As most of you read yesterday, Secretary of the Treasury Steven Mnuchin said the deadline to file taxes has been extended to July 15. “We are moving Tax Day from April 15 to July 15,” Secretary Steven Mnuchin wrote on Twitter. “All taxpayers and businesses will have this additional time to file and make payments without interest or penalties.” He said he was acting at President Donald Trump’s direction. The White House had announced previously they were deferring tax payments for 90 days, but that Americans would still need to file by April 15. Later in the day, the IRS issued formal guidance that superseded and expanded previous guidance that gave taxpayers extra time to pay, but included limitations on the amount of tax they could defer ($1M for individuals and $10M for corporations). The new guidance removes those caps and permits unlimited income tax payment deferral until July 15, 2020. The extension of the Federal deadline does not automatically apply to all states. Some states have already extended their due date. We are waiting for New York to issue formal guidance and will continue to monitor for future developments. If you have any questions, please contact a member of your Insero tax professional team.
Since many businesses have moved their workforce to remote work arrangements, we rounded up our top tips for remote workers:
- Get started early – dive into your to-do list as soon as you wake up. Many report that getting an early start helps them feel more productive if they can check items off their to-do lists or make progress on a project early before coming back to it throughout the day.
- Pretend like you are going into the office – Do all the things you’d do to prepare for a day in the office: set your alarm, make coffee, and get dressed, even if it’s a bit more casual than you’d dress for the office.
- Create a to-do list – Segment what you’ll do and when over the course of the day. Create personal events and reminders that tell you when to shift gears and start on a new task.
- Choose a dedicated work space – A specific room or surface in your home to work rather than on the couch. Ensure your home office provides all the necessary technology to be productive.
- Minimize distractions – Limit interruptions such as your television or social media. Consider closing your home office door if you’re not the only person home.
- Plan out what you’ll be working on ahead of time – try solidifying your schedule the day before, making it feel more official when you wake up the next day to get started on it.
- Use communication tools to stay connected – Instant messaging and videoconferencing can make it easy to check in with coworkers/supervisors/managers.
- Take clear breaks – Get away for your workspace and take a walk outside or spend time with others who might be in the house.
- Prepare your meals the night before – Preparing food ahead of time ensures you can use your meal times to eat, and that you aren’t performing non-work tasks that spend energy better used at your desk.
- Communicate – Tell everyone who needs to know about your schedule and availability often. When you finish a project or a task, say so. Don’t postpone asking for help if you need it.
On March 19, 2020, a group of senators introduced the Tax Filing Relief for America Act (S. 3535), a bill to extend the tax filing deadline from April 15, 2020, to July 15, 2020 after guidance from the Treasury Department and the Internal Revenue Service extended only the tax payment deadline in response to the novel coronavirus pandemic. The Tax Filing Relief for America Act would provide for basically the same timeline as the Treasury and IRS guidance that was issued this week. The legislation would enable taxpayers, along with their preparers, extra time to file their taxes without filing for an extension.
We will continue to monitor this bill. If you have any questions, please contact a member of your Insero tax professional team.
On March 18, the IRS issued Notice 2020-17 which provides more details regarding the deferral of Federal income tax payments previously discussed by Treasury Secretary Mnuchin, which was the subject of a prior Insero Tax Alert.
The current guidance provides that any person with a Federal income tax payment due April 15, 2020 is considered an Affected Taxpayer by the COVID-19 crisis and is eligible for the deferral of Federal income tax payments due on April 15, 2020, until July 15, 2020, without imposition of penalty or interest. This deferral applies to Federal income tax payments due up to the “Applicable Postponed Payment Amount” (APPA), which is:
- $10 million for each consolidated group or for each C corporation that does not join in filing a consolidated return; and
- $1 million for all other Affected Taxpayers.
The Notice confirms that the APPA is the same amount for individuals regardless of filing status. This means that a single individual and married individuals filing a joint return have the same $1 million APPA. The Notice also states that any tax due in excess of the APPA will be subject to penalties and interest if not paid by the original April 15, 2020 due date. This means that if a single individual taxpayer owes $2 million for 2019 Federal income taxes, including self-employment tax, the payment of the first $1 million can be deferred until July 15, 2020, but the additional $1 million will be subject to penalties and interest if not paid by April 15, 2020.
The relief provided in this Notice is available solely with respect to Federal income tax payments (including payments of tax on self-employment income) due on April 15, 2020 in respect of an Affected Taxpayer’s 2019 taxable year and Federal estimated income tax payments (including payments of tax on self-employment income) due on April 15, 2020, for an Affected Taxpayer’s 2020 taxable year.
The Notice expressly states that no extension is provided for the payment or deposit of any other type of Federal tax (e.g., payroll taxes, gift taxes or excise taxes) or for the filing of any tax return or information return. Therefore, Affected Taxpayers should consider requesting an extension of time to file their income tax return under the normal rules. Please note that state filing and payment obligations are not covered by the IRS guidance. Each state is addressing filing and payment obligations at the individual state level.
Although the Notice provides some additional clarification, a number of questions still remain. We will continue to update you when we receive additional clarification. If you have any questions, please contact a member of your Insero tax professional team.
On March 16, 2020, the House passed, by unanimous consent, an updated version of the coronavirus relief bill that it originally passed on March 14. The bill has been sent to the Senate. The bill, H.R. 6201, the Families First Coronavirus Response Act (the Act), provides: a) paid leave benefits to employees; b) tax credits for employers and self-employed taxpayers; and c) FICA tax relief for employers.
The tax changes in the updated version include:
- The original bill provided that sick leave and family and medical leave paid under the Act are not considered wages under Code Sec. 3111(a) (employer tax – old age, survivors and disability insurance portion of FICA; 6.2%). The updated version includes that provision and also provides an employer credit for the 1.45% hospital insurance portion of FICA with respect to sick leave and family and medical leave paid under the Act.
- The amount of the sick leave credit and the amount of the family and medical leave credit are increased by the portion of the employer’s “qualified health plan expenses” that are properly allocable to qualified sick leave wages. Qualified health plan expenses means amounts paid or incurred by the employer to provide and maintain a group health plan (as defined in Code Sec. 5000(b)(1)), but only to the extent that such amounts are excluded from the gross income of employees by reason of Code Sec. 106(a).
- The sick leave and family and medical leave credits may be taken against the employer’s railroad retirement tax.
- Sick leave and family and medical leave paid under the Act will not be considered wages under Code Sec. 3221(a) (employer’s railroad retirement tax).
Brief Summary of the Original Bill
Early on March 14, the House passed H.R. 6201, the “Families First Coronavirus Response Act” (the “Act”) to provide emergency supplemental appropriations and support Americans during the COVID-19 pandemic. Parts of the Act provide for emergency family and medical leave benefits, emergency paid sick leave benefits, and employer and self-employed tax credits and exclusion from employer FICA tax with respect to the payment of those benefits. The vote was 363-40.
Employer Tax Credits
The Act provides tax credits to employers to cover wages paid to employees while they are taking time off under the bill’s sick leave and family leave programs.
- The sick leave credit for each employee would be equal to his or her wages, limited to $511 per day while the employee is receiving paid sick leave to care for themselves, or $200 if the sick leave is to care for a family member or child whose school is closed. An additional limit applies to the number of days per employee: the excess of 10 days over the aggregate number of days taken into account for all preceding calendar quarters.
- The family leave credit for each employee is limited to $200 per day with a maximum of $10,000.
- The credits are refundable to the extent they exceed the employer’s payroll tax.
- Employers don’t receive the credit if they’re also receiving the credit for paid family and medical leave in Code Sec. 45S.
These rules apply only to wages paid with respect to the period beginning on a date selected by the Secretary of the Treasury which is during the 15-day period beginning on the date of the enactment of the Act, and ending on December 31, 2020.
Comparable Credits for Self-Employed.
The Act also provides for similar refundable credits against the self-employment tax.
- It covers 100% of a self-employed individual’s sick-leave equivalent amount, or 67% of the individual’s sick-leave equivalent amount if they are taking care of a sick family member, or taking care of a child following the child’s school closing. The sick-leave equivalent amount is the lesser of average daily self-employment income, or $511/day to care for the self-employed individual, or $200/day to care for a sick family member or child following a school closing.
- Self-employed individuals could receive a family leave credit for as many as 50 days multiplied by the lesser of $200 or their average self-employment income.
These rules apply only to days occurring during the period beginning on a date selected by the Secretary of the Treasury, which is during the 15-day period beginning on the date of the enactment of this Act, and ending on December 31, 2020.
Employer FICA Exclusion.
Under the Act, sick leave and family and medical leave paid under the Act will not be considered wages under Code Sec. 3111(a) (employer tax – old age, survivors and disability insurance portion of FICA; 6.2%).
If you have any questions, please contact a member of your Insero tax professional team.
Treasury Secretary Steven Mnuchin stated, during a press conference yesterday, that the IRS will allow taxpayers to defer payments for 2019 tax returns for 90 days. For individuals, the amount of tax which can be deferred is up to $1 million. Corporations can defer up to $10 million. These limits were selected to provide benefits to small businesses which report income through pass-through entities such as partnerships or S corporations. He indicated that the net impact of this action by the IRS will put $300 billion into the economy as another measure to minimize the consequences of the coronavirus pandemic.
Official details have not been released. We expect more information to be provided shortly, but his comments raise several questions which we are monitoring:
- Is the tax return filing deadline also extended? While 2019 tax payments will be deferred, it appears that the filing date will remain April 15, 2020, unless an extension is requested. Although Secretary Mnuchin said penalties and interest will not apply to the deferred payment, it would be prudent to request an extension of time to file since it is not clear from his statement that there will also be a waiver of late filing penalties. Furthermore, some taxpayers have certain information reporting included with their filings that can have steep late-filing/failure to file penalties.
- Are estimated tax payments, which are generally due on April 15 and June 15, subject to waiver and deferred under these caps? Technically, they are not payments for the 2019 tax year and may not be covered.
- What is the impact on state tax filings? Most states have been silent as to an extension, and those that had previously commented said they would follow the federal lead. It is unclear how states will conform to the federal guidance since it is not as simple as filing an extension.
The announcement was unclear as to what is required from individuals owing more than $1,000,000 or corporations owing more than $10,000,000. The announcement did not address payroll taxes or estate and gift taxes. However, if you are due a tax refund, you may want to file your return as quickly as possible.
We will continue to follow these developments and provide information on these issues as they are clarified. If you have any questions, please contact a member of your Insero tax professional team.
As always, the health and well-being of our people and our clients is of the utmost importance to Insero & Co. CPAs.
We are implementing our plan to move the majority of our workforce to remote work arrangements and our offices will be closed to the public through March 31, 2020, at which point we will reassess. We are closely monitoring information from the Centers for Disease Control
(CDC) and local health departments as well as the Treasury Department and the Internal Revenue Service to help ensure that we are taking appropriate precautions to ensure everyone’s safety while continuing to provide the highest standard of client service.
Our technological capabilities will allow our team to work from remote locations. During this time we will make every attempt to ensure your telephone calls and emails are answered in a timely manner and that your service team will be working to meet your needs.
You can still reach us during normal business hours at 800-232-9547 or 607-272-4444. If you have any questions, please feel free to reach out.
Thank you for your understanding during these challenging times. From all of us at Insero, we hope that you, your friends, colleagues, and families are safe and healthy.
We will be posting updates here as they become available.
Rochester, N.Y. – March 12, 2020 – Insero & Co. CPAs has been ranked as one of Accounting Today’s Top Firms for the Mid-Atlantic as part of their Top 100 Firms and Regional Leaders publication. This annual ranking of the leading national and local firms by revenue also includes data analysis and industry insights.
“We want to say thank you to our employees,” said Nancy Catarisano, Managing Partner. “It is their hard work that has made the growth that put us here possible.”
The Mid-Atlantic regional list includes firms in New Jersey, New York, and Pennsylvania with 61 percent of the firms located in New York state, 64 percent of which are located in New York City. Accounting Today reports that firms in this region performed better in 2019 than in 2018. Nationwide, six out of 10 regions reported slower growth rates than the previous year.
Insero is new to the list this year and reported a 6.45 percent increase in revenue. The firm currently employs 138 full-time employees across four offices.
For more information about the list, visit https://www.accountingtoday.com/the-top-100-firms-and-regional-leaders.
ABOUT INSERO & CO. CPAS
Rochester-based Insero & Co. CPAs is an accounting and business advisory practice with locations throughout New York state. A full-service public accounting firm, Insero provides attest, tax and consulting services to government agencies, colleges and universities, nonprofit organizations and companies ranging from privately held family businesses to multi-national corporations. These clients represent many industries, including service, manufacturing, distribution, high-tech, telecommunications, education, social services and real estate. For more information, visit www.inserocpa.com.
3 More Accounting Best Practices for Nonprofits
In a previous article, we discussed three accounting best practices designed to help nonprofits reduce risks and stay focused on their mission. Here, we build on those tips to show how organizations can improve in three critical areas: regulations, budgeting, and fundraising.
Best practice #1: Keep track of the latest nonprofit regulations
As we mentioned in our earlier article, nonprofits face different accounting challenges than for-profit enterprises. That includes different tax and accounting regulations, including GAAP and IRS requirements.
As you know, GAAP, or Generally Accepted Accounting Principles, are guidelines every accounting professional has to follow. GAAP rules change in sometimes complex ways, so you have to stay abreast of how those changes affect your organization. IRS requirements for nonprofits likewise change and require constant monitoring.
Whatever regulatory changes come next, it’s essential to have flexible ERP software in place. For example, Sage Intacct, the best-in-class cloud-based accounting software solution, provides reporting flexibility and configurability to let you adapt to new requirements in minutes instead of days or weeks. You can update your reporting format simply by editing your existing reports and pointing and clicking to insert the new columns, rows, and subtotals.
Best practice #2: Create realistic budgets with better forecasting
If you’re still creating spreadsheet-based budget forecasts, there is a better way. Imagine being able to model calculations such as projected cash flow, revenue recognition options, or headcount expenses without the errors common to spreadsheets. Plus, no more hidden formulas, broken links, or version-control issues!
With more advanced software solutions like Sage Intacct, you can create multiple what-if scenarios and easily discuss them across teams—all within one secure solution. More accurate forecasts lead to more refined budgets that identify both challenges and opportunities.
Best practice #3: Set realistic fundraising plans
Set overly ambitious fundraising goals, and your development team will inevitably fall short. But if your goals are too low, your team won’t be pushed. Again, the key is to have the right accounting software in place, which will give you quick access to detailed grant, fund, project, and donor data.
Look for integrated software solutions that automatically sync your financial and donor information. Then use that data to create realistic fundraising goals, and a plan to reach them. If circumstances change during the year, you can update the fundraising plan accordingly—the right software will make it easy.
Insero & Co. is a public accounting firm with decades of experience working with nonprofit organizations. Our experts are available to help you identify the best practices that can help your organization achieve your mission.