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Dear members —
Today is Juneteenth. This allows me to tell a (somewhat) embarrassing story. I was at the California Society of Enrolled Agents’ annual meeting two years ago when I saw on my calendar "Juneteenth." I happened to be standing next to NAEA (and CSEA) past president Lonnie Gary, and asked, naively, "What's Juneteenth?"
Pictured at Fly-In 2015 training (left to right): Betsey Buckingham, EA;
Lonnie Gary, EA, USTCP; Terry Durkin, EA; and Jim Adelman, EA (all are now past presidents)
He gently informed me of the importance of the day, mercifully without suggesting the EVP was an idiot (he is a better man than I). For my part, I thought how could I be this old (and, incidentally, how could I think of myself as rather well-educated) and fail to know this? Now I know, and now I am able to mark the date publicly. Thank you, Lonnie.
Otherwise, we have been working for the better part of the past year and a half to address education at NAEA, and the larger question of how do we provide essential, actionable education to a profession that has implicitly dedicated itself to lifelong learning. We are working with the board, with volunteers, and with consultants to build a map, and we are structuring our staff to carry out decisions as they come to pass. More immediately, we have been building virtual education opportunities for the balance of 2020 and into early 2021. I hope you noted last Friday's message unveiling a ton of useful and timely webinar topics through the end of June and our new August learning series, Tax Summer School. Please check out the offerings. I will "see" you there as I, too, need to bring home my CE units.
I also spend a lot of time thinking about why NAEA exists. I continue to draw the conclusion NAEA exists to foster success. We are a diverse community of tax professionals committed to the success of our profession, our clients, and one another, and who believe excellence requires a commitment to lifelong learning.
Finally, I would like to highlight an upcoming event:
- On Friday, June 26 at 1:30 P.M. EDT, I will be cohosting a live webinar focused on state advocacy: How to use NAEA's tax research center for state advocacy. The TaxAware Center is amazingly powerful, and useful not only for state and federal tax research but also for tracking legislative and regulatory developments at the state level.
Demand better ...
Robert Kerr, EA
Executive Vice President
Section 6012 for All!
The Treasury Inspector General for Tax Administration found that notwithstanding §6012 requirements, 10,495 tax preparers who prepared more than 2 million tax returns during the 2016 filing season did not themselves bother to file a 2016 tax return to report income received. Auditors found that an absence of third-party Forms 1099 and a lack of preparer enforcement activities on the part of the IRS allowed many of these preparers to slip under the radar. IRS agreed to the majority of TIGTA recommendations and has listed tax preparer enforcement as a priority on their SB/SE Focus Guide for 2020 (see above). From NAEA's perspective, this is just another indicator that the IRS does not prioritize the practitioner community in its strategic planning or resource investment, and underscores the importance of one of our IRS reform goals: An office at IRS devoted to the care and feeding of all preparers and practitioners.
A Kinder, Gentler IRS?
Before COVID-19, the Small Business/Self-Employed Operating Division pledged, among other things to:
To support these actions, SB/SE hired over 1,000 new ACS representatives. While the coronavirus slowed down these efforts, SB/SE is telling NAEA the pandemic has not interfered in training the new personnel and setting up telework (of course, enrolled agents might quibble on exactly how well trained these new staffers were during this crisis). SB/SE also moved ahead with a new civil fraud enforcement program working across business units at IRS. During the pandemic, the program is focusing on COVID-19 related fraud, specifically the new tax credits and the economic impact payments.
- "Take enforcement every time it's appropriate,"
- "Expand the non-filer initiative,"
- "Implement a Service-wide Return Preparer Strategy."
While the message is SB/SE remains open for business, enforcement leaders assured NAEA they are cognizant of the difficulties this pandemic has caused many taxpayers, especially small business, and indicates its staff will be alert to helping folks through this crisis.
Treasury Addresses Loan Forgiveness Concerns
The Treasury Department and Small Business Administration this week released two new loan forgiveness forms that slashed documentation requirements and provide many borrowers an easy pathway to PPP loan forgiveness after Congress made changes to the PPP:
The agencies also issued guidance that said borrowers can use the original eight-week period, if the loan was made before June 5, or the extended 24-week period.
"Small-business owners won't have to pay back" their PPP loans "even if they don't rehire all of the workers they laid off, the Trump administration affirmed, effectively eliminating a rule that many borrowers had feared would leave them stuck with a large debt," The New York Times reported.
The new forms added a safe harbor option, which permits borrowers simply to affirm they were unable to operate "at the same level of business activity" they had before the crisis because of government requirements or safety guidance, including social distancing rules. Those borrowers can have their loans fully forgiven if they meet the program's other rules, including a requirement that they spend at least 60 percent of their aid money on payroll.
Otherwise, here is a summary of new (or new-ish) notable legislative, regulatory, and tax administration issues since we last wrote:
- ICYMI: IRS is alerting nursing homes and other care facilities EIPs generally belong to recipients, not the organizations providing the care. IRS issued the reminder following concerns that people and businesses may be taking advantage of vulnerable populations who received EIPs. The payments are intended for recipients, even if a nursing home or other facility/provider receives the person's payment, either directly or indirectly by direct deposit or check.
- Money, money, money: With apologies to ABBA, widely anticipated Congressional and White House negotiations on another stimulus package in late July could carry a big payday for IRS. Lawmakers could grant the agency additional funding to carry out another round of economic impact payments. The administration is giving "serious consideration" to another round of stimulus checks, which, using the HEROS Act as a guidepost, would provide the IRS with a funding upgrade of as much as $520 million to respond to the coronavirus pandemic and the current extended filing season, but make no changes to the current tax filing deadlines.
- NPR recently hosted an interview including former National Taxpayer Advocate Nina Olson. The topic of the three-minute clip: IRS employees face a host of challenges in returning to work.
- IRS explained new rules under the CARES Act provide flexibility for health care spending, including for telehealth and high deductible health plans, as well as expanded rules on qualified medical expenses.
Off to Work We Go ...
IRS employees unable to work from home will return to their offices July 13 in any states that have not been affected by previous recalls.
The agency has already called back thousands of workers in seven states, with four more and Puerto Rico to follow suit on June 29. The latest announcement comes at a time when employee anxiety levels are high, yet the agency is under pressure to bring workers back to shovel through a previously unimaginable backlog of paper returns and unopened mail, and otherwise complete tasks associated with the extended tax filing season.
Happy Anniversary, Wayfair
The landmark decision widening the reach of sales taxes on online retailers is marking its two-year anniversary. The Supremes (these, not these) ruled on June 21, 2018, South Dakota vs. Wayfair, tossing out its 25-year-old physical presence standard limiting state collection of taxes from out-of-state vendors (in what E@lert believes was a terrible decision). The decision led to tax collection-and-remittance requirements on remote sellers and marketplace facilitators based on their level of economic activity in a state. Now all but two of sales tax states — Missouri and Florida — are collecting sales tax on remote sellers.
Through NAEA's relationship with Wolters Kluwer, you have the ability to find in one place state tax filing relief. Once you log in through NAEA's website, you will see "Coronavirus/COVID-19 Pandemic," and immediately beneath that, you will have access to a document that updates in real time.
You may also want to consider the following:
- The Kansas State Finance Council approved $400 million from the Coronavirus Relief Fund to be distributed to local governments based on populations, case rates, and unemployment rates; state agencies will also receive a total of $16.7 million in reimbursements from COVID-19 related costs.
- The California legislature passed, AB 85, a three-year NOL suspension and business tax credit limit. The bill awaits Governor Newsom's signature. Deloitte unpacks the provisions.
- Emergency rules in Colorado clarify meaning of "Internal Revenue Code" for income tax purposes. The heart of the matter is the term "Internal Revenue Code" incorporates changes to federal statutes on a prospective basis only for purposes of Colorado income tax.
| || GOVERNMENT RELATIONS NEWS|
Everything but the Kitchen Sink
Since last we spoke, we discovered the world's most efficient languages (we are not sure how useful this is as we do not anticipate traveling further than the Safeway for the foreseeable future); how coronavirus is affecting museums; and how coronavirus will reshape office design.
We are jonesing the 1980s (then again, who is not?) and streaming Bonnie Tyler, Meat Loaf (yes, 1977, but heavy play in our 1980s), and Asia. And because these are difficult times professionally and personally, we are reading HBR (our management theories are failing us and making us miserable) and how anger and irritability are connected to depression.
Otherwise, please consider this list of tax-related items, curated for America's tax experts:
- A little light reading: The Joint Committee on Taxation recently released its "Overview of the Federal Tax System as in Effect for 2020," JCX-14-20.
- And if you still cannot sleep, here's the Congressional Research Service's take on tax issues related to charitable giving. (BTW, both of these are deeply researched and interesting).
- IRS announced recently it will begin to process Forms 8655 (Reporting Agent Authorization), and announced it would be closing on July 1, 2020, payment P.O. Boxes in Cincinnati and Hartford. The agency will not forward mail received at those offices.
- Tax Analysts gathered a high-octane group, including Ways & Means Chairman Richard Neal (D-MA), the fantastic Pam Olson, and Bob Kerr's former IRS division chief, Mark Mazur, for a webinar addressing the success of economic relief measures and what's to come.
"We're all going to die. What a circus! That alone should make us love each other but it doesn't. We are terrorized and flattened by trivialities, we are eaten up by nothing."
— Charles Bukowski (1920 – 1994), American poet and novelist
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