Protests Cause California to Shutdown

It is reported that all California state departments and agencies have been asked to close their offices, in all cities’ downtown areas today, Monday June 1st, in preparation for possible protests.  In Los Angeles County, all 38 courthouses will be closed Monday.

Wilson Tax Law Group, APLC (www.wilsontaxlaw.com) is a boutique Orange County tax controversy law firm that specializes in representation of individuals and businesses before federal and state tax authorities with audits, appeals, FBAR, offshore compliance, litigation and criminal tax defense.  Firm founder and managing shareholder, Joseph P. Wilson, is a former Federal tax prosecutor, trial attorney for the IRS and trial attorney for the Franchise Tax Board.  The firm is entirely comprised of ex-IRS attorneys and Assistant US Attorneys.

For further information, or to arrange a consultation please contact: Wilson Tax Law Group, APLC

Newport Beach and Yorba Linda, California

Tel: (949) 397-2292 (Newport Beach Office)

Tel: (714) 463-4430 (Yorba Linda Office)

IRS Extends Covid-19 Tax Relief to Alien Individuals

IRS updated its FAQs for Individuals Claiming the Medical Condition Exception on May 29. 2020 as follows:

The virus that causes COVID-19 has created a global outbreak (the COVID-19 Emergency) during which some alien individuals, who are present in the United States, have fallen or may fall ill with COVID-19 or experience other medical conditions or medical problems. Some of these individuals may have intended to leave the United States but were unable to leave due to a medication condition or problem, as described in section 7701(b)(3)(D)(ii). These individuals may be eligible to claim the medical condition exception to exclude certain days of U.S. presence from the substantial presence test, described in section 7701(b)(3), provided they meet the requirements described in section 7701(b)(3)(D)(ii) and section 301.7701(b)-3(c) (Medical Condition Exception). Alien individuals who are eligible to claim the Medical Condition Exception generally must file Form 8843, Statement for Exempt Individuals and Individuals With a Medical Condition , to obtain this exception, which requires a signed statement from a physician or other medical official that the alien individual was unable to leave the United States due to a medical condition or medical problem.

Due to considerations unique to the COVID-19 Emergency, it may be difficult to obtain a signed statement by a physician or other medical official attesting to the alien individual's inability to leave due to a medical condition. Accordingly, these FAQs modify the requirements for completing Part V of Form 8843 for certain alien individuals claiming the Medical Condition Exception during calendar year 2020. These FAQs also provide information regarding relevant record keeping requirements for persons filing Form 8843 without a physician's statement, either pursuant to these FAQs or the relief granted in Rev. Proc. 2020-20. Rev. Proc. 2020-20, published on May 11, 2020, provides relief for certain nonresident alien individuals stranded in the United States due to the COVID-19 Emergency; it describes procedures for Eligible Individuals to claim the COVID-19 Medical Condition Travel Exception, pursuant to which an Eligible Individual can exclude a single period of up to 60 consecutive calendar days of presence in the United States for purposes of applying the substantial presence test.

Q 1. Will an alien individual who intended to but is or was unable to leave the United States on the individual's planned departure date due to a medical condition or medical problem in calendar year 2020 be required to obtain a physician's statement as required by Part V of Form 8843?

A1. Any alien individual who is eligible and fulfills the requirements to claim the Medical Condition Exception may file the Form 8843 without a physician's statement to cover a single period of up to 30 consecutive calendar days in calendar year 2020 (30-Day Medical Condition). This FAQ does not modify the eligibility requirements to claim the Medical Condition Exception, only the procedures for claiming the exception on Part V of Form 8843 and only with respect to a single period of up to 30 consecutive calendar days of presence in the United States in calendar year 2020.

Pursuant to the Medical Condition Exception, any days of presence for which an alien individual is eligible and claims a 30-Day Medical Condition will be excluded for purposes of the substantial presence test. The exemption from the Form 8843 requirement to obtain a physician's statement for a 30-Day Medical Condition can be claimed in addition to the relief provided in Rev. Proc. 2020-20. The instructions to Form 8843 for 2020 will reflect the 30-Day Medical Condition contemplated by this FAQ.

Q2. What types of documentary evidence should alien individuals retain to support their eligibility for the 30-Day Medical Condition?

A2. In lieu of a physician's statement, alien individuals claiming the 30-Day Medical Condition should retain documentary evidence that substantiates their medical condition, their inability to leave due to the medical condition, and the period of the medical condition, such as (i) evidence of consultations with a heath care provider (for example, a phone bill or a text message or email from the health care provider), (ii) receipts related to healthcare purchases, (iii) evidence of canceled or changed travel reservations, or (iv) official medical records or written healthcare correspondence that the individual received (for example, automated responses instructing an individual to self-isolate). These documents should not be submitted with the Form 8843, but alien individuals claiming the 30-Day Medical Condition should be prepared to produce these records if requested by the IRS.

Q3. How should alien individuals who only claim the 30-Day Medical Condition complete Part V of Form 8843 (the section of the form applicable to individuals claiming the Medical Condition Exception)?

A3. For those claiming a 30-Day Medical Condition without claiming relief under Rev. Proc. 2020-20 or any other excluded days pursuant to the Medical Condition Exception, the alien individual should write “30-Day Medical Condition” and then describe in detail the 30-Day Medical Condition that prevented the alien individual from leaving the United States under Line 17a in Part V of Form 8843. When determining the information to include in line 17a, an alien individual should provide relevant information so that the individual can clearly demonstrate qualification for the Medical Condition Exception if the Form 8843 is later reviewed by the IRS with the corresponding documentary evidence discussed in FAQ 2, as applicable. Lines 17b and 17c should be completed consistently with the form's instructions. Line 18 of the form should be left blank. As described in FAQ 2, third-party documentary evidence of an alien individual's medical condition should not be submitted with the form, but should be retained by the alien individual.

Q4. How should alien individuals who claim multiple Medical Condition Exceptions complete Part V of Form 8843?

A 4. An alien individual may be able to claim multiple Medical Condition Exceptions and should file a single Form 8843 enumerating all the applicable Medical Condition Exceptions on line 17a. The alien individual should attach a separate statement with respect to each Medical Condition Exception being claimed along with the relevant corresponding information as outlined in Rev. Proc. 2020-20, in FAQ 3, or the existing instructions, as applicable. As an example, line 17a could read:

“Condition 1: COVID-19 MEDICAL CONDITION TRAVEL EXCEPTION;

Condition 2: 30-DAY MEDICAL CONDITION,”

Lines 17b and 17c of Part V should be left blank, but the relevant information for each applicable exception, as described in Rev. Proc. 2020-20 and in FAQ 3, along with the dates that would otherwise be reflected under line 17b and line 17c, would be included in each separate statement. Neither of these conditions require a physician's statement, and thus line 18 should be left blank. Note, however, if an alien individual is also claiming a Medical Condition Exception that requires a physician's statement, the signature and relevant information from line 18 should be included in the separate attachment related to that medical condition.

Q5. What types of documentary evidence should Eligible Individuals retain to support their eligibility for the relief provided under Rev. Proc. 2020-20?

A5. An Eligible Individual claiming relief under Rev. Proc. 2020-20 should retain evidence of the individual's presence in the United States during the individual's claimed COVID-19 Emergency Period (such as a Customs and Border Protection Form I-94 showing the individual's entries into the United States, hotel receipts, or travel reservations, including confirmation of changes or cancellations). If the Eligible Individual was actually ill or advised to self-quarantine in the United States during the individual's excluded days under the revenue procedure, he or she may also retain the documents described in FAQ 2 to demonstrate presence in the United States through U.S.-based medical records and treatments, though failure to document an actual illness will not affect eligibility to claim relief under Rev. Proc. 2020-20.

An Eligible Individual who does not qualify for the presumption of an intent to leave the United States outlined in section 4.02 of Rev. Proc. 2020-20 (meaning, the individual has applied, or otherwise taken steps, to become a lawful permanent resident of the United States but is not yet a lawful permanent resident), should also retain any documents that may support a “facts and circumstances” analysis of the Eligible Individual's intent to leave the United States under section 301.7701(b)-3(c)(2). These documents should not be submitted with the Form 8843, but Eligible Individuals claiming relief under Rev. Proc. 2020-20 should be prepared to produce these records if requested by the IRS.

Wilson Tax Law Group, APLC (www.wilsontaxlaw.com) is a boutique Orange County tax controversy law firm that specializes in representation of individuals and businesses before federal and state tax authorities with audits, appeals, FBAR, offshore compliance, litigation and criminal defense. The firm was founded in 2014 by Joseph P. Wilson, a former Federal tax prosecutor, trial attorney for the IRS and trial attorney for the Franchise Tax Board.

For further information, or to arrange a consultation please contact: Wilson Tax Law Group, APLC

Newport Beach and Yorba Linda, California

Tel: (949) 397-2292 (Newport Beach Office)

Tel: (714) 463-4430 (Yorba Linda Office)

IRS Introduces Prepaid Debit Cards for Economic Impact Payments

The IRS has introduced a prepaid debit card known as The Economic Impact Payment Card for Economic Impact Payments (EIPs) to some taxpayers. The prepaid debit card is sponsored by the Treasury Department’s Bureau of the Fiscal Service, managed by Money Network Financial, LLC and issued by Treasury’s financial agent, MetaBank. Further, the determination of which taxpayers receive a debit card would be made by the Bureau of the Fiscal Service. If a taxpayer receives the prepaid debit card, it would arrive in a plain envelope from "Money Network Cardholder Services.". Moreover, taxpayers who receive their EIPs by prepaid debit card can do the following without any fees:

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  make purchases online and at any retail location where Visa is accepted;

  
  


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  get cash from in-network ATMs;

  
  


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  transfer funds to their personal bank account; and

  
  


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  check their card balance online, by mobile app or by phone.

  
  

In addition, the IRS has requested taxpayers to often check the EIP and the Get My PaymentFAQs for latest additions. Some of the common queries related to the prepaid debit cards include: (1) whether taxpayers can have their EIPs sent to their prepaid debit card; (2) whether IRS would send the prepaid debit cards; or (3) whether taxpayers can specifically ask the IRS to send the EIPs to them as a debit card. Additionally, the Service has urged taxpayers to be on the lookout for scams related to the EIPs and go directly and solely to the IRS website for official information. Finally, the IRS has advised taxpayers to visit EIPcard.com for more information about prepaid debit cards

Wilson Tax Law Group, APLC (www.wilsontaxlaw.com) is a boutique Orange County tax controversy law firm that specializes in representation of individuals and businesses before federal and state tax authorities with audits, appeals, FBAR, offshore compliance, litigation and criminal defense. The firm was founded in 2014 by Joseph P. Wilson, a former Federal tax prosecutor, trial attorney for the IRS and trial attorney for the Franchise Tax Board.

For further information, or to arrange a consultation please contact: Wilson Tax Law Group, APLC

Newport Beach and Yorba Linda, California

Tel: (949) 397-2292 (Newport Beach Office)

Tel: (714) 463-4430 (Yorba Linda Office)

 

IRS and Treasury Announce Expanded Tax Relief Measures; Extend Deadlines

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The IRS and Treasury have announced special federal income tax return filing and payment relief in response to the ongoing Coronavirus (COVID-19) emergency. Taxpayers do not need to file any additional forms or call the IRS to qualify for this automatic federal tax filing and payment relief. Additional guidance can be sought here.

Extension of Deadlines

A variety of tax-filing and payment deadlines falling on or after April 1, 2020, and before July 15, 2020, are postponed until July 15, 2020. Federal tax payments can be deferred to July 15 without penalties and interest, regardless of the amount owed. This deferment applies to all taxpayers, including individuals, trusts, estates, corporations and other non-corporate tax filers as well as those who pay self-employment tax. Taxpayers do not need to file any additional forms or call the IRS to qualify for this automatic federal tax filing and payment relief. Individual taxpayers who need additional time to file beyond the July 15 deadline, can request a filing extension by (1) filing Form 4868, Application for Automatic Extension of Time To File U.S. Individual Income Tax Return; and (2) submitting an electronic payment and selecting Form 4868 or extension as the payment type. However, taxes would still be due by the July 15 due date.

Scheduling and Rescheduling Payments

Taxpayers can schedule their payment electronically online, by phone or using their mobile device and the IRS2Go app. Moreover, those who cannot pay the full amount owed by July 15 may qualify for a payment plan or can apply for an offer in compromise. Penalties and interest will begin to accrue on unpaid tax liability beginning July 16. Those looking to reschedule or schedule their federal tax payments can use the (1) Electronic Federal Tax Payments System; and (2) debit, credit card or digital wallet. Finally, taxpayers who filed electronically and scheduled their payment with an electronic funds withdrawal, and want to reschedule their payment to the July 15 due date, can call the e-file Payment Services automated line at 1-888-353-4537 to cancel their payment no later than 11:59 p.m. Eastern time.

 

Qualifying Employers Entitled to Refundable Credits for Funding Coronavirus-Related Paid Leave

The IRS has urged qualifying employers to utilize the tax credits they are entitled to for covering the costs associated with providing paid sick leave, paid family and medical leave to employees unable to work because of the coronavirus (COVID-19). These credits are refundable; if the amount of the credit exceeds the amount of tax owed, the remainder is refunded to the business or organization. These credits, provided under the Families First Coronavirus Response Act (P.L. 116-127), are available to eligible employers beginning April 1, 2020, for qualifying leave they provide between April 1, 2020, and December 31, 2020.

Eligible Employers

Eligible employers comprise of businesses and tax-exempt organizations with fewer than 500 full-time and part-time employees within the United States or any U.S. territory or possession and that have to meet certain employer paid leave requirements.

Paid Sick Leave Requirement and Credit

Employees of eligible employers who are unable to work or telework because they are quarantined or experiencing COVID-19 symptoms and seeking a medical diagnosis can receive up to 80 hours of paid sick leave. This pay is at their regular rate of pay or, if higher, the applicable minimum wage, up to $511 per day and $5,110 in total. The eligible employer is entitled to a fully refundable tax credit equal to the required paid sick leave wages. Eligible employers can also get an additional credit for the employer’s share of Medicare tax imposed on the qualified sick leave wages and the cost of maintaining health insurance coverage for the employee during the sick leave period. The employer is not subject to the employer portion of Social Security tax on those wages.

Paid Family and Medical Leave Requirement and Credit

In addition to the paid sick leave credit, an employee who is unable to work or telework because of a need to care for a child whose school or place of care is closed or whose child-care provider is unavailable due to COVID-19, is entitled to paid family and medical leave equal to 2/3 of the employee’s regular pay, up to $200 per day and $10,000 in total. Up to 10 weeks of qualifying leave can be counted toward the paid family leave credit. An employee qualifies for paid family and medical leave if they have been on an employer’s payroll for 30 calendar days or more.

The eligible employer is entitled to a fully refundable tax credit equal to the required paid family leave wages. Eligible employers can also get an additional credit for the employer’s share of Medicare tax imposed on those wages and its cost of maintaining health insurance coverage for the employee during the family leave period. The eligible employer isn’t subject to the employer portion of Social Security tax on those wages.

Procedure for Claiming Credits

Eligible employers report their total qualified leave wages and the related credits for each quarter on their federal employment tax return, usually Form 941, Employer’s Quarterly Federal Tax Return. They can receive the benefit of the credits by reducing their federal employment tax deposits for that quarter by the amount of the qualified leave wages, allocable qualified health plan expenses, and the employer’s share of Medicare tax on the wages. They will account for the reduction in deposits due to the leave credits on the Form 941 they file at the end of the quarter. If employers don’t have enough federal employment taxes to cover the amount of the credits, after they have deferred deposits of employer Social Security taxes, they may request an advance payment of the credits from the IRS by submitting Form 7200, Advance Payment of Employer Credits Due to COVID-19. They may fax their completed forms to 855-248-0552.

Wilson Tax Law Group, APLC (www.wilsontaxlaw.com) is a boutique Orange County tax controversy law firm that specializes in representation of individuals and businesses before federal and state tax authorities with audits, appeals, FBAR, offshore compliance, litigation and criminal defense. The firm was founded in 2014 by Joseph P. Wilson, a former Federal tax prosecutor, trial attorney for the IRS and trial attorney for the Franchise Tax Board.

For further information, or to arrange a consultation please contact: Wilson Tax Law Group, APLC

Newport Beach and Yorba Linda, California

Tel: (949) 397-2292 (Newport Beach Office)

Tel: (714) 463-4430 (Yorba Linda Office)

Qualifying Employers Entitled to Refundable Credits for Funding Coronavirus-Related Paid Leave

The IRS has urged qualifying employers to utilize the tax credits they are entitled to for covering the costs associated with providing paid sick leave, paid family and medical leave to employees unable to work because of the coronavirus (COVID-19). These credits are refundable; if the amount of the credit exceeds the amount of tax owed, the remainder is refunded to the business or organization. These credits, provided under the Families First Coronavirus Response Act (P.L. 116-127), are available to eligible employers beginning April 1, 2020, for qualifying leave they provide between April 1, 2020, and December 31, 2020.

Eligible Employers

Eligible employers comprise of businesses and tax-exempt organizations with fewer than 500 full-time and part-time employees within the United States or any U.S. territory or possession and that have to meet certain employer paid leave requirements.

Paid Sick Leave Requirement and Credit

Employees of eligible employers who are unable to work or telework because they are quarantined or experiencing COVID-19 symptoms and seeking a medical diagnosis can receive up to 80 hours of paid sick leave. This pay is at their regular rate of pay or, if higher, the applicable minimum wage, up to $511 per day and $5,110 in total. The eligible employer is entitled to a fully refundable tax credit equal to the required paid sick leave wages. Eligible employers can also get an additional credit for the employer’s share of Medicare tax imposed on the qualified sick leave wages and the cost of maintaining health insurance coverage for the employee during the sick leave period. The employer is not subject to the employer portion of Social Security tax on those wages.

Paid Family and Medical Leave Requirement and Credit

In addition to the paid sick leave credit, an employee who is unable to work or telework because of a need to care for a child whose school or place of care is closed or whose child-care provider is unavailable due to COVID-19, is entitled to paid family and medical leave equal to 2/3 of the employee’s regular pay, up to $200 per day and $10,000 in total. Up to 10 weeks of qualifying leave can be counted toward the paid family leave credit. An employee qualifies for paid family and medical leave if they have been on an employer’s payroll for 30 calendar days or more.

The eligible employer is entitled to a fully refundable tax credit equal to the required paid family leave wages. Eligible employers can also get an additional credit for the employer’s share of Medicare tax imposed on those wages and its cost of maintaining health insurance coverage for the employee during the family leave period. The eligible employer isn’t subject to the employer portion of Social Security tax on those wages.

Procedure for Claiming Credits

Eligible employers report their total qualified leave wages and the related credits for each quarter on their federal employment tax return, usually Form 941, Employer’s Quarterly Federal Tax Return. They can receive the benefit of the credits by reducing their federal employment tax deposits for that quarter by the amount of the qualified leave wages, allocable qualified health plan expenses, and the employer’s share of Medicare tax on the wages. They will account for the reduction in deposits due to the leave credits on the Form 941 they file at the end of the quarter. If employers don’t have enough federal employment taxes to cover the amount of the credits, after they have deferred deposits of employer Social Security taxes, they may request an advance payment of the credits from the IRS by submitting Form 7200, Advance Payment of Employer Credits Due to COVID-19. They may fax their completed forms to 855-248-0552.

Wilson Tax Law Group, APLC (www.wilsontaxlaw.com) is a boutique Orange County tax controversy law firm that specializes in representation of individuals and businesses before federal and state tax authorities with audits, appeals, FBAR, offshore compliance, litigation and criminal defense. The firm was founded in 2014 by Joseph P. Wilson, a former Federal tax prosecutor, trial attorney for the IRS and trial attorney for the Franchise Tax Board.

For further information, or to arrange a consultation please contact: Wilson Tax Law Group, APLC

Newport Beach and Yorba Linda, California

Tel: (949) 397-2292 (Newport Beach Office)

Tel: (714) 463-4430 (Yorba Linda Office)

Qualifying Employers Entitled to Refundable Credits for Funding Coronavirus-Related Paid Leave

The IRS has urged qualifying employers to utilize the tax credits they are entitled to for covering the costs associated with providing paid sick leave, paid family and medical leave to employees unable to work because of the coronavirus (COVID-19). These credits are refundable; if the amount of the credit exceeds the amount of tax owed, the remainder is refunded to the business or organization. These credits, provided under the Families First Coronavirus Response Act (P.L. 116-127), are available to eligible employers beginning April 1, 2020, for qualifying leave they provide between April 1, 2020, and December 31, 2020.

Eligible Employers

Eligible employers comprise of businesses and tax-exempt organizations with fewer than 500 full-time and part-time employees within the United States or any U.S. territory or possession and that have to meet certain employer paid leave requirements.

Paid Sick Leave Requirement and Credit

Employees of eligible employers who are unable to work or telework because they are quarantined or experiencing COVID-19 symptoms and seeking a medical diagnosis can receive up to 80 hours of paid sick leave. This pay is at their regular rate of pay or, if higher, the applicable minimum wage, up to $511 per day and $5,110 in total. The eligible employer is entitled to a fully refundable tax credit equal to the required paid sick leave wages. Eligible employers can also get an additional credit for the employer’s share of Medicare tax imposed on the qualified sick leave wages and the cost of maintaining health insurance coverage for the employee during the sick leave period. The employer is not subject to the employer portion of Social Security tax on those wages.

Paid Family and Medical Leave Requirement and Credit

In addition to the paid sick leave credit, an employee who is unable to work or telework because of a need to care for a child whose school or place of care is closed or whose child-care provider is unavailable due to COVID-19, is entitled to paid family and medical leave equal to 2/3 of the employee’s regular pay, up to $200 per day and $10,000 in total. Up to 10 weeks of qualifying leave can be counted toward the paid family leave credit. An employee qualifies for paid family and medical leave if they have been on an employer’s payroll for 30 calendar days or more.

The eligible employer is entitled to a fully refundable tax credit equal to the required paid family leave wages. Eligible employers can also get an additional credit for the employer’s share of Medicare tax imposed on those wages and its cost of maintaining health insurance coverage for the employee during the family leave period. The eligible employer isn’t subject to the employer portion of Social Security tax on those wages.

Procedure for Claiming Credits

Eligible employers report their total qualified leave wages and the related credits for each quarter on their federal employment tax return, usually Form 941, Employer’s Quarterly Federal Tax Return. They can receive the benefit of the credits by reducing their federal employment tax deposits for that quarter by the amount of the qualified leave wages, allocable qualified health plan expenses, and the employer’s share of Medicare tax on the wages. They will account for the reduction in deposits due to the leave credits on the Form 941 they file at the end of the quarter. If employers don’t have enough federal employment taxes to cover the amount of the credits, after they have deferred deposits of employer Social Security taxes, they may request an advance payment of the credits from the IRS by submitting Form 7200, Advance Payment of Employer Credits Due to COVID-19. They may fax their completed forms to 855-248-0552.

Wilson Tax Law Group, APLC (www.wilsontaxlaw.com) is a boutique Orange County tax controversy law firm that specializes in representation of individuals and businesses before federal and state tax authorities with audits, appeals, FBAR, offshore compliance, litigation and criminal defense. The firm was founded in 2014 by Joseph P. Wilson, a former Federal tax prosecutor, trial attorney for the IRS and trial attorney for the Franchise Tax Board.

For further information, or to arrange a consultation please contact: Wilson Tax Law Group, APLC

Newport Beach and Yorba Linda, California

Tel: (949) 397-2292 (Newport Beach Office)

Tel: (714) 463-4430 (Yorba Linda Office)