Tax

How is the IRS doing? According to key leaders on the inside, not so good. The Treasury Inspector General for Taxpayer Administration’s (TIGTA) interim report combined with the National Taxpayer Advocate's midyear report highlighted a federal agency that was already struggling to keep up … and then COVID-19 hit. Subsequent rounds of stimulus legislation and changing tax laws created what Erin Collins, National Taxpayer Advocate, called a “perfect storm.”

The financial and economic conditions created for Atlanta families, individuals, and businesses, by the COVID-19 pandemic have been very challenging. For many businesses, initial stay-at-home and forced business closures meant a steep drop in revenue almost overnight. Faced with this reality, difficult decisions about employee furloughs and terminations were made. The result was a sharp increase in unemployment.

At the end of April, the Biden Administration introduced the American Families Plan (AFP), comprehensive legislation that calls for an investment of $1.8T through grants and tax credits for family and educational programs.  As part of President Biden’s larger economic recovery package, it proposes universal preschool, two years of free community college, paid medical leave, an extension of the Child Tax Credit, Earned Income Credit, and the Child and Dependent Care Credit.

As the COVID-19 pandemic persists, Atlanta individuals, families, and businesses are feeling the impact of restrictive government orders and health mandates in schools, at work, and other public places. While the arrival of the vaccine has helped to curb the number of new infections, there is still much work to be done as Georgia has only distributed 67% of received doses. Over the coming weeks, many will line up to receive either the first or second inoculation and manage with the side effects.

For businesses substantially affected by COVID-19, the employee retention credit (ERC) has been one of the more valuable incentives to keep workers on the payroll. Since its inception in March 2020, the ERC has undergone several modifications and extensions which has increased the credit’s value. There was an initial extension for the first half of the year in the Consolidated Appropriations Act, 2021, (CAA) and then another through the end of the year in the American Rescue Plan Act. The changes are meant to provide additional relief to businesses challenged by the pandemic.

Since the American Rescue Plan Act of 2021 (ARPA) was signed by President Biden, there has been a flurry of changes and updates impacting individual taxpayers. Initially, attention was focused on the distribution of the $1,400 economic impact payment and shifted to other issues such as the 2020 tax exemption on certain unemployment benefits. Attention quickly changed when it was announced the IRS would extend the individual tax filing deadline by 32 days to May 17th.

The Georgia Department of Revenue (GDOR) announced yesterday the state will also be extending the 2020 individual tax filing deadline from April 15, 2021, to May 17, 2021.

On the same day, the IRS issued millions of taxpayers the economic stimulus payment outlined in the American Rescue Plan Act of 2021; they also announced an extension to the individual tax filing deadline. The original date of April 15th has been the standard deadline but was modified last year during the COVID-19 pandemic.

The persistent COVID-19 pandemic continues to create economic and financial challenges for government agencies, businesses, organizations, and individuals. While there has been a reduction in the number of new cases, thanks in part to the vaccine, many of the protective restrictions across Atlanta remain. It is against this backdrop that President Biden signed the American Rescue Plan Act of 2021 (the Act) into law.

Alabama’s tax environment is known to favor simplicity and taxpayer-friendly policies. Despite this positive reputation, conflicts between state and federal taxation can leave taxpayers hanging in the balance. Recent tax reform, which passed both chambers of the legislature unanimously, provides a solution for some of the uncertainty caused by the Tax Cuts and Jobs Act and COVID-19.