I’d like to start off this article by addressing a few of the conditions we as employees, owners, and citizens are experiencing in our daily lives and our employment situations, and how that relates to this article and the article published in our last newsletter. As I review my last article which was published on February 14, 2020, I note that within the conclusion I was to have delivered this article the following month. Moreover, as we now know, worlds can change in such a short period, and one month has now turned into three months as a result of the Covid-19 Pandemic. What traditionally would have been the conclusion of our busy tax season and our well-earned vacation time or time to recharge our batteries has morphed into the undertaking of unusual assignments from our clients, and not just any clients but many of our more financially secure clients and those within the medical industry.
The Coronavirus Aid, Relief and Economic Security (CARES) Act contains provisions that make it easier to withdraw funds in certain tax-advantaged retirement accounts like 401(k)s and traditional Individual Retirement Accounts (IRAs). These temporary changes eliminate tax penalties on certain early withdrawals and relax rules on loans from some types of accounts with the objective of helping Americans deal with the financial fallout of the coronavirus outbreak. The CARES Act also waives RMDs for 2020.
Due to the COVID-19 pandemic, the IRS was unable to mail some previously printed balance due notices as a result of office closures. As IRS operations continue to reopen, these notices will be delivered to taxpayers in the next few weeks.
Some of the notices may reflect due dates that have already passed. The IRS assures taxpayers the due dates have been extended to July 10 or July 15, 2020, depending on the type of tax payment and original due date. The correct due date will appear on an additional insert mailed with each notice. Taxpayers who have questions can call the number provided on their notice.
As many businesses have been affected negatively across the nation due to the effects of the Coronavirus, there are a number of payroll tax benefits resulting from the CARES Act that have become available to help employers during this difficult time.
One option for employers, found in Section 2301 of the CARES Act, is the Employee Retention Credit. The purpose of this credit is to encourage employers to keep employees on the payroll, even if they are not working during the applicable period due to the effects of the coronavirus outbreak. This credit is a fully refundable tax credit against certain employment taxes equal to 50 % of the qualified wages an eligible employer pays to its employees after March 12, 2020, and before January 1, 2021.
Who qualifies for the credit?
You’ve done it! You navigated the application for a loan under the Payroll Protection Program (PPP), you’ve gotten your loan and are even well along the way to substantiating that all or a portion can be forgiven. All is right with the world, so it seems. Perhaps not ALL.
Among the many far-reaching effects of the pandemic is the immediate effect it is having on financial statements and the way accountants need to audit them.
The AICPA recently issued two Special Reports about these matters to help management and their accountants react to some of the special challenges presented by today’s challenging business environment. Here is a summary of the comments.
Valued Clients and Friends,
Our office is still considered to be open in this uncertain time but, in the event of any office closures mandated by the federal or state government, we would like you to know that we have the technological capabilities to work remotely to continue to meet your tax and accounting needs.
We will continue to monitor the recommended measures from the Center for Disease Control and our state and local governments. We have been working closely with our team members about how to properly practice respiratory etiquette & hand hygiene. Anyone not feeling well is encouraged to stay home. To protect everyone’s health our team members are also trying to limit client interactions within the office during this time.
We encourage you, our clients, to submit your information to us in the following ways, when possible.
- Our secure file exchange (tax portal) located on our website. Instructions to register for the portal can be obtained by emailing your accountant.
- Our share safe file exchange, now located at the bottom of your accountants email. This link will allow you directly upload files us in a secure setting. We also will be able to send you information / returns / work product back via the same method. If you do not have the link please email your accountant.
- US mail, UPS, Fedex, etc.
We feel that it is our obligation to protect the health and welfare of you, our staff and our families. We would like to thank you, in advance, for your cooperation and understanding as we navigate this pandemic together.
CAPALDI REYNOLDS & PELOSI, P.A.
I just don’t seem to be writing as many checks as I used to. And I don’t want the panic of being on vacation with no checkbook when my estimated taxes are due. The solution that works for me is to schedule my estimated tax payments to come directly from my bank account on the appropriate dates. No more checks getting lost in the mail or visits to the post office if the payment needs to be sent by certified mail. Now I just have to be sure that come the due dates there are sufficient funds in my account. These are not the only way to pay taxes, but they are free and easy ways to schedule payments in advance of the due date.
Late last year, Congress passed bipartisan tax legislation that President Trump promptly signed into law on December 20, 2019. The legislation included the “Setting Every Community Up for Retirement Enhancement (SECURE) Act”, which is mainly intended to expand opportunities for individuals to increase their retirement savings. The awkwardly named Act, which went into effect on January 1, 2020, introduces many significant changes that may affect you, your family, and your estate.
As professionals, when our clients ask us this question as it relates to helping them design a “Compensation Plan” for their businesses, we recognize the sensitivity of the topic and before we can answer them, we understand there is a fact-finding mission that must be undertaken. During this assignment, we know that the measurement of quantitative metrics will come into play, but we are also keenly aware of the fact that qualitative inputs fit into the equation and those inputs can’t be measured in a traditional manner, similar to the quantitative efforts of employees. Thus, as we go through our consulting engagement, we always have to keep in mind and be cognizant of the human emotions that may ultimately be encountered when helping to formulate this Plan. In the following sections, I would like to outline how we would go about discussing this topic with our clients, and how it can be boiled into a bonus payment plan within a professional business environment.