Tax News & Views Payroll Tax Confusion and Eagle Attacks Roundup

August 14, 2020

Businesses, Practitioners Clamor for Payroll Tax Memo Guidance – Jonathan Curry, Tax Notes ($). “A pair of letters to the Trump administration, one from the U.S. Chamber of Commerce and another from the American Institute of CPAs, highlight the challenges Treasury faces as it seeks to take a brief memo and create a workable framework out of it. Treasury Secretary Steven Mnuchin clarified August 12 that the tax deferral wouldn’t be mandatory, but many questions remain.”

AICPA requests guidance on payroll tax deferral Allistair M. Nevius, J. D., Journal of Accountancy. “The AICPA on Wednesday sent a letter to Treasury and the IRS requesting guidance on the recent presidential memorandum deferring some employee payroll taxes until next year.”

The AICPA has requested guidance on the following items:

  • Stating that an eligible employee can make an affirmative election at any time from Sept. 1, 2020, to Dec. 31, 2020, and if an employee does not elect to defer Social Security taxes, taxes will continue to be withheld, deposited, and paid;
  • Stating that an “eligible employee” is an employee whose wages are less than $4,000 (or equivalent amount depending on the employer’s pay period) per biweekly period;
  • Providing a model notice for employers to furnish to eligible employees to inform them that the election to defer Social Security taxes is available for the Sept. 1, 2020, to Dec. 31, 2020, period;
  • Stating that the payroll amount used to determine eligibility is a cliff; if the wage amount for a specified pay period is above $4,000 or the equivalent amount based on the employer’s regular payroll periods, no deferral is permitted;
  • Stating that the $4,000 limit should apply separately to each employer of an employee;
  • Stating that it is the responsibility of the employee and not the employer to pay the deferred payroll taxes;
  • Stating which penalties are waived as a result of this deferral, including the penalty applicable to responsible parties;
  • Addressing whether the increase in take-home pay attributable to the deferred taxes can be used to satisfy other employee obligations such as Sec. 401(k) loan repayments, garnishments, and child support payments; and
  • Stating a payment due date(s) for the deferred taxes and a mechanism for employees to pay the deferred taxes.

Trump’s Payroll-Tax Deferral Plans Spur Confusion – Richard Rubin, WSJ($). “President Trump’s gambit to defer Social Security payroll taxes for the rest of the year and pressure Congress into forgiving them is turning into a logistical challenge, with its rollout complicated by his own unclear statements about the plan.”

Self-employed left out of Trump payroll tax holiday…for now – Kay Bell, Don’t Mess With Taxes. 

“Since you're both the boss and employee, that means that you pay both those components of the Federal Insurance Contributions Act (FICA) payroll taxes. Getting to hold off paying at least some of your employee portion certainly could help with your cash flow.

Or not.

Right now, Trump's executive applies only to the Social Security part of FICA that's paid by those who work for others.”


Senate Adjourns Without a Relief Deal, Approves Tax Court Judges – Jad Chamseddine, Tax Notes($). “This means businesses will have to wait to see some tax provisions both sides agree on implemented, including the expansion of the employee retention tax credit that was included in the Health, Economic Assistance, Liability Protection, and Schools (HEALS) Act in the Senate and the Health and Economic Recovery Omnibus Emergency Solutions (HEROES) Act (H.R. 6800) in the House.”

The Check Really Is In The Mail. After Failing To Open Envelopes, IRS Duns Taxpayers For Money They’ve Sent  - Claudia Hill, Forbes. “Earlier this week I received nine notices from IRS for clients who had filed their Forms 1041 in June with balances due. The notice asked for the taxes per the return as well as interest and penalties for failure to pay. The returns were filed and processed electronically in mid-June, but the checks were mailed with Form 1041-V to the Ogden Service Center. None of the checks had been cashed.”

The IRS’s backlog of mail has been well documented over the last few months. So, what should you do if you mailed in your payment but are receiving non-payment notices?

“Best advice: never ignore IRS notices. Especially if you believe they are not correct. Get your documentation ready (copy of the certified mail receipt; copy of your checkbook showing you wrote the check and a copy of your bank statement showing it has not been cashed). Find the contact phone number in the top right corner of the letter. Use it. If you are told about the mail delay, ask them to place a “stay-up” on your account for as long as they believe it will take to open the mail and process what may be millions of pieces of correspondence and checks.”

Senator Kamala Harris Proposed A Bold Tax Credit To Help Low- And Middle-Income WorkersElaine Maag, Forbes. “As a Senator, Kamala Harris has proposed broad legislation designed to raise the incomes of low- and middle-income workers via her LIFT (Livable Incomes for Families Today) the Middle Class Act. That proposal would provide an annual income tax credit of up to $3,000 for single people and $6,000 for married couples.

“While Harris introduced the LIFT Act long before the COVID-19 pandemic, three features make it particularly important under today’s difficult economic situation: (1) The credit would phase-in quickly, allowing almost all low-income workers to qualify for the maximum benefit; (2) Workers without children at home would be eligible for the same maximum benefit as workers with children at home; and (3) The credit could be paid on a monthly basis.”

Charitable Organizations and the Election – Russ Fox, Taxable Talk. “Unless you’re hiding under a rock you know that in less than three months there will be an election for President (and many other offices). EideBailly has a timely reminder today that a 501(c)(3) organization (a charitable organization) cannot support one candidate over another. This is for all 501(c)(3) organizations including private foundations.”


Bald eagle attacks state’s $950 drone in U.P., sends it to bottom of Lake Michigan - Tanda Gmiter, Mlive

“In what state officials are describing tongue-in-cheek as a “brazen attack,” a bald eagle recently snatched a $950 drone belonging to the state of Michigan that was being flown to document shoreline erosion damage in the Upper Peninsula. After a brief tussle, the big bird ripped off one of the propellers from the small spinning aircraft and sent it to the bottom of Lake Michigan near Escanaba, state workers said.”

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