Weekly Update – September 9th 2021
Thanks to tight supply chains and logistics in the developed world, many people have grown accustomed to receiving whatever they ordered promptly and predictably. That era may be over, as shortages are likely to continue. Toyota will be slashing production of cars by 40% in the face of a continuing chip shortage. It may be another year – or two – before shortages in sectors from construction to medical testing to kitchen supplies are fully resolved. Quaarantines at key ports and a lack of dock workers at other ports mean that shipping containers are in short supply, a problem exacerbated when traffic through the Suez Canal was halted for a week when a giant container ship got stuck there. We will learn to cope.
This was a week of many sad and exciting happenings. I was all prepared to share photo’s of my day at the US Open which was great. My daughter Emily, her husband Jeff (an avid tennis player, still on a competitive league) and Emily’s good friend Rachael joined us for a day at the US open, Jeff planned the day of tennis matches we would see and Emily demanded that we eat all the NYC foods she missed while living in Michigan (pizza from a favorite restaurant in Brooklyn, bagels from our neighborhood bagel shop, Chinese food from flushing and Vietnamese food again from Brooklyn), we had it all and leftovers, plus great weather and seats for amazing matches. We had a great time and I am happy to share these photos
We had a wonderful visit and were able to take a walk on the beach and enjoy the fall weather.
Then I started reading about all of the recent hurricane Henri and Ida devastation, and remembered how we suffered through hurricane Sandy back in October 2012. The photos and stories are heartbreaking, having lived through similar circumstances I am glad to share some insight on tax advantages and support that is now available, but certainly you never want to live through this…
Hurricane Ida and Henri
News Release IR 2021-179 includes the following language:
“The IRS is offering relief to any area designated by the Federal Emergency Management Agency (FEMA) as qualifying for individual or public assistance. In New York, this currently includes Bronx, Kings, New York, Queens, Richmond and Westchester counties, and in New Jersey, it includes Bergen, Gloucester, Hunterdon, Middlesex, Passaic and Somerset counties.”
WASHINGTON — Victims of Hurricane Ida in parts of New York and New Jersey now have until Jan. 3, 2022, to file various individual and business tax returns and make tax payments, the Internal Revenue Service announced today. This is comparable to relief provided last week to Ida victims in Louisiana. See information below regarding extended periods for Louisiana tax filings and other disaster relief measures.
The IRS is offering relief to any area designated by the Federal Emergency Management Agency (FEMA) as qualifying for individual or public assistance. In New York, this currently includes Bronx, Kings, New York, Queens, Richmond and Westchester counties, and in New Jersey, it includes Bergen, Gloucester, Hunterdon, Middlesex, Passaic and Somerset counties. Taxpayers in Ida-impacted localities subsequently designated by FEMA in other parts of these states will automatically receive the same filing and payment relief. The current list of eligible localities is always available on the disaster relief page on IRS.gov.
Incident Period: August 21, 2021 and continuing. Emergency Declaration declared on August 22, 2021
Incident Period: August 21, 2021 and continuing. Emergency Declaration declared on August 22, 2021
Incident Period: August 20, 2021 and continuing. Emergency Declaration declared on August 22, 2021
Incident Period: August 20, 2021 and continuing. Emergency Declaration declared on August 21, 2021
THE AMERICAN RECOVERY PLAN ACT (ARPA)
Employee Retention Credit
This credit didn’t get as much attention as the Paycheck Protection Program when both were passed as part of COVID-19 relief, and it may be curtailed early as a mechanism to fund infrastructure bills being proposed. We have been analyzing the potential for our clients and helping them file amended payroll tax returns where applicable. The credit allows employers to receive a refundable credit of up to $5,000 for each employee for 2020, or $7,000 per quarter per employee for 2021, (possibly up to a total of $28,000 per employee for 2021). To be eligible, a business must either be fully or partially closed due to government orders or have experienced a decline of 80% or more in gross receipts compared to the same calendar quarter of 2019 (for 2020) or a decline of 20% or more in gross receipts compared to the same calendar quarter of 2019 (2021) . Startup companies may also be eligible. I know “too much information” just know that we are checking on eligibility for 2020 and 2021 for you and will be filing the amended tax returns that will result in a big fat check from the IRS should you be eligible.
As the credit now stands, it is available through the end of 2021, but there are discussions in Congress of cutting it off at the end of September. For more information, see the IRS FAQs for this credit.
Paycheck Protection Program (PPP)
Although the promise of the PPP was that if borrowers used the funds correctly, their loans would be forgiven, 6% of borrowers are being told they need to repay part of their PPP loans. About half of borrowers have not yet completed the forgiveness process. Some problems stem from the speed at which the program was rolled out, resulting in several updates to SBA’s guidance, applications, and forgiveness processes.
Meanwhile, a new report finds that as much as $3.6 billion in PPP loans were made to ineligible businesses, among other types of fraud in COVID relief programs. Nearly $87 billion in fraudulent unemployment payments will be made by the end of September, and $918 million in Economic Injury Disaster Loans may have been made to ineligible businesses.
I am thrilled to report that we have helped our clients file for forgiveness for PPP#1 and all those who followed our advice and guidance and spent the funds accordingly had ppp loans 100% forgiven with the expenditures fully deductible. This is huge and makes all that hard work so worthwhile.
Monthly Child Tax Credit Payments
September payments for the advance Child Tax Credit will be going out by direct deposit if the IRS has your banking information, which you can update at the IRS Child Tax Credit portal. You can also use this portal to update your mailing address if you prefer a paper check. The agency will also use this address to send out an end-of-year summary of the payments received, which will be needed for filing 2021 tax returns. This portal can be used to verify enrollment status, update banking information and mailing addresses, and to unenroll from future 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.
Student Loans and Fraud
Although the federal government has not yet clarified whether and how any student loans will be forgiven, this confusion has opened up opportunities for fraudsters yet again, to take advantage of financial pain for those with outstanding loans. The best way to avoid exploitation is prevention. Be cautious about providing information to anyone who requests personal information via email or over the phone. Beware of companies that offer forgiveness from programs that do not exist, and those who send emails from email addresses that do not end in “.gov.”
Please note that federal loan forgiveness does not require an extra payment CONTACT your loan servicer if you have any doubts. If you’ve been a victim of fraud, report it to the Federal Trade Commission and your state attorney general.
Due to Hurricane Ida, Louisiana residents and business owners have an extension until January 3, 2022 for any tax filings or tax payments due after August 26, 2021 through January 3, 2022. This includes tax returns that have been extended to October 15, quarterly estimated tax payments due September 15, quarterly payroll tax and excise tax returns due November 1, and tax-exempt organizations with an extended due date of November 15, 2021 for tax returns. This relief also extends to relief workers in the disaster area.
SOCIAL SECURITY TRUST FUND
A steep drop in employment during the pandemic may cause the Social Security trust fund reserves to be depleted in 2033, a year sooner than the estimate from a year ago. After 2033, continuing payroll tax revenues will be sufficient to pay only 76% of scheduled benefits. Congressional action will be needed in the coming years to shore up this program. iRest assured that it is a priority for this and any administration that follows to keep this fund alive and functioning as intended.
Avoid phishing attacks by being super careful about clicking on links in emails- especially those from “unknowns”. A commonly advised strategy is to hover the over the link to check on the destination before clicking on that link. However, a recent spate of phishing attacks has targeted Office 365 customers by leading victims to a fake login page where Office 365 credentials are stolen. Bad actors have been exploiting open redirects to redirect visitors from trustworthy sites to malicious sites. Google warns that the mouse hover trick is not a reliable tool to prevent phishing.
So far this year, scammers have stolen $545 million in COVID-related fraud from Americans, according to the FTC. These scams include overcharging consumers for sought-after goods such as hand sanitizer, toilet paper, and masks and fraudulent online shopping sites that never ship the purchased goods.
THE GREAT REASSESSMENT
In the U.S. there are currently 10 million job openings and 8.4 million unemployed seeking work. Business owners can’t find enough people; stores and restaurants are short-staffed. These are all symptoms of a massive shift in employment that has been called “The Great Resignation,” this actually appears to be more of a reassessment of work and a mismatch between the skills that employers want and the opportunities that employees seek. Some want to work remotely, some want more time for family, and some want a more meaningful career. In several job sectors, there are many more job openings than there are people with experience in those fields. These include professional and business services, education and health, wholesale and retail trade, and leisure and hospitality. This contrasts with the situation after the Great Recession, where the number of unemployed outnumbered available jobs in all sectors for years. Compounding the issue is the reluctance of many employers to hire people who have been out of work for six months or more, which, in the wake of the pandemic, is not an unusual situation.
For employees ready to participate in the Great Resignation, here are a few things to think about before quitting your current job. First, think about whether you’re running away from something or towards something new. It may be possible to make a few changes to your current situation that might shift it to something you enjoy more. No job will give you everything you need, so prioritize the “need-to-haves” from the “nice-to-haves.” Evaluate your financial situation and determine how long your savings will cover your current expenses. Best of luck to you employers and employees out there.
REOPENING THE OFFICE AND REMOTE WORK OPTIONS
Hiring remote employees opens the talent market to the world, not just to those living nearby, so it’s important to create a process for onboarding remote employees. A successful process includes these four building blocks:
- Employee support. Create a resource where employees can access all of the information they need to start their jobs and get their questions answered. Some organizations are using online chat bots that help employees resolve questions.
- Update your onboarding process. You will need a different process for on-site employees and remote employees.
- Introduce new hires before they start. Virtual meetings with new hires and their managers allow everyone to hit the ground running instead of spending the first few days introducing the new person.
- Monitor new hires and ask for feedback on the onboarding process. Like any other process, regular feedback and improvements ensure the process remains relevant.
The pandemic changed the workplace forever, but it’s not yet clear what the workplace will look like whenever it is that workers do return. Large companies such as Amazon, Apple, and Google are all pushing back their return to office plans, but most companies remain eager for team members to return some day. Remote and hybrid work are here to stay, a trend that began before the pandemic, but which accelerated over the last year. Key team members are leaving firms that require in-person work and moving to firms that allow remote work. Compensation for remote workers may change to reflect prevailing rates where they live, rather than where the company is located.
Even as COVID cases increase, the stock market is booming. Since hitting bottom in March 2020, the S&P 500 index has more than doubled, with August marking a seventh consecutive monthly rise. At the same time, other parts of the economy are not faring so well – businesses are not planning to reopen this fall, staffing shortages abound, and supply chain bottlenecks continue. Investor confidence seems to be related to two factors: the Federal Reserve will keep interest rates low and the federal government will continue spending to keep the recovery going.
States that ended federal COVID-related unemployment benefits saw about the same job growth as those that continued the additional benefits, according to analysis by the Wall Street Journal. However, it may be too early to detect any impact, and effects from state reopenings and restrictions may be offsetting any impacts. While the enhanced benefits did keep some people out of the labor market, other factors such as school closures, family-care responsibilities, employee fears about COVID and a mismatch between available jobs and the locations and qualifications of prospective workers have all likely had an impact.
- 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