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Dear members —
In the spirit of "the king is dead, long live the king," the pre-extension filing season is over, long live the pre-extension filing season. The phrase sounds better in French ("Le roi est mort, vive le roi"), but then again most things — even terrible things — sound better in French.
While DC Mayor Muriel Bowser has extended the city's stay-at-home order through May 15, tax administration feels calmer, not because tax professionals have received answers to their questions — they have not — but because we have settled into a phase that appears focused on economic impact payments (EIP) and SBA loans.
This week, IRS/Free File/Intuit created sites allowing people to provide IRS with banking and "zero" return information, the first Paycheck Protection Program (PPP) payments landed in bank accounts, funds for the SBA programs ran dry, and in something completely unrelated, IRS issued PTIN regulations.
Finally, a reminder: NAEA's members-only Facebook page as well as on the Member Community (a.k.a. WebBoard), are hopping with information, questions, and community, so please follow us there. We have also created a members-only coronavirus resource page, where we store a variety of resources curated just for you.
Robert Kerr, EA
Executive Vice President
IRS Still Shuttered ...
Somewhat akin to Wally World, but without John Candy, and much longer than two weeks, IRS is still, for the most part, closed.
Early Monday, IRS announced "IRS operations to process third-party authorizations are now closed. Please do not fax requests for Centralized Authorization File (CAF) numbers until further notice. The Income Verification Express Service is also temporarily on hold." The agency added, in an effort to be helpful, an alternative: clients can access Get Transcript Online, create an account to verify their identities, and immediately review or print a transcript.
Last we knew, though, that is not what representation looks like and, last we knew, the authentication rate for taxpayers hovered somewhere around 30 percent.
...and NAEA Responds
Recognizing IRS's significant operations limitations, NAEA earlier this week wrote IRS Commissioner Chuck Rettig to recommend next steps as the agency (we hope) ramps up to spend about $750 million in CARES Act special agency appropriations.
Our recommendations include:
And as to the funding, in addition to $250 million "to prevent, prepare for, and respond to coronavirus, domestically or internationally, including costs associated with the extended filing season and implementation of the Families First Coronavirus Response Act," the CARES Act also provided:
- Reopen CAF.
- Provide guidance on use of private-sector electronic signatures.
- Implement fully a secured messaging pilot program.
- Dedicate trained personnel to PPS.
That is a lot of tax administration money.
It Is All About the Stimulus
We will keep this brief, because you have been following it all week—and your clients have been making you absolutely crazy about it as well.
The Get My Payment tool is a miracle — how IRS turned it around so quickly is a wonder to behold. That said, the tool is limited and lumps together disparate people into a single category, vaguely called "Status Not Available." The Get My Payment tool FAQ page, in the section intuitively called "Payment Status Not Available" details under what circumstances this happens.
- Economic Impact Payments: Taxpayers have started to receive EIP deposits—some 80 million of them as of yesterday evening.
- Those expecting payments may check the Get My Payment tool on payment status, payment type, and whether the Service needs more information. Please note, data is updated only once per day (overnight, more specifically).
- Non-filers may enter payment information here.
- IRS has provided a general EIP information/FAQ page, which is loaded with information.
- IRS has also provided a Get My Payment tool FAQ page.
- Paycheck Protection Program:
- SBA has announced a lapse in appropriations (which is bureaucratese for "we're outta cash") and is no longer accepting applications. The full SBA PPP site is here.
- PBS NewsHour provides details.
IRS Issues PTIN Regulations
IRS issued proposed regulations related to PTIN user fees. Long-time readers know user fees on return preparers in general and enrolled agents in particular are a burr under E@lert’s saddle. The proposed regulations would reduce IRS's oversight fee from $33 per renewal to $21 per renewal. And for this small mercy, we suppose we should be pleased.
The optics on the timing are terrible, leading an observer to ask how IRS has time for such a mundane thing when the CAF unit is down and the agency is not processing paper anything. The fault on the release may not be IRS's, and E@lert is perfectly willing to give the agency a pass if someone at 1111 Constitution Avenue is to blame for the timing.
The content is more troubling than the timing. IRS consistently misapplies (or selectively applies) user fee policies as set forth in OMB Circular A-25; its calculations are opaque; and its results beggar belief.
IRS calculates $49.3 million of fully loaded costs over three years. The $16.4 million annual cost by our back-of-the-envelope math equates to a request for 120 full time staff to provide oversight of the PTIN program (we assume the average staffer is a grade 12 with DC locality pay, fully loaded). While we do not have a great line of sight on the PTIN program, we are hard-pressed to accept IRS requires 120 staffers to provide oversight, particularly when a third party processes the applications and runs a call center.
We are pleased to share that through NAEA's relationship with Wolters Kluwer, you have the ability to find in one place state tax filing relief. Once you log in (E@lert logs in through NAEA's website, via the member benefits tab), you will see "Coronavirus/COVID-19 Pandemic," and immediately beneath that, you will have access to a document that updates in real time.
Aside from our own resources, you may want to consider the following:
We note in particular:
- An interactive map from Akin Gump providing interactive current information on state, county, and local government business closures in response to the coronavirus emergency.
- Steptoe & Johnson provides a state level tracker for COVID-19 regulatory responses.
- The Tax Foundation is tracking state legislative responses to coronavirus.
- A number of states, including Indiana and Pennsylvania, as well as the District of Columbia are making COVID-19 exceptions to a variety of tax nexus issues. For instance, Indiana's Department of Revenue FAQs indicate a person's relocation as a result of the pandemic will not become the basis for establishing Indiana nexus.
- The New York State Department of Taxation and Finance released a notice (N-20-3) temporarily authorizing the use of digital signatures on certain documents. While a victory of sorts, DTF (which inexplicably refers to itself as "Tax") continues to insist it "cannot accept a digitally signed POA."
| || GOVERNMENT RELATIONS NEWS|
Everything but the Kitchen Sink
This filing season reminds us of the Yogi Berra quote that baseball is 90 percent mental and the other half is physical. So with the third half of the season bearing down upon us, we consider how ESPN is managing to provide 24/7 coverage of sports; discover how to take a virtual trip around the UK using only Harry Potter films; and nod to NPR for its social distancing haiku.
Still, nothing inspires like Bill Murray (even though "The French Dispatch" is now coronavirus-delayed until October 16). And our favorite Bill Withers song honors his recent death, at 81, while in the podcast arena, Canopy suggests 10 podcasts to make you a better tax pro.
Otherwise, please consider this list of tax-related items, curated for America's Tax Experts®:
- File under "worth repeating": The Department of Labor issued guidance regarding administration of the Emergency Paid Sick Leave Act as well as the Emergency Family and Medical Leave Expansion Act. Miller & Chevalier provides context, and a direct link to the temporary rule.
- Rev Proc. 2020-22 allows revocation of elections-out-of-Section 163(j) as well as new late elections. The 163(j) election, provided by the TCJA, permitted eligible taxpayers to elect out of an interest deduction cap. We ran across a new source, Capstan Tax Strategies, which takes a deeper dive for those interested.
- IRS and Security Summit partners are warning tax pros to take additional caution to protect taxpayer data. Additionally, the Service warns fraudsters are attempting to separate EIP recipients from their payments.
- NAEA's PAC processor, Aristotle, will be closed tomorrow, April 18, between 10:00 AM and 6:00 PM EDT for regularly scheduled maintenance.
- NAEA's HQ remains closed and we request that all renewal checks go to the lockbox address on the renewal forms.
- Reliable sources tell us IRS is cobbling together a set of FAQs to help us understand the recent like-kind exchange deadline extensions.
- Tax Notes recently included the headline "Fax Machines to the Rescue," which reports IRS is asking companies that normally must file forms on paper to fax them. Further, and ominously, a senior official said, "there is so much mail that the post office can't hold it, so we're literally holding it in trailers until our employees can get back."
- IRS yesterday updated its FAQ page providing information on the deferral of employment tax deposits and payments through December 31, 2020.
- According to Government Executive, IRS's Inspector General recently concluded the coronavirus is likely to lead to IRS backlogs. To which we say, thank you, Captain Obvious.
"To argue with a person who has renounced the use and authority of reason is like administering medicine to the dead.”"
— Thomas Paine (1737 – 1809), American patriot and political philosopher
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NAEA E@lert | Volume 2: Issue 9
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