Payroll update: Student loans, free tax filing, and more

The NBA finals started last week—the Denver Nuggets vs. the Miami Heat. Basketball is our second favorite sport, mostly because you don’t need to know all the rules to enjoy a game. One tidbit we’ve picked up? The team that makes its free throws usually wins.

Our Friday wrap is always a slam-dunk. And we make our free throws.

Students: Get ready to dig into your pockets

Student loan collections have been paused since the beginning of the pandemic. The latest pause is scheduled to end July 31, with collections recommencing Sept. 1. This pause was always billed as the last, and now it is.

Section 271 of the Fiscal Responsibility Acts of 2023 (H.R. 3746), also known as the debt-ceiling bill, requires recollections to commence Aug. 29, which is 60 days from June 30.

You should inform employees of this development.

Payroll Handbook D

The pause in student loan collections is unrelated to the Department of Education’s plan to forgive up to $20,000 in student loan debt. The Supreme Court heard arguments about the plan and will issue a decision by the end of the month.

If you don’t want employees to feel the bite or, as many have predicted, the Supreme Court tanks the plan, you can amend your IRC § 127 educational assistance plan to allow you to pay back up to $5,250 a year in employees’ loans.

Would you be comfortable letting the IRS do your taxes?

Free File is a collaborative effort between the IRS and commercial tax software firms under which taxpayers with incomes under a certain threshold who file simple returns can file their returns, well … for free.

The problems? No one uses it and at least one firm has been dinged because it funnels users into its paid services.

The Inflation Reduction Act, enacted last summer, requires the IRS to determine whether it could cut out the middlemen and create its own free file program. The IRS says it can and will pilot it during next year’s filing season.

How to count holidays against employees’ FMLA leave

An opinion letter issued this week by the Department of Labor confirms how you count an employee’s FMLA leave if it falls within a holiday week.

To recap, under the FMLA, the employee’s normal workweek is the basis of their leave entitlement. Two outcomes are possible:

  • If a holiday occurs during an employee’s workweek, and they work for part of the week and use FMLA leave for the remainder, the holiday doesn’t reduce their FMLA leave entitlement.
  • If the employee takes a full week of FMLA leave during a holiday week, the entire week counts against their leave entitlement.

Curious about who sees your tax data?

The IRS and state tax agencies have long-standing agreements to share tax data. In addition to state tax agencies, the IRS sends information to a wide array of state social service agencies.

Point your browser here for the full list of agencies.

Think you’re smart enough to practice before the Tax Court?

You don’t have to be an attorney to practice before the Tax Court, but if you want to represent a client in Tax Court, you must take its exam. The next test is scheduled for Nov. 8, 2023. If you’re interested, you must complete an online application by July 17 and submit it by Sept. 22.

The Tax Court is kind enough to make old tests available. Here’s a link to the most recent test. And yes, some very prominent payroll questions are included. There’s no answer grid, unfortunately.

Don’t be overconfident. After looking over the questions, we began to experience the queasy bar exam feeling, which usually only hits us when we drive past the place we took the test. Just for reference, only 11.8% of test takers passed the exam in 2021. Good luck!