Sunday, December 27, 2020

PTIN Renewal Ends December 31

The IRS reminds all active tax preparers to start the upcoming 2021 filing season smoothly by renewing their Preparer Tax Identification Numbers now. All current PTINs will expire December 31, 2020.

Anyone who prepares or helps prepare a federal tax return for compensation must have a valid PTIN from the IRS. They need to include the PTIN on any return filed with the IRS.

Tax preparers must pay a fee of $35.95 to renew or get a PTIN for 2021. This fee is non-refundable.

Those with a 2020 PTIN should use the online renewal process. This takes about 15 minutes. Form W-12, along with the instructions, provide a paper option for PTIN applications and renewals. The paper form can take four to six weeks to process. Failure to have and use a valid PTIN may result in penalties.

How to renew a PTIN online:

  • Go to the TaxProfessionals page on
  • Select the Renew or Register
  • Enter the user ID and password to login to the online PTIN account.
  • Follow the prompts to verify information and answer a few questions

Users will receive confirmation of their PTIN renewal once this process is completed.

Tax preparers can also use the online system to view a summary of the number of tax returns filed using their PTIN and receive secure messages from the IRS Return Preparer Office.

First time PTIN applicants can also apply for a PTIN online.

How to apply for a PTIN online:

  • Go to the TaxProfessionals page on
  • Select the Renew or Register button and select Create Account in the New User box.
  • First time users are issued a temporary password and will be prompted to change their password when they log in.
  • Select the appropriate PTIN Sign Up option.
  • Follow the prompts.

Tuesday, December 22, 2020

Latest Covid-19 Bill December 2020

The leaders of the House and the Senate announced Sunday evening they had agreed on another Covid-19 bill.  The House and Senate did pass the bill on Monday as presented by the leaders. Now the bill has to make its way to President Trump, who is expected to sign it into law.


The bill is a 5,593-page pdf document, double spaced.  Here is a quick summary of items we found in this bill in the roughly 1 hour that we read it.  Keep in mind, the following is a quick read of the 5,593 pages.


ECONOMIC IMPACT PAYMENTS - $600 per taxpayer, $1,200 for MFJ return, plus $600 per qualifying child.  Same AGI limitations as last spring’s Act including the same phaseout, same definition of qualifying child (under age 17, etc.), not allowed to anyone who is eligible to be claimed as a dependent, can only be offset as before, etc.  New items appear to include:

1)    No payment to anyone who died prior to January 1, 2020.

2)    Advance payments to be based on 2019 tax return.  It is part of the credit allowed on the 2020 return, reduced by the advance payments the taxpayer received.

3)    Direct deposit looks like it could be made into an account where a taxpayer made a direct payment of the balance due on the Federal tax return.

4)    SS, RRTA, VA, recipients will get direct deposit as before.

5)    It looks like these advance payments cannot be made after January 15, 2021, except for US possessions with mirror taxation.  This would basically mean only direct deposits will get the advance money.  It looks like everyone else will have to wait until they file their 2020 returns.


PAYCHECK PROTECTION PROGRAM – Expenses will NOT be reduced in connection with the forgiveness of the PPP loans.  Taxpayers can elect a covered period ending at the point of their choosing between 8 weeks and 24 weeks after origination of the loan.  A simplified forgiveness form is to be created by SBA within 24 days of this law’s enactment, for anyone who borrowed under $150,000.  (The PPP discussion starts on page 2042 of the bill.)


EIDL GRANTS – The grant is not taxable and expenses will NOT be reduced in connection with these grants.


SICK AND FAMILY LEAVE CREDITS – Although the requirement for small employers to pay sick leave and family leave ends December 31, 2020, these credits have been extended through March 31, 2021, for employers who voluntary make the payments.  Self-employed taxpayers can elect to use their average daily SE income from 2019 instead of 2020 to compute these credits for themselves.


EXTENDERS – Some were made permanent, some were extended through 2025, some were extended for different periods, and some were eliminated.


COLLECTING DEFERRED SOCIAL SECURITY TAXES FROM EMPLOYEES’ PAYCHECKS – The current period for employers to withhold these deferred SS taxes was January 1, 2021-April 30, 2021.  This bill appears to change this to the period January 1, 2021-December 31, 2021.


EDUCATOR EXPENSE – Includes personal protective equipment, disinfectant, and other supplies used for the prevention of the spread Covid-19.


Here are a few specific topics and the page they start on:


- Unemployment Insurance issues begins on page 1927.


- COVID-related Tax Relief Act of 2020 begins on page 1965 (TOC below)

Sec. 271. Short title; table of contents.

Sec. 272. Additional 2020 recovery rebates for individuals.

Sec. 273. Amendments to recovery rebates under the CARES Act.

Sec. 274. Extension of certain deferred payroll taxes.

Sec. 275. Regulations or guidance clarifying application of educator expense tax deduction.

Sec. 276. Clarification of tax treatment of forgiveness of covered loans.

Sec. 277. Emergency financial aid grants.

Sec. 278. Clarification of tax treatment of certain loan forgiveness and other business financial assistance under the CARES Act.

Sec. 279. Authority to waive certain information reporting requirements.

Sec. 280. Application of special rules to money purchase pension plans.

Sec. 281. Election to waive application of certain modifications to farming losses.

Sec. 282. Oversight and audit reporting.

Sec. 283. Disclosures to identify tax receivables not eligible for collection pursuant to qualified tax collection contracts.

Sec. 284. Modification of certain protections for taxpayer return information.

Sec. 285. 2020 election to terminate transfer period for qualified transfers from pension plan for covering future retiree costs.

Sec. 286. Extension of credits for paid sick and family leave.

Sec. 287. Election to use prior year net earnings from self-employment in determining average daily self-employment income for purposes of credits for paid sick and family leave.

Sec. 288. Certain technical improvements to credits for paid sick and family leave.


- Division EE - Taxpayer Certainty and Disaster Tax Relief Act of 2020 begins on page 4870 (TOC below)


Subtitle A—Certain Provisions Made Permanent

Sec. 101. Reduction in medical expense deduction floor.

Sec. 102. Energy efficient commercial buildings deduction.

Sec. 103. Benefits provided to volunteer firefighters and emergency medical responders.

Sec. 104. Transition from deduction for qualified tuition and related expenses to increased income limitation on lifetime learning credit.

Sec. 105. Railroad track maintenance credit.

Sec. 106. Certain provisions related to beer, wine, and distilled spirits.

Sec. 107. Refunds in lieu of reduced rates for certain craft beverages produced outside the United States.

Sec. 108. Reduced rates not allowed for smuggled or illegally produced beer, wine, and spirits.

Sec. 109. Minimum processing requirements for reduced distilled spirits rates.

Sec. 110. Modification of single taxpayer rules.

Subtitle B—Certain Provisions Extended Through 2025

Sec. 111. Look-thru rule for related controlled foreign corporations.

Sec. 112. New markets tax credit.

Sec. 113. Work opportunity credit.

Sec. 114. Exclusion from gross income of discharge of qualified principal residence indebtedness.

Sec. 115. 7-year recovery period for motorsports entertainment complexes.

Sec. 116. Expensing rules for certain productions.

Sec. 117. Oil spill liability trust fund rate.

Sec. 118. Empowerment zone tax incentives.

Sec. 119. Employer credit for paid family and medical leave.

Sec. 120. Exclusion for certain employer payments of student loans.

Sec. 121. Extension of carbon oxide sequestration credit.

Subtitle C—Extension of Certain Other Provisions

Sec. 131. Credit for electricity produced from certain renewable resources.

Sec. 132. Extension and phaseout of energy credit.

Sec. 133. Treatment of mortgage insurance premiums as qualified residence interest.

Sec. 134. Credit for health insurance costs of eligible individuals.

Sec. 135. Indian employment credit.

Sec. 136. Mine rescue team training credit.

Sec. 137. Classification of certain race horses as 3-year property.

Sec. 138. Accelerated depreciation for business property on Indian reservations.

Sec. 139. American Samoa economic development credit.

Sec. 140. Second generation biofuel producer credit.

Sec. 141. Nonbusiness energy property.

Sec. 142. Qualified fuel cell motor vehicles.

Sec. 143. Alternative fuel refueling property credit.

Sec. 144. 2-wheeled plug-in electric vehicle credit.

Sec. 145. Production credit for Indian coal facilities.

Sec. 146. Energy efficient homes credit.

Sec. 147. Extension of excise tax credits relating to alternative fuels.

Sec. 148. Extension of residential energy-efficient property credit and inclusion of biomass fuel property expenditures.

Sec. 149. Black lung disability trust fund excise tax.


Sec. 201. Minimum low-income housing tax credit rate.

Sec. 202. Depreciation of certain residential rental property over 30-year period.

Sec. 203. Waste energy recovery property eligible for energy credit.

Sec. 204. Extension of energy credit for offshore wind facilities.

Sec. 205. Minimum rate of interest for certain determinations related to life insurance contracts.

Sec. 206. Clarifications and technical improvements to CARES Act employee retention credit.

Sec. 207. Extension and modification of employee retention and rehiring tax credit.

Sec. 208. Minimum age for distributions during working retirement.

Sec. 209. Temporary rule preventing partial plan termination.

Sec. 210. Temporary allowance of full deduction for business meals.

Sec. 211. Temporary special rule for determination of earned income.

Sec. 212. Certain charitable contributions deductible by non-itemizers.

Sec. 213. Modification of limitations on charitable contributions.

Sec. 214. Temporary special rules for health and dependent care flexible spending arrangements.


Sec. 301. Definitions.

Sec. 302. Special disaster-related rules for use of retirement funds.

Sec. 303. Employee retention credit for employers affected by qualified disasters.

Sec. 304. Other disaster-related tax relief provisions.

Sec. 305. Low-income housing tax credit.

Sec. 306. Treatment of certain possessions.


Remember there are 5,593 pages in this proposed legislation and we’ve only spent about an hour reading it.  We do not have answers to everyone’s questions at this time.

This text has been shared courtesy of:  David & Mary Mellem, EAs & Ashwaubenon Tax Professionals, 920-496-1065 (920-496-9111).


©2020 Ashwaubenon Tax Professionals.  No reproduction of this article is permitted without the express written consent of Ashwaubenon Tax Professionals, 2140 Holmgren Way, Suite 1040, Green Bay, WI  54304.

Monday, December 21, 2020

A New and Improved MassTaxConnect is on the Way


PLAN AHEAD: MassTaxConnect will be unavailable from 5:00 p.m. on January 15, 2021 until 6:00 a.m. on
January 19, 2021 for an upgrade. Submit payments due or returns ahead of the closure.

A New and Improved MassTaxConnect is on the Way
Getting around MassTaxConnect will soon be faster, easier, and more user-friendly. On January 19, 2021, MassTaxConnect will have a more modern design based on user navigation.
Let’s look at the new account page
Once you log in to MassTaxConnect, your account page will come up in a list format. Important information will be color coded. Balances in red will need your immediate attention and those in green will indicate that you’re in compliance. You can go directly to returns or make a payment from this page.
The account page is just one of the improvements. You’ll also find:
  • Simple customization options
  • Easier to find action steps
  • Usability on most devices
  • Improved accessibility
  • New chatbot feature in 2021 
Keep your username and password
Your current username and password won’t change. In fact, MassTaxConnect will save all your information, including changes made by you right up until the shutdown on January 15 at 5:00 p.m.

Learn more
You’ll find more information, including FAQs and a link to a sneak preview of the upgrade, on our website. Video tutorials are being updated to reflect changes, and new ones will be available January 19.

Friday, December 11, 2020

Tax Planning Failed! Gift Tax Applies to Foundation Beneficiary Who Did Not Receive Foundation Assets


William Delaney, EA
Westwood, MA

A private foundation was established for the purpose of “…the defrayal of expenses for the upbringing and education, the fitting out and furtherance, the livelihood in general, and the economic furtherance in the widest sense, of the relatives of certain families…”  That type of language is about as expansive as your Editor has ever seen.  It is a third-party funded needs foundation, and disbursements usually must be classified as income to the person who benefits (i.e. the current foundation beneficiary).  So far, so good.


Now, what happens if the foundation is legally dissolved and the principal (corpus) is to be paid-out?  Is there a way to by-pass the beneficiary and make payment to an unrelated third-party without there being any income to the beneficiary or without a gift tax being imposed on the beneficiary?


The Foundation Board of Foundation (I know it is a bit redundant but it has a nice ring to it) voted to “…distribute the total assets…to the beneficiary…and to bring such assets in alignment in accordance with his wishes…”  Translation:  We intend to dissolve and have decided to make distributions to whomever or whatever may be selected by the beneficiary and not to the beneficiary himself (i.e. this will by-pass the beneficiary).


The big question is whether or not this plan will work---no income or gift tax application to the current beneficiary.  Keep in mind that it is not the trustees who decided where/how the money is to be disbursed; they took their directions from the beneficiary.

As it turns out, the beneficiary decided to move the money from the checking account of the foundation to the checking account of a third-party.  The beneficiary did not, nor never had, dominion or control over the third-party checking account.


§2511(a)(1) imposes a gift tax on the transfer of wealth to all transfers by gift, whether direct or indirect.  The devil is in the details, and the devil here is that little word “indirect.”  Furthermore, Reg. §25.2511-2(a) states that the gift tax is a personal liability of the donor and is an excise upon his act of making the transfer.  Seems like that by-pass scheme may not work because the donor in this case is not the trust but the beneficiary who legally authorized the transfer.


However, we may be able to get creative here…what about a qualified disclaimer

[§2518(b)].  Cannot the donor/beneficiary just opt out by disclaiming any interest in the property.  Then it is as if the property had never been in the hands of the person making the qualified disclaimer.  Well, a few problems if we suddenly discover (after-the-fact) that someone needs to make a problem go away.  The refusal must be in writing and received by the foundation within nine months after the by-pass transfer occurred.  Furthermore, the beneficiary/donor has not received any benefit from the property transferred and the transfer occurred without any direction on the part of the person making the disclaimer.  Apparently, whoever drafted the vote of the foundation to dissolve and transfer did not consider that one, big, overriding requirement.


Something to think about if you ever encounter the dissolution of a trust or private foundation.  See CCA 2020045011 – 11/6/2020

Saturday, December 5, 2020

Rhode Island Division of Taxation Seminar for Tax Preparers

The Rhode Island Division of Taxation is holding a seminar for tax preparers, on Wednesday December 9th 2020. The official run time is 9:00 a.m. to 11:30 a.m., but the seminar may run over, depending on circumstances. Speakers and topics are subject to change.

The seminar is intended to provide an update on what's new for the coming 2021 filing season. It is a general, plain-language summary. It is not intended as a substitute for Rhode Island General Laws, regulations, or Division of Taxation rulings.

For any questions, please contact: 

Neil Downing

Chief Revenue Agent

Rhode Island Division of Taxation

One Capitol Hill

Providence, R.I. 02908

(401) 574-8115

Tuesday, December 1, 2020

Preparing Any Returns in New York? You Will Need to Register

The NYS Continuing Education and Tax Preparer 
registration is now open!

Any preparer who prepares one or more NYS tax returns must register as a NYS Tax Preparer and complete the Continuing Education requirement through their Online Services account.

If the preparer has registered in a previous year, they must complete the 4-hour course. If the preparer is registering for the first time, they must complete the 16-hour course.

These courses are only available through the NYS Tax Dept. website. No other group can teach these courses. Federal/state tax topics provided by NATP or the NY Chapter do not quality for these credits. Only the NYS DTF offers these credits and currently they are only available online.

EA, CPA, PA and attorneys, and any employee directly supervised by the above are considered exempt from this registration and CE requirement.

If you have additional questions regarding this requirement, please contact for more information.