IRS Introduces Online Account System

The new system allows taxpayers to view certain individual account information including:

  • The amount you owe, updated for the current calendar day
  • Your balance details by year
  • Your payment history and any scheduled or pending payments
  • Key information from your most recent tax return
  • Payment plan details, if you have one
  • Digital copies of select notices from the IRS
  • Your Economic Impact Payments (EIP 1 and EIP 2), if any

You can also:

  • Make a payment online
  • See payment plan options and request a plan via Online Payment Agreement
  • Access your tax records via Get Transcript

This will be a great benefit to taxpayers, allowing them to circumvent the long call wait times to get the information they need quickly.

You can register for this account here.

Update: Consolidated Appropriations Act, 2021

Payroll Protection Program:
Round 2 of the Paycheck Protection Program is now available. It will be open through March 31, 2021.

A key difference in Round 2 and the original PPP offering is that firms must demonstrate a 25% reduction in revenue in 2020 from 2019 to qualify for the loan. This is accomplished by comparing any 2020 quarter’s revenue to the corresponding 2019 quarter. The basis of accounting is not relevant, but needs to be consistently applied between the comparing quarters.
A Round 2 borrower who received a PPP loan in 2020 also must have depleted the original PPP loan before applying for Round 2. A “Top Line Overview” of the program is available here.

Additional types of expenses paid for with Round 2 proceeds will qualify for forgiveness as well. Payroll, rent and utilities continue to qualify, but 2nd round funds can also be used for worker protection costs related to COVID 19, uninsured property damage cost caused by looting or vandalism during 2020, and certain supplier costs and expenses for operations.

The same loan sizing methodology applies to this round of PPP, 2.5x average monthly payroll costs. The borrower can use either 2019 or 2020 payroll costs to calculate this average. In addition, any single borrower that is assigned a NAICS code of 72 (including restaurants and hotels) is eligible for a maximum loan of 3.5x average monthly payroll costs instead of 2.5x.

Other important provisions of this Act:
– Expenses paid with PPP proceeds are deductible as business expenses. The IRS had previously opined that these expenses would be non-deductible to the borrower.
– The Employee Retention Tax Credit has been extended and expanded. This credit was originally not available to PPP borrowers, it is now available to them. The credit is described here, the IRS will update this link in the future as further guidance is available on the mechanics of the extended and expanded credit.
– First-draw PPP loans under $150k now qualify for a simplified forgiveness application. Form 3508S is used for this purpose, although banks will likely offer their own versions of the form via their PPP portals.
– Business meals are 100% deductible in 2021 and 2022 if bought from a restaurant instead of subjecting those deductions to a 50% deduction limitation.
– The 10% penalty on pre-59 1/2 retirement plan payouts is waived as long as the distribution is under $100k.

Identity Protection PINs Will Be Available to All Taxpayers in 2021

The IRS announced that all taxpayers will be able to opt in to using an Identity Protection PIN (IP PIN) in 2021 on Wednesday. A new IRS tool will be available online to create IP PINs on their website in January 2021. Each IP PIN is valid for one tax year only. The IRS announcement can be read here. We encourage taxpayers to use this option to help combat identity theft.

PPP Forgiveness Simplification

A new simplified forgiveness application was provided today by the U.S. Treasury and the SBA. To use the new simplified form to apply for forgiveness, borrower’s loans must be $50,000 or less. Under the Interim Final Rule (IFR), qualifying PPP borrowers are exempted from any reductions in forgiveness based on:

  • Reductions in full-time-equivalent (FTE) employees; and
  • Reductions in employee salary or wages.

The new form can be found here, and instructions here.

What To Expect If Your PPP Loan Is Audited

The SBA is expected to audit PPP loans, covering everything from eligibility to the forgiveness calculations.
This article provides background on what to expect if your PPP loan is selected for review.

SBA Provides Further Guidance on PPP Loan Forgiveness

The SBA recently updated their FAQ pages to clarify certain PPP forgiveness matters. A Journal of Accountancy article describes the updates and provides links to the SBA pages here.