Month: February 2022

Telehealth Is Calling: What Answering Does to Tax Obligations

COVID-19 prompted explosive growth for the telehealth industry, which provided safe access to care at a perilous time. Federal and state laws were relaxed and now government at all levels are being called on to create comprehensive telehealth legislation for the long-term. In the meantime, a variety of federal, state, and local laws are running the show, and can have a variety of implications on tax obligations.

Study after study shows patients, medical practitioners, investors, and more are on board for making telehealth a standard part of the health care delivery model. From big box stores to online retailers to national pharmacy chains, many are jumping on the bandwagon and disrupting traditional health care with new and innovative hybrid digital, in-person and even mobile models. Insurance companies are getting on board, with the introduction of plans covering digital first care at no cost to the patient. Mergers and acquisitions are fueling interest and growth. Even the U.S. Department of Health & Human Services provides best practice guides to help get telehealth initiatives off the ground.

Still, certain states – like New York – are slow to warm up to the telehealth boom, enacting strict rules on their operation. Perhaps that’s due to concerns about potential erosion of state medical board standards and controls. No doubt, the financial implications of allowing out-of-state providers to give telehealth care to NY residents can create a potential negative economic impact to in-state medical providers. There are also state, payroll and income taxes to consider.

As a health care practice or practitioner physically located in New York, you’re subject to New York state taxes. By jumping on the telehealth bandwagon, you may be liable for taxes in states where your patients receive virtual care and/or in states where your providers reside. Unfortunately, the rules vary by state, making the process for determining when and where you have an obligation to pay taxes more complex.

In general, a state can impose a tax on a taxpayer when “nexus” is present. In some states, nexus is triggered by a physical presence. So, if you hire a physician in another state to provide telehealth services, you likely triggered a tax return filing obligation in that state. Then there’s economic nexus, which applies in states like New York. When a certain amount of revenue is reached and a certain number of transactions completed, economic nexus is triggered. In New York, nexus is triggered by $500,000 in revenue and 100 transactions in the last four quarters. It’s important to note that thresholds vary by state and can be as low as $100,000 for revenue.

There’s also a potential for information and data services taxes, and taxes on medical equipment depending on a state’s rules. Finally, payroll taxes will likely have to be filed in all states where telemedicine providers reside.

While the pressure is on Washington to finalize sweeping legislation within the next two years, medical practices and providers who have expanded into the world of telehealth must comply with the myriad of laws governing related tax implications in place today.

Remember, your partners at RBT CPAs are here to help ensure you meet all your tax obligations, understand how your health care delivery model will impact taxes going forward, and be prepared should an audit be required. Contact your local office for assistance.

Is Tenure the Driver or Red Herring of Higher Education Costs?

Turnover for college leadership is increasing. Enrollment is down and the U.S. population is barely growing. University and college costs are high, as is student debt. Still, when COVID hit, institutions of higher learning turned on a dime and figured out how to continue adding value and justify costs when so many other aspects of society simply paused. The solutions adopted in COVID’s early days prompted renewed discussions about college costs and whether there are ways – like changing tenure laws – to make higher education more accessible for everyone over the long-term.

Modern-day tenure laws for higher education were born over 80 years ago. They existed before personal computers, MTV, microwaves, Facebook, and more. Education traditionalists assert the rights afforded to pursue truth, challenge the status quo, and answer tough questions can never be outdated. Tenured professionals are protected to explore the unexplored and ask the unanswered through research that is not tied to capitalism or politics but is for the common good. Not everyone agrees.

Some believe tenure drives up costs, amounting to tens or hundreds of thousands of dollars over one person’s career, and translating into higher tuition. There are also questions about whether tenure adds value, driving performance and results, and benefits students.

There are questions to be answered on the flip side of the argument. If a state changes its tenure laws, what will that mean to accreditation and its colleges’/universities’ ability to compete against schools in other states and around the world? What impact will it have on public versus private institutions within the same state? What will it mean to higher education in the long-term?

It’s an understatement to say higher education is in a state of disruption (like most industries once the initial panic about COVID passed).

At the end of last year, Hawaii followed the lead of several other states in evaluating the role of tenure in higher ed and the appetite for change. While some interesting proposals were brought to the table – like only offering tenure for teaching professionals and librarians (not purely researchers) – strong resistance by educators and institutions of higher learning paused progress, for now, but the conversation appears far from over.

In Georgia, the American Association of University Professors is challenging changes to tenure policies that would allow firing, the revocation of tenure, or suspended pay for not meeting performance standards. In South Carolina, 2021 ended with a bill on the table to eliminate tenure for future higher educators. Across the U.S., there’s a growing appetite for change in higher education, but the jury’s still out on what that will look like and when.

One interesting data point: Apparently, only one in four faculty hired at colleges/universities is on a tenure track. BestColleges reports that from 1975 to 2015, tenure-track positions decreased by 50% and full-time tenured positions dropped by 26%. This leads to the question: Is targeting tenure reform really the answer?

Another interesting point: After college costs increased by 169% from 1980 to 2019, according to the College Board’s 2021 Trends in College Pricing and Student Aid report, tuition increased at historically low rates and even decreased, when adjusting for inflation. Does this mean higher education costs have turned a corner or is the slowdown in growth temporary and resulting from the CARES Act and Higher Education Emergency Relief Fund?

One final consideration: Is the tenure discussion part of a larger narrative focused on reinventing higher education in a post-COVID world? What is the role of government versus higher education leadership? What will higher education and its delivery models look like 5 or 10 years from now? What will all of this mean to institutions of higher learning in New York State?

The answers are coming and may be more far-reaching and complex than tenure. Stay tuned. Remember! Your partners at RBT CPAs are here to help ensure you meet all your financial obligations; understand how COVID relief funds impact budgets, reporting, and taxes; and help ensure you’re prepared should an audit be required. Contact your local office for assistance.

SOURCES: FORBES, Best Colleges, Brookings.Edu, CNBC, Mckinsey & Co.

SLFRF Final Rule: Key Changes and Clarifications

The U.S. Treasury kicked off the year by providing the much-welcomed Final Rule for State and Local Fiscal Recovery Funds (SLFRF) on January 6, with final guidance on allowable uses, documentation, and reporting requirements. This replaces the interim Final Rule issued in May 2021.

Overall, the final rule affords greater flexibility and simplicity largely in response to feedback received during the comment process. An overview of the final rule was issued by the U.S. Treasury. Key changes and clarifications, which undoubtedly give local leaders peace of mind to move ahead, include:

Replacing Lost Public Sector Revenue: The final rule makes it easier to calculate lost revenue, with a standard allowance of $10 million. This is in lieu of determining an allowance using a revenue loss calculation. Recipients that select the standard allowance may use that amount – in many cases their full award – for government services, with streamlined reporting requirements.
Broader Use of Funds: The final rule clarifies that funds can be used for capital expenditures that support an eligible COVID-19 public health or economic response. For example, recipients may build certain affordable housing, childcare facilities, schools, hospitals, and other projects. In addition, eligible programs and services are expanded to include childcare, early learning, and services to address learning loss during the pandemic in impacted communities, as well as certain community development and neighborhood revitalization activities for disproportionately impacted communities.
Presumes Broader Impact without Analysis: With the final rule presuming an expanded set of households and communities to be “impacted” and “disproportionately impacted” by the pandemic, the need for additional analysis has been eliminated.
Government Hiring: The final rule allows for a broader set of uses to restore and support government employment, including hiring above a recipient’s pre-pandemic baseline, providing funds to employees that experienced pay cuts or furloughs, avoiding layoffs, and providing retention incentives.
Premium Pay: The final rule delivers more streamlined options to provide premium pay, by broadening the share of eligible workers who can receive premium pay without a written justification while maintaining a focus on lower-income and frontline workers performing essential work.
Water, Sewer & Broadband Infrastructure: The final rule significantly broadens eligible broadband infrastructure investments to address challenges with broadband access, affordability, and reliability, and adds additional eligible water and sewer infrastructure investments, including a broader range of lead remediation and stormwater management projects.

While the final rule takes effect April 1, 2022, recipients can choose to take advantage of its flexibilities and simplifications now, even ahead of the effective date. Treasury will not take action to enforce the interim final rule to the extent that a use of funds is consistent with the terms of the final rule, regardless of when the SLFRF funds were used. (For more information on compliance, consult the Statement Regarding Compliance with the Coronavirus State and Local Fiscal Recovery Funds Interim Final Rule and Final Rule, on the U.S. Treasury’s website.)

For many, the final rule is a green light to move full speed ahead. Remember, December 31, 2024, is the last day funds can be spent (although that extends to December 31, 2026, for contracts finalized by December 31, 2024). If you have questions or need assistance, please contact RBT CPA professionals dedicated to helping government clients.

The True Cost of Forgetting Finance in the Classroom

Apparently, you can put a price tag on financial literacy.

According to a poll by the National Financial Educators Council, lack of financial knowledge cost the average American $1,389 in 2021, creating a national price tag of $352 billion. That’s just the tip of the iceberg.

During the best of times, neglecting to address finance as a fundamental learning requirement of all high school students in the United States has far-reaching implications across society, affecting everything from poverty levels and crime, business productivity, health and health care, life expectancy, and more.

Add a global pandemic and an ensuing financial crisis, and the actual cost of failing to educate Americans about basics like saving, budgeting, and investing becomes more apparent, with a dramatic increase in reliance on the government for everything from food to rent to income.

While we’re still navigating the pandemic and learning to live a new normal alongside COVID and its variants, the truth is we won’t know the cost of failing to educate and prepare Americans for “a rainy day” for generations.

We do know the most vulnerable—namely children—are the hardest impacted.

We live in one of the wealthiest countries in the world and yet we have the third highest poverty rate among Organization for Economic Cooperation and Development (OECD) countries. 27.5% of people in America are classified as low income and 16.1% of our population under the age of 18 are below the poverty line. According to the U.S. Census Bureau, poverty in America is increasing, and it’s affecting those under age 18 at a higher rate.

Ironically, it is those same children who can break the cycle of poverty if they are given the tools and know-how in the form of financial literacy. America has a long way to go to make this happen.

Just six states require a stand-alone financial education course in high school. Another 15 embed personal finance into other courses. That includes New York, which has been given a “D” by The Nation’s Report Card on Financial Literacy. (No doubt this contributed to the majority of our nation’s adults not having enough savings to cover even one month of living expenses when COVID lockdowns began.)

With school districts and states scrambling to cover added costs for remote learning; cleaning and equipping facilities to support social distancing guidelines; COVID testing and tracing; getting food to low-income students; and even having enough staff to cover the basics in education, adding finance to the high school curriculum may not appear to be a priority but especially in light of what we’ve learned and experienced as a result of COVID, we have to ask: how can we afford not to add it to the course curriculum?

Hudson Valley Community College is leading the way with a six-week stand-alone personal finance course designed to help students set clear financial goals, make investment decisions, increase financial security, and build savings for retirement. As per the course description, students will learn the essentials of personal bookkeeping and recordkeeping to support lifelong financial planning and decision-making.

Should high schools in the Hudson Valley follow the community college’s lead?

We think so. Our school systems have evolved to address physical and mental wellness in the early grades, recognizing the long-term impact it has on our country’s health care, financial, and other social systems. The pandemic and society’s lack of financial preparedness puts a spotlight on the need to expand our school’s definition of wellness from just mental and physical to include financial wellness. Our RBT partners can help, by bringing their experiences teaching financial planning at the college level to local high schools, with support available for everything from advising on curriculum to facilitating classes or webinars TRUE? Yes

While your administration evaluates how well your district is supporting students’ current and future financial preparedness and wellness, remember to account for how COVID funds were allocated and spent in your district, and how new costs will be covered going forward, with the tax planning services from your partners at RBT.

Sources: Next Gen Personal Finance, National Financial Educators Council, US Census Bureau, Hudson Valley Community College,

Skill Gap Part 2: Collaborating to Address Challenges in the Hudson Valley

Manufacturing’s fourth industrial revolution, driven by artificial intelligence, cognitive automation, advanced robotics and analytics, and the Internet of Things (IOT) changing how work gets done and driving the need for more technology-savvy workers and skillsets. While employers have been preparing for changing workforce demographics for decades, none could have predicted the pandemic and its impacts on the workplace, including the great resignation, where employees are leaving the workforce in droves and holding employers to higher standards.

The pandemic combined with a generational shift in values has turned the labor market into an employees’ market, leaving employers to figure out what they need to do to compete for and win valued talent. As Baby Boomers retire, Millennials and Gen Zers are rising through the ranks with different values, redefining the workplace to account for things like work life balance, health, and job satisfaction. Every industry – including manufacturing – is being challenged to not only successfully create the future of work, but also to do it in a manner that considers very different generational mores than in the past.

As highlighted in a joint study conducted by global consulting firm Deloitte and The Manufacturing Institute, the industry is facing the largest talent shortfall ever, with an estimated 2 million jobs unfilled between 2015 and 2025, leaving employers to answer:

How are manufacturing jobs and careers evolving?
What skills are necessary for the future of work?
What should manufacturers be doing to develop a talent pipeline where employees have the skills to work alongside advanced technologies?

These questions and the challenges prompting them have even made it to the White House, with a push for immigration reform that will help manufacturers attract and retain STEM talent for the future.

They also prompted The National Association of Manufacturers and the Manufacturing Institute to launch Creators Wanted in 2021 [LINK TO www.creatorswanted.org] – a campaign to change perceptions about manufacturing jobs and build a talent pipeline. Focusing on workforce development among students, women, veterans, underrepresented communities and more, the campaign includes online events and content, as well as a nationwide tour to educate students, parents, workers, and community leaders about modern manufacturing.

In the Hudson Valley, the Council of Industry manufacturing association has multi-faceted, collaborative strategies addressing these issues in our region. From training programs and workforce development to networking, advocacy and more, the council offers comprehensive solutions for manufacturing organizations and members in our communities. Resources include:

Training A certificate program to train supervisors to lead; Hudson Valley Consortium Training, where six community colleges offer subsidized manufacturing related classes and certificates; and regulatory refresher training.
Workforce development A regional workforce development strategy; New York State Manufacturers Alliance Apprenticeship Program (NYMAAP) providing on-the-job training and additional instruction for those participating in three- to four-year apprenticeship programs (see more information below); the Recruiting Initiative campaign to market manufacturing jobs in the region and help local companies recruit talent; the Hudson Valley Pathways Academy, a program targeting grades 9 to 14, leading to an Associate Degree and building a talent pipeline; National Manufacturing Day events; connecting students with manufacturers and engineers; and org, a program to educate about modern manufacturing opportunities and career paths.
Networking Events to help manufacturing companies connect about business, Human Resources or Environmental Health & Safety, as well as special events.
Surveys & Data Participate in a regional survey to learn about pay and benefit practices, which come into play when creating rewards strategies to attract and retain talent.
Advocacy From Albany to Washington.

Of particular note is the Manufacturers Intermediary Apprenticeship Program (MIAP), which was created by the New York State Manufacturers Alliance of which the Council of Industry is a founding member and program administrator in the Hudson Valley. The program connects future skilled workers with small, medium, and large employers to secure paid apprenticeships in high-demand, competitive wage occupations, while completing their education.

Johnnieanne Hanson, Vice President of the Council, says interest in MIAP has grown during the pandemic, which likely put a brighter spotlight on recruiting and retention challenges. “What makes our program unique is that we’ve already done the legwork to create it. Employers don’t have to do anything other than express interest and start with even just one apprentice. So, it’s really appealing and do-able for a small to medium sized business that may otherwise not have the resources to build an apprenticeship program from the ground up.”

There’s also an abundance of financial support and incentives to get the ball rolling. “There’s money towards community college, tax credits, online learning licenses and grants for trainees,” Johnnianne says. “It’s a great time in terms of employers and employees have resources and support.”

The program can be used to attract new employees, incentivize new hires, and engage longer-term employees. “By investing in an employee, an employer is showing that it values the person, what they can contribute and their potential for the future. We’ve seen people who go through the program come out so happy and with such a sense of pride about the company investing in them. It means more than most realize,” Johnnianne adds.

The certifications can be viewed as the equivalent of a earning a college degree, while learning on-the-job skills and making an impact – two big values of the Millennials and Zers. In turn, employers set themselves up to retain and develop high potential talent.

“As the saying goes, ‘The best time to plant a tree is 20 years ago; the next best time is today.’ So, while employers should have been preparing for the talent crunch decades ago, it’s not too late to become part of the apprenticeship program. It starts with just a phone call,” Johnnieanne concludes.

No doubt, there has never been a more exciting or challenging time in manufacturing. RBT CPAs are here to partner with you on everything accounting and tax-wise, so you’re freed up to focus on creating a strong talent pipeline and business for the future. Let us know what we can do for you.

Hudson Valley Construction: Get Ready to Get Building

2022 didn’t get off to a great start, with yet another COVID surge in year three of the pandemic, which continues to impact everything from health care to supply chains. It’s not easy finding a silver lining, but the Bipartisan Infrastructure Bill signed into law last November offers more than a glimmer of hope nationally, for New York State, and in the Hudson Valley – especially for those in the construction industry.

At its essence, the law moves beyond the pandemic to focus on building a stronger, more competitive country for generations to come. Now is the time to get acquainted with it, so you’re prepared to make the most of this once in a lifetime investment in the Hudson Valley’s infrastructure and future.

What the Infrastructure Law Means to the U.S.

The $1.2 trillion law has money for everything from roads, bridges, railways, and highways to clean water, a stronger power grid, internet, climate change, and more. It includes 375 programs, of which 125 are new. Of the $1.2 trillion budget, $550 billion is new spending. There’s also $650 billion in previously authorized funding for roads and other infrastructure. About 60% of funds will be issued through formulas; the balance will be available through competitive applications.

What the Infrastructure Law Means to New York State

According to a White House Infrastructure Investment and Jobs Act State Fact Sheet for the state, over five years New York can expect to receive funds to:

Repair and rebuild roads and bridges. With a focus on climate change mitigation, equity, and safety for all – including cyclists, pedestrians, and low-income communities, New York is slated to receive $11.6 billion for federal highway programs and $1.9 billion for bridge repairs and replacements based on formula funding alone. The state can also compete for $12.5 billion through the Bridge Investment Program and almost $16 billion for major projects delivering substantial economic benefits to communities.
Improve healthy, sustainable transportation options. From formula funding, New York may receive $9.8 billion to improve public transportation.
Build EV chargers for long distance travel and convenience. $175 million will be provided via formula funding to expand the EV charging network in the state and there will be the opportunity to compete for $2.5 billion in grant funding.
Connect every New Yorker to reliable, high-speed internet. New York will receive a minimum of $100 million to help provide broadband coverage across the state. This includes providing internet service to more than 185,000 New Yorkers who currently lack access and helping low-income families afford internet service.
Prepare for the impacts of climate change, cyberattacks, and extreme weather. Based on historical formula funding, New York may receive $34 million to protect against wildfires; $28 million to protect against cyberattacks; and a $3.5 billion national investment in weatherization which will reduce energy costs.
Deliver clean drinking water to every New Yorker and get rid of lead service lines and pipes. Based on the traditional state revolving fund formula, New York may receive $2.6 billion to improve water infrastructure and ensure clean, safe drinking water for all communities. (In January, Governor Hochul announced $66 million in projects to improve drinking water and water infrastructure.)
Upgrade airports for the 21^st New York will receive approximately $685 million for infrastructure development at airports.

What the Infrastructure Law Means to the Hudson Valley

Some of what’s expected to reach our local communities includes $12 million for Stewart International Airport; $1 million to Columbia County airport; and $800,000 to Orange County Airport and the Hudson Valley Regional Airport. Villages like Newburgh will likely benefit from state monies earmarked to replace lead pipes and service lines and combat contaminants. Commuters and towns will benefit if Metro-North receives some of the $11 billion going to the Metropolitan Transit Authority. Plus, there are eight bridges in the Hudson Valley slated for upgrades (with funding from Bridge NY and the new law). That’s just to start.

U.S. Senator Charles E Schumer’s office indicated, “The deal is the largest federal investment in history for upstate airports, water, transit, broadband, trains, bridges and roads.”

U.S. Representative Sean Maloney added, “Every penny spent is about infrastructure of course, but it’s really about growing our economy and jobs.”

RBT CPAs is tracking developments related to the Infrastructure Law so we can help clients in construction and government maximize forthcoming opportunities. If you have any questions or need advice to prepare for all things financial related to the law, contact your partners at RBT CPAs – we’re always here to help.

Sources: Build.Gov, Times Union, National Law Review, Forbes, ThomasNet, News 12, Brookings.Edu

NYS PTET UPDATE: What We Know & What It Means to Your Business

Important Deadline Approaching

The PTET election period is open. To opt in, submit the Annual Election Application before or on March 15. For instructions on how to make the election, visit the NYS Department of Taxation and Finance website and click “Election.”

While RBT CPAs is always ready to do whatever it takes to support clients, by law we can’t make your PTET election. However, we can file your return and pay any tax owed if you complete and submit a TR-2000.

For more information or assistance, contact your local RBT CPAs, LLP office.

What is a pass-through entity (PTE)?

When a company’s income taxes are paid solely by its owners (rather than the business), it’s considered to be a PTE. The business doesn’t pay corporate taxes; instead, its owners pay taxes on their share of business income based on their personal tax rates. As a result, business owners avoid having to pay taxes twice – once at the corporate level and a second time on the income they receive as owners.

Are all businesses considered pass-through entities (PTEs)?

No. PTEs are distinguished by which tax form they file. To be considered a PTE, an entity must file a 1065 partnership or a 1120-S S corporation return. A sole proprietorship or LLC owned by a single member and reported via Form 1040, Schedule C, or Schedule E does not qualify as a PTE.

What is a pass-through entity tax (PTET)?

In 2017, the Tax Cuts and Jobs Act (TCJA) limited the deduction business owners could take for state and local taxes on income and property to $10,000. This impacted high tax states the hardest. States realized the same limit didn’t apply to businesses at a corporate level, and the pass-through entity tax (PTET) was born.

What is the NY State PTET election?

The PTET is not automatic; businesses must opt in to take the PTET each year. The opt in election must be made by no later than March 15. If a business does not want the PTET, no action is required.

What is the benefit of opting in to take the NY state PTET?

Businesses that opt in will receive a Federal tax deduction based on the PTET paid, while their owners may be eligible for a PTET credit on their NY state income tax returns.

Is there any potential downside to opting in?

PTEs and their owners should carefully consider whether a PTET election makes sense for them. Review the potential benefit prior to making an election to avoid any unwanted tax consequences for the PTE or its owners.

Who can make the PTET election?

Only an authorized person from an eligible entity – not a tax preparer – can make the election to opt in. For a partnership, an authorized person includes “any member, partner, owner or other individual with authority to bind the entity or sign returns under Tax Law 653.” For a New York S Corporation, an authorized person includes “any officer, manager or shareholder of the New York S corporation who is authorized under the law of the state where the corporation is incorporated or under the S corporation’s organizational documents to make the election.”

How do I make a PTET election?

You must login to your New York State tax account to make the election. (For instructions and more details, visit the New York State Department of Taxation and Finance webpage.)

How does my business pay its PTET?

Businesses will need to go onto their online NYS tax filing account and initiate payment directly to the state. A tax preparer or software cannot do this unless a business owner completes a TR-2000, which provides authorization to log into the account, file a return, and pay any tax owed. RBT CPAs encourages its clients to complete and submit this form and then we’ll handle the rest when it comes to your PTET filing.

My business is in NYC. Does the NYC PTET work the same way for me and my partners?

In order to receive a NYC PTET credit, an S Corporation must have all NYC resident individual owners or a partnership must have at least one NYC resident individual owner. So even if you’re doing business or operating out of NYC, you may not necessarily benefit from NYC PTET.

If you have any questions or need additional information or assistance, please remember RBT CPAs is here to help. Let us know what you need so you can be 100% confident you’re making the right decisions and taking the right actions in relation to the NYS PTET.

RBT CPAs is proud to say 100% of its work is prepared in America. Our company does not offshore work, so you always know who is handling your confidential financial data.