Weekly Update – August 12th 2021
What sets the Delta variant apart from other strains of the COVID-19 coronavirus is the amount of virus produced by those infected, a measure called viral load. One recent study found that people with the Delta variant had viral loads up to 1,260 times as high as the original strain. Higher viral loads make the Delta variant more transmissible and can also make infected people sicker. However, the CDC has also found that vaccines protect people from serious illness, hospitalizations, and death.
I have seen that several businesses and offices have once again required their staff and customers to wear masks after relaxing the rules a bit, this, in an effort to combat the spread of the virus. We have maintained a mask requirement to enter our office, although most of our staff is vaccinated and working remotely. I actually ventured out yesterday with my husband/contractor and friend/decorator for a day of shopping for the tile, fixtures, cabinetry and hardware to finish one of our recently gutted bathrooms. Staff at most of the stores and showrooms wore masks, although most were vaccinated. I am so glad we were able to choose and order what we needed in just one day.
I keep connected by sharing photos and texting through group messages, today was no different; my kids and staff received photo’s and running commentary of the rejects and choices we made. We may just finish this house before the 25 year mark!
I guess this is the reason we want to stay here, even though we pay high real estate tax and NYS/NYC income tax, I Love NY!
THE AMERICAN RECOVERY PLAN ACT (ARPA)
Paycheck Protection Program (PPP)
Last week, the SBA opened a portal that allows businesses to apply for forgiveness of PPP loans of $150,000 or less directly. Lenders must agree to use the portal, or this simplified option won’t work for the borrower. While about 900 lenders have so far signed on, the big banks are opting out. Some lenders prefer to stick with their own forgiveness processes because they don’t want to confuse borrowers. The SBA’s poor track record with technology and buggy portals is making other lenders cautious. Other lenders are enthusiastic about the time they will be able to save by turning the process over to the SBA.
Employee Retention Tax Credit (ERC)
We accounting professionals have been asking for more guidance regarding the ERC and finally we received some guidance last Wednesday evening (Notice 2021-49 and IR-21-165) which seems to go against the intentions of the last few tax bills. Now we in the accounting and small business community need to reach out to our legislators who are the one who can make a difference. My friend Mark Stewart, CPA (NCCPAP National president) and I, as a concerned citizen, business advocate and Educational Foundation President of the N/S Chapter of NCCPAP wrote and distributed a position statement. This morning AccountingToday highlighted our concerns in their article, mentioning Mark and NCCPAP’s 2 tax chairmen. We urge you all email your legislators after downloading and customizing our statement (see below), adding your personal pandemic related business experiences and need for continued stimulus support. We have been able to affect change in the past, last do it again (please)!
This article posted by AccountingToday last week also indicates that congress may end this tax credit to help pay for the bipartisan infrastructure plan.
Monthly Advance Payments Towards the Child Tax Credit
Robert Brown, CPA (NCCPAP N/S Chapter President) and I (Educational Foundation President) have been working with our favorite and local IRS liaison to plan out an informational seminar on the Advance Child Tax Credit payments. We are looking to educate as many individuals as we can about the potential opportunity and pitfalls of the program. We feel there are many eligible families who are not aware of the program and do not know how to apply as well as many who are currently receiving these funds and will end up owing taxes in April 2022. Please watch for my social media posts inviting you to sign up and watch our panel discussion (we are hoping to be presenting by the end of August) .
Again please remember, if you want to opt out of future payments, you must use the IRS portal for the advance Child Tax Credit by the deadline for the next month’s payment. Check out the IRS FAQs where you’ll find everything you need to know about opting out in Section J.
At present, the portal only allows taxpayers to verify enrollment status, update banking information and to unenroll from payments. For more information, taxpayers should consult the IRS webpage for this credit.
Corporation Responsible Party Registration
Have you moved or has the leadership team at your organization changed since you applied for the Employer Identification Number (EIN) for your business? If so, you may be receiving a letter from the IRS prompting you to update the contact information and the responsible party for your organization. The IRS requires up-to-date information for a business’ responsible person for businesses in case of problems with tax administration or payment.
Notices with Incorrect Data
The US is a voluntary tax system, third party reporting keeps many on the straight and narrow, but many times even though we and the taxpayers work hard to make sure to include all reportable items some times items slip through the cracks. I was very disheartened to see a notice come through this week relating to the IRS questioning the reporting of stock and bond sales reporting. In the past these IRS notices were very accurate, a taxpayer might have an on line account and as such had not received their year end reportable sales information via paper copy. In that case, we would submit the missing sales and cost basis and if necessary, have the client pay any required payments. The notice my client received this week seemed to have a technical error, the IRS had not acknowledged that the tax return included both the short term and long term stock sales detail. I am glad to say that we were able to identify the problem and quickly resolve it in the client’s favor, but it is very scary to received one of these letters notifying you that you sold X dollars (in this case over $400,000) of securities and need to report and maybe amend your tax return.
Please be aware that the notices you receive may not be accurate and contact your tax professional immediately upon receipt so that they can help resolve the issue (hopefully as was the case for our client with no adverse tax consequences).
Backlog on IRS Filings
Most taxpayers are aware that the IRS backlog of 35 million pieces of unopened and unprocessed mail sent since the pandemic began is slowing the payment of refunds and processing of paper-filed returns and correspondence. Anyone who has tried to call the IRS has likely spent a frustrating time on hold or has been disconnected.
IRS Hotline Answering System, Persistence Works
Only 3% of people calling the IRS for help with their personal tax return have spoken with a representative. We tax professionals have access to a special hotline but most recently Raquel worked hard to get through the system and was successful.
There is also a backlog in the IRS process for approving third parties. We prepare and submit a power of attorney which enables us to speak with the IRS representative on your behalf. Processing these approvals has been taking three to six weeks instead of the IRS’ internal benchmark of five days. While the IRS recently opened an online portal for uploading those requests, the entire approval process is something of a black hole, and we are finding that a tax authorization has not been granted when we call into the IRS, hoping to resolve a tax matter.
REOPENING THE OFFICE
Many companies were confident that returning to the office in September would be the ideal timeframe. However, the resurgence of COVID-19, and especially the Delta variant, has them questioning those plans. Wells Fargo has already pushed its reopening date to October, and many other large corporations, including Amazon and Lyft, do not plan to bring people back until sometime in 2022. Some companies, such as Bank of America, are requesting that employees wear masks when not at their desks. Health advisory consultants are advising companies to reinstate the plexiglass barriers and wellness checks they used earlier in the pandemic.
Besides concerns about the Delta variant, one in three employees said that returning to the office had a negative impact on their mental health. That’s according a McKinsey survey performed in June. Nearly half of workers who were remote but scheduled to return anticipated a negative impact on their mental health, a challenge that employers will have to address when – and if – employees eventually do return. The biggest concerns of workers are their physical health and safety and losing the sense of autonomy they had when they worked remotely. Adding safety protocols such as regular COVID-19 testing, social distancing and mask wearing can help with the physical health concerns, while creating flexible and hybrid work options can help with the mental health concerns. Managers who adopt a flexible work option and who model a better work-life balance can help employees feel more comfortable in their choices.
The pandemic has made many question the tradition of a five-day, 40-hour work week, and some companies are experimenting with offering their teams a four-day work week (of course NOT during tax season) for the same pay as a way to ease employee burnout. While shorter work weeks have been contemplated in the U.S. since at least 1933, experiments in the U.S. and around the world have had uneven results. Some companies find that coordinating meetings and days off led to extra stress, while others have found an increase to productivity and employee well-being. Hourly workers may not be able to make ends meet with shorter hours. Some sectors, such as finance and law, have a culture of working late nights and weekends, so a shorter workweek may be a hard sell.
If you do need to return to the office, that might mean adjusting to getting up earlier in the morning in order to continue with the lifestyle perks you enjoyed while not commuting. Here are some tips for getting your sleep schedule back on track. For example, establish regular and consistent times to go to bed and to wake up. Another suggestion is developing a regular exercise routine to help with insomnia and no more “nightcaps” which are said to cause sleep interruptions.
July’s jobs report from the Labor Department showed hiring rising faster than any time since August 2020. While economists had been hoping for 845,000 new jobs, nonfarm payrolls rose by 934,000 during July, with unemployment dropping to 5.4%. Average hourly earnings also rose by 0.4% for the month, although those gains are uneven across industries. The leisure and hospitality sector, which has been hard hit by the pandemic, led in job creation by adding 380,000 positions. However, there seem to still be more jobs than job seekers: job placement site Indeed estimates there are 9.8 million job openings, but there are only 8.7 million considered unemployed.
A new moratorium on evictions from the CDC is aimed at hard-hit areas in an effort to buy more time for states and local areas to distribute $47 billion in rental assistance. Many landlords and tenants are not aware that funding is available. Tenants are being disqualified for problems completing their applications, and some landlords say the money has too many strings attached.
To attract workers, many companies are offering new hires higher wages. However, those higher wages for new employees can be nearly the same as the wages paid to long-term employees, this is known as job compression. Overall, job-switchers are receiving a 5.8% pay increase while those who have been in the same job are only gaining 3.1% in pay over the last year. This disparity is prompting many companies to study compensation across their organizations and to develop new compensation models that reward long-time employees for remaining loyal.
- IRS resources for stimulus payments:
- The best source for up-to-date and accurate health information is the Center for Disease Control (CDC)
- Our Covid-19 Resource Center with relevant blog posts, videos and prior weekly newsletters
- Payroll, HR and benefits company Gusto has put together An Employer’s Guide to Navigating the Coronavirus
- Accounting Today has a special page for articles on COVID-19
- Intuit QuickBooks has a dedicated page to help small businesses
- Entrepreneur put together a listing of free tech resources for remote work
- The Consumer Financial Protection Bureau has warnings about COVID-related scams
- Fast Company has a listing of the best productivity apps for 2020
- The New York Times has an online newsletter on K-12 and higher education
- The Wall Street Journal has a collection of articles on education
- The Louvre has digitized 482,000 artworks from its collection
- PC Magazine explains how to carry your vaccination card on your phone
- How to create a strong password
We sincerely hope that you and your family are well and remain well. If you have any questions or concerns, don’t hesitate to reach out to us. We are all in this together!
Complementary Discovery Session
If you need help with your accounting, want to create a tax minimization plan, want to discuss your business growth plan or your finances, are concerned about retirement goals or need to be held accountable for your 90 day action plan, contact us for a complimentary discovery session or an appointment to just get started.