critical diagnostic cares act provisions

[Kathleen1]

There is a new critical diagnostic re: the Cares act.  Should this be checked on all returns?

[TaxGuyBill]

What exactly are you asking?

The diagnostic is probably indicating that Intuit has NOT updated their software yet for the CARES Act, so you need to know if anything in the CARES Act affects the return.  For example, NOLs or Qualified Improvement Property.

[Kathleen1]

The critical diagnostic indicates you have to check a box to apply the provisions of the Cares act as it related to NOL carrybacks and business interest limitations.  But there is no information regarding what impact it has on the return if you check it.  But it appears you have to check it to efile returns.

[CS Bray Accounting LLC]

It's a little silly that it suggests in the diagnostics that applying these provisions is optional, but you are in fact required to check the box to apply them in order to e-file. I am holding off e-filing clients until this is clarified further.

[Kathleen1]

I called Lacerte it was clear they have very little info on this.  He did say that they are waiting on the IRS to to revise the 8990 form.  So that part hasn't even been revised. It seems like they threw this out there a little too early.  I think if you have no NOL or excess business interest issues, you might be safe to just check the box and move on.  But hold those returns that do have those issues.  But that's just my guess based on what little information I got from my phone call to Lacerte.

[TaxGuyBill]

Personally, I think it is just Intuit's way to covering their butt for legal protection.  They are just notifying you that laws have changed, but the software has not.

[CS Bray Accounting LLC]

Much appreciated! Will be interesting (if you want to call it that) to see if any returns are actually changed by these provisions, which will complicate things if this is only applied once we're at the point of e-filing. Hopefully additional information is released so we can communicate the after-the-fact changes to the client properly. 

[CS Bray Accounting LLC]

TaxGuyBill, that's not the way this reads.... The check box requires you to apply the provisions. It seems to be more than just notifying us that a law has changed.

[George4Tacks]

Maybe @IntuitBettyJo or @IntuitAustin could confirm that this is main reason, or even better get a detailed explanation of exactly what this box does to the return. 

My latest guess is that it is a signal that the return is being filed after 3/27 and things like ES dates are changed. Returns filed before now have hopefully been locked without this box being checked and printing them would show the earlier due dates. This would be only one of the affected items. 

[Kathleen1]

A detailed explanation would be great.  And, fyi, the critical diagnostic is also showing up in locked returns. 

[Kathleen1]

Lacerte has now provided info in the F1 Help to explain what checking this box does.

Miscellaneous Information/Direct Deposit

Screen 3; Code 1795

Select the box (or enter 1) to apply the Coronavirus Aid, Relief, and Economic Security (CARES) Act provisions to the individual return.

This checkbox will:

1. Suppress Form 461 – Limitation on Business Losses
2. Update Form 8990 - Limitation on Business Interest Expense Under Section 163(j) from 30% to 50% limit
3. Generate critical diagnostic to remove “Carryover absorbed in 2019 [O]” from Net Operating Loss input screen to suspend the 80% of taxable income limitation on the use of NOLs.

[CPA Chris]

Problem is Colorado doesn't accept CARES act so between a rock and a hard spot.

[George4Tacks]

@CPA Chris If you remove the check mark, does the federal return change? That might be a simple solution. If those hard rocks in Colorado don't care, I am sure there are points of entry to override[O] or adjust [A] the appropriate items.

[CPA Chris]

Thx for your reply but Colo doesn't allow CARES so checking the box gives a Colo diagnostic and not checking the box gives a federal diagnostic.

[CPA Chris]

By NOT checking the box the federal diagnostic appears so you MUST check the box.  When you check the box you get a Colo diagnostic to NOT check the box.  A no win situation.  Haven't been able to get thru to Lacerte for 3 weeks (phone, email, etc) so will probably switch to a different software next year!!!!!!!!!!!

[NaomiS]

I am having the same problem. This is a diagnostic that I cannot get rid of. My client only has 2 w2s so there's nothing to adjust.

[NaomiS]

still doesn't answer the question regarding the Colorado State Critical Diagnostic that occurs when the "Apply Cares Act" box is checked. If you uncheck the "apply Cares act" box then I get the Federal critical diagnostic. This is a strange place to be stuck between a rock and a hard spot.

[NaomiS]

the federal return does not change in my case. She has two w2s.

[NaomiS]

have you had any luck? I'm stuck in the same place.

[George4Tacks]

Have any of you sent a copy of a return to Lacerte to make them aware of the problem? Highlight the returns and use Ctrl + L to open a message with the return attached. Give detail explanation of the problem and that will open a repair ticket to hopefully get the issue resolved. 

https://proconnect.intuit.com/community/accounting/help/sending-an-email-to-lacerte-support/00/4763

[NaomiS]

I called LaCerte and they said that it is critical in the sense that Colorado requires us to make adjustments. But he said, just check off the box because none of those apply to the client (she only had 2 w2s). So we just pushed it through. My boss and I were just shocked.

Thank you so much for your response.

[George4Tacks]

Sounds like it was a warning. See Q3 https://proconnect.intuit.com/community/individual/help/diagnostic-reference-ref-frequently-asked-qu...

[mhlester]

Same problem.

I guess we will paper file Colorado...

[George4Tacks]

If the return is correct you can bypass the error checking and still submit https://proconnect.intuit.com/community/electronic-filing/help/disabling-e-file-diagnostic-error-che...

[mhlester]

Thank you. I was also thinking of efiling the federal with the Cares checked and then efiling the CO separately with the Cares unchecked.

[George4Tacks]

Look at Naomi's post down a couple of items- "So we just pushed it through. My boss and I were just shocked.".