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Category: Legislation

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.

News for Your Week Ahead: June 11, 2021

Posted on by Walter Moore

On this weeks’ episode of MSATP TV, Ellen Silverstein and Brian Chrest join Executive Director Bill Feehley to tell us about one of our Signature Programs the Business Builder’s Think Tank (BBTT). If you interested in joining one of our Business Builder’s Think Tank groups please click here to register for one of the upcoming meetings!

Watch on YouTube.

Coming Up: On Thursday, June 17th at 10 a.m., we will have Jerry Lotz with CostSeg joining us to tell us how CostSeg can help you and your clients. Please follow us on Facebook to see this episode and more!

Princess Royale

Thank You to All Who Joined Us Both In Person and Virtually at Our Annual Convention & Banquet

While the past year was rather difficult, MSATP was very excited and happy for all those who joined us both in-person and virtually for the MSATP Annual Convention and Banquet. This years’ event offered 15 hours of CPE from John Kennedy, Bob Jennings, Ryan Jennings, Bill Leonard and Rob Smith! We were excited to see old faces and new that joined us and enjoyed their time with us in Ocean City, MD.

At the convention we handed out many awards and would like to congratulate all for their excellence and achievement.

To see a full recap of our award winners, please click here.

IRS Sending More Than 2.8 Million Refunds to Those Who Already Paid Taxes on 2020 Unemployment Compensation | IR-2021-123

The Internal Revenue Service is sending more than 2.8 million refunds this week to taxpayers who paid taxes on unemployment compensation that new legislation now excludes as income.

IRS efforts to correct unemployment compensation overpayments will help most affected taxpayers avoid filing an amended tax return. So far, the IRS has identified 13 million taxpayers that may be eligible for the adjustment. Some will receive refunds, which will be issued periodically, and some will have the overpayment applied to taxes due or other debts. For some there will be no change.

The American Rescue Plan Act of 2021 (ARPA) excluded up to $10,200 in unemployment compensation per taxpayer paid in 2020. The $10,200 is the maximum amount that can be excluded when calculating taxable income; it is not the amount of refunds.

For more information, click here.

IRS Sending Letters to More Than 36 Million Families Who May Qualify for Monthly Child Tax Credits; Payments Start July 15 | IR-2021-124

The Internal Revenue Service has started sending letters to more than 36 million American families who, based on tax returns filed with the agency, may be eligible to receive monthly Child Tax Credit payments starting in July.

The expanded and newly-advanceable Child Tax Credit was authorized by the American Rescue Plan Act, enacted in March. The letters are going to families who may be eligible based on information they included in either their 2019 or 2020 federal income tax return or who used the Non-Filers tool on IRS.gov last year to register for an Economic Impact Payment.
Families who are eligible for advance Child Tax Credit payments will receive a second, personalized letter listing an estimate of their monthly payment, which begins July 15.

Most families do not need to take any action to get their payment. Normally, the IRS will calculate the payment amount based on the 2020 tax return.  If that return is not available, either because it has not yet been filed or it has not yet been processed, the IRS will instead determine the payment amount using the 2019 return.

For more information, click here.

IRS Procurement Office to Hire 80 New Employees Nationwide, Including Contract Specialists | IR-2021-126

The Internal Revenue Service is looking to hire motivated acquisition professionals interested in providing America’s taxpayers top quality service. The agency’s Procurement office plans to fill 80 vacancies nationwide, many of which are contract specialists.

The IRS Procurement office provides acquisition services for IRS business units, Treasury departmental offices and Information Technology for the Bureau of Engraving and Printing. The office administers all aspects of the acquisition process from planning, contract award, management and closeout. IRS Procurement’s goal is to create agile and innovative best value contract solutions to ensure the IRS meets its mission.

For more information, click here.

Live IRS Webinars in June; Register Now for the 2020 IRS Tax Forum; Join HR Zoom Sessions for IRS Job Openings 

The IRS Tax Exempt & Government Entities would like to invite you to watch two live webinars we have scheduled this month.

1) Applying for Exemption

When: June 23, 2021, at 1:00 pm ET

Learn about:

  • Steps to take before applying to the IRS for tax-exempt status
  • Types of tax-exempt status available and forms used to request them
  • How to apply for tax-exempt status and tips to shorten the application process

Register: Register now for this free webinar

2) Reporting Election Workers Earnings

When: June 24, 2021, at 1:00 pm ET

Learn about:

  • Workers who should be treated as election workers
  • Taxes that should be withheld from election worker wages
  • Amounts to include in earnings

Register: Register now for this free webinar

Questions: Email questions to TEGE.outreach@IRS.gov with “Pre-submitted questions for Election Worker webinar (June 24)” in the subject line. We’ll include the answer in the presentation or separately as time permits.

IRS Virtual Nationwide Tax Forum

The 2021 Virtual Nationwide Tax Forum will consist of 30 live-streamed webinars between July 20 and August 19, 2021. Register by June 15 at 5:00 pm ET to get the $240 Early Bird rate before the price increases to $289.

It’s a great way to earn up to 28 hours of CE credits while getting the latest information on tax law, cybersecurity and more. And you can visit the IRS booths in the Virtual Exhibit Hall, including the TE/GE booth, where you can find other information and chat with the IRS.

TE/GE is presenting two topics at this year’s virtual Tax Forum:

  • Charities & Tax-Exempt Organizations Update: Learn about recent law and guidance changes and how those changes may affect your charity. Also, learn about the current electronic filing requirements for returns filed by charities and more.
  • Retirement Plans – IRS Compliance Initiatives: Learn about the latest IRS compliance initiatives for retirement plans and what to do if your client receives a letter from the IRS about their plan. Use our audit experience to identify and avoid common mistakes in plans.

Information Sessions on IRS Hiring

Did you know the IRS is hiring? We’re hosting virtual information sessions where you can learn more about working for the IRS.

Hear from employees currently working in these positions and learn about the day-to-day work we do at the IRS. A representative from HR will also discuss the application process and some of the requirements for the positions.

Participate in the following IRS virtual information sessions for current and future announcements for Tax Law Specialist positions:

June 10, 3-4:30 ET

Join ZoomGov Meeting

  • Meeting ID: 161 480 2207
  • Passcode: YmB9=pX#

For audio only:

  • 669 254 5252 US (West Coast)
  • 646 828 7666 US (East Coast)

June 17, 4-5:30 ET

Join ZoomGov Meeting

  • Meeting ID: 161 871 6566
  • Passcode: sfZw2f@W

For audio only:

  • 669 254 5252 US (West Coast)
  • 646 828 7666 US (East Coast)

News for Your Week Ahead: May 14, 2021

Posted on by Walter Moore

On this weeks’ episode of MSATP TV Marc Reibman of USB Payment Processing joins Executive Director Bill Feehley for an exciting new service they are offering to reduce those credit card processing fees!

Watch on YouTube.

Coming Up: On Thursday, May 20th at 10 a.m., MSATP President Barbara Smith will join Bill Feehley on MSATP TV to tell us about the Employee to Entrepreneur meeting coming up on June 15th.Tune in on Facebook for this episode and more!

IRS Extends Deadline to Apply for the 2022-2024 Volunteer Taxpayer Advocacy Panel | IR-2021-109

The Internal Revenue Service has extended the deadline for civic-minded volunteers to apply for membership on the Taxpayer Advocacy Panel (TAP) for 2022. Taxpayers may submit a TAP application online at www.improveirs.org through June 1, 2021.

The TAP is a federal advisory committee that listens to taxpayers, identifies major taxpayer concerns and makes recommendations for improving IRS service and customer satisfaction.

Taxpayers are encouraged to take this opportunity to make a difference in how the IRS delivers products and services. A video is available with information about the TAP and how to contribute to this dynamic group of volunteers.

For more information, please click here.

IRS Offers Overview of Tax Provisions in American Rescue Plan; Retroactive Tax Benefits Help Many People Now Preparing 2020 Returns | IR-2021-106

The Internal Revenue Service today provided an overview of some of the key tax provisions in the American Rescue Plan Act.

Several provisions affect the 2020 tax return people are filling out this filing season, including one exempting up to $10,200 in unemployment compensation from tax and another benefiting many people who purchased subsidized health coverage through either federal or state Health Insurance Marketplaces. In addition, the law also includes a third round of Economic Impact Payments, now going out to eligible Americans, that are generally equal to $1,400 per person for most people, as well as several other key changes for tax-year 2021.

For more information, click here.

IRS Grants Dyed Diesel Fuel Penalty Relief Due to Disruptions of the Fuel Supply Chain | IR-2021-108

The Internal Revenue Service, in response to disruptions of the fuel supply chain, will not impose a penalty when dyed diesel fuel is sold for use or used on the highway in the States of Alabama, Delaware, Georgia, Florida, Louisiana, Maryland, Mississippi, North Carolina, Pennsylvania, South Carolina, Tennessee, Virginia, and the District of Columbia.

This relief is retroactive to May 7, 2021, and will remain in effect through May 21, 2021.

This penalty relief is available to any person that sells or uses dyed diesel fuel for highway use.  In the case of the operator of the vehicle in which the dyed diesel fuel is used, the relief is available only if the operator or the person selling such fuel pays the tax of 24.4 cents per gallon that is normally applied to diesel fuel for highway use.

For more information, click here.

IRS Issues Guidance on Taxability of Dependent Care Assistance Programs for 2021-2022 | IR-2021-105

The Internal Revenue Service today issued guidance on the taxability of dependent care assistance programs for 2021 and 2022, clarifying that amounts attributable to carryovers or an extended period for incurring claims generally are not taxable. The guidance also illustrates the interaction of this standard with the one-year increase in the exclusion for employer-provided dependent care benefits from $5,000 to $10,500 for the 2021 taxable year under the American Rescue Plan Act.

Because of the pandemic, many people were unable to use the money they set aside in their dependent care assistance programs in 2020 and 2021. Generally, under these plans, an employer allows its employees to set aside a certain amount of pre-tax wages to pay for dependent care expenses. The employee’s expenses are then reimbursed from the dependent care assistance program.

For more information, click here.

Filing Season Reminder: Military Members and Their Families May Qualify for Special Tax Benefits | Tax Tip 2021-65

With the filing deadline around the corner, the IRS reminders members of the military that they may qualify for special tax benefits. For example, they don’t have to pay taxes on some types of income. Special rules may lower the tax they owe or allow them more time to file and pay their federal taxes.

Here are some of these special tax benefits:

  • Combat pay exclusion: If someone serves in a combat zone, part or all of their pay is tax-free. This also applies to people working in an area outside a combat zone when the Department of Defense certifies that area is in direct support of military operations in a combat zone. There are limits to this exclusion for commissioned officers.
  • Other nontaxable benefits: Base allowance for housing, base allowance for subsistence and uniform allowances are among several government pay items excluded from gross income, which means they are not taxed.
  • Moving expenses: Some non-reimbursed moving expenses may be tax deductible. To deduct these expenses, the taxpayer must be a member of the Armed Forces on active duty and their move must be due to a military order or result of a permanent change of station.
  • Deadline extensions: Some members of the military – such as those who serve overseas – can postpone most tax deadlines. Those who qualify can get automatic extensions of time to file and pay their taxes.
  • Earned income tax credit: Special rules allow military members who get nontaxable combat pay to choose to include it in their taxable income. One reason they might do this is to increase the amount of their earned income tax credit. People who qualify for this credit could owe less tax or even get a larger refund.
  • Joint return signatures: Both spouses must normally sign a joint income tax return. However, if military service prevents that from happening, one spouse may be able to sign for the other or get a power of attorney. Service members may want to consult with their installation’s legal office to see if a power of attorney is right for them.
  • Reserve and National Guard travel: Members of a reserve component of the Armed Forces may be able to deduct their unreimbursed travel expenses on their return. To do so, they must travel more than 100 miles away from home in connection with their performance of services as a member of the reserves.
  • ROTC allowances: Some amounts paid to ROTC students in advanced training are not taxable. However, active duty ROTC pay is taxable. This includes things like pay for summer advanced camp.

Special filing software. Miltax is free tax resource available for the military community, offered through the Department of Defense. There are no income limits. MilTax includes tax preparation and electronic filing software, personalized support from tax consultants and current information about filing taxes. It’s designed to address the realities of military life – including deployments, combat and training pay, housing and rentals and multi-state filings. Eligible taxpayers can use MilTax to electronically file a federal tax return and up to three state returns for free.

Filing Season Reminder: Social Security Benefits May Be Taxable | Tax Tip 2021-66

Taxpayers receiving Social Security benefits may have to pay federal income tax on a portion of those benefits. Social Security benefits include monthly retirement, survivor, and disability benefits. They don’t include supplemental security income payments, which aren’t taxable.

The portion of benefits that are taxable depends on the taxpayer’s income and filing status.

To find out if their benefits are taxable, taxpayers should take half of the Social Security money they collected during the year and add it to their other income. Other income includes pensions, wages, interest, dividends, and capital gains.

  • If they are single and that total comes to more than $25,000, then part of their Social Security benefits may be taxable.
  • If they are married filing jointly, they should take half of their Social Security, plus half of their spouse’s Social Security, and add that to all their combined income. If that total is more than $32,000, then part of their Social Security may be taxable.

Fifty percent of a taxpayer’s benefits may be taxable if they are:

  • Filing single, single, head of household or qualifying widow or widower with $25,000 to $34,000 income.
  • Married filing separately and lived apart from their spouse for all of 2020 with $25,000 to $34,000 income.
  • Married filing jointly with $32,000 to $44,000 income.

Up to 85% of a taxpayer’s benefits may be taxable if they are:

  • Filing single, head of household or qualifying widow or widower with more than $34,000 income.
  • Married filing jointly with more than $44,000 income.
  • Married filing separately and lived apart from their spouse for all of 2020 with more than $34,000 income.
  • Married filing separately and lived with their spouse at any time during 2020.

Revenue Procedure 2021-25, Inflation Adjusted Amounts for Health Savings Accounts

The IRS releases Revenue Procedure 2021-25, which provides the 2022 inflation adjusted amounts for health savings accounts and the maximum amount that may be made newly available for excepted benefit health reimbursement arrangements.

Revenue Procedure 2021-25 will be published in Internal Revenue Bulletin 2021-21 on May 24, 2021.

For more information, please click here.

TE/GE Job Announcements

The IRS has announced multiple full-time positions in the Tax Exempt/Government Entities division available across the country. These job announcements close soon, so apply today on USAJOBS.gov to become part of our team.

We’re hosting virtual information sessions for these job openings. Hear from employees currently working in these positions and gain a better understanding of the work they do day-to-day. A representative from HR will also discuss the application process and some of the requirements for the positions.

    • Thursday, May 13 at 2 – 3:30 p.m. ET
    • Monday, May 17 at 4 – 5:30 p.m. ET
    • Thursday, May 13 at 4 – 5:30 p.m. ET

Follow the IRS on social media and sign up for e-News newsletters

Everyone can follow official IRS social media accounts and sign up for e-News newsletters to get the latest alerts and information on a wide-range of tax topics.

These platforms are especially important right now. COVID 19-related relief, changes to filing and payment deadlines, and new business credits and Economic Impact Payments make these free and reliable communication channels crucial for anyone wanting the most current information.

News for Your Week Ahead: April 23, 2021

Posted on by Walter Moore

On this week’s episode of MSATP TV, Bob Jennings joins Executive Director Bill Feehley to tell us about his classes TaxSpeaker Security and Preparations, Compilations and Reviews. He will be presenting both of these classes at the MSATP Annual Convention & Banquet in Ocean City, MD on June 2-3, 2021.

Watch on YouTube.

Coming Up: On Thursday, April 29th at 10 a.m., Jim Arnie will join Bill Feehley on MSATP TV to give us a wrap up on the legislative session in Annapolis. Tune in on Facebook for one last up date on the 2021 legislative session.

American Rescue Plan Tax Credits Available to Small Employers to Provide Paid Leave to Employees Receiving COVID-19 Vaccines; New Fact Sheet Outlines Details | IR-2021-90

The Internal Revenue Service and the Treasury Department announced today further details of tax credits available under the American Rescue Plan to help small businesses, including providing paid leave for employees receiving COVID-19 vaccinations.

The additional details, provided in a fact sheet released today, spell out some basic facts about the employers eligible for the tax credits. It also provides information on how these employers may claim the credit for leave paid to employees related to COVID-19 vaccinations

Eligible employers, such as businesses and tax-exempt organizations with fewer than 500 employees and certain governmental employers, can receive a tax credit for providing paid time off for each employee receiving the vaccine and for any time needed to recover from the vaccine. For example, if an eligible employer offers employees a paid day off in order to get vaccinated, the employer can receive a tax credit equal to the wages paid to employees for that day (up to certain limits).

For more information, click here.

Second Round of Economic Impact Payments | 2021-04

The Coronavirus Response and Relief Supplemental Appropriations Act Second Round Economic Impact Payment data are now available on SOI’s Tax Stats Web page. The Coronavirus Response and Relief Supplemental Appropriations Act, enacted in December 2020, created a second round of advance cash payments to individuals. These tabulations provide data on the second round of Economic Impact Payments by adjusted gross income, State, and marital status. Data on the third round of Economic Impact Payments from the American Rescue Plan Act of 2021 will be available at a later date.

For more information, click here.

Taxpayer Should File Their Tax Return on Time Even if They Can’t Pay Their Tax Bill in Full | Tax Tip 2021-53

Taxpayers should file their tax return by the deadline even if they cannot pay the full amount due.

If an individual taxpayer owes taxes, but can’t pay in full by the May 17, 2021 deadline, they should:

File their tax return or request an extension of time to file by the May 17 deadline.

  • People who owe tax and do not file their return on time or request an extension may face a failure-to-file penalty for not filing on time.
  • Taxpayers should remember that an extension of time to file is not an extension of time to pay. An extension gives taxpayers until October 15, 2021 to file their 2019 tax return, but taxes owed are still due May 17, 2021.

For more information, click here.

Digital Advertising Gross Revenues Tax and Tobacco Tax Alterations and Implementaion | SB 787

Due to the broad interpretation of what “digital goods” were subject to a new sales tax in HB932 of 2020, the MDCC formed a working group of tax experts to develop a set of recommended amendments providing clarity in the law. After much work, amendments on two major issues were agreed upon and included in SB 787, which passed Monday night and awaiting review from the Governor.

The amendments do two things:

  • Clarify that a taxable “digital product” does not include educational instruction or seminars conducted by educational institutions or professional organizations and business associations.
  • Clarify that certain types of computer software and related services are not taxable, where the purchase involves software that is unusable until it is configured or modified as necessary to perform the required functions and for the software to operate as intended. This is often referred to as “enterprise software” used by businesses.

For more information, click here.

SB0133 and HB 0148 – Local Tax Relief for Working Families Act of 2021 

Posted on by Walter Moore

Both bills have passed in their respective House of origin and moved to the opposite chamber.

These bills will be applicable to all taxable years beginning after December 31, 2021.

They authorize local governments to impose the county income tax on a bracket basis. Local governments imposing the local tax on a bracket basis are authorized to impose a maximum tax rate of 3.5% and requires local governments to impose a minimum tax rate of 2.25%.

A county that imposes the county income tax on a bracket basis must (1) set, by ordinance or resolution, the income brackets that apply to each tax rate and (2) inform the Comptroller by July 1 prior to the year in which a new bracket is established.

A county may )1) apply a higher or equal tax rate to a higher income bracket than a rate applied to a lower income tax rate but may not apply a lower rate; (2) establish income brackets that differ from the State income brackets; and (3) request information from the Comptroller to assist the county in determining rates that are revenue neutral.  However, any rate changes are not required to be revenue neutral.

A county income tax rate in excess of 3.2% may only be imposed on incomes that are twice as great as the income bracket to which the highest individual and married filing joint returns apply.  This currently translates to the local income tax rate applying to net taxable income of $500,000 for an individual and $600,000 for married filing joint returns.

Currently, 12 local governments have a local income rate below 3.20%

News for Your Week Ahead: March 19, 2021

Posted on by Walter Moore

Executive Director Bill Feehley and Sami Satouri of Quest Insurance joins us on MSATP TV to discuss how Quest Insurance can handle all of your insurance needs.

Watch on YouTube.

Jonathan Pocius of Payroll Services joins Executive Director Bill Feehley to discuss how Payroll Services can provide a wide range of services including helping handle the Employee Retention Credit under the CARES Act.

Watch on YouTube. 

IRS Office of Chief Counsel Unveils National Virtual Settlement Days Effort This Year to Reach More Tax Payers in More Parts of the Nation | IR-2021-61

The Internal Revenue Service Office of Chief Counsel has embarked on its most far-reaching Settlement Days program ever, declaring the month of March 2021 as “National Settlement Month.”

This ambitious program builds upon the success achieved from last year’s many settlement day events, when Chief Counsel shifted the program to a virtual format due to the pandemic. Virtual Settlement Day (VSD) events will be conducted by every Chief Counsel office across the country and will serve taxpayers in all 50 states and the District of Columbia.

“Virtual Settlement Day events enable the IRS to deliver meaningful resolution options to taxpayers as the nation works through the pandemic,” said IRS Commissioner Chuck Rettig. “Virtual options are an addition to traditional methods of communication and interaction with taxpayers that the IRS will always make available under normal circumstances.”

For more information, click here.

Possible PPP Extension Gives Groups Time to Push for Boosting These Type of Loans | Maryland Chamber of Commerce

On Tuesday, the House of Representatives voted to extend the Paycheck Protection Program (PPP) to May 31, instead of March 31, giving the Small Business Administration an additional 30 days to process loans. Support to move the PPP deadline has grown since the Biden administration announced last month changes to the program, including a 14-day priority application period for businesses with fewer than 20 employees, an updated loan calculation for sole proprietors and new eligibility rules.

In a March 11 letter to the House Small Business Committee, the National Federation of Independent Business also highlighted that Congress should allow businesses that applied earlier and received a smaller loan to reapply and get a larger amount under the new rules. The latest changes to the PPP were incredibly critical, especially for sole proprietors, but gave them less than a month to apply. Making those changes retroactive would provide critical relief to minority-owned businesses who only received a fraction of the relief they needed.

For more information, click here.

Important Information Regarding 2020 Virginia Income Tax Returns | Virginia’s Conformity to the Internal Revenue Code Advanced to December 31, 2020.

Under emergency legislation enacted by the 2021 General Assembly, Virginia’s date of conformity to the terms of the Internal Revenue Code advances from Dec. 31, 2019, to Dec. 31, 2020. This allows Virginia to generally conform to the Coronavirus Aid, Relief and Economic Security (CARES) Act and the Consolidated Appropriations Act (CAA).

However, it specifically deconforms from three provisions of the CARES Act that temporarily change limitations applicable to the net operating loss deduction, excess business losses and the business interest deduction. This legislation also deconforms from the provision of the CAA that permanently reduces the medical expense deduction threshold.

For more information. click here.

Revenue Ruling 2021-07 | RR-2021-07

Revenue Ruling 2021-07 provides various prescribed rates for federal income tax purposes including the applicable federal interest rates, the adjusted applicable federal interest rates, the adjusted federal long-term rate, and the adjusted federal long-term tax-exempt rate. These rates are determined as prescribed by § 1274.

The rates are published monthly for purposes of sections 42, 382, 412, 642, 1288, 1274, 7520, 7872, and various other sections of the Internal Revenue Code.

For more information, click here.

Tax Day For Individuals Extended to May 17: Treasury, IRS Extend Filing & Payment Deadline | IR-2021-59

The Treasury Department and IRS announced that the federal income tax filing due date for individuals for the 2020 tax year will be automatically extended from April 15, 2021, to May 17, 2021. The IRS will be providing formal guidance in the coming days.

Individual taxpayers can also postpone federal income tax payments for the 2020 tax year due on April 15, 2021, to May 17, 2021, without penalties and interest, regardless of the amount owed. This postponement applies to individual taxpayers, including individuals who pay self-employment tax. Penalties, interest and additions to tax will begin to accrue on any remaining unpaid balances as of May 17, 2021. Individual taxpayers will automatically avoid interest and penalties on the taxes paid by May 17.

Individual taxpayers do not need to file any forms or call the IRS to qualify for this automatic federal tax filing and payment relief. Individual taxpayers who need additional time to file beyond the May 17 deadline can request a filing extension until Oct. 15 by filing Form 4868 through their tax professional, tax software or using the Free File link on IRS.gov. Filing Form 4868 gives taxpayers until Oct. 15 to file their 2020 tax return but does not grant an extension of time to pay taxes due. Taxpayers should pay their federal income tax due by May 17, 2021, to avoid interest and penalties.

The IRS urges taxpayers who are due a refund to file as soon as possible. Most tax refunds associated with e-filed returns are issued within 21 days.

This relief does not apply to estimated tax payments that are due on April 15, 2021. These payments are still due on April 15. Taxes must be paid as taxpayers earn or receive income during the year, either through withholding or estimated tax payments. In general, estimated tax payments are made quarterly to the IRS by people whose income isn’t subject to income tax withholding, including self-employment income, interest, dividends, alimony or rental income. Most taxpayers automatically have their taxes withheld from their paychecks and submitted to the IRS by their employer.

For more information, click here.

Get Help with Filing Season and Economic Impact Payments

Whether you’re busy preparing 2020 tax returns, helping your customers get their Economic Impact Payments or are a valued partner that can help spread the word on these topics in your community, IRS has resources to help you.

Check Outreach Connection to get information and products tailored to the individuals, businesses and tax-exempt entities you serve.

IRS Expands Help to Taxpayers in Multiple Languages with New Forms, Communication Preferences | IR-2021-56

The Internal Revenue Service today said that it continues its efforts to expand ways to communicate to taxpayers who prefer to get information in other languages. For the first time ever, the agency has posted to IRS.gov a Spanish language version of Form 1040 and the related instructions.

“Being able to talk to and receive information from the nation’s tax agency in their preferred language is something we hope to eventually provide to all taxpayers,” said IRS Commissioner Chuck Rettig. “We want everyone to be on the same playing field, so to speak, and each day that we can move forward with that goal is a good one.”

The new Form 1040 Schedule LEP, in English and Spanish, with instructions available in English and 20 other languages, can be filed with a tax return by those taxpayers who prefer to communicate with the IRS in another language. They can indicate their language of preference for IRS-issued written communications or change their language of preference. While communications may not be immediately sent in the selected language, the IRS will use this information to allocate resources and develop communication alternatives based on the reported language preferences.

For more information, click here.

Tax Time Guide: IRS Reminds Taxpayers of Recent Changes to Retirement Plans | IR-2021-57

The Internal Revenue Service today reminded taxpayers about the rules for required minimum distributions (RMDs) from retirement accounts.

A retirement plan account owner must normally begin taking an RMD annually starting the year he or she reaches 70 ½ or 72, depending on their birthdate and maybe the year they retire. Retirement plans requiring RMDs include traditional, Simplified Employee Pension Plan (SEP) and Savings Incentive Match Plan for Employees (SIMPLE) Individual Retirement Accounts; 401(k), 403(b), 457(b), profit sharing and other defined contribution plans.

The Setting Every Community Up for Retirement Enhancement (SECURE) Act changed the age when individuals must begin taking withdrawals from their retirement accounts. Someone born on or before June 30, 1949, was required to start getting RMDs for the year they reached the age of 70½. However, under the SECURE Act, if a person’s 70th birthday is July 1, 2019, or later, they do not have to take their first RMD until the year they reach age 72.

For more information, click here.

HB 0148 – Commercial Law | Personal Information Protection Act

HB 0148 has passed the House and waiting for a Hearing date in the Senate Finance Committee. The new requirements have been underlined.

The bill requires a business that maintains (in addition to a business that owns or licenses) personal information of a Maryland resident to implement and maintain reasonable security procedures and practices that are appropriate to the nature of the personal information maintained and the nature and size of the business and its operations.

For a  business that maintains personal data, generally, the business must notify the owner or licensee of the breach as soon as practicable; however, the bill requires the notification to be provided within 10 days (rather than 45 days) after the business discovers (or is notified) of the breach.

If a required notification is delayed because a law enforcement agency determines that the notification will impede a criminal investigate or jeopardize homeland or national security, notification must be given as soon as reasonably practicable, but no later than 7 days (rather than 30 days) after the law enforcement agency makes the required determination.

Read more on our blog.

HB 0148 – Commercial Law – Personal Information Protection Act

Posted on by Walter Moore

By Jim Amie

HB 0148 has passed the House and waiting for a Hearing date in the Senate Finance Committee. The new requirements have been underlined.

The bill requires a business that maintains (in addition to a business that owns or licenses) personal information of a Maryland resident to implement and maintain reasonable security procedures and practices that are appropriate to the nature of the personal information maintained and the nature and size of the business and its operations.

For a  business that maintains personal data, generally, the business must notify the owner or licensee of the breach as soon as practicable; however, the bill requires the notification to be provided within 10 days (rather than 45 days) after the business discovers (or is notified) of the breach.

If a required notification is delayed because a law enforcement agency determines that the notification will impede a criminal investigate or jeopardize homeland or national security, notification must be given as soon as reasonably practicable, but no later than 7 days (rather than 30 days) after the law enforcement agency makes the required determination.

The bill also modifies the methods for providing notification of breaches to individuals.  The bill requires (rather than authorizes) a business that owns, licenses, or maintains personal data to provide notification of the breach by written notice, electronic mail, telephone, or substitute notice. As under current law, notification by electronic mail may only be provided if specified conditions are met.  However, substitute notice may only be used if the business does not have sufficient contact information to give the other forms of notice as the bill repeals a provision allowing substitute notice  if the other forms of notice would be cost prohibitive.

In addition, the notification must be provided by (1) email, if the business has an email address for the individual; (2) conspicuous posting on the website of the business, if the business maintains a website; and (3) notification to major print or broadcast media in geographic areas where the individuals affected by the breach likely reside.

For data breaches involving a business that owns, licenses, or maintains personal information, the bill expands the information that must be included in a notice provided to the Office of the Attorney General.  At a minimum, the notice must include:

The number of affected Maryland residents;

A description of the breach, including when and how it occurred;

Any steps the business has taken (or plans to take) relating to the breach of the security of a       system; and;

The form of notice that will be sent to affected individuals and a sample notice.

Families First Coronavirus Response Act (FFCRA) FAQs

Posted on by Navaal Mahdi

By Bob Jennings of TaxSpeaker

  1. When is the effective date of the FFCRA? The Department of Labor announced that the paid leave provisions are effective on 4/1/2020 and apply to leave taken between 4/1/2020 and 12/31/2020.

 

  1. I have heard you say this is mandatory for all employers, even if I only have 1 employee. Is there an exception for small business? There is a small business exception if the business has fewer than 50 employees, but to get the exemption the business must “elect the small business exemption” whatever that is, and prove it to the DOL. No guidance is available yet.

 

  1. The touchiest question of all. “If I lay off employees before April 1, may I avoid the Sick leave and family leave provisions of this new bill? I frankly have no money right now, my business has been closed for 2 weeks and I would have to use food money to pay employees and then wait for a credit that does me no good.” I have to answer this one honestly, but yes, if you layoff by Tuesday night, March 31, the new Act does not apply to you or your employees. The new law is NOT retroactive.

 

  1. Can an employee use the first 2 weeks of time off under the sick leave pay plan you discussed and have it apply to the 2 weeks (out of 12) under the care portion of the Act, thus getting full pay for 2 weeks, and then lesser pay for 10 weeks. Assuming the employee meets the requirements to qualify, such as quarantined by state and caring for kids whose school was cancelled, yes.

 

  1. Are there any steps I should take in my tax office that you recommend? Tax returns are not due until July 15. All overtime should have already stopped a week ago, if not it needs to stop today, as should all weekend and night work. Yes, clients want their refunds, but you have to run your business in a business-like manner too, and overtime for something not due for 3 and ½ months makes no sense. Bluntly, the client should have gotten the information in earlier. If you employ seasonal help I would (this is cold and heartless, but you asked) immediately, before April 1, let them go. Your firm should be able to handle the workload with its regular staff levels since there are 3 more months to get it done.
  1. What about this 3rd bill that will probably pass by the weekend? I have in my possession now the 883-page bill passed by the Senate last night. Assuming it is passed by the House today or tomorrow I will go through it over the weekend. Anything that requires timely action within a few weeks I will put in a special newsletter next week. I will also be doing a special webinar on it, but it is too early to say if it will be 1,2,4 or 8 hours. If I believe it needs a full 8 hours to do it, I will first go through our state society sponsors and offer it through them, then as our own webinar. As to whether it will be a live class-well, not until fall at the soonest!

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