Tax Updates in 2022: What You Need to Know
The repercussions of the COVID-19 pandemic are unprecedented and have shaken up lives worldwide,
particularly in the different organizations. It significantly impacted labor markets, economies, businesses, and worldwide supply networks, resulting in widespread organizational disruptions and financial difficulties as businesses struggled to fund essential operational expenditures.
The government has responded to such market volatility and instability and has provided a way to ease the pain of businesses. “Congress has approved and President Trump has signed the Coronavirus Aid, Relief, and Economic Security (CARES) Act, a massive tax-and-spending package intended to provide additional economic relief to address the impact of the COVID-19 pandemic. The CARES Act Fund provides $2.2 trillion of economy-wide financial stimulus in financial aid to individuals, businesses, nonprofit entities, states, and municipalities.” For example, the government grants funds to organizations such as higher education institutions to cover the costs of shifting classes online and helping students facing financial difficulties due to the COVID-19 pandemic. Funding may be utilized to help with course materials, technology, accommodation, food, healthcare, and other related expenses.
It is apparent how the government has saved thousands of organizations and how the funds have supported them in carrying out their missions. However, after receiving such government contributions, businesses will be required to report on their activities, financial position, and cash flows throughout the crisis. The government has already issued a report outlining impending audits of CARES Act funds granted to various organizations. The report is more than a reminder to businesses about the significance of keeping solid records for all funds received and that increased scrutiny connected to the approaching audit should be taken seriously.
Form and Filing Changes
Being aware of various changes in the tax world is part of being upfront about the approaching audit. Forms and filing modifications can significantly influence the organization’s filings. Staying up to date on tax developments may help organizations ensure their filings are accurate and thorough. This article discusses the factors that management and auditors must consider while generating and auditing financial statements.
Especially since the IRS is quite particular about how documents are prepared and filed, an organization may be audited if there are any irregularities or mistakes. It is critical to stay up to date on any required form changes to ensure that forms and filings are accurate and complete.
Recent changes include (https://www.cbiz.com/insights/articles/article-details/not-for-profit-tax-updates-to-know-in-2022):
● 2020 Form 990: Numerous form updates were made to the not-for-profit information return, including further instructions for the CARES Act’s Paycheck Protection Program (PPP) loans.
● Excise Tax on Excess Compensation: Final regulations were issued on Jan. 21, 2021, and are applicable for tax years beginning after Dec. 31, 2021. Internal Revenue Code Section 4960 imposes an excise tax on applicable tax-exempt organizations (and related organizations) that pay remuneration in excess of $1 million or any excess tax parachute payment to any covered employee. The tax also applies if severance greater than three times regular compensation is paid to a covered even if that amount is less than $1 million. Most should be familiar with these rules with the proposed regulations going into effect in 2018.
● Donor Disclosure Changes: Last summer, the U.S. Supreme Court struck down California’s law requiring charitable organizations to disclose the names and addresses of donors who contributed more than $5,000. New Jersey and New York have posted on their websites that they will no longer require charities to fill out Schedule B with the Attorney General’s office.
● 1023 Application: There are numerous changes that were made to the 1023 application.
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Organizations that have received funding should prepare for the new form and filing changes and speak with a professional accounting provider if they have questions or concerns about implementing the new standard. HWA Alliance of CPA Firms, Inc. (HWAA) is mainly composed of audit professionals with extensive expertise in serving various industries and delivering audits of varying complexity. HWAA promises assurance, accuracy, and peace of mind, dedicated to helping you succeed. We can help your organization navigate these compliance requirements or strategize how you can best position your organization. Allow us to handle the complexity of compliance so you can continue to provide essential services to your community. Get your taxes done right away with us!
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