News for Your Week Ahead: August 19, 2021

Bob Jennings, CPA, EA provides a glimpse into TaxSpeaker’s offerings with MSATP this fall. Be sure to check out the upcoming Business Tax In-Depth seminar/webinar in Frederick, MD!

Watch on YouTube.

Coming Up: On Wednesday, August 25 at 10 a.m., Education Committee Chair Bob Medbery\will join us to give insight into our fall seminar season and upcoming events.

Be sure to Like/Follow us on Facebook so you can catch MSATP TV live every week.


Accounting for Cryptocurrency: A Challenge and Opportunity for CPA Firms and Protocols

Since its introduction in 2008, cryptocurrency has been gaining acceptance and use. That trend will continue as more people seek decentralized, private, and portable currency in a global economy.

This is good news for CPA professionals. The sheer number of cryptocurrency options is overwhelming, and there are aspects of fraud to consider, so people are likely to need advice from tax and accounting professionals.

CPAs who become cryptocurrency experts can take advantage of this opportunity. By offering cryptocurrency advice and auditing services to clients, firms can realize a new revenue source to offset the loss of other income from services such as traditional compliance work.

For more information, click here.


What People Should and Should Not Do If They Get Mails from the IRS | COVID Tax Tip 2021-119

Every year the IRS mails letters or notices to taxpayers for many different reasons. Typically, it’s about a specific issue with a taxpayer’s federal tax return or tax account. A notice may tell them about changes to their account or ask for more information. It could also tell them they need to make a payment. This year, people might have also received correspondence about Economic Impact Payments or an advance child tax credit outreach letter.

For more information, click here.


MSATP Members: Are you using the community forum on our website? You can introduce yourself, post your tax questions (and respond to questions other professionals have), and network with other members! To visit the community forum, click here.

Not a member? Join today by clicking here.

News for Your Week Ahead: August 12, 2021

MSATP President Barbara joined us to tell us about her upcoming seminar and webinar, Payroll and 1099 Forms on December 13, 2021.

Watch on YouTube.

Coming Up: On Wednesday, August 18 at 10 a.m., Bob Jennings will join us to tell us about the upcoming TaxSpeaker classes during the fall seminar season.

Be sure to Like/Follow us on Facebook so you can catch MSATP TV live every week.


Employee Retention Credit – The Latest Guidance | TaxSpeaker

The IRS has released Notice 2021-49 regarding the application of the rules for the Employee Retention Credit under the American Rescue Plan which extended the credit for wages paid before January 1, 2022, and answering some questions that practitioners have asked with regard to the application of the credit. However, the ERC does not have a large utilization, so Congress is looking at ending the credit as of September 30, 2021, as part of the infrastructure legislation for all employers other than Recovery Startup businesses.

For more information, click here.


Security Summit Warns Tax Pros to be Wary of Pandemic-Related Email Schemes | IR-2021-166

In a continuing twist on a common scam, the IRS, state tax agencies, and tax industry today warned tax professionals to beware of evolving phishing scams that use various pandemic-related themes to steal client data.

The Security Summit partners continue to see instances where tax professionals, especially those who engage in remote transactions, have been vulnerable this year to identity thieves posing as potential clients. The criminals then trick practitioners into opening email links or attachments that infect computer systems.

For more information, click here.


Treasury, IRS Provide Gross Receipts Safe Harbor for Employers Claiming the Employee Retention Credit | IR-2021-167

The Department of the Treasury and the IRS issued a safe harbor allowing employers to exclude certain items from their gross receipts solely for determining eligibility for the Employee Retention Credit (ERC).

Revenue Procedure 2021-33 provides a safe harbor permitting employers to exclude certain amounts from gross receipts solely for determining eligibility for the ERC. These amounts are:

  • The amount of the forgiveness of a Paycheck Protection Program (PPP) Loan;
  • Shuttered Venue Operators Grants under the Economic Aid to Hard-Hit Small Businesses, Non-Profits, and Venues Act; and
  • Restaurant Revitalization Grants under the American Rescue Plan Act of 2021.

For more information, click here.


Work Opportunity Tax Credit (WOTC) Transition Relief Under Internal Revenue Code § 51 | N-2021-43

Notice 2021-43 provides transition relief for employers that hire or hired certain individuals residing in empowerment zones and who begin work on or after January 1, 2021, and before the date that is 60 days from the date of publication of the notice. Section 51 of the Code provides employers with a work opportunity credit for hiring certain individuals certified by a Designated Local Agency (DLA) to be a member of a targeted group listed in section 51(d). Employers must receive, on or before the day on which such individual begins work for the employer, a certification from a DLA that such individual is a member of a targeted group or must request certification that the individual is a member of a targeted group by submitting Form 8850 (Pre-Screening Notification and Certification Request for the Work Opportunity Credit) to a DLA within 28 days of that individual beginning work.

For more information, click here.


Tax Security Tip: Get an IP PIN to Help Stop Identity Thieves | Tax Tip 2021-116

The IRS and its Security Summit partners recently kicked off their annual summer campaign. This year’s theme, Boost Security Immunity: Fight Against Identity Theft, urges tax pros to step up their efforts to protect client data. An IP PIN is a valuable tool that can help in this effort and it is now available to anyone who can verify their identity.

An Identity Protection PIN is six-digit number eligible taxpayers get to help prevent their Social Security number or Individual Taxpayer Identification Number from being used to file fraudulent federal income tax returns. This number helps the IRS verify a taxpayer’s identity and accept their tax return. The Get An IP PIN tool enables anyone who has an SSN or ITIN to get an IP PIN after they verify their identity through a rigorous authentication process. Taxpayers should review the Secure Access requirements before they try to use the Get An IP PIN tool.

For more information, click here.

Employee Retention Credit – The Latest Guidance by TaxSpeaker

Employee Retention Credit

The IRS has released Notice 2021-49 regarding the application of the rules for the Employee Retention Credit under the American Rescue Plan which extended the credit for wages paid before January 1, 2022, and answering some questions that practitioners have asked with regard to the application of the credit. However, the ERC does not have a large utilization, so Congress is looking at ending the credit as of September 30, 2021, as part of the infrastructure legislation for all employers other than Recovery Startup businesses.

Eligible Employers:

All employers, including tax-exempt employers, are eligible to take the credit as long as the employer meets the qualifications. There are limits as to which wages will be qualifying depending on the number of full-time employees, however.

Qualifications:

In order for a business to be qualified to take the credit, the business must meet one of the two following rules:

  1. Fully or partially suspended due to orders from an appropriate governmental authority limiting commerce, travel, or group meetings (for commercial, social, religious, or other purposes) due to COVID-19. Only wages paid during from the date the restrictions are put into place until the date the restrictions are lifted are qualified wages.

 

  1. Substantial decrease in gross receipts – Notice 2021-23
    • 2020 – 1st of the quarter where gross receipts are less than 50% from same quarter of 2019 to last day of quarter where sales are more than 80% of the same quarter of 2019
    • 2021 – any quarter where gross receipts are less than 80% of same quarter of 2019 or using the alternative method, if the prior quarter’s gross receipts were less than 80% of the comparative quarter of 2019, then the quarter will count. Using the alternative method, if a quarter in 2021 is qualified, the next quarter is automatically qualified. The Notice affirms that using the alternative method election is on a quarter-to-quarter basis. For 2021, if the employer was not in business in same quarter of 2019, then they would compare to 2020.
    • Recovery startup businesses, under Notice 2021-20 are only qualified under these rules for the 3rd and 4th quarter of 2021. The business must have started operations after 2/15/2020 and their average gross receipts must be less than $1,000,000. These employers cannot exceed $50,000 in total credit per quarter if qualifying under these rules. There is no limit to the credit if the business qualifies under the full or partial suspension of operations or decline in gross receipts. In addition, a Recovery Startup business is allowed to use all qualified wages without the limitation on the number of Full Time Employees. Recovery startup businesses are subject to the aggregation rules under Notice 2021-20.

Eligible Wages:

Employers with over 100 Full Time Employees (employees who work on average 30 hours per week or more) in 2020 (500 Full Time Employees in 2021) only have qualified wages for the Employee Retention Credit to the extent that the wages are paid to employees not to work. (Health care costs are still qualified.)

Employers with less than 100 Full Time Employees (500 in 2021), Recovery Startup Businesses, or Severely Financially Distressed Employers are allowed to use all wages as qualified wages.

Severely financially distressed employers are those businesses whose decline in gross receipts are less than 10% of those in 2019. These employers are not subject to the qualified wage limitation imposed on large employers.

No wages are allowed if they were used for PPP forgiveness, the Work Opportunity Credit, or Paid Sick and Family Leave credits. For the 3rd and 4th quarter only, wages used for the Shuttered Venue Operators Grant, Restaurant Revitalization Grant).

Qualified Wages include cash tips reported by employees when the tips exceed $20 in a month. However, IRS says there is no prohibition against taking the ERC and the credit under 45B for cash tips.

Maximum credit:

  • 2020 – 50% of eligible wages and qualified health care costs up to $10,000 for the year, maximum credit $5,000 per employee per year – wages paid between March 13 and December 31, 2020, inclusive.

 

  • 2021 – 70% of eligible wages and qualified health care costs up to $10,000 per quarter, maximum credit of $7,000 per employee per quarter

Owners, Spouses and Related Individuals

The wages paid to individuals who are related parties under Code Section 51 are not qualified for the Employee Retention Credit whose wages do not qualify for ERC include:  majority owners, family members who are employed, and most spouses.

The IRS is using Code Section 267 attribution to disqualify wages paid to spouses if the owner and/or spouse have any living close relatives, whether the relatives work for the business or not. The only exception to allowing a spouse’s wages to be qualified is where neither the owner nor the spouse have any close living relatives. This prohibition is for majority owners (more than 50%) of corporations and other entities.

Minority Owners can potentially have their wages qualify for the ERC, but again, if they are related to any of the other owners by marriage or blood, then they could be deemed to be more than 50% owners.
IRS Notice 2021-49 Owner/family wages and ERC Qualification

  Do not Qualify for ERC Qualify for ERC
Schedule C/F filers:    
Owner of Schedule C or F:  owner has or does not have living ancestor, descendent or sibling (living relatives from here forward)  

X

 
Spouse of Sch. C or F owner-owner has living relatives X  
Spouse of Sch. C or F owner-owner does NOT have living relatives    

X

Child, grandchild, parent or sibling of Sch. C or F owner X  
 

Form 1065 Filers-LLC’s and Partnerships

>50% owner, owner has or does not have living relatives  

X

 
50% or less owner, owner has or does not have living relatives  

X

 
Spouse of >50% owner, with living relatives X  
Spouse of >50% owner, no living relatives   X
Spouse of 50% or less owner   X
Child, grandchild, parent or sibling of >50% owner X  
Child, grandchild, parent or sibling of 50% or less  owner   X
 

Form 1120 and 1120S Filers

>50% owner, owner has living relatives  

X

 
>50% owner, owner does not have living relatives X  
50% or less owner**   X
Spouse of >50% owner, with living relatives X  
Spouse of >50% owner, no living relatives   X
Spouse of 50% or less owner   X
Child, grandchild, parent or sibling of >50% owner X  
Child, grandchild, parent or sibling of 50% or less  owner   X

**Assumes no other owners are related which would cause attribution of > 50% ownership.

Income Tax Reporting of Employee Retention Credit

The IRS holds that the reduction of expense for wages and qualified health costs occurs in the tax year the wages were paid or incurred, as opposed to the year that the credit was obtained. Employers who did not reduce wages or health care costs in the year attributable will need to amend their tax returns.

For example, a company who amends 2020 payroll tax returns to claim the Employee Retention Credit will report the credit as a reduction of wages and health care costs to the extent of the credit on their 2020 income tax return, even if the payroll tax return was filed or amended in 2021.

Other Changes Under the American Rescue Plan

The statute of limitations has been extended to 5 years for 3rd and 4th quarters of 2021 only for returns that are filed claiming the Employee Retention Credit.

If an employer receives the credit, then amends the payroll tax return to repay the credit, the repayment is determined to be an additional tax, but penalties for failure to timely pay or deposit tax will not apply if the taxpayer can show reasonable cause and not willful neglect.

For the 2nd through 4th quarters of 2021, the Employer’s share of Medicare taxes is now determined to be the non-refundable portion of the credit, where the Employer’s share of Social Security tax was the non-refundable portion of the credit in prior quarters. This particular change will affect the worksheets for the Form 941, but the ability to use the remaining credit against employee withholdings and as a potential credit will not change.

Courtesy of TaxSpeaker. Link TaxSpeaker to our aff link http://www.taxspeaker.com/aff/?maryland

News for Your Week Ahead: August 5, 2021

First Vice President Ana Barnabe tells us all about the benefits of an MSATP membership including free ethics CPE, Talking With TaxSpeaker, and more.

Watch on YouTube.

Coming Up: On Wednesday, August 11 at 10 a.m., MSATP President Barbara Smith will join us to discuss her Payroll and 1099 Forms seminar/webinar in Ellicott City, MD on December 13.

Be sure to Like/Follow us on Facebook so you can catch MSATP TV live every week.


Agency Collection Activities to Resume August 16 | Comptroller of Maryland

Comptroller Peter Franchot announced that the Comptroller’s Office will resume collection activities beginning August 16, 2021.

Collection and licensing activities have been on hold as a result of Executive Orders issued by Governor Larry Hogan in response to COVID-19, but those activities were to resume no later than June 30, 2021.

At the Comptroller’s request, in recognition of the financial struggles of Maryland individuals and businesses resulting from the pandemic, as well as the role that his agency played in administrating and assisting in pandemic relief programs, Governor Hogan granted an additional extension through August 15, 2021.

For more information, click here.


IRS Reminds Heavy Vehicle Owners of August 31 Highway Use Tax Return Deadline | IR-2021-164

The IRS reminds those who have registered, or are required to register, large trucks and buses that it’s time to file Tax Year 2021 Form 2290, Heavy Highway Vehicle Use Tax Return. The deadline to file and pay is Aug. 31, 2021, for vehicles used on the road during July 2021.

The highway use tax applies to highway motor vehicles with a taxable gross weight of 55,000 pounds or more. Taxpayers unsure if they must file can use the IRS online tool, “Do I Need to Pay the Heavy Highway Vehicle Use Tax?” The question-and-answer format helps owners determine if they are required to pay the highway use tax. The “Understanding Form 2290 – Heavy Highway Vehicle Use Tax” recorded webinar is also available.

For more information, click here.


Security Summit: Tax Pros Can Help Clients Battle Identity Theft Risk Related to Unemployment | IR-2021-163

IRS Security Summit partners outlined for tax professionals how they can assist clients who were victims of unemployment compensation fraud schemes that targeted state workforce agencies in 2020 and 2021.

The IRS, state tax agencies, and the tax industry – working together as the Security Summit – reported that unemployment compensation fraud was one of the more common identity theft schemes that emerged in 2020 as criminals exploited the COVID-19 pandemic and the resulting economic impact.

For more information, click here.


Information for FIRE Users | Issue Number: 2021-11

The IRS will be making significant improvements to the Filing Information Returns Electronically (FIRE) application process for new users. The new online Information Returns (IR) Application for Transmitter Control Code (TCC) is scheduled to deploy on September 26, 2021. The new application will be available on IRS.gov and will replace both the current Form 4419 and the Fill-in Form 4419 on the FIRE System.

New users will be required to authenticate their identities and create a new account through IRS Secure Access Account to access the new online IR Application for TCC. Details on what users need to verify their identities can be found at www.IRS.gov/SecureAccess. Existing Secure Access (SA) users will be able to use their existing SA account.

For more information, click here.

News for Your Week Ahead: July 29, 2021

Connie Hess and Marc Reibman of USB Payment Processing join us to discuss their new cash flow management program Merchant as a Service.

Watch on YouTube.

Jonathan Rivlin joins us to tell us about his upcoming seminar and webinar, Firm of the Future on October 21st in Columbia, MD, or virtually.

Watch on YouTube.

Coming Up: On Wednesday, August 4th at 10 a.m., First Vice President Ana Barnabe will join us to tell us all about all the benefits of an MSATP membership! Are you certain you are taking full advantage of your membership? If not, tune in to find out about your benefits!

Be sure to Like/Follow us on Facebook so you can catch MSATP TV live every week.


NFIB: Senate Bill Limiting Small Business Deduction Will Hurt Small Business

The Hill reported that Senate Finance Committee Chairman Ron Wyden (D-Ore.) “released a bill that would overhaul a deduction for noncorporate business income that was created by Republicans’ 2017 tax law.” NFIB Vice President of Federal Government Relations Kevin Kuhlman “said in a statement that Wyden’s bill ‘would directly hurt small businesses’ ability to hire, invest in their businesses, and increase employees’ compensation, and threatens the fragile economic recovery.’”

For more information, please click here.


Security Summit: Tax Pros Should Encourage Clients to Obtain IP PINs to Protect Against Tax-Related Identity Theft | IR-2021-158

Internal Revenue Service Security Summit partners called on tax professionals to increase efforts to inform clients about the Identity Protection PIN Opt-In Program that can protect against tax-related identity theft.

The IRS, state tax agencies, and the nation’s tax industry – working together as the Security Summit  – need assistance from tax professionals to spread the word to clients that the IP PIN is now available to anyone who can verify their identity.

For more information, click here.


Guidelines for the Application of the Retail Sales and Use Tax to Sales of Accommodations Facilitated by Accommodations Intermediaries 

Effective September 1, 2021, Senate Bill 1398 (2021 Acts of Assembly, Special Session I, Chapter 383) changes the application of the Retail Sales and Use Tax to sales of accommodations facilitated by accommodations intermediaries. The legislation makes similar changes to the local transient occupancy tax. Additionally, these changes will apply to the state-imposed transient occupancy taxes that fund transportation purposes in certain localities under Va. Code § 58.1-1743 and Va. Code § 58.1-1744 because these taxes are administered by local governments in the same manner as their local transient occupancy taxes. Virginia Tax has issued guidelines to provide processes and procedures for implementing the provisions of Va. Code §§ 58.1-602, 58.1-603, and 58.1-612.2, relating to the Retail Sales and Use Taxation of accommodations, as required by Senate Bill 1398.

For more information, click here.


Here’s what Taxpayers Need to Know About Higher Education Tax Credits | Tax Tip 2021-106

As a new school year approaches, students are considering what classes they need to take and how much the classes will cost. Whether it’s community college, a trade school, a four-year university or an advanced degree, higher education is expensive. The good news is tax credits can help offset these costs.

These credits reduce the amount of tax someone owes. If the credit reduces tax to less than zero, the taxpayer could even receive a refund.

For more information, click here.


Franchot Announces Shop Maryland Tax-Free Week, August 8-14 | Comptroller of Maryland

Comptroller Peter Franchot has announced that Shop Maryland Tax-Free Week returns August 8-14 with significant savings for consumers, scholarship opportunities for college and trade school students, and a much-needed sales boost for retailers.

“Tax-free week is a rite of Maryland’s late summer, signaling the approach of a new school year, cooler weather and a change of wardrobe,” Comptroller Franchot said. “Maryland’s high vaccination rates means life is beginning to return to normal. While I continue to urge caution, Marylanders should take advantage of tax-free week savings and support locally owned businesses that have been hit hard during the pandemic.”

For more information, click here.


Tax Tips for Students Working Summer Jobs | Tax Tip 2021-108

During the summer many students focus on making money from a summer job. They may want to gain work experience, earn some spending money or help pay for college. Here are some facts all student workers should know about summer jobs and taxes.

Not all the money they earn will make it to their pocket because employers must withhold taxes from their paycheck.

For more information, click here.


Special Edition of e-News for Small Business – Information for FIRE Users | Issue Number: 2021-11

The IRS will be making significant improvements to the Filing Information Returns Electronically (FIRE) application process for new users. The new online Information Returns (IR) Application for Transmitter Control Code (TCC) is scheduled to deploy on September 26, 2021. The new application will be available on IRS.gov and will replace both the current Form 4419 and the Fill-in Form 4419 on the FIRE System.

For more information, click here.

News for Your Week Ahead: July 22, 2021

We’re excited to announce a new member benefit: MSATP members can now access Talking With TaxSpeaker, a tax expert Q&A video service, at a discounted rate! 

Subscribers will have access to 15-20 minute video segments in which TaxSpeaker’s experts answer hot topic tax-related questions. Subscribers will also be able to submit any of their questions so they can be answered in the next Talking With TaxSpeaker episode!

This discounted subscription is only available to MSATP members for $162* — that’s 20% off the original price! Click the button below to register for the service now.

Want to learn more about the subscription? Bob Jennings joined us on MSATP TV this week to discuss what members can expect when subscribing.

Watch on YouTube.

*If you are a current Talking With TaxSpeaker subscriber through TaxSpeaker, you must call (812) 288-1513 and cancel your current subscription. Then, sign up for the MSATP discounted subscription using our website, or call (800) 922-9672. You must be an MSATP member to enjoy this member benefit. To become an MSATP member please click here.

Coming Up: On Tuesday, July 27 at 10 a.m., Connie Hess of USB Payment Processing joins us to tell us about their new Merchant as Service cashflow management program that can help you and your clients. On Wednesday, July 28 at 10 a.m., Jonathan Rivlin will join us to tell us about his upcoming class, Firm of the Future on October 21. To register for the seminar, please click here.

Be sure to Like/Follow us on Facebook so you can catch MSATP TV live every week.


Fraudulent Unemployment Claims

Our Second Vice President Donya Oneto recently encountered an issue with a client regarding a fraudulent unemployment claim. The state provided the following statement and advice which she was kind enough to pass onto you

There has been no breach in our Unemployment System. Fraudsters are using identities and personal identifiable information stolen from prior data breaches that have taken place such as (EQUIFAX, TARGET, Office of Personnel Management) to file fraudulent Unemployment Insurance Claims. We are also working in conjunction with the Office of the Inspector General to investigate these fraudulent claims.

In an attempt to protect yourself from any future fraud attacks:

  • Request your free credit reports via www.annualcreditreport.com and review them for other fraudulent activities.
  • Notify all three credit bureaus that you have been a victim of identity theft: Experian, Equifax, and Transunion.
  • File a police report with the local authorities.
  • You may file a complaint with the Federal Trade Commission at:ftc.gov/complaint.
  • You may file a complaint with the National Center for Disaster Fraud (NCDF).

Updated IRS Correction Principles and Changes to VCP Outlined in EPCRS Revenue Procedure 2021-30

The IRS Employee Plans Compliance Resolution System (EPCRS) permits any plan sponsor of a retirement plan (including SEP and SIMPLE IRA plans) to correct plan failures. EPCRS offers three correction programs:

  • Self-Correction Program (SCP) – Correct certain plan failures without contacting the IRS or paying a user fee
  • Voluntary Correction Program (VCP) – Correct failures not eligible for SCP and to get the approval of the IRS that the failures were properly corrected
  • Audit CAP – Resolve failures discovered during an IRS audit that can’t be corrected using SCP

For more information, click here.


A Tip for Teachers: Some Educator Expenses may be Tax Deductible | Tax Tip 2021-104

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 were not 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.

 For more information, click here.


Security Summit Partners Urge Tax Pros to Use Multi-Factor Authentication; Critical Step to Boost Protection Against Data Theft | IR-2021-155

With security incidents on the rise, the Internal Revenue Service, state tax agencies and the tax industry urged tax professionals and taxpayers to use a special feature – multi-factor authentication – available on tax software products to help protect against identity and data theft.

The Security Summit partners kicked off the annual 2021 “Protect Your Clients; Protect Yourself” summer campaign aimed at tax professionals. This year’s theme is “Boost Security Immunity: Fighting Against Identity Theft” to urge tax professionals to step up their efforts to protect client data amid the pandemic and its aftermath.

Multi-factor authentication, also known as two-factor authentication, provides more security. It allows the tax professional or taxpayer to use another feature such as a security code sent to a mobile device, a pin number, or a fingerprint in addition to the username and password. A thief may steal usernames and passwords but cannot access accounts without the additional multifactor feature.

For more information, please click here.

News for Your Week Ahead: July 15, 2021

Jim Dawson of Miles & Stockbridge joins us to discuss SDAT’s elimination of fees related to filing the articles of dissolution of a business, how it affects reinstating businesses, and what effect it will have on forfeitures.

Watch on YouTube.

Coming Up: On Wednesday, July 21 at 2 p.m., Bob Jennings of TaxSpeaker will join us to talk about an exciting new benefit he will be offering to MSATP members!

Be sure to Like/Follow us on Facebook so you can catch MSATP TV live every week!


IRS Readies Nearly 4 Million Refunds for Unemployment Compensation | IR-2021-151

The Internal Revenue Service announced it will issue another round of refunds this week to nearly 4 million taxpayers who overpaid their taxes on unemployment compensation received last year.

The American Rescue Plan Act of 2021, which became law in March, excludes up to $10,200 in 2020 unemployment compensation from taxable income calculations. The exclusion applied to individuals and married couples whose modified adjusted gross income was less than $150,000.

For more information, please click here.


IRS Provides Guidance for Multiemployer Retirement Plans Receiving Assistance from the PBGC | IR-2021-148

The Internal Revenue Service provided guidance for multiemployer qualified retirement plans that receive special financial assistance from the Pension Benefit Guaranty Corporation (PBGC) and for participants and beneficiaries in those plans.

Notice 2021-38 provides guidance under provisions of the American Rescue Plan Act of 2021 regarding special financial assistance paid by the PBGC to eligible multiemployer defined benefit pension plans that are financially at risk.

For more information, click here.


Making Payment for Deferred Tax Reported by Third-Party Payers | COVID Tax Tip 2021-99

The Coronavirus, Aid, Relief and Economic Security Act – CARES Act – allowed employers to defer the deposit and payment of the employer’s share of Social Security taxes and self-employed individuals to defer payment of certain self-employment taxes.

Here are some important dates for people to know:

  • The deferral applies to those taxes for the period March 27, 2020, through December 31, 2020.
  • Employers must pay 50% of the amount eligible to be deferred by December 31, 2021, and the remaining deferred tax by December 31, 2022.
  • If any portion of the employer’s share of Social Security tax is not deposited or paid by the applicable date, penalties and interest will apply.

For more information, click here.


Renting Your Vacation Home

The IRS has released tax tips about renting your vacation home. To watch please click here.

 

Pass Through Entities Take the RELIEF Act Grant as a Subtraction

Recently, one of our MSATP members wrote to Tax Pro Help at Maryland Taxes regarding the Pass Through Entity grants. We would like to pass on the tax tip received from their legal department.

PTEs take the RELIEF Act grant as they would any subtraction.

 State modifications are passed through to the members and not added to or subtracted from a PTE’s federal income. A PTE’s RELIEF Act subtraction should be treated like any other PTE subtraction. Any RELIEF Act subtractions should be passed to the members on the Maryland Schedule K-1, part C., Line 5, and detailed in Part G. The description in Part G should include the name of the grant and/or granting agency. The PTE does not need to provide with its return any Form 1099G with respect to a COVID grant.

We hope this information helps and thank the legal department at Maryland Taxes for their help!

News for Your Week Ahead: July 8, 2021


Ellen Silverstein and Bob Medbery join Bill Feehley to discuss the Mid-Summer Wine Tasting and Mt. Vernon Tour taking place on July 17th and Mt. Vernon Tour which will be on October 20th. We look forward to seeing you there!

Watch on YouTube.

Coming Up: On Wednesday, July 14th at 10 a.m., Jim Dawson of Miles & Stockbridge will join us to discuss SDAT’s elimination of fees related to filing the articles of dissolution of a business, how it affects reinstating businesses and what effect it will have on forfeitures.

Be sure to Like/Follow us on Facebook so you can catch MSATP TV live every week!

 


How Self-Employed Individuals and Household Emplloyers Repay Deferred Social Security Tax | COVID Tax Tip 2021-96

The Coronavirus Aid, Relief, and Economic Security Act allowed self-employed individuals and household employers to defer the payment of certain Social Security taxes on their Form 1040 for tax year 2020 over the next two years. Half of the deferred Social Security tax is due by December 31, 2021, and the remainder is due by December 31, 2022.

For more information, click here.


IRS Provides Answers for Certain Transportation Companies Eligible for Treasury Grants | IR-2021-145

The Internal Revenue Service posted answers to questions that certain transportation companies may have regarding Treasury grants and related taxes.

The Coronavirus Economic Relief for Transportation Services (CERTS) Act of the Consolidated Appropriations Act of 2021 authorizes the Department of the Treasury to provide grants to  transportation service providers–including eligible motorcoach companies, school bus companies, and passenger vessel companies– that experienced annual revenue losses of 25 percent or more as a result of COVID-19.

For more information, click here.


What Organizations Should Understand About Applying for Tax-Exempt Status | Tax Tip 2021-97

Organizations that want to apply for recognition of tax-exempt status under Section 501(c)(3) of the tax code use a Form 1023-series application. Here are some tips to help them understand the process.

  • The application process on IRS.gov includes a step-by-step guide explaining how to apply for tax exempt status.
  • Form 1023-series applications for recognition of exemption must be submitted electronically online at www.pay.gov. The application must be complete and include the user fee.
  • Some types of organizations don’t need to apply for Section 501(c)(3) status to be tax-exempt. These include churches and their integrated auxiliaries, and public charities with annual gross receipts normally no more than $5,000.

For more information, please click here.


Franchot Continues Countdown to July 15 State Tax Filing Deadline| Comptroller of Maryland

Comptroller Peter Franchot encourages taxpayers with last-minute questions about their state income tax returns before the July 15 filing deadline to seek assistance from agency staff, either in person or virtually.

The Comptroller extended the deadline by three months due to the economic impacts of the COVID-19 pandemic, as well as state and federal legislation that required extensive changes to 2020 tax forms in the middle of the tax filing season.

No interest or penalties will be assessed if returns are filed and taxes owed are paid by July 15. The extended deadline applies to 2020 individual, fiduciary and corporate income tax returns, as well as 2021 first and second quarter estimated payments.

For more information, please click here.


IRS Holds Special Weekend Events to Help People Who Don’t Normally File Taxes Get Child Tax Credit Payments and Economic Impact Payments | IR-2021-146

The Internal Revenue Service and partners in non-profit organizations, churches, community groups and others will host events in 12 cities this weekend to help people who don’t normally file a federal tax return to register for the monthly Advance Child Tax Credit (AdvCTC) payments.

The special events by IRS and partner groups to help people quickly file income tax returns and register for the advance payments will take place July 9-10, 2021. Events will be held in Atlanta, New York, Detroit, Houston, Los Angeles, Las Vegas, Miami, Milwaukee, Philadelphia, Phoenix, St. Louis and Washington, DC/Maryland.

For more information, please click here.

News for Your Week Ahead: July 2, 2021

Jonathan Pocius of Payroll Services joins Bill Feehley to talk about how Payroll Services, LLC can help you with your payroll needs, including claiming your employee retention credits.

Watch on YouTube.

Coming Up: On Thursday, July 7 at 10 a.m., Ellen Silverstein and Robert Medbery will join Executive Director Bill Feehley to tell us about our upcoming signature events!

Be sure to Like/Follow us on Facebook so you can catch MSATP TV live every week!


Comptroller Extends Filing, Payment Deadlines for Pass-Through Entities | Two New Laws Caused Extensive Changes to Tax Forms; Waiver of Interest and Penalty for Returns Filed by Sept. 15

Comptroller Peter Franchot extended the filing deadline for 2020 income tax returns from Pass-Through Entities (PTEs) to Sept. 15, 2021, due to new laws requiring extensive changes to PTE tax forms that can now be accessed on the Comptroller’s website.

PTE forms are expected to be available through software vendors soon, but the Comptroller’s Office cannot guarantee the date of availability of forms through any third-party vendor.

Taxpayers who file PTE returns and pay any outstanding liabilities by September 15 will not be charged interest or pay a penalty. No further action is required for PTEs to receive this waiver; it will be automatically granted.

For more information, click here.


SDAT Eliminates Burdensome Business Fees, Observes Growth in Maryland Entrepreneurship

The Maryland State Department of Assessments and Taxation (SDAT) announced that as of July 1, businesses will no longer be required to pay a $100 filing fee to close their business. The Department has been pursuing this fee elimination since 2017, and this year led a bipartisan effort to pass HB0647, which was signed into law by Governor Hogan.

“Thanks to Governor Hogan’s leadership and support during the COVID-19 pandemic, Maryland’s business community is stronger than ever, with more businesses registering in 2020 than any year prior,” said SDAT Director Michael Higgs. “For businesses that unfortunately need to close, SDAT is proud to have led the effort on this bi-partisan legislation that assists business owners in that process by removing the dissolution fee.”

For more information, click here.


National Taxpayer Advocate Assesses Tax Filing Season and Identifies Areas for IRS Improvement in Mid-Year Report to Congress | IR-2021-139

National Taxpayer Advocate Erin M. Collins today released her statutorily mandated mid-year report to Congress. The report presents an assessment of the 2021 filing season, identifies key objectives the Taxpayer Advocate Service (TAS) will pursue during the upcoming fiscal year, and contains the IRS’s responses to each of the 73 administrative recommendations the Advocate made in her 2020 Annual Report to Congress.

The Advocate’s report emphasizes that the difficulties the IRS faced in performing its traditional work due to the COVID-19 pandemic and the added responsibilities it was assigned to make three rounds of stimulus payments combined to create significant challenges for taxpayers.

For more information, please click here.


Revenue Procedure 2021-14 | RP-2021-14

Revenue Procedure 2021-14 provides guidance regarding elections and revocations related to § 2303(e) of the Coronavirus Aid, Relief, and Economic Security Act (CARES Act). Section 2303(e) of the CARES Act provides special rules for taxpayers with a net operating loss (NOL) for any taxable year beginning in 2018, 2019, or 2020, all or a portion of which consists of a “farming loss,” as defined by § 172(b)(1)(B)(ii) of the Internal Revenue Code (Code) (Farming Loss NOL).

Revenue Procedure 2021-14 will be in IRB: 2021-29, dated July 19, 2021.

For more information, please click here.


IRS: Families Receiving Monthly Child Tax Credit Payments Can Now Update Their Direct Deposit Information | IR-2021-143

The Internal Revenue Service upgraded a key online tool to enable families to quickly and easily update their bank account information so they can receive their monthly Child Tax Credit payment.

The bank account update feature was added to the Child Tax Credit Update Portal, available only on IRS.gov. Any updates made by Aug. 2 will apply to the Aug. 13 payment and all subsequent monthly payments for the rest of 2021.

For more information, please click here.


IRS Extends Tax Relief For Employer Leave-Based Donation Programs that Aid Victims of the COVID-19 Pandemic | IR-2021-142

The Internal Revenue Service extended the tax relief provided in Notice 2020-46 for calendar year 2021 for employers whose employees forgo sick, vacation or personal leave because of the COVID-19 pandemic.

Notice 2021-42 provides that cash payments employers make to charitable organizations that provide relief to victims of the COVID-19 pandemic in exchange for sick, vacation or personal leave which their employees forgo will not be treated as compensation. Similarly, the employees will not be treated as receiving the value of the leave as income and cannot claim a deduction for the leave that they donated to their employer.

For more information, please click here.


Draft Instructions for the Schedules K-2 and K-3 Released to Enhance Reporting of International Tax Matters By Pass-Through Entities | IR-2021-140

The Treasury and the IRS released today early draft instructions for the Schedules K-2 and K-3 for Forms 1065, 1120-S, and 8865 for tax year 2021 (filing season 2022). The early release drafts of the instructions provide a preview of the instructions before final versions are released. The new Schedules K-2 and K-3 were released on June 3 and 4, 2021.

The redesigned forms and instructions give useful guidance to partnerships, S corporations and U.S persons who are required to file Form 8865 with respect to controlled foreign partnerships on how to provide international tax information. The updated forms apply to any persons required to file Form 1065, 1120-S or 8865, but only if the entity for which the form is being filed has items of international tax relevance (generally foreign activities or foreign partners).

For more information, please click here.


Here’s What Taxpayers Need to Know About Paying Taxes on Their Hobby Activities | Tax Tip 2021-94

Many people are engaged in hobby activities that are also a source of income. For example, some people started selling handmade items during the pandemic. These people must report this income on their tax return.

A hobby is any activity that a person pursues because they enjoy it and with no intention of making a profit. This differs from those that perate a business with the intention of making a profit.

For more information, please click here.


Virginia Society Launches Career Center for Accountants | Accounting Today

The Virginia Society of CPAs has launched a new Career Center for firms seeking top talent, as well as for individuals pursuing career opportunities in accounting and finance.

The VSCPA Career Center offers job postings, résumé review services, and other career and talent management resources. The new site is part of the VSCPA’s career services strategy to connect CPAs with future-oriented resources to drive innovation in workplace trends, talent and leadership development. The center is powered by YM Careers, a job board software platform.

For more information, please click here.


IRS Announces “Dirty Dozen” Tax Scams for 2021 | IR-2021-135

The Internal Revenue Service began its “Dirty Dozen” list for 2021 with a warning for taxpayers, tax professionals and financial institutions to be on the lookout for these 12 nefarious schemes and scams.

This year’s “Dirty Dozen” will be separated into four separate categories: pandemic-related scams like Economic Impact Payment theft; personal information cons including phishing, ransomware and phone ‘vishing’; ruses focusing on unsuspecting victims like fake charities and senior/immigrant fraud; and schemes that persuade taxpayers into unscrupulous actions such as Offer In Compromise mills and syndicated conservation easements.

The agency compiled the list into these categories based on who perpetuates the schemes and who they impact. In addition to today’s scams the IRS will highlight the other schemes over the next three days.

For more information, please click here.


Errors Employers Should Avoid When Requesting Advance Payment of Employer Credits | COVID Tax Tip 2021-93

Employers who are filing Form 7200, Advance Payment of Employer Credits Due to COVID-19 should read the instructions carefully and take their time when completing this form to avoid mistakes.

Using a reputable tax preparer – including certified public accountants, enrolled agents or other knowledgeable tax professionals – can also help avoid errors. Mistakes can result in a processing delay, which means it may take longer to get the advanced payment.

For more information, please click here.


“A Closer Look” at Employee Tax Initiatives: Helping Small Business and Self-Employed Taxpayers| CL-2021-19

Today, the IRS published the latest executive column “A Closer Look,” which features Scott Irick, Director of Examination discussing how the IRS has a variety of compliance programs and outreach efforts to help employers meet their employment tax responsibilities. “The tax law can be complex for these taxpayers, and part of my role as director is to use a variety of tools to help people understand and meet their tax obligations,” said Irick.

“A Closer Look” is a column from IRS executives that covers a variety of timely issues of interest to taxpayers and the tax community. It also provides a detailed look at key issues affecting everything from IRS operations and employees to issues involving taxpayers and tax professionals.

For more information, please click here.