Scammers Using Fake Letters in Collections Scam

The Michigan Department of Treasury has issued the following release:

LANSING, Mich. – Michigan taxpayers with past-due tax debts should be aware of an aggressive scam that’s making the rounds through the U.S. Postal Service, according to the Michigan Department of Treasury (Treasury).

In the scheme, taxpayers receive a letter about an overdue tax bill, asking individuals to immediately contact a toll-free number to resolve an outstanding state tax debt. The letter aggressively threatens to seize a taxpayer’s assets ― including property and Social Security benefits ― if the debt is not settled.

“This is a tricky scam that has been reported throughout the state,” said Deputy State Treasurer Ann Good, who oversees Treasury’s Financial and Administrative Services programs. “Taxpayers have rights. If you have questions about an outstanding state tax debt, please contact us through a verified number so we can talk about options.”

The piece of correspondence appears credible to the taxpayer because it uses specific personal facts that’s pulled directly from publicly available information. The scammer’s letter attempts to lure the taxpayer into a situation where they could make a payment to a criminal.

The state Treasury Department corresponds with taxpayers through official letters sent through the U.S. Postal Service, providing several options to resolve an outstanding debt and information outlining taxpayer rights.

Taxpayers who receive a letter from a scammer or have questions about their state debts should call Treasury’s Collections Service Center at 517-636-5265. A customer service representative can log the scam, verify outstanding state debts and provide flexible payment options.

As always, if you have any questions, please contact our office.

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PPP Loan Program may be open for an additional 5 weeks

On Tuesday night, the Senate voted to approve a 5 week extension to the PPP Loan program. The program, which stopped accepting applications on June 30th, could continue to accept applications for an additional 5 weeks (August 8th), if approved by the House and signed by the President.

If you need assistance with the Paycheck Protection Loan program, or would like further information, please contact our office.

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Rollover relief for RMD’s from retirement accounts that were waived under the CARES Act

IR-2020-127, June 23, 2020

WASHINGTON — The Internal Revenue Service today announced that anyone who already took a required minimum distribution (RMD) in 2020 from certain retirement accounts now has the opportunity to roll those funds back into a retirement account following the CARES Act RMD waiver for 2020.

The 60-day rollover period for any RMDs already taken this year has been extended to August 31, 2020, to give taxpayers time to take advantage of this opportunity.

The IRS described this change in Notice 2020-51 (PDF), released today. The Notice also answers questions regarding the waiver of RMDs for 2020 under the Coronavirus Aid, Relief, and Economic Security Act, known as the CARES Act.

The CARES Act enabled any taxpayer with an RMD due in 2020 from a defined-contribution retirement plan, including a 401(k) or 403(b) plan, or an IRA, to skip those RMDs this year. This includes anyone who turned age 70 1/2 in 2019 and would have had to take the first RMD by April 1, 2020. This waiver does not apply to defined-benefit plans.

In addition to the rollover opportunity, an IRA owner or beneficiary who has already received a distribution from an IRA of an amount that would have been an RMD in 2020 can repay the distribution to the IRA by August 31, 2020. The notice provides that this repayment is not subject to the one rollover per 12-month period limitation and the restriction on rollovers for inherited IRAs.

The notice provides two sample amendments that employers may adopt to give plan participants and beneficiaries whose RMDs are waived a choice as to whether or not to receive the waived RMD.

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PPP Reforms pass the House and Senate, President signs bill into law

The U.S. House of Representatives and Senate passed a bill that changes the forgiveness requirements for PPP loans.  Today, President Trump signed the bill into law.

The reforms include:

  • Extending the 8 week forgiveness period to 24 weeks
  • Reducing the payroll expense requirement to 60% from 75%
  • Extending the loan repayment period from 2 years to 5 years for any portion not forgiven

For more details, please see this article.

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PPP Loan and Business Deductions

The IRS has issued a ruling (Notice 2020-32) stating that normal business expenses paid with funds from a Paycheck Protection Program loan (PPP) are not deductible business expenses on a federal tax return.

Congress has issued a statement responding to IRS Notice 2020-32, reflecting that Congress intends expenses paid with Paycheck Protection Program (PPP) funds to be deductible for federal tax purposes. We will update as further guidance is issued.

IRS guidance may limit deductions for PPP expenses

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Update for CARES Act – Actions to Take

The CARES Act was signed into law by President Trump on March 27, 2020, containing several provisions to aid small businesses during the COVID-19 crisisAt this time, we are still waiting for guidance and clarification of many items in the law 

 We recommend the following actions at this time: 

1. Apply for an Economic Injury Disaster Loan (EIDL) at the SBA website. You will need to provide information for your gross receipts and cost of goods sold for the period 2/1/19 – 1/31/20. The SBA will use this information to compute your loan amount. Be sure to check the box to receive an advance of up to $10,000. The $10,000 advance is a grant which will not have to be repaid. 

Apply at https://covid19relief.sba.gov/#/. Please contact our office if you would like assistance in completing the initial loan application process. 

Once the initial application process is complete, the SBA will likely need additional information to determine your eligibility and to calculate your total loan amount. 

2. Begin gathering information to apply for a Paycheck Protection Program (PPP) loan. These loans will be administered by banks and credit unions. The PPP funds may be used for payroll costs, rent, utilities, and interest expense. The loan will be forgiven to the extent the funds are used for qualified funds during an eightweek period. The Treasury is expected to release additional information by Friday, April 3, 2020. If you have worked with an SBA lender in the past, be sure to contact your lender to let them know of your interest in the program. Many lenders are creating mailing lists to disseminate information as quickly as possible once additional rules and regulations have been released. 

Note that the loans/grants are intended to assist in paying operating expenses that are impacted by the COVID-19 pandemic. The PPP funds cannot be used to pay the same funds as the EIDL funds, but it is important to start with the EIDL application in order to receive the emergency grant as soon as possible. 

Our office is working hard to learn about these new laws and are staying updated as additional guidance is issued. We are available to assist wherever needed. Please contact us for additional information. 

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Federal Response to COVID-19 Part 1

The information below is a summary of the first legislation passed, which we received from Paychex.  It is a summary of relevant information so far.  This is not reflective of the second bill passed early this morning.

In general, the Families First Coronavirus Response Act dedicates tens of billions of dollars for paid sick and family leave, unemployment insurance, free COVID-19 testing, and other measures to help Americans impacted by the crisis. The final bill, which takes effect for most covered employers no later than 15 days after enactment and sunsets on December 31, 2020, contains numerous provisions affecting businesses and individuals.

Here is an overview of the key elements, which generally apply to private employers with fewer than 500 employees:

Emergency Family Medical Leave (FML) Expansion Act: Temporarily expands the provisions under the Federal Family and Medical Leave Act specifically to address COVID-19-related absences.

  • Eligible employees, who have worked for their employer for 30 days, who qualify for leave under the expanded reasons for leave, would be paid by their employer after the first 10 days of leave at a rate of no less than two-thirds of their current rate of pay.
    There is cap of $200 per day, up to a maximum $10,000, for up to 12 weeks in the benefit year.
  • Employees are permitted to take but employers cannot require the use of any other paid time off during their leave.
  • Employees covered under a multi-employer bargaining agreement are addressed separately in the legislation.

Some exemptions apply for employers of health care workers.

Payroll Credit for Required Paid Family Leave: This refundable tax credit is designed to reimburse 100 percent of wages paid by the employer under the new Emergency FML expansion for each calendar quarter.

  • The tax credit is allowed against the employer portion of the tax-imposed Social Security rate of 6.2 percent and the Medicare rate of 1.45 percent.
  • The amount is capped for each employee at $200 per day and $10,000 for all calendar quarters.
  • If the credit exceeds the employer’s total liability of the employer portion of Social Security and Medicare in any calendar quarter, the excess credit is refundable to the employer.

Specific rules apply that prevent a double tax benefit.

Emergency Paid Sick Leave (PSL) Act: Employers are required to provide paid sick time, available for immediate use, to each employee requiring such time for specific reasons associated with the COVID-19 pandemic, including quarantines, currently seeking a diagnosis due to symptoms, or caring for an individual who is under quarantine or for a child whose school/care is closed due to COVID-19.

  • Provide up to 80 hours of paid sick leave (PSL) to eligible full-time employees and pro-rate part-time employee paid sick time based on the average number of hours regularly scheduled in a two-week period.
  • The calculation and caps for compensation vary dependent on the reason for leave with a maximum of $511 per day if the employee is the individual directly impacted and up to $200 per day if it is for care of someone else. Aggregate caps exist as well.
  • Employees may not be required to use other available paid time off before using paid sick time under this Act.
  • Employees covered under a multi-employer bargaining agreement are addressed separately in the legislation.
  • Some exemptions apply for employers of health care workers.
  • Employers will be required to post a notice of employee rights; the U.S. Secretary of Labor will provide a model notice within seven days of enactment.
  • Paid sick time provided under this Act is not preempted by other federal, state, or local law.

Payroll Credit for Required Paid Sick Leave (PSL): This refundable tax credit is designed to reimburse 100 percent of wages paid by the employer under the new Emergency PSL for each calendar quarter.

  • The tax credit is allowed against the employer portion of the tax imposed Social Security rate of 6.2 percent and the Medicare rate of 1.45 percent.
  • The amount is capped at the maximums of $511 or $200 per day, depending on the reason.
  • If the credit exceeds the employer’s total liability of the employer portion of Social Security and Medicare in any calendar quarter, the excess credit is refundable to the employer.
  • Specific rules apply that prevent a double tax benefit.
    Other General Provisions:

Emergency Unemployment Insurance Stabilization and Access Act of 2020: The bill provides $1 billion in emergency grants to states for activities related to facilitating unemployment insurance benefits, under certain conditions.

  • $500 million will be used to provide immediate additional funding to all states for staffing, technology, systems, and other administrative costs, provided certain requirements are met.
  • The remaining $500 million would be set aside in reserve for emergency grants to states which experienced at least a 10 percent increase in unemployment. Those states would be eligible to receive an additional grant, if certain conditions are met.
  • The U.S. Secretary of Labor will also work with states that want to implement work-sharing programs.
  • Coverage of Testing for COVID-19: Diagnostic testing and provider visits related to COVID-19 testing, including office visits, urgent care visits, and emergency room visits, must be provided without any co-pays, coinsurance, or deductibles.
    Additionally, no prior authorizations may be required for testing.
  • These provisions would apply to any health insurance plans, including individual and group health plans, Medicare, and Medicaid.
    Additionally, federal funding will be provided for uninsured individuals to receive reimbursement for COVID-19 testing and related services.
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Tax Deadline Extensions

Many payment and filing deadlines are being extended as a result of the Coronavirus. The following has been extended as of March 24, 2020. We will update as more information becomes available: 

  • Federal income tax returns and payments (including estimate payments) due between April 1st and July 15th are now due July 15th 
  • First quarter federal payroll due dates have not been extended. 
  • Michigan state and city income tax returns and payments (including estimate payments) due April 15th have been extended until July 15th. City tax returns normally due April 30th have been extended until July 31st. 
  • Michigan payroll filing due dates have not been extended. 

For our out-of-state employers, please ask for details. Many states have announced their own extensions, and most indicate that they will follow the federal income tax extensions. The AICPA is monitoring all state tax announcements and updating their summaries daily. 

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Michigan Temporary Unemployment Expansion

On March 16th, Michigan Governor Whitmer announced temporary expansions to Michigan’s unemployment laws. These expansions are effective immediately and continue through April 14, 2020 and allow workers to claim unemployment benefits if they are impacted by closures or quarantines as a result of COVID-19: 

  • An employer will not be charged for unemployment benefits if their employees become unemployed because of an executive order requiring them to close or limit operations. 
  • An employee is considered to leave work involuntarily for medical reasons if they leave work because of self-isolation or self-quarantine in response to elevated risk from COVID-19 due to being immunocompromised, displaying the symptoms of COVID-19, having contact in the last 14 days with someone with a confirmed diagnosis of COVID-19, the need to care for someone with a confirmed diagnosis of COVID-19, or a family care responsibility as a result of a government directive. 
  • An individual must be deemed laid off if they became unemployed because of self-isolation or self-quarantine in response to elevated risk from COVID-19 due to being immunocompromised, displaying the symptoms of COVID-19, having contact in the last 14 days with someone with a confirmed diagnosis of COVID-19, the need to care for someone with a confirmed diagnosis of COVID-19, or a family care responsibility as a result of a government directive. The employer of an individual covered by this subsection must seek a registration and work search waiver from the Unemployment Insurance Agency. 
  • An individual on a leave of absence due to displaying the symptoms of COVID-19, having contact in the last 14 days with someone with a confirmed diagnosis of COVID-19, the need to care for someone with a confirmed diagnosis of COVID-19 must be considered to be unemployed, or a family care responsibility as a result of a government directive, unless the individual is already on sick leave or receives a disability benefit. 
  • An individual who becomes unemployed because self-isolation or self-quarantine in response to elevated risk from COVID-19 due to being immunocompromised, displaying the symptoms of COVID-19, having contact in the last 14 days with someone with a confirmed diagnosis of COVID-19, the need to care for someone with a confirmed diagnosis of COVID-19, or a family care responsibility as a result of a government directive, and files a claim for unemployment benefits within 28 days of the last day worked must be considered to have filed on time. 
  • For each eligible individual filing an initial claim until April 14, 2020 at 11:59pm, not more than 26 weeks of benefits are payable to an individual in a benefit year. 
  • The unemployment insurance agency may approve a shared-work plan, regardless of whether the employer’s reserve in the employer’s experience account as of the most recent computation date preceding the date of the employer’s application is a positive number.
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Families First Coronavirus Response Act

On March 18th, President Trump signed the Families First Coronavirus Response Act (FFCRA), to ease the economic burden faced by many businesses and individuals as a result of the novel coronavirus disease (COVID-19). The information below is a summary of the provisions included: 

  • Family and medical leave. The Act includes the Emergency Family and Medical Leave Expansion Act (EFMLEA)which requires employers with fewer than 500 employees to provide both paid and unpaid public health emergency leave to certain employees through December 31, 2020. The emergency leave generally is available when an employee who has been employed for at least 30 days is unable to work or telework due to a need for leave to care for a son or daughter under age 18 because a school or place of care has been closed, or a childcare provider is unavailable, due to an emergency with respect to COVID-19 that is declared by a federal, state, or local authority. The first 10 days of leave may be unpaid and then paid leave is required, calculated based on an amount not less than two-thirds of an employee’s regular rate of pay and the number of hours the employee would otherwise be normally scheduled to work, not to exceed $200 per day and $10,000 in the aggregate. Certain exemptions and special rules apply. 
  • Emergency paid sick time. Under the Emergency Paid Sick Leave Act (EPSLA), private employers with fewer than 500 employees, and public employers of any size, must provide 80 hours of paid sick time to full-time employees who are unable to work (or telework) for specified virus-related reasons. Part-time employees are entitled to sick time based on their average hours worked over a 2-week period. This amount is immediately available regardless of the employee’s length of employment. The maximum amounts payable vary based on the reason for absence. Employees who are (1) subject to a quarantine or isolation order, (2) advised by a health provider to self-quarantine, or (3) experiencing symptoms and seeking diagnosis, must be compensated at their regular rate, up to a maximum of $511 per day ($5,110 total). Employees caring for an individual described in category (1), (2), or (3), caring for a son or daughter whose school is closed or child care provider is unavailable, or experiencing a “substantially similar condition” specified by the government must receive two-thirds of their regular rate, up to a maximum of $200 per day ($2,000 total). Employers cannot require employees to find a replacement worker or use other sick leave before this sick time. Employers may exclude health care providers and emergency responders 

The sick leave mandate takes effect not later than 15 days after March 18, 2020 (the date of the Act’s enactment) and expires December 31, 2020.  

Employer tax credits are available to cover all amounts paid under the EFMLEA and the EPSLA, as well as employer health plan expenses allocable to employees taking covered leave. These credits can be recovered immediately by reducing payroll tax deposits by the amount of leave paid out. 

Self-employed individuals can also receive a credit for as many as 50 days multiplied by the lesser of $200 or 67% of their average self-employment income paid under the EMFLEA.  

Small businesses with fewer than 50 employees may qualify for exemption from the requirement to provide leave due to school closings or child care unavailability if the leave requirements would jeopardize the viability of the business as a going concern.  

 

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