We're working to keep you informed in a world that changes by the minute. If you have anything you'd like to share, or if we can help you in any way, please reach out to Zach Donah at firstname.lastname@example.org or 617.303.2411, or Larry Liuzzo at email@example.com or 617.303.2405.
SD.172: Addressing Massachusetts Tax on Forgiven PPP Income
Thank you to all of you who contacted your state legislators to encourage them to enact SD.172 as soon as possible.
There are a couple points of opposition we have run into:
- “Double dip” tax break for loan recipients; and
- The potential revenue impact on the Commonwealth should the bill pass and conform to the federal rules.
We believe the intent of the Paycheck Protection Program (PPP) is to ensure our small businesses remain operational and people remain working. Without the PPP, countless more businesses across Massachusetts would have closed permanently and have rendered tens of thousands of more residents unemployed.
We understand that with March 15 quickly approaching the window to provide the most impactful relief is closing. We continue to convey that enacting the bill as soon as possible is critical. Please feel free to share this with your clients as their contact with their legislators is tremendously helpful in our efforts to seeing this done.
We are also compiling real world scenarios of how small businesses will be severely impacted for having to pay this tax. If you have any examples you would like to share, please email us at firstname.lastname@example.org and email@example.com.
As always, thank you for your help in our advocacy efforts, especially as many of you are in the midst of busy season.
Additionally, the DOR released a number of FAQs regarding the PPP. To learn more, click here.
AICPA Seeks Filing Deadline Certainty and Tax Year Relief
In efforts to provide certainty to tax practitioners and taxpayers, the AICPA called on the U.S. Treasury and the IRS to announce any tax filing and payment deadlines by Monday, March 1.
The IRS has maintained that it does not plan to extend, although with the looming possibility of additional federal relief, that may change. The feedback from our members remains split, and we will certainly keep you updated through all our publications, including here and in Friday@Five.
Other AICPA recommendations include:
- If the Treasury and the IRS determine they cannot hold to the April 15 deadline, that decision should be announced by March 1 and the postponed date should be June 15;
- Taxpayers should receive relief from underpayment penalties if they paid at least 70% of the tax due for the current year or paid 70% (90% if adjusted gross income (AGI) exceeds $150,000) of the amount of tax shown on their U.S. income tax return for the prior year;
- Taxpayers should also receive relief from late-payment penalties if they request an extension of time to file their income tax return in a timely manner and pay at least 70% of the taxes owed with the request;
- The IRS should halt compliance actions until it is prepared to devote the necessary resources for a proper and timely resolution of the matter; and
- The IRS should expand the existing temporary e-signature relief currently being provided to the millions of taxpayers affected by and working through the challenges created by the pandemic.
House Ways & Means Chairman Richie Neal Calls on IRS to Halt Incorrect Tax Delinquency Notices
Chairman Richie Neal and members of the House Committee on Ways & Means called on the IRS to stop sending erroneous tax delinquency notices to taxpayers. Citing the IRS backlog of roughly 7 million unprocessed 2019 tax returns, the Chairman and others claim that these notices are causing undue stress for taxpayers and practitioners, many of whom filed correctly and on time, and for the IRS employees still sifting through the unprocessed returns.
The IRS has since acknowledged these errors and issued a statement to taxpayers that these notices can be disregarded.
2020 Earned Income Tax Credit Information
Included in the last federal COVID-19 financial relief package, signed in late December 2020, is a lookback provision that allows taxpayers who qualify for the Earned Income Tax Credit (EITC) to choose either their 2019 or 2020 income earnings, whichever is higher, for this year’s EITC.
To figure the EITC credit, click here.
To learn more about the Massachusetts EITC, click here.
For more information and resources on the EITC, click here.
Guidance for Paycheck Protection Program (PPP)
DOR & IRS Updates