AICPA Requests Guidance on CARES Act Provisions

As CPAs and their clients continue to parse the details of the recently passed Coronavirus Aid, Relief and Economic Security (CARES) Act, the AICPA is requesting guidance on several aspects of the bill’s employee retention credit provisions.

In a letter dated April 17 to David Kautter at the U.S. Department of the Treasury and Charles Rettig at the IRS, AICPA tax executive committee chair Christopher Hesse lays out seven key areas where the group believes more information is needed:

  • Guidance related to an employer’s deduction for payroll taxes reduced by the employee retention credit
  • Clarification that Section 2302 of the Act allows employers to defer payments of Social Security taxes originally due on or after March 27, 2020, regardless of when the compensation was earned (as well as similar clarification for self-employed individuals)
  • Clarification on situations when an employee works a reduced schedule but continues to be paid their regular wage – if a portion of the employee’s wages and qualified health care costs can be claimed as a credit
  • Additional guidance regarding the definition of a “partial” suspension of operations for purposes of Section 2301 of the Act
  • Definition of the term “trade or business” for purposes of Section 2301 of the Act
  • Clarification as to whether an employer aggregated under the aggregation rules under Section 2301 of the Act is barred from utilizing the retention credit if another related entity receives an SBA loan
  • Clarification as to whether a not-for-profit organization that has not been fully or partially suspended can use the gross receipts test to qualify for payment of retention pay

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AICPA Pushes for Additional PPP Funding

With reports that the government’s initial $349 billion for the Paycheck Protection Program (PPP) will soon be exhausted, the AICPA called on Congress to take immediate action to approve additional funding of this CARES Act program to help small businesses and their employees.

The AICPA acknowledged the work of the U.S. Department of the Treasury and Small Business Administration to provide more detailed information about the rapidly deployed program’s requirements and rules. However, the group noted that the initial pool of funds set aside for the program will clearly not be enough to meet the relief requirements of small businesses during this unprecedented crisis.

Beyond additional funding, the AICPA is also suggesting greater flexibility on timing of the PPP’s eight-week payroll support cycle, indicating that it may make more sense to delay the start of this cycle until restrictions are lifted and businesses can operate again.

“This program was rolled out with remarkable speed and while there have been some bumps along the way, small businesses view the Paycheck Protection Program as a critical lifeline,” says AICPA President and CEO Barry Melancon. “We need to extend that support so we can protect workers and ensure our economy can rebound quickly once restrictions are lifted.”

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AICPA Appeals to IRS, Treasury for ‘Extensive Relief’ for Taxpayers

In light of the ongoing uncertainty and challenges caused by the spread of the coronavirus pandemic, the AICPA called for the U.S. Department of the Treasury and IRS to provide more extensive relief to all taxpayers.

Noting its appreciation for the agencies’ efforts to extend the tax filing and payment deadlines announced in the recent Notice 2020-18, the AICPA is nevertheless stressing the importance of providing additional relief. The AICPA recommends:

Postponing all deadlines and providing additional time to make payments. The AICPA believes taxpayers who do not have an April 15 payment or filing date are inherently disadvantaged and would similarly benefit from a deferral. The group argues that these individuals and their advisors need additional time for filings, tax payments, estimated taxes and gathering pertinent information to include in those filings or payment calculations.

Providing appropriate filing and payment relief for all filers and taxpayers (including tax-exempt organizations and fiscal year corporations) for tax returns, information returns, elections, claims for refund and other correspondence. The AICPA says relief should also apply broadly to all types of taxes (including payroll, excise tax, estate, gift and generations-skipping transfer tax, etc.), noting that deferment of other taxes that are not income taxes is necessary to aid both businesses and their employees.

“With shelter-in-place orders issued throughout the country and a spreading pandemic, there is a significant list of filing and payment challenges left unresolved,” says AICPA Vice President of Taxation Edward Karl. “We urge the Treasury Department and IRS to grant additional relief in these uncertain times and offer our assistance in identifying specific areas in need of FAQs or formal authoritative guidance.”

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It’s Official: IRS Delays April 15 Filing Deadline to July 15

As COVID-19 continues to weigh down the U.S. and global economies, the IRS has updated and enhanced its relief efforts for taxpayers, announcing Friday that the filing deadline for tax returns will be pushed from April 15 to July 15, 2020.

Edward Karl, the AICPA’s vice president of tax policy and advocacy, thanked everyone involved in the bipartisan effort. “We know that having a chorus of voices from Congress urging the Treasury Department to formally extend the deadline until July 15 was instrumental to the final decision made by the administration.”

The postponement laid out in Notice 2020-18 applies automatically to any “individual, trust, estate, partnership, association, company or corporation” with a federal income tax return or income tax payment due on April 15. Taxpayers do not need to seek an extension. In addition, no interest, penalty or addition to tax for failure to file a federal income tax return or to pay federal income taxes will accrue between April 15 and July 15, 2020.

The new notice applies only to federal income tax returns and payments (including self-employment tax payments) due April 15, 2020, for 2019, and to estimated income tax payments due April 15, 2020, for 2020. The notice does not apply to any other type of federal tax or to any federal information returns.

Notice 2020-18 supersedes the agency’s previous guidance (Notice 2020-17) regarding interest, penalty, or additional tax for failure to file a federal income tax return or to pay federal income taxes, which had included limits to the amount of tax that could be postponed.

Pandemic Forces Postponement of ENGAGE 2020

ENGAGE 2020, originally set for June 7-11 in Las Vegas, will be postponed until later this year due to concerns about the coronavirus pandemic.

ENGAGE 2020, sponsored by AICPA and the Chartered Institute of Management Accountants (CIMA), is one of the largest accounting and finance conferences in North America.

Details on the timing and format of the rescheduled event are still being set, as the situation surrounding the outbreak is constantly changing.

“We want our attendees, staff and speakers to be safe, so this is the most prudent step to take at this point,” says Clar Rosso, the AICPA executive vice president for engagement and learning innovation. “We also know that families, small businesses and companies of all sizes will be depending on CPAs and management accountants to help guide them through unexpected financial and economic challenges in the weeks ahead, so we are bearing that in mind, too.”

ENGAGE 2020 attendees who are already registered and others interested in details about the rescheduled event can sign up for updates on aicpaengage.com. More information about the postponement, refunds and other policies can be found in a FAQ on the site.

Several other upcoming AICPA conferences will also be postponed, including the AICPA CFO Conference, which will now be held Sept. 16-18 at the Loews Coronado Bay Resort in San Diego, Calif., the AICPA Employee Benefit Plans Conference and the AICPA Not-for-Profit Industry Conference, with the latter two reschedulings still to be determined. Please visit aicpaconferences.com for more information on events in the weeks ahead.

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Senators Introduce Bill to Extend Tax Filing Deadline

One day after the AICPA called for an extension of the tax filing deadline, three U.S. senators have introduced the Tax Filing Relief for America Act, a bill to extend the deadline from April 15 to July 15, 2020.

The legislation was put forth March 19 by Sens. John Thune, Steve Daines and Angus King. The AICPA swiftly applauded the move, which follows a previous announcement by the U.S. Department of the Treasury that it would extend the tax payment deadline to July 15.

“Treasury’s decision to extend the tax payment deadline from April 15 to July 15 was an important first step, but it only makes sense to also extend the tax filing deadline itself,” Thune says in a statement. “There’s enough confusion amid this outbreak as it is, so I believe it’s incumbent upon Congress to provide as much clarity and relief as possible to American families.”

Edward Karl, the AICPA’s vice president of tax policy and advocacy, says taxpayers and preparers are finding it difficult to comply with the filing deadlines. “Offering taxpayers only relief for federal income tax payments but not for the filing of any tax or information returns is not sufficient, nor does it recognize the burdens our citizens are facing across the country. More must be done immediately. This is why the AICPA supports Senator Thune’s legislation that will help millions of individuals and businesses, and the CPAs who advise them.”

AICPA president and CEO Barry Melancon said on March 18 that the administration had not gone far enough to provide relief during the COVID-19 crisis. “Nearly 60% of all taxpayers turn to a tax practitioner to prepare and file their tax returns, and individual and business tax filing deadlines are fast approaching. Even the relatively simple process of filing an extension form requires calculations based on data and information from the taxpayer. Given the current environment, this extension process is impossible for many taxpayers.”

The AICPA is urging Congressional leadership to support the legislation, which was cosponsored by Sens. Richard Burr and Chris Van Hollen.

The AICPA continues to encourage its members to refer to the following resources that can help them manage clients’ needs and their business at this time:

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AICPA Calls for Tax Relief for Individuals and Businesses Amid Coronavirus Pandemic

The AICPA is urging the U.S. Department of the Treasury and the IRS to provide relief to all taxpayers in light of the uncertainty and challenges caused by the coronavirus (COVID-19) pandemic.

The AICPA made the following recommendations for individuals:

  • Extend certain deadlines falling on or after March 15, 2020 and before Oct. 15, 2020 to give individuals additional time to file and make payments through Oct. 15, 2020.
  • Provide an automatic extension to Oct. 15, 2020, without the need to file any forms or request an extension.
  • Waive late payment penalties if at least 70% of an individual’s current tax due is paid by April 15, 2020 and waive interest through Oct. 15, 2020.
  • Waive underpayment penalties for 2020 estimated tax payments if paid by Sept. 15, 2020.
  • Extend the IRA contribution deadline.

The AICPA made the following recommendations for businesses:

  • Extend certain deadlines falling on or after March 15, 2020 and before Oct. 15, 2020, to give businesses additional time to file and make payments through Oct. 15, 2020.
  • Provide an automatic extension without the need to file any forms or request an extension.
  • Waive late payment penalties and interest through Oct. 15, 2020.
  • Provide appropriate relief for all businesses and tax-exempt organizations regarding elections and filings (including payroll, excise tax, etc.).

“We are hearing from our members that they and their clients are experiencing great uncertainty about this year’s tax filing season. Our recommendations will help give taxpayers, large and small, much-needed relief in the midst of this fast-moving emergency situation,” says Edward Karl, AICPA vice president of taxation.

AICPA Survey: Coronavirus Concerns Grow Among Business Executives

Business executives’ outlook for the U.S. economy rose sharply in the past quarter, but concern is growing about the potential global fallout from the spread of coronavirus.

This is according to the first-quarter AICPA Economic Outlook Survey, which polls CEOs, CFOs, controllers and other CPAs in senior management roles.

Some 61% of respondents expressed optimism about the U.S. economy’s overall outlook over the next 12 months, up from 50% last quarter. But responses in the final week of the survey, following dramatic stock market declines as the coronavirus spread, were decidedly more pessimistic.

Most businesses said they have seen no impact from coronavirus yet, although 21% reported at least a slight impact. Those impacted said they had seen some combination of supply chain interruptions (10%), factory shutdowns in China or other affected regions (7%), and decreased sales to China (5%) or other markets (3%).

Some 7% of business executives said their companies had made a minor downward adjustment to their profit and revenue forecasts due to virus concerns, while 51% said they had made no change but were closely monitoring the situation.

Forty-two percent said they didn’t expect to have to make any coronavirus-related adjustments, but – like the U.S. economic optimism question – responses late in the survey cycle showed much less confidence.

The AICPA survey is a forward-looking indicator that tracks hiring and business-related expectations for the next 12 months. In comparison, the U.S. Department of Labor’s February employment report, scheduled for release tomorrow, looks back on the previous month’s hiring trends.

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AICPA Survey: Flexible Work Arrangements Can Help CPA Firms Recruit and Retain Women

U.S. CPA firms that offer modified work arrangements have significant advantages in terms of recruiting and retaining female employees, according to the AICPA’s 2019 CPA Firm Gender Survey.

About half the firm respondents reported that flexible schedules (56%), reduced hours (50%), compressed work schedules (49%) or telecommuting options (56%) helped attract employees, while about 80% of firms said those arrangements helped retain employees.

“While perspectives are changing, women are still more likely to handle duties involving child care and managing households. At the same time, many younger workers expect employers to offer them some flexibility as to where and when their work is done,” says Jacquelyn Tracy, chair of the AICPA’s Women’s Initiatives Executive Committee and partner with Mandel & Tracy of Providence, R.I. “Modified work arrangements allow women to more successfully manage their careers as CPAs and the priorities in their personal lives.”

A Pew Research Center study found mothers spend more than 31% of their day on child care and housework, compared to about 17% for fathers.

The AICPA’s biennial gender survey asks firms how they are addressing gender disparities and advance women in the profession. More than 1,100 firms, ranging from those with fewer than 10 CPAs to those with more than 100, responded to the survey, which was conducted in 2019.

In addition to asking about working arrangements, the survey also questioned firms about gender distribution on executive committees, formal programs to advance women and succession planning. The survey found that 39% of firms monitor pay parity between genders and 85% of those who monitor disparities took action to close gaps.

Additionally, one in five firms offered unconscious bias training, with 59% of the firms with more than 100 CPAs offering it.

Among other findings of the survey:

  • The larger the firm, the more likely it is to have formal mentor and sponsorship programs to help advance women and minorities.
  • Women in small firms of up to 10 CPAs comprise 53% of executive committees but only 16% of firms with more than 100 CPAs.
  • An analysis of job titles found that women were nearly equally represented or outnumbered men in CPA firms through the senior manager level, after which the ratio declines.
  • Only 44% of firms have a succession plan, down from 47% in 2017. But 6% included a gender component in their plan, up from 2%.

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AICPA Report: CPA Exam Candidates Down, Hiring of Non-Accounting Graduates Up

An AICPA report says the number of CPA exam candidates in 2018 dropped to its lowest level in 10 years while hires of new accounting graduates declined by about 30% over the last four years.

This is according to the recently released report, Trends in the Supply of Accounting Graduates and the Demand for Public Accounting Recruits. The report, published every other year since 1971, identifies key trends in U.S. accounting enrollments and graduates as well as hiring of new graduates in public accounting. The report provides projections based upon university responses for the 2017-18 academic year and firm responses for the 2018 calendar year.

Yvonne Hinson, the AICPA’s Academic in Residence, wrote in the report that enrollments in accounting bachelor’s degree programs declined by 4% since 2016, but are the second highest on record. Further declines are seen in master’s and Ph.D. programs, at 6% and 23%, respectively.

“The more telling projections,” she wrote, come from the demand side. “The marketplace continues to demand different competencies and, while accounting graduates are still being hired, firms are seeking other skill sets to expand services. We are seeing that the gap in skills required in the profession, especially as it relates to technology needs, is being met with non-accounting graduates.”

Other results:

  • Diversity – In 2018, female accounting graduates outnumbered male graduates at the master’s level. Racial/ethnic diversity has increased in accounting graduates, with a 7 percentage point increase in Hispanic or Latino accounting graduates.
  • CPA Examination – The number of CPA Exam takers increased in 2015 and 2016 in preparation of the new CPA Exam that launched in 2017. CPA Examination candidates decreased 7% between 2017 and 2018. The number of CPA Exam candidates who passed their fourth section of the exam decreased 6% between 2017 and 2018.
  • Hiring – Hiring of new accounting graduates slowed 11%. Non-accounting hires as a percentage of all new graduate hires are up 11 percentage points to 31%. In 2018, new hires assigned to audit-related services increased by 4 percentage points, while new graduates assigned to taxation declined by 4 percentage points.

Read the full report.

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