Hurricane Ida Tax Relief in NY: Updates and Extensions

In the wake of Hurricane Ida’s destruction across parts of New York and New Jersey, lawmakers have extended certain federal tax deadlines. Various individual and business tax returns and payments, previously due on September 15 or October 15 of 2021, will now be accepted until January 3, 2022. The new federal deadline also applies to:

  • Individuals who had a valid extension to file their 2020 return that is due to run out on Oct. 15
  • Quarterly estimated income tax payments, due on Sept. 15
  • Quarterly payroll and excise tax returns, normally due on Nov. 1
  • Tax-exempt organizations, operating on a calendar-year basis, that had a valid extension due to run out on Nov. 15

Penalties on payroll and excise tax deposits, due on or after Sept. 1 and before Sept. 16, will be abated as long as the deposits are made by Sept. 16.

Regions Affected

According to the IRS, they are offering relief to any area designated by the Federal Emergency Management Agency (FEMA) as qualifying for individual or public assistance. In New York, this currently includes Bronx, Kings, New York, Queens, Nassau, Richmond and Westchester counties, and in New Jersey, it includes Bergen, Gloucester, Hunterdon, Middlesex, Passaic and Somerset counties.”

Suffolk County on Long Island has been declared ineligible to qualify for these tax deadline extensions.

Visit the IRS website for updates on eligible localities.

Additional Guidance

The IRS automatically provides filing and penalty relief to any taxpayer with an IRS address of record located in the disaster area.

Further, they will work with any taxpayer who lives outside the disaster area but whose records necessary to meet a deadline occurring during the postponement period are located in the affected area. Taxpayers qualifying for relief who live outside the disaster area need to contact the IRS at 866-562-5227.

Not sure whether your tax payments fall under these deadline extensions? As always, we are here to help. Contact us at (631) 368-3110.

CEO Brief: Alan Sasserath Spotlighted in HIA-LI Reporter

Learn more about Managing Partner Alan Sasserath, CPA, MS and the future of Sasserath & Co.

Tell us about how you/your company started.

I started my career at Ernst & Young, later working at two large regional firms before being a named partner at my own firm for over two decades. Over the years, I’m thankful to have become the go-to advisor for my clients – from domestic and international businesses to high-net-worth individuals – on their most sophisticated tax, M&A, planning, and business issues.

In 2021, it was time for me to launch my new firm, Sasserath & Co., to pursue my passion of helping clients solve their most complex business and financial challenges. Our technical expertise and holistic approach are unique among accounting firms, enabling us to provide clients with extraordinary value. In addition to our tax, M&A, and planning services, I am also proud to offer critical family office services, helping clients navigate tax, estate, and financial planning in the most comprehensive, streamlined, and efficient manner possible.

What was a turning point for you/your company?

A turning point for Sasserath & Co. was the launch of the new firm this year! The firm was created with a laser-focus on clients and ensuring they receive the attention they deserve. We are thrilled to launch this new chapter and are ready to help clients navigate the many opportunities and challenges that are presented now and in the future.

At the new firm, our sophisticated offerings in tax and accounting for closely held businesses, private equity services, M&A, and international tax are coupled with the superior level of service, value, and professionalism that our clients have come to expect. While it’s a new firm and new location, I’m happy to be joined by my partners Lynn Montag and George Batas, as well as many other longtime colleagues.

What is your philosophy at Sasserath & Co.?

At Sasserath & Co., we help clients grow and prepare for future transitions. We understand that every client has unique and individual needs. That’s why our philosophy is to approach all clients and matters holistically. If you are looking for an accounting firm to meet with once a year to get your taxes done, we’re not the firm for you. We don’t operate in a vacuum; we endeavor to become our clients’ partners and understand all aspects of their business, so we can provide them with immense value. As part of this approach, we also work closely with carefully and strategically chosen partners in law, M&A, and other professional services, enabling us to evaluate our clients’ businesses from all critical angles and help them best plan for the future.

Tell us about your company’s profile today.

Sasserath & Co. is focused on service. Whether the client is a closely held business, a large or small company with international operations, or a high-net-worth family, they will receive the dedication and broad approach we are known for. The firm serves as a tax and business advisor to both corporations and small businesses, understanding the inner workings of their companies and advising on both complex and routine matters that affect their bottom line.

The depth and breadth of our services is unique, particularly among Long Island firms. On the international side, the firm works with both foreign corporations as well as U.S. entities doing business abroad. We make sure to advise on the ever-changing rules, regulations, and tax strategies by tapping into our international network of talented individuals at the top of their fields from all over the globe.

What opportunities do you see in the future?

The next phase of Sasserath & Co. is to continue to build our services and take care of our clients using our technical expertise and critical guidance. Our goal is for clients to feel like they have a trusted partner at their side that can manage all aspects of their most complex and important affairs.

As we continue to navigate the pandemic and beyond, we aim to be a leader in the accounting world, providing up-to-date knowledge on state and federal programs that impact our clients’ business planning. As new programs and initiatives are rolled out post-pandemic, Sasserath & Co. will continue to advise clients and assist Long Islanders and worldwide clients in their tax and accounting needs.

The new firm is headquartered in Ronkonkoma, a hub of Long Island businesses and steps from MacArthur Airport, which places Sasserath & Co. in the epicenter of economic advancement. As the firm continues to grow, now is the time to find new people to grow with us as we continue to expand.

Sasserath Launches Sasserath & Co.

Boutique Firm to Focus on Sophisticated Tax and Accounting, Private Equity, Mergers & Acquisitions, International Tax Services, and Private Client Services

Alan R. Sasserath, CPA, MS, is pleased to announce the launch of a new firm, Sasserath & Co. The boutique firm focuses on sophisticated and technical tax and accounting for closely held businesses, private equity services, mergers and acquisitions, and international tax services. In addition, the firm offers private client services to manage high-net-worth clients’ needs including tax, estate, and financial planning.  At the new firm, these offerings are coupled with the superior level of service, value, and professionalism that clients have come to expect from Sasserath and his team. The new firm is headquartered in Ronkonkoma, a hub of Long Island business and steps from MacArthur Airport. Sasserath is joined by partners Lynn Montag, CPA and George Batas, CPA, MS, as well as many other longtime colleagues.

“The vision behind Sasserath & Co. is to create a firm entirely devoted to giving clients the attention they deserve, and we’re thrilled to launch this new chapter,” said Managing Partner Alan Sasserath. “We thank our clients and valuable business partners for enabling us to get to this point, and we look forward to helping them navigate the many opportunities and challenges that present themselves now and in the future.”

Sasserath & Co.’s depth and breadth of services is unique, particularly among Long Island firms. On the international side, the firm works with both foreign corporations as well as U.S. entities doing business abroad, advising on the ever-changing rules and regulations and tax strategy. Sasserath & Co. also provides essential guidance to clients buying or selling businesses, maximizing the value of their sale or acquisition. The firm also serves as a tax and business advisor to corporations and small businesses, understanding the inner workings of their companies and advising on both complex and routine matters that affect their bottom line. Sasserath & Co. also offers critical family office services to high-net-worth individuals and families who need a trusted partner to manage all aspects their most complex and important affairs.

Alan Sasserath has over 30 years of public accounting firm experience with a broad background in accounting, tax, audit, and financial planning. His technical experience includes working with high-net-worth individuals and closely held businesses. His industry experience includes technology, real estate management, construction, printing, as well as numerous service industries. In his new venture, Sasserath is also capitalizing on the opportunity to service high-net-worth clients with a distinctive holistic approach.

NYS Pass-Through Entity (PTE) Tax Considerations

By Alan R. Sasserath, CPA, MS and George Batas, CPA

On April 19, 2021, New York Governor Andrew Cuomo signed into law the FY 2022 budget which denotes changes to the state’s corporate and personal income tax provisions. One of the changes includes the highly anticipated Pass-Through Entity (PTE) Tax election, which will allow partnerships and New York S corporations to work around the $10,000 state and local tax (“SALT”) deduction limitation.

The new PTE tax election is effective for tax years on or after January 1, 2021. Elections are to be made annually and once made, are irrevocable for that year. The current election due dates are as follows:

  • For 2021, election to be made no later than October 15, 2021.
  • For future calendar years, by March 15th.

Election Overview

The PTE tax election is made at the entity level for eligible partnerships and S corporations. For partnerships, corporate partners are excluded from the election. The PTE tax election only applies to individual partners as outlined below:

  • Non-resident partners: New York sourced income.
  • Resident partners: All income included in the taxable income of a New York resident partner.

If elected, all partnerships/shareholders are opted in as there is no mechanism to elect out.

For S corporations, the election must be made by an authorized manager, shareholder, or officer.

Tax rate (based on aggregate income)

The PTE tax is imposed at the following rates:

  • 85% on income up to $2,000,000
  • 65% on income from $2,000,001 – $5,000,000
  • 3% on income from $5,000,001 – $25,000,000
  • 9% on income over $25,000,000

Estimated Tax Payments

The law provides that in 2021, electing PTEs are not required to make estimated tax payments. However, PTE owners are still required to make estimated tax payments for 2021. In other words:

  • The individual estimated tax penalty is calculated without regard to the PTE tax credit; and
  • If the individual owner wishes to avoid the estimated tax penalty, they will likely have an overpayment on their New York personal income tax return equal to their New York tax liability.

Even though estimated tax payments are not required for 2021, cash basis entities may have to make a payment by December 31, 2021, to ensure a 2021 tax deduction.  Currently, there is no mechanism to make such a payment.

Partnerships/S corporations are advised to obtain estimated tax waivers from all its non-resident partners to ensure that they are not liable to pay estimated tax payments, too.

New York State permits residents to claim non-resident credits against their tax liability for similar PTE taxes paid to other states. However, other states may or may not permit such a credit.

Tax Credit

The PTE tax paid at the entity level will be allocated to each individual owner as a refundable credit against their New York State tax liability. If there is a refund of a portion of the credit referred to above, such amount should be included in Federal taxable income in the year received.  Please note that this is our interpretation of the rule and individual owners should consult their tax advisors. Such credit will be required to be added back to their New York State taxable income.

The IRS released guidance in November 2020 approving that PTE taxes paid at the entity level are deductible for federal tax purposes. Pass-through entities should analyze the rules in each state they have nexus and/or shareholders in to determine whether it will be beneficial to make the election. Although we are still waiting for additional guidance on the NYS PTE rules, it is important to get an understanding of how this can benefit the partners/shareholders of your company. As additional guidance is released, we will keep you updated.

If you have any questions about the application of these regulations, please contact us at 631-368-3110. As always, we are available to help.

 

Sasserath Joins CMM Cares, Inc.’s Board of Directors

CMM Cares, Inc. has announced the election of Alan R. Sasserath, CPA, MS, Partner at Sasserath & Zoraian, LLP, to their Board of Directors. CMM Cares is a 501(c)3 and major supporter of veterans, children, and the arts on Long Island through fundraising, volunteering, and awareness campaigns. With the addition of Sasserath to its Board, CMM Cares is poised to make an even more significant impact within the community in 2021.

Sasserath, Partner at Sasserath & Zoraian, LLP, brings over 30 years of public accounting firm experience to his role with CMM Cares. With his strong background in accounting, tax, audit, and financial planning and his experience taking both Long Island and international businesses to the next level, Sasserath brings critical technical expertise to CMM Cares’ philanthropic efforts.

“Alan Sasserath has been an integral resource for businesses on Long Island,” said Victoria Tringone, Executive Director of CMM Cares. “We are excited to have him join the Board of Directors to bring our ideas and initiatives to the next level.”

At the start of the year, Sasserath was also elected to the Board of Directors for HIA-LI, a nonprofit member group of local businesses who aim to be a powerful force and economic engine for regional development on Long Island. An active supporter of various organizations, Alan is also a member of New York State Society of CPAs (NYSSCPA), SBC Global Alliance, International Tax Practitioners, and American Institute of Certified Public Accountants (AICPA).

Employee Retention Credit & Paycheck Protection Program Loans

Getting Ahead of the March 31st Deadline for Each

By Alan R. Sasserath, CPA, MS

A number of our friends and clients were/are eligible for Paycheck Protection Program (“PPP”) second draw loans AND the expanded Employee Retention Credit (“ERC”). March 31, 2021 is a critical day for each program.

With regard to the ERC, March 31st marks the end of the first quarter of 2021 that a taxpayer could be eligible for the 2021 expanded ERC. The general requirements (very high-level) to be eligible for this credit are: (1) that the taxpayer have a greater than 20% decline in gross receipts for the first quarter of 2021 when compared with the first quarter of 2019 and (2) have less than 500 employees. Even if a taxpayer applied for and received a second draw PPP loan, they can use wages paid during the first quarter of 2021 that will not or cannot be used for PPP loan forgiveness towards the ERC. The ERC is significant in that it could be worth up to $7,000 per employee per quarter.

If a taxpayer believes they will qualify for the ERC in Q1 2021, we are advising clients to contact their payroll company before their last payroll in March so they can claim the credit with the filing of the quarterly payroll tax return. Some payroll companies have sent information out regarding the ERC. Our concern is that if the payroll company is not notified ahead of time and they file the payroll tax return in the ordinary course of business (sometimes shortly after the last payroll of the quarter), then the taxpayer will be forced to claim the ERC on an amended payroll tax return. If the IRS gets flooded with such amended payroll tax returns, we don’t know what the processing time on those amended returns could be. That is why we think it is critical to get ahead of this now.

Current processing times for amended personal income tax returns are unusually long. We have clients that filed amended income tax returns in May of 2020 that are yet to be processed. The amended payroll tax returns will go to a different unit at the IRS, but again, who knows what they are prepared for and what kind of volume they will have to process.

With regard to the PPP, March 31st is the deadline for applying for second draw PPP loans. While the SBA provides PPP guidelines, each lender has their own rules regarding the application process. If you haven’t applied for the second draw PPP loan or have been holding off for one reason or another, do not miss this deadline! It is important to contact your lender now and find out the requirements for applying if you have not already done so.

As always, we are available to help. Don’t hesitate to contact us at 631-368-3110.