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U.S. Department of Treasury Expands Income Tax Filing and Payment Relief

Rachel Owens0 Comment

In an official pronouncement released Thursday, April 9, the U.S. Department of Treasury expanded on the income tax filing extension and payment relief efforts in response to the current COVID-19 situation.  Effectively, any “income” tax filing or payment that would normally be due during the months of April through June of 2020 has now been automatically extended until July 15, 2020.  As a supplement to the prior income tax filing and payment extensions granted, this new announcement delays the need to remit any quarterly estimated tax payments until July 15th without incurring any penalty or interest charges.  As a result, any business or individual with 2020 quarterly estimated tax payments needs is able to delay both the Quarter 1 and Quarter 2 payments (normally due April 15th and June 15th, respectively) until July 15, 2020.  Also extended are any fiscal year-end income tax return filings (and corresponding tax payments) for businesses (corporate, LLC, partnerships or trusts), gift and estate tax filings, nonprofit organization income tax filings that would have been due in April, May, or June of 2020.  Note that these enhanced extension relief rules do not pertain to Employment Tax Reporting and Payments (including all payroll-related tax returns and deposit requirements).  Finally, as reaffirmation of the recommendations we have previously provided for any business, organization or individual taxpayers that will require additional time to file their respective 2020 income tax returns, the standard extended due dates of September 15 and October 15 may still be requested via filing of the applicable extension form prior to July 15, 2020.

We trust you will find the highlights we have provided on this new pronouncement helpful, but should you have further questions please contact us.

PRESS RELEASE: NC Deferring Interest

Rachel Owens0 Comment

FOR IMMEDIATE RELEASE                                        Contact: Joseph Kyzer<mailto:[email protected]>

Tuesday, March 31, 2020

 

North Carolina Leaders Announce Shared Support for Deferring Interest on Income Tax Until July 15

Raleigh, N.C. – North Carolina leaders announced shared bipartisan support for deferring the accrual of interest on state income taxes filed before July 15, 2020, in a joint statement released by General Assembly lawmakers and Governor Cooper on Tuesday.

View on SpeakerMoore.com<http://speakermoore.com/north-carolina-leaders-announce-shared-support-deferring-interest-income-tax-july-15/>

The deadline for state and federal tax filings were recently delayed to July 15, 2020, and penalties for late payments were also waived.

However, the North Carolina General Assembly and Governor must approve legislation to defer accrual of interest on income taxes, an action that state leaders announced shared support for approving retroactively on Tuesday.

State Senate Democratic Leader Dan Blue (D-Wake), Senate Leader Phil Berger (R-Rockingham), House Speaker Tim Moore (R-Cleveland), and House Democratic Leader Darren Jackson (D-Wake) released a joint statement with Governor Cooper on Tuesday.

“One of the biggest questions we are getting on economic issues is whether families and businesses will be responsible for paying interest on their income taxes now that the filing deadline is delayed,” the five state leaders said in a joint statement Tuesday.

“Today, we can announce our shared support for retroactively waiving the accrual of those interest payments to provide further tax relief for North Carolinians amid the COVID-19 crisis, an important step to offer certainty and recovery assistance for millions of our state’s residents.”

Under North Carolina law, the liability for failure to pay estimated income tax on time is the accrual of interest. The Secretary of the Department of Revenue is not authorized to waive interest and the agency is required to charge interest on any unpaid tax.

Therefore, the General Assembly and Governor must approve legislation to ensure taxpayers are not liable for such interest between April 15, 2020, and July 15, 2020, the extended deadline.

____________________________________________________________________________________

NORTH CAROLINA GENERAL ASSEMBLY

Legislative Building | 16 West Jones Street | Raleigh, NC 27601 | 919-733-4111

 

COVID-19 Links

Rachel Owens0 Comment

In an effort to streamline the ever-changing world we live in with the COVID-19 virus, here are some links that are all related to updated tax changes, small businesses, individual sick leave, and other filing requirements.  As more information is released, it will be added at the top of this list.

 

 

 

Have you been using zoom?  https://www.forbes.com/sites/leemathews/2020/04/13/500000-hacked-zoom-accounts-given-away-for-free-on-the-dark-web/#58a7fbc858c5

US Dept of Treasury Grants Additional Income Tax Filing and Payment Relief https://www.irs.gov/pub/irs-drop/n-20-23.pdf

New NonProfit Extensions https://home.treasury.gov/news/press-releases/sm970

CDC Recommendations https://www.cdc.gov/coronavirus/2019-ncov/index.html

COVID-19 Relief Tracker https://www.forbes.com/sites/briannegarrett/2020/03/20/small-business-relief-tracker-funding-grants-and-resources-for-business-owners-grappling-with-coronavirus/#1e1e001bdd4c

There’s hope for Small Businesses! https://www.wraltechwire.com/2020/04/03/bank-of-america-accepting-virus-crisis-loan-applications-receives-10000-in-first-hour/

Key Highlights of the CARES Act and the FFCRA Relief Provisions https://www.langdoncpa.com/?p=4717&preview=true

SBA loans more difficult than we thought https://www.langdoncpa.com/2020/04/03/sba-loans-may-be-more-difficult-than-we-thought/

Employer tax credits, and more https://www.journalofaccountancy.com/news/2020/apr/irs-new-employer-tax-credits-form-employee-retention-credit-guidance-coronavirus.html

More Assistance for Nonprofits https://www.councilofnonprofits.org/trends-policy-issues/loans-available-nonprofits-the-cares-act-public-law-116-132

NC Press Release: Deferred Interest https://www.langdoncpa.com/2020/04/01/press-release-nc-deferring-interest/

Applications for Small Business Paycheck Protection Program https://www.journalofaccountancy.com/news/2020/mar/paycheck-protection-loan-for-small-businesses-coronavirus-pandemic.html

Employer questions answered! https://www.dol.gov/agencies/whd/employers

SBA debt relief related to COVID-19 https://www.sba.gov/page/coronavirus-covid-19-small-business-guidance-loan-resources#section-header-4

Gift tax returns extended too! https://www.journalofaccountancy.com/news/2020/mar/gift-gst-tax-returns-postponed-filing-deadlines-coronavirus-pandemic.html

Assisted Living Resources for COVID-19 https://www.ncala.org/covid-19.html

How much COVID-19 stimulus will I receive? https://www.cnbc.com/2020/03/27/the-stimulus-payment-calculator-tells-you-how-much-money-you-could-get.html

Possible Increase for VA Nursing Facilities https://www.vhca.org/publications/careconnection/march-26-2020/vhca-vcal-seeking-additional-funding-for-nf-care-under-covid-19-emergency/

COVID-19 Resources for Non-Profits https://www.ncnonprofits.org/resources/pandemicresources

The CARES Act questions answered https://www.journalofaccountancy.com/news/2020/mar/cares-act-economic-relief-coronavirus-tax-provisions.html?utm_source=mnl:alerts&utm_medium=email&utm_campaign=25Mar2020&utm_content=headline

NC DHHS provides additional COVID-19 support https://www.ncdhhs.gov/news/press-releases/nc-medicaid-increases-support-protect-those-most-risk-serious-illness-covid-19

Clarification on NC Tax Deadlines https://www.ncacpa.org/wp-content/uploads/2020/03/Frequently-Asked-Questions-COVID-final.pdf?utm_source=Google&utm_medium=Referral&utm_campaign=NCACPA&_zs=fG9HX&_zl=MMK22

Employers using Payroll Tax Credits for Paid Leave due to Coronavirus https://www.accountingtoday.com/news/employers-can-begin-using-payroll-tax-credits-for-paid-leave-for-coronavirus

CMS extends Cost Report Deadlines https://www.palmettogba.com/palmetto/providers.nsf/ls/JM%20Part%20A~BMYLSN5443?opendocument&utm_source=J11AL&utm_campaign=JMALs&utm_medium=email

Small Business Q&A https://sbshrs.adpinfo.com/covid19-faqs

IRS push back tax FILING deadline https://abc11.com/business/tax-day-pushed-back-amid-viral-outbreak-mnuchin/6031749/

Bill to address paid sick leave related to COVID-19 (FFCRA) https://www.forbes.com/sites/tomspiggle/2020/03/17/the-families-first-coronavirus-response-act-what-it-does-for-employees-who-need-paid-sick-leave/#615dd2f06f1a

HUD and Single Audit Extension https://www.whitehouse.gov/wp-content/uploads/2020/03/M-20-17.pdf?utm_medium=email&SubscriberID=111017000&utm_source=GAQC20&Site=AICPA&LinkID=8741972&utm_campaign=GAQC_AlertMAR20&cid=email:GAQC20:GAQC_AlertMAR20:https%3a%2f%2fwww.whitehouse.gov%2fwp-content%2fuploads%2f2020%2f03%2fM-20-17.pdf:AICPA&SendID=266068&utm_content=A20MAR400_GAQC_Alert401

IRS Press Release “Payment Relief” https://www.langdoncpa.com/2020/03/19/official-guidance-for-tax-deadlines/

Single Audit Submission Info https://www.whitehouse.gov/wp-content/uploads/2020/03/M-20-11.pdf

US Department of Labor defines FMLA related to COVID-19 https://www.dol.gov/agencies/whd/fmla/pandemic

IRS extends PAYMENT deadline https://www.cnbc.com/2020/03/17/treasury-and-irs-to-delay-tax-deadline-by-90-days.html

https://www.cpapracticeadvisor.com/tax-compliance/news/21129660/2020-tax-season-payment-deadline-extended-to-july-15-as-nation-fights-coronavirus-irs-news?utm_source=CPA+Other+Communications&utm_medium=email&utm_campaign=CCSN200317002&o_eid=9442A3978623C7T&rdx.ident=[object+Object]

 

Official Guidance for Tax Deadlines

Rachel Owens0 Comment

From IRS Press Release:

March 18, 2020

The Treasury Department and the Internal Revenue Service are providing special payment relief to individuals and businesses in response to the COVID-19 Outbreak. The filing deadline for tax returns remains April 15, 2020. The IRS urges taxpayers who are owed a refund to file as quickly as possible. For those who can’t file by the April 15, 2020 deadline, the IRS reminds individual taxpayers that everyone is eligible to request a six-month extension to file their return.

This payment relief includes:

Individuals: Income tax payment deadlines for individual returns, with a due date of April 15, 2020, are being automatically extended until July 15, 2020, for up to $1 million of their 2019 tax due. This payment relief applies to all individual returns, including self-employed individuals, and all entities other than C-Corporations, such as trusts or estates. IRS will automatically provide this relief to taxpayers. Taxpayers do not need to file any additional forms or call the IRS to qualify for this relief.

Corporations: For C Corporations, income tax payment deadlines are being automatically extended until July 15, 2020, for up to $10 million of their 2019 tax due.

This relief also includes estimated tax payments for tax year 2020 that are due on April 15, 2020.

Penalties and interest will begin to accrue on any remaining unpaid balances as of July 16, 2020. If you file your tax return or request an extension of time to file by April 15, 2020, you will automatically avoid interest and penalties on the taxes paid by July 15.

The IRS reminds individual taxpayers the easiest and fastest way to request a filing extension is to electronically file Form 4868 through their tax professional, tax software or using the Free File link on IRS.gov. Businesses must file Form 7004.

This relief only applies to federal income tax (including tax on self-employment income) payments otherwise due April 15, 2020, not state tax payments or deposits or payments of any other type of federal tax. Taxpayers also will need to file income tax returns in 42 states plus the District of Columbia. State filing and payment deadlines vary and are not always the same as the federal filing deadline. The IRS urges taxpayers to check with their state tax agencies for those details. More information is available at https://www.taxadmin.org/state-tax-agencies.

Employer Shared Responsibility Penalties

Rachel Owens0 Comment

by Tony Pandiscia

The Internal Revenue Service “IRS” has recently been issuing “226J Letters” to businesses to conduct inquiry into whether compliance was properly maintained under the Affordable Care Act [“ACA”] for the 2016 Tax Year.  While the IRS has been authorized to issue this correspondence in the past, the 2016 Tax Year is significant because it marks the first year following the sunset of favorable “transitional relief” rules that had been available in prior years for businesses that were not in compliance with the ACA.  When a business is not in compliance with the ACA healthcare mandate, the result is exposure to the “employer shared responsibility penalty” [or “ESRP”].

A business may incur the “ESRP” under the ACA when it is an applicable large employer [“ALEs”] whom fails to offer:

  • “minimum essential” health insurance coverage to its full-time employees and their children, or
  •  insurance coverage that is “considered affordable”.

Technical rules help determine exactly whom is an ALE [i.e. how to properly count the “full-time equivalent” employees], what would be considered “minimum essential” [health insurance coverage], as well as whether the premiums charged employees were “considered affordable”.  Most businesses confronted the myriad of health insurance options designed to meet ACA compliance beginning back in 2013 when the law was initially announced, although various provisions of the law effectively delayed the assessment of penalties until after January 1, 2015 to give businesses ample time to implement suitable health insurance programs and permit the IRS opportunity to develop adequate record keeping and tracking mechanisms.

It is important to understand that receipt of a the 226J Letter is not the actual assessment of the liability.  Instead it is a notification from the IRS that based on certain records in its database, the business may be subject to the ESRP and the business now has the responsibility to formally contest or confirm the assertion.  [Typically the records the IRS has analyzed include Forms 1094, 1095, W-2 along with the Premium Tax Credit database that is populated through the “Exchange” where individuals obtained coverage through “Healthcare.gov”.]  The formal response to the 226J Letter must be submitted to the IRS using Form 14764, plus attachments.  Included in the 226J Letter will be a “response deadline” [generally 30 days from the date of the letter] for which a business owner must submit the response or by default the IRS will assume no additional evidence is available to refute the ESRP assertion.

Due to the complexity and time-constraints involved, upon receipt of a 226J Letter a business owner should immediately contact a Tax Professional to assist with the response process.  The format of the Form 14764 allows for submission of explanations and substantive documentation that may help update or correct the IRS’ records, as well as counter (if applicable) the government’s ESRP assertion.  As with other IRS dispute resolution matters, reliance on a qualified Tax Professional will permit the business owner to avail him/herself of all applicable ESRP response strategies (including extensions of time, available exemptions, review of formula computations and ratios, and even installment payment plan negotiation attempts, as necessary).  Langdon & Company LLP is well-versed in ESRP issues, so feel free to connect with us if you have any questions.

Financial Considerations Before Tying the Knot

Pam Williams0 Comment

by Dwayne Murphymarriage

There are a number of things to consider when getting married among them are various financial considerations. Below are just a few items to discuss with financial implications:

  • Discuss past financial issues and future goals such as:
    • Current income, debt and spending habits.
    • Career paths and goals – such as are there plans in going back to school, career changes or job relocations.
    • Children, how many, and if they will be in day care or if one parent will stay home and if they plan or want to go back to work at some point.
    • Whether you might have an older parent living with you in the future and all the financial costs that would be involved.
    • Retirement planning and goals – as in your current situation, what your end goal is and how you plan to get there. Then determine if you want to start a combined retirement account or keep your individual retirement accounts separate.
  • Discuss who will handle the finances:
    • While you may want to designate one of you to handle the finances, both of you should be aware of your goals, spending habits and investments. This will make both of you feel responsible for saving and want to help contribute.
  • Joint or separate accounts?
    • Joint Accounts
      • Trust is the key here as this is probably the most convenient as all the money goes in and comes out of one account. However, if one of you makes more money or has more debt than the other then it could seem unfair to share everything.
      • Another option is to share a common account as well as keep separate accounts. The common account would be for common bills and to save for common goals such as a house. The separate accounts would be for individual spending habits. The issue here is how much each of you will contribute to the joint accounts, especially if one of you makes considerably more than the other.
    • Separate Accounts
      • This could be the easiest solutions for people with large balances in accounts that would be a hassle to move and not having to worry about opening another credit card in both names. The issue here is who is responsible for what bills and for saving towards common goals.
    • Tax considerations
      • First, understand the tax brackets and how your new income will be affected. Then update your withholding form W-4 and applicable state form to adjust the amount of taxes withheld from your paycheck. This hopefully should keep you from getting a shock come tax time.

In conclusion there are a number of things to consider when getting married and lot of them have financial implications. Hopefully by discussing some of the items above it will help to achieve a healthy financial marriage.  Contact our office for additional tax advice.

Dwayne ([email protected]) is an Audit Senior with Langdon & Company LLP.  He mainly works with various types of non-profit associations.

Should you be filing FinCEN Form 114, Report of Foreign Bank and Financial Accounts (FBAR)?

Pam Williams0 Comment

by: Brittany Craig

According the to the IRS’ FBAR guidance[1], theforeign currency list of U.S. persons who may be required to report their foreign bank and financial accounts annually to the United States Treasury include, but is not limited to the following who have a financial interest or signature authority in a foreign account or asset:

  • U.S. citizens
  • Resident aliens
  • Trusts
  • Estates
  • Certain domestic entities

The Department of the Treasury indicates that if the aggregate value of all foreign account(s) or asset(s) is at least $10,000 in U.S. dollars at any time during the calendar year, then the maximum value of the financial account(s) maintained by a financial institution physically located in a foreign country should be reported.

While the reporting threshold is $10,000, some U.S. persons may choose to report their foreign bank and financial account(s) even if they are below the aforementioned threshold in an effort to instill good faith with the Department of Treasury.

Form 114 must be received by the U.S. Department of Treasury no later than June 30, via FinCEN’s BSA E-Filing System.  Note, this report is not filed with a federal tax return and there are no extensions of time.  In addition, if the report is not filed on time non-willful penalties may be up to $10,000 and willful penalties may be up to the greater of $100,000 or 50% of account balances.  Criminal penalties may apply, too.

Our tax department is incredibly knowledgeable about miscellaneous forms and other tax issues.  Please feel free to contact our office for more information.

Brittany ([email protected]) is a tax senior at Langdon & Company LLP.  She has experience in tax planning for a variety of clients including corporate and pass-through to individuals.

[1] http://www.irs.gov/pub/irs-utl/IRS_FBAR_Reference_Guide.pdf

Identifying Identity Theft

Pam Williams0 Comment

by Susan Dean

Identity theft is one of the fastest growing crimes nationwide, and refund fraud caused by identity theft is one of the biggest challenges facing the Internal Revenue Service (IRS). At the end of fiscal 2013, the IRS had almost 600,000 identity theft cases in its inventory. With more than 3,000 employees working on identity theft cases, the IRS is focused on preventing, detecting and resolving identity theft issues as soon as possible.identity_theft

There are several ways taxpayers can experience identity theft involving their tax returns. One of the most frequent encounters occur when identity thieves trying to file fraudulent refund claims using another person’s identifying information, such as their name and social security number. By filing early in the tax-filing season, thieves have a lower chance of being detected and a higher chance of receiving fraudulent refunds. More often than not, taxpayers are unaware identity theft has even occurred until they try to file their own personal income tax return. A rejection from an attempt to electronically file or a notice from the IRS stating that “more than one tax return was filed” may be a good indicator that the taxpayer has been a victim of identity theft.

A delay in receiving an expected tax refund is also an indicator of possible identity theft. Tax return identity theft delays legitimate taxpayer refunds because the return appears to be a duplicate return and therefore may be a sign of other fraud or identity problems. If a duplicate return has been filed, the taxpayer may receive notice from the IRS. A notice received from the IRS may indicate a duplicate filing, assess the taxpayer for additional tax due or indicate that an expected refund was used to offset a prior tax liability. If a taxpayer receives a notice from the IRS and suspects the possibility of identity theft they should contact the IRS Identity Protections Specialized Unit at 800-908-4490. It is also recommended that you contact a tax professional for assistance in resolving the matter as soon as possible.

Langdon & Company LLP has helped several clients in the Triangle with identity theft matters relating to filing their tax returns and receiving their income tax refunds. For questions about identity theft or assistance with resolving an identity theft issue, please contact our office.

Susan is a tax manager at Langdon & Company LLP.  As an Enrolled Agent, she focuses primarily on the non-profit industry, trust income tax reporting and multi-state filings.

Obama Administration Delays Implementation of Key Part of the Affordable Care Act

Michael Miller0 Comment

The Administration announced recently that it will provide an additional year before the ACA mandatory employer and insurer reporting requirements begin. Scheduled to become effective January 1, 2014, the new effective date is January 1, 2015.  Formal transition guidance will be published in the coming weeks.  The Administration intends to strongly encourage employers and insurers to voluntarily implement the information reporting in 2014.

Because of the delay in reporting requirements, the Administration has also delayed the “shared responsibility payments” until 2015.  Under ACA’s “Employer Mandate,” employers with more than 50 full time employees would have to begin to offer affordable health insurance as defined by the Act or face substantial penalties or “shared responsibility payments.”  The delay means these penalties will not apply to 2014.

For more information, read the complete article here. We offer tax service professionals available to help guide you and your business through the ACA..