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Category: Legislation

News for Your Week Ahead: October 22, 2021

Posted on by Walter Moore

This week, Janice Shih discussed the MSATP and MVLS partnership, as well as our upcoming events!

Watch on YouTube.

Coming Up: On Thursday, October 28, at 9 a.m., Roy Frick will give an update on the MSA Scholarship Foundation, including how you can help the future of the profession.

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

MSATP Receives Maryland Volunteer Lawyers Services Partnership Award

MSATP is the proud recipient of the 2021 MVLS Partnership Award! Thanks to the continued generosity of our members who give back by taking on various pro bono tax cases!

To see pictures from the event, click here.

Here’s What Taxpayers Should Know About Backup Withholding | Tax Tip 2021-156

Backup withholding ensures that the government is paid the correct amount of taxes on specific types of payments reported on certain Forms 1099 and W-2G. Here are some facts about backup withholding. Backup withholding is required on certain non-payroll amounts when certain conditions apply. The payer making such payments to the payees does not generally withhold taxes, and the payees report and pay taxes on this income when they file their federal tax returns. There are, however, situations when the payer is required to withhold a certain percentage of tax to make sure the IRS receives the tax due on this income.

For more information, click here.

The Tax Responsibilities That Come With Shutting Down a Business | Tax Tip 2021-153

There are many reasons a business owner may choose to close their doors, and there are many things that must be done to go out of business. Two important steps all business owners must take are fulfilling their federal tax responsibilities and informing the IRS of their plans. The closing a business page of IRS.gov is designed to help owners navigate the process of shutting down.

For more information, click here.

IRS Joins International Organizations in Fighting Charity Fraud During Special Awareness Week | IR-2021-205

The Internal Revenue Service is joining international organizations and other regulators in highlighting Charity Fraud Awareness Week, Oct. 18-22.

The campaign is run by a partnership of charities, regulators, law enforcers and other not-for-profit stakeholders from across the world. The purpose of the week is to raise awareness of fraud and cybercrime affecting organizations and to create a safe space for charities and their supporters to talk about fraud and share good practice.

For more information, click here.

IRS Sets Forth Information For a Valid Research Credit Claim for Refund | IR-2021-203

The IRS has set forth the information that taxpayers will be required to include for a research credit claim for refund to be considered valid. Existing Treasury Regulations require that for a refund claim to be valid, it must set forth sufficient facts to apprise IRS of the basis of the claim. The Chief Counsel memorandum will be used to improve tax administration with clearer instructions for eligible taxpayers to claim the credit while reducing the number of disputes over such claims.

For more information, click here.

News For Your Week Ahead: October 8, 2021

Posted on by Walter Moore

This week, Jonathan Rivlin, CPA gave us a full rundown of his upcoming seminar/webinar on October 21, including some new and exciting updates to the course. If you have not thought about what your firm should look like given the new electronic payment thresholds like Venmo and PayPal, don’t miss this course! Check out the details below.

Watch on YouTube.

Coming Up: On Thursday, October 14, at 10 a.m., Allen Ayers, CPA, CFP will be joining us to discuss his upcoming seminar and webinar, Mergers & Contingency Planning on October 21, 2021.

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

Farmers and Ranchers Affected by Drought Have Additional Time to Replace Livestock | Tax Tip 2021-146

Farmers and ranchers who were forced to sell livestock due to drought may get extra time to replace the livestock and defer tax on any gains from the forced sales. Here are some facts about this to help farmers understand how the deferral works and if they are eligible.

  • The one-year extension gives eligible farmers and ranchers until the end of the tax year after the first drought-free year to replace the sold livestock.
  • The farmer or rancher must be in an applicable region. An applicable region is a county designated as eligible for federal assistance, as well as counties contiguous to that county.

For more information, click here.

N-2021-58: Extension Timeframes for Elections and Payments of COBRA Premiums | N-2021-58

Notice 2021-58 clarifies the application of the extension of timeframes by the Joint Notice (85 FR 26351, May 4, 2020) and EBSA Disaster Notice 2021-01 (Feb. 26, 2021) (Emergency Relief Notices) to elections and payments of COBRA premiums during the COVID-19 National Emergency. This notice clarifies that the disregarded period for an individual to elect COBRA continuation coverage and the disregarded period for the individual to make initial and subsequent COBRA premium payments generally run concurrently. This notice also addresses the interaction of these rules with the ARP COBRA premium assistance and Notice 2021-31, 2021-23 IRB 1173 (June 7, 2021).

For more information, click here.

ABLE Accounts: A Valuable Financial Solution For People with Disabilities | Tax Tip 2021-148

Achieving a Better Life Experience or ABLE accounts are tax-advantaged savings accounts for individuals with disabilities and their families. These accounts help disabled people pay qualified disability-related expenses without affecting their eligibility for government assistance programs.

For more information, click here.

Here’s How A Taxpayer’s Custody Situation May Affect Their Advance Child Tax Credit Payments | COVID Tax Tip 2021-147

Parents who share custody of their children should be aware of how the advance child tax credit payments are distributed. It is important to remember that these are advance payments of a tax credit that taxpayers expect to claim on their 2021 tax return. Understanding how the payments work will parents to unenroll, if they choose, and possibly avoid a possible tax bill when they file next year.

For more information, click here.

News for Your Week Ahead: August 12, 2021

Posted on by Walter Moore

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

Posted on by Walter Moore

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

Posted on by Walter Moore

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

Posted on by Walter Moore

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

Posted on by Walter Moore

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 8, 2021

Posted on by Walter Moore


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

Posted on by Walter Moore

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.

News for Your Week Ahead: June 18, 2021

Posted on by Walter Moore

On this weeks’ episode of MSATP TV, Jerry Lotz join Executive Director Bill Feehley to tell us how CostSeg can help and you clients be fiscally fit.

Watch on YouTube.

Coming Up: On Thursday, June 24 at 10 a.m., Michael Ashley of Registered Agents will be joining us to discuss how he can help you and your clients incorporate a business, form a limited liability company, or for other incorporation needs in all 50 states! Like/Follow us on Facebook to see this episode and more!

Update on Mandatory Electronic Filing for Form 4720 by Private Foundations

Section 3101 of the Taxpayer First Act requires certain exempt organizations to file information and tax returns electronically for tax years beginning after July 1, 2019. Private foundations required to file Form 4720, Return of Certain Excise Taxes Under Chapters 41 and 42 of the Internal Revenue Code, are included in the electronic filing mandate. Pending conversion of Form 4720 to electronic format, the IRS continued to accept the 2019 tax-year version of this return on paper. While software for the electronic version of Form 4720 has been under development, the IRS also continued to accept the 2020 tax-year version of Form 4720 from private foundations on paper. See Notice 2021-01, 2021-2 I.R.B. 315.

For more information, please click here.

IRS Unveils Online Tool to Help Low-Income Families Register for Monthly Child Tax Credit Payments | IR-2021-129

The Treasury Department and the Internal Revenue Service unveiled an online Non-filer Sign-up tool designed to help eligible families who don’t normally file tax returns register for the monthly Advance Child Tax Credit payments, scheduled to begin July 15.

This tool, an update of last year’s IRS Non-filers tool, is also designed to help eligible individuals who don’t normally file income tax returns register for the $1,400 third round of Economic Impact Payments (also known as stimulus checks) and claim the Recovery Rebate Credit for any amount of the first two rounds of Economic Impact Payments they may have missed.

For more information, click here.

New FAQs Available to Aid Families and Small Business Under the American Rescue Plan | IR-2021-128

The Internal Revenue Service today posted two new, separate sets of frequently-asked-questions (FAQs) to assist families and small and mid-sized employers in claiming credits under the American Rescue Plan (ARP).

Both the child and dependent care credit as well as the paid sick and family leave credit were enhanced under the ARP, enacted in March to assist families and small businesses with the fallout of the COVID-19 pandemic and recovery underway. The two sets of FAQs provide information on eligibility, computing the credit amounts, and how to claim these important tax benefits.

For more information, click here.

Filing Payroll Taxes Electronically Makes Good Sense | Tax Tip 2021-86

Running a business with employees can be hard work. One way business owners can make things a little easier on themselves is by filing payroll and employment taxes electronically. There are several benefits to filing these forms electronically:

  • It saves time.
  • It’s secure and accurate.
  • The filer gets an email to confirm the IRS received the form within 24 hours

There are two convenient ways businesses can e-file:

  • Employers submitting the forms themselves will need to purchase IRS-approved software. There may be a fee to file electronically. Also, the software will require a signature by one of two ways:
  • The software instructs the user to apply for an online signature PIN.

Taxpayers should allow at least 45 days to receive their PIN.

  • The user can scan and attach Form 8453-EMP, Employment Tax Declaration for an IRS e-file Return.
  • Employers can have their tax professional file the form for them. The Authorized IRS e-file Providers for Individuals and Businesses can help employers locate an Electronic Return Originator near them.

For more information, click here.

Facts to Help Taxpayers Understand Backup Witholding | Tax Tip 2021-85

Backup withholding is a federal tax on income that otherwise typically doesn’t require tax withholding, such as 1099 and W2-G income. Taxpayers who receive this type of income may have backup withholding deducted from their payments.

Here are some basic facts about backup withholding.

Backup withholding is required on certain nonpayroll amounts when certain conditions apply.

The payer making such payments to the payee doesn’t generally withhold taxes, and the payees report and pay taxes on this income when they file their federal tax returns. There are, however, situations when the payer is required to withhold a certain percentage of tax to make sure the IRS receives the tax due on this income.

For more information, click here.

News from the Justice Department’s Tax Division 

The United States has filed a complaint in the U.S. District Court for the Middle District of Georgia, Macon Division, seeking to bar Shondre D. Pitts, an Irwinton, Ga., tax return preparer, from preparing tax returns for others. The civil complaint against Pitts alleges he has a long history of preparing fraudulent returns and, as a result, his customers may face large income tax debts and may be liable for penalties and interest.

Hildares Kinkesha Parker-Greene, a Kinston, N.C., return preparer, was sentenced to 30 months in prison for conspiring to file false tax returns for her clients. In addition to the term of imprisonment, Parker-Greene has been ordered to serve three years of supervised release and pay $442,576 in restitution to the IRS.

Herbert E. Lewis, a Georgia certified public accountant, has been charged with one count of conspiracy to defraud the United States, 24 counts of wire fraud, 32 counts of aiding or assisting in the preparation of false federal tax returns and five counts of filing false federal tax returns. If convicted, Lewis faces a statutory maximum sentence of 20 years in prison for each count of wire fraud, five years in prison for conspiring to defraud the United States, three years in prison for each count of filing a false tax return and three years in prison for each count of aiding and assisting in the preparation of a false tax return. He also faces a period of supervised release, monetary penalties and restitution.

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