CPAs providing billable advisory services to small business may not want to be an agent

Responding to several questions from practitioners, the AICPA issued a statement clarifying that the Coronavirus Aid, Relief, and Economic Security (CARES) Act, P.L. 116-136, prohibits CPAs and accounting firms from collecting fees from small business clients they help apply for Paycheck Protection Program (PPP) loans.

The restrictions apply to CPAs and firms that act as official application agents as defined in the CARES Act. CPAs who serve as agents should receive compensation for their work, but Treasury has designated that lenders pay agents out of their fee.

In its statement, the AICPA said that its understanding is that the limitation on fees applies to fees for assistance in the preparation of a loan application for a loan available under the PPP. If an accounting firm charges fees for providing a small business with advice on deciding which loan program and tax relief program would be best for their business, the statement says that the AICPA thinks it’s “reasonable that those fees would fall outside this provision of the CARES Act.”

“Thus, a firm can perform services outside of loan preparation assistance, and those fees would be paid by the client,” the AICPA statement says.

Small businesses started applying Friday to the $349 billion PPP for forgivable loans to help cover costs such as payroll and rent. Many banks were unable to begin immediately processing the loan applications after the U.S. Small Business Administration (SBA) issued guidelines Thursday evening, but Treasury Secretary Steven Mnuchin said in a tweet Friday that $400 million worth of loan applications had been originated.

Individual contractors and self-employed individuals can begin applying for PPP loans April 10.

The AICPA anticipates receiving more questions from CPAs over the next several days and said that it is committed to working with Treasury and the SBA to provide answers to those questions. In addition, the AICPA said it is working with lenders and payroll providers to help ensure the quick and effective delivery of PPP loans.

“The Paycheck Protection Program is an innovative solution for unprecedented times,” the AICPA statement said. “It serves the economy, the profession, and individual CPA firms by helping clients stay in business. It will also help some CPA firms meet payroll obligations.”

The PPP application can be found here on the Treasury site, along with details for borrowers and lenders.

The PPP’s forgivable loans can be used to pay for up to eight weeks of payroll costs, including benefits and other costs. The program is available to small businesses with 500 or fewer employees, including not-for-profits, veterans’ organizations, tribal concerns, self-employed individuals, sole proprietorships, and independent contractors. Businesses with more than 500 employees in certain industries also can apply for loans, according to Treasury.

In addition to payroll, recipients also can use PPP funds to pay interest on mortgages, rent, and utilities.

Employers cannot receive a loan under the PPP and also claim an employee retention credit under the CARES Act. The employee retention credit gives eligible employers whose business operations are fully or partially suspended due to the COVID-19 pandemic a credit against employment taxes equal to 50% of qualified wages (up to $10,000 in wages) for each employee.

Visit the AICPA Coronavirus Resource Center for information and resources related to the pandemic.

For more news and reporting on the coronavirus and how CPAs can handle challenges related to the pandemic, visit the JofA’s coronavirus resources page.

— Jeff Drew (Jeff.Drew@aicpa-cima.com) is a JofA senior editor.