PPP Traps: 1 in 5 Accountants Report Shady Dealings

Fake employees, fake businesses, and lavish spending mar the COVID relief program.

Have you walked away from any PPP engagements?
PPP Practice Management Do’s and Don’ts:
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By Sandi Leyva

With fast money comes fast fraud, and the arrests and jail terms are only just beginning for individuals who applied for PPP money under false pretenses and have already been caught. You’ve seen the headlines, where people from every walk of life including reality TV stars, rappers, a Wal-Mart manager, and even an NFL player have been arrested on charges of PPP loan fraud.

PPP fraud has likely already impacted your firm. The extent of the fraud is the real story.

One thing is fairly predictable: “Audits will pick up,” says Bradley Burnett, tax attorney and instructor of the PPP Forgiveness webinars being conducted by Accountant’s Accelerator and CPA Trendlines.

According to respondents of an ongoing survey being conducted by CPA Trendlines and Accountant’s Accelerator, preliminary results show that just over 1 out of every five accounting professionals offering PPP services (22 percent) has had to walk away from at least one PPP engagement.  And one firm has had to walk away from more than five PPP engagements.

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The Forecast: Partly Gloomy, Chance of Doom

Almost three in four accountants now foresee a deeper downturn for the U.S. economy.

It gets worse: Almost 25 percent of accountants forecast a “much worse” outlook for the nation’s economy over the next 12 to 18 months. And another 48 percent predict “somewhat worse.” (CPA Trendlines Research)

BUSY SEASON BAROMETER:
How accountants are battling the Coronavirus recession
Join the survey. Get the answers.

By CPA Trendlines Research

New CPA Trendlines 2020 Busy Season Barometer results bear bad tidings for CPA firms, their clients, and their families. The forecast is not good. Accountants know numbers, and the numbers they are seeing do not bode well.

MORE BUSY SEASON 2020: Busy Season Benchmarks in Free FallFIinal RS eFiling Stats: The End of Tax Season? | Say Hello to the New 24-Month Busy Season | 9 Big Ways the IRS Could Help Accountants | The Mystery of 10 Million Missing Tax Returns | Tax Pro E-Filings Down 20 Percent | IRS Web Traffic Doubles over Year-Ago | COVID Drowns IRS in New Filings |   Percent | IRS Web Traffic Doubles over Year-Ago | COVID Drowns IRS in New Filings | 2020 Tax Season Comes to a Screeching Halt | The Tax Season 2020 Dumpster Fire | Tax Pros Fall Behind 6.2% in Returns Filed
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As the U.S. braces for a summer surge in coronavirus infections, the economy is crashing – with GDP down at an annual rate of 33 percent last quarter, and a 10 percent drop from the first quarter – the worst declines in more than 70 years of record-keeping. And new jobless claims in the latest week rose by 867,000 to 17 million.

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Say Hello to the New 24-Month Busy Season

Deann Auman Hill and Mike Shost at AICPA Engage: “The 24-Month Tax Season?”

COVID chaos turns Busy Season 2020 from bad to worse.

BUSY SEASON BAROMETER:
How accountants are battling the Coronavirus recession
Join the survey. Get the answers.

By CPA Trendlines Research

Last year—the good old days!—Busy Season seemed to be about as bad as it could get. Congress enacted the Tax Cuts and Jobs Act without explaining how it was to be enacted, and then changed some things. And then the IRS shut down before the rules could be set and the new forms and schedules made available. And all of a sudden it was April 15.

MORE on the 2020 SEASON: The Mystery of 10 Million Missing Tax Returns | Tax Pro E-Filings Down 20 Percent | IRS Web Traffic Doubles over Year-Ago | COVID Drowns IRS in New Filings | 2020 Tax Season Comes to a Screeching Halt | The Tax Season 2020 Dumpster Fire | Tax Pros Fall Behind 6.2% in Returns Filed
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Tax practitioners had little good to say about 2019. According to last year’s CPA Trendlines Busy Season Barometer, 46 percent said 2019 was worse than the previous year. Only 13 percent thought it was “much better.”

That was then.

This is now. And, now is worse.

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Accounting Firms Take Billions in PPP Payouts

CPA firms grab the biggest slice of PPP loan payouts, accounting for 56% of the tax and accounting industry’s imperiled jobs. (CPA Trendlines Research)

Thousands of tax prep shops, bookkeeping companies, CPA firms, and payroll services take emergency loans, promising to save over 200,000 jobs.

By CPA Trendlines Research

Some 6,610 tax, accounting, payroll, and bookkeeping firms have so far received millions of dollars in Small Business Administration Paycheck Protection Program loans, potentially saving over 210,613 jobs, according to new data obtained by CPA Trendlines Research.

The CPA Trendlines full list of tax, bookkeeping, payroll and CPA firms is available to PRO Members here.

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The leading borrowers have all been CPA firms – each collecting $5 million to $10 million against a promise to save 10,298 jobs, more than half of the entire industry headcount threatened by the pandemic-fueled economic crash.

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The Top Six IRS #FAILS this Tax Season (So Far)

Erin Collins, IRS Taxpayer Advocate
Collins

Sending out notices with expired deadlines? Check.

BUSY SEASON BAROMETER:
How accountants are battling the Coronavirus recession
Join the survey. Get the answers.

By CPA Trendlines Research

It’s been a hard year for everyone, from pauper to president to tax practitioners. The latter have been triple-whammied by the need to keep clients and employees healthy, the shifting rules and deadlines made to accommodate the lockdown and the staggering, stumbling service of the Internal Revenue … well, Service.

MORE on TAX SEASON 2020: Tax Pros Handling Bigger Share of E-filings | How COVID Has Pulverized IRS Operations | The Mystery of 10 Million Missing Tax Returns | COVID Cuts Accounting Profits | Why Busy Season May Never Be the Same Again | Getting a Handle on COVID |

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Let us pause to pity poor Erin M. Collins, who late last year landed a great new job: National Tax Advocate. She replaces Nina Olson, who held that position from 2001 to 2019, bowing out in the nick of time, leaving behind an impressive record of improvements in the American system of tax collection.
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How COVID Has Pulverized IRS Operations

Delays, postponements, system failures, shutdowns, and mounting backlogs.

By CPA Trendlines

Taxpayers who filed a 2019 paper return and are entitled to refunds may be in for a long wait, according to the first report to Congress from the new IRS watchdog.

MORE on the 2020 SEASON: The Mystery of 10 Million Missing Tax Returns | Tax Pro E-Filings Down 20 Percent | IRS Web Traffic Doubles over Year-Ago | COVID Drowns IRS in New Filings | 2020 Tax Season Comes to a Screeching Halt | The Tax Season 2020 Dumpster Fire | Tax Pros Fall Behind 6.2% in Returns Filed
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The IRS was forced to suspend the processing of paper tax returns, and as of May 16, it estimated it had a backlog of 4.7 million paper returns, says National Taxpayer Advocate Erin M. Collins, who succeeded long-time predecessor Nina Olsen just as the pandemic was ramping up.

Although the IRS is reopening some of its core operations, it is not clear when it can open and process all the returns sitting in mail facilities, the Taxpayer Advocate Service reports.

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The Seven Factors Keeping Accounting Firms Afloat Amid COVID-19

And the top five survival strategies, according to CPA Trendlines Research.

Confirmed cases. Source: jhu.edu

CPA Trendlines Business Barometer:
How accountants are managing:
Join the survey. Get the results.

By CPA Trendlines Research

Under the historically unprecedented pressures of the Covid-19 pandemic, U.S. accounting firms large and small are adapting as fast as they can—or rather, as fast as they must.

MORE:  Feeling the Pain? The Biggest Job Losses by Client Sector  |  Tax Season Pivots to Covid Rescue Season  |  How Accountants Are Coping with COVID-19 |  SURVEY: Confronting Coronavirus Chaos | Planning for the Coronavirus Recession | Tax Season Turns Ugly under Coronavirus | Tax Season Turns Ugly under Coronavirus | Coronavirus Culture-Shift Hits Accounting Firms | 41 Items to Check on Business Tax Returns | Tax Season Funnies: The Poetic Versions | How to Stop Drowning in COVID Tax Deadlines [Webinar]

CPA Trendlines is providing FREE access to some of our latest coronavirus crisis updates: Start here for a guide to all our free coverage.

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Practitioners are striving, struggling, scrambling to do what they have always done, and on top of that, to learn what they never knew in order to serve clients as in ways they needed to before.

Less than three months from when the first cases were reported, the pandemic has taken the lives of over 70,000 Americans and is approaching 3,000 deaths a day. While the pandemic has been a shock to the economy, tax and accounting practices appear to be maneuvering through it better than many other businesses.

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Tax Season Pivots to Covid Rescue Season

Shifting from tax prep to Covid relief: Karyn Vaughn, Deann Hill, and Joanne Bryson.
Shifting from tax prep to Covid relief: Karyn Vaughn, Deann Hill, and Joanne Bryson.

It ain’t pretty: 62% of accountants switch outlook from “better” to “worse.”

BUSY SEASON BAROMETER
How’s COVID-19 impacting accounting firms?

Join the survey. Get the answers.

By CPA Trendlines Research

The sentiments of accountants this busy season have been as up and down as the Dow Jones.

MORE on TAX SEASON: How Accountants Are Coping with COVID-19 |  SURVEY: Confronting Coronavirus Chaos | Planning for the Coronavirus Recession | Tax Season Turns Ugly under Coronavirus | Tax Season Turns Ugly under Coronavirus | Coronavirus Culture-Shift Hits Accounting Firms | 41 Items to Check on Business Tax Returns | Tax Season Funnies: The Poetic Versions | How to Stop Drowning in COVID Tax Deadlines [Webinar]

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The year started off on an optimistic note. But by the time the coronavirus got real, all hope had been abandoned.

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