The knowledge you need

On October 28, 2021, the IRS announced a new fee for executors seeking an estate tax closing letter. An estate tax closing letter specifies the estate tax amount and any generation-skipping transfer tax due. Additionally, it serves as an official certification the estate has been closed and all relevant taxes have been paid. Due to budget constraints and a high volume of estate tax return filings, the letter will now cost filers $67. While this is a nominal fee it represents the estimated direct and indirect costs of managing the totality of letter requests.  Executors, trustees, and other authorized representatives of an estate will need to follow these new requirements when requesting an estate tax closing letter.

What many not-for-profits may not be aware of is that accepting federal funds may trigger the need to comply with single audit requirements. Or, that some state funds may instead originate from the federal government, thus triggering the single audit. Especially with trillions in COVID-related funding having been distributed, not-for-profit executives and Board members may need to brush up on their knowledge of single audits – and what to do if the organization is subject to one. To help clients, prospects, and others, Wilson Lewis has provided a summary of the key details below.

Atlanta Employers with tipped employees on the payroll must be mindful of minimum wage requirements which can become complicated when an employee’s job consists of multiple duties. The Department of Labor (DOL) 80/20 rule provides compliance requirements that businesses must follow in such situations. As of December 28, 2021, the rules changed which will now require organizations to pay careful attention to the type and duration of work performed by certain employees. This change will force affected businesses to review and adjust policies to ensure compliance with the new rules.

The change of focus has created new challenges for independent auto dealers especially when it comes to inventory acquisition. As franchised dealers search for used car inventory, it makes it more difficult for independent dealers to keep lots full. According to the Cox Automotive Dealership Sentiment Index, 4th Quarter, inventory acquisition is the biggest challenge facing dealers.

The chaotic situation which followed the arrival of the pandemic created significant financial challenges for many Atlanta businesses. The variety of government orders combined with public concern about transmission changed the business landscape virtually overnight. The shift meant many businesses needed new and immediate capital infusions to make it through the transition. The Employee Retention Tax Credit (ERC) which was implemented as part of the CARES Act was one of several programs designed to help. Along with other federal relief programs, many were saved from financial uncertainty.

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.

Cryptocurrency is a high-risk investment option sought after by many institutional and individual investors (including Elon Musk). The risk profile is driven by the fact the digital currency is intangible, not insured by a federal institution, and is traded on non-regulated stock markets. Despite these obvious issues, cryptocurrency investments in Bitcoin, Ethereum, and others have reached a market cap of $2.57T. The acceptance of cryptocurrency as a payment option by Philipp Plein, Shopify, Whole Foods, Microsoft, AT&T, and Etsy has only increased its popularity.

Now that the pandemic has passed almost all these programs are no longer available. In fact, the recently enacted Infrastructure Investment and Jobs Act called for an early end to the Employee Retention Credit. The only remaining program is the Economic Injury Disaster Loan (EIDL) which is set to expire at year-end. Earlier today, the SBA announced new guidance to help small businesses that are considering applying for a new loan, targeted advance, or supplemental advance.

During the closing months of the year, many Atlanta individuals look for opportunities to reduce federal income taxes. It is a common practice to review both federal and state tax credits and deductions to identify where opportunities may exist. In fact, 2021 appears to be the last year to leverage many of the now-expired federal COVID-19 tax credit programs. Despite the options, many taxpayers reduce taxes simply by contributing to a tax-deferred retirement plan such as a 401(k), 403(b), 457, or a Thrift Savings Plan. Often increasing the elective deferral amount and accelerating contributions at year-end can go a long way towards tax planning goals. However, it is necessary to be aware of the annual contribution maximums.

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.