TUCSON (KVOA) – If you have a question for the IRS, you could be waiting months for a response. Some Tucson businesses have been left with few answers and plenty of concerns.
Owning a business in 2020 seems to be like being in the middle of a dark tunnel with a dead flashlight with a hole in your pocket, unable to see all your money falling out. Rachelle Bronson, the owner of Sticky’s Smoke Shop in Tucson, knows that feeling all too well.
“We had to shut our doors whole month of April and first week of May,” Bronson explained.
Devastating for a small business like hers she said what little she had in savings was spent on paying her staff through the closure.
“[To] Keep everybody a float and not at the food bank line,” Bronson said.
At the advice of her accountant, Bronson said, “She didn’t pay employee taxes known as 941’s. She was awaiting a Paycheck Protection Program Loan, believing there would be some kind of employee tax relief if she wasn’t approved for the loan but she was approved and said she paid all the taxes the next day. Then the IRS sent a bill of $427.83 in late fees, money she didn’t have.
“Literally between the rent, utilities and paying my employees took my account to zero,” Bronson said.
Her accountant filed responses to the IRS, with no response, she said they tried calling without any luck. Then in November, she received a letter from the IRS threatening to seize her property. Her accountant sent more letters disputing it but still no response.
“Who do I go to next, who do I have to call, I honestly don’t know where to go from here,” Bronson said.
Rachelle’s not alone, due to the pandemic the IRS acknowledges its services have been greatly impacted. It’s moved some services online but most needed communication will move at a snail’s pace.
Thomas Rooney, a CPA with Arizona Southwest CPA Services, said it could take months to hear back but expressed it’s hard to fault the IRS for what’s been thrown at it. He said he worries more about the big question mark clouding businesses, what to expect come tax filing day.
“A lot of small business owners are wondering where the help’s going to come from,” Rooney said.
Some thought the help was the PPP loans but due to an old law, Rooney said businesses that took out the loans can’t claim business expenses as a tax deduction.
“Even though the income side is tax free the expenses won’t be,” Rooney explained.
“We didn’t think much beyond the fact it was a traditional loan,” The Parish co-owner Bryce Zeagler said.
Just two doors down from Sticky’s Smoke Shop is The Parish restaurant. Co-owner Bryce Zeagler said his business needed the help from the loan but not being able to claim expenses as a deduction could make it all in vain.
“We needed the loan to make payroll but if we can’t deduct expenses for us and a lot of businesses that could mean having to report a profit in a year that’s almost laughable,” Zeagler said.
Congress is aware of the discrepancy, after working through the weekend a massive COVID-19 relief bill was passed which includes allowing businesses to claim their expenses as deductions after receiving a PPP loan. It still needs to be signed by President Trump but Zeagler is hopeful.
“The uncertainty week to week, month to month makes it hard to make any business decisions. How can I plan to pay taxes or not, when you don’t have any money? Makes it difficult,” Zeagler said.
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