Lawmakers Unveil COVID-19 Relief With PPP Deductibility - Stephen Cooper, Law360:
A bipartisan group of congressional lawmakers unveiled a $908 billion compromise Monday to restart negotiations on a coronavirus relief measure that includes several tax provisions, including a highly sought-after change making expenses paid for with federal loans tax deductible...
In addition to clarifying the deductibility issue, the new legislation would limit eligibility of PPP loans to businesses, with up to 300 workers, that have lost 30% of revenue in any quarter of 2020, according to a summary of the bill. Tax-exempt organizations — excluding those engaged in lobbying — that have fewer than 150 employees also would be eligible for PPP loans.
It's a 525-page proposal, so there are a lot of pieces.
PPP Loan Expense Deductibility Included in Final Relief Bill - Jad Chamseddine, Tax Notes:
The Bipartisan Emergency COVID Relief Act of 2020, released by a group of Senate and House lawmakers December 14, sets out the deductibility of business expenses paid for with the proceeds of PPP loans.
The group of lawmakers, led by Sens. Joe Manchin III, D-W.Va., and Susan M. Collins, D-Maine, introduced two bills, separating contentious provisions from those with overwhelming support.
Congress warms to possible Covid stimulus deal - Burgess Everett and Heather Caygle, Politico. "And though it's still not clear what exactly Senate Majority Leader Mitch McConnell and Speaker Nancy Pelosi will do with it, the $748 billion piece was fairly warmly received by Republicans on Monday and Democrats did not immediately dismiss it... Leaders of the group said it’s now up to McConnell and Pelosi to decide what can pass both chambers of Congress as lawmakers scramble to wrap up the legislative session by Friday."
Preliminary Details and Analysis of State and Local Aid Under the Bipartisan State and Local Support and Small Business Protection Act of 2020 - Jared Walczak, Tax Policy Blog. "Under the bill, $91.2 billion would flow to states and $60.8 billion to local governments ($152 billion total), plus $8 billion to tribal governments."
IRS issues scam warning to preparers. In an email to tax professionals, the IRS warned of a new approach:
The Internal Revenue Service today warned Electronic Return Originators of an identity theft scam targeting EFIN holders. Fraudsters posing as a “contractor” for the IRS may contact EROs, suggesting they are verifying or checking on the ERO’s EFIN acceptance letter. The scammers may request that the ERO email them a copy of the EFIN acceptance letter and provide a telephone number to call for questions.
Treasury Department hack raises IRS exposure questions - Kay Bell, Don't Mess With Taxes. "Again, not to overreact, but Treasury is the home to the IRS, which is a regular target of hackers. In addition to the routine taxpayer identity theft concerns, the IRS had some of its programs attacked and successfully hacked before, notably back in 2016 when a breach of its Get Transcript tool exposed 100,000+ accounts. That online service was down for more than a year while security was upgraded."
Hacked IT Company Previously Touted Its Work With IRS - William Hoffman, Tax Notes ($). "The IT company responsible for distributing software blamed for an alleged Russian cyberattack on Treasury published a 2017 case study promoting its work with the IRS."
Puerto Rico — Victims of a severe storm and flooding on September 13, have until January 15, 2021, to file various individual and business tax returns and make tax payments, the Internal Revenue Service announced today.
Individuals and households who reside or have a business in Arecibo parish qualify for tax relief. Taxpayers in localities added later to the disaster area will automatically receive the same filing and payment relief.
The declaration permits the IRS to postpone certain tax-filing and tax-payment deadlines for taxpayers who reside or have a business in the disaster area. For instance, certain deadlines falling on or after September 13, 2020, and before January 15, 2021, are postponed through January 15, 2021.
ALABAMA - Victims of Hurricane Zeta that began October 28, 2020 now have until March 1, 2021, to file various individual and business tax returns and make tax payments, the Internal Revenue Service announced today.
Following the recent disaster declaration issued by the Federal Emergency Management Agency, the IRS announced today that affected taxpayers in certain areas will receive tax relief.
Individuals and households who reside or have a business in Clarke, Dallas, Marengo, Mobile, Perry, Washington, and Wilcox counties qualify for tax relief. Taxpayers in localities added later to the disaster area will automatically receive the same filing and payment relief.
The declaration permits the IRS to postpone certain tax-filing and tax-payment deadlines for taxpayers who reside or have a business in the disaster area. For instance, certain deadlines falling on or after October 28, 2020, and before March 1, 2021, are postponed through March 1, 2021.
More information at Disaster Assistance and Emergency Relief for Individuals and Businesses.
Tax Tip From Hunter Biden: Report Gifts, Income - Robert W. Wood, Forbes ($):
Even gifts from foreign persons can face special tax disclosures, for there are special tax rules about foreign gifts and inheritances, including filing IRS Form 3520. The IRS instructions here say you should file a Form 3520 if you receive: (1) more than $100,000 from a nonresident alien individual or a foreign estate (including foreign persons related to that nonresident alien individual or foreign estate) that you treated as gifts or bequests; or (2) more than $16,649 from foreign corporations or foreign partnerships (including foreign persons related to such foreign corporations or foreign partnerships) that you treated as gifts. You are required to report bequests on Form 3520 when you actually or constructively receive them. Penalties can be severe, the greater of $10,000 or 35% of the gross reportable amount. For returns reporting gifts, the penalty is 5% of the gift per month, up to a maximum penalty of 25% of the gift.
Because foreign parties don't file W-2s or 1099s for transactions taking place overseas, taxpayers may be tempted to report payments as "gifts," which aren't subject to U.S. income tax. These disclosures give the IRS an opportunity to second-guess whether amounts are gifts or payments for services. If you don't file Form 3250, you can be a lot worse off than if you had reported the amounts as income in the first place.
Ignoring W-2Gs and $482,000 of Income Led to a Sub-Optimal Result - Russ Fox, Taxable Talk. "Bluffing in poker can work quite well. However, if your opponent will always call, bluffing cannot work. One poker player learned that the IRS always call your bluffs (especially when they have evidence)."
Everything That You Need to Know About Federal Tax Liens - Jason Freeman, Freeman Law. "The law generally defines a lien as a charge or encumbrance on the property of another as security for a debt or obligation. A lien does not change the ownership of the property; it merely identifies the property as having a claim against it."
Tax News In a Nutshell - 12.14.20 - Amie Kuntz, Living the Tax Life. "After a confusing week of stimulus discussions, a one-week spending bill was signed just in time to avert a federal government shutdown on December 11th."
Tips on Getting Ready Now to File 2020 Federal Income Tax Returns - Tax Warrior Chronicles. "A good first step, and often the easiest, is to gather Forms W-2, Forms 1099, and other income-related documents to help determine if you're eligible for various deductions or credits. If you received an Economic Impact Payment, you'll also need your Notice 1444, Your Economic Impact Payment, to calculate any Recovery Rebate Credit you may be eligible for on your 2020 federal income tax return."
Congress Could Fix the ACA’s Individual Mandate Without Waiting for the Supreme Court - C. Eugene Steuerle, TaxVox. "A mandate also is important if government is going to require insurance companies to sell to all comers, with no underwriting for pre-existing health conditions. Without some government-imposed nudge, many people would not insure themselves until they got sick, increasing the burden on providers and government and raising insurance premiums to unsustainable levels."
Do THIS — Not THAT in preparation for the upcoming tax season - April Walker, AICPA. Professionals offer their worst advice, tongue-in-cheek; April Walker intersperses actual good advice. I think "April Walker" would be a great secret identity for an accountant superhero with superpowers enabling her to "walk" through busy season.
Celebrate! A lot to celebrate today: Bill of Rights Day, International Tea Day, National Cupcake Day and National Wear Your Pearls Day. Stand up for your right to a cupcake and tea while wearing pearls.
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.