Alistair Nevius, J.D., the JofA’s editor-in-chief, tax, explains the differences between IRS announcements on March 17 and March 29 regarding the postponement of 1040 tax filing and payments from April 15 to May 17. He highlights what’s changed, what hasn’t, and one question regarding how the IRS will handle estimated tax payments on a 2020 return filed after April 15.
Also, to prepare for the opening of the U.S. Small Business Administration’s Shuttered Venue Operators Grant program, hear advice from Kristy Illuzzi, CPA, CGMA, a senior technical manager and staff liaison to the AICPA Private Companies Practice Section’s Technical Issues Committee.
What you’ll learn from this episode:
- The deadline for taxpayers to make 2020 IRA contributions.
- Some of the key questions tax practitioners still have regarding the IRS notice issued March 29.
- When the SBA’s SVOG application window opens and which entities are eligible for the program.
- The work that CPAs can do in advance of a client’s SVOG application.
- Why the acronyms DUNS and SAM are important in the SVOG process.
- News on the PPP deadline extension and a FASB update on goodwill impairment.
Play the episode below or read the edited transcript:
To comment on this episode or to suggest an idea for another episode, contact Neil Amato, a JofA senior editor, at Neil.Amato@aicpa-cima.com.
Neil Amato: Welcome back to the Journal of Accountancy podcast. We have news on several fronts as we get into the month of April. April generally means tax time, and so it seems like a good time to have the Journal of Accountancy’s editor-in-chief for tax, Alistair Nevius, back on the program.
Alistair, the IRS announced on March 17 that it was postponing the April 15 deadline for individual taxpayers. Earlier this week, they issued a notice that essentially said the same thing. So, what's different about the notice?
Alistair Nevius: Well, Neil, the first announcement was just a news release. The IRS needed to make it official, which is what the notice does. But also, the notice provides more detail about what forms are affected, and it expands on the news release a little. The notice says that the May 17 deadline is for all forms in the Form 1040 series — that is all the various individual income tax returns — as well as all associated elections that are made or required to be made on a timely filed form in the Form 1040 series or attachment to the form. So that was something new.
The notice also addresses forms in the Form 5498 series. Those are used for providing information about IRA contributions, Coverdell ESA contributions, and HSA and Archer MSA contributions. Those forms are normally due June 1, but the notice pushes that out to June 30.
Amato: Speaking of IRA contributions, that’s one question that had come up. What about the deadline for 2020 contributions to IRAs?
Nevius: Well, that’s right, Neil. That was not addressed in the news release, but the notice does answer that and says that the deadline for 2020 IRA contributions is also pushed out to May 17.
Amato: The news release March 17 explicitly said that the IRS was not extending the April 15 due date for first-quarter 2021 estimated tax payments. Is that still true under the notice that came out this week?
Nevius: Yes, that is still true.
One question that I've gotten from practitioners involves what the IRS will do with returns that are filed after April 15 with an overpayment that is to be applied to 2021 taxes. That's a very common practice — it’s right on line 36 of the Form 1040. You overpay on last year's return and apply the overpayment to this year's estimated tax. But now, if you are filing after April 15, say, on May 17, and applying the overpayment to estimated tax that was due back on April 15, is the IRS going to say that payment is late?
So, all the IRS has explicitly said so far is that there is no extension of the first-quarter estimated tax due date, without addressing this common practice, which is right on Form 1040. So, hopefully, the IRS can clarify what they will do about this issue, but for now it is unaddressed.
Amato: OK, so obviously there could be more notices forthcoming and definitely plenty of questions out there that can still be answered. Are there other specific practitioner questions the IRS could answer?
Nevius: There are several. Another one involves gift tax. So, normally if you extend your 1040 with Form 4868, you get an automatic extension of Form 709 for gift tax — but does the May 17 postponement apply to Form 709? Form 709 is not included in the list of postponed forms in the notice, so it would seem not.
And, speaking of Form 4868, which is the application for automatic extension of time to file a 1040, does it still need to be filed by April 15? Again, it is not listed in the forms postponed by the notice. So, the IRS has said that you don’t have to file Form 4868 to qualify for the May 17 postponement, and they have said that if you do file Form 4868, you still need to pay the tax by May 17, but they have not addressed the Form 4868 due date.
That’s another question that has come up from practitioners, and hopefully, the IRS can clear up some of these questions because I think practitioners are wondering whether these omissions were on purpose or by accident, and we’re waiting for further guidance to see.
Amato: I think that’s a good theme here, waiting and seeing on further guidance. Alistair, thank you very much.
Nevius: You’re very welcome.
Amato: The Shuttered Venue Operators Grant, or SVOG, is one of several government programs designed to help businesses recover from the COVID-19 pandemic’s effect on their operations. Created three months ago, it’s now close to becoming an available option for certain businesses. Kristy Illuzzi is a CPA who holds the CGMA designation, and she is an AICPA senior technical manager and staff liaison for the Private Companies Practice Section’s Technical Issues Committee.
Kristy, first, who exactly is the SVOG for, and what is its intended use?
Kristy Illuzzi: Sure, so, the Shuttered Venue Operators Grant — think entities that have a live venue, that have a theater, live performing arts organizations, museums, zoos, aquariums, motion picture theaters. Those places that, if you really think about it, beyond restaurants, which were probably very heavily impacted and we’ve talked about quite a bit during the pandemic, these are also those live venues that were very significantly impacted, and many had to be closed down in 2020 due to capacities and limits in the states on what could be operated. Not-for-profits are also included in there, so it could also include nonprofit museums, opera houses, and theaters.
Amato: What do CPAs who are advising SVOG applicants need to know about the process right now?
Illuzzi: So, the most important thing that we are trying to get the word out on is that the applications period is expected to open on April 8. In order to be ready, there is a preliminary application checklist on the SBA website for these grants that walk through what you need to do. So, that would be both entities and CPAs. In many cases, we understand that especially with these smaller venues, they are probably going to rely heavily on their accountants, similar to PPP, where the small businesses really rely on their accountants for assistance.
So, you’re going to want to look at that preliminary checklist. One of the key things is to make sure you register for a DUNS number. That’s Dun & Bradstreet’s number. A lot of small businesses may not have that already, so you can register for that online. Again, the AICPA as well as the SBA have links for that. And then also, once you have a DUNS number, you need to register in the Systems for Award Management, which is at SAM.gov. Now I have heard that once that DUNS number, the SAM registration can take up to two weeks when submitted, so it’s really important to do this as soon as possible, to avoid any potential delays in funding.
The other thing you want to do is gather documents that demonstrate your number of employees and monthly revenues, so you can calculate the average number of qualified employees that you’ve had the past 12 months. You’ll also need things like tax returns as well. If you’re a company that relies heavily on your CPA, I would contact your CPA immediately to see what you can do to start getting ready for this funding.
Amato: You mentioned a couple of websites, the SBA, and obviously the AICPA has resources as well. We’ll put that U.S. Small Business Administration and other hyperlinks in the show notes for this. What’s the interplay between SVOG and PPP, the Paycheck Protection Program, meaning if you go a PPP loan, can you get SVOG, or vice versa?
Illuzzi: That is a great question, Neil, and one that actually has had some confusion, because there was a change here. Originally when this grant came out, they were saying that if you received a PPP loan after 2020, you would not be eligible for the SVOG program. However, that has changed, and you now can apply for both. However, if you received the SVOG money first or apply for SVOG, your PPP loan will be reduced by any SVOG funding, so as not to double-count those dollars. So, it is important to know that you can apply for both. Now, if you receive or apply for a Restaurant Revitalization Grant, which is also coming down the pipeline, probably in April, you cannot also apply for an SVOG. So, think museums, places that might fall under both — you need to decide which program you are going to apply for. Probably the one with the most lost revenue, to be completely candid.
Amato: You mentioned getting the Dun & Bradstreet number and some of the documents you can have in advance of the April 8 application window opening. But tell me about the money and why it’s important maybe to be ready. I’ve read that the money is expected to go fast.
Illuzzi: It is. And part of that, Neil, is there’s not that much of it to go around. Unlike PPP, this program provides $16 billion in funding, which might seem like a lot of money. If I had that kind of money, I’d be very happy. But, for practitioners that are out there, for companies that are thinking about applying for this money, $16 billion is going to go very fast when we think about the amount of entities that are eligible.
The other thing that’s very important to note is that for the first 59 days of opening of the program, the SBA has stated that they will reserve no less than $2 billion of that funding to entities that have no more than 50 employees. So, they really are trying to get the money out first to those smallest of businesses.
The other thing is the first 14 days of the application process is going to be reserved for venues that had revenue losses of 90% or more from April to December 2020. So once again, if your business was significantly impacted, you will be prioritized. Our understanding is also that there is going to be a first-come, first-serve prioritization, so it is very important to get that application in as soon as possible, because once they reach the nonpriority period, it’s going to become first-come, first-serve is our understanding.
Amato: A lot of moving parts, a lot of good info, and a lot of deadlines coming up. So obviously there may be more on this story. But for now, Kristy, thank you, for being on and giving us this information today.
Illuzzi: Absolutely. Happy to help.
Amato: In other news, President Biden signed the PPP deadline extension into law. The application deadline was March 31. It’s now May 31.
Also, the Financial Accounting Standards Board provided relief to private companies and not-for-profits, giving them the option to perform goodwill impairment triggering event assessments at the end of an interim or annual reporting period. Those who choose this option no longer will be required to evaluate goodwill during a reporting period.
We’ll post the links to coverage of these stories in the episode show notes, and you can find more news at journalofaccountancy.com. I’m Neil Amato. Thanks for listening to the Journal of Accountancy podcast.