Tag Archives: Covid-19

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.

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.

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

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

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:

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

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

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:

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

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

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:

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 —

Any nonresident alien individual;
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
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

a United States Citizen; or
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 Earned Income Tax Credit | LEGAL THOUGHTS

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Coleman Jackson, P.C. | Transcript of Legal Thoughts Podcast
Published September 28, 2020.

This particular episode of Legal Thoughts is a podcast where the Attorney, Coleman Jackson is being interviewed by Mayra Torres, the Public Relations Associate of Coleman Jackson, P.C. The topic of discussion is “The Earned Income Tax Credit “. You can listen to this podcast by clicking here:

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: “The Earned Income Tax Credit.”
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 public relations associate, Mayra Torres will be asking the questions and I will be responding to her questions on this important tax topic: “The Earned Income Tax Credit.”

Interviewer: Mayra Torres, Public Relations Associate

Good afternoon everyone. My name is Mayra Torres and I am the public relations associate at Coleman Jackson, P.C. Coleman Jackson, P.C. is a taxation, litigation and immigration law firm based right here in Dallas, Texas.
Attorney many families’ household income during this dreadful Covid-19 pandemic has been terribly cut to the core. I mean folks are struggling financially just to pay their bills, keep a roof over their heads and buy basic food and necessities. Besides killing way too many people, this virus has destroyed people’s livelihoods. Folks can hardly make a fraction of the amount of money they were making before this dreadful disease happened.
This is a general question and I’m not sure even how to ask this question:
Question 1:

I recently heard some families talking about something called earned income tax credit. What is an earned income tax credit, who qualifies and how do they apply?

Attorney Answers Question 1:

Good afternoon Mayra.
Internal Revenue Code Section 32 allows an earned income tax credit for certain eligible individuals who work and meet certain criteria established under Section 32. The income tax credit is a refundable tax credit based on earned income that is available to certain low to modest wage earners. IRC Section 32 applies to individuals not corporations, partnerships, or any other form of business entity. The earned income credit is designed to offset some of the cost of living expenses for low to modest income taxpayers to ease the economic strain and rigor on them and their families.

Interviewer: Mayra Torres, Public Relations Associate

Question 2:

Other than the work requirement and being an individual, what are the other qualifying criteria for the earned income credit?

Attorney Answers Question 2:

In order to qualify the individual taxpayer must meet a number of different requirements. Different sets of rules apply in determining the earned income credit for taxpayers with qualifying children and taxpayers without qualifying children. If an individual is the qualifying child of more than one taxpayer, only one taxpayer can claim that person as a qualifying child for purposes of the earned income credit. Internal Revenue Code Section 32 also establishes certain qualifying income levels and provide phase out provisions blocking high income individuals from benefiting from the earned income tax credit.

Interviewer: Mayra Torres, Public Relations Associate

Question 3:

Attorney could you explain in more details the following distinctions:
1. What are the qualifying criteria for taxpayers with children?
2. What are the qualifying criteria for the earned income credit for taxpayers without children?

Attorney Answers Question 3:

Mayra, that is an excellent idea to hopefully help our listeners to understand this better. Let metake these in the order that you have suggested:
First: The Taxpayer who have a qualifying child for the tax year is eligible for the earned income tax credit if she meets the following seven requirements in addition to the earned income criteria –
1. the taxpayer has taxable income for the tax year;
2. the taxpayer’s adjusted gross income does not exceed a specified ceiling amount;
3. the taxpayer does not have more than a specified ceiling amount for investments;
4. the taxpayer is a United States Citizen or Resident for the entire year and if married, the taxpayer is married to a United States Citizen or Resident or, if taxpayer is married to a nonresident, the taxpayer must file an election for the nonresident to be taxed as a Resident. In this event the nonresident’s worldwide income is subject to U.S. taxation;
5. the taxpayer must use the filing status of married filing jointly, single, head of household, or widower with children. Taxpayer cannot qualify for the earned income tax credit filing married filing separate;
6. the taxpayer has a valid social security number; and
7. the taxpayer does not claim the foreign earned income tax credit or the foreign housing tax credit
Second: The Taxpayer who does not have a qualifying Child during the tax year is eligible for the earned income tax credit only if the taxpayer meets all four of the following requirements in addition to the earned income criteria:
1. The taxpayer and spouse; if any, are between the ages of 25 and 64. Note that the couple can meet this particular requirement if either the taxpayer or the taxpayer’s spouse is within these age requirements;
2. The taxpayer resided in the United States for more than half the tax year;
3. The taxpayer was not claimed as a dependent on another taxpayer’s tax return for the tax year; and
4. The taxpayer is not a qualifying child of another taxpayer for the tax year.

Interviewer: Mayra Torres, Public Relations Associate

Question 4:

Attorney what is a qualifying child for the purpose of the earned income tax credit?

Attorney Answers Question 4:

A qualifying child is defined in Internal Revenue Code Section 32 as someone who meets four tests:
1. The child must be the taxpayer’s son, daughter, stepchild, adopted child, foster child, or a descendant of such person or the taxpayer’s brother, sister, half brother or sister, stepbrother or stepsister, or a descendant of such person;
2. The child must be under 19 years of age at the end of the tax year and the child must be younger than the taxpayer or the taxpayer’s spouse if the couple is filing a joint tax return. There are special rules that applies to students and disabled individuals when it comes to the earned income credit age requirements;
3. The child must live in the taxpayer’s home within the United States for more than six months out of the tax year. There are certain temporary absences rules that applies in calculating the residency requirement under Internal Revenue Regulations Section 1.152-2(a)(2)(ii);
4. The married child of the taxpayer cannot be a qualifying child of the taxpayer if the married child of the taxpayer files a tax return with their spouse; except, solely for the purpose of filing a claim for refund and the married child is the taxpayer’s dependent.

Interviewer: Mayra Torres, Public Relations Associate

Question 5:

That That is a lot to digest! I mean what types of income is included to determine whether the taxpayer meets the earned income criteria in the first place?
And what happens if the taxpayer misunderstands these tax rules and claims the earned income tax credit by mistake or something?

Attorney Answers Question 5:

For clarity purposes Mayra; let me answer your two questions step by step:
First:
What types of income is included to determine whether the taxpayer meets the earned incomecriteria in the first place?
Earned income typically consists of-
1. Wages, tips, and other types of employee compensation;
2. Net earnings from self-employment;
3. And certain taxable disability payments received by a taxpayer prior to reaching the minimum retirement age;
4. Extra pay earned by active duty soldiers in a military combat zone pursuant to Internal Revenue Code Section 112;
5. There might be other types of income, but, these are the basic categories of income that are included in computing the earned income tax credit. I might add that some categories of income are specifically excluded from income for purposes of computing the earned income tax credit, such, investment income, social security income, welfare benefits, unemployment compensation, community property income and any other income exclusions specifically mentioned in Internal Revenue Code Section 32(c)(2)(a)(i).
What was your second question Mayra? Could you repeat it again?

Interviewer: Mayra Torres, Public Relations Associate

Question 6:

Oh, sure I would be glad to attorney. My question was-
What happens if the taxpayer misunderstands these tax rules and claims the earned income tax credit on their filed tax return by mistake or something?

Attorney Answers Question 6:

Taxpayers are responsible for the accuracy of any tax return that they file or someone else files on their behalf with the Internal Revenue Service and there can be civil and criminal consequences for filing inaccurate returns. Detailed Earned Income Computation Worksheets are contained in IRS Publication No. 596. The taxpayer should read this publication very carefully, especially, if they prepare their own tax return and are contemplating claiming the earned income credit.
In the event the taxpayer is using a paid tax return preparer to prepare their return and claim an earned income tax credit, they must perform their due diligence in selecting a qualified tax return preparer. The tax return preparer who is a paid tax return preparer of a tax return claiming the earned income credit must sign the return and complete and sign Form 8867, Paid Preparer’s Earned Income Credit Checklist and attach it to each return filed with the IRS claiming the earned income tax credit. Form 8867 also applies to returns filing head of household, child tax credit and additional child tax credit. The taxpayer must make sure Form 8867 is properly completed and filed with their tax return; so that, they can demonstrate that they possibly acted in good faith and reasonable in claiming an earned income credit for the tax year. This could form the basis for a reasonable cause defense in the event the IRS challenges the earned income tax credit position on the tax return; or these due diligence steps could form the basis for a tax preparer negligence claim. There is an inflation adjusted preparer penalty of $500 which applies when the tax preparer fails to complete Form 8867.
If a taxpayer claims the earned income credit in a previous year though they were not eligible and the IRS determines that the error was due to reckless or intentional disregard of the earned income credit rules, the taxpayer could be prohibited from claiming the credit on subsequent tax returns for two years pursuant to Internal Revenue Code Section 32(k)(1)(B)(ii).

Mayra’s Concluding Remarks

Attorney, thank you for very clear responses to all my questions concerning the Earned Income Credit.
I understand the earned income tax credit better now than when we first began discussing it this afternoon.
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 our 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, Dallas, Texas 75206.
English callers: 214-599-0431 and Spanish callers: 214-599-0432.

Coleman Jackson, Attorney’s concluding remarks:

THIS IS THE END OF “LEGAL THOUGHTS” FOR NOW

Thanks for giving us the opportunity to inform you about the earned income tax credit. 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.

Foreign Doctors and Other Healthcare Workers Opportunities to Work & Live in the United States

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October 9, 2020
By Coleman Jackson, Attorney

Covid-19 has revealed a lot of short comings in the health care system in the United States. An overwhelming majority of negative health outcomes have affected the minority communities throughout the country. The social injustices and the long tail of racial injustice and its impact on the health and well being of our follow citizens are glowing clearly down whatever dark path Covid-19 takes as it sweeps across America’s urban areas and rural areas and whatever other path this mysterious virus goes down. One thing is clear its impact is not equal on all of America.

America needs to do better. She must do much better by its citizenry. One place to start is making sure that a sufficient supply of quality healthcare workers is available to serve all America regardless of what they look like or how much money they have in the bank. Quality healthcare involves much more than universal health insurance and access to understaffed hospitals and clinics. There must be qualified, compassionate, skilled healthcare providers who are willing and able to serve communities throughout America staffing the hospitals, clinics and medical offices.

If there is a shortage in health care workers, can health insurance coverage alone solve the problems laid bear by Covid-19? There were a woefully insufficient number of healthcare workers in under served communities throughout the United States long before Covid-19 arrived on our shores. Health insurance does not solve this problem. Legislation enacted on November 12, 1999, 220 Public Law No. 106-95, 113 Statute 1312 Section 5 suppose to have made it easier for certain foreign physicians and other healthcare workers seeking to work and reside in the United States to enter the United States in the second employment-based preference category, known as the, EB-2 Visa under the national interest waiver. Now the EB-2 NIW is not the only visa that health care workers may use to work in the United States, for example, the H1-B, J-1, EB-1 and the traditional EB-2 are all visa types that might afford foreign health care workers the opportunity to live and work in the healthcare field within the United States. But the EB-2 NIW was designed to make it easier and shorten the time for foreign healthcare workers to come to the United States to live and work indefinitely in the healthcare industry.

The EB-2 NIW- Who Qualifies for the EB-2 National Interest Visa? All kinds of doctors, nurses and other healthcare workers may qualify; so long as, they agree to work full time in a field designated by the U.S. Department of Health and Human Services (HHS) as a health professional shortage area or in a Veterans Administration Hospital; and a federal agency or a state department of public health has determined that the healthcare workers’ service is in the public interest. These are the two prongs of the 1999 legislation establishing the EB-2 National Interest Waiver. They must be satisfied by obtaining a certification from the federal or state agency, such as the Veteran’s Hospital (VA) on the federal level or State Public Health Agency on the State level. Local health agency certification will prove to be insufficient and also private organization attestation of the public interest will prove to be insufficient to satisfy this requirement. A certification by the State Department of Public Health tend to be persuasive evidence of “public interest” when it comes to satisfying the National Interest Waiver certification requirement. Keep in mind that an NIW is generally considered an easier path to the second preference employment-based EB-2 visa. NIW healthcare workers must still satisfy all of the requirements for the traditional EB-2 visa in addition to the NIW requirements.

The EB-2 NIW- Does the EB-2 National Interest Visa applicant need to obtain a U.S. Department of Labor certification? The EB-2 NIW is exempt from labor certification requirements under the 1999 legislation. The physician or other healthcare worker must certify that they will work full time in a healthcare shortage area or VA hospital for five years. The healthcare worker must present credible evidence that their work will advance a critical national goal and that their work will benefit the public interest of the United States. In this time of Covid-19, this certification by the foreign healthcare worker could possibly be easier that ever before to meet due to increased coronavirus related sickness, hospitalizations and exhaustion and depletion of health industry capacity that was already strained in some rural and underserved areas of thee U.S. long before Covid-19 hit the American shores.

The EB-2 NIW- What is the process of applying and how long does it generally take from the filing of the application and working at an American hospital, clinic or other healthcare facility?First of all, the petitioner applying for an EB-2 NIW does not need a hospital or other institution to file the petition nor do they need a job offer. The foreign healthcare worker can self-petition for an EB-2 NIW. The petitioner must first file USCIS Form I-140 with supporting documentation showing the following:

All identification evidence required for the traditional EB-2 visa;
Written evidence that the two prongs of the National Interest Waiver showing that the healthcare worker will work full time in an underserved healthcare area, or in a Veterans Administration Hospital facility;
Credible Credentialing evidence that shows or demonstrates that the physician or other healthcare worker has the educational, licensing, experience and other professional indicia required by Immigration and Nationalization Act Section 212(a)(5) (B) to work in the intended State of the United States in which they intend to work;
All evidence required for USCIS Form I-485 Adjustment Application in the event an Immigrant Visa is immediately available. The immigrant must review theVisa Bulletin published each month by the U.S. Department of State in making the determination as to when to file Form I-485, Adjustment of Status Application; and
Other credible evidence as required for healthcare workers in the State.

As for the processing times at the USCIS, currently processing times are over one year; but, processing times varies based on all facts and circumstances and during Covid-19 the process could take a few months if the foreign healthcare worker shows that their skills are in the public interest and that they are willing to serve at medical facilities with acute shortages or in underserved communities in rural and intercity America. It should be noted that although an adjustment of status application (Form I-485) can be filed when an immigrant visa is available and can even be filed concurrently with the I-140; the USCIS is not expected to approve the adjustment application until the healthcare worker has actually served in the underserved medical area for at least five years. Where to file for EB-2 NIW? Outside of the United Sates the foreign worker files the appropriate forms and supporting documents with the U.S. Consulates Office in their home country; whereas, inside the United These the petitioning foreign healthcare worker files the appropriate forms and supporting documents with USCIS who handles immigration processing inside the country. Premium or expedited processing could be available to speed up the processing of the I-140 petition; but the availability of premium processing is changed by the government from time to time upon short notice.

The EB-2 NIW- What about the healthcare workers spouse and family? The foreign workers spouse and children under the age of 18 may be admitted to the Unites States in the E-21 and E-22 immigrant visa status. Their spouse and children can enroll and attend school in the United States. During the pendency of the adjustment of status application, the spouse is eligible to file for Form I-765, Employment Authorization Application for approval to work in the Unites States. The spouse and the children can maintain this status and live in the United States indefinitely; so long as, the principal foreign worker maintains the EB-2 NIW immigration status. Let’s just note that the foreign worker and their spouse and children can travel freely inside and outside of the United States, so long as, they maintain the second preference employment-based visa immigration status. Once the individual family members adjustment of status application is approved (they get their Green Cards) and they can reside and work in the United States permanently and they can apply for U.S. citizenship after holding the Green Card status for five years.

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 – Does unemployment compensation recipients have to pay federal taxes on the money received resulting from Covid-19? | LEGAL THOUGHTS

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Published July 14, 2020

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 Mayra Torres, the Public Relations Associate of Coleman Jackson, P.C.

The topic of discussion is “Is Unemployment Compensation Received Taxable Income?” 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 where ever 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: “Is Unemployment Compensation Received Taxable Income?”
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 Public Relations Associate, Mayra Torres, will be asking the questions and I will be providing the answers to the questions on this important tax topic: Is Unemployment Compensation Received Taxable Income?

Interviewer: Mayra Torres, Public Relations Associate

Question 1:

What are unemployment benefits?

Attorney Answers Question 1:

Unemployment benefits generally includes any amount of money received under any federal or state law program designed to protect taxpayers against loss of income caused by involuntary loss of employment or decrease in compensation.

Interviewer: Mayra Torres, Public Relations Associate

QUESTION 2:

Who is eligible to receive unemployment benefits?

Attorney Answers Question 2:

Keep in mind that unemployment benefits, as a general policy, is governed by State and federal labor laws and are designed to replace in whole or part the loss of employee wages due to some involuntary lay off or employment disruption.
Unemployment programs are administered by the States and each State has its own rules as to who qualifies and how they should apply. In Texas, the Texas Workforce Commission administers the Texas Unemployment Compensation System.

Interviewer: Mayra Torres, Public Relations Associate

Question 3:

Well okay, I kind of understand. But there is a lot of talk about the CARES Act and something about$600 dollars people are receiving.
What is the CARES ACT? Does it affect unemployment benefits… like, who qualifies and how they apply and how much they get and how long they can get unemployment benefits?

Attorney Answers Question 3:

Those are excellent questions!
The CARES Act was enacted into law on Friday, March 27, 2020. CARES stand for the Corona virus, Aid, Relief, and Economic Security Act. It is a $12, trillion-dollar economic relief package featuring extensive tax provisions. It is Public Law 116-136 (3/27/2020). And yes it does impact who qualifies for unemployment compensation, how they apply and how much they receive it and for how long if their loss income is related to Covid-19.
Employees who lost jobs qualify
Self-employed individuals qualify under the CARES Act
Qualified individuals impacted by Covid-19 must file unemployment claims through the State governmental agency who regulate unemployment benefits in their State. Residence in Texas must file claims with the Texas Workforce Commission and follow all filing requirements and follow-up guidance that TWC requires to obtain their compensation. Keep in mind that TWC rules and requirements may continue to change as the State continues to reopen its economy during this pandemic.

Interviewer: Mayra Torres, Public Relations Associate

Question 4:

Okay…. And what about undocumented workers and self-employed people; can they file for

unemployment benefits with TWC too?

Attorney Answers Question 4:

Yes, workers and self-employed individuals do not have to be United States citizens or lawful permanent residents to qualify for unemployment. All residence of Texas who had employment prior to the Covid-19 Crisis can file for unemployment.

Interviewer: Mayra Torres, Public Relations Associate

Question 5:

What about the $600 everybody is talking about; how do unemployed people get that?

Attorney Answers Question 5:

The CARES Act not only expanded the eligibility for unemployment to self-employed individuals like I mentioned before; the Act also extended coverage by 13 weeks and provides unemployed individuals with an extra $600 per week of federal assistance on top of the State benefits.
Qualified individuals apply for this extra $600 per week federal benefit when they file their State Unemployment Claim. Again, in Texas everything is filed with the Texas Workforce Commission.Contact TWC for help in filing an unemployment claim in Texas. The TWC rules are in flux as the State reopens during this pandemic.

Interviewer: Mayra Torres, Public Relations Associate

Question 6:

Okay, I was just curious; many folks are afraid of going back to work because they might get sick or get their families sick.
Can somebody continue to receive unemployment even though their boss tell them that they can come back to work now?

Attorney Answers Question 6:

Unemployment benefits are for people who loss their jobs or income due to no fault of their own. People who quit their jobs generally will not qualify for unemployment compensation in Texas. I say generally because facts and circumstances matter. Application of the law can be messy at times because facts matters. Perhaps an unemployed individual can make out a winnable case that it’s too dangerous for them to return to work during the Covid-19 pandemic.
But, Keep in mind that people who file initial and continuation claims for benefits with TWC provides self-certification under penalty of perjury that they are otherwise able to work and are available for work under the Texas Labor Code that governs such matters in Texas.
The rules concerning this question may change from day to day or week to week as the State of Texas reopens during this pandemic.

Interviewer: Mayra Torres, Public Relations Associate

Question 7

Okay, I understand; it sounds like it just depends on all the facts, and circumstances and State and federal government rules updates.
Another BIG QUESTION A LOT OF PEOPLE HAVE IS THIS!
Do unemployed individuals have to pay taxes on unemployment benefits that they receive?

Attorney Answers Question 7:

The tax treatment of unemployment benefits received depends on the type of program paying the benefits.
I am going to try to keep this simple; but folks must understand that the federal and state program funding the compensation can impact whether the amounts received are taxable.
I am going to limit my answer to only three types of unemployment benefits that I think are germane to the types of benefits that most people are receiving during this Covid-19 national emergency:
Types of Unemployment Benefits that are Taxable
1. Benefits paid by a State or the District of Columbia from the Federal Unemployment Trust Fund
2. State Unemployment insurance benefits
3. Unemployment assistance under the Disaster Relief and Emergency Assistance Act of 1974
Conclusion: Most people receiving unemployment due to Covid-19 falls under one of these programs. The benefits are taxable!

Interviewer: Mayra Torres, Public Relations Associate

Question 8

I think I’m getting it now! What about the extra $600 per week from CARES Act, is it taxable too?

Attorney Answers Question 8:

Yes, unemployment compensation received under the CARES Act is taxable because the CARES Act does not specifically exempt the $600 extra unemployment compensation from federal taxation.
In fact, the CARES Act states that in the event there is a conflict in the CARES Act with provisions in the Disaster Relief and Emergency Assistance Act of 1974, then the provisions of the Disaster Relief and Emergency Assistance Act of 1974 controls. As we have seen, benefits received under the 1974 Act is taxable.
So, the answer to your question is, yes, unless Congress exempts the $600 from federal taxation, it is taxable under Internal Revenue Code Section 85(a).

Interviewer: Mayra Torres, Public Relations Associate

Question 9

When does the taxes on that unemployment money have to be paid?

Attorney Answers Question 9:

Those filing for unemployment can ask TWC to withhold the appropriate amount of tax from their unemployment compensation. Make this choice by giving TWC Form W-4V, Voluntary Withholding Request; or
They may have to file estimated taxes by the 15th day of the end of each quarter. They can compute this amount on Form 1040-ES and make their estimated payments to the IRS by phone,online or by mail.

Interviewer: Mayra Torres, Public Relations Associate

Question 10

What if people don’t know and never ask TWC to withhold the money and never do this

estimated tax thing?

Attorney Answers Question 10:

If taxpayers don’t pay enough taxes during a year, either by withholding or by estimated tax deposits, or some combination of the two, they may have to pay an underpayment penalty.
The federal tax system in the United States is a pay-as-you-go self-certification system. But keep in mind, the IRS and the taxpayer will probably receive a Form 1099-G from TWC for all unemployment compensation paid during the course of the calendar year.

Attorney’s Concluding Remarks:

This is end of Legal Thoughts for now

Thanks for giving us the opportunity to inform you about taxation of unemployment compensation. If you want to see or hear more taxation, litigation and immigration LEGAL THOUGHTS from Coleman Jackson, P.C. 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.

Foreign Agricultural H-2A Visa Workers on American Farms During Covid-19 National Emergency

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By: Coleman Jackson, Attorney & Certified Public Accountant
May 14, 2020

The H-2A nonimmigrant visa classification has been around for a very long time. See Immigration and Nationality Act (INA) 101(a)(15)(ii)(a), 8 U.S.C. 1101. The H-2A foreign agricultural workers visa; known as H-2A is more in the public eye right now due to the media’s focus on the rise of Covid-19 cases in meat packing plants, on farms and in rural America potentially resulting in food supply chain disruptions. The concern of the coronavirus’ disruption of the food supply is very real and it is of grave concern to the well being of farmers’ bringing their goods to market and to their fellow citizens ability to feed their families. In a nutshell, the foreign agricultural workers program known as the H-2A Visa permits agricultural employers to fill shortages in the available work force by following certain procedures to lawfully bring foreigners to the United States temporarily to perform temporary or seasonal agricultural work. The Department of Homeland Security defers to the U.S. Department of Labor with respect to defining what work falls into the categories of temporary and seasonal agricultural work. Historically, the Department of Labor has defined “agricultural labor” as such duties as hauling and delivery on the farm, harvesting, cultivating and planting seed. Foreign workers on H-2A Visas has historically also worked as sheep herders, goat tenders, cattle raisers, poultry farmers and in other occupations typically in rural areas of America where various kinds of animals are raised for market. The point is that agricultural workers are not limited to farms performing task around a farm; foreign workers on H-2A Visas work on plantations, ranches, nurseries, meat packing plants, greenhouses, orchards, and as truck drivers and delivery drivers on these or other similar locations. The Immigration and Nationality Act (INA) has defined the term temporary agricultural work as no more than 12 months or employment of a seasonal nature tied to a certain time of the year, event or pattern.

There was-and-still-is a very regimented step-by-step process that agricultural employers must follow to bring foreign farm laborers to work on their farms, ranches, meat packing plants or similar locations; which begins with a petition filed with their state workforce commission; then they go to the DOL for labor certification that there is a lack of available domestic workers to perform the intended project; once the employer receives the DOL Labor Certification they file a request with the Department of Homeland Security; and upon approval, the foreign worker petitions the Consulate’s Office in their country to obtain the H2-A Visa to come to America and work on a specific temporary or seasonally project for less than 12 months. The H-2A visa is valid for 3 years.

This process has been relaxed and modified somewhat. Covid-19 has created the necessity to impose travel restrictions, stay at home orders and caused lots-and-lots of tremendous pain, loss and suffering throughout the country. In response to anticipated disruptions and uncertainties in the U.S. food supply and the ongoing impact of the Covid-19 epidemic in rural America; the Department of Homeland Security and U.S. Citizenship and Immigration Services (USCIS) published temporary amended regulations regarding temporary and seasonal agricultural workers and their U.S. employers in the H-2A nonimmigrant agricultural workers classification. These final regulations are published in 85 FR 21739 and is effective from April 20, 2020 through August 18, 2020.The following are the major amendments to the normal process that historically were used by domestic farmers to bring foreign nonimmigrant workers to work temporarily on their farms, ranches, meat packing plants and other similar locations under the H-2A Agricultural Workers program:

The H-2A regulations were temporarily amended to permit all H-2A employers to allow nonimmigrants who currently hold a valid H-2A visa status to start working upon the receipt of the employer’s new H-2A petition, but not earlier than the start date of employment listed on their H-2A petition.
The H-2A regulations were temporarily amended to permit all H-2A workers to immediately work for any new H-2A employer, but not earlier than the start date of employment listed on the H-2A petition filed during the Covid-19 National Emergency.
The H-2A regulations were temporarily amended to create a temporary exception to 8 CFR 24.2 to allow nonimmigrants to extend their H-2A period of stay beyond the three-year limitations without first requiring that the immigrant leave the United States and remain outside of the United States for an uninterrupted period of three months. It is important that an H-2A petition for an extension of stay with a new employer must have been filed with USCIS on or after March 1, 2020 and remain pending as of April 20, 2020.
H-4 nonimmigrants who are the spouses and children of an H-2A agricultural worker visa holders are beneficiaries of these same amendments noted in one through three above. H-4 visa holders’ admission and limitations of stay are dependent on the validity of the H-2A visa holders’ status and they must be otherwise admissible.

Moreover, as a practical matter, certain in-person interview requirements at the Consulate Offices have been eased during this Covid-19 National Emergency to facilitate foreign workers traveling into the United States. H-2A workers fall under the ‘essential worker’ category of critical worker and probably are exempt from the stay-at-home, travel restrictions and other measures imposed by local, state and federal governmental agencies during this Covid-19 National Emergency.

Foreign agricultural workers on H-2A visas are subject to the United States federal tax laws but they are exempt from withholding of U.S. federal income taxes, social security taxes and Medicare taxes on compensation paid to them for services performed in connection to their H-2A agricultural worker visa status. If they receive more than $600 in compensation, the foreign nonimmigrant worker must receive a Form W-2 from their employer which exempts social security and Medicare taxes. Typically, the worker files Form 1040-NR and the employer must report the wages of its agricultural nonimmigrant workers on Form 943, Employer’s Annual Federal Tax Return for Agricultural Employees and file all other appropriate tax returns with local, state and federal taxing authorities. Most of the modified filing, payment and reporting deadlines announced by the U.S. Treasury and Internal Revenue Service during this Covid-19 National Emergency applies to H-2A agricultural workers and their employers.

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