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Delayed Tax Refunds

July 7, 2021

If you’re one of the millions of Americans waiting patiently for your 2020 federal tax refund, I sympathize with you. This tax filing season has been one like never before and I am hearing from many of you wondering why you haven’t received your payment yet. There are several reasons for the delays, but I can assure you that your return was prepared with the utmost care and expertise, and it is likely part of the sizable IRS backlog of returns.

As of June 5, the IRS reported there are more than 18 million 2020 returns in its pipeline to be processed, and a few million others yet to be finalized from 2019. This past year has been extraordinary, the least of which being the COVID public health crisis and widespread unemployment. In addition, a series of stimulus payments from the federal government to help people navigate COVID financial woes was also managed by the IRS, and to ensure all eligible citizens received stimulus money, the IRS told Americans that everyone should file a tax return. Between more returns, unemployment amendments, issuing stimulus money and processing regular returns, the IRS has had its work cut out for it. Like many businesses during the pandemic, the IRS also had obstacles to overcome like switching its workforce from onsite to virtual and operating with a reduced staff.

If you have not received your refund 21 days after filing, it is likely that it is under further review. This happens more frequently when a return includes a recovery rebate credit, suspicion of identity theft or fraud, a claim for an earned income credit or other criteria that will ping a return for a manual review.

If you receive any correspondence from the IRS regarding your return, please contact me with a copy of the letter you received, and I can guide you through that. Unfortunately, due to the delays in processing, some notices are being sent by the IRS despite timely follow-up by you, or myself on your behalf. At this point, I am as powerless as you to speed up the IRS process, so patience is our best option right now.

I will keep you updated with all important news from the IRS that may apply to your situation. Thank you for your trust in me as your tax return professional and I look forward to serving you in the future.

WARNING: IRS Economic Stimulus Scams

There are new Stimulus Payment scams being sent to taxpayers. Be on guard and do not fall victim to these scams. They come via email or phone calls and appear to be real (see image to the right).

The U.S. Department of the Treasury, the Internal Revenue Service (IRS), and the United States Secret Service (USSS) urge all Americans to be on the lookout for criminal fraud related to these economic impact payments—particularly fraud using coronavirus lures to steal personal and financial information.

Always remember, the IRS will not call, text, email, or contact you on social media asking for personal or bank account information—even related to the economic impact payments.

Be suspicious of email with attachments or links claiming to have special information about economic impact payments or refunds.

Paycheck Protection Program Loan Forgiveness

Paycheck Protection Program (PPP) borrowers may be eligible for loan forgiveness if the funds were used for eligible payroll costs, payments on business mortgage interest payments, rent, or utilities during either the 8- or 24-week period after disbursement.

Click here to download the Small Business Association document on how to apply for loan forgiveness.

IRS fights fraud aimed at charities-joins international awareness week

The IRS issued the following release this week in regards to International Charity Fraud Awareness Week, Oct. 19-23.

The Internal Revenue Service is combating fraud by once again joining organizations around the world to highlight the third annual International Charity Fraud Awareness Week, Oct. 19-23.

International Charity Fraud Awareness Week (ICFAW) brings together everyone involved in the charity and not-for-profit sectors to raise awareness of and share good practices for tackling fraud and cybercrime. This award-winning campaign is led by a coalition of over 40 charities, regulators, law enforcement organizations, representative and umbrella bodies, and other not-for-profit stakeholders.

The IRS is partnering with ICFAW as part of its ongoing commitment to fight fraud against charities, businesses and individuals.

All charities are susceptible to fraud and can be targeted. Those providing services and supporting local communities may be especially vulnerable to fraudsters attempting to exploit the current pandemic or weather-related disasters. More than ever, charities need to be fraud aware and take steps to protect their money, people and assets from harm.

“Especially during these uncertain times, it’s vital for everyone to remain vigilant against fraud, identity theft, scams and schemes,” said IRS Director of Exempt Organizations and Government Entities, Margaret Von Lienen. “Cybercriminals are always on the lookout for new opportunities, and COVID-19 is just one more chance to take advantage of unsuspecting individuals and charities. This campaign provides resources that can help protect charities and other organizations.”

This year’s campaign has three core messages: be fraud aware, take time to check, and keep your charity safe.

The ICFAW Charity Fraud Hub features helpful documents, free tutorials, videos, case studies and on-demand webinars, including, ‘COVID-19 and charity fraud: what to watch out for and how to stay safe.’ Charities and anyone else interested in fighting fraud can also take part in the ICFAW social media campaign using #charityfraudout.

Those encouraged to participate in the week’s activities include:

  • Trustees, staff and volunteers from charities, non-government organizations, and non-profits
  • Organizations that represent the interests of non-profits
  • Accountants, auditors and those acting as professional advisors to non-profits
  • Regulators, law enforcement officials and policymakers working to safeguard non-profits

In addition to crooks who target charities, those who create fake charities are a problem for the non-profit community. In fact, fake charities are once again part of the IRS’ “Dirty Dozen” tax scams for 2020. Taxpayers can find legitimate and qualified charities with the Tax Exempt Organization Search tool on IRS.gov.

Visit the Fraud Advisory Panel website to learn more about ICFAW and how to get involved.

Source: IRS Issue Number:    IR-2020-235

 

IMPORTANT UPDATE ON COVID-19 FROM JANET SIENICKI

To our clients,

Our office has been locked down since March 14, 2020 for our client and employee safety due to concerns regarding COVID19.  Although we are closed to the public, we are open as an essential business designated by Indiana Executive Order 20-08 dated March 23, 2020.

Please know that our standard policy is no employee may work in our office sick.  We have extended that policy this year to include additional employee absence to allow for self-isolation.  This, in addition to the new processing we have had to implement has caused an additional amount of time to process all tax returns and we appreciate your patience.  The Treasury Department has changed the filing and payment date for certain 2019 tax filings to July 15, 2020 to allow for the processing issues of this tax season.  However, we continue to work diligently, as our staff availability permits, to finalize all returns as quickly as possible.

We continue to conduct business with our clients through online, email and phone services, without the need of in-person interaction.  We can wait until it is safe for any face-to-face meetings if that is required.

Please know we appreciate and care about our clients.  Stay safe & healthy!

Sincerely,

The Staff of Janet M Sienicki EA, ABA

Corona Virus Update-Helping Small Businesses

On Friday, President Trump signed into law the Senate’s coronavirus emergency relief package, known as the Coronavirus Aid, Relief, and Economic Security Act (CARES Act). To better explain the CARES Act, and the relief it will provide, Senator Todd Young’s team created a comprehensive toolkit that outlines what assistance is available and answers many frequently asked questions. The first I want to share is how to help small businesses. Here is what he outlined from the CARES Act:

Employee Retention Credit

  • Provides a refundable payroll tax credit for 50 percent of wages paid by employers to workers from March 13, 2020, through December 31, 2020.
    • The credit is made available to employers whose (1) operations were fully or partially suspended due to COVID-19, or (2) experienced a 50 percent loss in gross receipts in the current calendar quarter compared to the prior year.
  • The credit is provided for the first $10,000 of compensation(including health benefits) per eligible

Payroll Tax Deferment

  • Allows employers and self-employed individuals to defer the 6.2 percent employer-side Social Security payroll tax payments.
  • The deferred payment must be paid over two years, with half due by December 31, 2021, and the other half by December 31, 2022.

Net Operating Losses (NOL)

  • Allows NOLs earned in 2018, 2019, or 2020 to be carried back five years. NOLs are currently subject to income limitations and cannot be carried back to reduce taxable income in a prior year.
  • Temporarily removes the taxable income limitation to allow businesses to use NOLs to fully offset their taxable income.
    • These changes will allow businesses to receive critical cash flow from amended tax

Qualified Improvement Property (QIP)

  • Enables businesses to use bonus depreciation for improvements to facilities instead of having to depreciate those improvements over 39 years.
    • This is a technical correction to the Tax Cuts and Jobs Act and is therefore retroactive. The fix will incentivize businesses to continue investments as the country recovers from the COVID-19 crisis.

Economic Stabilization

  • Provides $500 billion in emergency relief through the S. Treasury to provide loans, loan guarantees, and other investments to adversely impacted businesses, states, and localities.
    • Includes direct lending of $25 billion for passenger airlines, $4 billion for cargo airlines, and $17 billion for business critical to maintaining U.S. national security.
    • Establishes certain limitations for companies receiving assistance, including the prohibition of buying back stocks, outsourcing jobs, or substantially increasing executive salaries and severance pay.

Paycheck Protection Program

  • Expands the existing 7(a) SBA loan program to provide $350 billion of payroll support through a new Paycheck Protection Program. Eligible employers include:
    • Small employers with 500 employees or fewer, as well as those who meet the current SBA size standards.
    • Self-employed and “gig economy” individuals.
    • Certain nonprofits, including 501(c)(3) organizations, 501(c)(19) veteran organizations, and tribal businesses.
  • Loans are provided through existing SBA-certified lenders, and additional lenders will be added through a streamlined process.
  • Maximum allowable loans are equal to 250 percent of the applicant’s average monthly payroll, including salaries, paid leave, insurance premiums, and retirement contributions plus mortgage interest, rent, and utility payment Loans are capped at $10 million per small business.
  • Conditional upon a business retaining their employees and payroll levels, portions of the loan used to cover payroll and specified expenses would be forgiven.
  • Businesses who have already laid off or furloughed workers, are provided a 30 day grace period following the loan origination date to rehire employees.

Emergency Economic Injury Disaster Loans (EIDL)

  • Establishes an Emergency Grant to allow eligible entities to request an advance payment of $10,000 on the EIDL loan within three days to support payroll and other debt obligations.
  • Expands the eligibility for entities suffering from the COVID-19 pandemic to access EIDL loans.
  • Provides SBA with more flexibility to disperse small dollar loans.
  • EIDLs issued prior to enactment of the law may be eligible for forgiveness to provide parity with the modification to 7(a) loans.

Entrepreneurial Assistance

  • Provides grants for SBA resource partners to offer counseling, training, and related assistance to small businesses affected by COVID-19:
    • $240 million for Small Business Development Centers and Women’s Business Centers.
    • $25 million to develop online information and training programs.
    • $10 million for Minority Business Centers to integrate technical assistance for

Visit sba.gov for additional guidance on application processes

Fall Tax Planning

Tax PlanningIf you think tax planning only happens in the spring, think again. Taxes are a year-round concern and there’s no better time than the present to plan for the future. Consider the following:

Fall means the end of summer and summer camp for many kids. Did you know there’s a tax credit for that? If your child attended a summer day camp (not summer school or an overnight camp) the cost of that camp may qualify for the Child and Dependent Care Credit. While this is often referred to as the “day care credit,” some summer camps also qualify. Keep good records and bring them to your tax appointment in the spring.

Fall also means college, and college football, and there are tax implications for both. The American Opportunity Tax Credit (AOTC), which has been extended through December 2017, is a great way to offset the costs of higher education. To qualify for the AOTC, you must meet all three of the following criteria:

  1. You, your dependent or a third party pays qualified education expenses for higher education.
  2. An eligible student must be enrolled at an eligible educational institution.
  3. The eligible student is yourself, your spouse or a dependent you list on your tax return.

The AOTC can offset 100% of the first $2,000 and 25% of the second $2,000 of qualified education expenses paid. There is a phaseout for higher income taxpayers and a refundable portion for lower income taxpayers so each situation is unique.

Pay special attention to #3 as this is a conversation to have with your children before you send them off to school. If a student claims himself as a dependent, he claims the education credit as well. However, students often qualify as dependents on their parents’ return and the parents often recognize a greater tax benefit when claiming the credit. Make sure your student knows to talk to you before asserting his independence and filing his own return.

In addition to the AOTC, higher education costs can be offset by the Lifetime Learning Credit, the Tuition and Fees Deduction and the Student Loan Interest Deduction. While education tax benefits are plentiful, they are also complicated. For more information, refer to IRS Publication 970 or give us a call.

As for football, many colleges and universities charge a booster fee for the right to purchase season tickets for football and other sports. While the cost of the tickets themselves is usually not deductible, the booster fee may be. If the fee is paid to the school or for the benefit of the school and gives you the right to purchase tickets, the cost of the booster fee may be 80% deductible as an itemized deduction on Form 1040, Schedule A.

Fall also means a third estimated tax payment is due on September 15. If you are self-employed or make estimated tax payments for other reasons, don’t miss this important deadline.

Finally, fall is the perfect time to do some planning to minimize your tax bill for 2016. Has your income changed since you filed your last return? Have you started school or started a business? Married or divorced? Retired? Had a baby? Purchased a house? Incurred serious medical expenses? Changed your health insurance? These and many other life experiences can affect your tax return so planning for those events now can save you money later. Waiting until January will be too late to influence your 2016 tax bill so call today and schedule an appointment with one of the enrolled agents in our office. Enrolled agents are America’s Tax Experts® and we pay attention to all this stuff so you don’t have to.

Home Energy Tax Credits Save You Money at Tax Time

energy-efficient-house2Certain energy-efficient home improvements can cut your energy bills and save you money at tax time. Here are some key facts that you should know about home energy tax credits:

Non-Business Energy Property Credit

  • Part of this credit is worth 10 percent of the cost of certain qualified energy-saving items you added to your main home last year. This may include items such as insulation, windows, doors and roofs.
  • The other part of the credit is not a percentage of the cost. This part of the credit is for the actual cost of certain property. This may include items such as water heaters and heating and air conditioning systems. The credit amount for each type of property has a different dollar limit.
  • This credit has a maximum lifetime limit of $500. You may only use $200 of this limit for windows.
  • Your main home must be located in the U.S. to qualify for the credit.
  • Be sure you have the written certification from the manufacturer that their product qualifies for this tax credit. They usually post it on their website or include it with the product’s packaging. You can rely on it to claim the credit, but do not attach it to your return. Keep it with your tax records.
  • You must place qualifying improvements in service in your principal residence by Dec. 31, 2016.

Residential Energy Efficient Property Credit

  • This tax credit is 30 percent of the cost of alternative energy equipment installed on or in your home.
  • Qualified equipment includes solar hot water heaters, solar electric equipment, wind turbines and fuel cell property.
  • Qualified wind turbine and fuel cell property must be placed into service by Dec. 31, 2016. Hot water heaters and solar electric equipment must be placed in to service by Dec. 31, 2021.
  • The tax credit for qualified fuel cell property is limited to $500 for each one-half kilowatt of capacity. The amount for other qualified expenditures does not have a limit. If your credit is more than the tax you owe, you can carry forward the unused portion of this credit to next year’s tax return.
  • The home must be in the U.S. It does not have to be your main home, unless the alternative energy equipment is qualified fuel cell property,

Source: IRS.gov

IRS Alerts Payroll and HR Professionals to Phishing Scheme Involving W-2s

IR-2016-34, March 1, 2016

WASHINGTON – The Internal Revenue Service today issued an alert to payroll and human resources professionals to beware of an emerging phishing email scheme that purports to be from company executives and requests personal information on employees.

The IRS has learned this scheme – part of the surge in phishing emails seen this year – already has claimed several victims as payroll and human resources offices mistakenly email payroll data including Forms W-2 that contain Social Security numbers and other personally identifiable information to cybercriminals posing as company executives.

“This is a new twist on an old scheme using the cover of the tax season and W-2 filings to try tricking people into sharing personal data. Now the criminals are focusing their schemes on company payroll departments,” said IRS Commissioner John Koskinen. “If your CEO appears to be emailing you for a list of company employees, check it out before you respond. Everyone has a responsibility to remain diligent about confirming the identity of people requesting personal information about employees.”

IRS Criminal Investigation already is reviewing several cases in which people have been tricked into sharing SSNs with what turned out to be cybercriminals. Criminals using personal information stolen elsewhere seek to monetize data, including by filing fraudulent tax returns for refunds.

This phishing variation is known as a “spoofing” email. It will contain, for example, the actual name of the company chief executive officer. In this variation, the “CEO” sends an email to a company payroll office employee and requests a list of employees and information including SSNs.

The following are some of the details contained in the e-mails:

  • Kindly send me the individual 2015 W-2 (PDF) and earnings summary of all W-2 of our company staff for a quick review
  • Can you send me the updated list of employees with full details (Name, Social Security Number, Date of Birth, Home Address, Salary) as at 2/2/2016.
  • I want you to send me the list of W-2 copy of employees wage and tax statement for 2015, I need them in PDF file type, you can send it as an attachment. Kindly prepare the lists and email them to me asap.

The IRS recently renewed a wider consumer alert for e-mail schemes after seeing an approximate 400 percent surge in phishing and malware incidents so far this tax season and other reports of scams targeting others in a wider tax community.

The emails are designed to trick taxpayers into thinking these are official communications from the IRS or others in the tax industry, including tax software companies. The phishing schemes can ask taxpayers about a wide range of topics. E-mails can seek information related to refunds, filing status, confirming personal information, ordering transcripts and verifying PIN information.

The IRS, state tax agencies and tax industry are engaged in a public awareness campaign – Taxes. Security. Together. – to encourage everyone to do more to protect personal, financial and tax data. See IRS.gov/taxessecuritytogether or Publication 4524 for additional steps you can take to protect yourself.