Author Archives:
Alexis Nash

New equipment, machinery, new office furniture, business vehicles, and updated computer software are items that most businesses invest in from time to time. Since these can be expensive purchases, most will plan before buying by carefully crafting the annual budget to ensure enough capital is available. Although there are many considerations that must be made prior to asset acquisition, it is important not to forget about taxes. When making a large investment the last thing any business wants to do is pay more in taxes than is necessary.

When an issue arises with a tax return filing, processing, or other concern, many will turn to the IRS to help with questions, address issues, and resolve outstanding situations. This has been a realistic expectation of the agency, but since the pandemic, it has all changed. The combination of staffing shortages, lack of modern technology, and previously existing backlogs, means it will be some time before the agency is operating normally. However, recent reports suggest the IRS has made notable progress in certain areas.

Many Atlanta families and high net worth individuals invest significant time uncovering strategies designed to limit federal and state income taxes due. Tax planning focuses on reviewing tax law changes, updates to incentives and deductions, and other changes in areas where savings may be present. Although these activities are most common at year-end, many will make it a regular focus throughout the year.

During the height of the COVID-19 pandemic, many Atlanta businesses were struggling to maintain operations while navigating uncertainty, new safety regulations, and an assortment of government-issued restrictions. One of the federal relief programs offered to help offset the hardships, the Employee Retention Tax Credit (ERC), provided a much-needed cash boost to business owners. However, when the program unexpectedly came to an end 3 months early (end of 3rd quarter of 2021) it created an issue for those who were not expecting to pay employment taxes. Unfortunately, the withheld amount became due, and many employers were simply unable to repay it. Since December 2021, the IRS has been providing relief to these taxpayers and those who filed an amended return but has yet to receive a refund.

The abrupt arrival of the pandemic in Georgia required state and local governments to issue several orders to reduce the potential for virus exposure and transmission. These changes forced many businesses to consider alternate service models to operate within the new guidelines. Concurrently, stay-at-home orders resulted in a sharp decline in demand creating an additional problem for struggling businesses. Not only were business owners placed in a peculiar predicament, but so were government organizations.

The Research & Development (R&D) tax credit helps Atlanta and Georgia companies offset the cost of qualifying research and experimental activities with a dollar-for-dollar federal credit worth anywhere between 6 and 20 percent, depending on the calculation method and circumstances. It is a valuable tax planning tool that reduces federal income tax liability, improves cash flow, and encourages further investment in technological advances. Each year, the IRS reviews thousands of R&D tax credit claims worth millions of dollars.

The Biden Administration has undertaken several new legislative initiatives since the start of the year. This included several economic revitalization programs introduced as part of the American Rescue Plan Act (ARPA). As the effects of the pandemic continue to dwindle, the White House is focusing on passing comprehensive legislation that creates jobs, cuts taxes, and reduces expenses for working families. Specific investments in healthcare, childcare, higher education, and workforce training will also be made. Formally known as the Build Back Better Act, it will be paid for by increasing taxes on corporations and individuals while modifying federal tax incentive programs. Although currently under review, it is expected to be taken up for a formal vote before the end of September.

Continuation of Health Coverage (COBRA) benefits are available to individuals who lose health insurance after being laid off, furloughed, have hours reduced, or other qualifying events. During and after the pandemic, it's estimated that as many as 16 million U.S. workers lost employer-sponsored health coverage. Even though COBRA is an option for 18 to 36 months or longer for some plans, the cost of premiums can prove too much for many to afford. The result is that many will simply have to go without healthcare coverage due to the high cost. To address this issue, there is a temporary and fully subsidized COBRA premium available for certain individuals throughout the summer.

At the end of April, the Biden Administration introduced the American Families Plan (AFP), comprehensive legislation that calls for an investment of $1.8T through grants and tax credits for family and educational programs.  As part of President Biden’s larger economic recovery package, it proposes universal preschool, two years of free community college, paid medical leave, an extension of the Child Tax Credit, Earned Income Credit, and the Child and Dependent Care Credit.

Since the American Rescue Plan Act of 2021 was signed into law last month by President Biden, there has been a flurry of changes coming out of Washington. This includes an extension to the Paycheck Protection Program application deadline, IRS extension of the individual tax filing deadline, an increase in EIDL maximums, and the introduction of the new American Jobs Plan.  All of this just months after the Consolidated Appropriations Act, 2021, (CAA) was passed at the end of December.