On Friday, July 17th, the Maryland Association of CPAs made a series of six recommendations to Congress to continue to support the economic recovery as a result of COVID-19.
CPAs continue to be on the frontlines of the financial recovery and are supporting the U.S. economy to deliver essential services and objective advice to individuals and businesses struggling with financial and economic uncertainty.
A number of our members and many of the small business clients they advise found a vital lifeline in the CARES Act relief funding allocated by Congress, along with other measures put in place to assist struggling businesses. As we move into mid-summer and the COVID-19 pandemic continues, small businesses face continued economic uncertainty and pressure. Additional relief and support are desperately needed in many areas. We understand there is no easy fix to the complex issues we face, but we ask for your help in guiding federal assistance, particularly in the following three areas, to help restore and create jobs.
1. Support for 501(c)(6) and Organizations Access to PPP:
Financial relief options for tax-exempt business organizations — specifically, 501(c)(6) organizations like the MACPA — are badly needed. These organizations play a critical role in economic development, particularly during times of crisis. The MACPA and other 501(c)(6) organizations have continued to support small businesses during this unprecedented time. CPAs have had to quickly learn to navigate unfamiliar new roles, such as unemployment specialist and loan officer. The MACPA provides the training, tools, and support CPAs need to remain up to date on these complex and evolving issues. In turn, CPAs are able to provide expert advice and reassurance to small businesses struggling with economic uncertainty. We have done this work without the benefit of federal aid offered to other 501(c) organizations. We ask Congress to reconsider its limitation to ensure ALL Section 501(c) organizations are included in crucial funding to combat COVID-19. Without this financial support, innumerable associations will fail.
2. Enact COVID-19 Liability Protections for Businesses and Employers:
Employers face uncertainty as they reopen their businesses in a safe and socially responsible manner. Even with implementing safeguards to protect workers — from disinfecting offices to operating on staggered shifts to allowing for more social distancing — are they at risk of being held liable if employees contract the virus? Please support necessary regulatory changes and protections to curtail employer liability and potential frivolous lawsuits as a result of COVID-19 for businesses that follow the guidelines of the Centers for Disease Control and the State of Maryland. Such legislation could significantly reduce the uncertainty for struggling small business owners, including thousands of our CPA members who themselves are small businesses.
3. Support for relief to state and local governments:
With tens of millions of individuals collecting unemployment benefits, businesses
closed, and school districts and municipalities now forced to take stringent measures,
the fiscal situation of state and local governments will certainly get worse before it gets better. The time has come to pass another financial relief package that ensures our state and local governments receive the necessary and adequate funding to close the significant budget gaps. State legislators are struggling to put together budgets which, without the promise of federal aid, are sure to include tax increases levied on taxpayers already experiencing financial duress and cuts to critical state programs. Federal help is needed to position states for success as we begin to rebuild
4. Support automatic forgiveness of PPP Loans for small businesses (S.4117, Paycheck Protection Small Business Forgiveness Act):
Eighty-six percent of PPP borrowers received loans of $150,000 and less, but these loans account for fewer than 27 percent of total PPP loan dollars. As the struggle to reopen our economy continues, please help ensure that the forgiveness process is easy, simple, and less technical for small business owners who are still trying to figure out how to survive the economic impact of the coronavirus shutdown by eliminating the unnecessarily complicated paperwork required by the SBA.
5. Allow Full Deductibility of Business Expenses Related to PPP (S.3612, Small Business Expense Protection Act of 2020):
In late April, the Internal Revenue Service released Notice 2020-32, which indicates that no tax deduction is allowed for an expense that is otherwise deductible if the payment of the expense results in forgiveness of a PPP covered loan. S. 3612 will remedy the IRS guidance and allow taxpayers to deduct covered expenses paid or incurred by an eligible recipient of a small business loan that is forgiven pursuant to section 1106(b)4 of the CARES Act.
6. Remove barriers to remote work (S. 3995, Remote and Mobile Workforce Relief):
Serious problems facing remote workers as a result of the pandemic have come to the forefront. Normally, they would be taxed on the resulting income by the state in which they work, but their remote work has opened up the possibility of having that income taxed by their state of residence as well. This situation can create unexpected filing complications and possibly a higher tax bill. This bill would establish a 30-day threshold and uniform rules to help ensure that the appropriate amount of tax is paid to state and local jurisdictions without placing undue burdens on employees and their employers.