Questions are on the uptick. Here are a few of them…and our answers. 

How do I report my fantasy sports winnings? 

Likely as gambling income. DraftKings, FanDuel and similar online sites let individual players vie for cash prizes that are based on the performance of professional athletes. According to IRS attorneys, the entry fee paid by the user is akin to a wager. So, as a result, the applicable tax rules for gambling should apply for these daily fantasy sports contests. You report winnings on Schedule 1 of the Form 1040. Losses are deductible by itemizers on Schedule A to the extent of reported winnings. Some gamblers can file Schedule C if their gambling activity is extensive enough to rise to the level of a trade or business, but this can be a difficult hill to climb. 

I just inherited from my mom EE savings bonds that haven’t reached maturity. Will I owe federal income tax on the accrued but untaxed pre-death interest? 

It depends. We assume your mom opted to defer reporting the bond interest as income until the earlier of the year the bonds mature or when they’re cashed in. Now that she has died, her executor can opt to include on her final income tax return all pre-death interest earned on the bonds. If this is done, then you would report only post-death interest on your 1040 in the year the bonds mature or are redeemed. If the executor doesn’t include the interest income on your mom’s final return, you will owe taxes on all bond interest in the year of maturity or redemption. 

What federal tax breaks are available if I decide to buy an electric vehicle? 

Presently, the federal income tax credit ranges from $2,500 to $7,500.It applies only to purchases of new electric cars, and there are various limitations. The House-passed Build Back Better bill would increase the tax break to a maximum of $12,500 for new electric vehicles bought in 2022 through 2031. The vehicle’s manufacturer’s suggested retail price can’t exceed $55,000 for sedans, or $80,000 for vans, SUVs or pickup trucks. The credit would begin to phase out for taxpayers with modified adjusted gross income over $500,000 for joint filers, $375,000 for household heads and $250,000 for single or married-filing-separate filers. The bill would also allow a lesser credit for people who buy used electric vehicles. 

Will these proposed higher credits survive in the Senate?

It’s too soon to tell. 

Will Congress limit the gain deferral from like-kind exchanges of realty? 

It’s looking very unlikely. When real property used in a business or held for investments is exchanged for like-kind real property, the gain that would otherwise be triggered if the realty were sold can be deferred. President Biden wanted to cap the amount of deferred gain each year at $500,000 for each taxpayer…$1 million in the case of married couples filing a joint return. Gains over the $500,000 and $1 million caps would then be immediately taxed. However, this idea didn’t make it into the House-passed $1.75 trillion spending bill.

Taxes and Education

Now that kids are back in college, let’s look at two tax breaks for education.  Distributions from 529 plans used for college are tax-free. Eligible expenses include the cost of room and board for students enrolled at a college or university at least half-time, tuition, books, supplies, fees, computers and internet access. Funds can be withdrawn tax-free to cover off-campus housing, food and utilities, but the distribution can’t exceed the room and board allowance the college includes in the cost of attendance. You should be able to get this from the school’s website. 

The American Opportunity Tax Credit is worth up to $2,500 per student for each of the first four years of college. This break starts to phase out for joint filers with modified adjusted gross incomes above $160,000…$80,000 for single filers and household heads…and ends when modified AGI tops $180,000 and $90,000. The student must be in school at least half-time, and eligible expenses include tuition, books and required fees, but not the cost of room and board. 

Coordinating these two education tax breaks can be somewhat tricky because you cannot use the same college expenses for both benefits. For example, if you take $8,000 from a 529 plan for tuition, you can’t also use that same $8,000 as a qualifying education expense in figuring your American Opportunity Tax Credit. 

Feel free to reach out to our team if you have questions.

Where Is My Refund?

Individual Tax Returns and Refunds

Let’s take a look at the 2021 filing season. Millions of individuals still await refunds from timely filed 2020 tax returns. As of Sept. 18, IRS had a backlog of 7.8 million individual returns that require manual processing. Some need further review because of mistakes with refundable credits or math errors. About 9 million math error notices were mailed to taxpayers from June 1 through July 15, compared with 628,997 for the same period last year. Others are paper returns filed this year that need to be manually processed by IRS.  The good news is that IRS is making progress on processing returns. As of June 25, there were 16.7 million 2019 and 2020 Forms 1040 waiting for action.  Amended-return filers also need lots of patience this filing season. As of Sept. 18, IRS had more than 2.8 million Forms 1040-X yet to process. Unfortunately, there’s not much you can do if you’re affected by the delay, other than continuing to check the “Where’s My Refund” tool on IRS’s website.

Business Tax Returns

Business tax return filers are being caught up in the turmoil, too. IRS has 2.3 million unprocessed employment tax returns filed on Form 941. And it is way behind on reviewing Forms 1139 and 1045. The CARES Act reversed the general ban on carry-backs of net operating losses by requiring NOLs arising in 2018, 2019 or 2020 to first be carried back five years, unless the taxpayer elects to carry the NOLs forward. The law also expanded the 80% taxable income limit for utilizing NOLs for 2018 to 2020. After IRS temporarily let firms file claims via fax for quick refunds of NOL carry-backs or carry-forwards, the agency was inundated with such filings, and it’s still experiencing longer-than-normal processing backlogs. 

What You Can Do

Want to call IRS for help with a tax question or to check on your refund? You will be one of the lucky few if you can actually reach a live person. So far in 2021, only 9% of callers reached a live customer service representative. One reason for this dismal level of service is the historic number of callers. IRS has received over 200 million calls on its various phone lines so far in 2021, more than five times the usual number. In addition to the normal callers every year, people are calling IRS often and repeatedly about their delayed refunds, the status of their stimulus payments or monthly child tax credit payments, how to account for the numerous retroactive tax changes, and so much more. You might have better luck if you call this fall, say, in late Oct. or Nov. But don’t expect a detailed answer if your query relates to a delayed refund. The operator typically can’t say much beyond what you can see on “Where’s My Refund.”T

The Team at BJ Kane & Co. are always here to help. If you need help navigating though the Refund and Tax Return process please do not hesitate to reach out to our team.

The Five Main Reasons Professional Athletes Go Broke

Spoiler: lack of education and/or business savvy isn't among them.

Below is an article by Adam Hess published yesterday on Wealth Management.com. We had to share it.

Professional athletes know they can go broke if they are not careful, but that knowledge alone may not be enough. They hear it from agents, teammates, and even the leagues they play in. Sports Illustrated estimates 78% of NFL players face financial trouble within two years of leaving the game, and another 60% of NBA players are in the same boat five years after retirement. On average, NFL players last 3.3 years in the league, while NHL, MBA, and MLB careers last 3.5, 4.8, and 5.6 years, respectively.

Despite the warnings, athletes keep running through their money. Why? Is it a lack of education or business savvy? Demonstrably not. Lots of business builders are college or even high-school dropouts. And establishing, for example, a successful chain of convenience stores does not confer an automatic understanding of investment principles and financial prudence, just as playing a sport for a living does not preclude it.

But athletes face a challenge early in life that other standout achievers encounter later, something called a "liquidity event." This life-altering infusion of assets can be jarring even for those with decades of adult experience in business,” says Nate Johnson, my colleague at CW Boss. “They still have to weigh opportunities to help loved ones, have fun with friends and colleagues, and build more wealth.”

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To help young athletes dodge obstacles and navigate their careers with a solid understanding of what can go wrong, we present the five most dangerous financial pitfalls for pro athletes.

1.The “need” to support everyone

Supporting an entourage and extended family is a big temptation for the newly wealthy, particularly if they come from an impoverished background. as is not uncommon among pro athletes. But over time, it is stressful, and it can still leave a client feeling guilty for not providing even more support. This is not fair to an athlete whose career can end suddenly with injury. Who is going to support the athlete then? To be in a position to help loved ones, your clients must pay themselves first, and then pay their future selves second. Only then can they consider continuing to provide support to the relatives and friends who made sacrifices to help them early on.

2.Children are expensive

Pro athletes get going early on launching their careers and making good money. This can lead to marriage, homeownership, and having kids—planned or not—earlier than most of their peers. Raising a child to age 18 in the US costs $233,610, according to the U.S. Department of Agriculture. That's without college, which typically costs more than $25,000 a year. A U.S. private high school costs on average $16,000 a year ($37,000-plus for boarding schools). In short, children are expensive, so where planning is feasible, athletes should view these costs as though the big paychecks have already stopped. When planning for children, financial projections should be based on what the athlete has right now in savings, not what may come in in the future.

3.Divorce is expensive

Half of the first marriages end in divorce, and the likelihood of this outcome increases for pro athletes. Without a prenuptial agreement, an athlete can take a huge financial hit. Further, divorce settlements are based on a snapshot in time. An athlete who divorces in the middle of a successful career may have no problem meeting alimony and/or child support obligations while the big paychecks are rolling in; but once a career is over and their income shrinks, your client may need a good lawyer to renegotiate the terms of the divorce to reflect their new financial reality.

4.Keeping up with the Joneses

Athletes who prioritize material wealth—cars, houses, jewelry, etc.—over financial discipline, strategic investing, and cultivating additional revenue sources tend to have money troubles. “Things get worse when there's competition among teammates to own the most eye-catching luxuries,” says Johnson. “Especially when some teammates make 10, 15, or even 30 times what an impressionable rookie earns.” While it is hard to watch colleagues buying and enjoying luxury possessions, a young athlete who prioritizes saving and investing stands a greater chance of being able to enjoy the good life later, confident he or she will not break the bank.

5.Overconfidence

Athletes who think the money will never stop, either because their career will be long or they will smoothly move to another lucrative field, should remember what COVID-19 taught us about the unpredictable. No one can foresee the length of a particular athlete's playing career or guarantee a soft landing in the next phase of his life. Athletes who save understand that a cautious and respectful approach to their finances confers more financial freedom, and more career choices, later on.

When I played pro basketball overseas, I tried not to overspend, because I knew my already tenuous career could end abruptly. After my playing days, I went into financial planning and quickly understood that the tendency to splurge was not specific to athletes. The impact of a significant liquidity event can turn the head of a 60-year-old accountant as readily as that of a young sports prodigy. The young athlete simply has had fewer opportunities and less time to prepare for the responsibilities and rewards of lasting wealth. That's where you come in.

Adam Hess is vice president of CW Boss at Cyndeo Wealth Partners, an RIA in St. Petersburg, Fla. He was a professional basketball player in Europe and Asia from 2004 through 2016.

Our firm works with many professional athletes and we and our partner Comprehensive Wealth Advisors are well versed on how to guide professional athletes to have a long life of wealth and happiness.

Happy Memorial Day

Three ways to support families of the fallen this Memorial Day.

Thank you to all of the men and women who protect our freedom everyday.

Tax Change Highlights

Joe Biden wants to cut a cherished tax break: Stepped-up basis for inherited property

Currently, a decedent’s unrealized gains aren’t hit with income tax at death, and heirs step up their basis in the assets they receive, equal to fair market value on death. Biden’s plan calls for an end to the effects of stepped-up basis for many wealthy individuals.

What would Biden’s proposal do exactly?

It doesn’t adopt a carryover basis regime by which the heir would take the same tax basis in the asset as the decedent. That rule applies to gifts.

It would instead treat death as a realization event for income tax purposes…essentially a deemed taxable sale of the decedent’s assets at fair market value, with any gains and losses reported on the decedent’s final individual tax return. The heirs would continue to get a fair-market-value basis in assets they receive.

Gains of less than $1 million would not be taxed. Plus other exceptions:

Property donated to charity would be exempt. Family-owned businesses and farms would escape tax, provided heirs run them. And the existing gain exclusion of $250,000 (or $500,000) on sales of primary residences would continue to apply.

Let’s illustrate the current rules and Biden’s proposal with a simple example

John’s mother owns stock that she bought years ago for $500,000. When his mom dies, John inherits the stock, which is worth $3 million. Under current law, neither John nor his mom owe income tax on the $2.5 million unrealized gain, and John’s basis in the shares is stepped up to $3 million. Let’s say John sells the stock five years later for $3.6 million. John pays tax at that time on his $600,000 long-term capital gain. If Biden’s proposal is enacted, the stock would be deemed sold upon the death of John’s mom. Her final tax return would reflect gain of $1.5 million ($2.5 million less $1 million exemption) and would show capital gains tax due from the deemed sale.

Taxing unrealized capital gains at death may sound simple, but it’s not

There are lots of complexities that come along with such a sea change: Figuring basis would be tricky, especially for non-marketable assets owned many years. Liquidity issues could lead to forced sales of assets to pay income tax due at death. Asset valuation. A slew of logistic and administrative difficulties. Last but not least, getting all Democrats on board to curtail one of the biggest tax breaks is not a given.

Happy Tax Day

Tax Return and Refund Update

Biden’s plan is a starting point and will not pass Congress as-is.

It is bound to evolve, with many compromises expected to be made over time.  Enacting tax hikes will be difficult in general. There is zero GOP support for higher taxes. Senate Democrats would again have to turn to budget reconciliation to allow tax increases on individuals to pass the Senate with a simple-majority vote. And getting all Democratic senators to support tax increases is not a given.  But even if tax hikes do pass this year, we don’t think they’ll be retroactive.

Consider asking for a penalty waiver under IRS’s first-time abatement policy.

IRS will OK a waiver of the late filing or late payment penalties for filers who pay or arrange to pay the tax due and have been tax-compliant for the past three years. The penalties for late payroll tax deposits and delinquent returns of S corporations or partnerships are also eligible for the waiver if the conditions are satisfied. You have to request the waiver. The abatement isn’t provided automatically. Also, check to see if you have reasonable cause to get the penalty dismissed. 

Filed your 2020 return and awaiting your refund? It could be delayed. 

IRS is holding 16 million individual returns for manual processing. These include returns using 2019 income to figure the 2020 earned income tax credit, returns showing inconsistencies between IRS’s records on stimulus checks paid and the recovery rebate credit reported on the 1040, plus returns with other errors or potential fraud issues. 11 million business and other returns are also delayed. And believe it or not, IRS is still processing some 2019 individual returns. 

Calling IRS’s toll-free line about your refund or other tax queries? 

Good luck in reaching a live person. The agency’s phone service is dismal. As of April 10, IRS employees have answered only 2% of calls to the 1040 number. This means that only one out of 50 calls have gotten through to a live operator, and the average wait time on hold for these lucky callers was 20 minutes. And if you are calling about a delayed refund, expect even more frustration. Even if you can reach a live person, it’s unlikely the operator can help you much. IRS systems don’t give a reason for why a return is needed for further manual review.

New Law Extends COVID Tax Credit for Employers Who Keep Workers On Payroll

According to the IRS published on January 26, 2021;

The Internal Revenue Service urges employers to take advantage of the newly-extended Employee Retention Credit, designed to make it easier for businesses that, despite challenges posed by COVID-19, choose to keep their employees on the payroll.

The Taxpayer Certainty and Disaster Tax Relief Act of 2020, enacted December 27, 2020, made a number of changes to the employee retention tax credits previously made available under the Coronavirus Aid, Relief, and Economic Security Act (CARES Act), including modifying and extending the Employee Retention Credit (ERC), for six months through June 30, 2021. Several of the changes apply only to 2021, while others apply to both 2020 and 2021.

As a result of the new legislation, eligible employers can now claim a refundable tax credit against the employer share of Social Security tax equal to 70% of the qualified wages they pay to employees after December 31, 2020, through June 30, 2021. Qualified wages are limited to $10,000 per employee per calendar quarter in 2021. Thus, the maximum ERC amount available is $7,000 per employee per calendar quarter, for a total of $14,000 in 2021.

Employers can access the ERC for the 1st and 2nd quarters of 2021 prior to filing their employment tax returns by reducing employment tax deposits. Small employers (i.e., employers with an average of 500 or fewer full-time employees in 2019) may request advance payment of the credit (subject to certain limits) on Form 7200, Advance of Employer Credits Due to Covid-19, after reducing deposits. In 2021, advances are not available for employers larger than this.

Effective January 1, 2021, employers are eligible if they operate a trade or business during January 1, 2021, through June 30, 2021, and experience either:

1. A full or partial suspension of the operation of their trade or business during this period because of governmental orders limiting commerce, travel or group meetings due to COVID-19, or

2. A decline in gross receipts in a calendar quarter in 2021 where the gross receipts of that calendar quarter are less than 80% of the gross receipts in the same calendar quarter in 2019 (to be eligible based on a decline in gross receipts in 2020, the gross receipts were required to be less than 50%).

Employers that did not exist in 2019 can use the corresponding quarter in 2020 to measure the decline in their gross receipts. In addition, for the first and second calendar quarters in 2021, employers may elect in a manner provided in future IRS guidance to measure the decline in their gross receipts using the immediately preceding calendar quarter (i.e., the fourth calendar quarter of 2020 and first calendar quarter of 2021, respectively) compared to the same calendar quarter in 2019.

In addition, effective January 1, 2021, the definition of qualified wages was changed to provide:

• For an employer that averaged more than 500 full-time employees in 2019, qualified wages are generally those wages paid to employees that are not providing services because operations were fully or partially suspended or due to the decline in gross receipts.

• For an employer that averaged 500 or fewer full-time employees in 2019, qualified wages are generally those wages paid to all employees during a period that operations were fully or partially suspended or during the quarter that the employer had a decline in gross receipts regardless of whether the employees are providing services.

Retroactive to the March 27, 2020, enactment of the CARES Act, the law now allows employers who received Paycheck Protection Program (PPP) loans to claim the ERC for qualified wages that are not treated as payroll costs in obtaining forgiveness of the PPP loan.

For more information, see COVID-19-Related Employee Retention Credits: How to Claim the Employee Retention Credit FAQs​​​​​​.

Second Draw PPP Loans

The Paycheck Protection Program reopened for the second round for those who qualify. According to the U.S. Small Business Administration:

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Notice: Paycheck Protection Program resumed January 11, 2021 at 9am ET

SBA, in consultation with the U.S. Treasury Department, reopened the Paycheck Protection Program (PPP) for First Draw PPP Loans the week of January 11, 2021. SBA will begin accepting applications for Second Draw PPP Loans on January 13, 2021.

To promote access for smaller lenders and their customers, SBA will initially only accept Second Draw PPP Loan applications from participating community financial institutions (CFIs), which include Community Development Financial Institutions (CDFIs), Minority Depository Institutions (MDIs), Certified Development Companies (CDCs), and Microloan Intermediaries. Paycheck Protection Program lending will reopen to all participating lenders shortly thereafter. At least $25 billion is being set aside for Second Draw PPP Loans to eligible borrowers with a maximum of 10 employees or for loans of $250,000 or less to eligible borrowers in low or moderate income neighborhoods.

Borrowers can be matched with qualified PPP lenders using SBA Lender Match.

Loan details

The Paycheck Protection Program (PPP) now allows certain eligible borrowers that previously received a PPP loan to apply for a Second Draw PPP Loan with the same general loan terms as their First Draw PPP Loan. 

Second Draw PPP Loans can be used to help fund payroll costs, including benefits. Funds can also be used to pay for mortgage interest, rent, utilities, worker protection costs related to COVID-19, uninsured property damage costs caused by looting or vandalism during 2020, and certain supplier costs and expenses for operations.

Maximum loan amount and increased assistance for accommodation and food services businesses

For most borrowers, the maximum loan amount of a Second Draw PPP Loan is 2.5x average monthly 2019 or 2020 payroll costs up to $2 million. For borrowers in the Accommodation and Food Services sector (use NAICS 72 to confirm), the maximum loan amount for a Second Draw PPP Loan is 3.5x average monthly 2019 or 2020 payroll costs up to $2 million.

Who may qualify

A borrower is generally eligible for a Second Draw PPP Loan if the borrower: 

• Previously received a First Draw PPP Loan and will or has used the full amount only for authorized uses

• Has no more than 300 employees; and

• Can demonstrate at least a 25% reduction in gross receipts between comparable quarters in 2019 and 2020.

How and when to apply

You can apply for a Second Draw PPP Loan from January 13, 2021, until March 31, 2021. To promote access for smaller lenders and their customers, SBA will initially only accept Second Draw PPP Loan applications from participating community financial institutions (CFIs). All Second Draw PPP Loans will have the same terms regardless of lender or borrower. 

To be matched with a participating lender, visit SBA Lender Match.

If you wish to begin preparing your application, you can download the following PPP borrower application form to see the information that will be requested from you when you apply with a lender:

• Paycheck Protection Program Second Draw Borrower Application Form (released 01-08-21)

Supplemental materials

• Top-line Overview of Second Draw PPP Loans

• Frequently Asked Questions for Lenders and Borrowers (12-09-20)

• How to Calculate Loan Amounts (06-26-20)

• Frequently Asked Questions for Faith-Based Organizations Participating in the PPP and Economic Injury Disaster Loan Program

• PPP Myth vs. Fact

Affiliation rules

• Paycheck Protection Program Affiliation Rules

• Interim Final Rule for Applicable Affiliation Rules

If you have question or need assistance with the second round PPP application feel free to reach out to our team.

Happy New Year!

From our family to yours Happy New Year. May your new year be filled with Love, Wealth and Health.

Important Legislation Regarding PPP Loans

Just released by Robert W. Wood, contributor to Forbes.com states “Expenses with PPP money are tax deductible, Congress reverses IRS.” According to Mr. Wood;

Can you deduct business expenses? Of course. But can you deduct them if you use forgiven PPP loan money to pay for them? Until now, the debate has raged, with the IRS saying multiple times “no way, no tax deduction.” But finally, Congress has come to the rescue and said that the whole point of the program was to provide needed loan money for wages and other key expenses. The loan forgiveness was key too, saying that despite normal tax rules, if the loan is forgiven, that will not be income. Now the third piece of the puzzle is finally in place, you can still claim normal tax deductions for business expenses paid with PPP money. The latest COVID relief law states that “no deduction shall be denied or reduced, no tax attribute shall be reduced, and no basis increase shall be denied, by reason of the exclusion from gross income provided by [the loan forgiveness provision that says forgiven PPP loans will not count as income].”

The text of the new legislation can be found here. There has been uniform agreement from business that allowing tax deductions should be the rule, which is hardly surprising. But the IRS position has been unmovable. From the beginning, the IRS relied on what it said were traditional tax principles, the tax agency saying that it would be an impermissible double tax benefit to have income on debt forgiveness not to taxed as income, and then to also allow tax deductions for the expenses paid with the forgiven loan money. Some tax lawyers and academics sided with the IRS in this debate. In fact, some groups and news sources objected strongly to allowing the tax deductions, even saying that a change to allow the tax deductions would be a $100 billion tax deduction to the wealthy, or a a $120 billion windfall to the top 1%. Now that the Congress had the last word on this long-debated and highly controversial topic, it is not clear whether all the talk will stop.

But businesses that snapped up the PPP loan money and that spent the money on wages and rent have been wringing their hands as the 2020 tax year comes to a close. The Paycheck Protection Program was the centerpiece of the CARES Act, providing loans to businesses of up to $10M. If you comply, you don’t even have to pay your loan back. What’s more, there is not even any forgiveness of debt income when your loan is forgiven, something that normally is a standard tax result from a forgiven loan. So far, so good, but can businesses claim tax deductions for business expenses? In Notice 2020-32, the IRS denied tax deductions even for expenses that are normally fully deductible. The IRS says allowing a deduction would be a double dip. Congress quickly moved to reverse the IRS in the Small Business Expense Protection Act, S.3612 - 116th Congress (2019-2020). That bill languished until now.

The IRS hasn’t been kind to PPP loans, and to stop people from claiming deductions and then later getting forgiveness, the IRS said no again. The IRS released Revenue Ruling 2020-27 to address situations where a loan is not yet forgiven but might be in the future. In the ruling, the IRS described two situations. In the first, a borrower pays payroll and mortgage interest that are valid PPP expenditures. The borrower applies for forgiveness in November 2020 and satisfied all the requirements under the CARES Act to have it forgiven, but it doesn’t yet have an answer as to whether it will be forgiven.

In the second case, the borrower paid the same type of expenses with its PPP loan, but expects to apply for forgiveness in 2021. In both cases, the IRS says the business cannot deduct these business expenses. The businesses both have a “reasonable expectation” that the loans will be forgiven. The IRS also released Rev. Proc. 2020-51, which provides a safe harbor for PPP borrowers whose loan forgiveness has been partially or fully denied and who wish to claim deductions for otherwise eligible payments on a return, amended return, or administrative adjustment request. All of the IRS releases are out the window now.

For further information from The National Law Review Click HERE. If you have any questions with regards to your specific circumstance feel free to reach out to us by our contact us page on our website.

BJ Kane & Co. Services Reminder

B.J. Kane & Co., P.C. was established in 1986 as a CPA Firm catering to healthcare professionals, located in Northern Virginia, just fifteen minutes from Washington, DC.

Our firm has valuable insight into both taxes and health care, and serves some of the largest health care providers in the Washington Metropolitan area.

Our team has expertise in tax planning and preparation, business consulting, compensation formulas, estate and financial planning, and management advisory services. We use our wide range of strategic business alliances to benefit our clients, and are known for cultivating long-term relationships and expanding top practices. 

We are dedicated to taking our clients to the next level.

Apply for the Rebuild VA Grant Fund Link Correction

In the blog post and newsletter we sent out yesterday, the link to apply for this Grant Fund was incorrect. Here are two links that contain the link to the application as well as a link to the FAQ. We do apologize for the inconvenience. If you have further questions or problems accessing the link feel free to reach out to us at info@bjkane.com.

Governor Northam Invites Small Businesses and Nonprofits to Apply for Up to $100,000 from Rebuild VA Grant Fund

According to Governor Ralph Northam Rebuild VA was launched in August and businesses can still apply. Below is an announcement that was released on October 28th.

Program allotted additional $30 million, eligibility expanded

RICHMOND—Governor Ralph Northam today announced that Rebuild VA, a grant program to help small businesses and nonprofit organizations affected by the COVID-19 pandemic, will expand eligibility criteria and increase the amount of grant money businesses receive.

Rebuild VA launched in August with $70 million from the federal Coronavirus Aid, Relief, and Economic Security (CARES) Act. Governor Northam is directing an additional $30 million to support the expansion of the program. Businesses with less than $10 million in gross revenue or fewer than 250 employees will be eligible under the new criteria, and the maximum grant award will increase from $10,000 to $100,000.

“We started Rebuild VA to help small businesses and nonprofit organizations navigate the impacts of the COVID-19 pandemic,” said Governor Northam. “These changes to the program will ensure that we can provide additional financial assistance to even more Virginians so they can weather this public health crisis and emerge stronger.” 

Rebuild VA will now be open to all types of Virginia small businesses that meet size and other eligibility requirements, from restaurants and summer camps, to farmers and retail shops. Businesses that previously received a Rebuild VA grant will receive a second award correlated with the updated guidelines.

Rebuild VA is administered by the Department of Small Business and Supplier Diversity (SBSD) in partnership with the Department of Housing and Community Development and the Virginia Tourism Corporation, and the Virginia Economic Development Partnership. Eligible businesses and nonprofits must demonstrate that their normal operations were limited by Governor Northam’s Executive Orders Fifty-Three or Fifty-Five, or that they were directly impacted by the closure of such businesses. In September, the program expanded eligibility to supply chain partners of businesses whose normal operations were impacted by the pandemic. 

Rebuild VA funding may be utilized for the following eligible expenses:

• Payroll support, including paid sick, medical, or family leave, and costs related to the continuation of group health care benefits during those periods of leave;

• Employee salaries;

• Mortgage payments, rent, and utilities;

• Principal and interest payments for any business loans from national or state-chartered banking, savings and loan institutions, or credit unions, that were incurred before or during the emergency;

• Eligible personal protective equipment, cleaning and disinfecting materials, or other working capital needed to address COVID-19 response.

For additional information about Rebuild VA and how to submit an application, click on the apply button.

If you or your company needs assistance in applying for Rebuild Va, feel free to reach out to our office at info@bjkane.com.

CARES Act Provider Relief Fund

The Provider Relief Funds supports American families, workers, and the heroic healthcare providers in the battle against the COVID-19 outbreak. HHS distributes $175 billion to hospitals and healthcare providers on the front lines of the coronavirus response.

CARES Act Provider Relief Fund: For Providers

The Provider Relief Fund supports healthcare providers in the battle against the COVID-19 pandemic. Through the Coronavirus Aid, Relief, and Economic Security (CARES) Act and the Paycheck Protection Program and Health Care Enhancement Act (PPPCHE), the federal government has allocated $175 billion in payments to be distributed through the Provider Relief Fund (PRF).

Qualified healthcare providers, services, and support may receive Provider Relief Fund payments for healthcare-related expenses or lost revenue due to COVID-19. Separately, the COVID-19 Uninsured Program reimburses providers for testing and treating uninsured individuals with COVID-19.

These distributions do not need to be repaid to the US government, assuming providers comply with the terms and conditions.

How to Apply for Phase 3 General Distribution

CARES Act Provider Relief Fund: General Information

Phase 1 General Distribution

HHS distributes $50 billion to providers who bill Medicare fee-for-service to provide financial relief during the coronavirus (COVID-19) pandemic. These funds are allocated proportionally to providers' share of 2018 patient revenue. On April 10, 2020, HHS immediately distributed $30 billion to eligible providers throughout the American healthcare system.

CARES Act Provider Relief Fund: Phase 2-3 and General Information

General Distribution ($50 billion)

$50 billion is allocated proportionally to providers' share of 2018 net patient revenue. The allocation methodology is designed to provide relief to providers who bill Medicare fee-for-service, with at least 2% of that provider's gross patient revenue regardless of its payer mix. Payments are determined based on the lesser of 2% of a provider's 2018 (or most recent complete tax year) net patient revenue or the sum of incurred losses for March and April.

Information about the Initial $30 Billion Distribution and Targeted Distributions

Reporting Requirements and Auditing

All recipients of Provider Relief Fund (PRF) payments must comply with the reporting requirements described in the Terms and Conditions and specified in future directions issued by the Secretary.

For Recipients of Payments more than $10,000

Recipients of Provider Relief Fund (PRF) payments exceeding $10,000 in the aggregate must report required information, including intent, use of funds, and other data elements. For more details:

• Download the Final Reporting Data Elements - PDF.

• This document updates and supplements July 20, 2020, Post-Payment Notice of Reporting Requirements notice: General and Targeted Distribution Post-Payment Notice of Reporting Requirement - PDF.

•  View the summary of reporting guidelines for payments exceeding $10,000 - PDF.

These final reporting requirements do not apply to:

• Nursing Home Infection Control distribution recipients

• Rural Health Clinic Testing distribution recipients

• Health Resources and Services Administration (HRSA) Uninsured Program reimbursement recipients

Separate reporting requirements may be announced in the future.

Auditing

The recipients of Provider Relief Fund payments may be subject to auditing to ensure the accuracy of the data submitted to HHS for payment. Any recipients identified as having provided inaccurate information to HHS will be subject to payment recoupment and other legal action. Further, all recipients of Provider Relief Fund payments shall maintain appropriate records and cost documentation including, as applicable, documentation described in 45 CFR § 75.302 – Financial management and 45 CFR § 75.361 through 75.365 – Record Retention and Access, and other information required by future program instructions to substantiate that recipients used all Provider Relief Fund payments appropriately.

Upon the Secretary's request, the recipient shall promptly submit copies of such records and cost documentation. The recipient must fully cooperate in all audits the Secretary, Inspector General, or Pandemic Response Accountability Committee conducts to ensure compliance with applicable Terms and Conditions. Deliberate omission, misrepresentation, or falsification of any information contained in payment applications or future reports may be punishable by criminal, civil, or administrative penalties, including but not limited to revocation of Medicare billing privileges, exclusion from federal health care programs, and/or the imposition of fines, civil damages, and/or imprisonment.

Please refer to the Terms and Conditions associated with each payment distribution and the Reporting Requirements and Auditing FAQs for more details.

CARES Act Provider Relief Fund: FAQs

CARES Act Provider Relief Fund: For Patients

If you have insurance

Private insurers must waive insurance plan members' cost-sharing payments for COVID-19 diagnostic testing and certain related items and services.

Some private insurers, including Humana, Cigna, UnitedHealth Group, and the Blue Cross Blue Shield system, have agreed to waive cost-sharing payments for insured patients' COVID-19 treatment.

If a patient has insurance and seeks COVID-19 treatment from an out-of-network provider that has received General or Targeted Distributions from the Provider Relief Fund, the provider has agreed not to seek to collect out-of-pocket payments more significant than what the patient would have otherwise been required to pay if an in-network provider had provided the care.

If you do not have insurance

Suppose you are uninsured and receive COVID-19-related testing and/or treatment services. In that case, your provider may have submitted a claim to the Health Resources & Services Administration (HRSA) to reimburse these services. Providers who participate in and are reimbursed from the HRSA COVID-19 Uninsured Program are not allowed to "balance bill" individuals who do not have health care coverage (uninsured).

If you receive a bill in which a portion of that bill is paid for by HRSA, you may not be responsible for the remainder of the bill if the rendered service was for COVID-19 testing and/or treatment.

If you received a bill and were charged for COVID-19 testing and/or treatment services and the statement shows HRSA reimbursement for those services, please contact your health care provider to discuss how best to resolve your bill's payment. (If your provider has questions, they can visit the HRSA COVID-19 Uninsured Program site .)

Please note that if your provider didn't submit a bill for your COVID-19-related testing and/or treatment to the HRSA COVID-19 Uninsured Program or the care was not eligible for reimbursement from the program, you may be responsible for full payment of the bill.

Back Taxes and Tax Forms Update

Back Taxes

IRS is hitting pause on sending out many balance-due notices, in response to criticism from lawmakers. IRS will stop mailing out second notices o taxpayers with outstanding tax debt. It is taking this step to avoid confusion for taxpayers who responded to IRS’s first balance-due notice by mailing a payment. Much of that correspondence is still sitting unopened in the agency’s mail backlog. Also, IRS is postponing many new tax lien notices through Sept. 30.

Forms

The 2020 Form 1040 will look slightly different from the 2019 version, based on a draft released by IRS. The return will have two new line items: One for the above-the-line deduction for cash charitable contributions of $300 or less by non-itemizers. The other allows eligible filers who qualify for stimulus payments to reconcile the amount they received against the recovery rebate credit they otherwise entitled to. These two changes apply only for 2020. Additionally, whether filers have transacted in virtual currency has been moved from Schedule 1 on last year’s 1040 to page 1 of the 2020 return. If you have any questions or need clarification, please feel free to reach out to us at info@bjkane.com.