Weekly Update – July 21st 2023 – What’s in Your Tax Mitigation Tool Box
It been another crazy busy summer week starting with a Town Hall panel web presentation on IRS/NYS tax collections mitigation. Even through we had the framework set from prior presentations a lot of time and energy went into preparing for this one and I love participating. I had a great time yet again presenting with Karen Tenenbaum, esq, CPA, Moshe Zupnick, esq, and Marisa Friedrich, esq, of Tenenbaum Law, P.C..
Our beach is still under construction but the work is moving along and we still have beach access, although limited, but most importantly our beaches will be better protected during hurricane season…
I am still battling the bugs, but now I also hunt for cucumbers, black berries and have been harvesting kale, swiss chard, basil and other herbs.
All this work is starting to pay off, this week I made a “garden to table” lunch…
My fig tree is still healthy and starting to produce despite the spotted lantern fly nymphs that have attacked it this year…
The weather is expected to clear up by this afternoon and I look forward to the annual CASCPA summer bar-b-q at Belmont Lake State Park. I hope you have some great plans as well.
WEEKLY TAKE AWAY
I’ve mentioned before that even when presenting on a tax topic I learn so much from the other panel members and our attendees. On Monday our Town Hall panel presentation focused on the IRS and NYS collections processes and remedies we accounting professionals have in our tool kit. I later spoke with Moshe Zupnick of Tenenbaum Law, P.C. in detail about best practices for clients who may have special circumstances as to why they still owe taxes even after filing an extension. It really hit home how important it is to have trusted strategic partners to call upon when the need arises. No one can be an expert in all things, just knowing what specialist to call on is critical when taking care of our clients and their needs.
TAX ISSUES/TAX PLANNING
The IRS Has Begun Sending Out Notices Again- Resolve Tax Debt With the Help of an Expert
We have heard that the IRS has begun sending out notices again; they have also expanded their audits to include the amended payroll tax returns (941X) submitted by businesses for the 2020 and 2021 Employee Retention Tax Credits (ERC). Tax mitigation and reduction requires we thoroughly examine the notice, available documentation, and prepare a plan which can include penalty abatement where applicable:
- The IRS allows for a first time abatement of penalties (could be late payment, late filing, underpayment of tax or estimates, etc).
- The IRS allows for a “reasonable cause” abatement of penalties.
- The IRS allows for a six year “limited lookback” for tax filings. If your situation meets the criteria you may not have to file and pay back due taxes.
- The IRS has programs to assist in the collection/payment of various levels of tax debt, i.e., $25,000, $50,000, under $250,000
- Those businesses who were ineligible for ERC funds but followed advice of the “ERC Mills” could face criminal charges in addition to penalties even after returning the funds.
- The IRS examination notices for amended payroll tax returns (941X) include a request for very specific documentation as proof of eligibility
- Those businesses who were ineligible for PPP 2 funds but applied for them and the forgiveness of the loan could face criminal charges in addition to penalties even after returning the funds. They could also be liable for cancellation of debt income.
- Those businesses who were ineligible for PPP funding forgiveness of the loan could face criminal charges in addition to penalties even after returning the funds.
- New York State allows for a one time voluntary disclosure of taxes due the purpose of which is to abatement penalties associated with the late payment and/or late filing of the return. underpayment of tax or estimates).
- New York State voluntary disclosure will “buy” you an additional 45 days to pay the taxes, however interest will still accrue.
Senate Report Confirms Data Leakage from Tax Preparation Companies
The July 2023 Senate investigation report: “Attacks on Tax Privacy: How the Tax Prep Industry Enabled Meta to Harvest Millions of Taxpayers’ Sensitive Data” listed out in their findings: major tax preparation software companies have been sending sensitive personal information to tech companies like Meta and Google, in possible violation of taxpayer privacy laws. The companies sited: TaxSlayer, H & R Block and TaxAct, shared millions of taxpayers’ data with Meta, Google, and other big tech firms. The companies used pixels to send data to Meta and Google who used the information for advertising purposes. The information included household make-up, general income, addresses, investment income, W-2 information, etc. The tax preparation companies may have violated taxpayer privacy laws; circular 230 governs how the accounting profession treats our clients’ data. For example we follow specific guidelines related to obtaining releases from our clients in order to provide information to mortgage brokers. Here is an article by accountingTODAY.
Senate Held Classified Briefing on Artificial Intelligence and National Security
Last week: July 10th the senate held it’s first classified briefing on artificial intelligence and it’s impact on global ad national security. There were several news reports leading up to the meeting which was instituted by Senate Majority Leader Chuck Schumer.
“The briefing Tuesday, requested after Senate Majority Leader Chuck Schumer (D-N.Y.) and others warned that lawmakers needed expertise on the rapidly developing industry, brought in top intelligence and defense officials, including Director of National Intelligence Avril Haines, Deputy Secretary of Defense Kathleen Hicks and the Director of the White House Office of Science Technology and Policy Arati Prabhakar, to brief senators on the risks and opportunities presented by AI.
“AI has this extraordinary potential to make our lives better,” said Sen. John Kennedy (R-La.) before pausing.
“If it doesn’t kill us first,” he added.
Congress and the administration have been scrambling to better understand the risks and benefits of generative AI in recent months, especially since the quick rise of OpenAI’s ChatGPT tool after it launched in late November. ”
Firefighters are Leaving the U.S. Forest Service for Better Pay and Benefits
Thousands of federal wildland firefighters could walk off the job if Congress fails to pass a permanent pay increase, officials and advocates warned amid an already scorching summer that could lead to an explosion of wildfires later in the year.
Biden’s New Plan to Forgive $39 Billion in Student Loans
Last Friday the Biden administration announced it will cancel $39 billion in federal student loans for more than 804,000 borrowers, following the US Supreme Court’s decision last month to strike down the White House’s previous student loan forgiveness plan.
The Education Department said that it will do so by accounting for payments made under income-driven repayment plans — which are capped to a certain percent of borrowers’ income — that it argues should have qualified toward loan forgiveness, but were previously unrecognized by loan servicers that collect payments.
“For far too long, borrowers fell through the cracks of a broken system that failed to keep accurate track of their progress towards forgiveness,” US Secretary of Education Miguel Cardona said in a statement Friday. “By fixing past administrative failures, we are ensuring everyone gets the forgiveness they deserve.”
This new plan differs from the one that was struck down by the Supreme Court, which would have forgiven $10,000 worth of loans for most student borrowers and $20,000 for Pell Grant recipients, applying to a population of about 37 million people.
Separately, Biden is also creating a new income-driven repayment plan — called SAVE (Saving on a Valuable Education) — that will allow some borrowers to cut their monthly payments in half and cancel the rest of their debt after making 10 years of payments.
Consumer Financial Protection Bureau Takes Action Against Bank of America
The Consumer Financial Protection Bureau (CFPB) ordered Bank of America to pay more than $100 million to customers for systematically double-dipping on fees imposed on customers with insufficient funds in their account, withholding reward bonuses explicitly promised to credit card customers, and misappropriating sensitive personal information to open accounts without customer knowledge or authorization.
Google’s Medical AI Chatbot is Already Being Tested in Hospitals
Google’s Med-PaLM 2, an AI tool designed to answer questions about medical information, has been in testing at the Mayo Clinic research hospital, among others, since April. According to Google senior research director Greg Corrado, the WSJ reports, Med-PaLM 2 is still in its early stages. Corrado said that while he wouldn’t want it to be a part of his own family’s “healthcare journey,” he believes Med-PaLM 2 “takes the places in healthcare where AI can be beneficial and expands them by 10-fold.”
- 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 prior blog posts, videos and prior weekly newsletters
- Entrepreneur put together a listing of free tech resources for remote work
- The Consumer Financial Protection Bureau has warnings about COVID-related scams
- 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
- 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 here for you.
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
Get in touch
Contact us if you have any questions or want to discuss the next steps for your business.