Monday, December 20, 2021

It's Official - The IRS Is Broken, And We Are Deserting A Sinking Ship

William Delaney, EA
Westwood, MA
As of October 30, 2021, the IRS had a backlog of over 2.7 million unprocessed amended returns (National Taxpayer Advocate Blog 11/10/2021).  Apparently, the IRS has said that the processing time for these returns is 20 weeks from the time when they reach the surface.  The taxpayer advocate’s office estimates that the actual processing time is “considerably longer than 20 weeks.”  This considerably longer time period mirrors your editor’s personal experience with client amended returns.


Help is not on the way.  The National Taxpayer Advocate announced, in its’ Nov. 10, 2021 Blog, that it will no longer accept cases “…where the sole issue involves the processing of amended returns until the IRS is able to work through its backlog.”  We are, however, referred to the Where’s My Amended Return tool available on the IRS website.  This will, we are assured, “…provide the status of amended returns…”


The Practitioner Priority Service (866-860-4259) is available for questions such as: “providing general procedural guidance and timeframes.”  Your editor recently called the PPS (phoned very late in the day and got through in 4 minutes) to ask about a long-delayed amended return (large refund claim).  The very nice Service representative was able to tell me that the return had been received (already knew that from the IRS tool); the return had not been processed (already knew that from the IRS tool); her only advice was to wait until it had been processed, although she did not know when that would be.  So, I knew nothing more than I knew before making the call.


In a recent appearance before a congressional committee, IRS Commissioner Charles Rettig commented that PPS and other IRS representatives should not be contacted and asked the status of refund returns because they can only see what the taxpayer can see; they cannot provide any additional information.  This dovetails with your editor’s personal experience (as described above).


Another “tool” experience is also worth noting.  The message on the tool was that the taxpayer should call a specified number because the IRS needed information of some kind.  Repeated calls were unsuccessful (why are you not surprised) and your editor was treated to “courtesy disconnects.”  So, thought I, call PPS, which I did.  The PPS representative could see what I could see, but there was nothing else to tell her anything about the issue, and the employee who posted the message was not there, so this was all she could do for me.  Actually, she did do more.  She posted a note asking the IRS employee to phone me directly (have not heard from him---again, why are you not surprised).  Later, it occurred to me that of course the employee was not there---I had called PPS after the normal work day.  Had I called PPS during the normal work day I would not have been able to get through (which I already knew as a result of the courtesy disconnects), so your ever humble editor was caught between the devil and the deep blue sea.  No way to respond to the IRS or solve the problem for the taxpayer!


If the National Taxpayer Advocate has backed off, and the Practitioner Priority Service can only do what we have already done prior to calling, where does one go; to whom does one turn?  Our advice is to read and retain our recently published blog article on amended returns, so that you will be informed if an amended return eventually surfaces and is rejected or returned for late filing or similar nonsensical reason. 


Members of Congress recently wrote a CYA letter to the IRS Commissioner demanding answers as to why the IRS is so far behind and unable to provide good taxpayer service.  NATP recently published commentary and a link to the letter.  This is coming from the same Congress which has repeatedly cut the annual IRS budget, thereby directing the IRS to do more with less.  Be careful (Members of Congress) what you wish for; you may just get it!

Friday, December 17, 2021

Rhode Island Division of Taxation New Taxpayer Portal


Division's New Taxpayer Portal

Effective January 4, 2022tax payments can no longer be made using the website which uses the following web address:, online debit payments may only be made via the Division’s Taxpayer Portal, which can be accessed via the following address:

Learn more:

For questions or assistance, please call the Division at (401) 574-8484. Please activate your Taxpayer Portal account as soon as possible. 

Thursday, December 16, 2021

PPP Loan Forgiveness Basis Issue


Mary Mellem, EA

A cash basis taxpayer reports income as received and expenses as paid.  An accrual basis taxpayer reports income as earned and expenses as incurred.  Naturally this means the forgiveness of a PPP loan is forgiveness income (nontaxable per law) at the time it is forgiven based on the taxpayer’s method of accounting.


IRS Notice 2020-32, released in late April 2020 (a year and a half ago) said the expenses related to PPP loan proceeds were NOT deductible when paid/incurred because they “would result in the forgiveness” and owners’ bases in entities was NOT increased by the nontaxable PPP debt forgiveness.  Both of these were changed on December 27, 2020, when the Consolidated Appropriations Act, 2021 was signed by President Trump.  These expenses became retroactively deductible and partners and S corporation shareholders were retroactively allowed to increase their basis by the forgiven PPP loan.


Because of the original denial of expenses, many taxpayers paid/incurred additional expenses to help keep their income down.  As a result of the retroactive deductibility of the expenses paid with the PPP loan proceeds, many of these taxpayers had losses for the year.  In the case of partnership and S corporations, in many cases the losses exceeded the owner’s basis.


There have been questions on whether the forgiveness could be considered to have happen earlier, such as when the PPP qualifying expenses are paid/incurred.


Now IRS has released Revenue Procedures 2021-48, 2021-49, and 2021-50 dealing with this timing issue.  The question is:  When can a taxpayer treat the PPP loan as forgiven –

1) When the expenses are paid/incurred?

2) When the application for PPP loan forgiveness is filed?

3) When the PPP loan forgiveness actually takes place?


In Revenue Procedure 2021-48, IRS answers this question by saying, effectively, “YES”.  Actually, IRS said the taxpayer can choose any of the above as long as it is consistent with the tax-exempt income resulting from the forgiveness of a PPP Loan being treated as gross receipts under a particular Federal tax provision, including but not limited to IRC §§448(c) and 6033.  IN OTHER WORDS – CHOOSE WHICH OF THE THREE DATES THAT YOU WANT TO USE as long as it is shown as income on the books as of the same date.


The Revenue Procedure also states a partnership or S corporation (plus subsidiary members of consolidated groups) must make the decision of the timing of the PPP Loan forgiveness at the entity level.  If the decision is to treat the forgiveness as if it happened in a prior year, the entity will file an amended return for the prior year.  It appears this amended return can be filed at any time during the normal 3-year statute of limitations as long as the conditions above are met.  (See below if the entity is a partnership subject to the BBA provisions.)


Revenue Procedure 2021-49 addresses the allocation of the PPP Loan forgiveness among the owners of a partnership or S corporation.  Basically, the amount of forgiveness income to allocate to a partner or S corporation shareholder is tied to the PPP Loan related expenses that were allowed to that person.


Revenue Procedure 2021-50 addresses partnerships subject to the Bipartisan Budget Act of 2015 (BBA).  Under §6227, a BBA partnership (a partnership subject to the consolidated audit procedures) is limited in its ability to file an amended tax return.  BBA partnerships must generally file an Administrative Adjustment Request (AAR) under §6227 to make partnership adjustments AND is not allowed to amend its tax return after the due date of the return, UNLESS specifically provided by the Secretary of the Treasury or his/her delegate.


This Revenue Procedure exercises that authority to allow a BBA partnership to file an amended return and furnish Schedules K-1 for taxable years ending after March 27, 2020.  The BBA partnership should file Form 1065 with the “Amended Return” box checked, “FILED PURSUANT TO REV PROC 2021-50” at the top of the amended return, and issuing amended Schedules K-1 to each owner, with this same “FILED PURSUANT…”.  A partner that receives an amended Schedule K-1 must amend the partner’s return.  A BBA PARTNERSHIP’S AMENDED RETURN MUST BE FILED NO LATER THAN DECEMBER 31, 2021.  Otherwise, a BBA partnership is required to go through the AAR procedures, which can be used through the normal 3-year statute of limitations for the applicable tax year.



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


©2021 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.

Wednesday, December 15, 2021

What's New at the Mass DOR


What’s new on the “What’s Trending” page

One thing we’re continuing to do is to keep our What’s Trending page updated with all the latest trending topics. We recently added to the page some new timely topics of discussion like, advance payment requirements, E-file requirements, elective pass-through entity excise and more.
December deadlines approaching
A few very important deadlines are approaching this month that you should know about. First up is the Health Insurance Responsibility Disclosure (HIRD) filing that is due tomorrow December 15. Two exemption renewals are due on December 31, the Small Business Energy Exemption and the Paid Family Medical Leave exemption. Go to MassTaxConnect to meet all the upcoming deadlines. 
Updates on advance payments
New updates in the Advance Payment arena. We’ve added more FAQs and a penalty self-assessment worksheet to the page. Beginning in January 2022, taxpayers will see new lines on returns for advance payment and determine if there is an advance payment penalty using the worksheet. Check out the page to learn more.
Estimated payments can be made for PTE
Back in September, Mass legislators moved to create an elective pass-through entity (PTE) excise in response to the $10,000 federal state and local tax (SALT) cap. Entities can now register and make  estimated payments on MassTaxConnect. We’ll continually update the FAQ page. Bookmark the page for easy access.
New! Filing season overview webinar
Stay tuned in January for some filing season info. We will be posting a filing season overview video on our website for your viewing. To get ready for 2022, we’ll talk about the Mass/Federal differences, Personal Income Tax updates, Trustee updates, how to report unemployment on a tax return, DOR initiatives and E-file requirements to name a few. We will include a link to the recording in the next edition of DOR News.
Also coming soon: PTE excise presentation
Another video will be released soon on the elective pass-through entity excise. We’ll cover all the need-to-know information about the new excise and what to expect. Be on the lookout for that email as well. Most everything you need to know to date is covered on the FAQ page, which is updated as needed.
DOR blog – Extra! Extra! Read all about it
Did you know we have a blog? If you didn’t, check it out. Our blog is a space where we go into detail about many topics across the agency. Check out some of the new blogs covering job opportunities at DOR, video resources, and a lot more. Curl up with your laptop and get caught up.
MTC video translations now offered in Spanish
Spanish translations are now available for a number of DOR YouTube tutorial videos. We started first with our notices and will continue to identify more ways to assist non-English-speaking taxpayers. To view the translated videos, head over to our YouTube channel.

Thursday, December 9, 2021

Massachusetts / Rhode Island NATP Chapter Annual State Update Seminar

 Massachusetts / Rhode Island NATP Chapter Annual State Update Seminar - January 6th 2022

Join the Massachusetts / Rhode Island NATP Chapter on Thursday, January 6th, 2022 for our Annual State Update Seminar. This all day event will be held at the Southbridge Hotel & Conference Center, Southbridge MA. Registration details are below, and are handled online directly by National NATP. A link to the registration website is listed below. Please take a look at the details on our speakers and topics provided in this great update opportunity including continental breakfast, snacks, lunch, vendors and great networking opportunities PLUS even 2 CE Credit Hours. Registration is from 7:00am to 8:00am & Education is from 8:00am to 5:00pm.
  • Register online with credit card.
  • For more information or to register by phone, fax or mail, use this form.
  • After January 3rd, please register at the door with the form above.

Massachusetts State Tax Update presented by Massachusetts Department of Revenue.

Rhode Island State Tax Update presented by Rhode Island Division of Taxation.

Connecticut State Tax update presented by a representative.

New York State Tax Update presented by Kathryn Keane of New York NATP Chapter.

Federal Tax Update presented by Kathryn Keane of New York NATP Chapter. (2 Hours of CE Credits)

Featured Speaker - Kathryn M. Keane, EA.

Kathryn is a principal of Macanta, a small tax and related services practice located in Brooklyn, NY, serving over 850 individual clients and 50 businesses. In December 2006, Kathryn completed two three-year terms on the National Board of Directors of NATP and was twice awarded Chapter Person of the Year for 2002 and 2008 for her volunteer service to the community at large as well as to NATP. In addition to serving as an Education Committee member for NY NATP, she currently serves as Chair of the IRS Tri-Boro Practitioner Liaison Committee. Kathryn is a frequent speaker for NATP Chapters. She has also presented for VASEA, NCCPAC (Nassau-Suffolk County Chapter) and local chapters of NYSSCPA. Kathryn has a B.S. degree from Brooklyn College.

President's Message


Ronald Fisher, EA, President
Massachusetts/Rhode Island NATP Chapter

I am privileged and honored to return once again and serve as President of the Massachusetts/Rhode Island NATP Chapter for 2022. I appreciate the confidence the Board of Directors and the Membership has shown in my ability to lead this organization.

I want to first thank all of you for your membership and support of this chapter.  I also want to remind each of you that my only job is to help you and your business achieve success in the tax profession.  The board and I exist solely to provide support, education and local networking opportunities for our members and we encourage all of you to get connected with the other like-minded professionals in this chapter.

Somehow, we all survived the 2020 tax filing season (and we thought the 2019 tax filing season was the worst)!  Changing tax laws for unemployment and the PTC in March of 2021 that affected 2020 tax returns, State delays deciding what they would do with those changes, explaining preparation  delays to countless clients daily, delayed IRS processing of tax returns and refunds that included unemployment, stimulus and PTC requiring manual IRS review, IRS delays in responding to communications, inability to reach anyone at the IRS, extending the due date to May, continuing issues with covid 19, etc., etc., all contributed to a colossal new level of challenges for all of us.  Shortly, the 2021 tax filing season will begin.  Let’s hope it goes easier on all of us.

From a chapter perspective, we returned to “in person” teaching in 2021 and I urge all of you to register and participate in Chapter education events.  It is the best way for you to meet, connect and build solid professional relationships with other local tax preparers, get assistance and learn how they handle difficult tax situations.  You can learn about all upcoming chapter events on our website -  As a reminder, our next event, the State tax update, is scheduled for January 6, 2022 at the Southbridge Hotel and Conference Center.

Lastly, if you are interested in becoming more involved and serving on the board, working along with our very experienced and dedicated board members, please send me an email (  I would be happy to talk to you and let you know what is involved in being a member of the Massachusetts/Rhode Island board.  

If there is ever anything that you need, please reach out to me or any of the other board members.  My number is (508) 735-6607.  I wish you all a healthy and prosperous 2022!

Ron Fisher, EA


Wednesday, December 1, 2021

Massachusetts Ussues an FAQ to Explain the New Elective Pass-Through Entity Excise Tax (MGL Chapter 36D)

William Delaney, EA
Westwood, MA
The current MA state budget (enacted 7/16/21) adds new Chapter 63D to the Taxation of Pass-Through Entities (Chapter 63) of MGL.  Preliminary information regarding this new law was posted to our blog a few months ago.  

Under Section 1 (of Chapter 63D),

An “eligible pass-through entity” shall have the following meaning:  “…an S corporation…or a limited liability company that is treated as an S corporation or a partnership…” under the Internal Revenue Code.

According to an updated FAQ (11/19/21) issued by the MA DOR, the state legislature didn’t get it quite right because “In addition, a trust can make the election with respect to income that passes through the trust to beneficiaries that are subject to tax on that income under the Massachusetts personal income tax.”  The FAQ also tells us (correctly) that “Only an eligible pass-through entity can make an election to pay the PTE Excise.”  

The MA DOR has just rewritten the statutory definition of an eligible pass-through entity to include a trust!!!  Where that is coming from (the authority to override state law) we are not told.  Your editor wonders if the MA legislature has gotten the word to clean up its act.

Now for the rest of the story.  Section 1 (see above) also states that a “Qualified member,” means a shareholder of an S corporation or a partner in a partnership, including a member of a limited liability company that is treated as an S corporation or partnership…that is a natural person or trust or estate subject to tax under section 10 of chapter 62;…”  Only a qualified member (as defined) is eligible to claim the refundable credit.  Since this definition does NOT include trust beneficiaries, they are not eligible for a credit based on the payment by the 1041 filer which the MA DOR has just authorized.  Apparently, the DOR missed that little subtlety when they amended the statute???

There, however, is more.  The inspiration for this work-around the SALT limitation is IRS Notice 2020-75.  The notice only allows the deduction for taxes paid by the entity (and this is the key element in the work-around scheme) if the entity is a partnership or an S corporation.  Nowhere does the notice mention a trust (See SECTION 2, .02(2) and (3); also SECTION 1).  

Section 1 of Chapter 63D acknowledges that the “Code” referred to in this newly enacted legislation is the Internal Revenue Code.  Since the IRS Notice is an interpretation of that Code and is provided as guidance, when it excludes trust from what is defined as an eligible pass-through entity, where is the authority for the MA DOR to expand the applicable federal definition to include trusts and trust beneficiaries?  Colleagues, there is no authority.  The Commissioner has overstepped his bounds.  See MA Letter Ruling 08-11 (7/7/2008) which says, in part “The Department of Revenue is an administrative agency charged with carrying out the laws of the Commonwealth…In doing so, the Department may issue rulings, but only such as are not inconsistent with law…”

A final word (what, you thought that your Editor was finished?).  In a recent blog, we published an article entitled WHAT IS AN FAQ AND SHOULD WE CARE?  What the Commissioner has done is an eloquent reason as to why we should care---he has attempted to write law via an FAQ!  Remember what an FAQ is and is not…

An FAQ is not authority.  It cannot be relied upon as an accurate interpretation of state law.  It is not a vehicle for adding to or rewriting state statute (only the legislature may do that).  Unfortunately, it has become more and more the only “resource” available in certain tax situations because the MA DOR is apparently unable to devote the time needed to prepare more formal and authoritative, documented guidance.

Monday, November 22, 2021

What Is An FAQ And Should We Care??

On May 6, 2020, the Internal Revenue Service published an FAQ which included, in

William Delaney, EA
Westwood, MA

Q&A 15, a position (with no particular reason noted or cited) which stated that individuals who were incarcerated were not eligible to receive EIP payment(s) under the CARES Act. If you will recall, there was an uproar when the public learned that the database used for issuing payments included criminals who were incarcerated. The IRS moved to demand a return of the payments.

What didn’t make the headlines in the same way was an Action, filed on behalf of those who were being denied an EIP as a result of the FAQ – Scholl v. Mnuchin, USDC ND CA, Case No. 4:20-cv-05309 (10/14/20).

The plaintiffs argued that the FAQ was incorrect, and that they had been harmed by

denial of an EIP payment. The Service argued that an FAQ is an informal publication

found on the agency’s web page, and that it was not subject to judicial review under the

federal Administrative Procedures Act (APA) since it was neither a final decision nor an

interpretation of law.

The Court looked to the conditions which must exist under the APA which would allow

the judiciary to take a look and it found that there are two requirements…

“First – the action must mark the consummation of the agency’s decision-making

process…Second – the action must be one by which the rights or obligations have been

determined, or from which legal consequences will flow.” Cited as authority: US Army

Corps of Engineers v. Hawkes Co, 136 S.Ct. 1807 (2016).

Did the guidelines, as laid out by the US Supreme Court in Hawkes, allow the Court in

Scholl to take a look? Here is what the Court determined…

The FAQ took the unequivocal position that incarcerated individuals were not eligible for

an EIP payment. (First requirement met)

The CARES Act requires the government to issue EIP payments to individuals who

meet the criteria specified by Congress (in the Act). By denying the incarcerated

individuals an EIP payment, and by relying on the FAQ as their authority for so doing

(no particular reason noted of cited), the government denied the payments to a specific

segment of the population. (Second requirement met)

Yes, the Court did have standing under the APA to review the FAQ and its attendant

consequences. “Accordingly, the court finds that the IRS’s determination that

incarcerated individuals are ineligible for an EIP is a final agency action.”

The eventual outcome in this case is not important to our discussion. What is important

is that the IRS went beyond where the typical FAQ is supposed to go, and turned it into

a “final agency action” as opposed to “…restatements of existing law and filing

procedures…” and not interpretations of statute or procedures. See IRS homepage

(1996) wherein the IRS posted FAQs on a web page for the first time.

FAQs, as we know them and notwithstanding the Scholl circumstances outlined above,

are not intended to be binding (final) guidance. According to the Internal Revenue

Manual (IRM) – see IRM § (1/10/18) “…FAQs that appear on but that

have not been published in the (Internal Revenue) Bulletin are not legal authority and

should not be used to sustain a position unless the items (e.g. FAQs) explicitly indicate

otherwise or the IRS indicates otherwise by press release or by notice or announcement

published in the Bulletin.”

This brings us back to what an FAQ is intended to be – guidance but not authority.

However, now comes the Internal Revenue Service [IR 2021-202 (10/12/21)] to tell us

that FAQs which we relied upon because they were posted on the IRS web site (but not

in the Internal Revenue Bulletin) will not result in the imposition of a negligence or other

accuracy related penalties if the “alternative to guidance published in the Bulletin” turns

out to be incorrect. This slightly upgrades the IRS FAQ. However, the IRS has again

reiterated that “FAQs typically provide responses to general inquiries rather than

applying the law to taxpayer-specific facts…FAQs that have not been published in the

Bulletin will not be relied on, used, or cited as precedents by Service personnel in the

disposition of cases.”

What to take home from this reading---An FAQ is not authority; it is a cannot be relied

upon opinion as to what the law allows. Unfortunately, it has become more and more

the only “resource” available in certain tax situations because the IRS is unable to

devote the time needed to prepare more formal and authoritative guidance. Now we

have been given some protection from accuracy and negligence penalties if we FAQ

information in our practice and that information turns out to be less than accurate.

Thursday, October 21, 2021


As was mentioned at our seminar class last week, the IRS now requires all e-filers to have a Data Security Plan.

Compliments of our speaker, John Sheeley, EA, we have been offered a free 1 CE on-demand program which takes tax pros through the process.

Please send John a THANK YOU if you have a moment -

Bitcoin Miners Look to Nuclear Power

William Delaney, EA
Westwood, MA

At our recent federal tax seminar, one of the topics had to do with what are bitcoins

and other similar "currency" and how are these transactions reported and taxed.  What

we didn't discuss, but what might be of interest to everyone, are the following excerpts

from an article (titled as above) in the Wall Street Journal dated 9/27/2021 (page B9)...

"Mining bitcoin is an energy-intensive process.  To unlock more of the currency, miners

must solve mathematical puzzles that become increasingly complex, which means they

require more computing power---and electricity...The way to boost the odds of figuring out

the puzzle is to put more machines to work."

"Talen Energy Corp. has entered into a joint venture with bitcoin-mining company 

TeraWulf Inc., which has started land development for a mining facility the size of four

football fields next to its (Talen Energy's) Pennsylvania nuclear plant...We are building

demand adjacent to the existing nuclear plant."

"For bitcoin miners, the partnership allows them to promote projects as having an

environmentally friendly source of power.  'That was the big difference for us,' said

Maxim Serezhin, chief executive at Standard Power, which is building a

nuclear-powered bitcoin-mining facility at a former paper mill in Coshocton, Ohio."

Who knew that nuclear power was environmentally friendly?  This was news to your

editor as he read the WSJ article.  But, what do I know about anything, I'm over age 35?

Tuesday, October 5, 2021

Penalty for Failure to Deposit Deferred Taxes Really Hurts

Mary Mellem, EA

A part of the Covid relief provisions permitted employers to defer the deposit of the matching Social Security taxes applicable to payroll during most of the 2020 calendar years.  The provision requires the employers to deposit ½ of these deferred taxes by December 31, 2021; and the other ½ of these deferred taxed by December 31, 2022.


Now IRS Office of Chief Counsel has released PMTA 2021-07:  Penalty for Failure to Deposit Taxes Deferred Under CARES Act Section 2302(a)(2).


Briefly this PMTA states the failure of the taxpayer to make the full deposits timely will cause the taxpayer to be subject to the normal “failure-to-deposit” penalties.  The penalties will apply from the date the deposit would have NORMALLY been due if the deferral had not taken place under the normal deposit rules.


The failure to deposit 100% of the deferred taxes by their applicable date (½ by 12/31/21, and ½ by 12/31/22) means the entire deferred taxes were required to be deposited by their original deposit dates as if the deferral did not take place.


For example - Taxpayer A is a monthly depositor.  Taxpayer deferred $10,000 of applicable taxes.  Taxpayer paid $4,900 by December 31, 2021, instead of the required $5,000.  RESULTS -


Taxpayer A did NOT deposit the required ½ of these taxes by December 31, 2021.  Taxpayer A is in default of the provisions of the deferral option.  Therefore, Taxpayer A is subject to penalties for failure to deposit.  Deferred taxes from March 2020 that were due April 15, 2020, are now subject to the failure-to-deposit penalty for not being deposited by April 15, 2020.  And for not depositing the April 2020 taxes by May 15, 2020, the April deferred taxes are now subject to the failure-to-deposit penalty for not being deposited by May 15, 2020.  Etc.  In other words, the penalty will apply to every amount that was deferred.


This same result applies if the any of the second ½ of the deferral is not deposited by December 31, 2022; the entire deferred amounts are deemed due on their original deposit dates and are subject to penalties for not being made timely, going back to the original dates.


This is a reason some employers may want to pay the first ½ of the deferred taxes soon, instead of waiting until December 31, 2021.  And some may want to pay the second ½ of the deferred taxes as soon as they have the funds available instead of waiting until December 31, 2022.  Missing the deadline by any amount could make the taxpayer subject to serious failure-to-deposit penalties on the ENTIRE deferred taxes.


HOW DO EMPLOYERS MAKE THE REQUIRED PAYMENTS?  Here is the information found on when we typed “deferral of reemployment tax deposits” in the SEARCH box:

“Q&A 29. How can an employer pay the deferred amount of the employer's share of Social Security tax it owes before the applicable date by which the deferred amount of the employer's share of Social Security tax must be deposited and paid? (added July 30, 2020)


The employer may pay the amount it owes electronically using EFTPS, by credit or debit card, or by a check or money order. The preferred method of payment is EFTPS. If an employer is using EFTPS, in order to pay the deferred amount, an employer that files Form 941 should select Form 941, the calendar quarter in 2020 to which its payment relates and payment due on an IRS notice in EFTPS. An employer that files annual returns, like the Form 943, 944, or CT-1, should select the return and 2020 tax year to make a payment.


For example, if an employer that files Form 941 wants to pay $300 of its deferred employer's share of Social Security tax, $100 of which is attributable to the second calendar quarter of 2020, and the other $200 of which is attributable to the third calendar quarter of 2020, the employer must make two payments through EFTPS. Each payment should be made for the calendar quarter to which the deferral is attributable, and the entry in EFTPS must reflect it as a payment due on an IRS notice. Thus, the employer would pay $100 for the second calendar quarter of 2020 using EFTPS and select payment due on an IRS notice in EFTPS while doing so and would also separately pay $200 for the third calendar quarter of 2020 using EFTPS and make the same selection.


For more information, visit, or call 800-555-4477 or 800-733-4829 (TDD).”



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

Thursday, September 16, 2021


2021 Annual Meeting & Seminar

Massachusetts / Rhode Island NATP Chapter Annual Meeting & Educational Seminar October 16th 2021

Join the Massachusetts / Rhode Island NATP Chapter on Saturday, October 16th 2021 for our Annual Meeting & Educational Seminar. This all day event will be held at the Southbridge Hotel & Conference Center. We are offering both in-person and virtual option via webinar. Registration details are below, and is handled online by National. Take a look at the details on our speaker and topics provided in this great Continuing Education  opportunity including continental breakfast, snacks, lunch, vendors and great networking opportunities (In-Person). This seminar is limited to the First 100 Registrants!

  • For online registration FOR IN PERSON MEETING, click here.
  • For online registration FOR VIRTUAL MEETING, click here.
  • To register by phone, fax or mail, click for the registration form.
  • After October 14th, please print the form (see link above) and register at the door.

Registration 7:00 am to 8:00 am (Continental Breakfast Included)
Education 8:00 am to 6:00 pm (Webinar Log-in 7:55 am)
Annual Meeting Prior to Lunch (Lunch Included)

CE Credits -
9 Federal Tax Law Topics FOR IN-PERSON Attendees Only

Speaker - John Sheeley, EA


  • Schedule E-Beyond the Basics: Deciding which activities belong on a Schedule E or another Schedule like C, F or even line 21. Analyze appropriateness of IRC 121.
  • Crowd Funding: Raising funds for charitable purposes, business start-ups and medical funds and how to report them.
  • Data Security in the Tax Office: Best practices as suggested by industry and the IRS Security Summit.
  • S Corps: Options and misconceptions.
  • Taxation of Crypto Currencies: Overview of IRS related position on reporting and examination and how to complete due diligence.

Chester, New York based John Sheeley, EA began his career in the tax industry in 1987, passing the IRS special enrollment exam in 1995. His career includes 13 years as a multi-unit franchisee of a national tax firm and 5 years as a tax manager at a regional CPA firm in New York. A National Tax Practice Institute fellow, John completed his undergraduate education at the State University of New York at Oswego.

John formed his current tax services firm in 2008, with a focus on the tax and representation needs of U.S. citizens living abroad, and non‐resident alien entrepreneurs and entertainers living and working in the United States. The Firm prepares the occasional cannabis industry and crypto currency tax return.

John is also the founder of Tax Practice Pro, Inc, a national continuing education provider. His current teaching focus centers on taxation of legal marijuana businesses, problems of S corps, and taxation of non-resident aliens and those living abroad. He can be reached at

Thursday, August 26, 2021

Massachusetts Joins Rhode Island In A Mostly Successful Attempt To Work Around The Federal $10,000 Itemized Deduction (SALT) Limitation.

William Delaney, EA
Westwood, MA

Under RI Gen. Laws §44-11-2.3, a pass through entity (S corporation; partnership), is permitted to make an annual election “by filing the prescribed tax form and remitting the appropriate tax.” [§(a)(1)] “…to pay the state tax at the entity level…” [§(a)(5)(b)(1)] A proportionate credit for state tax paid shall be allowed on the owner’s RI personal income tax return [(a)(5)(d)]. Effective 7/1/2019.

§(a)(4) defines a pass-through entity as “…a corporation that…is treated as an S corporation…, or a general partnership, limited partnership, limited liability partnership, a member of a limited liability company, a beneficiary of a trust, or a sole proprietor.”

This is a far more expansive definition than its MA counterpart found in Section 1 of the MA legislation (see below), and it appears to exceed the relied upon authority found in IRS Notice 2020-75 (see page 2), which limits the concept to “…taxes imposed on and paid by a partnership or an S corporation on its income.” (editor’s commentary).

The current MA state budget (enacted 7/16/2021) adds new Chapter 63D to the Taxation of Pass-Through Entities (Chapter 63) of MGL. An “eligible pass-through entity” is defined as an S corporation; a partnership; an LLC which elects S corporation taxation [Section 1]. See also comments (above) regarding the comparable RI language which defines a pass-through entity.

“An eligible pass-through entity may elect to pay an excise on its qualified income taxable in Massachusetts at a rate of 5 per cent. A qualified member (defined as a shareholder of an S corporation or a partner in a partnership) of an electing pass-through entity shall be allowed a refundable tax credit computed proportionately but limited to 90% of the amount apportioned. The credit may only be claimed for the tax year in which the eligible pass-through entity’s taxable year ends (usually a calendar year) [Section 2]. RI does not reduce the apportioned credit amount.

The election is to be made on an annual basis, “…in a manner determined by the commissioner…” and “…shall not be revoked.” It applies to all members of the entity. [Section 6]. If the SALT limitation is subsequently repealed, the tax credit will no longer apply [Section 3].

The applicable federal concept is that this taxation scheme qualifies under federal law as a tax imposed on income which is an allowable federal deduction (state income tax expense) against pass-through income (but see commentary on page 1 regarding the expansive RI definition of a pass-through entity). The deduction is added back to pass-through income for purposes of both RI and MA personal income taxation. Authority is IRS Notice 2020-75 effective November 9, 2020, which states that the IRS “…intend(s) to issue proposed regulations…”. Specifically, as authority used by both RI and MA…


.01 Purpose and scope. “…the forthcoming proposed regulations will clarify that Specified Income Tax Payments (as defined in section 3.02(1) of this notice) are deductible by partnerships and S corporations in computing their non-separately stated income or loss.”

.02(1) “…the term Specified Income Tax Payment means any amount paid by a partnership or an S corporation to a State, a political subdivision of a State…(Domestic Jurisdiction) to satisfy its liability for income taxes imposed by the Domestic Jurisdiction on the partnership or the S corporation.” Apparently, it does not matter that the tax is self-imposed by election and not uniformly imposed by statute (editor’s commentary).

.02(2) “…the partnership or S corporation is allowed a deduction for the Specified Income Tax Payment in computing its (federal) income for the taxable year in which the payment is made.”

.02(4) “Any Specified Income Tax Payment…is not taken into account in applying the SALT deduction limitation to any individual who is a partner in the partnership or a shareholder of the S corporation.” This is the work-around the $10,000 limitation because the specified income tax payment is outside of the limitation (not taken into account) when claiming itemized deductions (editor’s commentary).