Podcasts about internal revenue code irc

This podcast provides an overview of federal income taxation, beginning with the historical and constitutional basis, particularly the Sixteenth Amendment, which granted Congress the power to tax income without apportionment. The lecture then discusses the roles of the IRS and Treasury Department. The main sources of tax law are the Internal Revenue Code (IRC), Treasury Regulations, Revenue Rulings, Revenue Procedures, and Judicial Decisions. Beyond raising revenue, tax policy is shaped by considerations such as encouraging homeownership or environmental responsibility.Gross income, as defined in IRC Section 61, includes "all income from whatever source derived" unless specifically excluded. Common examples are wages, salaries, interest, dividends, business income, and capital gains. Illegal income, gambling winnings, and prizes are also included. The Supreme Court defines gross income as undeniable accessions to wealth, clearly realized, and over which the taxpayers have complete dominion.Exclusions from gross income include gifts, inheritances, life insurance proceeds, certain fringe benefits, and municipal bond interest. Cancellation of Debt (COD) income is usually included unless it occurs during bankruptcy or insolvency.Filing statuses include single, married filing jointly or separately, head of household, and qualifying widow(er), which affect tax brackets, standard deductions, and credit eligibility. The U.S. tax system is progressive, meaning the marginal tax rate increases as income rises.The tax system encourages or discourages behaviors through charitable deductions, mortgage interest deductions, and retirement savings incentives. Tax considerations are integral to estate planning and business transactions.A hypothetical scenario illustrates these principles with an individual who has wages, side gig income, dividends, an inheritance, and installs solar panels. The analysis involves determining filing status, calculating gross income while considering exclusions, and identifying potential tax credits.

This lecture begins by outlining the historical and constitutional roots of the federal income tax. Early in American history, the federal government used excise taxes and tariffs to raise revenue, and only in special circumstances, such as the Civil War, did it introduce temporary income taxes. The Sixteenth Amendment in 1913 dramatically shifted the legal landscape, giving Congress the authority to impose an income tax without the need for apportionment among the states. This development paved the way for modern federal income taxation, removing most constitutional barriers that had previously hindered direct taxation of individual incomes.Next, the lecture covers how the federal tax system is organized. The Internal Revenue Service (IRS) enforces tax laws and issues guidance, while the Treasury Department oversees both the IRS and broader financial policies. Various authorities define tax law: the Internal Revenue Code (IRC) enacted by Congress; Treasury Regulations that interpret and clarify the Code; official Revenue Rulings and procedures from the IRS; and judicial decisions at multiple levels, including the U.S. Tax Court, district courts, courts of appeal, and potentially the Supreme Court. Together, these sources form a complex legal framework that practitioners must navigate.Tax policy goals also factor into the system's structure. While the primary purpose of taxation is to fund government operations, Congress uses the tax code to shape economic and social behavior, encouraging homeownership via mortgage interest deductions or fostering charitable giving through donation write-offs. This means that the Code is more than just a revenue-raising tool; it's also a mechanism for incentivizing and discouraging certain activities.A significant portion of the lecture is devoted to gross income, a concept anchored by IRC Section 61. This broad definition—“all income from whatever source derived”—captures wages, business profits, interest, dividends, rents, and many other forms of economic gain. Even illegal proceeds and certain prizes count as gross income, reflecting the principle that if a taxpayer obtains a clear economic benefit, it is presumed taxable. Nevertheless, there are notable exclusions: gifts, inheritances, certain fringe benefits, and life insurance proceeds are among the items that Congress or the courts have decided should not be included in gross income. Sometimes, these exclusions further a policy objective, such as not penalizing individuals receiving gifts or not taxing life insurance benefits that mitigate financial burdens upon death.The lecture then introduces the importance of filing status: single, married filing jointly, married filing separately, head of household, and qualifying widow(er). Each status affects how taxpayers fall into brackets in the progressive tax system, where higher marginal rates apply to additional increments of income. The system aims to tax those with greater resources more heavily, though fairness and efficiency debates remain. Thus, individuals with the same gross income may pay different effective tax rates, influenced by both filing status and the presence of deductions or credits.Finally, the lecture underscores the policy rationales embedded in the tax code. Deductions for retirement contributions or energy-efficient home improvements reveal the government's intent to channel societal behaviors. Because these incentives directly affect how people earn, save, and invest, attorneys and other professionals must understand both the letter of the law and the broader purpose it serves.Overall, Lecture 1 underscores that modern federal income taxation rests on a constitutional foundation, shaped by the Sixteenth Amendment, enforced by a multi-tier system of statutes, regulations, and court rulings, and guided by deliberate policy goals. The core concept of “gross income”—and the many exceptions that reduce it—forms the building block for tax liability calculation

Overview of Tax Law and the US Tax System Main Themes: Importance of Tax Law: Tax law is crucial for funding government functions, influencing economic behavior, and ensuring compliance obligations for individuals and businesses. Sources of Tax Law: US tax law stems from the Constitution, statutes like the Internal Revenue Code, regulations from the IRS, and judicial precedents. Diversity of Tax Types: The US employs various tax types, including income, sales, property, estate, and gift taxes, each targeting different economic activities. Division of Tax Authorities: Tax authority is split between federal (IRS), state, and local levels, each administering their respective taxes. Principles Guiding Taxation: Key principles like progressive, regressive, and proportional taxation influence the fairness and impact of tax systems. Role of the IRS: The IRS plays a multifaceted role in tax collection, taxpayer assistance, enforcement of tax laws, and providing regulatory guidance. Most Important Ideas/Facts: Constitutional Basis: The Constitution grants Congress the power to levy taxes (Article I, Section 8) and allows for a federal income tax (16th Amendment). "The U.S. Constitution grants Congress the power to levy taxes." Internal Revenue Code (IRC): The IRC serves as the main statutory source for federal tax law, detailing rules for income, deductions, credits, etc. "The Internal Revenue Code (IRC) is the main statutory source that outlines the rules governing federal taxes." Types of Taxes: The lecture distinguishes between income tax (personal and corporate), sales tax, property tax, and estate/gift taxes. "There are several different types of taxes that individuals and businesses may be subject to." Progressive vs. Regressive: Understanding the difference between progressive taxation (higher earners pay a higher percentage) and regressive taxation (same rate for all, impacting lower earners more) is crucial for analyzing tax fairness. "The U.S. federal income tax system is progressive, meaning that higher levels of income are taxed at higher rates." "Sales tax is generally considered regressive because it imposes the same rate on all consumers, regardless of income level." Taxable vs. Exempt Income: Recognizing which income is subject to tax and which is exempt is essential for accurate tax calculation and planning. "Understanding what constitutes taxable and exempt income is crucial for effective tax planning and compliance." Key IRS Functions: The IRS not only collects taxes, but also assists taxpayers, enforces compliance through audits, and provides guidance on tax law interpretation. "The IRS plays a vital role not only in tax collection but also in providing guidance, ensuring compliance, and maintaining the overall integrity of the tax system." Case Study Insights: Individual Taxation: The example of John highlights the importance of Form 1040, understanding deductions and credits, and the potential impact of various income sources. Corporate Taxation: The case of XYZ Corporation illustrates the process of calculating net income, filing Form 1120, and the issue of double taxation on corporate profits and subsequent dividend distributions. Overall, this lecture provides a foundational understanding of tax law and the US tax system, emphasizing its complex structure, diverse elements, and the critical role of the IRS in ensuring its function. --- Support this podcast: https://podcasters.spotify.com/pod/show/law-school/support

To answer this question, I need to first share why and when LTC insurance companies are required to approve and pay a claim, and then I'll discuss where this can get confusing or messed up. LTC insurance companies are strictly regulated by the Internal Revenue Code (IRC) 7702(b). If the plans offered will be tax deductible to some individuals and most businesses, and for benefits to be paid tax-free, LTC insurance companies must adhere to the 7702(b) rule. This week, I'm sharing and simplifying definitions within the 7702(b) code. When we understand when companies are required to pay, we'll be better able to use their own vocabulary when talking with the claims departments. If you already own LTC insurance, you should read the policy and review it every couple of years.  Have your kids read it, too.  And adult children should read and review their parents' policies. If you would like help reviewing your plan, ask.  I'll be glad to to review it with you. If you don't own LTC insurance, it's time to schedule with me at start designing a customized plan to meet your specific wants and needs. Schedule at   

 Understanding Authority Hierarchy in TaxDid you know the IRS isn't actually who makes tax laws? And IRS Publications aren't actual Authority? Let's find out who does and what is. From Congress-created laws in the Internal Revenue Code (IRC) to U.S. Treasury regulations, court case rulings, and IRS publications, she explains the hierarchy and reliability of these sources. She emphasizes the importance of basing tax positions on substantial authority rather than simplified IRS guidance or social media information. Tax professionals are urged to be thorough in their research and not dismiss clients' internet findings outright, as they often contain elements of truth. This episode serves as a guide for tax professionals to better understand and utilize authoritative tax sources. Introduction to Real Estate Taxing Exploring Facebook Tax Groups Understanding Tax Authority Levels Internal Revenue Code: The Holy Grail Treasury Regulations Explained Judicial Authority and Court Cases IRS Guidance and Its Limitations Practical Advice for Tax Professionals Conclusion and Final Thoughts 

For fast-growing companies, becoming a C corporation for income tax purposes can offer significant tax savings for their shareholders. Section 1202 of the Internal Revenue Code (IRC) is a powerful tool for attracting investors with funds to fuel a company's growth. To qualify for these tax benefits, both the company and shareholder must meet specific requirements, and non-compliance can result in missed opportunities for savings. It is crucial for businesses to have a comprehensive understanding of the qualifications and technical aspects of Section 1202 to make the most of this tax law.In this episode, Brooks Nelson, Tax Partner and Sarah McGregor, Tax Director, are joined by Barry Weins, Tax Director and Molly Gill, Transaction Tax Senior Associate. Together they discuss how qualified business stock offers a valuable opportunity to exclude capital gains from taxation, making it a powerful tool for attracting investors and fueling the growth of small to mid-sized businesses.Listen to learn more about: 02:11 – Section 1202 background04:57 – Businesses that qualify for Section 120205:47 – Beneficial transaction examples06:42 – Recurring questions regarding Section 1202 10:37 – Difficulties of collecting client information13:31 – Factors investors should consider18:02 – How to become eligible for Section 1202 20:03 – How state provisions vary Related Guidance Article: LLC vs. S Corp: Which Offers Better Tax Savings?Webinar: Maximize Tax Savings Through Cost Segregation, Section 179D, and Section 45L Approach and Client Success Stories

In late April the Department of Labor (DOL) released the Retirement Security Rule, generally referred to as the “fiduciary rule.”  Nevin (Adams) and Fred (Reish) take a look at what's changed —what hasn't—and what it all means for retirement plan advisors. This now-final rule updates and broadens the definition of an investment advice fiduciary under the Employee Retirement Income Security Act (ERISA) and the Internal Revenue Code (IRC).  In this new podcast episode, the prolific podcasting pair ponder: The impact(s) to retirement plan advisors who are already ERISA fiduciaries, and compliant with PTE 2020-02, How the five-part test has changed, The implications of the so-called “Hire Me” exception, What changes to the “regular basis” criteria mean to the “drive-by” plan sale to plan sponsors.

For this episode of The Jason Cavness Experience, I am covering HR Laws you have to follow if your company has 49 or fewer employees CavnessHR Product/Market Fit Validation and Tech Platform Validation To help us with our product market fit and tech platform validation. We are providing Employee Handbooks and HR policies at no cost to companies with 49 or fewer people in the city of Seattle. Email me at jasoncavness@CavnessHR.com if you are interested in this. Go to www.thejasoncavnessexperience.com for the full episode and other episodes of The Jason Cavness Experience on your favorite platforms.  Sponsor  CavnessHR delivers HR companies with 49 or fewer people with our HR platform and by providing you access to your own HRBP. www.CavnessHR.com HR Laws for Small Business with 49 or fewer employees  If you have at least one employee, the following HR laws apply to you.  Drug-Free Workplace Act: The Drug-Free Workplace Act of 1988 only applies to federal grant recipients and federal contractors with a contract for more than $100,000. Drug-Free Workplace Requirements Generally, it requires that covered employers: adopt a drug-free workplace policy; and establish a drug-free awareness program. Employers faced with alcohol and drug use in the workplace often consider employee and applicant drug testing as a way to reduce safety risks and avoid other problems caused by employee drug use. Employers that use drug testing should be aware of the many laws and regulations governing safety, employee privacy, and disability.  The issues involved include both legally mandated and voluntary drug-free workplace programs, discrimination and accommodation, testing, and special requirements for the transportation industry. Electronic Communications Privacy Act (ECPA): Prohibits intentional interceptions of wire, oral, or electronic communications. https://it.ojp.gov/privacyliberty/authorities/statutes/1285 Employee Polygraph Protection Act: Forbids most employers to use lie detectors. Poster required.  https://www.dol.gov/agencies/whd/polygraph Employee Retirement Income Security Act (ERISA): Regulates benefits through a complex series of rules covering pensions, profit-sharing, stock bonus, and most insurance and other benefit plans. What is ERISA? The Employee Retirement Income Security Act (ERISA) was enacted to ensure that employees receive the pension and other benefits promised by their employers. ERISA also incorporates and is tied to Internal Revenue Code (IRC) provisions designed to encourage employers to provide retirement and other benefits to their employees. Most provisions of ERISA and the IRC are intended to ensure that tax-favored pension plans do not favor the highest-paid employees over rank-and-file employees. ERISA has a complex series of rules that cover pension, profit-sharing, stock bonus, and most “welfare benefit plans,” such as health and life insurance. ERISA has created a single federal standard for employee benefits, and it supersedes almost all state laws that affect employee benefit plans. An employer's responsibilities under ERISA vary depending on the type of plan involved. https://www.dol.gov/general/topic/retirement/erisa Military Leave -Uniformed Services Employment and Reemployment Rights Act (USERRA) of 1994: Prohibits discrimination against those who serve in the military; mandates military leave of absence.  With the increased use of reserve and National Guard troops in full-time military service, employers must frequently deal with the requirements of the Uniformed Services Employment and Reemployment Rights Act (USERRA) of 1994 when those employees are called to active services and when they return. USERRA governs the leave and reinstatement requirements for military personnel. The law contains specific requirements for protected leave, rules for benefits employees are entitled to during military leave, and the requirements for reinstatement back in the civilian workforce.  https://www.dol.gov/vets/programs/userra/userra_fs.htm Employee Right to Know Laws (Hazardous Chemicals in Workplace): A disclosure rule that requires private sector employers with hazardous substances in their workplace to develop a comprehensive hazard communication program to train and inform employees.  https://www.osha.gov/Publications/osha3111.html National Labor Relations Act (NLRA): Employees have the right to organize and bargain collectively for wages, hours, and working conditions. The National Labor Relations Act of 1935 (NLRA) was passed by Congress to encourage a healthy relationship between private sector workers and their employers. It was designed to curtail work stoppages, strikes, and general labor strife, which were viewed by Congress as harmful to the economy and the nation's welfare. To this end, the Act defines and protects the rights of employees and employers, encourages collective bargaining, and prohibits certain practices on the part of both labor and management. The NLRA also provides a system for conducting elections to determine who represents the employees and for enforcement of the strictures against unfair practices by any of the parties.  https://www.nlrb.gov/guidance/key-reference-materials/national-labor-relations-act Occupational Safety and Health Act (OSHA): Employers must furnish a workplace that is free from recognized hazards. Poster required. https://webapps.dol.gov/elaws/elg/osha.htm Equal Pay Act (EPA): Forbids discrimination in pay on the basis of gender. Poster required. Two federal statutes prohibit gender-based differences in pay: the Equal Pay Act of 1963 (EPA) and Title VII of the Civil Rights Act of 1964 (Title VII). Title VII and other federal laws also prohibit pay discrimination based on race, color, religion, national origin, age, and disability. Although the EPA and Title VII both prohibit pay discrimination based on gender, the laws differ in several aspects, including coverage, enforcement, and remedies.  https://www.eeoc.gov/laws/statutes/epa.cfm Fair Labor Standards Act (FLSA): Regulates the payment of minimum wages and overtime. Poster required. The Fair Labor Standards Act (FLSA), also known as the federal Wage and Hour Law, regulates minimum wage, overtime, equal pay, recordkeeping, and child labor for employees of enterprises engaged in interstate or foreign commerce and employees of state and local governments. The FLSA is enforced by the Wage and Hour Division of the U.S. Department of Labor (DOL). The FLSA applies in all states, but states are permitted to develop their own laws and regulations to provide even greater protection for their workers than is provided under federal law. In cases in which the two laws conflict, the law most beneficial to the employee prevails. Therefore, it is essential that employers understand both the state and federal laws. https://www.dol.gov/agencies/whd/flsa Immigration Reform and Control Act (IRCA): Employers must verify that workers are legally entitled to work in the United States. IRCA also prohibits employers from discriminating in hiring, firing, recruiting, or referring based on national orgin or citizensip status. It is also illegal to retaliate against an employee who has filed.  The Immigration Reform and Control Act of 1986 (IRCA) bars employers from hiring individuals, including undocumented immigrants, who are not legally entitled to work in the United States Employers must verify that individual are eligible to work by obtaining an Employment eligibility Verification Form, know as Form I-9 and inspecting the required supporting documents at the time of hiring. I-9 forms must be retained for 3 years after the worker is hired or for one year after termination, whichever is longer. https://www.uscis.gov/i-9 Federal Income Tax Withholding:  Employers are required to make deductions from employees' pay for Social Security. Employers are required by law to make deductions from the pay of their employees for federal income tax, for Social Security tax under the Federal Insurance Contribution Act (FICA), and for Medicare tax. The government provides detailed tables for the computation of these withholding amounts. Internal Revenue Service (IRS) Publication 15 (Circular E), Employer's Tax Guide, provides details and may be obtained on the IRS website athttps://www.irs.gov/forms-instructions.  What do employers need to consider regarding Social Security and Medicare? The Social Security program was created by the federal Social Security Act. It is a worker-employer-government insurance program, covering benefits for retirement, survivors, disability and Medicare. Employers withhold two separate taxes from employees' paychecks. One is the Social Security tax and the other is the Medicare tax. Medicare, which is funded through taxes, provides health insurance for people aged 65 or older and many people with disabilities. Medicare consists of Parts A (hospital insurance), B (medical insurance), and C (Medicare Advantage), which offer additional preventive health benefits and patient protections. In 2006, Medicare began offering prescription drug plans, known as Part D.  https://www.irs.gov/individuals/international-taxpayers/federal-income-tax-withholding Federal Insurance Contributions Act (FICA) of 1935 (Social Security): Employers and Employees are required to contribute to Social Security and Medicare. https://www.irs.gov/taxtopics/tc751 Health Insurance Portability and Accountability Act (HIPAA): Limits the duration of pre-existing condition exclusion in group health plans and gives new enrollees credit for prior coverage. https://www.hhs.gov/hipaa/index.html If you have at least 15 employees, the following HR laws apply to you. Americans with Disabilities Act (ADA): Forbids discrimination against the disabled. The Americans with Disabilities Act (ADA) prohibits disability discrimination. In the workplace, employers cannot discriminate against a qualified individual with a disability. Reasonable accommodation by employers is required absent undue hardship. The ADA Amendments Acts of 2008 (ADAAA) and its regulations significantly broadened the definition of disability, shifting the focus away from whether an individual has a disability and toward whether discrimination occurred.  https://www.dol.gov/general/topic/disability/ada Pregnancy Discrimination Act (PDA): Forbids discrimination on the basis of pregnancy, childbirth, or related medical conditions. Several federal laws protect or grant rights to workers on the basis of pregnancy or related medical conditions. These rights and protections may include the right to be free from discrimination, harassment, and stereotypes; the right to reasonable workplace accommodations, such as job modifications, extended or additional breaks, and leave; the right to leave for pregnancy, childbirth, related medical conditions, and bonding; and the right to equivalent fringe benefits, such as health insurance. https://www.eeoc.gov/laws/statutes/pregnancy.cfm Genetic Information Nondiscrimination Act: To prohibit discrimination on the basis of genetic information with respect to health insurance and employment. The Genetic Information Nondiscrimination Act (GINA) prohibits genetic information discrimination against employees or job applicants. https://www.eeoc.gov/laws/statutes/gina.cfm Title VII of the Civil Rights Act of 1964: Prohibits discrimination on the basis of race, color, religion, sex, and national origin. Federal fair employment laws protect employees from discrimination based on age, race, color, sex, national origin, religion, disability, and genetic information. Federal law covers employers of 15 or more employees, except for the Age Discrimination in Employment Act (ADEA), which covers employers with 20 or more employees. State laws often cover employers with fewer employees and provide protection for groups not covered under federal law. Certain individuals in the workplace, such as independent contractors, are not protected by federal fair employment laws if they are not employees. Employers are liable for discriminatory acts by supervisors—in some cases, strictly liable. There are many preventive measures an employer can take to reduce the probability of being sued for discrimination. Civil rights laws also impose numerous recordkeeping requirements on employers. https://www.eeoc.gov/laws/statutes/titlevii.cfm Civil Rights Act of 1964 (Update): Extends prohibition of discrimination on the basis of sex to gay, lesbian, and transgender individuals. https://www.npr.org/2020/06/15/863498848/supreme-court-delivers-major-victory-to-lgbtq-employees If you have at least 20 employees, the following HR laws apply to you. Age Discrimination in Employment Act (ADEA): Forbids the discrimination on the basis of age 40 and over. The Age Discrimination in Employment Act (ADEA) prohibits all public employers and private employers with 20 or more employees from discriminating against employees or applicants based on age. Individuals must be at least 40 years of age to be covered by the ADEA. Harassment of employees based on age is also unlawful discrimination. The ADEA also protects an older worker's disability payments, retirement incentives, life insurance, pension, and retirement plans. Amendments to the ADEA set out standards for waivers of legal rights by older employees in return for retirement incentives. Many states also have fair employment laws that prohibit age discrimination. Different age groups may be protected under state law, and smaller employers may be subject to state requirements. https://www.eeoc.gov/laws/statutes/adea.cfm Consolidated Omnibus Benefits Reconciliation Act (COBRA): Requires that employees who lose coverage under group health plans be given a continuation option. https://www.dol.gov/general/topic/health-plans/cobra CavnessHR Product/Market Fit Validation and Tech Platform Validation To help us with our product market fit and tech platform validation. We are providing Employee Handbooks and HR policies at no cost to companies with 49 or fewer people in the city of Seattle. Email me at jasoncavness@CavnessHR.com if you are interested in this.

Welcome to the Making Margin podcast! Greenway's team is here to discuss common financial mistakes and to help you navigate them. Meet the voices behind this episode of Making Margin:NickNatalie JeffAllieSince its inception, the 529 has been a popular education savings vehicle. Over the years, it has received a few enhancements, but none better than the most recent one thanks to the Secure Act 2.0. We'll talk about the 529, the changes, and how it might fit into a financial plan.In 1996, U.S. Senator Bob Graham of Florida, where a prepaid plan was well established, and U.S. Senator Mitch McConnell of Kentucky, which had a savings trust, led a bipartisan effort to provide federal tax relief for all plans, resulting in the creation of Section 529 of the Internal Revenue Code (IRC).QuestionsWhat have been the changes to 529 plans, previously and in 2023?How should a plan most appropriately be utilized? Who does it make sense for?Resources:https://www.collegesavings.org/history-of-529-plans#:~:text=In%201996%2C%20U.S.%20Senator%20Bob,Internal%20Revenue%20Code%20(IRC).https://finaid.org/savings/state529deductions/

We chat with Silencer Central CEO Brandon Maddox about the excise tax stamp on firearm suppressors, which is a $200 federal tax introduced as part of the 1934 National Firearms Act., which is part of the Internal Revenue Code (IRC § 5801 – 5872). We discuss the origins of the tax, its purpose, and how it is implemented today. We discuss the formation of so-called "gun trusts" as legal entities to purchase suppressors. 

Internal Revenue Service (IRS) tax forms are forms used for taxpayers and tax-exempt organizations to report financial information to the Internal Revenue Service of the United States. They are used to report income, calculate taxes to be paid to the federal government, and disclose other information as required by the Internal Revenue Code (IRC). There are over 800 various forms and schedules. Other tax forms in the United States are filed with state and local governments. Individual forms. 1040. As of the 2018 tax year, Form 1040, U.S. Individual Income Tax Return, is the only form used for personal (individual) federal income tax returns filed with the IRS. In prior years, it had been one of three forms (1040 , 1040A and 1040EZ - see below for explanations of each) used for such returns. The first Form 1040 was published for use for the tax years 1913, 1914, and 1915. For 1916, Form 1040 was converted to an annual form (for example, updated each year with the new tax year printed on the form). Initially, the IRS mailed tax booklets (Form 1040, instructions, and most common attachments) to all households. As alternative delivery methods (CPA/Attorneys, internet forms) increased in popularity, the IRS sent fewer packets via mail. In 2009 this practice was discontinued. Income tax returns for individual calendar year taxpayers are due by April 15 of the next year, except when April 15 falls on a Saturday, Sunday, or a legal holiday. In those circumstances, the returns are due on the next business day. An automatic extension until Oct. 15 to file Form 1040 can be obtained by filing Form 4868. Form 1040 is two abbreviated pages, not including attachments. Prior to the 2018 tax year, it had been two full pages, again not counting attachments, but following the passage of the Tax Cuts and Jobs Act of 2017, the IRS dramatically shortened both pages. The current first page collects information about the taxpayer(s) and any dependents, and includes the signature line. The current second page includes information on income items and adjustments to income, and additionally calculates the allowable deductions and credits, tax due given the income figure, and applies funds already withheld from wages or estimated payments made towards the tax liability. Prior to 2018, information on income items and adjustments to income had been entered on the first page. The Presidential election campaign fund checkoff, which allows taxpayers to designate that the federal government give $3 of the tax it receives to the Presidential election campaign fund, is near the top of the first page on both pre- and post-2018 versions of Form 1040. Form 1040 has 20 attachments (up from 14 before 2018), called "schedules", which may need to be filed depending on the taxpayer: --- Send in a voice message: https://anchor.fm/law-school/message Support this podcast: https://anchor.fm/law-school/support

Do you know the 4-part questions to use to determine if someone qualifies for the R&D tax credit? This conversation with Adam and Roger is going to be enlightening both personally and professionally.  I'm sure you'll get some great notes from this. Also, how many of this have said to our spouse “Heh Hon, I'm going to start a business, “trust me I have a plan”, there's this opportunity and I know what I'm doing? As accounting professionals, it makes sense we'd create the business plan & proforma.  But what happens when things don't go as planned?  Are you ready to pivot and following the numbers?  Marketing can change so we need to be ready and willing to go where the clients are. Adam shares some great ideas and shares some good examples. Enjoy this next episode of this podcast, building the premier accounting firm! Your Host: Roger Knecht, president of Universal Accounting Center Our Guest: Adam Farnsworth, CPA Adam Farnsworth has been working as a CPA since 2015 after he completed his master's degree at the University of Utah and his undergraduate degree at Colorado State University. As the founder of Leaf Specialty Tax Consultants, he has built a team that saves companies millions of dollars annually by identifying tax credit savings. Leaf Specialty Tax Consultants was born after founder Adam Farnsworth saw a need for businesses to have a better way to access and claim Research and Development (R&D) Tax Credits. Across the United States, companies are using innovation, technology, and research to make the world a better place. By creating a consulting business for R&D Tax Credit, LEAF wants to provide a way for businesses to have the advantage of a tax credit expert to provide computation and substantiation guidance surrounding Section 41 of the Internal Revenue Code (IRC) and affiliated code sections, court cases, regulations, and affiliated state tax credits. Sponsors: Universal Accounting Center Helping accounting professionals confidently and competently offer quality accounting services to get paid what they are worth.   Offers: Speak with Adam regarding the possibilities related to R&D tax credits.  You can reach him directly or schedule a time that is convenient for you at: https://leaftaxconsultants.com/contact-us/ https://calendly.com/afarnsworth-1/r-d-tax-credit-free-consultation   Book recommendation mentioned in the discussion, A legal guide to research and development by Alex Sadler. Off quality tax services becoming a certified Professional Tax Preparer, PTP   As you work ON your business consider applying the proven principles from The Turnkey Business Plan for a successful accounting, bookkeeping & tax business.  Creating your proforma.   For Additional FREE Resources for accounting professionals check out this collection HERE!   Remember this, Accounting Success IS Universal. Listen to our next episode and be sure to subscribe.   For more information on how you can apply these principles in your business please visit us at www.universalaccountingschool.com or call us at 801.265.3777

Every year the Arizona State Senate and House of Representatives must consider whether or not and how to conform to the Internal Revenue Code (IRC) for the tax year that just ended. To Arizona taxpayers this is vitally important since they must use federal adjusted gross income to determine the starting point for filing state tax returns. With the legislative session convening in January and tax returns due April 15, the pressure is on to pass the conforming legislation early. Without early passage, taxpayers and tax preparers are left making assumptions and often file for extensions or have to amend returns. When conformity occurs late in the session it means higher costs to the taxpayer and more complexity and time spent on state income taxes.So why does the Arizona Legislature have to consider this bill each year? Rather than create a separate tax code with separate definitions, Arizona uses the IRC as the base for the state, making taxes less complicated for taxpayers. Since state returns use the federal definitions as the starting point, any changes at the federal level mean Arizona needs to update, or taxpayers face increased complexity and higher likelihood of amended returns or errors.It turns out the Arizona Constitution prohibits the delegation of legislative authority, meaning state legislators can’t designate the IRC as the definition for Arizona taxes on a rolling basis, automatically adopting any changes made at the federal level. Instead, the state uses fixed date conformity, which aligns Arizona taxes to the IRC as of a specific date in time and allows lawmakers the ability to assess federal changes each year. That hasn’t always been the case. Prior to 1980 Arizona did not conform to the IRC at all, and instead made its own definitions of what was taxable at the state level. That meant individuals and businesses had to keep federal and state definitions in mind when filing both returns, making the filing process a laborious one. To simplify the process and ease the burden on taxpayers, Arizona began conforming on a fixed date basis to the IRC. In most years income tax conformity is noncontroversial and viewed as a technical exercise, updating the date in Arizona Revised Statute that refers to the IRC. When Congress enacts major changes or overhauls, like with the Tax Cuts and Jobs Act of 2017, there are potential revenue impacts in Arizona. In those instances, the process of conforming can become more complex and delve more into policy considerations, often delaying legislative resolution and thereby causing uncertainty for Arizona taxpayers. ASCPA members and tax experts David Walser, Anne Cornelius, Ed Zollars and Jared Van Arsdale provide insights on income tax conformity and why it matters to Arizonans. Longtime ASCPA lobbyist Kevin DeMenna shares historical context and the politics behind this annual exercise. Arizona Department of Revenue Deputy Director Dr. Grant Nülle gives an overview of the process from the department’s perspective. 

Do you know how to take full advantage of your company’s non-qualified stock options? How do you factor this financial asset into your financial portfolio? From understanding exactly what non-qualified stock options are to knowing what it takes to put yourself in the best position to succeed - this is the episode you don’t want to miss. What about dealing with the tax implications, I’ve got you covered on that front too! Get your financial information from a source that has your best interests at heart. Make sure you have pen and paper handy - you’ll want to take good notes so you can reference this critical information down the road!  You will want to hear this episode if you are interested in... What a non-qualified stock option is and how it works. [1:15]  How your non-qualified stock option is taxed. [3:30]  Breaking down an example of how to utilize non-qualified stock options. [5:00] Three strategies you can use to exercise your options. [9:45] Helpful questions to ask yourself. [12:30] What are non-qualified stock options?  Have you ever worked for a company that offered non-qualified stock options (NSO)? How do the options work? If you’ve got the option for NSO at work, you might want to know what those options are. An NSO is a type of employee stock option where you pay ordinary income tax on the difference between the grant price and the price at which you exercise the option. It is important to note that non-qualified stock options require payment of income tax of the grant price minus the price of the exercised option. NSOs might be provided as an alternative form of compensation. In most cases, the prices are often similar to the market value of the shares. Now that you understand what non-qualified stock options are, the important part comes next, how can you use those options?  Three strategies you can use  To make the most of your company's non-qualified stock options, I’ve got three strategies for you to consider. If you don’t have a place to start when it comes to using your stock options, let this be a starting place for you!  Exercise your NSO and sell it immediately with your own cash or through a brokerage. Exercise your NSO and hold on to the stock options.  Wait toward the very end of when the NSOs are set to expire, exercise, and then sell.  There is however an additional way to have your NSOs taxed and rather than waiting to exercise them - you can use an 83b election. The 83(b) election is a provision under the Internal Revenue Code (IRC) that gives an employee the option to pay taxes on the total fair market value of the restricted stock at the time of granting. To learn more about NSO and so much more, make sure to tune in to this informative episode! Connect With Morrissey Wealth Management  www.MorrisseyWealthManagement.com/contact

This session's guest is Van Carlson with Strategic Risk Alternatives (https://strategicriskalternatives.com/). Mr. Carlson has over twenty five years of experience within the risk management industry. Van began his career with Farmers Insurance Group as an agent; eventually growing his book to be among the largest in his home state of Idaho. Van specializes in advising clients how best to manage risk. The Captive Insurance company is a frequently used product he recommends for, implements and manages for his clients. This risk management tool is governed by 831(b) of the Internal Revenue Code. A few take-aways from this session:The use of a Captive is a great tool to provide for protection of a businesses cash flow that may not be available though standard insurance policies.Coverage offered through the Captive is in addition to the standard insurance coverage that you would purchase to manage risk. The insurance premiums paid to the captive are tax deductible to the insured company, up to $2.2 million.The insurance premiums received by the captive are not taxable revenue up to $2.2 million per insured.A captive can be an optimal tool to provide business interruption coverage for events like the COVID-19 pandemic. The Basics of the 831(b) Election for Captives January 25, 2017By P. Bruce Wright, M. Kristan Rizzolo, Saren Goldner, and Christopher W. SchoenSutherland Asbill & Brennan LLP Section 831(b) was added to the Internal Revenue Code (IRC) in 1986 as part of an effort to more closely align the taxation of mutual and stock property and casualty ("P&C") insurance companies. Prior law provided for three layers of taxation for mutual P&C insurance companies depending on the quantum of their gross receipts but not for stock P&C insurance companies. Under section 831 as enacted in 1986, in general, both stock and mutual insurance companies that are not life insurance companies compute their tax as provided in IRC section 11, subject to the special rules for calculating taxable income that are contained in part II of subchapter L. In addition, the special rules that had applied to small mutual P&C insurance companies were extended to all small nonlife insurance companies.Under section 831(b), small nonlife insurance companies that meet the requirements, including a premium limitations amount, may elect to be subject to an alternative tax based only on taxable investment income. Under this alternative tax, the underwriting profits of the electing insurance company are exempt from federal income tax.In part as a result of perceived abuses, Congress changed the requirements for qualification under section 831(b) effective for taxable years ending after December 31, 2016, and at the same time increased the premium limitation amount. Section 831(b) now requires an electing company to(1) be an insurance company; (2) have net written premiums (or, if greater, direct written premiums) for the taxable year that do not exceed $2.2 million;1(3) meet the diversification requirements described below; and(4) make or have in effect, an election to be taxed under section 831(b).The diversification requirements were added by Congress as anti-abuse measures to address estate and gift tax evasion issues; the amendments do not address federal income tax concerns. In general, to satisfy the diversification requirements, no one policyholder2 may pay more than 20 percent of a section 831(b) company's annual net written premiums (or, if greater, direct written premiums). For purposes of applying the 20 percent limitation, the amendments apply attribution rules under which all policyholders that are related within the meaning of sections 267(b) and 707(b), or are members of the same controlled group, are treated as a single policyholder. The new provisions also include an alternative diversification requirement that is an ownership-based test. Under the ownership test, the ownership of a section 831(b) company by "specified holders" (as defined below) must not be greater than (by more than a 2 percent de minimis margin) the ownership of the business or assets being insured. More specifically, an insurance company will have met this alternative diversification test if each specified holder that is an owner of the section 831(b) company has no greater interest in the section 831(b) company than he or she has in the insured business or assets (the "specified assets"). A specified holder is any individual who is a spouse or lineal descendant (including by adoption) of an individual who holds an interest (directly or indirectly) in the specified assets being insured.In connection with amending the eligibility requirements for making an election to be subject to tax under section 831(b), Congress also added new annual information reporting requirements on electing companies, leaving the specifics of the required information up to the Internal Revenue Service (IRS).  In November 2016, shortly before the new provisions became effective for most electing companies, the IRS issued Notice 2016–66 indicating that certain section 831(b) companies are "transactions of interest" requiring information reporting under sections 6011 and 6111 as "reportable transactions." Notice 2016–66 provides that section 831(b) electing companies meeting the following requirements are "transactions of interest."(1) A person ("A") directly or indirectly owns an interest in an entity (the "Insured") that conducts a trade or business;(2) A, the Insured, or related person(s) directly or indirectly own at least 20 percent of the voting power or value of the section 831(b) electing company that contracts with Insured (or an intermediary) in a transaction that the section 831(b) electing company and the Insured treat as insurance or reinsurance of Insured; and(3) Either(a) section 831(b) electing company's incurred liabilities for losses and claims administration during the most recent 5 taxable years (or such shorter period if the company has been in existence only for such shorter period) are less than 70 percent of the company's premiums earned less policyholder dividends for the same period or, (b.) during the same 5-year period, section 831(b) electing company has directly or indirectly made available or otherwise conveyed funds to A, the Insured or related person(s) in a transaction that did not result in taxable income or gain to the recipient of the funds.Pursuant to Notice 2016–66, "material advisors" and all participants to the transactions are required to disclose information about the transactions to the IRS, including a description of the "insurance" coverage provided by the captive, the names and contact information of actuaries and underwriters, an explanation of how premium amounts were determined, a description of claims, and a description of the captive's assets. The initial report, for transactions from prior open years, originally was due January 30, 2017, but Notice 2017–08 extended the deadline for filing that initial report to May 1, 2017.In February 2015, the IRS included section 831(b) companies on its "Dirty Dozen" list of tax scams. The IRS also has numerous audits of section 831(b) companies under way and cases docketed in the United States Tax Court. One of the concerns of the IRS is whether the transactions of section 831(b) electing companies are properly characterized as insurance. In order to be treated as insurance for federal tax purposes, a transaction must meet a four-part test that requires the presence of an insurance risk, risk shifting, and risk distribution and the recognition of the transaction as insurance in its commonly accepted sense (for more information on this topic, see "When Are Premiums Paid to a Captive Insurance Company Deductible for Federal Income Tax Purposes?").P. Bruce Wright, M. Kristan Rizzolo, and Saren Goldner are partners and Christopher W. Schoen is counsel in the tax department of the law firm Sutherland Asbill & Brennan LLP. Mr. Wright and Ms. Goldner are located in New York, and Ms. Rizzolo and Mr. Schoen are located in Washington.The $2.2 million maximum is subject to increases for inflation, using 2013 as the base year for calculation.To date, there is not guidance on what is meant by a "policyholder," although Congress has proposed a technical corrections bill that would make it clear that a "policyholder" refers to the original direct insured. The Benefits of Captive Insurance: Pros and Cons published by Alternative Risk Resources on their websiteFlexibility in setting the cost of premiumsYou may cover a huge variety of risksYou have more control!They foster a greater safety cultureYou get ongoing educationRisk management actually becomes profitableCompanies need to weigh the pros and cons of captive insurance to understand the potential benefit of insurance captives. Captive insurance allows your business to limit risk and retain what would have been insurance company profits. Unused premiums and income generated by your captive insurance company are returned to your business, turning what used to be an expense into a profit generating program. Alternative Risk Resources’ group captive brokers make the process of understanding and joining a group captive insurance company a turnkey process.Explaining the Basics of Group Captive Insurance Access to underwriting profits and investment income are the most tangible benefits of joining a group captive program. The biggest benefit to joining, though, is the intangible safety culture captives foster.Accidents and losses change from being something a business accepts will happen to avoidable events. Everybody in an organization insured through a captive becomes more safety conscious, changing the focus from minimizing claims to actively preventing accidents.Long-term, proven cost savings and the increased profitability of group captive insurance programs make captives an attractive risk mitigation and investment solution for qualifying businesses. With a group captive, your company is in control of its insurance plan with underwriting profits and unused premiums returned as profit. A captive insurance program is a company providing insurance coverage and benefits exclusively to its member owners.The businesses paying premiums are the same entities owning and profiting from the insurance company’s success.Fewer claims and invested unused premiums translate directly into profit for the group captive’s member owners. The bottom line advantages over traditional insurance programs ensure that eventually every company qualifying for captive insurance will participate. The lack of knowledge about how group captive insurance programs work is often the only reason a qualified company is not a captive insured entity. Alternative Risk Resources’ professional brokers are here to help you understand the benefits of captive insurance.

In this episode of Business Matters, Roxanne Sexton with the Bean Team discusses the Paycheck Protection Program and more specifically, how to maximize the loan forgiveness provisions of the PPP. We outline and then discuss the 4 categories provided by the PPP to determine the amount of loan that will be forgiven. Of course, all of this is based on the guidelines issued through the time of the recording.   PAYCHECK PROTECTION PROGRAM LOANS Frequently Asked Questions (FAQs)The Small Business Administration (SBA), in consultation with the Department of the Treasury, intends to provide timely additional guidance to address borrower and lender questions concerning the implementation of the Paycheck Protection Program (PPP), established by section 1102 of the Coronavirus Aid, Relief, and Economic Security Act (CARES Act or the Act). This document will be updated on a regular basis.Borrowers and lenders may rely on the guidance provided in this document as SBA’s interpretation of the CARES Act and of the Paycheck Protection Program Interim Final Rules (“PPP Interim Final Rules”) (link). The U.S. government will not challenge lender PPP actions that conform to this guidance,1 and to the PPP Interim Final Rules and any subsequent rulemaking in effect at the time.Question: Paragraph 3.b.iii of the PPP Interim Final Rule states that lenders must “[c]onfirm the dollar amount of average monthly payroll costs for the preceding calendar year by reviewing the payroll documentation submitted with the borrower’s application.” Does that require the lender to replicate every borrower’s calculations? Answer: No. Providing an accurate calculation of payroll costs is the responsibility of the borrower, and the borrower attests to the accuracy of those calculations on the Borrower Application Form. Lenders are expected to perform a good faith review, in a reasonable time, of the borrower’s calculations and supporting documents concerning average monthly payroll cost. For example, minimal review of calculations based on a payroll report by a recognized third-party payroll processor would be reasonable. In addition, as the PPP Interim Final Rule indicates, lenders may rely on borrower representations, including with respect to amounts required to be excluded from payroll costs.If the lender identifies errors in the borrower’s calculation or material lack of substantiation in the borrower’s supporting documents, the lender should work with the borrower to remedy the issue.2 Question: Are small business concerns (as defined in section 3 of the Small Business Act, 15 U.S.C. 632) required to have 500 or fewer employees to be eligible borrowers in the PPP? Answer: No. Small business concerns can be eligible borrowers even if they have more than 500 employees, as long as they satisfy the existing statutory and regulatory definition of a “small business concern” under section 3 of the Small Business Act, 15 U.S.C. 632. A business can qualify if it meets the SBA employee-based or revenue-As of May 3, 2020based size standard corresponding to its primary industry. Go to www.sba.gov/size for the industry size standards.Additionally, a business can qualify for the Paycheck Protection Program as a small business concern if it met both tests in SBA’s “alternative size standard” as of March 27, 2020: (1) maximum tangible net worth of the business is not more than $15 million; and (2) the average net income after Federal income taxes (excluding any carry-over losses) of the business for the two full fiscal years before the date of the application is not more than $5 million.A business that qualifies as a small business concern under section 3 of the Small Business Act, 15 U.S.C. 632, may truthfully attest to its eligibility for PPP loans on the Borrower Application Form, unless otherwise ineligible.Question: Does my business have to qualify as a small business concern (as defined in section 3 of the Small Business Act, 15 U.S.C. 632) in order to participate in the PPP? Answer: No. In addition to small business concerns, a business is eligible for a PPP loan if the business has 500 or fewer employees whose principal place of residence is in the United States, or the business meets the SBA employee-based size standards for the industry in which it operates (if applicable). Similarly, PPP loans are also available for qualifying tax-exempt nonprofit organizations described in section 501(c)(3) of the Internal Revenue Code (IRC), tax-exempt veterans organization described in section 501(c)(19) of the IRC, and Tribal business concerns described in section 31(b)(2)(C) of the Small Business Act that have 500 or fewer employees whose principal place of residence is in the United States, or meet the SBA employee-based size standards for the industry in which they operate.Question: Are lenders required to make an independent determination regarding applicability of affiliation rules under 13 C.F.R. 121.301(f) to borrowers? Answer: No. It is the responsibility of the borrower to determine which entities (if any) are its affiliates and determine the employee headcount of the borrower and its affiliates. Lenders are permitted to rely on borrowers’ certifications.Question: Are borrowers required to apply SBA’s affiliation rules under 13 C.F.R. 121.301(f)? Answer: Yes. Borrowers must apply the affiliation rules set forth in SBA’s Interim Final Rule on Affiliation. A borrower must certify on the Borrower Application Form that the borrower is eligible to receive a PPP loan, and that certification means that the borrower is a small business concern as defined in section 3 of the Small Business Act (15 U.S.C. 632), meets the applicable SBA employee-based or revenue-based size standard, or meets the tests in SBA’s alternative size standard, after applying the affiliation rules, if applicable. SBA’s existing affiliation exclusions apply to the PPP, including, for example the exclusions under 13 CFR 121.103(b)(2).As of May 3, 2020Question: The affiliation rule based on ownership (13 C.F.R. 121.301(f)(1)) states that SBA will deem a minority shareholder in a business to control the business if the shareholder has the right to prevent a quorum or otherwise block action by the board of directors or shareholders. If a minority shareholder irrevocably gives up those rights, is it still considered to be an affiliate of the business? Answer: No. If a minority shareholder in a business irrevocably waives or relinquishes any existing rights specified in 13 C.F.R. 121.301(f)(1), the minority shareholder would no longer be an affiliate of the business (assuming no other relationship that triggers the affiliation rules).Question: The CARES Act excludes from the definition of payroll costs any employee compensation in excess of an annual salary of $100,000. Does that exclusion apply to all employee benefits of monetary value? Answer: No. The exclusion of compensation in excess of $100,000 annually applies only to cash compensation, not to non-cash benefits, including:employer contributions to defined-benefit or defined-contribution retirement plans;payment for the provision of employee benefits consisting of group health care coverage, including insurance premiums; andpayment of state and local taxes assessed on compensation of employees. Question: Do PPP loans cover paid sick leave? Answer: Yes. PPP loans covers payroll costs, including costs for employee vacation, parental, family, medical, and sick leave. However, the CARES Act excludes qualified sick and family leave wages for which a credit is allowed under sections 7001 and 7003 of the Families First Coronavirus Response Act (Public Law 116–127). Learn more about the Paid Sick Leave Refundable Credit here.Question: My small business is a seasonal business whose activity increases from April to June. Considering activity from that period would be a more accurate reflection of my business’s operations. However, my small business was not fully ramped up on February 15, 2020. Am I still eligible? Answer: In evaluating a borrower’s eligibility, a lender may consider whether a seasonal borrower was in operation on February 15, 2020 or for an 8-week period between February 15, 2019 and June 30, 2019.Question: What if an eligible borrower contracts with a third-party payer such as a payroll provider or a Professional Employer Organization (PEO) to process payroll and report payroll taxes? Answer: SBA recognizes that eligible borrowers that use PEOs or similar payroll providers are required under some state registration laws to report wage and other data onAs of May 3, 2020the Employer Identification Number (EIN) of the PEO or other payroll provider. In these cases, payroll documentation provided by the payroll provider that indicates the amount of wages and payroll taxes reported to the IRS by the payroll provider for the borrower’s employees will be considered acceptable PPP loan payroll documentation. Relevant information from a Schedule R (Form 941), Allocation Schedule for Aggregate Form 941 Filers, attached to the PEO’s or other payroll provider’s Form 941, Employer’s Quarterly Federal Tax Return, should be used if it is available; otherwise, the eligible borrower should obtain a statement from the payroll provider documenting the amount of wages and payroll taxes. In addition, employees of the eligible borrower will not be considered employees of the eligible borrower’s payroll provider or PEO.Question: May lenders accept signatures from a single individual who is authorized to sign on behalf of the borrower? Answer: Yes. However, the borrower should bear in mind that, as the Borrower Application Form indicates, only an authorized representative of the business seeking a loan may sign on behalf of the business. An individual’s signature as an “Authorized Representative of Applicant” is a representation to the lender and to the U.S. government that the signer is authorized to make the certifications, including with respect to the applicant and each owner of 20% or more of the applicant’s equity, contained in the Borrower Application Form. Lenders may rely on that representation and accept a single individual’s signature on that basis.Question: I need to request a loan to support my small business operations in light of current economic uncertainty. However, I pleaded guilty to a felony crime a very long time ago. Am I still eligible for the PPP? Answer: Yes. Businesses are only ineligible if an owner of 20 percent or more of the equity of the applicant is presently incarcerated, on probation, on parole; subject to an indictment, criminal information, arraignment, or other means by which formal criminal charges are brought in any jurisdiction; or, within the last five years, for any felony, has been convicted; pleaded guilty; pleaded nolo contendere; been placed on pretrial diversion; or been placed on any form of parole or probation (including probation before judgment).Question: Are lenders permitted to use their own online portals and an electronic form that they create to collect the same information and certifications as in the Borrower Application Form, in order to complete implementation of their online portals? Answer: Yes. Lenders may use their own online systems and a form they establish that asks for the same information (using the same language) as the Borrower Application Form. Lenders are still required to send the data to SBA using SBA’s interface.Question: What time period should borrowers use to determine their number of employees and payroll costs to calculate their maximum loan amounts? As of May 3, 2020Answer: In general, borrowers can calculate their aggregate payroll costs using data either from the previous 12 months or from calendar year 2019. For seasonal businesses, the applicant may use average monthly payroll for the period between February 15, 2019, or March 1, 2019, and June 30, 2019. An applicant that was not in business from February 15, 2019 to June 30, 2019 may use the average monthly payroll costs for the period January 1, 2020 through February 29, 2020.Borrowers may use their average employment over the same time periods to determine their number of employees, for the purposes of applying an employee-based size standard. Alternatively, borrowers may elect to use SBA’s usual calculation: the average number of employees per pay period in the 12 completed calendar months prior to the date of the loan application (or the average number of employees for each of the pay periods that the business has been operational, if it has not been operational for 12 months).Question: Should payments that an eligible borrower made to an independent contractor or sole proprietor be included in calculations of the eligible borrower’s payroll costs? Answer: No. Any amounts that an eligible borrower has paid to an independent contractor or sole proprietor should be excluded from the eligible business’s payroll costs. However, an independent contractor or sole proprietor will itself be eligible for a loan under the PPP, if it satisfies the applicable requirements.Question: How should a borrower account for federal taxes when determining its payroll costs for purposes of the maximum loan amount, allowable uses of a PPP loan, and the amount of a loan that may be forgiven? Answer: Under the Act, payroll costs are calculated on a gross basis without regard to (i.e., not including subtractions or additions based on) federal taxes imposed or withheld, such as the employee’s and employer’s share of Federal Insurance Contributions Act (FICA) and income taxes required to be withheld from employees. As a result, payroll costs are not reduced by taxes imposed on an employee and required to be withheld by the employer, but payroll costs do not include the employer’s share of payroll tax. For example, an employee who earned $4,000 per month in gross wages, from which $500 in federal taxes was withheld, would count as $4,000 in payroll costs. The employee would receive $3,500, and $500 would be paid to the federal government. However, the employer-side federal payroll taxes imposed on the $4,000 in wages are excluded from payroll costs under the statute.33 The definition of “payroll costs” in the CARES Act, 15 U.S.C. 636(a)(36)(A)(viii), excludes “taxes imposed or withheld under chapters 21, 22, or 24 of the Internal Revenue Code of 1986 during the covered period,” defined as February 15, 2020, to June 30, 2020. As described above, the SBA interprets this statutory exclusion to mean that payroll costs are calculated on a gross basis, without subtracting federal taxes that are imposed on the employee or withheld from employee wages. Unlike employer-side payroll taxes, such employee-side taxes are ordinarily expressed as a reduction in employee take-home pay; their exclusion from the definition of payroll costs means payroll costs should not be reduced based on taxes imposed on the employee or withheld from employee wages. This interpretation is consistent with the text of the statute and advances the legislative purpose of ensuring workersAs of May 3, 2020remain paid and employed. Further, because the reference period for determining a borrower’s maximum loan amount will largely or entirely precede the period from February 15, 2020, to June 30, 2020, and the period during which borrowers will be subject to the restrictions on allowable uses of the loans may extend beyond that period, for purposes of the determination of allowable uses of loans and the amount of loan forgiveness, this statutory exclusion will apply with respect to such taxes imposed or withheld at any time, not only during such period.4 Questions 2 – 18 published April 6, 2020.5 Questions 19 – 20 published April 8, 2020.Question: I filed or approved a loan application based on the version of the PPP Interim Final Rule published on April 2, 2020. Do I need to take any action based on the updated guidance in these FAQs? Answer: No. Borrowers and lenders may rely on the laws, rules, and guidance available at the time of the relevant application. However, borrowers whose previously submitted loan applications have not yet been processed may revise their applications based on clarifications reflected in these FAQs.Question: Are PPP loans for existing customers considered new accounts for FinCEN Rule CDD purposes? Are lenders required to collect, certify, or verify beneficial ownership information in accordance with the rule requirements for existing customers? Answer: If the PPP loan is being made to an existing customer and the necessary information was previously verified, you do not need to re-verify the information. Furthermore, if federally insured depository institutions and federally insured credit unions eligible to participate in the PPP program have not yet collected beneficial ownership information on existing customers, such institutions do not need to collect and verify beneficial ownership information for those customers applying for new PPP loans, unless otherwise indicated by the lender’s risk-based approach to BSA compliance.4Question: Do lenders have to use a promissory note provided by SBA or may they use their own? Answer: Lenders may use their own promissory note or an SBA form of promissory note.Question: The amount of forgiveness of a PPP loan depends on the borrower’s payroll costs over an eight-week period; when does that eight-week period begin? Answer: The eight-week period begins on the date the lender makes the first disbursement of the PPP loan to the borrower. The lender must make the first disbursement of the loan no later than ten calendar days from the date of loan approval.5Question: Do lenders need a separate SBA Authorization document to issue PPP loans? Answer: No. A lender does not need a separate SBA Authorization for SBA to guarantee a PPP loan. However, lenders must have executed SBA Form 2484 (theAs of May 3, 2020to issue PPP loans and receive a loan number for each originated PPP loan. Lenders may include in their promissory notes for PPP loans any terms and conditions, including relating to amortization and disclosure, that are not inconsistent with Sections 1102 and 1106 of the CARES Act, the PPP Interim Final Rules and guidance, and SBA Form 2484.As of May 3, 2020Lender Application Form for the Paycheck Protection Program)6to issue PPP loans and receive a loan number for eachoriginated PPP loan. Lendersmay include in theirpromissory notes for PPP loans any terms and conditions, including relating to amortization and disclosure, that arenot inconsistent with Sections 1102 and 1106 of theCARES Act, the PPP Interim Final Rulesand guidance, and SBA Form 2484.22.Question: I am a non-bank lender that meets allapplicable criteria of the PPP InterimFinal Rule. Will I be automatically enrolledas a PPP lender? What criteria will SBAand theTreasuryDepartmentuse to assess whetherto approvemy application to participate as a PPP lender? Answer:We encourage lenders that arenot currently7(a) lenders to apply in order to increase the scope of PPP lending optionsand the speed with which PPP loanscan be disbursedtohelp small businesses across America.We recognize that financialtechnology solutionscan promote efficiency and financial inclusionin implementingthePPP. Applicants should submit SBA Form 3507 and the relevant attachments to NFRLApplicationForPPP@sba.gov.Submission of theSBA Form3507does notresult in automatic enrollmentin the PPP.SBA and the Treasury Department willevaluate each application from anon-bank or non-insured depository institution lenderand determine whetherthe applicant has the necessary qualifications to process, close,disburse, andservice PPP loans made with SBA’sguarantee. SBAmay requestadditionalinformation from the applicant beforemaking a determination.23.Question: How do the $10 million cap and affiliationruleswork for franchises? Answer:If a franchise brand islisted on the SBA Franchise Directory,each of itsfranchiseesthat meets the applicable size standardcan apply for a PPP loan. (Thefranchisor does not apply on behalf of its franchisees.)The $10 million cap on PPP loansis a limit perfranchisee entity,and each franchisee is limited to one PPP loan.Franchise brands that have been denied listing on the Directory because of affiliation between franchisor andfranchisee may request listing toreceive PPP loans.SBA willnot apply affiliation rules to afranchise brand requesting listing on the Directory to participatein the PPP, but SBA will confirm that the brandis otherwiseeligible for listing on the Directory.24.Question: How do the $10 million cap and affiliationruleswork for hotels and restaurants (and any business assigned a North American Industry Classification System(NAICS)code beginning with 72)? Answer:Under the CARES Act,any singlebusinessentitythat is assigned a NAICScode beginning with 72 (includinghotels andrestaurants) andthat employs not more than 500employees perphysicallocationiseligible to receive a PPPloan.6Thisrequirementissatisfiedbyalenderwhenthelendercompletesthe processofsubmitting aloan through the E-Transystem;notransmissionorretentionofaphysical copy of Form2484isrequired.As of May 3, 2020In addition, SBA’s affiliation rules (13 CFR 121.103 and 13 CFR 121.301) do not apply to any business entity that is assigned a NAICS code beginning with 72 and that employs not more than a total of 500 employees. As a result, if each hotel or restaurant location owned by a parent business is a separate legal business entity, each hotel or restaurant location that employs not more than 500 employees is permitted to apply for a separate PPP loan provided it uses its unique EIN.The $10 million maximum loan amount limitation applies to each eligible business entity, because individual business entities cannot apply for more than one loan. The following examples illustrate how these principles apply.Example 1. Company X directly owns multiple restaurants and has no affiliates.Company X may apply for a PPP loan if it employs 500 or fewer employees per location (including at its headquarters), even if the total number of employees employed across all locations is over 500. Example 2. Company X wholly owns Company Y and Company Z (as a result, Companies X, Y, and Z are all affiliates of one another). Company Y and Company Z each own a single restaurant with 500 or fewer employees.Company Y and Company Z can each apply for a separate PPP loan, because each has 500 or fewer employees. The affiliation rules do not apply, because Company Y and Company Z each has 500 or fewer employees and is in the food services business (with a NAICS code beginning with 72). Example 3. Company X wholly owns Company Y and Company Z (as a result, Companies X, Y, and Z are all affiliates of one another). Company Y owns a restaurant with 400 employees. Company Z is a construction company with 400 employees.Company Y is eligible for a PPP loan because it has 500 or fewer employees. The affiliation rules do not apply to Company Y, because it has 500 or fewer employees and is in the food services business (with a NAICS code beginning with 72).The waiver of the affiliation rules does not apply to Company Z, because Company Z is in the construction industry. Under SBA’s affiliation rules, 13 CFR 121.301(f)(1) and (3), Company Y and Company Z are affiliates of one another because they are under the common control of Company X, which wholly owns both companies. This means that the size of Company Z is determined by adding its employees to those of Companies X and Y. Therefore, Company Z is deemed to have more than 500 employees, together with its affiliates. However, Company Z may be eligible to receive a PPP loan as a small business concern if it, together with Companies X and Y, meets SBA’s other applicable size standards,” as explained in FAQ #2. Question: Does the information lenders are required to collect from PPP applicants regarding every owner who has a 20% or greater ownership stake in the applicant business (i.e., owner name, title, ownership %, TIN, and address) satisfy a lender’s obligation to collect beneficial ownership information (which has a 25% ownership threshold) under the Bank Secrecy Act? As of May 3, 2020Answer: For lenders with existing customers: With respect to collecting beneficial ownership information for owners holding a 20% or greater ownership interest, if the PPP loan is being made to an existing customer and the lender previously verified the necessary information, the lender does not need to re-verify the information. Furthermore, if federally insured depository institutions and federally insured credit unions eligible to participate in the PPP program have not yet collected such beneficial ownership information on existing customers, such institutions do not need to collect and verify beneficial ownership information for those customers applying for new PPP loans, unless otherwise indicated by the lender’s risk-based approach to Bank Secrecy Act (BSA) compliance.For lenders with new customers: For new customers, the lender’s collection of the following information from all natural persons with a 20% or greater ownership stake in the applicant business will be deemed to satisfy applicable BSA requirements and FinCEN regulations governing the collection of beneficial ownership information: owner name, title, ownership %, TIN, address, and date of birth. If any ownership interest of 20% or greater in the applicant business belongs to a business or other legal entity, lenders will need to collect appropriate beneficial ownership information for that entity. If you have questions about requirements related to beneficial ownership, go to https://www.fincen.gov/resources/statutes-and-regulations/cdd-final-rule. Decisions regarding further verification of beneficial ownership information collected from new customers should be made pursuant to the lender’s risk-based approach to BSA compliance.77 Questions 21 – 25 published April 13, 2020.Question: SBA regulations require approval by SBA’s Standards of Conduct Committee (SCC) for SBA Assistance, other than disaster assistance, to an entity, if its sole proprietor, partner, officer, director, or stockholder with a 10 percent or more interest is: a current SBA employee; a Member of Congress; an appointed official or employee of the legislative or judicial branch; a member or employee of an SBA Advisory Council or SCORE volunteer; or a household member of any of the preceding individuals. Do these entities need the approval of the SCC in order to be eligible for a PPP loan? Answer: The SCC has authorized a blanket approval for PPP loans to such entities so that further action by the SCC is not necessary in the PPP program.Question: SBA regulations require a written statement of no objection by the pertinent Department or military service before it provides any SBA Assistance, other than disaster loans, to an entity, if its sole proprietor, partner, officer, director, or stockholder with a 10 percent or more interest, or if a household member of any of the preceding individuals, is an employee of another Government Department or Agency having a grade of at least GS-13 or its equivalent. Does this requirement apply to PPP loans? As of May 3, 2020Answer: No. The SCC has determined that a written statement of no objection is not required from another Government Department or Agency for PPP loans.Question: Is a lender permitted to submit a PPP loan application to SBA through E-Tran before the lender has fulfilled its responsibility to review the required borrower documentation and calculation of payroll costs? Answer: No. Before a lender submits a PPP loan through E-Tran, the lender must have collected the information and certifications contained in the Borrower Application Form and the lender must have fulfilled its obligations set forth in paragraphs 3.b.(i)-(iii) of the PPP Interim Final Rule. Please refer to the Interim Final Rule and FAQ #1 for more information on the lender’s responsibility regarding confirmation of payroll costs.Lenders who did not understand that these steps are required before submission to E-Tran need not withdraw applications submitted to E-Tran before April 14, 2020, but must fulfill lender responsibilities with respect to those applications as soon as practicable and no later than loan closing.88 Questions 26 – 28 published April 14, 2020.9 Question 29 published April 15, 2020.10 Question 30 published April 17, 2020.Question: Can lenders use scanned copies of documents or E-signatures or E-consents permitted by the E-sign Act? Answer: Yes. All PPP lenders may accept scanned copies of signed loan applications and documents containing the information and certifications required by SBA Form 2483 and the promissory note used for the PPP loan. Additionally, lenders may also accept any form of E-consent or E-signature that complies with the requirements of the Electronic Signatures in Global and National Commerce Act (P.L. 106-229).If electronic signatures are not feasible, when obtaining a wet ink signature without in-person contact, lenders should take appropriate steps to ensure the proper party has executed the document.This guidance does not supersede signature requirements imposed by other applicable law, including by the lender’s primary federal regulator.9Question: Can a lender sell a PPP loan into the secondary market? Answer: Yes. A PPP loan may be sold into the secondary market at any time after the loan is fully disbursed. A secondary market sale of a PPP loan does not require SBA approval. A PPP loan sold into the secondary market is 100% SBA guaranteed. A PPP loan may be sold on the secondary market at a premium or a discount to par value.10As of May 3, 2020Question: Do businesses owned by large companies with adequate sources of liquidity to support the business’s ongoing operations qualify for a PPP loan? Answer: In addition to reviewing applicable affiliation rules to determine eligibility, all borrowers must assess their economic need for a PPP loan under the standard established by the CARES Act and the PPP regulations at the time of the loan application. Although the CARES Act suspends the ordinary requirement that borrowers must be unable to obtain credit elsewhere (as defined in section 3(h) of the Small Business Act), borrowers still must certify in good faith that their PPP loan request is necessary. Specifically, before submitting a PPP application, all borrowers should review carefully the required certification that “[c]urrent economic uncertainty makes this loan request necessary to support the ongoing operations of the Applicant.” Borrowers must make this certification in good faith, taking into account their current business activity and their ability to access other sources of liquidity sufficient to support their ongoing operations in a manner that is not significantly detrimental to the business. For example, it is unlikely that a public company with substantial market value and access to capital markets will be able to make the required certification in good faith, and such a company should be prepared to demonstrate to SBA, upon request, the basis for its certification.Lenders may rely on a borrower’s certification regarding the necessity of the loan request. Any borrower that applied for a PPP loan prior to the issuance of this guidance and repays the loan in full by May 7, 2020 will be deemed by SBA to have made the required certification in good faith.1111 Question 31 published April 23, 2020.Question: Does the cost of a housing stipend or allowance provided to an employee as part of compensation count toward payroll costs? Answer: Yes. Payroll costs includes all cash compensation paid to employees, subject to the $100,000 annual compensation per employee limitation.Question: Is there existing guidance to help PPP applicants and lenders determine whether an individual employee’s principal place of residence is in the United States? Answer: PPP applicants and lenders may consider IRS regulations (26 CFR § 1.121-1(b)(2)) when determining whether an individual employee’s principal place of residence is in the United States.Question: Are agricultural producers, farmers, and ranchers eligible for PPP loans? Answer: Yes. Agricultural producers, farmers, and ranchers are eligible for PPP loans if: (i) the business has 500 or fewer employees, or (ii) the business fits within the revenue-based sized standard, which is average annual receipts of $1 million.Additionally, agricultural producers, farmers, and ranchers can qualify for PPP loans as a small business concern if their business meets SBA’s “alternative size standard.” TheAs of May 3, 2020“alternative size standard” is currently: (1) maximum net worth of the business is not more than $15 million, and (2) the average net income after Federal income taxes (excluding any carry-over losses) of the business for the two full fiscal years before the date of the application is not more than $5 million.For all of these criteria, the applicant must include its affiliates in its calculations. Link to Applicable Affiliation Rules for the PPP.Question: Are agricultural and other forms of cooperatives eligible to receive PPP loans? Answer: As long as other PPP eligibility requirements are met, small agricultural cooperatives and other cooperatives may receive PPP loans.1212 Questions 32 – 35 published April 24, 2020.13 Questions 36 published April 26, 2020.14 Question 37 published April 28, 2020.Question: To determine borrower eligibility under the 500-employee or other applicable threshold established by the CARES Act, must a borrower count all employees or only full-time equivalent employees? Answer: For purposes of loan eligibility, the CARES Act defines the term employee to include “individuals employed on a full-time, part-time, or other basis.” A borrower must therefore calculate the total number of employees, including part-time employees, when determining their employee headcount for purposes of the eligibility threshold. For example, if a borrower has 200 full-time employees and 50 part-time employees each working 10 hours per week, the borrower has a total of 250 employees.By contrast, for purposes of loan forgiveness, the CARES Act uses the standard of “full-time equivalent employees” to determine the extent to which the loan forgiveness amount will be reduced in the event of workforce reductions.13Question: Do businesses owned by private companies with adequate sources of liquidity to support the business’s ongoing operations qualify for a PPP loan? Answer: See response to FAQ #31.14Question: Section 1102 of the CARES Act provides that PPP loans are available only to applicants that were “in operation on February 15, 2020.” Is a business that was in operation on February 15, 2020 but had a change in ownership after February 15, 2020 eligible for a PPP loan? Answer: Yes. As long as the business was in operation on February 15, 2020, if it meets the other eligibility criteria, the business is eligible to apply for a PPP loan regardless of the change in ownership. In addition, where there is a change in ownership effectuated through a purchase of substantially all assets of a business that was in operation onAs of May 3, 2020February 15, the business acquiring the assets will be eligible to apply for a PPP loan even if the change in ownership results in the assignment of a new tax ID number and even if the acquiring business was not in operation until after February 15, 2020. If the acquiring business has maintained the operations of the pre-sale business, the acquiring business may rely on the historic payroll costs and headcount of the pre-sale business for the purposes of its PPP application, except where the pre-sale business had applied for and received a PPP loan. The Administrator, in consultation with the Secretary, has determined that the requirement that a business “was in operation on February 15, 2020” should be applied based on the economic realities of the business’s operations.Question: Will SBA review individual PPP loan files? Answer: Yes. In FAQ #31, SBA reminded all borrowers of an important certification required to obtain a PPP loan. To further ensure PPP loans are limited to eligible borrowers in need, the SBA has decided, in consultation with the Department of the Treasury, that it will review all loans in excess of $2 million, in addition to other loans as appropriate, following the lender’s submission of the borrower’s loan forgiveness application. Additional guidance implementing this procedure will be forthcoming.The outcome of SBA’s review of loan files will not affect SBA’s guarantee of any loan for which the lender complied with the lender obligations set forth in paragraphs III.3.b(i)-(iii) of the Paycheck Protection Program Rule (April 2, 2020) and further explained in FAQ #1.1515 Questions 38 – 39 published April 29, 2020.Question: Will a borrower’s PPP loan forgiveness amount (pursuant to section 1106 of the CARES Act and SBA’s implementing rules and guidance) be reduced if the borrower laid off an employee, offered to rehire the same employee, but the employee declined the offer? Answer: No. As an exercise of the Administrator’s and the Secretary’s authority under Section 1106(d)(6) of the CARES Act to prescribe regulations granting de minimis exemptions from the Act’s limits on loan forgiveness, SBA and Treasury intend to issue an interim final rule excluding laid-off employees whom the borrower offered to rehire (for the same salary/wages and same number of hours) from the CARES Act’s loan forgiveness reduction calculation. The interim final rule will specify that, to qualify for this exception, the borrower must have made a good faith, written offer of rehire, and the employee’s rejection of that offer must be documented by the borrower. Employees and employers should be aware that employees who reject offers of re-employment may forfeit eligibility for continued unemployment compensation.Question: Can a seasonal employer that elects to use a 12-week period between May 1, 2019 and September 15, 2019 to calculate its maximum PPP loan amount under the interim final rule issued by Treasury on April 27, 2020, make all the required certifications on the Borrower Application Form? As of May 3, 2020Answer: Yes. The Borrower Application Form requires applicants to certify that “The Applicant is eligible to receive a loan under the rules in effect at the time this application is submitted that have been issued by the Small Business Administration (SBA) implementing the Paycheck Protection Program.” On April 27, 2020, Treasury issued an interim final rule allowing seasonal borrowers to use an alternative base period for purposes of calculating the loan amount for which they are eligible under the PPP. An applicant that is otherwise in compliance with applicable SBA requirements, and that complies with Treasury’s interim final rule on seasonal workers, will be deemed eligible for a PPP loan under SBA rules. Instead of following the instructions on page 3 of the Borrower Application Form for the time period for calculating average monthly payroll for seasonal businesses, an applicant may elect to use the time period in Treasury’s interim final rule on seasonal workers.Question: Do nonprofit hospitals exempt from taxation under section 115 of the Internal Revenue Code qualify as “nonprofit organizations” under section 1102 of the CARES Act? Answer: Section 1102 of the CARES Act defines the term “nonprofit organization” as “an organization that is described in section 501(c)(3) of the Internal Revenue Code of 1986 and that is exempt from taxation under section 501(a) of such Code.” The Administrator, in consultation with the Secretary of the Treasury, understands that nonprofit hospitals exempt from taxation under section 115 of the Internal Revenue Code are unique in that many such hospitals may meet the description set forth in section 501(c)(3) of the Internal Revenue Code to qualify for tax exemption under section 501(a), but have not sought to be recognized by the IRS as such because they are otherwise fully tax-exempt under a different provision of the Internal Revenue Code.Accordingly, the Administrator will treat a nonprofit hospital exempt from taxation under section 115 of the Internal Revenue Code as meeting the definition of “nonprofit organization” under section 1102 of the CARES Act if the hospital reasonably determines, in a written record maintained by the hospital, that it is an organization described in section 501(c)(3) of the Internal Revenue Code and is therefore within a category of organization that is exempt from taxation under section 501(a).16 The hospital’s certification of eligibility on the Borrower Application Form cannot be made without this determination. This approach helps accomplish the statutory purpose of ensuring that a broad range of borrowers, including entities that are helping to lead the medical response to the ongoing pandemic, can benefit from the loans provided under the PPP.16 This determination need not account for the ancillary conditions set forth in section 501(r) of the Internal Revenue Code and elsewhere associated with securing the tax exemption under that section. Section 501(r) states that a hospital organization shall not be treated as described in section 501(c)(3) unless it meets certain community health and other requirements. However, section 1102 of the CARES Act defines the term “nonprofit organization” solely by reference to section 501(c)(3), and section 501(r) does not amend section 501(c)(3). Therefore, for purposes of the PPP, the requirements of section 501(r) do not apply to the determination of whether an organization is “described in section 501(c)(3).”As of May 3, 2020This guidance is solely for purposes of qualification as a “nonprofit organization” under section 1102 of the CARES Act and related purposes of the CARES Act, and does not have any consequences for federal tax law purposes. Nonprofit hospitals should also review all other applicable eligibility criteria, including the Interim Final Rules on Promissory Notes, Authorizations, Affiliation, and Eligibility (April 28, 2020) regarding an important limitation on ownership by state or local governments. 85 FR 23450, 23451.17  

You can also see more details, including a table with tax brackets and deductions at www.ascpa.com/conformity. On the morning of May 31, 2019, Governor Doug Ducey signed Arizona's 2020 state budget into law. The state's budget is crafted every session and is comprised of a package of roughly nine or ten bills. This year's budget package included the highly anticipated income tax conformity legislation, HB 2757 (tax provisions; omnibus). As Society members are well aware, Arizona requires taxpayers to use their Federally Adjusted Gross Income as the starting point for state income tax assessment. The state has conformed to the Internal Revenue Code (IRC) each year since 1978 to include federal provisions that became effective in the previous year. But the political challenges associated with conforming to the changes made by the Tax Cuts and Jobs Act of 2017 stalled legislative efforts to address conformity in a timely manner, leaving taxpayers and tax practitioners with more questions than answers as tax returns are prepared. This year the Society worked tirelessly to educate legislators, many of whom were newly elected, of the importance of full conformity. Legislative budget analysts produced highly speculative estimates ranging from $50 million to $250 million, and the issue quickly became highly politicized. Some Republican legislators viewed conforming to the IRC as a tax increase, and an unintended consequence of the Tax Cuts and Jobs Act, which was intended to put money back into the pockets of taxpayers, not state government. Meanwhile most Democrats, and a fair number of Republicans, wanted to use the potential revenue from full conformity as a way to fund budget priorities. Early in the session Sen. J.D. Mesnard (R – Chandler) introduced SB 1143 (conformity; internal revenue code; rates), which conformed to the IRC as of January 1, 2018, and reduced the state income tax rates by 0.11%, which would have applied retroactively to tax years beginning with 2018. The legislation passed the Senate and House along a party-line vote. Governor Ducey, however, vetoed the measure on February 1, 2019. In his veto message the Governor stated that he vetoed SB 1143 because it was "the wrong policy, and any bill with a fiscal impact should be considered as part of budget discussions agreed to by the Legislature and Executive, just as every budget bill is considered, every session." The fiscal impact associated with conformity, coupled with the governor's veto message, meant that the conformity negotiations were effectively tied to the state budget negotiations from that point forward. After months of discussions, Governor Ducey and legislative leadership reached a tentative budget deal over the weekend of May 18. The House began debating the budget package in earnest on Thursday, May 23. After a marathon session of debating, amending, and voting on the proposal, the House adjourned at roughly 4:30 AM on Friday, May 24. The Senate, however, didn't' have the votes necessary to pass the deal, as a handful of Senators were refusing to vote on the budget until their individual priorities were addressed. The Senate met on Friday and Saturday of Memorial Day weekend, a move that was highly unusual as the legislative workweek is typically Monday through Thursday. Senate President Fann, however, was firm in her resolve to negotiate a budget deal that her members could support and send to the governor. President Fann was eventually successful in negotiating a budget that her caucus could support, but Sen. Mesnard remained opposed to the conformity-related provisions, and voted against a majority of the budget bills. HB 2757 (tax provisions; omnibus) ultimately passed the House by a party-line vote of 31-29 and the Senate by a vote of 16-13, with Sen. Mesnard joining the Democrats in opposition. Governor Ducey signed the legislation on May 31, 2019.

* Use coupon code PODCAST25 for 25% off this webcast * Webcast URL: https://www.theknowledgegroup.org/webcasts/section-956-proposed-regulations/ Join us for this Knowledge Group Online CPE Section 956 Webinar. In October 2018, the U.S. Department of the Treasury and the Internal Revenue Service (IRS) issued proposed regulations that would exempt certain U.S. controlled foreign corporation (CFC) shareholders from Internal Revenue Code (IRC) section 956 deemed dividend rules. Although the proposed regulations favor many corporate taxpayers, one must not forget that section 956 still applies. Moreover, not all CFC shareholders covered by section 956 can claim the benefits of the new participation exemption. Inaction in the U.S. Congress is also limiting the scope of the relief provided by the proposed rules. This poses potential pitfalls for the unwary. In this LIVE Webcast, a panel of key thought leaders organized by The Knowledge Group will provide an overview to help you understand the critical elements of the proposed Section 956 regulations and its potential effects on corporate taxpayers. Speakers will also offer the best strategies on how to maximize the potentials of and mitigate the risks posed by the new participation exemption. For anymore information please click on the webcast url at the top of this description.

Human Resources: Issues and Answers,Can employers still reimburse employees for meals?, Issue: Your company reimburses employees for meals when they work late or on weekends. You heard that the Tax Cuts and Jobs Act of 2017 changed the tax treatment of such meals. What are the revised rules? Answer: The Tax Cuts and Jobs Act of 2017 (TCJA) revised the limits on meals provided to employees, as well as the limits on other company meals and entertainment expenses. Prior to January 1, 2018, subject to other requirements and limitations under the Internal Revenue Code (IRC) that applied to the deduction of business expenses, employers were generally permitted to: Deduct up to 50 percent of the cost of the face value of tickets to non-charitable events and up to 100 percent of the cost of tickets for charitable events as client entertainment expenses; Deduct up to 50 percent of the cost of meals and other food and beverages provided while entertaining clients or while traveling on company business; Deduct up to 100 percent of the cost of meals and other food and beverages provided for the convenience of the employer on the company’s premises (such as in the employer’s cafeteria or delivered to the company’s office), to the extent that such expenses were excludible from the employee’s gross income under the de minimis fringe benefit provisions of the IRC; and Deduct up to 100 percent of the cost of company holiday parties and picnics and similar events. Effective for amounts paid or incurred after December 31, 2017, subject to other requirements and limitations under the IRC that apply to the deduction of business expenses, the TCJA: Eliminates the employer deduction for tickets to both non-charitable and charitable events as client entertainment expenses; Continues to impose a limit of 50 percent on an employer’s deduction for meals and other food and beverages provided while entertaining clients or while traveling on company business; Imposes a reduced limit of 50 percent on the deduction for meals and other food and beverages provided for the convenience of the employer on the company’s premises. Unless further extended, after 2025, the employer’s deduction for meals and food and beverages provided for the convenience of the employer on the employer’s premises will be eliminated altogether; and Continues to permit employers to deduct up to 100 percent of the cost of company holiday parties and picnics. Source: Sec. 13304 of the Tax Cuts and Jobs Act of 2017 (P.L. 115-97, 131 Stat. 2054), signed by the president on December 22, 2017. This is a cultural communication issue.  Make sure that your plans, if you choose to, to cut your employee catering budget is communicated well, and give employees time to adjust prior to making changes that could affect them!

Latest Insights, Trends, Polls and Thoughts ... "There is currently a lack of clarity in the tax code about how Direct Primary Care (DPC) agreements should be treated vis-à-vis Health Savings Accounts (HSAs). The Internal Revenue Code (IRC) clearly states that HSAs must be paired with a high deductible health plan (HDHP). Section 223(c) of the IRC also prohibits individuals with HSAs from having a second health plan to cover services not covered by the HDHP. Current Treasury Department interpretation of the IRC treats DPC monthly fee arrangements like a second health plan, rather than a payment for a medical service. As such, under current policy, individuals with HSAs are effectively barred from having a relationship with a DPC provider, because the DPC agreement makes the individual ineligible to fund the HSA. However, 23 states have passed laws defining DPC as a medical service outside of health plan or insurance regulation." ~DPC Coalition; www.dpcare.org By Michael Tetreault, Editor-in-Chief | The DPC Journal November 15, 2017 | Run Time: 31:35 Listen in as Jay Keese, Executive Director of The Direct Primary Care Coalition (DPCare.org) and Michael Tetreault, Editor of The DPC Journal ...  Discuss a Variety of the The Federal and Statewide Efforts Happening Across The U.S. To Clarify Private, Direct Pay Healthcare Language. We talk about the following issues: + Who should pay for the private, direct pay subscription fees; + Defining DPC in Pennsylvania, Arizona, Oregon, Florida, South Carolina, Georgia, West Virginia and Virginia Updates; + Missouri Medicaid Pilot; + 2017 action items accomplished; + DPC, HSAs and 2016 Year-End Devenir HSA Research Report Key Findings + HSA accounts now exceed 20 million. The number of HSA accounts rose to 20 million, holding almost $37 billion in assets, a year over year increase of 22% for HSA assets and 20% for accounts for the period of December 31st, 2015 to December 31st, 2016. HSA investments see continued growth. HSA investment assets reached an estimated $5.5 billion in December, up 29% year over year. The average investment account holder has a $14,971 average total balance (deposit and investment account). Health plans remain the largest driver of account growth. Health plan partnerships continued as the leading driver of new account growth, accounting for 37% of new accounts opened in 2016. + Michigan Medicaid Pilot; + Employers and Tax Treatment of Direct Primary Care & Concierge Medicine with Health Savings Accounts (HSAs) ; + Lack of Definitions in Some States; + The Primary Care Enhancement Act (H.R. 365 and S. 1358) + 2017 & 2018 challenges; + 2018 solutions proposed in 2017; + 2018 policy questions still need to be answered and addressed in the space; + The ACA; + Medicare; + initiatives that may help moonlighting and financially challenged DPC Physicians across the U.S. to add more revenue to their practice; + what still needs to be done legislatively in certain states; + how flexible should the DPC model be to match existing state or federal laws; + who should and should not consider DPC; + What will practicing as a DPC Physician Look Like in the next 2-3 years? and more. (c) 2017 The Direct Primary Care Journal (The DPC Journal) The Direct Primary Care Coalition's mission is to support DPC, an innovative, non-partisan approach to better primary care. The central tenets of this movement are based on a culture of service, patient empowerment, trusting relationships supported by unrushed care, rejection of FFS insurance incentives, excellence of medical care and promotion of health. To learn more, participate or become part of the the DPC Coalition policy activities, visit https://www.dpcare.org/join Learn More ... www.DirectPrimaryCare.com | www.ConciergeMedicineToday.com

There has been a lot of talk around the office and with clients about taxation of Social Security benefits. Since we are talking about taxation, we are talking about Internal Revenue Code (IRC), and we all know that the IRS likes to make things a clear cut as possible**[1].  In this week’s news article I […] The post Taxation of Social Security Benefits appeared first on Help with My Social Security.com.