March 2, 2021
IRS Formalizes Employee Retention Credit FAQs - Nathan Richman, Tax Notes:
A new IRS notice offers a list of frequently asked questions about the COVID-19 relief employee retention credit, thereby allowing taxpayers to rely on the guidance for penalty prevention purposes.
Notice 2021-20, 2021-11 IRB 1, released March 1, both formalizes the IRS’s FAQs issued for the original version of the program under the Coronavirus Aid, Relief, and Economic Security Act (P.L. 116-136) and adapts the guidance to changes that have happened since then.
Notably, Notice 2021-20 updates the FAQs for changes made to the program by the Consolidated Appropriations Act, 2021 (P.L. 116-260), enacted in late December 2020.
Related: Resources to Help You with the Employee Retention Credit.
IRS offers guidance on employee retention credit and PPP eligibility - Michael Cohn, Accounting Today. "The IRS guidance in Notice 2021-20 also includes answers to questions such as which employers are eligible; what constitutes full or partial suspension of trade or business operations; what is meant by a significant decline in gross receipts; how much is the maximum amount of an eligible employer’s employee retention credit; what are qualified wages; how does an eligible employer claim the employee retention credit; and how does an eligible employer substantiate the claim for the credit."
House approves $1.9 trillion rescue bill and legislation moves to the Senate - Jay Heflin, Eide Bailly Tax News & Views:
The legislation is now in the Senate and the Democratic leaders in that chamber have released a “substitute amendment” for the House-passed bill. This amendment will be the legislation that Senators will debate and seek to amend over the next several days.
One item missing from the Senate document is the provision increasing the minimum wage to $15 an hour over the next five years, which was included in the House-passed bill. It was removed because the Senate Parliamentarian determined that it was not germane to the legislation.
Jay is providing regular updates on the bill here at ebtaxblog.com.
More tax reporting for gig workers - Renu Zaretsky, Daily Deduction. "In a last-minute addition, the House-passed pandemic relief bill would dramatically increase the amount of tax reporting for gig workers, home hosts and the like. Currently, firms such as Airbnb and Uber must report to the IRS payments in excess of $20,000. The bill would require tax reporting on payments of $600 or more."
Corp. Tax Hikes In Virus Bill Could Preview Dems' Playbook - Alan K. Ota, Law360 Tax Authority"
One proposal in H.R. 1319, President Joe Biden's $1.9 trillion American Rescue Plan that was passed by the House on Saturday, would repeal a tax break for multinationals to pay for a $22.8 billion pension aid plan included in the bill. Another recent Senate proposal whose fate is less clear would replace the bill's proposal for a $15 hourly minimum wage with a voluntary wage floor to be enforced with tax breaks for compliance by small businesses and penalties for noncompliance by big corporations.
Little tax hikes to raise x dollars are rarely good policy.
What Does the March 1 Deadline Mean for Farmers? - Kristine Tidgren, Ag Docket. "Certain estimated tax payment deadlines for taxpayers who reside or have a business in a federally declared disaster area are postponed for a period during and after the disaster. During the processing of these tax returns, the IRS automatically identifies taxpayers located in a covered disaster area (by county or parish) and applies the appropriate penalty relief."
IRS Might Not Be Ready for Filing Season Risks, Watchdog Says - William Hoffman, Tax Notes ($). "The IRS hasn’t sufficiently updated operational and customer service risks for the filing season, the GAO said in a report released March 1. Those include a backlog of unprocessed individual and business returns; delayed taxpayer refunds and increased refund interest; and potential processing delays attributable to IRS staff on weather and safety leave who aren’t able to telework."
IRS Examiners Can Do More to Uncover UBI, Report Says - Fred Stokeld, Tax Notes ($):
EO examiners at the IRS don’t always try to identify organizations with unrelated business income requirements, according to a Treasury Inspector General for Tax Administration report released March 1. TIGTA made eight recommendations “to help improve guidance, address compliance issues, and safeguard against reporting material errors related to UBI.”
Related: Final Regulations Issued for Unrelated Business Income Activities
Fidelity Prevails in Donor-Advised Fund Negligence Suit - Kristen Parillo, Tax Notes ($). "A California district court has rejected a couple’s claim that Fidelity’s charitable arm made false promises to secure their $100 million stock donation and botched the liquidation, thereby reducing the size of their deduction."
PPP and other pandemic tax moves to make in March 2021 - Kay Bell, Don't Mess With Taxes. "A key one is deciding whether it's worth filing your 2020 tax return as soon as possible. Your choice could affect how much or whether you'll get any EIP this year or should/will be able to collect it as a recovery rebate tax credit when you file 2021 taxes next year."
The $1,100 Per Child Tax Rebate Bonus For Divorced And Unmarried Parents - Peter Reilly, Forbes ($). "Divorced and never married co-parents have the chance to pick up an extra $1,100 per dependent child when they file their 2020 returns. It requires trust, cooperation and running multiple versions of their 2020 returns."
IRS works to limit reach of taxpayer-friendly trust passive activity case - Part 1 - Ben Peeler, Eide Bailly Tax News & Views. "Frank Aragona Trust gave trusts a roadmap to deduct business losses and avoid NIIT on business income. IRS examiners look to make the roads harder."
Evaluating Mississippi’s Plan to Phase Out the Individual Income Tax - Katherine Loughead and Jared Walczak, Tax Policy Blog. "Some on one side have little interest in acknowledging Texas, Florida, Tennessee, or many other states that have reduced or go without an income tax and reap the benefits. Some on the other side would often prefer not to talk about Kansas, where haste, wishful thinking, and a desire to implement a sizable net tax cut without identifying offsets or spending reductions made for a notoriously failed experiment."
Maryland’s Digital Advertising Levy Sets Off a New Battle Over Taxing E-Commerce - Howard Gleckman, TaxVox. "No doubt digital ads are a tempting source of tax revenue...Yet a system where each state imposes its own tax, based on its own rules, on pixels that cross state lines in a nanosecond, seems designed for chaos and multiple taxation."
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