Tax Update amid Virus Outbreak – Volume 9
August 20, 2020
Dear friends and family,
I hope you are all enjoying the dogdays of summer. Personally, it has been a menagerie of events. My wife and I dropped our youngest off for his first year of away-from-us college (yes, there is a story there) last weekend. Empty nesting may be over-rated; we will let you know. My father has had some significant health issues and is recovering, but slowly.
It is with very mixed emotions that we announce that Connie Sweeney will be leaving the company on August 21st. She and Mark will be moving back to their home roots in Colorado. We are excited for a new chapter in their lives, but we are sad to see her go. Connie has been a part of our team since 2006 starting as an administrative assistant and growing to serve many of our clients as well as taking the role as firm administrator. I have known Connie, Mark and the children for almost 20 years. She is as much a dear friend as co-worker. She will be greatly missed.
And, did we also received tax relief?
The Order
Sunday, August 9, the President signed an executive order containing addressing four major points. Most talked about is the payroll tax cut for employees. This is not really a tax cut, but a tax deferral for employees making less than $104,000 per year. These workers are allowed to defer their withheld social security and Medicare until the end of the year. Mind you, we are unsure as to how this is to affect the employers who are required to match the employee withholding. There are many questions surrounding the order. Accounting Today does a nice job summarizing some of the issues in the attached article: Clarity on Executive Order
Additionally, there is a deferral of student loan payments through the end of the year. Please consult your student loan administrator for more information on how to take advantage of this order.
We still believe
We still believe more relief is on the way, but Congressional impasse and their summer break have stalled talks. The President seems intent on making something happen, but there is certainly more bickering to come.
Update on PPP forgiveness
Some banks have begun rolling out their forgiveness applications. We learned late last week Bank of America has opened their forgiveness application and tools. We are still encouraging our loan clients to delay applications until the 24-week period is complete. However, Bank of America is requiring their borrowers who were funded before June 5th to log into their account and elect the 24-week period. If you bank with BOA, we strongly encourage you to log into their system and make the 24-week election. Other borrowers should be looking for communications from their respective banks. on the We believe there is more clarification coming from Treasury and the SBA. Additional information can be found on the SBA website: SBA FAQs
Tax Deadlines
The automatically extended federal tax deadline of July 15th has come and gone. We truly appreciate those who worked with us to get their information in and returns completed by the due date. Believe it or not, we are actually one month away from our next federal deadline. Partnership and S Corporation tax returns are due, after final extension, on September 15th. If you have not heard from us already, expect an email and then a phone call. The sooner we receive your data the more time we will have to process.
Individual returns are due October 15th. We encourage you to transmit your tax information as soon as you can, but no later than September 30. In addition to tax returns being due, some of our PPP clients 24-week period will be coming to a close during that time and we expect a much busier time period than normal.
Tax Authority delays
We have had more than a few emails from our clients requesting an update of the status of their filed electronic and paper returns. We have seen delays for both. And we have seen unusual delays from various states as well. On August 13, the IRS issues a statement updating taxpayers on the status of filed returns. The IRS continues to encourage the use of electronic filing. On their website, the IRS says, “We’re experiencing delays in processing paper tax returns due to limited staffing. If you already filed a paper return, we will process it in the order we received it”. IRS UPDATE 8-13-2020 Hang in there! The returns will be processed, and refunds issued. It is just going to take some time.
New services
Over the next few weeks and months we will be introducing a few new services. In response to many of your calls, we are partnering with a Human Resource management consultant to assist with answering questions on hiring practices, benefits, employee manuals, etc. We are excited to step into a new service space.
We are also introducing a new real estate assessment tool. The tool is designed to assist clients who own residential and commercial real estate when analyzing investment return, tax consequences of a real estate sale, alternative investment strategies and tax remediation strategies. We can also assist homeowners determining tax on their principal residence and ways to mitigate tax where applicable.
We love working for you!
Stay safe,
Shawn Sumrall and the Badger, Sumrall Team