July 7, 2020 | Blog
Trump signs 5-week PPP extension - Jeff Drew, Journal of Accountancy. "President Donald Trump signed a bill Saturday re-opening the application window for the Paycheck Protection Program (PPP) until Aug. 8."
New Law Extends PPP Loan Program Through August 8, 2020 - Ed Zollars, Current Federal Tax Developments. "Note that this bill does not allow businesses that had already obtained a PPP loan to obtain another one, but rather allows those qualified businesses that did not obtain a PPP loan additional time to apply."
Trump signs PPP extension - Morgan Chalfant, The Hill. "The bill extends the deadline for businesses to apply for PPP loans until Aug. 8. The program, set up to assist businesses impacted by closures related to the coronavirus pandemic, had expired on Tuesday night with roughly $130 billion left unused."
A New 1099 for Independent Contractors. The IRS is changing the common form for reporting Non-W2 employee compensation. From IRS Tax Tip 2020-80:
There is a new Form 1099-NEC, Nonemployee Compensation for business taxpayers who pay or receive nonemployee compensation.
Starting in tax year 2020, payers must complete this form to report any payment of $600 or more to a payee.
Generally, payers must file Form 1099-NEC by January 31. For 2020 tax returns, the due date is February 1, 2021. There is no automatic 30-day extension to file Form 1099-NEC. However, an extension to file may be available under certain hardship conditions.
These amounts were formerly reported on Form 1099-MISC. The MISC form will still be around for reporting many business payments, including rents abd prizes and awards among other other things.
The 1099-NEC will cover:
Services performed by someone who is not your employee (including parts and materials);
Cash payments for fish (or other aquatic life) you purchase from anyone engaged in the trade or business of catching fish;
Payments to an attorney (box 1).
Tax Tip 2020-80 also reminds taxpayers of "backup withholding" requirements when somebody you are paying fails to provide a tax ID number: "Nonemployee compensation may be subject to backup withholding if a payee has not provided a taxpayer identification number to the payer or the IRS notifies the payer that the TIN provided was incorrect (PDF)."
Groups Get Some NOL Answers and Carryback Waiver Relief - Emily Foster, Tax Notes ($). "Treasury has proposed regulations to assist consolidated groups in computing net operating losses under the Tax Cuts and Jobs Act and provided rules for waiving loss carrybacks allowed under the coronavirus stimulus relief"
Tennessee Enacts Lower Economic Nexus Threshold - Lauren Loricchio, Tax Notes ($). "The bill will decrease Tennessee’s annual in-state sales transaction threshold for remote sellers and marketplace facilitators from $500,000 to $100,000, beginning October 1."
Oregon Governor Signs Gross Receipts Tax Cleanup Bill - Paul Jones, Tax Notes. "The CAT, approved in 2019, is a 0.57 percent tax on businesses’ annual Oregon gross receipts over $1 million, plus a flat $250 tax on that income. It allows taxpayers a statutory subtraction of 35 percent of the greater of their cost inputs or labor costs apportioned to the state. (The subtraction is capped at 95 percent of a taxpayer’s commercial activity in Oregon.)"
Bozo Tax Tip #8: Amend Rather than Extend - Russ Fox, Taxable Talk. "Every amended return is looked at by a human–one who has the power to send your return to Examination..."
IRS Has Unclaimed Tax Refunds Worth More Than $1.5 Billion - Kelly Phillips Erb, Forbes. "To claim your refund for the 2016 tax year, your return must be postmarked on or before Tax Day, July 15, 2020." Don't wait three years. Withheld taxes may only be refundable for two years.
How Many Audit “Bites” of the Same Apple Does IRS Get? - Roger McEowen, Agricultural Law and Taxation Blog. "...whether or not the IRS can get a “second-bite” at the audit apple is highly fact-dependent."
Don't miss your tax notice's July 10 deadline - Kay Bell, Don't Mess With Taxes. "If you recently received an Internal Revenue Service notice, you might need to take action by this Friday, July 10."
Preparers May Fight IRS On PPP Deduction Denial-Hundreds Of Billions At Stake - Peter Reilly, Forbes. "I predict that a lot of returns will go in claiming the deductions. One reason for that will be that normal people don’t cherish all the crumbs dropped by the IRS like you and I do and will not get the word."
I hope Congress will affirm deductibility of expenses that lead to loan forgiveness, saving all of us a lot of uncertainty and stress.
Related: IRS: PPP Loan forgiveness triggers loss of tax deductions
Tax Week in a Nutshell – 7.5.20 - Amie Kuntz, Living the Tax Life.
Does Biden’s Big New Deal Have Any Room for Tax? - Joseph Thorndike, Tax Notes Opinions Blog. "To date, Biden’s campaign tax plan has been something of a piecemeal affair, released in dribs and drabs over the course of many months, and lacking a central theme beyond (1) a vague commitment to increased progressivity, and (2) a generalized opposition to most elements of the Tax Cuts and Jobs Act."
Lesson From The Tax Court: Being Too Smart Precludes Innocent Spouse Relief - Bryan Camp, TaxProf Blog. A story about a bright woman married to a tax wizard whose wand failed him.
The woman claimed "innocent spouse" protection for tax deficiencies arising out of "distressed debt" tax shelters set up by her husband and used on their joint return. The Tax Court judge was impressed by her background. In his opinion, Tax Court Judge Goeke said the woman
...is a very intelligent person with a zest for learning and intellectual pursuits. She graduated from the College of St. Francis with a bachelor of science degree in chemistry in 1963, followed by a master's degree in biochemistry in 1965 from Purdue University. She obtained a real estate license in 1967 and has retained it. She obtained a master of business administration degree from Northern Illinois University in 1975 and a doctorate in educational administration from that institution in 1981. In 1990 she obtained a law degree from Villanova University, and she has been a member of the Illinois Bar since 1991. She obtained most of these degrees while being the mother of a son born in 1968 and also being employed first as a teacher in a Chicago suburban high school and later as an administrator at John Hersey High School from 1990 until 2005 when she retired. In 2011,
But while a little knowledge can be a dangerous thing, a lot of knowledge can be even worse. Bryan Camp sums up the problem:
The bottom line, as Judge Goeke writes, is that while her love for and devotion to her husband was admirable, her decision “to ignore the facts and circumstances she well knew on an intellectual level is not a lack of knowledge or purposes of section 6015(b)(1)(C) and (D) and (f). We have explained Mrs. Rogers’ education and her thirst for knowledge. Her willingness to set aside her intellect to support Mr. Rogers does not cause her to be eligible for relief from her joint tax liabilities.”
The moral? Even in the best marriages, filing "married filing separately" sometimes is the right thing for a relationship.
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.