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August 2020

TXCPA Committee Recommends Suspending All IRS Notices

TXCPA’s Federal Tax Policy Committee sent a letter to IRS Commissioner Charles Rettig expressing concerns and offering suggestions for dealing with the mail backlog resulting from the pandemic and strategically targeting the timing and content of notices to improve taxpayer service. The committee recommends that the IRS suspend “all” notices – not just CP501, CP503 and CP504 – to allow for processing of existing, potentially responsive, correspondence and payments, and to allow taxpayers to use proof of delayed receipt of any notices during this pandemic as evidencing reasonable cause for abating any related penalty.

https://www.tscpa.org/docs/default-source/comment-letters/federal-tax-policy/2020/irs-mail-backlog-8-28-20.pdf?sfvrsn=381bddb1_2 


New PPP Forgiveness Guidance for Treatment of Owners and Forgiveness of Certain Nonpayroll Costs

By Susan Roberts, CPA-Fort Worth, CGMA, CLA

 

The Small Business Association released a new interim final rule that has some limited, but critical new guidance:

  1. The owner-employee rules are not applicable to owner-employees with less than a 5% ownership stake in a C- or S-corporation. Owner-employees with less than a 5% ownership stake should be included in either Table 1 or Table 2 of Schedule A and use the amounts paid during the covered period, not 2019 earnings.
  2. Related party rent is eligible for forgiveness, but only to the extent that it represents the mortgage interest owed on the underlying property. So, if monthly rent is $5,000 and monthly mortgage interest on the building is $3,000, only $3,000 of the rent would be eligible for forgiveness. This is a treatment consistent with what we thought might be the case. The guidance also reiterates the requirement for the lease and the underlying mortgage to be in place as of Feb. 15, 2020.
  3. With respect to sub-leases, shared rent and home-based businesses, amounts related to sub-leases or tenants are not eligible for forgiveness. There are a few specific examples given:
    1. A lease for $10k per month with a sub-lease for $2,500 per month, only $7,500 per month is eligible for forgiveness.
    2. If a borrower owns a building subject to a mortgage and leases a portion of the building to a third party, only a portion of the mortgage interest related to the borrower occupied space will be eligible for forgiveness.
    3. If a borrower shares a rented space with another business, only the rent and utilities prorated in the same manner as on the borrower’s 2019 tax filings are eligible for forgiveness.
    4. For home-based businesses, costs eligible for forgiveness are limited to the share of expenses that were deductible on the borrower’s 2019 tax filings.

https://www.sba.gov/sites/default/files/2020-08/PPP%20IFR%20-%20Ownership.pdf

https://www.journalofaccountancy.com/news/2020/aug/ppp-forgiveness-guidance-addresses-owner-employee-compensation-rent-costs.html

 


IRS Web Options

IRS.gov has numerous online options to assist tax professionals and their clients.

 

 

  • Taxpayers can check the status of their economic impact payment at Get My Payment.

 

  • Taxpayers who previously have been issued an identity protection PIN but lost it must use the Get an IP PIN tool to retrieve their numbers. Taxpayers who have an IP PIN need to provide it when they file their return or if they are using the non-filer tool to enter their economic impact payment information.

 

 

 

  • Get Transcript, view a transcript online and print it. Tax transcripts are currently only available online.

 

  • Direct Pay, make tax payments or estimated tax payments directly debited from a checking or savings account.

 

 

 

 

  • The Interactive Tax Assistant can help answer tax law questions. Currently, there are no email options that will generate answers to questions posed by taxpayers.

 

 

 


Pending Check Payments and Payment Notices

The IRS has indicated that if a taxpayer mailed a check (either with or without a tax return), it may still be unopened in the backlog of mail the IRS is processing due to COVID-19. Any payments will be posted as the date the IRS received them rather than the date the agency processed them. To avoid penalties and interest, taxpayers should not cancel their checks and should ensure funds continue to be available so the IRS can process them.

 

The IRS is providing relief from bad check penalties for dishonored checks received between March 1 and July 15 due to delays in processing. However, interest and penalties may still apply.

 

Due to high call volumes, the IRS suggests waiting to contact them about any unprocessed paper payments still pending. See www.irs.gov/payments for options to make payments other than by mail.

 

https://www.irs.gov/newsroom/irs-operations-during-covid-19-mission-critical-functions-continue