October 16, 2020
California Incentivizes Small Businesses Impacted by the COVID-19 Pandemic – Iris Chung, Eide Bailly. “California Governor Gavin Newsom signed S.B. 1447 recently to offer up to $100 million in hiring credits to small California businesses impacted by the COVID-19 pandemic.”
Which California Employers Qualify for the Small Business Hiring Credit? Small business employers who qualify:
The credit is equal to $1,000 for each net increase in qualified full-time equivalent employees, as measured over defined periods discussed below, not to exceed $100,000. The credit can be used against personal income and corporation franchise or income taxes for tax years beginning on or after January 1, 2020, but before January 1, 2021.
IRS-CI, DOJ Announce Largest-Ever Tax Charge Against One Individual, Plus Related Deal With Billionaire Robert Smith – Kelly Phillips Erb, Forbes. “Robert T. Brockman, a 79-year-old resident of Texas, and the chairman and CEO of The Reynolds and Reynolds Company, has been accused of hiding over $2 billion in income from the IRS over 20 years.”
“Brockman was charged in a 39-count indictment that focuses on two separate pieces:
- The first set of charges focus on tax fraud, including tax evasion and failure to file Reports of Foreign Bank and Financial Accounts (FBARs), for the tax years 2000 through and including 2018.
- The second set of charges is an investor fraud scheme involving manipulating debt securities.
The charges include: conspiracy, tax evasion, wire fraud affecting a financial institution, concealment money laundering, tax evasion money laundering, tax evasion money laundering, international concealment money laundering, evidence tampering and destruction of evidence.”
U.S. attorney Anderson also announced a non-prosecution agreement with Robert Smith. Smith is a Texas Billionaire who made the news in 2019 when he announced he would pay the student debt for the entire graduation class of Morehouse College.
U.S. Indicts Tech CEO for Record $2 Billion in Tax Evasion – Nathan Richman, Tax Notes ($). “The IRS and Justice Department's announcement of charges in a scheme to evade taxes on $2 billion of capital gain was accompanied by notice that a billionaire philanthropist had a nine-figure non-prosecution agreement.”
Justice Dept. charges Texas billionaire with biggest tax fraud case in US history – Justine Coleman, The Hill. “U.S. Attorney David Anderson announced the grand jury’s indictment during a Thursday press conference, saying Brockman was charged with two schemes: a tax-fraud scheme and an investor-fraud scheme.”
Covid-19 Has Cost States $31 Billion In Tax Revenue— And That’s Just The Beginning – Liz Farmer, Forbes. “The global pandemic has so far cost U.S. state governments a collective $31 billion in lost tax revenues and it’s expected to get worse with no additional federal stimulus in sight.”
“A total of 36 states reported total tax revenue declines for the period between March and August, with Alaska, Florida, Hawaii, Minnesota, Oregon and Texas reporting drops of more than 10%.
Eight states (Alabama, Colorado, Georgia, Idaho, Nebraska, South Dakota, Vermont, and Washington) reported modest growth for the same period.”
On The Money: McConnell shoots down $1.8 trillion coronavirus deal, breaking with Trump | Pelosi cites progress on testing provisions | Jobless claims spike to 898K – Sylvan Lane, The Hill. “Senate Majority Leader Mitch McConnell (R-Ky.) on Thursday shot down the prospect of a coronavirus deal totaling between $1.8 trillion and $2.2 trillion — the goalposts of the current talks between Democrats and the White House.”
2021 Social Security wage base announced – Sally P. Schreiber, J.D., Journal of Accountancy.
“The Social Security Administration (SSA) announced that the maximum amount of wages subject to the old age, survivors, and disability insurance (OASDI) tax will increase to $142,800 in 2021 from $137,700 in 2020. The OASDI tax rate is 6.2%, so an employee with wages up to or above the maximum in 2021 will pay $8,853.60 in tax, with the employer paying an equal amount. Self-employed individuals pay tax at a 12.4% rate up to the limit, for a $17,707.20 maximum amount of OASDI tax.”
Higher earners face more payroll taxes in 2021 as Social Security wage base goes to $142,800 – Kay Bell, Don’t Mess With Taxes. “In the same benefits raise announcement, the SSA noted that the amount of income subject to the Social Security payroll withholding also is going up in 2021.”
IRS to Shut Down Fax Lines to File Claims for Tentative Refunds Related to CARES Act Provisions at the End of 2020 – Ed Zollars, Current Federal Tax Developments. “The IRS has updated its FAQ on “Temporary procedures to fax certain Forms 1139 and 1045 due to COVID-19,” to provide that the ability to fax claims for refund using Forms 1139 and 1045 will continue through December 31, 2020. After that date, the fax numbers can no longer be used for that purpose.”
This is a roundup of tax news and opinion. Any opinions expressed or implied are those of the author and not necessarily those of Eide Bailly. Opinions found in linked items are those of the authors of the linked item, not of your bloggers or of Eide Bailly. “$” means link may be behind a paywall. Items here do not constitute tax advice.