“It Was the Best of Times; It Was the Worst of Times.”
By Neil H. Fishman, CPA, CFE, FCPA, CAMS, National President, NCCPAP
September 3, 2020—As I write this message, Congress is on its annual summer break for the month of August and will not return until September 8. When they return, they will only be in session for about four weeks, and then they will be out campaigning for the upcoming election on November 3. While the results of that election remain to be seen, we are seeing divisions within the country the likes of which we have never seen before. The country is becoming more polarized than ever.
This is also seen in Washington, D.C. The current pandemic, coupled with the economic issues that the country is facing, is unprecedented in that both are happening concurrently. There are a number of issues facing Congress to deal with this combined crisis, and there are several pieces of legislation that need to be addressed immediately which can provide help to the public.
First, we have the Paycheck Protection Program (PPP), which is part of the CARES Act. When the CARES Act was written, it was written very quickly, and because of that, portions of it were vague and ambiguous. The PPP was one part where this happened. As a result, it was left open to interpretation by other departments of the federal government as opposed to stating what/how Congress specifically wanted it to be treated. In April, the Internal Revenue Service issued Bulletin: 2020-32, where they specifically stated that if a business received PPP funding, which is then forgiven, the expenses that these funds were used for would NOT be deductible against business income. This is directly against the intent of Congress when the CARES Act was passed. In May, S.3612, Small Business Expense Protection Act of 2020, was introduced. This legislation SPECIFICALLY states that any deduction or expense associated with PPP Funds would be allowed in full. As of now, there are a total of 31 Senators from both sides of the aisle who have signed on as co-sponsors of this bill, yet it has remained in Committee since its introduction nearly four months ago.
Second, also dealing with PPP, is the forgiveness aspect. When the CARES Act was passed, no one had any idea how long the current situation would last. Many businesses received funding almost immediately. Many others, specifically small businesses, had to wait for their applications to be processed and eventually they received their PPP funding. Many businesses went through their PPP funds without being able to reopen, either in whole or in part. Others have been forced to close their doors permanently. Regardless, these business entities will have to deal with applying for forgiveness of the funds received. Another bill, H.R. 7777, Paycheck Protection Small Business Forgiveness Act, was introduced in July and is in Committee as well. This legislation would provide for the automatic forgiveness of any PPP funding up to $150,000. This legislation has a total of 66 Representatives as co-sponsors, again bipartisan. I have heard that the Senate Republican leadership has been in contact with the U.S. Department of the Treasury about this, and that Treasury rejected the $150,000 limit. With both of these issues sitting in Committee, it makes it difficult for us in our capacity as tax advisors/tax planners to give proper advice to our clients until the issues with PPP are cleared up.
Lastly, there is one other piece of legislation I would like to bring up—S.1192/H.R.3330, Taxpayer Protection and Preparer Proficiency Act of 2019. This legislation would give the U.S. Department of the Treasury/IRS the authority to regulate paid tax return preparers. Currently, anyone can hang out a shingle saying that they prepare income tax returns. Anyone can get a Preparer Tax Identification Number (PTIN) and submit tax returns for the taxpayers who hire them to do so. According to the IRS, 62% of those who have a PTIN indicating that they are a paid tax return preparer are NOT OTHERWISE CREDENTIALED. For these individuals, if they commit egregious errors in preparing tax returns, there is no oversight. If you are a credentialed CPA, EA, or Attorney, there are state or federal authorities to whom a complaint can be made. When I told this to a Member of Congress recently, they were amazed that anyone could get a PTIN. I am not against these individuals who are not CPAs, EAs or Attorneys; they are entitled to their livelihood. Over a decade ago, when the IRS attempted to regulate tax return preparers, the requirements of these individuals were to take continuing education courses and to pass a minimum competency test. If you own a home and have a plumber or electrician come to your house to make repairs, they are licensed and regulated. If you engage someone to prepare your tax return, shouldn’t that person also be regulated in some way? In a year where there is so much impact on business and personal income, it is more imperative than ever that this bill become law.
As Congress winds down the current session, it is my hope that they will find a way to put aside partisan politics and work together to pass legislative bills that are designed to help everyone.
The National Conference of CPA Practitioners (NCCPAP) is a professional organization comprised of Certified Public Accountants practicing in the United States. In addition to serving as a forum for education, networking, and community impact, NCCPAP also advocates for its clients. NCCPAP influences tax administration and tax policy by regularly meeting with Internal Revenue Service representatives, state taxing authorities, and elected officials. NCCPAP members represent over one million businesses and individual clients. The organization is headquartered in Woodbury, NY. For more information visit, www.NCCPAP.org.
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