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November 2021

IRS Highlights Tax Withholding Estimator

The IRS has reminded taxpayers that the last quarter of 2021 is a good time to check withholding. The IRS’s convenient Tax Withholding Estimator (https://www.irs.gov/individuals/tax-withholding-estimator), will help taxpayers determine if they have too much withheld and how to make an adjustment to put more cash into their own pocket now. About 70 percent of taxpayers over withhold their taxes every year, […]

LLC Tax-Exempt Determination Letter Requirements Released

The IRS released standards that a limited liability company (LLC) must satisfy to receive a determination letter recognizing it as tax-exempt under Code Secs. 501(a)(1) and 501(c)(3). This does not affect the status of organizations currently recognized under Code Sec. 501(c)(3).

Required ProvisionsThe IRS would issue said letter only if an LLC’s articles of organization and its operating agreement each include:

provisions requiring that each member […]

Final Regulations Reflect CARES Act Impact on FDII, GILTI, and FTC Transition Carryback Rules

The Treasury and IRS have issued final regulations addressing the calculation of qualified business asset investment for qualified improvement property, under the alternative depreciation system (ADS), for purposes of the Code Sec. 250 deduction (for foreign-derived intangible income and Code Sec. 951A global intangible low-taxed income (GILTI)) and for purposes of determining GILTI.

The regulations also contain transition rules relating to the impact of loss […]

October 2021

Qualified Sick and Family Leave Wages Reporting Guidance Issued

The IRS and the Treasury Department have issued guidance to employers about reporting the amount of qualified sick and family leave wages paid to employees for leave taken in 2021 on Form W-2, Wage and Tax Statement. Further, the notice provides guidance under recent legislation, including: the Families First Coronavirus Response Act (FFCRA) ( P.L. 116-127), as amended by the COVID-Related Tax […]

IRS Reminder for Classification of Workers as Employees or Independent Contractors

The IRS has emphasized the importance of correctly determining whether the individuals providing services to businesses were employees or independent contractors. Generally, an employee performs services that businesses control. Independent contractors offer their services to the public. Businesses have a right to control the details of the services performed.

The classification depends on the:

company’s behavioral Control on what the worker does […]

September 2021

Guidance Provided on Premium Assistance for COBRA Continuation Coverage

The IRS provided additional guidance on the application of the American Rescue Plan Act of 2021 (ARP) (P.L. 117-2) relating to temporary premium assistance for Consolidated Omnibus Budget Reconciliation Act of 1985 (COBRA) continuation coverage. This notice supplements Notice 2021-31, I.R.B. 2021-23, and addresses additional issues.

EligibilityThe IRS noted that if the original qualifying event was a reduction in hours or an […]

Foreign Tax Credit Did Not Apply Against Net Investment Income Tax

The foreign tax credit did not apply against the net investment income tax (NIIT). The structure of the Internal Revenue Code made the credit inapplicable to the NIIT, and tax treaties did not override that fact.

Under Code, Foreign Tax Credit Did Not Apply to NIITThe foreign tax credit is in chapter 1, subtitle A of the Code, and it expressly […]

August 2021

Penalty Relief for Certain Pass-through Forms

Partnerships, S corporations, and U.S. persons with interests in foreign partnerships may rely on transition relief from penalties for tax years beginning in 2021 with respect to new Schedules K-2 and K-3. These schedules may be required for:

Form 1065, U.S. Return of Partnership Income,Form 1120-S, U.S. Income Tax Return for an S Corporation, andForm 8865, Return of U.S. Persons With […]

No Surprise Billing Act Interim and Proposed Regulations

The Departments of the Treasury, Labor, and Health and Human Services (the Departments), have issued interim final rules and identical proposed regulations to implement provisions of the No Surprises Act. On December 27, 2020, the Consolidated Appropriations Act, 2021 (CAA), which included the No Surprises Act, was signed into law. The No Surprises Act provides federal protections against surprise billing […]

IRS Provides Answers to Question Pertaining to Treasury Grants and Related Taxes

The IRS has provided answers to questions that certain transportation companies may have regarding Treasury grants and related taxes, https://www.irs.gov/newsroom/coronavirus-economic-relief-for-transportation-services-certs-frequently-asked-questions. These companies must largely prioritize the use of the grants for payroll costs, though grants may be used for operating expenses, including the acquisition of services and any equipment needed to protect workers and customers from COVID-19. In addition, the funds […]

Flaherty Salmin CPAs Named To 2021 IPA 400 Firm List

August 9, 2021 – ROCHESTER, NY – Flaherty Salmin CPAs, a tax and accounting firm in Rochester, New York, has again made the list as an Inside Public Accounting (IPA) 400 Firm.

“We are thrilled to be identified among the nation’s most recognized top accounting firms,” said Tim Flaherty, managing partner, Flaherty Salmin CPAs. “Our employees’ dedication to personal service is […]

July 2021

Supreme Court Rejects Affordable Care Act Challenge

The Supreme Court has reversed and remanded California v. Texas, holding that the Plaintiffs do not have standing to challenge the Patient Protection and Affordable Care Act’s (ACA) minimum essential coverage provision.

In 2010, ACA, under the newly added Code Sec. 5000A, required most Americans to obtain minimum essential health insurance coverage, or pay a penalty. In 2017, under the Tax Cuts and […]

Residential Rental Property Depreciation Procedures

The IRS has released a revenue procedure explaining how a taxpayer changes its method of computing depreciation for certain residential rental property. Automatic consent procedures for changing accounting method are available for taxpayers adopting the depreciation method changes.

Residential Rental Property Allowed 30-Year ADS Depreciation
Tax Cuts and Jobs Act ( P.L. 115-97) added residential rental property held by an electing real property […]

Eligible Partnerships May File Amended Returns

An eligible partnership may file amended partnership returns for tax years beginning in 2018, 2019, and 2020 by filing a Form 1065, U.S. Return of Partnership Income (Form 1065), with the “Amended Return” box checked. The partnership may also issue an amended Schedule K-1, Partner’s Share of Income, Deductions, Credits, etc. (Schedule K-1), to each of its partners.

Partnerships Eligible for Amended-Return Procedures
The amended-return procedures […]

BEAT QDP Reporting Requirement Deferred

The Treasury Department and the IRS have announced that they intend to amend the base erosion and anti-abuse tax (BEAT) regulations under Code Sec. 59A and Code Sec. 6038A to defer the information reporting requirements for qualified derivative payments (QDPs) until tax years beginning on or after January 1, 2023. The current regulations provide that the QDP reporting requirements apply to tax years beginning […]

June 2021

Safe Harbor for Certain PPP Loan Recipients Who Did Not Deduct Expenses

A safe harbor is available for certain Paycheck Protection Program (PPP) loan recipients who relied on prior IRS guidance and did not deduct eligible business expenses. These taxpayers may elect to deduct the expenses for their first tax year following their 2020 tax year, rather than filing an amended return or administrative adjustment request for 2020.

The IRS had initially determined […]

Guidance on COBRA Premium Assistance, Related Tax Credit

The IRS has provided guidance for employers, plan administrators, and health insurers regarding the new credit available to them for providing continuation health coverage to certain individuals under the Consolidated Omnibus Budget Reconciliation Act of 1985 (COBRA) during the COVID-19 (Coronavirus) emergency.

COBRA provides eligible former employees, retirees, spouses, former spouses, and dependent children with the right to temporary continuation of […]

Employers Entitled to Claim Refundable Tax Credits for Providing Paid Sick Leaves to Employees

The IRS has reminded employers that under the American Rescue Plan Act of 2021 (ARP) ( P.L. 117-2), small and midsize employers and certain government employers are entitled to claim refundable tax credits that reimburse them for the cost of providing paid sick and family leave to their employees due to COVID-19. This includes leave taken by employees to receive […]

Dependent Care Carryover, Extended Claims Period Treatment Clarified

Dependent care assistance benefits carryovers and extended claims period amounts that would have been excluded from income if used during the preceding tax year will remain excludable in tax years ending in 2021 and 2022. In addition, these benefits will not be taken into account in determining the dependent care benefits exclusion limit for the tax years ending in 2021 […]

May 2021

Suspension of Excess Advance Premium Tax Credit Repayment

The IRS has announced that, under the American Rescue Plan Act of 2021 (ARP) ( P.L. 117-2), the requirement that taxpayers increase their tax liability by all or a portion of their excess advance payments of the Premium Tax Credit (excess APTC) is suspended for tax year (TY) 2020. A taxpayer’s excess APTC is the amount by which the taxpayer’s advance payments of […]

April 2021

Cash Rewards for Money Order, Debit Card Purchases Included in Income

The Tax Court ruled that rewards dollars that a married couple acquired for using their American Express credit cards to purchase debit cards and money orders—but not to purchase gift cards—were included in the taxpayers’ income. The court stated that its holdings were based on the unique circumstances of the case.

Background

During the tax years at issue, each taxpayer had an […]

March 2021

Six-Time Rochester Top Workplaces Recipient Provides Straight Answers, Trusted Solutions

ROCHESTER, NY (MARCH 29, 2021) – Ask any CPA what they’ve been up to lately, and the unanimous answer is, “work, eat, sleep.” Even though the April 15 tax deadline has been extended to May 15, the team at Flaherty Salmin CPAs is still busily taking care of their corporate, affordable housing and personal clients’ needs, while also helping those […]

February 2021

Employee Retention Credit Expanded & Extended

The recently enacted stimulus law extends a number of provisions for businesses struggling to cope with the pandemic. For instance, the law greatly expanded the effectiveness of the Employee Retention Credit (ERC). Originally, businesses had to choose between taking the Paycheck Protection Program (PPP) or the ERC. For most employers, the PPP provided more benefit and more businesses qualified […]

Reporting Penalty Relief for Partnerships

The IRS has issued guidance that provides partnerships with relief from certain penalties for the inclusion of incorrect information in reporting their partners’ beginning capital account balances on the 2020 Schedules K-1 (Forms 1065 and 8865). The IRS has also provided relief from accuracy-related penalties for any tax year for the portion of an imputed underpayment attributable to the inclusion […]

Additional Final Regulations on Section 163(j) Issued

The IRS has issued final regulations providing additional guidance on the limitation on the deduction for business interest under Code Sec. 163(j). The regulations finalize various portions of the proposed regulations issued in 2020 with few modifications. They address the application of the limit in the context of calculating adjusted taxable income (ATI) with respect to depreciation, amortization, and depletion. […]

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