AICPA Backs IRS Expansion of e-Signatures

by | Sep 9, 2020 | Tax Tips and News

When the Internal Revenue Service announced this summer, it was temporarily expanding the use of e-signatures on IRS forms, a number of professional tax groups applauded. One of those is the American Institute of CPAs (AICPA). Now the group is recommending the temporary measures be expanded and made permanent.

The original notice alerted IRS employees they could temporarily accept scanned or digital signatures as well as allow the sharing of certain documents by email in order to cope with the constraints mandated by the COVID-19 pandemic.

In June, the IRS extended the guidance expiration date from the original July 15 date to the end of 2020. Despite the extra time frame, however, the original relief from so-called “wet” signature requirements was very limited in its scope and did not include documents associated with return filings or extensions.

The AICPA wants the IRS relief to become permanent.

The CPA group has submitted a formal letter of request to the IRS that asks the agency to expand the scope of its original memo to allow all electronic file signature authorization forms—including on non-income tax returns and paper-filed returns. In response, the IRS has issued a new memo allowing for a temporary deviation from the handwritten signature requirement for a limited number of tax forms.

The next step, AICPA members say, is to make the expanded e-signatures permanent.

“We greatly appreciate the IRS’s decision to expand the scope of their e-signature requirements. By expanding the scope of relief beyond collection activities, the IRS is lessening the burden on taxpayers and tax practitioners in a significant way,” said AICPA Vice President of Taxation, Edward Karl, CPA, CGMA. “The steps taken by the Service helps the nation navigate difficult circumstances. We encourage the IRS to continue to work to make this relief permanent.”

At present, some 11 states have provided pandemic-related guidance allowing e-signature use on tax returns. The AICPA says these states “recognize the health and technology challenges arising from COVID-19 and understand how these challenges make it difficult for practitioners and clients to obtain handwritten signatures.”

Source: “AICPA Applauds IRS Temporary Acceptance of E-Signatures, Urges Permanent Relief“

– Story provided by TaxingSubjects.com

IRS Issues Guidance for Deferral of Employee Social Security Tax

by | Sep 1, 2020 | Tax Tips and News

Businesses that were wondering how to handle the upcoming “payroll tax holiday” created by a Presidential Memorandum signed earlier this month received an answer late last week. The Internal Revenue Service published a notice that explains the upcoming Social Security tax withholding deferral.  

This guidance comes just in time, since the tax relief officially begins tomorrow.

How long is the Social Security tax withholding deferral period?

IRS Notice 2020-65 explains that certain wages paid from September 1, 2020, to December 31, 2020, may be deferred to the following period (January 1, 2021, through April 30, 2021). If employers do not pay the deferred tax by May 1, 2021, “interest, penalties, and additions to tax will begin to accrue.”

What wages are eligible for deferral?

The IRS says applicable wages and compensation paid during the deferral period are defined in section 3121(a) and section 3231(e)3. In the press release, they identify some limitations.

“The employee Social Security tax deferral may apply to payments of taxable wages to an employee that are less than $4,000 during a bi-weekly pay period, with each pay period considered separately,” the IRS writes. “No deferral is available for any payment to an employee of taxable wages of $4,000 or above for a bi-weekly pay period.”

For more information about the deferral of certain employee Social Security taxes, read Notice 2020-65.

Sources: IR-2020-195; Notice 2020-65

– Story provided by TaxingSubjects.com