May 5, 2021

By Jeff Drew

The U.S. Small Business Administration (SBA) has stopped accepting new Paycheck Protection Program (PPP) applications from most lenders almost a full month before the $292 billion program’s application deadline.

The SBA informed lenders Tuesday afternoon that the PPP general fund was out of money and that the only remaining funds available for new applications are $8 billion set aside for community financial institutions (CFIs), which typically work with businesses in underserved communities. The agency also has set aside $6 billion for PPP applications still in review status or needing more information due to error codes.

This and other PPP issues will be addressed during an AICPA Town Hall at 3 p.m. ET on Thursday.

Congress in late March extended the PPP application deadline two months to May 31, in part to give the SBA and lenders time to resolve error codes that were holding up nearly 200,000 applications in the SBA’s PPP platform. The unresolved error codes were related to validation checks instituted by the SBA to help prevent fraudulent applications from being funded.

The PPP Extension Act of 2021, P.L. 117-6, did not include any additional funding for the current round of the PPP, which Congress provided with more than $290 billion to make forgivable loans to small businesses and not-for-profits suffering economic loss related to the COVID-19 pandemic.

The SBA reported Monday that it had approved more than 5.6 million PPP loans totaling more than $258 billion from the program’s reopening on Jan. 11 through May 2. First-draw PPP loans accounted for $57.3 billion, and second-draw loans totaled nearly $201 billion.

AICPA experts discuss the latest on the PPP and other small business aid programs during a virtual town hall held every other week. The webcasts, which provide CPE credit, are free to AICPA members and $39.99 for nonmembers. Go to the AICPA Town Hall Series webpage for more information and to register. Recordings of Town Hall events are available to view for free on AICPA TV.

The AICPA’s Paycheck Protection Program Resources page houses resources and tools produced by the AICPA to help address the economic impact of the coronavirus.

For more news and reporting on the coronavirus and how CPAs can handle challenges related to the outbreak, visit the JofA’s coronavirus resources page or subscribe to our email alerts for breaking PPP news.

— Jeff Drew (Jeff.Drew@aicpa-cima.com) is a JofA senior editor.

April 1, 2021

By Cheri H. Freeh, CPA, CGMA, Quakertown, Pa.

Editor: Valrie Chambers, CPA, Ph.D.

On March 13, 2020, life as everyone knew it in the United States came to a grinding halt as the president declared a national emergency concerning COVID-19. At first there was a great deal of conflicting information regarding whether accounting firms were permitted to remain open, whether remote working was permitted, if a total shutdown was required, what government services were available, and whether sufficient resources would even be available to continue working if it was permitted. The entire country was in a state of confusion, and accounting firms were no less affected than everyone else.

Many large regional and national accounting firms were better equipped to handle the situation due to their previous investments in technology and their movements toward becoming paperless offices. Unfortunately, a significant number of small, local CPA firms or sole proprietor CPAs with one or two employees simply were not ready to jump into the paperless and/or remote-working world.

Initially, the first step for these small firms was to ask the following questions:

Are we permitted to work?: This may seem like an odd question, but it was not completely evident at the beginning. For example, in Pennsylvania, the initial order from Gov. Tom Wolf required accounting firms to cease all operations. It was determined a day later that accounting firms were considered essential and were permitted to open their offices or work remotely. In a survey conducted by Arizent, Accounting Today's parent company, larger accounting firms were far more likely to have closed offices or locations, while only 11% of firms with fewer than 50 staff members reported closing their offices (Hood, "Despite Productivity Drops, Firms Commit to Remote Work in Reopening," Accounting Today (July 7, 2020), available at www.accountingtoday.com).

How can we complete our work and keep everyone safe?: With the importance of limiting contact, it became necessary to work remotely. Many small firms had to scramble to set up secure methods for their staff to work from home. Since many of the clients of these small firms are not technologically savvy, working with client-provided paper documents was also necessary. To accommodate the needs of staff to pick up and drop off records and use copiers and scanners at the office, it became critical to limit the number of staff members who could access the office at any one time. Initially, there were so many unknowns that concerns arose regarding the safety of handling client documents. To ensure staff safety, many small offices were closed to the public; dropboxes were used to accept client records; records were received by mail; and once received, records were quarantined for a period in a location with ultraviolet light systems or other disinfecting treatments.

How can we meet the needs of our employees?: Besides the need to access client records and office equipment, employees needed ways to perform their work while, in many cases, educating their children at home and/or caring for other family members. There were also psychological concerns to consider. Staff members had different comfort levels, and employers had to be sensitive. In many cases generational differences determined the importance of various concerns.

How can we meet the needs of our clients?: As mentioned previously, a large portion of the clientele of small firms do not have the ability to scan and upload documents and may not even have a computer, let alone a printer. This presents challenges to any firm, no matter how advanced the technology is at the firm level. The general public was scared. As Congress worked to address economic concerns, accountants worked to keep their clients aware of the various new stimulus, loan, and grant programs arising to address their economic needs. It became very common that the small firm practitioner was not only a tax preparer but also a source of comfort and advice to his or her clients.

How can we make sure client records are safe and secure?: Above all, security of client records is crucial. Detailed documentation of the location of all client files and records was necessary. A master file of the location of all client documents was absolutely necessary. Staff training was also necessary to ensure that all staff handled client documents and files in a safe and secure manner.

Besides dealing with all these issues, accountants also had to learn about Paycheck Protection Program loans, Economic Injury Disaster Loans, stimulus payments, and unemployment benefits to assist their clients. Small firms do not have the benefit of dedicated research and training departments to provide information to staff members. As a result, additional time was necessary to track down information to pass on to clients.

What to carry into the future

After enduring all the questions, stresses, unknowns, and challenges presented by the pandemic, what lessons have small firms learned that can be taken into the future?

Technology is critical to facing the future. Small firms need to be ready for remote-working conditions when necessary, and this means working with a qualified IT professional to ensure secure connectivity. Remote working may be required due to many circumstances other than a pandemic; for example, snowstorms, natural disasters, civil unrest, child care issues, or even having to be home to meet an appliance repair technician. When the proper technology is in place, staff members can be productive at times when they would not have been in the past.

Small firms can become more competitive in hiring talent if they are able to offer full or partial remote-work options. Work/life balance is highly important, and the ability to avoid the time and stress of commuting can be a big selling point for a firm.

Electronic remote meetings can be huge time-savers. It has been said that one of the most common phrases uttered during 2020 was, "I think you're on mute." While electronic remote meetings get a bit old after several months, with no end in sight, they do have their merits and, when used sporadically, can save travel time and costs.

All firms, large and small, should evaluate the office space necessary to operate their businesses. With increased remote working, the need for dedicated office space for each employee will correspondingly decrease. Some firms are moving to a "hotel" model for providing staff offices. Staff members are not provided their own offices and, instead, reserve an office if they choose to come into the firm office for a day or a period of time to meet a client.

Communication and training with both staff and clients help to create efficiencies. The pandemic has, at times, been scary and confusing and has created uncertainty and insecurities. Clear communication helps shape expectations and can be used to reduce uncertainty and fear.

The AICPA has multiple resources available on its website to assist small firms in meeting various needs (visit future.aicpa.org/topic/covid-19). These resources can save precious time and help firms provide top-notch services to clients.

The pandemic has been challenging, yet small CPA firms across the country have navigated through and survived the storm and have learned to prepare for the worst but still hope for the best. Experience is the best teacher, and many lessons have been learned through this experience. As someone once said to me (in a remote meeting), "You shouldn't let a good pandemic go to waste."

April 8, 2021

AICPA

The situation regarding the May 17 bifurcated filing and payment due date with IRS keeping the 1st quarter estimated payment at April 15 is extremely fluid. There is also uncertainty regarding filing an extension for gift tax returns due April 15. Unfortunately, there are no clear answers. Our recommendations as of the time of this statement are as follows:

• In order to ensure that the 1st quarter 2021 estimate is credited to April 15, the taxpayerwill need to pay the estimate on a Form 1040-ES or make an online payment directed to2021 on or before April 15.
• To file an extension for a gift tax return (Form 709), Form 4868 or Form 8892 should befiled on or before April 15.

Statement and suggestions

The situation regarding the May 17 bifurcated filing and payment due date with IRS keeping the 1st quarter estimated payment at April 15 is extremely fluid as AICPA releases this statement and suggestions. There are significant efforts underway on Capitol Hill where (1) a bill has been drafted in the House that would change the 2021 1st quarter estimated payment due date to May 17; (2) a companion bill is being considered in the Senate; and (3) IRS Commissioner Rettig has been called to testify at an April 13 Senate Finance Committee hearing on “The 2021 Filing Season and 21st Century IRS.”

Despite our efforts, the IRS continues to maintain that the due date for taxpayers required to make a first quarter estimated tax payment will remain as April 15. We are aware that April 15 is fast approaching, and every day relief is not granted presents enormous challenges for many taxpayers and their CPAs. We remain grateful for the pending Congressional relief and hopeful that those of you continuing to struggle at this late hour will benefit.

Q1 2021 estimated tax payment

We have received thousands of questions from tax practitioners, business organizations, governmental entities and even some desperate taxpayers with nowhere else to turn, about how to handle the payment of the 1st quarter 2021 estimate, which as of the time of this statement, is due April 15. Additionally, tax practitioners have sought clarification on the treatment of applying overpayments to the 1st quarter estimate from a Form 1040 if a payment is made with the federal extension, Form 4868 that might be filed by May 17. This has long been a standard practice and is helpful when taxpayers and their CPAs do not have sufficient information or time to prepare and file a complete and accurate return and corresponding quarterly payment amount. The issue in question is whether payments made with the extension on May 17 will be counted as timely when applied back. There is no conclusive guidance available from the IRS on how to handle this issue.

While not ideal, our recommended course of action to ensure that the 1st quarter 2021 estimate is credited to April 15, is to pay the estimate on a Form 1040-ES or make an online payment directed to 2021 on or before April 15. Given that we are not certain that a payment with a Form 4868, even if paid by April 15, will be credited by the IRS as paid by April 15, this recommendation is the most conservative approach.

Unfortunately, a clear answer does not exist, and opinions are mixed. However, we were able to gather information on best practices. While we cannot advise on an authoritative solution, we hope that our small firm members and those without a large network will have access to options, to create their own process, or receive validation that they are not alone in their chosen approach.

In some cases, CPAs have indicated to us that if the amount of the estimated tax payment is “immaterial,” they are including the payment with an extension at May 17 – not making an April 15 estimated payment - and informing their clients of the potential for additional calculated interest for one month. Others are planning to file extensions including a 1st quarter payment at April 15.

Form 709 gift tax return extensions

Tax year 2020 Form 709 gift tax returns or extensions are due by April 15, 2021 (for taxpayers not in declared disaster areas). IRS has indicated on its website that “Filing Form 4868 or Form 2350 after April 15, 2021 ... will not extend the due date for filing your 2020 federal gift tax return – it only will extend the due date for filing your 2020 income tax return.”

The best option is to file the Form 4868 to extend both the Form 1040 and the Form 709 with a reasonable estimate by April 15, even though the Form 4868 for extending individuals is not due until May 17 this year.

The second option is to file Form 8892 by April 15 to extend gift tax returns. This option should be used when a reasonable estimate by April 15 is not possible. We note that there is a checkbox on Form 8892 that indicates “If you are applying for an automatic 6-month extension of time to file Form 709 but are not applying for an extension of time to file your individual income tax return, check here.” If the taxpayer is planning to file the Form 1040 or extend the individual return after April 15 and by May 17 (for taxpayers not in declared disaster areas), some firms are writing “See Attachment” on the line and then on the attachment, writing “Taxpayer will not file for an extension of taxpayer’s income tax return by the due date of the taxpayer’s gift tax return.”

Despite our efforts to share our concerns on these issues with the IRS, there may still be unanswered questions into next week.

March 17, 2021

Washington, D.C. – Following weeks of calls from the American Institute of CPAs (AICPA), Members of Congress and other groups to extend the April 15th filing and payment deadline, the Internal Revenue Service (IRS) announced today that it would extend the filing and payment deadline for some – but not all – taxpayers for the 2021 tax season from April 15th to May 17th.

“While we appreciate the IRS’ recognition that a filing deadline postponement is indeed necessary, the announcement is far too selective in who is receiving relief,” said AICPA President and CEO Barry Melancon, CPA, CGMA. “In fact, the taxpayers who are most likely to benefit from this additional time are taxpayers who are able to meet the original filing deadline.”

According to an IRS press release, the relief does not include estimated tax payments that are due on April 15th. This IRS extension does not extend to the millions of small business owners and individuals who pay estimated taxes and the following:

• Trust income tax payments and return filings on Form 1041
• Corporate income tax payments and return filings on various Forms 1120

“Americans, individuals and small businesses have been impacted immeasurably. The fact is virtually all aspects of the federal government and state and local governments have also been impacted. A fair assessment might conclude, for a variety of reasons, that the IRS has been affected more than other federal agencies. I believe taxpayers and practitioners understand this,” Melancon continued. “It is commendable that the IRS wants to demonstrate a return to normalcy. However, the IRS, through no fault of their employees, is seeing significant backlogs, inundated phone lines, unopened mail by the millions and systems sending out unwarranted notices. Extending all tax returns due to June 15th exhibits an understanding of the IRS' impact on the American public.”

In letters to the Department of the Treasury and the IRS, AICPA has emphasized that the benefits of extending the payment and filing deadline to June 15th would ease the impact of the pandemic on taxpayers – especially small businesses – and tax practitioners and help many states maintain revenue levels within their current fiscal years.

Failure to include estimated payments nullifies any benefit of a postponement since the tax return work has to be done to calculate estimated payments. More than 9.5 million individual returns filed in for the 2018 tax year included estimated payments.

“This selective decision by the IRS unfortunately creates more bureaucracy and confusion and is out of sync with real world stresses that taxpayers, tax practitioners and small businesses are dealing with,” said Melancon.

BACKGROUND:

• In a letter sent earlier last month, the AICPA called attention to the hardship that millions of taxpayers and tax practitioners are facing while making good faith efforts to comply with their tax obligations. The AICPA called for relief from underpayment and late payment penalties for the 2020 taxable year.
• Late last month, the AICPA sent a letter urging the Department of the Treasury and the IRS to provide taxpayers with more certainty and stability by announcing any pending tax filing and payment deadline postponements. Additionally, the AICPA called for Treasury and the IRS to provide underpayment and late payment penalty relief, delay collection activities and expand the temporary e-signature relief to the millions of taxpayers affected and working through the challenges created by the COVID-19 pandemic.
• A subsequent statement released by the AICPA again urged action by Treasury and the IRS and reiterated the need for filing and payment extension and urgency of doing it now.
• The AICPA released a statement yesterday addressing criticism of a deadline postponement and reiterating the need for a payment and filing deadline extension to June 15th.

Amanda Ross Edwards PhD

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March 10, 2021

By Alistair M. Nevius, J.D.

The House of Representatives passed the American Rescue Plan Act, H.R. 1319, on Wednesday by a vote of 220–211. It now goes to President Joe Biden for his signature. He is expected to sign it quickly.

H.R. 1319 was first passed by the House on Feb. 27. The Senate made several amendments and passed its version of the bill on March 6. The bill then came back to the House for a final vote on Wednesday.

Among the act’s many provisions are several tax items. Most of the tax provisions that were in the House version of the bill were unchanged in the Senate’s version, but the tax treatment of 2020 unemployment benefits, the phaseout ranges for economic impact payments, and the treatment of student loan debt forgiveness were changed by the Senate.

Here is a look at the final version of the tax provisions:

Unemployment benefits

The act makes the first $10,200 in unemployment benefits tax-free in 2020 for taxpayers making less than $150,000 per year.

Recovery rebates

The act creates a new round of economic impact payments to be sent to qualifying individuals. The same as last year’s two rounds of stimulus payments, the economic impact payments are set up as advance payments of a recovery rebate credit. The act creates a new Sec. 6428B that provides individuals with a $1,400 recovery rebate credit ($2,800 for married taxpayers filing jointly) plus $1,400 for each dependent (as defined in Sec. 152) for 2021, including college students and qualifying relatives who are claimed as dependents. As with last year’s economic impact payments, the IRS will send out the advance payments of the credit.

For single taxpayers, the credit and corresponding payment will begin to phase out at an adjusted gross income (AGI) of $75,000, and the credit will be completely phased out for single taxpayers with an AGI over $80,000. For married taxpayers who file jointly, the phaseout will begin at an AGI of $150,000 and end at AGI of $160,000. And for heads of household, the phaseout will begin at an AGI of $112,500 and be complete at AGI of $120,000.

The act uses 2019 AGI to determine eligibility, unless the taxpayer has already filed a 2020 return.

COBRA continuation coverage

The act provides COBRA continuation coverage premium assistance for individuals who are eligible for COBRA continuation coverage between the date of enactment and Sept. 30, 2021. The act creates a new Sec. 6432, which allows a COBRA continuation coverage premium assistance credit to taxpayers. The credit is allowed against the Sec. 3111(b) Medicare tax. The credit is refundable, and the IRS may make advance payments to taxpayers of the credit amount.

The credit applies to premiums and wages paid after April 1, 2021, and through Sept. 30.

Under new Sec. 6720C, a penalty is imposed for failure to notify a health plan of cessation of eligibility for the continuation coverage premium assistance.

Taxpayers who receive the COBRA continuation coverage premium assistance credit are not also eligible for the Sec. 35 health coverage tax credit.

Under new Sec. 139I, continuation coverage premium assistance is not includible in the recipient’s gross income.

Child tax credit

The act expands the Sec. 24 child tax credit in several ways and provides that taxpayers can receive the credit in advance of filing a return. The act makes the credit fully refundable for 2021 and makes 17-year-olds eligible as qualifying children.

The act increases the amount of the credit to $3,000 per child ($3,600 for children under 6). The increased credit amount phases out for taxpayers with incomes over $150,000 for married taxpayers filing jointly, $112,500 for heads of household, and $75,000 for others, reducing the expanded portion of the credit by $50 for each $1,000 of income over those limits.

The IRS is directed to estimate taxpayers’ child tax credit amounts and pay monthly in advance one-twelfth of the annual estimated amount. Payments will run from July through December 2021.

The IRS must set up an online portal to allow taxpayers to opt out of advance payments or provide information that would be relevant to modifying the amount.

The taxpayer in general will have to reconcile the advance payment amount with the actual credit amount on next year’s return and increase taxable income by the excess of the advance payment amount over the actual credit allowed. But taxpayers whose modified AGI for the tax year does not exceed 200% of the applicable income threshold ($60,000 for married taxpayers filing jointly) will have the increase for an excess advance payment reduced by a safe harbor amount of $2,000 per child.

Earned income tax credit

The act also makes several changes to the Sec. 32 earned income tax credit. It introduces special rules for individuals with no children: For 2021, the applicable minimum age is decreased to 19, except for students (24) and qualified former foster youth or homeless youth (18). The maximum age is eliminated.

The credit’s phaseout percentage is increased to 15.3%, and the phaseout amounts are increased.

The credit would be allowed for certain separated spouses.

The threshold for disqualifying investment income would be raised from $2,200 to $10,000.

Temporarily, taxpayers would be allowed to use their 2019 income instead of 2021 income in figuring the credit amount.

Child and dependent care credit

The act makes various changes to the Sec. 21 child and dependent care credit, effective for 2021 only, including making it refundable. The credit will be worth 50% of eligible expenses, up to a limit based on income, making the credit worth up to $4,000 for one qualifying individual and up to $8,000 for two or more. Credit reduction will start at household income levels over $125,000. For households with income over $400,000, the credit can be reduced below 20%.

The act also increases the exclusion for employer-provided dependent care assistance to $10,500 for 2021.

Family and sick leave credits

The act codifies the credits for sick and family leave originally enacted by the Families First Coronavirus Response Act (FFCRA), P.L. 116-127, as Secs. 3131 (credit for paid sick leave), 3132 (credit for paid family leave), and 3133 (special rule related to tax on employers). The credits are extended to Sept. 30, 2021. These fully refundable credits against payroll taxes compensate employers and self-employed people for coronavirus-related paid sick leave and family and medical leave.

The act increases the limit on the credit for paid family leave to $12,000.

The number of days a self-employed individual can take into account in calculating the qualified family leave equivalent amount for self-employed individuals increases from 50 to 60.

The paid leave credits will be allowed for leave that is due to a COVID-19 vaccination.

The limitation on the overall number of days taken into account for paid sick leave will reset after March 31, 2021.

The credits are expanded to allow 501(c)(1) governmental organizations to take them.

Employee retention credit

The act codifies the employee retention credit in new Sec. 3134 and extends it through the end of 2021. The employee retention credit was originally enacted in the Coronavirus Aid, Relief, and Economic Security (CARES) Act, P.L. 116-136, and it allows eligible employers to claim a credit for paying qualified wages to employees.

Under the act, the employee retention credit would be allowed against the Sec. 3111(b) Medicare tax.

Premium tax credit

The act expands the Sec. 36B premium tax credit for 2021 and 2022 by changing the applicable percentage amounts in Sec. 36B(b)(3)(A). Taxpayers who received too much in advance premium tax credits in 2020 will not have to repay the excess amount. A special rule is added that treats a taxpayer who has received, or has been approved to receive, unemployment compensation for any week beginning during 2021 as an applicable taxpayer.

Student loans

The act amends Sec. 108(f) to specify that gross income does not include any amount that would otherwise be included in income due to the discharge of any student loan after Dec. 31, 2020, and before Jan. 1, 2026.

Miscellaneous tax provisions

The act amends Sec. 162(m), for years after 2026, to add a corporation’s five highest-compensated employees (besides the employees already covered by Sec. 162(m)) to the list of individuals subject to the $1 million cap on deductible compensation.

The act extends the Sec. 461(l) limitation on excess business losses of noncorporate taxpayers for one year, through 2027.

The act also repeals Sec. 864(f), which allows affiliated groups to elect to allocate interest on a worldwide basis.

The act provides that targeted Economic Injury Disaster Loan (EIDL) grants received from the U.S. Small Business Administration (SBA) are not included in gross income and that this exclusion from gross income will not result in a denial of a deduction, reduction of tax attributes, or denial of basis increase. Similar treatment is afforded SBA restaurant revitalization grants.

The act temporarily delays the designation of multiemployer pension plans as in endangered, critical, or critical and declining status and makes other changes for multiemployer plans in critical or endangered status.

For more on the nontax provisions in the act, see “House Gives Final Approval to $1.9 Trillion Pandemic Aid Bill.”

March 2, 2021

By Jeff Drew

The AICPA called on Congress to extend the application period for the Paycheck Protection Program (PPP) by at least 60 days. 

The current deadline for PPP applications is March 31, but many applications have run into problems in the U.S. Small Business Administration’s (SBA’s) PPP processing platform, which has refused to accept some applications due to system problems and has caught thousands of other applications in validation checks designed to prevent fraudulent applications from being approved. These validation checks can produce dozens of different error codes, many of which require significant manual labor on the part of lenders and borrowers to rectify.

“The PPP process issues are many,” Barry Melancon, CPA, CGMA, AICPA president and CEO, said in a press release Tuesday. “It is well documented that small businesses, nonprofits, and the CPAs who advise them are experiencing error codes when submitting a PPP loan application. We continue to provide input to the [SBA] about these problems and are hopeful more progress will be made soon.”

Adding to the stress is an announcement the administration of President Joe Biden made Feb. 22 saying that the PPP loan calculation formula for sole proprietors, self-employed individuals, and independent contractors would be changed to help those individuals receive more financial support. The SBA has yet to release guidance detailing those changes, though it is expected to do so this week.

The Biden administration also said in its release that the SBA would accept PPP applicants only from businesses with fewer than 20 employees during a two-week period that started Feb. 24 and ends March 9.

“We applaud the Biden administration’s efforts to make PPP more inclusive and accessible to underserved businesses,” Melancon said. “However, these changes make it even harder for the smallest business entities — the self-employed and independent contractors — to meet the March 31 deadline.”

Despite the processing issues, the SBA approved almost 2.2 million PPP loans for a total of $156 billion from the program’s reopening on Jan. 11 through Feb. 28. Congress allocated $284.5 billion to the program in the Economic Aid to Hard-Hit Small Businesses, Nonprofits, and Venues Act, P.L. 116-260.

The American Rescue Plan Act of 2021, H.R. 1319, which is under consideration in the Senate after being passed by the House early Feb. 27, provides $7.25 billion more in PPP funds but does not extend the March 31 deadline. The AICPA recommended in its release that Congress extend the deadline in a separate vote.

AICPA experts discuss the latest on the PPP and other small business aid programs during a virtual town hall held every other week, including March 4 at 3 p.m. ET. The webcasts, which provide CPE credit, are free to AICPA members and $39.99 for nonmembers. Go to the AICPA Town Hall Series webpage for more information and to register.

The AICPA’s Paycheck Protection Program Resources page houses resources and tools produced by the AICPA to help address the economic impact of the coronavirus.

Accounting firms can prepare and process applications for the PPP on the CPA Business Funding Portal, created by the AICPA, CPA.com, and fintech partner Biz2Credit.

For more news and reporting on the coronavirus and how CPAs can handle challenges related to the outbreak, visit the JofA’s coronavirus resources page or subscribe to our email alerts for breaking PPP news.

— Jeff Drew (Jeff.Drew@aicpa-cima.com) is a JofA senior editor.

February 24, 2021

By Alistair M. Nevius, J.D.

In a recent letter to Treasury and the IRS, the AICPA called for greater certainty for taxpayers and tax practitioners and for underpayment and late-payment penalty relief, both of which will provide greater assistance to those affected by the COVID-19 pandemic.

In the letter, sent on Tuesday from Christopher Hesse, CPA, chair of the AICPA Tax Executive Committee, the AICPA urged Treasury and the IRS to announce any pending tax filing and payment deadline postponements by March 1. The AICPA also requested underpayment and late-payment penalty relief, a delay in collection activities, and an expansion of the temporary e-signature relief. The letter noted that many taxpayers and tax professionals continue to struggle to calculate and make tax payments and prepare and file tax returns.

The IRS has said that taxpayers and tax professionals should assume that the April 15 deadline will not change, but it has also been reported that the IRS will not commit to keeping an April 15 filing deadline if Congress approves another round of economic impact payments.

Specific AICPA recommendations include:

• If Treasury and the IRS determine they cannot hold to the April 15 deadline, that decision should be announced by March 1 and the postponed date should be June 15.
• Taxpayers should receive relief from underpayment penalties if they paid at least 70% of the tax due for the current year or paid 70% (90% if adjusted gross income (AGI) exceeds $150,000) of the amount of tax shown on their U.S. income tax return for the prior year.
• Taxpayers should also receive relief from late-payment penalties if they timely request an extension of time to file their income tax return and pay at least 70% of the taxes owed with the request.
• The IRS should halt compliance actions until it is prepared to devote the necessary resources for a proper and timely resolution of the matter.
• The IRS should expand the existing temporary e-signature relief currently being provided to the millions of taxpayers affected by and working through the challenges created by the pandemic.

— Alistair M. Nevius, J.D., (Alistair.Nevius@aicpa-cima.com) is the JofA’s editor-in-chief, tax.

Mon February 22, 2021

By Katie Lobosco, CNN 

(CNN)The Biden administration announced several changes Monday to the Paycheck Protection Program in an effort to reach minority-owned and very small businesses that may have previously missed out on accessing loans to help weather the coronavirus pandemic.

Starting Wednesday, small businesses with fewer than 20 employees will have a two-week exclusive window to apply for the funding. Bigger businesses will be blocked during that time period.

The administration will also change some eligibility rules, effective the first week in March. The self-employed, sole proprietors and independent contractors can now qualify for more money. They previously were excluded altogether or received as little as $1 because the loan amounts were calculated based on the number of employees.

The loan program will also open up to small business owners with non-fraud related felonies, those delinquent on their federal student loans and some non-citizen residents, such as Green Card holders or those in the country on visas -- all of who were excluded earlier.

"While the Paycheck Protection Program has delivered urgent relief to many businesses across the country, the initial round of PPP last year left too many minority-owned and mom and pop businesses out while larger, well connected businesses got funds quickly," said an administration official on a call with reporters Sunday.

Initial hiccups

Covid relief went to hair salons, restaurants, law firms -- and some members of Congress

Congress created the forgivable loan program last March to help hard-hit small business owners who had to close their doors because of state and local pandemic lockdown measures. The first round of loans was slow to reach the smallest businesses and those without an existing relationship with a lender may have missed out.

The first program closed in August, but lawmakers added funding in December and reopened the program so that owners could apply for a second loan. Congress targeted the new loans to those with fewer than 300 employees that have seen drops of at least 25% of their revenue during the first, second or third quarters of 2020. Lawmakers also carved out $12 billion for minority-owned businesses.

Since the program reopened, about $134 billion has been lent to 1.8 million small business owners. About half of the funds allocated in December remain and will be available through March 31.

More money on the table

The Democratic-backed relief bill making its way through Congress would add $7 billion to the program and would make more non-profit organizations eligible.

Another $175 million would be used for outreach and promotion, creating a Community Navigator Program to help target eligible businesses.

The bill would also provide $15 billion to the Emergency Injury Disaster Loan program, which provides long-term, low-interest loans from the Small Business Administration. Severely impacted small businesses with fewer than 10 workers will be given priority for some of the money.

It also provides $25 billion for a new grant program specifically for bars and restaurants. Eligible businesses may receive up to $10 million and can use the money for a variety of expenses, including payroll, mortgage and rent, utilities and food and beverages.

Arlette Saenz and Nikki Carvajal contributed to this report.

FEBRUARY 17, 2021 

MATTHEW ERSKINE

When I help settle an estate the most challenging task is mediating what is the “best” way to divide the jewelry, art, furniture and other tangible personal property of the deceased among their heirs. People behave irrationally when they feel that they were promised something under the will. They already feel that the item is theirs.  This is compounded by the friction between and among family members that existed during the decedent’s lifetime. 

So, what is the best way to divide your assets? The fact is that there is no “best” way to divide assets, but there are some things you can do, or refrain from doing, to help avoid a family fight.

First, do not tell someone that you will give them something in your will. If you want to give them something, give it to them today; otherwise, if you sell or give the item away to someone else, or even if it gets lost, the person you promised the item to will be disappointed. In the worst case, they may even be mad enough to sue the estate for the value of the item, especially when they have done work for you before your death with the expectation that they will get the item in return. I have had one client who promised a family necklace to a daughter who later forgot and gave it to a daughter-in-law. It was not so much that the mother had given the necklace away that hurt, it was that she had forgotten that she had promised it to her daughter. Fortunately, the daughter-in-law was gracious enough to give the necklace to her sister-in-law, and bad feelings where averted, but it could have been a very bad situation.

Second, ask your heirs if they want it. Tastes change from generation to generation and things like formal china and silver sets for 28 is not something a 25-year-old single grandchild living in a studio apartment in LA is going to be able to take, even if they wanted it. Sometimes children and other heirs are very forthright in expressing their interest in certain things. Others may feel awkward about coming out and asking. My recommendation is to ask them what they would like. Sometimes they will surprise you with what they would like to have as a remembrance of you. Conversely, if you are gifting the item to another, or to charity, tell those who want it that they are not getting it and why. 

Third, write out how you want to have things divided after your death, but keep it confidential.  If you have specific things you wish to go to specific people, write it down, and put it with your original will. Such a memorandum may not always be as binding as a trust, but it has great moral, and some legal force. You can also provide a method, or person, to break any stalemates. If there is no resolution, you can instruct that the items be sold. 

Fourth, if you have artwork or collectibles, consider appointing someone who is knowledgeable about the items as a special personal representative to handle the division and possible sale of the collection. Your heirs probably do not have the same experience and knowledge you have about your collection, and too often heirs become overwhelmed by the sheer volume of stuff and end up selling, or giving away, very valuable items for a song. 

Fifth, if you have things of local, social or historical interest, donate them to a local historical society. Many times, people keep the newsletters and other materials of the clubs and papers from their schools that are of not monetary value, but are not something that the local historical society or school alumni association has, and they value the item even if no one else does. I once had a client who came across a catalog of one of the first coin auctions held in Boston in the 1840s. It had notes as to who bought what, and for how much, written on the margins. According to an ephemera expert, it was not worth anything, but a local research library that had a collection of auction catalogs going back into the 19th century was delighted to get the piece.

Finally, try to organize what you have. By this, I mean go through and inventory what you own as well as you can. Tell the history of the items, where you acquired it, with whom and why. Further, tell what items you consider good, which are better, and which are the best, and why.  Do not be afraid of getting some professional help. I have at times worked with local colleges to get help cataloging the papers of a writer or composer and allowing them to use the materials in their research. Getting access to this expertise is not always easy, but it is possible.

There are a number of online services that provide a way to designate assets, though I have not tried any. I do feel, however, that these suggestions are relevant whether you use one of those services or not. These steps do not guarantee a conflict-free settlement of your estate, as there are some people who just want to have a fight, no matter what the excuse. In most cases, these suggestions, will help to minimize bad feelings all around.     

Matthew Erskine is managing partner of Erskine & Erskine in Worcester, Mass., which provides legal and fiduciary services for unique assets.