Treasury Department and IRS Release Guidance on Payroll Tax Deferral
Sep 01,2020
Note: This article was updated on Friday, September 4, 2020. On Friday, August 28, 2020, the Treasury Department and Internal Revenue Service issued guidance on President Trump’s August 8, 2020 executive order about the deferral of certain payroll taxes. On September 3, 2020, the IRS confirmed the payroll tax deferral is optional. Employers may, but are not required to, defer the withholding. According to the guidance, the payroll tax deferral applies to the employee portion of two separate taxes – Section 3101(a), which is the old-age, survivors and disability insurance (OASDI) tax, and Section 3201, the Railroad Retirement Act Tier 1 tax. The guidance enables employers to defer the withholding, deposit and payment of these payroll taxes over the next four months. Background In the August 8, 2020 executive order, the president instructed Treasury Secretary Steven Mnuchin to defer the withholding, deposit and payment of employee Social Security tax or...
IRS Reminds Businesses Reporting Large Cash Transactions About E-file Option
Sep 01,2020
The IRS recently issued a reminder that businesses which are required to file reports of large cash transactions can do so online. This quick and secure option allows batch filing of reports, which is a useful feature for those that are required to file numerous forms. Form 8300, Report of Cash Payments over $10,000, has to be filed by a business within 15 days of the transaction. This is applicable to all businesses (including nonprofits), regardless of industry and size. E-filing is secure and there is no charge to use it, making it an efficient  and cost-effective way for businesses to meet the reporting deadline. Receipts will be sent automatically upon filing. Form 8300 helps law enforcement combat money laundering, tax evasion, drug dealing, terrorist financing and other criminal activities. When to Report Cash Payments An individual or business is required to file Form 8300 if they receive $10,000 or...
New Rules on the Deductibility of Net Business Interest Expense
Aug 13,2020
Does your business have debt with interest? Recent IRS and US Department of Treasury rule changes may affect you. We have previously discussed changes to the rules surrounding Section 163(j), the deductibility of net business interest expense. Originally enacted as part of the Tax Cuts and Jobs Act (TCJA), and temporarily amended by the Coronavirus Aid, Relief, and Economic Security (CARES) Act, Section 163(j) was further amended on July 28, 2020 by the IRS and Department of Treasury. The Final Regulations and New Proposed Regulations provide definition and guidance on limitations on the deductibility of business interest expense (BIE). Included in the new regulations are changes on adjustable taxable income (ATI), items that no longer qualify as business interest expense for the limitation, guidance for partnerships and K-1s, what qualifies as eligibility for electing real property trade of business (ERPTB), self-charging lending transactions and more. What follows is a technical...
Net Operating Loss Deadline for 2018 Approaches
Jun 26,2020
The Coronavirus Aid, Relief and Economic Security (CARES) Act contains numerous provisions, including a change in net operating losses (NOLs), bringing some financial relief to taxpayers affected by the COVID-19 pandemic. This change allowed taxpayers who had NOLs to go back five years and offset those losses. This is an important reminder that NOL carrybacks for 2018, which can go from 2017 to as far back as 2013, are due June 30, 2020. What To Do Taxpayers need to determine if they had a loss in 2018 and income in any prior year to see if they are eligible for an NOL carryback. Eligible taxpayers may file an application for a tentative carryback adjustment of the tax liability for a prior taxable year that is affected by a NOL carryback. The tentative carryback adjustment procedure allows a taxpayer to obtain a tentative tax refund based on an NOL carryback. Taxpayers...
Businesses Receiving PPP Loans Cannot Claim Tax Deductions for Expenses
May 01,2020
This article was updated on May 1 at 5:10 p.m. On Thursday, April 30, the Internal Revenue Service (IRS) issued guidance on expenses related to the Paycheck Protection Program (PPP). The guidance states that businesses with forgivable loans cannot claim tax deductions for expenses covered by the PPP.  The IRS Notice 2020-32 is expected to be published on May 18, 2020. The IRS notice “clarifies that no deduction is allowed under the Internal Revenue Code for an expense that is otherwise deductible if the payment of the expense results in forgiveness of a covered loan” as outlined by the Coronavirus Aid, Relief and Economic Security (CARES) Act. Expenses that are not eligible for tax deductions include: Payroll costs Certain employee benefits relating to healthcare Interest on mortgage obligations Rent Utilities Interest on any other existing debt obligations As a reminder, any amounts forgiven are not taxable pursuant to the CARES...
IRS Extends More Tax Deadlines
Apr 13,2020
In March, the IRS announced extended tax filing and payment deadlines. On April 9, the IRS expanded this to include additional returns, tax payments and other actions. According to the IRS notice, “As a result, the extensions generally now apply to all taxpayers that have a filing or payment deadline falling on or after April 1, 2020, and before July 15, 2020. Individuals, trusts, estates, corporations and other non-corporate tax filers qualify for the extra time. This means that anyone, including Americans who live and work abroad, can now wait until July 15 to file their 2019 federal income tax return and pay any tax due.” The IRS also stated that individuals who need time beyond the July 15, 2020 deadline can request an extension to October 15, 2020 by filing Form 4868. Businesses must file Form 7004 to extend. Extensions do not extend time to pay taxes owed. Further, the April...
CARES Act Helps Businesses with Change in Interest Expense Deduction for 2019 and 2020
Apr 06,2020
The Coronavirus Aid, Relief and Economic Security (CARES) Act, which was passed by Congress to help people and businesses facing financial hardship as a result of the COVID-19 pandemic, is temporarily changing some tax limits that were put in place by the Tax Cuts and Jobs Act (TCJA) of 2017. Prior Interest Expense Deduction Rules Section 163(j) of the Internal Revenue Code (IRC) created a limitation on the deduction of business interest expenses for tax years beginning after December 31, 2017. The law applied to interest on all business debt without a transition rule in place prior to the law. Deductions for business interest expense were limited to the sum of: Business interest income Floor plan financing interest expense 30% of Adjusted Taxable Income (ATI) Interest expense that had been disallowed as a deduction in the current tax year could be carried forward indefinitely to future years and would be...
Extended Deadlines for Federal Tax Filing
Mar 28,2020
On March 20, 2020, the Treasury Department and the IRS issued Notice 2020-18 postponing the due date for both filing federal income tax returns and making federal income tax payments from April 15, 2020 until July 15, 2020. In addition, the due date for filing Forms 709 (United States Gift and Generation-Skipping Transfer Tax Return) and making payments of Federal gift and generation-skipping transfer tax due April 15, 2020, is postponed to July 15, 2020. There is no need to file an extension to benefit from this extended deadline. However, a taxpayer may choose to file an extension (Form 8892) by July 15, 2020 to obtain an extension to file Form 709 by October 15, 2020. Note that any federal gift and generation skipping transfer tax payments postponed until July 15, 2020 will still be due on July 15, 2020. No interest, penalty or addition to tax for failure to...
DOL Clarifies Effective Date of Certain Provisions of FFCRA
Mar 25,2020
According to information on the U.S. Department of Labor's (DOL) website,  the paid leave provisions of the Families First Coronavirus Response Act (FFCRA),  which includes the Emergency Paid Sick Leave Act and the Emergency Family and Medical Leave Expansion Act, will become effective on Wednesday, April 1, 2020. Additionally, the DOL announced in a Field Assistance Bulletin that there will be a temporary non-enforcement  period of FFCRA from March 18 through April 17. During this grace period, no enforcement actions will be taken against private or public employers for non-compliance as long as they are able to show that they have made "reasonable, good faith efforts to comply with the Act." This means: Any violations are remedied as soon as is practical. The violations were not made willfully. The employer must send written notification to the DOL stating it will comply with the Act in the future. The DOL will begin...
2019 Tax Filing Deadline Extended to July 15, 2020
Mar 20,2020
On March 20, 2020, the Treasury Department announced the 2019 tax filing deadline  has been extended to July 15, 2020. This move is in recognition of the hardship faced by many as a result of restrictions caused by the COVID-19 pandemic. This includes an extension of the due date for filing Forms 709 (United States Gift and Generation-Skipping Transfer Tax Return) to July 15, 2020 and making payments of Federal gift and generation-skipping transfer tax. There is no need to file an extension to benefit from this extended deadline. However, a taxpayer may choose to file an extension (Form 8892) by 7/15/2020 to obtain an extension to file Form 709 by 10/15/2020. Note that any federal gift and generation skipping transfer tax payments postponed until 7/15/2020 will still be due on 7/15/2020. No interest, penalty or addition to tax for failure to file will be accrued from 4/16/2020 until 7/15/2020....

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