We're joined by tax expert, tax attorney, author, and Forbes columnist Kelly Phillips Erb AKA @taxgirl. Kelly gives us the rundown of what's been going on in Congress with tax deadline extensions, small business relief due to coronavirus, and more. We also discuss the Senate stock sale scandal, potential job losses in accounting due to the recession we have almost certainly entered, accounting firms going remote, the challenges of remote work, and how we can more effectively communicate clients about COVID-19.
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Kelly Phillips Erb: [00:00:21] What the bill does is it expands the eligibility for small businesses, meaning those that are under 500 employees to receive loans under the Small Business Act. These loans are specifically targeted for folks who are affected by the virus, and they can be used for payroll ...
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Blake Oliver: [00:02:20] Welcome to The Cloud Accounting Podcast. I'm Blake Oliver.
David Leary: [00:02:23] And I'm David Leary.
Kelly Phillips Erb: [00:02:24] And I'm Kelly Phillips Erb.
David Leary: [00:02:25] Kelly! Thank you, thank you, thank you for joining us! Almost a year ago, I tried to have you join the podcast, and I think you had tickets to a hockey game, or childcare took precedent. So-
Kelly Phillips Erb: [00:02:38] Probably. Yeah, probably hockey.
David Leary: [00:02:39] So, last week, all this tax change, and deadlines, and all these things kept coming out, and I was like, "Oh, I should get Kelly on again." Then, you responded to me. This time, you were like, "I'm not doing anything now. Kids are just at home." For those of you who don't know who Kelly is, Kelly Phillips Erb, she is @taxgirl on Twitter. Kelly is a columnist. She writes for Forbes, and she writes for Bloomberg Tax. To some extent, I feel like she's been- with all the rumors that were happening last week, she was the one constantly tweeting on top of things and saying, "This is just a rumor. This hasn't been finalized yet," from the tax situation. Blake and I are sending articles to each other, and I almost feel like I'm running around with my head cut off, like a chicken. There's just been like a week of announcements, or hopeful announcements, with deadlines, and tax refunds ... We're bringing Kelly on to hopefully straighten Blake and I out on where those things are at. Before we jump into that, though - Blake, how's it going?
Blake Oliver: [00:03:32] It's okay. I apparently left Los Angeles at exactly the right time because they just shut down the city. I'm in quarantine now in Phoenix. Gonna ride this out from here. So, I'm in my parents condo, and they're helping to take care of Thomas, our five-year-old son. My wife and I both work, so this is the only way we can make it work. One of us would have to quit our jobs, otherwise. So, yeah-
David Leary: [00:03:53] That's been my struggle this week with the kids around. It's super-hard.
Blake Oliver: [00:03:58] It's really hard.
David Leary: [00:03:58] It's super-super-hard.
Blake Oliver: [00:03:59] I've got some stories about working remotely with kids, so maybe we can help offer a little bit of advice, or maybe- yeah, Kelly, what are you doing to get through this?
Kelly Phillips Erb: [00:04:08] Well, my poor kids ... I've been working from home a lot, like my whole career. It was actually one of the reasons that I set up my practice the way that I did, because I'm a tax attorney, as well. My kids have- they've been at the office. Yesterday, my daughter was watching the White House briefing with me. This is just something ... Honestly, they know more than a lot of people in Congress, right now. They've been paying attention ... That's how I keep them occupied. I regale them with tax stories.
Blake Oliver: [00:04:41] That is great. The apple does not fall far from the tree, as you said in your tweet.
Kelly Phillips Erb: [00:04:46] Yes.
David Leary: [00:04:46] We should have them join the podcast and clarify [crosstalk]
Kelly Phillips Erb: [00:04:47] I don't know that you want that. They have some very strong opinions.
Blake Oliver: [00:04:52] We could do a Kid's Edition for all the accountants to have their kids listen to, when they have to do calls [crosstalk]
Kelly Phillips Erb: [00:05:00] -well, nothing for nothing, and actually, what might be a really cool future piece is I did have a discussion- I know this is off topic from tax, but I did have a discussion with my daughter yesterday because, in the midst of all this financial news, she did look at me and said, "Mom, do we have money? Are we gonna be okay?" I do think that's something that a lot of kids are really anxious about, right now.
Blake Oliver: [00:05:19] Well, one thing that a lot of accountants were anxious about was the tax deadline. So, maybe you can fill us in on what has happened in this crazy week, when it comes to the filing deadlines, the payment deadlines. Maybe walk us through the timeline because a lot has changed really quickly.
David Leary: [00:05:35] I think, as of last Friday, nothing was ... I don't even know if some of the extensions were announced then. It was just lots of rumors, at that point; even as of last Friday, when we recorded.
Kelly Phillips Erb: [00:05:45] Right. What happened was, in terms of how the rumors started, different offices were making decisions about keeping people home. It alarmed a lot of tax professionals, who were worried that they were not gonna be able to have face-to-face contact with their clients. While it's true that a lot of folks can work remotely, sometimes you do have to get signatures and other things that maybe can't be done remotely, especially for certain clients who are, technologically, a little challenged.
[00:06:14] There were some conversations that were had. The AICPA, for example, was having intense conversations with the service about moving the deadline. I think what happened is a lot of people who were involved in some of those high-level conversations decided that it was a done deal, and they announced it to various folks. I did get an email from - and I'm not gonna name it - but from a fairly large tax and accounting firm that very competently announced that there was a deadline shift to October. I also saw colleagues of mine suggesting that the deadline had been moved to July. Again, this was all last week, before anything was final. Then, what happened from there is that the White House has been holding regular briefings about the COVID-19 crisis and what's been happening, and in one of those briefings - I wrote about it; I actually saw it when it happened, and I think this is what contributed to the confusion-
David Leary: [00:07:17] Before you talk about the briefing, for a moment, didn't the AICPA, late last week, put out recommendations, as well, on what they thought deadlines should be?
Kelly Phillips Erb: [00:07:25] Yes, and there've been a number of groups that have done that. It's not just the- I mean, the AICPA, obviously, has been very on top of this, but there have been also a number of other groups that have said to the service, "We need to change these deadlines," especially as the states were changing them. Last week, California extended ... There have been a number of states; I have a list of those, as well. Some states were extending deadlines. The reason that this all mattered - for those of us who are in the profession - is because Monday was the deadline for a lot of small business, and business tax returns. So, a lot of tax professionals were hopeful that there was gonna be an announcement before Monday, March 16, that the deadline was being moved for corporate and individual returns, and that didn't happen.
[00:08:13] But I think that was kind of what was fueling the sense of urgency was that they wanted to get that announcement out before March 16 and, of course, that didn't happen. What did happen is that the president had a briefing, where he had Mnuchin- Secretary of the Treasury, Steven Mnuchin, on the White House briefing. He announced, during the briefing, that the payments would be delayed. What he actually said was that they were going to accept deferred payments and waive penalties and interest. He did not say that the deadlines would be extended. In fact, he very clearly said that if you needed an extension, you could apply for one.
[00:08:57] Well, not everybody watch the briefing, obviously, and you know how folks hear sound bites. Then, the headlines started flying that the tax deadline had been extended. I think some of that was an honest mistake. I think some of it was folks saying that tax deadline meant payment. Then, there's been a lot of discussion - you've probably seen on Twitter - about whether or not there's really any- would have been any impact on taxpayers to not file a timely extension, if they didn't. There's a lot of confusion that came out of that announcement, and the IRS was very, very slow to issue guidance. A lot of folks felt that maybe the reason for that was because they were blindsided, that they didn't expect that announcement. I don't know what happened. None of us were in that room. But I do know that the IRS guidance did not come out immediately.
[00:09:46] The IRS has issued guidance, twice now, in response to it, in response to that conversation. On - I believe it was - the 18th, and the 19th, they issued guidance clarifying that payment deadlines had been extended but filing deadlines had not. Many of us were actually writing about that this morning, when the notification came over Twitter from the Treasury Secretary that the filing deadline has also been pushed to July. That is not yet confirmed on the IRS website; although, again, it's from the Secretary of the Treasury, so I think we can rely on it. But if you check the IRS website, as of Friday morning, it does not say that the filing deadline has been moved. So, I think we're all sitting, waiting for guidance.
[00:10:37] Further complicating things, the Senate introduced a bill yesterday that would extend the filing deadline and would also extend the time to make estimated payments through October. So, again, a lot of dates being thrown around; a lot of information being thrown at taxpayers, who are maybe in a position where they're not meeting with their professionals regularly, right now, because of the crisis. So, it's a really confusing time for a lot of folks.
Blake Oliver: [00:11:07] We definitely know, now, that the tax- the individual tax deadline is now July 15. Do I have that right?
Kelly Phillips Erb: [00:11:14] Yes.
Blake Oliver: [00:11:15] That's filing and payment; but estimated payments for like the second- estimated payment, all that, everything's still the same, other than that change.
Kelly Phillips Erb: [00:11:27] Well, yeah, but there's a lot of confusion, as you probably know [crosstalk] because the guidance from the service specifically says that the estimated payments- the waivers for the penalty, and interest on the estimated payments are those due on, and they actually use that language - "Due on" - April 15, and they're not due, now, until July. Well, of course, June happens to be the fluky date in the estimated payment scheme, where you make one on April 15, and then you make another one two months later. So, that's confusing for folks because they're trying to figure out, does that mean that the estimated payments- the second estimated payment is actually due before the first? I think the way it sits, right now, the answer is yes to that.
[00:12:13] There were some folks tweeting, and I actually thought it was pretty funny. They said that the IRS made it as easy as 2-1-3, because now, of course, the estimated payments are out of order. If the Senate bill gets pushed through, or if the IRS issues guidance, I expect that we're gonna see that resolved because that is something that a lot of people are confused about, right now. It just realistically doesn't make sense that - especially now that the filing deadline has been moved - why would you move filing, and payment deadlines to July, but still expect people to pay estimateds in June? It's just not logical.
David Leary: [00:12:51] Kelly, have you been keeping up with the whole, "Hey, the IRS is gonna cut checks ..." They're gonna be sending people money. Like all of that stack of news that keeps seeming to change, as well?
Kelly Phillips Erb: [00:13:00] Yes.
David Leary: [00:13:00] Is the IRS capable- are they staffed to do this, or are they gonna be shut down because of the virus? How are they gonna print and mail these checks?
Kelly Phillips Erb: [00:13:08] Oh, my gosh. Well, that's like another week of podcasts for me to rant about [crosstalk] funding. But it is remarkable to me that Congress is so dismissive of the money that they send to IRS, and yet they keep giving them more jobs to do. The way that this- the bill is set up, right now, and again, this is a proposal. This isn't fixed. I do think we're gonna see some kind of check. It's just a matter of how it's gonna happen. Right now, the way it's written is it would be tied to returns, to tax returns, so that does signal, I think, that the IRS would be in charge of cutting those checks. Are they staffed for it? I honestly ... I don't know.
[00:13:46] You've seen, as well as me, folks complaining nonstop. I have, and I'm not kidding, phone calls from the lien department that haven't been returned since July of last year. So, with that kind of lack of response time, I don't see how we're gonna have services ... The reason I hedge a little bit is because the Senate wants this - some people in the Senate want this - to be a priority. The president wants this to be a priority because money in hand is good for people, for the economy, is kind of the theory, right? But I don't see the IRS going and hiring a whole lot of folks to make this happen, so what I fear is gonna happen is that I think these checks will go out from the service; I think they will be a priority; but I think what that means is that other taxpayer-related services will get pushed back.
Blake Oliver: [00:14:39] Well, and what about the coronavirus situation at those IRS offices, as David said? We talked last week about how the union representing IRS workers is complaining that the IRS management isn't taking enough precautions for their employees. Many of those workers at the IRS are- I think almost 40- 40 to 50 percent are not that far away from retirement. It's kind of an aging workforce there because they haven't been hiring in recent years, so their current staff has just been not really turning over.
Kelly Phillips Erb: [00:15:10] Right.
Blake Oliver: [00:15:10] So, what is gonna happen if these people are the ones keeping- continuing to work, and there is a COVID-19 outbreak in those IRS offices? Are they just gonna keep working, or are they gonna go home? Maybe you have some insight into this, Kelly, but I doubt they have the systems to work remotely.
Kelly Phillips Erb: [00:15:27] Well, I know that some of them do work remotely, but typically those are things like revenue officers; folks who are making calls and doing case management. I think that's something that is more easily done from home. When you're talking about taxpayer checks, notwithstanding the physical piece, which is that not everybody has direct deposit, I think there are some real security issues that you have to worry about when you have remote workers, at that point, because how- who has access to the system? Who has access to account numbers? The amounts of the checks, even though I know people have been talking about them being floated as flat checks, if you read the Senate proposal, it's not flat. It actually is gonna depend on how much money you make, and how many kids you have, and your filing status. All of those kinds of things would be tied to tax returns.
[00:16:18] You also have to have a valid Social Security number or [inaudible] taxpayer identification number. Again, those are things that are gonna have to be cross-checked on systems. I don't see that being an efficient system that's gonna be done from home, so I agree. I think that there's gonna be a lot of challenges in terms of staffing, and worker retention, because that's another issue. When you talk about- when you were mentioning the numbers of folks who were coming up for retirement age, let's assume that those folks stay in the job, and they don't get sick. What kind of signal is sending out to future workers about the way that they value Treasury workers, and IRS workers?
[00:16:56] So, I do think that they have to be careful. If we decide they're essential, and accountants and attorneys are not, which is what - in some states - seems to be the case ... In Pennsylvania, where I am, right now, for example, attorneys were dubbed nonessential. We actually have been forced to close. There's a lot of moving parts that I think are gonna make this difficult, not just for taxpayers, but for tax professionals, and for the service.
David Leary: [00:17:23] I think that covers what's happening with taxes, and the IRS, but I've talked to a lot of accountants and bookkeepers, and they're very scared. A lot of small businesses are in pain. They're afraid they're gonna lose half their clients because so many businesses are shut down. So, is there any that you've seen on the radar, in these bills, as you're reviewing them, that's gonna help small businesses, specifically?
Kelly Phillips Erb: [00:17:45] Yeah, I think so. There was a lot of concern in the House bill, the one that got passed last week, about whether or not that relief was targeted enough to help small businesses. So, the Senate bill, which the House bill last week- that was passed last week has been signed into law; that was signed this week. There's a new bill that's been introduced in the Senate by Senate Majority Leader Mitch McConnell. I referenced it earlier. It has some tax relief, but it also has some small business relief, and also some student loan relief. Again, right now, these are proposals ... It's in the bill.
[00:18:21] The bill is actually over 200 pages long. It's huge. I slogged through it last night, and I do have a piece up about it. It offers a lot of relief for a lot of different segments of the economy, and small businesses are in there. One of the things that it would do is there are small business loans that are available, but the criteria for those can be kind of difficult. What the bill does is it expands the eligibility for small businesses, meaning those that are under 500 employees, to receive loans under the Small Business Act. These loans are specifically targeted for folks who are affected by the virus, and they can be used for payroll; they can also be used for those paid sick leaves that folks were anxious about having to pay; continuation of healthcare, salaries; it can also be used for mortgage payments, rents, utilities, and debts.
[00:19:20] The key bits on these are that the loans that are used to cover payroll may also be eligible for forgiveness under the bill, if they keep employees. They're trying to create incentives to hold on to employees and not let them go. Also, folks that run bars and restaurants, if they're using the money to pay employees that normally would be tipped, they also may be eligible for loan forgiveness. So, that's one piece in that bill that I think a lot of senators are on board with. There are some other bits that aren't quite as popular. One of-
Blake Oliver: [00:20:01] I just wanna ask you one question about that part you just mentioned. You said small businesses. It is all small businesses, or is it limited to certain types, or a certain size? How much money can they get?
Kelly Phillips Erb: [00:20:15] The way it's written, right now, is under 500 employees, and the loans are up to $10 million. Again, that doesn't mean that every small business can get a loan of up to $10 million because the loan criteria still exists, but it's expanded it so that more businesses would be eligible, and they would be eligible to do things that you might normally not be able to get loans to do. Like, if you go to your bank normally and say, "I need a small business loan so I can pay my folks- pay my employees," they might be a little skeptical. This has made that very clear that it can be used for payroll support.
[00:20:51] Again, I think the more interesting piece for a lot of small businesses is the idea that, if they hold on to employees, they might be eligible for loan forgiveness. If that makes it through, I think that's a game-changer for a lot of folks who are paying employees, right now, to not do anything, or to work limited hours. They don't wanna let those people go, but as a small business ... I'm a small business owner. You can't promise people that you'll keep paying them, if the money isn't coming in.
Blake Oliver: [00:21:22] Yeah, and that's the thing that could kill this economy is when you have 20 percent or more of the workforce suddenly out of work.
Kelly Phillips Erb: [00:21:28] Right.
Blake Oliver: [00:21:28] People can't pay their bills. They can't pay their rent. They can't pay their mortgages. That's where you get a situation that spirals out of control. So, hopefully, this will make it into the bill.
Kelly Phillips Erb: [00:21:38] On a related note, they also have- there is a proposal that would allow folks to take either distributions, or loans from retirement plans and not be penalized, and that would be up to- the number that's in the bill, right now, is $100,000. Basically, the idea is that if you are forced to stay home, or if you have expenses that are related to the coronavirus because you're taking care of someone, or you have healthcare expenses, that you would be able to tap those retirement accounts and not be penalized because, as you know, take them now, you can be penalized. Also, it's not clear that all retirement plans that allow for loans would extend in these circumstances, and the bill says, yes, it would be appropriate.
Blake Oliver: [00:22:29] But that would definitely be a last resort sort of thing to do, from a financial planning perspective, because the markets are way down, and you don't wanna [crosstalk] all the advice I've seen is to stay in until the markets come back with your retirement accounts. Right, David?
David Leary: [00:22:43] What a nice gift from these senators, who were briefed on all this February 24th, and some sold stock.
Kelly Phillips Erb: [00:22:50] Yeah.
David Leary: [00:22:50] Now, they're telling us we can cash out some of our portfolios, now that the market's down 40, 50 percent. Wow, what a gift from our senators!
Kelly Phillips Erb: [00:22:58] I agree with you that it's a last resort, but I also think, realistically, that most Americans don't have easily ... They can't just run out and grab $10,000 out of a savings account. I mean, a lot of your everyday Americans' savings, quite frankly, is in retirement accounts, and I think that that's sort of what that's a nod to. I agree that it's unfortunate that the markets are down, and it's not an ideal time to have to do that, but if the choice is that, or how do I pay for groceries this month, I think that it's an option.
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Blake Oliver: [00:24:48] I just wanna touch on that story, David, that you mentioned because I think everybody in America should know what happened here. It's just shocking. Senate Intelligence Committee Chairman Richard Burr of North Carolina sold off as much as $1.7 million in stock just before the market dropped in February. This is a guy who is privileged to have access to national intelligence that included information on the coronavirus. There's a recording of him warning a group of his constituents about this, while simultaneously telling the public that everything was gonna be fine. This is one of the most shocking things that I've seen come out of this, and two other senators-
Kelly Phillips Erb: [00:25:31] I think the number's up to four, now, actually, I think I saw an article this morning that they're saying that at least four senators-
Blake Oliver: [00:25:38] Yeah, there was the new senator from Georgia, was it? I forget her name. Also, Dianne Feinstein. So, this is not just a Republican thing. This is- this crosses the aisle. I bet we'll find that a number of highly placed people in Congress did insider trading.
David Leary: [00:25:54] This Burr guy's even worse because, when they had the bill a decade to go, after the 2008 situation - they passed that bill about Congress and insider trading - he's one of the three senators that voted against it. So, this guy's probably been doing this constantly, any time he gets news. This is when people overthrow governments. It's crazy. Like, what are they thinking? They're so greedy. It's unbelievable to me! I don't wanna get started. I was cussing last night. I told Blake, I'm gonna cuss on the podcast. It is unacceptable, at so many levels.
[00:26:27] In the meantime, you're hearing about ... I'm glad this bill stuff for restaurants. I went to two webinars this week that are really focused on restaurants who are struggling with cash flow, obviously. I'll put the show links in, but there are two webinars put on by accountants and bookkeepers that just specialize in restaurants; really just helping them get through the next week, two weeks - how do you do it? So, when these loans ... These loans need to get here.
Kelly Phillips Erb: [00:26:51] In states like mine, our governor, Governor Wolf, in Pennsylvania, has actually ordered all restaurants to close even for takeout after 8:00 at night, now. I'm not sure why that provision's in place, but I do know that all dine-in restaurants are closed now, in the state of Pennsylvania ... My husband teases me because I over-tip at the best of times, but I we ordered pizza last week, when the quarantine ... Because of the kids; because when the quarantine first hit ... I over-tipped the pizza guy, and he was shocked. I wanna say whenever I tipped, I didn't ever tip him like by egads. It was a few extra dollars over what I would normally give. I was just giving it to him, and he asked me if I wanted change. I said no, and he literally stood there, looking stunned.
[00:27:44] My takeaway from that is that nobody else was doing that. That was the thing that was bothering me. He said, "Well, thanks very much for this." I said, "Well, you came out here and gave me food. Of course, I'm gonna give you a nice tip for that." I do think people need to remember that, as they're doing their takeout, and their delivery, that while there are bills in Congress that are intended to help the restaurants, we can do our part, too. I know that folks don't necessarily have lots of cash floating around, but if somebody is bringing you food, they're working; they're hustling to get ... It's a convenience for you. I say make sure that you acknowledge that they're out hustling.
David Leary: [00:28:26] It'll be interesting data, whoever puts that out, because Square obviously knows how much people are tipping, or all these electronic point-of-sales do, right? If tipping is down because that's even worse.
Kelly Phillips Erb: [00:28:36] [Distorted audio] I almost always tip in cash for my delivery folks, so I'm not [distorted audio]
Blake Oliver: [00:28:43] Well, clearly, this is a disaster for restaurant, for hospitality, for entertainment. My brother-in-law is a jazz musician, and all of his work evaporated in one week, and now he's at home wondering, "How am I gonna pay the rent?" It also doesn't help that he's an extroverted person, so now he's stuck at home, and doesn't ... He's called me more in one week than I think I've talked to him in a year. It's tough for people.
[00:29:10] Accounting is not necessarily going to escape. I mean, we're the sort of industry that tends to do pretty well in a downturn because people need the numbers; they need plans; they need to know how they're doing; where they can cut. I spotted an article in CPA Trendlines, a report looking at what happened, in previous downturns, to the accounting profession and trying to figure out what might happen now. If past recessions are any guide, then they are estimating that the profession could lose up to 100,000 jobs, which would be about 10 percent of the current accounting workforce, encompassing all accounting. That would be for about 10 years. Sorry, it would be 10 percent and could take up to seven years to recover all of those jobs.
Kelly Phillips Erb: [00:29:57] Wow.
Blake Oliver: [00:29:57] It's like this ... This is really serious. I mean, Steven Mnuchin, he came out, and he said we could have unemployment at 20 percent. Then, I went and looked at what unemployment was during the Great Recession, and it was- 10 percent was the highest. I don't mean to be an alarmist, but I think we need to be realistic, and this could be worse. This could be Great Depression-level unemployment, if we don't address this issue of people not having paychecks and still needing to pay the rent.
Kelly Phillips Erb: [00:30:26] Right, and I think that's why some of these provisions are important. It's interesting because I know when the payment deadlines got pushed, but the filing deadlines didn't - which, again, I understand that the filing deadlines needed to be pushed - but when they weren't, someone had asked me, how does this help the profession? I said it's not intended to help the profession. That wasn't ever what the pushing this off was about. It's about giving people more money to hold on to. Delaying the payments mean that taxpayers hold onto their money a little longer.
[00:31:00] In that Senate bill, they actually would extend estimated payments all the way through October, so that you wouldn't have to pay estimated payments as a self-employed person, or otherwise someone subject to estimated payments through October. Then, also, corporations, it would be the same. Corporations would have their tax payments delayed through October. So, I think that one of the things that Congress is trying to do is to delay these payments as long as possible. What that would mean for the economy, long-term, I don't know that we know what that's gonna mean. But extending payroll taxes, for example - that's also in the bill - extending the payment deadlines for those; just allowing folks to hold on to money a little longer.
Blake Oliver: [00:31:52] Yeah. The big question is how long does this shutdown go? Does it extend from California, and New York, and Washington, into other states? I mean, if it goes until the fall, which might be necessary, then it's gonna take more than just delay of payments because those payments are gonna be due at some point. We can kick the can down the road only so long, right?
Kelly Phillips Erb: [00:32:14] Right. Absolutely [crosstalk]
Blake Oliver: [00:32:14] Where should we go next, David? Because I've got some stuff about the CPA exam; working from home in public accounting firms ...
David Leary: [00:32:28] Yeah, we can probably get into working from home a little bit, and then [crosstalk]
Blake Oliver: [00:32:31] Before we do that, let me just say, in case anyone didn't know, Prometric, the testing centers where people go to take the CPA exam, those are closed for 30 days, until April 16. I think it's unlikely they'll be opening in April. Probably not necessarily gonna happen. So, people who were gonna take the CPA exam, now, that's delayed. NASBA has advised the State Boards of Accountancy they should allow folks who aren't able to take it in this window to delay that.
Kelly Phillips Erb: [00:33:02] Are accountants subject- CE compliance, is that on a rotating basis, or is it annual? [crosstalk] for attorneys, that we've actually extended- the Bar has extended the deadline because those are quarterly, depending on who you are. So, everybody is- kind of everybody's divided into groups, so people whose continuing-education requirements are due in April have been extended.
Blake Oliver: [00:33:30] Oh, that's interesting. I haven't heard anything about that. The requirement in California is 80 hours, every two years, and it's based on your renewal date for your license. So, probably, that won't be adjusted for some time. I don't know, maybe people are coming due. Luckily, there's actually a lot of online options. I don't know about in the legal world, but there's a ton of online options now for continuing education for accountants.
David Leary: [00:33:53] Which are more important than ever, right? Because conferences are being canceled everywhere.
Kelly Phillips Erb: [00:33:58] Right.
Blake Oliver: [00:33:58] AICPA Engage has been canceled. That was the big AICPA conference. That has been ... Well, it's been delayed, and there is no date, as of yet, when it will be rescheduled. A bunch of others, of course. David, you're tracking that at accountingconferences.com.
David Leary: [00:34:15] Correct.
Blake Oliver: [00:34:15] Which is a website that you set up to help people know what's been canceled. I think we can safely assume that anything in April and May is canceled, at this point, right?
David Leary: [00:34:23] There's a couple of ones that either ... Probably they just haven't communicated it in a way where it's easy to figure out, but that's the whole point of the site is you just go to one spot, and they're all listed, if it's been canceled.
Blake Oliver: [00:34:35] Now, going to the remote work, and the working from home, I think it was last weekend, we were talking about how a lot of accounting firms and the big ones, in particular, were still having people come into the office. That has, of course, all changed in the course of a few days. Going Concern has a list of public accounting firms that are in mandatory work-from-home mode, and you can find that link in the show notes. It's a long list. I can't even read them all ... All the big ones - Deloitte, PwC, Ernst & Young, KPMG, RSM, Grant Thornton. I think Grant Thornton was the first to send everyone home.
[00:35:08] This is really important because you can't- a lot of them were sending out emails saying, "Work from home if you can; if your client work allows it," but that doesn't really work in public accounting because everybody's gonna take that to mean, "Well, if I can come into the office, I should. If I'm not sick, I should." Now that everyone's mandatory work-from-home, hopefully ... The cases of COVID-19 that have been spreading in some of these offices ... Ernst & Young had a case; a few cases; so did some of the other Big Four. Hopefully, this will- we'll do our part, in the accounting world, to limit the spread.
David Leary: [00:35:41] I think the working at home is getting ... We've talked about this. You're going through it. I'm going through it. You're working at home with your kids.
Blake Oliver: [00:35:49] Yeah.
David Leary: [00:35:49] I've started to really worry about the mental health of accountants and bookkeepers in this because, yes, accountants and bookkeepers are in the same spot. They have to go home. They have to work from home. They have a spouse there that's maybe working, not working, right now. There's a lot of stress. The kids are there. There's a lot of stress. But I think what's different for accountants and bookkeepers is they're taking on the stress of 80 of their clients, who are all freaking out and coming to them ... The burden- the mental weight that I feel like is on accountants and bookkeepers that I've spoken to ... To be honest, I started crying yesterday. It really concerns me about the mental health of our accountants and bookkeepers who are out there. That's why I'm glad the tax deadline got moved, because it's just- it's a weight that's off their shoulders a little bit. They get some elbow room to take a breath; but they're weighing on that.
Kelly Phillips Erb: [00:36:34] We have the same issue in the law, because I have clients on the compliance, and the controversy side ... I have clients, right now ... I got a call ... Keep in mind, we've been talking about working from home. I got a call yesterday about an offer in compromise that I had submitted. It's crazy to me that someone is calling me to talk about an offer in compromise. I feel like all of those kinds of issues should be pushed off, right now. The IRS should not be collecting. The IRS should not be pursuing taxpayers who are not getting paid right now. It's a similar thing.
[00:37:13] In this particular case, I have- one of those taxpayers had a heart issue and was in the hospital for all of December. He's out now, but when I was talking to his wife last month, when we saw this coming down the pike, she was joking - we were only sort of joking - that this is the kind of thing that could send him back to the hospital, because it's an enormous amount of stress to put on taxpayers. Exactly what you're saying about bookkeepers and accountants, we have the same issue in the law that those folks ... We're shifting those burdens to us. We're the ones staying up at night, staring at the ceiling, wondering how we can maneuver an additional extension so that somebody doesn't lose their house. It is a lot of stress to carry around.
Blake Oliver: [00:38:01] I'm curious to know how people are ... David, you posted something on Twitter about the emails to clients, or emails from companies about coronavirus, and some of them are coming off good, and some of them not so good, right?
David Leary: [00:38:16] I mean, there's the volume of them. I'm getting emails from a place I bought car tires from eight years ago - a tire repair place - how they're handling ... Every time I open my email, there's 40 more. It's just noise.
Blake Oliver: [00:38:16] Yeah, and it doesn't ... It just adds to the stress, if they're not helpful. If they're just repeating something we already know and saying, "Oh, we're wiping down surfaces to protect you." Okay, great ... Everybody is doing that. I was curious, what's the best practice for accountants communicating with their clients about this? Because I did a webinar, earlier in the week, with Will Lopez, over at Gusto. We asked the folks on the webinar: "How many of you have done a mass email to your client base? How many of you have communicated?" Actually, a good chunk had not yet done it.
[00:39:08] So, there's a challenge here because everybody's getting communications about COVID-19, like you said, from the random tire place, where they bought something eight years ago, so we don't wanna just add to that noise. We wanna be- as practitioners, we wanna be sensitive, but we also don't wanna be out of communication with our clients. So, what is the best way to reach out to them? I thought that Karen Rayburn of "The Profitable Firm," she wrote a really good post about ... It's called, "How to (and not to) write an email about COVID-19 to your clients."
David Leary: [00:39:41] Oh, good find.
Blake Oliver: [00:39:41] Yeah, and the first thing she says is the smartest thing, which is, if you can, call them individually; leave a message, send them a text message, be personal with this because it's very sensitive, and ask them how they're doing. You should also send a firm-based communication. Then, she has guidelines for how to do that. For instance, start positive. Don't start by telling them there's a global pandemic, and a stock market crash. We all know this, right?
Kelly Phillips Erb: [00:40:09] Right.
Blake Oliver: [00:40:09] I keep getting those emails saying ... It's just nonsense. Then, make it clear; keep it short, and make it clear why you are writing that email and have a call to action. Don't just write this email for no reason. So, if the call to action is: "Schedule a meeting with me to talk about what we can do during this time," have a link for them to book the meeting, and then, perhaps, link to something longer. If you've got a lot to say about this, link to a blog post on your website. Don't write an essay. I thought that was really nice. It's good advice for how we can stay in touch with our clients and be sensitive, at the same time.
David Leary: [00:40:48] It makes sense to have it [crosstalk] Oh, go ahead.
Kelly Phillips Erb: [00:40:50] I was just gonna say, I would add two quick things. One is - and it may sound self-serving coming from a lawyer - but my husband also is a lawyer, and he does employment and corporate law. One of the things that they've been working with clients on, who are small-business owners, is crafting those kinds of emails because, sometimes, depending on the industry, there may also be mandated requirements; things that you have to disclose.
Blake Oliver: [00:41:17] Mm-hmm.
Kelly Phillips Erb: [00:41:17] Obviously, if it's just working from home, that might not be something, but we were talking about things like service of process; things that you might not think about normally. One good piece of advice is - you know I always say - you should always have a team, anyway. You should always have a good accountant; you should always have a good lawyer; you should have a good health insurance advisor. There are people that you should have on your team at all times, but now, it's a good idea, I think, for small business owners to shoot their lawyers a note and say, "Is there anything I need to be telling my clients?" It doesn't all have to be doomsday, but it may be that if you're not gonna be at your office, you have an obligation to let them know. If records are offsite, you have an obligation to let them know. Again, really industry-specific, that would be one thing that I would consider doing - just a real quick email to your attorney.
[00:42:05] The other thing I would consider is - I started doing this last week - rather than send out a mass email, which we have not done from the firm, we actually started putting a tag on the bottom of our signatures. It's in red. Our logo's red, too, so it doesn't look weird. It just reminds- well, not reminds people, but advises people that we're working from home remotely, and that we appreciate their patience, and we've given them alternative contact information, and told them that the best way to reach us is by email.
[00:42:36] So, I think that there are ways that you can communicate with your clients without it being so over the top. Every time someone gets an email from me, at the bottom, from the firm, it just says ... I think it's two sentences. Again, "Just please note that we are currently working remotely. The best way to reach us is via email. Here is also a really good fax-number type thing." So, I think that there are soft ways that you can advise clients without punching them in the face.
Blake Oliver: [00:43:03] Yeah, that's great. Great advice. I would love to keep discussing this with you, Kelly. This has been super-helpful for me, personally, and I know our listeners are gonna find all of your reporting and insights really valuable. If folks wanna follow you online, read what you're writing, and stay up to date, where's the best place for them to do that?
Kelly Phillips Erb: [00:43:23] So, I'm on Twitter. It's just @taxgirl. That's pretty easy, as well. Otherwise, I'm at Forbes.com/sites/KellyPhillipsErb, which is kinda hard to find sometimes. So, the easiest thing to do is to go to Taxgirl.com, and I usually have links to newsletters and articles from there.
Blake Oliver: [00:43:44] Taxgirl.com. That's great. And I'm at blakeoliver.com. You can follow me on Twitter, @BlakeTOliver. And how about you, David?
David Leary: [00:43:53] I'm @DavidLeary.
Blake Oliver: [00:43:55] And if you have a story for us, if you wanna tell us about what is going on in your life, right now, just leave us a message. We have a voicemail box set up. It's (202) 695-1040. Then, we'll take a listen, and maybe we'll even play it on the air. We really wanna hear from our listeners - how are they coping? What are they doing to stay sane? Do you have any best practices, tips, or just thoughts about what we've been talking about here on the show?
David Leary: [00:44:25] I think that's a wrap.
Blake Oliver: [00:44:26] All right. Thank you, again, Kelly, so much for joining us. We hope to have you back, if there's any other significant developments; I'm sure there will be.
Kelly Phillips Erb: [00:44:35] Sure, and you've been warned that I'm wordy. I apologize in advance.
Blake Oliver: [00:44:37] No, this is great.
Kelly Phillips Erb: [00:44:39] Well, not in advance [crosstalk] late now, but in advance of in the future.
Blake Oliver: [00:44:43] No, this is fantastic. It is. It's so helpful. David and I try to stay up on top of this stuff, but it's been overwhelming [crosstalk] We have day jobs, too, so ...
Kelly Phillips Erb: [00:44:51] Oh, yeah, me, too.
Blake Oliver: [00:44:54] We're keeping everyone informed. Thanks, Kelly. Thanks, David.
Kelly Phillips Erb: [00:44:57] Thank you!
Blake Oliver: [00:44:57] And I'll see you here again next week.
David Leary: [00:44:59] All right.
Kelly Phillips Erb: [00:44:59] Awesome. Thanks. Bye.
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