Tag: business tax

Coronavirus Relief Package Signed Into Law – More to Come

The Families First Coronavirus Response Act (H.R. 6201) has been signed into law to provide Coronavirus relief to many. Read more to learn the latest.

The Families First Coronavirus Response Act (H.R. 6201) is now law, and attorneys, accountants, and other professionals are poring over it. What are its main provisions, and how might this coronavirus relief affect you?

The Society for Human Resource Management and other outlets have highlighted the following provisions:

Paid Family Leave From Coronavirus Relief

The law provides 12 weeks of qualifying family and medical leave at two-thirds of their salary when employees can’t work because their minor child’s school or child care service is closed due to a public health emergency.

Those on the payroll for at least 30 calendar days are eligible. Benefits are capped at $200 a day (or $10,000 total) and expire at the end of the year.

Paid Sick Leave From Coronavirus Relief

sick leave

Employers have to provide 80 hours of paid-sick-leave benefits in various scenarios, including a situation in which an employee has been ordered by the government to quarantine or isolate or has been advised by a health care provider to self-quarantine. The payment is capped at $511 a day and expires at year-end.

Covered employers that are required to offer emergency FMLA or paid sick leave are eligible for refundable tax credits. Employers with fewer than 50 workers can apply for an exemption from providing paid family and medical leave and paid sick leave if it “would jeopardize the viability of the business.” According to the SHRM, “Gig-workers and other self-employed workers will be eligible for a tax credit to cover the benefits.”

A notable exemption is companies with more than 500 employees. The thinking on Capitol Hill was that such companies are capable of providing benefits without direct government help.

Part-Time Workers

Uber driver

They are also covered. According to the New York Times, such employees will receive the amount they typically earn in a two-week period. The self-employed — from freelance writers to Uber drivers — “should calculate their average daily self-employment income for the year, then claim the amount they take as a tax credit (they can reduce their estimated quarterly tax payments in the meantime).“

LEARN MORE: The Families First Coronavirus Response Act (H.R. 6201)

Is everyone getting a check?

tax evading

There are a lot of rumors floating around about everyone getting a relief check. The government is still working on who gets a check and how much — and how to get the money to everyone who is eligible. As these proposals take a more solid form, we’ll have more details.

For now, keep in mind that the legal situation can change as quickly as the health situation, and ruling and reinterpretations of laws can change suddenly, modifying the advice in this article. We’ll be keeping an eye on authoritative sources in the coming days.

© 2020

READ MORE: Tax Filing Deadline Extended to July 15 Due to COVID-19

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Telecommuting, Coronavirus and You

We provide some helpful tips regarding telecommuting, coronavirus, and your business. If you have employees or are now working from home, learn these tips.

Usually, when companies begin moving from an office-based to a virtual model, they do it gradually, with plenty of planning and training. However, because of the COVID-19, many businesses are seeing the need to quickly empty out offices and send everyone home to keep the virus from spreading. No one knows how long the emergency will last, but you want to make sure the telecommuting system you hurried to implement keeps your business running until the coronavirus pandemic passes.

To make telecommuting work, even temporarily, you must keep in mind the needs of both your customers and your employees, all of whom have to get used to the new system on short notice. Every company will have different needs, but here are some general guidelines.

Make Sure Everyone Has The Technology

telecommuting

You may assume that today everyone has a late-model computer at home, with a high-speed connection. But not everyone does, or if they do, they have to share their resources with other family members. So be prepared to rent or purchase laptops for your staff and help them set up an internet connection.

Take Charge of Security

telecommuting

This will vary widely from business to business, and from employee to employee. In the office, you may have a highly secure intranet that encompasses your files, customer accounts, financial records and more. It will have to be extended so everyone has access from remote locations. You can simplify the task by giving employees access to only the information they need.

Your HR director needs access to employee files but probably not to sales figures, for example. Each remote computer needs its own security software to ensure no single machine becomes the weak link in the chain.

Rethink Your Meetings

telecommuting

You won’t be able to casually meet with staff the way you did in the office. Even formal meetings will be different. You’ll need to rethink the way you interact with your staff, and the way they interact with each other. Skype and other messaging software can be used for quick notes or video calls. Zoom is good for conferences. Evernote allows employees to share and collaborate on various projects — it’s easy to use and inexpensive. There are other choices as well, depending on your needs.

Some companies like visual conferences, and there are economical choices. But keep in mind that each employee’s background may be a messy living room rather than a well-ordered office.

Also, no matter how sophisticated your software, you cannot perfectly replicate the in-office experience. Each employee will have to work more independently. Of course, you can — and should — ask for progress reports and encourage regular communication.

Be Flexible and Understanding

telecommuting

Finally, be flexible and understanding. Many employees may not have a dedicated home office, so the voices of spouses — also working from home — and children may become part of any meeting, despite everyone’s best efforts. You will need to be understanding. But if everyone remains open to experimenting with ways to make telecommuting work, there’s a very good chance your company can weather this enforced situation.

Indeed, you may find that many, even most, of your employees adapt so well that this can become a permanent arrangement for them. This will not only improve employee morale and give you a recruiting edge, but reduce your real estate costs. Good luck with the transition!

© 2020

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Diesel Engine Company Executive Sentenced To Prison in Tax Case

In this recent tax case, an executive failed to pay taxes to the IRS and created false records, ultimately sinking his company.

He failed to pay taxes to the IRS and created false records, ultimately sinking his company.

A Nebraska businessman was sentenced to one year and one day in prison for failing to pay federal taxes.

Delving Deeper

Rolley D. Bennett Jr., 53, of Omaha, Nebraska, was also ordered to pay $31,576.19 in restitution.

Bennett was the controller of the Diesel Power Equipment Company, headquartered in Omaha. During the period of 2013 and 2014, he failed to pay approximately $879,000 in payroll trust fund taxes to the IRS.

tax case

Photo by Hunters Race on Unsplash

The Business

Diesel Power distributed and repaired diesel engines, generators, pumps, parts, and accessories, primarily to the mining, railroad, industrial equipment, and agricultural irrigation industries.

Bennett’s failure to make the payroll tax payments resulted in Diesel Power ultimately going out of business.

Bennett took steps to conceal the nonpayment of Diesel Power’s employment taxes, including creating cash flow reports that reported the employment tax liabilities had been paid and creating journal entries in the company’s general ledger, which accrued the employment tax liabilities and their associated payments.

tax case

Photo by Wesley Tingey on Unsplash

This Tax Case Verdict

“Failure to remit those employment taxes resulted in the loss of tax revenue to the government and the possible loss of future Social Security or Medicare benefits for the employees,” said Karl Stiften, Special Agent in Charge of IRS Criminal Investigation.

©2019

Featured image by Larry Farr on Unsplash

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New Regulations for Global Intangible Low-Taxed Income

Learn about the new final and proposed regulations that will affect U.S. shareholders eligible for global intangible low-taxed income.

A key component of the Tax Cuts and Jobs Act of 2017 (TCJA) was the implementation of global intangible low-taxed income foreign tax credits (GILTI) for controlled foreign corporations. GILTI taxes U.S. shareholders currently on income earned through their controlled foreign corporations (CFC) even though their profits are not repatriated.

Affect of Global Intangible Low-Taxed Income (GILTI)

According to the recently issued final GILTI regulations, partners are treated as they would be for any foreign partnership. Consequently, any partner who indirectly owns less than 10% of a CFC (by voting or value) will not have a GILTI inclusion. The final GILTI regulations are retroactive for any CFC tax year after December 31, 2017.

Application of the Regulations

This created a problem, however, because treating income at the partnership level is inconsistent with the treatment of Subpart F Income, which traditionally has been determined at the partnership level. The Internal Revenue Service issued proposed regulations to resolve this. The proposed regulations extend the aggregate treatment of domestic partnerships to Subpart F and Section 956 inclusions — which is a fundamental change to the treatment of Subpart F income. These proposed regulations are effective for tax years beginning after December 31, 2017.

The proposed regulations also address the high-tax exclusion from GILTI by allowing CFCs to elect to exclude certain income that is subject to a foreign effective tax rate of at least 18.9% if that income is also excluded under Subpart F. (CFCs that don’t have Subpart F income still may be subject to GILTI.) This exclusion will become effective once the proposed regulations are final and effective.

Opportunities and Challenges

Global Intangible Low-Taxed Income

Photo by Ben Rosett on Unsplash

These new rules pose potential opportunities and challenges for taxpayers:

  • Partners who don’t meet the 10% threshold are not considered a U.S. shareholder for purposes of these rules. These partners, however, still may be subject to the passive foreign investment company rules.
  • If the high-tax exclusion is elected, it applies to all CFCs owned by the controlling U.S. shareholder group.
  • Once the high-tax exclusion is elected, it applies to subsequent tax years unless it is revoked. If revoked, the election would not be available to that CFC for 60 months. Any subsequent elections cannot be revoked for 60 months.
  • U.S. companies that have a high-taxed CFC and a low-taxed CFC may face unfavorable consequences if they elect the high-taxed exclusion.
  • Coordinating the GILTI rules with the Subpart F rules may have tax consequences for CFCs with de minimis income as defined by Subpart F. Under the new regulations, Subpart F income is taxed solely under the Subpart F rules, whereas de minimis Subpart F incomes falls solely under the GILTI rules.

Companies will need to consider carefully how all these issues affect them. For help evaluating these considerations, contact us today.

©2019

Featured image by Sean Pollock on Unsplash.

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