Businesses (including Schedule C’s, farms, and rentals) are required to prepare these annual informational returns for certain amounts paid during conduct of their trade or business.
Recipient copies are required to be issued by January 31, 2022.
We will be issuing more detailed information on this subject before the end of the year, including any upcoming changes.
Please watch for our next correspondence.
Paycheck Protection Program (PPP)
It has been determined that for federal tax purposes the PPP loan is not taxable. However, the forgiveness associated with the loan will impact the basis of the business owner(s) and could impact tax liability.
Please communicate the status of your PPP loan(s) with us. If you have PPP loan questions or need help with the forgiveness application, contact us, we are happy to help.
S Corporation Health Insurance on W-2
Health insurance for S Corp officers must be reported on their W-2’s. Please contact your accountant if you have questions.
If your company uses an outside payroll service, the payroll service must be provided with this information prior to the end of the year so that it can be included in the shareholder employee’s form W-2. If the information is not provided to the payroll service in a timely manner, they may charge an additional fee to rerun affected W-2’s.
If you process your own payroll, work with your accountant to be assured of proper reporting.
Corporate Activity Tax (CAT)
Effective January 1, 2020, businesses with activity in Oregon were subject to the Corporate Activity Tax (CAT). Taxpayers with more than $750,000 of commercial activity within Oregon are required to register with the Oregon Department of Revenue; taxpayers with more than $1,000,000 of commercial activity are required to file an annual tax return. The tax rate is 0.57% on commercial activity over $1,000,000, less 35% of labor or cost of sales, plus $250.
The 2021 Corporate Activity Tax is return due April 15, 2022. If you meet the requirements and have not already registered, click here to get registered with the Oregon Department of Revenue via Revenue Online.
Because cost of sales is a potential deduction for this tax, now would be a good time to review your Chart of Accounts to make sure expense categories are properly reporting in the Cost of Goods Sold section of your books. Also, if you are not currently allocating your payroll between Cost of Goods Sold and Operating Expenses, we would strongly recommend getting that set up properly.
For the purposes of this tax, if you have several separate business entities for your businesses, they may be considered a single unitary group and be required to file a single combined return. To better understand how the state defines a unitary group, contact us and we will walk you through how the state determines a unitary group.
The law establishing the CAT does not prohibit any business from recovering a business expense when setting the total price for the sale, lease, or license of an item or the sale of a service. The CAT is imposed on the entity doing business in Oregon and is considered part of the business’s expenses. A business may include the CAT with other business expenses when setting the total price charged to customers. However, the total price charged (including any amount estimated to be attributable to the CAT) is included in the business’s commercial activity. Please contact us to help you to determine the appropriate recovery rate.
Personal Property Return
All businesses (Schedule C’s and farms included) and non-profits are required to file an annual Personal Property Tax Return with their county assessor’s office for all personal property owned as of January 1, 2022.
You may or may not receive the necessary form for this purpose from the County Assessor at the beginning of 2022. Extensions are not available, and penalties will be assessed on late filed returns.
If you need our assistance in preparing any of these forms, or have any questions regarding filing requirements, please contact us by January 31, 2022. Click here for more information regarding Personal Property Tax Returns.
If you would like our support, Click here for Personal Property Tax Engagement Letter.
Dates for W-2s
W-2 and W-3 government forms must be filed by January 31, 2022. The employee copies of W-2’s must be mailed or distributed no later than January 31, 2022, as well.
Personal Use of a Corporate Auto
W-2’s MUST include any owners/employee’s personal use of a company-owned or leased vehicle. This amount is included in calculating Social Security tax. We have the information to help you calculate the amounts to report to your payroll service. You should notify your payroll service before they process your last payroll for the calendar year, otherwise you could incur additional charges.
SUI Rate Change for Payroll Tax
If you receive a letter from the Employment Department for State Unemployment Tax rate change, please update your SUI rate as of January 1, 2022. If you are using a payroll service, please send the letter to them so they have accurate information to begin processing payroll that month.
The IRS has been auditing business mileage reimbursements and expenses, travel logs, and personal use of corporate vehicles. If you have not already done so, please keep track of business and personal mileage, especially if you are deducting actual expenses in your corporation. Keep a travel log in your vehicle; keep receipts for repairs, gas, and other related items.