Stim pickings: What to tell clients about coronavirus relief

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Taxpayers will get their money now. Taxpayers will get their money soon. They’ll get it but they have to send it back. Keep your loan but lose your breaks. Did we send a check to a dead guy?

No wonder clients have questions about COVID-related relief. What are they asking?

“‘How much will I get and when will I get it?’” said Bill Nemeth, president and education chair of the Georgia Association of Enrolled Agents.

“‘If 2019 hasn’t yet been filed, is it better to wait to file and use 2018 to get a better stimulus payment?’” said Brian Stoner, a CPA in Burbank, California, who has mostly seen questions about stimulus payments, “plus questions of California unemployment with the federal additions and how much someone will get, and, finally, estimated calculations of Paycheck Protection Plan loans and loan forgiveness.”

“Many have asked when they can expect to receive their stimulus payment and if they need to pay it back,” said Robbin Caruso, a Cranbury, New Jersey-based partner in the tax controversy practice at Top 100 Firm Prager Metis.

Show the money

More than 130 million COVID-19 economic impact payments have been delivered, according to the IRS. The agency has completed almost 87 percent of the expected 150 million relief payments.

Caruso joins a lot of her colleagues in sharing a standard litany of responses: Check “Get My Payment” on; you can generally keep the check (unless it came to a dead person); payments are coming for those who’ve filed 2018 or 2019 returns and meet a few other eligibility requirements; Social Security recipients should receive their payment shortly.

The Internal Revenue Service has said that individuals who received a stimulus payment for someone deceased or incarcerated should return the money (see our story). They left unanswered how the agency would enforce that, beyond saying that recipients of “inadvertent” payments should write “VOID” on paper checks and mail them back.

“Others should expect to receive payment over the next few months if they filed either a 2018 or 2019 return. Otherwise they’ll need to request the credit on their 2020 return,” Caruso added.

“I tell them to go to the IRS site and look it up, [and] as you know, the website has had its share of problems,” Nemeth said. “Luckily, I have 8821 authorizations on all my clients so I can pull their 2020 IRS account transcript and see if the payment has been processed and how much it’s for.”

Questions linger

“Now that many of them have obtained loans, they want to know how to spend the money to maximize the amount of the loan that can be forgiven,” said Michael Greenwald, a partner at Top 100 Firm Friedman, in New York. “Of course, they also want to know about all the tax changes in the CARES Act and how to take advantage of those.”

Many clients ask how to take advantage of and compare the various Small Business Administration relief programs, according to Caruso. “I’m advising that one size does not fit all,” she said. “We’re getting many questions on how to qualify for the maximum forgiveness and, at this time, there are still many issues regarding the computation that are awaiting guidance.”

“Initially, clients were wondering if they qualified for the PPP loans or the Economic Injury Disaster Loans and how those interacted. They also wanted to know about the various tax credits and whether those affected eligibility for PPP loans,” said Friedman’s Greenwald.

Attempting to clarify Congress’s hastily written Paycheck Protection Program, the Treasury and the IRS issued rules and guidance that, in some cases, stirred new confusion, whipsawed borrowers and led dozens of companies to return loans.

“The questions have evolved,” added Barbara Taibi, a partner in the EisnerAmper Personal Wealth Advisors Group in Iselin, New Jersey. “Initially it was all so new, we had to read a lot of information, absorb it and then circulate to our clients. The initial loan process and completion of the applications was the first hurdle. We then moved on to understanding some of the complications of the loan process, such as what are ‘wages?’ What payroll costs can be included? What about independent contractors?”

“Attention has shifted to the repayment of the loans,” Taibi said. “We know that taxpayers who received loans to pay expenses can then not turn around and deduct those expenses on their P&L. This was an item in question up until [recently]. We’re also now looking at the loan forgiveness terms and what they mean. We know you have to maintain employees through June 30 to qualify, but what are the rules going forward?”

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Coronavirus CARES Act IRS Paycheck Protection Program