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Dear members —
Today's message is personal. And I am at a loss for words, because everything feels either trite or fraught. I could say we live in difficult times, which is certainly true, yet only partially relevant. I could say I am saddened, or even appalled, which would also be true, yet miss the point because this is not about me.
As I considered how to tackle the issue on my mind, and on the minds of many, I wondered whether I should use this public platform to address it. I have for many years been granted free rein to speak on behalf of this organization and my profession, a sign of trust in my judgement that I have never ever taken for granted. I do not today, either, although to be clear, today, I speak for myself. The message is simple, and powerful: Wrong is wrong. Wrong is not situational; it does not care the color of your skin, the language you speak, your political party, or who you love. Wrong is just that, wrong.
What we have seen in the past few weeks is tragic and unjust. Another tragic death, followed by an outpouring of grief and anger. We are left in shock, in disbelief, and with serious questions about race and diversity in this country of ours.
I wish I had the answers, which of course I do not. I know, however, we have before us an opportunity to come together, rather than to retreat to our corners; an opportunity to demand better of ourselves, of our communities, and of our institutions, public and private. I know each of us is able to do *something* that makes a difference, some act of courage. And closer to home, I know this organization can work on diversity and inclusion. In all spaces, from our neighborhood to our nation, we will only be better if we demand better.
I dedicate this opening to NAEA's staff, which demonstrates every day the strength that comes from diversity.
Demand better ...
Robert Kerr, EA
Executive Vice President
Doing Less with Less
The Treasury Inspector General for Tax Administration (TIGTA) this week issued a report in which it identified 879,415 non-filing high income taxpayers owing approximately $45.7 billion. These high-income taxpayer cases from tax years 2014-2016 are parked mostly in an account succinctly referred to as the Individual-Master-File-Case-Creation-Nonfiler-Identification-Process, or IMF CCNIP (we are not kidding). They land here once the IRS identifies a non-filer return, and a select few of them are chosen for notices before heading to the Taxpayer Delinquency Investigation, or TDI, queue. A lucky (or unlucky, depending on one's perspective) few in TDI are plucked out for a special howdy-doo from Field Collections. Back in the not-so-distant past, when the IRS was (in our opinion) more properly funded, it was very rare that high income non-filers did not get a special greeting from Field Collections, often in the form of a knock on their doors.
As Congress has chosen over the last decade to underfund the agency, high earners have not only paid less than what they owed, but also, apparently, avoided the time and expense of even filing a return. TIGTA found that 37 percent of these cases never even made it out of the IMF CCNIP account, 58 percent were still languishing in the TDI queue, and a little less than 5 percent were shelved from the TDI queue for lack of resources.
In E@lert's opinion, TIGTA's recommendations to the agency were thoughtful and well-considered: consolidate management, reallocate resources from elsewhere in the agency, send notices to all cases in the IMF CCNIP, work all multiyear cases, identify repeat offenders, and stop shelving cases to make the TDI queue look smaller.
TIGTA did not make the most practical solution — nor is it in a position to do so. The heart of the matter is Congress habitually underfunding the Internal Revenue Service (NAEA has been advocating for years in this space, including letters (here and here) regarding the agency's FY20 budget, and, over multiple years as a plank in our annual Fly-In Day). It is time for both political parties to fix this situation, or else high earners may begin to assume filing and paying taxes is only for the little people.
Changes to Payroll Protection Program
E@lert, who discovered an empty 2020 CE bucket recently, yesterday attended the first of a half dozen scheduled June NAEA webinars. Jason Dinesen, EA, led a 1 CE course entitled "COVID-19 Tax Issues Update: The latest news, changes, and guidance." E@lert, who is a bit of a geek, decided to share with Facebook the class in progress.
The point today is Jason covered a piece of breaking news: Both the House and Senate had passed a bill (HR 7010) making significant changes to Payroll Protection Program (PPP) requirements:
Tony Nitti, who is one of E@lert's favorite tax writers, takes a masterful run at both the bill and at framing the PPP issue more broadly: The program includes many missteps and much to irritate many observers, including those who were eligible but did not apply, and those who made decisions weeks ago and cannot at this late date take advantage of the HR 7010 language.
- Covered period: Changes from eight weeks to 24 weeks from loan origination date or December 31, 2020, whichever is later.
- Payroll cap for non-payroll costs: In order for the PPP proceeds to be forgiven, the CARES Act stipulated no more than 25 percent of expenses could be non-payroll. HR 7010 raises the cap to 40 percent. PROBLEM &mdahs; the bill also states the loan recipient needs to use at least 60 percent of the covered loan for payroll costs, and implies a cliff.
- Staff replacement: As long as number of staff or salary/hourly wage are restored to February 15, 2020, levels any time before the end of the calendar year, loan recipients will not need to take a haircut on forgiveness.
Looks like the CAF units are starting to reopen. Reliable sources tell E@lert Ogden Campus is processing requests sent the last week of March. Looks like IRS is processing first in, first out (FIFO). Speaking of manual processing, we still have no word on how IRS is going to manage the trailers full of paper returns, some of which (of course) are for prior years, and how the agency is going to handle the e-filed returns for which refunds have been lost in limbo.
We continue to ask, though, and as always, when we know something, you will know something.
Finally, two things:
- Thanks to Clarice Landreth, EA, who shot up a flare: IRS just released an updated Form 433-A, which we (naturally) think is super exciting.
- We have a vibrant NAEA Facebook community, where the EVP has been sharing thoughts and news in the moment. Please consider joining us there. We're better together!
"Human nature will not change. In any future great national trial, compared with the men of this, we shall have as weak, and as strong; as silly and as wise; as bad and as good."
— Abraham Lincoln (1809 – 1865), American statesman
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NAEA E@lert | Volume 2: Issue 10
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