Weekly Digest – September 30 2021
This recent article in the Washington Post has highlighted (please sing as you read) where have all the employees gone…to the legal cannabis industry, which has been absorbing furloughed, laid-off, and disenchanted retail and restaurant workers at a rapid pace throughout the pandemic. An estimated 321,000 people in the U.S. work in the industry, more than work as dentists, paramedics, or electrical engineers. Burnout, overwork, and challenges with unhappy customers in retail during the pandemic are driving many to seek work in an industry with a growing reputation for treating its workers well. Many are finding better pay, more consistent hours, improved benefits, and more opportunities for advancement than in their previous positions.
We know from our own experience within our firm and client base, that taking care of our staff members, treating them as we would want to be treated creates not only a more pleasant work environment but also a better relationship between staff and customers/clients/patients. During this time of staggered work hours and remote work, it’s so important to maintain a system of great communication and manage expectations. We love to share photo’s of our morning walks, beautiful meals we’ve created and special occasions.
Clouds reflected on the wet sand on my walk the other morning.
My daughter Jessie was able to treat her dog Samson to a few hours at a local pool turned into a doggie water park before they closed down for the season.
Lately I have been sharing the photo’s of my daily fig harvest; 21 yesterday morning. I am so glad I have so many friends and neighbors to share them with :).
THE AMERICAN RECOVERY PLAN ACT (ARPA)
Monthly Advanced Child Tax Credit Payments
What are parents doing with their advance Child Tax Credit payments? Research by data aggregation company Envestnet indicates that parents earning up to $50,000 have largely been saving and investing the extra money. This is a change from spending patterns in the summer of 2020 when stimulus payments drove a surge in discretionary spending. Families today are more likely to use the money to pay their credit cards, insurance, mortgages, or rent.
The IRS is working to resolve the technical error that delayed September payments for many families. Families who had recently updated their banking information and mailing address with the Child Tax Update Portal were most impacted. If you have not yet received your payment, check the portal regularly, ensure the IRS has your income and personal information, and be aware that the IRS may change your payments.
As a reminder, if you want to opt out of future payments, you must opt out by the deadline for the next month’s payment. Check out the IRS FAQs where you’ll find everything you need to know about opting out in Section J.
Have you been receiving confusing and erroneous letters from the IRS? You’re not alone, according to a recent report from the Tax Inspector General for Tax Administration (TIGTA). The report looked at how well the IRS dealt with the challenges of the pandemic and its People First Initiative. TIGTA found that in the spring and early summer of 2020, the IRS sent out nearly 90,000 premature tax collection notices for taxes that were postponed due to the COVID-19 extension for filing and payment to July 15, 2020. These notices were sent out erroneously because the IRS had not updated its usual process of mailing out collection notices for tax returns not received by April 15 of each year. While the IRS did include explanatory inserts in the envelopes notifying taxpayers that the notice may not have been correct, the incorrect notices caused confusion for many taxpayers and their advisors.
Filing Due Dates Extended for Those Impacted by Hurricane Ida
Residents of New York and New Jersey impacted by Hurricane Ida now have additional time to file:
- January 3, 2022 to file New Jersey business and individual tax returns and make tax payments.
- December 14, 2021 to file New York business tax returns and make tax payments. New York business tax returns are still due October 15th with individual tax estimates and make tax payments due by December 14th.
While NJ followed the IRS announcement almost immediately, the NYS announcement came in the final hours of the September 15th “perfect storm” deadline for extended corporation tax filings and the personal and corporation 2021 estimate #3, again this does NOT include the personal tax deadline of October 15th (glad they didn’t wait any longer). This extension applies to any tax returns or tax payments that normally would be due between September 1, 2021 and December 31, 2021. Residents of Louisiana also have an extension to file tax returns and pay taxes.
The NYS Pass Through Entity Tax Workaround (PTE)
The NYS 2021-2022 fiscal year budget included a potentially favorable new law that can be elected annually beginning with 2021. The Pass-through Entity Tax (PTE tax) which many businesses with operations or investors in New York may want to take advantage of this year must be elected by a partner or shareholder by October 15th. For maximum effect, the estimated tax liability should be paid by December 31, 2021. This new tax is similar to tax laws passed in several other states recently and is a way for smaller businesses (and even some larger ones) in New York to work around the recent federal tax law changes that took away previously available tax deductions for state income taxes.
Under New York’s new PTE tax, any entity taxed as a partnership or New York S Corporation may elect into the New York PTE tax system. By doing so, the entity will be voluntarily electing to pay an entity-level income tax on at least a portion of its profits allocated to its individual investors (not corporations or other partnerships) at graduated rates starting at 6.85% on taxable income of $1 or more and increasing to up to 10.9% on incomes in excess of $25 Million. Pass-through entities electing-in to the tax for this year must do so by October 15. The election must be made by March 15 for each year after 2021.
Pass-through entities included under this law are:
- federal S corporations that have made the New York S corporation election; and
- Limited liability companies (LLCs) (not operating as a Schedule C -disregarded entity).
NJ Pass-Through Business Alternative Income Tax Act (BAIT)
P.L.2019, c.320 enacted the Pass-Through Business Alternative Income Tax Act, effective for tax years beginning on or after January 1, 2020. For New Jersey purposes, income and losses of a pass-through entity are passed through to its owners. However, the law allows pass-through entities to elect to pay tax due on the individual owner’s share of distributive proceeds. The owner(s) may then claim a refundable tax credit for the amount of tax paid by the pass-through entity on their share of distributive proceeds. The purpose is to reduce federal taxable income thereby reducing an owner’s federal taxable income, while not affecting the NJ tax liability. The tax savings grown as the business net income increases.
Pass-through entities included under this law are:
- federal S corporations that have made the New Jersey S corporation election; and
- Limited liability companies (LLCs) (not operating as a Schedule C -disregarded entity)..
The entity must have at least one member who is liable for tax on their share of distributive proceeds pursuant to the New Jersey Gross Income Tax Act, N.J.S.A. 54A:1-1 et seq., in a taxable year.
Single member limited liability companies and sole proprietorships may not elect to pay the Pass-Through Business Alternative Income Tax.
THE GREAT REASSESSMENT
Succeeding in many companies is often equated with a promotion to management. But as a thoughtful essay from Ed Zitron in The Atlantic explains, this measure of success may become meaningless in a remote future of work. The existing model generally requires that new employees work long hours with little mentorship with the expectation that the best performers will be promoted to management positions, regardless of their ability to be effective managers. Zitron suggests that a better path forward may be to emulate the model of sports franchises that carefully nurture talent to help people excel at their role: “A great manager (like a great coach) can take a good worker and make them great, or take an average worker and make them good.” Zitron suggests reducing the bureaucracy of multiple layers of management by shifting the emphasis from controlling team members to guiding those team members to become the best they can be.
Companies with cultures that emphasize connection and empowerment in their workforces will likely have less impact from the “Great Resignation” according to management consultant Michael Stallard, who shares strategies for building a connected, empowered, and cohesive workforce. For example, keeping the organization’s vision in the forefront keeps everyone connected to and working towards that vision. As I have noted above, leaders who care about team members show this by sharing personal experiences can improve relationships. Supporting employees in achieving their career goals can help them to do their best work.
With headlines announcing a record 10.9 million job openings with 8.4 million people seeking jobs, it should be relatively easy for job seekers to find new positions. However, that’s not the reality for many seeking new positions. Millions of those openings are for low-paying, labor-intensive jobs lacking benefits or are for part-time only positions, which may be rejected by those who left better-paying, full-time positions. A mismatch between skills and desires of prospective employees and the skills and offerings of employers is also a contributing factor. Many people would prefer to continue working remotely, while many employers want workers back in the office. In addition, the rapid pace of technology changes can quickly lead to obsolete skills, it’s so important for people to up with the latest software. In addition, overreliance on software applications to screen applicants may inadvertently filter out the best candidates as job descriptions become ever-more complex and detailed.
REOPENING THE OFFICE AND REMOTE WORK OPTIONS
One of the positives cited by remote workers was the reduction in interruptions from co-workers stopping by to chat. However, research indicates that those interruptions can lead to higher job satisfaction and contribute to a sense of belonging in the workplace. Developing relationships with co-workers can lead to increased engagement and help when looking to brainstorm solutions. However, it’s important to set boundaries or these interruptions may distract you and reduce your productivity. Simple gestures like wearing headphones even if you’re not listening to music send a signal to co-workers that you need to focus on the work at hand.
Meetings in a hybrid environment were hard, but meetings in a hybrid environment can be even harder as leaders will need to ensure that both the in-person and the remote participants have opportunities to contribute meaningfully. Sharing the agenda and any handouts beforehand helps bring focus. Make sure that people in the conference room and online participants are given equal attention and opportunities for participation by adding electronic whiteboards and monitoring online chat. Keeping technology simple makes it easy to start meetings on time. Choosing technology that allows remote participants to easily follow who is speaking in the conference room can also make meetings more productive.
According to the Federal Reserve, U.S. household wealth rose to a record high of $141.7 trillion in the second quarter of 2021. Contributing factors are the increase in real estate values and stock prices.
Difficulties in finding enough workers to operate 24/7 in the busy Los Angeles and Long Beach ports is just one of the factors contributing to supply chain problems. Besides a shortage of workers, congestion at the ports from a pileup of containers makes it hard for drivers to navigate ports. Drivers can’t always find trucks or the chassis needed to transport shipping containers. With West coast warehouses full, some cargo owners are simply leaving their containers at the port as mobile storage. Moving to a 24/7 schedule at the ports and across all parts of the supply chain, including rail, trucking, and warehousing as is done in other parts of the world could alleviate the problem, but disagreements about scheduling on top of a shortage of workers have so far made that nearly impossible.
According to the latest forecast from the Organization for Economic Cooperation and Development, the fast-spreading delta variant of COVID-19 has slowed global economic recovery, but won’t stop it. Back in May, the OECD forecast that the U.S. economy would grow by 6.9% in 2021; that forecast has now been reduced to 6%. The rapid spread of the delta variant in Asian countries is contributing to shortages of manufactured goods and parts, which can lead to bottlenecks that result in shortages for retailers.
- IRS resources for stimulus payments:
- IRS information about the Advance Child Tax Credit Payments
- The best source for up-to-date and accurate health information is the Center for Disease Control (CDC)
- Our Covid-19 Resource Center with relevant blog posts, videos and prior weekly newsletters
- Payroll, HR and benefits company Gusto has put together An Employer’s Guide to Navigating the Coronavirus
- Accounting Today has a special page for articles on COVID-19
- Intuit QuickBooks has a dedicated page to help small businesses
- Entrepreneur put together a listing of free tech resources for remote work
- The Consumer Financial Protection Bureau has warnings about COVID-related scams
- Fast Company has a listing of the best productivity apps for 2020
- The New York Times has an online newsletter on K-12 and higher education
- The Wall Street Journal has a collection of articles on education
- The Louvre has digitized 482,000 artworks from its collection
- PC Magazine explains how to carry your vaccination card on your phone
- How to create a strong password
We sincerely hope that you and your family are well and remain well. If you have any questions or concerns, don’t hesitate to reach out to us. We are all in this together!
Complementary Discovery Session
If you need help with your accounting, want to create a tax minimization plan, want to discuss your business growth plan or your finances, are concerned about retirement goals or need to be held accountable for your 90 day action plan, contact us for a complimentary discovery session or an appointment to just get started.