What your tax resolution clients need to know about Economic Injury Disaster Loans

With the implementation of a significant IT upgrade two weeks ago, the Small Business Administration (SBA) has suddenly gone from processing just 900 disaster loan applications per day, to over 10,000 per day. Given the fact that millions of small businesses have applied for these loans and are desperately in need of these funds in order to simply stay in existence during the COVID-19 recession, this will be welcome news for these small businesses.

However, these loans come with a LOT of strings attached. As their professional advisor, it behooves you to have an understanding of these loan conditions, some of which are quite draconian. This will help you to help your clients make a wise decision about accepting this loan or not, and if they do, how to properly utilize the funds.

This should probably be a CPE webinar, but due to other projects I’m working on this week, this blog post will need to suffice.

There are three main things that I want you, as a tax professional, to be aware of on behalf of your clients in relation to the Economic Injury Disaster Loans:

  1. The terms of the loan agreement.
  2. Restrictions on use of proceeds.
  3. The realization that this may be a once in a lifetime opportunity to “refinance” IRS tax debt into a 30 year, fixed rate loan at 3.75%.

Let’s briefly address each of these items.

 

EIDL Loan Terms and Conditions

SBA Form 1391 is the loan agreement for an Economic Injury Disaster Loan, and spells out the terms and conditions of the loan. Their are two very important things to understand about this loan agreement.

First, on loans in excess of $25,000, the SBA will secure their loan position with a general lien against all the business’ assets. This collateral for the loan is secured by use of a UCC-1, which will be filed in the county in which the business is located. The SBA deducts a $100 fee from the loan proceeds in order to cover the preparation and filing of the UCC-1. When I say that this lien covers all assets, I do mean all. It operates very similarly to a federal tax lien, and covers all property, rights to property, and property that may be acquired in the future. Heck, it even includes intangible intellectual property that the business may create in the future. It’s a very broad lien.

This may make it very difficult … Continue reading

CPE: How It Works

Most months, we will premiere at least one new continuing education webinar. You will need to register for each webinar individually, for attendance tracking purposes. In order to receive credit for attending, and receive your Certificate of Completion, you will need to:

  1. Register for the specific webinar session ahead of time.
  2. Attend for the entire 50 minutes.
  3. Respond to all three polling questions presented during the webinar.
  4. If you complete all three items above, your Certificate of Completion will be emailed to you within one week of the webinar and your attendance will also be reported to the IRS if you provided a valid PTIN at the time of registration.
  5. If you fail to meet any of the attendance verification requirements, you will NOT be issued a Certificate of Completion. This is an IRS and NASBA rule, not ours. If you experience technical difficulties that prevent you from answering polling questions or staying logged in for the 50 minutes, we cannot issue you credit.

What topics will be covered?

Most courses will be in the Federal Tax Law or Federal Tax Law Update categories. Non-tax topics, such as marketing, A&A, or MAS, will occasionally be presented.

Due to the fact that I practice almost exclusively in the field of representing delinquent taxpayers in front of SB/SE Collections and the collection side of Appeals, you can expect a disproportionate number of the webinars to cover taxpayer representation.


CPE Recognition Info for Enrolled Agents & Unenrolled Preparers

We are an IRS approved continuing education provider, number 4Y1UP.

All webinars on federal tax law topics will carry an IRS program number and are eligible for CE for Enrolled Agents and AFSP participants. We may occasionally present webinars on other topics for which CPAs may earn CPE hours but Enrolled Agents cannot.


CPE Recognition Info for CPAs

The webinars presented here qualify as CPE for CPAs in most states and territories, because most states simply have no registration/approval process or requirement for CPE providers. We follow NASBA standards for all training.

Five accounting boards may not allow CPE credit for our webinars: Illinois, Puerto Rico, New Jersey, New York, and Texas. We will be working on obtaining the necessary registrations with these states during the 2018 filing season.

State boards of accountancy have final authority regarding the applicability of any particular course to your CPE requirements. Please check with your state board regarding requirements and acceptance.


Who the

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CPE Frequently Asked Questions

How do I access the webinar?
You will receive a confirmation email directly from GoToWebinar that contains your unique access link. You will also receive reminders the day before and one hour before the webinar with the same link. Sometimes these emails get filtered by overly aggressive spam filters, so be sure to look in your spam folder for it.

Where can I download the slides?
Slides for each presentation are always available in three places:

  1. A link will be included in the reminder email before the webinar start time.
  2. A link will be posted in the chat box on the webinar itself.
  3. From the “Handouts” pane of the GoToWebinar control panel during the session.

Where’s my Certificate of Completion?

Please allow up to 72 hours to receive your Certificate of Completion. Since these are delivered via email, please be sure to check your spam folder for it, as they sometimes wind up in there. If you don’t see it, then you may not have qualified for credit. Under IRS/NASBA rules that we are required to follow, you must:

  • Stay online for at least 50 minutes per 1 CE/CPE hour
  • Submit answers to all three polling questions per hour

If you have technical issues, such as computer problems or Internet connection issues, that causes you to miss a polling question or to miss the full 50 minutes, I cannot issue you credit. IRS and NASBA require that we maintain records, which can be audited, of who attended what, and we must utilize the electronic attendance record to grant credit. Sorry, we can’t just take your word for it that you were in attendance the whole time.

Do you report CE hours to the IRS?

If you provided a PTIN at the time of registration, then yes, your CE hours will be reported to the IRS. If you did not provide a PTIN at the time of registration, then no, your hours will not be reported. Make sure the PTIN you provide is the right one and in the proper format. It starts with a “P” followed by eight digits.

It’s incredibly time consuming for me to fix PTIN errors, and for the free CE webinars in particular, I’ve decided to no longer “chase people down” for the proper PTIN, there are simply too many people that enter it incorrectly (into the hundreds sometimes). This may sound harsh, but I just really think … Continue reading