Updated Guidance and Resources from the IRS

2020 National Tax Security Awareness Week – November 30 through December 4

The IRS, state tax agencies and the nation’s tax industry announced their 5th Annual National Tax Security Awareness Week will take place between November 30 and December 4.

This year there’s a heightened need for security as fraudsters seek to use the COVID-19 pandemic to scam taxpayers and payroll community.

National Tax Security Awareness Week will feature a week-long series of 30-minute presentations for both individuals and companies.

Click here for more.

 


Technical Guidance for Paycheck Protection Program (PPP)

Revenue Procedure 2020-51 (click here) provides a safe harbor for certain Paycheck Protection Program (PPP) loan participants, whose loan forgiveness has been partially or fully denied. Also for those who decide to forego requesting loan forgiveness, they may be able to deduct some or all of the eligible expenses on:

  • The taxpayer’s timely filed, including extensions, original income tax return or information return, as applicable, for the 2020 taxable year
  • An amended return or an administrative adjustment request (AAR) under section 6227 of the Internal Revenue Code (Code) for the 2020 taxable year, as applicable.

For taxpayers who decide to forego requesting loan forgiveness, the safe harbor also allows these taxpayers to claim a deduction for the otherwise deductible eligible payments on an original income tax return or information return, as applicable, for the taxable year in which the taxpayer decides to forego requesting forgiveness.

Revenue Ruling 2020-27 (click here) provides guidance on whether a PPP loan participant that paid or incurred certain otherwise deductible expenses can deduct those expenses in the taxable year in which the expenses were paid or incurred, provided that if, at the end of that year, the taxpayer reasonably expects to receive forgiveness of the covered loan. The revenue ruling also provides guidance if, as of the end of the 2020 taxable year, the PPP loan participant has not applied for forgiveness, but intends to apply in the next taxable year.

 


Common errors to avoid when claiming employer tax credits

Employers who are filing Form 941, Employer’s Quarterly Federal Tax Return and claiming an employer tax credit should read the instructions carefully and take their time when completing the form to avoid mistakes.

This IRS Tax Tip (click here) covers:

  • Using a reputable tax preparer including certified public accountants, enrolled agents or other knowledgeable tax professionals
  • Mistakes can result in a processing delay or a balance due notice, which could mean a delay or require filing an amended return
  • Common mistakes to avoid when completing Form 941
  • Reporting advances requested instead of the advance payments of credits received
  • Incorrectly reconciling the advance payment of the credit requested and received
  • Requirements when using third-party payers or reporting agents
  • What third-party payers and reporting agents should also ask employers

 


Reminder: Work Opportunity Tax Credit extended

The Work Opportunity Tax Credit is a valuable tax credit available to employers who hire long-term unemployment recipients and others certified by their state workforce agency if the individual began or begins work for the employer after December 31, 2014, and before January 1, 2021.  Click here for more.