Lee B

Very interesting, I wonder if there are any court cases ?

In Oregon while CPAs and Attorneys are exempted, EAs are subject to to the State Board of Tax Examiners testing, rules and regulations. This has been an ongoing legal battle between the NAEA and OAEA with the Board of Tax Examiners for decades now. While we have occasional cases of preparer fraud in the Portland Metro area, it's pretty rare in the rest of the state.

In the PPP Loan Application, the calculation of the PPP Loan Request is reduced by any EIDL advance so in your example the $44,000 should have been the loan amount, net of the EIDL advance.

I have noticed recently that HRB has been advertising their consulting services for PPP Loan Forgiveness. Now that's a scary idea.

I have a client with a SBA 504 loan who received a letter from their servicing agent informing them that as part of the CARES ACT, their SBA Loan principal, interest and servicing fees would be paid for them for the months of April thru September. Based on my research, the CARES ACT designated $ 17 Billion to be used to pay 6 months of loan payments for 3 different SBA small business programs and etc. It appears that the CARES ACT also directed that these payments were not to be considered taxable income. However, I assume that under current law (just like PPP Loans which have been forgiven) my client will not be able to deduct the interest and servicing fees for these 6 months.

Copied from Accounting Today: "The Internal Revenue Service should make more of a priority of going after tax preparers who haven’t filed their own tax returns or paid their tax liabilities and penalties, according to a new report. The report, released Monday by the Treasury Inspector General for Tax Administration, noted that as of November 2018, the IRS’s Return Preparer Database indicated that more than 30,000 preparers self-identified as being tax noncompliant on their Preparer Taxpayer Identification Number applications in tax years 2011 through 2018. TIGTA’s analysis of that database found 10,495 preparers who prepared more than 2 million tax returns for clients in 2016, but who didn’t file their own personal tax return to report the income they received. On top of that, TIGTA identified the top 100 nonfiler preparers out of those 10,495 preparers based on the number of returns they prepared for clients in 2016 using their PTIN information. Those top 100 preparers prepared between 1,000 to 6,000 tax returns for clients in 2016, and TIGTA estimates that each of those 100 preparers potentially received somewhere from $189,000 to upwards of $1 million. In addition, TIGTA estimates $45.6 million in potential taxes could be assessed if the IRS worked on 6,903 of the preparer nonfiler cases. After reviewing a draft of the report, IRS management told TIGTA it has included 449 of the nonfiler preparers in its examination plan for this fiscal year. TIGTA also did an analysis of delinquent preparer penalty and tax “modules” as of May 27, 2019, and it indicated the majority were in active collection status. However, a significant part of them weren’t in active status because they were in “currently not collectible,” or CNC, status or were in a queue awaiting assignment to the IRS’s Collection function. There seemed to be discrepancies when TIGTA analyzed those modules showing there were high-priority preparer penalty modules in CNC shelved status, preparers in CNC hardship status who were probably earning significant income nonetheless, and high-dollar modules that were sitting around aging in the queue. The IRS’s new nonfiler strategy doesn’t include specific items to address preparers who have failed to file their own tax returns that are due, and the IRS’s current preparer misconduct strategy doesn’t offer specific direction on how the agency might deal with preparers who are nonfilers or have balances due on their own tax accounts. “Paid tax return preparers (preparers) serve an important role in the U.S. tax system as they prepare approximately 60 percent of all tax returns filed, and their actions have an enormous impact on the IRS’s ability to administer the tax laws effectively,” said the report. “When preparers cannot manage their own tax affairs, or worse, if they intentionally claim credits and deductions to which they are not entitled, they could undermine the tax administration system."

For me I don't want to be wrestling with PPP Loan Forgiveness Applications in December, January or February 2021. My largest client's PPP Loan 8 week window ended on June 11th. They meet all of the forgiveness hurdles except the FTE calculation, which currently leaves them with 95 % of their loan forgiven. I am currently trying project what the result of the February 15th/June 30th FTE Safe Harbor calculation might look like. I am also trying to evaluate whether we can tweak the Safe Harbor FTE calculation by making some work schedule adjustments to the last half of June.

Needed Clarification: PPP Loans approved after June 5th have the 24 week expanded expense window. PPP Loan approved before then have the option of choosing either the 8 week or the 24 week window.

Be careful, the 24 week expanded expense window only applies to PPP Loans which were approved by the SBA after the PPP Flexibility Act was signed into law, according to additional Treasury/SBA guidance issued several days ago.

It's your responsibility to prepare their tax return based on the information available, it's your client's responsibility to provide you with the relevant information. The tone of your comments imply that you are trying to fix this for them, which puts you in a difficult situation ?

Does anyone use or have clients that use Freshbooks. I would appreciate any feedback. Thanks, in advance,

When refunds are held up, most often the returns have been selected for "enhanced electronic screening" ( I just love that phrase ) due to refundable credits or other issues subject to tax preparer due diligence requirements.

I think the FTE calculations will prevent that.

I thought Carbonite was problematic when used with ATX because it wouldn't back up the hidden files that ATX uses ?

Perhaps you were too subtle and it just went over his head

"However, hours spent in the owner’s capacity as an investor, such as arranging financing, procuring property, reviewing financial statements or reports on operations, and traveling to and from the real estate, will not be considered hours of service for the enterprise."

I suspect that it has to do with the college's benefit package provided to employees, which probably says something like, "dependents of full time employees can attend tuition free."

Meh, the two bills haven't been reconciled yet

Wow, my mind boggles. Wait I'm on west coast, it's way too early this stuff ! Aaagh

My off the cuff answer is yes deductible !

The online class I took Wednesday from the OSCPA actually addressed this issue. According to the presenters, other interest is an allowable expense, but it is not a forgiveable expense !

In addition, neither of these bills addresses the issue of the non deductibility of expenses paid with the proceeds of a forgiven loan, which was not the intent of Congress. This whole PPP loan situation reminds me of when I was kid watching "The Three Stooges"!

If they make some of these changes, are they going to be retroactive, because my largest client's 8 week window ends on June 10th. Conversely, my second largest client just received their funds today and under current law, their window begins today and ends on June 30th. It's impossible to plan when the goalposts keep moving, not one, not twice, not three times, I'm sure I have lost count. This is the most insanity I have ever seen in my 44 years of accountancy !

I just finished taking another look at the Drake Accounting Payroll Function. Probably the biggest improvement is that they now efile Forms 94x. They finally recognized that their software wasn't handling Oregon's Statewide Transit Tax and Worker's Benefit Fund correctly. I understand that Oregon is a smaller state clear across the country, but you shouldn't advertise that your software is efile compliant in all 50 states, when it isn't !!! Had a long conversation with a very nice support person. I will check back again next May to see if they had made enough improvements to make the software's live payroll functional enough for me to use in Oregon.

I have spent the last 4 weeks babysitting 2 PPP Loan Applications thru 2 FinTech Companies for my 2nd largest client. Finally today,one of the loans finalized and the funds were deposited in my client's checking account today. What a frustrating experience, hours of dealing with poorly designed websites, days of waiting with no feedback. Too many phone calls, talking to people who only knew the basics of what they were trying to do. All because the large regional bank, where my client has been a customer for over 20 years gave my client no help, no encouragement, and didn't even return phone calls. I did my first application for my largest client with a small local bank back on April 2nd, it took me an hour at most, a piece of cake. The documentation requirements for these last two applications increased exponentially. Now all I have to do is fill out the forgiveness applications, which appears to be way more challenging! I really need a vacation !