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Dear members —
In speaking with the press, which is beginning to ask the "meta" questions — of the "what does coronavirus mean for the industry" variety, I have started to suggest we do not yet have the necessary perspective. A popular question is, "How's business?" The trouble with the question is, as I say with gallows humor, we are only in the third half of the filing season. I suspect many NAEA members cannot say how they are doing — from a business perspective — because too much is still up in the air.
NAEA leadership also this week made a difficult, yet IMHO correct, decision to cancel the 2020 National Conference. Your responses to our survey were meaningful, and the team read all of your individual comments. We will come through this together, though only if we continue to anchor decisions on the needs, desires, and health of our members. Any further thoughts on the topic should go to firstname.lastname@example.org.
You will read below on issues ranging from veterans payments to IRS collection policy statements to the so-called "Phase 3.5" legislative relief ...
Please remember 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 also created a members-only coronavirus landing page, where we curated resources just for you.
Robert Kerr, EA
Executive Vice President
What about the Special Enrollment Exam?
We revealed last week that Prometric test sites are closed through May 31, 2020, and that a well-placed source at IRS confirmed the new set of exams are ready to go. When Prometric reopens testing sites, the new Special Enrollment Exam (SEE) will be ready to go.
On Wednesday, IRS announced SEE delays and cancellations:
We made inquiries with respect to an extension of the two-year test window and are pleased to see IRS decided to allow those potential enrolled agents a generous amount of extra leeway.
- The 2020-21 test window will not start on May 1. Candidates who already scheduled May appointments are being contacted regarding rescheduling
- The June 15-29 international testing window has been cancelled. International candidates may still schedule in the three remaining test windows (August and November 2020 and February 2021).
- The two-year carryover period for test results has been extended to three years for any passed examination parts that had not expired as of February 29, 2020.
IRS in the Time of Coronavirus
Here is a summary of what happened this week:
- Starting with the biggie: Notice 2020-32 clarifies that no deduction is allowed under the IRC for an expense otherwise deductible if the payment of the expense results in forgiveness of a covered loan pursuant to CARES Act §1106(b). On the upside, however, the notice also clarifies income associated with the loan forgiveness is excluded from gross income. Peter J. Reilly nails it in Forbes.
- And a second big deal: IRS sent an email recalling "mission critical" employees to job sites, which includes approximately 10,000 employees at 10 sites. Their main functions: opening mail, answering telephones, and other activities that usually take place during a tax season. More here.
- Announcement 2020-5 addresses the federal tax treatment of financial assistance provided to Connecticut homeowners for the repair of deteriorating concrete foundations due to pyrrhotite (it was a HUGE thing BTW).
- Rev. Proc. 2020-29 modifies temporarily Rev. Proc. 2020-1, and allows for the electronic submission of requests for letter rulings, closing agreements, determination letters, and information letters under the jurisdiction of chief counsel and for determination letters issued by LB&I.
- IRS continues to update its "Get My Payment" EIP FAQs.
- IRS has also updated FAQs (more specifically, FAQ 15+) related to temporary procedures to fax certain Forms 1139 and 1045 to claim quick refunds of the credit for prior year minimum tax liability and NOL deductions. Until further notice, the forms must be sent only by fax, to special fax numbers.
- Here are IRS FAQs for carrybacks of NOLs for taxpayers with §965 inclusions (yes, even typing this hurts E@lert's head ... there is SO MUCH to know)
- Ally Versprille at Bloomberg reported IRS started on Monday processing previously submitted IVES requests for tax transcripts. Mortgage lenders and small business lenders as well as higher education institutions use the program. Processing will be delayed for an indeterminate period.
- Updating last week: ACS reopened for IMF taxpayers, and some assistors are accepting faxed Forms 2848. To the best of our knowledge, POAs are not being posted to CAF and transcripts will be placed in e-Services secure mailboxes (SOR) only. All CAF fax lines are down and all PPS phone lines are out of service.
- IRS's mission critical functions announcement answers two key levy release questions.
- E@lert begs each of you: ACS availability is still limited, so please do not call with non-urgent issues or with non-collection issues.
Thoughts on CAF and the Dead
As to CAF, some observations: We believe (but have not confirmed) IRS sees CAF as part of essential operations, and we suspect (based, alas, on second-hand information) the agency is working with the 10,000 returning employees to reopen the CAF Unit. This probably requires an initial reorganization of physical office space to allow for social distancing.
Questions that remain: How will the CAF Unit prioritize work? First in, first out? How will staffers triage paper requests and faxed requests? NAEA's advocacy team is trying every angle we have to pose and receive answers to these questions. When we know more, you will know more.
As to the dead, we do not mean these dead, but the deceased, and more specifically, deceased taxpayers in receipt of EIP. Treasury Secretary Stephen Mnuchin insists they must be returned. Meanwhile former National Taxpayer Advocate Nina Olson (and do not let the "former" part of her title distract you, Nina still swings a large stick) has a different opinion. Here is an excerpt from a recent San Francisco Chronicle article:
In an emailed statement, Treasury Secretary Steven Mnuchin said, "You're not supposed to keep that payment. We're checking the databases, but there could be a scenario where we missed something, and yes, the heirs should be returning that money."
Experts are not sure they legally have to.
"It's not clear whether making a payment to the deceased person is erroneous under the law," said Nina Olson, former IRS national taxpayer advocate and is now executive director of the Center for Taxpayer Rights. And even if it is, getting that money back would be no easy task.
"Saying heirs should be returning that money is not legal guidance. It is not the legal position of the IRS," Olson said.
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.
Aside from our own resources, you may want to consider the following:
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Everything but the Kitchen Sink
Since last we spoke, we have learned Neiman Marcus is potentially headed to bankruptcy; what famous people's bookshelves reveal; dirty money is piling up in the City of Angels; how dog apparel is doing during coronavirus; and someone has our back when it comes to common grammar errors.
On the movie front, E@lert always recommends this Sean Connery classic (I should like to have seen Montana). We are listening to this to remain calmer than we feel. And when we need a non-60s rock pick-me-up, we turn here (please do not judge).
Otherwise, please consider this list of tax-related items, curated for America's Tax Experts®:
- File under "worth repeating": An eagle-eyed National Tax Practice Institute™ (NTPI®) instructor noticed a memorandum from Fred Schindler, Director, Headquarters Collection SB/SE, in which he provides IRM 5.1.10 temporary COVID-19 pandemic collection relief.
- SSA is predicting a $4,200 (from $137,700 to $141,900) wage base increase for 2021, so EAs might want to share this with higher earning clients. This Bloomberg article also includes a link to the agency's annual report to its board of trustees.
- NAEA's auditing form sent an update informing us "the recent outcry against public companies receiving the PPP caused SBA to update its PPP loan FAQ (at question 31) with a particular emphasis on the basic qualifications of the loan program." The firm concluded, "If your organization received a PPP loan or has applied for the program, an additional review of these requirements would be prudent."
- Speaking of SBA (not to be confused with SSA), here is a Politico article suggesting all is not smooth sailing with the small business loan (Phase 3.5) relaunch.
- The follow-up letters on the EIC payments started arriving early this week, and many, including the former National Taxpayer Advocate, are not amused.
- Secretary Mnuchin is warning some U.S. firms could face criminal liability over coronavirus loans, and that every loan over $2 million will be subject to a Treasury audit (E@lert wonders why he reveals the hurdle — which is generally not done, for obvious, we hope, reasons).
"An adventure is only an inconvenience rightly considered. An inconvenience is only an adventure wrongly considered."
— G. K. Chesterton (1874 – 1936), English writer, philosopher, critic, and lay theologian
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NAEA E@lert | Volume 2: Issue 9
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