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Reporting Foreign Bank and Financial Accounts | LEGAL THOUGHTS

Coleman Jackson, P.C. | Transcript of Legal Thoughts Podcast
Published June 14 ,2021

FBAR - Reporting Foreign Bank and Financial Accounts

LISTEN:

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, Public Relations Associate of Coleman Jackson, P.C.   The topic of discussion is “Reporting Foreign Bank and Financial Accounts“. 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, government contracts litigation and immigration law firm based in Dallas, Texas.
  • Our topic for today is: “Reporting Foreign Bank and Financial Accounts”.
  • 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: “Reporting Foreign Bank and Financial Accounts.”

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 law firm based right here in Dallas Texas representing clients from around the world in taxation, litigation, and immigration law.
  • Attorney, thank you for joining us today to discuss the laws that require certain individuals, businesses and other entities to timely report Foreign Bank and Financial Accounts. A very important topic anyone with foreign bank accounts and other assets abroad.
  • Question 1:
  • Could you give us a general overview of the legal source of these legal rules obligating certain individuals to disclose their foreign bank, financial accounts, and other offshore asset holdings. I mean what law requires this; who does it apply to and what are the penalties for failing to comply?  These are all questions everyone with foreign assets probably needs the answer to.  So, Attorney could you explain this in terms easy to understand?

Attorney Answers Question 1:

  • Good afternoon Mayra. Yes, I can give a general overview as to what laws impose these requirements foreign bank accounts disclosures, why Congress say they enacted these statutes, who these disclosure rules apply to and what penalties are imposed on those who fail to timely disclose their foreign holdings.
  • Answer No. 1:
  • The Bank Secrecy Act (BSA) was enacted into law in 1970. The Bank Secrecy Act is codified in 31 USC Sections 5311 et seq.  The law authorizes the U.S. Department of Treasury’s Financial Crimes Enforcement Network (FinCen) to administer and enforce the law.  The BSA gives FinCen authority to collect information from a U.S. person who have financial interests in or signatory   authority over foreign bank and financial accounts.   The BSA also gives FinCen numerous powers to enforce the law as it relates to financial institutions as well; but that is beyond the scope of this particular podcast.  I am only going to talk about the application of the law to certain U.S. persons as defined in the BSA.
  • The Report of Foreign Bank and Financial Accounts (FBAR), which is FinCen Form 114 required to be filed by April 15th annually to report certain foreign bank and financial holdings by U.S. persons. A timely FBAR is required because foreign financial institutions may not be subject to the same reporting requirements as domestic financial institutions. The FBAR is also a tool used by the United States government to identify persons who may be using foreign financial accounts to circumvent United States law. Information contained in FBARs can be used to identify or trace funds used for illicit purposes or to identify unreported income maintained or generated abroad.  So, this explains what Congress is getting at in terms of certain U.S. persons.  The law is designed to detect tax fraud, money laundering, and other nefarious financial criminal activity.
  • In April 2003, the Financial Crimes and Enforcement Network (FinCEN) delegated enforcement authority regarding the FBAR to the Internal Revenue Service (IRS). The IRS is now responsible for:
  • Investigating possible civil violations;
  • Assessing and collecting civil penalties; and
  • Issuing administrative rulings.
  • But let’s it be clear, Form 114, the annual FBAR filed with FinCen not the Internal Revenue Service. The April 2003 delegation of enforcement authority to the IRS had absolutely no impact on who must file an FBAR (Form 114), or where the Form 114 must be filed or when the FBAR is required to be filed.  FBAR disclosure are filed on FinCen’s website.

Interviewer:  Mayra Torres, Public Relations Associate

Question 2:

Attorney it is abundantly clear why disclosing foreign bank accounts and other offshore assets and financial holdings annually in an FBAR is so important.

Please explain in more detail exactly who is required to file the FBAR?

Attorney Answers Question 2:

  • Under the Bank Secrecy Act, a United States person must file an FBAR under certain conditions that I will explain in a minute. U.S. person is defined in the BSA as: a citizen of the United States, a resident of the U.S.,  Business structured under the laws of any state or territory of the United States; such as, a corporation, partnership, limited liability company, trust and estate.  A U.S. person must file an FBAR with the Financial Crimes Network on FinCen Form 114 to report:
  • a financial interest in or signatory or other authority over one or more financial accounts located outside the United States if
  • the aggregate value of those foreign financial accounts exceeded $10,000 at any time during the calendar year reported.
  • Generally, an account at a financial institution located outside the United States is a foreign financial account. Whether the account produced taxable income has no effect on whether the account is a “foreign financial account” for FBAR purposes. But you don’t need to report foreign financial accounts that are:
  • Correspondent/Nostro accounts,
  • Owned by a governmental entity,
  • Owned by an international financial institution,
  • Maintained on a United States military banking facility,
  • Held in an individual retirement account (IRA) you own or are beneficiary of,
  • Held in a retirement plan of which you’re a participant or beneficiary, or
  • Part of a trust of which you’re a beneficiary, if a U.S. person (trust, trustee of the trust or agent of the trust) files an FBAR reporting these accounts.
  • You don’t need to file an FBAR for the calendar year if:
  • None of your foreign financial accounts, either singularly or combined exceeded $10,000 at any time during the calendar year reported.
  • All your foreign financial accounts are reported on a timely filed consolidated FBAR.
  • All your foreign financial accounts are jointly-owned with your spouse and your spouse and you authorized your spouse to file the jointly held accounts on a timely filed Form 114 by executing Form 114a.  If you own separate foreign accounts, you must file a timely Form 114.

Interviewer:  Mayra Torres, Public Relations Associate

  • I see, so if a taxpayer has foreign financial accounts and the aggregate maximum value exceed $10,000 at any time during the calendar year then they must file Form 114 with the Financial Crimes Network.
  • Question 3:
  • Attorney, what is the due date for filing Form 114 with the Financial Crimes Network to report foreign bank account holdings?

Attorney Answers Question 3:

  • Mayra, that is an excellent question because there are potential grave civil fines and potential criminal consequences for U.S. persons who fail to timely file Form 114 with the Financial Crimes Network. The FBAR is an annual report filed on FinCen Form 114.  The FBAR is due April 15th following the calendar year reported.
  • Taxpayers are allowed an automatic extension to October 15th if they fail to meet the FBAR annual due date of April 15th. You don’t need to request an extension to file the FBAR by October 15th. The October 15th  extension is automatic.
  • If you are affected by a natural disaster, the government may further extend your FBAR due date. It’s important that you review relevant for complete information.
  • If a filer does not have all the available information to file the return by the automatic extension date of October 15th, the filer should file as complete a return as possible and amend the report when additional or new information becomes available.

Interviewer:  Mayra Torres, Public Relations Associate

Question 4:

Attorney, what could happen to a taxpayer who fails to file their required FBAR by the extended filing deadline of October 15th?

Attorney Answers Question 4:

  • If a required FBAR is not filed by the appropriate date the U.S. Person in violation of the Bank Secrecy Act may be subject to civil monetary penalties and/or criminal penalties, or both, for FBAR reporting and/or recordkeeping violations. The exact penalty imposed will depend on all the facts and circumstances of each case. The current maximum penalties for failing to file required FBARs or delinquent FBARs are as follows:
  • For Non-Willful Violations: U.S. persons who inadvertently violate the law are subject to civil penalties up to a maximum of $12,921 for each negligent violation. The 9th Circuit Court of Appeals ruled earlier this year that 31 U.S.C. Section 5341 permits the IRS to impose only one non-willful penalty when an untimely FBAR is filed, no matter the number of foreign bank accounts are held by the taxpayer; but this issue is not settled in all the Circuits.  I don’t think the 5th Circuit Court; which is the Circuit Court of Appeals with federal court jurisdiction over Texas; have not as far as I know addressed this issue as to whether the delinquent FBAR penalty can be imposed based on the number of unreported accounts or whether it is to be imposed on each untimely Form 114.  Taxpayer’s need to understand that the IRS takes a very aggressive posture when imposing the penalties authorized under the Bank Secrecy Act.  I am merely warning U.S. persons with unreported foreign accounts.  The penalties for violations of the Bank Secrecy Act are very severe and are aggressively pursued by the IRS.  The courts tend to decide matters regarding whether the taxpayer acted non-willfully or willfully in kind of mechanical manner; in the sense that, the annual tax return specifically asks the question as to whether the taxpayer owns, has signatory authority over or control foreign accounts.  That question on the Form 1040 tax return must be answered yes or no.  The Form 1040 tax return instructions cautions the taxpayer to consult the form’s instructions before answering the question.  With that said, let’s talk about penalties for willful violations of the Bank Secrecy Act because proving that a taxpayer’s actions were inadvertent or non-willful can be challenging.
  • For Willful Violations: U.S. persons who fail to file Form 114 or fail to retain records of the foreign accounts willfully may be subject to  civil penalties of up to the greater of $129,210, or 50% of the amount in the account at the time of the violation.
  • For a Negligent Violation by Financial Institutions or Non-financial Business or Trade: These types businesses who negligently violate the Bank Security Act’s FBAR requirements may be subject to a negligence civil penalty up to $1,118.  This penalty does not apply to individuals who violates the BSA.
  • For a Pattern of Negligent Activity by a Financial Institution or Non-financial Trade or Business: These types of businesses who engages in a patter of negligent violations of the FBAR rules may be subject to civil penalty for Negligent Violation of $1,078 with respect to any such violation, not more than $86,976. These pattern of negligent activity penalties does not apply to individuals; they apply to businesses.
  • These penalties will be applied if an FBAR is filed late or not at all. If the taxpayer has not been contacted by the IRS about the late FBAR and are not under investigation by the IRS, they may file a late FBAR. To keep penalties to a minimum, this should be done as soon as possible.
  • When filing a late FBAR, it gives the option to provide further explanation of the late filing or indicate whether the filing is made in conjunction with an IRS compliance program. If the foreign financial account is properly reported the late-filed FBAR, and the IRS determines that the FBAR violation was due to reasonable cause, no penalty will be imposed.
  • Taxpayers can be audited by the IRS. Taxpayer’s can file Form 2848, Power of Attorney and Declaration of Representative to authorize a lawyer or other professional to represent them in delinquent FBAR matters and IRS investigations regarding foreign bank accounts and foreign assets and unreported earnings.  Sometimes the IRS discover FBAR issues during routine audit examinations of the taxpayer’s tax returns.  Sometimes delinquent FBARs are discovered during BSA/ Anti-money laundering examinations, counter-terrorist investigations and during informal and formal financial crimes enforcement actions by the Financial Crimes Network and the Office of Foreign Assets Control.  Further, banks must also make regular Suspicious Activity Reports under the Bank Secrecy Act.   So as you can see there are a lot federal agencies involved with enforcement of the Bank Secrecy Act and there are numerous ways the United States government can learn about taxpayer’s foreign accounts.  There are potentially substantial civil penalties that could be assessed against non-compliant taxpayers with unreported foreign accounts and even potentially criminal exposure for FBAR violators.

Interviewer:  Mayra Torres, Public Relations Associate

  • Wow, Attorney, hearing about all those penalties; it is obvious that the IRS and other law enforcement agencies of the U.S. government has a lot of power to enforce these rules against people who don’t follow the Bank Secrecy Act exactly right! The government doesn’t take this matter lightly. It is very important for FBARs to be filed accurately and by the appropriate due date.
  • Question No. 5
  • So Attorney, explain how and where does a taxpayer file an FBAR?

Attorney Answers Question 5:

  • An FBAR must be filed electronically through the Financial Crimes Enforcement Network’s (FinCen) BSA E-Filling System . You access FinCen’s BSA E-Filing Web Portal by going to fincen.treas.gov.
  • I mentioned this fact once before during this presentation; but let me say it again; FBARs are not filed with the taxpayer’s annual tax return. Form 114 is used to file FBARs.  Form 114 is not a tax form.
  • If the taxpayer desires to file Form 114 in paper format, the taxpayer must call FinCEN’s Regulatory Helpline at 800-949-2732 to request an exemption from e-filing. If FinCEN approves the request, FinCEN will send the paper FBAR form to complete and mail to the IRS at the address in the form’s instructions. FinCen will not accept paper-filings on TD F 90-22.1, which is obsolete and was replaced by Form 114 several years ago now) or a printed FinCEN Form 114, which is currently used for e-filing only.
  • If the taxpayer would prefer to have someone else file their FBAR on their behalf, they must sign a Record of Authorization to Electronically File FBARs, to authorize that individual or law firm to electronically file Form 114 on their behalf. FinCEN Report 114a; which I mentioned a while back in this discussion when I was talking about joint-holders of foreign accounts, are not filed with FinCen. Form 114a is for recordkeeping purposes only.  The joint-account holders must present this form for examination in the event FinCEN or IRS ask for it.
  • I would like to note that the law requires that these records be kept for five years from the due date of the FBAR.
  • Records must be kept for each foreign account that are required to be included on Form 114. The records must establish the name on the account, the account number, name and address of the foreign bank, type of account, and maximum value during the year. The Bank Secrecy Act does not precisely mandate the type of document that must be kept by the taxpayer.  It could possibly be bank statements or a copy of the filed FBAR.  Whatever document the taxpayer use to substantiate this required information, must be kept for five years after the due date of the FBAR.
  • In the case of an officer or employee who files an FBAR to report signatory authority over their employer’s foreign financial accounts; the employee is not required to personally keep records on these accounts. But their employer must keep the required records for these foreign accounts.

Mayra Torres’s Concluding Remarks:

  • Attorney thank you very much for this very comprehensive and informative presentation on the topic:  “Reporting Foreign Bank and Financial Accounts.”
  • 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, government contract 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 THE END OF “LEGAL THOUGHTS” FOR NOW

  • Thanks for giving us the opportunity to inform you about the “Reporting Foreign Bank and Financial Accounts”.
  • If you want to see or hear more taxation, government contracts 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.

United States Temporary Protected Status designation for Venezuelans residing in the United States on March 8, 2021 | LEGAL THOUGHTS

Coleman Jackson, P.C. | Transcript of Legal Thoughts Podcast
Published April 26,2021.

United States Temporary Protected Status designation for Venezuelans residing in the United States on March 8, 2021

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

This particular episode of Legal Thoughts is a podcast where the Attorney, Coleman Jackson is being interviewed by Reyna Munoz, Immigration Legal Assistant of Coleman Jackson, P.C.   The topic of discussion is “Immigration Matters You Ought to Know About: United States Temporary Protected Status designation for Venezuelans residing in the United States on March 8, 2021”. You can listen to this podcast by clicking here:

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

TRANSCRIPT:

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

ATTORNEY:  Coleman Jackson

Welcome to Immigration Thoughts

  • My name is Coleman Jackson, and I am an attorney at Coleman Jackson, P.C., a taxation, litigation, and immigration law firm based in Dallas, Texas.
  • Our topic for today is: Immigration Matters You Ought to Know About: United States Temporary Protected Status designation for Venezuelans residing in the United States on March 8, 2021. Other members of Coleman Jackson, P.C. are Yulissa Molina, Tax Legal Assistant, Reyna Munoz, Immigration Legal Assistant, Leiliane Godeiro, Litigation Legal Assistant and Mayra Torres, Public Relations Associate.
  • On this “Legal Thoughts” podcast our immigration legal assistant, Reyna Munoz, will be asking the questions and I will be providing the answers to the questions on this very important immigration topic: Immigration Matters You Ought to Know About: United States Temporary Protected Status designation for Venezuelans residing in the United States on March 8, 2021.

Interviewer:  Reyna Munoz, Immigration Legal Assistant

  • Hi Attorney, thank you for joining me today and for taking the time to answer a few questions that I have in regard to the recent USCIS announcement about designating Venezuela Temporary Protected Status.

Question No. 1

Attorney, can you tell me, what this is about?

Attorney Answers Question 1:

  • Hi Reyna, yes what you heard is correct! On March 8, 2021, Secretary Mayorkas designated Temporary Protected Status or TPS for Venezuela. What this does is it allows Venezuelan nationals that are currently residing in the United States to file an initial application for TPS.

Interviewer:  Reyna Munoz, Immigration Legal Assistant

Question 2:

That is great news attorney, I’m sure that this will help a lot of Venezuelan nationals. How long do Venezuelan nationals get to have this new Temporary Protected Status?

Attorney Answers Question 2:

  • Reyna, the TPS designation for Venezuelans is currently for a period of 18 months. That is it currently ends in September 2022.

Interviewer:  Reyna Munoz, Immigration Legal Assistant

Question 3:

Why was this TPS designation for Venezuelans made at this time?

Attorney Answers Question 3:

  • TPS was designated for Venezuela because of the extraordinary and temporary conditions that prevent Venezuelan nationals from returning safely to their home country. The extreme and harsh conditions that currently confronts Venezuela are:
  • Hunger and malnutrition and lack of basic essentials for safety and security and human dignity
  • A growing influence and presence of non-state armed groups
  • Repression and recrimination by state actors, their enablers, and other bad people
  • A crumbling Venezuelan infrastructure

Interviewer:  Reyna Munoz, Immigration Legal Assistant

  • That is very interesting information attorney. It sounds like TPS for Venezuelans is a humanitarian response to dangerous times for our neighbors in Venezuela.

Question No. 4:

Who is eligible to apply for Temporary Protective Status under the new Venezuelan TPS designation?

Attorney Answers Question 4:

  • That is a very thoughtful and insightful question, Reyna, those individuals who are nationals of Venezuela who can demonstrate continuous residence in the United States as of March 8, 2021 are eligible to apply for Temporary Protected Status under this TPS designation. That means they must have been physically residing in the United States on March 8, 2021.
  • These TPS applicants will also have to go through security and background checks to determine their eligibility for TPS.
  • It’s extremely important that Venezuelans residing outside of the United States do not fall for scams and other misinformation from smugglers or others claiming that the border is now open. They must have been residing in the U.S. on March 8, 2021.  People should not risk their lives, or their families lives and health with false information that they can come from Venezuela now and claim TPS. This TPS designation is limited to Venezuelan nationals and is not applicable to citizens from other South American countries.
  • Furthermore, due to the coronavirus pandemic, travel and admission restrictions remains in full force and effect on the U.S. border.

Interviewer:  Reyna Munoz, Immigration Legal Assistant

Question 5:

  • Thank you for explaining this in such a comprehensive manner, attorney. It is very important that people understand that:
  • they must be a Venezuelan national to be eligible for TPS under the Venezuelan TPS designation; and
  • they must have been residing in the United States on March 8, 2021;
  • Question No. 5:
  • When and how can eligible individuals apply for TPS?

Attorney Answers Question 5:

  • Those that would like to file an application for TPS will have to submit an application within the 180-day registration period, that is, March 9, 2021 through September 5, 2021. Keep in mind that they have to be able to show continuous residence in the United States since March 8, 2021 and continuous physical presence in the United States since March 9, 2021.
  • Form I-821 Application for Temporary Protected Status will have to be filed with USCIS and if the individual wishes to apply for employment authorization, they will have to file Form I 765. Furthermore, if a ground of inadmissibility applies, then Form I 601, Application for Waiver of Grounds of Inadmissibility will also have to be filed with the TPS package.

Interviewer:  Reyna Munoz, Immigration Legal Assistant

  • Thank you for that information, attorney.

Question No. 6:

What sorts of evidence will need to be submitted to USCIS in support the TPS application?

Attorney Answers Question 6:

  • The individual can expect to submit evidence such as identity and evidence to demonstrate that they are a national of the designate country such as:
    • A copy of their passport
    • A copy of their birth certificate
    • Any national identity that includes a photograph and/or fingerprint issued by their country
  • The immigrant can also expect to submit entry evidence such as:
    • A copy of their passport; and
    • I-94 Arrival/Departure record
  • Finally, continuous residence evidence will also have to be submitted. This could be evidenced by such documents and information as the following:
    • Employment records
    • Rent receipts, utility bills, receipts or letters from companies
    • School records
    • Hospital records
    • Attestations by church, union, or other organization officials

Interviewer:  Reyna Munoz, Immigration Legal Assistant

  • I’m sure a lot of people that are expecting to apply for TPS will find this information very helpful, attorney.

Question No. 7:

Is there a fee to apply for TPS?

Attorney Answers Question 7:

  • As of March 10, 2021, if the immigrant is applying for Venezuelan TPS and is between ages of 14 and 65 years old and they are applying for an employment authorization card, then the filing fee for the I-821 is $50, the biometric fee is $85, and the I-765 fee is $410 bringing the total USCIS filing fee to $545. These fees could be changed by the government with little notice.
  • Under certain facts and circumstances the TPS applicant can file Form I-912, Application for Fee Waiver in these TPS cases.

Reyna Munoz’s Concluding Remarks:

  • Thank you for this detailed explanation of the new TPS designation for Venezuelan nationals, attorney. Hopefully, many of our Legal Thoughts Podcast listeners or their friends from Venezuela will find this update on the new TPS designation for Venezuelans very helpful.
  • 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 for more taxation, litigation, and immigration Legal Thoughts podcasts. Everybody take care!  Read our taxation, government contract litigation and immigration law firm’s blogs at www.cjacksonlaw.com.  Coleman Jackson, P.C., is located right here in Dallas, Texas at 6060 North Central Expressway, Suite 620 Dallas, Texas 75206.
  • English callers: 214-599-0431 | Spanish callers:  214-599-0432 | Portuguese callers:  214-272-3100.

Attorney’s Concluding Remarks:

THIS IS THE END OF “LEGAL THOUGHTS” FOR NOW

  • Thanks for giving us the opportunity to inform you about “Immigration Matters You Ought to Know About: United States Temporary Protected Status designation for Venezuelans residing in the United States on March 8, 2021.” If you want to see or hear more taxation, litigation and immigration LEGAL THOUGHTS from Coleman Jackson, P.C. Stay tuned! We are here in Dallas, Texas and want to inform, educate, and encourage our communities on topics dealing with taxation, litigation and immigration.  Until next time, take care.

Immigration Matters You Ought to Know About: Undocumented Immigrants and the I-601 and I-601A Unlawful Presence Waivers | LEGAL THOUGHTS

Coleman Jackson, P.C. | Transcript of Legal Thoughts Podcast
Published March 29, 2021.

Undocumented Immigrants and the I-601 and I-601A Unlawful Presence Waivers

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

This particular episode of Legal Thoughts is a podcast where the Attorney, Coleman Jackson is being interviewed by Reyna Munoz, Immigration Legal Assistant of Coleman Jackson, P.C.   The topic of discussion is “Immigration Matters You Ought to Know About: Undocumented Immigrants and the I-601 and I-601A Unlawful Presence Waivers”. You can listen to this podcast by clicking here:

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

TRANSCRIPT:

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

ATTORNEY:  Coleman Jackson

Welcome to Immigration Thoughts

  • My name is Coleman Jackson, and I am an attorney at Coleman Jackson, P.C., a taxation, litigation, immigration law firm based in Dallas, Texas.
  • Our topic for today is: Immigration Matters You Ought to Know About: Undocumented Immigrants and the I-601 and I-601A Unlawful Presence Waivers. Other members of Coleman Jackson, P.C. are Yulissa Molina, Tax Legal Assistant, Reyna Munoz, Immigration Legal Assistant, Leiliane Godeiro, Litigation Legal Assistant and Mayra Torres, Public Relations Associate.
  • On this “Legal Thoughts” podcast our immigration legal assistant, Reyna Munoz, will be asking the questions and I will be providing the answers to the questions on this very important immigration topic: Immigration Matters You Ought to Know About: Undocumented Immigrants and the I-601 and I-601A Unlawful Presence Waivers.

Interviewer:  Reyna Munoz, Immigration Legal Assistant

  • Attorney, thank you for joining me today and for taking the time to discuss the Application for Waiver of Grounds of Inadmissibility, I 601 and the Application for Provisional Unlawful Presence Waiver, I 601A.

Question 1:

Attorney, can you tell me, what is the I 601 and the I 601A waiver?

Attorney Answers Question 1:

  • Sure Reyna. A lot of immigrants in Texas came to the U.S. undocumented; therefore, they need a Waiver of Unlawful Presence. many undocumented immigrant parents waste their money when their U.S. citizen children turn 21. They waste their money because although they can successfully get their I-130, Petition for Alien Relative petition approved, their U.S. citizen children do not qualify for the U.S. person who will suffer extreme and unusual hardship if the undocumented immigrant is not granted an I-601 waiver for unlawful presence in the U.S.  Bottom line, it’s a waste of money to file an I-130 when you do not have a qualifying relative to satisfy Form I-601, Application for Waiver of Grounds of Inadmissibility based on the unlawful presence ground of inadmissibility.  The undocumented immigrant needs a qualifying relative who will suffer extreme hardship if the undocumented immigrant is not permitted to immigrate to the United States.  The extreme hardship requirement for a waiver of unlawful presence can only be satisfied by a qualifying relative, such as, a U.S. citizen parent or U.S. citizen spouse.  Repeat, U.S. citizen children do not and cannot satisfy the qualifying relative requirement; therefore, unless the undocumented immigrant has a qualifying relative, it is a waste of time, effort, and money for their 21-year-old child to file an I-130, Petition for an Alien Relative on their behalf if the intent is to get a Green Card through the child.  A big log or bolder is blocking the road for the undocumented immigrant seeking a Green Card through their 21-year-old child.  The parents need a qualifying relative! If they had a qualifying relative, the parents probably would have gotten their Green Cards years ago.
  • Form I-601A, Provisional Waiver of Unlawful Presence is a waiver request based on humanitarian concerns of immigrants leaving the U.S. who are barred from returning for 5 to 10 years due to the fact that they have spent more than 180 continuous days unlawfully in the U.S. Before the I-601A provisional waiver process was implemented, these parents and other undocumented immigrants would leave the U.S. without an I-601 Waiver and when they got to the Consulate in their home country, they learned that they needed a waiver of unlawful presence to return to the United States.  The waiver was typically then prepared in the foreign country and submitted for approved by the U.S. Consulate Office.  Often times the Consulate would deny the waiver and therefore the immigrant would get stuck for 5 to 10 years in their home country with their husband, or wife and children remaining up here.  Family separation occurred as an inherent feature of the immigration waiver process.  The Form I-601A was created to hopefully prevent this harsh family separation reality.  Form I-601A can only be used to request waiver for unlawful presence.  It cannot be used to request a waiver or pardon for any other reason of inadmissibility of the undocumented immigrant.  For example, if there are crimes in the immigrants’ background or medical or health issues, DUI issues, Domestic Violence issues or other inadmissibility issues with the immigrant, the I-601A waver cannot be used for these grounds of inadmissibility.

Interviewer:  Reyna Munoz, Immigration Legal Assistant

  • Thank you for this detailed explanation Attorney. You’re correct, a lot of times undocumented people think that once their child turns 21, they will immediately be able to apply for a green card, but it is important for them to understand that this is a process and they need a qualifying relative who suffer extreme and unusual hardship in the event the undocumented immigrant leaves the U.S. and is not permitted to return for 5 to 10 years.

Question 2:

Attorney, what are the differences between the I 601 and the I 601A?

Attorney Answers Question 2:

  • The I 601 waiver is used to request waiver or pardon for a host of areas of inadmissibility, such as, unlawful presence, physical or mental health (such as, DUI, domestic violence could be considered by some Consulate Officers as indications of mental illness); whereas, the I 601A provisional waiver can only be used to request a pardon for unlawful presence in the U.S. Inadmissibility based on mental health, physical health, crimes, or other grounds of inadmissibility are not eligible for consideration in an I 601A waiver case.
  • The I 601 waiver is granted to pardon numerous offending grounds of inadmissibility; whereas the I 601A waiver is a provisional waiver of unlawful presence.
  • The I 601 waiver is typically filed at the U.S. Consulates Office by undocumented immigrants seeking a green card through a qualifying relative; whereas, the I-601A provisional waiver of unlawful presence is filed inside the U.S. before the immigrant leaves the United States. It is provisional in the sense that the Consulate Officer will make the final determination as to whether the immigrant is admitted to return to the United States.

Interviewer:  Reyna Munoz, Immigration Legal Assistant

  • It sounds like the these understanding the use and purpose of these two forms and this whole area of immigration waiver law are incredibly important topics for many immigrants residing in Texas and throughout the Southwest.

Question 3:

Who can file an I 601, Application for Waiver of Grounds of Inadmissibility?

Attorney Answers Question 3:

  • Reyna, the following types of immigrants may file Form I 601, Application for Waiver of Inadmissibility:
    1. Those applying for adjustment of status
    2. Those applying for Temporary Protected Status, TPS
    3. Those who are applying for adjustment of status under the Nicaraguan Adjustment and Central American Relief Act
    4. Those who are applying for an immigrant visa or adjustment of status under Violence Against Women’s Act (VAWA), And finally,
    5. Special Immigrant Juveniles who have an approved I 130, Petition for Alien Relative.

Interviewer:  Reyna Munoz, Immigration Legal Assistant

Question 4:

Thank you for that detailed list, attorney. Now tell me, who is eligible to file the I 601A, Provisional Unlawful Presence Waiver??

Attorney Answers Question 4:

  • Reyna, those eligible to file the I 601A Provisional Waiver for Unlawful Presence must meet the following requirements:
    1. They must be physically present in the United States at the time of filing;
    2. They must be least 17 years of age or older;
    3. They must have a case pending with the United States Department of State because they are: (A) the principal beneficiary of an approved I-130 or they are the beneficiary of an approved I 360; or (B) they are the spouse or child of a principal beneficiary of an approved immigrant visa and have paid the immigrant visa processing fee; or (C) they have been selected by the Department of State to participate in the Diversity Visa program; and
    4. They must be able to demonstrate that denying admission to the United States would result in extreme hardship to a relative U.S. citizen spouse or U.S. citizen lawful permanent resident or parent.

Interviewer:  Reyna Munoz, Immigration Legal Assistant

Question 5:

Attorney, in regard to the I 601A you mentioned “extreme hardship,” what exactly does this term mean in U.S. immigration law?

Attorney Answers Question 5:

  • That is correct, Reyna. The applicant must demonstrate that being denied the entrance back into the United States will cause extreme hardship to their qualifying relative. Some of the areas of the qualifying relative’s life that might be relevant in support of an I-601 or I-601A, Application for Waiver to overcome unlawful presence ground of inadmissibility are:
    1. Education: Disruption of current academic programs or loss of opportunity for higher education due to lower quality education in home country;
    2. Personal considerations: Such as separation for close relatives in the United States
    3. Financial considerations: Cost of caring for family members or loss of job
    4. Health of the qualifying relative: Ongoing medical treatments in the United states
    5. Special Considerations: fears of persecution or cultural differences in home country
  • Keep in mind that the U.S. citizen relative must prove that they will suffer extreme financial hardship if their immigrant relative is not allowed back into the country. The hardship must be more than the mere normal and expected financial difficulty derived from lack of the undocumented immigrants earned income, family relations or household support. The hardship that might be experienced by the undocumented immigrant or their children are not factors that the adjudicators typically would consider when evaluating waiver cases.  Even when a qualifying relative meets the extreme hardship requirement, it simply means the adjudicator of the waiver application can exercise discretion and grant the waiver.  It is not mandatory that the waiver be granted even when extreme hardship is clearly shown.

Interviewer:  Reyna Munoz, Immigration Legal Assistant

  • Attorney thank you for summarizing what term “extreme hardship” means in the unlawful presence waiver context. This is such an important fact and potential hurdle for all immigrants who must meet the extreme hardship requirement to overcome the unlawful presence ground of admissibility.

Question 6

Attorney, my final question regarding the unlawful presence waiver is this:   Is there a filing fee for Form 1 601 and Form I 601A?

Attorney Answers Question 6:

  • Yes Reyna, there is a USCIS filing fee for both of these forms.
  • As of March 11, 2021, the filing fee for the I 601, Application for Waiver of Grounds of Inadmissibility is $930 and the filing fee for the I 601 A, Application for Provisional Unlawful Presence Waiver is $630.
  • USCIS filing fees are subject to change with little notice.

Reyna Munoz’s Concluding Remarks:

  • Attorney, thank you for the detailed information on both the Application for Waiver of Grounds of Inadmissibility, I 601 and the Application for Provisional Unlawful Presence Waiver, I 601A. Unlawful presence in the U.S. is a hurdle facing many immigrant families throughout Texas and the Southwest in general. This information may prevent them from spending their hard-earned money unwisely.  I mean, if they don’t have a qualifying relative in the U.S. for the unlawful presence waiver; that sounds like a big problem.  I mean that is a huge problem, Attorney!  Like you said, its like a big log or bolder stretching across the road blocking the path to a Green Card for people who have been here for a while undocumented.
  • Our listeners who want to hear more podcast like this one should subscribe to our Legal Thoughts Podcast on Apple Podcast, Google Podcast, Spotify or wherever they listen to their podcast for more taxation, litigation and immigration Legal Thoughts podcasts. Everybody take care!  Read our taxation, government contract litigation and immigration law firm’s blogs at www.cjacksonlaw.com.  Coleman Jackson, P.C., is located right here in Dallas, Texas at 6060 North Central Expressway, Suite 620 Dallas, Texas 75206.
  • English callers: 214-599-0431 | Spanish callers:  214-599-0432. Portuguese callers:  214-272-3100.

 Attorney’s Concluding Remarks:

THIS IS THE END OF “LEGAL THOUGHTS” FOR NOW

  • Thanks for giving us the opportunity to inform you about Immigration Matters You Ought to Know About: Undocumented Immigrants and the I-601 and I-601A Unlawful Presence Waivers
  • Immigrants who have resided in the United States for more than 180 days continuously without lawful status has a major problem under current immigration law. They need a waiver or pardon for unlawful presence when they leave the U.S. in order to lawfully reenter the U.S.  That in a nutshell is what the I- 601 and I-601A waivers are designed to accomplish as far as unlawful presence is concerned.  This is the current state of immigration law in the United States as it pertains to undocumented immigrants and current waiver unlawful presence.
  • If you want to see or hear more taxation, government contract litigation and immigration LEGAL THOUGHTS from Coleman Jackson, P.C. Stay tuned! We are here in Dallas, Texas and want to inform, educate and encourage our communities on topics dealing with taxation, government contract litigation and immigration.  Until next time, take care.

Immigration Matters You Ought to Know About: USCIS Reverting back to 2008 US Citizenship Test | LEGAL THOUGHTS

Coleman Jackson, P.C. | Transcript of Legal Thoughts Podcast
Published March 5, 2021.

USCIS Reverting back to 2008 US Citizenship Test

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

This particular episode of Legal Thoughts is a podcast where the Attorney, Coleman Jackson is being interviewed by Reyna Munoz, Immigration Legal Assistant of Coleman Jackson, P.C.   The topic of discussion is “Immigration Matters You Ought to Know About: USCIS Reverting back to 2008 US Citizenship Test”.  You can listen to this podcast by clicking here:

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

TRANSCRIPT:

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

ATTORNEY:  Coleman Jackson

Welcome to Immigration Thoughts

  • My name is Coleman Jackson, and I am an attorney at Coleman Jackson, P.C., a taxation, litigation, and immigration law firm based in Dallas, Texas.
  • Our topic for today is: Immigration Matters You Ought to Know About: USCIS Reverting back to 2008 US Citizenship Test. Other members of Coleman Jackson, P.C. are Yulissa Molina, Tax Legal Assistant; Reyna Munoz, Immigration Legal Assistant; and Mayra Torres, Public Relations Associate.
  • On this “Legal Thoughts” podcast our immigration legal assistant, Reyna Munoz, will be asking the questions and I will be providing the answers to the questions on this very important immigration topic: Immigration Matters You Ought to Know About: USCIS Reverting back to 2008 US Citizenship Test.

Interviewer:  Reyna Munoz, Immigration Legal Assistant

Question 1:

Good morning Attorney, as you know we will be discussing a very important topic this week to keep our listeners informed on Immigration Matters that they ought to know about. Our topic of interest is the new United States Citizenship Test that has been announced by USCIS. Can you tell me what this is about?

Attorney Answers Question 1:

  • Good morning Reyna.
  • On February 22, 2021, the United States Citizenship and Immigration Services (USCIS) announced that it will go back to the 2008 version of the naturalization test. This will begin on March 1, 2021.

Interviewer:  Reyna Munoz, Immigration Legal Assistant

Question 2:

Attorney, why did USCIS decide to revert to the 2008 U.S. Citizenship test?

Attorney Answers Question 2:

  • Well Reyna, this is due to an executive order that the Biden Administration released on February 02, 2021 titled “Restoring Faith in Our Legal Immigration Systems.” USCIS determined that the revised naturalization civics test that was implemented on December 1, 2020 may inadvertently create potential barriers to the naturalization process. Reverting back to the 2008 civics test will eliminate barriers and make the process more accessible to all eligible individuals.

Interviewer:  Reyna Munoz, Immigration Legal Assistant

  • Wow attorney, it’s good to see that these barriers will be eliminated by reverting back to the 2008 naturalization civics test!

Question 3:

Who can take this test, attorney?

Attorney Answers Question 3:

  • Reyna, the civics test is given to applicants that are applying for United States Citizenship, it is also a requirement for naturalizing.

Interviewer:  Reyna Munoz, Immigration Legal Assistant

  • This test is incredibly important then, for those who wish to become naturalized US Citizens!

Question 4:

What sort of topics does the test contain?

Attorney Answers Question 4:

  • That’s a good question, Reyna!
  • The people taking the test must demonstrate knowledge and understanding of the fundamentals of the history, principles, and form of government of the United States.

Interviewer:  Reyna Munoz, Immigration Legal Assistant

Question 5:

Attorney, does USCIS provide any study guides or any assistance in helping applicants study for the test??

Attorney Answers Question 5:

  • Yes, test items and study guides can be found on the Citizenship Resource Center on WWW.USCIS.GOV/CITIZENSHIP

Interviewer:  Reyna Munoz, Immigration Legal Assistant

  • Thank you for sharing this helpful website!

Question 6:

Attorney, you’ve answered a lot of important questions! My final question is, what about the people that have been studying for the 2020 test? How will they be affected by this new order?

Attorney Answers Question 6:

  • Good question, Reyna
  • Those that filed their application for naturalization on or after December 1, 2020 and before March 1, 2021 will be given the option by USCIS to take either the 2020 civics test or the 2008 civics test. There will also be a transition period where both tests are being offered. On April 19, 2021, the 2020 test will be phased out for those taking the test for the first time and those applicants that are filing on or after March 1, 2021 will take the 2008 civics test.
  • Reyna, I hope this answered your question. Do you have any more questions?

Reyna Munoz’s Concluding Remarks:

  • That answered my question perfectly! Those are all my questions for now, Attorney, thank you! This information is incredibly helpful for those that are going to take the United States Citizenship test!
  • Our listeners who want to hear more podcast like this one should subscribe to our Legal Thoughts Podcast on Apple Podcast, Google Podcast, Spotify or wherever they listen to their podcast. Everybody take care!  Follow us for more taxation, litigation and immigration Legal Thoughts from Coleman Jackson, P.C., which is located right here in Dallas, Texas at 6060 North Central Expressway, Suite 620 Dallas, Texas 75206.
  • English callers: 214-599-0431 | Spanish callers:  214-599-0432. Portuguese callers:  214-272-3100.

 Attorney’s Concluding Remarks:

THIS IS THE END OF “LEGAL THOUGHTS” FOR NOW

  • Thanks for giving us the opportunity to inform you about “Immigration Matters You Ought to Know About: USCIS Reverting back to 2008 US Citizenship Test.” If you want to see or hear more taxation, litigation and immigration LEGAL THOUGHTS from Coleman Jackson, P.C. Stay tuned! We are here in Dallas, Texas and want to inform, educate and encourage our communities on topics dealing with taxation, litigation and immigration.  Until next time, take care.

Here’s Why People Filing Taxes Should Be Careful When Selecting A Professional Tax Return Preparer | LEGAL THOUGHTS

Coleman Jackson, P.C. | Transcript of Legal Thoughts Podcast
Published March 10, 2021.

Here’s Why People Filing Taxes Should Be Careful When Selecting A Professional Tax Return Preparer

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

This particular episode of Legal Thoughts is a podcast where the Attorney, Coleman Jackson is being interviewed by Reyna Munoz, Immigration Legal Assistant of Coleman Jackson, P.C.   The topic of discussion is ““Here’s why people filing taxes should be careful when selecting a professional tax return preparer.” 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: “Here’s why people filing taxes should be careful when selecting a professional tax return preparer.”
  • 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: Here’s why people filing taxes should be careful when selecting a professional tax return preparer.”

Interviewer:  Mayra Torres, Public Relations Associate

  • 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 today we are discussing a very important tax topic because filing taxes is on folks minds these days. Many people may be filing taxes for the first time this year because of the recovery rebate credit issues involving their economic impact payments and other Covid-19 relief received during 2020.
  • In this Podcast, we will be discussing the safest, easiest and perhaps cheapest way folks can file their tax returns.

Question 1:

Attorney let’s start with the cheapest way folks can file their taxes for 2020!  What options exist for people who do not want to pay a professional tax return preparer?  I mean, can people file their tax returns for free?

Attorney Answers Question 1:

  • Good morning Mayra.
  • First people can always prepare and file their tax return themselves without hiring and paying anyone.
  • Second people can go to IRS.gov and select a number of brand-name tax software providers who will permit certain eligible taxpayers to use their software to prepare and electronically file their individual tax return for absolutely free. This particular free tax preparation option might be an excellent option for some taxpayers.  Typically, the software providers require people to meet certain income, age and state residency requirements.  The software vendors’ individual qualifying requirements can be found at IRS.gov. Most of the free vendors software is in English, but a few are in Spanish.  This free file option is certainly an option that taxpayers should explore.
  • Third people can use possibly find free tax preparer clients hosted by various accounting and legal societies throughout the community. Some churches and business and law schools also provide minimum fee tax advice and counsel.  People should contact the professional schools in their communities to inquire whether students in tax law training provide such services to the community.  When I attended SMU School of Law, I participated in their tax clinic that provided free or minimum fee tax controversy services by enrolled students under the supervision of the tax clinic professor.  People should make inquiries at professional societies, schools, and places of worship to see what’s available.
  • So to summarize; Mayra, as you can see there are a number of options available for people to get their tax returns prepared at little to no costs.

Interviewer:  Mayra Torres, Public Relations Associate

That is an excellent summary of the free or low-cost tax return preparation and filing options that might be available to people this year:

  1. people can prepare and file their returns without using anyone to help them;
  2. People can go to IRS.gov and select a brand-named software provider to prepare and file their return if they meet the provider’s qualification requirements, and
  3. People can search for a free or low-cost professional tax return preparer at local places of worship, or professional accounting or law societies or local law school tax clinics and accounting schools.

Question 2:

Attorney, some people can’t qualify for one of these free or low-cost tax preparation services. Some people just think taxes are very complex; they can’t prepare these complicated tax returns themselves, and they just want to hire someone to prepare the return and file it for them.  What characteristics and qualifications should people look for when hiring a tax return preparer?

Attorney Answers Question 2:

  • Mayra, that is a very good question since people are responsible for the accuracy of their tax return regardless of whether they prepare and file it themselves or hire someone else to prepare and file their return.
  • These are some of the things that people might should consider when selecting a tax return preparer:
    1. Indicial of educational training in tax law and tax accounting. This might be evidenced by a degree from college in taxes, accounting, law, finance, or some related business degree.  Return preparer might be qualified with only certificates but with increasing complexity of the tax issues involved, should cause taxpayers to exercise more exacting screening of a tax return preparer before they hire them to work on their return.
    2. Professional Tax Identification Number (or PTIN). The PTIN is an annual credentialing issued by the Department of Treasury to professionals authorized to practice before the Internal Revenue Service as paid tax return preparers. To obtain a PTIN, a tax professional must be an attorney in good standing with a State Bar Association, a licensed Certified Public Accountant in good standing with a state CPA licensing authority, an enrolled agent in good standing with the Internal Revenue Service, or a registered tax return preparer under the defunct IRS Registered Tax Return Preparer Program. Taxpayers should look for these types of credentialing when selecting a tax return preparer. In recent years, the annual PTIN fee has been suspended due to Court challenges regarding the IRS’ attempt to regulate tax practice.  The IRS’ stated goal when instituting the PTIN program was to improve the integrity and quality of the tax preparation industry.   Some tax professionals challenged this attempt in Court.  Nevertheless, PTIN credential could be a good metric for the public to use when selecting a tax return preparer.  The bottom line is this— when the professional does not have a current PTIN Card; It is possibly a bright red alert to the taxpayer that they could be taking unnecessary risk by hiring an unqualified tax return preparer.  Taxpayers are responsible and liable for the accuracy of their tax returns regardless of who prepares or files the return for them.
    3. Experience in tax return preparation is critical factor when selecting a tax return preparer. Tax law is constantly changing from year to year, and it is very important that the tax return professional maintains competencies in tax law on an annual basis.  The more experience that the tax return preparer has with the type of return involved the better.  For example, if you have foreign accounts, you should think long and hard before hiring any return preparer who has never worked with taxpayers with foreign accounts or offshore assets.  Over the years, our law firm has seen many taxpayers who have been greatly harmed by tax return preparers who failed to properly counsel and advise them with regards to proper tax accounting for offshore assets and accounts.
    4. So to summarize: taxpayers should look for relevant tax law and accounting education, IRS Tax Professional PTIN certificate and tax experience relevant to tax issues related to their particular situation when selecting a tax return preparer.
  • It is very important to make a wise selection choosing which tax return preparer to hire because taxpayers can be subject to civil penalties and even criminal exposure for inaccuracies and materially false statements and tax positions taken on their tax returns and in their claims for refunds.

Interviewer:  Mayra Torres, Public Relations Associate

  • Bright Red Alert! Before hiring anyone to do your tax return, look at the tax return professional’s educational background… like where did they go to school and where did they learn tax and accounting; look at whether they have a current IRS Tax Professional PTIN certification, and look at whether they have the right type of tax experience to prepare your tax return!
  • If any of these three things are missing; it’s a bright red alert folks! Attorney, thanks for answering my question so clearly concerning what characteristics people should look for when selecting a tax return preparer.
  • Did I get the bright red alerts right, Attorney?

Question 3:

Attorney, it sounds like taxpayers can get in very serious trouble on their taxes if they hire an unqualified, incompetent, or dishonest tax return preparer.

Is there any where a taxpayer can turn for help when they suspect that they have been harmed by their tax return preparer?

Attorney Answers Question 3:

  • The Internal Revenue Service has been given the authority by Congress to maintain the public’s confidence in the federal tax system. Under that authority the IRS maintains advisory committees who establish practices, procedures and policies of the oversight offices designed to enforce regulations governing those authorized to practice before the IRS.  The IRS is required under these regulations to maintain a list of individuals and companies who have been disbarred from practice before the IRS; list practitioners with monetary sanctions, and a list of practitioners who have otherwise been sanctioned by the IRS.
  • In addition to the IRS oversight that I have mentioned; professionals such as attorneys and certified public accountants are accountable to their respective professional licensing authorities in their states. These various professional licensing boards have specific complaint procedures where injured taxpayers can file an official complaint.
  • Finally, taxpayers harmed by tax return preparers can also turn to the courts for redress by filing a lawsuit for professional liability or other claim.
  • I should caution here that every tax position taking on a particular tax return may not rise to the level incompetence or malfeasance on the part of the tax return preparer. Judgment is an inherent part of being a tax professional.  That intangible characteristic of confidence and trust in your tax professional cannot be overstated.

Interviewer:  Mayra Torres, Public Relations Associate

Question 4:

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

Attorney Answers Question 4:

  • The Internal Revenue Code imposes an entire laundry list of civil penalties and criminal penalties on Tax Return Preparers who are incompetent or engage in disreputable conduct. The names and descriptions of these various penalties can be very informative as what goals the IRS is attempting to achieve in terms of protecting the public, protecting the public’s confidence in the tax system, and maintaining the overall integrity of the U.S. federal tax system.  So that I don’t overly complicate this for our none-tax professional listeners, I am going to leave out any references to the specific Internal Revenue Code Section or Treasury Regulation where these penalties are codified.  Most of our listeners probably don’t really care to know the actual tax code section and treasury regulation reference numbers for these penalties.
  • This is a list of some of the types of penalties that the IRS can impose on Tax Return Preparers. Taxpayers should just thing about the item on the list and look beyond what is right in front of them to what the IRS is trying to accomplish by imposing these penalties on incompetent preparers or those engaged in disreputable conduct:
    1. Civil Penalties imposed on tax return preparers for failure to meet due diligence requirements for determining eligibility for certain tax benefits, such as, child tax credit, head of household, and earned income credit. Often times, taxpayers take these tax positions in error or with bad advice from tax preparers.
    2. Penalties imposed on tax return preparers for failure to sign the return and penalties for failing to supply identifying numbers such as, PTIN etc. Again, often, returns prepared by paid tax preparers appear to be self-prepared.
    3. Various penalties imposed against tax preparers for giving false or misleading information to the Department of the Treasury or any of its officers, employees, or agents.
    4. Various penalties imposed against tax preparers for aiding, advising or abetting others in violating federal tax law by suggesting or aiding in an illegal plan to evade the proper application and administration of U.S. tax laws or payment of U.S. taxes.
  • Items three and four can result in civil negligence and civil accuracy related penalties; and willful or reckless violation of U.S. Tax laws could lead to criminal referrals and prosecution of the tax return preparer and the taxpayer.
  1. Penalties imposed on tax return preparer for failure to give the taxpayer a copy of their tax return.
  2. Penalties imposed on the tax return preparer for failure to maintain a copy of the prepared tax return.
  3. Penalties imposed on the tax return preparer for failure to maintain a record of who prepared the return.
  • Items five through seven is designed to create a contemporary record and to provide a chain of responsibility. Tax return preparer operations are subject to IRS examination and investigation.
  • These are only a few of the penalties that the IRS could impose on incompetent tax return preparers and those engaged in disreputable conduct.
  • Taxpayers must be careful when tax return preparers over promise, make claims of abilities to obtain certain refund amounts or tax results, or seek to negotiate taxpayer refund checks. Sometimes dishonest preparers claim that the taxpayer has companies, farms, and factories that the taxpayer themselves never knew they had.  Remember you are responsible for the numbers and data on your tax return and the IRS will look for you first to timely pay the correct amount of taxes.  Your tax return preparer may or may not ever be held accountable.  So, a word to the wise:  be careful when you select your tax return preparer.
  • All these penalty areas that I have mentioned in this podcast should help taxpayers to exercise wisdom and discretion when selecting a tax return preparer. Look for professionals with character and experience even though it might cost you more to have your taxes done.  It may cost more in the long run if you choose an incompetent tax preparer, or one engaged in disreputable acts.

Interviewer:  Mayra Torres, Public Relations Associate

  • Attorney, thanks for such a thorough response to my questions about characteristics, qualifications, and other things that people should consider when selecting a tax return preparer. Character and experience always matter!
  • That’s all the questions I have for now with respect to being wise and prudent when selecting a tax return preparer. It sounds like it’s very dangerous to select the wrong person or firm to prepare your tax return.

Attorney Comment:

  • Well, those were all excellent questions, Mayra. And I am glad we were able to discuss the importance of exercising wisdom and being prudent when selecting a tax return preparer.

Mayra Torres’s Concluding Remarks:

  • Attorneys thank you for this comprehensive and informative presentation on selecting a tax return preparer.
  • 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 THE END OF “LEGAL THOUGHTS” FOR NOW

  • Thanks for giving us the opportunity to inform you about the why people filing taxes should be careful when selecting a professional tax return preparer.
  • 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

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

Update on Covid-19 Relief for Individuals and Businesses

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

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

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

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

ATTORNEY:  Coleman Jackson

Welcome to Tax Thoughts

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

Reyna Munoz Introduces Herself to the Audience:

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

Question 1:

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

Attorney: Coleman Jackson

ANSWER 1:

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

Interviewer: Reyna Munoz, Immigration Legal Assistant

  • That sounds interesting.

Question 2:

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

Attorney: Coleman Jackson

ANSWER 2:

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

Interviewer: Reyna Munoz, Immigration Legal Assistant

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

Question 3:

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

 Attorney: Coleman Jackson

ANSWER 3:

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

Interviewer: Reyna Munoz, Tax Legal Assistant

QUESTION 4:

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

Attorney: Coleman Jackson

ANSWER 4:

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

Interviewer: Reyna Munoz, Tax Legal Assistant

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

Question 5:

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

Attorney: Coleman Jackson

ANSWER 5:

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

Interviewer: Reyna Munoz, Tax Legal Assistant

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

Question 6:

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

Attorney: Coleman Jackson

ANSWER 6:

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

Interviewer: Reyna Munoz, Tax Legal Assistant

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

Reyna Munoz’s Concluding Remarks

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

Attorney’s Concluding Remarks:

THIS IS END OF “LEGAL THOUGHTS” FOR NOW

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

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

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

Update on Covid-19 Relief for Individuals and Businesses

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

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

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

TRANSCRIPT:

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

ATTORNEY:  Coleman Jackson

Welcome to Tax Thoughts

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

Reyna Munoz Introduces Herself to the Audience:

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

Question 1:

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

Attorney: Coleman Jackson

ANSWER 1:

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

Interviewer: Reyna Munoz, Immigration Legal Assistant

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

Question 2:

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

Attorney: Coleman Jackson

ANSWER 2:

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

Interviewer: Reyna Munoz, Immigration Legal Assistant

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

Question 3:

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

Attorney: Coleman Jackson

ANSWER 3:

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

Interviewer: Reyna Munoz, Tax Legal Assistant

QUESTION 4:

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

Attorney: Coleman Jackson

ANSWER 4:

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

Interviewer: Reyna Munoz, Tax Legal Assistant

  • That sounds great!

Question 5:

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

Attorney: Coleman Jackson

ANSWER 5:

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

Interviewer: Reyna Munoz, Tax Legal Assistant

Question 6:

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

Attorney: Coleman Jackson

ANSWER 6:

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

Interviewer: Reyna Munoz, Tax Legal Assistant

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

Question 7:

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

Attorney: Coleman Jackson

ANSWER 7:

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

Reyna Munoz’s Concluding Remarks

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

Attorney’s Concluding Remarks:

THIS IS END OF “LEGAL THOUGHTS” FOR NOW

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

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

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

Update on Covid-19 Relief for Individuals and Businesses

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

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

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

TRANSCRIPT:

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

ATTORNEY:  Coleman Jackson

Welcome to Tax Thoughts

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

Reyna Munoz Introduces Herself to the Audience:

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

Attorney: Coleman Jackson

ANSWER 1:

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

Interviewer: Reyna Munoz, Immigration Legal Assistant

Question 2:

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

Attorney: Coleman Jackson

ANSWER 2:

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

Interviewer: Reyna Munoz, Immigration Legal Assistant

Question 3:

What is the substantial presence test?

 Attorney: Coleman Jackson

ANSWER 3:

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

 Interviewer: Reyna Munoz, Tax Legal Assistant

QUESTION 4:

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

Attorney: Coleman Jackson

ANSWER 4:

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

Interviewer: Reyna Munoz, Tax Legal Assistant

  • That sounds easy enough; but Attorney!

Question 5:

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

Attorney: Coleman Jackson

ANSWER 5:

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

Interviewer: Reyna Munoz, Tax Legal Assistant

Question 6:

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

Attorney: Coleman Jackson

ANSWER 6:

  • They should contact the Internal Revenue Service and inquire.

Interviewer: Reyna Munoz, Tax Legal Assistant

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

Question 7:

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

Attorney: Coleman Jackson

ANSWER 7:

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

Reyna Munoz’s Concluding Remarks

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

Attorney’s Concluding Remarks:

THIS IS END OF “LEGAL THOUGHTS” FOR NOW

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