IRS Issues Official Guidance on Filing and Payment Deadline Postponements
In Notice 2020-18, the IRS has made official the earlier announcement by Treasury Secretary Steven Mnuchin that the filing and payment deadline for 2019 federal income tax returns and 2020 federal income tax estimates that would otherwise be due on April 15, 2020, has been postponed to July 15, 2020. Unlike the payment deadline relief announced on March 18, there is no cap on the amount of payments that may be postponed under this new measure. Affected taxpayers do not have to file Forms 4868 or 7004 to obtain this relief.
FASB, Banking Regulators Ease Path for Loan Modifications Triggered by Coronavirus Pandemic
FASB gave a rare, quick affirmative response to a March 22, 2020, regulatory statement that urges banks to work with borrowers affected by the coronavirus (COVID-19) pandemic so that their loans can be modified without the usual penalties and accounting implications that come from a default. The board said it concurred with a statement made by six federal and state banking agencies which clarified that lenders would not need to automatically classify loans that were in good standing prior to COVID-19 as troubled debt restructurings (TDR), a worry raised by some banks. “The agencies view prudent loan modification programs offered to financial institution customers affected by COVID-19 as positive and proactive actions that can manage or mitigate adverse impacts on borrowers, and lead to improved loan performance and reduced credit risk. The statement reminds institutions that not all modifications of loan terms result in a TDR,” the Board of Governors of the Federal Reserve System, the Conference of State Bank Supervisors, the Consumer Financial Protection Bureau, the Federal Deposit Insurance Corporation, the National Credit Union Administration, and the Office of the Comptroller of the Currency stated in a joint statement. The measure includes short-term (e.g., six month) modifications such as payment deferrals, fee waivers, extensions of repayment terms, or other delays in payment that are insignificant.
Trustees Announce Opening for FASB Senior Analyst Seat
The Financial Accounting Foundation (FAF), which oversees FASB, has announced its search to fill R. Harold Schroeder’s seat on the board when he vacates it next year. Schroeder, who provides an investor’s perspective on the board, ends his second and final term as a FASB member on June 30, 2021. The new FASB member would initially take up the post beginning on July 1, 2021, for five years ending June 30, 2026, and may be eligible for reappointment. FASB members can, and typically do, serve a maximum of 10 years on the board. The ideal candidate would have significant experience at the senior level of the financial reporting profession as a sophisticated user of financial statements, the FAF said. Applications must be submitted by April 30.
More Draft Implementation Guidance for Long-Term Insurance Contracts Issued
The AICPA’s Financial Reporting Executive Committee has issued two more working drafts of accounting issues for insurers to help with implementation of FASB’s revised standards on long-term contracts. FASB requires insurers to periodically review the assumptions they make about their long-term policyholders and update the liabilities on their balance sheets if the assumptions change. The latest drafts address considerations for determining the expected term of the contract and whether an entity can change its accounting policy for including the cost of reinsurance in loss recognition testing for all products, respectively. The AICPA asked for informal feedback by May 15.