Weekly Digest – July 7 2021

While pandemic restrictions are easing in the U.S. as vaccination rates rise and infection rates fall, whether that trend will continue may depend on the interaction of three principles. First, current vaccines are still effective against the variants. Those who have been fully vaccinated with any of the vaccines are not as likely to get as sick or to be hospitalized, but they may still be able to transmit the virus to unvaccinated people. Second, variants are pummeling unvaccinated people. The Delta variant is more contagious and is spreading aggressively through regions with large unvaccinated populations. Finally, the longer that variants spread among unvaccinated people, the less likely it will be that the current vaccine will protect against other variants. Each time the virus infects a new person, a few mutations creep in, which over time can help the virus spread more easily or slip past immune system defenses more readily. This means that booster shots against the new variants will most likely be needed.

THE AMERICAN RECOVERY PLAN ACT (ARPA)

Monthly Child Tax Credit Payments

The IRS has added the ability to change banking information to its portal for the advance Child Tax Credit. According to a news release from the IRS, any updates by August 2 will apply to the August payment. The deadline for updates for the July 15 payment was June 28. At this point, the portal only allows parents to verify enrollment to receive advance payments; to unenroll in the program; and to update banking information. Payments cannot be split between bank accounts. Families who are already enrolled but who have not provided direct deposit information will receive a paper check. For more information, taxpayers should consult the IRS webpage for this credit.

TAX DELAYS

The IRS ended the 2021 tax filing season with more than 35 million unprocessed tax returns, more than four times the amount at the end of the 2019 filing season, prior to the pandemic. According to IRS Commissioner Charles Rettig, a contributing factor is the difficulty of reconciling stimulus payments received by taxpayers with stimulus payments reported on tax returns. This backlog means that millions of taxpayers are still waiting for refunds.

More information on the IRS’ performance can be found in a report from the Taxpayer Advocate Service. According to that report, over half of the backlog comes from returns filed on paper, some of which are 2019 tax returns. The IRS Where’s My Refund tool provides only limited information about the status of tax refunds. Taxpayers do not receive information on the reason for a delay, what information the IRS needs from the taxpayer or an estimate of when the refund will be paid.

TAX SCAMS

Every year, the IRS releases a list or its “Dirty Dozen” tax scams, and this year’s list contains an entire category devoted to pandemic-related scams. Economic impact payments (stimulus checks) were especially inviting to thieves, who sent emails, text messages, and made phone calls in an effort to get banking information so they could intercept payments. As a reminder, the IRS never initiates contact by phone, email, text, or social media asking for personal information such as Social Security numbers or banking information. Many scammers also took advantage of the flood of unemployment claims by filing fraudulent claims. Anyone who receives a 1099-G reporting unemployment benefits that were not actually received should report their state unemployment agency.

REOPENING THE OFFICE

Instead of returning to the office to work, as many as 95% of workers are considering taking part in what’s being called the “Great Resignation.” In April, a record 4 million people quit their jobs. After working from home for more than a year, many employees want to continue working remotely, and are willing to quit their jobs if their employer requires in-office work. Others are taking advantage of a record number of job openings, while some people are burned out from a year of working long hours while juggling childcare and home schooling.

For employers concerned about losing key employees, there are signs that an employee might quit soon. For example, changes in work behavior from working hard to just getting the minimum done or being less willing to satisfy a boss are both signs that an employee is considering quitting. Being alert to these signs can give employers the opportunity to keep those people. More money can help, but generally only makes a big difference if the employee can’t make ends meet with their current pay. Weekly one-on-one meetings with a manager can also help solve problems with workload and obstacles that prevent them from completing their assigned tasks. However, that manager might be the problem, since many people don’t leave a job, they leave a manager. Identifying those managers requires looking for patterns in retention.

ECONOMY

Early in the pandemic, many shippers made decisions in line with earlier recessions: as incomes go down, demand also goes down, and accordingly, they cut orders. However, as the economy comes roaring back, those early decisions are tangling global supply lines. While prices for some staples such as lumber have already dropped significantly in response to supply and demand, the impacts of multiple supply line disruptions are converging on the prices of complex items such as automobiles. New cars, which normally sell for $2,000 to $3,000 below manufacturer’s suggested retail price, are selling at or just below that suggested price. Used car prices are also increasing and were a chief source of inflation this last spring. In time, as congestion in global supply lines eases, prices and inflation should also normalize.

Cutting off the federal boost of $300 per week in unemployment benefits so far has not spurred additional job searches according to data from job-hunting sites. However, states began ending pandemic-related unemployment in mid-June at the earliest, so it may be too soon to measure any impact. Some people may not be ready to return to work for health reasons. Childcare continues to be a challenge, with many day care centers closed.

GENERAL RESOURCES

We sincerely hope that you and your family are well and remain well. If you have any questions or concerns, don’t hesitate to reach out to us. We are all in this together!

Want to grow your business? Learn more about our services