Update for Tax Practitioners

As we close out 2020 and prepare for the next “busy season,” there are a number of updates CPAs and tax practitioners need to be aware of. Here are some of the highlights:

E-SIGNATURES

IRS

The Internal Revenue Service (IRS) has released more information on proper protocols surrounding E-Signatures. The IRS “Closer Look” article on E-Signatures can be found here. The IRS also hosted a webinar specifically on E-Signature verification process and Power of Attorney for one hour with the public on December 10. This webinar titled, “Uploading Forms 2848/8821 with electronic signatures” an archive of this webinar will be on IRS.gov shortly. Until then, these are the slides released with information on E-Signatures.

Tax practitioners should take note, those participating in E-Signatures will need an E-Services account which takes 3-4 weeks to register and set up. Participants should begin this process immediately to be prepared for the January system change for E-Signatures.

Georgia Department of Revenue

On December 11, the Georgia Department of Revenue (GA DOR) also sent out an email notifying the public of a regulation hearing stating that, “Administration Rules for E-Signatures and remote notarizations are being proposed for adoption and amendment by the GA DOR. Interested parties seeking to comment, comment period ends on January 11, 2021, on the proposed Rules should review the notice for further guidance.” The notice and an exact copy and synopsis of the proposed Rules may be found on the GA DOR’s website at: Notice ADMIN 2020-2. Members of The Georgia Society of CPAs are encouraged to read these proposed regulations and send individual comments as needed.

NEXUS

When the COVID-19 pandemic hit, Nexus was temporarily suspended by most states including Georgia. The definition of “temporary” is seemingly in a gray area and is debatable if it is still being applied now that Governor Kemp, and other Governors in other states, have lifted and then reapplied many of the restrictions and stay at home orders that first occurred when the pandemic began. In July the GA DOR issued a notice from the legal department that states that the temporary protections provided under this guidance will extend for periods of time where:

  1. There is an official work from home order issued by an applicable federal, state or local government unit, or
  2. Pursuant to the order of a physician in relation to the COVID-19 outbreak or due to an actual diagnosis of COVID-19, the employee is working at home. Additionally, the subsequent 14 days are included in the time period to allow for a return to normal work locations.

CPAs should be mindful that these rules are not the same in every state. For example, South Carolina has extended its suspension of Nexus several times with the most recent date of it returning being June 30, 2021. Meanwhile, other states in the northeast of the country are still operating under Nexus.

CONFORMITY

The Georgia Legislature passed conformity during their extended session in 2020, and Georgia’s Governor signed it on June 30, 2020. As the Georgia Conformity Bill states: “the provisions of the United States Internal Revenue Code of 1986, as amended, provided for in federal law enacted on or before March 27, 2020” will be conformed to with certain exceptions. This language was intentional, as The CARES Act, being signed on March 27, 2020, fell within this date range.

Currently another stimulus package is making its way through the US House and Senate with hopes of being signed before the end of the year. If Congress manages to pass another package, Georgia’s Legislature will need to address conformity in the upcoming session and make some decisions on conformity for 2020 returns.

CHANGES TO FORMS

1040- Congress has released changes to the 1040 for 2020. See the new version here.

1065 K1- Many changes have been released regarding the partnership return changes to Form 1065. Practitioners are strongly urged to re-read the instructions for this form specifically, as significant changes have been made. Filers may view the 1065 K1 on irs.gov draft forms.

Additionally, GSCPA’s Tax Talk with Art and Anson featured an in-depth discussion on all changes related to the 1065 K1 form which may be purchased here.