money or sensitive personal financial information."

The IRS urges taxpayers to refrain from engaging potential scammers online or on the phone. The IRS plans to unveil a similar list of enforcement and compliance priorities this year as well.

Here are this year's scams:

Phishing:

Taxpayers should be alert to potential fake emails or websites looking to steal personal information. The IRS will never initiate contact with taxpayers via email about a tax bill, refund or Economic Impact Payments. Don't click on links claiming to be from the IRS. Be wary of emails and websites − they may be nothing more than scams to steal personal information.

IRS Criminal Investigation has seen a tremendous increase in phishing schemes utilizing emails, letters, texts and links. These phishing schemes are using keywords such as "Coronavirus," "COVID-19" and "Stimulus" in various ways.

These schemes are blasted to large numbers of people in an effort to get personal identifying information or financial account information, including account numbers and passwords. Most of these new schemes are actively playing on the fear and unknown of the virus and the stimulus payments.

Fake Charities:

Criminals frequently exploit natural disasters and other situations such as the current COVID-19 pandemic by setting up fake charities to steal from well-intentioned people trying to help in times of need. Fake charity scams generally rise during times like these.

Fraudulent schemes normally start with unsolicited contact by telephone, text, social media, e-mail or in-person using a variety of tactics. Bogus websites use names similar to legitimate charities to trick people to send money or provide personal financial information. They may even claim to be working for or on behalf of the IRS to help victims file casualty loss claims and get tax refunds.

Taxpayers should be particularly wary of charities with names like nationally known organizations. Legitimate charities will provide their Employer Identification Number (EIN), if requested, which can be used to verify their legitimacy. Taxpayers can find legitimate and qualified charities with the search tool on IRS.gov.

Threatening Impersonator Phone Calls:

IRS impersonation scams come in many forms. A common one remains, threatening phone calls from a criminal claiming to be with the IRS. The scammer attempts to instill fear and urgency in the potential victim. In fact, the IRS will never threaten a taxpayer or surprise him or her with a demand for immediate payment.

Phone scams or "vishing" (voice phishing) pose a major threat. Scam phone calls, including those threatening arrest, deportation or license revocation if the victim doesn't pay a bogus tax bill, are reported year-round. These calls often take the form of a "robocall" (a text-to-speech recorded message with instructions for returning the call).

The IRS will never demand immediate payment, threaten, ask for financial information over the phone, or call about an unexpected refund or Economic Impact Payment. Taxpayers should contact the real IRS if they worry about having a tax problem.

Social Media Scams:

Taxpayers need to protect themselves against social media scams, which frequently use events like COVID-19 to try tricking people. Social media enables anyone to share information with anyone else on the Internet. Scammers use that information as ammunition for a wide variety of scams. These include emails where scammers impersonate someone's family, friends or co-workers.

Social media scams have also led to tax-related identity theft. The basic element of social media scams is convincing a potential victim that he or she is dealing with a person close to them that they trust via email, text or social media messaging.

Using personal information, a scammer may email a potential victim and include a link to something of interest to the recipient which contains malware intended to commit more crimes. Scammers also infiltrate their victim's emails and cell phones to go after their friends and family with fake emails that appear to be real and text messages soliciting, for example, small donations to fake charities that are appealing to the victims.

EIP or Refund Theft:

The IRS has made great strides against refund fraud and theft in recent years, but they remain an ongoing threat. Criminals this year also turned their attention to stealing Economic Impact Payments as provided by the Coronavirus Aid, Relief, and Economic Security (CARES) Act.

Much of this stems from identity theft whereby criminals file false tax returns or supply other bogus information to the IRS to divert refunds to wrong addresses or bank accounts.

The IRS recently warned nursing homes and other care facilities that Economic Impact Payments generally belong to the recipients, not the organizations providing the care. This came following concerns that people and businesses may be taking advantage of vulnerable populations who received the payments. These payments do not count as a resource for determining eligibility for Medicaid and other federal programs They also do not count as income in determining eligibility for these programs. 

Taxpayers can consult the Coronavirus Tax Relief page of IRS.gov for assistance in getting their EIPs. Anyone who believes they may be a victim of identity theft should consult the Taxpayer Guide to Identity Theft on IRS.gov.

Senior Fraud:

Senior citizens and those who care about them need to be on alert for tax scams targeting older Americans. The IRS recognizes the pervasiveness of fraud targeting older Americans along with the Department of Justice and FBI, the Federal Trade Commission, the Consumer Financial Protection Bureau (CFPB), among others.

Seniors are more likely to be targeted and victimized by scammers than other segments of society. Financial abuse of seniors is a problem among personal and professional relationships. Anecdotal evidence across professional services indicates that elder fraud goes down substantially when the service provider knows a trusted friend or family member is taking an interest in the senior's affairs.

Older Americans are becoming more comfortable with evolving technologies, such as social media. Unfortunately, that gives scammers another means of taking advantage. Phishing scams linked to Covid-19 have been a major threat this filing season. Seniors need to be alert for a continuing surge of fake emails, text messages, websites and social media attempts to steal personal information.

Scams targeting non-English speakers:

IRS impersonators and other scammers also target groups with limited English proficiency. These scams are often threatening in nature. Some scams also target those potentially receiving an Economic Impact Payment and request personal or financial information from the taxpayer.

Phone scams pose a major threat to people with limited access to information, including individuals not entirely comfortable with the English language. These calls frequently take the form of a "robocall" (a text-to-speech recorded message with instructions for returning the call), but in some cases may be made by a real person. These con artists may have some of the taxpayer's information, including their address, the last four digits of their Social Security number or other personal details – making the phone calls seem more legitimate.

A common one remains the IRS impersonation scam where a taxpayer receives a telephone call threatening jail time, deportation or revocation of a driver's license from someone claiming to be with the IRS. Taxpayers who are recent immigrants often are the most vulnerable and should ignore these threats and not engage the scammers.

Unscrupulous Return Preparers:

Selecting the right return preparer is important. They are entrusted with a taxpayer's sensitive personal data. Tax professionals (such as us, CPA Partners LLC) provide honest, high-quality service. Dishonest preparers pop up every filing season committing fraud, harming innocent taxpayers or talking taxpayers into doing illegal things they regret later.

Taxpayers should avoid so-called "ghost" preparers who expose their clients to potentially serious filing mistakes as well as possible tax fraud and risk of losing their refunds. Ghost preparers don't sign the tax returns they prepare. They may print the tax return and tell the taxpayer to sign and mail it to the IRS. For e-filed returns, the ghost preparer will not digitally sign as the paid preparer. By law, anyone who is paid to prepare or assists in preparing federal tax returns must have a Preparer Tax Identification Number (PTIN). Paid preparers must sign and include their PTIN on returns.

Unscrupulous preparers may also target those without a filing requirement and may or may not be due a refund. They promise inflated refunds by claiming fake tax credits, including education credits, the Earned Income Tax Credit (EITC) and others. Taxpayers should avoid preparers who ask them to sign a blank return, promise a big refund before looking at the taxpayer's records or charge fees based on a percentage of the refund.

Taxpayers should take particular care in selecting a credible tax preparer. To speak with a qualified tax professional now, schedule an appointment here.

Offer in Compromise Mills:

Taxpayers need to wary of misleading tax debt resolution companies that can exaggerate chances to settle tax debts for "pennies on the dollar" through an Offer in Compromise (OIC). These offers are available for taxpayers who meet very specific criteria under law to qualify for reducing their tax bill. But unscrupulous companies oversell the program to unqualified candidates so they can collect a hefty fee from taxpayers already struggling with debt.

These scams are commonly called OIC "mills," which cast a wide net for taxpayers, charge them pricey fees and churn out applications for a program they're unlikely to qualify for. Although the OIC program helps thousands of taxpayers each year reduce their tax debt, not everyone qualifies for an OIC. In Fiscal Year 2019, there were 54,000 OICs submitted to the IRS. The agency accepted 18,000 of them.

Individual taxpayers can use the free online Offer in Compromise Pre-Qualifier tool to see if they qualify. The simple tool allows taxpayers to confirm eligibility and provides an estimated offer amount. Taxpayers can apply for an OIC without third-party representation; but the IRS reminds taxpayers that if they need help, they should be cautious about whom they hire.

Fake Payments with Repayment Demands:

Criminals are always finding new ways to trick taxpayers into believing their scam including putting a bogus refund into the taxpayer's actual bank account. Here's how the scam works:

A con artist steals or obtains a taxpayer's personal data including Social Security number or Individual Taxpayer Identification Number (ITIN) and bank account information. The scammer files a bogus tax return and has the refund deposited into the taxpayer's checking or savings account. Once the direct deposit hits the taxpayer's bank account, the fraudster places a call to them, posing as an IRS employee. The taxpayer is told that there's been an error and that the IRS needs the money returned immediately or penalties and interest will result. The taxpayer is told to buy specific gift cards for the amount of the refund.

The IRS will never demand payment by a specific method. There are many payment options available to taxpayers and there's also a process through which taxpayers have the right to question the amount of tax we say they owe. Anytime a taxpayer receives an unexpected refund and a call from us out of the blue demanding a refund repayment, they should reach out to their banking institution and to the IRS.

Payroll and HR Scams:

Tax professionals, employers and taxpayers need to be on guard against phishing designed to steal Form W-2s and other tax information. These are Business Email Compromise (BEC) or Business Email Spoofing (BES). This is particularly true with many businesses closed and their employees working from home due to COVID-19. Currently, two of the most common types of these scams are the gift card scam and the direct deposit scam.

In the gift card scam, a compromised email account is often used to send a request to purchase gift cards in various denominations. In the direct deposit scheme, the fraudster may have access to the victim's email account (also known as an email account compromise or "EAC"). They may also impersonate the potential victim to have the organization change the employee's direct deposit information to reroute their deposit to an account the fraudster controls.

BEC/BES scams have used a variety of ploys to include requests for wire transfers, payment of fake invoices as well as others. In recent years, the IRS has observed variations of these scams where fake IRS documents are used in to lend legitimacy to the bogus request. For example, a fraudster may attempt a fake invoice scheme and use what appears to be a legitimate IRS document to help convince the victim.

The Direct Deposit and other BEC/BES variations should be forwarded to the Federal Bureau of Investigation Internet Crime Complaint Center (IC3) where a complaint can be filed. The IRS requests that Form W-2 scams be reported to: phishing@irs.gov (Subject: W-2 Scam).

Ransomware:

This is a growing cybercrime. Ransomware is malware targeting human and technical weaknesses to infect a potential victim's computer, network or server. Malware is a form of invasive software that is often frequently inadvertently downloaded by the user. Once downloaded, it tracks keystrokes and other computer activity. Once infected, ransomware looks for and locks critical or sensitive data with its own encryption. In some cases, entire computer networks can be adversely impacted.

Victims generally aren't aware of the attack until they try to access their data, or they receive a ransom request in the form of a pop-up window. These criminals don't want to be traced so they frequently use anonymous messaging platforms and demand payment in virtual currency such as Bitcoin.

Cybercriminals might use a phishing email to trick a potential victim into opening a link or attachment containing the ransomware. These may include email solicitations to support a fake COVID-19 charity. Cybercriminals also look for system vulnerabilities where human error is not needed to deliver their malware.

The IRS and its Security Summit partners have advised professionals and taxpayers to use free, multi-factor authentication feature being offered on software products. Use of the multi-factor authentication feature is a free and easy way to protect clients and practitioners' offices from data thefts. 

Working Virtually: Protect Data at Home and at Work

Posted by Admin Posted on July 22 2020

With cyberthieves active during COVID-19, the IRS and the Security Summit partners have urged professionals to review critical security steps to ensure they are fully protecting client and personal data whether working in the office or a remote location.

Many professionals have expanded telework options this year as firms work to keep personnel safe, practice recommended safety guidelines and use technology to virtually serve their clients.

During this period, the Department of Homeland Security's Cybersecurity and Infrastructure Security Agency (CISA) have urged organizations to maintain a heightened state of alert as cybercriminals seek to exploit Covid-19 concerns.

"The Security Summit partners urge professionals to take time this summer to give their data safeguards a thorough review and ensure that these protections are in place whether they work from home or the office," said IRS Commissioner Chuck Rettig.

Although the Security Summit is making major progress against tax-related identity theft, cybercriminals continue to evolve. They are aware that personal and client data may be more vulnerable this year during COVID-19, especially if they are working remotely.

The following are the basic "Security Six" protections that everyone handling sensitive data, should use:

1. Anti-virus software

Although details may vary between commercial products, anti-virus software scans computer files or memory for certain patterns that may indicate the presence of malicious software (also called malware). Anti-virus software (sometimes more broadly referred to as anti-malware software) looks for patterns based on the signatures or definitions of known malware from cybercriminals. Anti-virus vendors find new issues and malware daily, so it is important that people have the latest updates installed on their computer.

Once users have installed an anti-virus package, they should scan their entire computer regularly by doing:

  • Automatic scans – Most anti-virus software can be configured to automatically scan specific files or directories in real time and prompt users at set intervals to perform complete scans.
  • Manual scans – If the anti-virus software does not automatically scan new files, users should manually scan files and media received from an outside source before opening them. This manual process includes:
    • Saving and scanning email attachments or web downloads rather than opening them directly from the source.
    • Scanning portable media, including CDs, for malware before opening files.

Sometimes the software will produce a dialog box with an alert that it has found malware and asks whether users want it to "clean" the file (to remove the malware). In other cases, the software may attempt to remove the malware without asking first.

When selecting an anti-virus package, professionals should learn about its features, so they know what to expect. Remember, keep security software set to automatically receive the latest updates so that it is always current.

A reminder about spyware, a category of malware intended to steal sensitive data and passwords without the user's knowledge: Strong security software should protect against spyware. But remember, never click links within pop-up windows, never download "free" software from a pop-up, and never follow email links that offer anti-spyware software. The links and pop-ups may be installing the spyware they claim to be eliminating.

A reminder about phishing emails: A strong security package also should contain anti-phishing capabilities. Never open an email from a suspicious source, click on a link in a suspicious email or open an attachment – to avoid being the victim of a phishing attack and having clients' and firm data compromised.

2. Firewalls

Firewalls provide protection against outside attackers by shielding a computer or network from malicious or unnecessary web traffic and preventing malicious software from accessing systems. Firewalls can be configured to block data from certain suspicious locations or applications while allowing relevant and necessary data to pass through, according to CISA.

Firewalls may be broadly categorized as hardware or software. While both have their advantages and disadvantages, the decision to use a firewall is far more important than deciding which type used:

  • Hardware – Typically called network firewalls, these external devices are positioned between a computer and the internet (or another network connection). Hardware-based firewalls are particularly useful for protecting multiple computers and control the network activity that attempts to pass through them.
  • Software – Most operating systems include a built-in firewall feature that should be enabled for added protection even if using an external firewall. Firewall software can also be obtained as separate software from a local computer store or software vendor. If downloading firewall software from the internet, make sure it is from a reputable source (such as an established software vendor or service provider) and offered via a secure website.

While properly configured firewalls may be effective at blocking some cyber-attacks, don't be lulled into a false sense of security. Firewalls do not guarantee that a computer will not be attacked. Firewalls primarily help protect against malicious traffic, not against malicious programs (malware), and may not protect the device if the user accidentally installs malware. However, using a firewall in conjunction with other protective measures (such as anti-virus software and safe computing practices) will strengthen resistance to attacks.

The Security Summit reminds professionals that anti-virus software and firewalls cannot protect data if employees fall for email phishing scams and divulge sensitive data, such as usernames and passwords. The Summit reminds the community that users, not the software, is the first line of defense in protecting taxpayer data.

3. Two-factor authentication

Software providers, email providers and others that require online accounts now offer customers two-factor authentication protections to access email accounts. Professionals should always use this option to prevent their accounts from being taken over by cybercriminals and putting their clients and colleagues at risk.

Two-factor authentication helps by adding an extra layer of protection beyond a password. Often two-factor authentication means the returning user must enter credentials (username and password) plus another step, such as entering a security code sent via text to a mobile phone. The idea is a thief may be able to steal the username and password but it's highly unlikely they also would have a user's mobile phone to receive a security code and complete the process.

The use of two-factor authentication and even three-factor authentication is on the rise, and professionals should always opt for a multi-factor authentication protection when it is offered, whether on an email account, software account or any password-protected product.

Using the two-factor authentication options offered by software providers is critical to protect data stored within those systems. Professionals also can check their email account settings to see if the email provider offers two-factor protections.

4. Backup software/services

Critical files on computers should routinely be backed up to external sources. This means a copy of the file is made and stored either online as part of a cloud storage service or similar product. Or, a copy of the file is made to an external disk, such as an external hard drive with multiple terabytes of storage capacity. Professionals should ensure that data that is backed up also is encrypted – for the safety of the client and business. 

5. Drive encryption

Given the sensitive data maintained on computers, users should consider drive encryption software for full-disk encryption. Drive encryption, or disk encryption, transforms data on the computer into unreadable files for an unauthorized person accessing the computer to obtain data. Drive encryption may come as a stand-alone security software product. It may also include encryption for removable media, such as a thumb drive and its data.

6. Virtual Private Network

This is critical for practitioners who work remotely. If employees must occasionally connect to unknown networks or work from home, establish an encrypted Virtual Private Network (VPN) to allow for a more secure connection. A VPN provides a secure, encrypted tunnel to transmit data between a remote user via the Internet and the company network. Search for "Best VPNs" to find a legitimate vendor; major technology sites often provide lists of top services.

July 15 Tax Payment Deadline Approaching

Posted by Admin Posted on June 27 2020

As the 2019 tax filing and payment deadline approaches, the IRS reminds taxpayers and businesses that 2019 income tax liabilities as well as postponed April 15 and June 15, 2020 estimated tax payments are due July 15, 2020. This postponement provided temporary tax relief in response to the COVID 19 pandemic.

Taxpayers who owe a 2019 income tax liability, as well as estimated tax for 2020, must make two separate payments on or by July 15, 2020: One for their 2019 income tax liability and one for their 2020 estimated tax payments. The two estimated tax payments can be combined into a single payment.

A list of forms due July 15 is on the Coronavirus Tax Relief: Filing and Payment Deadlines page. Electronic payment options are the optimal way to make a tax payment.

Paying electronically:

  • Individuals – Taxpayers can use Direct Pay for two payments each day. Direct Pay allows taxpayers to pay online directly from a checking or savings account for free, and to schedule payments up to 365 days in advance. They will receive an email confirmation of their payments.
    • Taxpayers attempting to make at least three payments on the same day using Direct Pay will receive a warning of possible duplicate payment, and they will need to select override for those payments to continue.
       
  • Businesses – For businesses or those making large payments, the best payment option is the Electronic Federal Tax Payment System, which allows up to five payments per day. Enrollment is required. Taxpayers can schedule payments up to 365 days in advance and opt in to receive email notifications about their payments. Visit IRS.gov/eftps for details.

Paying by check, money order or cashier's check:

  • 2019 Tax Liability – If paying a 2019 income tax liability without an accompanying 2019 tax return, taxpayers paying by check, money order or cashier's check should include Form 1040-V, Payment Voucher with the payment.
     
  • For those paying when filing their 2019 income tax return, do not staple or paperclip the payment to the return. For more information, go to Pay by Check or Money Order on IRS.gov.
     
  • 2020 Estimated Tax Payments - Taxpayers making their 2020 estimated tax payment by check, money order or cashier's check should include the appropriate Form 1040-ES payment voucher. Indicate on the check memo line that this is a 2020 estimated tax payment.

Additional electronic payment options:

Payment options are available at IRS.gov/payments:

  • Taxpayers can pay when they file electronically using tax software online. If using a tax preparer, ask the preparer to make the tax payment through an electronic funds withdrawal from a bank account.
     
  • Taxpayers can choose to pay with a credit card, debit card or digital wallet option through a payment processor. Processing fees apply. No part of the card service fee goes to the IRS.
     
  • The IRS2Go app provides mobile-friendly payment options, including Direct Pay and Payment Provider payments on mobile devices.
     
  • Individuals and businesses, preferring to pay in cash, can do so at a participating retail store. Go to IRS.gov/paywithcash for instructions.

For taxpayers paying separately from when they file their tax return, the more secure and quicker way to send a payment to the IRS is by going to IRS.gov/payments and choosing an electronic payment option to submit the payment. Taxpayers should continue to use electronic options to support social distancing and speed the processing of tax returns, refunds and payments.

Relief for Taxpayers Affected by COVID-19 Taking Distributions or Loans From Retirement Plans

Posted by Admin Posted on June 21 2020

The Internal Revenue Service has released Notice 2020-50 (PDF) to help retirement plan participants affected by the COVID-19 coronavirus take advantage of the CARES Act provisions providing enhanced access to plan distributions and plan loans. This includes expanding the categories of individuals eligible for these types of distributions and loans (referred to as "qualified individuals") and providing helpful guidance and examples on how qualified individuals will reflect the tax treatment of these distributions and loans on their federal income tax filings.

The CARES Act provides that qualified individuals may treat as coronavirus-related distributions up to $100,000 in distributions made from their eligible retirement plans (including IRAs) between January 1 and December 30, 2020. A coronavirus-related distribution is not subject to the 10% additional tax that otherwise generally applies to distributions made before an individual reaches age 59 ½. In addition, a coronavirus-related distribution can be included in income in equal installments over a three-year period, and an individual has three years to repay a coronavirus-related distribution to a plan or IRA and undo the tax consequences of the distribution.

In addition, the CARES Act provides that plans may implement certain relaxed rules for qualified individuals relating to plan loan amounts and repayment terms. In particular, plans may suspend loan repayments that are due from March 27 through December 31, 2020, and the dollar limit on loans made between March 27 and September 22, 2020, is raised from $50,000 to $100,000.

As authorized under the CARES Act, Notice 2020-50 expands the definition of who is a qualified individual to take into account additional factors such as reductions in pay, rescissions of job offers, and delayed start dates with respect to an individual, as well as adverse financial consequences to an individual arising from the impact of the COVID-19 coronavirus on the individual's spouse or household member. As expanded under Notice 2020-50, a qualified individual is anyone who –

  • is diagnosed, or whose spouse or dependent is diagnosed, with the virus SARS-CoV-2 or the coronavirus disease 2019 (collectively, "COVID-19") by a test approved by the Centers for Disease Control and Prevention (including a test authorized under the Federal Food, Drug, and Cosmetic Act); or
     
  • experiences adverse financial consequences as a result of the individual, the individual's spouse, or a member of the individual's household (that is, someone who shares the individual's principal residence):
    • being quarantined, being furloughed or laid off, or having work hours reduced due to COVID-19;
    • being unable to work due to lack of childcare due to COVID-19;
    • closing or reducing hours of a business that they own or operate due to COVID-19;
    • having pay or self-employment income reduced due to COVID-19; or
    • having a job offer rescinded or start date for a job delayed due to COVID-19.

Notice 2020-50 clarifies that employers can choose whether to implement these coronavirus-related distribution and loan rules, and notes that qualified individuals can claim the tax benefits of coronavirus-related distribution rules even if plan provisions aren't changed. The guidance clarifies that administrators can rely on an individual's certification that the individual is a qualified individual (and provides a sample certification), but also notes that an individual must actually be a qualified individual in order to obtain favorable tax treatment. Further, Notice 2020-50 provides employers a safe harbor procedure for implementing the suspension of loan repayments otherwise due through the end of 2020, but notes that there may be other reasonable ways to administer these rules.

Employers, financial institutions, and individuals should refer to Notice 2020-50 for more details about how the CARES Act rules for coronavirus-related distributions and loans from plans apply.

Tax Relief For Investors and Businesses Affected by COVID-19 in New Markets Tax Credit Transactions

Posted by Admin Posted on June 17 2020

The Treasury Department and the Internal Revenue Service have provided tax relief for certain taxpayers affected by the COVID-19 pandemic involved in new markets tax credit transactions.

The taxpayers receiving relief through today's guidance are community development entities (CDEs) and qualified active low-income community businesses (QALICBs) investing and conducting businesses in low-income communities.

Notice 2020-49 (PDF) provides a CDE or QALICB with relief for certain specified time-sensitive acts that are due to be performed between April 1, 2020, and Dec. 31, 2020, in order to meet requirements under section 45D of the Internal Revenue Code and its regulations. A CDE or QALICB may perform these acts by Dec. 31, 2020. The additional time is provided for the following time-sensitive acts:

Making investments

If a CDE is due to invest cash received in a qualified low-income community investment (QLICI) on or after April 1, 2020, and before Dec. 31, 2020, that cash investment is treated as invested in a QLICI to the extent it is invested by Dec. 31, 2020.

Reinvestments

If a CDE is due to reinvest certain amounts of cash or payment in a QLICI on or after April 1, 2020, and before Dec. 31, 2020, the amounts are treated as continuously invested in a QLICI to the extent the amounts are so reinvested by Dec. 31, 2020.

Expending amounts for construction of real property

If a QALICB is due to expend the proceeds of a capital or equity investment or loan by a CDE for construction of real property on or after April 1, 2020, and before Dec. 31, 2020, such proceeds are treated as a reasonable amount of working capital of the QALICB if so expended by Dec. 31, 2020.

Changes to Health Care Spending Available Under The CARES Act

Posted by Admin Posted on June 17 2020

The new rules under the CARES Act provide flexibility for health care spending that may be helpful in the current environment where more people may need at-home services due to measures to fight the coronavirus.

Telehealth and High Deductible Health Plans

Under the CARES Act, a high deductible health plan (HDHP) temporarily can cover telehealth and other remote care services without a deductible, or with a deductible below the minimum annual deductible otherwise required by law. Telehealth and other remote care services also are temporarily included as categories of coverage that are disregarded for the purpose of determining whether an individual who has other health plan coverage in addition to an HDHP is an eligible individual who may make tax-favored contributions to his or her HSA. Thus, an otherwise eligible individual with coverage under an HDHP may still contribute to an HSA despite receiving coverage for telehealth and other remote care services before satisfying the HDHP deductible, or despite receiving coverage for these services outside the HDHP. The temporary rules under the CARES Act, as extended by IRS Notice 2020-29 (PDF), apply to services provided on or after Jan. 1, 2020, with respect to plan years beginning on or before Dec. 31, 2021.

Expansion of qualified medical expenses

The CARES Act also modifies the rules that apply to various tax-advantaged accounts (HSAs, Archer MSAs, Health FSAs, and HRAs) so that additional items are "qualified medical expenses" that may be reimbursed from those accounts. Specifically, the cost of menstrual care products is now reimbursable. These products are defined as tampons, pads, liners, cups, sponges or other similar products. In addition, over-the-counter products and medications are now reimbursable without a prescription. The new rules apply to amounts paid after Dec. 31, 2019. Taxpayers should save receipts of their purchases for their records and so that they are able to submit claims for reimbursements.

New Warnings Against COVID-19 Fraud and Other Financial Schemes

Posted by Admin Posted on June 17 2020

The Internal Revenue Service reminds taxpayers to guard against tax fraud and other related financial scams related to COVID-19.

In the last few months, the IRS Criminal Investigation division (CI) has seen a variety of Economic Impact Payment (EIP) scams and other financial schemes looking to take advantage of unsuspecting taxpayers. CI continues to work with law enforcement agencies domestically and abroad to educate taxpayers about these scams and investigate the criminals perpetrating them during this challenging time.

"Criminals seize on every opportunity to exploit bad situations, and this pandemic is no exception," said IRS Commissioner Chuck Rettig. "The IRS is fully focused on protecting Americans while delivering Economic Impact Payments in record time. The pursuit of those who participate in COVID-19 related scams, intentionally abusing the programs intended to help millions of Americans during these uncertain times, will long remain a significant priority of both the IRS and IRS-CI."

Criminals are continuing to use the COVID-19 Economic Impact Payments as cover for schemes to steal personal information and money. Scams related to COVID-19 are not limited to stealing EIPs from taxpayers, however. CI has already seen scams related to the organized selling of fake at-home test kits, offers to sell fake cures, vaccines, pills and advice on unproven treatments for COVID-19. Other scams purport to sell large quantities of medical supplies through the creation of fake shops, websites, social media accounts and email addresses where the criminal fails to deliver promised supplies after receiving funds.

"Criminals try to take advantage of our most vulnerable times and our most vulnerable populations. But because we have seen many of these criminals and schemes before, we know how to find them and we know how to expose them," said Don Fort, Chief of IRS Criminal Investigation. "And because COVID-19 is a global problem, it requires a global solution. Not only are we leveraging our financial investigative expertise domestically, we are working hand-in-hand with our J5 partners on those COVID-19 cases that cross borders. There truly is no place for criminals to hide."

Other COVID-19 related scams involve setting up fake charities soliciting donations for individuals, groups and areas affected by the disease. Some criminals are offering opportunities to invest early in companies working on a vaccine for the disease promising that the "company" will dramatically increase in value as a result. These promotions are often styled as "research reports," make predictions of a specific "target price," and relate to microcap stocks, or low-priced stocks issued by the smallest of companies with limited publicly available information.

Finally, CI has also seen a tremendous increase in phishing schemes utilizing emails, letters, texts and links. These phishing schemes are using keywords such as "Corona Virus," "COVID-19," and "Stimulus" in varying ways. These schemes are blasted to large numbers of people known by the bad actors in an effort to get personally identifying information or financial account information to include account numbers and passwords. Most of these new schemes are actively playing on the fear and unknown of the virus and the stimulus payments.

Coronavirus-related (COVID-19) scams should be reported to the National Center for Disaster Fraud (NCDF) Hotline at 866-720-5721 or submitted through the NCDF web Complaint Form. The NCDF is a national coordinating agency within the Department of Justice's Criminal Division dedicated to improving the detection, prevention, investigation and prosecution of criminal conduct related to natural and man-made disasters and other emergencies, such as the coronavirus (COVID-19). Hotline staff will obtain information regarding your complaint, which will then be reviewed by law enforcement officials.

Taxpayers can also report fraud or theft of their Economic Impact Payments to the Treasury Inspector General for Tax Administration (TIGTA). Reports can be made online. TIGTA investigates external attempts to corruptly interfere with federal tax administration, including IRS-related coronavirus scams.

Also, taxpayers can always report phishing attempts to the IRS. Those who receive unsolicited emails or social media attempts to gather information that appear to be from either the IRS or an organization closely linked to the IRS, such as the Electronic Federal Tax Payment System (EFTPS), should forward it to phishing@irs.gov. Taxpayers are encouraged not to engage potential scammers online or on the phone.

IRS Provides Answers Regarding COVID Related Tax Relief for Qualified Opportunity Funds and Investors

Posted by Admin Posted on June 07 2020

The Internal Revenue Service has provided guidance for Qualified Opportunity Funds (QOFs) and their investors in response to the ongoing Coronavirus Disease 2019 (COVID-19) pandemic.

Notice 2020-39 (PDF) answers questions regarding relief from certain requirements under section 1400Z-2 of the Internal Revenue Code (Code) and the implementing regulations. Additionally, the IRS has updated the Qualified Opportunity Zones frequently asked questions.

Taxpayers who sold property for an eligible gain and who would have had 180 days to invest in a QOF to defer that gain, may have additional time. Notice 2020-39 provides that if a taxpayer's 180th day to invest in a QOF would have fallen on or after April 1, 2020, and before December 31, 2020, the taxpayer now has until December 31, 2020 to invest that gain into a QOF. (The 180th day for some of these taxpayers was already postponed through July 15, 2020, under Notice 2020-23.) In addition, the notice provides that the period between April 1, 2020, and December 31, 2020, is suspended for purposes of the 30-month period during which property may be substantially improved.

The guidance also provides that, due to the COVID-19 pandemic, a QOF's failure to hold less than the 90% of its assets in Qualified Opportunity Zone Property on any semi-annual testing dates from April 1, 2020, through Dec. 31, 2020, is due to reasonable cause under section 1400Z-2(f)(3) and such failure does not prevent qualification of an entity as a QOF or an investment in a QOF from being a qualifying investment. As such, the QOF will not be liable for the statutory penalty under section 1400Z-2(f) due to such a failure during this period.

For Qualified Opportunity Zone Business projects that meet the requirements of the 31-month working capital safe harbor under the final regulations, the notice reminds taxpayers that due to the COVID-19 pandemic these projects have up to an additional 24 months in which to expend their working capital.

Similarly, the notice reminds taxpayers that due to the COVID-19 pandemic, QOFs that received distributions of QOF stock or partnership interests as a return of capital or realized proceeds from a sale of that stock, partnership interest or qualified opportunity zone property have an additional 12 months in which to reinvest those amounts in the manner intended before the COVID-19 pandemic.

Those Who Do Not File Tax Returns Can Register For Stimulus Payments With IRS Non-Filers Tool

Posted by Admin Posted on June 07 2020

With 159 million Economic Impact Payments processed, the Internal Revenue Service reminds many low-income Americans who don't usually file tax returns to register for a payment by October 15.

Millions of low-income people and others who aren't required to file a tax return may be eligible for an Economic Impact Payment and can easily register for a payment by using the free Non-Filers toolavailable only on IRS.gov.

"IRS employees worked around the clock to deliver the Economic Impact Payments and new tools to help taxpayers in record time," said IRS Commissioner Chuck Rettig. "Even with these unprecedented steps, there remain people eligible for these payments who need to take action. Registering to receive the payments is easy, and millions of non-filers have already taken this step. We urge everyone to share this information widely to help more people receive these payments."

In the past two months, more than 159 million Americans have received Economic Impact Payments totaling almost $267 billion. Of the payments, 120 million were sent to Americans by direct deposit, 35 million by check and 4 million payments were made in the form of a pre-paid debit card. This includes payments sent to those who usually do not have to file a tax return but receive retirement, survivor or disability benefits under various programs administered by the Social Security Administration as well as the Department of Veterans Affairs and the Railroad Retirement Board who qualify. These individuals can use Get My Payment to check on their payment status.

Non-Filers tool on IRS.gov helps millions; special feature remains available through October 15

To help people who aren't normally required to file a tax return, the IRS created the Non-Filers tool, available in English and Spanish, in partnership with the Free File Alliance. The Non-Filers tool is designed for people with incomes typically below $24,400 for married couples, and $12,200 for singles. This includes couples and individuals who are homeless. People can qualify, even if they do not have earned income or work. Usually, married couples qualify to receive a $2,400 payment while others normally qualify to get $1,200. People with qualifying children under 17 can get up to an additional $500 for each child. Anyone who already filed either a 2018 or 2019 return does not qualify to use this tool.

The Non-Filers tool will remain available through the summer and fall, though many eligible people without a filing obligation have already received an Economic Impact Payment. The IRS urges every other eligible non-filer to register soon to quickly receive their payment. Anyone who registers by October 15 will receive their payment by the end of the year.

To help reach these non-filers, over the next few months the IRS will be conducting an extensive outreach and education effort to partner groups who serve homeless individuals, underserved communities, limited English households and others. As part of this effort, the agency has created an Economic Impact Payment partner page, and materials are available in multiple languages.

The IRS cautions that some people who need to file a tax return have been mistakenly using the Non-Filers tool to try to get an Economic Impact Payment.

PPP Updates and Individual Tax Updates

Posted by Admin Posted on June 04 2020
We are continuing our focus on keeping you informed on topics and changes related to you as changes continue to occur.  Here are the latest updates:
 
PAYROLL PROTECTION PROGRAM (PPP):
  • There is still availability to get a PPP if you have not yet obtained one, but you need to act fast with these changes the applications will go quickly
  • Last night the senate passed changes to the PPP program and the bill is going to the president to be signed into law for the following changes:
    • Extended spending period to 24 weeks (up from 8 weeks)
    • 60% of the funds to be spent on payroll (down from 75%)
    • December 31st to return to pre-pandemic employment levels (previously June 30th)
    • 5 years to repay the loan (up from 2 years)
    • Payroll tax payments can be delayed (previously not allowed if you had a PPP)
 
INDIVIDUAL UPDATE:
  • July 15th extended deadline is just 6 weeks away, send your information in sooner than later for filing prior to July 15th .  All individual clients have been extended thru October 15, 2020 for their 2019 tax returns
  • IRS has approved the 1040-X (amended individual return) to be submitted electronically starting later this summer
  • IRS permitting remote signatures for retirement-plan participants to take coronavirus-related distributions
 
We will continue to post updates on social media as changes occur.  Stay healthy and safe.
 
Thank you,
CPA Partners

SBA Issues Final Interim Rules Providing PPP Guidance

Posted by Admin Posted on June 01 2020

The Small Business Administration (SBA) released two new interim final rules on the Paycheck Protection Program (PPP). One set covers the requirements for loan forgiveness, confirming and expanding upon the previously released loan forgiveness form and instructions and the other addresses the SBA’s procedures for reviewing applications for loans and loan forgiveness. Key takeaways from both sets of rules are below. The guidance is effective immediately.

Separately, the House and Senate introduced bipartisan bills to amend the PPP. Both bills propose to expand the covered periods in which borrowers can use loan proceeds and qualify for forgiveness, and remove the limit on the amount of non-payroll costs that can be forgiven. The Senate bill would also allow expenses funded with forgiven loan proceeds to be deductible, overriding Notice 2020-32 previously issued by the IRS. While numerous members of the House indicated support for such a provision, the House bill does not include a similar provision. The House is expected to vote on its bill this week, but timing for the Senate is less certain at this time.

Requirements for loan forgiveness

Cash compensation eligible for forgiveness is generally limited to $15,385 per employee over the eight-week covered period in 2020 ($100,000 limit multiplied by (eight-week covered period divided by 52-week year)), however, the interim rule imposes an additional limit on “owner-employees,” being the lesser of $15,385, or 8/52 of 2019 compensation in total, across all businesses. The “across all business” requirement may come as a surprise to many and may serve to further limit the amount of owner compensation eligible for forgiveness.

Unfortunately, the term “owner-employees” is not defined for this purpose. It presumably includes S corporation shareholders in accordance with general tax principles. This additional limitation could render substantial amounts paid by borrowers under previous guidance no longer eligible for forgiveness. It is also unknown whether attribution rules will apply to pull in related-party salaries into a single limitation. Consider a family business taxed as an S corporation. If the business has a sole equity shareholder whose family members are salaried employees, it is unclear whether attribution rules would apply and additionally limit the forgiveness of the amounts paid to the family members.

The rules include new limitations on health insurance for owners. In general, noncash compensation paid to employees, such as retirement and healthcare contributions made on their behalf, is additionally eligible for forgiveness, and these amounts do not count toward the above-mentioned limit on cash compensation.

The interim rule provides these additional amounts cannot increase the compensation cap described above for amounts paid for self-employed individuals, including Schedule C filers and general partners.

However, the interim rule does not discuss S corporation owner-employees for this purpose. It is unclear whether this exclusion reflects a policy position or a drafting error.
Bonuses and hazard pay as well as salaries, wages and commission payments to furloughed employees during the covered period are eligible for loan forgiveness, subject to the $100,000 limit prorated for the covered period.
A full-time equivalent (FTE) employee is defined as one who works 40 hours or more on average each week. The rule provides the methodology for calculating FTEs by dividing the average number of hours paid for each employee per week by 40 and capping the result at 1.0. This echoes the guidance included in the loan forgiveness application. For part-time employees, employers have the choice of computing FTEs by average actual hours during the covered period or they can use a default FTE of 0.5 for each part-time employee regardless of actual hours worked.
Prepayments of eligible costs other than mortgage interest are eligible for forgiveness.
The guidance also addressed documentation requirements for employers regarding reduced headcounts if they attempt to rehire the same employee but the employee rejects the offer. Specifically, in calculating the loan forgiveness amount, a borrower may exclude any reduction in FTE employee headcount that is attributable to an individual employee if:
i. The borrower made a good faith, written offer to rehire such employee (or, if applicable, restore the reduced hours of such employee) during the covered period or the alternative payroll covered period;
ii. The offer was for the same salary or wages and same number of hours as earned by such employee in the last pay period prior to the separation or reduction in hours;
iii. The offer was rejected by such employee;
iv. The borrower has maintained records documenting the offer and its rejection; and
v. The borrower informed the applicable state unemployment insurance office of such employee’s rejected offer of reemployment within 30 days of the employee’s rejection of the offer.
Loan application review procedures

Borrowers are responsible for the accuracy of the PPP forgiveness calculation as well as the supporting loan forgiveness application and documentation.
The SBA may review PPP loans of any size and at any time. Specifically whether:
– The borrower was eligible for the loan, based on the Coronavirus Aid, Relief, and Economic Security (CARES) Act and guidance available at the time the loan was applied for,
– The loan amount was calculated correctly,
– The loan proceeds were used for eligible costs, and
– The borrower is eligible for the amount of loan forgiveness applied for.
Borrowers will have the opportunity to respond to questions posed by the SBA and/or the lender during the loan review process.
Lenders must approve or deny an application for loan forgiveness within 60 days of submission. Borrowers will have an opportunity to appeal a denial of PPP loan forgiveness under soon-to-be-issued guidance.
Borrowers must retain documentation supporting the PPP loan and corresponding forgiveness for six years after the loan is forgiven or repaid in full.

Small Businesses Concerns Regarding PPP Forgiveness

Posted by Admin Posted on June 01 2020

Businesses that have taken out loans under the Small Business Administration’s (SBA) Paycheck Protection Program (PPP) have had two ongoing concerns – should they return the loans (because of concerns about eligibility), and what do they need to know about the loan forgiveness process. While there likely will be ongoing confusion and changes to the PPP program, there are two things businesses that take the loans can do to justify their decision both to the general public and to government regulators: don’t change the cadence of your business to qualify for a loan or forgiveness, and document, document, document.

  • PPP in review

Through May 25, the SBA had issued $511 billion in PPP loans. The program provides cash flow assistance through 100% federally guaranteed loans to companies that maintain their payroll during the coronavirus public health emergency. The loans may be forgiven up to the full principal amount of qualifying loans guaranteed under the PPP.

The PPP requires borrowers to make a good faith certification that their loan is necessary to support their ongoing operations during the currently uncertain economy. The statutory language in the Coronavirus Aid, Relief, and Economic Security (CARES) Act appears to have broad application. Determining eligibility is complicated, however, because the CARES Act offered few guidelines for the loan program. Regulations implementing the program were not issued until the day before banks started taking applications for the loans on April 3.

Since then, the SBA has amended the regulations to state that borrowers with concerns about whether they qualified for the loan and who then repaid it by May 18 will be deemed to have made a good faith certification of economic need. Some companies have repaid the loan funds, either because of public perception (in the case of some public companies) or because they determined after receiving the funds that they were ineligible for the program.

Keep your cadence

Working on the assumption that your business keeps the PPP funds, how should you prepare to make the case for loan forgiveness? Don’t change the cadence of your business or how you gather information solely for the purpose of supporting good faith certification. If the key drivers of your business (cash flow, for example) are uncertain because of the pandemic, either now or at a reasonable time in the future, you can make a good faith case that the PPP loan was needed.

The SBA has also clarified (see Paycheck Protection Program Loans Frequently Asked Questions #46) that any borrower that, together with its affiliates, received PPP loans with an original principal amount of less than $2 million will be deemed to have made the required good faith certification concerning the necessity of the loan. (Less than 1% of PPP loans have been for $2 million or more; 75% of loans were for amounts of $150,000 or less.)

Business are also concerned about how “adequate sources of liquidity” will be defined by the SBA. A key thing for companies to consider: If your business would be impacted now or through a reasonable future time period, say six months, and if you tapped available liquidity, this will bolster your good faith certification for a PPP loan. A business does not have to exhaust everything (line of credit or cash on hand), but document how, by tapping into your liquidity, you will still be out of funds in eight weeks.

Document, document, document

Companies need to go through a robust and comprehensive analysis of each good faith certification – why they needed the PPP loan and how they used it correctly to qualify for forgiveness. This analysis should include documentation of discussions with the board of directors or owners’ group. The analysis should demonstrate that the company made the decision to get a PPP loan based on the normal course of business, as impacted by the economic slowdown. If you change the cadence of your business to justify qualification for a government program, you will more likely be on the defensive when asked by a government agency why you needed the loan.

Businesses that received loans should be using some form of calculation to estimate what their forgiveness amount will be. Companies must demonstrate they used funds as required – 75% on payroll, and 25% on other expenses.

If you are still confused about how the Treasury Department and SBA will view your reasons for taking loan, spend it appropriately as best you can. If it doesn’t get forgiven, it converts to a 1% loan that you can repay over two years.

On May 15, the SBA released the Paycheck Protection Program (PPP) loan forgiveness application with new rules and guidance for business owners and not-for-profits. Organizations must complete this form to apply for forgiveness of their PPP loan. Watch this Baker Tilly webinar for an overview of the application form along with some insights and takeaways from our PPP loan specialists.

Other PPP resources

The PPP program has evolved since March and further changes are possible. Both the House and Senate are considering legislation to modify the PPP, including:

  • Extending the current eight-week period during which businesses must use funds to have loans forgiven to 24 weeks or Dec. 31, whichever comes sooner
  • Allowing businesses to repay loans over five years instead of two
  • Revising the rule that no more than 25% of proceeds can be spent on expenses
  • Extending the deadline to apply for a loan from June 30 to the end of 2020

Businesses should pay attention to the Treasury Department’s Paycheck Protection Program Loans Frequently Asked Questions website, with the understanding that other more formal guidance may be issued in the form of rules and regulations.

 

Form 1040-X E-Filing Options Available This Summer

Posted by Admin Posted on June 01 2020

The Internal Revenue Service has announced that later this summer, taxpayers will for the first time be able to file their Form 1040-X, Amended U.S Individual Income Tax Return, electronically using available tax software products.

Making the 1040-X an electronically filed form has been a goal of the IRS for a number of years. It's also been an ongoing request from the nation's tax professional community and has been a continuing recommendation from the Internal Revenue Service Advisory Council (IRSAC) and Electronic Tax Administration Advisory Committee (ETAAC).

Currently, taxpayers must mail a completed Form 1040-X to the IRS for processing. The new electronic option allows the IRS to receive amended returns faster while minimizing errors normally associated with manually completing the form.

"This new process is a major milestone for the IRS, and it follows hard work by people across the agency," said IRS Commissioner Chuck Rettig. "E-filing has been one of the great success stories of the IRS, and more than 90 percent of taxpayers use it routinely. But the big hurdle that's been remaining for years is to convert amended returns into this electronic process. Our teams have worked diligently to overcome the unique challenges related to the 1040-X, and we look forward to offering this new service this summer."

About 3 million Forms 1040-X are filed by taxpayers each year.

The new electronic filing option will provide the IRS with more complete and accurate data in an easily readable format to enable customer service representatives to answer taxpayers' questions. Taxpayers can still use the "Where's My Amended Return?" online tool to check the status of their electronically-filed 1040-X.

When the electronic filing option becomes available, only tax year 2019 Forms 1040 and 1040-SR returns can be amended electronically. In general, taxpayers will still have the option to submit a paper version of the Form 1040-X and should follow the instructions for preparing and submitting the paper form. Additional enhancements are planned for the future.

"Adding amended returns to the electronic family also complements our partnership with the tax software industry, which continues to work with us to provide better ways to help taxpayers," said Ken Corbin, Commissioner of the IRS Wage and Investment division.

Guidance for Income Tax Withholding on Certain Periodic Retirement and Annuity Payments

Posted by Admin Posted on May 28 2020

The U.S. Department of the Treasury and the Internal Revenue Service today issued a proposed regulation updating the federal income tax withholding rules for periodic retirement and annuity payments made after December 31, 2020.

Prior to the Tax Cuts and Jobs Act (TCJA), if no withholding certificate was in effect for a taxpayer's periodic payments, the amount to be withheld from the payments was determined by treating the taxpayer as a married individual claiming three withholding exemptions.

The TCJA amended this rule to provide that the rate of withholding on periodic payments when no withholding certificate is in effect would instead be determined under rules prescribed by the Secretary of the Treasury.

In Notice 2020-03 (PDF), the IRS provided that, for 2020 the default rate of withholding on periodic payments will continue to be based on treating the taxpayer as a married individual claiming three withholding allowances when no withholding certificate is in effect.

Under the proposed regulation for 2021 and future calendar years, the Treasury Department and the IRS will provide the rules and procedures for determining the default rate of withholding on periodic payments when a taxpayer has no withholding certificate in effect in applicable forms, instructions, publications and other guidance.

FAQs Regarding Economic Impact Payments

Posted by Admin Posted on May 28 2020

As Economic Impact Payments continue to be successfully delivered, the Internal Revenue Service today reminds taxpayers that some payments are being sent by prepaid debit card. The debit cards arrive in a plain envelope from "Money Network Cardholder Services."

Nearly 4 million people are being sent their Economic Impact Payment by prepaid debit card, instead of paper check. The determination of which taxpayers received a debit card was made by the Bureau of the Fiscal Service, a part of the Treasury Department that works with the IRS to handle distribution of the payments.

Those who receive their Economic Impact Payment by prepaid debit card can do the following without any fees.

  • Make purchases online and at any retail location where Visa is accepted
  • Get cash from in-network ATMs
  • Transfer funds to their personal bank account
  • Check their card balance online, by mobile app or by phone

This free, prepaid card also provides consumer protections available to traditional bank account owners, including protection against fraud, loss and other errors.

Frequently asked questions continually updated on IRS.gov

The IRS has two sets of frequently asked questions to help Americans get answers about their Economic Impact Payments, including those arriving on prepaid debit card. These FAQs include answers to eligibility and other many common questions, including help to use two Economic Impact Payment tools.

Get My Payment, an IRS online tool, shows the projected date when a direct deposit has been scheduled or date when the payment will be mailed by check or prepaid debit card. The Non-Filers Enter Payment Info Here tool helps taxpayers successfully submit basic information to receive Economic Impact Payments quickly.

The IRS regularly updates the Economic Impact Payment and the Get My Payment frequently asked questions pages on IRS.gov as more information becomes available. Taxpayers should check the FAQs often for the latest additions.

Here are answers to some of the top questions people are asking about the prepaid debit cards:

Can I have my economic impact payment sent to my prepaid debit card?

Maybe. It depends on your prepaid card and whether your payment has already been scheduled. Many reloadable prepaid cards have account and routing numbers that you could provide to the IRS through the Get My Payment application or Non-Filers: Enter Payment Info Here tool. You would need to check with the financial institution to ensure your card can be re-used and to obtain the routing number and account number, which may be different from the card number. If you obtained your prepaid debit card through the filing of a federal tax return, you must contact the financial institution that issued your prepaid debit card to get the correct routing number and account number. Do not use the routing number and account number shown on your copy of the tax return filed. When providing this information to the IRS, you should indicate that the account and routing number provided are for a checking account unless your financial institution indicates otherwise.

Will IRS be sending prepaid debit cards?

Some payments may be sent on a prepaid debit card known as The Economic Impact Payment Card The Economic Impact Payment Card is sponsored by the Treasury Department's Bureau of the Fiscal Service, managed by Money Network Financial, LLC and issued by Treasury's financial agent, MetaBank®, N.A.

If you receive an Economic Impact Payment Card, it will arrive in a plain envelope from "Money Network Cardholder Services." The Visa name will appear on the front of the Card; the back of the Card has the name of the issuing bank, MetaBank®, N.A. Information included with the Card will explain that the card is your Economic Impact Payment Card. Please go to EIPcard.com for more information.

Can I specifically ask the IRS to send the Economic Impact Payment to me as a debit card?

Not at this time. For those who don't receive their Economic Impact Payment by direct deposit, they will receive their payment by paper check, and, in a few cases, by debit card. The determination of which taxpayers receive a debit card will be made by the Bureau of the Fiscal Service (BFS), another part of the Treasury Department that works with the IRS to handle distribution of the payments. BFS is sending nearly 4 million debit cards to taxpayers starting in mid-May. At this time, taxpayers cannot make a selection to receive a debit card. Please go to EIPcard.com for more information.

Watch out for scams related to Economic Impact Payments

The IRS urges taxpayers to be on the lookout for scams related to the Economic Impact Payments. To use the new app or get information, taxpayers should visit IRS.gov. People should watch out for scams using email, phone calls or texts related to the payments. Be careful and cautious: The IRS will not send unsolicited electronic communications asking people to open attachments, visit a website or share personal or financial information. Remember, go directly and solely to IRS.gov for official information.

Final Regulations Providing Relief for Certain Tax-Exempt Organizations

Posted by Admin Posted on May 28 2020

The Department of the Treasury and the Internal Revenue Service have issued final regulations, which can be found here, clarifying the reporting requirements generally applicable to tax-exempt organizations.

This document contains final regulations updating information reporting regulations under section 6033 that are generally applicable to organizations exempt from tax under section 501(a) to reflect statutory amendments and certain grants of reporting relief for tax-exempt organizations required to file an annual Form 990 or 990-EZ information return that have been made since the previous regulations were adopted.

The final regulations reflect statutory amendments and certain grants of reporting relief announced by the Treasury Department and the IRS in prior guidance to help many tax-exempt organizations generally find the reporting requirements in one place.

Among other provisions, the final regulations incorporate the existing exception from having to file an annual return for certain organizations that normally have gross receipts of $50,000 or less. That exception was previously announced in Revenue Procedure 2011-15. The regulations also provide that the requirement to report contributor names and addresses on annual returns generally applies only to returns filed by Section 501(c)(3) organizations and Section 527 political organizations. All tax-exempt organizations must continue to maintain the names and addresses of their substantial contributors in their books and records. This change will have no effect on transparency, as contributor information that is open to public inspection will be unaffected by this regulation.

The final regulations allow tax-exempt organizations to choose to apply the regulations to returns filed after September 6, 2019.

Nationwide Virtual Tax Forums Beginning July

Posted by Admin Posted on May 21 2020

Tax pros can choose from up to 30 webinars beginning in July

The Internal Revenue Service has announced the 2020 IRS Nationwide Tax Forums will be held virtually in 2020 with a series of live-streamed webinars beginning this July.

"Given restrictions on large gatherings and difficulties with travel, we've made the decision to present the IRS Nationwide Tax Forums in a virtual format this year," IRS Commissioner Chuck Rettig said. "While we're unable to meet in person, tax professionals will still be able to choose from a wide variety of virtual seminars on tax law.Many will be able to fully satisfy their annual continuing education requirements by registering and attending."

Held each summer for the past 30 years, the IRS Nationwide Tax Forums are the IRS's marquee outreach event to the tax professional community. The forums were scheduled to take place in six cities around the country this summer. Those in-person events are canceled.

However, the change to a virtual format allows experts from the IRS and its association partners to still educate and update the tax professional community on tax law, cybesecurity, ethics and other topics.

Seminar dates and agenda

The 2020 Nationwide Tax Forums will begin on July 21 and continue through Aug. 20 with live-streamed webinars broadcast on Tuesdays, Wednesdays and Thursdays. Registration enables attendees to participate in all of the live webinars and earn up to 30 Continuing Education Credits at one price.

As in previous years, the Nationwide Tax Forums agenda will feature a plenary session with tax law and publications update, as well as multiple sessions on high-interest topics such as qualified business income, exam and enforcement priorities, due diligence, cybersecurity and more. Presentations are made by both IRS experts and partner associations.

This year several seminars, including the plenary session, will be provided in Spanish.

Further details, including course titles, dates and times, will be available beginning in early June.

2020 registration and fees

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.

Registration information, as well as information on transfers and cancelations, is available at www.irstaxforum.com.

Discounts for national association members

Members of partner associations listed below qualify for a discount of $10 off the Early Bird rate, but only if they register by June 15. Participating association members should contact their association directly for more information:

  • American Bar Association (ABA) Section of Taxation
  • American Institute of Certified Public Accountants (AICPA)
  • National Association of Enrolled Agents (NAEA)
  • National Association of Tax Professionals (NATP)
  • National Society of Accountants (NSA)
  • National Society of Tax Professionals (NSTP)
  • Low Income Taxpayer Clinics (LITC)
  • Volunteer Income Tax Assistance Program (VITA)

View presentations from past forums

IRS Adds Phone Operators to Answer Economic Impact Payment Questions

Posted by Admin Posted on May 20 2020

WASHINGTON — May 18th, 2020, the IRS 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.

Answers for most Economic Impact Payment questions are available on the automated message for people who call the phone number provided in the letter (Notice 1444). Those who need additional assistance at the conclusion of the message will have the option of talking to a telephone representative.

Americans are encouraged to use IRS.gov

The IRS regularly posts new and updated answers to the most frequently asked questions about Economic Impact Payments and the Get My Payment tool. Those who wish to know the status of their Economic Impact Payment are reminded to check Get My Payment regularly; the information is frequently updated as the IRS continues to process the remaining payments for delivery.

For those who are eligible for an Economic Impact Payment but aren't required to file a tax return, the IRS reminds them the Non-Filers tool also remains available in English or Spanish for them to register for a payment.

COVID-19 Updates from CPA Partners

Posted by Admin Posted on May 18 2020
Our focus continues to be on keeping you informed on topics and changes relevant to you as changes continue to occur. Here are the latest updates:
 
PAYROLL PROTECTION PROGRAM (PPP):
  • The U. S. Small Business Administration (SBA), in consultation with the Department of Treasure released an application form on Friday for the Paycheck Protection Program (PPP) loan forgiveness along with instructions for completing the form.  The form still leaves many questions and has some changes from earlier interpretations of the CARES ACT.  To help clients with PPP Loan debt forgiveness requirements, we developed debt forgiveness services which can be tailored to your organization’s situation. If your organization received PPP funds and you are interested in outsourcing the monitoring and forgiveness analysis, or need professional advice on technical matters with respect to calculations, please contact us.
 
(Proposed) HEROES ACT:
  • In an effort to further support the economy during the pandemic closures, the House of Representatives passed the fourth COVID-19-related stimulus package, the Health and Economic Recovery Omnibus Emergency Solutions (Heroes) Act. The $3 trillion bill contains multiple spending measures designed to encourage employers to retain employees, provide additional economic impact payments to individual taxpayers and their families, extend the weekly unemployment compensation payments through January 2021, and further modify tax and benefit changes from the Coronavirus Aid, Relief, and Economic Security (CARES) Act and the Tax Cuts and Jobs Act.  The centerpiece of the plan is nearly $1 trillion of aid to state and local governments, which, it seems clear, will require financial assistance to get through this crisis. Some in the Senate may resist state and local aid, but this appears to be the issue that will drive negotiations forward since the current bill is unlikely to pass the Senate as is. Many of the tax items included in this bill could find their way into final legislation
We continue to keep an eye on the latest changes and are posting changes to social media as soon as we see them. We hope you continue to stay safe and healthy.
 
CPA Partners

Three New Credits Available to Businesses Hit By COVID-19

Posted by Admin Posted on May 14 2020

WASHINGTON — The Internal Revenue Service today reminds employers affected by COVID-19 about three important new credits available to them.

Employee Retention Credit:
The employee retention credit is designed to encourage businesses to keep employees on their payroll. The refundable tax credit is 50% of up to $10,000 in wages paid by an eligible employer whose business has been financially impacted by COVID-19.

The credit is available to all employers regardless of size, including tax-exempt organizations. There are only two exceptions: State and local governments and their instrumentalities and small businesses who take small business loans.

Qualifying employers must fall into one of two categories:

1. The employer's business is fully or partially suspended by government order due to COVID-19 during the calendar quarter.
2. The employer's gross receipts are below 50% of the comparable quarter in 2019. Once the employer's gross receipts go above 80% of a comparable quarter in 2019, they no longer qualify after the end of that quarter.

Employers will calculate these measures each calendar quarter.

Paid Sick Leave Credit and Family Leave Credit:

The paid sick leave credit is designed to allow business to get a credit for an
employee who is unable to work (including telework) because of Coronavirus
quarantine or self-quarantine or has Coronavirus symptoms and is seeking a medical diagnosis. Those employees are entitled to paid sick leave for up to 10 days (up to 80 hours) at the employee's regular rate of pay up to $511 per day and $5,110 in total.

The employer can also receive the credit for employees who are unable to work due to caring for someone with Coronavirus or caring for a child because the child's school or place of care is closed, or the paid childcare provider is unavailable due to the Coronavirus. Those employees are entitled to paid sick leave for up to two weeks (up to 80 hours) at 2/3 the employee's regular rate of pay or, up to $200 per day and $2,000 in total. 

Employees are also entitled to paid family and medical leave equal to 2/3 of the employee's regular pay, up to $200 per day and $10,000 in total. Up to 10 weeks of qualifying leave can be counted towards the family leave credit.

Employers can be immediately reimbursed for the credit by reducing their required deposits of payroll taxes that have been withheld from employees' wages by the amount of the credit.

Eligible employers are entitled to immediately receive a credit in the full amount of the required sick leave and family leave, plus related health plan expenses and the employer's share of Medicare tax on the leave, for the period of April 1, 2020, through Dec. 31, 2020. The refundable credit is applied against certain employment taxes on wages paid to all employees.

How will employers receive the credit?

Employers can be immediately reimbursed for the credit by reducing their required deposits of payroll taxes that have been withheld from employees' wages by the amount of the credit.

Eligible employers will report their total qualified wages and the related health
insurance costs for each quarter on their quarterly employment tax returns or Form 941 beginning with the second quarter. If the employer's employment tax deposits are not sufficient to cover the credit, the employer may receive an advance payment from the IRS by submitting Form 7200, Advance Payment of Employer Credits Due to COVID-19.

Eligible employers can also request an advance of the Employee Retention Credit by submitting Form 7200.

The IRS has also posted Employee Retention Credit FAQs and Paid Family Leave and Sick Leave FAQs that will help answer questions.

Updates and other information can be found on the Coronavirus page of IRS.gov.

Guidance For Estates and Trusts Regarding Itemizing Deductions

Posted by Admin Posted on May 14 2020

WASHINGTON — The Internal Revenue Service today issued proposed regulations 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 December 31,
2017, and before January 1, 2026.

Specifically, the proposed regulations clarify the following deductions are
allowable in figuring adjusted gross income and are not miscellaneous itemized
deductions:

• Costs paid or incurred in connection with the administration of the estate or
trust which would not have been incurred otherwise.
• Deductions concerning the personal exemption of an estate or non-grantor trust.
• Deductions for trusts distributing current income.
• Deductions for trusts accumulating income

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.

For more information about this and other TCJA provisions, visit IRS.gov/taxreform.

IRS Provides Flexibility For Taxpayers

Posted by Admin Posted on May 14 2020

WASHINGTON — The Internal Revenue Service today released guidance to allow temporary
changes to section 125 cafeteria plans. These changes extend the claims period for
health flexible spending arrangements (FSAs) and dependent care assistance programs
and allow taxpayers to make mid-year changes.  

The guidance issued today addresses unanticipated changes in expenses because of the
2019 Novel Coronavirus (COVID-19) pandemic and provides that previously provided
temporary relief for high deductible health plans may be applied retroactively to
January 1, 2020, and it also increases for inflation the $500 permitted carryover
amount for health FSAs to $550.

Notice 2020-29 (PDF) provides greater flexibility for taxpayers by:

• Extending claims periods for taxpayers to apply unused amounts remaining in a health
FSA or care assistance program for expenses incurred for those same qualified
benefits through December 31, 2020.
• Expanding the ability of taxpayers to make mid-year elections for health coverage,
health FSAs, and dependent care assistance programs, allowing them to respond to
changes in needs as a result of the COVID-19 pandemic.
• Applying earlier relief for high deductible health plans to cover expenses related
to COVID-19, and a temporary exemption for telehealth services retroactively to
January 1, 2020.

Notice 2020-33 (PDF) responds to Executive Order 13877, which directs the Secretary
of the Treasury to "issue guidance to increase the amount of funds that can carry
over without penalty at the end of the year for flexible spending arrangements." The
notice increases the limit for unused health FSA carryover amounts from $500, to a
maximum of $550, as adjusted annually for inflation. 

House Democrats Push for New Round of Stimulus Checks In Coronavirus Bill

Posted by Admin Posted on May 13 2020

WASHINGTON — House Democratic leaders are pushing for another round of stimulus payments of up to $1,200 per person in new coronavirus relief legislation that's headed for a vote Friday.
The eligibility criteria in the HEROES Act are similar to those in the first round approved in late March, with some expansions.

The legislation would provide up to $1,200 in payments (or $2,400 for married couples), with an extra $1,200 per dependent up to a maximum of three.

The income thresholds are the same as in the CARES Act, with money for people making up to $99,000 and couples up to $198,000. The amount would start to reduce from $1,200 above thresholds of $75,000 and $150,000, respectively.

House Speaker Nancy Pelosi, D-Calif., said Tuesday that for many Americans, the new direct payments are "necessary for their survival" and that they would serve as a "stimulus to the economy."

The legislation makes all dependents eligible for the extra $1,200, rather than just children younger than 17. That includes households with full-time students younger than 24 and adult dependents. People who are overdue on child support would not lose their payments, which were garnished in the first round, and the money would not be subject to transfer to pay debts.

The legislation would remove the CARES Act's requirement of a Social Security number, meaning immigrants who file returns with a taxpayer identification number (or TIN) could get money.

As under the CARES Act, the direct deposits or checks would be based on 2019 tax returns. For those who haven't filed yet, they would be based on 2018 returns. Seniors who are on Social Security would also get benefits based on information on file, and other non-filers would be able to apply.

The $3 trillion legislation would also include funding for:

• Extending the $600-per-week unemployment benefits in CARES 2 through January.

• Nearly $1 trillion in aid to state and local governments.

• Hazard pay for some essential workers.

• Expanding coronavirus testing, contract tracing and treatment.

• Enhancing tax credits for employers to keep workers on their payrolls.

• Providing full COBRA subsidies for those who lost their employer-provided health care coverage.

• Additional money for the U.S. Postal Service.

• Support to help renters and homeowners make monthly rent, mortgage and utility payments.

The 1,815-page legislation is likely headed for a vote in the Democratic-led House on Friday. But its prospects in the Republican-run Senate are far from certain.

Michael Zona, a spokesman for Senate Finance Committee Chairman Chuck Grassley, R-Iowa, called the overall legislation "DOA in the Senate," although he didn't comment specifically on the stimulus money.

"Sen. Grassley will work with his colleagues on Phase 4 legislation if it becomes necessary," Zona said in an email. "It's too early to say what that legislation might encompass. It would need to address any ongoing problems in an effective manner."

A summary from House Democratic leaders said the cash would act as "cushioning the economic blow of the coronavirus crisis with a second round of more substantial economic impact payments."

The first round of payments provided a lifeline to many people struggling during the pandemic. The new Democratic-led bill comes as the coronavirus continues to ravage the economy with mass shutdowns that have led about 33 million Americans out of work to file for jobless benefits.

Latest Updates from CPA Partners

Posted by Admin Posted on May 08 2020
As changes continue to incur, our focus is to keep you informed on topics and changes that are relevant to you.  Here are the latest updates:

1.Individual Stimulus Payments
    a.To enter your direct deposit information or check the status of your payment, go to: https://www.irs.gov/coronavirus/get-my-payment
       i.Use ALL CAPS for the address when entering your information
       ii.Use your 2018 tax return information if you filed your 2019 return after 3/15/2020

2.Paycheck Protection Program (PPP)
     a.The 2nd round of funding has not yet been fully exhausted, if you haven’t applied for your PPP loan yet apply as soon as possible, many lenders are not taking new applications however you can try checking here for additional lenders.  https://www.sba.gov/paycheckprotection/find?address=33772&pageNumber=1
     b.Forgiveness calculation - business owners have many questions that have not been clarified, but the SBA is expected to release their interim rule on May 15th to provide guidance to business owners. If you have already received your funding we can assist with budgeting the payroll costs and other costs for the 8 week period and inform you of the updated rules.  Please contact us with questions.
     c.Over the weekend, the Small Business Administration provided a response regarding employees that are refusing to be rehired, here is the latest guidance on what to do if you are finding yourself in that situation:
       i.If an employee turns down a written offer to be rehired: keep the documentation regarding the written offer and documentation of the rejection of the offer and then that employee can be excluded from the calculation.  The Small Business Administration warned that employees who reject offers of reemployment may find themselves ineligible to continue to receive unemployment benefits.
     d.The AICPA is challenging the nondeductibility of PPP-related expenses ruling from the SBA and we are keeping a close eye on this as it will affect the 2020 planning.

3.Small Business Administration – Economic Injury Disaster Loans
     a.Has been reopened for eligible agricultural businesses so far, the program has limited funding at the moment, we are keeping an eye on developments and are hopeful that the program will reopen to all small businesses .

4.Unemployment
     a.States continue to work on updating their portals but we are still hearing many are frustrated with the processes.
     b.Florida’s system is only open during the week and shut-down on the weekends, so we would recommend applying and updating during off-peak hours during the week.

5.IRS
     a.Is working to bring back employees and reopen paper filing of returns.

6.Local grants, loans, funding
     a.We are keeping an eye on opportunities available and adding to our resource page as they come up.
 
We are keeping an eye on the latest changes and posting changes to social media as soon as we see them.  We hope you are staying safe and healthy.
 
CPA PARTNERS

US Stimulus Program Answers Regarding Covid-19 Relief

Posted by Admin Posted on May 05 2020

Millions of Americans are struggling financially, trying to make ends meet after being laid off or furloughed, and worried about when they will receive unemployment benefits. Adults of all ages are anxious about the arrival of stimulus payments as well as many small business owners fear that even if they are able to qualify for a new government loan, they may not be able to they may not be able to pay it back.

To get you some answers, here is a list of various questions related to US stimulus programs answered by bankers, credit counselors, financial advisors and tax experts to weigh in on your concerns. 

"I am 18 years old and no longer staying with my parents. I live on my own, but last year I was claimed as a dependent. Does this mean I won’t get a stimulus check for myself ? I was laid off my everyday job due to the virus."

You may qualify for your own stimulus payment if you meet certain income requirements, but you won’t see any of that money until next year. Economic impact payments are technically advance tax credits for 2020. If your income drops this year, you may be eligible for any credit you were not able to claim using your 2019 or 2018 return, according to the Tax Foundation.

“The IRS will pretend like the credit is just like money that was withheld from their paycheck. So if the credit and their payroll withholdings are more than what they owe in tax, the IRS will pay them the difference as a refund,” said Richard Winchester, a tax policy expert and visiting professor at Seton Hall University School of Law. 

If your adjustable gross income falls below $75,000 for 2020, you would qualify for a $1,200 tax credit and it would be applied to this year’s tax bill. If that credit exceeds the amount you owe in taxes, you should get a refund once you file your 2020 return next year. 

 

"I own a small business and am finally able to apply for the Paycheck Protection Program loan the second time around. My question is, what happens if I don’t get full PPP loan forgiveness? Are there other options?"

If the loan that you receive through the Paycheck Protection Program is not completely forgiven, you will have to repay the money. This is how loan forgiveness works under the PPP rules: 

First, your small business must maintain its headcount of full-time employees through June 30, 2020.  Second, it must not reduce the compensation paid to any employee by more than 25%. Third, at least 75% of the money must be used to pay employee compensation and benefits. 

“If it fails to meet all three of these conditions, the business will have to return a portion of the money over a two-year period at 1% interest, with an option to delay the first payment for six months,” Winchester said.

If your business does not meet those requirements and full forgiveness is not given, you’ll have to carry the loan. That’s why small business owners should “be clear about how much money they truly need for payroll before taking out the loan,” said Josh Folds, market president at First Horizon Bank in Palm Beach Gardens, Florida. If you have to pay it back, he said, “fortunately, the interest rate on PPP loan payments is relatively low compared to other loan programs.”

 

"When are we going to get our stimulus payment? I’m on Supplemental Security Income and I don’t file taxes."

Social Security and Supplemental Security Income recipients without dependent children will receive their economic impact payments automatically without having to file any additional forms, according to the IRS and Social Security Administration. You’ll get the full $1,200 payment if your adjusted gross income is under $75,000.

The IRS says payments will be based on your 2019 benefits and will be sent to SSI recipients the same way you get your normal benefits, either through direct deposit, Direct Express debit card or paper check. 

You may be able to use the IRS’ Get My Payment tool to provide or update your bank information to receive an electronic payment faster.

If you have a dependent under age 17, you should fill out the Non-Filers form on the IRS.gov website by May 5 to make sure you get the $500 payment for your child. 

The Treasury Department said it expects payments for SSI recipients to go out no later than early May.

 

"On April 15th I checked a deceased family member's checking account and saw that a $1,200 stimulus check had been deposited to the account. I am not the only person whose deceased loved one has received this money. How do I return it?"

Treasury Secretary Steven Mnuchin said in an interview last week that deceased people aren’t eligible for the $1,200 stimulus payments some of them have been getting, and their relatives and estates should pay the money back to the government. However, he did not offer guidance as to exactly how you are to return that payment. For now, financial advisors suggest you hang on to the money  and don’t spend it. 

 

"I have lost my job due to coronavirus. I filed for unemployment last Friday. When I check the status of my application, it says I should call, but the phones are jammed. What other options do I have?"

More than 30 million Americans have filed for unemployment insurance since mid-March. The Labor Department says it generally takes two to three weeks after you file your claim to receive your first benefit check, but this differs by state. Your unemployment benefits may be delayed due to a surge in volume being reported by unemployment offices around the country.

Continue to call or go to the website of your state’s unemployment insurance program to get updates on your claim. Find a list of state websites at CareerOneStop.org.

Ed Serna, executive director of the Texas Workforce Commission, said the state’s unemployment agency gets more than a million calls a day. Many filers are calling to just make sure everything is OK with their claim.

“We’re going to start calling outbound in a really big way and reaching out to individuals to contact them instead of them constantly trying to contact us,” Serna said on a Texas Standard news radio show on Monday. “You can still try to contact us. That’s OK. But we’re going to be outbound calling and contacting people to get these issues resolved.” 

Until your first benefit check arrives, “make sure you are keeping your financial obligations on track,” said the National Foundation for Credit Counseling’s Bruce McClary. “Look into credit card deferment or mortgage forbearance or ask your landlord about a payment plan.”

 

Pinellas CARES Small Business Grant

Posted by Admin Posted on Apr 29 2020

Pinellas County has initially identified up to $35 million in emergency relief funds to support the small businesses hardest hit by the COVID-19 pandemic. Funds are available as part of the Coronavirus Aid, Relief, and Economic Security (CARES) Act federal stimulus package.

Pinellas County will provide emergency financial support through the Pinellas CARES Small Business Grant for qualified small businesses that are negatively impacted by the COVID-19 pandemic due to orders to close or limit operations. This program is intended to help offset the significant, temporary loss of revenue to these qualified businesses during this pandemic, and to assist businesses in retaining and paying employees.

The program will offer one-time $5,000 grants to qualifying small businesses to cover expenses such as employee wages, vendor bills and rent. The emergency relief is targeted specifically to help local brick and mortar businesses cover immediate financial needs. Grants are strictly limited to businesses located physically within Pinellas County. Funds can only be used to reimburse the costs of business interruption caused by required closures provided those costs are not paid by insurance or by another federal program.

Regardless of whether a business is or is not eligible for this program, it may still qualify for other existing funding programs. Visit www.pced.org/covid19loans for a list of federal and state programs assisting businesses impacted by the COVID-19 pandemic.

Eligibility

Businesses are eligible for a one-time $5,000 grant from Pinellas County if:

 The business occupies commercial space within Pinellas County.

 Has at least 1, but no more than 25, full-time equivalent (FTE) employees, including the business owner. The firm can have many more part-time employees as long as the total weekly hours of all employees does not exceed 1,000 (25 FTE x 40-hour work week).

 The business has been operating since at least October 1, 2019 and was still in operation on February 29, 2020.

 Firm is expected to return to full operations after local and state emergency guidelines during COVID-19 are rescinded.

Eligible business types:

 “Food Service Establishments” as defined in Chapter 500, Florida Statutes, and “Public Food Service Establishments” as defined in Chapter 509, Florida Statutes.

 Bars, pubs and nightclubs as described in Governor’s Executive Order 20-68.

 Short-term lodging establishments and vacation rental management companies that collect and remit Tourist Development Taxes.

 Non-essential businesses covered under Section 5 of the “State of Florida & Pinellas County ‘Safer-at-Home’ Guidance” document.

 Places of public and private assembly covered under Section 2 of the “State of Florida & Pinellas County ‘Safer-at-Home’ Guidance” document.

These business types were selected because they were either required to close due to the Governor’s or Pinellas County Board of County Commissioners’ (BCC)’s orders or were severely impacted by those orders, as in the case of food service and lodging establishments. While restaurants may remain open for carryout or delivery, the orders still resulted in a significant loss of employment and revenues. Many restaurants were not able to adapt or retain employees and closed entirely.

The lodging industry depends heavily on Pinellas County’s beaches, museums and attractions – all of which were closed by the orders. Non-essential travel is also restricted by government orders. Hotel occupancy is typically around 90% at this time of year; recent occupancy levels have been as low as 17%.

The Pinellas CARES Small Business Grant is a companion to the grant programs that are currently offered by Pinellas County’s municipal partners. Businesses that have already applied or received funding from municipal grant programs are still eligible for this program. Owners with more than one eligible business may submit an application for each legal entity.

We estimate that approximately 6,500 businesses in Pinellas County would qualify for this grant. There are sufficient funds for each of these firms to receive a $5,000 grant.

Ineligible businesses

 Firms with more than 25 full-time equivalent (FTE) employees. Pinellas County has limited funding. Small businesses tend to be in a more precarious financial condition. The County intends to preserve and promote small local businesses as evidenced by the BCC’s implementation of the Small Business Enterprise (SBE) program. 

 Publicly traded companies. These firms are owned by the stockholders, who may not be local residents and are not involved in the day to day operations of the company.

 Home-based businesses. These firms are technically not required to close under the Governor’s or the BCC’s orders. Many could continue to operate within Center for Disease Control (CDC) social distancing guidelines or through online sales or activities. Home-based businesses also tend to have very few employees and do not pay the additional rent or utilities expenses of brick and mortar businesses.

 Non-profit organizations. 501(c)(3) organizations are by definition “charitable organizations” and receive funding primarily from private donors and governmental sources. Other 501(c) organizations are involved in lobbying activities and/or are supported primarily by member dues, rather than by sales of products or services.

 Firms with unpaid code enforcement liens against them.

 Firms with an owner, officer, partner, or principal actor who has a felony or financial mismanagement conviction within the last two years for which he or she is still serving a sentence (including prison, parole, and probation).

Application process

 Applications will be submitted using a digital online portal.

 Applicants will be required to attach supporting documentation to prove their business location, status and employee count, and to demonstrate recent business income and expenses.

 Applicants will be required to digitally sign the application and attest, under penalty of perjury, that all information submitted is truthful.

 Completing the application should take approximately 10-15 minutes, if the applicant has the necessary documentation at hand.

Timeline

 April 28 to May 3, 2020: Program outreach and education.

 May 4 to June 1, 2020: Application portal open for submissions from eligible Pinellas County small businesses.

Next Wave of Stimulus Checks Set to Hit Bank Accounts Next Week

Posted by Admin Posted on Apr 25 2020

WASHINGTON - In the second big wave of stimulus payments, the IRS will send money over the next few days to people who recently provided their direct-deposit information.

These payments will include tax filers who successfully used the Internal Revenue Service website's "Get My Payment" tool to add bank information by midday on April 22, according to the IRS and people who don't file tax returns but instead receive Social Security or Social Security disability benefits, according to the Treasury Department.

The payments most likely will follow the pattern that occurred when the government sent the first round of direct deposits two weeks ago. Some people saw the money in their accounts within hours. Nearly all the payments had arrived 3-5 business days after noitce. This time around, that would mean payments arriving by April 29.

The IRS hasn't released amounts, but this round of payments will put the $292 billion program of one-time payments -- $1,200 per adult and $500 per child -- well beyond its halfway point. As of April 17, the IRS had sent out 88 million payments totaling $158 billion, according to data released Friday.

People who receive Supplemental Security Income or veterans benefits and don't file tax returns should get their payments by early May.

That is all much faster than the pace of payments for the previous round of stimulus checks in 2008.

"The IRS, Treasury and partner agencies are working nonstop to get these payments out in record time to Americans who need them," Chuck Rettig, IRS commissioner, said in a statement Friday.

The rest of the money may be delivered more slowly. Those who can give the IRS their direct-deposit information will place themselves in future rounds of electronic payments. The IRS is expected to gather the data each Wednesday and send it the next day to the Bureau of the Fiscal Service, the office that makes payments, according to Jesse Solis, a spokesman for Republicans on the House Ways and Means Committee. The payments would then reach individuals no later than the following Wednesday.

But those who receive paper checks could wait for up to several months, because the government's check-printing capacity is limited to about 5 million a week or a bit more.

Some payments may be made on debit cards, according to the Treasury. People who have questions will have trouble reaching the IRS, which is urging people not to call and is warning taxpayers that it isn't opening mail right now.

Those who are still waiting for the payments have complained about error messages on the IRS website, problems with returns prepared by tax-preparation companies, payments to deceased individuals and missing money for children.

The IRS said it is aware of those problems and is trying to address them. Some taxpayers who had had trouble with the IRS website said Friday that it is now working for them.

COVID-19 Update from CPA Partners

Posted by Admin Posted on Apr 24 2020
We continue to be here for you working remotely and as the stay at home and social distancing orders continue, our main objective continues to be to support you in this ever-changing environment together. With the fast changing information, here is the latest summary of changes:
 
  1. New Cares Act Funding coming  for both Paycheck Protection Program and EIDL Grants and Loans thru the SBA
    1. We anticipate later this week
      1. If you haven’t applied yet, now is the time to get the documents together as we anticipate these funds will go fast as well
  2. If you have received funding thru the SBA grant, EIDL loan, or PPP program – please let us know and provide us a copy of the signed final documents, each program has their own requirements on what you can use the funds for and we are here to assist you in coordination of making sure you meet the requirements.
  3. Stimulus Checks – Still seeing IRS errors and hoping it will be improved, but if you need to enter your direct deposit information the link is here:
    1. https://www.irs.gov/coronavirus/economic-impact-payments
  4. 2019 Tax Returns
    1. Rumors are future stimulus packages will be based off if you have completed your 2019 tax returns, so we highly recommend getting your 2019 information in and your return prepared sooner than later
  5. IRS Collections
    1. Have been temporarily suspended for most collections unless the taxpayer has agreed to an action or risk of permanent loss to the expiration of a statute
  6. Retirement Plan Distributions
    1. Required Minimum Distributions (RMD)- for 2020 are suspended for certain defined contribution plans and IRAs, including 401(k), 403(b), and governmental 457(b) plans as well as SEP IRAs, SIMPLE IRAs, and traditional IRAs. This includes the first RMD, which individuals may have delayed from 2019 until April 1, 2020.  Certain beneficiaries taking distributions from inherited IRAs may also skip the 2020 distribution when calculating their 5-year distribution period
    2. IRA Withdrawals - Affected, eligible participants in workplace retirement plans and IRA owners can take an aggregate distribution in 2020 of up to $100,000 from all retirement accounts without incurring the usual 10% early withdrawal penalty.  In addition, the income tax on the distributions may be spread evenly over 3 years. Or, the distribution may be repaid to an eligible retirement plan within a 3-year period
  7. Government Student Loans
    1. If you have student loans, please connect with your lender if you have any questions regarding the 0% interest and/or continued payments even though you thought the payments were suspended automatically thru September 30th.   Also, If you are close to being able to request forgiveness on your loans, you may want to continue to make payments on the loans.
  8. IRS Paper Returns are currently not being accepted
    1. If you have an amended return or other paper return you are waiting on the IRS to process, they have advised it may be returned, so please keep copies of all the returned envelopes and original mailing dates for the IRS when they open back accepting the paper returns
  9. Scanning Documents from your phone – this can be extremely helpful when you are at home instead of sending a .jpeg:
    1. iPhone: https://mashable.com/article/apple-iphone-scanner-notes-app/
    2. Android: https://www.androidpolice.com/2020/04/09/create-convert-pdf-phone-camera-android-free/
 
Hope you stay healthy!

CPA Partners

Summary of New CARES Act Funding

Posted by Admin Posted on Apr 22 2020

$310 billion increase (total of $659 billion) for Paycheck Protection Program
• Sets aside the following amounts:
o $30 billion for loans made by Insured Depository Institutions and Credit Unions that have assets between $10 billion and $50 billion; and
o $30 billion for loans made by Community Financial Institutions, Small Insured
Depository Institutions, and Credit Unions with assets less than $10 billion
• No changes to eligibility for the PPP (No c(6) fix)

$10 billion increase (total of $20 billion) for EIDL Grants and an additional $50 billion to
support EIDL Loans
• Allows agricultural enterprises as defined by section 18(b) of the Small Business Act (15
U.S.C. 647(b)) with not more than 500 employees to receive EIDL grants and loans.

$75 billion increase (total of $175 billion) for reimbursement to hospitals and healthcare
providers
• Same language as the CARES Act

$25 billion for COVID-19 tests
• Covers expenses to research, develop, validate, manufacture, purchase, administer, and
expand capacity
• $11 billion for states and localities and includes ability to cover cost of testing for
employers
• $1 billion for CDC for contact tracing

City Of Pinellas Park Launches Small Business Relief Program

Posted by Admin Posted on Apr 22 2020

PINELLAS PARK, FL — The City of Pinellas Park is assisting small businesses that have been negatively impacted by the coronavirus.

To ensure the resiliency of local businesses and assist in job retention, the City of Pinellas Park established a Small Business Relief Fund to provide grants to eligible small businesses for working capital.

Applications are now being accepted, and city staff members are taking questions regarding the application process.

Financial assistance, in the form of grants (not loans), in the amount of$2,500 may be available. These grants will be awarded to eligible, qualified small businesses based on the availability of funds, program guidelines and the submission of all required information and supporting documentation.

Assistance for completing the application is available by contacting Amanda Conte with the Economic Development Team at 727-369-5619.

Hard copies of the application are available at the outside pickup box at the Technical Services Building and can be dropped off in the outside drop box. Hard copies will have a longer process period.

The funding for this program is limited, so applications will be processed on a first-come, first-served basis and will close once funds are depleted.

New Interim Stimulus Plan; Paycheck Protection Plan Update

Posted by Admin Posted on Apr 21 2020

Senate to convene; House could act as soon as Thursday, April 23rd.

The White House and Congress have agreed on a new pandemic relief plan providing funds for a tapped-out small business aid program and aid for coronavirus testing and overwhelmed hospitals. President Donald Trump said he’d sign the measure and begin discussions on a next round of stimulus.

Senate Minority Leader Chuck Schumer and House Minority Leader Kevin McCarthy confirmed the agreement.

The Senate is scheduled to meet at 4 p.m. Tuesday for a pro forma session, and the measure could be approved then if text is completed and all senators agree to approve it by unanimous consent. If that happens, a House vote as soon as Thursday is expected, House Majority Leader Steny Hoyer announced early Tuesday.

“We do have a deal, and I believe we will pass it this afternoon at 4 p.m.,” Schumer said on CNN. “They are still dotting the i’s and crossing the t’s, but every major issue was resolved.”

McCarthy, appearing later on Fox News, said, “There is a deal that is done.”

Trump in a tweet urged Congress to approve the package, adding, “After I sign this Bill, we will begin discussions on the next Legislative Initiative with fiscal relief to State/Local Governments for lost revenues” and other spending.

The new package would replenish the Paycheck Protection Program for small businesses, which was part of the $2 trillion stimulus approved late last month and ran out of money last week. Passage would allow the government to take new applicants for the program, which provides forgivable loans to small business that keep employees on the payroll for eight weeks.

The basic outline of the plan was announced Sunday: In addition to the PPP funding, it was to include $75 billion for hospitals, with a significant portion aimed at those in rural areas; and $25 billion for virus testing.

Paycheck Protection Program Loans Updated Information

Posted by Admin Posted on Apr 19 2020

The Paycheck Protection Program (PPP) funds have been exhausted. In less than two weeks, $349 billion has been claimed by around 1.6 million small business owners. While that may seem like a lot, 1.6 million is a mere 6% of America’s small businesses. This means 94% of small business owners, many of whom have applications pending with lenders, have been left to fend for themselves.

There has been a lot to learn over the past two weeks as a nation, as an industry, and as business owners. It’s important to take a closer look at the Paycheck Protection Program, and most importantly, what needs to be done next.

From the get-go, this program was ambitious. Financial institutions, small business owners and government agencies alike knew there would be challenges, delays and failures. But with less than a week’s notice (and fewer than 12 hours to build the final application) financial institutions around the country created some semblance of a formal process and began accepting applications.

To put this into perspective, in all of 2019, the SBA processed 60,000 loans. Somehow, that was accomplished in less than 14 days.

It became apparent fairly early on in the program’s launch that many segments of small business owners may find themselves with nowhere to turn. Big banks, if they participated in the program at all, prioritized their customers first. Small business owners without a prior relationship with an SBA-approved lender began to feel left in the cold. Many of these businesses turned to online marketplaces and non-bank SBA lenders.

For the program as a whole, the average PPP loan size was just under $240,000. For business owners who came to fintech lenders, the average was just over $82,000—one third the national average. This is due to the fact that fintech lenders’ super power is processing smaller loan amounts at a higher volume. Community banks, on the other hand, specialize in processing large amounts at a lower volume; this is not what Main Street needs right now.

The fact that fintech and non-bank lenders have been approved to participate in the distribution of PPP loans will make a world of difference if and when more funds are appropriated. Small businesses would have benefited more had these lenders been approved earlier in the process (most of them weren’t approved until the money had actually run out), but they can take heart knowing that more high-tech options will be available in the next phase.

In addition, the SBA didn’t approve every FDIC bank and credit union—only those that were SBA-licensed lenders. 

Another problem that plagued many financial institutions around the country was getting “pristine” applications to submit to the SBA. Ever-changing requirements led to many business owners’ applications bouncing back from the SBA. Most lenders found out early on that the PDF application that was released by Treasury was missing a few important data points (date of birth, business start date, and 6-digit NAICS industry code) that were needed to submit the application through E-Tran.

The rules also changed days into the launch of the program about whether a business owner could submit an application to more than one financial institution. This created a lot of confusion and trepidation for business owners who wanted to ensure they followed the guidelines to a tee, while also ensuring they secured a place in line with the fastest-moving loan processor.

What Comes Next?

The priority now is Congress approving additional PPP funds. The increase is already in discussion and has bi-partisan support to some degree, but it is time to get it passed and get these funds into the hands of the nation’s small business owners.

Until then, financial institutions are preparing for the second wave of approvals. Ideally, the SBA will also approve all banks, credit unions, and legitimate fintech lenders to participate in this next round so that those small business customers that were placed at a disadvantage in the first round will become the priority in round two. With SBA’s early E-Tran problem resolved, I am confident the next wave of capital distribution will be much faster. Business owners who did not get funded in the first round should work now to ensure their applications are in pristine condition.

Tax Day 2020 & COVID-19 Update

Posted by Admin Posted on Apr 15 2020
Happy Tax Day (April 15th!).  Today is the most unusual tax day and as stay at home orders continue, our main objective continues to be to support you in this ever-changing environment together. With the fast changing information, here is the latest summary of changes:
 
  1. Stimulus Checks are being paid, CPA Partners is able to calculate your stimulus check payment at CPA Partners if you contact us, or you can use this online tool: https://www.aarp.org/money/investing/info-2020/coronavirus-stimulus-payment-calculator.html
    1. The full stimulus amount is:
      1. Single/Married Filing Separate/Head of Household - $1,200
      2. Married Filing Jointly - $2,400
      3. Dependents under 17 - $500 (up to three)
    2. To Qualify for the full stimulus your adjusted gross income must be under:
      • Single/Married Filing Separate –  $75,000
      • Head of Household - $112,500
      • Married Filing Jointly –$150,000
    3. Your stimulus is reduced by $5 for every $100 in the following adjusted gross income ranges:
      • 0 dependents: Single/MFS $75,000 to $99,000; HoH $112,500 to $136,500; MFS $150,000 to $198,000
      • 1 dependent: Single/MFS $75,000 to $109,000; HoH $112,500 to $146,495; MFJ $150,000 to $208,000
      • 2 dependents: Single/MFS $75,000 to $119,000; HoH $112,500 to $156,495; MFJ $150,000 to $218,000
      • 3 dependents: Single/MFS $75,000 to $129,000; HoH $112,500 to $166,495; MFJ $150,000 to $228,000
    4. The stimulus checks are not taxable to you and do not have to be refunded and are based on 2018 or 2019 tax returns, whichever was most recently filed.
    5. If you need to provide your direct deposit information if you qualify go to: https://www.irs.gov/coronavirus/get-my-payment
  2. Current Business COVID Loan programs and IRS business tax credits being offered can be found here:
    1. https://www.cpapartnersllc.com/index.jsp?page=blog&postId=25132
  3. Stimulus Phase Four Bill
    1. Has been introduced, including potential provisions for ages 16+, monthly payments to certain individuals, CARES 2 ACT, additional PPP funding, expanded SNAP, removing the state/local income tax cap, and a few other items have been introduced as provisions.  We are continuing to watch for changes and will update you as we find out more and the bill is finalized, which is looking like will be sometime in May.
 

Check The Status of Your Economic Impact Payment

Posted by Admin Posted on Apr 15 2020

You May Need: Your 2019 return, if filed, and your 2018 return

This application will give you information about: Your payment status, your payment type, and whether we need more information from you, including bank account information

Use the following link from the IRS to view your payment; Get My Payment

Didn't File a Return in 2018 or 2019?
If you have a filing requirement and have not filed a tax return for 2018 or 2019, you must file a 2019 tax return to receive the payment. 

If you are not required to file a 2018 or 2019 tax return, visit Non-Filers: Enter Payment Info Here.

Paycheck Protection Program for Sole Proprietors and Independent Contractors

Posted by Admin Posted on Apr 15 2020

April 10th 2020 was the first day independent contractors and self-employed individuals can apply for the $349 billion Paycheck Protection Program. Although the program emphasizes keeping workers on payroll, it is open to the nearly 26 million solo entrepreneurs in the U.S. who pay themselves by distributions, too. It gives small businesses access to forgivable loans to cover payroll or wages they pay themselves over the eight weeks following the signing date.

Application – Contact your local banker to request their application form and required document list

Eligibility – Must have begun operations prior to February 15, 2020

Cost Covered – Mortgage (rental office lease & utilities – for self-employed individuals that have a home office, business use of home can be covered) rent, office lease, utilities, payroll costs (if applicable) and net self-employment earnings

Documentation Required – 2019 tax return, including Schedule C. and/or Schedule 1.
If your 2019 tax return is not complete, attach the 2019 financial statements along with a 2018 tax return.
All 2019 Form 1099-MISC.
2019 payroll tax forms 940/941 (if you pay employees)
Any other documents that can
Loan forgiveness –8 weeks following receipt of funds.   You must spend 75% on payroll costs, remaining 25% must be spent on business portion (home office calculation) of mortgage, rent and utilities.

Loan Amount - Ask your banker to provide a template to calculate loan amount, below is the calculation:

Without Employees - 2.5 times your average monthly payroll costs – Take the net –self-employment income from Schedule C, Line 31, (not exceeding $100,000) – divide by 12 months, and multiply by 2.5 to obtain loan amount

With Employees - Take the net –self-employment income from Schedule C, Line 31, add back employee wages, employer health insurance costs for employees, employee retirement plan contribution for employees (Not to exceed $100,00)  Divide the net total by 12, and times by 2.5 to obtain loan amount

IRS Deposits First Stimulus Checks into Americans' Bank Accounts

Posted by Admin Posted on Apr 13 2020

The first of the Economic Impact Payments promised to American taxpayers were direct deposited on Saturday, the IRS announced. The agency promised more payments would come "very soon."

"We know many people are anxious to get their payments; we'll continue issuing them as fast as we can," according to a statement on Twitter.

"Anxious" likely doesn't begin to cover it for the estimated 17 million Americans who filed for unemployment benefits over the past month. Here are some of the FAQs about the stimulus package;

1: What do I have to do to receive my rebate?

For most Americans, nothing. The IRS will use bank account information from tax filings to direct deposit stimulus checks. If you need to update your information, you should be able to do so with the "Get My Payment" web application. 

2. How does the government determine how much I’ll get? 

The government will base the amount you receive on the adjusted gross income, or your income minus certain deductions, that you reported on your most recent taxes. If you haven’t filed your 2019 taxes yet, they’ll look at what you reported for 2018. 

Individuals who earn up to $75,000 a year will be eligible for a one-time maximum relief payment of $1,200. If your salary is more than $75,000 but less than $99,000, you’re eligible for a reduced payment. The government will base the amount you receive on a sliding scale, with the amount falling by $5 for every $100 in income above $75,000. 

3. Does the amount change if I’m married?

If you’re married and filing jointly, you’re eligible for a $2,400 check, as long as your adjusted gross income is less than $150,000 a year. If you and your partner earn more than $150,000 but less than $198,000, you’re still eligible for a reduced payment based on the same sliding scale, which subtracts $5 for every $100 in income you earn over that $150,000 threshold. 

4. If I’m a parent, do I get more money? 

If you’re a parent, you may also receive up to an additional $500 per child, no matter your filing status. To qualify, your child must meet the same eligibility guidelines for the child tax credit.

If you’re a single parent, which usually means you file your taxes as a “head of household,” you’re eligible for the full $1,200 check, as long as you earn less than $112,500 a year. If you make more than $112,500 but less than $136,500, your check will be reduced using the same sliding scale. 

5. Do I qualify if I don’t have an income? 

If you’re retired or if you’re disabled, you’re still eligible to receive that $1,200 check, as long as your Social Security benefit income doesn’t exceed the individual limit. 

Here’s how you’ll get paid

If you set up direct deposit with the IRS, the government will send your relief payment to the bank account they have on file, meaning you should receive the funds more quickly.

If you don’t have direct deposit set up, your check will be sent to you in the mail. 

Four Factors Required to Reopen the Economy

Posted by Admin Posted on Apr 11 2020

Donald Trump’s top adviser on coronavirus testing said that by May the U.S. will be in the “ballpark” of the diagnostic capacity it needs, should the president decide to recommend parts of the country relax economy-crushing social distancing practices.

Admiral Brett Giroir said in an interview Saturday the U.S. is working on four forms of diagnostics it needs to reopen the economy: widespread surveillance to catch new flare-ups; testing of people who have specific symptoms; contact-tracing for confirmed cases; and antibody testing to know who’s recovered from the virus, which he said is weeks away.

“By May we’ll have a lot more testing than we do now,” Giroir said. “By May, we certainly will be in the ballpark. Whether we are exactly there depends on some factors, including how much is circulating and where regionally this falls out. That is the correct answer, I can’t give you a yes or no.”

Trump tapped Giroir, an assistant secretary at the Department of Health and Human Services, to accelerate U.S. testing for the virus last month. The government’s delays in fielding a functional test in January and February prevented containment of the outbreak when it first erupted, leaving public health authorities all but blind to the spread of the virus across the country for weeks.

While the U.S. has now tested more than 2.2 million people for the virus, fewer than 100,000 nationwide had been tested by March 19, less than a week after Giroir was appointed, according to the Covid-19 Tracking Project.

Anthony Fauci, director of the National Institute for Allergy and Infectious Diseases, who serves on Trump’s coronavirus task force, said last month that the shortage of testing was a “failing.”

The U.S. has now surpassed Italy in total deaths from the virus, making it the global epicenter. Even so, there are signs of optimism in hot spots such as New York that have Trump eyeing an easing of measures that have hundreds of millions of Americans in near-lockdown. Giroir said testing is ramping up and didn’t rule out a May reopening.

‘Biggest Decision’

Testing is one factor as Trump weighs the “biggest decision” of his life -- when to begin loosening economically punishing stay-at-home orders that have slowed the virus’s spread.

The president, who has said he won’t let the “cure” for the coronavirus pandemic be worse than the problem itself, said Friday he’ll announce an “opening our country” council on Tuesday to guide any reopening.

Trump is anxious to reopen “at the earliest responsible moment,” Vice President Mike Pence has said. Hopes to return American life to normal by Easter Sunday were abandoned on March 30 on the advice of Trump’s infectious disease experts. The current advisory runs until the end of this month, setting up a momentous decision for May 1.

The president has touted total testing numbers as a mark of success, but shortages of Covid-19 tests remain a problem.

Trump’s health secretary appointed Giroir, who serves as an assistant secretary for health, on March 13 to marshal more widespread testing capacity. Testing has so far been aimed at particular groups, such as health care workers and nursing home residents, who are among the most at risk from the virus.

Minorities at Risk

Giroir said the administration is discussing adding minority groups to the priority list, as they’re more likely to have conditions that raise the chances of the virus being fatal. That trend has been seen in cities including Chicago, Detroit, New Orleans and Washington D.C.

“We are considering expanding that group. That’s an active discussion,” he said. It’s especially so because some minorities may not know they have health conditions that put them at higher risk, he added.

“My opinion is we probably need to be more explicit about minorities being a high priority, because they may not know they have hypertension or diabetes or other things,” he said.

Giroir described the wide range of testing that would help track the disease’s spread if social distancing guidelines are rolled back in some or all of the country.

“We are going through, test by test, item by item, test-tube by test-tube, swab by swab, distribution mechanism by distribution mechanism, statewide, nationwide, globally,” he said.

Four Stages

The first type of necessary testing is baseline surveillance, which he likened to a radar system, “to see what’s circulating where.” This would require hundreds of thousands of tests monthly, including of people with no symptoms.

A second batch will be testing people with symptoms. this would require millions of tests per month, because you want five or ten tests conducted for every positive one, he said. “Somewhere between 10 and 20% is probably a sweet-spot number to know that you’re oversampling the population,” Giroir said, referring to test positivity rate.

Authorities will also need to do contract-trace testing -- on average, testing five people per confirmed case.

In total, “you’re talking about millions of tests per month -- more than we’re doing now, particularly when you open up the country and have active surveillance and active track-and-trace, but certainly within the realm of what we believe is going to be industrially possible,” he said.

Abbott Labs

The U.S. is also racing to develop antibody testing, with laboratory tests ongoing at the U.S. Centers for Disease Control and Prevention. The goal is a finger-stick blood test that will signal who has had the virus. “That will be available in the course of weeks,” Giroir said.

“Once we are, this will give some information about who has had the virus and is presumably immune,” he said, cautioning: “Just having an antibody does not absolutely guarantee that you’re immune to getting this again.”

Pence has touted the looming availability of the antibody test. “When validated, we’re confident that the production will scale up to tens of millions of tests very quickly,” Trump said Friday.

Trump has taken particular interest in a new rapid test by Abbott Laboratories, which delivers results in as little as five minutes. The president took an Abbott test himself.

The company, which unveiled the device in late March, already has 18,000 toaster-sized testing machines in use and is shipping 50,000 tests a day. “We expect the production of that to double,” Giroir said.

‘Test is Not a Test’

The U.S. has about 200 higher-volume m2000 machines, according to Abbott spokesman John Koval, and has shipped out a million tests. Trump’s administration has grumbled about health facilities not using that platform enough. Giroir said Saturday they hope to triple usage of that platform in May to 60% from 20% now.

Coordination is complicated, he said, with a range of tests and different needs in different regions. “A test is not a test is not a test,” he said. “The picture is much more available now. I think we know exactly where the industrial production is, the exact roadblocks to many.”

The U.S. continues to have spot shortages of swabs, the small sticks used to collect medical samples, including for Covid-19 testing. This week it will receive a shipment of 1.75 million swabs to distribute, Giroir said. “We are making sure that the public health labs are completely flush in swabs, we are making sure that the community based testing sites are flush in swabs,” he said.

There are other hurdles to reopening. Pence has stressed the need to see major communities coming down off their caseload peaks, as well as the development of therapeutics and the issuance of guidelines for businesses to open. CDC Director Robert Redfield has said the U.S. will also need to convince Americans that it’s safe to begin to ease restrictions.

The U.S. is, in effect, signaling a targeted approach in lieu of widespread, across-the-board testing for anyone that wants it.

“That is physically impossible and it’s a poor strategy, because testing negative one day doesn’t mean you wouldn’t be positive the next day,” Giroir said. “So, testing everyone is not a strategy.”

IRS Launches Tool to Help Non-Filers Register for Stimulus Checks

Posted by Admin Posted on Apr 10 2020

Treasury, IRS launch new tool to help non-filers register for Economic Impact Payments

To help millions of people, the Treasury Department and the Internal Revenue Service launched a new web tool allowing quick registration for Economic Impact Payments for those who don’t normally file a tax return.

The non-filer tool, developed in partnership between the IRS and the Free File Alliance, provides a free and easy option designed for people who don’t have a return filing obligation, including those with too little income to file. The feature is available only on IRS.gov, and users should look for Non-filers: Enter Payment Info Here to take them directly to the tool.

“People who don’t have a return filing obligation can use this tool to give us basic information so they can receive their Economic Impact Payments as soon as possible,” said IRS Commissioner Chuck Rettig. “The IRS and Free File Alliance have been working around the clock to deliver this new tool to help people.”

The IRS reminds taxpayers that Economic Impact Payments will be distributed automatically to most people starting next week. Eligible taxpayers who filed tax returns for 2019 or 2018 will receive the payments automatically. Automatic payments will also go in the near future to those receiving Social Security retirement or disability benefits and Railroad Retirement benefits.

How do I use the Non-Filers: Enter Payment Info tool?
For those who don’t normally file a tax return, the process is simple and only takes a few minutes to complete. First, visit IRS.gov, and look for “Non-Filers: Enter Payment Info Here.” Then provide basic information including Social Security number, name, address, and dependents. The IRS will use this information to confirm eligibility and calculate and send an Economic Impact Payment. Using the tool to get your payment will not result in any taxes being owed. Entering bank or financial account information will allow the IRS to deposit your payment directly in your account.  Otherwise, your payment will be mailed to you.

“Non-Filers: Enter Payment Info” is secure, and the information entered will be safe. The tool is based on Free File Fillable Forms, part of the Free File Alliance’s offerings of free products on IRS.gov.

Who should use the Non-Filers tool?
This new tool is designed for people who did not file a tax return for 2018 or 2019 and who don’t receive Social Security retirement or disability benefits or Railroad Retirement benefits. Others who should consider the Non-Filers tool as an option, include:

Lower income: Among those who could use Non-Filers: Enter Payment Info tool are those who haven’t filed a 2018 or 2019 return because they are under the normal income limits for filing a tax return. This may include single filers who made under $12,200 and married couples making less than $24,400 in 2019.

Veterans beneficiaries and Supplemental Security Income (SSI) recipients: The IRS continues to explore ways to see if Economic Impact Payments can be made automatically to SSI recipients and those who receive veterans disability compensation, pension or survivor benefits from the Department of Veterans Affairs and who did not file a tax return for the 2018 or 2019 tax years. People in these groups can either use Non-Filers: Enter Payment Info option now or wait as the IRS continues to review automatic payment options to simplify delivery for these groups. 

Social Security, SSDI and Railroad Retirement beneficiaries with qualifying dependents: These groups will automatically receive $1,200 Economic Impact Payments. People in this group who have qualifying children under age 17 may use Non-Filers: Enter Payment Info to claim the $500 payment per child.

Students and others: If someone else claimed you on their tax return, you will not be eligible for the Economic Impact Payment or using the Non-Filer tool.

Coming next week: Automatic payments begin
Eligible taxpayers who filed tax returns for either 2019 or 2018 and chose direct deposit of their refund will automatically receive an Economic Impact Payment of up to $1,200 for individuals or $2,400 for married couples and $500 for each qualifying child. Individuals who receive Social Security retirement or disability benefits, SSDI or who receive Railroad Retirement benefits but did not file a return for 2019 or 2018 will automatically receive a payment in the near future.

Coming next week: Get My Payment shows Economic Impact Payment date, helps with direct deposit
To help everyone check on the status of their payments, the IRS is building a second new tool expected to be available for use by April 17. Get My Payment will provide people with the status of their payment, including the date their payment is scheduled to be deposited into their bank account or mailed to them.
An additional feature on Get My Payment will allow eligible people a chance to provide their bank account information so they can receive their payment more quickly rather than waiting for a paper check. This feature will be unavailable if the Economic Impact Payment has already been scheduled for delivery.

More Information on Economic Impact Payments
The IRS will post additional updates on IRS.gov/coronavirus on these and other issues.

Stimulus Checks Posed to Roll Out Next Week For Qualifying Americans

Posted by Admin Posted on Apr 10 2020

Americans have received conflicting information on when they will receive stimulus checks, but there’s good news: Checks will be hitting their bank accounts soon. 

The government is prioritizing the first few waves of payments in the coming weeks toward low-income Americans and Social Security beneficiaries, Greene-Lewis says, the first wave of $1,200 stimulus payments is on track to be paid the week of April 13.

“Direct deposit is the quickest way that people will receive their money,” Greene-Lewis says. “Then the IRS will work on issuing the paper checks.”

Treasury Secretary Steven Mnuchin said on April 2 the first stimulus payments would arrive in some taxpayers’ accounts via direct deposit within two weeks. Then Larry Kudlow, senior economic adviser, said checks could go out this week or next. 

Who's eligible?

About 80% of Americans are eligible to receive a stimulus payment, according to the IRS. Cash will be distributed by the agency, so Americans who have received prior tax refunds via direct deposit will get rebate checks faster than those waiting on paper checks. The IRS is expected to start sending paper checks on April 24.

Most U.S. adults with a Social Security number will receive a payment, as long as they aren’t claimed as dependents by someone else. If you don’t have direct deposit, a check will be mailed to the address on file.

If you haven’t set up direct deposit with the IRS, you can register through an online portal the agency expects to open soon. If your address has changed, you can notify the IRS by mailing a 8822 change of address form or call the IRS to report your new address. It may take time to process change of address forms in the next few weeks, so experts suggest calling. 

How do I get relief money?

The emergency stimulus checks could be as much as $1,200 per person, $2,400 for married couples filing taxes jointly and $500 per dependent child.

Income amounts for the payments made this year are based on 2019 tax returns, or 2018 tax returns for people who haven’t filed their 2019 return yet.

Those who are eligible for relief payments don’t have to do anything to get it, and if they filed a 2018 or 2019 tax return with direct deposit information on it, the money will be deposited there when the IRS issues payments.

Do Social Security recipients need to file a tax return?

Social Security income recipients don’t need to file a return to get their stimulus payment. It will be calculated based on information from their SSA-1099 Social Security Benefit Statement for 2019 or RRB-1099 Social Security Equivalent Benefit Statement and deposited by the IRS.

Low-income Americans on Social Security who don’t file a return are still eligible, says Dina Pyron, financial services partner and global TaxChat leader at Ernst & Young. As long as they receive a SSA-1099 form, the IRS knows where to find them since they have their address or pay them the way they receive Social Security. 

What if I didn't earn enough to file a return?

There are as many as 10 million Americans who aren’t required to file a tax return. To be sure, low income families without a bank account will likely wait longer for their stimulus money. While only 6% of people in the U.S. don’t have a bank account, according to data from U.S. Financial Health Pulse, those who make less than $30,000 a year have an unbanked rate of 17%, or about 12 million people.

“Once again, the greatest burdens will be shouldered by the most vulnerable among us, when instead we should be doing everything to give them a leg up,” Jennifer Tescher, president and CEO of Financial Health Network, a non-profit authority on consumer financial health, said in a note.

FAQs Regarding Tax Filing & Payment Relief

Posted by Admin Posted on Apr 09 2020

20 most frequently asked questions on tax filing and payment relief. 

Q1: Due to office shutdowns in major cities, taxpayers and tax preparers may not timely receive or respond to IRS communications/notices that are sent by mail. Will the IRS provide any relief for late responses due to COVID-19?

Unfortunately, the IRS has not expressly announced any relief for affected taxpayers in regards to correspondence. Treasury and IRS are being urged to provide generous and automatic relief for issues related to administrative actions such as expiring statues of limitations, the processing of correspondence and other actions not already covered by previous relief related to COVID-19.

Q2: If the United States has been declared a disaster area by the President, why is section 7508A relief not granted?

Typically, when the President invokes the Robert T. Stafford Disaster Relief and Emergency Assistance Act, taxpayers are granted broad payment and filing relief under section 7508A. However, the IRS’s approach to COVID-19 has not been consistent with how the agency treated tax payment and filing deadlines over the last several years following a federally-declared disaster. 

Q3: Has the IRS provided e-signature authorization on all forms (such as, Form 8879) to allow e-filing without needing to meet with the taxpayer in person?

On March 27, the IRS issued a memorandum saying they would temporarily accept digital signatures on certain documents to protect their employees. However, it is unclear whether this relief also applies to Form 8879, which would allow millions of taxpayers to e-file their returns. It is important for the IRS to take whatever measures are possible to allow taxpayers and their preparers to utilize technology, such as e-signatures, to keep a safe distance from others during the pandemic. (Unofficially, IRS has explained that the new policy only applies to the specific collection forms listed in their memorandum.)

Q4: Has IRS announced filing or payment relief for Form 706? How can IRS expect taxpayers and practitioners to file estate tax returns (which are paper) when offices are under mandatory shut down?

Notice 2020-20 and IRS FAQ #7 only offer relief for gift taxes and the GST tax. We are expecting further guidance and relief in this area.

Q5: Was relief for estimated tax payments limited to individuals and corporations (or does it also apply to estates, trusts, S corporations and other entities)?

Notice 2020-18 provides relief to any taxpayer defined as a “person,” which also included estates, trusts, S corporations and other entities. However, relief has only been granted for estimated tax payments with an April 15 due date, and not on any other date. IRS FAQ #1 confirms that estimated payments on any other date is not deferred.

Q6: How will IRS treat 2019 overpayments and excess Q1 payments?

The IRS has not provided definitive guidance. It is reasonable that 2019 overpayments and excess Q1 payments would be credited to the next payment due. We expect additional FAQs to be issued soon to address this concern.

Q7: Has the IRS indicated whether they are considering relief for Q2, Q3 and Q4?

The IRS has not officially provided relief for any payments other than Q1. Treasury and the IRS are being urdged to develop a contingency plan for deadlines occurring after July 15.

Q8: Given that the IRS has not provided filing/payment extensions to many types of returns and the extreme difficulty of some taxpayers to meet their filing deadlines, is a zero-extension valid?

Currently, the IRS has not provided a response regarding the validity of zero-extensions. Treasury and the IRS are urged to offer generous and automatic relief for other issues related to administrative actions such as expiring statues of limitations, the processing of correspondence, and other actions not already covered by previous relief related to COVID-19.

Q9: Has IRS provided relief for partnership and corporation filings for fiscal year filers with the year ending January 31, 2020?

Notice 2020-18 only granted filing and payment relief if the fiscal year filer had a payment or return due date of April 15 (regardless of extension). IRS FAQ #1 and FAQ # 5 confirm. This approach however is inconsistent with how tax deadlines have been dealt with in the past in a disaster zone. The Treasury and IRS are urged to grant broad relief for all taxpayers with a payment or return due date between March 3 and July 15.

Q10: The CARES Act suspended required minimum distributions (RMDs) for 2020. What if individuals already took their RMD for 2020? Are they permitted to contribute the amount back into their IRA?

If an individual already took out their RMD for 2020, there is an opportunity to recontribute it as a rollover if it is recontributed within the 60-day rollover period.

Q11: Has IRS provided filing or payment relief for Form 709? If yes, does the relief extend to GST elections on the return?

Notice 2020-20 extended filing and payment for Form 709 to July 15 and we think that if the GST election out of automatic allocation is on a timely filed gift tax return, including on a Form 709 filed by the postponed 7/15 deadline, the IRS should treat the election as valid. However, Notice 2020-20 did not specifically address elections.

Q12: With the IRS shutting down many critical services, like that PPS line and various help desks, how are tax preparers expected to resolve issues that only the IRS can resolve?

We understand that the IRS is dealing with an unpredictable crisis and they must do what they can to keep their employees safe. However, these shutdowns will not permit taxpayers and their advisors to get the help they need to file their returns.

Q13: Has the IRS granted any relief for non-income tax payments, such as payroll or excise tax deposits?

Currently, there’s no relief for non-income tax payments under recentlyissued IRS guidance (except for gift tax and GST tax in Notice 2020-20). This approach is entirely inconsistent with how the IRS has treated tax payment and filing deadlines over the last several years following a federally-declared disaster.

Q14: Has the IRS provided any relief for information reporting forms (such as Form 3520 and Form 5471)?

Notice 2018-18 does not provide relief for information reporting forms. Mike Desmond, IRS Chief Counsel, has stated that “We have received hundreds of additional comments in terms of time-sensitive dates in the internal revenue laws that are not covered by that April 15 payment and filing deadline extension. Those are all being triaged here, and we’re considering all of them.”

Q15: Has the IRS provided any relief for related information returns that are filed with a return that was granted an automatic extension (such as Form 1040)?

Notice 2018-18 does not provide relief for information returns. IRS FAQ #10 specifically states that relief only applies to the filing of Federal income tax returns due April 15, 2020. However, the IRS did grant an extension of time to file to FATCA information returns. The guidance does not specifically grant relief to FBAR filings; however, an automatic extension is available without the need to file a form.

Q16: Does the postponement of the 4/15 deadline apply to “timely elections”?

Notice 2018-18 does not provide relief for timely elections.Mike Desmond, IRS Chief Counsel, has stated that “We have received hundreds of additional comments in terms of time-sensitive dates in the internal revenue laws that are not covered by that April 15 payment and filing deadline extension. Those are all being triaged here, and we’re considering all of them.”

Q17: Has an extension of time been granted to file or revoke certain business elections (such as, method of accounting changes or S corporation elections)?

Notice 2018-18 does not provide relief for filing or revoking business elections. Mike Desmond, IRS Chief Counsel, has stated that “the IRS is considering the best way that can be done and is aware taxpayers need guidance soon.”

Q18: How do I know if a state has provided any filing or payment relief? Are most states following federal relief?

Most states are following federal relief measures, but it is important to check state specifics when filing.

Q19: Has IRS provided filing or payment relief for the Form 990 series returns?

Currently, there is no relief for filing or payments related to Form 990 series. Similar to other relief measures that do not fall on April 15, the Treasury and IRS are urged to follow normal disaster-guidance procedures, and offer broad relief. We expect additional relief measures and FAQs soon.

Q20: Has IRS provided filing or payment relief for citizens living abroad (or is their return still due June 15th?)

The current guidance and accompanying FAQs do not specifically address this situation. Expect additional FAQs to hopefully address more issues that practitioners are encountering.

Comparing COVID-19 Loan Programs

Posted by Admin Posted on Apr 09 2020
  

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https://secure.emochila.com/swserve/siteAssets/site13540/images/Coronavirus_Loan_Programs_grid_compare_040320_Page_2.jpg

 

IRS Warns of Coronavirus-Related Scams

Posted by Admin Posted on Apr 02 2020

Watch out for schemes tied to economic impact payments

WASHINGTON — The Internal Revenue Service today urged taxpayers to be on the lookout for a surge of calls and email phishing attempts about the Coronavirus, or COVID-19. These contacts can lead to tax-related fraud and identity theft.

"We urge people to take extra care during this period. The IRS isn't going to call you asking to verify or provide your financial information so you can get an economic impact payment or your refund faster," said IRS Commissioner Chuck Rettig. "That also applies to surprise emails that appear to be coming from the IRS. Remember, don't open them or click on attachments or links. Go to IRS.gov for the most up-to-date information."

Taxpayers should watch not only for emails but text messages, websites and social media attempts that request money or personal information.

“History has shown that criminals take every opportunity to perpetrate a fraud on unsuspecting victims, especially when a group of people is vulnerable or in a state of need,” said IRS Criminal Investigation Chief Don Fort. “While you are waiting to hear about your economic impact payment, criminals are working hard to trick you into getting their hands on it. The IRS Criminal Investigation Division is working hard to find these scammers and shut them down, but in the meantime, we ask people to remain vigilant.”

Don’t fall prey to Coronavirus tricks; retirees among potential targets
The IRS and its Criminal Investigation Division have seen a wave of new and evolving phishing schemes against taxpayers. In most cases, the IRS will deposit economic impact payments into the direct deposit account taxpayers previously provided on tax returns. Those taxpayers who have previously filed but not provided direct deposit information to the IRS will be able to provide their banking information online to a newly designed secure portal on IRS.gov in mid-April. If the IRS does not have a taxpayer’s direct deposit information, a check will be mailed to the address on file. Taxpayers should not provide their direct deposit or other banking information for others to input on their behalf into the secure portal.

The IRS also reminds retirees who don’t normally have a requirement to file a tax return that no action on their part is needed to receive their $1,200 economic impact payment. Seniors should be especially careful during this period. The IRS reminds retirees – including recipients of Forms SSA-1099 and RRB-1099 −  that no one from the agency will be reaching out to them by phone, email, mail or in person asking for any kind of information to complete their economic impact payment, also sometimes referred to as rebates or stimulus payments. The IRS is sending these $1,200 payments automatically to retirees – no additional action or information is needed on their part to receive this.


The IRS reminds taxpayers that scammers may:

  • Emphasize the words “Stimulus Check” or “Stimulus Payment.” The official term is economic impact payment.
  • Ask the taxpayer to sign over their economic impact payment check to them.
  • Ask by phone, email, text or social media for verification of personal and/or banking information saying that the information is needed to receive or speed up their economic impact payment.
  • Suggest that they can get a tax refund or economic impact payment faster by working on the taxpayer’s behalf. This scam could be conducted by social media or even in person.
  • Mail the taxpayer a bogus check, perhaps in an odd amount, then tell the taxpayer to call a number or verify information online in order to cash it.

Reporting Coronavirus-related or other phishing attempts
Those who receive unsolicited emails, text messages or social media attempts to gather information that appear to be from either the IRS or an organization closely linked to the IRS, such as the Electronic Federal Tax Payment System (EFTPS), should forward it to phishing@irs.gov.

Taxpayers are encouraged not to engage potential scammers online or on the phone. Learn more about reporting suspected scams by going to the Report Phishing and Online Scams page on IRS.gov.

Official IRS information about the COVID-19 pandemic and economic impact payments can be found on the Coronavirus Tax Relief page on IRS.gov. The page is updated quickly when new information is available.

COVID-19 Individual and Business Support

Posted by Admin Posted on Apr 02 2020

 
 

As the Coronavirus (COVID-19) continues to spread globally, our main objective is to support you and your business, and to navigate this complicated and ever-changing environment together. With the fast changing information, here is the latest summary of changes:
 

  1. Individual Stimulus Checks
    1. IRS latest goal is within 3 weeks to start issuing checks
      1. $1,200 ($2,400 married) plus $500 per eligible child
      2. Adjusted Gross Income up to $75,000 ($150,000 married) for full payments
        1. Phased out by $5 for each $100 up to $99,000 ($198,000 married)
    2. If you have not filed your 2018 return yet, contact us immediately as you will not be eligible for the stimulus
      1. Unless you are only on social security for 2019, then you will get a check automatically
    3. Payments will be calculated by the IRS and automatically sent to the banking information on your 2019 (or 2018) return, if you do not have banking information on your return the IRS is developing a portal to enter your banking information
  2. Paycheck Protection Plan “PPP”
    1. Contact your banker ASAP as the loan applications open Friday and the funds are anticipated to go quickly
    2. https://www.cpapartnersllc.com/index.jsp?page=blog&postId=25043
  3. SBA Economic Injury Disaster Loan “EIDL”
    1. Get in line ASAP and there is a $10,000 advance grant available as part of the process
    2. https://covid19relief.sba.gov/#/
    3. Application is now streamlined
  4. Unemployment
    1. Has been expanded, additional $600 per week on top of each state’s unemployment and expanded to include subcontractors.
    2. each state is still working on putting out the additional guidance
  5. Families First Coronavirus Act “FFCRA”
    1. Is in effect as of today April 1, 2020
    2. https://www.cpapartnersllc.com/index.jsp?page=blog&postId=24857
  6. Payroll
    1. Payroll deposits and returns are currently still due timely and no extensions have been given, however there will be payroll credits starting in 2nd quarter (some refundable) and we will keep you posted on changes
    2. Payroll Retention Credit Release by the IRS: https://www.irs.gov/newsroom/irs-employee-retention-credit-available-for-many-businesses-financially-impacted-by-covid-19

 
We are keeping up with the changes on our website with the following tab, please check here for changes: https://www.cpapartnersllc.com/coronavirus-resource-center
 
We are here and working hard to keep you up-to-date with accurate and timely information. 
 
Stay Healthy!

Social Security Recipients Will Receive $1,200 Payments

Posted by Admin Posted on Apr 02 2020

Treasury announced late Wednesday that Social Security beneficiaries who typically do not file a tax return will automatically get the $1,200 payment.     
The announcement is a reversal from earlier in the week when the Internal Revenue Service said everyone would need to file some sort of tax return in order to qualify for the payments. Democrats and some Republicans criticized the IRS for requiring so many extra hurdles for this vulnerable population to get aid when the government already has their information on file.
The reversal came as the Trump administration tries to rapidly get stimulus payments out to Americans in the face of the quickest economic decline in modern history.

“Social Security recipients who are not typically required to file a tax return need to take no action, and will receive their payment directly to their bank account,” said Treasury Secretary Steven T. Mnuchin.
The $2.2 trillion aid legislation, passed in response to the coronavirus pandemic, directed the Treasury to look at Americans’ 2019 or 2018 tax returns to determine if they are eligible for a payment. But the law also said Treasury should look at Social Security data for seniors and the disabled.
Criticism poured in after the IRS posted a notice on its website on Monday instructing Social Security recipients who do not normally send in a return to file a “simple” tax return, which would be available soon.

More than 15 million Americans on Social Security do not file an annual tax return because their income is so low, according to the Center on Budget and Policy Priorities.
During the last recession, when the U.S. government sent most Americans a stimulus check and required a filed tax return to get it, 3.5 million Social Security recipients were left out because they never sent a return, according to a 2008 Treasury Department analysis.

There were concerns that even more people won’t file during the pandemic. But the Trump administration ultimately reversed course.
Mnuchin said direct deposits should begin by April 17, followed by checks in the mail. About 60 percent of tax filers gave the IRS direct-deposit information in recent years, said Nicole Kaeding of the National Taxpayers Union Foundation. The IRS said there would soon be a web-based portal for people to update their direct-deposit information.
Beyond the tax-filing hurdle, millions of other Americans are realizing that they don’t qualify for a coronavirus relief check.
Most high school seniors and college students won’t get any money. The bill gives nothing to families for their children older than 16, a shock to many households already reeling from canceled graduations, and college students readjusting to life at home with so many universities shut down.

Many immigrant families are also learning that they are ineligible. In order for anyone in the family to receive a payment, each person in the household — including children — is supposed to have a valid Social Security number.

Updated: Top Takeaways from CARES Act

Posted by Admin Posted on Apr 02 2020

Takeaway #1 – Individuals

Provides economic support to individuals in response to the economic distress caused by the coronavirus (COVID-19) pandemic; includes one-time payments for certain individuals and couples ($1,200 and $2,400 respectively) as well as $500 per child; creates a temporary Pandemic Unemployment Assistance program to provide payments to those not traditionally eligible for unemployment benefits; waives the 10% penalty on early withdrawals from retirement plans; provides relief from student loan debt.

Takeaway #2 – Small Businesses

Establishes a program where eligible small businesses and nonprofit organizations can apply for business interruption loans for expenses covering the period beginning Feb. 15, 2020, through June 30, 2020. In addition, the SBA’s Economic Injury Disaster Loan program is revised to include to sole proprietors, cooperatives and ESOPs.

Takeaway #3 – Higher Education

Provides temporary relief for federal student loan borrowers; enables employers to provide a student loan repayment benefit to employees on a tax-free basis; authorizes the Secretary of Education to modify current allowable uses of funds for institutional grant programs so colleges and universities can re-deploy resources and services to COVID-19 efforts.

Takeaway #4 – Businesses, States and Municipalities

Provides $500 billion to Treasury’s Exchange Stabilization Fund to provide loans, loan guarantees, and other investments to businesses and state and local governments; $46 billion is available for passenger air carriers, air cargo carriers, and businesses important to maintaining national security; $454 billion may be used to support lending to eligible businesses, states, and municipalities. Also provides $150 billion to states, territories, and tribal governments to use for expenditures incurred due to the public health emergency with respect to COVID-19.

As the CARES Act and related programs are evolving, the SBA and other federal agencies are making determinations around qualification, administration and deployment of the $454 billion in funds for businesses. We are in the process of understanding such implications for entities that would be deemed mid-market or larger (more than 500 employees) and we will be keep you informed of developments in real-time. 

Takeaway #5 – Telehealth

Expands telehealth services in Medicare, including services unrelated to COVID-19 treatments.

Takeaway #6 – Medical Devices and Pharmaceuticals

Requires the strategic national stockpile to include certain types of medical supplies; provides permanent liability protection for manufacturers of personal respiratory protective equipment; requires drug manufacturers to submit more information when there is an interruption in supply; requires manufacturers to maintain contingency plans to ensure back up supply of products.

Takeaway #7 – Defense Production Act

Increases access to materials necessary for national security and pandemic recovery under the Defense Production Act.

 

Employee Retention Credit for Financially Impacted Businesses

Posted by Admin Posted on Apr 02 2020

WASHINGTON — The Treasury Department and the Internal Revenue Service today launched the Employee Retention Credit, designed to encourage businesses to keep employees on their payroll. The refundable tax credit is 50% of up to $10,000 in wages paid by an eligible employer whose business has been financially impacted by COVID-19.

Does my business qualify to receive the Employee Retention Credit?

The credit is available to all employers regardless of size, including tax-exempt organizations. There are only two exceptions: State and local governments and their instrumentalities and small businesses who take small business loans.

Qualifying employers must fall into one of two categories:

  1. The employer's business is fully or partially suspended by government order due to COVID-19 during the calendar quarter.
  2. The employer's gross receipts are below 50% of the comparable quarter in 2019. Once the employer's gross receipts go above 80% of a comparable quarter in 2019, they no longer qualify after the end of that quarter.

These measures are calculated each calendar quarter.

How is the credit calculated?

The amount of the credit is 50% of qualifying wages paid up to $10,000 in total. Wages paid after March 12, 2020, and before Jan. 1, 2021, are eligible for the credit. Wages taken into account are not limited to cash payments, but also include a portion of the cost of employer provided health care.

How do I know which wages qualify?

Qualifying wages are based on the average number of a business's employees in 2019.

Employers with less than 100 employees: If the employer had 100 or fewer employees on average in 2019, the credit is based on wages paid to all employees, regardless if they worked or not. If the employees worked full time and were paid for full time work, the employer still receives the credit.

Employers with more than 100 employees: If the employer had more than 100 employees on average in 2019, then the credit is allowed only for wages paid to employees who did not work during the calendar quarter.

I am an eligible employer. How do I receive my credit?

Employers can be immediately reimbursed for the credit by reducing their required deposits of payroll taxes that have been withheld from employees' wages by the amount of the credit.

Eligible employers will report their total qualified wages and the related health insurance costs for each quarter on their quarterly employment tax returns or Form 941 beginning with the second quarter. If the employer's employment tax deposits are not sufficient to cover the credit, the employer may receive an advance payment from the IRS by submitting Form 7200, Advance Payment of Employer Credits Due to COVID-19.

Eligible employers can also request an advance of the Employee Retention Credit by submitting Form 7200.

Where can I find more information on the Employer Retention Credit and other COVID-19 economic relief efforts?

Updates on the implementation of this Employee Retention CreditFrequently Asked Questions on Tax Credits for Required Paid Leave  and other information can be found on the Coronavirus page of IRS.gov.

Economic Impact Payments: What You Need to Know

Posted by Admin Posted on Apr 02 2020

WASHINGTON — The Treasury Department and the Internal Revenue Service today announced that distribution of economic impact payments will begin in the next three weeks and will be distributed automatically, with no action required for most people. However, some taxpayers who typically do not file returns will need to submit a simple tax return to receive the economic impact payment.

Who is eligible for the economic impact payment?

Tax filers with adjusted gross income up to $75,000 for individuals and up to $150,000 for married couples filing joint returns will receive the full payment. For filers with income above those amounts, the payment amount is reduced by $5 for each $100 above the $75,000/$150,000 thresholds. Single filers with income exceeding $99,000 and $198,000 for joint filers with no children are not eligible. Social Security recipients and railroad retirees who are otherwise not required to file a tax return are also eligible and will not be required to file a return. 

Eligible taxpayers who filed tax returns for either 2019 or 2018 will automatically receive an economic impact payment of up to $1,200 for individuals or $2,400 for married couples and up to $500 for each qualifying child.

How will the IRS know where to send my payment?

The vast majority of people do not need to take any action. The IRS will calculate and automatically send the economic impact payment to those eligible.

For people who have already filed their 2019 tax returns, the IRS will use this information to calculate the payment amount. For those who have not yet filed their return for 2019, the IRS will use information from their 2018 tax filing to calculate the payment. The economic impact payment will be deposited directly into the same banking account reflected on the return filed.

The IRS does not have my direct deposit information. What can I do?

In the coming weeks, Treasury plans to develop a web-based portal for individuals to provide their banking information to the IRS online, so that individuals can receive payments immediately as opposed to checks in the mail.

I am not typically required to file a tax return. Can I still receive my payment?

Yes. The IRS will use the information on the Form SSA-1099 or Form RRB-1099 to generate Economic Impact Payments to recipients of benefits reflected in the Form SSA-1099 or Form RRB-1099 who are not required to file a tax return and did not file a return for 2018 or 2019. This includes senior citizens, Social Security recipients and railroad retirees who are not otherwise required to file a tax return.

Since the IRS would not have information regarding any dependents for these people, each person would receive $1,200 per person, without the additional amount for any dependents at this time.

I have a tax filing obligation but have not filed my tax return for 2018 or 2019. Can I still receive an economic impact payment?

Yes. The IRS urges anyone with a tax filing obligation who has not yet filed a tax return for 2018 or 2019 to file as soon as they can to receive an economic impact payment. Taxpayers should include direct deposit banking information on the return.

I need to file a tax return. How long are the economic impact payments available?

For those concerned about visiting a tax professional or local community organization in person to get help with a tax return, these economic impact payments will be available throughout the rest of 2020.

Where can I get more information?

The IRS will post all key information on IRS.gov/coronavirus as soon as it becomes available.

The IRS has a reduced staff in many of its offices but remains committed to helping eligible individuals receive their payments expeditiously. Check for updated information on IRS.gov/coronavirus rather than calling IRS assistors who are helping process 2019 returns.

Paycheck Protection Program

Posted by Admin Posted on Mar 31 2020

 

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Congress passed “The Coronavirus Aid, Relief, and Economic Security Act” (CARES Act), which included the “Paycheck Protection Program” (PPP) for small businesses. The PPP provides short-term cash flow assistance to small businesses to help these businesses and their employees deal with the immediate economic impact of the COVID-19 pandemic. Loans are made by lenders certified by the Small Business Administration (SBA) and guaranteed by the federal government. The SBA will administer the PPP.


CPA Partners is available to guide you through the various relief programs being made available at the Federal and state levels.


Below is a summary description of key elements of the PPP:
 
Borrower Requirements
• Good faith certification that the loan is necessary because of economic uncertainty caused by COVID-19 and will be applied to maintain payroll and make required payments
• Borrower must also certify that they are not receiving assistance and duplicative funds for the same uses from another SBA program
• No collateral or personal guarantee are required
 
Payment Deferral
• Not less than 6 months and not more than 1 year (including payment of principal, interest, and fees)
• To be determined by the originating lender
 
Permitted Uses
• Payroll costs
• Health care benefits (including paid sick or medical leave, and insurance premiums)
• Mortgage interest obligations (principal is not eligible)
• Rent obligations
• Utility payments
• Interest on other debt obligations incurred prior to February 15, 2020
 

Terms of Loan Forgiveness (Sec. 1106)

Loan recipients will be eligible for loan forgiveness for an 8-week period after the loan’s origination date in the amount equal to the sum of the following costs incurred during that period:

• Payroll costs (compensation above $100,000 excluded)
• Payment of interest on mortgage obligation
• Rent obligations
• Utility payments
• The amount forgiven cannot exceed the amount borrowed.
 

Loan forgiveness will be proportionally reduced if the average number of employees is reduced during the covered period as compared to the same period in 2019. The amount of loan forgiveness will be reduced by the amount of any reduction in total employee salary or wages during the covered period that is in excess of 25 percent of the total salary or wages.


• Payroll documentation and documentation of expenses are required to receive forgiveness, to ensure the forgiveness was used to retain employees and pay expenses
• Borrowers that rehire laid off workers by June 30 won’t be penalized for having a smaller workforce at the beginning of the period
• Borrowers with tipped workers may receive loan forgiveness for the additional wages paid to those employees
• The canceled loan amount will not count towards gross income for tax purposes
 
Eligible Businesses:

Small businesses, nonprofits, Tribal business concerns, and veteran’s organizations that:

• Have less than 500 employees or the applicable size standard for the industry as provided by SBA, or
• Are sole proprietors, self-employed individuals, or independent contractors
• Were in business on February 15, 2020
 
Federal Guarantee
Increases the government guarantee of 7(a) loans to 100 percent through December 31, 2020
 
Maturity Schedule
Maximum 10-year maturity after application for loan forgiveness
 
Interest Rate
Not to exceed 4 percent during the covered period
 
Covered Loan Period
Retroactive to February 15, 2020 through June 30, 2020
 
Eligible Lenders
SBA and the Department of the Treasury are granted authority to determine additional lenders to administer the Payment Protection Program loans
 
Loan Amount
• 2.5x average monthly payroll costs during the 1-year period* before the date on which the loan is made, or
• For new businesses, the measurement period would be January 1 to February 29, 2020

The application can be found here.

The Coronavirus Aid, Relief, and Economic Security Act

Posted by Admin Posted on Mar 31 2020

 

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The CARES Act: Highlights & Key Provisions

 
The Coronavirus Aid, Relief and Economic Stimulus (CARES) Act is one of the largest such bills ever passed in Congress, and contains a wide variety of provisions to help businesses and workers during the economic crisis caused by COVID-19. Below you will find some highlights of key provisions.
 

Benefits for Small Businesses

A key focus of this bill and earlier bills have been relief for small businesses. The bill contains many provisions that support small businesses, including a Paycheck Protection Program, Emergency Economic Injury Grants, Debt Relief for Existing and SBA Borrowers, and Resources for Business Counseling Services, all described below. Note that some of the business tax provisions described in a later section also apply to small businesses.
 

Paycheck Protection Program

  • 350 billion in funding for a provision to create a Paycheck Protection Program (PPP) that will provide small businesses and other entities with zero-fee loans of up to $10 million. Eligibility for this program is defined as:
    • Businesses, start-ups, veterans organizations and nonprofits with 500 employees or less or that meet the applicable size standard for the industry within which the organization operates as provided by the Small Business Association.
    • For businesses with more than one location, if it employs 500 or fewer employees per physical location; has under US$500 million in gross revenue; and falls within the “accommodation and food services” sector under the North American Industry Classification System (NAICS), the business is eligible for loans.
    • Sole proprietorships and independent contractors.
    • The bill requires lenders to determine whether a business was operational on February 15, 2020, and had employees for whom it paid salaries and payroll taxes, or a paid independent contractor.
  • Up to 8 weeks of average payroll and other costs will be forgiven if the business retains its employees and their salary levels throughout the coverage period of February 15, 2020 – June 30, 2020. Principal and interest is deferred for up to a year and all borrower fees are waived. This temporary emergency assistance through the U.S. Small Business Administration (SBA) and the Department of Treasury can be used in coordination with other COVID-financing assistance established in the bill or any other existing SBA loan program.
  • The bill requires the SBA Administrator to set a cap on how much a bank can earn to process loan applications and prioritize underserved borrowers, including those in rural communities, minorities, women and veterans.

 

Emergency Economic Injury Grants

  • $10 billion in funding for a provision to provide an advance of $10,000 to small businesses and nonprofits that apply for an SBA economic injury disaster loan (EIDL) within three days of applying for the loan. EIDLs are loans of up to $2 million that carry interest rates up to 3.75 percent for companies and up to 2.75 percent for nonprofits, as well as principal and interest deferment for up to 4 years. The loans may be used to pay for expenses that could have been met had the disaster not occurred, including payroll and other operating expenses.
    • The EIDL grant does not need to be repaid, even if the grantee is subsequently denied an EIDL, and may be used to provide paid sick leave to employees, maintaining payroll, meet increased production costs due to supply chain disruptions, or pay business obligations, including debts, rent and mortgage payments. Eligible grant recipients must have been in operation on January 31, 2020. The grant is available to small businesses, private nonprofits, sole proprietors and independent contractors, tribal businesses, as well as cooperatives and employee-owned businesses.
    • A business that receives an EIDL between January 31, 2020 and June 30, 2020 as a result of a COVID-19 disaster declaration is eligible to apply for a PPP loan or the business may refinance their EIDL into a PPP loan. In either case, the emergency EIDL grant award of up to $10,000 would be subtracted from the amount forgiven in the payroll protection plan.
  • The bill provides $562 million to ensure that SBA has the resources to provide Economic Injury Disaster Loans (EIDL) to businesses that need financial support.

 

Debt Relief for Existing and New SBA Borrowers

  • $17 billion in funding for a provision to provide immediate relief to small businesses with standard SBA 7(a), 504, or microloans. Under this provision, SBA will cover all loan payments for existing SBA borrowers, including principal, interest, and fees, for six months. This relief will also be available to new borrowers who take out an SBA loan within six months after the President signs the bill. The measure also encourages banks to provide further relief to small business borrowers by allowing them to extend the duration of existing loans beyond existing limits; and enables small business lenders to assist more new and existing borrowers by providing a temporary extension on certain reporting requirements. While SBA borrowers are receiving the six months debt relief, they may apply for a PPP loan that provides capital to keep their employees on the job. The six months of SBA payment relief may not be applied to payments on PPP loans.
  • Permanent fix that allows SBA to waive fees for veterans and their spouses in the 7(a) Express Loan Program, regardless of the President’s budget. Under current law, SBA may only waive fees on 7(a) Express loans to veterans when the President’s budget does not project a cost above zero for the overall 7(a) loan program.

 

Resources for Business Counseling Services
 

Many large companies are struggling to respond to the unprecedented economic disruption our nation is facing, so small businesses that have even fewer resources to dedicate to navigating the economic impacts of COVID-19 must have access to reliable counseling and mentorship services.

The CARES Act provides $275 million in grants to the nation’s network of Small Business Development Centers (SBDCs) and Women’s Business Centers (WBCs), as well as the Minority Business Development Agency’s Business Centers (MBDCs), to provide mentorship, guidance and expertise to small businesses. The funding will allow SBDCs, WBCs, and MBDCs to hire staff and provide programming to help small businesses and minority-owned businesses respond to COVID-19.


Benefits for Individuals - Individual Payments
 

All U.S. residents with adjusted gross income up to $75,000 ($150,000 combined for married couples), who are not a dependent of another taxpayer and have a work-eligible social security number, are eligible for a $1,200 ($2,400 married) rebate. In addition, they are eligible for an additional $500 per child. This is true even for those who have no income, as well as those whose income comes entirely from non-taxable means-tested benefit programs, such as SSI benefits.

The rebate amount is reduced by $5 for each $100 that a taxpayer’s income exceeds the phase-out threshold. The amount is completely phased-out for single filers with incomes exceeding $99,000, $146,500 for head of household filers with one child, and $198,000 for joint filers with no children.


Unemployment Insurance
 

The CARES Act also includes additional unemployment provisions, including creating additional categories for benefits for the self-employed and contractors. In addition, the bill authorizes additional funds to supplement traditional unemployment insurance of $600 per week due to unemployment from the pandemic. These extra payments are currently available for the next four months.


Business Tax Provisions
Employee Retention Credit for Employers Subject to Closure Due to COVID-19
 

The provision provides a refundable payroll tax credit for 50 percent of wages paid by employers to employees during the COVID-19 crisis. The credit is available to employers whose (1) operations were fully or partially suspended, due to a COVID-19-related shut-down order, or (2) gross receipts declined by more than 50 percent when compared to the same quarter in the prior year.
The credit is based on qualified wages paid to the employee:

  • For employers with greater than 100 full-time employees, qualified wages are wages paid to employees when they are not providing services due to the COVID-19-related circumstances described above.
  • For eligible employers with 100 or fewer full-time employees, all employee wages qualify for the credit, whether the employer is open for business or subject to a shut-down order. The credit is provided for the first $10,000 of compensation, including health benefits, paid to an eligible employee. The credit is provided for wages paid or incurred from March 13, 2020 through December 31, 2020.

Wages paid to employees during which they are furloughed or otherwise not working (due to reduced hours) as a result of their employer’s closure or economic hardship are eligible for the credit. However, for employers with 100 or fewer employees, all employee wages qualify for the credit, regardless of whether they are furloughed or face reduced hours. The credit is for wages paid by eligible employers from March 13, 2020 through December 31, 2020.

Note: Employers that receive Small Business interruption loans are not eligible for the credit.
 

Limitation on Business Interest
 

The provision generally and temporarily increases the amount of interest expense businesses are allowed to deduct on their tax returns, by increasing the 30-percent limitation to 50 percent of taxable income (with adjustments) for 2019 and 2020.


Net Operating Losses
 

This provision would allow five-year carry back for 2018, 2019, and 2020 tax years, respectively. Net operating losses (NOL) are currently subject to a taxable-income limitation, and they cannot be carried back to reduce income in a prior tax year. The provision provides that an NOL arising in a tax year beginning in 2018, 2019, or 2020 can be carried back five years.
 

Delay of Payment for Employer Payroll Taxes
 

The provision allows employers and self-employed individuals to defer payment of the employer share of the Social Security tax they otherwise are responsible for paying to the federal government with respect to their employees. The provision requires that the deferred employment tax be paid over the following two years, with half of the amount required to be paid by December 31, 2021 and the other half by December 31, 2022.


Limitation on Losses for Non-corporate Taxpayers
 

The provision modifies the loss limitation applicable to pass-through businesses and sole proprietors, so they can utilize excess business losses. The 80 percent carry back limitation would be lifted for pass-through entities to harmonize with corporate NOL treatment for 2018, 2019, and 2020.


Credit for Prior-year Minimum Corporate Tax Liability
 

The corporate alternative minimum tax (AMT) was repealed as part of the Tax Cuts and Jobs Act, but corporate AMT credits were made available as refundable credits over several years, ending in 2021. The provision accelerates the ability of companies to recover those AMT credits, permitting companies to claim a refund now.


Treasury and Federal Reserve Lending Fund
 

Under section 4003, the Treasury Department’s Exchange Stabilization Fund is provided $500 billion to be distributed to the following areas:

  • Direct lending, including $25 billion for passenger air carriers and support businesses specified in FAA regulations; $4 billion for air cargo carriers; and $17 billion for businesses important to national security.
  • $454 billion, plus unobligated funds available but not used, in support of the Federal Reserve’s lending facilities to eligible businesses, states and municipalities in order to relieve the market conditions.

The Treasury Department will need to issue details about how this program will operate.
There is also an effort to assist medium-sized businesses. The language states that the Secretary shall endeavor to seek the implementation of a program or facility that provides financing to banks and other lenders that make direct loans to eligible businesses including, to the extent practicable, nonprofit organizations, with between 500 and 10,000 employees, with such direct loans being subject to an annualized interest rate that is not higher than 2 percent per annum. For the first 6 months after any such direct loan is made, or for such longer period as the Secretary may determine in his discretion, no principal or interest shall be due and payable.

There are also various stipulations and requirements attached to this program related to the availability of alternative financing, restrictions on stock buybacks, efforts to retain employees, prevention of loan forgiveness, restrictions on dividends, and more.
 

 

 
 

Securing Virtual Meetings

Posted by Admin Posted on Mar 30 2020

            

The US National Institute of Standards and Technology (NIST) has published guidelines for companies to follow when employing a remote workforce, specifically related to protecting privacy while leveraging online collaboration tools to host virtual meetings while responding to the current COVID-19 pandemic.

Jeff Greene, director of the National Cybersecurity Center of Excellence at NIST states, "Unfortunately, if virtual meetings are not set up correctly, former coworkers, disgruntled employees, or hackers might be able to eavesdrop. Using some basic precautions can help ensure that your meetings are an opportunity to collaborate and work effectively – and not the genesis of a data breach or other embarrassing and costly security or privacy incident.”

Mr. Greene’s statement represents an often-repeated scenario that accompanies the rapid adoption and implementation of new technologies within an organization. The lack of proper vetting, configuration, and user education will typically result in some security flaw or failure within security operations as companies adjust to new communication tools in an effort to maintain operational capacity.

Cash Flow Management During a Crisis

Posted by Admin Posted on Mar 30 2020

How will my revenue be impacted, and for how long?

How will my collections be impacted?

What expenses can I pay now, defer, or eliminate?

How much flexibility do I have in vendor payment terms?

What relief aid and/or financing programs are available, and how do I know which program will provide the most benefits?

 

The following is an overview of recommended steps to shift your company’s perspective on cash flow management during this unusual time of crisis. We have also created an Excel template (available below) to help you assess and refocus your cash flow management.
 
Cash Flow Forecasting
One of the first steps companies can take to manage cash flow during a crisis is to forecast basic cash flow components. This will help you identify potential challenges, measure impacts, and implement strategies to improve cash flow positions.
 
Revenue and Expense Management Managing the Cash Conversion Cycle
Cash flow management starts with revenues and expenses. Businesses often have more control over these areas as opposed to outside financing, third-party vendors, or customer collections. Also, your ability to forecast can help with other decisions, such as reducing inventory purchases to match expected sales reductions.
 
Offer creative revenue promotions.
Provide multiple payment options, such as electronic payments and credit cards.
Consider alternative revenue streams.
Minimize variable costs, such as travel, R&D, entertainment, etc.
Evaluate labor costs intelligently (voluntary employee leaves, furloughs, minimize overtime, reduce hours, etc.).
Convert fixed costs to variable costs (sale-leaseback, contract manufacturing, vehicle and equipment leasing, third-party warehousing, etc.).
Audit or review vendor invoices carefully.
The cash conversion cycle consists of inventory, receivables, and payables. In general, companies should look for ways to decrease days in inventory and days in receivables (collections) while increasing days in payable.
 
Provide incentives to accelerate collections.
Send invoices promptly and more frequently (or early if possible).
Revisit past-due accounts.
Request deposits or retainers.
Negotiate vendor payment terms, or request more services from your vendors.
Review inventory management processes such as input costs, bulk purchasing, material waste/spoilage, etc.
Consider just-in-time inventory purchasing or ways to reduce supplier lead times.
Improve forecasting accuracy by matching projected sales with inventory purchases.
Capital Expenditures Debt Capital
Fixed assets are required for most businesses, and the cost to maintain fixed assets can be significant.
 
Defer capital expenditures where practical.
Sell or lease non-essential assets.
Evaluate options to lease vs. purchase.
Obtain multiple bids on large purchases.
Carefully evaluate and manage costs on capital projects.
Businesses may need to rely on debt more heavily during times of crisis. While debt can provide relief, the money is not free. Businesses should carefully asses credit options and the amount needed to get them through a crisis.
 
Evaluate flexible financing options and stay in close communication with your credit providers.
Understand government financing programs, guidelines, and processes.
Be open to creative alternative sources, such as private equity and insurance vehicles that can provide sources of capital.
Improve financial reporting and transparency with lenders – don’t hide surprises.

Assessing COVID-19 Impacts on Financial Statements

Posted by Admin Posted on Mar 30 2020

ASC 350 - Goodwill & Indefinite-Lived Intangibles

Goodwill and indefinite-lived intangibles are tested annually for impairment, however, testing may be required between annual testing dates if events or circumstances indicate that the fair value of the entity or asset may be below its carrying amount. Impairment occurs if the fair value of the entity or asset is less than its carrying value.

ASC 360 – Long-Lived Assets

Long-lived assets or asset groups are tested for recoverability whenever events or circumstances indicate that the carrying amount may not be recoverable. The recoverability test determines if impairment exists by comparing the sum of the asset or asset group’s undiscounted cash flows over its remaining life to the asset or asset group’s carrying value. If the sum of the undiscounted cash flows is less than the carrying value, the impairment amount will be determined by the difference in the fair value and carrying value of the asset or asset group.


Triggering Event Examples (ASC 360-10-35-21)

A significant decrease in the market price of a long-lived asset (asset group).

Macroeconomic conditions (e.g., deterioration in general economy).

A significant adverse change in the extent or manner in which a long-lived asset (asset group) is being used or in its physical condition.

Industry and market considerations (e.g., deterioration in the environment in which the company operates).

A significant adverse change in legal factors or in the business climate that could affect the value of a long-lived asset (asset group), including an adverse action or assessment by a regulator.

Cost factors (e.g., increases in raw materials, labor).

An accumulation of costs significantly in excess of the amount originally expected for the acquisition or construction of a long-lived asset (asset group).

Overall financial performance (e.g., negative or declining cash flows).

A current-period operating or cash flow loss combined with a history of operating or cash flow losses, or a projection or forecast that demonstrates continuing losses associated with the use of a long-lived asset (asset group).

Other relevant entity-specific events (e.g., changes in management or key personnel).

A current expectation that, more likely than not, a long-lived asset (asset group) will be sold or otherwise disposed of significantly before the end of its previously estimated useful life. The term “more likely than not” refers to a level of likelihood that is more than 50 percent.

Events affecting a reporting unit (e.g., change in composition of net assets, expectation of disposing all or a portion of the reporting unit).

 

Senate Passes the Coronavirus Aid, Relief, and Economic Security Act "CARES Act"

Posted by Admin Posted on Mar 26 2020

The Coronavirus Aid, Relief, and Economic Security Act (“CARES Act”) Key Takeaways

On March 25, 2020, the Senate unanimously passed (96-0) the Coronavirus Aid, Relief, and Economic Security Act (“CARES Act”), commonly known as “Phase Three” of coronavirus economic relief. The CARES Act provides much needed stimulus to individuals, businesses, and hospitals in response to the economic distress caused by the coronavirus (COVID-19) pandemic. 

The bill passed on March 25 is not yet law. Until the CARES Act is passed by the House of Representatives and signed into law by the President, it is subject to revisions. The bill will now go to the House, which is currently not in session. The House may reconvene to address the bill or pass the bill by unanimous consent agreement. The House is expected to pass the bill without changes on March 27, and it will then be presented to the President for his signature.

Additional information, updates, and analysis regarding the CARES Act will be posted on our blog. Please check back frequently for updates. We are available to assist in interpretation of the CARES Act for your business and can help you find ways to claim and/or use available funding for your company. 

The CARES Act

Top 10 Takeaways:

  1. Provides stimulus to individuals, businesses, and hospitals in response to the economic distress caused by the coronavirus (COVID-19) pandemic.
     
  2. Creates a $349 billion loan program for small businesses, including 501(c)(3) non-profits and physician practices. These loans can be forgiven through a process that incentivizes companies to retain employees.
     
  3. Allocates $500 billion for assistance to businesses, states, and municipalities, with no more than $25 billion designated for passenger air carriers, $4 billion for air cargo carriers, and $17 billion for businesses critical to maintaining national security. The remaining $454 billion may be used to support lending to eligible businesses, states, and municipalities.
     
  4. Allocates $130 billion in relief to the medical and hospital industries, including for medical supplies and drug and device shortages.
     
  5. Expands telehealth services in Medicare, including services unrelated to COVID-19 treatments.
     
  6. Provides $1,200 to Americans making $75,000 or less ($150,000 in the case of joint returns and $112,500 for head of household) and $500 for each child, to be paid “as rapidly as possible.”
     
  7. Expands eligibility for unemployment insurance and provides people with an additional $600 per week on top of the unemployment amount determined by each state.
     
  8. Expands the Defense Protection Act, allowing for a period of two years when the government may correct any shortfall in resources without regard to the current expenditure limit of $50 million.
     
  9. Provides the Secretary of the Treasury with the authority to make loans or loan guarantees to states, municipalities, and eligible businesses and loosens a variety of regulations prior legislation imposed through the Dodd-Frank Wall Street Reform and Consumer Protection Act, the Economic Stabilization Act of 2008, and others.
     
  10. Accompanied by supplemental appropriations to help the government respond to this pandemic.

Updated 04/01/20

Recovery rebates for individuals.  To help individuals stay afloat during this time of economic uncertainty, the government will send up to $1,200 payments to eligible taxpayers and $2,400 for married couples filing joints returns. An additional $500 additional payment will be sent to taxpayers for each qualifying child dependent under age 17 (using the qualification rules under the Child Tax Credit).

Rebates are gradually phased out, at a rate of 5% of the individual's adjusted gross income over $75,000 (singles or marrieds filing separately), $122,500 (head of household), and $150,000 (joint). There is no income floor or ''phase-in''-all recipients who are under the phaseout threshold will receive the same amounts. Tax filers must have provided, on the relevant tax returns or other documents (see below), Social Security Numbers (SSNs) for each family member for whom a rebate is claimed. Adoption taxpayer identification numbers will be accepted for adopted children. SSNs are not required for spouses of active military members. The rebates are not available to nonresident aliens, to estates and trusts, or to individuals who themselves could be claimed as dependents.

The rebates will be paid out in the form of checks or direct deposits. Most individuals won't have to take any action to receive a rebate. IRS will compute the rebate based on a taxpayer's tax year 2019 return (or tax year 2018, if no 2019 return has yet been filed). If no 2018 return has been filed, IRS will use information for 2019 provided in Form SSA-1099, Social Security Benefit Statement, or Form RRB-1099, Social Security Equivalent Benefit Statement.

Rebates are payable whether or not tax is owed. Thus, individuals who had little or no income, such as those who filed returns simply to claim the refundable earned income credit or child tax credit, qualify for a rebate.

Waiver of 10% early distribution penalty. The additional 10% tax on early distributions from IRAs and defined contribution plans (such as 401(k) plans) is waived for distributions made between January 1 and December 31, 2020 by a person who (or whose family) is infected with the Coronavirus or who is economically harmed by the Coronavirus (a qualified individual). Penalty-free distributions are limited to $100,000, and may, subject to guidelines, be re-contributed to the plan or IRA. Income arising from the distributions is spread out over three years unless the employee elects to turn down the spread out. Employers may amend defined contribution plans to provide for these distributions. Additionally, defined contribution plans are permitted additional flexibility in the amount and repayment terms of loans to employees who are qualified individuals.

Waiver of required distribution rules. Required minimum distributions that otherwise would have to be made in 2020 from defined contribution plans (such as 401(k) plans) and IRAs are waived. This includes distributions that would have been required by April 1, 2020, due to the account owner's having turned age 70 1/2 in 2019.

Charitable deduction liberalizations. The CARES Act makes four significant liberalizations to the rules governing charitable deductions:

(1) Individuals will be able to claim a $300 above-the-line deduction for cash contributions made, generally, to public charities in 2020. This rule effectively allows a limited charitable deduction to taxpayers claiming the standard deduction.

(2) The limitation on charitable deductions for individuals that is generally 60% of modified adjusted gross income (the contribution base) doesn't apply to cash contributions made, generally, to public charities in 2020 (qualifying contributions). Instead, an individual's qualifying contributions, reduced by other contributions, can be as much as 100% of the contribution base. No connection between the contributions and COVID-19 activities is required.

(3) Similarly, the limitation on charitable deductions for corporations that is generally 10% of (modified) taxable income doesn't apply to qualifying contributions made in 2020. Instead, a corporation's qualifying contributions, reduced by other contributions, can be as much as 25% of (modified) taxable income. No connection between the contributions and COVID-19 activities is required. 

(4) For contributions of food inventory made in 2020, the deduction limitation increases from 15% to 25% of taxable income for C corporations and, for other taxpayers, from 15% to 25% of the net aggregate income from all businesses from which the contributions were made.

Exclusion for employer payments of student loans. An employee currently may exclude $5,250 from income for benefits from an employer-sponsored educational assistance program. The CARES Act expands the definition of expenses qualifying for the exclusion to include employer payments of student loan debt made before January 1, 2021. 

Break for remote care services provided by high deductible health plans.  For plan years beginning before 2021, the CARES Act allows high deductible health plans to pay for expenses for tele-health and other remote services without regard to the deductible amount for the plan.

Break for nonprescription medical products. For amounts paid after December 31, 2019, the CARES Act allows amounts paid from Health Savings Accounts and Archer Medical Savings Accounts to be treated as paid for medical care even if they aren't paid under a prescription. And, amounts paid for menstrual care products are treated as amounts paid for medical care. For reimbursements after December 31, 2019, the same rules apply to Flexible Spending Arrangements and Health Reimbursement Arrangements.

Business only provisions 

Employee retention credit for employers. Eligible employers can qualify for a refundable credit against, generally, the employer's 6.2% portion of the Social Security (OASDI) payroll tax (or against the Railroad Retirement tax) for 50% of certain wages (below) paid to employees during the COVID-19 crisis. 

The credit is available to employers carrying on business during 2020, including non-profits (but not government entities), whose operations for a calendar quarter have been fully or partially suspended as a result of a government order limiting commerce, travel or group meetings. The credit is also available to employers who have experienced a more than 50% reduction in quarterly receipts, measured on a year-over-year basis relative to the corresponding 2019 quarter, with the eligible quarters continuing until the quarter after there is a quarter in which receipts are greater than 80% of the receipts for the corresponding 2019 quarter.

For employers with more than 100 employees in 2019, the eligible wages are wages of employees who aren't providing services because of the business suspension or reduction in gross receipts described above.

For employers with 100 or fewer full-time employees in 2019, all employee wages are eligible, even if employees haven't been prevented from providing services. The credit is provided for wages and compensation, including health benefits, and is provided for the first $10,000 in eligible wages and compensation paid by the employer to an employee. Thus, the credit is a maximum $5,000 per employee. 

Wages don't include (1) wages taken into account for purposes of the payroll credits provided by the earlier Families First Coronavirus Response Act for required paid sick leave or required paid family leave, (2) wages taken into account for the employer income tax credit for paid family and medical leave (under Code Sec. 45S ) or (3) wages in a period in which an employer is allowed for an employee a work opportunity credit (under Code Sec. 51 ). An employer can elect to not have the credit apply on a quarter-by-quarter basis. 

The IRS has authority to advance payments to eligible employers and to waive penalties for employers who do not deposit applicable payroll taxes in reasonable anticipation of receiving the credit. The credit is not available to employers receiving Small Business Interruption Loans. The credit is provided for wages paid after March 12, 2020 through December 31, 2020.

Delayed payment of employer payroll taxes. Taxpayers (including self-employeds) will be able to defer paying the employer portion of certain payroll taxes through the end of 2020, with all 2020 deferred amounts due in two equal installments, one at the end of 2021, the other at the end of 2022. Taxes that can be deferred include the 6.2% employer portion of the Social Security (OASDI) payroll tax and the employer and employee representative portion of Railroad Retirement taxes (that are attributable to the employer 6.2% Social Security (OASDI) rate). The relief isn't available if the taxpayer has had debt forgiveness under the CARES Act for certain loans under the Small Business Act as modified by the CARES Act (see below). For self-employeds, the deferral applies to 50% of the Self-Employment Contributions Act tax liability (including any related estimated tax liability).

Net operating loss liberalizations. The 2017 Tax Cuts and Jobs Act (the 2017 Tax Law) limited NOLs arising after 2017 to 80% of taxable income and eliminated the ability to carry NOLs back to prior tax years. For NOLs arising in tax years beginning before 2021, the CARES Act allows taxpayers to carryback 100% of NOLs to the prior five tax years, effectively delaying for carrybacks the 80% taxable income limitation and carryback prohibition until 2021.

The Act also temporarily liberalizes the treatment of NOL carryforwards. For tax years beginning before 2021, taxpayers can take an NOL deduction equal to 100% of taxable income (rather than the present 80% limit). For tax years beginning after 2021, taxpayers will be eligible for: (1) a 100% deduction of NOLs arising in tax years before 2018, and (2) a deduction limited to 80% of taxable income for NOLs arising in tax years after 2017.

The provision also includes special rules for REITS, life insurance companies, and the Code Sec. 965 transition tax. There are also technical corrections to the 2017 Tax Law effective dates for NOL changes.

Deferral of noncorporate taxpayer loss limits.  The CARES Act retroactively turns off the excess active business loss limitation rule of the TCJA in Code Sec. 461(l) by deferring its effective date to tax years beginning after December 31, 2020 (rather than December 31, 2017). (Under the rule, active net business losses in excess of $250,000 ($500,000 for joint filers) are disallowed by the 2017 Tax Law and were treated as NOL carryforwards in the following tax year.)

The CARES Act clarifies, in a technical amendment that is retroactive, that an excess loss is treated as part of any net operating loss for the year, but isn't automatically carried forward to the next year. Another technical amendment clarifies that excess business losses do not include any deduction under Code Sec. 172 (NOL deduction) or Code Sec. 199A (qualified business income deduction).

Still another technical amendment clarifies that business deductions and income don't include any deductions, gross income or gain attributable to performing services as an employee. And because capital losses of non-corporations cannot offset ordinary income under the NOL rules, capital loss deductions are not taken into account in computing the Code Sec. 461(l) loss and the amount of capital gain taken into account cannot exceed the lesser of capital gain net income from a trade or business or capital gain net income.

Acceleration of corporate AMT liability credit. The 2017 Tax Law repealed the corporate alternative minimum tax (AMT) and allowed corporations to claim outstanding AMT credits subject to certain limits for tax years before 2021, at which time any remaining AMT credit could be claimed as fully-refundable. The CARES Act allows corporations to claim 100% of AMT credits in 2019 as fully-refundable and further provides an election to accelerate the refund to 2018.

Relaxation of business interest deduction limit. The 2017 Tax Law generally limited the amount of business interest allowed as a deduction to 30% of adjusted taxable income (ATI). The CARES Act generally allows businesses, unless they elect otherwise, to increase the interest limitation to 50% of ATI for 2019 and 2020, and to elect to use 2019 ATI in calculating their 2020 limitation. For partnerships, the 30% of ATI limit remains in place for 2019 but is 50% for 2020. However, unless a partner elects otherwise, 50% of any business interest allocated to a partner in 2019 is deductible in 2020 and not subject to the 50% (formerly 30%) ATI limitation. The remaining 50% of excess business interest from 2019 allocated to the partner is subject to the ATI limitations. Partnerships, like other businesses, may elect to use 2019 partnership ATI in calculating their 2020 limitation.

Technical correction to restore faster write-offs for interior building improvements. The CARES Act makes a technical correction to the 2017 Tax Law that retroactively treats (1) a wide variety of interior, non-load-bearing building improvements (qualified improvement property (QIP)) as eligible for bonus deprecation (and hence a 100% write-off) or for treatment as 15-year MACRS property or (2) if required to be treated as alternative depreciation system property, as eligible for a write-off over 20 years. The correction of the error in the 2017 Tax Law restores the eligibility of QIP for bonus depreciation, and in giving QIP 15-year MACRS status, restores 15-year MACRS write-offs for many leasehold, restaurant and retail improvements.

Accelerated payment of credits for required paid sick leave and family leave. The CARES Act authorizes IRS broadly to allow employers an accelerated benefit of the paid sick leave and paid family leave credits allowed by the Families First Coronavirus Response Act by, for example, not requiring deposits of payroll taxes in the amount of credits earned.

Pension funding delay. The CARES Act gives single employer pension plan companies more time to meet their funding obligations by delaying the due date for any contribution otherwise due during 2020 until January 1, 2021. At that time, contributions due earlier will be due with interest. Also, a plan can treat its status for benefit restrictions as of December 31, 2019 as applying throughout 2020.

Certain SBA loan debt forgiveness isn't taxable. Amounts of Small Business Administration Section 7(a)(36) guaranteed loans that are forgiven under the CARES Act aren't taxable as discharge of indebtedness income if the forgiven amounts are used for one of several permitted purposes. The loans have to be made during the period beginning on February 15, 2020 and ending on June 30, 2020.

Suspension of certain alcohol excise taxes. The CARES Act suspends alcohol taxes on spirits withdrawn during 2020 from a bonded premises for use in or contained in hand sanitizer produced and distributed in a manner consistent with FDA guidance related to the outbreak of virus SARSCoV- 2 or COVID-19.

Suspension of certain aviation taxes. The CARES Act suspends excise taxes on air transportation of persons and of property and on the excise tax imposed on kerosene used in commercial aviation. The suspension runs from March 28, 2020 to December 31, 2020.  


The full CARES act can be read here

 

White House, Senate reach historic $2 trillion stimulus deal

Posted by Admin Posted on Mar 25 2020

The White House and Senate leaders struck a major deal early Wednesday morning over a $2-trillion package to provide a jolt to an economy struggling amid the coronavirus pandemic, capping days of marathon negotiations that produced one of the most expensive and far-reaching measures in the history of Congress.

"Ladies and gentleman, we are done," White House legislative affairs director Eric Ueland said right before 1 a.m. after leaving Senate Majority Leader Mitch McConnell's office following negotiations that have gone around the clock since last Friday. "We have a deal."
McConnell formally announced the agreement on the Senate floor, saying, "At last, we have a deal. After days of intense discussions, the Senate has reached a bipartisan agreement on a historic relief package for this pandemic."
The majority leader described it as "a war-time level of investment for our nation," and said that the Senate would move to pass it later in the day on Wednesday. The Senate will re-convene at noon. An exact time has not yet been set for the vote.
The full details have yet to be released. But over the last 24 hours, the elements of the proposal have come into sharper focus, with $250 billion set aside for direct payments to individuals and families, $350 billion in small business loans, $250 billion in unemployment insurance benefits and $500 billion in loans for distressed companies.
The stimulus bill also has a provision that would block President Donald Trump and his family, as well as other top government officials and members of Congress, from getting loans or investments from Treasury programs in the stimulus, according to Minority Leader Chuck Schumer's office.
The package, if it passes Congress, would be the most significant legislative action taken to address the rapidly intensifying coronavirus crisis, which is overwhelming hospitals and grinding much of the economy to a halt.
Schumer called it "the largest rescue package in American history," in remarks on the Senate floor in the early hours of Wednesday morning. "This is not a moment of celebration -- but of necessity," he said.
The plan will deliver a massive infusion of financial aid into a struggling economy hard hit by job loss, with provisions to help impacted American workers and families as well as small businesses and major industries including airlines.
On CNN's "New Day" Wednesday, Schumer touted the bill as "worker-friendly," pointing to its billions for unemployment insurance benefits and small business loans.
Larry Kudlow, Trump's chief economic adviser, called the package "the single largest main street assistance program in the history of the United States" at a White House briefing on Tuesday.
"This legislation is urgently needed to bolster the economy, provide cash injections and liquidity and stabilize financial markets to get us through a difficult and challenging period in the economy facing us right now," Kudlow said.
Under the plan as it was being negotiated, individuals who earn $75,000 in adjusted gross income or less would get direct payments of $1,200 each, with married couples earning up to $150,000 receiving $2,400 -- and an additional $500 per each child. The payment would scale down by income, phasing out entirely at $99,000 for singles and $198,000 for couples without children.
While the final bill text hasn't been released, some of the areas have been debated behind closed doors for days. There was intense partisan debate over the $500 billion proposal to provide loans to distressed companies, with $50 billion in loans for passenger air carriers. Democrats contended there was not enough oversight on how the money would be doled out, but the Trump administration agreed to an oversight board and the creation of an inspector general position to review how the money is spent.
Negotiators also discussed providing four months of unemployment benefits, extending to self-employed workers. Also, the bill would ensure the Small Business Administration could serve as a guarantor for loans of up to $10 billion for small businesses to ensure they can maintain their payrolls and pay off their debts.
In addition, the bill would provide a major amount of funding for hard-hit hospitals -- $130 billion -- as well as $150 billion for state and local governments that are cash-strapped due to their response to combat coronavirus.
After two consecutive days of high-profile setbacks -- with Senate Democrats blocking procedural votes on Sunday and Monday over opposition to a bill initially crafted by Senate Republicans -- a deal appeared to be imminent by Tuesday morning.
Top negotiators signaled that many of the issues had been resolved and suggested there could be action on a package later in the day.
Schumer optimistically announced at one point that the Senate was at the two-yard line. But by Tuesday evening, no legislative text had been made public as negotiators continued their work.
Asked on Tuesday evening why negotiators appeared to be having such a hard time closing out the deal, Treasury Secretary Steven Mnuchin, who has served as a point person for the administration in the talks, responded, "Who says we are having a hard time? It's just a complicated deal. We go through a lot of language."
"We are getting there," he responded.
Democrats had argued they wanted to see more safeguards for American workers in the deal and oversight for how funding would be doled out. Schumer and House Speaker Nancy Pelosi both signaled on Tuesday that they had won concessions in the emerging deal to that end.
Pelosi said in an interview with CNN's Dana Bash on Tuesday that "many of the provisions in there have been greatly improved because of negotiation," while Schumer said the legislation will have "unemployment insurance on steroids."
"Does it have everything we need? No. Are some things in there that I would have rather not had? No, of course. But this is the art of compromise," Schumer told CNN's John Berman Wednesday morning, adding, "America needed huge help quickly. And I think we've risen to that occasion."
Schumer also suggested that the trillion-dollar stimulus plan may not be enough to offset the economic damage given the uncertainty of the pandemic, and that negotiators might have to "come back in a bipartisan way and do more if we need."
McConnell praised the emerging deal as a win for Republicans as well, saying, "We are close to a bill that takes our bold Republican framework, integrates further ideas from both parties and delivers huge progress."
Once a deal is released, the next question will be how quickly it can be approved by both chambers -- a challenge made more daunting by the fact that Congress is now operating in a scenario where several of its members have tested positive for coronavirus while many more have self-quarantined after contact with infected individuals.
A Democratic leadership aide told CNN that the House still has emergency convening authority and could quickly come back into session Wednesday. But the aide said it's "more likely" the House vote would wait until Thursday since it's still unclear when the Senate will act on the legislation, which has yet to be released.
Pelosi suggested on Tuesday that she is hoping to avoid bringing the full House back to Washington to vote on the package, seeking to pass it through unanimous consent instead. But any individual member can block such a move, creating uncertainty over whether that will be feasible.
Another option may be for the House to approve the package by voice vote as opposed to holding a recorded roll call vote.
The Democratic leadership aide said Wednesday morning that the House still plans to vote -- likely by voice vote -- without bringing all its members back to Washington.
House Republicans are falling in line behind the Senate stimulus plan and are willing to allow quick passage of the plan, according to a source on the GOP whip team.
After conferring with the various factions of the House GOP Conference, the source said that it is a "possible outcome" for the House to voice vote the package when the chamber eventually considers it.
Pelosi has called for the bill to be approved by unanimous consent, but the GOP source said that "it's a very real possibility" that a member would object, preventing that from happening.
Pelosi is also open to allowing the bill to pass by a voice vote, which would allow the presiding officer to rule in favor of the side that has the most voice votes.
However, members could request a recorded, roll call vote, which would require the full House to return to pass the bill, something lawmakers are eager to avoid amid the coronavirus outbreak.

Business Insurance Considerations

Posted by Admin Posted on Mar 24 2020

              

COVID-19: Business Insurance Considerations

The COVID-19 pandemic is raising many questions regarding insurance coverage for businesses. CPA firms maintain multiple types of insurance to help protect their businesses, each of which may provide coverage relevant to the pandemic.

Below is a sample list of business insurance policies and related exposures that may be insured under these policies. Bear in mind that insurance coverage is governed by the terms, conditions and exclusions of each applicable policy, and is dependent on the facts and circumstances presented.

  • Property: Examples of potential exposures include costs to close and sanitize a workplace and business interruption costs. For more information, see Property and Coronavirus: Is My Business Covered?
  • Workers' Compensation: Examples of exposures include claims alleging that COVID-19 was contracted through work. For more information, see Impact of Coronavirus in U.S. Casualty Claims
  • Directors' and Officers' and Employment Practices Liability: Shareholders may allege that directors and executive officers breached their fiduciary duty in responding to COVID-19, resulting in a diminution in share value. Employees may allege violation of federal, state or local employment discrimination laws or ordinances, and seek recovery of lost wages and benefits and other compensatory damages. For more information, see Client Alert: The Coronavirus – D&O, EPL, and Wage and Hour Insurance.
  • Cyber Liability: Professional service workers are working from home due to COVID-19. As a result, cyber risks are likely to be elevated both due to the risk of inadvertent violations of privacy laws and the intentional acts of bad actors. For more information, see Cyber Risk Implications of the Coronavirus Outbreak.
  • Professional Liability: Examples of professional liability claims that may emerge from the pandemic include allegations of improper tax or consulting advice, or errors in tax return preparation or audits. Extensive risk management resources are available in the AICPA Professional Liability Insurance Program Policyholder Resource Center.  AICPA members can direct technical questions about accounting and auditing to the AICPA Technical Hotline.  Lastly, specific professional liability risk management questions can be directed to the CNA Accountants Assistance Line at 800-CNA-8060 or specialtyriskcontrol@cna.com.

All claims or potential claims should be reported promptly and in writing to insurance carriers in accordance with the conditions detailed in the applicable policy. Timely reporting of potential claims allows the insurer to initiate an investigation to determine if a claim can be mitigated or prevented and provides the policyholder with access to the advice and recommendations of the insurer. Additionally, it preserves the rights of the policyholder in the event a future related claim is made. 


 

How To Stay Productive While Working Remote

Posted by Admin Posted on Mar 23 2020

With the spread of the novel coronavirus affecting everything from international travel to the availability of hand sanitizer, mitigating COVID-19 in the United States has become a growing concern. That’s why many companies are mandating or recommending that as many employees as possible work remotely until the virus can be slowed.

Plenty of people fantasize about working from the comfort of their own home, foregoing their commute in favor of more sleep, family or exercise time. But working remotely is a double-edge sword — sure, you get to stay home, but it can be harder to focus on actually working. Whether it’s a pile of laundry that suddenly looks more appealing than your bosses’ to-do list, or a quick three-hour binge of that one Netflix show you’ve been dying to watch, staying productive at home can take a little extra effort. Plus, the isolation can quickly become a downer for those used to socializing at work. And some people, of course, would prefer to stay in the office.

Continue reading on Time's website here.

Official IRS Statement Regarding Paid Leave and Tax Credits

Posted by Admin Posted on Mar 23 2020

WASHINGTON — The U.S. Treasury Department, Internal Revenue Service (IRS), and the U.S. Department of Labor (Labor) announced that small and midsize employers can begin taking advantage of two new refundable payroll tax credits, designed to immediately and fully reimburse them, dollar-for-dollar, for the cost of providing Coronavirus-related leave to their employees. This relief to employees and small and midsize businesses is provided under the Families First Coronavirus Response Act (Act), signed by President Trump on March 18, 2020.

The Act will help the United States combat and defeat COVID-19 by giving all American businesses with fewer than 500 employees funds to provide employees with paid leave, either for the employee's own health needs or to care for family members. The legislation will enable employers to keep their workers on their payrolls, while at the same time ensuring that workers are not forced to choose between their paychecks and the public health measures needed to combat the virus.

Official IRS release can be read here

US Small Business & Florida Emergency Loans

Posted by Admin Posted on Mar 23 2020
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Certified Public Accountants & Business Consultants
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As the Coronavirus (COVID-19) continues to spread globally, we want to support you and your business, and to navigate this complicated and ever-changing environment together.  We want your small business to have a plan in place and part of this plan is additional funding.  Most states have been declared a disaster area and then the following option is available to you:  
If you would like to engage us to assist you in applying for these loans, please contact your account representative to get started.
 
We encourage you to act fast in submitting the applications to reduce the strain on your business cash flow as we anticipate the lenders to be overwhelmed.
 
Do you have a plan in place for these common issues small business may encounter during a disaster?
  • Capital Access
    • cash funds for payroll, inventory, payables, etc.
  • Workforce Capacity
  • Inventory and Supply Chain Shortfalls
  • Facility Remediation/Clean-up Costs
  • Insurance Coverage Issues
  • Changing Market Demand
  • Marketing
Plan – As a business, your plan needs to be in place and ready for changes as this incident worsens and eventually improves.  We are here to help or get you with a key resource to help.
 
We will be sending out additional e-mails this week regarding the paid leave act, extensions, and other congress actions taking place.
 
While we are closed for appointments, we are working remotely and continuing to move your work thru.  As everything continues to develop, please continue to check our resource page at: https://www.cpapartnersllc.com/coronavirus-resource-center
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IRS clarifies extended filing deadline

Posted by Admin Posted on Mar 23 2020

   

The IRS and the Treasury Department formally issued guidance, Notice 2020-18 (the Notice), pushing back the federal tax filing deadline to July 15, 2020, aligning the filing due date with the extended deadline for payments. Taxpayers do not have to file for an extension to qualify for the extended due date.

  • Notice 2020-18  supersedes and expands upon earlier guidance that gave taxpayers extra time to pay their taxes but not to file income tax returns.
  • The Notice allows for the deferral of the entire balance due whereas previous guidance allowed individuals to only defer up to $1 million and corporations up to $10 million of tax payments without interest and penalties. 
  • The Notice applies to income tax returns and payments by individual taxpayers, trusts, estates, partnerships, associations, companies and corporations. Tax payments on self-employed income are included as well.
  • Estimated tax payments also moved to July 15, 2020, from April 15, 2020.  
  • The Notice does not address June 15, 2020, estimated payments, fiscal-year entities or other types of federal taxes or returns.
  •  

 

US tax filing day moved from April 15 to July 15

Posted by Admin Posted on Mar 21 2020

                        

Tax Day is being pushed back until July while the nation copes with the effects of the coronavirus, Treasury Secretary Steven Mnuchin announced Friday.

"At his direction, we are moving Tax Day from April 15 to July 15. All taxpayers and businesses will have this additional time to file and make payments without interest or penalties," Mnuchin said in a pair of tweets.

"I encourage all taxpayers who may have tax refunds to file now to get your money."

The announcement follows one earlier this week that individuals and businesses would be allowed to delay paying their 2019 tax bills for 90 days past the usual April 15 deadline.

Mnuchin said then that individuals would be able to delay paying up to $1 million in tax payments, while corporations would be able to defer payment on up to $10 million. Individuals and corporations would not be subject to interest or penalty payments during that period of time, Mnuchin said.

The delay is part of an effort to keep $300 billion in the economy while people and companies deal with the unprecedented financial impact caused by the coronavirus.

In its Wednesday announcement on the initial 90-day delay, the Internal Revenue Service cautioned that the delay applied only to federal income taxes, not state income taxes.

"Taxpayers also will need to file income tax returns in 42 states plus the District of Columbia," the agency said on its website. "State filing and payment deadlines vary and are not always the same as the federal filing deadline. The IRS urges taxpayers to check with their state tax agencies for those details."

The Treasury Department was expected to comment later Friday.

Treasury and IRS to delay tax payment deadline by 90 days

Posted by Admin Posted on Mar 19 2020

                    

Taxpayers will get a three-month reprieve to pay the income taxes they owe for 2019, Treasury Secretary Steven Mnuchin said on Tuesday at a news conference.

As part of its coronavirus response, the federal government will give filers 90 days to pay income taxes due on up to $1 million in tax owed, Mnuchin said in Washington. The reprieve on that amount would cover many pass-through entities and small businesses, he said.

 

Corporate filers would get the same length of time to pay amounts due on up to $10 million in taxes owed, Mnuchin said.

During that three-month deferral period, taxpayers won’t be subject to interest and penalties, he said.

You should still get your 2019 income tax return in to the federal government as soon as possible, especially if you’re due a refund and need cash.

“We encourage those Americans who can file their taxes to continue to file their taxes on April 15,” Mnuchin said. “Because for many Americans, you will get tax refunds.”

Indeed, the IRS processed more than 65 million income tax returns as of March 6. Of these, 52.7 million filers received tax refunds, averaging $3,012, according to the agency.

 

While the federal government is granting taxpayers a little more time, you should still check in on your state’s position.

Some states have rolled out delays due to coronavirus.

For instance, California is granting a 60-day delay for affected individuals and businesses unable to file on time.

Meanwhile, Maryland is giving additional time for certain business tax returns, and the state will grant an extension to individuals if the federal government moves forward on its delay.

Florida Disaster Loan for Florida Small Businesses

Posted by Admin Posted on Mar 18 2020

How to applyhttps://floridadisasterloan.org/

  • Qualified Applicant: Applications will be accepted by qualified for-profit, privately held small businesses that maintain a place of business in the state of Florida. All qualified applicants must have been established prior to March 9, 2020, and suffered economic injury as a result of the designated disaster. Qualified small business applicants must be an employer business with 2 to 100 employees.
  • Amount: Up to $50,000 per eligible small business.  Loans of up to $100,000 may be made in special cases as warranted by the need of the eligible small business.
  • Term: 1 year.
  • Limitation: Only one loan may be made per eligible business. All previous bridge loans received MUST be paid in full.
  • Interest Rate: Loans will be interest-free for the loan term (1 year). The Interest rate will be 12% per annum on the unpaid balance thereafter, until the loan balance is repaid in full.  Loan default is subject to a normal commercial collection process.
  • Application Period: Applications will be accepted by qualified Florida small businesses under this program through May 8, 2020, contingent on the availability of funds.

Designated Disaster Areas: All Florida counties statewide per Executive Order 20-52.

CDC's Guidance on Preparation

Posted by Admin Posted on Mar 18 2020

                     

Before a COVID-19 outbreak occurs in your community: Plan

Depending on the severity of the outbreak in your local area, public health officials may recommend community actions designed to help keep people healthy, reduce exposures to COVID-19, and slow the spread of the disease. Local public health officials may make recommendations appropriate to your local situation. Creating a household plan can help protect your health and the health of those you care about in the event of an outbreak of COVID-19 in your community. You should base the details of your household plan on the needs and daily routine of your household members. 

Continue reading on CDC's official website

 

Stress and Coping

The outbreak of coronavirus disease 2019 (COVID-19) may be stressful for people. Fear and anxiety about a disease can be overwhelming and cause strong emotions in adults and children. Coping with stress will make you, the people you care about, and your community stronger.

Everyone reacts differently to stressful situations.  How you respond to the outbreak can depend on your background, the things that make you different from other people, and  the community you live in.

Continue reading on CDC's official website

 

Congress passes COVID-19-related tax relief

Posted by Admin Posted on Mar 18 2020

On March 18, President Trump signed the Families First Coronavirus Response Act (H.R. 6201), “FFCRA,” which provides affected individuals with paid sick and emergency leave and creates tax credits for affected employers, expands food and nutrition services, allows for emergency state unemployment insurance grants, and increases Medicaid funding to states, among other things.

UPDATE: Based on new guidance from the Department of Labor (DOL), the FFCRA becomes effective on Wednesday, April 1, 2020.  This date relieves many administrative burdens for calculation of the tax credit as no eligible leave will be contemplated during Q1 2020.  Employers will be able to first claim the tax credit on its Q2 941 filing due July 31, 2020 for the period 4/1/2020-6/30/2020. 

Under FFCRA, there are two benefits available for both employers (500 employees or fewer) and employees. Summary chart below:

 

  1. Benefits for Employees

Emergency Family Medical Leave (EFML)

Private-sector (and tax-exempt) employers with fewer than 500 workers and all government entities would be required to provide as many as 12 weeks of job-protected leave to employees ONLY in the situation in which they are unable to work or telework due to caring for a child (under the age of 18) whose school or place of care is closed. The first 10 days may be unpaid, although a worker could choose to use other accrued leave (including EPSL). Employers would be required to pay employees two-thirds of their wages, not to exceed $200 per day and $10,000 in the aggregate. Only employees that have been employed for at least 30 days by the employer will qualify.

As with traditional FMLA leave, EFMLA leave is job-protected, and an employer must return the employee to the same or equivalent position upon their return to work. The bill outlines an exception for employers with fewer than 25 employees stating that, if the employee’s job no longer exists due to the coronavirus pandemic, employers would be required to make reasonable efforts to restore the employee to an equivalent position over a one-year period.

The bill grants the Secretary of Labor the authority to issue regulations exempting: (1) certain healthcare providers and emergency responders from taking leave under the bill; and (2) small businesses with fewer than 50 employees from the requirements of the bill if it would jeopardize the viability of the business.

Emergency Paid Sick Leave (EPSL)

Private-sector (and tax-exempt) employers with fewer than 500 workers and all public-sector employers would have to provide paid sick leave of two weeks (80 hours) for full-time employees. The same employers would have to provide average hours for a two-week period for part-time employees. These benefits are capped at $511 per day and $5,110 in the aggregate for those on leave because of their own health issue, and $200 per day and $2,000 in the aggregate for those needing to care for others.

Qualifying sick leave under this bill includes ANY of the following situations:

  • Employee is under federal, state or locally mandated quarantine or isolation (employees taking leave are entitled to pay at either their regular rate or the applicable minimum wage, whichever is higher, up to $511 per day and $5,110 in the aggregate (over a 2-week period);
  • Employee has been advised by a healthcare provider to self-quarantine (employees taking leave are entitled to pay at either their regular rate or the applicable minimum wage, whichever is higher, up to $511 per day and $5,110 in the aggregate (over a 2-week period));
  • Employee is experiencing symptoms and seeking a medical diagnosis employees taking leave are entitled to pay at either their regular rate or the applicable minimum wage, whichever is higher, up to $511 per day and $5,110 in the aggregate (over a 2-week period));
  • Employee is caring for an individual under (1) or (2) above (employees taking leave are entitled to pay at 2/3 their regular rate or 2/3 the applicable minimum wage, whichever is higher, up to $200 per day and $2,000 in the aggregate (over a 2-week period));
  • Employee is caring for a family member under quarantine or isolation, or caring for a child whose school has closed, or care provider is unavailable, due to the coronavirus (employees taking leave are entitled to pay at 2/3 their regular rate or 2/3 the applicable minimum wage, whichever is higher, up to $200 per day and $12,000 in the aggregate (over a 12-week period);
  • Employee is experiencing substantially similar condition specified by Health and Human Services Secretary (employees taking leave are entitled to pay at 2/3 their regular rate or 2/3 the applicable minimum wage, whichever is higher, up to $200 per day and $2,000 in the aggregate (over a 2-week period)).
  1. Benefits for Employers

Emergency Family Medical Leave (EFML) Tax Credit

Any amount paid by an employer under EFML is eligible for a 100% refundable tax credit, equal to 100% of the qualified emergency family leave wages required to be paid by the Emergency Family and Medical Leave Expansion Act.  The credit is claimed against the tax imposed by section 3111(a) (the employer portion of the Social Security taxes) each calendar quarter through the IRS Form 941.  The amount of qualified leave wages taken into account for each employee is capped at $200 per day and $10,000 for all calendar quarters. If the credit exceeds the employer’s total liability for any calendar quarter, the excess credit is refundable to the employer.

Emergency Paid Sick Leave (EPSL) Credit

This is a 100% refundable tax credit for employers, equal to 100% of qualified paid sick leave wages required to be paid by the Emergency Paid Sick Leave Act that are paid by an employer for each calendar quarter through the IRS Form 941. The tax credit is allowed against the tax imposed by section 3111(a) of the Internal Revenue Code (the employer portion of Social Security taxes). This credit is capped at $2,000 or $5,110, depending on the sick leave taken by the employee.

Claiming an exemption for employers with less than 50 employees

Employers with less than 50 employees may elect an exemption to the EPSL and EFML if it would jeopardize the viability of the business as a going concern.  To elect this small business exemption, a business should document why its business with fewer than 50 employees meets the criteria set forth by the Department, which will be addressed in more detail in forthcoming regulations.

Special Considerations for Self-Employed Individuals

Self-employed individuals may only take into account those days they are unable to work for qualified reasons under the Emergency Family and Medical Leave Credit or the Emergency Paid Sick Leave Credit. They must maintain documentation to be prescribed by the Treasury to establish their eligibility for the credit.

Other Elements of FFCRA

  • Unemployment insurance: Provides as much as $1 billion for emergency transfers to states in fiscal 2020 to process and pay unemployment benefits. Individuals in states with rising unemployment can qualify for an additional 13 weeks (20 in some states) of unemployment benefits.
  • Increase in Medicaid funding: Provides states with a 6.2% Medicaid FMAP increase for all medical services for the duration of the public health emergency.
  • Other provisions: Healthcare plans, including high-deductible health plans, are to provide for COVID-19 testing at no cost to the insured. This includes diagnostic testing, including visits to a provider, urgent care center or emergency room. There is also a waiver of Medicare, Medicare Advantage, Medicaid and CHIP cost sharing.

Actions Employers Can Take Today

Employers may be eligible, depending on the direct or indirect impact to their employees, for up to a total of $10,000 for EFMLA, and up to $2000 or $5110 for sick leave in tax credits for employees that are on emergency or sick leave. Employers must accurately capture the hours and corresponding pay for each type of leave in order to calculate and capture the tax credit.  Payroll providers can help establish time codes to assist with this process.

Q&A: What does 90-day tax payment delay mean for filers?

Posted by Admin Posted on Mar 18 2020



The Trump administration has announced that most individuals and businesses will be allowed to delay paying their federal tax bills for 90 days as part of an emergency relief plan amid the coronavirus pandemic.

Some questions and answers about the delay and its potential impact on the US economy;

DO I STILL NEED TO FILE?

YES. 

The details on the program are still scant. But as of now, taxpayers need to file their federal tax returns by the traditional April 15 deadline. The 90-day extension is solely for the money that is due. Those delayed payments are now due July 15.

However, taxpayers who are facing difficulty filing on time always still have the option to request a six-month extension. Visit the IRS website for more details.

___

WHO GETS TO WAIT TO PAY?

Treasury Secretary Steven Mnuchin said individuals who owe less than $1 million will be able to delay paying. Corporations will be able to defer payment on taxes due up to $10 million. Mnuchin said only the “super rich” would be excluded.

 

However, because details are still pending, it’s unclear if the delay applies to trusts or whether people who make quarterly payments on their taxes will still need to make that first payment by April 15, said Lance Christensen, a partner at the accounting firm of Margolin Winer & Evens.

___

WILL I BE PENALIZED FOR WAITING TO MAKE PAYMENTS?

No. During this unprecedented delay, individuals and corporations will not be subject to interest or penalty payments.

___

 

WHAT IF I AM EXPECTING A REFUND?

If you are expecting a refund, continue to file as usual. As of now, the IRS is still processing returns and sending out refunds.

___

DOES THIS APPLY TO MY STATE TAXES TOO?

No. Check with your state tax authority to see about any changes to due dates. Some are not extending their deadline, others are following the federal model and others still are setting their own deadlines. California, for example, has bumped its date for filing and payment of state taxes to June 15.

___

HOW WILL THIS HELP THE ECONOMY?

It’s unclear.

Treasury Secretary Steven Mnuchin estimates that taxpayers will be able to keep $300 billion in the economy for now. And some tax and economic experts say any extra cash in the hands of Americans is helpful because many will be struggling to get by.

However, some say the tax delay will not provide widespread financial relief.

Howard Gleckman, a senior fellow at the nonpartisan Tax Policy Center, says he thinks it will have a limited impact. That is in part because about three-quarters of Americans get refunds in any year and won’t benefit from a delayed tax bill.

The IRS expected about 150 million individual tax returns, as of the most recent count, about 68 million taxpayers have already filed.

Those who file early tend to be low- and middle-income individuals who are getting a refund. Higher-income individuals, or those with complex taxes who owe money to the government, tend to file later, Gleckman said. This move will provide some relief for them, but Gleckman warns that higher income individuals have extra cash, and they tend to save it not spend it. That leaves lower income individuals, who need it most and are more likely to go out and spend it, without relief from this move.

Important COVID-19 update from CPA Partners ⚠

Posted by Admin Posted on Mar 18 2020

As the COVID-19 situation continues to evolve, CPA Partners’ priority remains on doing our part to ensure the health and welfare of our staff, our clients, and the community at large. As you are likely aware, government authorities are asking businesses to do all they can to help limit the spread of the coronavirus.

Effective Wednesday, March 18th CPA Partners will be operating primarily in a remote working environment.

Our long-standing practice of utilizing technology, tools, and processes that support remote work provide our team with the ability to continue to effectively service clients and continue business operations during this time.

CLIENT MEETINGS
Our offices will be closed to visitors until further notice. In-person meetings will need to be rescheduled with conference calls, or other electronic communication tools. If you need to reschedule a meeting, please contact our office.

DOCUMENTS
Please submit documents to us electronically thru your portal (https://www.cpapartnersllc.com/portal-login). Contact our admin team to assist if you are not currently set-up for portal at receptionist@cpapartnersllc.com or 727-398-2080 extension 0.

Alternatively, we ask that you mail documents to our office at 8200 – 113th Street North, Suite 103, Seminole FL 33772

RESOURCES
We are closely following the COVID-19 situation as it evolves, and are working to publish insights to keep you informed about potential business implications. This includes emerging tax proposals and financial statement filing requirements. Continue to check our new Coronavirus Resource Center at https://www.cpapartnersllc.com/coronavirus-resource-center  for updates and additional resources in the coming days.

MOVING FORWARD
We will continue to monitor the COVID-19 situation and respond accordingly. We will continue to adapt our processes and keep you informed of changes that may impact you. If you have any questions or concerns in the shadow of the coronavirus pandemic, please do not hesitate to contact our office.
Thank you for partnering with us as we push forward during this situation. I have utmost confidence in the talents and abilities of our team members and clients to work through these challenges and emerge stronger together.

Sincerely,
CPA PARTNERS
 

Quickbooks Desktop EFTPS Users

Posted by Admin Posted on Aug 13 2019
https://cpapartners.tumblr.com/post/186984290207/quickbooks-desktop-users-required-to-change-their

Independence Day

Posted by Admin Posted on July 02 2019
https://cpapartners.tumblr.com/post/186006043722/we-will-be-closed-july-4th-and-5th-in-observance

Quickbooks Checkup

Posted by Admin Posted on June 19 2019
https://cpapartners.tumblr.com/post/185707974407/contact-us-to-schedule-your-quickbooks-checkup

IRS announces tax season start date

Posted by Admin Posted on Jan 10 2019
https://cpapartners.tumblr.com/post/181903617332/irs-announces-tax-season-start-date-despite

Refer a friend & get rewarded

Posted by Admin Posted on Jan 10 2019
https://cpapartners.tumblr.com/post/181903574052/refer-a-friend-get-rewarded

New Florida Sales Tax Rates for 2019 Commercial Real Estate

Posted by Admin Posted on Dec 19 2018

 

CLICK HERE to view the new Florida Sales Tax Rates for 2019 Commercial Real Estate.

Tax Planning

Posted by Admin Posted on Nov 29 2018
As the end of the year approaches, it is a good time to think of planning moves that will help lower your tax bill for this year and possibly the next. CPA Partners can help with any questions you may have. Year-end planning for 2018 takes place against the backdrop of a new tax law — the Tax Cuts and Jobs Act — that make major changes in the tax rules for individuals and businesses. For individuals, there are new, lower income tax rates, a substantially increased standard deduction, severely limited itemized deductions and no personal exemptions, an increased child tax credit, and a watered-down alternative minimum tax (AMT), among many other changes. For businesses, the corporate tax rate is cut to 21%, the corporate AMT is gone, there are new limits on business interest deductions, and significantly liberalized expensing and depreciation rules. And there's a new deduction for non-corporate taxpayers with qualified business income from pass-through entities. We have compiled a checklist of actions based on current tax rules that may help you save tax dollars if you act before year-end. Not all actions will apply in your particular situation, but you (or a family member) will likely benefit from many of them. We can narrow down the specific actions that you can take once we meet with you to tailor a particular plan. In the meantime, please review the following list and contact us at your earliest convenience so that we can advise you on which tax-saving moves to make: Year-End Tax Planning Moves for Individuals • Higher-income earners must be wary of the 3.8% surtax on certain unearned income. The surtax is 3.8% of the lesser of: 1. Net investment income (NII), or 2. The excess of modified adjusted gross income (MAGI) over a threshold amount ($250,000 for joint filers or surviving spouses, $125,000 for a married individual filing a separate return, and $200,000 in any other case). As year-end nears, a taxpayer's approach to minimizing or eliminating the 3.8% surtax will depend on his estimated MAGI and NII for the year. Some taxpayers should consider ways to minimize (e.g., through deferral) additional NII for the balance of the year, others should try to see if they can reduce MAGI other than NII, and other individuals will need to consider ways to minimize both NII and other types of MAGI. • The 0.9% additional Medicare tax also may require higher-income earners to take year-end actions. It applies to individuals for whom the sum of their wages received with respect to employment and their self-employment income is in excess of an unindexed threshold amount ($250,000 for joint filers, $125,000 for married couples filing separately, and $200,000 in any other case). Employers must withhold the additional Medicare tax from wages in excess of $200,000 regardless of filing status or other income. Self-employed persons must take it into account in figuring estimated tax. There could be situations where an employee may need to have more withheld toward the end of the year to cover the tax. For example, if an individual earns $200,000 from one employer during the first half of the year and a like amount from another employer during the balance of the year, he or she would owe the additional Medicare tax, but there would be no withholding by either employer for the additional Medicare tax since wages from each employer don't exceed $200,000. • Long-term capital gain from sales of assets held for over one year is taxed at 0%, 15% or 20%, depending on the taxpayer's taxable income. The 0% rate generally applies to the excess of long-term capital gain over any short term capital loss to the extent that it, when added to regular taxable income, is not more than the "maximum zero rate amount" (e.g., $77,200 for a married couple). If the 0% rate applies to long-term capital gains you took earlier this year—for example, you are a joint filer who made a profit of $5,000 on the sale of stock bought in 2009, and other taxable income for 2018 is $70,000—then before year-end, try not to sell assets yielding a capital loss because the first $5,000 of such losses won't yield a benefit this year. And if you hold long-term appreciated-in-value assets, consider selling enough of them to generate long-term capital gains sheltered by the 0% rate. • Postpone income until 2019 and accelerate deductions into 2018 if doing so will enable you to claim larger deductions, credits, and other tax breaks for 2018 that are phased out over varying levels of adjusted gross income (AGI). These include deductible IRA contributions, child tax credits, higher education tax credits, and deductions for student loan interest. Postponing income also is desirable for those taxpayers who anticipate being in a lower tax bracket next year due to changed financial circumstances. Note, however, that in some cases, it may pay to actually accelerate income into 2018. For example, that may be the case where a person will have a more favorable filing status this year than next (e.g., head of household versus individual filing status), or expects to be in a higher tax bracket next year. • If you believe a Roth IRA is better than a traditional IRA, consider converting traditional-IRA money invested in beaten-down stocks (or mutual funds) into a Roth IRA if eligible to do so. Keep in mind, however, that such a conversion will increase your AGI for 2018, and possibly reduce tax breaks geared to AGI (or modified AGI). • It may be advantageous to try to arrange with your employer to defer, until early 2019, a bonus that may be coming your way. This could cut as well as defer your tax. • Beginning in 2018, many taxpayers who claimed itemized deductions year after year will no longer be able to do so. That's because the basic standard deduction has been increased (to $24,000 for joint filers, $12,000 for singles, $18,000 for heads of household, and $12,000 for marrieds filing separately), and many itemized deductions have been cut back or abolished. No more than $10,000 of state and local taxes may be deducted; miscellaneous itemized deductions (e.g., tax preparation fees) and unreimbursed employee expenses are no longer deductible; and personal casualty and theft losses are deductible only if they're attributable to a federally declared disaster and only to the extent the $100-per-casualty and 10%-of-AGI limits are met. You can still itemize medical expenses to the extent they exceed 7.5% of your adjusted gross income, state and local taxes up to $10,000, your charitable contributions, plus interest deductions on a restricted amount of qualifying residence debt, but payments of those items won't save taxes if they don't cumulatively exceed the new, higher standard deduction. • Some taxpayers may be able to work around the new reality by applying a "bunching strategy" to pull or push discretionary medical expenses and charitable contributions into the year where they will do some tax good. For example, if a taxpayer knows he or she will be able to itemize deductions this year but not next year, the taxpayer may be able to make two years' worth of charitable contributions this year, instead of spreading out donations over 2018 and 2019. • Consider using a credit card to pay deductible expenses before the end of the year. Doing so will increase your 2018 deductions even if you don't pay your credit card bill until after the end of the year. • If you expect to owe state and local income taxes when you file your return next year and you will be itemizing in 2018, consider asking your employer to increase withholding of state and local taxes (or pay estimated tax payments of state and local taxes) before year-end to pull the deduction of those taxes into 2018. But remember that state and local tax deductions are limited to $10,000 per year, so this strategy is not a good one if to the extent it causes your 2018 state and local tax payments to exceed $10,000. • Take required minimum distributions (RMDs) from your IRA or 401(k) plan (or other employer-sponsored retirement plan). RMDs from IRAs must begin by April 1 of the year following the year you reach age 70-½. (That start date also applies to company plans, but non-5% company owners who continue working may defer RMDs until April 1 following the year they retire.) Failure to take a required withdrawal can result in a penalty of 50% of the amount of the RMD not withdrawn. Thus, if you turn age 70-½ in 2018, you can delay the first required distribution to 2019, but if you do, you will have to take a double distribution in 2019-the amount required for 2018 plus the amount required for 2019. Think twice before delaying 2018 distributions to 2019, as bunching income into 2019 might push you into a higher tax bracket or have a detrimental impact on various income tax deductions that are reduced at higher income levels. However, it could be beneficial to take both distributions in 2019 if you will be in a substantially lower bracket that year. • If you are age 70-½ or older by the end of 2018, have traditional IRAs, and particularly if you can't itemize your deductions, consider making 2018 charitable donations via qualified charitable distributions from your IRAs. Such distributions are made directly to charities from your IRAs, and the amount of the contribution is neither included in your gross income nor deductible on Schedule A, Form 1040. But the amount of the qualified charitable distribution reduces the amount of your required minimum distribution, resulting in tax savings. • If you were younger than age 70-½ at the end of 2018, you anticipate that in the year that you turn 70-½ and/or in later years you will not itemize your deductions, and you don't have any traditional IRAs, establish and contribute as much as you can to one or more traditional IRAs in 2018. If the immediately previous sentence applies to you, except that you already have one or more traditional IRAs, make maximum contributions to one or more traditional IRAs in 2018. Then, when you reach age 70-½, do the steps in the immediately preceding bullet point. Doing all of this will allow you to, in effect, convert nondeductible charitable contributions that you make in the year you turn 70-½ and later years, into deductible-in-2018 IRA contributions and reductions of gross income from age 70-½ and later year distributions from the IRAs. • Take an eligible rollover distribution from a qualified retirement plan before the end of 2018 if you are facing a penalty for underpayment of estimated tax and having your employer increase your withholding is unavailable or won't sufficiently address the problem. Income tax will be withheld from the distribution and will be applied toward the taxes owed for 2018. You can then timely roll over the gross amount of the distribution, i.e., the net amount you received plus the amount of withheld tax, to a traditional IRA. No part of the distribution will be includible in income for 2018, but the withheld tax will be applied pro rata over the full 2018 tax year to reduce previous underpayments of estimated tax. • Consider increasing the amount you set aside for next year in your employer's health flexible spending account (FSA) if you set aside too little for this year. • If you become eligible in December of 2018 to make health savings account (HSA) contributions, you can make a full year's worth of deductible HSA contributions for 2018. • Make gifts sheltered by the annual gift tax exclusion before the end of the year and thereby save gift and estate taxes. The exclusion applies to gifts of up to $15,000 made in 2018 to each of an unlimited number of individuals. You can't carry over unused exclusions from one year to the next. Such transfers may save family income taxes where income-earning property is given to family members in lower income tax brackets who are not subject to the kiddie tax. • If you were in an area affected by Hurricane Florence or any other federally declared disaster area, and you suffered uninsured or unreimbursed disaster-related losses, keep in mind you can choose to claim them on either the return for the year the loss occurred (in this instance, the 2018 return normally filed next year), or the return for the prior year (2017). • If you were in an area affected by Hurricane Florence or any other federally declared disaster area, you may want to settle an insurance or damage claim in 2018 in order to maximize your casualty loss deduction this year. Year-End Tax-Planning Moves for Businesses & Business Owners • For tax years beginning after 2017, taxpayers other than corporations may be entitled to a deduction of up to 20% of their qualified business income. For 2018, if taxable income exceeds $315,000 for a married couple filing jointly, or $157,500 for all other taxpayers, the deduction may be limited based on whether the taxpayer is engaged in a service-type trade or business (such as law, accounting, health, or consulting), the amount of W-2 wages paid by the trade or business, and/or the unadjusted basis of qualified property (such as machinery and equipment) held by the trade or business. The limitations are phased in for joint filers with taxable income between $315,000 and $415,000 and for all other taxpayers with taxable income between $157,500 and $207,500. • Taxpayers may be able to achieve significant savings by deferring income or accelerating deductions so as to come under the dollar thresholds (or be subject to a smaller phaseout of the deduction) for 2018. Depending on their business model, taxpayers also may be able increase the new deduction by increasing W-2 wages before year-end. The rules are quite complex, so don't make a move in this area without consulting your tax adviser. • More "small businesses" are able to use the cash (as opposed to accrual) method of accounting in 2018 and later years than were allowed to do so in earlier years. To qualify as a "small business" a taxpayer must, among other things, satisfy a gross receipts test. Effective for tax years beginning after Dec. 31, 2017, the gross-receipts test is satisfied if, during a three-year testing period, average annual gross receipts don't exceed $25 million (the dollar amount used to be $5 million). Cash method taxpayers may find it a lot easier to shift income, for example by holding off billings till next year or by accelerating expenses, for example, paying bills early or by making certain prepayments. • Businesses should consider making expenditures that qualify for the liberalized business property expensing option. For tax years beginning in 2018, the expensing limit is $1,000,000, and the investment ceiling limit is $2,500,000. Expensing is generally available for most depreciable property (other than buildings), and off-the-shelf computer software. For property placed in service in tax years beginning after Dec. 31, 2017, expensing also is available for qualified improvement property (generally, any interior improvement to a building's interior, but not for enlargement of a building, elevators or escalators, or the internal structural framework), for roofs, and for HVAC, fire protection, alarm, and security systems. The generous dollar ceilings that apply this year mean that many small and medium sized businesses that make timely purchases will be able to currently deduct most if not all their outlays for machinery and equipment. What's more, the expensing deduction is not prorated for the time that the asset is in service during the year. The fact that the expensing deduction may be claimed in full (if you are otherwise eligible to take it) regardless of how long the property is held during the year can be a potent tool for year-end tax planning. Thus, property acquired and placed in service in the last days of 2018, rather than at the beginning of 2019, can result in a full expensing deduction for 2018. • Businesses also can claim a 100% bonus first year depreciation deduction for machinery and equipment—bought used (with some exceptions) or new—if purchased and placed in service this year. The 100% writeoff is permitted without any proration based on the length of time that an asset is in service during the tax year. As a result, the 100% bonus first-year writeoff is available even if qualifying assets are in service for only a few days in 2018. • Businesses may be able to take advantage of the de minimis safe harbor election (also known as the book-tax conformity election) to expense the costs of lower-cost assets and materials and supplies, assuming the costs don't have to be capitalized under the Code Sec. 263A uniform capitalization (UNICAP) rules. To qualify for the election, the cost of a unit of property can't exceed $5,000 if the taxpayer has an applicable financial statement (AFS; e.g., a certified audited financial statement along with an independent CPA's report). If there's no AFS, the cost of a unit of property can't exceed $2,500. Where the UNICAP rules aren't an issue, consider purchasing such qualifying items before the end of 2018. • A corporation (other than a "large" corporation) that anticipates a small net operating loss (NOL) for 2018 (and substantial net income in 2019) may find it worthwhile to accelerate just enough of its 2019 income (or to defer just enough of its 2018 deductions) to create a small amount of net income for 2018. This will permit the corporation to base its 2019 estimated tax installments on the relatively small amount of income shown on its 2018 return, rather than having to pay estimated taxes based on 100% of its much larger 2019 taxable income. • To reduce 2018 taxable income, consider deferring a debt-cancellation event until 2019. • To reduce 2018 taxable income, consider disposing of a passive activity in 2018 if doing so will allow you to deduct suspended passive activity losses. These are just some of the year-end steps that can be taken to save taxes. Again, by contacting us, we can tailor a particular plan that will work best for you. Very truly yours,

Holiday Open House & Toy Drive

Posted by Admin Posted on Nov 28 2018
https://cpapartners.tumblr.com/post/180586804407/join-us-for-live-music-food-drinks-and-holiday

Federal Due Dates for Extensions - 2017 Income Taxes

Posted by Admin Posted on July 27 2018

September 15 - S-Corporations (1120S) & Partnerships (1065)

File a 2017 calendar year income tax return (Form 1120S & 1065) and pay any tax due. This due date applies only if you timely requested an automatic 6-month extension. Otherwise, see March 15. Provide each shareholder with a copy of Schedule K-1 or a substitute Schedule K-1.

 

October 15 — Individuals (1040) & C-Corporations (1120)
 

     If you have an automatic 6-month extension to file your Individual income tax return for 2017, file Form 1040,             1040A, or 1040EZ and pay any tax, interest, and penalties due.

File a 2017 calendar year Corporation income tax return (Form 1120) and pay any tax, interest, and penalties due. This due date applies only if you timely requested an automatic 6-month extension

How Will New the Tax Cuts and Jobs Act Affect Your Business?

Posted by Admin Posted on June 19 2018

What Business Owners Need to Know

The biggest news to come from the tax law changes is the reduction of the corporate tax rate from 35 percent to 21 percent. The question is, do these changes apply to all businesses? No, they don't. But there are significant changes for businesses, regardless of structure.


While the C Corporation tax rate has been reduced to 21%, the Pass-Through entities are eligible for a qualified business income deduction.  Beginning this tax year, S-Corporations, Partnerships, Trusts, Estates & Schedule C (Sole Proprietors), and Schedule E filers might be eligible to a deduction of up to 20 percent of their qualified business income.

All these rate deductions sound great, but there are major shockers in what businesses will be able to write off as expenses under the new law.
One example: entertainment expenses will no longer be deductible under this new law. So whether you are buying season football tickets for clients to watch your favorite team, or going to the opera, these benefits are no longer write-offs on your tax return.
We are keeping up-to-date with new regulations as they come in and as additional guidance is issued.  We are including the new tax laws in all our tax planning.

The Tax Cuts and Jobs Act was passed with little guidance provided to the IRS and professionals on the rules for applying the new requirements.  We are constantly researching and seeking additional guidance on the implementation and will provide you with updates as we learn more.  We highly recommend you consult with us regarding your tax planning to learn how this Tax Cuts and Jobs Act affects you.

Call us at 727-398-2080 or email us: info@cpapartnersllc.com and we would be happy to set up a  Free half hour in office free consultation to discuss the new tax laws.

Affected by Hurricane Irma?

Posted by Admin Posted on Feb 09 2018

Important Updates & Reminders

Posted by Admin Posted on Feb 05 2018
https://cpapartners.tumblr.com/post/170544260662/updates-and-important-reminders-from-cpa-partners

Tax Relief for Victims of Hurricane Irma in Florida

Posted by Admin Posted on Sept 19 2017
https://cpapartners.tumblr.com/post/165519913482/victims-of-hurricane-irma-that-took-place

How to Know it’s Really the IRS Calling or Knocking on Your Door

Posted by Admin Posted on Aug 07 2017
https://cpapartners.tumblr.com/post/163912878452/how-to-know-its-really-the-irs-calling-or

THIS WEEKEND IS TAX FREE WEEKEND IN FLORIDA!

Posted by Admin Posted on Aug 04 2017
https://cpapartners.tumblr.com/post/163794092097/this-weekend-is-tax-free-weekend-in-florida

REMINDER: The Extended Deadline is Just Around the Corner!

Posted by Admin Posted on July 26 2017
https://cpapartners.tumblr.com/post/163448497762/dont-forget-to-bring-in-your-paperwork-the

Important Facts about Filing Late and Paying Penalties

Posted by Admin Posted on Apr 21 2017
https://cpapartners.tumblr.com/post/159829549702/important-facts-about-filing-late-and-paying

Team Spotlight: Toni Dennis

Posted by Admin Posted on Apr 05 2017
https://cpapartners.tumblr.com/post/159229036417/wed-love-for-you-to-get-to-know-our-team-here-at

Can I deduct this? Read these facts about charitable donations!

Posted by Admin Posted on Mar 30 2017
https://cpapartners.tumblr.com/post/158925656598/know-these-facts-before-deducting-a-charitable

MAKE SURE YOU’RE FILING YOUR ANNUAL REPORT WITH SUNBIZ.ORG AND NOT A THIRD PARTY SITE

Posted by Admin Posted on Mar 17 2017
https://cpapartners.tumblr.com/post/158513390832/make-sure-youre-filing-your-annual-report-with

IRS Has Refunds Totaling $1 Billion for People Who Have Not Filed a 2013 Tax Return

Posted by Admin Posted on Mar 01 2017
https://cpapartners.tumblr.com/post/157871708092/did-you-not-file-your-2013-tax-return-dont-be

“Where’s My Refund?” Updates Feb. 18 for Most EITC and ACTC Filers

Posted by Admin Posted on Feb 15 2017
https://cpapartners.tumblr.com/post/157275223812/wheres-my-refund-updates-feb-18-for-most-eitc

Staff Spotlight: Victoria Mann

Posted by Admin Posted on Feb 13 2017
https://cpapartners.tumblr.com/post/157194267492/staff-spotlight-victoria-mann-is-one-of-the

QuickBooks Group Training 3.8.17

Posted by Admin Posted on Feb 06 2017
https://cpapartners.tumblr.com/post/156892303157/quickbooks-group-training

IRS Warns Tax Payers About "Phishing" Scams

Posted by Admin Posted on Feb 01 2017
https://cpapartners.tumblr.com/post/156678385847/phishing-schemes-lead-the-irs-dirty-dozen-list

FRAUD ALERT!!

Posted by Admin Posted on Jan 30 2017
https://cpapartners.tumblr.com/post/156318742212/stay-alert-dont-let-someone-pretending-to-be

1099 & W-2 are Due January 31 2017

Posted by Admin Posted on Jan 30 2017
https://cpapartners.tumblr.com/post/156592335447/reminder-employers-must-file-forms-w-2-by-jan-31

Quickbooks Training

Posted by Admin Posted on Jan 13 2017
https://cpapartners.tumblr.com/post/155809877937/quickbooks-group-training

Health Care Information Forms

Posted by Admin Posted on Jan 12 2017
https://cpapartners.tumblr.com/post/155635970137/health-care-information-forms

Welcome to Our Blog!

Posted by Admin Posted on Sept 27 2016
This is the home of our new blog. Check back often for updates!

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