Demetrios J. Lambos, CPA PLLC

03/16/2023

https://www.accountingtoday.com/news/kpmg-faces-questions-over-svb-and-signature-audits

KPMG could find itself on the receiving end of lawsuits and investigations after giving a clean audit opinion to the financial statements of Silicon Valley Bank's parent company and Signature Bank only weeks before they failed.

10/17/2020

PPP forgiveness simplified for loans of $50,000 or less:

Recipients of Paycheck Protection Program (PPP) loans of $50,000 or less will be able to apply for forgiveness using a simplified application that was released Thursday by Treasury and the U.S. Small Business Administration (SBA).

A new interim final rule (IFR) provides new guidance concerning forgiveness and loan review processes for PPP loans of $50,000 or less.

Under the IFR, PPP borrowers of $50,000 or less are exempted from any reductions in forgiveness based on:

- Reductions in full-time-equivalent (FTE) employees; and

- Reductions in employee salary or wages.

The new application form, SBA Form 3508S, can be used by PPP borrowers applying for forgiveness on PPP loans with a total loan amount of $50,000 or less, unless those borrowers together with their affiliates received loans totaling $2 million or more. Instructions for Form 3508S also were released.

Of the 5.2 million PPP loans approved by the SBA, about 3.57 million were for $50,000 or less, according the IFR. Those loans accounted for about $62 billion of the $525 billion in PPP loans. About 1.71 million PPP loans of $50,000 or less were made to businesses that reported having zero employees or one employee.

The IFR streamlines the forgiveness process for PPP borrowers of $50,000 or less because they will not be required to perform potentially complicated FTE or salary reduction calculations. Borrowers of $50,000 or less still will have to make some certifications and provide documentation to the lender for payroll and nonpayroll costs.

Lender responsibilities:

For PPP loans of all sizes, the IFR also contains guidance on lender responsibilities with respect to the review of borrower documentation of eligible costs for forgiveness in excess of a borrower’s PPP loan amount.

According to the IFR, when a borrower submits Form 3508S or the lender’s equivalent form, the lender will be required to:

- Confirm receipt of the borrower certifications contained in the form; and

- Confirm receipt of the documentation the borrower is required to submit to aid in verifying payroll and nonpayroll costs, as specified in the instructions to the form.

The borrower is responsible for providing an accurate calculation of the loan forgiveness amount. The borrower will attest to the accuracy of the reported information and calculations on the loan forgiveness application. Lenders are permitted to rely on borrower representations, according to the IFR.

In addition, the IFR addresses what a lender should do if a borrower submits documentation of eligible costs that exceed the borrower’s PPP loan amount. According to the IFR, the amount of loan forgiveness that a borrower may receive cannot exceed the principal amount of the PPP loan.

Whether a borrower submits SBA Form 3508, 3508EZ, or 3508S, or a lender’s equivalent form, the lender is required to confirm receipt of the documentation the borrower is required to submit to aid in verifying payroll and nonpayroll costs. If applicable, the lender also is required to confirm the borrower’s calculations on the loan forgiveness application, up to the amount required to reach the requested forgiveness amount.

If you have any questions, please contact me and please like and share.

09/01/2020

IRS Payroll Tax Deferral Guidance Update (Effective September 1st, 2020):

Last Friday the IRS released guidance regarding the payroll tax deferral enacted earlier this month by the President. The guidance gives us an understanding of how the deferral will work and how small businesses will be affected. I have included some relevant information that will be of value to you and your business in the months ahead:

- The payroll tax deferral is part of the Executive Order signed by President Trump on August 14th.

- The deferral is for the employee portion of Social Security taxes, which equates to 6.2% of an employee’s wages. The Executive Order applies exclusively to the employee portion of social security taxes. Deferral for the employer portion of social security taxes was already approved by Congress in the CARES Act, which applies from March through the end of this year. All other payroll taxes are still expected to be paid.

- Individuals making over $4,000 bi-weekly pre-tax ($104,000 in annual income) are not eligible to participate. What is important to note here is that this is not a deferral on wages up to $4,000 bi-weekly. It is a deferral for employees who make up that amount. Any individual with greater than the specified amount are required to continue paying social security taxes on all income.

- Employees who wish to take advantage of the tax deferral can do so for any income earned between tomorrow, September 1st and the end of the year, December 31st.

- Though the payroll tax deferral is available to any individual making less than $104,000 annually, there is no requirement to participate and employees can continue to pay their portion of the social security tax through the end of the year.

For those that choose to defer collection of Social Security taxes, it is important to remember the following:

- A deferral is different from forgiveness. Congress is the only body with the legal authority to forgive taxes, meaning without legislation, any money that is deferred must be paid back.

- The time frame to pay back deferred taxes is January 1st – April 30th of 2021. Any money owed to the IRS that is not paid back by April 30th is subject to fines and penalties.

- Though the tax deferral comes on the side of the employee, the responsibility to pay back the money lies with the employer. This means employees who do receive the tax deferral can expect to see reduced net pay in 2021 equal to the increases they see for the remainder of this year.

The following is still unclear regarding the payroll tax deferral:

- How seasonal employees and those laid off between now and the end of the year are affected. The money is still required to be paid back, though whether the obligation remains with the employer or transfers to the employee is uncertain at this time.

- How these tax deferrals will be reported. There is speculation a revised version of the 941 Form will be produced, but this is not certain. Additionally, it still remains unclear whether employers and employees will be required to opt in should they choose to participate, or if they will be required to opt out should they choose not to participate.

- How self-employed persons will be affected. The Executive Order applies specifically to “employment-related” taxes and not “self-employment” taxes. At the moment is appears the portion of self-employment taxes not covered by the CARES Act is not eligible for deferral.

I will continue to keep you informed as more updates become available. If you have any questions, please feel free to contact me and please like and share.

08/20/2020

If you’ve received an IRS notice and have already made payment. This might be the reason why you’re receiving the notice.

House Ways and Means Chair Richard Neal wants the IRS to quit sending balance due notices for now.

05/05/2020

"IRS denies deductions for forgiven paycheck protection loans"

Small businesses who have received or will receive a loan from the paycheck protection program, the IRS is denying deductions from tax returns for amounts forgiven as part of the award received under the paycheck protection program.

Small businesses that manage to get their Paycheck Protection Program loans forgiven may find themselves losing valuable tax breaks, according to new guidance from the Internal Revenue Service.

Companies that qualify for loan forgiveness under legislation Congress approved won’t be able to deduct the wages or other businesses expenses they paid for using the loan, according to an IRS notice published last Thursday.

“This treatment prevents a double tax benefit,” the agency said in the notice. “This conclusion is consistent with prior guidance of the IRS.”

The guidance clarifies a point of confusion in the $670 billion small business loan program to help businesses struggling as the Coronavirus has brought the economy to a standstill. The law states that the forgiven loan won’t be taxed, but didn’t specify whether companies could still write off the expenses they covered with that money.

The tax code permits companies to write off businesses expenses, such as wages, rent and transportation expenses, but generally doesn’t allow write-offs for tax-exempt income.

The ruling adds to the list of stumbling blocks facing businesses as they try to qualify for the Paycheck Protection Program loans.

The program, run by the Small Business Administration, provides funds to cover eight weeks of payroll costs and the loans are forgiven if the employers keep workers on the job or quickly rehire laid-off workers.

If you are a small business owner who needs assistance with planning for the tax effects of the paycheck protection loan which you were awarded, contact Demetrios J. Lambos, CPA for a consultation and let me provide my services to help you better prepare.

04/16/2020

" Working Remotely "

Demetrios J. Lambos, CPA PLLC is a remote based CPA firm in which we utilize the safety and security features developed by Quickbooks and integrated into the QuickBooks Documents Center. We use the Center as our internal social networking tool which helps organize and keep your accounts documented in which we can add, share or scan documents related to your business, then attach it to a transaction, all in one place.

For more information, contact Demetrios J. Lambos, CPA and let us help your business grow by providing excellent accounting services in a timely and efficient manner from your home, office or wherever you may be.

04/15/2020

Employee Retention Credit Available for Many Businesses Financially Impacted by COVID-19:

The Employee Retention Credit is a refundable tax credit against certain employment taxes equal to 50 percent of the qualified wages an eligible employer pays to employees after March 12, 2020, and before January 1, 2021. Eligible employers can get immediate access to the credit by reducing employment tax deposits they are otherwise required to make. Also, if the employer's employment tax deposits are not sufficient to cover the credit, the employer may get an advance payment from the IRS.

For each employee, wages (including certain health plan costs) up to $10,000 can be counted to determine the amount of the 50% credit. Because this credit can apply to wages already paid after March 12, 2020, many struggling employers can get access to this credit by reducing upcoming deposits or requesting an advance credit on Form 7200, Advance of Employer Credits Due To COVID-19.

The credit is available to all employers regardless of size, including tax-exempt organizations. There are only two exceptions: state and local governments and their instrumentalities and small businesses which take Small Business Loans. If an employer takes an SBA loan under the CARES Act (for example, the Paycheck Protection Program, Economic Injury Disaster Loans, and other SBA loans) the employer is not eligible for the retention credit.

Employers, including tax-exempt organizations, are eligible for the credit if they operate a trade or business during calendar year 2020 and experience either:

1. the full or partial suspension of the operation of their trade or business during any calendar quarter because of governmental orders limiting commerce, travel, or group meetings due to COVID-19, or
2. a significant decline in gross receipts.

A significant decline in gross receipts begins:

- on the first day of the first calendar quarter of 2020
- for which an employer’s gross receipts are less than 50% of its gross receipts
- for the same calendar quarter in 2019.

The significant decline in gross receipts ends:

- on the first day of the first calendar quarter following the calendar quarter
- in which gross receipts are more than of 80% of its gross receipts
- for the same calendar quarter in 2019.

The credit applies to qualified wages (including certain health plan expenses) paid during this period or any calendar quarter in which operations were suspended.

It will be critically important that you determine if you will receive more aid using the Employee Retention Credit or using the Paycheck Protection Program, Economic Injury Disaster Loans and Loan Advance, SBA Debt Relief, and SBA Express Bridge Loans. If you need assistance, contact Demetrios J. Lambos, CPA PLLC.

04/10/2020

COVID 19 Small Business Economic Injury Disaster Loans:

Small business owner's, the CARES Act states: “…individuals who operate under a sole proprietorship or as an independent contractor and eligible self-employed individuals shall be eligible. Applicants who fall in this category will need to provide documentation such as “payroll tax filings reported to the Internal Revenue Service, Forms 1099–MISC, and income and expenses from the sole proprietorship, as determined by the (SBA) Administrator and the (Treasury) Secretary.”

These grants do not have to be repaid as long as funds are used for:
• providing paid sick leave to employees unable to work due to the direct effect of the COVID–19
• maintaining payroll to retain employees during business disruptions or substantial slowdowns
• meeting increased costs to obtain materials unavailable from the applicant’s original source due to interrupted supply chains
• making rent or mortgage payments; and
• repaying obligations that cannot be met due to revenue losses.

In order to qualify, you must be:

• a small business, cooperative, ESOP or tribal business with 500 or fewer employees
• An individual who operates under as a sole proprietorship, with or without employees, or as an independent contractor; or
• A private non-profit or small agricultural cooperative
• Your business must be directly affected by COVID-19

To review your real-time funding options and to apply, contact Demetrios J. Lambos, CPA PLLC and let us assist you in helping your business obtain the financial assistance it needs. We also provide preparation of financial statements services, which is a requirement to apply for the loan.

04/10/2020

COVID - 19 Update on tax deadlines for filing & payments due:

IRS extends more tax deadlines to cover individuals, trusts, estates corporations and others:

To help taxpayers, the Department of Treasury and the Internal Revenue Service announced today that IRS Notice 2020-23 extends additional key tax deadlines for individuals and businesses.

Last month, the IRS announced that taxpayers generally have until July 15, 2020, to file and pay federal income taxes originally due on April 15. No late-filing penalty, late-payment penalty or interest will be due.

Today’s notice expands this relief to additional returns, tax payments and other actions. As a result, the extensions generally now apply to all taxpayers that have a filing or payment deadline falling on or after April 1, 2020, and before July 15, 2020. Individuals, trusts, estates, corporations and other non-corporate tax filers qualify for the extra time. This means that anyone, including Americans who live and work abroad, can now wait until July 15 to file their 2019 federal income tax return and pay any tax due.

Extension of time to file beyond July 15:

Individual taxpayers who need additional time to file beyond the July 15 deadline can request an extension to Oct. 15, 2020, by filing Form 4868 through their tax professional, tax software or using the Free File link on IRS.gov. Businesses who need additional time must file Form 7004. An extension to file is not an extension to pay any taxes owed. Taxpayers requesting additional time to file should estimate their tax liability and pay any taxes owed by the July 15, 2020, deadline to avoid additional interest and penalties.

Estimated Tax Payments:

Besides the April 15 estimated tax payment previously extended, today’s notice also extends relief to estimated tax payments due June 15, 2020. This means that any individual or corporation that has a quarterly estimated tax payment due on or after April 1, 2020, and before July 15, 2020, can wait until July 15 to make that payment, without penalty.

If you have any questions or need help, please contact Demetrios J. Lambos, CPA for all your tax and financial accounting related needs.

04/04/2020

"Always Delivering More Than Expected"

My mission is to consistently assist in the transformation of small businesses by delivering peace of mind while eliminating the constant tension and worry built in with the ownership and management of the operations and finances of a business.

Demetrios J. Lambos, CPA is excited to utilize his knowledge, business acumen, and technical expertise to help his clients create better structures and systems in their business by analyzing the performance of their operations and give them a better opportunity to grow and add value to their business. No matter what your accounting & tax situations, contact Demetrios J. Lambos, CPA PLLC year round for smart solutions with unmatched client customer service.

03/31/2020

IRS & Treasury Extend April 15 Tax Payment Deadline to July 15

The U.S. Department of the Treasury (Treasury) and the IRS have extended the April 15 tax payment deadline to July 15, 2020, due to the novel coronavirus disease 2019 (COVID-19) pandemic.

On March 18, 2020, the IRS published Notice 2020-17 providing that individuals, regardless of filing status, may defer up to $1 million in tax payments due on April 15, 2020. For example, the $1 million threshold is the same for a single individual as it is for a married couple filing a joint return. The $1 million threshold also applies to trusts and estates. For consolidated groups, and C corporations that do not join in filing a consolidated return, relief is granted up to $10 million in tax payments due on April 15, 2020. According to Treasury Secretary Steven Mnuchin, this delay will free up $300 billion of liquidity in the economy.

This extension is automatic, meaning taxpayers may delay paying their federal income tax for up to 90 days and the IRS will not assess penalties or interest on payments made during the three-month deferral period. Interest and penalties on any unpaid balance will begin to accrue on July 16, 2020. In addition, any amount of unpaid federal income tax in excess of the thresholds listed above also will continue to accrue interest and penalties during the deferral period.

This relief applies only to federal income tax payments due for a taxpayer’s 2019 tax year, including tax on self-employment income. Estimated federal income tax payments due on April 15, 2020, regarding a taxpayer’s 2020 taxable year, also qualify for the 90-day extension. The dollar amount thresholds ($1 million for individuals and $10 million for corporations) apply in the aggregate to all the above types of federal tax payments. For example, if an individual taxpayer owes $800,000 in federal income tax for the 2019 tax year and $300,000 also is due in estimated federal income tax for the first quarter of 2020, only the first $1 million is eligible for relief from penalties and interest if paid between April 15, 2020, and July 15, 2020.

No payment extension is provided for any other type of federal tax or for the filing of any tax or information return, so individuals and businesses are still required to file their tax returns by April 15 unless they submit paperwork for an automatic six-month extension.

Be sure to reach out if you have any questions about how these changes may affect you.