The IRS now allows taxpayers to view their Economic Impact Payment amounts online, if any, by using their online account. Online account is an online system that allows taxpayers to securely access their individual account information. Taxpayers can view:
The amount they owe, updated for the current calendar day
Their balance details by year
Their payment history and any scheduled or pending payments
Key information from their most recent tax return
Payment plan details, if they have one
Digital copies of select notices from the IRS, and
Their Economic Impact Payments (EIP 1 and EIP 2), if any
See payment plan options and request a plan via Online Payment Agreement, &
Access their tax records via Get Transcript. The amount of the Economic Impact Payment is needed when calculating the amount of the taxpayer’s Recovery Rebate Credit for 2020.
Warning. Taxpayers must first create an account with the IRS before accessing any information. Tax professionals are not allowed to access or create an account for their tax clients. The taxpayer must create his or her own account and is the only person allowed to access the information, even if the client provided their information to the tax professional to create or access an account, or consented to use their information to create or access the account. Unauthorized use of the online account system is prohibited and subject to criminal and civil penalties.
Foreign Bank and Financial Accounts (FBAR) Filing Requirement for Virtual Currency: Virtual currency is a digital representation of value that functions as a unit of account, a store of value, or a medium of exchange. Some virtual currencies have an equivalent value in real currency or act as a substitute for real currency. Generally, a U.S. person who has a financial interest in, or signature or other authority over, any foreign financial accounts, including bank, securities, or other types of financial accounts located in a foreign country, must file an FBAR with the FinCEN if the aggregate value of those foreign financial accounts exceeds $10,000 at any time during the calendar year. Currently, the FBAR regulations do not define a foreign account holding virtual currency as a type of reportable account . However, FinCEN intends to propose to amend the regulations regarding FBARs to include virtual currency as a type of reportable account under 31 CFR 1010.350. FinCEN Notice 2020-2.
Thank you to NCCPAP and Bruce Oberfest, member of the Westchester/Rockland Chapter, for bringing this to our attention.
The Tax Cuts and Jobs Act, P.L. 115-97 keeps on giving! Relief for small business! Proposed Regulation 132766-18 was issued in July. It addresses the TCJA changes dealing with who can use the cash basis of accounting for tax purposes.
TCJA simplifies recordkeeping for “small business”. If a business has average annual gross receipts of $25 million or less the cash method of accounting may be used for tax purposes (adjusted for inflation to $26 million for 2019 and 2020) (Sec. 448(c)). Also, uniform capitalization to inventory is not required (Sec. 263A), immaterial inventory can be treated as supplies and materials (Sec. 471 (c)), and the percentage of completion method of accounting for long term construction contracts is not required (Sec. 460(e)).
Average annual gross receipts amount is computed using the gross receipts for the three years preceding the tax year in question. Caution, aggregation rules apply at 50% or more common control. Filing a change in accounting method is required.
Not So Fast!
These benefits are not allowed for “tax shelters”. The definition of tax shelters is broad. It includes any non-C corp entity where more than 35% of losses in any tax year are allocated to owners who do not actively participate in management. This includes syndicates. Care is advised because a change in accounting method may generate a loss causing the entity to be classified as a tax shelter. Once this happens the taxpayer will be locked into the accrual method for five years.
Some things don’t change!
Sec 448(c) provides that qualified personal service corporations, farming businesses, partnerships with no C corp partners, and S corps generally can continue to use the cash method regardless of the gross receipts test as long as they are not “tax shelters”.
Conflicts between code sections have arisen and will require additional clarification.
Wednesday night 6/3/20, the Senate passed House bill HR 7010 which provides relief for PPP loan payback. The 8 week period is extended to 24 weeks. The payroll cost percentage is now 60% as opposed to 75%. Payback period for loan is now 5 years instead of 2. Business may now delay payroll tax payments.
The bill now goes to the President for signature. More to come!
Tax pros should review new checklist with steps to protect data
Despite major progress against identity and data theft, these threats
still happen. They continue to put tax professionals and their clients
at risk. To help combat this, the IRS and its Security Summit partners
created a new Taxes-Security-Together Checklist. The checklist includes
things tax pros can do now to prevent and recognize data theft. It also
gives steps tax preparers can follow if they do experience a data
Following this checklist is a great starting point for tax
professionals who want to protect their offices, computers and data.
This tax tip is the first in a series highlighting the items in this
Here’s a rundown of the Taxes-Security-Together checklist:
Follow these steps, known as the “Security Six” measures
Activate anti-virus software.
Use a firewall.
Use two-factor authentication.
Use backup software or services.
Use drive encryption.
Create and secure virtual private networks.
Create a data security plan
Federal law requires all professional tax preparers to create and maintain an information security plan for client data.
The security plan requirement is flexible enough to fit any size of tax preparation firm.
Tax professionals should focus on risk areas. These include employee management and training, information systems, and detection and management of system failures.