This month’s update includes information on the Arizona Legislature’s attempts to adjourn session, tax implications of forgiven PPP loans, letters sent to Arizona’s Congressional delegation, an overview of the governor’s executive orders and the monthly State Board of Accountancy meeting.
As the April 30 expiration of the stay-at-home order approached, the Arizona House and Senate began discussing procedures after their five-week recess. At the end of April, it was announced that the legislature would adjourn for the year on May 1, with the expectation of a special session called by the governor in June. Members of the House Republican caucus disagreed with that timeline and some members of the legislature announced their desire to pass a resolution overturning the governor’s stay-at-home order and state of emergency. As talks amongst House and Senate Republicans continued, it was announced that the Senate would adjourn on May 8. Meanwhile, the House Republican caucus adamantly opposed final adjournment of session and returned on May 18 to the regular order of business in an attempt to force the Senate back into session. After passing a number of unamended senate bills, the House and Senate plan to adjourn the regular session on May 26. It is likely one or more special sessions will be called in the summer and fall to address the impacts of COVID-19 and the state’s budget shortfalls.
State Taxability of Forgiven PPP Loans
After discussions with other state societies, the ASCPA worked with our Tax Legislation Review Committee and determined that without legislative action, forgiven PPP loans would be taxable under Arizona statute. With assistance from the committee, the Society sent letters to all 16 legislative leaders to make them aware that without action by the Legislature, the forgiven loans would be considered taxable cancellation of debt income in Arizona.
Letters Urging Guidance from SBA and Treasury
In coordination with the AICPA, the Society sent letters to Arizona’s congressional delegation urging their offices to direct the Small Business Administration and the U.S. Department of the Treasury to issue guidelines and clarification on PPP loan forgiveness calculations.
Letters Requesting Co-Sponsorship of S. 3612, Small Business Expense Protection Act of 2020
The Society requested Senators Kyrsten Sinema and Martha McSally co-sponsor S. 3612 , the Small Business Expense Protection Act of 2020. The legislation would remedy recent IRS guidance on deductible expenses related to forgiven PPP loans.
As of May 16, the stay-at-home and travel requirement executive orders were rescinded per Executive Order 2020-36 (stay healthy, return smarter, return stronger). The new order allows dine-in restaurant, gym, pool and spa attendance, while urging continued adherence to the Centers for Disease Control and White House guidelines, including social distancing and enhanced sanitation. On May 4, Governor Doug Ducey issued Executive Order 2020-34 which allows for the partial re-opening of Arizona. Effective May 8, barbers and cosmetologists were allowed to open and effective May 11, dine-in services were permitted in restaurants.
State Board of Accountancy Update
The State Board of Accountancy held its May meeting via telephone due to the stay-at-home order. As of May 1, Prometric has resumed testing with limited capacity for the CPA Exam. The Board is working with the National Association of State Boards of Accountancy to determine the next steps for candidates for the CPA Exam with a Notice to Schedule extension in the third quarter of 2020.