News

By Nick Spoltore, Esq.

March 30, 2020

The Coronavirus Aid, Relief, and Economic Security Act (CARES Act, H.R. 748, hereinafter “the Act”) was enacted into law on March 27, 2020. It contains many tax provisions which will impact your practice immediately. This post highlights the major tax law changes contained in the Act.

QIP Fix

As you know, Qualified Improvement Property should have been provided a 15-year recovery period under TCJA. The text was inadvertently left out and QIP was ineligible for 100% Bonus Depreciation. The Act fixes the TCJA error and designates QIP as 15-year property for depreciation purposes, a category eligible for 100% Bonus Depreciation. This change is effective for property placed in service after December 31, 2017.

But remember if you elected out of §163(j), you’re out of luck on the Bonus Depreciation.

Increase of §163(j) Limit

The Act increases the limitation in §163(j)from 30% to 50% for tax years beginning in 2019 and 2020. The limitation will not apply to partnership partners in 2019. Special rules apply for the treatment of excess business interest allocated to a partner in any tax year beginning in 2019. In addition, a taxpayer may elect to calculate the interest limitation for the tax year beginning in 2020 utilizing the adjusted taxable income for the last tax year beginning in 2019 as the base. For partnerships, the election must be made by the partnership.

461(l) Deferral

The Act suspends the $250k/$500k loss limitation for noncorporate taxpayers. Excess business losses arising in 2018, 2019, and 2020 can be deducted.

NOLs

For tax years beginning after December 31, 2017, the Act temporarily removes the 80% of taxable income limitation so that NOLs fully offset income. In addition, NOLs arising in a tax year beginning after December 31, 2018 and before January 1, 2021 may be carried back five years.

Employer Payroll Taxes

The Act allows taxpayers to defer paying the employer portion of certain 2020 payroll taxes effective for payments due after the Act’s enactment. Half will be due on December 31, 2021 with the remainder due on December 31, 2022.

Payroll Tax Credit

The Act provides a refundable payroll tax credit for 50% of wages paid by certain employers to certain employees during the COVID-19 crisis. The credit is available to employers whose operations have been fully or partially suspended or whose quarterly receipts declined more than 50% year over year. Other restrictions apply, and the number of full-time employees is relevant. Wages include health benefits and are capped at the first $10,000. This credit applies to wages paid after March 12, 2020 and before January 1, 2021.

Rebate Checks

The Act provides a refundable credit for 2020 equal to $1,200 ($2,400 for individuals filing joint returns) plus $500 for each qualifying child of the taxpayer. Phaseout occurs at $75,000 to $99,000 for a Single filer, $150,000 to $198,000 for a joint return with no children, and $112,500 to $146,500 for HOH with one child.

These direct payments are arguably the most talked about provision in the entire legislation. Our CARE webinar will cover the rebates, including widespread eligibility, in extraordinary detail so you can fluently discuss these with your clients. Receipt of unearned, untaxed money will undoubtedly be a pleasant topic welcomed by your clients and similarly will create goodwill to augment your bottom line.

No Penalty for Coronavirus-Related Retirement Plan Distributions

Any 2020 coronavirus-related distribution up to $100,000 from an eligible retirement plan will not incur the §72(t) 10% additional tax and may be included in income over three years. Distributions can also be contributed back to an eligible retirement plan within the three-year period.

No 2020 RMDs

IRAs and certain defined contribution plans will have no required minimum distributions for 2020.

There are other tax related topics in the Act which due to blog brevity I have not detailed herein. Eligible student loan payments, donations of food inventory, limitations on cash contributions, and an above the line $300 charitable contribution are chief among them. In much the same manner, this post was written with a broad brush due to the length and complexity of the Act. But don’t fear since our CARE webinar will comprehensively present the Act’s topics with the full amount of detail they are due. Join our panel of tax experts as they explain the relevant aspects of this new legislation with acumen specifically designed to impart to you exactly the info you’ll need for your clients’ tax consultation, preparation, and planning. Multiple dates of CARE are scheduled for your convenience, and you can sign up HERE.

Nick Spoltore is VP of Tax & Advisory Content for Surgent CPE. Mr. Spoltore is a graduate of the University of Notre Dame and of Delaware Law School. Before joining Surgent, he practiced tax and business law at the firm of Heaney, Kilcoyne in Pennsylvania and also in Delaware.

Success as a remote worker begins with developing a few simple rules that will allow you to be engaged and intentional about your work and will create a positive experience.

1. Your home office: Ensure your office is in a part of your home that is quiet and away from home and family distractions.

2. A door is a must: Have a door and use it. A great way to put yourself in a ‘work’ mindset is to open and shut your door just like you would if you were going into the office. When you enter in the morning open and shut your door, then upon leaving, do the same.

3. Get tough with distracting people: Have a conversation with your family about the rules of working from home. ‘When the door is shut, please don’t disturb me. When I am on my lunch break, we can talk.’

4. Dress like you are a professional: The act of getting dressed for work is important to changing your mindset from home to work. This does not have to mean business casual, but it also should not mean pajamas. Dress for your day!

5. Setup your desk like the office: Talk to your firm about setting up your home office desk just like your office. If you have duel monitors, ask for them at home. If you have a scanner, ask for one at home. If you have an office phone, set up forwarding to your home or cell phone. The more you can replicate, the more it will feel like you can work the same remotely.

6. Set specific work and break hours that are clear and transparent: Communicate with your supervisor about the work and break hours that will work best for your firm. Ensure that they are clear and then add them to your calendar and/or send a message to everyone. Transparency in this area is necessary for success.

7. Insure you have a stable internet connection: Your connection to the office is completely reliant to the internet. Shop around for the fastest and most reliable connection in your geographic area. You may have to invest more, but that is the price that you will be paying for the opportunity to work remotely.

8. Learn to use Skype, Google Hangout and/or Zoom: While you may not be able to physically see your team as much as you have in the past, you can still take the time to see them through various video technologies. Talk to your firm about their preference and then learn to become adept in its usage.

9. Get a headset: Where a headset was an option before, when working at home with video technology, it is a necessity. Find one that will work with your technology solutions.

10. Don’t mix work and personal life: Work when you are on work hours and do personal tasks when you are on personal time. Sneaking in a load of laundry or starting dinner at the end of the day is fine but know when to draw the line. Equate your small home tasks to a quick walk to the break room for a glass of water or a chat with a coworker that only takes a few minutes. Do your best to replicate your office schedule when you are at home.

This resource was developed by PCPS in conjunction with Boomer Consulting. Find more resources and information about employee engagement in the AICPA PCPS Human Capital section.

This tool is an example of the turnkey practice management tools and resources PCPS delivers. 

PCPS is an add-on firm membership section within the AICPA.  A PCPS firm membership at only $35 per CPA, up to a max of $700 per firm, is a great investment for a broad range of practice management resources.  Find out if you are already a PCPS member or register for a virtual tour to learn more.

NASBA, AICPA, Prometric and the Boards of Accountancy (Boards) have been monitoring the COVID19 crisis and have taken the following actions to ensure the health and safety of our CPA Exam candidates.

Effective immediately, Prometric will close test centers in the United States and Canada for a period of 30 days. They anticipate re-opening test centers on April 16, 2020, however, please note the specific date will depend on circumstances that are changing daily. No action is required on the part of the candidate. Prometric will cancel scheduled appointments and clear the Notices to Schedule (NTS) for candidates to reschedule at their convenience.

NASBA has recommended that the Boards of Accountancy extend all NTS with expirations between April 1 – June 30, 2020, until September 30, 2020.  At this time, no action is required by candidates and there is no need to contact NASBA or your Board of Accountancy. Please monitor our social media channels and website for updates on when the NTS extensions are completed.

NASBA will identify all candidates who have an open NTS and credit expiring through June 30, 2020, and provide this information to Boards with a recommendation to grant an extension of credit if the candidate is impacted by circumstances beyond their control. Due to shutdowns of many board offices, the decisions to extend conditional credit will not be finalized until Boards resume normal operations. There is no need to contact Boards at this time.   

NASBA remains committed to maintain operating hours, however, many of our staff are working remotely. The best way to contact us during this time is via email at cpaexam@nasba.org. Again, please monitor our social media channels and websites for updates on our operating status.

Now is the right time to think about how the coronavirus could affect your business, employees, customers, and vendors. Disaster Planning is not just for hurricanes and floods but for any unplanned interruption of your business for an unacceptable amount of time. When (not if) the coronavirus affects your business it will be for much longer than a one-week flu. I have attached a list of questions for every business owner to consider with their team and help prepare their response. Do you have any idea how you would respond: - If an employee does not have available sick time, how do you make sure they do not come to work if they are sick? - How will you decide if you need to close an office? - If your customers are affected, how long can your business survive without any new sales? These questions are not easy to answer. While you might say, I hope it never happens to me – hope is not an effective strategy. The worst time to try and figure out your response is in the middle of a crisis. There are too many pressures, emotions are running high, and no one is thinking clearly. Developing a disaster recovery plan is like buying life insurance, you hope you never have to use it but if you do you are very glad that you have it!  

 

Jennifer Elder, CPA, CSP
CEO
The Sustainable CFO
jelder@sustainablecfo.com
410-231-1881

28 Disaster Response Questions
to prepare for the coronavirus
 
 
Questions about your employees:
1.     Will you train your employees on how to identify coronavirus symptoms? 
2.     If an employee does not have available sick time, how do you make sure they do not come to work if they are sick? 
3.     How will you respond if an employee is diagnosed with coronavirus?   
4.     Who can work from home? 
5.     How will your employees get access to the necessary information and documents they need to work from home? 
6.     Will you allow employees to travel? 
7.     If employees must travel, what steps will you take to ensure their medical safety? 
8.     How will you respond if an employee needs to care for an infected family member? 
9.     If an employee contracts coronavirus will they only be allowed to use their accrued sick time?  
 
Questions about your operations:
10.  How will you decide if you need to close an office? 
11.  Will you close your business for the recommended 2-week quarantine or longer? 
12.  How will you disinfect your office? 
13.  How will keep employees, customers, and vendors informed? 
14.  What parts of your business are crucial to keep operating?

Questions about your finances:
15.  If your offices are closed, how will you collect payments? 
16.  How long can your business survive without any new sales?
17.   How will you pay your bills and payroll if your office is closed? 
18.  Do you have available lines of credit? 
19.  Will you pay your employees and for how long if you close your office? 
20.  If an employee contracts coronavirus will they only be allowed to use their accrued sick time?
 
Questions about your customers:
21.  Will you notify customers if an employee is diagnosed? 
22.  How will you stay connected to customers if employees are out sick or the office is closed? 
23.  How will you deliver on contracts if the office is closed or there is a disruption in your supply chain? 
24.  Do you have a “force majeure” clause in your contracts? 
25.  How will you respond if a customer is affected by the coronavirus and does not pay your invoice on time? 
 
Questions about your supply chain:
26.  Do you currently source any supplies or products from China? 
27.  How would a delay in delivery of materials and products affect your production? 
28.  Do you have alternate suppliers?
 
This is not an all-encompassing list but a place to get started thinking about your response.  While you might say, “I hope it never happens to me” – hope is not an effective strategy.  The worst time to try and figure out your response is in the middle of a crisis.  There are too many pressures, emotions are running high, and no one is thinking clearly.  Developing a disaster recovery plan is like buying life insurance, you hope you never have to use it but if you do you

So what counts for CPE?  The specifics from the ND Board of Accountancy Rules are listed below.  If the State Board requests back up for your CPE you should be able to provide proof of attendance.  In many cases that might be a CPE certificate but you can also provide an attendance form from the class or verification from the course provider.  The Society can send you a copy of your reporting form (if you have misplaced yours).  We can also print a signed transcript (this is preferred by the MN State Board of Accountancy).

In the future the ND Board of Accountancy is planning to participate in a NASBA system where you would record your CPE and immediately upload that proof of attendance.  So keep those records in order!!  The Society is planning to upload our CPE information directly into the NASBA system so those records would already be uploaded.  It's anticipated that this new reporting system would be in place for the June 2021 reporting deadline. 

The overriding consideration in determining if a specific program qualifies as a continuing education program is if it is a formal program of learning which contributes directly to professional competence. The program must also meet the specifications below.

2. Formal programs not requiring class attendance (self-study), may qualify only if:

Looking to expand your services?  Consider becoming a Peer Reviewer.  Here's a link to a page with qualification requirements and much more information!

https://www.aicpa.org/interestareas/peerreview/community/how-to-become-a-peer-reviewer.html

Amanda Gessner, CPA, CFE was one of only 38 CPAs honored by the American Institute of CPAs (AICPA) as a member of the Leadership Academy’s 11th graduating class. Amanda was selected based on her exceptional leadership skills and professional experience for the four-day Leadership Academy program, which will be held from October 6-10 in Durham, N.C. 

Amanda is an Audit Manager with Schmitz-Holmstrom, LLP.  She graduated from the University of Minnesota-Crookston.  She also graduated from the Women’s Leadership Program from the Center for Technology & Business, a six-month program dedicated to expanding personal, professional, community, and health leadership skills for women.  She has previously served on the Board and Finance Committee for the BisMan Community Food Co-Op.  She is also a member of the Bismarck-Mandan Young Professionals.

The AICPA Leadership Academy was designed to strengthen and expand the leadership skills of promising young professionals while they network with a peer group of talented and motivated CPAs. The Leadership Academy features career-development workshops and sessions with some of the accounting profession’s most prominent influencers, including William (Bill) Reeb CPA, CITP, CGMA, chair of the American Institute of CPAs, Barry Melancon, CPA, CGMA, American Institute of CPAs president and CEO, Association of Certified Professional Accountants CEO, and Mark Koziel, CPA, CGMA, Executive Vice President – Firm Services, Association of Certified Professional Accountants.

Participants were selected from public accounting firms of all sizes, business and industry, academia and consulting firms.

The 2019 Leadership Academy attendees were recommended by their employers, state CPA societies or both. Candidates submitted resumes and a statement explaining how participating in the Leadership Academy would impact them personally and professionally. They also wrote an essay on the topic “The future will bring significant changes to the accounting profession. What do leaders have to get right in order to successfully lead? 

To date, 351 CPAs have participated in the AICPA Leadership Academy, many of whom have gone on to take on leadership positions in their firms, businesses and volunteer organizations.

More information about the AICPA Leadership Academy is available online

To renew your license, go the the North Dakota State Board of Accountancy website located at http://www.nd.gov/ndsba/

Recently it has come our attention many of your clients have been receiving IRS notices concerning the 199a deductions.  If your clients have received these there is help. 

Contact
Office of Senator John Hoeven
338 Russell Senate Office Bldg.
Washington, D.C. 20510
P: 202-224-2551