Weekly Update – June 24th 2021
Is there a perfect number of hours to work each day? Research shows that five hours seems to be the maximum that people can focus and be creative. The constraint of a shorter workday can also increase productivity as people are forced to find ways to get their work done in less time. While a shorter workday gives people more time for other pursuits, it also has several downsides. People have less time to interact and develop relationships with co-workers. Getting more work done in less time can be stressful. Some jobs, such as caretaking or manufacturing, are not so easily performed in shorter workdays, which may lead to new kinds of inequality in the workplace. But in the wake of the pandemic, many people want increased flexibility in how they structure their workdays, and many employers are more open to new schedules that help people work to their strengths and maintain well-being.
In our firm we have found that mixing up the day with client and staff meetings along with periods of intense project work and a few breaks makes the day more enjoyable as well as productive and the hours seem to fly by. Of course this past 16 months the added stress of a health crisis and many changes in tax laws and deadlines has made our accounting community feel overwhelmed, but also much appreciated.
I love this time of year and seeing my garden start to produce. My “farm to table” lunch is just the “thing” to break up the day…
My lunch of Greek salad with other locally sourced vegetables and homemade salad dressing adds to the day and is a healthy lunch! I hope you have found a way to make your work day enjoyable and productive as well.
THE AMERICAN RECOVERY PLAN ACT (ARPA)
Administration of the Paycheck Protection Program and COVID-related loans and grants were the responsibility of the Small Business Association. However, due in part to the extraordinary demands for funds, the SBA fell short of helping all small business owners who needed funds. Since March 2020, the SBA issued close to $211 billion in loans, three times as much as in the previous 68 years. The agency fell short because it did not have the leadership or systems in place to quickly respond to a national crisis of the magnitude of the pandemic. The overwhelming demands on the SBA meant that many small business owners were left waiting in the dark about their applications while the agency struggled to respond to a deluge of applications. The speed and lack of timely safeguards also made it possible for many applicants to exploit those loopholes to receive funds they were not entitled to.
Economic Impact Payments (aka Stimulus Checks)
As I attend accounting seminars and share our clients concerns I have heard that many people have still not received their expected stimulus checks. This could be due to the huge backlog of original and amended paper tax returns that the IRS is still processing. As discussed previously we should have the ability to reconcile missed 2021 stimulus checks when we submit your 2021 tax return.
Restaurant Revitalization Fund
When the Restaurant Revitalization Fund was created by Congress, the first 21 days of the program were supposed to prioritize underserved groups such as women, veterans or members of certain cultural and racial groups. However, because demand for funds was far in excess of the allocation from Congress, restaurant owners outside of those priority groups sued because they had no opportunity to apply. Judges in Texas and Tennessee have agreed with those legal challenges, so nearly 3,000 restaurants that were promised funds have been told their approval has been revoked. They will only receive funds after all other applications have been reviewed, which makes it unlikely that they will receive anything at all. A bill has been introduced that would add additional funds to the program, but its prospects are not clear.
Monthly Child Tax Credit Payments of $250-300 Per Child for Many Families Scheduled to Start July 15th
Starting next month, parents can begin receiving monthly payments of up to $300 per child as an advance against their child tax credit. However, some parents may want to opt out of receiving monthly payments. Because this is an advance on a tax credit, families who tend to owe money to the IRS when they file their tax returns may be hit with a surprise tax bill. Other families prefer to have a large lump sum when they file their tax returns rather than smaller amounts throughout the year. For higher-income families, receiving an advance on their child tax credit may complicate their tax planning.
The IRS has set up a webpage dedicated to the advance child tax credit, which currently only allows non-filers to submit information so that they can receive payments. The IRS plans to provide additional tools to allow families to determine whether they are eligible and for how much, and to check on the status of their advance payments and to opt out of receiving payments, but those tools are not yet available.
IRS AND TAX MATTERS
New Issues With Slow Refund Processing by The IRS
Some taxpayers are still waiting for refunds when they filed their tax return in February. Some tax returns take longer to process than others, including when a return:
- Includes errors such as an incorrect recovery rebate credit (RRC) amount
- Was filed with missing information
- Is affected by identity theft or fraud
- Includes a claim filed for an earned income tax credit or an additional child tax credit using 2019 income
- Includes a Form 8379, Injured Spouse Allocation (this can take up to 14 weeks to process)
- Needs further review in general
An IRS liaison stated that the majority of delayed processing of returns are due to the incorrect recovery rebate credit amount reported, where the IRS’s records show that an economic impact payment (EIP) was issued.
If there is a discrepancy between what was reported on the tax return and what the IRS has on file for the RRC amount (stimulus payments one and two) the IRS is manually verifying the tax return for credit eligibility. If the eligibility has not been met, the IRS will generate Letter 105C or Letter 106C, Correspondence for Disallowing a Claim. This letter provides for appeals rights in disallowing a claim. The taxpayer will have to reply to the correspondence before the IRS will continue processing the return.
However, if the discrepancy is not an eligibility issue, and the IRS records show an EIP was made, the IRS representative is routing the return to the Accounts Management team for further research, which includes tracing EIP funds and identity theft issues.
Affordable Care Act Survived the Latest Supreme Court Challenge
We had filed a protective claim for refunds to be claimed should the court challenge be affirmed. This will not be the case, but we are glad we did act proactively should the law be overturned. For more on this click through to the NYS article. For some historical prospective you can review this article from The Commonwealth Fund.
Offering the option for remote work was supposed to help keep employees engaged – and more importantly – loyal to their employer. However, research from Korn Ferry indicates that the largest group taking part in 2021’s “Great Resignation” is those working remotely. Many remote workers are quitting when employers are asking them to return to the office, but many are quitting even with the option to remain remote. Some are leaving due to problems with managers unaccustomed to supervising remote teams while others are taking more control of their careers to find workplaces that are better aligned to their values. Offering remote work opens up a wider audience for recruiting, but it can also be harder to align those workers with a company’s culture.
REOPENING THE OFFICE
According to Gallup’s latest survey of workers around the world, U.S. workers are among the most stressed in the world. Women were especially stressed in the U.S., due in part to the expectation that they will be primary caregivers to children and to their predominance in low-paying service jobs which were disrupted in the pandemic. Younger workers expect their workplaces to provide more than just a paycheck, which means that employers will need to help improve employee well-being if they want a resilient and loyal workforce.
Only 18% of employees want to return to work as it was before the pandemic, which means that most employees will not be thrilled about coming back to the office. An article in Harvard Business Review has pointers for transitioning your team back to the next normal for your business. First, being transparent about all changes as those changes are announced will help manage expectations. Involving the team in implementing any new work from home policies can help everyone buy into it and be willing to help out those who need more flexibility. Some team members may need emotional space to grieve or otherwise come to terms with the impact of the pandemic.
Weekly jobless claims jumped last week by 37,000 over the previous week’s level of 375,000, increasing for the first time since April, according to the Labor Department. New applications for Pandemic Unemployment Assistance (PUA) also climbed by nearly 47,000. The PUA program offers jobless benefits to contractors, gig workers and others who don’t qualify for traditional unemployment. However, some note that weekly numbers can be volatile due to inconsistent reporting and backlogs in state unemployment offices.
U.S. home prices are up a record 13.2% compared to last May, according to Zillow. Some cities, such as Austin, Phoenix, and Salt Lake City, saw prices rise by 20% or more. Low mortgage rates, low supply and increased demand are all contributing to a hot housing market, with many homes selling in under a week. Rents are also up 5.4% compared to last May.
- IRS resources for stimulus 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
- 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
- Entrepreneur put together a listing of free tech resources for remote work
- 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.