Tax News & Views Sowed Confusion Roundup

April 29, 2020

Mnuchin Sows Confusion Over PPP as Businesses Await Guidance - Alexis Gravely, Tax Notes ($):

Uncertainty shrouds the loan program intended to help small businesses weather the coronavirus pandemic as Treasury Secretary Steven Mnuchin announces new rules without additional guidance from Treasury.

Paycheck Protection Program (PPP) loans in excess of $2 million will be fully reviewed by the Small Business Administration before they are forgiven, according to an April 28 update by Mnuchin on CNBC’s Squawk Box.

The article points out that "It’s not yet clear how to interpret the 'costs incurred and payments made' phrase that defines what is eligible for forgiveness within the CARES Act." It also remains unclear how forgiveness related to payroll will be determined.

The Treasury yesterday updated its Frequently Asked Questions (new Q&A 37) on the program to say that private companies are subject to still hazy rules for public companies on "good faith" certification of need for PPP loans. 

PPP Loan Review Procedures Described in Joint Statement Issued by SBA Administrator and U.S. Treasury Secretary - Ed Zollars, Current Federal Tax Developments. "It's not clear if borrowers will have a chance to see that regulatory guidance before the May 7 repayment deadline to avoid scrutiny."


Employee Definition Remains Fluid for PPP Loan Recipients - Eric Yauch, Tax Notes ($):

The updated FAQ added question 36, which said that for purposes of loan eligibility, the CARES Act defines “employee” to include “individuals employed on a full-time, part-time, or other basis.” The FAQ said a business must calculate the total number of employees, including part-time employees, in the calculation when applying for a loan.

But the FAQ points out that the definition is different on the back end when loan forgiveness is being determined. 

FASB Delays Accounting Standards Amid COVID-19 - Kristin Cornell and Matthew Neir, Eide Bailly. The delay applies to some private company lease accounting (Topic 842, Leases) and certain franchisors (Topic 606, Revenue from Contracts with Customers,).

Key Details Missing as People Consider New Retirement Plan Loans - Stephanie Cumings, Tax Notes ($) "Another question is whether plans that have no loan provision must be amended to first permit loans before permitting CARES Act loans."

Colleges Awaiting Answers on Ability to Use CARES Act Credit - Frederic Lee, Tax Notes ($). "A lack of guidance from the IRS is leaving tax-exempt higher education institutions uncertain about whether they can benefit from the employee retention credit under recent federal COVID-19 relief legislation."

The IRS Could Speed Up Coronavirus Rebates By Opening Secure Phone Lines - Elaine Maag, TaxVox.


Iowa reminds taxpayers of unextended tax deadlines. While deadline for 2019 income tax returns and payments due April 30 has been extended to July 30, an Iowa Department of Revenue press release lists deadlines that have not been extended. Unextended deadlines include the April 30 due dates for estimated tax credits and the May 1 deadline for competing applications for 2019 Solar Energy System and Geothermal Heat Pump Credits.

Iowa tax revenue drops by 48% as tax deadlines pushed back over coronavirus - Stephen Gruber-Miller, Des Moines Register. Buried lead: "At her Tuesday news conference, [Iowa Governor] Reynolds also said her revised budget will not include her proposed 'Invest in Iowa Act' which would have raised Iowa's sales tax to fund water quality and mental health programs and cut income and property taxes. That plan 'is going to have to be put on hold,' she said." 

Indiana Governor Extends Business Tax Deadlines - executive Order 20-23. Items covered include business personal property tax returns and administrative dissolutions.

Florida extends May 1 deadline for Corporate Income and Franchise Tax Payment. Florida Order #20-52-DOR-003. Filing deadline is extended to August 3; payment deadline extended to June 1.

Virginia announces limited delay for tax payments:

Certain income tax payments originally due during the period from April 1, 2020 to June 1, 2020 may now be submitted to the Department of Taxation (“the Department”) without the accrual of interest as would otherwise be required for late payments. This waiver of interest only applies if full payment is made on or before June 1, 2020. For a taxpayer filing on extension, at least 90 percent of the total tax liability must be paid by June 1, 2020 in order for the interest waiver to apply. If the interest waiver applies to such a taxpayer, no interest will accrue on the amount of tax paid by June 1, 2020, but interest will accrue from the original due date to the date of payment on any amount left unpaid after June 1, 2020.

Virginia has been a holdout on COVID-19 extensions.


11 Tax Tips For The Unemployed During The COVID-19 Pandemic - Kelly Phillips Erb, Forbes. "To lessen any surprises, you can choose to have federal income tax withholding from your benefits during the year."

Who Gets The Million Plus Stimulus Checks? - Peter Reilly, Forbes. "Joe Kristan, one of the pillars of the tax blogosphere, thinks that 461(l) is really bad tax policy and that its repeal would be even better than its suspension." Sorry, Peter, I got busy yesterday. They will be coming. 

"Reviewing the Economic and Revenue Implications of Cost Recovery Options" - Erica York and Huaqun Li, Tax Policy Blog. "We estimate that full expensing for all capital investments would boost economic output by 5.1 percent, wages by 4.3 percent, and create more than 1 million full-time equivalent jobs over the long run."

A pre-disaster inventory can pay off when filing insurance or tax claims - Kay Bell, Don't Mess With Taxes. "A full, accurate list of your belongings before Mother Nature does her worst could be invaluable for insurance and possible tax relief purposes."


Today in History: Joan of Arc relieves Orleans - "During the Hundred Years’ War, the 17-year-old French peasant Joan of Arc leads a French force in relieving the city of Orleans, besieged by the English since October."

When I was 17, I bagged groceries.

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