Author: Lily

MSATP Comments on AICPA Letter to IRS 

MSATP supports the AICPA’s letter asking the IRS to push back the Sept 30 filing deadline for taxpayers to receive penalty relief under of IRS Notice 2022-36. The notice was issued August 24 and provides automatic relief from failure to file penalties for certain 2019 and 2020 returns filed by September 30, 2022.

In the letter, the AICPA states:

“We are pleased that IRS has provided some measure of COVID-19 related penalty relief for taxpayers. We applaud the unprecedented waiver of the failure to file penalty under section 6651(a)(1).1 And we praise the IRS for waiving the various international information reporting penalties under sections 6038, 6038A, 6038C, 6039F and 6677 in certain cases. Under the Notice, these penalties will be waived if the returns are filed on or before September 30, 2022. As the AICPA has requested and pointed out in various letters to IRS and Congress and through our multiyear dialogue with IRS on Form 3520 penalties, the penalty relief provided will save the Treasury and the IRS resources by prompting voluntary compliance. Additionally, significant taxpayer burden will be reduced by automatically waiving the penalties covered by Notice 2022-36 and automatically providing refunds where penalties have already been paid.

“We request that the deadline of September 30, 2022 be extended to December 31, 2022. The business cycle of the tax profession is filled with upcoming deadlines (September 15 deadline for pass-throughs, September 30 for trusts, and October 15 for individuals and corporations), and inserting a September 30 deadline into this mix creates an insurmountable burden for most practitioners and taxpayers. Additionally, given the complex facts often associated with international information reporting and that many affected taxpayers live abroad, the September 30 deadline is unrealistic and will fail to prompt a critical mass of impacted taxpayers to avail themselves of the benefits of the Notice. Extending the deadline will assist the practitioner community in maximizing the relief provided and will bring more taxpayers into voluntary compliance. In turn, such voluntary compliance will save the IRS resources.

“We also note that the Notice provides relief for ‘specified tax returns for taxable years 2019 and 2020 that are filed on or before September 30, 2022.’ We urge clarification to make explicit that the rules under section 7502 apply to determine whether returns are filed timely under this Notice.”

 

Outsourcing Payroll Duties Can Be a Sound Business Practice, but… Know Your Tax Responsibilities as an Employer | IRS Small Business

Many employers outsource some or all their payroll and related tax duties to third-party payroll service providers. Third-party payroll service providers can greatly streamline business operations as well as help assure filing deadlines and deposit requirements are met. Some of the services they provide are:

• Administering payroll and employment taxes on behalf of the employer where the employer provides the funds initially to the third-party.
• Reporting, collecting and depositing employment taxes with state and federal authorities.

Employers who outsource some or all their payroll responsibilities should consider the following:

• The employer is ultimately responsible for the deposit and payment of federal tax liabilities. Even though the employer may forward the tax amounts to the third-party to make the tax deposits, the employer is the responsible party. If the third-party fails to make the federal tax payments, then IRS may assess penalties and interest on the employer’s account. The employer is liable for all taxes, penalties and interest due. The employer may also be held personally liable for certain unpaid federal taxes.
• If there are any issues with an account, then the IRS will send correspondence to the employer at the address of record. The IRS strongly suggests that the employer does not change their address of record to that of the payroll service provider as it may significantly limit the employer’s ability to be informed of tax matters involving their business.
• Electronic Funds Transfer (EFT) must be used to deposit all federal tax deposits. Generally, an EFT is made using Electronic Federal Tax Payment System (EFTPS). Employers should ensure their payroll providers are using EFTPS, so the employers can confirm that payments are being made on their behalf. Employers should register on the EFTPS system to get their own PIN and use this PIN to periodically verify payments. A red flag should go up the first time a service provider misses a payment or makes a late payment. When an employer registers on EFTPS they will have on-line access to their payment history for 16 months. In addition, EFTPS allows employers to make any additional tax payments that their third-party provider is not making on their behalf such as estimated tax payments.

EFTPS is secure, accurate, easy to use and provides an immediate confirmation for each transaction. The service is offered free of charge from the U.S. Department of Treasury and enables employers to make and verify federal tax payments electronically 24 hours a day, 7 days a week through the internet or by phone. For more information, employers can enroll online at EFTPS.gov or call EFTPS Customer Service at 800-555-4477 for an enrollment form or speak with a customer service agent.

There have been prosecutions of individuals and companies, who acting under the guise of a payroll service provider, have stolen funds intended for payment of employment taxes.

Remember, employers are ultimately the parties responsible for the payment of income tax withheld and both the employer and employee portions of social security and Medicare taxes.

Employers who believe that a bill or notice received is a result of a problem with their payroll service provider should contact the IRS as soon as possible by calling the number on the bill, writing to the IRS office that sent the bill, calling 800-829-4933 or visiting a local IRS office. For more information about IRS notices, bills and payment options, refer to Publication 594, The IRS Collection Process.

COVID Tax Relief: IRS Provides Broad-Based Penalty Relief For Certain 2019 and 2020 Returns Due to the Pandemic | IR-2022-155

To help struggling taxpayers affected by the COVID-19 pandemic, the IRS issued Notice 2022-36, which provides penalty relief to most people and businesses who file certain 2019 or 2020 returns late.

The IRS is also taking an additional step to help those who paid these penalties already. Nearly 1.6 million taxpayers will automatically receive more than $1.2 billion in refunds or credits. Many of these payments will be completed by the end of September.

Besides providing relief to both individuals and businesses impacted by the pandemic, this step is designed to allow the IRS to focus its resources on processing backlogged tax returns and taxpayer correspondence to help return to normal operations for the 2023 filing season.

More information here.

 

SDAT Conducts Tax Credit Awareness Campaign, Encourages Marylanders to Apply Online | Nearly 124,000 Postcards To Be Mailed Encouraging Low-income Homeowners and Renters to Apply for Property Tax Credits

The Maryland State Department of Assessments and Taxation (SDAT) today announced the implementation of its 2022 Tax Credit Awareness Campaign, urging Marylanders to consider whether they may be eligible to receive a homeowners’ or renters’ property tax credit. The quickest and easiest way to find out more information and submit an application is by accessing the innovative online tax credit application system, which strengthens SDAT’s ability to continue processing all tax credit applications in an accurate and timely manner. The deadline to file for both tax credits is October 1, 2022.

Read the full press release here.

 

IRS Issues Final Rule Under No Surprises Act (T.D. 9965) | via Wolters Kluwer IntelliConnect*

The IRS has released final rules under the No Surprises Act which includes certain disclosure requirements relating to information that group health plans, and health insurance issuers offering group or individual health insurance coverage, must share about the qualifying payment amount (QPA) under the interim final rules issued in July 2021, titled Requirements Related to Surprise Billing; Part I (July 2021 interim final rules). Additionally, the Service has finalized select provisions under the October 2021 interim final rules, titled Requirements Related to Surprise Billing; Part II (October 2021 interim final rules), to address certain requirements related to consideration of information when a certified independent dispute resolution (IDR) entity makes a payment determination under the Federal IDR process. These final rules are effective on November 17, 2022, for plan years or policy years beginning on or after January 1, 2022.

Information to be Shared About Qualifying Paying Amount

The IRS has added a definition for the term “downcode” to 26 CFR 54.9816-6, 29 CFR 2590.716-6, and 45 CFR 149.140; and final rules under 26 CFR 54.9816-6(d), 29 CFR 2590.716-6(d), and 45 CFR 149.140(d) to require additional information about the QPA that must be provided with an initial payment or notice of denial of payment, without a provider, facility, or provider of air ambulance services having to make a request for this information, in cases in which the plan or issuer has downcoded the billed claim. These final rules also specify that, if a QPA is based on a downcoded service code or modifier, in addition to the information already required to be provided with an initial payment or notice of denial of payment, a plan or issuer must provide a statement that the service code or modifier billed by the provider, facility, or provider of air ambulance services was downcoded; an explanation of why the claim was downcoded, including a description of which service codes were altered, if any, and which modifiers were altered, added, or removed, if any; and the amount that would have been the QPA had the service code or modifier not been downcoded.

Payment Determinations Under Federal IDR Process

Although the QPA is a quantitative figure, the amount that best represents the value of the qualified IDR items and services may be more or less than the QPA due to additional circumstances that are not easily quantifiable such as the care setting or the teaching status of the facility. It, therefore, is reasonable to ensure that certified IDR entities consider the QPA, a quantitative figure, and then consider the additional, likely-qualitative factors, when determining the out-of-network rate.

In determining which offer to select during the Federal IDR process under these final rules, the certified IDR entity must consider the QPA for the applicable year for the same or similar item or service and then must consider all additional information submitted by a party to determine which offer best reflects the appropriate out-of-network rate, provided that the information relates to the party’s offer for the payment amount for the qualified IDR item or service that is the subject of the payment determination (and does not include information that the certified IDR entity is prohibited from considering in making the payment determination under Code Sec. 9816(c)(5)(D).

 

Phase-In Period for Dividend Equivalent Payment Regulations Extended Further (Notice 2022-37) | via KPMG

The IRS today released an advance version of Notice 2022-37 announcing an additional two-year extension for taxpayers to comply with the final regulations with respect to dividend equivalents under sections 871(m), 1441, 1461, and 1473.

Notice 2022-37 [PDF 111 KB] states that Treasury and the IRS intend to revise the regulations and in the meantime provides the following extensions of time:

• An extension to the phased-in application of the section 871(m) regulations to delta-one and non-delta-one transactions (Treasury and the IRS intend to revise the effective/applicability date for Reg. section 1.871-15(d)(2) and (e) to provide that these rules will not apply to any payment made with respect to any non-delta-one transaction issued before January 1, 2025.)
• An extension of the simplified standard for determining whether transactions are combined transactions (Withholding agents are not required to combine any transactions that are listed securities entered into in 2017. Notice 2017-42, Notice 2018-72, and Notice 2020-2 extended the period during which this simplified standard for combined transactions applies to include 2018 through 2022. Notice 2022-37 further extends the period during which this simplified standard for combined transactions applies to include 2023 and 2024.)
• An extension of phase-in relief for qualified derivatives dealers (QDDs) (Notice 2017-42, Notice 2018-72, and Notice 2020-2 announced that Treasury and the IRS intended to amend Reg. sections 1.871-15(q)(1) and (r)(3), and 1.1441-1(b)(4)(xxii)(C) to provide that a QDD will not be subject to tax on dividends and dividend equivalents received in 2017 through 2022 in its equity derivatives dealer capacity or withholding on those dividends (including deemed dividends). Notice 2022-37 announces that Treasury and the IRS intend to amend those provisions to provide that a QDD will not be subject to tax on dividends and dividend equivalents received in 2023 and 2024 in its equity derivatives dealer capacity or withholding on those dividends (including deemed dividends) as well.)
• An extension of transition rules from Notice 2010-46 (Notice 2018-5, Notice 2018-72, and Notice 2020-2 provided that notwithstanding the preamble to the 2017 regulations, withholding agents may apply the transition rules described in Notice 2010-46, Part III, for payments made in 2018 through 2022. Notice 2022-37 provides that withholding agents may also apply the transition rules described in Notice 2010-46, Part III, for payments made in 2023 and 2024.)

Notice 2022-37 further provides the anti-abuse rule provided in Reg. section 1.871-15(o) will continue to apply during the phase-in years (described above). As a result, a transaction that would not otherwise be treated as a section 871(m) transaction may nevertheless be a section 871(m) transaction under Reg. section 1.871-15(o).

View the KPMG article here.

 

District of Columbia—Tobacco Tax: Upcoming Tax Rate Changes for Cigarettes and Other Tobacco Products | via Wolters Kluwer IntelliConnect*

There are upcoming tax rate changes in the District of Columbia for cigarettes and other tobacco products.

Rate Changes

Effective October 1, 2022 the total tax on a package of 20 cigarettes is $5.02. The total tax is a combination of the tax of $4.50 and the surtax of $0.52.

The calculated tax applicable to other tax products for tax year 2023 is 79%.

 

Virginia—Personal Income Tax: Deduction Enacted for Educators | via Wolters Kluwer IntelliConnect*

Virginia enacted an income tax deduction of up to $500 for certain expenses incurred by an eligible educator, applicable to taxable years 2022, 2023, and 2024. An eligible educator is an individual who, for at least 900 hours during the taxable year, served as a Virginia licensed teacher, instructor, student counselor, principal, special needs personnel, or student aide for public or private primary or secondary school students in Virginia. Qualifying expenses are those incurred for participation in professional development courses and the purchase of books, supplies, computer equipment (including related software and services), other educational equipment, and supplementary materials used directly in service to Virginia students as an eligible educator.

 

Virginia—Personal Income Tax: Military Retirement Subtraction Enacted | via Wolters Kluwer IntelliConnect*

Virginia enacted a subtraction modification for certain military benefits, starting at $10,000 in 2022 and increasing to $40,000 when fully phased in beginning in 2025. Military benefits include military retirement income and benefits paid to the surviving spouse of a veteran. The subtraction is allowed only for military benefits received by an individual age 55 or older. Similar provisions were previously enacted in the biennial budget (TAXDAY, 2022/06/23, S.18).

 

Nexus Webinar:

• Date: Thursday, September 22, 2022
• Time: 1:00 p.m. – 5:00 p.m.
• CPE: 4 (Recommended)
• Speakers: James Dawson, JD; Sonia Shaikh, Joseph Flack, & Brigid Fitzpatrick

Cost: $160 (Members); $180 (Non-Members)

Register here: Seminar – Maryland Society of Accounting & Tax Professionals (msatp.org)

 

Inflation Reduction Act of 2022 Webinar:

• Date: Friday, September 23, 2022
• Time: 10:00 a.m. – 12:00 p.m.
• CPE: 2 (Recommended)
• Speaker: Bradley Burnett, JD

Cost: $100 (Members); $110 (Non-Members)

Register here: Seminar – Maryland Society of Accounting & Tax Professionals (msatp.org)

View more seminars/webinars here!

 

Check out our first-ever volunteer spotlight with Ron Grafman, EA — the outgoing Board of Trustees Delegate on MSATP’s Board of Directors.

Ron believes that MSATP truly serves its members — therefore, members should want to give back by volunteering. He would love to see more members get involved because that’s what makes the Society successful, and what makes it so great.

Read more here: Volunteer Spotlight: Ron Grafman – Maryland Society of Accounting & Tax Professionals (msatp.org)

Get involved and volunteer today — more details here.

 

3 all-inclusive days down by the shore, 13 hours of CPE, and access to Maryland’s top talent in the accounting and tax field.

Register here: Home (msatp.org)

 

Looking for more CPE opportunities? The following Wolters Kluwer webinars are available to you at a special rate:

• Compilation and Review in the Red Zone | August 30, 2022 | 3 – 5 p.m. | 2 CPE (Recommended) | $106
• 2022 LLCs: Reducing Self-employment Tax and Maximizing the 20% Passthrough Deduction | September 1, 2022 | 3 – 5 p.m. | 2 CPE (Recommended) | $106
• Transactional Tax Basis Capital Reporting | September 6, 2022 | 12 – 2 p.m. | 2 CPE (Recommended) | $106

Register here: Seminars – Maryland Society of Accounting & Tax Professionals (msatp.org)

In case you missed our email yesterday, check out this week’s MSATP TV: Jonathan Pocius of Payroll Services LLC discussed the new MarylandSaves program. Click the image or link below to watch the lunch and learn!

Watch here: MSATP TV: Maryland Saves – YouTube

 

Saving For College: The 529 | By Bob Jennings, TaxSpeaker

How do you save for college for your kids or grandkids? One of the most useful tools used by parents and more often by grandparents is something called a 529 plan.

Congress created 529 plans in 1996. A qualified tuition program (QTP) (also known as a 529 plan or program) is a program set up to allow you to either prepay or contribute to an account established for paying, a student’s qualified education expenses at an eligible educational institution. Whoever purchases the Section 529 plan is the custodian and controls the funds until they are withdrawn. One of our favorite sources for information on 529 plans is www.savingforcollege.com.

QTPs may be established and maintained by states (or agencies or instrumentalities of a state) and eligible educational institutions. Because multiple accounts may be established the taxpayer is not restricted to one specific state operated 529, even if already funded.

There is no deduction at the federal level for contributions to 529 plans, although many states offer a state credit or deduction. Earnings are not subject to federal tax and generally not subject to state tax when used for the qualified education expenses of the designated beneficiary, such as tuition, fees, books, as well as room and board. You can set one up and name anyone as a beneficiary — a relative, a friend, even yourself. There are no income restrictions on either you, as the contributor, or the beneficiary. There is also no limit to the number of plans you set up. And, 529 plans are exempt from estate tax.

Read about qualified educational expenses, and check out more details in TaxSpeaker’s newsletter here.

 

IRS Webinar: Foreign Tax Credit – Individuals | Tuesday, August 23, 2022 @ 2 PM EST

Webinar Objectives:

• Overview of foreign tax credit (FTC) concepts
• Treaty vs. statutory withholding rates
• Foreign tax redeterminations (FTRs)
• Foreign fiscal year considerations
• Plus, a live Q & A

1 CE credit will be offered for this webinar. Category: Federal Tax

Questions? Email cl.sl.web.conference.team@irs.gov.

Register Here: Foreign Tax Credit – Individuals (webcaster4.com)

 

What Business Owners Need to Do When Closing Their Doors For Good | IRS Tax Tip 2022-122

There are a few things business owners need to do before they close their business. Of course, they need to fulfill their federal tax responsibilities. It’s also important to notify the IRS of their plans.

Business owners must take these steps when closing a business:

• File a final tax return and related forms. The type of return to file and related forms depends on the type of business.
• Take care of employees. Business owners with one or more employees must pay any final wages or compensation, make final federal tax deposits and report employment taxes.
• Pay taxes owed. Even if the business closes now, tax payments may be due next filing season.
• Report payments to contract workers. Businesses that pay contractors at least $600 for services including parts and materials during the calendar year in which they go out of business, must report those payments.
• Cancel EIN and close IRS business account. Business owners should notify the IRS so they can close the IRS business account.
• Keep business records. How long a business needs to keep records depends on what’s recorded in each document

IRS.gov has information to help guide business owners through the process of shutting down.  Small businesses and self-employed taxpayers can find information including:

• What forms to file
• How to report revenue received in the final year of business
• How to report expenses incurred before closure

Business owners can also get helpful information on declaring bankruptcy, selling their business and terminating retirement plans.

 

Tax Pros: Create a Written Data Security Plan | IR-2022-147

The Security Summit partners unveiled a special new sample security plan designed to help tax professionals, especially those with smaller practices, protect their data and information. The special plan, called a Written Information Security Plan (WISP), is outlined in a 29-page document that’s been worked on by members of the Security Summit, including tax professionals, software and industry partners, representatives from state tax groups, and the IRS.

 

Truckers Need to File by Aug. 31 Deadline, E-file Encouraged | IR-2022-146

If you have clients who have registered, or are required to register, large trucks and buses, it’s time for them to file Form 2290, Heavy Highway Vehicle Use Tax Return. The IRS strongly encourages using e-file and filing before the payment deadline of Aug. 31, 2022, for vehicles first used in July 2022.

 

Maximum Educator Expense Deduction Rises to $300 in 2022 | IR-2022-148

As the new school year begins, teachers and other educators will be able to deduct up to $300 of out-of-pocket classroom expenses for 2022 when they file their federal income tax returns next year. Visit IRS.gov for more information about who qualifies, what’s deductible, and more.

 

Are you hiring? MSATP members can post job opportunities on our website for free. Email info@msatp.org and we’ll help you get started.
 
Looking for a job? We have some exciting new opportunities on our website, including several job opportunities at American University! You can view the classifieds section of our website clicking the button below.

View Here: Job Opportunities – Maryland Society of Accounting & Tax Professionals (msatp.org)

 

3 all-inclusive days down by the shore, 13 hours of CPE, and access to Maryland’s top talent in the accounting and tax field.

Register Here: https://bbcc.msatp.org

 

Looking for more CPE opportunities? The following Wolters Kluwer webinars are available to you at a special rate:

• How to Avoid Common Peer Review Pitfalls | August 22, 2022 | 3 – 5 p.m. | 2 CPE (Recommended) | $106
• Accounting Standards for CPAs: Summer Update | August 24, 2022 | 3 – 5 p.m. | 2 CPE (Recommended) | $106
• Compilation and Review in the Red Zone | August 30, 2022 | 3 – 5 p.m. | 2 CPE (Recommended) | $106
• 2022 LLCs: Reducing Self-employment Tax and Maximizing the 20% Passthrough Deduction | September 1, 2022 | 3 – 5 p.m. | 2 CPE (Recommended) | $106
• Transactional Tax Basis Capital Reporting | September 6, 2022 | 12 – 2 p.m. | 2 CPE (Recommended) | $106

Register Here: Seminars – Maryland Society of Accounting & Tax Professionals (msatp.org)

 

RSVP Here: You’re invited to “Summer Wine Tasting.” Tap here to RSVP – Paperless Post Flyer

Tune in for a special episode of MSATP TV, exclusively on our YouTube Channel! Rob Smith of Liscio introduced the Accountants and Bookkeepers Co-Operative Library — a content-driven community. Click the button below to watch the episode!

Watch Here: MSATP TV: Circle, The Cooperative Library for Accountants & Bookkeepers – YouTube

 

Imagine a library where you can enter and view best practice workflows and step-by-step training materials for the software you use every day.

“Wings” of the library include core technologies, tax department, bookkeeping, firm management, personal productivity, and Liscio training.

Content is designed to be consumed as quickly as possible and geared towards solving problems that accountants see every day.  Videos are time stamped and outlined. Notes are included and articles have executive summaries. This content doesn’t just tell what/why you should do something. It shows you step-by-step how to get it done.

Here are two examples.

• https://liscio.circle.so/c/teams/sync-sharepoint-to-file-explorer-5ff4acaf-ea0a-4ffb-ba6e-8cd18ae95149
• https://liscio.circle.so/c/excel/index-match-f7db2ef2-5f0c-4fa6-9ae3-4df1c3b7f8e1

To become part of our MSATP library community, click the link below:

Sign up | Accountant Co-op (circle.so)

 

MarylandSaves | On-Demand Webinar by Payroll Services LLC

MarylandSaves is a new retirement savings program, sponsored by the state of Maryland Small Business Retirement Savings Program. It’s a simple and seamless way to help Maryland employees save and plan for the future.

Nearly one million private-sector employees in Maryland have no access to an employer-sponsored retirement savings plan. MarylandSaves was created by Governor Hogan and the Maryland State Legislature to meet this urgent need. With MarylandSaves, employers can now offer their employees an easy way to save for their retirement in a convenient Roth IRA that employees can take wherever their career leads.

MarylandSaves makes it as easy as possible to help all Marylanders plan for their futures and set themselves up for secure retirement.

Starting September 15, 2022, Maryland businesses will be required to participate in MarylandSaves. 

MSATP’s corporate sponsor Payroll Services LLC created a 15-minute on-demand webinar to explain the new State program and what you will need to be aware of. Check out the webinar by clicking the link below.

Maryland Saves Goes Live September 15th 2022 – YouTube

Plus, Jonathan Pocius of Payroll Services LLC will be joining us on MSATP TV next week to discuss MarylandSaves further. Email your questions to info@msatp.org by Monday, August 15, 2022, to have them answered!

 

IRS Expands Crypto Question on Draft Version of 1040 | By Michael Cohn, Accounting Today

The Internal Revenue Service has released a draft version of Form 1040 for next tax season, with an expanded question about virtual currencies, now referred to as digital assets, along with other changes on drafts of that form and related forms and schedules.

Last tax season, the question was: “At any time during 2021, did you receive, sell, exchange, or otherwise dispose of any financial interest in any virtual currency?” The draft form for tax year 2022 says, “At any time during 2022, did you: (a) receive (as a reward, award, or compensation); or (b) sell, exchange, gift, or otherwise dispose of a digital asset (or a financial interest in a digital asset)? (See instructions.)” Presumably, this is to encompass other forms of digital assets besides cryptocurrency, such as nonfungible assets, or NFTs, many of which rose rapidly in value last year before seeing sharp declines. Presumably, there will be more detailed instructions forthcoming from the IRS.

Continue reading the article here.

 

3 all-inclusive days down by the shore, 13 hours of CPE, and access to Maryland’s top talent in the accounting and tax field.

Register Here!

 

Looking for more CPE opportunities? The following Wolters Kluwer webinars are available to you at a special rate:

• When Your Client Dies: Final Form 1040, Post-Death Elections and More | August 15, 2022 | 3 – 5 p.m. | 2 CPE (Recommended) | $106
• How to Avoid Common Peer Review Pitfalls | August 22, 2022 | 3 – 5 p.m. | 2 CPE (Recommended) | $106
• Accounting Standards for CPAs: Summer Update | August 24, 2022 | 3 – 5 p.m. | 2 CPE (Recommended) | $106
• Compilation and Review in the Red Zone | August 30, 2022 | 3 – 5 p.m. | 2 CPE (Recommended) | $106
• 2022 LLCs: Reducing Self-employment Tax and Maximizing the 20% Passthrough Deduction | September 1, 2022 | 3 – 5 p.m. | 2 CPE (Recommended) | $106
•  Transactional Tax Basis Capital Reporting | September 6, 2022 | 12 – 2 p.m. | 2 CPE (Recommended) | $106

Register Here!

 

RSVP Here!

 

Our very first Volunteer Spotlight is with Ron Grafman! Take a look at why Ron believes you should get involved with MSATP as a volunteer.

 

When did you join MSATP? 

Ron joined MSATP in 1984. Donald Hull was president and the one who signed his certificate.

 

What positions have you held on the Board?

The only position Ron has not held is Secretary! He has been Treasurer, Delegate, and was President from 2009-2010 during MSATP’s 50^th anniversary. Most recently, he was the Board of Trustees Delegate.

 

What’s your favorite memory with MSATP?

Ron’s favorite memory with MSATP is when Sidney Weinberg, the founder of MSATP, told him that he had the potential to be a great president one day. Ron was not even considering running for president at that point in time, but years later he did! Ron was a fantastic president and did many great things for the society, just like Sidney predicted. 

 

Why should members become active within the organization?

Ron believes that we have a wonderful organization that really serves its members, therefore members should want to give back by volunteering. He would love to see more members get involved, because that’s what makes MSATP successful, and what makes it so great. When looking back on all his years of volunteering, Ron’s answer has never changed on this. 

Get involved and volunteer today! https://www.msatp.org/volunteer-program/

From Markers to Face Masks, Classroom Supplies May Be Tax Deductible | IRS Tax Tip 2022-118

Teachers go above and beyond for their students, often buying classroom supplies needed to make learning successful. The educator expense deduction allows eligible teachers and administrators to deduct part of the cost of technology, supplies and training from their taxes. They can only claim this deduction for expenses that weren’t reimbursed by their employer, a grant or other source.

Who is an eligible educator:

The taxpayer must be a kindergarten through grade 12 teacher, instructor, counselor, principal or aide. They must also work at least 900 hours a school year in a school that provides elementary or secondary education as determined under state law.

Things to know about this deduction:

Starting on tax returns for 2022, educators can deduct up to $300 of trade or business expenses that weren’t reimbursed. If two married educators are filing a joint return, the limit rises to $600. These taxpayers cannot deduct more than $300 each.

For 2021 returns, the limit is $250, or $500 for married educators filing jointly. As teachers prepare for the school year, they should remember to keep receipts after making any purchase to support claiming this deduction.

Qualified expenses are amounts the taxpayer paid themselves during the tax year.

Here are some of the expenses an educator can deduct:

• Professional development course fees
• Books and supplies
• COVID-19 protective items to stop the spread of the disease in the classroom.
• Computer equipment, including related software and services
• Other equipment and materials used in the classroom

 

Virginia—Sales and Use Tax: Guidelines Issued for the Application of Tax to Sales of Accommodations Facilitated by Accommodations Intermediaries | via Wolters Kluwer IntelliConnect

Virginia issued guidelines regarding previously enacted legislation that changes the application of the retail sales and use and transient occupancy taxes to sales of accommodations involving accommodations intermediaries. The changes are effective October 1, 2022. Specifically, the legislation does the following:

• requires accommodations intermediaries to collect the tax and remit it to the Department of Taxation, and eliminates the requirement that, where the accommodations are provided at a hotel, accommodations intermediaries remit the portion of the tax not attributable to the accommodations fee to the hotel for the hotel to remit to the Department;
• provides that in a transaction involving multiple parties that may be considered accommodations intermediaries, such parties may agree that one party is responsible for collecting and remitting the taxes. In such event, the party agreeing to collect and remit such taxes would be the sole party liable for the tax;
• makes similar changes to transient occupancy taxes administered by localities;
• requires intermediaries to submit to a locality each month the property addresses and gross receipts for all accommodations facilitated by the intermediary in such locality; and
• amends various related definitions.

Collection Of Tax Beginning October 1, 2022

For any retail sale of accommodations facilitated by an accommodations intermediary, regardless of whether the accommodations are at a hotel, short-term rental, or other type of lodging, the accommodations intermediary is deemed a dealer making a retail sale of accommodations and must collect the tax computed on the room charge and remit the same to the Department.

For any transaction involving two or more parties that meet the definition of “accommodations intermediary,” the parties may make an agreement regarding which party is responsible for collecting and remitting the tax, so long as the responsible party is a dealer registered with the Department. Additional charges levied in connection with the rental of accommodations that are not part of the “room charge” and the tax collectible on such charges are collectible from the customer by the accommodations provider. In such instances, the accommodations provider must remit the tax collected on the additional charges to the Department.

Accommodations providers are required to collect and remit all taxes on transactions not facilitated by intermediaries.

Similar rules apply to the transient occupancy taxes, which are remitted to the locality. In addition, intermediaries are required to submit to a locality each month the property addresses and gross receipts for all accommodations facilitated by the intermediary in such locality.

Invoice Requirements

In any retail sale of accommodations facilitated by an accommodations intermediary, the accommodations intermediary must separately state the amount of the tax on the bill, invoice, or similar documentation and must add the tax to the room charge. Thereafter, the tax is a debt from the customer to the accommodations intermediary, recoverable at law in the same manner as other debts. Where the retail sale of accommodations is not facilitated by an accommodations intermediary, the accommodations provider must separately state the amount of the tax in the bill, invoice, or similar documentation and must add the tax to the total price paid for the use or possession of the accommodations.

Marketplace Facilitators

Accommodations intermediaries may have an obligation to register and collect the retail sales and use tax as marketplace facilitators. Marketplace facilitators are generally permitted to apply for waivers of their duty to collect and remit tax based on a showing either of undue hardship or that all of their marketplace sellers are already registered dealers. In the past, these waivers may have permitted accommodations intermediaries to allow accommodations providers to collect and remit all taxes due on retail sales of accommodations. However, under the new legislation, accommodations intermediaries, where they are deemed dealers for purposes of a retail sale of accommodations, may not assign or otherwise transfer their duty to collect and remit taxes as required by law to accommodations providers or any other entity.

 

District of Columbia—Property Tax: Budget Act Amends Property Tax Provisions | via Wolters Kluwer IntelliConnect

The District of Columbia has passed the 2023 Budget Act and it includes amendments to multiple property tax provisions.

Increase Limit Amended for Seniors and Disabled Individuals

Residential property receiving the homestead deduction and senior or disabled owner real property tax relief are protected by a cap credit on their property tax bills. Currently, the real property tax cannot be increased annually more than 5% in the property’s taxable assessed value. Beginning October 1, 2022, the residential real property increase for these properties is limited to 2% annually.

Disabled Veterans Deduction Amended

The homestead deduction for disabled veterans is increased to $445,000 (currently, $250,000). Real property receiving the deduction will no longer be eligible for the:

• reduction in tax liability for persons over age 65 and for those with disabilities; and
• owner-occupied residential tax credit (the homestead deduction).

Additionally, the disabled veterans homestead is exempt from the requirement that a residential property’s taxable assessments cannot be less than 40% of the current year’s assessed value.

Tax Abatement for Downtown Housing

The tax abatement for downtown housing has been amended to:

• expand the geographical area for the abatement;
• increase the percentage of affordable housing units to 15% (currently, 8%); and
• require the Mayor to set the annual amount for the abatement.

Act 24-492 (D.C.B. 24-714), Laws 2022, approved July 25, 2022, applicable October 1, 2022, and effective after a 30-day congressional review period

 

District of Columbia—Personal Income Tax: Earned Income Credit, Exclusions Expanded | via Wolters Kluwer IntelliConnect

The District of Columbia has enacted a buget for 2023 that makes permanent changes to income tax provisions regarding:

• the earned income tax credits; and
• gross income exlcusions.

The budget is making permanent the changes enacted earlier this year in emergency legislation.

Act 24-0492 (D.C.B. 24-0714), Laws 2022, approved July 25, 2022, effective after a 30-day congressional review period

 

IRS Extends Deadline for Amending Retirement Plan or IRA to Reflect Provisions of SECURE Act and Miners Act | via Wolters Kluwer IntelliConnect

The IRS has extended the deadlines for amending a retirement plan or individual retirement arrangement (IRA) to reflect certain provisions of Division O of the Further Consolidated Appropriations Act, 2020, P. L. 116-94, known as the Setting Every Community Up for Retirement Enhancement Act of 2019 (SECURE Act), and section 104 of Division M of the Further Consolidated Appropriations Act, 2020, known as the Bipartisan American Miners Act of 2019 (Miners Act). In addition, the Service has extended the deadline for amending a retirement plan to reflect the provisions of section 2203 of the Coronavirus Aid, Relief, and Economic Security Act (CARES Act), P. L. 116-136.The extended amendment deadline for (1) a qualified retirement plan or Code Sec. 403(b) plan (including an applicable collectively bargained plan) that is not a governmental plan or (2) an IRA is December 31, 2025.

Extension of Plan Amendment Deadline

SECURE Act and Miners Act

The deadlines for amending a retirement plan or IRA to reflect the provisions of the SECURE Act or the Miners Act, as set forth in Notice 2020-68 and Notice 2020-86, are extended as follows:

• For a qualified plan (including an applicable collectively bargained plan) that is not a governmental plan within the meaning of Code Sec. 414(d), the deadline to amend a plan for provisions of the SECURE Act, or section 104 of the Miners Act is December 31, 2025.
• The plan amendment deadline for a qualified governmental plan, within the meaning of Code Sec. 414(d), is 90 days after the close of the third regular legislative session of the legislative body with the authority to amend the plan that begins after December 31, 2023.
• The deadline for a Code Sec. 403(b) plan (including an applicable collectively bargained plan) that is not maintained by a public school, as described in Code Sec. 403(b)(1)(A)(ii), to amend a plan for provisions of the SECURE Act or the regulations thereunder is December 31, 2025.
• The plan amendment deadline for a Code Sec. 403(b) plan that is maintained by a public school, as described in Code Sec. 403(b)(1)(A)(ii), is 90 days after the close of the third regular legislative session of the legislative body with the authority to amend the plan that begins after December 31, 2023.
• The deadline to amend a governmental plan under Code Sec. 457(b) for provisions of the SECURE Act or section 104 of the Miners Act is the later of (i) 90 days after the close of the third regular legislative session of the legislative body with the authority to amend the plan that begins after December 31, 2023, or (ii) if applicable, the first day of the first plan year beginning more than 180 days after the date of notification by the Secretary that the plan was administered in a manner that is inconsistent with the requirements of Code Sec. 457(b).
• The deadline to amend the trust governing an IRA that is an individual retirement account or the contract issued by an insurance company with respect to an IRA that is an individual retirement annuity for provisions of the SECURE Act is December 31, 2025, or such later date as the Secretary prescribes in guidance.
• Lastly, amendments to a retirement plan to reflect a provision of the SECURE Act that are made on or before the dates as extended will not cause the retirement plan to fail to satisfy the anti-cutback requirements of Code Sec. 411(d)(6) or section 204(g) of ERISA by reason of such amendments.

CARES Act

The deadlines for amending a retirement plan to reflect the provisions of section 2203 of the CARES Act are extended as follows:

• the deadline for amending a retirement plan that is not a governmental plan is December 31, 2025; and
• the deadline for amending a retirement plan that is a governmental plan is 90 days after the close of the third regular legislative session of the legislative body with the authority to amend the plan that begins after December 31, 2023, or, if later, with respect to a governmental plan under Code Sec. 457(b), the first day of the first plan year beginning more than 180 days after the date of notification by the Secretary that the plan was administered in a manner that is inconsistent with the requirements of Code Sec. 457(b).

Notice 2020-68, 2020-38 I.R.B. 567, and Notice 2020-86, 2020-53 I.R.B. 1786 are modified.

Notice 2022-33

 

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IRS Statement on balance due notices (CP-14) 

The IRS is aware that some payments made for 2021 tax returns have not been correctly applied to joint taxpayer accounts, and these taxpayers are receiving erroneous balance due notices (CP-14 notices) or notices showing the incorrect amount.

Who is affected: Generally, these are payments made by the spouse (second taxpayer listed) on a married filing jointly return submitted through their Online Account. Some other taxpayers may also be affected outside of this group.

No immediate action or phone call needed: Taxpayers who receive a notice but paid the tax they owed in full and on time, electronically or by check, should not respond to the notice at this time. The IRS is researching the matter and will provide an update as soon as possible. Taxpayers who paid only part of the tax reported due on their 2021 joint return, should pay the remaining balance or follow instructions on the notice to enter into an installment agreement or request additional collection alternatives. Taxpayers can ensure that their payment is on their account by checking Online Account under the SSN that made the payment. Note that any assessed penalties and interest will be automatically adjusted when the payment(s) are applied correctly.

For additional information for tax professionals, click here.

 

Notice from Maryland Comptroller 

The Comptroller is considering requiring PTEs to make the election to be taxed at the entity level on the 510D with first estimated payment of a tax year beginning after December 31, 2022. The election will be irrevocable for that tax year. The election will be made yearly.

The policy/ procedure change is intended to provide clarity to the Comptroller and taxpayers, and to assist with the expeditious processing of year-end PTE returns.

The Comptroller is soliciting questions and concerns about this change in policy. The Comptroller also wishes to put practitioners on notice of this change for planning purposes.  Please submit questions and concerns to ksermon@marylandtaxes.gov.

TG 10-102.1(b)(2)(ii) permits a pass-through entity to elect to pay tax on all members’ share of income at the entity level. The election operates as a work-around to the federal SALT deduction cap.

Until now, the election has been made on the PTE’s year-end return for the year the return covers. The PTE has been able to make estimated payments, but has not had to decide to make the election until the tax year was over.

 

Security Summit Warns Tax Pros of Evolving Email and Cloud-Based Schemes to Steal Taxpayer Data | IR-2022-143

As part of a special Security Summit series, the IRS, state tax agencies, and the nation’s tax industry warn tax professionals to beware of evolving scams designed to steal client data.

The Security Summit partners continue to see instances where tax professionals have been vulnerable to identity theft phishing emails that pose as potential clients. The criminals then trick practitioners into opening email links or attachments that infect computer systems with the potential to steal client information.

The Summit also warns tax professionals using cloud-based systems to store and prepare tax returns and information to make sure they use multi-factor authentication in light of recent attacks. Specifically, the Summit partners urge people using cloud-based platforms to use multi-factor options like phone, text or tokens. This can avoid potential vulnerabilities with authentication done just through email, which is easier for identity thieves to access.

Continue reading here.

 

ABLE Accounts Can Help People With Disabilities Pay For Disability-Related Expenses | Tax Tip 2022-112

People with disabilities can use an Achieving a Better Life Experience or ABLE account to help pay qualified disability-related expenses. This tax-advantaged savings account doesn’t affect their eligibility for government assistance programs.

Here are some key things people should know about these accounts.

 

AICPA Solicits Feedback on CPA Exam Exposure Draft 

The American Institute of CPAs (AICPA) is soliciting feedback on the Exposure Draft of the new design of the Uniform CPA Examination® (CPA Exam). Developed through research and input from the profession, the Exposure Draft informs the content and scope of the CPA Exam expected to launch in January 2024. Stakeholders are asked to provide feedback through September 30, 2022.

This request for stakeholder input is the next step in the AICPA and National Association of State Boards of Accountancy (NASBA) joint CPA Evolution initiative, which is transforming the CPA licensure model to recognize the rapidly changing skills and competencies the accounting profession requires.

The Exposure Draft is the result of two years of research conducted through a Practice Analysis to align the CPA Exam to the CPA Evolution initiative. The Practice Analysis collected input about the work newly licensed CPAs are required to perform from various stakeholders who share an interest in preserving the strength and mission of the accounting profession.

The Exposure Draft includes the draft Uniform CPA Examination® Blueprints, which is the official document that presents content eligible for assessment on the Exam, based on the knowledge and skills required of a newly licensed CPA.

Continue reading here.

 

Semiconductor Manufacturing Tax Credit Passes House | via Wolters Kluwer IntelliConnect

A tax credit for semiconductor manufacturers is on its way to the White House for President Biden’s signature.

The CHIPS and Sciences Act of 2022 (H.R. 4346) passed in the House of Representatives by a 243-187 vote on July 28, 2022, after clearing the Senate a day earlier. No Democrats voted against the bill, although one did vote “present,” while 25 Republicans crossed the aisle to vote with the majority.

The bill includes what is being called the Advanced Manufacturing Investment Tax Credit. According to a summary document, the ITC “provides a 25 percent investment tax credit for investments in semiconductor manufacturing. The credit covers both manufacturing equipment as well as the construction of semiconductor manufacturing facilities.”

Also covered under the ITC are “incentives for the manufacturing of the specialized tooling equipment required in the semiconductor manufacturing process,” the summary states.

The document notes that when paired with the more than $54 billion in grants to semiconductor chip manufacturers, the ITC “would completely erase the 40 percent cost difference for leading-edge semiconductor production.”

By Gregory Twachtman, Washington News Editor

 

Schumer, Manchin Find Agreement On Corporate Minimum Tax, IRS Funding | via Wolters Kluwer IntelliConnect

Senate Majority Leader Charles Schumer (D-N.Y.) and Sen. Joe Manchin (D-W.V.) reached agreement on a scaled back reconciliation bill that would, among other legislative actions, implement a corporate minimum tax of 15 percent and provide new funds to the Internal Revenue Service for compliance and enforcement activities.

Dubbed the Inflation Reduction Act of 2022 (H.R. 5376), Democratic leadership in the Senate state the bill would raise about $450 billion to cover its spending provisions. The newly negotiated bill is missing key provisions from the Build Back Better Act, which failed to move due to objections by Manchin, such as a targeted income tax on the wealthiest Americans, adjustments to the state and local tax deduction, and a continuation of monthly child tax credit payments.

According to a summary document of the tax proposals, the bill would set a corporate alternative minimum tax rate of 15 percent “on adjusted financial statement income for corporations with profits in excess of $1 billion.”

The bill would allow corporations “to claim net operating losses and tax credits against the AMT, and would be eligible to claim a tax credit against the regular corporate tax for AMT paid in prior years, to the extent the regular tax liability in any year exceeds 15 percent of the corporation’s adjust finance statement income.”

A separate overall bill summary document notes that the 15 percent corporate alternative minimum tax would raise $313 billion, citing estimates from the Joint Committee on Taxation.

Money For IRS Enforcement

The reconciliation bill also provides long-requested funds to the IRS to improve taxpayer compliance through an $80 billion investment over 10 years.

The breakdown of how the funds are to be allocated are $45.6 billion for enforcement; $25.3 billion for operations support; $4.8 billion for business modernization; and $3.2 billion for taxpayer services.

“By investing $80 billion over the next ten years for tax enforcement and compliance, the Congressional Budget Office estimates the IRS will collect $203 billion,” the tax summary document states.

Energy-Related Tax Credits

The Inflation Reduction Act also includes a number of tax credits related to energy policy.

According to the summary document of the energy policy provisions, the bill will provide 10 years of “consumer tax credits to make homes energy efficient and run on clean energy, making heat pumps, rooftop solar, electric HVAC and water heaters more affordable.”

On the manufacturing side, there is a “$10 billion investment tax credit to build clean technology manufacturing facilities, like facilities that make electric vehicles, wind turbines and solar panels,” the energy policy summary document states. The bill also allocates an estimated $30 billion in production tax credits “to accelerate U.S. manufacturing of solar panels, wind turbines, batteries, and critical minerals processing.”

Consumers also will be eligible for tax credits to purchase electric vehicles. This is a means-tested tax credit of up to $4,000 for the purchase of a used electric vehicle or up to $7,500 for the purchase of a new electric vehicle. It is aimed at low- and middle-income purchasers of electric vehicles.

Other tax credits will be available for clean sources of electricity and electricity storage, as well as tax credits for clean fuels and clean commercial vehicles; the reduction of emissions from industrial manufacturing processes; and in support of domestic production of biofuels.

No date has been set on when the upper chamber of Congress will consider the Inflation Reduction Act.

By Gregory Twachtman, Washington News Editor

 

Delaware—Personal Income Tax: Subtraction for Military Pension Income Increased | via Wolters Kluwer IntelliConnect

Delaware is increasing the subtraction adjustment for military pension income received by personal income taxpayers who are under the age of 60. Effective for tax years beginning on or after January 1, 2022, the subtraction from federal adjusted gross income increases from $2,000 to $12,500.

 

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The Comptroller is considering requiring PTEs to make the election to be taxed at the entity level on the 510D with first estimated payment of a tax year beginning after December 31, 2022. The election will be irrevocable for that tax year. The election will be made yearly.

 

The policy/ procedure change is intended to provide clarity to the Comptroller and taxpayers, and to assist with the expeditious processing of year-end PTE returns.

 

The Comptroller is soliciting questions and concerns about this change in policy. The Comptroller also wishes to put practitioners on notice of this change for planning purposes.  Please submit questions and concerns to ksermon@marylandtaxes.gov.

 

TG 10-102.1(b)(2)(ii) permits a pass-through entity to elect to pay tax on all members’ share of income at the entity level. The election operates as a work-around to the federal SALT deduction cap.

 

Until now, the election has been made on the PTE’s year-end return for the year the return covers. The PTE has been able to make estimated payments, but has not had to decide to make the election until the tax year was over.

 

 

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IRS Encourages Tax Professionals to Inform Clients About IP PIN Opt-In Program | IR-2022-140

The IRS and the Security Summit Partners have encouraged tax professionals to inform their clients about the IRS Identity Protection (IP) PIN Opt-In Program to help protect taxpayers against tax related identity theft. The IP PIN Opt-In Program has been made available to all individuals capable of verifying their identity. The IRS has also highlighted key information that taxpayers need to know about the IP PIN Opt-In Program, namely:

• It’s a six-digit number known only to the taxpayer and the IRS;
• The Opt-In Program is voluntary;
• The IP PIN should be entered onto the electronic tax return when prompted by the software product or onto a paper return next to the signature line;
• The IP PIN is valid for one calendar year. Taxpayers must obtain a new IP PIN each year;
• Only taxpayers who can verify their identities may obtain an IP PIN; and
• IP PIN users should never share their number with anyone but the IRS and their trusted tax preparation provider. The IRS will never call, email or text a request for the IP PIN.

Further, if taxpayers are unable to validate their identity and their income is less than $ 72,000, they can file Form 15227, Application for an Identity Protection Personal Identification Number, upon which the IRS will attempt to verify their identities over a telephonic call and assign them an IP PIN for next filing season. Additionally, taxpayers can also get their identity verified by making an appointment with Taxpayer Assistance Center and carry necessary identification documents with them. The IP PIN process for confirmed victims of identity theft remains unchanged. These victims will automatically receive an IP PIN each year.

 

What Businesses Need to Know About Reporting Nonemployee Compensation and Backup Withholding to the IRS | IRS Tax Tip 2022-109

When a business hires an independent contractor, the employer is generally not responsible for withholding income taxes, Social Security, or Medicare taxes from their compensation. However, by law, business taxpayers who pay nonemployee compensation of $600 or more must report these payments to the IRS. They do this using Form 1099-NEC, Nonemployee Compensation.

Generally, payers must file Form 1099-NEC by January 31. There is no automatic 30-day extension to file Form 1099-NEC. However, an extension to file may be available under certain hardship conditions.

Nonemployee compensation reportable on Form 1099-NEC is subject to backup withholding if a payee has not provided a Taxpayer Identification Number to the payer or the IRS notifies the payer that the payee provided a TIN that does not match their name in IRS records.

Continue reading here.

 

Tax Rules That Expired 12/31/2021 | via Bob Jennings of TaxSpeaker

At the end of 2021, many existing tax rules expired, awaiting the normal Congressional extender bills and long-drawn-out political posturing before retroactive rule changes. This year it does not look like Congress will be able to extend anything in the current political climate, so here is a special list of things that have already expired and that are no longer in effect for 2022.

Selected Expired Individual Tax Items:

• The 1 year only increase in the child credit expired at the end of 2021. This credit reverted back to $2,000 (from $3,000); reduced the age back to under 17 (from under 18); is no longer fully refundable ($1,400 max), and reverts back to lower income phaseouts.
• The 1 year only increase in the dependent care credit also expired at the end of 2021. It reverts back to 20% (from 50%); reverts back to a very low AGI phaseout (at $15,000 it begins reducing from 35% to 20%); and lowers qualified expenses back to $3,000 for 1 child ($6,000 for >1) from the one year only amounts of $8,000 and $16,000.
• The $600 non-itemizer charitable deduction amount expired at the end of 2021.
• The 2021 increase to the earned income credit for taxpayers without children and for older and younger Americans reverts back to 2020 rules.
• The 100% of AGI charity deduction for cash contributions reverted back to a 60% limit.
• The credits for nonbusiness energy property (insulation, storm windows, and doors, etc.) and alternative fuel refueling (electric car chargers) expired at the end of 2021.
• The deduction for mortgage insurance premiums as mortgage interest expired at the end of 2021.
• Required minimum distributions returned for taxpayers 72 and over 72 after 2018.

Selected Expired Business Tax Items:

• Full expensing of R&D costs changes from 2021 to a 5-year amortizing asset deduction in 2022.
• The business interest expense deduction goes from 30% of EBITDA in 2021 to 30% of EBIT in 2022.
• The 1099-K reporting threshold of $20,000 for 2021 has been dropped to $600 for 2022.
• The Employee Retention Credit for all businesses, including startups, expired at the end of 2021, although it may still be claimed on amended 941s for 2021 and 2020.
• The 3-year recovery period for racehorses two years old or younger also reverted back to 7 years for 2022

For more updates like this, subscribe to TaxSpeaker’s newsletter here.

 

IRS Updates to CTC FAQs | via NATP

The IRS revised the FAQs (Fact Sheet 2022-32) for the 2021 child tax credit and advance child tax credit. The revisions removed question 7 and renumbered question 8 under “Topic B: Eligibility for Advance Child Tax Credit Payments and the 2021 Child Tax Credit.” Former question 7 was:

Q B7. How could I have checked to see if I was eligible for Advance Child Tax Credit payments? (updated Jan. 11, 2022)

A7. The Advance Child Tax Credit Eligibility Assistant allowed you to see if you were eligible for Advance Child Tax Credit payments.

The IRS removed the eligibility assistant from their website. If taxpayers need to check information regarding payments, they should use the online portal.

 

What To Do When the IRS Balance-Due Notice Arrives | via Jim Buttonow, Accounting Today

Much has been publicized about the IRS pausing some of its compliance and collection notices in 2022. Specifically, the IRS announced that it would suppress many balance-due reminder notices until the IRS caught up on processing paper returns, correspondence, and other backlogged items.

But tax professionals and their clients shouldn’t get too comfortable. The IRS can’t suppress about 9 million notices that go out every year. These notices are the first balance-due notice in a series of collection notices. In IRS terms, this notice is called the CP14 notice and demand for tax.

The CP14 notice is required by law (Internal Revenue Code Section 6303) to be issued within 60 days after the IRS assesses the tax. The bulk of CP14 notices show up in the beginning of June (for 2021 returns, this date was likely June 6, 2022), asking for payment within 21 days.

This notice and demand letter sets the stage for the IRS to enforce collection. If the taxpayer doesn’t respond to the CP14 notice with payment, the IRS can begin the process to collect the taxes by levy or by filing a notice of federal tax lien. Usually, the IRS will send a series of reminder notices, called the collection notice stream, to ask for payment before starting enforced collection.

For details on what to do if your client gets a CP14 notice, click here.

 

District of Columbia—Personal Income Tax: Earned Income Credit and Some Exclusions Expanded | via Wolters Kluwer IntelliConnect

The District of Columbia has enacted emergency legislation that makes changes to income tax provisions regarding:

• the earned income tax credits; and
• gross income exclusions.

What changes are made to the earned income tax credits?

The earned income tax credit is expanded for fiscal years beginning after December 31, 2022. A resident of the District who files a return, but who is not a citizen or resident alien of the United States, is allowed a credit against the personal income tax. Further, an individual can claim an earned income tax credit despite not having a social security number as required by IRC Sec. 32(m). An individual taxpayer identification number is allowed.

Which gross income exlcusions are changed?

As of January 1, 2022, the exclusion for cash assistance for excluded workers given pursuant to grants awarded by the Washington Convention and Sports Authority is extended through the end of 2023.

Further, exclusions are enacted for:

• grants to housing providers to cover the costs of past due rent of District residents who are tenants of those housing providers;
• grants awarded under § 1-328.04(x);
• funding received by a taxpayer from the District Department of the Environment or the District of Columbia Sustainable Energy Utility to incentivize solar installations benefiting low-income residents;
• grants issued under § 8-1774.10(c)(23);
• rebates issued pursuant to the Public Access to Automated External Defibrillator Act of 2000; and
• lump-sum payments an individual receives from the early educator pay parity program.

Act 24-470 (D.C.B. 845), Laws 2022, effective July 19, 2022, for a 90 day period that expires October 11, 2022

 

District of Columbia—Sales and Use Tax: Budget Bill Signed that Authorizes Sales Tax Apply to Sales in Federal Buildings and by Federal Organizations | via Wolters Kluwer IntelliConnect

District of Columbia Mayor Muriel Bowser has signed the Fiscal Year 2023 Budget Request Act of 2022 (Act), which includes changes to sales tax laws.

The Act provides that sales and use tax will be imposed on sales made in federal buildings and by government-sponsored enterprises, corporations, institutions, and organizations. Taxable sales include transactions made in federal buildings at:

• gift shops;
• souvenir shops;
• kiosks;
• convenience stores;
• food shops;
• cafeterias;
• restaurants; and
• similar establishments

Additionally, sales of goods and services by a government sponsored enterprise or corporation, institution or organization established by federal statute or regulation will be subject to tax. Examples include, but are not limited to the:

• Smithsonian Institution;
• National Gallery of Art;
• National Building Museum;
• Federal National Mortgage Association; and
• Federal Home Loan Mortgage Corporation.

Act 24-485 (D.C.B. 24-715), Laws 2022, approved July 19, 2022, effective after a 30-day congressional review period.

 

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• Proving Material Participation for the Passive Loss Rules | August 3, 2022 | 12 – 2 p.m. | 2 CPE (Recommended) | $106
• How to Prepare for Your Upcoming AICPA Peer Review | August 5, 2022 | 3 – 5 p.m. | 2 CPE (Recommended) | $106

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SDAT Raises Business Personal Property Exemption From $2,500 TO $20,000 

The Maryland State Department of Assessments and Taxation (SDAT) announced that HB268, which raises the exemption from personal property assessment for all Maryland businesses from $2,500 to $20,000, has taken effect. This legislation will save 14,217 businesses from paying taxes on $44.2 million in assessment, and is an extension of HB90, which SDAT sponsored in 2018 and exempted 28,493 businesses from $10.8 million in assessment.

HB268 took effect on June 1, 2022, and is effective for tax years starting after June 30, 2022, and includes annual filings submitted as early as January 2022. SDAT will automatically adjust assessments of filings that were submitted between January 1, 2022, and June 30, 2022 so that reported business personal property less than $20,000 is not assessed.

Late filing penalties previously billed on 2022 business personal property returns reporting less than $20,000 have been abated and filers who have already paid a late filing penalty billed on a return filing reporting less than $20,000 are being mailed a refund check for the penalty paid.

Beginning in 2023, filers with a total original cost of personal property less than $20,000 will also be able to self-attest on their Annual Report that their personal property falls within the exemption range and will no longer be required to submit a return detailing their personal property.

 

Here’s What Taxpayers Need to Know About Business-Related Travel Deductions | IRS Tax Tip 2022-104

Business travel deductions are available when employees must travel away from their tax home or main place of work for business reasons. The travel period must be substantially longer than an ordinary day’s work and a need for sleep or rest to meet the demands the work while away.

Travel expenses must be ordinary and necessary. They can’t be lavish, extravagant or for personal purposes.

Employers can deduct travel expenses paid or incurred during a temporary work assignment if the assignment length does not exceed one year.

Travel expenses for conventions are deductible if attendance benefits the business and there are special rules for conventions held outside North America.

For information about deductible travel expenses while away from home, click here.

 

VIRGINIA — New Electronic Payment Requirement for Some Individual Income Taxpayers | Virginia Department of Taxation

A recent legislative change requires taxpayers to submit all of their income tax payments electronically if:

• Any estimated tax payment exceeds $1,500; or
• Any extension payment exceeds $1,500; or
• The total anticipated income tax liability in any taxable year exceeds $6,000.

Individual taxpayers should start making all of their payments electronically if any of the above conditions apply to them. This includes all payments for estimated taxes, extension payments, and any other amounts due when a taxpayer files a return.

We’re sending letters to taxpayers who may meet this requirement with their estimated tax payment, which is due September 15.

Visit the Virginia Tax website for more information on individual income tax payment options.

 

Simplified DSUE Portability Election | via NATP

Rev. Proc. 2022-31 provides a simplified method for some estates to obtain an extension of time to make the portability of the deceased spousal unused election (DSUE) amount pursuant to §2010(c)(5)(A). This revenue procedure applies to estates that are not normally required to file an estate tax return because the value of the gross estate and adjusted taxable gifts is under the filing threshold in §6018(a). In addition, the election must be filed on or before the fifth annual anniversary of the decedent’s date of death.

To make the election, the executor filing Form 706, United States Estate (and Generation-Skipping Transfer) Tax Return, on behalf of the decedent’s estate must state at the top of the form that the return is “Filed pursuant to Rev. Proc. 2022-32 to elect portability under §2010(c)(5)(A).”

Rev. Proc. 2022-32 supersedes Rev. Proc. 2017-34.

 

Pennsylvania—Corporate Income Tax: Rate Reduction, Market Based Sourcing for Intangibles Enacted | via Wolters Kluwer IntelliConnect

Pennsylvania has enacted legislation:

• to reduce the corporate income tax over a series of years;
• to require market based sourcing for the sales of intangibles; and
• codify the existing economic nexus rules currently in place as tax policy issued in Corporation Tax Bulletin 2019-04.

What are the reduced corporate income tax rates?

The corporate income tax rate will be reduced as follows:

• 9.99% through December 31, 2022;
• 8.99%, January 1, 2023 through December 31, 2023;
• 8.49%, January 1, 2024 through December 31, 2024;
• 7.99%, January 1, 2025 through December 31, 2025;
• 7.49%, January 1, 2026 through December 31, 2026;
• 6.99%, January 1, 2027 through December 31, 2027;
• 6.49%, January 1, 2028 through December 31, 2028;
• 5.99%, January 1, 2029 through December 31, 2029;
• 5.49%, January 1, 2030 through December 31, 2030; and
• 4.99%, January 1, 2031 and each taxable year after.

What will market based sourcing of intangibles mean?

The sales factor used for apportioning the income of multi-state corporations will be determined using market-based sourcing rules for intangible related receipts. Currently, corporations source those receipts using costs of performance. The change will apply to tax years beginning after December 31, 2022.

Sales of intangibles will be sourced to Pennsylvania if the gross receipt are:

• from the lease or license of intangible property, including a sale or exchange of property where the receipts from the sale or exchange derive from payments that are contingent on the productivity, use or disposition of the property, if and to the extend the property is used in Pennsylvania;
• from when the property sold is a contract right, government license or similar property that authorizes the holder to conduct a business activity in a specific geographic areas, if and to the extent the property is use in or associated with Pennsylvania;
• from the sale, redemption, maturity or exchange of securities, held by the taxpayer primarily for sale to customers in the ordinary course of its trade or business, if the customers are in Pennsylvania;
• received by a corporation that regularly lends fund to unaffiliated entities or to individuals from interest, fees and penalties imposed in connection with loans secured by real property;
• received by a corporation that regularly lends funds to unaffiliated entities or to individuals from interest, fees, and penalties imposed in connection with loans not described above, if the borrower is in Pennsylvania;
• received from interest, fees and penalties in the nature of interest from credit card receivables and gross receipts from fees charged to cardholders, such as annual fees, if the billing address of the cardholder is in Pennsylvania;
• received from interest, not described above, is included in the numerator of the sales factor if the lender’s commercial domicile is in Pennsylvania; and
• received from intangible property, not described above, will be excluded from the numerator and the denominator of the sales factor.

What are the nexus rules being codified?

Corporations, with no physical presence, and sales of $500,000 or more per year sourced to Pennsylvania are deemed to have nexus in Pennsylvania. The change applies to tax years beginning after December 31, 2022.