SSA wage base increases for 2022
The maximum amount of an individual’s taxable earnings in 2022 subject to Social Security tax is $147,000, the Social Security Administration (SSA) announced. An increase from $142,800 for 2021, the wage base limit applies to earnings subject to the tax, known officially as the old age, survivors, and disability insurance (OASDI) tax. Because the OASDI tax rate is 6.2%, an employee with total wages from an employer at or above the maximum in 2022 will pay $9,114 in tax, with the employer paying an equal amount. The Medicare hospital insurance tax of 1.45% each for employees and employers has no wage limit and is unchanged for 2022.
The SSA also announced a cost-of-living adjustment (COLA) for benefits payable in 2022 of 5.9%, compared with a COLA increase for 2021 of 1.3%.
IRS Chief Counsel outlines R&D credit refund requirements
In Chief Counsel Memo 20214101F, highlighted by IRS News Release IR-2021-203, the IRS Office of Chief Counsel delineated the information taxpayers must provide to establish a valid claim for refund of a credit for increasing research activities, or research and development (R&D), under Sec. 41. Specifically, taxpayers must identify all business components to which the claim relates for that year. For each business component, they must identify all research activities performed, all individuals performing each activity, and all information each individual sought to discover. They must also provide the total qualified expenses for employee wages, supplies, and contract research for the claim year. The memo also described the format in which the information must be submitted and discussed the limitation periods for submitting claims. The AICPA has askedthe IRS (see comment letter) to delay implementation of these requirements beyond the planned end of a “grace period” on Jan. 10, 2022, to allow adequate time for comment and response.
6-year limitation period applies to entire return
In Chief Counsel Advice (CCA) 202142009, the IRS Office of Chief Counsel advised that the extended six-year statute of limitation on assessment under Sec. 6501(e)(1)(C) applies to an entire return, not just to items related to Subpart F income where those items were omitted from the return. The CCA also concluded that an agreement to extend the period of limitation for assessment under Sec. 6501(c)(4) did not also extend the limitation period for filing a claim for credit or refund when the agreement was entered into after the credit or refund limitation period under Sec. 6511(a) had expired but before the expiration of the six-year assessment period.