Conner Ash P.C.

The Congressional Budget Office (CBO) has announced that the estimated federal budget deficit for the first quarter of fiscal year 2021 is $572 billion, $215 billion more than the deficit recorded during the same period in 2020. In its Monthly Budget Review: December 2020, the CBO reports that first-quarter receipts totaled $803 billion, which was $3 billion (or 0.4%) less than last year. Individual income tax receipts dropped by $38 billion (or 9.9%). Payroll tax receipts grew by $31 billion (or 10.7%). Withholding fell by $17 billion (or 3%). This was attributed to a decline in wages and legislation enacted in response to COVID-19. Read the full budget review here: https://bit.ly/39o7JmF

A taxpayer with a foreign account worth more than $10,000 in the preceding year must report the account and file a Report of Foreign Bank and Financial Accounts (FBAR). One U.S. citizen living in Israel was charged penalties for willful failure to timely file FBARs on 17 accounts. A U.S. District Court found his failure was non-willful (which would limit the penalty to $10,000). The IRS imposed a penalty of $170,000 ($10,000 for each of 17 accounts). The taxpayer argued that the penalty should be per FBAR form, not per account. Citing the FBAR instructions, which say the form is used to report multiple accounts, the court agreed, and capped the penalty at $10,000. (Kaufman, DC CT, 1/11/21)

Did you know that eight out of 10 taxpayers receive their income tax refunds using direct deposit? The reason, according to the IRS, is that filing electronically and choosing direct deposit is the fastest way to receive a refund. In fact, the IRS uses the same electronic transfer system to deposit tax refunds that’s used by other federal agencies to deposit nearly 98% of all Social Security and Veterans Affairs benefits into millions of accounts. Also, direct deposit avoids the possibility that a refund check could be lost or stolen. For more information, contact us or visit: https://bit.ly/3a42Az3

Who's ready for some football

Here’s a reminder about the IRS’s new e-filing requirements for tax-exempt organizations (EOs). In 2019, The Taxpayer First Act amended the tax code to require most EOs to e-file their returns and related forms. The requirement to e-file applies to tax years beginning after July 2, 2019. EOs that file Form 990 or Form 990-PF must e-file their returns for tax years ending July 31, 2020, and later. The rules are different for EOs that file Form 990-EZ. For tax years ending before July 31, 2021, the IRS will accept either a paper or e-filed Form 990-EZ. But for tax years ending on or after July 31, 2021, Form 990-EZ must be e-filed.