Monitoring Policy Changes: Stay Abreast of Changes in Tax Laws, Regulations, and Programs that Affect Employment Tax Credits and Provide Updated Advice to Clients Accordingly

As the landscape of tax laws, regulations, and programs evolves, it’s crucial to stay informed about any changes that might impact your clients’ eligibility for employment tax credits. This proactive approach allows you to offer updated, relevant advice and ensures that clients take advantage of all available benefits while staying compliant with the latest requirements.

Here’s how you can effectively monitor and integrate these policy changes into your advisory services:

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1. Regularly Review Legislative Updates and IRS Guidelines

Federal, state, and local tax laws are subject to change, and new programs may be introduced or existing ones modified. Keeping up with these changes ensures that your clients remain in compliance and can benefit from new tax credits.

Actionable Steps:

• Set Up Alerts: Use IRS newsletters, government websites, and tax law resources like the Tax Foundation or CCH Group to set up email alerts or news feeds on relevant policy changes.
• Review Key Legislation: Regularly check new laws passed by Congress or updates issued by the IRS, especially regarding employment-related tax credits like the Work Opportunity Tax Credit (WOTC), Employee Retention Credit (ERC), Family and Medical Leave Credits, and State-Specific Programs.
• Monitor Regulatory Updates: Keep an eye on changes in state and local tax regulations by subscribing to state tax department newsletters and updates from state government websites.

Example Actions:

• Set a monthly reminder to check the IRS Newsroom and Federal Register for updates on employment tax credits.
• Sign up for alerts from Tax Foundation for legislative updates.

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2. Track Proposed and Enacted Bills Impacting Tax Credits

Changes to tax laws often start as proposed bills in Congress before they become enacted. Monitoring the legislative process ensures you’re prepared for changes that may affect your clients’ strategies in advance.

Actionable Steps:

• Track Pending Legislation: Regularly review Congress.gov and GovTrack for bills related to employment tax credits.
• Understand the Impact of New Bills: When a bill is introduced that could change credit eligibility or introduce new credits, assess its potential impact on your clients and inform them early.

Example Actions:

• Review and track the status of bills like The American Rescue Plan Act or other stimulus packages that may affect tax credits.
• Notify clients of any new bills that could impact their credit eligibility, such as expanded WOTC categories or new ERC guidelines.

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3. Engage with Industry Associations and Professional Groups

Staying connected with industry groups and professional associations helps you gain insights and early alerts on policy changes that might affect tax credits.

Actionable Steps:

• Join Tax Professional Associations: Become a member of associations such as the National Association of Tax Professionals (NATP) or the American Institute of CPAs (AICPA). These organizations often provide detailed updates and webinars on new laws and regulations.
• Attend Webinars and Conferences: Participate in webinars, seminars, and conferences that focus on tax credits and regulatory changes. These forums often feature discussions with experts and updates on the latest legislative changes.
• Collaborate with Tax Software Providers: Tax software platforms like QuickBooks or ADP often provide updates and alerts regarding new tax laws that impact businesses, especially in payroll and employee-related tax credits.

Example Actions:

• Subscribe to newsletters from AICPA and NATP for industry updates.
• Attend quarterly webinars from tax law firms or consulting firms that focus on updates to tax credit programs.

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4. Leverage IRS and State Websites for Direct Updates

The IRS is the central source for updates on tax credits and employment-related programs. Keeping a close eye on the IRS website as well as state tax authority sites is essential for up-to-date information.

Actionable Steps:

• Subscribe to IRS Email Updates: The IRS offers an email subscription service where you can receive updates on important notices, forms, and IRS guidance related to tax credits.
• Review IRS Notices and FAQs: Whenever the IRS releases new Notices or FAQs related to credits, review them in detail to understand any updates to eligibility criteria or filing procedures.
• Stay Informed About State Programs: If your clients are located in multiple states, make sure you check each state’s tax authority website for localized credits or changes to state-specific programs (e.g., state-level WOTC).

Example Actions:

• Subscribe to IRS.gov’s e-News for Tax Professionals to receive updates about tax law changes and new IRS guidance on credits.
• Regularly check state-specific tax resources like California’s Franchise Tax Board or New York’s Department of Taxation and Finance for changes to state credits.

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5. Maintain a System for Sharing Updates with Clients

Once you’ve gathered information on tax law changes, your next step is to effectively communicate these updates to your clients. Clear communication ensures that your clients can quickly take advantage of new opportunities or avoid compliance issues.

Actionable Steps:

• Create a Centralized Resource: Develop an internal newsletter or bulletin system where clients can receive periodic updates on changes to employment tax credits, new tax credit programs, and updates from government agencies.
• Host Client Webinars or Calls: Organize quarterly webinars or conference calls to discuss the latest updates on tax credits and what clients can do to stay compliant.
• Personalized Advice: For significant changes in tax laws, consider reaching out to individual clients with personalized communication, explaining how the changes impact their business and the actions they need to take.

Example Actions:

• Develop a monthly tax credit newsletter with updates on eligibility, program changes, and deadlines, sent directly to clients.
• For significant legislative changes, follow up with clients via email or call to discuss how it will affect their tax position.

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6. Assess and Adjust Client Strategies Based on Policy Changes

After identifying a policy change or new program, adjust your clients’ existing strategies to reflect the changes. These adjustments may involve modifying their hiring strategies, altering payroll classifications, or re-submitting claims for previously missed credits.

Actionable Steps:

• Reevaluate Client Eligibility: When a new tax credit is introduced or an existing program changes, immediately assess how it affects your clients’ eligibility and their current workforce composition.
• Modify Hiring Practices: Advise clients to modify their hiring practices if the policy changes create new opportunities for tax credits (e.g., hiring more workers from targeted groups for WOTC).
• Resubmit Claims: In cases where new eligibility guidelines open the door for additional credits (e.g., changes to ERC requirements), help your clients gather the necessary documentation and resubmit their claims.

Example Actions:

• If the IRS expands ERC eligibility to include more types of businesses, review clients’ past claims and adjust strategies to ensure they qualify for the extended benefits.
• Recommend new hiring strategies to clients who could benefit from new target groups introduced in WOTC regulations.

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7. Document All Policy Changes and Client Actions

Ensure that all updates and subsequent actions taken for your clients are well-documented. This will not only help you stay organized but will also serve as important records in case of audits or reviews.

Actionable Steps:

• Maintain a Compliance Log: Keep a record of all policy changes, the steps you took to notify clients, and the actions each client has taken to align with new regulations.
• Audit Trail: For each client, ensure there’s a documented history of all consultations and strategic adjustments made due to policy changes.
• Track Deadlines: Keep track of important dates associated with any new policies or changes (e.g., submission deadlines for new tax credit claims).

Example Actions:

• Maintain an audit trail in your client records that details policy changes, advice given, and changes in client operations to meet new credit eligibility requirements.

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Conclusion

Staying abreast of policy changes related to employment tax credits is essential for providing proactive, accurate advice to clients. By leveraging multiple sources, monitoring legislation, and keeping open communication channels with your clients, you ensure that they are fully informed and compliant. This continuous attention to policy updates will help your clients maximize the benefits they receive from employment tax credits while minimizing potential risks or missed opportunities.