Weekly Legislative Update September 20, 2021

TIA Signs onto Small Business Tax Fairness Act Coalition Letter

Dear Chairman Wyden and Ranking Member Crapo:

 
On behalf of the undersigned organizations, we write to convey our concerns regarding the Small Business Tax Fairness Act (S.2387). While we appreciate the intent to simplify the 199A deduction and eliminate the special rules for specified service businesses, we have serious concerns that the proposed phase out limits will exclude a significant number of small businesses from this important deduction.
 
As you know, the 199A deduction was intended to create some parity between the tax rates for C corporations and the tax rates for pass through entities. Pass through entities are already facing a significant disadvantage by the fact that, while the lower C corporation rates set in 2017 are permanent, the 199A deduction will sunset at the end of 2025. To significantly lower the phase out, while also retaining the 2025 sunset will be extremely harmful for a wide swath of small businesses, many of which are still struggling to survive and recover from the pandemic.
 
Again, while we appreciate the provisions of the proposed bill to simplify the calculations of the 199A deduction and to remove the distinction between different types of pass through entities, the tradeoff) – namely the new complete elimination of the deduction for taxpayers with incomes over $500,000 (with a phase out starting at $400,000) – is far too high for the undersigned organizations to be able to support this legislation.
 
As it considers S.2387, we would urge the Committee to eliminate any income threshold amount which cuts off the deduction entirely, to add a provision to make 199A permanent and to eliminate the restriction on trusts and estates claiming the 199A deduction.
We thank you for your consideration of this matter and stand ready to provide any additional information or support that may be required to help enact these common sense provisions that are so essential to the success of our Nation’s pass-through businesses.
 
Sincerely,
 
Tire Industry Association and other trade associations
 
Renewed Tax Credit Can Help Employers Hire Workers; Key Certification Requirement Applies
 
With many businesses facing a tight job market, the Internal Revenue Service reminds employers to check out a valuable tax credit available to them for hiring long-term unemployment recipients and other groups of workers facing significant barriers to employment.

During National Small Business Week, the IRS is highlighting tax benefits and resources designed to help new and existing small businesses. For any business now hiring, the Work Opportunity Tax Credit (WOTC) may help.
 
Legislation enacted in December extended the WOTC through the end of 2025. This long-standing tax benefit encourages employers to hire workers certified as members of any of ten targeted groups facing barriers to employment. With millions of Americans out of work at one time or another since the pandemic began, the IRS noted that one of these targeted groups is long-term unemployment recipients who have been unemployed for at least 27 consecutive weeks and have received state or federal unemployment benefits during part or all of that time.
 
The other groups include certain veterans and recipients of various kinds of public assistance, among others. Specifically, the 10 groups are:
 
  • Temporary Assistance for Needy Families (TANF) recipients,
  • Unemployed veterans, including disabled veterans,
  • Formerly incarcerated individuals,
  • Designated community residents living in Empowerment Zones or Rural Renewal Counties,
  • Vocational rehabilitation referrals,
  • Summer youth employees living in Empowerment Zones,
  • Supplemental Nutrition Assistance Program (SNAP) recipients,
  • Supplemental Security Income (SSI) recipients,
  • Long-term family assistance recipients,
  • Long-term unemployment recipients.
 
To qualify for the credit, an employer must first request certification by submitting IRS Form 8850, Pre-screening Notice and Certification Request for the Work Opportunity Credit, to their state workforce agency (SWA). Do not submit this form to the IRS.
Normally, Form 8850 must be submitted to the SWA within 28 days after the eligible worker begins work. But under a special relief provision, a Nov. 8, 2021, submission deadline applies to two groups of new hires—qualified summer youth employees living in Empowerment Zones and designated community residents living in Empowerment Zones.
 
To qualify for the Nov. 8 submission deadline, eligible employees must start work on or after Jan. 1, 2021, and before Oct. 9, 2021. Other requirements and further details can be found in Notice 2021-43 and the instructions (.pdf) to Form 8850.
Eligible businesses claim the WOTC on their federal income tax return. It is generally based on wages paid to eligible workers during the first year of employment.
 
The credit is first figured on Form 5884, Work Opportunity Credit, and then is claimed on Form 3800, General Business Credit.
Though the credit is not available to tax-exempt organizations for most groups of new hires, a special rule allows them to claim the WOTC for hiring qualified veterans. These organizations claim the credit against payroll taxes on Form 5884-C, Work Opportunity Credit for Qualified Tax Exempt Organizations.
 
For more information about the Work Opportunity Tax Credit, visit IRS.gov/WOTC.
 
IRS: Hurricane Ida Victims in Mississippi Now Eligible for Tax Relief; Oct. 15 Deadline, other dates Extended to Nov. 1
 
Victims of Hurricane Ida in parts of Mississippi now have until Nov. 1, 2021, to file various individual and business tax returns and make tax payments, the Internal Revenue Service announced recently.
 
The IRS is offering relief to any area designated by the Federal Emergency Management Agency (FEMA) as qualifying for individual or public assistance. Currently, individuals and households affected by Hurricane Ida that reside or have a business in all 82 counties and the Mississippi Choctaw Indian Reservation qualify for tax relief. The current list of eligible localities is always available on the disaster relief page on IRS.gov.
 
“The IRS stands ready to help people and businesses affected by Hurricane Ida, now and in the weeks ahead,” said IRS Commissioner Chuck Rettig.
 
The tax relief postpones various tax filing and payment deadlines that occurred starting on Aug. 28, 2021. As a result, affected individuals and businesses will have until Nov. 1, 2021, to file returns and pay any taxes that were originally due during this period. This means individuals who had a valid extension to file their 2020 return due to run out on Oct. 15, 2021, will now have until Nov. 1, 2021, to file. The IRS noted, however, that because tax payments related to these 2020 returns were due on May 17, 2021, those payments are not eligible for this relief.
 
The Nov. 1, 2021 deadline also applies to quarterly estimated income tax payments due on Sept. 15, 2021, and the quarterly payroll and excise tax returns normally due on Nov. 1, 2021. Businesses with an original or extended due date also have the additional time including, among others, calendar-year partnerships and S corporations whose 2020 extensions run out on Sept. 15, 2021 and calendar-year corporations whose 2020 extensions run out on Oct. 15, 2021.    
 
In addition, penalties on payroll and excise tax deposits due on or after Aug. 28, 2021 and before Sept. 13, will be abated as long as the deposits are made by Sept. 13, 2021.
 
The IRS disaster relief page has details on other returns, payments and tax-related actions qualifying for the additional time.
The IRS automatically provides filing and penalty relief to any taxpayer with an IRS address of record located in the disaster area. Therefore, taxpayers do not need to contact the agency to get this relief. However, if an affected taxpayer receives a late filing or late payment penalty notice from the IRS that has an original or extended filing, payment or deposit due date falling within the postponement period, the taxpayer should call the number on the notice to have the penalty abated.
 
In addition, the IRS will work with any taxpayer who lives outside the disaster area but whose records necessary to meet a deadline occurring during the postponement period are located in the affected area. Taxpayers qualifying for relief who live outside the disaster area need to contact the IRS at 866-562-5227. This also includes workers assisting the relief activities who are affiliated with a recognized government or philanthropic organization.
Individuals and businesses in a federally declared disaster area who suffered uninsured or unreimbursed disaster-related losses can choose to claim them on either the return for the year the loss occurred (in this instance, the 2021 return normally filed next year), or the return for the prior year (2020). Be sure to write the FEMA declaration number – EM-3569 − on any return claiming a loss. See Publication 547 for details.
 
The tax relief is part of a coordinated federal response to the damage caused by Hurricane Ida and is based on local damage assessments by FEMA. For information on disaster recovery, visit disasterassistance.gov.
 
Join TIA for Top Golf in Vegas!
 
For the first time, TIA has organized a golf outing at TopGolf Las Vegas to benefit TIA’s government affairs efforts. Join us for a fun-filled afternoon of golf, laughter, and networking for a worthy cause before the GTE show at Top Golf.
 
There is no pressure – whether you are an avid golfer or have never swung a club, TopGolf is the spot for you. There are many things to do in Las Vegas, there are plenty of places to go to – but if you are looking for a truly unique experience, look no further than TopGolf.
 
The cost is $150 Per Golfer and registration includes 2 hours of golf and refreshments in a private bay. The fun-filled day will include reserved bays, two-hours of golf, and refreshments.
 
The event will take place on October 31st, 2021 from 2-4 pm at 4627 Koval Ln, Las Vegas, NV 89109. TopGolf is located behind the MGM Grand and is a short walk from the strip. There is also plenty of parking available at the complex.
 
We hope you can spend the afternoon with us networking with industry professionals while enjoying some golf and appetizers for a good cause to support the association.
 
We also have sponsorship opportunities available for this event. For more information and to RSVP contact me at rlittlefield2@tireindustry.org
 
CLICK HERE for a registration form.
 
CLICK HERE for a sponsorship form.
 
A HUGE THANK YOU TO OUR SPONSORS SO FAR:
 
AME International
 
Dill Air Controls
 
Stellar Industries