April 22, 2020
Senate Passes Bill for More Small-Business Stimulus - Kristina Peterson and Andrew Duehren, Wall Street Journal ($). "$484 billion bill now goes to the House, where a vote is expected Thursday"
The text of the bill can be found here. While the bill funds more PPP funding, it does not address a number of uncertainties in the program. The ability to deduct expenses funded with the loans remains uncertain, for example. Also uncertain are some aspects of determining loan forgiveness, including precisely how payroll affects the forgiveness computation.
Paycheck Protection Program Gets Big Boost - Peter Reilly, Forbes. "The one change in the program is that $60 billion is set aside for smaller banks, credit unions and community financial institutions. That is probably a good thing, as there is anecdotal evidence that smaller institutions are taking better care of the little people."
Republican Senator Raises Eyebrows With Comments on PPP Loans - Eric Yauch, Tax Notes:
Sen. Marco Rubio, R-Fla., said in a tweet April 20 that the Paycheck Protection Program (PPP) loan certification is “real and enforceable.”
“That is why any company (of any size) that hasn’t been harmed by the current economic conditions & nevertheless applies for & receives a #PPP has a big problem. They made a false certification to the federal government,” Rubio wrote.
Is that what the legislation really does? Perhaps not:
But practitioners were quick to point out that the certification language for businesses to qualify for a PPP loan in the Coronavirus Aid, Relief, and Economic Security (CARES) Act (P.L. 116-136) is broad, requiring a loan applicant to certify in good faith that “uncertainty of current economic conditions makes necessary the loan request to support the ongoing operations of the eligible recipient.”
Arguably, every business is uncertain of the current economic conditions, practitioners pointed out.
The guidance includes the following:
Revenue Procedure 2020-20 (PDF), which provides that, under certain circumstances, up to 60 consecutive calendar days of U.S. presence that are presumed to arise from travel disruptions caused by the COVID-19 emergency will not be counted for purposes of determining U.S. tax residency and for purposes of determining whether an individual qualifies for tax treaty benefits for income from personal services performed in the United States;
Revenue Procedure 2020-27 (PDF), which provides that qualification for exclusions from gross income under I.R.C. section 911 will not be impacted as a result of days spent away from a foreign country due to the COVID-19 emergency based on certain departure dates; and
An FAQ, which provides that certain U.S. business activities conducted by a nonresident alien or foreign corporation will not be counted for up to 60 consecutive calendar days in determining whether the individual or entity is engaged in a U.S. trade or business or has a U.S. permanent establishment, but only if those activities would not have been conducted in the United States but for travel disruptions arising from the COVID-19 emergency.
Related: The Impact of COVID-19 on International Tax - Shannon Lemmon, Eide Bailly.
Relief Granted for Some Whose Ability to Claim §911 Exclusions are Impacted by the COVID-19 Emergency - Ed Zollars, Current Federal Tax Developments.
Several States Open to VDA Payment Plans During Pandemic - Amy Hamilton, Tax Notes. "Several states have informally indicated to the Multistate Tax Commission that they will consider payment plans for taxpayers that are seeking to enter voluntary disclosure agreements but are experiencing cash flow shortages during the COVID-19 pandemic."
VDAs are agreements worked out when taxpayers voluntarily come into compliance in a state where they had not been filing sales tax or income tax returns. The states agree to pay a limited amount of back taxes, sometimes without penalty, and the states agree to not pursue additional taxes for old years.
Related: States are Looking for More Tax Money: How to Protect Yourself - Lauren Taylor, Eide Bailly
Didn't file taxes, but have kids? Tell the IRS so you can get your full COVID payment ASAP - Kay Bell, Don't Mess With Taxes. "If you're among this group, head now to the IRS' new nonfiler online tool. The first page provides an overview of what to expect when you use it."
This Tax Season May Create Many Superseding Returns - Nancy Rossner, Procedurally Taxing. Superseding returns as defined by the IRM in 220.127.116.11.10 (07-22-2019) are certainly not a new concept. In fact, Keith Fogg wrote about them in a blog post on Procedurally Taxing dating back to 2017. Now is a good time to go back and read that post, as it provides an excellent explanation of what a superseding return actually is and the legal basis for superseding returns.
Census of Governments Illustrates Declining Aid to Localities, Other Trends in State and Local Finance - Megan Randall, TaxVox. "The Urban Institute’s interactive feature, State and Local Finance Data: Exploring the Census of Governments, shows that local governments are facing the coronavirus crisis after 40 years of significant decline in federal and state financial assistance."
Today in History: The Oklahoma Land Rush. From Wikipedia: "The land run started at high noon on April 22, 1889, with an estimated 50,000 people lined up for their piece of the available two million acres..."
Also, the first Boomer Sooners: "A number of the people who participated in the run entered the unoccupied land early and hid there until the legal time of entry to lay quick claim to some of the most choice homesteads. These people came to be identified as 'Sooners'. This led to hundreds of legal contests that arose and were decided first at local land offices and eventually by the U.S. Department of the Interior. Arguments included what constituted the "legal time of entry". While some people think that the settlers who entered the territory at the legally appointed time were known as 'boomers', the term actually refers to those who campaigned for the opening of the lands, led by David L. Payne."
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