In a letter to the IRS and Treasury, the AICPA recommended, in light of the ongoing COVID-19 pandemic, that the IRS implement fair, reasonable and practical penalty relief measures, including targeted relief from both the underpayment-of-estimated-tax penalty and the late-payment penalty for the 2020 tax year.
Advocacy & Tax Relief
Dependent care assistance program benefits carried over or available during an extended claims period under special temporary COVID-19 relief provisions retain their status as excludable from employees’ gross income and wages, the IRS explains in a notice.
Here’s a look at changes affecting 2020 and 2021 that were included in Congress’s stimulus legislation.
The IRS issued guidance on the amount of and limitations on the child tax credit, earned income tax credit, and premium tax credit available for taxpayers for the 2021 tax year as a result of changes to those provisions enacted by the American Rescue Plan Act of 2021, P.L. 117-2.
The IRS issued guidance on a safe harbor permitting qualifying taxpayers who have PPP loans, who did not deduct expenses related to those loans paid or incurred in 2020 on their 2020 returns, to deduct the expenses on their returns for the immediately subsequent tax year, instead of on an amended return or administrative adjustment request for the 2020 tax year.
The IRS provided for penalty relief under Sec. 6656 for an employer’s failure to timely deposit certain employment taxes with the IRS to allow employers to immediately take advantage of various credits enacted in response to the COVID-19 pandemic.
The AICPA has released some recommendations for practitioners concerning various issues that have arisen due to the postponement of the April 15 tax deadline for individuals.
The IRS issued guidance on the temporary rule that allows a 100% deduction for eligible restaurant meals in 2021 and 2022.
Rep. Lloyd Smucker, R.-Pa., announced he will introduce a bill that pushes back the due date for first-quarter 2021 estimated tax payments from April 15, 2021, to May 17, 2021. The AICPA expressed its support for the bill.
The IRS issued guidance on how to claim the employee retention credit for the first and second quarters of 2021. It will issue guidance on the employee retention credit from July 1 to Dec. 31, 2021, provided in new Sec. 3134, at a later date.
A bipartisan group of 60 members of Congress wrote the IRS, urging that the deadline for first quarter 2021 federal estimated tax payments be postponed until May 17.
The IRS issued a notice providing more details and clarification of its previously announced postponement of the April 15 tax deadline for individuals. The notice extends the date for making 2020 IRA contributions; however, it does not extend the date for estimated tax payments.
The IRS announced that purchases of personal protective equipment used to combat the COVID-19 pandemic qualify for the Sec. 213 medical expenses deduction to the extent they exceed 7.5% of a taxpayer’s adjusted gross income and have not been compensated for by insurance or otherwise.
The IRS has postponed individual returns’ due date to May 17, but June 15 remains a more appropriate date for many reasons, the AICPA says.
The IRS announced that it is postponing the April 15 deadline for individual tax returns and payments. The postponement applies only to individual taxpayers. Formal guidance is expected in the near future.
The American Rescue Plan Act’s $350 billion in “fiscal recovery” aid to states comes with a big string attached — the states may not use the money to offset new tax credits or other revenue reductions.
The U.S. House of Representatives voted 415-3 Tuesday night to extend the Paycheck Protection Program application deadline by 60 days. The PPP Extension Act of 2021 moves the PPP application deadline from March 31 to May 31 and allots an additional 30 days for processing applications received by May.
In a letter dated March 15, the AICPA asked for IRS guidance on how S corporations and partnerships should treat tax-exempt income from PPP loan forgiveness, especially when it occurs during a different tax period.
The bill contains numerous tax provisions, including a $1,400 rebate for individuals. It also extends federal unemployment benefits and provides funds for small businesses, COVID-19 vaccination and testing, K-12 schools and colleges and universities, and state and local governments.
The $1.9 trillion coronavirus relief bill that passed Congress contains many tax provisions, including changes to the child tax credit and many other credits, making certain unemployment benefits tax-free in 2020, and a $1,400 recovery rebate credit for many individuals.