Maintaining compliance with state tax laws can be challenging for individuals and businesses, especially those companies that operate across state lines. Unlike the federal government, each state enacts its own tax laws, which often vary from jurisdiction to jurisdiction. These differences can be confusing and open the door to potential reporting issues with income and other taxes. Not only does this result in missed tax payments, but it can also cause the assessment of additional fines, penalties, and interest.

Are you planning to make a significant capital investment? If so, all businesses, including lessors and lessees, may want to make those purchases soon, as the tax-saving opportunity created by 100% bonus depreciation is set to expire at the end of the year, barring additional action from Congress. This means that starting on January 1, 2023, bonus depreciation will begin to phase out over four years, ultimately ending in 2026.

On May 20, 2022, the IRS announced that interest rates on overpayments and underpayments of tax will increase for the third quarter of 2022, which begins on July 1.

New Jersey and Pennsylvania-area employers hit with IRS penalties over failure to pay income taxes related to the Employee Retention Credit (ERC) may have some relief on the way.

The economic effects of the COVID-19 pandemic on businesses have primarily passed. The last parcel of federal relief, the American Rescue Plan Act, provided one final economic boost for individuals and businesses, and since then, popular federal relief programs, including the Paycheck Protection Program, Shuttered Venue Operators Grant, and the Employee Retention Credit (ERC), has expired.

The Energy Efficient Home Credit was established by the Energy Policy Act of 2005 to allow eligible contractors to claim a $2,000 tax credit for each newly constructed or significantly reconstructed energy-efficient qualifying residence. The tax credit (Section 45L of the Internal Revenue Code) was set to expire at the end of 2020 but was extended by the Consolidated Appropriations Act of 2021 to include residences sold or leased on or before December 31, 2021. The credit can be retroactively taken up to three years.

It’s no secret the IRS is facing significant operational challenges attempting to work through the backlog of unprocessed returns, issuing refund payments, maintaining customer service, all while preparing for the 2021 tax season. And attempts to streamline existing workflows and standardize tax reporting have added another layer of complexity. For example, recently, changes were made to how pass-through entities (partnerships and S-corporations) report international tax-related items. Previously, this information was reported on IRS Form K-1, but recent changes mean these details are now to be reported in various places on Schedule K-2 or Schedule K-3.

Dealing with the IRS can be challenging for many businesses and individual taxpayers, and because of this most would prefer not to engage with the agency, whether it is a missing return, request for additional information, or an outstanding balance. Despite the aversion, resolving issues and concerns has traditionally been a process that unfolded according to certain timeframes.

On January 28, 2022, New Jersey Governor Phil Murphy signed bills S844 and S2533, raising the threshold for nonprofit audits from $500,000 to $1M, effective immediately. Therefore, New Jersey nonprofits whose gross receipts exceed $500,000, but do not exceed $1M, no longer need an audit.

Businesses have been on a roller coaster these past two years. In addition to managing the economic fallout from COVID-19, legislators passed dozens of tax laws and stimulus packages that required management to make important financial decisions on the fly. So, as we enter the 2022 tax filing season, let’s recap the various COVID-19 relief packages and how some of the provisions could impact the preparation and filing of your business taxes.