Click the following link for up-to-date instructions on how stop payments, return payments, and how to update your information for payments.

How did the summer go by so fast? 
Extension deadlines are around the corner! 

If we do not have all of your information by the following document deadline dates (with the exception of pending K-1s) we cannot guarantee your returns will be filed by the extension deadlines.

(You will be responsible for all late filing and late payment penalties should you neglect to provide all documents needed by our document deadlines.)

Partnership & S-Corp Deadline
IRS Deadline:  September 15, 2021
Document Deadline:  August 2nd

Estate & Trust Deadline
IRS Deadline:  September 30, 2021
Document Deadline:  August 2nd

Individual & C-Corp Deadline
IRS Deadline:  October 15, 2021
Document Deadline:  August 30th

Friendly reminder that your 2021 2nd Quarter Estimates
are due June 15, 2021.

Why waste a check when you can pay online?

South CarolinaClick here to pay online
Federal:  Click here to pay online

 As many of you are aware, the deduction for state and local taxes (SALT) is limited to $10,000 on an individual’s income tax return. Many states have passed laws to workaround this limitation and have the tax paid and deducted at the entity level. On May 17, South Carolina became one of those states.

Per Bill S627, partnerships and S corps may elect to have their active trade or business income taxed at 3% and paid by the entity. The tax paid would then be deductible by the entity. The election must be made by the due date of the entity’s return, including extensions, and the election is applicable for tax years after December 31, 2020.

An important item to note is the entity can only pay tax on active trade or business income. This has not been expressly defined, but we are assuming that it follows the same guidelines as for individuals. This means that we do not expect most rentals or any guaranteed payments to qualify.

While we are still waiting on more detailed guidance, this entity-level tax will provide a nice deduction for many business owners who have had their SALT deductions limited. With potential tax reform there is a chance the SALT cap will be eliminated or modified. If that happens, this workaround could be for naught. We will keep you updated as we learn more.

Your TLG Team

By: Sharon Kreider, CPA

Article Note:

  • The SBA began accepting Restaurant Revitalization applications on May 3.
  • The Restaurant Revitalization Fund (RRF) is a first-come-first-serve program.
  • The Paycheck Protection Program ends on May 31, 2021.

Finally, April 15, I mean May 17, is almost behind us.  We should get a breather for at least a few weeks. We should, but “no.”  Our business clients have something else in mind as they wait impatiently for us to get back to their business. Two items loom: The Restaurant Revitalization Fund grant program and the (second draw) Paycheck Protection Program.

The Paycheck Protection Program ends on May 31, 2021. All eligible entities can apply through a participating lender until then. We’ve done this before when we helped clients with the first draw PPP loans. We can do it again.  If you need a refresher, second draw loan details are available on the SBA website. If the client hasn’t yet applied, there’s not a lot of time to work with the client (probably a small business client who doesn’t know they qualify for an additional PPP loan) to get their application into the lender.

The Restaurant Revitalization Fund grants are new.  The SBA began accepting applications on May 3.  This is a first-come-first-serve program.  If you have restaurant, bar, or other qualifying business clients, the earlier the application is submitted, the more likely the business will get government money to help them recover from COVID close-downs, capacity limits, and customer caution.

Restaurant Revitalization Fund Program Details

The American Rescue Plan Act (ARPA) established the Restaurant Revitalization Fund (RRF) to provide funding to help restaurants and other eligible businesses keep their doors open. This program provides restaurants with funding equal to their pandemic-related revenue loss up to $10 million per business and no more than $5 million per physical location.

ARPA funded the restaurant revitalization program with $28.6 billion.  Of that amount, set-asides have been established for small businesses.

  1. $5 billion is set aside for applicants with 2019 gross receipts of not more than $500,000.
  2. An additional $4 billion is set-aside for applicants with 2019 gross receipts from $500,001 to $1,500,000.
  3. An additional $500 million is set-aside for applicants with 2019 gross receipts of not more than $50,000.

Eligible entities who have experienced pandemic-related revenue loss include:

  • Restaurants,
  • Food stands, food trucks, food carts,
  • Caterers,
  • Bars, saloons, lounges, taverns,
  • Snack and nonalcoholic beverage bars,
  • Bakeries (onsite sales to the public comprise at least 33% of gross receipts),
  • Brewpubs, tasting rooms, taprooms (onsite sales to the public comprise at least 33% of gross receipts)
  • Breweries and/or microbreweries (onsite sales to the public comprise at least 33% of gross receipts),
  • Wineries and distilleries (onsite sales to the public comprise at least 33% of gross receipts),
  • Inns (onsite sales of food and beverage to the public comprise at least 33% of gross receipts),
  • Licensed facilities or premises of a beverage alcohol producer where the public may taste, sample, or purchase products.
Calculation of revenue loss

For applicants in business before January 1, 2019: 2019 gross receipts minus 2020 gross receipts minus PPP loan amounts. For applicants that began operations partially through 2019: (average 2019 monthly gross receipts x 12) minus 2020 gross receipts minus PPP loan amounts. For applicants that began operations on or between January 1, 2020, and March 10, 2021, and applicants not yet opened but have incurred eligible expenses: amount spent on eligible expenses between February 15, 2020, and March 11, 2021 minus 2020 gross receipts minus 2021 gross receipts (through March 11, 2021) minus PPP loan amounts.

Required documentation

Documentation is required for the revenue loss calculation. Preferred documentation is:

  • 3 most recent months of bank statements for the account into which RRF funds will be deposited.
  • 2019 Gross Receipts – Federal Tax Returns filed (Forms 1120, 1120S and 1065, or Schedules C and F;
  • 2020 Gross Receipts (Federal Tax Returns filed, Point of Sale reports, or externally or internally prepared financial statements such as Income Statements or Profit and Loss Statements, signed, dated & certified as to accuracy by Applicant (may delay review past 14 days).
  • Additional documentation is required for Applicants: a brewpub, tasting room, taproom, brewery, winery, distillery, bakery, or Inn to evidence that onsite sales to the public comprise at least 33% of gross receipts for 2019.
  • In addition, businesses will be required to submit IRS Form 4506-TRequest for Transcript of Tax Return, completed and signed by the applicant.

Applications are made through SBA-recognized Point of Sale (POS) vendors or directly via SBA in an online application portal:  An SBA 3172 sample application is available for download on the SBA website.

The SBA began accepting RRF applications on May 3, 2021. The first 21 days are reserved for processing applications for businesses owned at least 51% by women, veterans, and socially and economically disadvantaged individuals.  Socially disadvantaged individuals are defined as those who have been subjected to racial or ethnic prejudice or cultural bias.


After the first 21 days, the SBA will fund eligible businesses on a first-come basis UNTIL FUNDING IS EXHAUSTED.

Repaying the grant

Recipients are not required to repay the funding if funds are used for eligible expenses no later than March 11, 2023. Funds may be used for payroll, mortgage payments, rent payments, utilities, maintenance expenses, construction of outdoor seating, supplies, food, and beverage materials (including raw materials0, supplier costs, and operating expenses. Like PPPs, grants are tax-free to the recipient and do not reduce tax deductions for expenses paid with grant proceeds.

Businesses that receive RRF funds will be required to report to SBA no later than December 31, 2021, how they have used their funds for eligible expenses. If, by December 31, 2021, the entity has not expended all its funds, the annual reporting requirement continues until funds have been fully expended.

Sharon Kreider, CPA

Sharon Kreider, CPA, has helped more than 15,000 California tax preparers annually get ready for tax season. She also presents regularly for the AICPA, the California Society of Enrolled Agents, CCH Audio, and Western CPE. You’ll benefit from the detailed, hands-on tax knowledge Sharon will share with you—knowledge she gained through her extremely busy, high-income tax practice in Silicon Valley. With her dynamic presentation style, Sharon will demystify complex individual and business tax legislation. She’s a national lecturer for business and professional groups and consistently receives outstanding evaluations. In 2014, she was awarded the prestigious AICPA 2014 Sidney Kess Award for Excellence in Continuing Education.

Register and Apply through the SBA

Select this option to begin the application process for a Restaurant Revitalization Award. This portal will help you calculate your eligible award amount, monitor status, and interact with the SBA.

Click to Register to Start Your Application

The White House – Fact Sheet: The American Families Plan

President Biden’s April 28 “Fact Sheet: The American Families Plan” contains numerous tax breaks for low and middle earner taxpayers and numerous tax increases on taxpayers “making over $400,000 per year.”

Tax breaks. Here is a summary of the tax breaks in the Fact Sheet:

Extend expanded ACA premiums tax credits in the American Rescue Plan. The American Rescue Plan Act of 2021 (PL 117-2; the American Rescue Plan) expanded the Code Sec. 36B premium credit that is available to many persons who are enrolled in an Exchange-purchased qualified health plan, thus, in effect, lowering health plan premiums for those persons. This expansion applies to 2021 and 2022. The American Families Plan would make those premium reductions permanent.

Extend the Child Tax Credit increases in the American Rescue Plan through 2025 and make the Child Tax Credit permanently fully refundable. The American Rescue Plan made several changes to the Child Tax Credit for 2021. For example, it expanded the Child Tax Credit from $2,000 per child to $3,000 per child for children six years old and above, and $3,600 per child for children under six. It also made 17-year-olds eligible to be qualifying children for the first time and made the credit fully refundable. And, it provided for advance periodic payment of the credits.

The American Families Plan would make permanent the full refundability of the Child Tax Credit, while extending the other expansions to the Child Tax Credit through 2025. “The credit would also be delivered regularly.”
The Fact Sheet says that the President is committed to working with Congress to achieve his ultimate goal of making permanent the Child Tax Credit as well as all of the expansions he signed into law in the American Rescue Plan.
Permanently increase the Child and Dependent Care Credit. The American Rescue Plan made the following changes to the Child and Dependent Care Credit for 2021: it increased the amount of the credit for many taxpayers and made the credit refundable. The American Families Plan would make these changes permanent.

Make the Earned Income Tax Credit expansion for childless workers permanent. The American Rescue Plan made changes that roughly tripled the Earned Income Tax Credit (EITC) for childless workers for 2021. The American Families Plan would make these changes permanent.

Tax increases. Here is a summary of the tax increases in the Fact Sheet:
Increase the top tax rate to 39.6%. The President’s plan would restore the top tax bracket to what it was before the 2017 Tax Cuts and Jobs Act (PL 115-97), returning the rate to 39.6%, applying only to those within the top 1%.
Increase the tax on capital gains for high earners. The Fact Sheet says, “Households making over $1 million-the top 0.3% of all households-will pay the same 39.6% rate on all their income, equalizing the rate paid on investment returns and wages.”

Reducing the step-up in basis at death for some taxpayers. The President’s plan would end the practice of “stepping-up” the basis for gains in excess of $1 million ($2.5 million per couple when combined with existing real estate exemptions) at death and would tax the gains if the property is not donated to charity. The reform will be designed with protections so that family-owned businesses and farms will not have to pay taxes when given to heirs who continue to run the business.

Change taxation of carried interest. The President is also calling on Congress to close the carried interest loophole so that hedge fund partners will pay ordinary income rates on their income.

Cut into the rule for like-kind exchanges. The President would eliminate the like-kind exchange rule with respect to gains greater than $500,000 on real estate exchanges.

Make the excess business loss rules permanent. Under Code Sec. 461(l), for non-corporate taxpayers in tax years beginning after Dec. 31, 2020, and before Jan. 1, 2026, the “excess business loss” of the taxpayer for the tax year, if any, is disallowed. With some modifications, an excess business loss is (1) the excess of the taxpayer’s aggregate deductions for the tax year that are attributable to trades or business of the taxpayer over (2) (A) the taxpayer’s aggregate gross income or gain attributable to those trades or businesses plus (B) a threshold amount. Any disallowed excess business loss is taken into account in determining whether there is an NOL carryover to the following tax year under Code Sec. 172. The American Families Plan would make this rule permanent.

Close loopholes in the 3.8% net investment income tax. Certain unearned income of high-earner individuals, estates, and trusts is subject to a surtax of 3.8%. (Code Sec. 1411)

The Fact Sheet says that the application of this provision is “inconsistent across taxpayers due to holes in the law” and says that the President’s proposal “would apply the taxes consistently to those making over $400,000.”

By Michael Cohn April 23, 2021, 5:26 p.m. EDT

The Internal Revenue Service is holding up millions of tax refunds for manual processing and its systems were unable to process many of the quarterly payments that needed to be sent by April 15.

The IRS is holding approximately 29 million tax refunds that need to be processed manually because of the complexities of some of the recent tax laws passed by Congress. The agency’s systems are also overwhelmed and were unable to process many of the delayed quarterly estimated tax payments that were due April 15, despite pleas from accountant groups like the American Institute of CPAs and the National Conference of CPA Practitioners to delay the payments until May 17 to match the extended filing date.

The recent passage of a number of tax-related COVID-19 relief packages, including the Consolidated Appropriations Act in December and the American Rescue Plan Act in March, required the IRS to send out second and third rounds of Economic Impact Payments to taxpayers. The laws also included provisions requiring the IRS to do “plus-up payments” to provide taxpayers with the maximum amounts of their stimulus payments, as well as take into account expansions in programs like the Earned Income Tax Credit and the Additional Child Tax Credit, along with newer tax credits like the Recovery Rebate Credit.

IRS headquarters in Washington, D.C.

“In total, the IRS is now holding over 29 million returns for manual processing,” wrote National Taxpayer Advocate Erin Collins on her blog Thursday. “As one would expect, IRS employees are stretched thin working through the manual processing of these returns, so if a taxpayer’s return is pulled for manual processing, there will be delays.”

She attributed the delay in part to the late passage of the Consolidated Appropriations Act, which meant the IRS couldn’t adjust its tax forms and computer systems in time before the start of the filing season to allow for efficient processing of tax returns where taxpayers elected to use their 2019 income for claiming some tax breaks. The IRS instead had to create a manual process for doing corrections of the Recovery Rebate Credit, or to verify a lookback election for using 2019 income vs. 2020 income to calculate the EITC or ACTC. Millions of tax returns now need to be manually processed by the IRS’s Error Resolution System unit, and the IRS is placing those returns in “suspense” until an IRS employee is able to review them in order to verify the 2019 income or the prior Economic Impact Payment.

“Essentially, the return is in a queue waiting to be reviewed and processed, and during this time, it is not evident on IRS systems why the return is being held,” said Collins.

As of the week ending April 9, 2021, over 8 million individual 1040 or 1040-SR tax returns were being held in this “suspense” status until review and manual processing can take place. During a normal filing season when the IRS’s Error Resolution System unit is fully operational, it doesn’t typically suspend returns, Collins pointed out. Instead it’s usually able to review and process the tax returns as they arrive.

On top of those 8 million individual tax returns in the IRS ERS unit, millions of others are also awaiting manual processing, including 5.3 million individual 2019 and 2020 paper tax returns; 4.7 million individual returns with processing errors or fraud identification issues requiring responses from taxpayers; and 11 million business and other returns.

The IRS also experienced delays last week in its Modernized e-File system when trying to process the quarterly estimated tax payments that the IRS insisted were due April 15, despite the May 17 extension for filing individual tax returns.

“We identified a delay in processing Form 1040 balance due, Form 1040-X amended, and Form 1040-ES estimated tax payment requests submitted via Modernized e-File,” the IRS announced in a QuickAlert for Tax Professionals on Thursday. “The issue has been resolved, and pending payments are being processed. The taxpayer’s account will be credited with the original requested payment date(s).”

The IRS urged taxpayers not to submit the payments a second time if they were worried the payments didn’t go through. “Taxpayers should not re-submit these payments. If a taxpayer re-submitted any of these payment requests due to the delay in processing they may cancel them by calling 1-888-353-4537,” said the IRS. “Cancellation requests must be received no later than 11:59 p.m. Eastern time, at least two business days prior to the scheduled payment date.”

Some tax professionals were getting worried inquiries from clients when the payments wouldn’t go through last week. “Many advisers began getting calls beginning on April 16 from clients concerned that payments scheduled to have been withdrawn from their accounts on April 15 had not been withdrawn,” wrote Ed Zollars, a partner at Thomas, Zollars & Lynch, in his Current Federal Tax Developments blog for Kaplan Financial Education. “Reports on CPA society discussion forums and on TaxTwitter made it clear that this was not an isolated problem, impacting individuals all across the country. While some tax software providers’ support departments began reporting that the IRS was aware of the problem, the IRS did not publish anything official until a week later on April 22.”

The IRS has been facing an array of challenges this tax season from the pandemic, the constantly changing tax laws and the need to send out the second and third rounds of Economic Impact Payments while also preparing for the launch of a new portal for the expanded Child Tax Credit program by July 1. Not only are its computer systems being overwhelmed, but its call centers are as well. That’s affecting the level of service to the point where the majority of calls are going unanswered.

“You hear from taxpayers and congressional offices all the time, but my understanding is that there have been days where if you calculated by looking at the number of calls that were answered and divide it by the number of calls that came in, the level of service was 2 to 3 percent,” said Nina Olson, executive director of the Center for Taxpayer Rights and the former National Taxpayer Advocate, during a webinar last week hosted by the Urban-Brookings Tax Policy Center. “Even by the IRS’s own calculation, where it does the number of calls that are answered, divided by the number of calls that aren’t routed automatically, it’s at 15 percent. With all the attention on enforcement, you can’t have that level of customer service and think that in any way, you’re having a successful filing season.”

Michael Cohn Editor-In-Chief, AccountingToday.Com 


Click HERE to read the article.

On March 25, 2021, the Senate Budget Committee held a hearing provocatively entitled, Ending a Rigged Tax Code, to outline estate and income tax proposals that would constitute the most progressive tax plan in generations if enacted: the “For the 99.5% Act” and the “Sensible Taxation and Equity Promotion Act” (STEP). These plans are so expansive in reach that they may adversely affect families of modest means.

What’s in the Proposals?

The “For the 99.5% Act” is an ambitious opening argument in the debate over the estate tax.  It proposes the following:

  • Federal estate and the generation-skipping transfer (GST) tax exemption reduced to $3.5 million (down from $11.7 million)
  • The lifetime gift tax exclusion is reduced to $1 million
  • Gift, estate and GST tax rates will be increased up to 65% (from 40%)
  • Valuation discounts for “non-business” assets will be disallowed
  • Curtailment of sophisticated planning strategies
  • Some portion of the assets funding grantor trusts after the enactment of the Act (likely before January 1, 2022) may be includable in the taxable estate
  • Dynasty trusts are limited to 50 years (applies to trusts established before and after enactment)

The STEP Act goes even further by closing the so-called “stepped-up basis” loophole, which allows the basis of assets of inherited property to equal the value on the date of death.

SAX Thoughts – Planning is more important than ever before

Taxpayers should plan now or risk losing what may be a very short window of opportunity.  Keep the following considerations in mind:

  • Estate tax increases under these proposals are dramatic, even for moderately wealthy clients
  • Transferring assets to secure asset protection and business succession purposes will become more difficult if either of these proposals become law
  • Trusts established before these proposals are incorporated into law will enjoy greater flexibility and tax benefits

The debate over the estate tax has already become aggressively progressive and support is growing among a chorus of politicians and their constituents for whom the cries of wealth inequality have been resonating since before the pandemic crisis started.  There is reason to think that these proposals could form the foundation of major tax legislation intended to pay for pandemic relief as well as the expensive infrastructure plan currently being touted by the Biden Administration.

Ultimately there may be a limited window of time to take advantage of significant planning opportunities available under current law.  We encourage you to talk with a Sax advisor  so that we may help you craft plans that can protect and preserve your wealth and the wealth of your family for future generations.


Joy E. Matak

Joy Matak, JD, LLM is a Partner at Sax and Co-Leader of the firm’s Trusts and Estates Practice. She has more than 20 years of diversified experience as a wealth transfer strategist with an extensive background in recommending and implementing advantageous tax strategies for multi-generational wealth families, owners of closely-held businesses, and high-net-worth individuals including complex trust and estate planning.  She can be reached at

Click HERE to read the article by Tax Expert Sharon Kreider, CPA.

I think we all have ideas on what tax reform should look like for a better America. I’m putting a few items in writing as if I were advising President Biden. We should always remember that to provide comprehensive advice on tax policy. We would need to assemble a team that includes domestic and international tax experts, an economist, a statistician, a trend specialist, Dr. Phil, and a fortune-teller.

Three Basic Assumptions

There are three basic assumptions applied in the following discussion of President Biden’s tax proposals.

 (1) Our country has run up a big covid-related deficit, and we will have to pay the deficit down someday.

 (2) Our economy is fragile because of Covid, so legislators will need to consider the immediate impact on our economy of all proposed tax increases. A negative impact may require a delay in implementing what might otherwise be good policy in meeting budget needs.

(3) All changes will require that the “boys and girls” in Congress step across the aisle to address a common good. Dump the “I can’t win unless you lose” philosophy that has prevailed for several years. In the old days, there was horse-trading and barter — otherwise known as compromise. “If you vote for steel tariffs, I’ll vote for an agriculture bill.” A change in Congressional personality is a big assumption.

Our Client’s Question

My wealthy (and very conservative) client called after the election results were apparent and asked, “What is Biden going to do to me? Are my taxes going up?” He didn’t want a wait-and-see answer. He wanted my opinion. I told the client: “Yes, your taxes are going up. The question is when and how much.

Campaign Trail “Promises”

President Biden’s tax policy ideas on the campaign trail included raising taxes on wealthy individuals. He proposed raising the top rate from 37% to 39.6% — the pre Tax Cuts and Jobs Act top rate. He’d tax capital gains and profits interest as ordinary income, at least for those with more than a million dollars of income, and he’d limit tax-deferred exchanges.

Individual Rate Tax Increase

While President Biden said he would raise taxes, he promised that no one with an income of less than $400,000 would see a tax increase. The President would like a more progressive tax system1 and one that redistributes wealth. That sounds like taxing the rich to give to the poor. We might restate the President’s goal as one that raises revenue to pay down our debt and raises revenue to provide additional credits to low-income taxpayers, particularly those suffering from Covid-19 health and work issues.

1 For the data that argues that the US tax system is progressive, see the Tax Policy Center’s Briefing Book, A citizen’s guide to the fascinating (though often complex) elements of the US tax system.

2021 Tax Rate Chart

Here’s the 2021 tax rate chart. As you can see, there isn’t a clean break on the $400,000 number the President used in his campaign. It is unclear if the $400,000 number is per individual. Is it $400,000 single and $800,000 married filing joint? That’s unlikely as the President was aiming his tax increases at the top 1% of taxpayers. In the latest data, the top 1% of taxpayers reported AGI of about $540,000 (SOI FY2018). To meet President Biden’s promises and raise some revenue for the deficit and low-income earner benefits, we might advise that the 35% rate be increased to 37% and that the 37% rate be increased to 39%. If we are trying to respect the fragility of the economy reeling from Covid, making the increases over a few years (i.e., 1% in 2022 and an additional 1% in 2023) might be advisable.

Tax practitioner note. My suggested top-rate isn’t 39.6%. Could we have a rule that we don’t use decimals or fractions in tax law? If you insist on something higher than 39%, add another bracket at 40% for those with income above $1 million, for example.

Taxing Long Term Capital Gains

President Biden has proposed that long-term capital gains (and qualified dividends) be taxed as ordinary income for those with income in excess of $1 million. Granted, the proposed change only affects those with high income, but we have been told that favoring investment helps our economy. There are pros and cons to that statement. The President thinks it is unfair that capital gains are taxed at a lower rate than wages. If I were advising the President, I would remind him how entrenched a reduced tax rate is on long-term capital gains.

Rather than ordinary income as proposed, consider another bracket with a higher rate — perhaps 24% or 25% when taxable income exceeds $1 million, phased in over the next four years. Here is the current long-term capital gains chart for you to look at when considering another tax bracket with a higher rate.

Profits Interest

While we are at it, let’s fix the hedge fund loophole. The hedge fund manager works for the fund and is paid for his or her work with a share of the profits as the fund assets are sold. A profits interest sounds like pay for work, and it really should be ordinary income. Be careful in agreeing with that statement. It would also make the profits interest that a general partner or managing member receives at the sale of the investment property (think apartment building or shopping center) taxable as ordinary income.

Tax Deferred Exchange

President Biden has proposed the elimination of §1031 tax-deferred exchanges for investors with income above $400,000. Tax-deferred exchanges have been in the law since 1921. They are entrenched in tax law, and elimination of the deferral is likely to disturb the real estate market place2. Any change to §1031 will require compromise because some very powerful special interest groups will lobby hard to retain the tax benefit. Perhaps, Mr. President, a limit on the deferral would be more palatable, say $1,000,000 or $2,000,000.

2 There is a 2015 Senate Finance Committee report on repealing §1031 that has some interesting findings and commentary on the economic impact of repeal.