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More so than any time in recent history, the COVID-19 pandemic has enabled company leaders to reflect on the notion of becoming compassionate leaders.

Sara Elizabeth Hyre, head of Clark Nuber’s Tax Department, and Tom Sulewski, head of our Audit Department, are two leaders who have overseen their service groups during a time of unprecedented change in the industry – walking a tightrope of meeting client expectations and ensuring their employees are cared for.

Here’s what these shareholders had to say about the enduring strength of compassionate leadership:

Thank you both for sitting down to talk with us today.  » Read more

Last year, following the passage of the federal CARES Act, the Washington State Department of Revenue (DOR) published guidance regarding its view on whether federal COVID-19 related financial assistance is subject to the Business & Occupation (B&O) tax (including loan forgiveness under the Paycheck Protection Program [PPP]).

At that time, the DOR indicated its belief that the financial assistance should not be reportable for B&O tax purposes. Since then, the Legislature has enacted a specific exemption from the B&O tax for qualifying grants received on or after February 29, 2020 (the date the Governor issued a COVID-19 emergency proclamation).

The new law (SHB 1095),

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The chances of an IRS examination of a tax-exempt entity is one in 742, reported the Treasury Inspector General For Tax Administration (TIGTA) in February. For-profit businesses are five times as likely to be examined (one in 156) and individuals are three times as likely to be examined (one in 226). The rate for churches is about one in 5,000.

To better show you how many this is, during FY 2019, there were almost 1.5 million Form 990 series returns and notices filed; however, the EO function examined approximately 2,000 (0.13 percent) Form 990 series returns during the same year.

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3/29/2021 Update: The Internal Revenue Service and the Treasury Department have provided additional details around the tax deadline extension.

As reported earlier, the April 15 deadline for filing and paying individual income tax has been extended until May 17, 2021. This week, the IRS announced they are also automatically extending the deadline for individuals to make 2020 contributions to their individual retirement accounts and health savings accounts. The deadline for doing so is automatically postponed until May 17.

In the press release, the IRS also doubled down on the condition that 2021 Q1 payments are still due on April 15,

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Creating an environment for solving difficult challenges is a prerequisite for effective leadership. Occasionally, the challenges may be positive and fun to address, such as how to best take advantage of a new market opportunity.

However, anyone in a position of leadership will face adversity sooner or later. While I would not characterize problem-solving in the face of adversity as “fun,” it is nevertheless rewarding, perhaps even more so, as the stakes are often very high.

The challenges of 2020 have taught me a great deal about leading through adversity. When faced with a major challenge, there is typically no playbook for responding to the issues that spring up with little notice.

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As 2019 came to a close, Clark Nuber promoted a record five principals into the ranks of shareholder. Little did these new shareholders know what was waiting for them on the other side of the new year. We recently met with them to discuss the challenges of 2020, the unexpected opportunities of working remote, and what it was like coming into a leadership role during a once-in-a-lifetime crisis.

Interviewer: You’ve been shareholders at Clark Nuber for over a year now. Did you see yourself here when you first began?

Jennifer Mace (JM): I would say it felt like a natural progression.

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The Taxpayer Certainty and Disaster Tax Relief Act of 2020 (TCDTR) signed into law in December 2020, extends certain favorable CARES Act provisions regarding charitable deductions and provides for disaster relief deductions. Here are the highlights.

Individual Charitable Contribution Deduction for Non-Itemizers

Individuals that do not itemize deductions on their tax returns may take a charitable deduction for 2020 up to $300 per return for cash contributions to an organization exempt under Code Section 501(c)(3), except for contributions to supporting organizations and donor advised funds. This deduction will also be available for 2021, up to $300 (and, added by TCDTR, $600 on a joint return).

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The Consolidated Appropriations Act, 2021 made a second draw of Paycheck Protection Program (PPP) loans available to qualifying organizations. Here is an overview of the entities eligible for first and second draw PPP loans:

Eligible for First Draw PPP Loans

  • Small entities that, together with their affiliates, have 500 or less employees. This includes nonprofits, veterans’ organizations, tribal concerns, self-employed individuals, sole proprietorships, and independent contractors.
  • Certain entities with more than 500 employees in certain industries can also apply. This includes businesses with a NAICS Code that begins with 72 (The Accommodation and Food Services sector) or eligible news organizations with no more than 500 employees per physical locations,

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Introduction

Starting in 2018, under the Tax Cuts & Jobs Act (TCJA), all business meals were made 50% deductible. This included all employee, business, travel, and per diem meals, unless separately billed to a client. It also included meals incurred during entertainment (i.e. football games) if the meals were separately stated from the entertainment expense. The 50% meals limitation does not apply to employee parties. It was unclear whether employee office snacks (de minimis) and office meals were subject to the 50% limitation.

On October 9, 2020, the IRS issued final regulations that clarified the employee office snacks (de minimis) and office meals are subject to the 50% limitation.

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Most of us spent 2020 experiencing upheaval like never before, both on a global scale and in our personal and professional lives. Since March 2020, the world has been in constant state of flux as we all try to get our bearings in the COVID-19 reality. To frame a terrible year in its best possible light, you could characterize this as an intense period of innovation. But is all the change we’re going through really strategic innovation? Or is it merely a knee-jerk reaction to the current moment?

I’ve spent the year watching with curiosity to see which of these new COVID-induced routines will be valuable enough to stay – the true innovations – and which are destined for the dustbin when the quarantine lifts.

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Media Contact

Melissa Takade
Director of Marketing
Clark Nuber
Phone: 425-454-4919
Contact Melissa

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