Dear Clients and Friends,
Season’s Greetings from all of us at Beverly and Bucker! We hope that the holidays find you in good health and high spirits. As we prepare for the upcoming tax season, we have some news for our clients and a few announcements.
We’re excited to welcome back Marcel Kay and Christy Gray this tax season! Marcel, a Fredericksburg native, has been with us for three years and has continued his work in the local community between tax seasons. This will be Christy’s second year with us and we are happy to announce that she has passed the Individual Tax portion of the Enrolled Agent Exam. These exams are tough and require a great knowledge of tax preparation. We’re very proud of Christy and glad to have her on the team. As always, we look forward to implementing our knowledge to provide our clients with the best service this tax season.
Last year was a doozy! We had several clients who were surprised by their results, mostly due to under-withholding. It appears that many payroll departments were using inaccurate tax tables and not taking out enough. We’ve checked in with several clients and it seems like the tax tables are more accurate this year, but it’s always good to make sure that you have enough federal and state tax withheld. IRS has provided a “paycheck checkup” on their website. Please visit if you would like to see if you are underwithheld in 2019. If you have concerns, please contact me and we can discuss if an estimated payment is necessary. If you need to make an estimated payment for 2019 it will be due January 15th, 2020.
● Businesses: Note that Partnership and S-Corp business returns are due March 15th If you are a Corporation, S-Corp, Partnership, or Self Employed business owner, we request that you to drop off your information by January 31st, 2020. In many cases, our accounting department will need to complete Year-End Statements for your company that are then used to prepare your tax return. If we do not receive the necessary info to prepare your Year-End Financial Statements by Jan. 31, 2020, we may have to file an extension for your business return. This does not mean that you will incur penalty, be considered late, or be forced to file an extension for your personal returns. We intend to file all returns by or before April 15th. If you know that you would like an extension, feel free to call in now so that we can add you to our list. If you do not want an extension, it is imperative that we receive your information well in advance of the March 15th deadline.
● Investments: If you have investments and receive the brokerage statement in midMarch, we recommend that you drop off your tax papers or make your appointment before receiving these forms. This allows us to prepare the majority of your return in advance. We will be able to apply the brokerage statements as soon as they arrive and complete your return. If you wait to drop off all of your forms before receiving this statement, your taxes may need to be filed for extension.
● Appointments: Please schedule your appointment soon as spaces fill up quickly. If you are unable to find an appointment with your preferred tax preparer, please know that we are all here to provide quality service and prepare accurate tax returns to get you the best results.
● Drop off service: For your convenience, we also offer a drop-off option which saves many clients from having to take time away from work. We are happy to correspond via phone or email while preparing dropped off returns if there are any questions or concerns. Documents can be dropped off at our front desk during office hours or in the drop-off slot to the left of our front door after hours. Please include a phone number with any information you drop off.
● Client Organizer: Client organizers serve as a type of checklist for your tax information. If we’ve prepared your returns in the past, your organizer will show items that you have provided in prior years. Please contact us to request a client organizer if needed. We can send the organizer via mail or email, or you can pick one up in person.
IRS has been sending more letters than we have ever seen before. We responded to twice as many letters in 2019 than we have in any other year. It is possible that this is due to IRS automating more of its correspondence in an attempt to minimize fraudulent returns. Regardless of the reason, it appears that this will continue for the foreseeable future. Know that if we fail to report information that you have provided to us, causing IRS to send a letter of adjustment, we will correspond for you free of charge. However, due to the recent increase in the volume of letters from IRS, we must charge a fee to respond to letters not caused by preparation error.
We would like to reiterate that the IRS will never contact taxpayers via phone. If you receive a phone call from a person or machine claiming to be from the IRS, please disregard or call us immediately. We are here to answer any questions concerning correspondence to or from IRS.

Tax Alerts
Tax Briefing(s)

The IRS has provided guidance regarding whether taxpayers receiving loans under the Paycheck Protection Program (PPP) may deduct otherwise deductible expenses. Act Sec. 1106(i) of the Coronavirus Aid, Relief, and Economic Security (CARES) Act ( P.L. 116-136) did not address whether generally allowable deductions such as those under Code Secs. 162 and 163 would still be permitted if the loan was later forgiven pursuant to Act Sec. 1106(b). The IRS has found that such deductions are not permissible.

Treasury and the Small Business Administration (SBA) have worked together to release the Paycheck Protection Program (PPP) Loan Forgiveness Application. According to Treasury’s May 15 press release, the application and correlating instructions inform borrowers how to apply for forgiveness of PPP loans under the Coronavirus Aid, Relief, and Economic Security Act (CARES) Act ( P.L. 116-136). The PPP was enacted under the CARES Act to provide eligible small businesses with loans during the COVID-19 pandemic.

Eligible individuals who are not otherwise required to file federal income tax returns for 2019 may use a new simplified return filing procedure to make sure they receive the Economic Impact Payments (EIPs) provided by the Coronavirus Aid, Relief, and Economic Security (CARES) Act ( P.L. 116-136).

To encourage businesses that have experienced an economic hardship due to COVID-19 to keep employees on their payroll, the Coronavirus Aid, Relief, and Economic Security (CARES) Act ( P.L. 116-136) has provided several new credits for employers, including a new employee retention credit. The IRS has issued a fact sheet summarizing a few key points about the new credit.

The Treasury Department and the IRS have provided tax relief to certain individuals and businesses affected by travel disruptions arising from the coronavirus (COVID-19) emergency.

The IRS and the Employee Benefits Security Administration are extending certain timeframes during the Outbreak Period for group health plans, disability and other welfare plans, pension plans, and participants and beneficiaries of these plans during the COVID-19 National Emergency. The beginning of the Outbreak Period is March 1, 2020. The end date is yet to be determined.

Due to the 2019 Novel Coronavirus outbreak (COVID-19), the IRS has provided increased flexibility with respect to:

  • 2020 mid-year elections under a Code Sec. 125 cafeteria plan related to employer-sponsored health coverage, health Flexible Spending Arrangements (health FSAs), and dependent care assistance programs; and
  • grace periods to apply unused amounts in health FSAs to medical care expenses incurred through December 31, 2020, and unused amounts in dependent care assistance programs to dependent care expenses incurred through December 31, 2020.

The IRS has released proposed regulations that address changes made to Code Sec. 162(f) by the Tax Cuts and Jobs Act (TCJA) ( P.L. 115-97). The proposed regulations provide operational and definitional guidance on the deductibility of fines and penalties paid to governmental entities.

A partnership was denied a charitable contribution deduction because it had entered in an conservation easement that violated the perpetuity requirement of Code Sec. 170(h)(5) and its regulations. The Tax Court held that if there is a judicial extinguishment of an easement the donee receives a proportionate value of any proceeds.

The IRS has released proposed regulations clarifying that the following deductions allowed to an estate or non-grantor trust are not miscellaneous itemized deductions:

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