We just want to bring you up to speed on our latest 5-hour zoom meeting with the ADCPA. And yes, we are very fortunate we belong to this group of dental CPAs. We have been educating each other, providing support and ideas for all of our clients during the COVID circus and that helps you and us!

Number 1 Question of the Week
Should I file my PPP loan forgiveness application?
Our ADCPA members are in complete agreement with this. There is NO reason to do so yet (other than it makes you crazy and your bankers want their fee) and a lot of reasons to NOT file. We are working our way through the ERC and PPP allocation of expenses. While many of you do not qualify for the ERC (a small sample of our clients so far), it is imperative that we still have the opportunity to help you with the allocation if it does apply.

So please be patient. Our ADCPA colleagues are saying to wait until May to apply. This gets us to the next subject – business tax return extensions.
Extensions for Business Tax Returns

We will be filing extensions for your business returns (1120S, 1120C and 1065). This is being done for several reasons. 

  • One: the states are not sure if they are going to allow the PPP expenses to be deducted for state tax purposes. SC and NC typically draggggggg their feet on this type of decision so we need to know if they will allow it or not. 

  • Two: some of you may want to fully fund your retirement plan. As many of you know, you have until September 15 to fully fund your profit-sharing piece.

  • Three: if you do not have a retirement plan, new tax rules allow you to set up a 2020 plan as long as it is set up before you file your business returns (including extensions). So this gives us some time to reduce your 2020 tax liability if you need that and are interested.  

  • Four: if you are eligible for the ERC, we need time to allocate expenses between the ERC and PPP. The ERC must be filed through your payroll company with an amended Form 941 for 2020. 

  • Five: if you have received a loan from HHS, we need to know if it is forgiven. See the next section relating to this topic.

  • Six: The IRS has confirmed the PPP expenses are deductible.  However, we are waiting on additional guidance on how to report this on the tax return.  

Depending on all sorts of circumstances, we are hopeful we will be filing your individual tax returns on time BUT it depends on the circumstances above. We will be sending out another “Extension” Eblast next week with more details.
HHS Loans (Income)

Some of you received money from HHS. This probably will be included in income BUT we need to know if the “loan” is forgiven. To date, guidance is needed. The loan forgiveness application is due out any day and should clarify the rules for forgiveness. You will need to apply for the forgiveness. The best and easiest way is to have used the income towards a drop-in patient revenue. For example, if you received $50,000 for HHS and your revenue dropped $100,000, you are eligible for the forgiveness. It becomes more complicated if this is not the case.

Again, we will need to know if the HHS income is taxable or not (if you have to repay it). Please let us know so we can treat it properly on your 2020 tax returns.
Interplay of HHS, PPP & ERC
None of the expenses can overlap. This is called double dipping and is considered FRAUD. Expenses used for PPP forgiveness cannot be the same as those used for the ERC or HHS.   
Some of you have not received refunds from the IRS for 2019. The IRS Commissioner has stated that the IRS still has a huge backlog of correspondence as a result of the Covid shutdown. Be prepared for a long wait on anything filed on paper or responses to notices.

Even our CPA Hotline is nonresponsive. It is what it is. . .
We hope you are all staying healthy, sane and keeping busy. We are headed into a very taxing tax season (ha, ha!) and will do our best to get back to you on a timely basis. 

Stay tuned for our next Eblasts!