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COVID-19 and the IRS: Tax Updates


Posted on March 23, 2020

Last Updated: August 26, 2020

IRS Sending Catch-Up Economic Impact Payments To Spouses Who’s Payment Was Diverted Due To Back Child Support

The Internal Revenue Service will soon send catch-up Economic Impact Payment checks to about 50,000 individuals whose portion of the EIP was diverted to pay their spouse’s past-due child support.

These catch-up payments are due to be issued in early-to-mid-September. They will be mailed as checks to any eligible spouse who submitted Form 8379, Injured Spouse Allocation, along with their 2019 federal income tax return, or in some cases, their 2018 return. These spouses do not need to take any action to get their money. The IRS will automatically issue the portion of the EIP that was applied to the other spouse’s debt.

The IRS is aware that some individuals did not file a Form 8379, Injured Spouse Allocation, and did not receive their portion of the EIP for the same reason above. These individuals also do not need to take any action and do not need to submit a Form 8379. The IRS does not yet have a timeframe but will automatically issue the portion of the EIP that was applied to the other spouse’s debt at a later date.

Affected taxpayers can check the status of their Payment by using the Get My Payment tool, available only on IRS.gov.

For more information, see the Receiving My Payment section of the Frequently Asked Questions in the Economic Payment Information Center on IRS.gov.

SBA Offers Guidance On Appealing Rejections Of PPP Loan Forgiveness

The U.S. Small Business Administration has posted rules about how businesses who have been turned down for forgiveness of their Paycheck Protection Program loans can appeal the decision, and about how forgivable PPP loans interact with the SBA’s Economic Injury Disaster Loans.

The interim final rule from the SBA and the Treasury Department describes the appeal procedures for PPP loan forgiveness applications that have been turned down. The PPP was included as part of the CARES Act in March and provided hundreds of billions of dollars in forgivable loans for small businesses trying to cope with the economic fallout from the novel coronavirus crisis. Businesses could have the loans forgiven if they met certain conditions, such as keeping their employees on payroll for up to eight weeks. Otherwise, their applications for loan forgiveness could be rejected by the SBA.

Please visit SBA.gov for more information.

Tax Advocate Serves to Assist with Missing Tax Payments

Starting Aug. 10, TAS will provide an assist to the IRS to correct stimulus or economic impact payments (EIPs) under five specific situations. Here’s the list of scenarios.

• Dependent payments. The IRS created a non-filers tool so that eligible individuals who had not filed a tax return in 2018 or 2019 could get a stimulus payment. Many parents have reported that they received their $1,200 but did not get the extra $500 for each child, or they received money for one child but not for another.

The US Government Accountability Office said in a report in June that some 465,000 stimulus payments from April 10 to May 17 did not include the $500 for qualifying children. The IRS Commissioner Charles Rettig later revised the figure down to 365,000.

“These payments are already in process to be issued by direct deposit or mail and should be received in August,” said TAS spokesman Kenneth Drexler. “We are hopeful that these payments will be made without any problems, but if problems arise, TAS will be able to assist.”

IRS To Adjust Stimulus Payment Errors For Eligible Individuals

The Taxpayer Advocate Service will help the IRS resolve stimulus check issues beginning on August 10 – and the IRS will start correcting payment amounts for eligible Americans within the coming weeks.

Individuals who are due an additional amount of money will receive it in the same form as their initial economic impact payment – unless it was on a debit card, in which case the individual will receive a paper check instead.

Some people, however, will still have to wait until they file their 2021 return in order to receive the correct amount. Specific guidance to help people determine whether they can take action now, or will need to wait until next year, can be expected soon – along with details regarding how to reach out for assistance.

IRS Announces It Will Not Extend The Tax Filing Deadline Again

Amid much speculation, the IRS announced today that the tax filing and payment deadline of July 15 will not be extended.  Individual taxpayers unable to meet the July 15 due date can request an automatic extension of time to file until Oct. 15. Earlier this year, as a result of  COVID-19, the original filing deadline and tax payment due date for 2019 was postponed from April 15 to July 15.

In order to obtain the automatic extension to October 15, the IRS reminds taxpayers filing Form 1040 series returns that they must file Form 4868 by July 15. The extension provides additional time to file the tax return – it is not an extension to pay any taxes due.

The IRS urges people who owe taxes, even if they have a filing extension, to carefully review their situation and pay what they can by July 15 to avoid penalties and interest. For people facing hardships, including those affected by COVID-19, who cannot pay in full, the IRS has several options available to help. It’s recommended that taxpayers carefully review their situation and pay what they are able, and to research the various payment options available for the rest of their balance.

“The IRS understands that those affected by the coronavirus may not be able to pay their balances in full by July 15, but we have many payment options to help taxpayers,” said IRS Commissioner Chuck Rettig. “These easy-to-use payment options are available on IRS.gov, and most can be done automatically without reaching out to an IRS representative.”

IRS Is Stepping Up It’s Collection And Fraud Enforcement Starting July 16, 2020!

The IRS expects to step up its collections and fraud enforcement efforts starting July 16 after limiting its work during the coronavirus pandemic, an official said. The agency plans to take a phased approach to its enforcement efforts, including approving liens, levies, and seizures for non-compliant taxpayers, Paul Mamo, the IRS’s director of collection operations, said Friday. It’s also planning how such efforts would look for each area in the country. Enforcement efforts would begin after the tax filing season ends, which is July 15,2020.

IRS Extreme Backlog of Tax Returns as the Extended Filing Deadline Approaches

Federal employees, including those working for the Internal Revenue Service, only returned to federal offices on June 1 after working remotely. Only 91,383,000 refunds have been sent so far, down 12 percent from 104,047,000 sent by the same time in 2019.  For the 90 percent of tax returns that have been filed electronically, automated processing has allowed those returns to be disbursed at a relatively average pace.

It’s a different story, however, for the 10 percent of people still mailing their returns. Of the 135,229,000 returns received this year, 122,870,000 have been processed. A backlog is continuing to pile up, and the IRS says there is no set timeline when it will restart processing paper returns.

If you still haven’t filed your taxes, the IRS recommends filing electronically, by this year’s deadline of July 15, 2020.

Estimated Tax Payment Due Dates Extended

The Internal Revenue Service reminds taxpayers that estimated tax payments for tax year 2020, originally due April 15, 2020, and June 15, 2020, are now due July 15, 2020. This means that any individual or corporation that has a quarterly estimated tax payment due has until July 15, 2020, to make that payment without penalty.

In response to the COVID-19 outbreak, the Treasury Department and the IRS are providing special tax filing and payment relief to individuals and businesses. This relief applies to federal income tax returns and tax payments (including tax on self-employment income) otherwise due on April 15, 2020. This relief does not apply to state tax payments or deposits or payments of any other type of federal tax.

IRS reminder: June 15 tax deadline postponed to July 15 for taxpayers who live and work abroad

The Internal Revenue Service today reminded people who live and work abroad that they have until Wednesday, July 15, 2020, to file their 2019 federal income tax return and pay any tax due. The usual deadline is June 15.

This extension was included in a wide range of Coronavirus-related relief announced in early April. The extension generally applies to all taxpayers who have an income tax filing or payment deadline falling on or after April 1, 2020, and before July 15, 2020. This means that anyone, including Americans who live and work abroad, nonresident aliens and foreign entities with a U.S. filing and payment requirement, have until July 15 to file their 2019 federal income tax return and pay any tax due. Visit IRS.gov/Coronavirus for details.

Due to COVID-19, the IRS is providing relief on a variety of issues as part of the People First Initiative.

The IRS is modifying certain activities through the filing and payment deadline, Wednesday, July 15, 2020. Here’s what people need to know about relief related to IRS exams or audits.

Field, office and correspondence audits – Generally, the IRS won’t start new field, office and correspondence audits. The agency will continue to work refund claims, where possible, without in-person contact. However, the IRS may start new audits if needed to preserve the statute of limitations.

  • In-person meetings – In-person meetings for current field and office audits are on hold. However, examiners will continue their work remotely, where possible. Taxpayers should respond to any requests for information during this period, if possible.
  • Unique situations – Corporations and businesses may want to begin a previously scheduled audit while people and records are available. When it’s in the best interest of both parties and appropriate people are available, the IRS may move forward with an audit. COVID-19 developments could slow activities.
  • General requests for information –Taxpayers should reply to all IRS correspondence, if requested.  

Earned income tax credit and wage verification reviews – Taxpayers have until July 15, 2020, to respond to the IRS and verify that they qualify for the earned income tax credit or to verify their income. These taxpayers should submit all requested information. If they can’t contact the agency and explain why the information is not available, the IRS won’t deny these credits for a failure to provide information until July 15, 2020.

Independent Office of Appeals – Appeals employees will continue to work their cases. They aren’t currently holding in-person meetings, but conferences may be held by phone or video. Taxpayers should respond to any requests for information form the Independent Office of Appeals.

Statute of limitations  The IRS will continue to protect all statutes of limitations. If statute expirations might be jeopardized during this period, taxpayers are encouraged to cooperate in extending these statutes. Otherwise, the IRS will issue Statutory Notices of Deficiency and pursue similar actions to protect the interests of the government.
Source: IRS

Mnuchin Doubles Down on Recent PPP Loan Guidance

Treasury Secretary Steven Mnuchin, in apparent contrast with lawmakers, is doubling down on recent IRS guidance that prohibits certain tax deductions for expenses related to a business’s forgivable Paycheck Protection Program (PPP) loans. According to Notice 2020-32, businesses that qualify for PPP loan forgiveness under the Coronavirus Aid, Relief, and Economic Security (CARES) Act will not be able to deduct certain business expenses, including wages, paid for by the loan. “The money coming in the PPP is not taxable. So if the money that is coming is not taxable, you cannot double dip,” Mnuchin said in a recent televised interview. “You cannot say that you are going to get deductions for workers that you did not pay for.”

New Bill Expected to Clarify Congressional Intent

However, top congressional tax writers are voicing disapproval of Notice 2020-32, stating that it goes against congressional intent under the new law. To that end, a new bill clarifying lawmakers’ intent for the deductibility of certain expenses related to business’s forgivable PPP loans is expected to surface. “We believe the position taken in the Notice ignores the overarching intent of the PPP, as well as the specific intent of Congress to allow deductions in the case of PPP loan recipients,” Senate Finance Committee Chairman Chuck Grassley, R-Iowa, ranking member Ron Wyden, D-Ore., and House Ways and Means Committee Chair Richard Neal, D-Mass., wrote in a May 5 letter to Mnuchin.  “[A]s was expressed to Treasury during the development of the PPP, we did not intend to deny the deductibility of ordinary and necessary business expenses, nor did these small businesses expect to lose deductions for their business expenses when they applied for a PPP loan,” the tax writers wrote. In addition to criticizing the Treasury’s and IRS’s apparent disregard of congressional intent in Notice 2020-32, the lawmakers also stated that the IRS’s analysis of the applicability of Code Sec. 265(a) is incorrect. “Therefore, even putting aside clear congressional intent, we believe Section 265(a) should not be read to deny ordinary and necessary business deductions in this case. “Additionally, a spokesperson for Chairman Neal has said that the PPP loan issue will be addressed in the next round of economic relief legislation. Bipartisan discussions are already underway on what lawmakers are calling a “phase four” or “CARES 2” package.

IRS Updates Employee Retention Credit FAQs & Releases Draft Form 941

As the COVID-19 crisis continues to roil the economy, all eyes seemed to be focused on the Paycheck Protection Program (PPP). But that’s not the only option for relief for struggling small businesses. One opportunity that’s often overlooked is the Employee Retention Credit or ERC. It’s found in the CARES Act, and like the PPP, it’s designed to help businesses keep employees on the payroll. 

Unlike the PPP, the ERC isn’t a loan: it’s a refundable tax credit. It’s calculated each calendar quarter for wages paid after March 12, 2020, and before January 1, 2021. That means the ERC is generally available for quarters 2, 3, and 4 for the 2020 year (and part of quarter 1). The amount of the credit is 50% of qualifying wages paid up to $10,000 per employee for all quarters. Qualifying wages may not exceed $5,000 – or 50% of $10,000 – for any employee for all calendar quarters. (Again, you can find out more here.)

That means no applications, no fees, and no waiting. It does, however, have some rules – after all, this is tax. I wrote about the ERC in April, and since then, the Internal Revenue Service (IRS) has changed the rules (I think they like to suggest they clarified them). Here’s what you need to know.

Generally, employers are eligible for the ERC if they:

  • Fully or partially suspend operation during any calendar quarter in 2020 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; or
  • Experience a significant decline in gross receipts during the calendar quarter.

In late April, the IRS updated its website-based guidance to clarify the treatment of employers who are shut down (wholly or partially) as a result of COVID-19. According to the FAQs, mere statements from a governmental official, including comments made during press conferences or media interviews, do not rise to the level of a governmental order. Additionally, the declaration of a state of emergency by a governmental authority is not sufficient if it does not limit commerce, travel, or group meetings. And, a declaration that does not affect the employer’s operations does not rise to the level of a governmental order for purposes of the ERC. 

Check out the Frequently Asked Questions link above for more information.

Forgiven Paycheck Protection Loans

Small businesses that manage to get their Paycheck Protection Program loans forgiven may find themselves losing valuable tax breaks, according to new guidance from the Internal Revenue Service.

Companies that qualify for loan forgiveness under legislation Congress approved won’t be able to deduct the wages or other businesses expenses they paid for using the loan, according to an IRS notice published Thursday.

“This treatment prevents a double tax benefit,” the agency said in the notice. “This conclusion is consistent with prior guidance of the IRS.”

SBA Paycheck Protection Program – Additional Funding has been provided

Additional funds have been made available for the SBA Paycheck Protection Program and we anticipate they will go quickly!

If you would like to receive a PPP loan but have not yet been approved, you will want to speak with us soon as the SBA is starting to process applications today.  Please consider calling us if you:

  • applied but your bank did not finish submitting your application
  • do not know the status of your application
  • have not yet applied for PPP but would like to

We have partners that we are working with to process applications and prepare them for submission to the SBA. These partners can help you navigate the application and answer any questions you may have.

Though there is no guarantee of receiving the loan, one way to get a head start is to fill out your application now and provide all of your supporting documents.

Call us today at 630-832-6500 to schedule your complimentary call to see how we can help you.

#IRSTaxTip:

Taxpayers with a filing requirement must file a tax return to get an Economic Impact Payment.  https://go.usa.gov/xvNe9

Senate Approves $320 Billion CARES Act PPP Funding

The Senate, as was expected on April 21, 2020 approved over $320 billion in additional funding for the expired small business Paycheck Protection Program (PPP). The bipartisan agreement to re-up the Coronavirus Aid, Relief, and Economic Security (CARES) Act small business program comes almost a week after funding for the PPP lapsed.

Paycheck Protection Program

“This bipartisan agreement will provide more than $320 billion in additional funding for the Paycheck Protection Program, which is already helping millions of small-business employees receive paychecks instead of pink slips,” Senate Majority Leader Mitch McConnell, R-Ky., said in an April 21 statement. Although a short debate is expected among senators once the bill reaches the floor, it is expected to pass by voice vote, a spokesperson for McConnell told Wolters Kluwer.

“Congressional Democrats are proud to have secured an agreement on an interim emergency funding package that has been transformed to provide real support for the lives and livelihoods of the American people,” Senate Minority Leader Chuck Schumer, D-N.Y., and House Speaker Nancy Pelosi, D-Calif., said in a joint statement on April 21.

It remains unclear at this time how and when the House, currently in recess, will pass the additional PPP funding measure, known on Capitol Hill as “phase 3.5” of Congress’ response to the COVID-19 pandemic. Additionally, lawmakers are already beginning discussions on a “phase 4” or “CARES 2” legislative package.

IRS Launches New Tool To Help You Track Your Refund

The Treasury Department and the Internal Revenue Service (IRS) have released a new web tool that will allow taxpayers to update their direct deposit information to receive their stimulus checks (Economic Impact Payments) more quickly. This tool, which is now available, is available to those taxpayers who have filed 2018 and/or 2019 tax returns and is separate from the tool used by non-filers (you’ll find more about the registration tool for non-filers here).

The new tool, Get My Payment, which is available now, will:

  • Provide you with the status of your payment, including the date your payment is scheduled to be deposited into your bank account or mailed;
  • Advise you of your payment type; and
  • Allow eligible taxpayers a chance to provide bank account information to receive payments more quickly rather than waiting for a paper check. This feature will be unavailable if your payment has already been scheduled for delivery.

Entering bank or financial account information will allow the IRS to deposit your payment directly into your account. Otherwise, your payment will be mailed to you as a paper check (that will slow the receipt of your check).

Cares ACT; CARES 2

Lawmakers are continuing talks on a “phase four” economic relief package in response to the COVID-19 global pandemic. To that end, the House’s “CARES 2” package is currently in the works and could see a floor vote as early as this month. The CARES Act is known on Capitol Hill as the third phase of legislation aimed to address the national emergency. However, House Speaker Nancy Pelosi, D-Calif., said this week that a House floor vote on a “CARES 2” package could happen this month.  According to Pelosi, the CARES 2 package would:

  • go further in assisting small businesses, including farmers;
  • extend and strengthen unemployment benefits; and
  • distribute additional direct payments.

SBA Issues Details for Paycheck Protection Program Loans

The U.S. Small Business Administration on Thursday issued an interim final rule for the Paycheck Protection Program (PPP), which is offering $349 billion in forgivable loans that small businesses impacted by the coronavirus pandemic can use to cover costs including payroll and rent.

The interim final rule lays out additional implementation guidelines and requirements for the PPP, which Congress created as part of the $2 trillion Coronavirus Aid, Relief, and Economic Security (CARES) Act, P.L. 116-136. The new rule provides greater clarity on several issues and changes the interest rate on loans made under the program from 0.5% to 1%, a change the American Bankers Association said would encourage banks of all sizes to participate in the program.

The CARES Act established the PPP as a new 7(a) loan option overseen by the Treasury Department and backed by the SBA, which is authorized to provide a 100% guarantee to lenders on loans issued under the program. The full principal amount of the loans may qualify for loan forgiveness if the borrower maintains or rehires staff and maintains compensation levels. However, not more than 25% of the loan forgiveness amount may be attributable to non-payroll costs.

Loan payments will be deferred for six months; however, interest will continue to accrue during the six-month deferment. No collateral or personal guarantees are required.

We can help navigate the application process. Call us today at 630-832-6500.

Let Us Help You Secure Your Paycheck Protection Program or Economic Injury Disaster SBA Loan!

If your business needs help with with a Paycheck Protection Program forgivable loan, and/or an Economic Injury Disaster SBA loan, call us, we can help! You need a loan application that is PERFECT and PRECISE to avoid any delays in getting your loan, the rejection of your loan or, worse yet, the money running out. Our experienced team members obtained over $40,000,000.00 during the BP oil spill. Call Now! 630-832-6500

Social Security Recipients and other low-income taxpayers do not need to file additional paperwork

the Treasury Department abruptly changed course late Wednesday and announced that Social Security beneficiaries and other Americans who haven’t filed income taxes for the past two years won’t have to take any extra steps to receive one-time checks of up to $1,200 under a new economic recovery program.

“Social Security recipients who are not typically required to file a tax return need to take no action and will receive their payment directly to their bank account,” Treasury Secretary Steven Mnuchin said in a statement.

Most Americans won’t have to do anything to receive a payment under the $2.2 trillion program designed to help the economy recover from the fallout of the coronavirus pandemic. The checks will be sent automatically within the next three weeks to eligible Americans who filed tax returns in 2018 and 2019.

 

IRS has temporarily closed all Taxpayer Assistance Centers

In response to the national emergency an to protect our employees, America’s taxpayers, communities and our partners, the IRS has temporarily closed all Taxpayer Assistance Centers and discontinued face-to-face service throughout the country until further notice. The IRS Is continuing to process tax returns, issue refunds and help tax payers to the greatest extent possible. This does not mean your tax problem will go away. Call us today at 877 4 IRS LAW to secure a permanent solution for your IRS problems, before they seize your income or assets.

The IRS Has announced a temporary hold on enforced collections through the ACS!

The IRS has announced a temporary hold on enforced collections through the ACS! However, if your case has been assigned to a Revenue Officer, this does not apply to you! They can, and will continue to enforce collections through any means available such as garnishing your wages or levying on your bank account.  Call us today at 877 4 IRS LAW today to see how we can help you navigate the IRS maze while protecting your income and assets from the IRS.

Federal Tax Court Building Closed until further Notice

The U.S. Tax Court building is closed until further notice. Mail will be held for delivery until the Tax Court reopens. The U.S. Tax Court has announced the cancellation of several trial sessions. During this period, the Tax Court will not process applications for admission to practice and requests for copies of documents. However, petitions may be hand delivered between the hours of 10:00 a.m. and 2:00 p.m., Monday through Friday. More information can be sought by contacting the Public Affairs Office at (202) 521-3355.

IRS Federal Tax Return Filing and Payment Due Date for 2019 Tax returns Update

Any person with a Federal income tax return or payment due on April 15, 2020, is eligible for relief under the Notice. “Person” includes any type of taxpayer, such as an individual, a trust, an estate, a corporation, or any type of unincorporated business entity. The payment due refers to both 2019 Federal income tax payments (including payments of tax on self-employment income) and 2020 estimated Federal income tax payments (including payments of tax on self-employment income), regardless of the amount owed. The return or payment must be due on April 15, 2020 – this relief does not apply to Federal income tax returns and payments due on any other date.

Illinois Department of Revenue Update – Filing and Payment Date for 2019 Tax Returns Extended to Match IRS Deadline

In light of the recent Disaster Proclamation issued by Governor JB Pritzker and by his direction, the Illinois Department of Revenue (IDOR) is following the federal government in providing special tax filing and payment relief to individuals and businesses in response to the COVID-19 Outbreak. The filing payment deadline for 2019 Illinois income tax returns has been extended from April 15, 2020, to July 15, 2020.

SBA Loan Assistance for Small Businesses Suffering From the COVID-19 Virus.

Our nationwide team can assemble a loan package for you to help save your business from the shutdown. Our top team member secured MILLIONS of dollars for clients during the BP oil spill. Get your loan application in before the thousands of other do and before the money runs out! Call 630-832-6500 to get the process started. Call NOW!

IRS Grants 90-Day Extension:

The IRS has granted a 90-day extension of time to file and make your tax payment for 2019, moving the deadline for both to July 15, 2020. This applies for individuals and  non-corporate taxpayers with payments up to $1,000,000.00, including self-employment tax. For businesses, this applies to payments up to $10,000,000.00.  This 90-day extension period will be interest and penalty free. 


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