Lawsuits have already been filed on processing the claims over the long and excessive delays. What can taxpayers do? Call their Congressional Representatives which have been inundated with calls or bring a refund suit? How about the Taxpayer Advocate? It is still not clear, what the best course of action should be.

The IRS also issued 7 warning signs for questionable ERC claims in IR-2024-39. The suspicious signs include:

1. Too many quarters being claimed. Employers, did you meet the eligibility for each and every quarter?
2. Government orders that don’t qualify. Document, document, document! In some cases, the IRS has been seeing cases where the promoters supply generic narratives about “governmental orders” which is not enough.
3. Too many employees and wrong and erroneous calculations. Check the numbers!
4. Businesses citing supply chain disruption issues, be careful to follow IRS announcements in this area.
5. Businesses which overstate the qualifying wages for specific tax periods. Payroll records should be maintained to support the claims.
6. Businesses that did not pay wages or did not exist during the period claimed.
7. Be on high alert if your promoter claimed there was nothing to lose.
8. The IRS is going after both taxpayers claiming the credits and promoters who took part in the erroneous claims.

The Extension of Deadlines

Due to the severe winter storms, flooding, and mudslides that occurred at the start of 2023, the IRS announced tax relief for affected individuals and businesses in California. This announcement extended the deadline for filing individual and business tax returns and making tax payments to October 16, 2023. This extension applies to taxpayers across most counties in California.

What is a Failure-to-File Penalty?

A failure-to-file penalty is assessed when your return is filed after the due date (usually April 15^th for personal income tax returns) or extended due date (when you request a filing extension).  It is calculated at 5 percent per month up to a maximum of 25 percent of the tax liability.  So, the higher your tax liability, the higher the dollar amount of the penalty.  This can add up to thousands of dollars, plus the interest charged on the penalty.

tax problem resolution tool. Taxpayers eligible for an OIC suffer from financial hardship that makes paying the total amount owed and financially surviving impossible. For many, an OIC offers the only path to eliminating tax debt and becoming solvent.

However, the OIC program has come with a requirement that devastates taxpayers living on the edge: They must agree to forfeit a tax refund upon which they depend.

The bottom line is Taxpayers still have until October 15^th to file their FBAR.

The Internal Revenue Service issued a notice on April 9^th  reminding U.S. citizens, resident aliens and any domestic legal entity that the deadline to file their annual Report of Foreign Bank and Financial Accounts (FBAR) is still April 15, 2021. The extension of the federal income tax filing due date and other tax deadlines for individuals to May 17, 2021, does not affect the FBAR requirement.

This could cause many Taxpayers to inadvertently file their FBAR late. The deadline to file the FBAR was changed several years ago to coincide with the deadline for filing individual tax returns in an effort to assist with compliance. With this most recent extension, however, it puts individuals at risk of late filing, since the deadlines are no longer on the same date. Interestingly, in past years the IRS granted an automatic extension of time to file FBARs to October 15^th for FBARs, but there is no mention of the automatic extension in the IRS notice.

At the time of this writing it appears that there was still about $130 billion in loans still available. With an average loan size (the precise number keeps changing) of about $110,000 that means that up to about another 1.2 million businesses could take advantage of the PPP loan program.

If handled properly, the loan will be forgiven by the government. Therefore, it is essentially a grant by the government. When the loan is forgiven there will no discharge of debt income to take into account. However, businesses will be unable to deduct expenses paid with the forgiven loans on their income tax returns.

• Annual “cash” payroll costs are capped at $100,000 per employee. While this is not news, the SBA calculates that this amount on a pro-rata basis for the 8 week “Covered Period” is $15,385. If you do the math, that is equal to 8 weeks per year divided by 52 weeks multiplied by $100,000. Some were hoping that those on a semi-monthly pay schedule could use a larger amount based upon 24 pay periods per year. Apparently not.
• Alternative Payroll Covered Period. The Covered Period is generally eight weeks (actually 56 days) beginning on the date the loan is first funded. The Alternative Payroll Covered Period is only for employers with bi-weekly or more frequent payroll schedules. Therefore, it doesn’t appear to apply to employers who pay semi-monthly. It begins on the on the first day of the first payroll period following the PPP Loan Disbursement Date and ends 56 days later.  The following example is provided:  Alternative Payroll Covered Period: “… if the Borrower received its PPP loan proceeds on Monday, April 20, and the first day of its first pay period following its PPP loan disbursement is Sunday, April 26, the first day of the  Alternative Payroll Covered Period is April 26 and the last day of the Alternative Payroll Covered Period is Saturday, June 20.”  This suggests that one cannot include payments for a payroll period that begins before the PPP Loan Disbursement Date but is paid after that date. However, that is inconsistent with the Press Release issued concurrently by the SBA which states that the form and instructions provide “Flexibility to include eligible payroll and non-payroll expenses paid OR incurred during the eight-week period after receiving their PPP loan.” (emphasis supplied).  See more below.

“Capital improvements must substantially improve your home,” explains Dennis Brager, a certified tax specialist with Los Angeles-based Brager Tax Law Group. “Kitchen and bathroom remodels, room additions, modifications for an elderly parent would all qualify…” This is in regards to answering how to use your cash-out refinance money so it’s tax-deductible

Read full article here

The importance of the memo is that while it mostly repeats and fleshes out the People First Initiative, it is a direct “order” from the head of SBSE Collection to all Collection Executives. The People First Initiative is a bit more nebulous in terms of its actual impact on the activities of rank and file employees.  The collection activities outlined in the memo include most activities related to the collection process such as meeting with taxpayers, filing new Notices of Federal Tax Liens (NFTL), issuing levies, taking or scheduling seizures actions, and pursuing civil suit proceedings. Automated tax levy programs are also suspended. The memorandum also directs Collections not to default installment agreements for missed payments due between April 1 and July 15, 2020 (the suspension period).  Due to the ongoing and ever changing nature of the COVID-19 epidemic in the United States, the IRS may extend the suspension period and the incorporated relief provisions further.

It is important for taxpayers and their advisors to remember that even though collection enforcement activity will be rare from now through July 15^th, once the suspension period ends the IRS may begin filing liens and levies with a vengeance. Our tax lawyers are therefore recommending to our clients that, to the extent practicable, they position themselves to take appropriate action to forestall collection after the suspension period ends. This includes submitting offers in compromise, and requesting installment agreements now.