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Under Stress

Conduct stress testing to stay competitive

Very few people saw the COVID-19 pandemic coming — nevertheless, it had a significant impact on businesses, including banking. In the ensuing volatile business environment, community banks need to ensure they’re prepared for unexpected challenges by using all the tools at their disposal to help them stay profitable. One such tool is stress testing, which can be done at either the enterprise or individual loan level.

Stress testing enables banks to simulate specific “disaster” scenarios and evaluate the bank’s (or loan’s) potential for withstanding them in terms of earnings, capital adequacy and other financial metrics. It can provide valuable information about potential risks that community banks can use to stay afloat through inevitable economic ups and downs.

Set up the scenario

Stress testing generally involves scenario analysis. This consists of applying historical or hypothetical scenarios to predict the financial impact of various events, such as a severe recession, loss of a major client or a localized economic downturn. Tools for performing such tests can range from simple spreadsheet programs to sophisticated computer models.

The Office of the Comptroller of the Currency (OCC) considers “some form of stress testing or sensitivity analysis of loan portfolios on at least an annual basis to be a key part of sound risk management for community banks.” But its guidance doesn’t prescribe any particular methods of stress testing. It describes two basic approaches to stress testing: “bottom up” and “top down.” A bottom-up approach generally involves conducting stress tests at the individual loan level and aggregating the results. In contrast, a top-down approach applies estimated stress loss rates under various scenarios to pools of loans with similar risk characteristics.

The guidance outlines four methods to consider:

  1. Transaction-level stress testing. This estimates potential losses at the loan level by assessing the impact of changing economic conditions on a borrower’s ability to service debt.
  2. Portfolio-level stress testing. This method helps identify current and emerging loan portfolio risks and vulnerabilities (and their potential impact on earnings and capital). It assesses the impact of changing economic conditions on borrower performance, identifies credit concentrations and gauges the resulting change in overall portfolio credit quality.
  3. Enterprise-wide stress testing. This considers various types of risk — such as credit risk within loan and security portfolios, counterparty credit risk, interest rate risk, and liquidity risk — and their interrelated effects on the overall financial impact under a given economic scenario.
  4. Reverse stress testing. This approach assumes a specific adverse outcome, such as credit losses severe enough to result in failure to meet regulatory capital ratios. It then works backward to deduce the types of events that could produce such an outcome.

The right approach and method for a particular bank depends on its portfolio risk and complexity, as well as its resources. Even a simple stress-testing approach can produce positive results.

Gather information

A bottom-up approach at the transaction level may offer a significant advantage: In addition to assessing the potential impact of various scenarios on a bank’s earnings and capital, the OCC says it can help the bank “gauge a borrower’s vulnerability to default and loss, foster early problem loan identification and strategic decision making, and strengthen strategic decisions about key loans.”

For example, when evaluating a loan application, consider gathering information on the various risks the borrower faces. Examples include operational, financial, compliance, strategic and reputational risks. This information can be used to run stress tests that measure the potential impact of various risk-related scenarios on the borrower’s ability to pay. An added benefit of this process is that, by discussing identified risks and stress test results with borrowers, you can help them understand their risks and develop strategies for managing and mitigating them. For instance, they might tighten internal controls, develop business continuity / disaster recovery plans or purchase insurance.

Get to the heart of the matter

Risk management is at the heart of loan management. Stress testing can play a key role in helping community banks manage risk by enabling them to more fully envision and respond to potential loan portfolio problems.

Click here to contact one of our experts.

© 2022

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Keeping up with the CECL standard

It’s been about six years since the Financial Accounting Standards Board (FASB) unveiled its current expected credit loss (CECL) model for estimating credit losses.

After several deferrals, the new model is finally set to take effect in 2023 for nonpublic entities, including most community banks. (Technically, these nonpublic banks must adopt the new model for fiscal years beginning after December 15, 2022, or 2023 for calendar-year banks.)

By now, all banks are familiar with the CECL model, and most have taken concrete steps toward adopting it. If your bank is behind schedule in its transition efforts, kick those efforts into high gear. Time is running out, and the FASB has indicated that no further deferrals are expected. (See “FASB: No more CECL delays” below.)

New model in a nutshell

Under pre-CECL rules, banks generally measure credit impairment based on incurred losses. Under the CECL model, they’ll apply a forward-looking approach, recognizing an immediate allowance for all expected credit losses over an asset’s life. The FASB adopted the new guidance based on its view that the incurred-loss model, which delays recognition of credit losses until they become probable, provides information that’s “too little, too late.” The CECL model addresses this weakness by requiring banks to record credit losses that are expected but do not yet meet the “probable” threshold.

The CECL model’s requirements are complex. But many banks are expected to substantially increase loan loss reserves, which may have a negative impact on earnings and regulatory capital. The consequences for your bank depend on its circumstances. However, with some preparation, you can anticipate the impact on financial performance and take steps to prepare for it.

Selecting a methodology

Most banks have already identified the methodologies they’ll use to estimate credit losses. If you haven’t, time is of the essence: You must have the systems and processes in place to collect and analyze the data your methodology requires. Plus, it’s helpful to do some trial runs to test the methodology before the implementation date.

The CECL model provides banks with the flexibility to use their judgment in selecting methodologies for estimating credit losses that are both appropriate and practical. And the federal banking agencies have said that they don’t expect smaller, less complex institutions to implement complex modeling techniques. Rather, the CECL model will be scalable to institutions of all sizes, and regulators anticipate that many banks will be able to satisfy its requirements by building on existing systems and methods.

Many community banks have opted for one of these two popular methods:

The weighted average remaining maturity (WARM) method. Briefly, under the WARM method, a bank estimates the allowance for credit losses by applying an average annual loss rate to the projected paydowns of loans. One reason for this method’s popularity is that it’s viewed as the closest thing to traditional methods of accounting for loan and lease losses (ALLL), so the required data tends to be more readily available.

The Federal Reserve’s Scaled CECL Allowance for Losses Estimator (SCALE) method.  This is a spreadsheet-based tool that, according to the Fed, “draws on publicly available regulatory and industry data to aid community banks with assets of less than $1 billion in calculating their CECL allowances.”

The right method depends on several factors, including your bank’s complexity, available data, and resources. Depending on your circumstances, you may want to consider more sophisticated methodologies, such as discounted cash flow techniques.

Parallel testing is critical

One reason your bank needs to select a CECL methodology as early as possible is to give management time to do some parallel runs to validate the methodology before you “go live.” This means running your CECL model (or even multiple CECL models) at the same time as your existing ALLL model and comparing the results. Parallel runs provide several important benefits, including helping you spot errors and make appropriate adjustments to your new model’s variables. They also offer you a sneak preview of the CECL model’s impact on your bank.

If you have the luxury of running multiple models parallel to your existing ALLL model, you can evaluate a range of potential CECL loss estimates and evaluate which provides the most appropriate reserve. Or you might even consider selecting different models for different portfolio segments, if appropriate.

Stay in control

As the transition to the CECL standard approaches, it’s also important to evaluate — and, if necessary, update — your policies, procedures, systems, and internal controls to ensure that your credit losses will be properly calculated and documented. Ideally, they’ll be in place early enough to be operated as part of the parallel runs described above.

Sidebar: FASB: No more CECL delays

In light of previous deferrals of the CECL standard’s effective date for nonpublic entities, as well as the disruption and economic uncertainty caused by the COVID-19 pandemic, many community banks hoped that another reprieve was in the works. But in February 2022, the FASB voted not to defer the effective date any further.

Despite the implementation challenges faced by smaller banks, the FASB decided that simplifications had been made to the CECL model that eased the impact on smaller institutions. It also emphasized the importance of applying a unified standard across all financial institutions.

Click here to contact one of our experts.

© 2022

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IRS Increases Mileage Rate for the Rest of 2022

On June 9, 2022, the IRS announced that they are increasing the optional standard mileage rate for the rest of 2022. Effective July 1, 2022, the standard mileage rate for business travel will increase 4 cents from 58.5 to 62.5 cents per mile. The rate for deductible medical and moving rates will also increase 4 cents from 18 to 22 cents. The IRS also provided legal guidance for the changes in Announcement 2022 – 13.

The IRS usually updates the mileage rate once a year in the fall for the next calendar year but is making this special midyear increase in response to recent gas price increases. IRS Commissioner Chuck Rettig said, “ We are aware a number of unusual factors have come into play involving fuel costs, and we are taking this special step to help taxpayers, businesses, and others who use this rate.” According to the IRS, fuel costs are influential to the mileage figure, but other items such as depreciation, insurance, and other fixed and variable costs factor into the calculation as well.

The optional standard mileage rate is used to calculate the deductible costs of operating an automobile for business use in lieu of tracking actual costs. The rate is also used by the federal government and many businesses as the standard rate to reimburse their employees for mileage. Visit the IRS website for more information: https://www.irs.gov/newsroom/irs-increases-mileage-rate-for-remainder-of-2022

Contact one of our experts if you have any questions about the standard mileage rate.

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Find Hidden Treasure in Financial Statement Footnotes

Dig deeper!

Numbers tell only part of the story. Comprehensive footnote disclosures, which are found at the end of reviewed and audited financial statements, provide valuable insight into a company’s operations. Unfortunately, most people don’t take the time to read footnotes in full, causing them to overlook key details. Here are some examples of hidden risk factors that may be unearthed by reading footnote disclosures.

Related-party transactions:  Companies may give preferential treatment to, or receive it from, related parties. Footnotes are supposed to disclose related parties with whom the company conducts business. For example, say a tool and die shop rents space from the owner’s parents at a below-market rate, saving roughly $120,000 each year. Because the shop doesn’t disclose that this favorable related-party deal exists, the business appears more profitable on the face of its income statement than it really is. If the owner’s parents unexpectedly die — and the owner’s brother, who inherits the real estate, raises the rent to the current market rate — the business could fall on hard times, and the stakeholders could be blindsided by the undisclosed related-party risk.

Accounting changes: Footnotes disclose the nature and justification for a change in accounting principle, as well as that change’s effect on the financial statements. Valid reasons exist to change an accounting method, such as a regulatory mandate. But dishonest managers can use accounting changes in, say, depreciation or inventory reporting methods to manipulate financial results. Unreported and contingent liabilities A company’s balance sheet might not reflect all future obligations. Detailed footnotes may reveal, for example, a potentially damaging lawsuit, an IRS inquiry or an environmental claim. Footnotes also spell out the details of loan terms, warranties, contingent liabilities and leases.

Significant events Outside: Stakeholders appreciate a forewarning of impending problems, such as the recent loss of a major customer or stricter regulations in effect for the coming year. Footnotes disclose significant events that could materially impact future earnings or impair business value. Transparency is key in today’s uncertain marketplace, it’s common for investors, lenders and other stakeholders to ask questions about your disclosures and request supporting documentation to help them make better-informed decisions. We can help you draft clear, concise footnotes and address stakeholder concerns.

On the flip side, we can also discuss concerns that arise when reviewing disclosures made by publicly traded competitors and potential M&A targets. Contact one of our experts to discuss more details on your financial statement footnotes. © 2022

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How COVID-19 Changed The Health Insurance Industry

HOW COVID-19 CHANGED THE HEALTH INSURANCE INDUSTRY

By early 2022, the Centers for Disease Control and Prevention (CDC) had tracked more than 75 million cases of COVID-19 in the U.S., and some models suggest the total number of infections is much higher. The scale of the pandemic has had a significant impact on the health insurance sector. Health insurers are responsible for covering certain forms of COVID-19 testing, which sees shifting demand depending on community spread and new variants of the virus. Many individuals have also avoided routine health checkups and elective procedures during the pandemic, which can affect revenues and long-term outcomes. More broadly, pandemic-related disruptions are shaping carriers’ coverage models, considerations and priorities in ways that will last for years to come.

Unemployment and loss of health insurance

In the pandemic’s early months, public health precautions also had significant economic consequences. The crisis necessitated shutdowns of restaurants, office buildings, gyms, sports and entertainment venues and other businesses. Unemployment in the U.S. rose sharply from 3.5% in January 2020 to 14.7% in April, and more than 20 million people lost their jobs in April alone.

Because employment is the primary source of health insurance coverage for Americans, the record-setting jobs losses took an even greater toll. Even though many unemployed people gained coverage through Medicaid and Marketplace plans, nearly 3 million people still lost health insurance during the spring and summer of 2020.

Legislative changes

In addition to existing health insurance options, the government has taken steps to provide a safety net and combat the rapid decline of employer-based coverage rates. The Families First Coronavirus Response Act prohibited states from terminating Medicaid coverage during the pandemic, and the Affordable Care Act had expanded Medicaid coverage to all low-income adults in many states. However, the number of people who lost health insurance coverage due to unemployment was higher in states that had not expanded Medicaid.

The Biden Administration also passed the No Surprises Act, which took effect January 1, 2022, and protects insured patients from receiving unexpected bills for healthcare they’ve received from out-of-network hospitals, doctors or providers they did not select. As an example, research shows roughly one in five emergency room visits result in surprise bills due to patients inadvertently receiving out-of-network care.

The No Surprises Act also includes the following provisions:

  • It requires private health plans to cover out-of-network claims and apply in-network cost sharing. The law applies to both job-based and non-group plans.
  • It prohibits doctors, hospitals and other covered providers from billing patients more than the in-network cost sharing amount for surprise medical bills.

Providers are obligated to make policyholders aware of those protections, and both providers and health plans are responsible for identifying bills that are protected under the Act.

Changes in consumer behavior

Behavioral shifts also changed how people receive healthcare. When people are in a position to choose, more have sought medical treatment at urgent care centers than ever before. In 2020, urgent care centers saw visits increase 58% with record-high patient volumes during the second half of the year. First-time visitors accounted for nearly half of the 28 million patients who used urgent care.

That spike in activity was driven by high demand for COVID-19 testing, but urgent care centers also offer patients greater convenience. Overall, urgent care providers have higher rates of technology adoption compared to the primary care sector. The growing reliance on urgent care also helps reduce emergency room visits, which helps conserve hospital resources and results in lower costs for carriers and patients alike.

 

LASTING SHIFTS IN HEALTH INSURANCE

COVID-19 has led to widespread changes for health insurance, and many of those changes could last beyond the pandemic. In particular, insurers should assess the impact in five areas:

Shifting insurance models

Whether they embraced a remote or hybrid work environment or had to think of creative ways to attract and retain talent during a labor shortage, the pandemic prompted many companies to reevaluate longstanding practices. As a result, more companies are moving away from traditional insurance models. To offer workers more flexibility in coverage options, organizations are increasingly turning to health reimbursement arrangements (HRAs) and self-insurance options.

Insurance as incentive

U.S. companies are also exploring plans that incentivize getting the COVID-19 vaccine. Some companies have begun charging unvaccinated employees more for health insurance to cover the increased risk of hospitalization with COVID-19. While only 1% of companies surveyed had taken this measure as of September 2021, 13% reported considering it and larger companies comprised one-fifth of that group.

Coverage of telehealth services

The pandemic drastically accelerated the adoption of telemedicine, and health insurance companies met increased demand by offering more coverage for telehealth services. Johns Hopkins researchers found a more than 50-fold increase in telehealth use among privately insured people of working age during the early months of the pandemic. Between March and June 2020, telehealth consults comprised nearly 24% of outpatient consults compared to 0.3% during the same period in 2019. The growth of telehealth is projected to continue even after COVID-19 shifts to endemic status, and one market research firm forecasts a sevenfold growth in the telehealth market by 2025.

Considerations for “long haulers”

For some, the impact of a COVID-19 infection can linger long after symptoms dissipate. Studies estimate that approximately 14% of COVID-19 survivors between the ages of 18 and 65 develop new symptoms and receive new diagnoses up to six months after their initial bout with the virus. Those who’ve received such diagnoses are thought to be suffering from “long COVID.” Everything from fatigue to brain fog to cardiac complications have been identified as symptoms of long-haul COVID. Insurers could see an uptick in appeals as those denied coverage for respiratory therapy and other rehabilitative treatments may appeal insurers’ decisions. The emergence and proliferation of COVID long haulers may cause carriers to reevaluate their definition of “medical necessity.”

A growing emphasis on mental health

Physical issues are not the only long-term impact of COVID-19 that insurance carriers should consider. Isolation, fears of contracting the virus and economic uncertainty have contributed to a growing mental health crisis. Approximately four in 10 U.S. adults have reported symptoms of anxiety or depressive disorder, up from one in ten adults who reported these symptoms from January to June 2019. Moving forward, health insurance carriers will likely have to reassess coverage for mental health services.

MOVING FORWARD

Health insurers continue to adjust to pandemic-era health and labor trends, as well as the challenges posed by long COVID and mental health issues. Carriers are offering employers alternate models and offering policyholders greater access to telehealth and mental health services, in addition to expanding coverage for treatment options. Insurers that take a forward-looking approach to dealing with the lasting impacts of the pandemic will be positioned to grow and capture emerging opportunities in a competitive landscape.

If you have any further questions about how your health insurance could affect your 2022 tax return please contact your ATA representative.

Written by Peter Popo, Imran Makda and Scott Cederburg. Copyright © 2022 BDO USA, LLP. All rights reserved. www.bdo.com

 

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How Inflation Could Affect Your Financial Statements

Business owners and investors are understandably concerned about skyrocketing inflation. Over the last year, consumer prices have increased 8.3%, according to the latest data from the U.S. Bureau of Labor Statistics. The Consumer Price Index (CPI) covers the prices of food, clothing, shelter, fuels, transportation, doctors’ and dentists’ services, drugs, and other goods and services that people buy for day-to-day living. This was a slightly smaller increase than the 8.5% figure for the period ending in March, which was the highest 12-month increase since December 1981. Meanwhile, the producer price index (PPI) is up 11% over last year. This was a smaller increase than the 11.2% figure for the period ending in March, which was the largest increase on record for wholesale inflation. PPI gauges inflation before it hits consumers.

Key impacts for your business, inflation may increase direct costs and lower customer demand for discretionary goods and services. This leads to lower profits — unless you’re able to pass cost increases on to customers. However, the possible effects aren’t limited to your gross margin.

Here are seven other aspects of your financial statements that might be impacted by today’s high rate of inflation.

1. Inventory.  Under U.S. Generally Accepted Accounting Principles (GAAP), inventory is measured at the lower of 1) cost and 2) market value or net realizable value. Methods that companies use to determine inventory cost include average cost, first-in, first-out (FIFO), and last-in, first-out (LIFO). The method you choose affects profits and the company’s ending inventory valuation. There also might be trickle-down effects on a company’s tax obligations.

2. Goodwill. When estimating the fair value of acquired goodwill, companies that use GAAP are supposed to apply consistent valuation techniques from period to period. However, the assumptions underlying fair value estimates may need to be revised as inflation increases. For instance, market participants typically use higher discount rates during inflationary periods and might expect revised cash flows due to rising expenditures, changes in customer behaviors and modified product pricing.

3. Investments. Inflation can lead to volatility in the public markets. Changes in the market values of a company’s investments can result in realized or unrealized gains or losses, which ultimately impact deferred tax assets and liabilities under GAAP. Concerns about inflation may also cause a company to revise its investment strategy, which may require new methods of accounting or special disclosures in the financial statement footnotes.

4. Foreign currency. Inflation can affect foreign exchange rates. As exchange rates fluctuate, companies that accept, hold and convert foreign currencies need to ensure they’re capturing the correct rate at the appropriate point in time.

5. Debts. If your company has variable-rate loans, interest costs may increase as the Federal Reserve raises interest rates to counter inflation. The Fed already raised its target federal funds rate by 0.5% in May and is expected to increase rates further over the course of 2022. Some businesses might decide to convert variable-rate loans into fixed-rate loans or apply for additional credit now to lock in fixed-rate loans before the next rate hike. Others may restructure their debt. Depending on the nature of a restructuring, it may be reported as a troubled debt restructuring, a modification or an extinguishment of the debt under GAAP.

6. Overhead expenses. Long-term lease agreements may contain escalation clauses tied to CPI or other inflationary measures that will lead to increased lease payments. Likewise, vendors and professional service providers may increase their prices during times of inflation to preserve their own profits.

7. Going concern disclosures. Each reporting period, management must evaluate whether there’s substantial doubt about the company’s ability to continue as a going concern. Substantial doubt exists if it’s probable that the entity will be unable to meet obligations as they become due within 12 months of the financial statement issuance date. Soaring rates of inflation can be the downfall of companies that are unprepared to counter the effects, causing doubt about their long-term viability.

We can help. Inflation can have far-reaching effects on a company’s financial statements.

Contact us for help anticipating how inflation is likely to affect your company’s financials and brainstorming ways to manage inflationary risks. © 2022

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Do You Have a Health Savings Account?

Do you have a Health Savings Account?
Health Savings Accounts (HSAs) are tax-advantaged savings accounts funded with pretax dollars. Funds can be withdrawn tax-free to pay for qualified medical expenses. An HSA must be coupled with a high-deductible health plan (HDHP). The IRS annually adjusts HSA and HDHP amounts based on inflation.
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Once You File Your Tax Return, Consider These 3 Issues

The tax filing deadline for 2021 tax returns is April 18 this year. After your 2021 tax return has been successfully filed with the IRS, there may still be some issues to bear in mind.

 

Here are three considerations:

1. You can throw some tax records away now You should hang onto tax records related to your return for as long as the IRS can audit your return or assess additional taxes. The statute of limitations is generally three years after you file your return. So you can generally get rid of most records related to tax returns for 2018 and earlier years. (If you filed an extension for your 2018 return, hold on to your records until at least three years from when you filed the extended return.)

However, the statute of limitations extends to six years for taxpayers who understate their gross income by more than 25%. You should keep certain tax-related records longer. For example, keep the actual tax returns indefinitely, so you can prove to the IRS that you filed a legitimate return. (There’s no statute of limitations for an audit if you didn’t file a return or you filed a fraudulent one.)

What about your retirement account paperwork? Keep records associated with a retirement account until you’ve depleted the account and reported the last withdrawal on your tax return, plus three (or six) years. And retain records related to real estate or investments for as long as you own the asset, plus at least three years after you sell it and report the sale on your tax return. (You can keep these records for six years if you want to be extra safe.) 

2. Waiting for your refund? You can check on it The IRS has an online tool that can tell you the status of your refund. Go to irs.gov and click on “Get Your Refund Status” to find out about yours. You’ll need your Social Security number, filing status and the exact refund amount. 

3. If you forgot to report something, you can file an amended return In general, you can file an amended tax return and claim a refund within three years after the date you filed your original return or within two years of the date you paid the tax, whichever is later. So for a 2021 tax return that you file on April 15, 2022, you can generally file an amended return until April 15, 2025.

However, there are a few opportunities when you have longer to file an amended return. For example, the statute of limitations for bad debts is longer than the usual three-year time limit for most items on your tax return. In general, you can amend your tax return to claim a bad debt for seven years from the due date of the tax return for the year that the debt became worthless.

We’re here year round If you have questions about tax record retention, your refund or filing an amended return, contact us. We’re not just available at tax filing time — we’re here all year!

Contact us if you have questions about this or other tax-related topics. © 2022 https://ata.net/contact-us

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Key Tax-Related Deadlines for Businesses and Employees

Here are some of the key tax-related deadlines that apply to businesses and other employers during the second quarter of 2022. Keep in mind that this list isn’t all-inclusive, so there may not be additional deadlines that apply to you.

The IRS announced tax relief for Tennessee severe storms, straight-line winds and tornadoes that may affect taxpayers’ deadlines. Read below for more information.

Contact us to ensure you’re meeting all applicable deadlines and to learn more about the filing requirements.

April 18

If you’re a calendar-year corporation, file a 2021 income tax return (Form 1120) or file for an automatic six-month extension (Form 7004) and pay any tax due. Corporations pay the first installment of 2022 estimated income taxes.

For individuals, file a 2021 income tax return (Form 1040 or Form 1040-SR) or file for an automatic six-month extension (Form 4868) and paying any tax due. (See June 15 for an exception for certain taxpayers.) For individuals, pay the first installment of 2022 estimated taxes, if you don’t pay income tax through withholding (Form 1040-ES).

May 2

Employers report income tax withholding and FICA taxes for the first quarter of 2022 (Form 941) and pay any tax due.

May 10

Employers report income tax withholding and FICA taxes for the first quarter of 2022 (Form 941), if you deposited on time and fully paid all of the associated taxes due.

June 15

Corporations pay the second installment of 2022 estimated income taxes. The second estimated tax installment for individual taxpayers is due June 15 as well.

Our 2022 tax calendar gives you a quick reference to the most common forms and 2022 tax due dates for individuals, businesses, and tax-exempt organizations. Communicate any questions you may have with your ATA representative. © 2022

However, there is tax relief for Tennessee victims of severe storms, straight-line winds and tornadoes beginning December 10, 2021 now have until May 16, 2022, to file various individual and business tax returns and make tax payments, the Internal Revenue Service announced today.

Following the recent disaster declaration issued by the Federal Emergency Management Agency, the IRS announced today that affected taxpayers in certain areas will receive tax relief.

Individuals and households affected by severe storms, straight-line winds and tornadoes that reside or have a business in Cheatham, Davidson, Decatur, Dickson, Dyer, Gibson, Henderson, Henry, Lake, Obion, Stewart, Sumner, Weakley, and Wilson counties qualify for tax relief. The declaration permits the IRS to postpone certain tax-filing and tax-payment deadlines for taxpayers who reside or have a business in the disaster area. For instance, certain deadlines falling on or after December 10, 2021, and before May 16, 2022, are postponed through May 16, 2022.

Read the full details in this IRS update.

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April 1: Required Minimum Distributions

Time’s nearly up for some retirees to take a required minimum distribution (RMD) from certain retirement accounts, to avoid harsh penalties. For those who turned 72 in the last half of 2021, your first year RMD must be taken by April 1, 2022, so act fast. This applies to those with IRAs, 401(k)s and similar workplace plans.

For all RMDs after the first year, the deadline is Dec. 31. This also means that if you must take your first RMD (for 2021) by April 1, 2022, you’ll still need to take another one for 2022, by Dec. 31, 2022. Exceptions to the RMD rules exist for some.

Here’s more information: https://bit.ly/3qKfJ9M.