News & Tech Tips

Commercial Activity Tax (CAT) Update

Due to Ohio statutes for Commercial Activity Tax (CAT) reporting purposes, in addition to regular revenue typically reported for CAT filing, businesses this year must also include:


  • The gross proceeds received from the 3 special BWC rebates issued in 2020 – issued around April, October and December


  • Grants received from Ohio, county or local jurisdictions


  • EIDL grants for the CARES Act



Please note that the Ohio Department of Taxation has specifically excluded forgiveness of PPP loans and employee retention credits, so these proceeds do not have to be included for CAT reporting.  



If you have any questions about this update or would like to discuss your situation specifically, please contact your Whalen advisor for assistance.

Paycheck Protection Program Loan Necessity Questionnaire

Last week, the SBA released finalized forms for a PPP Loan Necessity Questionnaire.


Businesses and not-for-profits that received $2 million or more in Paycheck Protection Program (PPP) loans must complete one of two new loan necessity questionnaires being sent to lenders by the U.S. Small Business Administration (SBA) for distribution to borrowers.


The new forms are designed to collect supplemental information SBA loan reviewers will use in evaluating the good-faith certification borrowers made on their PPP applications that economic uncertainty made their loan request necessary to support ongoing operations.


The forms are available to view:


SBA Form 3509: Paycheck Protection Program Loan Necessity Questionnaire (For-Profit Borrowers)


SBA Form 3510: Paycheck Protection Program Loan Necessity Questionnaire (Non-Profit Borrowers)



For any questions or assistance with this form, please contact your Whalen advisor.



SOURCE: Journal of Accountancy

Another Round of 2020 BWC Refunds for Ohio Employers

The Ohio BWC announced this week that they are issuing a $5 billion dividend to ease the financial pressures organizations may be experiencing amid the ongoing coronavirus (COVID-19) pandemic.


This is being issued in addition to a recent $1.3 billion dividend that was issued at the end of October.


Checks will be mailed by the BWC to eligible employers in Mid-December.



How much will an employer receive?


BWC defines the private employer dividend as 372% of billed premium for eligible employers for the policy period of July 1, 2019, through June 30, 2020. BWC will apply the percentage to the blended premium amount.


BWC defines the public employer dividend as 372% of billed premium for eligible employers for the policy period of Jan. 1, 2019, through Dec. 31, 2019. BWC will apply the percentage to the blended premium amount.



Who is eligible for the dividend?


Eligibility is defined as follows:


  1. State Insurance Fund employers (private employers or public employer taxing districts only).
  2. The employer must have reported payroll greater than zero for the applicable policy period.
  3. The employer must have been billed premium for the applicable policy period.
  4. Employers must have completed their payroll true-up for policy year 2019 as of Oct. 2, 2020.
  5. The employer must be in an active, reinstated, combined, cancelled – business sold, or debtor-in-possession status or, in a lapsed status with a lapse date of Jan. 1, 2020 or later as of Oct. 2, 2020.



For further details on this dividend, please visit the BWC website here.



If you have any questions regarding this announcement, please contact your Whalen advisor.




Small Business Relief Grant

The Small Business Relief Grant is designed to provide relief to Ohio businesses that have been negatively affected by COVID-19.


Governor Mike DeWine has designated up to $125 million of funding received by the State of Ohio from the federal CARES Act to provide $10,000 grants to small businesses to help them through the current crisis.


The program, which will begin accepting applications November 2, 2020, will be administered by the Ohio Development Services Agency.


For the full Terms and Conditions for participation in the Small Business Relief Grant, please click here.



For questions or assistance with the application process, please contact your Whalen advisor.




SOURCE: Ohio Development Services Agency

The easiest way to survive an IRS audit is to get ready in advance

IRS audit rates are historically low, according to the latest data, but that’s little consolation if your return is among those selected to be examined. But with proper preparation and planning, you should fare well.

In fiscal year 2019, the IRS audited approximately 0.4% of individuals. Businesses, large corporations and high-income individuals are more likely to be audited but, overall, all types of audits are being conducted less frequently than they were a decade ago.

There’s no 100% guarantee that you won’t be picked for an audit, because some tax returns are chosen randomly. However, the best way to survive an IRS audit is to prepare for one in advance. On an ongoing basis you should systematically maintain documentation — invoices, bills, cancelled checks, receipts, or other proof — for all items to be reported on your tax returns. Keep all your records in one place. And it helps to know what might catch the attention of the IRS.

Audit hot spots

Certain types of tax-return entries are known to the IRS to involve inaccuracies so they may lead to an audit. Here are a few examples:

  • Significant inconsistencies between tax returns filed in the past and your most current tax return,
  • Gross profit margin or expenses markedly different from those of other businesses in your industry, and
  • Miscalculated or unusually high deductions.

Certain types of deductions may be questioned by the IRS because there are strict recordkeeping requirements for them — for example, auto and travel expense deductions. In addition, an owner-employee salary that’s inordinately higher or lower than those in similar companies in his or her location can catch the IRS’s eye, especially if the business is structured as a corporation.

Responding to a letter

If you’re selected for an audit, you’ll be notified by letter. Generally, the IRS doesn’t make initial contact by phone. But if there’s no response to the letter, the agency may follow up with a call.

Many audits simply request that you mail in documentation to support certain deductions you’ve taken. Others may ask you to take receipts and other documents to a local IRS office. Only the harshest version, the field audit, requires meeting with one or more IRS auditors. (Note: Ignore unsolicited email messages about an audit. The IRS doesn’t contact people in this manner. These are scams.)

Keep in mind that the tax agency won’t demand an immediate response to a mailed notice. You’ll be informed of the discrepancies in question and given time to prepare. You’ll need to collect and organize all relevant income and expense records. If any records are missing, you’ll have to reconstruct the information as accurately as possible based on other documentation.

If the IRS chooses you for an audit, our firm can help you:

  • Understand what the IRS is disputing (it’s not always clear),
  • Gather the specific documents and information needed, and
  • Respond to the auditor’s inquiries in the most expedient and effective manner.

The IRS normally has three years within which to conduct an audit, and often an audit doesn’t begin until a year or more after you file a return. Don’t panic if you’re contacted by the IRS. Many audits are routine. By taking a meticulous, proactive approach to how you track, document and file your company’s tax-related information, you’ll make an audit much less painful and even decrease the chances that one will happen in the first place.