Category: Dyersburg, TN

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Paycheck Protection Program – CARES Act Small Business Administration Loans

Post author By Alexis Long
Post date March 31, 2020
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FOR IMMEDIATE RELEASE

Mark Puckett, CPA

info@atacpa.net

Paycheck Protection Program – CARES Act Small Business Administration Loans (Update)

We are releasing an update to our previous email. Due to the changing nature of the loan initiative discussed below, please contact your lender for the most up-to-date information.
(April 1, 2020 | 8:45 p.m.)

The Coronavirus Aid, Relief and Economic Security (CARES) Act was enacted March 27, 2020 and provides an unprecedented level of national emergency assistance for individuals, families and businesses impacted by the Coronavirus pandemic. The Act provides for a loan program that will be administered by the Small Business Administration (SBA) and provides up to $349 billion in loans to eligible borrowers with the express intention of motivating employers to retain and re-hire employees.

The Loan Program

Among the economic relief provisions of the CARES Act, the Paycheck Protection Loan Program establishes a loan regime that allows qualifying businesses negatively impacted by the Coronavirus pandemic to obtain loans through the SBA to fund a variety of qualified costs including:

Payroll costs
Continuation of health care benefits
Employee salaries and commissions for U.S. based employees (up to $100,000 per person)
Mortgage interest obligations (but not loan principal)
Rent
Utilities
Interest on any other debt obligations incurred before the covered period

Qualifying businesses can apply through banks that are already authorized to make loans under the SBA’s existing 7(a) loan program. The SBA and the Secretary of the Treasury will also extend eligibility to additional qualified lenders that do not currently participate in such program. Repayment of a Paycheck Protection loan may be fully or partially guaranteed by the SBA. Neither the SBA nor any participating lenders will charge fees to the borrowers.

Eligibility

Borrowers with 500 or fewer employees (or a greater number based on the size standard applicable to the industry) may be eligible:

For-profit businesses of all types, including self-employed individuals, independent contractors and sole proprietorships
Nonprofit organizations exempt under Section 501(c)(3)
Veterans organizations
Tribal businesses

The Act contains exceptions to standard SBA rules that relax eligibility restrictions for certain covered entities such as businesses in the accommodation and food service industry (NAICS 72) that have less than 500 employees per physical location. Other exceptions include franchises assigned a franchise identifier code and businesses licensed under Section 301 of the Small Business Investment Act.

Loan Amount & Terms

The maximum loan amount permitted for an eligible borrower is equal to the lesser of 2.5 times the average monthly payroll costs incurred in the one-year period before the loan is made (except for seasonal employers and employers not in business between February 15, 2019 and July 30, 2019), or $10,000,000.

Loans are available for an amortizing term of up to 2 years at 0.5 percent interest. The SBA will direct lenders to defer payment of both principal and interest for a minimum of 6 months and up to a maximum of 12 months. Borrowers will not be required to pledge any collateral or provide personal guarantees to secure the loans.

Loan Forgiveness

Borrowers will be eligible for loan forgiveness equal to the amount spent by the borrower during an 8-week period following the loan disbursement actually spent on rent, payroll and benefit costs, utilities and mortgage interest.

The loan forgiveness amount is subject to reduction if the borrower terminates employees or reduces employee salaries and wages during the 8-week forgiveness period. Reductions in workforce, salaries and wages that occur from February 15, 2020 to April 26, 2020 will be disregarded for purposes of reducing the forgiveness amount so long as the reductions are eliminated by June 30, 2020.

Borrowers who satisfy the requirements for loan forgiveness will be able to exclude the forgiveness amount from taxable income.

Continue to monitor ATA’s COVID-19 resource page for more information. Please know that we continue to be here to partner with you and amplify your business.

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Six Key Cybersecurity Controls that are Critical to Banks

Post author By Alexis Long
Post date March 12, 2020
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Cybersecurity risk heightened with bank wiring

The OCC and FDIC recently issued an interagency statement on heightened cybersecurity risks, prompted in part by a warning from the Department of Homeland Security of potential cyberattacks against U.S. targets because of increased geopolitical tension. The statement reminds banks not only to implement and maintain effective preventive controls, but also to prepare for a worst-case scenario by maintaining sufficient business continuity planning processes for the rapid recovery, resumption and maintenance of the institution’s operations.

The statement describes six key cybersecurity controls that are critical to protecting banks from malicious activity:

Response, resilience and recovery capabilities,
Identity and access management,
Network configuration and system hardening (that is, modifying settings and eliminating unnecessary programs to minimize security risks),
Employee training,
Security tools and monitoring, and
Data protection.

For a detailed discussion of these controls, you can read the statement at https://www.fdic.gov/news/news/financial/2020/fil20003.html.

OCC Annual Report emphasizes BSA/AML risk

The OCC recently issued its 2019 Annual Report. The report warned that compliance risk related to Bank Secrecy Act/anti-money laundering activities remained high last year. It encouraged banks to implement BSA/AML risk management systems commensurate with the risk associated with their products, services, customers and geographic footprint. Noting that BSA/AML compliance remains a priority, the OCC outlined recent guidance that embraces using innovative technologies to meet these compliance obligations. The agency also encourages community banks with lower BSA risk profiles to reduce costs and increase operational efficiency by sharing BSA compliance-related resources.

Debt collection: Handle with care

A recent federal court case, Hackler v. Tolteca Enterprises Inc., illustrates the importance of carefully following the Fair Debt Collection Practices Act (FDCPA). In that case, a collection agency sent a letter to a debtor attempting to collect a debt. It stated, “If you dispute the validity of this debt within 30 days, from receipt of this notice, we will mail verification of the debt to you. If you do not dispute the validity of this debt within 30 days, from receipt of this notice, we will assume it is valid. At your request, we will provide you with the name and address of the original creditor if different from the current creditor.”

Because the letter failed to specify that the debt must be disputed, and the request must be made “in writing,” as required under the statutory notice requirements, the U.S. District Court for the Western District of Texas found the defendant liable for violations of the FDCPA.

© 2020

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The Tax Aspects of Selling Mutual Fund Shares

Post author By Alexis Long
Post date February 25, 2020
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Perhaps you’re an investor in mutual funds or you’re interested in putting some money into them. You’re not alone. The Investment Company Institute estimates that 56.2 million households owned mutual funds in mid-2017. But despite their popularity, the tax rules involved in selling mutual fund shares can be complex.

Tax basics

If you sell appreciated mutual fund shares that you’ve owned for more than one year, the resulting profit will be a long-term capital gain. As such, the maximum federal income tax rate will be 20%, and you may also owe the 3.8% net investment income tax. When a mutual fund investor sells shares, gain or loss is measured by the difference between the amount realized from the sale and the investor’s basis in the shares. One difficulty is that certain mutual fund transactions are treated as sales even though they might not be thought of as such. Another problem may arise in determining your basis for shares sold.

What’s considered a sale

It’s obvious that a sale occurs when an investor redeems all shares in a mutual fund and receives the proceeds. Similarly, a sale occurs if an investor directs the fund to redeem the number of shares necessary for a specific dollar payout. It’s less obvious that a sale occurs if you’re swapping funds within a fund family. For example, you surrender shares of an Income Fund for an equal value of shares of the same company’s Growth Fund. No money changes hands but this is considered a sale of the Income Fund shares. Another example: Many mutual funds provide check-writing privileges to their investors. However, each time you write a check on your fund account, you’re making a sale of shares.

Determining the basis of shares

If an investor sells all shares in a mutual fund in a single transaction, determining basis is relatively easy. Simply add the basis of all the shares (the amount of actual cash investments) including commissions or sales charges. Then add distributions by the fund that were reinvested to acquire additional shares and subtract any distributions that represent a return of capital. The calculation is more complex if you dispose of only part of your interest in the fund and the shares were acquired at different times for different prices.

You can use one of several methods to identify the shares sold and determine your basis:

First-in first-out.

The basis of the earliest acquired shares is used as the basis for the shares sold. If the share price has been increasing over your ownership period, the older shares are likely to have a lower basis and result in more gain.

Specific identification.

At the time of sale, you specify the shares to sell. For example, “sell 100 of the 200 shares I purchased on June 1, 2015.” You must receive written confirmation of your request from the fund. This method may be used to lower the resulting tax bill by directing the sale of the shares with the highest basis.

Average basis.

The IRS permits you to use the average basis for shares that were acquired at various times and that were left on deposit with the fund or a custodian agent.

As you can see, mutual fund investing can result in complex tax situations. Contact us if you have any questions. We can explain in greater detail how the rules apply to you. © 2020

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Standard or Itemized?

What’s best for you, taking the standard deduction or claiming itemized deductions?

The standard deduction changes yearly and is based on age and filing status. The Tax Cuts and Jobs Act raised the standard deduction so that more people could benefit from its simplicity. Itemizing deductions requires more work, but taxpayers can save taxes if the total exceeds the standard deduction.

Eligible taxpayers may prefer to itemize if they: pay state and local income tax, mortgage interest, mortgage insurance, real estate or personal property tax; suffered a large eligible casualty loss; make significant charitable donations; and/or have high medical deductions. We can help choose your best path. Talk with your ATA business partner to know which is best for you.

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New law helps businesses make their employees’ retirement secure

Post author By Alexis Long
Post date February 5, 2020
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A significant law was recently passed that adds tax breaks and makes changes to employer-provided retirement plans. If your small business has a current plan for employees or if you’re thinking about adding one, you should familiarize yourself with the new rules.

The Setting Every Community Up for Retirement Enhancement Act (SECURE Act) was signed into law on December 20, 2019, as part of a larger spending bill. Here are three provisions of interest to small businesses.

Employers that are unrelated will be able to join together to create one retirement plan. Beginning in 2021, new rules will make it easier to create and maintain a multiple employer plan (MEP). A MEP is a single plan operated by two or more unrelated employers. But there were barriers that made it difficult to setting up and running these plans.

Soon, there will be increased opportunities for small employers to join together to receive better investment results, while allowing for less expensive and more efficient management services. There’s an increased tax credit for small employer retirement plan startup costs. If you want to set up a retirement plan, but haven’t gotten around to it yet, new rules increase the tax credit for retirement plan start-up costs to make it more affordable for small businesses to set them up.

Starting in 2020, the credit is increased by changing the calculation of the flat dollar amount limit to:

The greater of $500, or the lesser of: a) $250 multiplied by the number of non-highly compensated employees of the eligible employer who are eligible to participate in the plan, or b) $5,000.

There’s a new small employer automatic plan enrollment tax credit. Not surprisingly, when employers automatically enroll employees in retirement plans, there is more participation and higher retirement savings. Beginning in 2020, there’s a new tax credit of up to $500 per year to employers to defray start-up costs for new 401(k) plans and SIMPLE IRA plans that include automatic enrollment. This credit is on top of an existing plan start-up credit described above and is available for three years. It is also available to employers who convert an existing plan to a plan with automatic enrollment.

These are only some of the retirement plan provisions in the SECURE Act. There have also been changes to the auto-enrollment safe harbor cap, nondiscrimination rules, new rules that allow certain part-timers to participate in 401(k) plans, increased penalties for failing to file retirement plan returns and more. Contact us to learn more about your situation at info@atacpa.net. © 2019

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ATA Named Top Tax Firm by Forbes

Post author By Alexis Long
Post date January 23, 2020
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Alexander Thompson Arnold PLLC (ATA) is humbled to be recognized as a top tax firm in America. Research company, Stratista, worked with Forbes to compile the list of leading organizations, which only included 227 firms. This award displays ATA’s passion to work diligently with clients on their taxes to amplify their business. For more information visit Forbes’ website.

“We strive to provide our clients sound tax advice and expertise through heavy research and training,” said managing partner, John Whybrew. “It’s an honor to have our firm recognized by Forbes and be commended for our hard work.”

ATA is a long-term business advisor to its clients and provides other services that are not traditionally associated with accounting. For example, Revolution Partners, ATA’s wealth management entity provides financial planning expertise; ATA Technologies provides trustworthy IT solutions; Sodium Halogen focuses on growth through the design and development of marketing and digital products; Adelsberger Marketing offers video, social media, and digital content for small businesses; and Center Point Business Solutions is a comprehensive human resource management agency.

ATA has 14 office locations in Tennessee, Kentucky and Mississippi. Recognized as an IPA Top 200 regional accounting firm, it provides a wide array of accounting, auditing, tax and consulting services for clients ranging from small family-owned businesses to publicly traded companies and international corporations. ATA is also an alliance member of BDO USA LLP, a top five global accounting firm, which provides additional resources and expertise for clients.

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The SECURE Act

In addition to a year-end funding bill, lawmakers finalized the Setting Every Community Up for Retirement Enhancement (SECURE) Act. The retirement bill includes expansion of the automatic contribution to savings plans to 15% of employee pay, allows some part-time employees to participate in 401(k) plans and raises the age limit for IRA contributions from age 70½ to 72.

Also included in the retirement package are provisions aimed at Gold Star families, eliminating an unintended tax on children and spouses of deceased military family members. As with the funding bill, the Senate is expected to pass and the president to sign the bill by the end of the week.

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Individual Deductions and Updates

Post author By Alexis Long
Post date December 30, 2019
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Watch the Individual Deductions and Updates video here.

What’s happening with deductions in 2019?

The standard deduction for separate filers is $12,200 and for joint filers, it’s $24,400. Itemized deductions are more beneficial if taxpayers ‘bunch’ deductions into one year. The itemized deductions that may be able to be shifted from year-to-year are real estate taxes, state income tax estimates. This bunching strategy needs to be discussed with your tax advisor to most benefit.

Some expenses are limited or no longer tax-deductible

Let’s discuss what expenses are limited or no longer tax-deductible. State and local tax deduction, including sales tax, property tax, and state income tax, is limited to $10,000. Home office expenses and unreimbursed business expenses are no longer deductible if you are a W-2 employee. Personal casualty and theft losses are only allowed if it arises due to an event officially declared a federal disaster area. Finally, work-related moving expenses are not deductible, except for members of the Armed Forces.

Medical Savings and Spending Accounts – Health Savings Account and Flexible Spending Accounts

Health Savings Accounts also known as HSA’s are available to participants in qualified high-deductible health plans. You can contribute pre-tax income up to $3,500 for self-only coverage or $7,000 for family coverage into an employer-sponsored HSA account. HSAs can bear interest or be invested, growing tax-deferred similar to an IRA. Withdrawals for qualified medical expenses are tax-free, and you can carry over a balance from year to year, allowing the account to grow.
Flexible Spending Accounts, also known as FSA’s, can be funded with $2,700 pretax income in an employer-sponsored account but have limitations on what can be rolled over to the following year based on the employer plan. The plan pays or reimburses you for qualified medical expenses. What you don’t use by calendar year’s end, you generally lose.

Contact your CPA to discuss these deductions in more depth.

Tax planning for your investment portfolio

Post author By Alexis Long
Post date December 16, 2019
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Watch planning for your investment portfolio video here.

Recent changes to ordinary income tax rates and tax brackets affect the tax you pay on investments. Your long term capital gains rate can be as much as 20 percentage points lower than your ordinary income tax rate, which make long-term gains more attractive.

If you’ve sold investments this year, and have substantial gains, then you may want to review your portfolio for unrealized losses and consider selling them before year end to offset your gains.

Income investments

Some types of investments produce income in the form of dividends or interest. Here are some tax consequences to consider:

Qualified dividends are taxed at the favorable long-term capital gains tax rate rather than at your higher ordinary-income tax rate.

Interest income generally is taxed at ordinary-income rates. So stocks that pay qualified dividends may be more attractive taxwise than other income investments, such as CDs and taxable bonds.

Capital Losses

If net losses exceed net gains, you can only deduct up to $3,000 of the losses per year. You carry forward the excess losses until they are used.

Although tax considerations are important, don’t let them control your investment decisions. You need to consider your goals, risk tolerance, fees, and other factors related to buying and selling securities.