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Dear members —
NAEA President, Don Rosenberg, EA, asked me this morning to yield the microphone so he can make an announcement:
First, thank you for the honor of leadership.
My vacation in Nashville cancelled, but I am happy to be in the Grand Ole Opry every Saturday night. My wife and I attend a Opry concerts virtually and although it is not the same as being there, it is a great experience. The song that resonated recently is a cover of "Try a Little Kindness," by Keith Urban and yes, I remember the Glen Campbell version. When you deal with others during these challenging times remember to try a little kindness.
I am happy to announce that our August schedule is going on not quite as usual but it will be a grEAt CE event. We are going to run our annual members meeting and the board meeting as well. So I invite you all to join us on Thursday, August 6, 2020, at 6pm for our Annual Meeting, and on Friday, August 7, at 12 noon for our Board meeting. Also, we are continuing our May board meeting on Saturday, May 30th at 11 AM EDT. You will see details in separate reminder e-mails.
This is going to be a challenging year. I will update you as things develop. Let's work together to make things happen for NAEA.
We're ten weeks into an abruptly announced work from home requirement for many of us, just shy of halfway through a filing season extension that is itself longer than the original filing season, and seeing filing volumes take what looks like a normal mid-filing season lull. As of May 15th, returns received are down 8.2 percent, to 130.5M while returns processed are down 14.3 percent, to 117.9M. By this point last year, IRS had processed some 9.3M paper returns, compared to 0.1M this year. Returns filed by tax pros, I don't need to tell you, are down precipitously, some 17.7 percent or nearly 13 million. I've suggested to tax writers even coronavirus does not change a fundamental truth: nothing inspires like a deadline.
I've had the chance to review copy in our soon-to-be-launched website, which itself is an investment in the future of this organization. The site is the result of member surveys and member consultation, as well as professional consultants, and significant staff effort. Here’s my take on its vibe: much more organic, designed to enhance engagement opportunities and build retention, much less organized to parallel how the office is structured. What you won't see is how much more functional it is on the back end, from our ability to understand usage patterns and perform site analytics to our ability to edit and manage our content.
Finally, Monday is Memorial Day (and NAEA will be closed). Please take a moment to reflect on how lucky we are, in the end, to be Americans today, notwithstanding how troubling this pandemic or the state of our deeply divided country. Thank a veteran. Consider those we are unable to thank in person. And, if possible, give yourself some time to decompress. Tomorrow is in fact, another day.
Robert Kerr, EA
Executive Vice President
A Reading of the Tea Leaves
No organization has been more vocal about its priorities for re-opening IRS. In three separate letters to Commissioner Rettig, NAEA has laid out its priorities, including protecting a taxpayer's right to representation. Our reading of the tea leaves (which we'd put up against our favorite divination professor's): what we are hearing from a number of sources at the agency is the Service will continue to make process in placing more Customer Service Representatives on all phone lines, including PPS, from the safety of their own homes. As outlined in the press recently, the agency is calling back more employees to respond to the backlog of paper correspondence. The biggest caveat, obviously, is any further outbreaks of COVID19 could quickly send those folks back home.
In regard to opening the Centralized Authorization File (CAF), we are hearing "soon" and have picked up on a number of hints that there will be some positive changes to the CAF process as IRS considers new e-signature and electronic filing methods — both long-time, major government relations goals of this organization.
Finally, we are hearing about a significant expansion of a secured messaging tool — Taxpayer Digital Communications (interesting TDC explanation here, on page 2). IRS officials informed us they plan to bring this tool, although currently limited to a pilot program, to correspondence and regular exam, as well as appeals. This tool could be a game changer for practitioners with e-Services Accounts.
NAEA Provides Comments on Proposed PTIN User Fees
IRS issued — on April 16th of all days — proposed regulations related to PTIN user fees. Long-time readers know user fees on return preparers in general and on enrolled agents in particular are like nails on a chalkboard to E@lert. The proposed regs would reduce IRS' oversight fee from $33 per renewal to $21 per renewal. And for this small mercy, we suppose we should be pleased. Yet we aren't. Not really.
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 $16.4M 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 don't 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.
You'll see newly-installed President Rosenberg's comments here.
Otherwise, here’s a summary of what legislative, regulatory, and tax administration issues since last we wrote:
- File under "Phase 4": We all remember Congress passed several bills to address coronavirus, culminating in mid-to-late April in the so-called Phase 3.5 (an addition to the PPP funding, which ran out with eye-popping speed). While the House last week passed an enormous follow-up bill, and the Senate shows no sign of picking it up, pundits are suggesting (and E@lert concurs), Congress will in all likelihood create another tax package to support a struggling economy. Treasury Secretary Mnuchin seems onboard (deets here). Ideas include business advances on payroll taxes and at least a possibility of expanding PPP eligibility to 501(c)(6) organizations, such as ours.
- IRS yesterday dropped a proposed rule to clarify the time period in which a taxpayer could claim the historic building rehabilitation credit (or qualified rehabilitated building, QRB). Further explanation here.
- Repeat from May 8th edition: Notice 2020-23 extends the deadline to file a Tax Court petition and a notice of appeal from a Tax Court decision. If the statutory deadline (E@lert's note: holy cow!) for filing a petition or notice of appeals falls on or after April 1, 2020 and before July 15, 2020, the filing deadline is now extended to July 15, 2020.
- IRS raised the 2021 Health Savings Account limits. Darla Mercado at CNBC provides details.
- IRS also named a new Chief, Independent Office of Appeals, Andy Keyso, who has a great background for the position (and who NAEA's EVP knows personally).
- IRS released a number of pieces of guidance (real guidance) in the past few weeks, including: Notice 2020-36 (501(c)(3) group exemption letter program); Rev. Proc. 2020-19 (REITs and RICs); Rev. Proc. 2020-21 (temporary guidance for the public approval requirement under Section 147(f) for Qualified Private Activity Bonds); Rev. Proc. 2020-30 (conducting business in a country other than the U.S. due to COVID-19); and Notice 2020-29 and 2020-33 (FSAs). Plus News Release 2020-94 (deductibility and reporting of amounts paid to or at direction of government entities).
An EFIN Purge, Anyone?
NAEA's advocacy team worked closely with several members (hat tips in particular to Roger Nemeth, EA and Clarice Landreth, EA) to weigh in with IRS on an occurrence as welcome as a skunk at a garden party. We're told IRS each May purges EFINs that have not been used in the prior 24 months. Before IRS shuts off EFINs, it is supposed to send Letter 5882C to the EFIN-holders in question. We also understand no one has ever seen a Letter 5882 in the wild.
Lots of activity on NAEA's Facebook page (have we mentioned lately what a great tool this is to communicate quickly to members and for members to help one another?), and we believe the situation is under control.
Note to all: IRS provides a Circular 230 exemption from the 24-month minimum usage rule. This exemption is provided if the practitioner applies for the EFIN under his/her SSN (not EIN) and the entity is listed as "sole proprietor." A call to the e-Help Desk (1-866-255-0654) to advise the assistor the EFIN is for Transcript Delivery System purposes only should help address the issue going forward.
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, Kevin Harvick took the checkered flag at Darlington, in the first NASCAR race since early March, albeit without fans in the stands; Major League Baseball has proposed a July start to an abbreviated 82-game season (go Tribe!); Mark Cuban wants to save "The O"; the Wall Street Journal considered the science of prayer;
Here's what E@lert is streaming: in honor of those who have fallen, "8th of November" and because we love a good cover, this version of "50 Ways to Leave Your Lover." And we're reading classic cold war Call for the Deadfrom the master of the genre, John le Carré.
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 (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.
- MarketWatch on how coronavirus will affect those saving for retirement.
- A June 30th deadline looms large for businesses with 2018 NOLs. We thought this analysis interesting.
- Monte Jackel, in Procedurally Taxing blog, attempts to unpack the May 19, 2020 Executive Order relating to regulatory relief to support economic recovery from coronavirus. While the whole of the article is of interest, we found particularly interesting his rhetorical questions around whether IRS will/can extend further filing/payment deadlines.
- NOAA predicts a busy hurricane season could collide with COVID-19. (No word on locusts, however)
- CQ/Roll Call's recent podcast takes a run at bringing the latest on the Paycheck Protection Program and then pivots to legislators trying to prevent companies from liability if employees contract coronavirus while on the job.
- File under "bad facts make bad law": Holland & Knight issued an article focused on the standard applied in determining a taxpayer's reasonable-basis defense to a negligence penalty.
- There's money stuck in your dependent care account. The New York Times addresses the obvious question: "Now what?"
"You’ve got to learn to leave the table/When love’s no longer being served."
— Nina Simone (1933 – 2003), American singer, songwriter, & civil rights activist (in "You've Got to Learn")
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NAEA E@lert | Volume 2: Issue 9
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