IRS Tax Filing Deadline Moved to May 17
Mar 18, 2021
Yesterday, the U.S. Internal Revenue Service (IRS) extended the federal income tax filing due date for individuals for the 2020 tax year to Monday, May 17, 2021. “This continues to be a tough time for many people, and the IRS wants to continue to do everything possible to help taxpayers navigate the unusual circumstances related to the pandemic, while also working on important tax administration responsibilities,” said IRS Commissioner Chuck Rettig.” While the deadline has been extended, there are some items worth noting:
- The delay applies to individuals filing Forms 1040 and 1040-SR.
- The postponement does NOT apply to first-quarter estimated tax payments for 2021. The deadline for such remains April 15. After that date, interest and penalties on unpaid amounts will apply.
- The extension also does NOT include fiduciary (trust) income tax return
- It does NOT change the deadlines for corporate, partnership, or nonprofit tax returns.
- The deadline to file the 2020 tax return remains Oct. 15 for taxpayers who file Form 4868 to request an automatic extension. The deadline to submit this form is now May 17, not April 15.
- Recent law changes allow an exemption of up to $10,200 of unemployment compensation. If you received unemployment compensation last year and already have filed your 2020 tax return, the IRS strongly urges you not to file an amended return from federal tax but the IRS hasn’t announced what steps to take but plans to do so soon. For those who haven’t yet filed their 2020 returns, the IRS released guidance on March 16 that includes a worksheet and instructions to claim the exemption
Some state agencies have followed suit in extending the deadline. We expect more states to push back their tax filing deadlines but recommend each taxpayer check with their state agency for any state tax deadline extensions.
Finally, while the deadline has been extended, we highly recommend taxpayers get their documents to their CPA and file as soon as possible, especially those who are owed refunds. Filing electronically with direct deposit is the quickest way to get refunds, and it can help some taxpayers more quickly receive any remaining stimulus payments they may be entitled to. If you have any questions, please reach out to your William Vaughan Company advisor at 419.891.1040 or check out the IRS news release here.
Categories: Tax Compliance, Tax Planning
The Fourth Industrial Revolution: Industry 4.0
Mar 10, 2021
While many industries experience change and opportunity, manufacturing companies are embracing one in particular: Industry 4.0. This initiative joins Information Technology (IT) with Operational Technology (OT) to improve processes, increase automation, and support data exchange.
Industry 4.0 is often used interchangeably with the notion of the fourth industrial revolution. It is characterized by, among others, 1) more automation than in the previous revolution, 2) the linking of the physical and digital world through cyber-physical systems, enabled by Industrial IoT, 3) a shift to smart products and automation to define production steps, 4) closed-loop data models and control systems and 4) customize data and dashboards
Industry 4.0 is comprised of eight technology sectors that inspire new ways of thinking and working, Additive Manufacturing & Advanced Materials, Artificial Intelligence (AI), Big Data, Cloud Computing, Cyber Security, Modeling, Simulation, Visualization & Immersion, Robotics, and the Industrial Internet of Things (IoT) are the key aspects of Industry 4.0.
There are numerous advantages to entering the fourth industrial revolution, each of which can have a great impact on your business. The pursuit of more efficient, customer-centric processes paired with Industry 4.0 pushes past optimization and leads to new opportunities and innovation.
Here are some insights into a few of the benefits of Industry 4.0:
- Enhanced Productivity – Optimization and automation will lead to saved costs, increased profitability, limited waste, reduced opportunity for delays and errors, faster production, and overall improved function of the value chain.
- Real-Time Optimization – Customers at every step of the value chain expect good products produced fast. By increasing automation, production increases to real-time operation leading to satisfying increased expectations while keeping the process moving forward.
- Increased Business Continuity – Predictable and preventive maintenance as a result of digital technology means less downtime and fewer expenditures
- Higher Product Quality – Cross-collaboration between departments and the ease of data sharing means improvement and modifications are made quickly which results in a higher quality of product
- Lower Costs – Automation and system integrations also mean a reduction in waste, efficient use of resource and materials, reduction of downtime which ultimately leads to lower overall operating costs
- Improved Agility – With real-time data available at your fingertips, being able to forecast and pivot become much easier
- Innovation – Increased visibility across production lines, distribution chains, and supply chains allow for innovation and improvement whether it be for process enhancement or new product development.
There’s no doubt Industry 4.0 has enabled manufacturers to increase operational visibility, reduce costs, expedite production times, and deliver exceptional customer support. Over the coming months, William Vaughan Company is going to explore various topics involving the importance of this new era, strategies to implement, and ways to leverage Industry 4.0 to help you lead in the markets where you compete. Stay tuned for more on Industry 4.0.
Categories: Manufacturing & Distribution
SBA Unveils New PPP Forgiveness Applications & Guidance
Jan 21, 2021
On Tuesday, the U.S. Small Business Administration (SBA) and Treasury released new PPP loan forgiveness guidance along with new forgiveness applications.
These applications include:
- PPP Loan Forgiveness Application Form 3508S – this new one-page application is for borrowers who received a PPP loan of $150,000 or less. While no supporting documentation is required to be submitted with the application, borrowers are advised to maintain payroll, nonpayroll, and other documents that could be requested during an SBA loan review or audit.
- Form 3508EZ – this streamlined application is for borrowers that meet certain safe harbors
- Form 3508 – the full application is for those who don’t qualify for using either of the previous two forms
- Form 3508D – this two-page document is to be submitted by certain individuals who are required to disclose a controlling interest in an entity applying for a PPP loan
Borrowers using Forms 3508 and 3508EZ must submit payroll and nonpayroll documentation when applying for loan forgiveness. The instructions included with these forms provide lists of the required documents.
In addition to the new forms, an interim final rule (IFR) was released which simplified previous loan forgiveness rules and integrated changes made by The Economic Aid to Hard-Hit Small Businesses, Nonprofits, and Venues Act (P.L. 116-260) which provided an additional $248 billion of funding to the PPP and allowed for a second-draw.
The SBA also noted it had approved roughly 60,000 PPP loan applications submitted by nearly 3,000 lenders for over $5 billion from the program’s re-opening through Jan. 17.
As always, we encourage you to connect with your William Vaughan Company advisor with questions on how this may impact your individual circumstances, or check out our COVID-19 Resource Center for additional insights.
Categories: COVID-19
Grant vs. Debt Accounting For PPP Funds
Jan 15, 2021
Over the past several weeks’ companies have started to receive notification of forgiveness of their PPP loans. As you begin to think about how you will account for your loan and forgiveness, it is important to remember proper GAAP accounting. As we noted in our prior blog, Accounting for PPP Loan Proceeds, the legal form of a PPP loan is debt. However, the PPP loan does include a forgiveness component which under certain scenarios permits treating the proceeds as a grant and following IAS 20 Accounting for Government Grants as an option. To be treated as a grant, the proceeds must be reasonably assured they will comply with the eligibility and forgiveness requirements. The biggest difference between the two options is under grant accounting, the income is recognized as the costs are incurred and for debt accounting, the gain is recognized when the entity is notified of forgiveness.
PPP loans should be derecognized when the debt is extinguished, in accordance with the guidance in ASC 405-20, Liabilities: Extinguishments of Liabilities. Under this guidance, debt is extinguished when either the debtor pays the creditor, or the debtor is legally released from being the primary obligator. As a result, when treating the PPP loan proceeds as debt you recognize the income in the year the company is notified of forgiveness. For any business with a 12/31 year-end who receive notification after such, even if the financial statements have not been issued, the gain should be recognized in 2021. If a company wants to recognize the gain during the fiscal year 2020 they should consider grant accounting.
Each borrower under the PPP program should carefully analyze its unique facts and circumstances in determining the appropriate accounting. Regardless of the accounting approach followed by a borrower they should disclose in the footnotes how the PPP loan was accounted for and where the related amounts are presented in the financial statements. Should you have questions about your specific situation, please contact your William Vaughan Company advisor or reach out to our contributor, Juli Seiwert in our firm’s audit department.
Connect With Us.
Juli Seiwert, CPA
Audit Senior Manager, William Vaughan Company
juli.seiwert@wvco.com | 419.891.1040
Categories: Audit & Accounting, COVID-19