Author Archives: Coleman Jackson

Podcast – The United States Citizenship Act of 2021 | LEGAL THOUGHTS

Coleman Jackson, P.C. | Transcript of Legal Thoughts Podcast
Published February 25, 2021.

The United States Citizenship Act of 2021

Legal Thoughts is a podcast presentation by Coleman Jackson, P.C., a law firm based in Dallas, Texas serving individuals, businesses, and agencies from around the world in taxation, litigation and immigration legal matters.

This particular episode of Legal Thoughts is a podcast where the Attorney, Coleman Jackson is being interviewed by Reyna Munoz, Immigration Legal Assistant of Coleman Jackson, P.C.   The topic of discussion is “The United States Citizenship Act of 2021”.  You can listen to this podcast by clicking here:

You can also listen to this episode and subscribe to Coleman Jackson, P.C.’s Legal Thoughts podcast on Apple Podcast, Google Podcast, Spotify, Cashbox or wherever you may listen to your podcast.

TRANSCRIPT:
ATTORNEY:  Coleman Jackson
Legal Thoughts
COLEMAN JACKSON, ATTORNEY & COUNSELOR AT LAW

ATTORNEY:  Coleman Jackson

Welcome to Immigration Thoughts

  • My name is Coleman Jackson, and I am an attorney at Coleman Jackson, P.C., a taxation, litigation, and immigration law firm based in Dallas, Texas.
  • Our topic for today is: The United States Citizenship Act of 2021
  • Other members of Coleman Jackson, P.C. are Yulissa Molina, Tax Legal Assistant; Reyna Munoz, Immigration Legal Assistant; and Mayra Torres, Public Relations Associate.
  • On this “Legal Thoughts” podcast our immigration legal assistant, Reyna Munoz, will be asking the questions and I will be providing the answers to the questions on this very important immigration topic: “The United States Citizenship Act of 2021.

Interviewer:  Reyna Munoz, Immigration Legal Assistant

Question 1:

Attorney, I have been hearing a lot about President Biden’s Immigration Bill proposal. Can you tell me what this is all about?

Attorney Answers Question 1:

  • Yes, Reyna. On January 20, 2021, the Biden Administration released a statement that states his immigration bill named the United States Citizenship Act of 2021 has been sent to Congress. This immigration bill creates a road map to citizenship for undocumented people, it keeps families together, embraces diversity, promotes immigrant and refugee integration and citizenship. Not only that, but it also includes growing the economy, it protects workers from exploitation and improves the employment verifications process.
  • This immigration bill also discusses border protection by supplementing existing border resources with technology and infrastructure, manages the border and protects border communities, cracks down on criminal organizations, addresses the root cause of migration, improves immigration courts, and supports asylum seekers and other vulnerable populations.
  • We are not sure if this bill will get through Congress, but we believe it is important to educate the public on the contents of this immigration bill proposal.

Interviewer:  Reyna Munoz, Immigration Legal Assistant

Question 2:

Attorney, if this bill passes, who benefits from it?

Attorney Answers Question 2:

  • If this bill passes undocumented people will be able to apply for temporary legal status. After five years, if they pass a criminal and National security background check and pay their taxes, they will be able to apply for a green card.
  • Furthermore, dreamers, TPS holders, and immigrant farmworkers who meet specific requirements are eligible for green cards immediately under this legislation.
  • Keep in mind that this is an administration proposal. It must be negotiated and approved by both the U.S. House of Representatives and the U.S. Senate and signed by the President in order to become law.  There could be many modifications and compromises along the way.  And this comprehensive immigration proposal may never become law.

Interviewer:  Reyna Munoz, Immigration Legal Assistant

Question 3:

Attorney, what about US citizenship? Will undocumented people be able to apply for citizenship at any point?

Attorney Answers Question 3:

  • Yes, Reyna. As a matter of fact, all green card holders who pass additional background checks and demonstrate knowledge of English and U.S. civics can apply to become United States citizens.

Interviewer:  Reyna Munoz, Immigration Legal Assistant

That is amazing news!

Question 4:

What about the people that have an approved family-sponsorship petition outside of the United States?

Attorney Answers Question 4:

  • This comprehensive immigration bill proposal provides a section on keeping families together. Those that have an approved family-sponsorship petition will be allowed to join their family in the United States on a temporary basis while they wait for green card to become available.

Interviewer:  Reyna Munoz, Immigration Legal Assistant

Question 5:

Attorney, does the bill state anything on integration for immigrants and refugees?

Attorney Answers Question 5:

  • Yes, the bill provides funding for state and local governments, private organizations, educational institutions,community-based organizations, and not for profit organizations. This funding is to expand programs and promote integrations and inclusion. It will also increase English-language instructions and provide assistance to individuals seeking to become citizens.

Interviewer:  Reyna Munoz, Immigration Legal Assistant

That is great to hear, attorney!

Question 6:

How will this immigration bill help grow the United States economy?

Attorney Answers Question 6:

  • This bill will give the Department of Homeland Security the authority to adjust green cards based on macroeconomic conditions and it will incentivize higher wages for non-immigrant, high-skilled visas to prevent unfair competition with American workers. It will also provide dependents of H-1B visa holders work authorizations and children will be prevented from aging out of the system.

Interviewer:  Reyna Munoz, Immigration Legal Assistant

Question 7:

How will this immigration bill protect undocumented people in the workplace?

Attorney Answers Question 7:

  • This bill will protect migrant and seasonal workers by increasing the penalties for employers who violate labor laws. It also grants greater access for U-Visa for workers who suffer serious labor violations and cooperate with worker protection agencies.
  • Also, DHS and the Department of Labor will be required to establish a commission involving labor, employer, and civil rights organization to make recommendations for improving the employment verification process.

Interviewer:  Reyna Munoz, Immigration Legal Assistant

Question 8:

Attorney, if this bill passes it will be very helpful for the undocumented community that meet certain requirements. However, what does this bill have to say in regards to border security and crime?

Attorney Answers Question 8:

  • Reyna, you are right. If this bill passes it will be a great help for a lot of undocumented people. However, it will also provide more robust border security. This bill will provide funding for training and continuing education to promote agent and officer safety and professionalism. It will also provide budget to deploy technology to expedite screening and enhance the ability to identify narcotics and other contraband at every land, air, and seaport of entry. This bill also gives the ability to prosecute individuals that are involved in smuggling and trafficking networks.

Interviewer:  Reyna Munoz, Immigration Legal Assistant

Question 9:

It’s good to hear that this bill also addresses border security and targets criminal activity. Does the bill say anything about finding the root source of migration?

Attorney Answers Question 9:

  • Yes Reyna. This immigration bill will also dedicate funds to find the underlying cause of migration. It will also increase assistance to El Salvador, Guatemala, and Honduras. It will also re-establish the Central American Minors program which will reunite children with U.S. relatives.

Interviewer:  Reyna Munoz, Immigration Legal Assistant

Question 10:

Thank you, Attorney, for that information. What else does the bill say about protecting vulnerable individuals that are undocumented?

Attorney Answers Question 10:

  • Well Reyna, this bill will reduce immigration court backlogs and will expand training for immigration judges. It will also restore fairness and balance to the immigration system. The bill will also eliminate one year deadline for filing asylum claims and will raise the cap on visas from 10,000 to 30,000.
  • The U.S. Citizenship Act of 2021 sent to Congress by the President is in the first steps of the legislative process. Again, in order for this bill to become law, it must be passed by the U.S. House of Representatives and the U.S. Senate.  There might be many changes along the way as this bill goes through the legislative process. Its fate in the legislative process is unknown.  People should stay tune for further updates.
  • Reyna, do you have any additional questions regarding the United States Citizenship Act of 2021 proposed by President Biden?

Reyna Munoz’s Concluding Remarks:

  • No, I think those are all my questions for now Attorney. Thank you for explaining this important bill that if passed will change the lives of so many people that are undocumented.
  • Our listeners who want to hear more podcast like this one should subscribe to our Legal Thoughts Podcast on Apple Podcast, Google Podcast, Spotify or wherever they listen to their podcast. Everybody take care!  Follow us for more taxation, litigation and immigration Legal Thoughts from Coleman Jackson, P.C., which is located right here in Dallas, Texas at 6060 North Central Expressway, Suite 620 Dallas, Texas 75206.
  • English callers: 214-599-0431 | Spanish callers:  214-599-0432. Portuguese callers:  214-272-3100.

 Attorney’s Concluding Remarks:

THIS IS THE END OF “LEGAL THOUGHTS” FOR NOW

  • Thanks for giving us the opportunity to inform you about “The United States Citizenship Act of 2021.”If you want to see or hear more taxation, litigation and immigration LEGAL THOUGHTS from Coleman Jackson, P.C. Stay tuned! We are here in Dallas, Texas and want to inform, educate, and encourage our communities on topics dealing with taxation, litigation, and immigration.  Until next time, take care.

Podcast – Update on Covid-19 Relief for Shuttered Venue Operators, Museum Operators, Motion Picture Theater Operators, and Talent Representatives | LEGAL THOUGHTS

Coleman Jackson, P.C. | Transcript of Legal Thoughts Podcast
Published February 3, 2021.

Update on Covid-19 Relief for Shuttered Venue Operators, Museum Operators, Motion Picture Theater Operators, and Talent Representatives

Legal Thoughts is a podcast presentation by Coleman Jackson, P.C., a law firm based in Dallas, Texas serving individuals, businesses, and agencies from around the world in taxation, litigation, and immigration legal matters.

This particular episode of Legal Thoughts is a podcast where the Attorney, Coleman Jackson is being interviewed by Reyna Munoz, Tax Legal Assistant of Coleman Jackson, P.C.   The topic of discussion is “Update on Covid-19 Relief for Shuttered Venue Operators, Museum Operators, Motion Picture Theater Operators, and Talent Representatives” You can listen to this podcast by clicking here:

You can also listen to this episode and subscribe to Coleman Jackson, P.C.’s Legal Thoughts podcast on Apple Podcast, Google Podcast, Spotify, Cashbox or wherever you may listen to your podcast.

TRANSCRIPT:
ATTORNEY:  Coleman Jackson
Legal Thoughts
COLEMAN JACKSON, ATTORNEY & COUNSELOR AT LAW

ATTORNEY:  Coleman Jackson

Welcome to Tax Thoughts

  • My name is Coleman Jackson, and I am an attorney at Coleman Jackson, P.C., a taxation, litigation and immigration law firm based in Dallas, Texas.
  • Our topic for today is: “Update on Covid-19 Relief for Shuttered Venue Operators, Museum Operators, Motion Picture Theater Operators, and Talent Representatives.
  • Other members of Coleman Jackson, P.C. are Yulissa Molina, Tax Legal Assistant, Leiliane Godeiro, Litigation Legal Assistant, Reyna Munoz, Immigration Legal Assistant and Mayra Torres, Public Relations Associate.
  • On this “Legal Thoughts” podcast our immigration legal assistant, Reyna Munoz will be asking the questions and I will be responding to her questions on this important tax topic: “Update on Covid-19 Relief for Shuttered Venue Operators, Museum Operators, Motion Picture Theater Operators, and Talent Representatives.”

Mayra Torres Introduces Herself to the Audience:

  • Good morning everyone. My name is Mayra Torres, and I am the public relations associate at Coleman Jackson, P.C.  Coleman Jackson, P.C. is a law firm based right here in Dallas Texas representing clients from around the world in taxation, litigation, and immigration law.
  • Attorney we have published three prior podcasts where we discussed various aspects of economic Covid-19 relief offered to individuals and businesses in the Consolidated Appropriations Act, 2021. In Part One of Legal Thoughts Podcast several weeks ago, we spent most of our time talking about stimulus checks.  Then in Part Two, we spent the bulk of our time discussing tax relief in the Act for businesses, such as the Paycheck Protection Program.  And in Part Three that was published a couple of weeks ago, we discussed Discharge of Indebtedness and the Paycheck Protection Program.
  • In this Podcast, we will be discussing various aspects of the Shuttered Venue Operators Grant Program which became law on December 27, 2020.

Question 1:

  • Attorney let’s start right on the basics here! What is the Shuttered Venue Operators Grant Program?

Attorney: Coleman Jackson

ANSWER 1:

  • Good morning Mayra.
  • The Shuttered Venue Operators Grant Program is Section 324 of the Economic Aid to Hard-Hit Small Businesses, Nonprofits and Venues Act signed into law on December 27, 2020 which is designed to give economic relief to hard-hit businesses in the entertaining industry.  It is the U.S. Congress response to the economic turmoil caused by Covid-19 on businesses, entities and organizations in the arts, cultures and entertaining sectors of our communities who have been hard-hit by the devastation of doing all the things scientist have told us to do as a community to contain or bend the curve of the spread of corona virus.  These entertaining venues were hard-hit by venue shutdowns and attendance restrictions throughout this global pandemic and National Health Emergency.
  • The Shuttered Venue Operators Grant Program is Title III, Section 324 of the Consolidated Appropriations Act, 2021.  We have produced and published several Podcast over the last few weeks where discuss various aspects of the Consolidated Appropriations Act, 2021.

Interviewer: Mayra Torres, Public Relations Associate

  • Yes, Attorney, we have published at least three podcasts in recent weeks discussing stimulus payments to individuals, paycheck protection program loans to small businesses, and PPP Loan Forgiveness procedures under the Consolidated Appropriations Act, 2021. Anyone wanting to listen to these prior Podcast can subscribe to our Podcast on Apple Podcast, Google Podcast, Spotify or wherever they listen to their podcast.
  • That is wonderful news about economic grant relief to performing arts venues, museums, and other cultural venues! That is indeed great news, Attorney!  We all have a major interest in seeing our favorite entertainers venues survive this dreadful pandemic and thrive.  What a joy it will be when we can all go out and safely have fun again.  It’s good that the U.S. Congress is sending economic Covid-19 relief to hard-hit businesses in the entertainment, arts and culture sector of the economy.  These businesses survival is critical for everyone’s wellbeing and happiness.  I mean, the arts and culture are very important to us all because arts and culture adds spice, quality, and enjoyment to life.

Question 2:

  • Attorney, what kinds of businesses and organizations are eligible to apply for a Shuttered Venue Operators Grant?

Attorney: Coleman Jackson

ANSWER 2:

  • Mayra, you are right about the need of society for survival of arts and culture venues during this pandemic.
  • The following types of individuals, entities, businesses, and organizations may be eligible to apply for a grant under the Small Business Administration’s Shuttered Venues Operators Program:
    1. Venue Operators;
    2. Event Promotors;
    3. Theatrical Producers;
    4. Live Performing Arts Operators;
    5. Museum Operators;
    6. Motion Picture Theaters Operators; and
    7. Talent Representatives
  • Let me note that the Economic Aid Act for Hard-Hit businesses adopts the term Small Business as defined in the Small Business Act. Hard-Hit business can apply to individuals, business entities and even governmental agencies, under certain circumstances under Section 324 of the Economic Aid Act to Hard-Hit Small Businesses, Nonprofits and Venues Act of December 27, 2020.

Interviewer: Mayra Torres, Public Relations Associate

  • So, movie theaters, promotors, venue operators, and live performing arts venues are among the types of businesses who may apply for a Shuttered Venue Grant under this grant program.
  • Did I get all that right, Attorney?

Question 3:

  • Attorney, can someone listening to our podcast today go out and start a business in the performing arts, movie theaters and entertaining promoter industry and apply for one of these Small Business Administration’s Hard-Hit Shuttered Venue Grants?

 Attorney: Coleman Jackson

ANSWER 3:

  • Mayra, your brief summary of eligible businesses or entities who may be eligible to apply for a grant under the program is right. Your list is not as comprehensive as the laundry list of potentially eligible entities that I listed; however.
  • As for your question about someone listening to this podcast and then going out and starting a business or organization to apply for a Economic Hard-Hit Venues Grant under this SBA Program; not so fast! The business must have been in operations as of February 29, 2020.  If a business started operations in 2020 for the first time, the business must have been fully operational on February 29, 2020.
  • Keep in mind the business will have to demonstrate to the satisfaction of the Small Business Administration that the business has suffered a revenue loss of 25% in 2020 from revenue in 2019 due to the corona virus pandemic. The SBA permits business not in existence in 2019 to use an alternative method to show the 25% decline in business.  In those instances, the SBA looks at the decline in gross revenue for the second, third and fourth quarters of 2020 and compares it with the businesses first quarter gross revenue for 2020.
  • So bottom line: Mayra the answer to your question is NO.  An individual cannot listen to this podcast today and go out and start a new business in the entertaining, promoter, arts venue arena in hopes of applying for a grant under the Economic Hard-Hit venues grant program.  Now whether such individual or business can purchase an existing business that potentially qualifies for the grant?  That could be something that could be considered.

Interviewer: Reyna Munoz, Tax Legal Assistant

QUESTION 4:

  • Attorney, we talked about the Paycheck Protection Program Loan a few weeks ago. Can a business apply for a PPP loan and a grant under the SBA shuttered grants program for small businesses, nonprofits, and shuttered venues?

Attorney: Coleman Jackson

ANSWER 4:

  • Well, that kind of sound like double dipping. But it depends upon when the business or entity received their Paycheck Protection Program Loan.  If the entity applied for and received their PPP loan before December 27, 2020, they can also apply for a Shuttered Venues Grant under the SBA Grant Program for shuttered nonprofits, small businesses, and venues.
  • However, in the event the business applied for and received their PPP loan after December 27, 2020, they are not eligible to apply for a SBA Shuttered Venues Grant. Double dipping is not allowed; however, that business who received a first draw PPP loan can apply and receive a second draw PPP loan under the Consolidated Appropriations Act, 2021.  We talk about the potential and procedures for a second draw loan in our previous podcast on this topic.

Interviewer: Mayra Torres, Public Relations Associate 

  • Attorney, thanks for such a thorough response to my questions about whether a business could apply for and receive both a paycheck protection program loan and an SBA grant under the Shuttered Venues Program. It sounds like your answer is no; unless the business applied for and received their PPP loan prior to December 27, 2020.

Question 5:

  • I was just wondering Attorney. Are grants under the Small Business Administration’s Shuttered Venue Operators Program, loans that must be paid back?  Are they tax free?

Attorney: Coleman Jackson

ANSWER 5:

  • Those are excellent questions, Mayra.
  • No grants under the Small Business Administration Program for shuttered non-profits, small businesses and venues are not loans. A grant does not have to be paid back by the recipient of the grant.
  • And yes, grants received by the business or organization under Title III, Section 324 of the Economic Aid to Hard-Hit Small Businesses, Non-profits and Venues Act are tax free. The grant is not included in the business’s gross income.
  • Section 278 (d) states, in part that “any grant made under section 324 of the Economic Aid to Hard-Hit Small Businesses, Nonprofits, and Venues Act shall not be included in the gross income of the person that receives such grant”.
  • These and other specific tax rules established in the Act applies to all tax periods after the effective date of the Consolidated Appropriations Act, 2021 was December 27, 2020.

Interviewer: Mayra Torres, Public Relations Associate 

  • Attorney it is definitely good news to know that shuttered business operators do not have to pay federal taxes on grants received under this SBA shuttered venue operators grant program. That is relief when relief is needed from the devastation of this dreadful corona virus pandemic.

Question 6:

  • Attorney, how likely an auditor comes knock years from now seeking to examine the books and records of shuttered venue operator who receives one of these SBA shuttered venues grants.?

Attorney: Coleman Jackson

  • Another excellent and thoughtful question, Mayra.

ANSWER 6:

  • Businesses should consult with their trusted advisors in terms of applying with laws and regulations governing Shuttered Venues Act grants. Several federal agencies could be involved in administrating and conducting audit examinations of nonprofits, small businesses and shuttered venues operators who receives these Small Business Administration Shuttered Venues Grants.
  • Subsequent rules and regulations could come from the Small Business Administration, United States Treasury or other governmental agency establishing accountability and proper business accounting for grants received during this pandemic. Businesses should keep good books and records that properly reflect the expenditure of such shuttered venues grant funds for at least seven years.

Interviewer: Mayra Torres, Public Relations Associate 

  • Attorney thanks for such a detailed explanation of discharge of indebtedness and the Paycheck Protection Program.

Mayra Torres’s Concluding Remarks

  • Attorneys thank you this comprehensive and informative presentation on the SBA Shuttered Venue Operators Program.
  • I know we have not talked about everything concerning the Consolidated Appropriations Act, 2021. But these are my questions for now as it relates to the SBA Covid-19 Relief for the Shuttered Venues Operators.  Perhaps we can do another podcast covering other aspects of this topic as time permits and interest by our listeners is communicated to us through calls, emails or otherwise.
  • Our listeners who want to hear more podcast like this one should subscribe to our Legal Thoughts Podcast on Apple Podcast, Google Podcast, Spotify or wherever they listen to their podcast. You can follow our blogs by going to our law firm’s website at cjacksonlaw.com.  Everybody take care for now!  Come back in about two weeks, for more taxation, litigation and immigration Legal Thoughts from Coleman Jackson, P.C., which is located right here in Dallas, Texas at 6060 North Central Expressway, Suite 620, Dallas, Texas 75206.
  • English callers: 214-599-0431; Spanish callers:  214-599-0432 and Portuguese callers:  214-272-3100.

Attorney’s Concluding Remarks:

THIS IS END OF “LEGAL THOUGHTS” FOR NOW

  • Thanks for giving us the opportunity to inform you about the “Consolidated Appropriations Act, 2021 as it relates to the Small Business Administration’s Grant Program for Shuttered non-profits, small businesses and venues”. We might do future blogs or podcast dealing with various other aspects of the Consolidated Appropriations Act, 2021 in the near future.
  • If you want to see or hear more taxation, litigation and immigration LEGAL THOUGHTS from Coleman Jackson, P.C. Stay tune!  Watch for a new Legal Thoughts podcast in about two weeks and check our law firm’s website at www.cjacksonlaw.com to follow our blogs.  We are here in Dallas, Texas and want to inform, educate and encourage our communities on topics dealing with taxation, litigation and immigration.  Until next time, take care.

A GOVERNMENT CONTRACTS LAWYER’S OVERVIEW OF BID PROTEST

By:  Coleman Jackson, Attorney & CPA
March 12, 2021

What is a bid protest in Government Contract

What is a bid protest?

A bid protest is a challenge to the award or proposed award of a contract for the procurement of goods and services or a challenge to the terms of a solicitation for such a contract.

What kinds of bid protests can be filed at GAO?

Protests may be filed against procurement actions by federal government agencies.

What kinds of protests cannot be filed at GAO?

Protests may not be filed against procurement actions by non federal government agencies, such as state, local, or foreign governments, or actions by certain exempted federal agencies, such as the Postal Service. For more information, see Bid Protest Regulations (4 C.F.R. § 21.5) and Bid Protests at GAO: A Descriptive Guide.

Who can file a bid protest at GAO?

Only “interested parties” may file protests. In the case of a solicitation challenge, an interested party is generally a potential bidder for the contract. In the case of a contract award challenge, an interested party is generally an actual bidder that did not win the contract. In addition, other factors, such as the bidder’s standing in the competition and the nature of the issues raised may affect whether it qualifies as an interested party. For more information, see Bid Protest Regulations (4 C.F.R. § 21.0(a)) and Bid Protests at GAO: A Descriptive Guide.

When must a protest be filed?

In general, a protest challenging the terms of a solicitation must be filed before the time for receipt of initial proposals. A protest challenging the award of a contract must be filed within 10 days of when a protester knows or should have known of the basis of the protest (a special case applies where, under certain circumstances, the protester receives a required debriefing). Please be aware that the regulations regarding the timely filing of protests depend on all facts and circumstances of each case and are strictly enforced. For more information, see Protest Regulations (4 C.F.R. § 21.2) and Bid Protests at GAO: A Descriptive Guide.

How is time calculated for filing deadlines?

“Days,” under GAO’s regulations, means “calendar days.” In the event a deadline falls on a weekend, federal holiday, or other day when GAO is closed, the deadline is extended to the next business day. For more information, see Bid Protest Regulations (4 C.F.R. § 21.0(e)) and Bid Protests at GAO: A Descriptive Guide.

I was awarded a contract and was told that the award has been protested – what must I do, and what am I allowed to do?

Parties that have been awarded a contract are permitted to participate in a protest as an intervenor. They are not required to do so, however, as it is the agency’s responsibility to respond to the protest and defend the award of the contract.

Are employee unions or representatives allowed to file protests or participate as intervenors?

Government employees and their representatives may participate as protesters and intervenors in protests involving competitions conducted under Office of Management and Budget Circular A-76. For more information, see Bid Protest Regulations (4 C.F.R. § 21.0(a)(2), (button) (2)) and Bid Protests at GAO: A Descriptive Guide.

Do I need an attorney to file a protest or participate as an intervenor?

No. Parties may file a protest or participate as an intervenor without being represented by an attorney. However, only attorneys are permitted to have access to material subject to a protective order.  Bid protest rules, procedures and practices are governed by the rule of law(The Federal Acquisition Regulations (FAR) for federal contracts); therefore, an understanding of relevant statutes, regulations and case law would be extremely helpful for framing and presenting a credible bid protest.

 

Federal Bid Protest Jurisdiction and Filing Deadlines

 Federal Bid Protest Jurisdiction and Filing Deadlines:

This reference lays out the filing deadlines, jurisdictional requirements, stay rules, and appeal processes for each place a bid protest can be filed: the Government Accountability Office,the U.S. Court of Federal Claims, and the procuring agency.

The rules differ by type of procurement. Chart 1 lists the rules for protesting contracts awarded under FAR Parts 13, 14, and 15. Chart 2 lists the rules for protesting task and delivery orders issued under most IDIQ contracts. Chart 3 lists the special rules that apply to protests of task orders issued under the General Service Administration’s Federal Supply Schedule contracts.

GAO Procedures:

Over the years, GAO’s decisions on federal contract awards have created a uniform body of law applicable to the federal procurement process upon which the Congress, the courts, agencies, and the public all rely.

Automatic Stay?

For pre-award protests, the agency must suspend award of the contract once it receives notice from GAO that a protest has been filed. FAR 33.104(b).For post-award protests, the agency must suspend performance if it receives notice of the protest from GAO within 10 days after contract award or within 5 days after the debriefing date offered to the protester for requested and required debriefings under FAR 15.505 or 15.506, whichever is later.  FAR 33.104(c).  (Note: Debriefings are not “required” for procurements under FAR Part 13 (FAR 13.106-3(d)), or Part 14 (except 14.5 (two-step sealed bidding) FAR 14.503-1(g))).In DoD procurements, for debriefings requested and required under FAR 15.506(d), contracting officers must provide an opportunity for unsuccessful offer or to submit additional questions within 2 business days of receiving a debriefing. The agency then has 5 business days to respond in writing. See10 U.S.C. § 2305(b)(5). The 5-day filing period to trigger an automatic stay does not start until after the agency delivers the written responses. See31 U.S.C. § 3553(d)(4). 

 Jurisdictional Timelines

Jurisdictional Timelines:

  • A pre-award protest based on alleged improprieties in the RFP that are apparent prior to receipt of proposals must be filed prior to the time set for receipt of proposals. Improprieties subsequently incorporated into the solicitation must be protested by the next closing time for receipt of proposals following incorporation. See 4 C.F.R. § 21.2(a)(1). Where a basis for challenging the terms of a solicitation does not arise until after proposal submission, a protest is due 10 days after the basis of protest is known or should have been known. See 4 C.F.R. § 21.2(a).
  • An offer or excluded from the competitive range before award must request a debriefing in writing within 3 days after receipt of notice of exclusion to obtain a “required” debriefing. See FAR 15.505(a)(1). The offer or then must file its protest not later than 10 days after the date on which the debriefing is held. See 4 C.F.R. § 21.2(a)(2).
  • For competitions where a debriefing is requested and required, post-award protests must be filed not later than 10 days after the debriefing is held, but not before the offered debriefing date. See 4 C.F.R. § 21.2(a)(2), for DoD, 10 days run from when DoD answers timely “additional questions.”
  • For all other protests not covered above, the protester must file its protest within 10 days after the basis of protest is known or should have been known, whichever is earlier. See 4 C.F.R. § 21.2(a)(2).

Subject Matter Jurisdiction Limits:

  • Only an “interested party” may protest improprieties in an RFP or award or termination of a federal contract. See 4 C.F.R. § 21.1(a). An “interested party” is an actual or prospective offer or whose direct economic interest would be affected by the award of a contract or the failure to award a contract. See 4 C.F.R. § 21.0(a)(1).

Note: An alleged Procurement Integrity Act violation must be brought to the Agency’s attention within 14 days of discovery, or it cannot be raised in a GAO protest. See FAR 33.102(f); 41 U.S.C. § 2106. 

 Process for Appealing Unsuccessful Decision

Process for Appealing Unsuccessful Decision:

A Request for Reconsideration may be filed at GAO not later than 10 days after the basis for reconsideration is known or should have been known, whichever is earlier. See 4 C.F.R. § 21.14.

A protester may “appeal” a GAO decision to the Court of Federal Claims by filing suit alleging that the agency’s procurement was “arbitrary, capricious, an abuse of discretion, or otherwise not in accordance with the law” in violation of the Administrative Procedure Act, 5 U.S.C. § 706(2)(A). 28 U.S.C. § 1491. There is no strict timeline for filing such an “appeal.”

A contractor may also file suit in the Court of Federal Claims alleging that an Agency’s proposed or actual corrective action, even if recommended or approved by GAO, is arbitrary, capricious, an abuse of discretion, or otherwise not in accordance with law.

 

Readers interested in following our blogs on government contract law, such as, relevant federal, state and local public contract decisions should visit our website at www.cjacksonlaw.com where we post our most recent blogs.  Our blogs in government contracting covers relevant decisions issued by the GOA, case decisions issued by the Court of Federal Claims and various state court decisions on public contract law.  Readers can also subscribe to our taxation, government contract litigation and immigration law Legal Thoughts Podcast where ever they listen to their podcast.

This law blog is written by the Taxation | Litigation | Immigration Law Firm of Coleman Jackson, P.C. for educational purposes; it does not create an attorney-client relationship between this law firm and its reader.  You should consult with legal counsel in your geographical area with respect to any legal issues impacting you, your family or business.

Coleman Jackson, P.C. | Taxation, Litigation, Immigration Law Firm | English (214) 599-0431 | Spanish (214) 599-0432 | Portuguese (214) 272-3100

A LAWYER’S OVERVIEW OF GOVERNMENT PROCUREMENT CONTRACTS

By:  Coleman Jackson, Attorney & Certified Public Accountant
March 06, 2021

NOTE:  This is merely and overview of government procurement contracts and just scratch the surface of this complex and intricate area of contract law.  This area of law is also known as Public Contract Law.OVERVIEW OF  GOVERNMENT PROCUREMENT CONTRACTS

General Concepts: Each year, the U.S. federal government and its various agencies procure more than $300 billion of everything in more than 4,000 categories, ranging from airplanes to zippers. For many products and services, the U.S. government is the biggest buyer on the planet.

In 2020, the federal government spent more than $6.5 trillion, that is, spending exceeded collections by about $3.3 trillion resulting in a deficit. If broken out in terms of minutes, it would mean that the government spent more than $9 million every minute. However, a more accurate realization is that Covid-19 impacted the 2020 budget; also, budgets and government spending is spread out throughout the year, and high spending periods will fluctuate between agencies and will be impacted by health factors and other unknowns. Typically speaking, one of the biggest spending periods is in the months of August and September, as government agencies that have extra funds available (through the allocation from Congress) need to spend the money or risk losing it. Any money not spent goes back to the U.S. Treasury. Note: The 2020 fiscal year ended on September 30, 2020, and the new fiscal year started on October 1, 2020.

Another important thing to consider is that the federal government is not just one buyer. It is a collection of tens of thousands of buyers that purchase everything from nuts and bolts, and paperclips, to aircraft carriers.

With so many needs – from the simple, to the complex, to the classified – government buyers will order things in bulk or small, one-offs. Other times buyers will say they know they need certain products or services, but they do not know how much, how often, or when their next order will come. This creates a unique feature within government contracting that is not present in the private sector resulting in the use of different contract types or contract vehicles to accomplish the governments requirement needs.

Contract vehicles are ways in which a government agency or department can buy what it needs. They all have different rules. Government agencies are often looking for contract vehicles that will get them what they need, as quickly as possible and at the best cost point as possible. One of the most commonly known to businesses is the General Services Administration (GSA) Schedule. The GSA Schedule is a listing of products and services with pricing. Government buyers use the GSA to buy a wide variety of things, and businesses work hard to get on the GSA Schedule to make sure their products and services are readily available at the fingertips of government buyers.

 

U.S. government contracts

U.S. government is also an attractive customer for a few other reasons:

  • The government makes its needs publicly known through such media as the Commerce Business Daily, a publication listing numerous public contracting opportunities. (You can find this publication at many large public libraries.) This is quite different from most markets, wheresuppliers have to thoroughly research to identify the purchasers needs.
  • Government sales are conducted in an open environment where there are many rules to ensure that the process is fair.
  • The government frequently buys in very large volumes and overlong periods of time. That kind of customer can provide a solid foundation for growing your company.
  • Laws set aside all or part of many contracts for women-owned businesses, small businesses, minority-owned businesses, and other firms the government identifies as disadvantaged historically and that the government desires to equalize, support and include in the economic growth of the country.

Having the U.S. government as a customer can give a business a stamp of approval. If you can meet the government’s standards for quality, price and service, odds are good you can meet other customers’ requirements as well.

But there are downsides to selling to the government. It can be hard to find the proper purchasing agent among the thousands employed by various branches and agencies of the federal government. In addition, the rules and paperwork are daunting. The good news is that there are many sources of help. The SBA’s website is one good place to start looking for help selling to the government. Agencies like the U.S. Postal Service, the Department of Interior and the Army, as well as many others, send out solicitations to businesses that are on their mailing lists. To find out how to get on the lists, contact the agency you’re interested in.

And don’t restrict yourself to selling to the federal government. State and local governmental entities, including cities, counties, school districts and others, actually purchase more goods and services than the federal government. There are more of them and they are smaller, but these government customers can provide alternative tracks to growth that are just as viable as the opportunities in Washington, DC.

You can sidestep many of the hassles of winning a government contract if you subcontract with the main or prime contractor. Prime contractors, ranging from large defense contractors to companies that may be smaller than yours, do most of the work to land the government job. Then they may hire you to fulfill all or part of it. Find prime contractors by perusing many of the same resources you would to sell directly to the government.  Many government contracts require small disadvantaged businesses based on race, gender, disabilities, veteran set-asides.

Definition: Agreements that outline business transactions between companies and government entities. Government contracting is the process where businesses provide products or services to federal, state, and local governmental agencies and entities.

 

An Overview of Government Contract Law

 An Overview of Government Contract Law:

The government of the United States buys more products and services than any other entity worldwide. The United States Department of Defense (DOD) makes up a large portion of the country’s purchases.

There are three main differences between government purchases and those of the private consumer:

  • Government contracts are highly regulated to ensure the most competition, guarantee proper use of government funds, and promote a healthy economy.
  • Government contracts include clauses, like the “changes” or “default” clauses, that allow the government to enact special rights within the contract like being able to change the terms of the contract or even end it.
  • Government contracts follow the procedures laid out in the Contract Disputes Act should there be any claims or legal action, because the government is a sovereign entity.

The Competition in Contracting Act and Federal Acquisition Streamlining Act are both important laws that regulate government contracts.

The Federal Acquisition Regulation (FAR) controls acquisitions made by the United States Executive Branch, and it is outlined in title 48 of chapter one in the Code of Federal Regulations parts 1 through 53.

Agencies like the DOD, NASA, and the General Services Administration (GSA) can create supplements to the Federal Acquisition Regulation. Those three specific agencies actually amended the FAR in pursuant to the Administrative Procedure Act.

The United States Government can only be contract-bound by an authorized contracting officer (or CO) who has been issued a warrant by the executive agency. These contract warrants (or certificates of appointment) can be held to a specific amount or allowed an unlimited amount of money.

A contract officer is authorized to grant, manage, or terminate a government contract.  CO’s play a pivoted and major role in government procurement law.

The Contract Disputes Act (CAS)govern legal issues regarding government procurement contract issues and disputes which must first be submitted to a contract officer for resolution.

Once the contract officer makes a decision regarding the legal claim, the complaining entity represented in the contract can appeal the decision with the United States Court of Federal Claims (CFC) or a board of contract appeals.  Note there must be privity of contract in government contract disputes.  Typically, subcontractors cannot file a complaint under CAS.

The claim can then move on to be appealed before the Court of Appeals of the United States for the Federal Circuit, and even eventually to the Supreme Court.

Any company that sells its products or services to other business entities or nonprofits could probably also sell to the government.

The United States Government can make a great customer or client because of the following:

  • Government needs are easy to see through publications like Commerce Business Daily.
  • Rules and regulations ensure fair trading practices.
  • Government purchases are usually large and long term, providing a reliable income for the business.
  • As I mentioned before, contracts are set aside for businesses owned by minorities and women, as well as small businesses.
  • Government business will give your company a good reputation as it means that your products or services meet high standards.

 An Overview of Some Difficulties of Government Contracting

 An Overview of Some Difficulties of Government Contracting:

Conducting business with the government can also be very difficult as it can be tough to find the right channels for marketing your company with so many employees throughout different branches. They also require certain standards in terms of bookkeeping, record keeping, cost accounting and overall compliance cost accounting standards and government accounting principles.

Moreover, government contracts are typically subject to review and exacting audit compliance procedures and examination.

Bottom line is government contracts are subject to detailed paperwork where government contractors must comply withdetailed regulations from the bid process through completion of the contract.  Invoices for payment must often be certified under the penalty of perjury. These requirements can also be a bit overwhelming as a business owner new to the government procurement procedures. Thankfully, there are lots of options for assistance.

If you’re interested in working with a particular federal government agency, like the Postal Service or the DOD, you can contact that particular agency and get your business on their mailing list.

The federal government isn’t the only option, state agencies and local entities, like school districts, also make great customers.

Smaller, non-federal agencies have more opportunities for trading and, even though they are smaller, they can offer just as much potential for growing your company as working with the federal government would.

  Overview of Some Benefits of Government Contracting

Overview of Some Benefits of Government Contracting

Government contracts are a tremendous financial opportunity for small businesses.

The U.S. government is the largest customer in the world. It buys all types of products and services — in both large and small quantities — and it’s required by law to consider buying from small businesses.

The government wants to buy from small businesses for several reasons, including:

  • To ensure that large businesses don’t “muscle out” small businesses
  • To gain access to the new ideas that small businesses provide
  • To support small businesses as engines of economic development and job creation
  • To offer opportunities to disadvantaged socio-economic groups

 How it all works:

The process of requesting proposals, evaluating bids, and awarding contracts should take place on a level playing field. The government should consider a bid from any qualified business.

Set-aside and sole-source contracts:

Federal agencies must publicly list their contract opportunities. Some of these contracts are set aside exclusively for small businesses and historically disadvantaged businesses based on race, gender, disabilities or other factors.

In some cases, these so-called set-aside contracts might consist of certain types of tasks on larger contracts. In others, entire contracts may be reserved for small businesses or historically disadvantaged businesses. When a contract is set-aside for one specific small business, it’s called a sole-source contract.

 

The Small Business Administration (SBA’s) role in Government Contracting 

 The Small Business Administration (SBA’s) role in Government Contracting:

The SBA works with federal agencies in order to award approximately 23 percent of prime government contract dollars to eligible small businesses. It also offers counseling and help to small business contractors.

The United States Government is the single largest procurer of goods and services in the world, and the Department of Defense (DOD) accounts for the lion’s share of federal acquisitions.  Three major characteristics distinguish Government acquisitions from private sector contracts.  First, Government contracts are subject to a myriad of statutes, regulations, and policies which encourage competition to the maximum extent practicable, ensure proper spending of taxpayer money, and advance socioeconomic goals.  Second, Government contracts contain mandatory clauses which afford the Government special contractual rights, including the right to unilaterally change contract terms and conditions or terminate the contract.  The most important clauses are the “Scope Clause, “Changes” clause, the “Termination for Convenience” clause, and the “Default” clause.  Third, due to the Government’s special status as a sovereign entity, claims and litigation follow the unique procedures of the Contract Disputes Act.   It is critical that Contractors; especially small businesses who are new in government procurement, to be fully knowledgeable of how the “Payment” clause works because long delays in payment could cause budgetary difficulties and performance issues to the naïve.

Government contracts are subject to several statutes, including the Competition in Contracting Act and the Federal Acquisition Streamlining Act.  In addition to statutes, there are a multitude of regulations which govern acquisitions by executive branch agencies.  Foremost among these is the Federal Acquisition Regulation (FAR), which is codified in Parts 1 through 53 of Title 48, Chapter 1 of the Code of Federal Regulations.  Executive branch agencies may issue their own regulatory supplements to the FAR, such as the Defense Federal Acquisition Regulation Supplement (DFARS).  The FAR is amended pursuant to the Administrative Procedure Act, with proposed changes issued jointly by the DOD, the General Services Administration (GSA), and the National Aeronautics and Space Administration (NASA), in coordination with the FAR Council.

Only Contracting Officers have the authority to contractually bind the United States Government.  This authority is vested in the executive agency, which then delegates this authority by issuing a certificate of appointment or “warrant.”  The warrant provides signature authority up to a specified amount of money, or it can be an unlimited warrant.  Contracting Officers have the authority to award, administer, and terminate Government contracts.

Overview of Government Contract Dispute Resolution”

Government contract claims are subject to the Contract Disputes Act, which requires the claim to be presented first to the Contracting Officer (“CO”).  After the Contracting Officer’s Final Decision or deemed denial, the claim may be appealed to either the United States Court of Federal Claims (CFC) or to the appropriate Board of Contract Appeals.  The forum to file the law suit challenging the CO’s decision is chosen by the contractor. Note that the contractor does not have file suit within the administrative process; but the Board Judges are government procurement experts who deal exclusively with government procurement contract disputes; whereas, the Judges on the Court of Federal Claims may not have government procurement experience and may handle all kinds of complaints filed against the federal government.   Resolution of federal procurement disputes by the Board process could likely be quicker as well. Numerous issues are involved in the contractor’s decision of which forum to choose to litigate their CAS claim.  Whether CAS litigation occur in the Court of Federal Claims or in one of the Boards of Appeal, after trial on the merits in either venue, the tribunal decision may be appealed to the United States Court of Appeals for the Federal Circuit, and finally to the Supreme Court.  It is very important to note that the Court of Federal Claims has the exclusive authority to hear bid protests, which are challenges to an award, proposed award, or terms of a solicitation of a federal contract.  The Boards do not have any authority to hear bid protest or any other none-CAS matters.


What are Some of the Different Types of Government Procurement Contracts

What are Some of the Different Types of Government Procurement Contracts?

Government contracts generally fall under a few different categories, each of which involves different requirements and varying risk to the contractor.  Understanding the type of government contract, you’re competing for can help give you a better sense of what to expect, the risk involved and how to put together and negotiate a more compelling and competitive proposal. To give a brief overview, we’ve laid out the top four most common types of government procurement contracts and what they entail below:

1. Fixed-Price Contracts

Fixed-price contracts are just that — they ask contractors to submit a bid to complete a project under a predetermined price (and often within the bounds of a target price). They are not subject to any type of adjustment unless certain provisions (such as changes in the contract, pricing, or defective pricing) are included in the original agreement. Contract price can sometimes be renegotiated through different contract clauses (depending on the variety of fixed-price contract in question), but these bids will be low-risk if the government and contractor carefully communicate on a reasonable price. The risk inherent to fixed-price contracts will increase if deliverables, standards and other measures are unclear or if the contractor must execute custom development with a yet-to-be completed solution. All federal agencies use fixed-price contracts and they’re the most common type of contract requested at a state and local level.

In Fixed-Price contracts, the contractor is paid a set fee for their goods or services, regardless of incurred costs. Accurately planning and forecasting your expenditure (in terms of time, available personnel, expertise and capital) is absolutely vital to ensuring that you see a positive return on your investment once you’ve won a bid. While some degree of risk may be present, these contracts provide great profit opportunities for successful contracts that are well executed.  These contracts can also be dangerous for the naïve or businesses who are new or unfamiliar with government procurement contract procedures, policies, regulations and so forth.  Silent clauses and provisions could be applicable to the contract.

2. Cost-Reimbursement and Cost-Plus Contracts

These types of contracts allow a contractor to seek reimbursement for incurred costs up to a prescribed allowance. Usually, costs will be estimated upfront to establish a ceiling that a contractor cannot exceed without first gaining approval. As long as incurred costs do not exceed the stipulated maximum, then a contractor can seek reimbursement for any justified expenses as they fulfill the contract.

This kind of contracts are typically used when there are uncertainties or contingencies involved in a proposal that cannot be estimated upfront with complete accuracy. Examples of agencies that use these types of government contracts include the Federal Transit Administration, National Weather Services and US Department of Defense.

Cost-plus contracts are often more concerned with the final quality of a project rather than cost (an example of this type of project would be ones executed in support of United States space and satellite programs). Because there is less built-in incentive to be efficient, these types of contracts usually require closer oversight to ensure maximum efficiency and thrift. The contract itself can be supplemented with additional award or incentive fees to help encourage efficiency, but designing and implementing these programs also requires additional contract administration. While these contracts are often lower risk than Fixed-Price contracts, the profit margins may also be lower and bidding requires that you offer competitive pricing (i.e. low rates) in order to win.  Contractors must be very careful when bidding on cost-reimbursement and cost-plus contracts because the potential to bid too low can be damaging.  This is particularly a danger that the naïve or unsophisticated small business could face.

3. Time-and-Materials Contracts (T&M)

Time-and-materials contracts are a cross between fixed-price and cost-reimbursement contracts and often require the government to shoulder more risk than the contractor (making them a less popular option for government agencies). Like cost-reimbursement and cost-plus contracts, T&M contracts are only used when it’s not possible to nail down an accurate cost or timeline estimate for a project at the time when a proposal is submitted. The government is basically paying for your services by the hour, including your fees and profit, so competitive pricing is key to winning and net profits are often (but not always) lower.

4. Indefinite Delivery/Indefinite Quantity (IDIQ) Contracts

IDIQ contracts are often used to supplement or amend fixed-price or cost-reimbursement contracts in order to provide flexibility with regard to specific supplies, services or aspects of a project required by the government. In contrast to other contract types, IDIQs allow the government contracting agency to “down select” multiple entities that will compete for future break-out contracts (often called “task orders”) under the umbrella of the main contract. This results in the contracting agency receiving bids from the pool of awardees for each follow-up task order, which theoretically provides them with the best possible value, flexibility and service. It also streamlines the process for issuing, awarding and executing task orders in the event of a national emergency.

The umbrella, or main contract, usually runs for a period of five to ten years, during which time the individual task orders are announced on an as-needed basis. Typical response times required for down selected entities range from a few days to a month or more, depending on the urgency of the requirement. In extreme cases, the government can ask for a response on the very same day a task order is issued. These responses are purely pricing requests for vendor equipment to aid first responders in a natural or man-made disaster, such as supplying temporary lighting and generators.

IDIQs often specify that a contractor supply a minimum quantity of suppliers and services and agree to a fixed timeline and maximum price ceiling for the contract tasks. They also ask contractors to identify a few different consultants and suppliers that they might leverage for a task and submit these names as part of the initial bid. This can help the government streamline the contracting process by limiting their decision process to a few pre-approved options for each task.

Awards are given out in base year period intervals for each task order (usually 1 to 5 years) and are eligible for renewal after the base period concludes. At the time of renewal, each task order can be “re-competed” for by the incumbent contractor and those previously down selected under the umbrella contract. For contract renewals, responding to specific task orders is not required.

This has been a general overview of government procurement procedures, practices and legal principles.  This is a complicated area of law and this brief presentation does not attempt to cover the breath of this legal area in any respect. Public Contract Law

This law blog is written by the Taxation | Litigation | Immigration Law Firm of Coleman Jackson, P.C. for educational purposes; it does not create an attorney-client relationship between this law firm and its reader.  You should consult with legal counsel in your geographical area with respect to any legal issues impacting you, your family or business.

Coleman Jackson, P.C. | Taxation, Litigation, Immigration Law Firm | English (214) 599-0431 | Spanish (214) 599-0432 | Portuguese (214) 272-3100

Podcast – Update on Covid-19 Relief for Individuals and Businesses pt. 3 | LEGAL THOUGHTS

Coleman Jackson, P.C. | Transcript of Legal Thoughts Podcast
Published January 27, 2021.

Update on Covid-19 Relief for Individuals and Businesses

Legal Thoughts is a podcast presentation by Coleman Jackson, P.C., a law firm based in Dallas, Texas serving individuals, businesses, and agencies from around the world in taxation, litigation, and immigration legal matters.

This particular episode of Legal Thoughts is a podcast where the Attorney, Coleman Jackson is being interviewed by Reyna Munoz, Tax Legal Assistant of Coleman Jackson, P.C.   The topic of discussion is “Update on Covid-19 Relief for Individuals and Businesses pt. 3” You can listen to this podcast by clicking here:

You can also listen to this episode and subscribe to Coleman Jackson, P.C.’s Legal Thoughts podcast on Apple Podcast, Google Podcast, Spotify, Cashbox or wherever you may listen to your podcast.

TRANSCRIPT:
ATTORNEY:  Coleman Jackson
Legal Thoughts
COLEMAN JACKSON, ATTORNEY & COUNSELOR AT LAW

ATTORNEY:  Coleman Jackson

Welcome to Tax Thoughts

  • My name is Coleman Jackson and I am an attorney at Coleman Jackson, P.C., a taxation, litigation and immigration law firm based in Dallas, Texas.
  • Our topic for today is: “Update on Covid-19 Relief for Individuals and Businesses- Part 3.”
  • Other members of Coleman Jackson, P.C. are Yulissa Molina, Tax Legal Assistant, Leiliane Godeiro, Litigation Legal Assistant, Reyna Munoz, Immigration Legal Assistant and Mayra Torres, Public Relations Associate.
  • On this “Legal Thoughts” podcast our immigration legal assistant, Reyna Munoz will be asking the questions and I will be responding to her questions on this important tax topic: “Update on Covid-19 Relief for Individuals and Businesses- Part 3.”

Reyna Munoz Introduces Herself to the Audience:

  • Good morning everyone. My name is Reyna Munoz and I am the immigration legal assistant at Coleman Jackson, P.C.  Coleman Jackson, P.C. is a taxation, litigation and immigration law firm based right here in Dallas, Texas.
  • Attorney we have published two prior podcast where we discussed various aspects of the tax relief offered to individuals and businesses in the Consolidated Appropriations Act, 2021. In Part One of Legal Thoughts Podcast  several weeks ago, we spent most of our time talking about stimulus checks.  Then in Part Two, we spent the bulk of our time discussing tax relief in the Act for businesses, such as the Paycheck Protection Program.  In this Part Three, we will be discussing Discharge of Indebtedness and the Paycheck Protection Program.

Question 1:

  • So, Attorney, let’s get started this morning with this question: Generally speaking, Attorney, what are the tax implications for discharge of indebtedness?

Attorney: Coleman Jackson

ANSWER 1:

  • Good morning Reyna.
  • That is an excellent place to start before we get into the Paycheck Protection Program and the special rules of forgiveness of Paycheck Protection Program loans to businesses under the CARES Act and the Consolidated Appropriations Act, 2021.
  • Generally speaking, under Internal Revenue Code Section 61(a)(11) and Treasury Regulations Section 1.61-12(a), a taxpayer that is discharged from paying a debt by a creditor must include the gross amount discharged in gross income for federal income tax purposes.  It is gross income because the taxpayer has received an increment in wealth; it’s the same as wages, or earnings or dividends or other forms of increase in wealth realized by a taxpayer.
  • There are several exceptions to this rule however, and the one we care about in this Podcast relates to the exceptions codified into law under the CARES Act and the Consolidated Appropriations Act, 2021.

Interviewer: Reyna Munoz, Immigration Legal Assistant

  • That sounds interesting.

Question 2:

  • Could you explain in a nutshell when a Payroll Protection Program loan is qualified for tax-free loan forgiveness under the Covid-19 relief programs you have been discussing in these last three podcasts?

Attorney: Coleman Jackson

ANSWER 2:

  • Reyna, in a nutshell; whether a Paycheck Protection Program Loan is eligible for tax-free cancellation of debt treatment depend upon how much of the paycheck protection program loan amount was used for payment of payroll costs during a covered period.
  • Under the Original CAREs Act, paycheck protection program loan proceeds could be used to pay certain eligible business expenses, such as, payroll costs, utility payments, rent and interest on some mortgage obligations. All of this cost had to be incurred by the recipient of the loan.  Depending upon whether 75 percent or more of the loan proceeds were used on payroll cost during the covered period, some or all of the payroll protection loan was subject to forgiveness under the CARES Act.  Under the original CARES Act there were some questions as to whether the cancelation of the debt was taxable income under Internal Revenue Code Section 61.  Also, under the original CARES Act, the IRS issued rules that stated that the  business costs paid from the Paycheck Protection Act Loan Proceeds were not deductible by the business on their federal tax return.  However, Congress overruled the Internal Revenue Service in the Consolidated Appropriations Act, 2021 making all Payroll Protection Program Loans tax-free and Congress also ruled that the business expenses paid with the loan proceeds were fully deductible business expenses pursuant to normal Internal Revenue Code provisions.  These particular relief provisions in the Consolidated Appropriations Act, 2021 relates back to and applies to Payroll Protection Program loans under the CARES Act as well as those originating under the Consolidated Appropriations Act, 2021.

Interviewer: Reyna Munoz, Immigration Legal Assistant

  • Let me make sure I understand what you just said attorney! I think you said that when a Payroll Protection Program Loan is used to pay business operating expenses, such as, payroll costs, utility payments, rent, and certain kinds of mortgage interest, the Payroll Protection Program loan can be canceled tax-free to the business?  And the business can still deduct the business expenses paid using the loan proceeds on their annual federal tax return!
  • Did I get all that right, Attorney?

Question 3:

  • Attorney is the discharge of Payroll Protection Loan under the CARES Act automatic or do an application for forgiveness have to be filed somewhere?

 Attorney: Coleman Jackson

ANSWER 3:

  • Reyna your summary of what I said is perfect. And no, the forgiveness of a Paycheck Protection Program Loan is not automatic.
  • The recipient must submit the appropriate application to the Small Business Administration through their financial institution.
  • Under the CARES Act, loan forgiveness request were filed on Form 3508 or 3508EZ depending upon the maximum amount of the loan forgiveness and certain other factors. Further all loan forgiveness applications have to be accompanied by credible business records and documents during the covered period supporting the business owners’ assertions in the debt cancellation applications.

Interviewer: Reyna Munoz, Tax Legal Assistant

QUESTION 4:

  • Attorney in a nutshell, what are the eligibility requirements for cancelation of the Payroll Protection Program Loan under the Consolidated Appropriation Act, 2021? I mean, Attorney are the rules, forms and steps to take for tax-free discharge of the debt the same as under the CARES Act?

Attorney: Coleman Jackson

ANSWER 4:

  • Very well! Let me describe some of the differences or changes to the Payroll Protection Program Loan forgiveness rules, forms and procedures made by the Consolidated Appropriations Act, 2021.
  • Remember in our previous Podcast in Part 2, we explained how the eligible expenses paid from a Paycheck Protection Program Loan was expanded under the Consolidated Appropriations Act, 2021 to include expenses like, payment for business software and cloud computing services incurred due to covid-19, certain covered capital expenditures and certain covered worker safety measure expenditures; The key metric to keep in mind is this one: The Paycheck Protection Program is still essentially focused on maintenance of a business’ employees and staff.  Keep people employed– that in a nutshell is what PPP is about.  You can just go by the name of the program— that is, Paycheck Protection Program.  So, expenditure of at least 75% of the loan proceeds to maintain payroll during the covered period is still key to tax-free cancellation of the debt under the Consolidated Appropriations Act, 2021.
  • The Consolidated Appropriations Act, 2021 made it simpler and easier for covered Paycheck Protection Program Loan requests from certain eligible recipients to be forgiven. Only a certification as follows need to be made by the loan recipient; and no substantiating documentation need to be filed with the certification:
  • An eligible recipient must submit to their lender a certification that attest that–
    1. a description of the number of employees they were able to retain because of the paycheck protection loan;
    2. Estimates of amount of the loan spent on payroll costs;
    3. Attest that they have accurately supplied items 1 and 2 and complied with Section 307, Simplified Forgiveness Application requirements of the Consolidated Appropriations Act, 2021 which requires retention of the employment records 4 years after submission of the forgiveness application and retention of all other pertinent records for a period of 3 years.
    4. The Consolidated Appropriations Act, 2021 states that the simplified loan application forgiveness form is not be any more than one page in length. These simplified PPP loan forgiveness procedures apply to Paycheck Protection Program loans in the amount of $150,000 or less.  The Section 307 Simplified Forgiveness Application provisions of the Consolidated Appropriations Act, 2021 applies to Paycheck Protection Program loans originating under the CARES Act or the Consolidated Appropriations Act, 2021.

Interviewer: Reyna Munoz, Tax Legal Assistant

  • That sounds like a solid way many businesses can keep their employees working during this dreadful pandemic. Attorney, Paycheck Protection Program Loan forgiveness is not subject to taxation, right.  I mean we started this podcast talking about discharge of indebtedness.

Question 5:

  • Is the cancelation or forgiveness by the Small Business Administration a discharge of indebtedness where the business will owe income taxes on the amount discharged? I need this to be clear; like in a nutshell; is it taxable income to the business or to the owner of the business?

Attorney: Coleman Jackson

ANSWER 5:

  • In a nutshell, Reyna!
  • Paycheck Protection Loans forgiven by the Small Business Administration is a statutory exception to the Internal Revenue Code Section 61.
  • In a nutshell, Paycheck Protection Program Loans that are forgiving or canceled by the Small Business Administration are tax-free to the business, to its owners, shareholders or partners.
  • Let me throw in this caution however, all business who apply for and successful obtain SBA cancelation of a Paycheck Protection Program Loan should maintain the required books and records because they might have to submit such records for audit inspection and examination up to four years after the loan has been written off by the government.

Interviewer: Reyna Munoz, Tax Legal Assistant

  • That last point is an important one. Paycheck Protection Program Loans are Small Business Administration Loans.  SBA loans are subject to audit examination.

Question 6:

  • Attorney, what is the extent or scope of the likely audit examination?

Attorney: Coleman Jackson

ANSWER 6:

  • Businesses should consult with their trusted advisors when seeking forgiveness of these loans. The matters that we have been discussing are laws.  That is, we are explaining recent Acts of Congress in the government’s attempt to deal with the economic fall out and devastation caused by this dreadful global pandemic.
  • In answer to your question with respect to the scope of the audit; I really don’t know exactly, but for sure the business is going to have to most likely present evidence of eligibility for the loan and eligibility for forgiveness of the loan pursuant to any subsequent rules and regulations that the Small Business Administration, United States Treasury or other governmental agency might issue in the future. Businesses should keep good books and records that properly reflect the expenditure of Paycheck Protection Program loan proceeds for at least seven years.

Interviewer: Reyna Munoz, Tax Legal Assistant

  • Attorney thanks for such a detailed explanation of discharge of indebtedness and the Paycheck Protection Program.

Reyna Munoz’s Concluding Remarks

  • Attorneythank you for this cogent presentation.
  • I know we have not talked about everything concerning the Consolidated Appropriations Act, 2021. But these are my questions for now.  Perhaps we can do another podcast on this topic as time permits and interest by our listeners is communicated to us through calls, emails or otherwise.
  • Our listeners who want to hear more podcast like this one should subscribe to our Legal Thoughts Podcast on Apple Podcast, Google Podcast, Spotify or wherever they listen to their podcast. You can follow our blogs by going to our law firm’s website at cjacksonlaw.com.  Everybody take care for now!  Come back in about two weeks, for more taxation, litigation and immigration Legal Thoughts from Coleman Jackson, P.C., which is located right here in Dallas, Texas at 6060 North Central Expressway, Suite 620, Dallas, Texas 75206.
  • English callers: 214-599-0431; Spanish callers:  214-599-0432 and Portuguese callers:  214-272-3100.

Attorney’s Concluding Remarks:

THIS IS END OF “LEGAL THOUGHTS” FOR NOW

  • Thanks for giving us the opportunity to inform you about the “Consolidated Appropriations Act, 2021 as it relates to Discharge of Indebtedness and the Paycheck Protection Program”. We might do future blogs or podcast dealing with the Exclusion of Entities Receiving Shuttered Venue Operator Grants under Section 7(a)(36) of the Small Business Act, 15 U.S.C. 636(a)(36).
  • If you want to see or hear more taxation, litigation and immigration LEGAL THOUGHTS from Coleman Jackson, P.C. Stay tune!  Watch for a new Legal Thoughts podcast in about two weeks and check our law firm’s website at www. cjacksonlaw.com to follow our blogs.  We are here in Dallas, Texas and want to inform, educate and encourage our communities on topics dealing with taxation, litigation and immigration.  Until next time, take care..

Podcast – Update on Covid-19 Relief for Individuals and Businesses pt. 2 | LEGAL THOUGHTS

Coleman Jackson, P.C. | Transcript of Legal Thoughts Podcast
Published January 18, 2021.

Update on Covid-19 Relief for Individuals and Businesses

Legal Thoughts is a podcast presentation by Coleman Jackson, P.C., a law firm based in Dallas, Texas serving individuals, businesses, and agencies from around the world in taxation, litigation, and immigration legal matters.

This particular episode of Legal Thoughts is a podcast where the Attorney, Coleman Jackson is being interviewed by Reyna Munoz, Tax Legal Assistant of Coleman Jackson, P.C.   The topic of discussion is “Who is responsible to maintain minimum essential healthcare coverage?”You can listen to this podcast by clicking here:

You can also listen to this episode and subscribe to Coleman Jackson, P.C.’s Legal Thoughts podcast on Apple Podcast, Google Podcast, Spotify, Cashbox or wherever you may listen to your podcast.

TRANSCRIPT:

ATTORNEY:  Coleman Jackson
Legal Thoughts
COLEMAN JACKSON, ATTORNEY & COUNSELOR AT LAW

ATTORNEY:  Coleman Jackson

Welcome to Tax Thoughts

  • My name is Coleman Jackson and I am an attorney at Coleman Jackson, P.C., a taxation, litigation and immigration law firm based in Dallas, Texas.
  • Our topic for today is: “Update on Covid-19 Relief for Individuals and Businesses- Part 2.”
  • Other members of Coleman Jackson, P.C. are Yulissa Molina, Tax Legal Assistant, Leiliane Godeiro, Litigation Legal Assistant, Reyna Munoz, Immigration Legal Assistant and Mayra Torres, Public Relations Associate.
  • On this “Legal Thoughts” podcast our immigration legal assistant, Reyna Munoz will be asking the questions and I will be responding to her questions on this important tax topic: “Update on Covid-19 Relief for Individuals and Businesses- Part 2.”

Reyna Munoz Introduces Herself to the Audience:

  • Good morning everyone. My name is Reyna Munoz and I am the immigration legal assistant at Coleman Jackson, P.C.  Coleman Jackson, P.C. is a taxation, litigation and immigration law firm based right here in Dallas, Texas.
  • Attorney about a week or so ago, we had a conversation about tax relief offered to individuals and businesses in the Consolidated Appropriations Act, 2021. In the first Legal Thoughts Podcast, about a week ago, we spent most of our time talking about stimulus checks.  We had said that we would continue this conversation in a future podcast and primarily discuss benefits to businesses in the $900 billion Covid relief package.

Question 1:

  • But before turning to my questions dealing with business relief under the Consolidated Appropriations Act, 2021; besides the $300 weekly federal unemployment compensation for people who lost their jobs due to Covid, and the $600 stimulus checks for certain individuals, are there any other significant benefits in the Consolidated Appropriations Act, 2021 for individuals or households?

Attorney: Coleman Jackson

ANSWER 1:

  • Good morning Reyna.
  • Yes Reyna; let me briefly summarize some other significant benefits to individuals in the $900 billion dollar Consolidated Appropriations Act, 2021 that was passed by Congress on December 27, 2020.
    1. Families with children are eligible for the Child Tax Credit based on 2019 income rather than 2020 income.  This applies to both the determinations of eligibility for the earned income tax credit and the additional child tax credit.  These credits are designed to help low-income to modest income families with qualifying children.
    2. The threshold adjusted gross income (AGI) for determining the amount an individual or family can deduct in medical expenses was changed from 10 percent of AGI to 7.5 percent of AGI for tax years beginning in 2020.
    3. There are other minor benefits to individuals and families in the Consolidated Appropriations Act, 2021; but, I think I have mentioned the major ones that people should watch out for in terms of seeing whether they personally are impacted by the Consolidated Appropriations Act, 2021.

Interviewer: Reyna Munoz, Immigration Legal Assistant

  • So attorney let me summarize the benefits to individuals, families and households to make sure I understand what you are saying:
  • The unemployed due to Covid-19 is eligible to receive 11 weeks of $300 per-week federal emergency unemployment benefits on top of their state unemployment benefit.
  • With certain exceptions and limitations that you mentioned Attorney, individuals and families can be eligible to receive stimulus payments of $600 for each family member.
  • Families eligibility for the earned income credit and additional child tax credit is based on the families 2019 income.
  • And lastly, medical expense deductions starting in 2020 are based on adjusted gross income of 7.5 percent rather than 10 percent.

Question 2:

  • Attorney, attorney did I summarize the major benefits for individuals and families under the Consolidated Appropriations Act 2021 correctly? Is what I just said an accurate understanding of what you previously said?

Attorney: Coleman Jackson

ANSWER 2:

  • Reyna, you have a good ear. You basically heard me correctly.  The four points that you listed are the major benefits for individuals and families that I gleaned from the Consolidated Appropriations Act, 2021; but, keep in mind that the Act is very massive with numerous tax and none-tax provisions.  I am not going to try to cover that whole piece of legislation in a podcast.  We are merely pointing out some major high points that might be of interest to our listeners.
  • Before we turn to our discussion of businesses impacted by this legislation, let me just point out that the Consolidated Appropriations Act, 2021 corrected the original Cares Act that created the unfortunate situation where couples using only one social security number was denied the stimulus payment under the Cares Act. Under the Consolidated Appropriations Act, 2021, couples using only a single social security number in their household and the other an Individual Taxpayer Identification Number or ITIN are eligible for the $600 stimulus payment under the Consolidated Appropriations Act, 2021.

Interviewer: Reyna Munoz, Immigration Legal Assistant

  • Thanks for pointing out that a second round of direct cash assistance payments of $600 for each family member may be available for mixed-status families where only one spouse has a social security number under the Consolidated Appropriations Act, 2021. That is good news where only one spouse has a social security number!

Question 3:

Let us now talk about businesses.  What is in the Consolidated Appropriations Act, 2021 that benefits businesses, such as, sole proprietors and independent contractors?  And what types of businesses are we talking about, Attorney?

Attorney: Coleman Jackson

ANSWER 3:

  • Reyna; that is good direction to go in! We need to hit the high points of what’s in the Consolidated Appropriations Act, 2021 for businesses, such as independent contractors, sole proprietors, partnerships and other types of businesses.
  • The most significant benefit in the Consolidated Appropriations Act, 2021 is Title II—Continuing The Paycheck Protection Program and Other Small Business Support.
  • A Small Business Concern is defined in the Consolidated Appropriations Act, 2021 as it is defined in section 3 of the Small Business Act, 15 U.S.C. 632. Any business owner who are wondering whether they are a small business should consider reviewing section 3 of the Small Business Act.
  • The Act mandates that the Administrator of the Small Business Administration shall within 10 days after the Act becoming effective, draft, adopt and implement appropriate regulations to administer the provisions and laws established by Congress in the Consolidated Appropriations Act, 2021. Small business owners who think they might be eligible for any benefits under the Consolidated Appropriations Act, 2021 may want to consult with their banker, attorney or other trusted advisor immediately in preparation for the role out of  new SBA regulations implementing the Consolidated Appropriations Act, 2021.

Interviewer: Reyna Munoz, Tax Legal Assistant

QUESTION 4:

  • Attorney how soon will the Small Business Administration issue the implementation regulations for the Consolidated Appropriation Act, 2021?

Attorney: Coleman Jackson

ANSWER 4:

  • I am not sure with regards to the exact date or timing as to when the Small Business Administration will issue the regulatory framework or rules of the road in implementing the Paycheck Protection Act provisions of the Consolidated Appropriations Act, 2021. It is reported that the SBA is working on the regulations and guidelines.  What small business owners need to know at this time is that Congress authorized an additional $285 billion dollars for the Paycheck Protection Program and they specifically set business size limitations, a phase financial institution criteria where its suppose to start funding through community and small financial institutions typically used by minorities and others in depressed economic areas and then to major banking institutions who might not normally fund such areas, and Congress also expanded the types of qualified expenses that can be paid using the Paycheck Protection Program loan proceeds.  There are changes also made to the loan forgiveness procedures and lots and lots of other provisions in the Consolidated Appropriations Act, 2021 that benefits businesses.
  • The Consolidated Appropriations Act, 2021 distinguishes between two broad groups: Let me just call them the “First Draw Borrowers” and the Second Draw Borrowers.
  • First Draw Borrowers are borrowers who did not participate in the original Paycheck Protection Program enacted in the original Cares Act. The Consolidated Appropriations Act, 2021 requires first time borrowers to have less than 500 employees and their business operations must have been operational as of February 15, 2020.  The first draw  Paycheck Protection Program loan cannot exceed 2.5 times the small business average monthly payroll cost and cannot exceed $10 million dollars.

Interviewer: Reyna Munoz, Tax Legal Assistant

  • That sounds great!

Question 5:

  • What are the terms and requirements in the Paycheck Protection Program for the Second Draw Borrowers?

Attorney: Coleman Jackson

ANSWER 5:

  • The Consolidated Appropriations Act, 2021 are for businesses that participated in the original Cares Act, Paycheck Protection Program.  Businesses can apply for a “Second Draw Loan” if they have spent or expect to spend the full amount of their first Paycheck Protection Program loan before they receive funding for the second loan.  They can also apply for a Second Draw Loan” whether they have applied for and received forgiveness of their First Draw Loan or not.  In general the small business must have 300 employees or less to be eligible to apply for a Second Draw Loan under the Consolidated Appropriations Act, 2021, Paycheck Protection Program.
  • It should be noted that the Consolidated Appropriations Act, 2021 increased the ability for Paycheck Protection Program borrowers to request an increase in loan amount due to updated regulations. This effects, such entities that did not accept their loan or returned the loan under the Cares Act.  Impacted entities should consult with their lender, attorney or other trusted advisor concerning making such requests under the Consolidated Appropriations Act, 2021.

Interviewer: Reyna Munoz, Tax Legal Assistant

Question 6:

  • Attorney what are the other eligibility requirements for the Second Draw Paycheck Protection Program Loan under the Consolidated Appropriations Act, 2021?

Attorney: Coleman Jackson

ANSWER 6:

  • The term eligible entity under the Consolidated Appropriations Act, 2021 is defined as a nonprofit organization, housing cooperative, veteran’s organization, tribal business concern, eligible self-employed individual, sole proprietor, independent contractor, or small agricultural cooperative that employs 300 employees or less.
  • The maximum amount of a Paycheck Protection Program loan made to an eligible small business that is assigned a North American Industry Classification System code beginning with 72 at the time of disbursal is the lesser of, at the election of the entity (1) the entities average monthly payroll cost in the year the loan is made, or (2) the entities average monthly payroll cost for the calendar year 2019 multiplied by 3.5 or a maximum of $2 million dollars. The NAICS Code 72 covers such business establishments as cafeterias, restaurants, drinking places, recreational camps, hotels, and generally any type of accommodations and food services establishment.  The business must have been operational as of February 15, 2020.
  • All other small businesses, with the exception of those with North American Industry Classification System Code of 72, which are accommodations and food services industry sector business cannot exceed 300 employees and their second draw loans are limited to 2.5 times the business’ average monthly payroll costs. The second draw loan cannot exceed $2 million dollars. The business must have been operational as of February 15, 2020.
  • Finally, all businesses applying for a second Paycheck Protection Program loan under the Consolidated Appropriations Act, 2021 must show that their business revenue declined by at least 25 percent in any quarter in 2020 compared to the same quarter in 2019.
  • Again, I want to stress that the Small Business Administration are still developing the regulations and implementation of the guidelines for the Consolidated Appropriations Act, 2021. Therefore, some implementation particulars may change but the basic eligibility details are in the Statute itself.  Business owners could consult with their lender, attorney, or other trusted advisor in preparation for the role out of the Second Draw Paycheck Protection Program by the Small Business Administration.  And they can refer to the Small Business Administration website for updates about this program.

Interviewer: Reyna Munoz, Tax Legal Assistant

  • Attorney thanks for such a detailed explanation of what kinds of businesses might be eligible to apply for a Paycheck Protection Program Loan under the Consolidated Appropriations Act, 2021. Its eligible self-employed individuals, independent contractors, people with their own businesses too! And it sounds like, based on required computation models that you mentioned, Attorney; eligible individuals and business need to engage in some complicated computations in terms of determining what their qualified payroll costs are and computing the 25 percent decline in revenue and so forth.

Question 7:

  • Attorney, are there any limitations on the types of expenses a business can pay with a Paycheck Protection Program loan?

Attorney: Coleman Jackson

ANSWER 7:

  • Yes, there are. First of all, the Paycheck Protection Program is for business expenses.  It is absolutely improper to use any of the funds for personal expenses or any other expenses not specifically associated with the business who applies for and receive the Paycheck Protection Program loan whether under the First Draw Loan or the Second Draw Loan.
  • Under the Cares Act, business expenses such as, payroll costs, rents, and utilities could be paid from a Paycheck Protection Program Loan.
  • The Consolidated Appropriations Act, 2021 expanded types of expenses that can lawfully be paid from the Paycheck Protection Program Loan to business expenses such as:
    1. covered operations expenditures, such as, payments for any business software or cloud computing services that facilitates business operations, delivery of services, and such;
    2. covered property damage cost related to property damage and vandalism or looting due to public disturbances that occurred during 2020 that was not covered by insurance;
    3. covered supplier cost for such things expenditure to a supplier of essential goods or services under contract, order or purchase order in effect during the Paycheck Protection Program coverage period; and
    4. covered worker protection expenditures which are capital facility expenditures to adapt a business establishment to comply with Department of Health and Human Services, the Center for Disease Control, local health authorities, or equivalent occupational safety standards and requirements beginning March 1, 2020 and extending to when the President declares the National Emergency resulting from Covid-19 has ended.
  • So as you can see, the types of eligible expenses that can be paid from the Paycheck Protection Program loan has been drastically expanded by enactment of the Consolidated Appropriations Act, 2021.

Reyna Munoz’s Concluding Remarks

  • Attorney, thank you for this cogent presentation.
  • I know we have not talked about the everything concerning the Consolidated Appropriations Act, 2021. But these are my questions for now.  Perhaps we can do another podcast on this topic in about two weeks or something.
  • Our listeners who want to hear more podcast like this one should subscribe to our Legal Thoughts Podcast on Apple Podcast, Google Podcast, Spotify or wherever they listen to their podcast. You can follow our blogs by going to our law firm’s website at cjacksonlaw.com.  Everybody take care for now!  Come back in about two weeks, for more taxation, litigation and immigration Legal Thoughts from Coleman Jackson, P.C., which is located right here in Dallas, Texas at 6060 North Central Expressway, Suite 620, Dallas, Texas 75206.
  • English callers: 214-599-0431; Spanish callers:  214-599-0432 and Portuguese callers:  214-272-3100.

Attorney’s Concluding Remarks:

THIS IS END OF “LEGAL THOUGHTS” FOR NOW

  • Thanks for giving us the opportunity to inform you about “Who is responsible to maintain minimum essential healthcare coverage?”. If you want to see or hear more taxation, litigation and immigration LEGAL THOUGHTS from Coleman Jackson, P.C.  Stay tune!  Watch for a new Legal Thoughts podcast in about two weeks.  We are here in Dallas, Texas and want to inform, educate, and encourage our communities on topics dealing with taxation, litigation, and immigration.  Until next time, take care.

Podcast – Update on Covid-19 Relief for Individuals and Businesses | LEGAL THOUGHTS

Coleman Jackson, P.C. | Transcript of Legal Thoughts Podcast
Published January 11, 2021.

Update on Covid-19 Relief for Individuals and Businesses

Legal Thoughts is a podcast presentation by Coleman Jackson, P.C., a law firm based in Dallas, Texas serving individuals, businesses, and agencies from around the world in taxation, litigation, and immigration legal matters.

This particular episode of Legal Thoughts is a podcast where the Attorney, Coleman Jackson is being interviewed by Reyna Munoz, Tax Legal Assistant of Coleman Jackson, P.C.   The topic of discussion is “Update on Covid-19 Relief for Individuals and Businesses” You can listen to this podcast by clicking here:

You can also listen to this episode and subscribe to Coleman Jackson, P.C.’s Legal Thoughts podcast on Apple Podcast, Google Podcast, Spotify, Cashbox or wherever you may listen to your podcast.

TRANSCRIPT:

ATTORNEY:  Coleman Jackson
Legal Thoughts
COLEMAN JACKSON, ATTORNEY & COUNSELOR AT LAW

ATTORNEY:  Coleman Jackson

Welcome to Tax Thoughts

  • My name is Coleman Jackson, and I am an attorney at Coleman Jackson, P.C., a taxation, litigation and immigration law firm based in Dallas, Texas.
  • Our topic for today is: “Update on Covid-19 Relief for Individuals and Businesses.”
  • Other members of Coleman Jackson, P.C. are Yulissa Molina, Tax Legal Assistant, Leiliane Godeiro, Litigation Legal Assistant, Reyna Munoz, Immigration Legal Assistant and Mayra Torres, Public Relations Associate.
  • On this “Legal Thoughts” podcast our immigration legal assistant, Reyna Munoz will be asking the questions and I will be responding to her questions on this important tax topic: “Update on Covid-19 Relief for Individuals and Businesses.”

Reyna Munoz Introduces Herself to the Audience:

  • Good morning everyone. My name is Reyna Munoz, and I am the Immigration Legal Assistant at Coleman Jackson, P.C.  Coleman Jackson, P.C. is a taxation, litigation and immigration law firm based right here in Dallas, Texas.
  • Attorney a lot of folks are receiving bills from the IRS claiming that they owe a “shared responsibility payment for failure to maintain healthcare coverage on members of their household”. I mean some of these bills are for tax periods that are a long time ago, like 2015, 2017 and 2018.  What is this about?
  • Question 1: Just tell me, what is this all about?

Attorney: Coleman Jackson

ANSWER 1:

  • Good morning Reyna.
  • Yes Reyna; Congress recently passed and the President recently signed into law a $900 Billion Covid Relief Package with quite a few tax provisions.  The package includes $600 payments to individual taxpayers with adjusted gross income (AGI) of $75,000 or less or in case of head of households with adjusted gross income (AGI) of $112,500.  The new relief payment for joint return tax filers is $1,200 with AGI of $150,000 or less.  And taxpayers receive $600 for each qualifying child.  The new relief package also extended the weekly federal unemployment compensation of $300 for qualified individuals who lost their jobs due to Covid-19.”.

Interviewer: Reyna Munoz, Immigration Legal Assistant

Question 2:

  • Attorney, who qualifies for the recovery rebate tax credits or stimulus checks?

Attorney: Coleman Jackson

ANSWER 2:

  • Other than the adjusted gross income limitations that I mentioned, the following individuals are eligible to receive stimulus checks unless specifically ineligible:
  • Everyone is eligible other than —
  1. Any nonresident alien individual;
  2. Any individual with respect to whom a deduction under section 151 is allowable to another taxpayer for a taxable year beginning in the calendar year in which the individual’s taxable year begins; and
  3. Any estate or trust.
  • To summarize: Anyone who does not fall into either 1, 2 or 3 above is eligible to receive a stimulus check.

Interviewer: Reyna Munoz, Immigration Legal Assistant

Question 3:

What is the substantial presence test?

 Attorney: Coleman Jackson

ANSWER 3:

  • Reyna; that is an excellent question!
  • In United States Tax Law a nonresident alien is any individual who is not a United States Citizen and does not pass the Green Card Test or Substantial Presence Test.
  • To summarize: A Nonresident is anyone who is not
  1. a United States Citizen; or
  2. a Lawful Permanent Resident or Green Card Holder; or
  • a person who passes the substantial presence test with respect to length of physical presence within the United States. We go into detailed discussions of the substantial presence test in prior blogs which can be found on our website and in prior podcast as well.  So I will not go through this mechanical test again now.

 Interviewer: Reyna Munoz, Tax Legal Assistant

QUESTION 4:

  • Attorney how does an eligible individual apply for a stimulus check?

Attorney: Coleman Jackson

ANSWER 4:

  • Well, taxpayers don’t exactly have to apply for stimulus checks.
  • Taxpayers who are eligible to receive a stimulus check will receive the check by direct deposit to any account to which the taxpayer authorized the IRS to send refunds or federal payments to on or after January 1, 2019. In the event the taxpayer does not authorize the IRS to direct deposit the stimulus check the United States Treasury will mail a paper check or debit card directly to the last known address of the taxpayer.  The law requires the Treasury to send out these payments as rapidly as possible.  Eligible individuals should already have received their stimulus check or should receive them pretty soon.

Interviewer: Reyna Munoz, Tax Legal Assistant

  • That sounds easy enough; but Attorney!

Question 5:

  • How will the United States Treasury know the correct amount of money to send to the taxpayer?

Attorney: Coleman Jackson

ANSWER 5:

  • Excellent question!
  • The stimulus payment computations and eligibilities will be based on tax returns filed by taxpayers for the tax period ending December 31, 2019.

Interviewer: Reyna Munoz, Tax Legal Assistant

Question 6:

  • What should families do if they think they are eligible but they have not received a stimulus check at all or in the wrong amount?

Attorney: Coleman Jackson

ANSWER 6:

  • They should contact the Internal Revenue Service and inquire.

Interviewer: Reyna Munoz, Tax Legal Assistant

  • Covid-19 has killed a lot of people. And also lots of people have died since December 31, 2019; my question is whether their heirs, such as, surviving spouses and children going to receive their deceased relatives stimulus payments. I am kind of wondering about this since the tax refunds or credits are based on tax returns filed for tax periods ending December 31, 2019.  Is that right!

Question 7:

  • Attorney, are the heirs of a deceased individual eligible to receive a stimulus check on behalf of the decedent?

Attorney: Coleman Jackson

ANSWER 7:

  • The “Consolidated Appropriations Act, 2021”. That is the official title of the United States Law that was recently passed by Congress that implemented the tax provisions we have been talking about this morning in this podcast.
  • Under the “Consolidated Appropriations Act, 2021”; any individual who was deceased before January 1, 2020 or in case of joint return, both taxpayers were deceased before January 1, 2020; the heirs of those taxpayers would not receive the stimulus payment.
  • Under the Act, any individual who dies after January 1, 2020 or in case of joint return, both taxpayers die after January 1, 2020, the lawful heirs of those taxpayers should be able to claim the stimulus payment. They might have to specifically make a claim with the IRS like you would normally in a decedent representative case. What I am saying is that I am not sure the U.S. Treasury would know to send the stimulus payment to a decedent’s heir or representative unless they are told of the decedent’s death.

Reyna Munoz’s Concluding Remarks

  • Attorney, thank you for this cogent presentation.
  • I know we have not talked about the $900 Billion Covid Relief Packages’ tax implications for businesses yet. Perhaps we can talk more about this and produce a future podcast or blog.
  • Our listeners who want to hear more podcast like this one should subscribe to our Legal Thoughts Podcast on Apple Podcast, Google Podcast, Spotify or wherever they listen to their podcast. Everybody take care!  And come back in about two weeks, for more taxation, litigation and immigration Legal Thoughts from Coleman Jackson, P.C., which is located right here in Dallas, Texas at 6060 North Central Expressway, Suite 620, Dallas, Texas 75206.
  • English callers: 214-599-0431; Spanish callers:  214-599-0432 and Portuguese callers:  214-272-3100.
  • English callers: 214-599-0431 and Spanish callers:  214-599-0432.

Attorney’s Concluding Remarks:

THIS IS END OF “LEGAL THOUGHTS” FOR NOW

  • Thanks for giving us the opportunity to inform you about “Updates on the Recent $900 Billion Covid Relief Package Recently Enacted Into Law. We talked basically about the Stimulus Payments in this blog; but there are many individual and business tax provisions in the “Consolidated Appropriations Act, 2021”.  We could do several future podcast and blogs on this massive piece of legislation.  If you want to see or hear more taxation, litigation and immigration LEGAL THOUGHTS from Coleman Jackson, P.C.  Stay tune!  Watch for a new Legal Thoughts podcast in about two weeks.  We are here in Dallas, Texas and want to inform, educate and encourage our communities on topics dealing with taxation, litigation and immigration.  Until next time, take care.

Podcast – The Long-Arm of the United States Tax Code | LEGAL THOUGHTS

Coleman Jackson, P.C. | Transcript of Legal Thoughts Podcast
Published November 24, 2020.

The Long-Arm of the United States Tax Code

Legal Thoughts is a podcast presentation by Coleman Jackson, P.C., a law firm based in Dallas, Texas serving individuals, businesses, and agencies from around the world in taxation, litigation, and immigration legal matters.

This particular episode of Legal Thoughts is a podcast where the Attorney, Coleman Jackson is being interviewed by Reyna Munoz, Tax Legal Assistant of Coleman Jackson, P.C.   The topic of discussion is “What does the Long-Arm of the United States Tax Code Mean?” You can listen to this podcast by clicking here:

You can also listen to this episode and subscribe to Coleman Jackson, P.C.’s Legal Thoughts podcast on Apple Podcast, Google Podcast, Spotify, Cashbox or wherever you may listen to your podcast.

TRANSCRIPT:
ATTORNEY:  Coleman Jackson
Legal Thoughts
COLEMAN JACKSON, ATTORNEY & COUNSELOR AT LAW

ATTORNEY:  Coleman Jackson

Welcome to Tax Thoughts

  • My name is Coleman Jackson, and I am an attorney at Coleman Jackson, P.C., a taxation, litigation, and immigration law firm based in Dallas, Texas.
  • Our topic for today is: “What does the Long-Arm of the United States Tax Code Mean?”
  • Other members of Coleman Jackson, P.C. are Yulissa Molina, Tax Legal Assistant, Reyna Munoz, Immigration Legal Assistant, Leiliane Godeiro, Litigation Legal Assistant and Mayra Torres, Public Relations Associate.
  • On this “Legal Thoughts” podcast our law firm’s Immigration Legal Assistant, Reyna Munoz will be asking the questions and I will be giving the answers as she and I will be discussing: “What does the Long-Arm of the United States Tax Code Mean?”

Reyna Munoz Introduces Herself to the Audience:

  • Hi everyone, I am Reyna. I am the Immigration Legal Assistant at the tax, litigation and immigration law firm of Coleman Jackson, P.C.  Right here in Dallas, Texas.
  • Hi Attorney; today we will be discussing the topic: What does the Long-Arm of the United States Tax Code Mean?

Question 1:

  • Well, attorney what does the long-arm of the U.S. Tax Code mean anyway?

Attorney Answers Question 1:

  • Good morning Reyna. I think this is a fascinating topic; so let’s get started!
  • United States citizens and Lawful Permanent Residents (or commonly known as Green Card Holders) are required to pay taxes on their gross income, regardless of where it is earned or how it is earned in the world.  That basic rule is established in United States Code, Section 61(a); and explained in 26 Code of Federal Regulations, Section 1.1-1(b).
  • So, to answer your question, that is why it is often said by tax professionals that the U.S. tax code has long arms.  It can reach U.S. citizens and Green Card holders and their gross income from anywhere in the world.  These are very long-arms indeed!

Interviewer: Reyna Munoz, Tax Legal Assistant

Question 2:

  • That is interesting! How would the United States Government find out about this gross income and these foreign interest of U.S. citizens and Green Card Holders?

Attorney: Coleman Jackson

ANSWER 2:

  • S. citizens and Green Card Holders have a legal duty to voluntarily file appropriate tax returns and other informational materials with the U.S. government reporting their gross income and interests in financial accounts held overseas. Federal tax returns must be filed annually to report gross income (such as, Form 1040 (individuals), Form 1065 (Partnerships), Form 1120 (Corporations), Form 1041 (Estates).  All of these tax forms are filed with the Internal Revenue Service when applicable.  Further U.S. citizens and Green Card Holders with ownership interest or signatory authority of foreign accounts must complete Schedule B, Part III, Line 7 of Form 1040 their individual tax return discussing their interest or signatory authority over any foreign account during the tax period; and moreover, in the event the balance in any single account or combination of foreign accounts is greater than $10,000 during the tax period, the taxpayer must also file an FBAR with the Financial Crimes Network.
  • It will not be hard for the U.S. Department of Treasury to find out about taxpayers reporting obligations today with the technology that is in existence. In fact, it is easier today than ever for information to be shared by business entities, governmental entities and individuals in seconds around the world.
  • The U.S. Treasury has negotiated operating and reporting agreements with governments around the world to share directly or indirectly financial banking information of U.S. citizens and Green Card holders.
  • LET ME JUST SAY, IT IS EXTREMELY UNLIKELY THAT THE U.S. GOVERNMENT WILL NOT LEARN OF THESE EARNINGS AND FOREIGN ASSETS TODAY.

Interviewer: Reyna Munoz, Tax Legal Assistant

Question 3:

  • What can happen if a U.S. Citizen fails to report all of their gross income and fail to report their ownership interest in a foreign bank account?
  • First what is a foreign bank account anyway?

Attorney Answers Question 3:

  • A foreign bank account is an account in a foreign institution, or an institution physically located outside of the borders of the U.S. and its territories. Branches of U.S. domiciled banks located overseas are not classified as a foreign bank for FBAR reporting purposes or IRS purposes.
  • Individuals who fail to comply with U.S. laws can expect there to be a gradation of criminal and civil exposure. What I mean by that is in the United States criminal penalties and civil penalties for violation of the law are graded based on level of culpability.  This is also true with regards to failure to voluntarily comply with the U.S tax laws.  The U.S. tax code imposes varies kinds of penalties for violations, such as tax evasion, failure to file penalties, negligent filing penalties.
  • As for failure to report interest in foreign accounts, the IRS is permitted to assess and collect civil penalties against any individual who fails to report their interest in a foreign account on a timely filed FBAR.
  • I have written numerous blogs with regards to the penalty structure designed to hold tax cheats accountable.

 Interviewer: Reyna Munoz, Tax Legal Assistant

QUESTION 4:

  • Attorney what could you at least explain what you mean by gradation of penalties?

Attorney Answers Question 4:

  • Okay, very well! Let me briefly describe what gradation of penalties means as it relates to failure to file a required FBAR.
  • If an individual’s failure to file an FBAR is deemed willful by the IRS, then the IRS has the discretion to assess a maximum penalty of $100,000 or 50 percent of the balance in the foreign account at the time of the violation. Whichever is higher is the collectable penalty.
  • Willfulness does not require actual knowledge of the duty to report interest in a foreign account. Reckless or careless disregard of their statutory duty to report their ownership or beneficiary interest in the foreign account is enough for the IRS assess and collect the penalty.
  • The IRS has been challenged in Courts around the country, and they have a pretty good betting record on winning the willfulness FBAR cases. Come on, just look; these cases are what lawyers routine call document cases. For example, (1) it’s easy to prove whether someone is a U.S. citizen or Green Card Holder because there is a U.S. birth Certificate or Naturalization  Certificate or Lawful Permanent Resident Card; (2) it’s easy to prove that the account is located outside of the U.S. and its territories because there are bank account statements; and (3) it’s easy to prove that the taxpayer filed a tax return failing to list the foreign bank account because there is Schedule B, Part III, Line 7 of IRS Form 1040.  Hey, three strikes and you are out.  Willfulness to violate the FBAR rules is not a very high burden for the IRS to carry in these FBAR violation cases.

Interviewer: Reyna Munoz, Tax Legal Assistant

Question 5:

  • Okay Attorney that sounds like three strikes. It might be hard to hit the ball.  But what about—
  • If the taxpayer hired a professional tax return preparer to prepare and file, the return? Could the taxpayer now say it was none willful?

Attorney: Coleman Jackson

ANSWER 5:

  • Well it depends on all the facts and circumstances as to whether a skillful negotiated and advocate could make out a defense.
  • But the main thing everyone should take away is this:
  • Taxpayers are deemed to have constructive knowledge of and responsibility for the contents of their tax returns which are signed under penalty of perjury.
  • Where immigrants are involved who lacks the knowledge of the English language, cultural norms in terms of voluntary tax reporting, educational challenges and other capacity factors, in these circumstances skillful advocacy might manage to turn what appears to be a willful violation into a none willful violation of U.S. law. People with foreign gross income and foreign account interest need to do their due diligence in picking tax professionals in preparation of U.S. tax returns and compliance with FBAR requires because the penalties for failing to comply are rough regardless of the gradation of the penalties.

Interviewer: Reyna Munoz, Tax Legal Assistant

Question 6:

  • Okay, I think I understand.
  • Attorney, you mentioned voluntary disclosure. Is there a way a person can get this right even after they failed to property report their gross income or foreign account?

Attorney: Coleman Jackson

ANSWER 6:

  • Yes, the IRS has voluntary disclosure programs. But the Offshore Voluntary Disclosure Program or OVDP has ended and the IRS is no longer accepting taxpayers’ disclosures for failing to report foreign accounts under that program.
  • The various Streamlined Procedures Programs are still viable; but only if the violation is non willful. I have written blogs on this in the past and will not go into any more details here; other than, the taxpayer must make sure their actions were none willful because the IRS audits these submissions and if the IRS deems the actions of the taxpayer were willful violations rather than none willful violations, they could make a referral to IRS Criminal Investigations for possible referral to the U.S.  Justice Department.
  • The IRS also still have a FBAR only disclosure program that might be used by some taxpayers under appropriate circumstances.
  • Mayra, thanks for your questions on this topic. We have numerous blogs on foreign accounts on our law firm’s blog site.   We must go for now.

Attorney’s Concluding Remarks:

THIS IS END OF “LEGAL THOUGHTS” FOR NOW

  • Thank you for giving us the opportunity to inform you about What does the Long-Arm of the United States Tax Code Mean?”
  • We might discuss other aspects of this topic on gross income and foreign accounts matters in follow up podcasts or blogs in the near future.  If you want to see or hear more taxation, litigation and immigration LEGAL THOUGHTS from Coleman Jackson, P.C., subscribe to our podcast and stay tune!  We are here in Dallas, Texas and want to inform, educate, and encourage our communities on topics dealing with taxation, litigation, and immigration.  Until next time, take care.