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Welcome to the latest issue of the Newsletter! In this issue, you will find information on Interest Rate Increases, Holiday Closures, PPP Loans, and the Work Opportunity Tax Credit.
As always, if there is anything that you would like to see more of in our newsletters, please let us know.
IRS announces interest rate increases
The Internal Revenue Service announced that interest rates will increase for the calendar quarter beginning October 1, 2022.
For individuals, the rate for overpayments and underpayments will be 6% per year, compounded daily, up from 5% for the quarter that began on July 1. Here is a complete list of the new rates:
- 6% for overpayments (5% for corporations). (payments made in excess of the amount owed)
- 3.5% for the portion of a corporate overpayment exceeding $10,000.
- 6% for underpayments. (taxes owed but not fully paid)
- 8% for large corporate underpayments.
Under the Internal Revenue Code, the rate of interest is determined on a quarterly basis. For taxpayers other than corporations, the overpayment and underpayment rate is the federal short-term rate plus 3 percentage points.
Generally, for a corporation, the underpayment rate is the federal short-term rate plus 3 percentage points, and the overpayment rate is the federal short-term rate plus 2 percentage points. The rate for large corporate underpayments is the federal short-term rate plus 5 percentage points. The rate on the portion of a corporate overpayment of tax exceeding $10,000 for a taxable period is the federal short-term rate plus one-half (0.5) of a percentage point.
The interest rates announced are computed from the federal short-term rate determined during July 2022.
Section 6621.---Determination of Rate of Interest
Section 6621 of the Internal Revenue Code establishes the interest rates on overpayments and underpayments of tax. Under section 6621(a)(1), the overpayment rate is the sum of the federal short-term rate...
holiday closure
The Federal Reserve will be closed October 10th, 2022
In observance of Columbus Day, The Federal Reserve will be closed October 10th, 2022.
If you would like your payroll dated for Friday, October 7th, please have it turned in by Thursday, October 6th.
If you would like your payroll to be dated October 10th or 11th, please have your payroll turned in by October 7th.
All payrolls are due by 12:00 p.m. to ensure a timely deposit.
Holiday Closures
Veterans Day
Thanksgiving & Black Friday
Thanksgiving & Black Friday
November 11, 2022
The Federal Reserve will be closed. ProPay will be open.
Thanksgiving & Black Friday
Thanksgiving & Black Friday
Thanksgiving & Black Friday
November 24 & 25, 2022
ProPay will be closed for both Thanksgiving and Black Friday.
Christmas
Thanksgiving & Black Friday
Christmas
December 26, 2022
The Federal Reserve and ProPay will be closed for Christmas.
paycheck protection program loans
IRS advises that improperly forgiven Paycheck Protection Program loans are taxable
The IRS issued guidance addressing improper forgiveness of a Paycheck Protection Program loan (PPP loan)
The guidance confirms that, when a taxpayer's loan is forgiven based upon misrepresentations or omissions, the taxpayer is not eligible to exclude the forgiveness from income and must include in income the portion of the loan proceeds that were forgiven based upon misrepresentations or omissions. Taxpayers who inappropriately received forgiveness of their PPP loans are encouraged to take steps to come into compliance by, for example, filing amended returns that include forgiven loan proceed amounts in income.
"This action underscores the Internal Revenue Service's commitment to ensuring that all taxpayers are paying their fair share of taxes," said IRS Commissioner Chuck Rettig. "We want to make sure that those who are abusing such programs are held accountable, and we will be considering all available treatment and penalty streams to address the abuses."
Many PPP loan recipients who received loan forgiveness were qualified and used the loan proceeds properly to pay eligible expenses. However, the IRS has discovered that some recipients who received loan forgiveness did not meet one or more eligibility conditions. These recipients received forgiveness of their PPP loan through misrepresentation or omission and either did not qualify to receive a PPP loan or misused the loan proceeds.
The PPP loan program was established by the Coronavirus Aid, Relief and Economic Security Act (CARES Act) to assist small US businesses that were adversely affected by the COVID-19 pandemic in paying certain expenses. The PPP loan program was further extended by the Economic Aid to Hard-Hit Small Businesses, Nonprofits and Venues Act.
Under the terms of the PPP loan program, lenders can forgive the full amount of the loan if the loan recipient meets three conditions.
1. The loan recipient was eligible to receive the PPP loan. An eligible loan recipient:
- is a small business concern, independent contractor, eligible self-employed individual, sole proprietor, business concern, or a certain type of tax-exempt entity;
- was in business on or before February 15, 2020; and
- had employees or independent contractors who were paid for their services, or was a self-employed individual, sole proprietor or independent contractor.
2. The loan proceeds had to be used to pay eligible expenses, such as payroll costs, rent, interest on the business' mortgage, and utilities.
3. The loan recipient had to apply for loan forgiveness. The loan forgiveness application required a loan recipient to attest to eligibility, verify certain financial information, and meet other legal qualifications.
If the three conditions above are met, then under the PPP loan program the forgiven portion is excluded from income. If the conditions are not met, then the amount of the loan proceeds that were forgiven but do not meet the conditions must be included in income and any additional income tax must be paid.
Report Tax-Related Activities
To report tax-related illegal activities relating to PPP loans, submit Form 3949-A, Information Referral.
Taxpayers should also report instances of IRS-related phishing attempts and fraud to the Treasury Inspector General for Tax Administration at 800-366-4484
Work opportunity tax credit
IRS updates Information on tax credit helping businesses to hire certain categories of workers
The IRS updated information on the Work Opportunity Tax Credit (WOTC), available to employers that hire designated categories of workers who face significant barriers to employment. For employers facing a tight job market, the WOTC may be able to help.
The updates include information on the pre-screening and certification process. To satisfy the requirement to pre-screen a job applicant, on or before the day a job offer is made, a pre-screening notice (Form 8850, Pre-Screening Notice and Certification Request for the Work Opportunity Credit) must be completed by the job applicant and the employer.
The Targeted Jobs Tax Credit (TJTC), which preceded WOTC, did not contain a pre-screening requirement. In enacting WOTC to replace the TJTC in 1996, Congress included the requirement that employers pre-screen job applicants before or on the same day the job offer is made. In doing so, Congress emphasized that the WOTC is designed to incentivize the hiring and employment of certain categories of workers.
After pre-screening a job applicant, the employer must then request certification by submitting Form 8850 to the appropriate state workforce agency no later than 28 days after the employee begins work. Other requirements and further details can be found in the instructions to Form 8850.
WOTC has 10 designated categories of workers. The 10 categories are:
- Qualified IV-A Temporary Assistance for Needy Families (TANF) recipients
- Certain veterans, including unemployed or disabled veterans
- The formerly incarcerated or those previously convicted of a felony
- Designated community residents living in Empowerment Zones or Rural Renewal Counties
- Vocational rehabilitation referrals
- Summer youth employees living in Empowerment Zones
- Food stamp (SNAP) recipients
- Supplemental Security Income (SSI) recipients
- Long-term family assistance recipients
- Qualified long-term unemployment recipients.
Although the credit generally is not available to tax-exempt organizations, a special provision allows them to claim the WOTC against the employer's share of Social Security tax for hiring qualified veterans. These organizations claim the credit on Form 5884-C, Work Opportunity Credit for Qualified Tax-Exempt Organizations Hiring Qualified Veterans. Visit the WOTC page for more information.
Frequently Asked Questions
Please reach us at Payroll@propaytexas.com if you cannot find an answer to your question.
If your company is a semi-weekly tax payer, the total 941 tax liability (found on the Tax Report) will be due the Wednesday or Friday after your check date.
If your company is a monthly tax payer, the total 941 tax liability will be due on the 15th of the following month.
We ask that you email or fax us any IRS notices, state unemployment notices, state withholding notices, or anything that pertains to payroll.
You may email us at payroll@propaytexas.com or fax us at (806) 356-9393.
Yes. ProPay is a third-party sender with Amarillo National Bank. The agreement we are asking you to sign highlights the relationship between ProPay and our clients, and ProPay and Amarillo National. Even if you bank with another bank, we need you to sign the document and return it to us.
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