What You Should Know About CDD & AML for Attorney Paymaster Services

28-Jul-2020

AML, KYC and CDD processes are an important part of attorney paymaster services.

Working with an attorney paymaster is a good idea for businesses engaging in large transactions including real estate, jet fuel, gold or diamonds, and note transactions. These often involve significant amounts of money and have several federal regulations that you must satisfy to avoid legal trouble. As paymaster, the attorney acts as a neutral third-party to receive funds from a buyer, hold them in escrow as all the paperwork and legal requirements are settled, then release the funds to the seller. Anyone looking to hire an attorney in these capacities should be aware that they must comply with certain regulatory requirements around KYC, CDD, and AML. AML, KYC and CDD processes are an important part of attorney paymaster services.

Breaking Down KYC, CDD, and AML

Regulatory landscapes around financial transactions have a lot of abbreviations and acronyms, but perhaps none more important than:
  • KYC — Know Your Customer/Client
  • CDD — Customer Due Diligence
  • EDD — Enhanced Due Diligence (sometimes required)
  • AML — Anti-Money Laundering
These are requirements that attorney paymasters must satisfy in order to represent clients in a financial transaction.

Know Your Customer/Client

KYC is a critical part of financial transactions, particularly large or international transactions. These activities are intended to provide more information about the person or company behind the transaction to ensure the funding source is legitimate and not tied to nefarious organizations, such as terrorism or organized crime.

Customer Due Diligence

In order to manage risk effectively and protect themselves from potential involvement in financial crimes or similar activities, attorneys perform CDD. This process, along with the KYC activities, provides in-depth information about the location and identity of a client and a client’s activities to properly assess potential risks. It’s critical that clients work with attorneys to complete the CDD process to avoid delays in the transaction.

Enhanced Due Diligence

Some high-risk customers may need to go through an enhanced due diligence process to get a better understanding of their financial activities. The initial CDD will usually determine whether a more in-depth review is necessary. What may trigger EDD? High transaction amounts or volume, ties to high-risk countries, or evidence of current or past high-risk activities.

Anti-Money Laundering

AML activities ensure that an attorney paymaster will not participate in transactions for purposes of money laundering or with laundered money. The purpose is to make it more difficult for someone involved in criminal activities to get away with the money, and to prevent corruption, tax evasion, theft or fraud. AML usually involves an initial review, then continual monitoring of financial transactions to spot potential red flags. If you are interested in working with Cantley Dietrich for attorney paymaster services, contact us today to learn more about our KYC, CDD and AML processes and important details about how these services can benefit you in certain financial transactions.

Beckett G. Cantley, Senior Partner at Cantley Dietrich Named to Top Ten Downloads on SSRN

03-Jul-2020

Cantley Dietrich paper on Section 831(b) captive insurance in top ten SSRN downloads.

Beckett Cantley, senior partner of Cantley Dietrich, was named to the top ten most downloaded papers published on the research site SSRN under the Consumer Protection & Enforcement and the Life Insurance topic headings. The paper, Summary of Articles on Abusive Captive Insurance Companies, was published by the Utah chapter of the American Institute for CPAs (AICPA) on September 15, 2013. Cantley Dietrich paper on Section 831(b) captive insurance in top ten SSRN downloads.

About the Paper

Author Beckett G. Cantley, JD, LLM, analyzed the current IRS enforcement actions in light of the multiple publications Prof. Cantley had previously published in scholarly journals dissecting the tax promoters and life insurance agents who advised unsuspecting business owners to use Internal Revenue Code (IRC) Section 831(b) to form a captive insurance company (CIC) for reasons not in keeping with the intent and substance of the statute. The provision was rarely used until the late 2000s, and promoters advised clients that since the IRS rarely audited these vehicles, a CIC was compliant as a tax planning, estate planning, or wealth transfer entity. As CICs gained in popularity, the IRS took note and started updating statutes and regulations to go after individuals or companies abusing the purposes of Section 831(b) CICs.

The IRS Targets CICs

The IRS identified five areas of Section 831(b) non-compliance:
  • Life insurance on the owners of CICs as a core “investment”
  • Offshore jurisdictions posing as unassailable managers
  • Premiums in excess of risk and inappropriate coverages
  • Estate planning ownership
  • Loan-back structures
In 2016, the IRS released Notice 2016-66, announcing its disapproval of the use of CICs involved in investing “capital in illiquid or speculative assets usually not held by insurance companies.” For example, startup companies sometimes purchased large life insurance policies on their principals as a way to generate commission for life insurance promoters, and not as a sound business decision by a startup. Unscrupulous promoters were still persuading investors to create Captives, even as the IRS warned in their annual “Dirty Dozen” tax scams list (as early as 2015) that they were potentially abusive tax shelters. Starting in 2017, they backed up these warnings with policy underwriting that created requirements for CICs to meet the threshold of a legitimate financial vehicle. Congress has passed laws and clarified specific provisions or tests to determine whether a CIC is being used for a legitimate business purpose. There were also enhanced reporting requirements after CICs were designated as a “Transaction of Interest” (TOI), including financial tax shelter disclosure, list maintenance and registration regulations. The IRS’ ability to prosecute abuses related to Section 831(b) was reinforced in the Tax Court decision Avrahami v. Commissioner (2017) and followed by several other key wins, and highlights the arguments they are likely to use in future enforcement, including anti-abuse and judicial anti-avoidance doctrines:
  • Circular cash flows
  • Lack of bona fide debt
  • Step transaction doctrine
  • Sham transaction doctrine
  • Business purpose doctrine
  • Substance over form doctrine
  • Economic substance doctrine

Lessons Learned

Historically, once something is designated as a new TOI, the IRS will target and audit it. Promoters may reassure clients, but this often leads to significant proposed adjustments to taxpayer returns and substantial penalties. While CICs can provide a useful risk management and mitigation tool for business owners, it’s important to work with advisors who won’t blur the legal lines of when they are appropriate.

About SSRN

The SSRN eLibrary has 948,360 research papers from over 500,000 researchers that cover more than 50 disciplines. It provides a platform to disseminate early-stage research or communicate important findings prior to publication in academic journals. The Cantley Dietrich article was also published in the Utah AICPA September 2013 Journal. You can access an electronic version at https://ssrn.com/abstract=3226652

IRS Conducting More Audits on High-Net-Worth Taxpayers

30-Jun-2020

IRS increasing audits on high-net-worth individuals in 2020

The IRS recently told taxpayers it is now auditing more high-net-worth individuals. It’s important to prepare, in case you find yourself the subject of one of these audits. The IRS originally formed a team of tax collectors in 2010 to look for high-net-worth individuals who may have taken advantage of loopholes or been overly aggressive on their tax filings. The group was officially named the Global High-Wealth Industry Group (GHW) in the Large Business and International Division (LB&I), but colloquially called The Wealth Squad. Now, they have now resurrected this group to resume the task they were charged with. IRS increasing audits on high-net-worth individuals in 2020

What Does the Wealth Squad Do?

The Wealth Squad, made up of auditors specifically trained to look at high-wealth individuals, examines their income sources and any potential tax-evasion strategies they might employ, including:
  • Complex domestic financial affairs
  • Businesses or entities they control, including pass-through entities
  • Offshore accounts
  • Trust accounts, including foreign trusts
  • Foundations
It’s no secret that the IRS has limited auditing resources; the GHW team was formed to conduct audits most likely to yield the biggest results. IRS investigations require a lot of time and money, so deploying those resources to collect a couple hundred dollars from an average taxpayer is not efficient when those same resources could be put toward uncovering tens of thousands in unpaid taxes from higher-net-worth individuals. In addition, there are far more high-net-worth individuals today than ever before. In the 1980s, it was extraordinarily rare to be a billionaire, with only a few in the entire country. In 2019, the combined net worth of the Forbes 400 was $2.96 trillion, and you need a net worth of at least $2 billion just to make the list.

How to Protect Yourself

Low-income Americans have little risk of audits, with fewer than 1 percent targeted each year. If your income or net worth is over $10 million, however, you have about a 1 in 3 chance. Those with complex and sophisticated financial, business and other tax arrangements also stand a higher chance of being audited. Although these arrangements can be perfectly legal and valid, it’s still important to engage knowledgeable tax advisors—attorneys, accountants, and wealth managers—who can take a close look at your finances and legal structures to ensure that everything is in order before the IRS discovers a problem. This is especially true if you have foreign bank accounts or trusts, or business interests overseas. Any filing, position, or statement to the IRS can be amended, refiled, or withdrawn until you receive the dreaded audit letter. Once you are under audit, do not make changes.

Talk to Cantley Dietrich

If you are concerned about your financial situation or think you may be at higher risk with the increased scrutiny on high-net-worth individuals, talk to an advisor at Cantley Dietrich today and learn more about how you can be prepared in case of an audit.

What Are Attorney Paymaster, Escrow and Commission Dispersal Services?

05-Jun-2020

Paymaster, escrow and commission dispersal services are beneficial for large financial transactions

When engaging in certain business transactions, you must follow federal and your State’s regulations to remain compliant with the law—in fact, depending on the property being transacted, you may need to comply with laws most people have never heard of. When you or your business engages in those transactions, working with a firm that offers paymaster, escrow and commission dispersal services can help the transactions go smoothly and ensure that all the appropriate legal boxes are checked in the process. The paymaster is a neutral third party that receives funds from a buyer, holds them in escrow until all the people in the transaction agree that everything is ready and then disburses the funds according to the contract’s terms. Then the paymaster reconciles the escrow account and fills out all the appropriate IRS paperwork. Transactions in which it’s a good idea to engage with a paymaster service include:

  • Personal Protective Equipment (gloves, masks, ventilators, and protective gear)
  • Real estate
  • Jet fuel
  • Gold, diamonds and precious stones
  • Note transactions or guarantees
These transactions must be compliant with various federal entities, including the U.S. Department of Homeland Security, U.S. Treasury, and sometimes the Department of State. Navigating the maze of legal requirements to avoid delays in the process can be confusing, but getting something wrong could mean serious fines or penalties. These transactions are also typically in the millions of dollars, so there are a lot of downsidesin the event of an error. Paymaster, escrow and commission dispersal services are beneficial for large financial transactions

Know Your Customer (KYC) & Anti-Money Laundering (AML)

One of the most important aspects of large domestic and international financial transactions is KYC, or know your customer. These are legal requirements that compel companies conducting transactions to know who is on the other end, confirm that person’s identity and conduct due diligence in identifying any potential risks related to doing business with that person or entity. The requirement falls under anti-money laundering (AML) laws, and failing to adhere to the rules can lead to sanctions, fines and other damages that could come from working knowingly or unknowingly with money launderers or terrorists. It can also protect your business from losses that are the result of an illegal transaction.

Why Use Paymaster Services?

One of the biggest benefits of using a paymaster service instead of traditional letters of credit through a financial institution is the ability to conduct transactions without the hassles normally associated with going through banks, including credit checks or the need to have an established relationship with the financial institution. Paymasters aren’t party to the transaction; they are only involved to make sure everything goes as planned and that all compliance issues are addressed. Paymasters take care of checking the identify of all parties in the transaction. They may look at:
  • Driver’s license or passport
  • IRS forms for U.S. or non-U.S. citizens
  • Transaction documents
  • Recorded report of any pending exchanges that the paymaster is involved with
This protects companies by providing compliance for KYC and AML regulations while avoiding the need to conduct all the necessary background checks on your own.

Contact Cantley Dietrich for Paymaster Services

To find out more about paymaster, escrow and commission dispersal services through Cantley Dietrich, contact us today.

Should You Be Worried About IRS Criminal Penalties?

26-May-2020

The IRS uses fines and prosecution to punish people who don’t comply with tax laws.

Most people are aware that cheating on your taxes is against the law, but when it comes to tax compliance, not everyone is on the same wavelength about what constitutes “cheating” or the potential risks it poses. There is a difference between civil penalties and criminal penalties when it comes to IRS enforcement actions.  Criminal penalties are rare—in the sense that most people avoid the behaviors leading to criminal tax activity.  When one commits tax evasion or tax fraud, the IRS will likely seek criminal penalties.  While criminal penalties seem rare, that may be partly because only a small number of cases are prosecuted by the IRS each year. However, before you think there’s nothing to worry about, you should know that in 2019 the IRS had a 91.2% conviction rate for the cases it did bring. The agency boasted about their success to send a message that they will continue to pursue aggressive enforcement strategies.

We certainly hope you are not intentionally cheating on your taxes!  Even for the on-the-level, middle-of-the-road taxpayer, there are things that you may be doing (or not doing) that could put you at a higher risk of being audited and facing penalties. 

The IRS uses fines and prosecution to punish people who don’t comply with tax laws.

Common Tax Compliance Issues

The most common way for people to dabble in tax “gray areas” is by under reporting income.  While this may serve to lower your tax bill, at best it results in civil penalties and, at worst, could result in charges of tax evasion. At highest risk for under reporting are self-employed individuals or those working in a business that primarily uses cash transactions. Another risky behavior is writing off exaggerated or fabricated business expenses, which is also against the law.

For high-net-[GD1] worth individuals, tax compliance can be complicated significantly by the complexity of your tax affairs and the tax-planning mechanisms you are using to manage your wealth. While most high net worth individuals have one or more advisors—and most of them are likely great—you may be out of compliance by function of the multiple layers or strategies you have put in place. You may not even be aware that you are out of compliance, particularly if you are using the advice of multiple advisors who may not be cohesively viewing or planning with you.

The Risks of Tax Non-Compliance

If you are subjected to an audit and the revenue officer finds errors or omissions, three things could happen:

  • Fines — These are commonly referred to as a civil penalty.  Civil penalties are the simplest thing that arevenue officer can do topenalize you for non-compliance. These fees vary based on what the revenue officeruncovers. On the low end, 20% penalties could be added to your tax bill if the revenue officer suspects that it is the result of negligence; on the higher end, it could be 75% or more if they suspect it was fraud.
  • Criminal Investigation— The revenue officer may also refer your case to the Criminal Investigation Division (CID) if they suspect you willfully committed tax fraud.
  • Prosecution — IRS investigators can charge you with tax evasion or fraud, filing a false return or failure to file a return.

How to Avoid Tax Compliance Issues

The easiest way to avoid tax compliance issues is to have your taxes prepared by a licensed CPA and regularly reviewed by a knowledgeable tax attorney. These individuals can review your current financial situation and identify potential red flags. Then you can address those concerns early—long before an audit begins —so you can avoid the hassle and potential financial penalties.

Cantley Dietrich has a team of tax attorneys with a practice grounded in tax compliance for high-net-worth individuals. We work holistically with other advisors and strive for a cohesive, understandable, and compliant plan for your estate. Call us today to discuss how we can help you avoid the risks of IRS audits.

The Risks of DIY Wealth Management

01-May-2020

DIY wealth management isn’t the best approach for a high-net-worth individual or business.

We live in a DIY culture, but there are still some things that you should not try to do on your own. For someone with high net worth, wealth management is one of those things. Rather than trying to figure out investments, tax minimization strategies and estate planning on your own, work with a knowledgeable advisor who understands U.S. and international tax laws and works with you in your specific facts and circumstances to develop plans that reduceyour tax liability and increase profitability for you in the long term.

DIY wealth management isn’t the best approach for a high-net-worth individual or business.

Why You Shouldn’t Do it Yourself

It might be tempting to think that you can manage your own wealth portfolio, but for most people there are significant drawbacks to doing this without the help of an experienced advisor. These include:

  • A tendency to make financial or investment decisions based on emotions
  • Not having all the information about current market trends
  • Not having time to stay updated on the latest market research and information
  • Lack of knowledge and understanding about new tax laws and regulations

All of these issues can lead to bad money management decisions, and for someone with high net worth, the stakes are often higher. Taking your cousin’s advice on investing or relying on an estate plan template you found online is risky for someone who has a significant portfolio or has amassed considerable wealth. In the end, even a seemingly small mistake could cost you a lot in increased taxes or investment losses.

A Better Option: Experienced Wealth Management Advisors

Working with a wealth management advisor who specializes in high-net-worth individuals can provide significant benefits, including:

  • Unbiased advice on investment strategies, which is especially helpful in a market downturn when you may react negatively and want to take steps that could hurt you more in the long term
  • Knowledge of all the changes to tax laws and regulations that can impact your taxes, estate plan and investment portfolio
  • A broader overview of your entire financial life—including assets, investments, property, and business income—and other personal information that can affect your wealth plan, such as a marriage, divorce or children

Finally, a personal wealth manager can provide you with individualized advice about your own position. Even if you are able to find good information online, that information may not be applicable or appropriate for your unique situation. With an increasingly complex financial life, high-net-worth individuals need an increasingly personalized strategy for their own wealth management.

If you are DIY-ing your wealth management right now, talk to Cantley Dietrich today to get advice from advisors who make it their business to work with high-net-worth individuals.  As tax attorneys, Cantley Dietrich can provide you with tools and expertise to adjust your tax and estate plans as laws and regulations change.

4 Mistakes You Don’t Want to Make in Protecting Your Assets

28-Apr-2020

4 mistakes that people make when it comes to asset protection plans (or lack thereof).

You worked hard to build your assets. Unfortunately, those with bigger assets often become targets for litigation. Even if you’re lucky enough to escape that, life can change quickly, and your assets could be at risk if they’re not properly protected.

For someone with high net worth, proper protection starts with a holistic plan created in connection with your legal, wealth management, and accounting advisors.  These advisors work together to create a dedicated asset protection plan that incorporates the best tools and strategies to provide the protection your facts and circumstances require. Read below about four mistakes many people make when it comes to asset protection strategies and plans.

4 mistakes that people make when it comes to asset protection plans (or lack thereof).

Mistake 1: Waiting to Create a Plan

You have a lot of tools at your disposal to protect your assets, but once there is a claim on those assets, it’snearly impossible to protect them legally. Trying to transfer them out of your name, hide them or otherwise omit them puts you at risk of violating laws against fraudulent transfer.

An old Army adage, “prior proper planning prevents poor performance,”is also true for estate planning and asset protection. Proactively taking steps to protect your assets reduces your risk of the slap-dash, last minute shenanigans people try once they’re on the defensive.

Mistake 2: Mixing Business & Personal Assets

If you own a business, it’s important that you don’t put your personal assets into the business entity, because it can open you up to legal challenges if you are ever sued. A simple analogy is to remember that your business is not your personal piggy bank.  Cracking it open when you need money or sliding assets back into the business to cover payments is a really bad idea.  Personal assets should be placed in the appropriate personal wealth protection vehicle (such as asset protection trusts or irrevocable trusts). As long as you properly create and fund the trust, many legal protections can keep your personal assets out of business disputes.

Mistake 3: Assuming Offshore Assets Are Safe

If you have some of your assets in offshore accounts, it’s still important to talk to an asset protection planning attorney about the best ways to protect them. Just because they are not in the U.S. doesn’t mean they can’t be targeted if you are ever named in a lawsuit or a personal dispute such as a divorce. Additionally, remember that offshore accounts and assets often have higher levels of reporting requirement and scrutiny such that failure to observe the proper formalities can compromise your costly protections.

Mistake 4: Trying to Hide Assets

When it comes to litigation, assume all your assets will be discovered, because they probably will. If you didn’t do the work beforehand to protect and preserve your assets, it’s not worth going to jail now trying to hide them. Assume that anyone who “used to be” your friend will disclose what you did to hide that asset and it will come back to hurt you in future litigation, where you could find yourself charged with other crimes such as perjury or fraud. Orange is not the new black, keep yourself out of jail and out of trouble by planning in advance.

The best thing you can do to protect your assets is contact Cantley Dietrich today. Our experienced attorneys can review your assets and help you find the right tools to legally protect you—and them—from many of the risks the future may hold.

Benefits of a Boutique Firm for Estate Planning & Income Tax Planning

03-Apr-2020

Boutique estate planning and income-tax planning firms offer several benefits for clients.

When it comes to your taxes and wealth planning, it’s important that you have a team of people you trust to protect the wealth you have earned over time. The challenge for many people is finding the right firm with the right expertise. For many high-net-worth individuals and families, the best answer may not be a “high-powered” firm with thousands of attorneys, it’s actually a boutique estate planning or income tax planning firm that can provide you with one-on-one attention.

Boutique firms are at their best when you hear, “we don’t try to be all things to all people.”  If you want a one-stop shop where you can litigate, conduct mergers, make claims on mineral rights, and do your estate planning, the large firm is for you.  If you prize individualized, direct attention on a specific matter, then a boutique firm is the right place.

Boutique estate planning and income-tax planning firms offer several benefits for clients.

No Two Estate Plans or Tax Plans are Alike

One of the primary reasons to look at a boutique firm for all your estate planning and tax planning needs is that your estate plan or your income tax needs will be different from anyone else’s. Even though we use some common threads and tools for people with similar net worth, similar business income or similar assets, you deserve a plan tailored specifically to your situation and circumstances.

Boutique firms give you the personal service that lets you know you’re getting the best advice based on your financial picture.

The Expertise of a Large Firm

There’s no denying that a large tax planning or estate planning firm will have vast resources, but the right boutique firm has exceptional attorneys and tax professionals who provide the same high-caliber advice as a bigger firm, without the hassles that often come from dealing with a large firm, like having your attorney’s attention diverted to other clients and other matters on a regular basis.

At Cantley Dietrich, we recruit the best talent in the nation to work in our Las Vegas, Atlanta, Dallas, Houston, and Salt Lake City offices. Our attorneys understand state and local, federal,and international tax planning laws, so you get a comprehensive plan using the right tools and practical applications of the law.

Focused Expertise

When you work with a smaller firm or a boutique firm, what you get are attorneys with specialized experience and expertise in tax planning and estate planning. Our attorneys don’t cover every area of the law; we focus on helping you make smart decisions on your income taxes and protecting the wealth you have earned.

Attorneys that focus intensely in their field are often at the forefront of legal strategies and changes in that area, which benefits you if you have a particularly large estate or need complicated planning assistance.

Contact Us Today to Learn More

If you are still not sure whether a boutique tax planning and estate planning firm is for you, call Cantley Dietrich today to meet with our attorneys and see why we are the best choice.

Why Asset Protection is Critically Important

31-Mar-2020

High-net-worth individuals and business owners need an asset protection plan.

Asset protection for a high-net-worth individual or a business is an essential part of any wealth-protection strategy. According to a review by Harvard Law School, the U.S. far outpaces other developed countries in the number of suits filed per 100,000 people, with 57% more than the next-closest country (United Kingdom).

Many of these lawsuits are considered “frivolous” and are thrown out before they reach a judgment, but millions still make it through the courts. For that reason, it’s important that you have a personal asset protection strategy to avoid losing what’s important to you in the event of a lawsuit.

High-net-worth individuals and business owners need an asset protection plan.

The Most Common Threats to Assets

Your assets could be threatened by almost anything, but the most common reasons someone brings a lawsuit include (in no particular order):

  • Negligence
  • Divorce
  • Vehicle accidents
  • Personal injury
  • Partner or business disputes
  • Missed financial obligations
  • Professional malpractice
  • Harassment at your business
  • Accidents on your business property
  • Vehicle accidents involving company vehicles

An asset protection strategy is like a sliding scale of protection. How much and how deeply you care to restrict a judgment creditor’s ability to take something changes how you protect the assets.  A judgement creditor is that person who, if any of those things (above) happen to you, is the someone who files a lawsuit against you or your business and then pursues your personal wealth or assets—such as your home or personal bank account. Along that scale of protections are strategies to protect your wealth from lawsuits filed against you personally.

Why Insurance Isn’t Enough

Many businesses and individuals believe that having liability insurance is enough to protect you if these things occur, but that is often not the case. We often see lawsuits arise out of that one “terrible, horrible, no good very bad day[GD1] ” where the insurance payment draws from an old account and the policy refuses to pay on the same day there’s an accident. Don’t laugh, it happens. It’s imperative to have good insurance, but damages sought in many lawsuits often surpass insurance limits, and insurance companies have a reputation that they will do whatever they can to avoid paying a claim.

Get the Protection You Need

There are myriad legal ways to protect your assets from litigation or creditors, but they are regulated by state, federal and international laws. The important thing is to be proactive in setting up these protections. If you wait until after a lawsuit is filed, it’s often too late. The old Army saying, “Prior proper planning prevents poor performance,” is never truer than in recognizing the value in protecting yourself before problems arise.  

At Cantley Dietrich, our advisors have a deep understanding of federal, many state, and international laws that can protect your assets. Everyone has unique facts and circumstances, risk tolerances, and worries, and every plan is designed specifically for your unique situation. Our ultimate goal is to educate you on where to expect risk, how you can reduce risk, and provide opportunities to safeguard your family and wealth in the event of the unexpected. We also know that asset levels and laws change over time, so we can work with you to conduct regular checkups on your strategies to help ensure everything remains protected.

It’s a smart approach with a focus on privacy and security for our high-net-worth clients. Talk to Cantley Dietrich today about how we can help you.

Tax Extension for Small Businesses and Individuals

26-Mar-2020

tax-filing deadline moved

tax-filing deadline moved We are living through an unprecedented time. As unbelievable as it was to watch America go to war for the first time in half a century, the fallout from the COVID-19 coronavirus is mind-blowing. We added words that were never a part of our vocabulary, but are now deeply ingrained: social distancing, self-quarantine, shelter in place and so on. Despite the efforts of individuals and governments, the disease marches on. While we won’t launch into a discussion about whether wearing face masks is effective, we do want to applaud one thing going right with Congress. Despite the effects on small business from all the social distancing, self-quarantining and restrictions on gathering in groups, we are grateful that filing taxes has been put on a temporary delay. The IRS moved the national income tax filing day to July 15, three months after the normal deadline for Americans to send in their returns. “At @realDonaldTrump’s direction, we are moving Tax Day from April 15 to July 15,” Treasury Secretary Steven Mnuchin wrote in a tweet about the extension. “All taxpayers and businesses will have this additional time to file and make payments without interest or penalties.” https://twitter.com/stevenmnuchin1/status/1241002750483324930?s=20 Most Americans are entitled to refunds when they file their federal tax returns. As of March 13, the Internal Revenue Service had issued 59.2 million refunds out of the 76.2 million individual income tax returns it had received, or 77.7% of the total number of returns filed by that date. The average refund check was $2,973, according to IRS data. Many individual states already had extended their own tax-filing deadlines to various dates to give people relief from the financial fallout of the coronavirus outbreak, which has shuttered businesses nationwide and led to large-scale layoffs. The IRS move will increase pressure on states to align their deadlines with the new one for federal income tax returns. It is unclear if the deadline extension also will include the deadline for funding Individual Retirement Accounts for the 2019 tax year. If you have further questions about your tax filing or preparing for your 2020 income expectations, please contact.