COVID | Northeast Financial Strategies, Inc.

IRS Extends Economic Impact Payment Deadline to Nov. 21 to Help Non-Filers

by NFS | Oct 6, 2020 | Archives, Blog Posts, COVID

WASHINGTON — The Internal Revenue Service announced today that the deadline to register for an Economic Impact Payment (EIP) is now November 21, 2020. This new date will provide an additional five weeks beyond the original deadline.

The IRS urges people who don’t typically file a tax return – and haven’t received an Economic Impact Payment – to register as quickly as possible using the Non-Filers: Enter Info Here tool on IRS.gov. The tool will not be available after November 21.

“We took this step to provide more time for those who have not yet received a payment to register to get their money, including those in low-income and underserved communities,” said IRS Commissioner Chuck Rettig. “The IRS is deeply involved in processing and programming that overlaps filing seasons. Any further extension beyond November would adversely impact our work on the 2020 and 2021 filing seasons. The Non-Filers portal has been available since the spring and has been used successfully by many millions of Americans.”

Special note: This additional time into November is solely for those who have not received their EIP and don’t normally file a tax return. For taxpayers who requested an extension of time to file their 2019 tax return, that deadline date remains October 15.

To support the ongoing EIP effort, many partner groups have been working with the IRS, helping translate and making available in 35 languages IRS information and resources on Economic Impact Payments.

To help spread the word, the IRS sent nearly 9 million letters in September to people who may be eligible for the $1,200 Economic Impact Payments but don’t normally file a tax return. This push encourages people to use the Non-Filers tool on IRS.gov.

“Time is running out for those who don’t normally file a tax return to get their payments,” Rettig added. “Registration is quick and easy, and we urge everyone to share this information to reach as many people before the deadline.”

While most eligible U.S. taxpayers have automatically received their Economic Impact Payment, others who don’t have a filing obligation need to use the Non-Filers tool to register with the IRS to get their money. Typically, this includes people who receive little or no income.

The Non-Filers tool is secure and is based on Free File Fillable Forms, part of the Free File Alliance’s offering of free products on IRS.gov.

The Non-Filers tool is designed for people with incomes typically below $24,400 for married couples, and $12,200 for singles who could not be claimed as a dependent by someone else. This includes couples and individuals who are experiencing homelessness.

Anyone using the Non-Filers tool can speed the arrival of their payment by choosing to receive it by direct deposit. Those not choosing this option will get a check.

Beginning two weeks after they register, people can track the status of their payment using the Get My Payment tool, available only on IRS.gov.

PPP Loan Forgiveness Application Update

by NFS | Aug 11, 2020 | Archives, Blog Posts, COVID

Last week the Small Business Administration (SBA), in consultation with the U.S. Department of the Treasury, released their updated Paycheck Protection Program (PPP) Frequently Asked Questions document to provide additional guidance on PPP loan forgiveness While the updated document does provide us with some supplemental information including caps on owner compensation, the treatment of health insurance and retirement expenses and timing of payroll cycles, there are still areas of the loan forgiveness application process that lack clarity and leave us with many unanswered questions.

As of yesterday, August 10th 2020, the SBA intended to open their portal to receive PPP Forgiveness Loan Applications. Since we expect further guidance from the SBA, we are asking that our clients continue to remain patient over the next couple of weeks. We understand you are eager to apply for PPP loan forgiveness, but it is critical that we have all of the details we need to make the process as easy and efficient as possible, ensure accurate applications are submitted and ultimately, maximize loan forgiveness.

The good news is that the SBA appears to be trying to simplify and accelerate the forgiveness application process so when the time is right, it should be less arduous for PPP loan recipients. In the meantime, please know we will continue to monitor the situation and keep you updated as additional guidance is released. Please contact our office if you have any questions or concerns.

Economic Impact Payments Belong to Recipient, Not Nursing Homes or Care Facilities

by NFS | Jun 16, 2020 | Archives, Blog Posts, COVID

WASHINGTON – The Internal Revenue Service today alerted nursing home and other care facilities that Economic Impact Payments (EIPs) generally belong to the recipients, not the organizations providing the care.

The IRS issued this reminder following concerns that people and businesses may be taking advantage of vulnerable populations who received the Economic Impact Payments.

The payments are intended for the recipients, even if a nursing home or other facility or provider receives the person’s payment, either directly or indirectly by direct deposit or check. These payments do not count as a resource for purposes of determining eligibility for Medicaid and other federal programs for a period of 12 months from receipt. They also do not count as income in determining eligibility for these programs.

The Social Security Administration (SSA) has issued FAQs on this issue, including how representative payees should handle administering the payments for the recipient. SSA has noted that under the Social Security Act, a representative payee is only responsible for managing Social Security or Supplemental Security Income (SSI) benefits. An EIP is not such a benefit; the EIP belongs to the Social Security or SSI beneficiary. A representative payee should discuss the EIP with the beneficiary. If the beneficiary wants to use the EIP independently, the representative payee should provide the EIP to the beneficiary.

The IRS also noted the Economic Impact Payments do not count as resources that have to be turned over by benefit recipients, such as residents of nursing homes whose care is provided for by Medicaid. The Economic Impact Payment is considered an advance refund for 2020 taxes, so it is considered a tax refund for benefits purposes.

The IRS noted the language in the Form 1040 instructions apply to Economic Impact Payments: “Any refund you receive can’t be counted as income when determining if you or anyone else is eligible for benefits or assistance, or how much you or anyone else can receive, under any federal program or under any state or local program financed in whole or in part with federal funds. These programs include Temporary Assistance for Needy Families (TANF), Medicaid, Supplemental Security Income (SSI), and Supplemental Nutrition Assistance Program (formerly food stamps). In addition, when determining eligibility, the refund can’t be counted as a resource for at least 12 months after you receive it.”

IR-2020-121

Changes to The PPP Loan Program Under the New PPPFA

by NFS | Jun 12, 2020 | Archives, Blog Posts, COVID

Big changes to the PPP loan program happened quickly, and last week’s changes brought a lot of new forgiveness deadlines. This information is based on the PPPFA (Paycheck Protection Program Flexibility Act) updates as of June 5th when the President signed the final ruling into law.

1) 8 Week Covered Period is Extended to 24 Weeks

Borrowers can choose to extend the eight- week period to 24 weeks, or they can keep the original eight-week period. New PPP borrowers will have a 24-week covered period, and in all cases, the covered period can not extend beyond Dec 31, 2020.

2) The Deadline to Apply For a PPP Loan is June 30th

There are still funds available and the deadline to apply is now set at June 30th. So if anyone was not applying thinking they did not have time to spend the funds they should act quickly and apply before this month ends.

* There are conflicting reports on this loan deadline, the house version had December 31st, and a Senator demanded the program stop lending new funds on June 30th.

3) 75% Rule Reduced to 60%

Now borrowers must spend at least 60% on payroll, not the 75% in the original bill. However, there was a cliff provision meaning borrowers must spend at least 60% on payroll or none of the loan will be forgiven. However, this has already been updated just a few days after it was passed.

Due to the 24 week covered period, this rule should not be a problem. This along with the other changes should make it easier to achieve 100% forgiveness.

4) Rehire Date Moved From 6/30/20 to 12/31/20

Businesses now have until 12/31/20 to rehire employees back to the 2/15/20 level.

Due to the 12/31/20 rehire date, most typically won’t be filing forgiveness applications until January 2021 at the earliest.

5) Required FTE Goal For The Rehire Exemption is Reduced If You Are Unable To Rehire People or Business Has Declined Due to HHS, CDC, or OSHA Requirements Regarding COVID-19

The legislation includes two new exceptions allowing borrowers to achieve full PPP loan forgiveness even if they don’t fully restore their workforce. Previous guidance already allowed borrowers to exclude from those calculations employees who turned down good faith offers to be rehired at the same hours and wages as before the pandemic. The new bill allows borrowers to adjust because they could not find qualified employees or were unable to restore business operations to Feb. 15, 2020, levels due to COVID-19 related operating restrictions.

We will need guidance to clarify the inability to restore business operations, but overall this is helpful to increase Safe Harbor and obtain full forgiveness.

6) New PPP Loans Will Have a Minimum Maturity of 5 Years

New borrowers now have five years to repay the loan instead of two. Existing PPP loans can be extended up to 5 years if the lender and borrower agree. The interest rate remains at 1%.

7) Allow Payroll Tax Deferral

Allow small businesses to take a PPP loan and also qualify for a separate, recently enacted payroll tax deferral, currently prohibited to prevent “double dipping.”

8) Extend Loan Forgiveness Period

Extend the period for when a business can apply for loan forgiveness, from within six months to within 10 months of the last day of the covered period, before it must start making interest and principal payments. Under the new bill, PPP loan interest and payment of principal and fees will be deferred until the loan is forgiven by the lender.

Here Are Some Indirect Changes to The PPP Loan Program:

We assume the $15,385 per person payroll limit will be increased to $46,154 but need confirmation from the SBA.
The forgiveness application will be completely changed.
Although utilities, health insurance, SUTA, and other small costs are still eligible, they become less important. Rather than worry about tracking small receipts, we are recommending focusing on the big items that are easy to show to the lender that’ll review the forgiveness application – payroll and rent.

We will continue to keep you updated as we get additional guidance.

IRS Sending Out New Coronavirus Stimulus Debit Cards Instead of Checks

by NFS | Jun 1, 2020 | Archives, Blog Posts, COVID

The U.S. Treasury Department has announced that the IRS will begin sending out four million stimulus payments on prepaid debit cards this week instead of mailing paper checks. With these so-called “Economic Impact Payments” (EIP) cards, clients can make purchases, get cash from in-network ATMs and transfer funds to their personal bank account without incurring any fees. They may also check their card balance online, by mobile app or by phone at no cost.

The EIP cards can be used online, at ATMs or at any retail location where Visa is accepted. This free, prepaid card also provides consumer protections available to traditional bank account owners, including protections against fraud, loss and other errors. It will include instructions on how to activate and use the cards.

“Treasury and the IRS have been working with unprecedented speed to issue Economic Impact Payments to American families. Prepaid debit cards are secure, easy to use, and allow us to deliver Americans their money quickly,” said treasury Secretary Steven T. Mnuchin in a press release. “Recipients can immediately activate and use the cards safely.”

The standard stimulus payment is $1,200 for single filers or $2,400 for joint filers. In addition, parents may receive $500 for each qualified child. But these amounts are phased out based on income levels.

EIP cards will be available to taxpayers who don’t have bank account information on file with the IRS. Currently, they are being distributed to those who had tax returns processed by either the Andover or Austin IRS Service Centers. If this applies to clients, give them a head’s up that that the debit cards are coming. They will likely appreciate this timely information.

The IRS began distributing economic stimulus payments in April via direct deposit to taxpayers who had up-to-date information on file. It followed up with payments by paper check starting in mid-May. However, the agency estimated it might take as long as four to five months to mail out the millions of remaining checks. Now it says that sending four million prepaid debit cards will cut down on the time.

The U.S. Treasury has already delivered more than 140 million payments worth $239 billion to taxpayers by direct deposit to accounts at financial institutions, Direct Express card accounts and by check.

EIP Cards are part of the Treasury’s U.S. Debit Card program providing prepaid debit card services to federal agencies for the electronic delivery of non-benefit payments. MetaBank was selected as the Treasury’s financial agent for the U.S. Debit Card program in 2016 following a competitive selection process conducted by the Bureau of the Fiscal Service.

Finally, be aware that some are viewing the use of the EIP cards as a test for future stimulus payments, if any are forthcoming. If all goes well, this might be a simpler and faster approach to distributing money to taxpayers.

Act by Wednesday 05/13 for chance to get quicker Economic Impact Payment; timeline for payments continues to accelerate

by NFS | May 11, 2020 | Archives, Blog Posts, COVID

WASHINGTON – With a variety of steps underway to speed Economic Impact Payments, the Treasury Department and the Internal Revenue Service urged people to use Get My Payment by noon Wednesday, May 13, for a chance to get a quicker delivery.

The IRS, working in partnership with Treasury Department and the Bureau of Fiscal Services (BFS), continues to accelerate work to get Economic Impact Payments to even more people as soon as possible. Approximately 130 million individuals have already received payments worth more than $200 billion in the program’s first four weeks.

Starting later this month, the number of paper checks being delivered to taxpayers will sharply increase. For many taxpayers, the last chance to obtain a direct deposit of their Economic Impact Payment rather than receive a paper check is coming soon. People should visit Get My Payment on IRS.gov by noon Wednesday, May 13, to check on their payment status and, when available, provide their direct deposit information.

“We’re working hard to get more payments quickly to taxpayers,” said IRS Commissioner Chuck Rettig. “We want people to visit Get My Payment before the noon Wednesday deadline so they can provide their direct deposit information. Time is running out for a chance to get these payments several weeks earlier through direct deposit.”

After noon Wednesday, the IRS will begin preparing millions of files to send to BFS for paper checks that will begin arriving through late May and into June. Taxpayers who use Get My Payment before that cut-off can still take advantage of entering direct deposit information.

How Get My Payment works

The Get My Payment tool provides eligible taxpayers with a projected Economic Impact Payment deposit date. The information is updated once daily, usually overnight. There is no need to check more than once a day. Taxpayers who did not choose direct deposit on their last tax return can use this tool to input bank account information to receive their payment by direct deposit, expediting receipt.

Non-Filers portal remains available

For those not required to file a federal tax return, the Non-Filers: Enter Payment Info Here tool helps them submit basic information to receive an Economic Impact Payment quickly to their bank account. Developed in partnership between the IRS and the Free File Alliance, this tool provides a free and easy option for those who don’t receive Social Security retirement, survivor or disability benefits (SSDI), Railroad Retirement benefits, Supplemental Security Income (SSI) and VA Compensation and Pension (C&P) benefits. The Non-filers tool is also available in Spanish.

Eligible taxpayers who filed tax returns for 2019 or 2018 will receive the payments automatically. Automatic payments will also be sent to those receiving Social Security retirement, disability benefits, Railroad Retirement benefits, Veterans Affairs benefits or Supplemental Security Income soon.

Watch out for scams related to Economic Impact Payments

The IRS urges taxpayers to be on the lookout for scams related to the Economic Impact Payments. To use the new app or get information, taxpayers should visit IRS.gov. People should watch out for scams using email, phone calls or texts related to the payments. Be careful and cautious: The IRS will not send unsolicited electronic communications asking people to open attachments, visit a website or share personal or financial information.

IR-2020-92, May 8, 2020