Tag Archives: national preparedness month

Tax Updates Mid September

 

September 15 Deadline Approaches

The IRS reminds taxpayers who pay estimated taxes that the deadline for their third quarter payment is September 15, 2023. This affects those taxpayers not subject to withholding, such as gig workers, sole proprietors, retirees, partners and S corporation shareholders. Those who expect to owe at least $1000 in taxes for 2023 after subtracting their withholding and tax credits must also pay. Taxpayers who are uncertain whether they are required to pay estimated taxes can use IRS tools to find out: Tax Withholding Estimator and the IRS Interactive Tax Assistant offer clear instructions. 

“Sweeping” Effort to Restore Fairness

The IRS announces “key changes” coming to reduce burden on average taxpayers and “restore fairness” to the tax system with Inflation Reduction Act funding. The agency will shift its focus from working-class taxpayers to the wealthy, using Artificial Intelligence to identify sophisticated tax-avoidance schemes. The IRS plans to ensure audit rates do not increase for those earning less than $400,000 a year and will expand compliance efforts in high-income/high wealth and partnership categories. Additionally, protecting all taxpayers from a variety of scams and schemes by raising consumer awareness on these issues will be a priority.

September – National Preparedness Month

The IRS reminds taxpayers that September is National Preparedness Month. With peak hurricane season just ahead, an updated emergency preparedness plan is key. 

Recommendations include the following:

  • Secure critical original documents inside water- and fireproof containers. This includes tax returns, birth certificates, social security cards, deeds, titles, and insurance policies. A duplicate copy of each can be stored with a trusted friend or converted into a digital file format and kept securely.
  • Keep a detailed inventory of property and business contents. Photos, videos, and written descriptions (including make and model numbers where applicable) are critical when documenting insurance claims or tax benefits. The IRS offers disaster loss workbooks for businesses and individuals to help compile such lists.
  • Reconstructing Records after a disaster may be required for getting federal assistance, insurance, or tax purposes. The IRS has tips for Reconstructing Records.
  • Employers using payroll service providers should check if their provider has a fiduciary bond in place to protect the employer against a possible provider default. The Electronic Federal Tax Payment System (EFTPS) used by many employers to make federal tax payments can be especially convenient when disaster displaces businesses or employees. An EFTPS account can be created here.

Late September IRS Updates

Improperly Forgiven PPP Loans are Taxable

The IRS has released guidance addressing improper forgiveness of Paycheck Protection Program (PPP) loans. When a PPP loan is forgiven based upon misrepresentations or omissions, the taxpayer is not eligible to exclude the forgiven loan proceeds from taxable income. Taxpayers who inappropriately received PPP loan forgiveness are encouraged to file amended returns and come into compliance. 

September 30 Deadline for COVID Penalty Relief

The IRS reminds struggling individuals and businesses affected by the pandemic that they may qualify for late-filing penalty relief if they file their 2019 and 2020 returns by September 30, 2022. This aims to help not only taxpayers but to allow the IRS to focus resources on processing backlogged tax returns in an effort to return to normal operations for the 2023 filing season. The relief applies to the failure-to-file penalty, usually assessed at a rate of 5% per month, up to 25% of the unpaid tax, when a return is filed late.

Victim Relief Abounds

  • Victims of storms and flooding that began on September 15 in parts of Alaska now have until February 15, 2023, to file various individual and business tax returns and make tax payments. This applies to those in FEMA-designated areas, currently the Regional Education Attendance Areas of Bering Strait, Kashunamiut, Lower Kuskokwim and Lower Yukon. 
  • Hurricane Fiona victims in all 78 Puerto Rican municipalities also have until February 15, 2023, to file various returns and make payments. 
  • Farmers and ranchers in applicable regions forced to sell livestock because of drought conditions have more time to replace their livestock and defer tax on any gains from the forced sales. This includes parts of 44 states, and generally applies to gains realized on the sales of draft, dairy, or breeding livestock. Sales of other livestock held for slaughter or sport, or poultry, are not eligible. More information is available in Notice 2022-43.
  • Look for much of Florida to be offered relief shortly. Updated localities are always available on the disaster relief page of IRS.gov.
  • Employers using payroll service providers should ensure their provider has a fiduciary bond in place to protect the employer against a possible default. Using the Electronic Federal Tax Payment System (EFTPS) to make federal tax deposits and business tax payments makes it easy and convenient to pay the government even when disaster displaces employees and businesses. Any business can create an EFTPS account.

Reconstructing records after a disaster may be required for tax or insurance purposes or getting federal assistance. For more information, visit National Preparedness Month.