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In the IRS’s Progress Update, Fiscal Year 2020, “Putting Taxpayer’s First”, it released important statistics and Agency priorities. Here are some highlights from the 44-page report. Tax Returns and Forms processed, $242M Collected taxes, $3.5T Average Refund, $2,034 Revenue from Enforced IRS Collection Actions, $51.1B IRS hiring of internal and external employees rose by more than 100% Issued 81M Economic Impact Payments totaling almost $147B Released Notices informing business owners of new NOL carryback rules…
With legislation passed at the end of 2020, the IRS has officially reversed its prior guidance, Revenue Notice 2020-32, and will now allow federal income tax deductions for expenses paid with forgiven PPP loans. Previously, the IRS sought to avoid “double-dipping”, where if a taxpayer receives tax-free income (forgivable PPP loan proceeds), that taxpayer cannot also deduct expenses (expenses covered by the PPP loan proceeds) incurred in generating income. It is a long-standing principle of…
The Act includes several tax provisions that aim to provide relief to individuals and businesses impacted by the COVID-19 pandemic. Here are a few: Businesses Paycheck Protection Program (“PPP”): Forgiven PPP loans are not taxable income and have no effect on business basis for tax purposes. Deductions are allowed for otherwise deductible expenses that are paid with funds from a forgiven PPP loan, overturning the IRS’s previous guidance. Increased limits for corporations and charitable deductions.…
The Financial Crimes Enforcement Network (FinCEN) has been busy over the last 30 days. In its latest Notice, it indicates that FinCEN wishes to amend the foreign bank account reporting regulations. The changes would require U.S. citizens to report cryptocurrency accounts held with foreign institutions (foreign exchanges) if those accounts are more than $10,000 in value. This represents a significant shift in U.S. policy on the reporting of cryptocurrency positions. This change would apply to…
FinCEN has already issued proposed regulations that would require banks and money service businesses to submit reports, keep records, and verify the identity of customers for transactions involving cryptocurrency with legal tender status (legal tender digital assets) held in “unhosted”, non-custodial, wallets. The enhanced recordkeeping concerning non-custodial wallets would be triggered by cryptocurrency transactions in the amount of $3,000 or more. Notably, the period for public comment was lessened to 15-days by FinCEN, down from…
The IRS continues to experience delays mailing backlogged notices due to the volume and restart of issuing notices during the pandemic. This delay impacts some, but not all, IRS notices dated from November 9 to November 23, 2020. The impacted notices are those requesting payment for tax owed or notifying taxpayers of changes made to a tax return resulting in a different refund amount or tax owed. Each impacted notice mailed to taxpayers will include…
The IRS extends, until June 30, 2021, the period in which it will accept digitally signed and emailed documents due to the COVID-19 pandemic. While the IRS was shut down, millions of pieces of mail piled up in its mail room (they are still sifting through it). Because of this and other COVID 19 challenges, in August 2020 the IRS announced expanded the use of e-signatures as a way to make it easier to file…
Coinbase, one of the largest and most popular crypto exchanges, recently changed some of its third-party tax reporting rules for its users. The company used to issue annual 1099-K’s. These tax forms were issued to its crypto users who processed at least $20,000 worth of payments in a tax year, or at least 200 transactions for the previous tax year. Now, Coinbase reports that it will no longer issue 1099-K’s, but instead it will issue…
For many years, the Boyle rule established that the failure of a third-party accountant to file a tax return by its due date does not establish a taxpayer’s “reasonable cause” for the forgiveness of late-file penalties. But is the Boyle rule consistent with the realities of e-filing? For now, yes. In a 2020 Tax Court case, Padda, the court rejected a taxpayer’s claim that his accountant’s failure to electronically submit his tax returns on time…
Concerning the non-deductibility of expenses related to the Paycheck Protection Program (PPP), the IRS released updated guidance this month (November 2020). Under the new IRS guidance, a calendar year borrower who received a PPP loan in 2020, which loan has not been forgiven by the end of 2020, may not deduct expenses incurred with PPP loan proceeds if (i) the expenses are qualifying expenses under the PPP rules (i.e., qualifying payroll costs, mortgage interest, utility…