Learning Center for Tax and Financial Insights

Article Highlights: IRS Resuming Collection & Enforcement Activities IRS Has Started Contacting Taxpayers Who Have Not Responded to Prior Notices. Taxpayers Not Responding Could be Subject to Liens and Levies Beginning on July 15, 2021, the IRS will Start to Levy Taxpayer Assets The IRS is reporting that it is resuming “certain collection and enforcement processes that had been suspended because of the coronavirus pandemic.” On June 15, 2021, this process kicked off as the IRS started contacting taxpayers who have not responded to prior balance due notices. Since April 2020, the IRS halted its systemic and automated lien and levy programs for pandemic relief, but the agency is now planning to continue its normal collection casework processes. Balance due notices, levies, and liens Typically, balance due notices are sent automatically following the tax filing deadline if the IRS believes the taxpayer has a tax bill. Starting June 15, 2021, the IRS started sending follow-up letters to those taxpayers who haven’t responded to prior notices. The notification will state that they have 30 days (45 days if out of the country) to respond or pay their tax bills.

Article Highlights: Increased Child Tax Credit High Income Phaseout Advanced Payments Non-filer Credit Registration IRS Letters Scam Awareness As we noted in prior articles, Congress has made substantial changes to the child tax credit (CTC) for 2021. The CTC has been increased to as much as $3,000 per child ages 6 through 17 at the end of 2021, and $3,600 per child age 5 and under at the end of 2021. For taxpayers who have their main homes in the United States for more than half of the tax year and bona fide residents of Puerto Rico, the CTC is fully refundable. However, it does begin to phase out for higher-income taxpayers once their modified adjusted gross income, based on their filing status, exceeds: $75,000 for single filers and married persons filing separate returns. $112,500 for heads of household. $150,000 for married couples filing a joint return and qualifying widows and widowers. New for 2021 is a provision that allows advance payments to eligible taxpayers of one-half of the estimated 2021 CTC in monthly payments (July through December). The monthly advance payments will be estimated based on a taxpayer’s 2020 tax return, or their 2019 tax return if 2020 information is not available. All qualifying families are automatically enrolled for advanced payments. Payments will be by check or direct deposit. The IRS, on June 15th, unveiled an online tool

If you’re a small business owner or an aspiring entrepreneur, there will be situations surrounding you that can impact profitability where you may consider the options of merge, buy, or sell a business. Watch this video to learn the basics of mergers and acquisitions. .embed-container { position: relative; padding-bottom: 56.25%; height: 0; overflow: hidden; max-width: 100%; } .embed-container iframe, .embed-container object, .embed-container embed { position: absolute; top: 0; left: 0; width: 100%; height: 100%; }

July 1 - Time for a Mid-Year Tax Check-Up Time to review your 2021 year-to-date income and expenses to ensure estimated tax payments and withholding are adequate to avoid underpayment penalties. July 12 - Report Tips to EmployerIf you are an employee who works for tips and received more than $20 in tips during June, you are required to report them to your employer on IRS Form 4070 no later than July 12. Your employer is required to withhold FICA taxes and income tax withholding for these tips from your regular wages. If your regular wages are insufficient to cover the FICA and tax withholding, the employer will report the amount of the uncollected withholding in box 12 of your W-2 for the year. You will be required to pay the uncollected withholding when your return for the year is filed.

July 1 - Self-Employed Individuals with Pension PlansIf you have a pension or profit-sharing plan, you may need to file a Form 5500 or 5500-EZ for calendar year 2020. Even though the forms do not need to be filed until August 2, you should contact this office now to see if you have a filing requirement, and if you do, allow time to prepare the return July 15 - Non-Payroll WithholdingIf the monthly deposit rule applies, deposit the tax for payments in June. July 15 - Social Security, Medicare and Withheld Income Tax

Here are five things that happened this past month that affect your small business. 1) There’s a tight labor market nationwide these days, and it’s giving workers more leverage. The economy’s recovery is giving low-wage workers more leverage, as “ballooning job openings in fields requiring minimal education” combine with a shrinking labor force. For some, this means higher wages, bonuses, or competing offers. “Average weekly wages in leisure and hospitality, the sector that suffered the steepest job losses in 2020, were up 10.4% in May from February 2020.” (Source: The Wall Street Journal) Why this is important for your business: If you operate in an affected industry, you may already be experiencing some of these hiring difficulties. You aren’t the only one. 2) A surge in inflation may be around for a while – but it’s temporary. Inflation has been a hot topic in the news this month, as the US sees rising prices on various consumer goods. According to two Federal Reserve officials, this period of high inflation “may last longer than anticipated but should still ease over time as the economy settles back to normal.” (Source: Reuters) Why this is important for your business: You may be feeling the pinch of higher prices from your suppliers, or perhaps you’ve had to raise prices for your customers to keep up with rising costs. Keep a close eye on this. 3) Business travel could be on the rebound. Travel is way up nationwide, but much of it is leisure – for now. Signs indicate that business travel will continue to bounce back after more than a year of lockdowns and travel restrictions. The CEO of Hyatt Hotels believes things will be closer to normal in the autumn. “Most of the bankers, consultants and lawyers that I’m talking to are gearing up to be back on the road, so I think that will really take hold in a more affirmative way in the fall,” he said. (Source: CNBC) Why this is important for your business: It’s time to decide whether your business will resume travel for employees. If you’ve gotten by just fine with Zoom meetings over the past year, maybe you’ll decide not to travel as often going forward. 4) With no more PPP, struggling businesses must find funding elsewhere. The federal government’s Paycheck Protection Program (PPP) has completed its second round, so businesses still struggling from effects of the pandemic are looking for funding elsewhere. “Small business loan approval percentages at big banks... climbed slightly from 13.4% in April from 13.5% in May 2021… Small banks’ approvals jumped higher from 18.2% in April, to 18.7% in May.” (Source: Forbes) Why this is important for your business: If your business is still reeling from the economic impacts of COVID-19, new PPP funds don’t look likely. You’ll have to seek funding elsewhere. 5) G-7 countries have reached a historic deal on global corporate tax reform. Finance ministers of the G-7 countries – Canada, France, Germany, Italy, Japan, the U.K. and the U.S. – “have backed a U.S. proposal that calls for corporations around the world to pay at least a 15% tax on earnings.” If finalized, this would “represent a significant development in global taxation.” (Source: CNBC) Why this is important for your business: Companies with international operations would see changes to their taxation under this proposal – but it’s still a long way from being adopted. Stay tuned.