COCPA NewsAccount - September/October 2020

NEWSACCOUNT COLORADO SOCIETY OF CPAs • SEPTEMBER/OCTOBER 2020

#CPAStrong: The Essential Profession PAGE 4

Colorado Economic Update: The COVID Edition PAGE 8

Bias By Any Other Name is Still Bias PAGE 16

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NewsAccount | September/October 2020

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Contents Features 5

Quick Pulse Survey Says: Disruption and Uncertainty Prevail This report is the first in a series of benchmarking collaboratives conducted by Avenue M Group on behalf of 18 state CPA societies.

8

Colorado Economic Update: The COVID Edition Data confirm what we already know: The Colorado economy has been hard hit

by COVID-19. Yet, some good things are happening.

13

Why It Matters: Being Involved in the State Legislative Process One of the COCPA’s most important activities is working with state legislators to understand, amend, and pass legislation that helps Colorado businesses succeed.

16

Bias By Any Other Name is Still Bias: Consciously Seeking Unconscious Bias Is it possible to figure out consciously something that we’re doing unconsciously? The answer is yes, according to Dr. Nita Mosby Tyler.

19

Mental Health: A Foundation for Achievement In this second article on mental health in the workplace, Lisa Hackard shares her discussions with two mental health professionals. They explore the importance of mental health as the foundation for professional and personal achievement.

22

Ready? Dressed? Returning? Work as What You Do v. Where You Do It COCPA members share their organizations’ plans for work as they continue to navigate the ever-changing COVID-19 landscape.

26

2020 Colorado Tax Legislation Update The Colorado General Assembly met for only 84 days. The results were as unexpected and unpredictable as everything else this past spring.

16 Departments 2

Chair Column

32

Movers & Shakers

33

In Memoriam, Classified Ads

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September/October 2020 | www.cocpa.org

1

CHAIR COLUMN

NEWSACCOUNT

A bimonthly publication of the Colorado Society of Certified Public Accountants Vol. 66, No. 3 September/October 2020

Moving Forward Together

Officers

BY SHARON S. LASSAR, PHD, CPA (FLORIDA)

Sharon S. Lassar, Chair Randy L. Watkins, Vice Chair Peter J. Derschang, Treasurer Benjamin T. Hrouda, Immediate Past Chair Mary E. Medley, Secretary

Directors

Jim Brendel, Toby Clary, Audra Dixon, Renny Fagan, Mary-Margaret Henke, Kelly Kozeliski

Editorial Board

Jack Allgood, Steve Corder, Georgia Z. Phillips, Lori Anne Reinwald, Laura J. Theiss, Barbara J. Tedesko, Steve Van Meter, Michael D. West, Charlie Wright Mary E. Medley, President/CEO, Editor Natalie G. Rooney, Contributing Writer Ariana Cassard, Blue Ocean Ideas, Design NewsAccount (ISSN #10899952) is published bimonthly by the Colorado Society of Certified Public Accountants, 7887 E. Belleview Ave., Suite 200, Englewood, CO 80111. NewsAccount is published in January, March, May, July, September, and November and reports information, news, and trends in the accounting profession. The Colorado Society of CPAs assumes no liability for readers’ business decisions in reference to advertisements or other information included in this publication.

Membership dues include a $12.00 one-year subscription to NewsAccount.

Periodical postage paid in Englewood, CO, and additional mailing offices.

POSTMASTER: Send address changes to NewsAccount, Colorado Society of Certified Public Accountants 7887 E. Belleview Ave., Suite 200 Englewood, CO 80111 Net press run = 6,388 copies; sales through dealers and carriers, street vendors, and counter sales = 0; paid or requested mail subscription = 6,312; free distribution by mail = 0; free distribution outside the mail = 20; total free distribution = 20; total distribution = 6,332; office use, leftovers, spoiled = 56; returns from news agents = 0; total sum = 6,388; percent paid and/or requested circulation = 99%.

303-773-2877 • 800-523-9082 Fax: 303-773-6344

NewsAccount is available online at www.cocpa.org.

I

Under “normal” circumstances, I would have spent much of this past summer traveling our beautiful state on the annual Chair Tour and meeting many of you in person. This year, we have had to be more creative in our efforts to connect, network, and learn from each other. And even though I wasn’t able to be with you in person, the Virtual Chair Tour still brought many of us together.

f you didn’t have the opportunity in August to join one of the virtual meet ups, I’d like to share a bit about what we discussed because it speaks to how important each of us is to the COCPA, Colorado’s business community, our clients, and the organizations we champion. I strongly believe that the strength of the COCPA rests on us as volunteers. In mid-August, the COCPA put out a call for volunteers. If you haven’t had the chance to do so already, please read that message and consider how you might play a role this year.

I strongly believe that the strength of the COCPA rests on us as volunteers.

COCPA VOLUNTEERS IN ACTION One way to volunteer is to help the Society with its legislative efforts which are needed now more than ever. In June, Colorado House Bill 20-1420 went barreling through the extended legislative session just days before adjournment. It would have required taxpayers to add back several deductions to federal taxable income for purposes of computing their Colorado income taxes.

The add backs included the Section 199A deduction for individuals with adjusted gross income of $75,000 or $150,000 for married filing joint taxpayers for tax years beginning after Jan. 1, 2021. The quick and dedicated efforts of COCPA members resulted in the AGI thresholds being increased to $500,000 and $1,000,000 and the add back being limited to tax years beginning after Jan. 1, 2021, but before Jan. 1, 2023. Several other additions to federal taxable income were reduced as well. See the related article on page 13.

Also in early June, the Colorado Department of Revenue adopted emergency rules to clarify that the definition of “Internal Revenue Code” does not incorporate federal statutory changes enacted after the end of a tax year. Taxpayers who had already filed tax returns incorporating CARES Act provisions for 2019 and earlier years in their calculation of taxable income were caught off guard - and may need to file amended Colorado tax returns.

COCPA volunteers drove success in the 2020 legislative session, but this isn’t the last time we’ll be dealing with such challenges. Colorado legislators will continue to seek revenue to bolster the state’s general fund after COVID-19’s deep impact. We will need COCPA members to step up and lead when this topic arises again during the next legislative session in January 2021.

WANTED: TECH SKILLS In late July, the National Association of State

Boards of Accountancy (NASBA) approved CPA Evolution – the initiative that is transforming the CPA licensure model to recognize the rapidly changing skills and competencies the practice of accounting requires today and will require in the future. A new licensure exam will launch by 2024. But for the past few years, we already have been seeing the need for change as employers continue to seek entry level staff with strong technology skills. In their quest to fill jobs, accounting firms have been reaching beyond accounting majors to other disciplines such as computer science and engineering. This hiring trend affirms that while CPA Evolution is moving us forward, our students need to be bolstering their technological skills now.

ACCOUNTING’S TALENT PIPELINE As COVID-19 has continued to impact the economy, there has been a lot of concern that job and internship offers would be rescinded. Good news: At the University of Denver, we have seen accounting firms follow through on every internship and job offer made to accounting students.

This has not held true for companies recruiting for other disciplines where we have seen some job offers and internships cancelled. Summer accounting internships were virtual and shorter in length, but 100 percent of them took place and then resulted in a full-time job offer.

CPAs make a DIFFERENCE 2020 HEROES & HEROINES SOUGHT Nominations Deadline:

September 21, 2020 Each and every day, away from the headlines, in businesses large and small across Colorado, and in others’ lives, CPAs make a difference. We will honor those contributions with the 2020 Everyday Heroes and Heroines Awards.

Accounting firms are to be commended not only for keeping their existing staff working but also for filling their recruiting pipelines. We’ve all experienced the ongoing challenges of recruiting and retaining the best and the brightest staff, but current recruiting activity indicates that firms are thinking and planning ahead for a post-COVID-19 world.

If you know a CPA who should be considered, please submit a nomination. Send a narrative, not to exceed three pages, explaining why you believe the candidate should be recognized and detailing his or her accomplishments.

Firms are moving forward with an active fall recruiting schedule. It will look different, of course, with meet the firm events, interviews, and meet and greets taking place virtually. Nonetheless, recruiting teams are still connecting with universities in their search for talent. As things begin to turn around, firms want to ensure they don’t have a hole in their recruiting pattern.

Nominees must hold a CPA certificate and be a COCPA member. They should be “everyday” heroes and heroines who haven’t been recognized widely for their contributions. Nominees should demonstrate significant service in one or more areas:

WHAT MATTERS TO STUDENTS What students care about today is changing as well, which all hiring organizations would be wise to understand. PwC LLP recently surveyed students entering the recruiting pipeline this fall. Only 40 percent of them indicated they are very or extremely concerned about COVID-19, but 79 percent are paying closer attention to current events about social justice. We need to understand what is on the minds of the students we want to attract.

Since the 1960s, the accounting profession has struggled to attract diverse individuals, but diversity continues to become more important.

Clients are demanding diverse audit teams. Students are seeking diversity where they earn their degrees and within the companies they join.

We’re living in uncertain times, but as the most trusted business advisors, we bring so much to the table. I look forward to meeting with you – even if it’s virtually – and hearing what’s on your mind and what’s happening in your corner of the state.

Email Sharon Lassar at slassar@du.edu.

INVOLVEMENT: Describe the nominee’s level(s) of involvement, length of involvement, and time devoted to nonprofit organizations and community activities.

LEADERSHIP: Describe the nominee’s position(s) held and substantial accomplishments achieved in one or more community organizations, including taking the lead in identifying and solving a problem, founding or rescuing an organization, or developing an innovative program.

IMPACT: Describe how the nominee’s actions benefited the community, improved the overall quality of life, helped others overcome adversity, or served as a role model for CPAs exemplifying the profession’s core values of integrity, competency, and objectivity.

For more information and to submit your nomination electronically, contact Terry Cervi, terry@cocpa.org, 303-741-8610.

September/October 2020 | www.cocpa.org

3

FROM YOUR COCPA

#CPAStrong: The Essential Profession

O

n March 22, 2020, Colorado Gov. Jared Polis issued Executive Order D2020-013 ordering Colorado non-critical-workplaces to reduce in-person workforce by fifty percent. In that order, under Critical Business or Operation, and exempt from the workforce reduction, was, “7. Financial Institutions, Including: Banks and credit institutions; Insurance, payroll, and accounting services; and services related to financial markets.”

In the days and weeks that followed, the lockdown tightened, however CPAs continued to be essential providers of services to clients, companies, and organizations. Whether handling myriad requests for help with Payroll Protection Program loans and other federal and state relief programs, working with clients to file tax returns, or moving to 100% remote auditing, consulting, and financial management work, the profession remained #CPAStrong.

Today, “safer at home” continues, and face coverings, social distancing, and virtual meetings have become norms. Through it all, the accounting profession has demonstrated its commitment to taking care of myriad businesses and countless individuals.

On the cover of this NewsAccount, and in the COCPA video you can view at cocpa.org/CPAStrong, we celebrate and thank you for your dedication to serving the public interest in limitless ways while also focusing on keeping your colleagues, employees, friends, and families healthy and safe.

Never has there been a prouder moment for those of us who work with and for you. You are, indeed, #CPAStrong.

Mary E. Medley, CEO

COCPA Talent Platform The direct connection between hiring managers and professional talent Find your perfect professional match at COCPA.org/talent 4

NewsAccount | September/October 2020

STATE OF THE PROFESSION

Quick Pulse Survey Says: Disruption and Uncertainty Prevail

BY AVENUE M GROUP

This report is the first in a series of benchmarking collaboratives conducted by Avenue M Group on behalf of 18 state CPA societies from across the United States. From the end of April through early May 2020, CPAs were invited to participate in a brief sentiment survey in order to analyze the impact of COVID-19 on practice operations. Nationally, over 14,000 members responded. Following is an analysis of the Colorado results.

A

Optimism regarding the length of the disruption among CPAs who work in education/academia is low, with 42% anticipating it may take over two years before their work returns to pre-COVID-19 levels.

95%

When asked about which resources would be most helpful, preferences varied based on specialty, sector, and position. At the time the survey was launched, many CPAs had an urgent need for updates on accounting and financial reporting considerations related to COVID-19 - particularly resulting from passage of the CARES Act and creation of programs like the Payroll Protection Program. Many identified a need for guidance in advising clients on federal relief programs. Thirty-six percent showed an interest in guidance for managing a remote workforce on a long-term basis.

venue M Group launched the Quick Pulse sentiment survey in May 2020 to capture the concerns and challenges facing Colorado CPAs during the early months of the coronavirus pandemic. The responses came from partners, shareholders, sole practitioners, C-Suite executives, staff members, controllers, corporate accounting and finance professionals, educators, and government employees. According to the more than 600 members who responded to the survey, 91% believe COCPA has met or exceeded expectations during the pandemic. Only 1% stated the organization had not met expectations at all, while 8% said the Society had fallen a bit short.

shared that the COVID-19 pandemic has been disruptive to their firm, organization, or company.

The impact of COVID-19 on businesses in the United States is evolving, and organizations are rapidly assessing how to respond. Many businesses were initially forced to close, and Americans were restricted to working from home or within highly restricted environments. The overwhelming sentiment shared by 95% of respondents was that COVID-19 has been disruptive to their organizations, with 13% reporting a reduction in staff.

Although government stimulus measures were implemented in April and early May, opinions are mixed on when we will begin to see a recovery. Eighteen percent of CPAs expect the financial impact to last six months or less, while 19% stated it could be as long as 13 to 24 months. The top two challenges facing most CPAs include ensuring the continued health and safety of employees and losing clients and revenue due to business closures. Keeping a work/life balance is likely to continue as many adjust to the new normal.

Although some CPAs are seeing a spike in demand for assistance, the disruption to operations is likely to be significant and long-lasting.

Although the vast majority of CPAs have felt a financial impact and reduction in business, the pandemic appears to be impacting the community in different ways. Over two-fifths (43%) of COCPA CPAs report business has moderately or greatly decreased. However, for 15% of those who specialize in consulting/advisory roles, business has moderately or greatly increased.

EMPLOYEES Employees’ health and safety are a top concern for half (49%) of COCPA CPAs. In response, and as a result of the pandemic, numerous changes were made to the work environment. Forty percent reduced their staff at the physical office, and 22% moved to an entirely remote workforce.

Thirteen percent reported staff reductions; eight percent stated that some staff were furloughed; and decreased compensation for salaried employees occurred for six percent of COCPA CPAs responding to the study.

Other actions taken by COCPA CPAs include (verbatim responses): • Staff have been asked to use PTO • Hiring freeze • Decrease in hours • Work-share – reducing hours • Some staff are being paid 100% but not able to work FINANCIAL Over two-fifths (44%) of COCPA CPAs report concern over losing revenue due to business closures. As such, it is not surprising that over three in ten (31%) of respondents shared that they are reevaluating CONTINUED ON PAGE 6 September/October 2020 | www.cocpa.org

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STATE OF THE PROFESSION CONTINUED FROM PAGE 5 WHAT ARE YOUR MOST PRESSING CONCERNS?

PUBLIC ACCOUNTING

BUSINESS & INDUSTRY/ CORPORATE FINANCE

NOT-FORPROFIT ORGANIZATION

CONSULTING/ ADVISORY

EDUCATION/ ACADEMIA

Ensuring the continued health and safety of our employees

46%

64%

53%

26%

58%

Losing clients/revenue due to business closures

52%

32%

28%

39%

33%*

Keeping a work/life balance

37%

48%

38%

30%

33%*

Helping clients/employer meet government deadlines

46%

12%

9%*

9%*

8%*

Reevaluating our budget and business plan to ensure longterm stability

21%

50%

66%

17%*

58%

Handling stress related to a personal situation and/or family needs

28%

38%

19%

35%

33%*

Collecting tax information from clients

34%

2%*

0%*

4%*

0%*

Servicing clients or customers when there are travel restrictions

20%

14%

16%

13%*

0%*

Staying employed/keeping my job

14%

36%

16%

13%*

33%*

Laying off or furloughing staff due to a drop in business

10%

12%

28%

4%*

33%*

Conducting audits when agencies, organizations and institutions remain closed

13%

3%*

0%*

4%*

0%*

n=

345

104

32

23

12

*Fewer than 5 respondents

their budgets and business plans to ensure long-term stability. Other financial concerns expressed by CPAs include: • No bonuses or salary increases • Changes will occur after PPP expires • Bad debt or slow pay • Succession planning • Additional hazard pay for front line employees PERSONAL The ability to maintain work/life balance was cited as a challenge for 40% of respondents. This sentiment was less prevalent for those working in the consulting/advisory sector (30%), especially compared to those working in business and industry/corporate finance (48%). Other concerns include: • Whether to retire now or wait • Staff was sick and lost time • Some staff were forced to stay home with kids and not work Depending on the business sector, the most pressing concerns and challenges that have arisen due to COVID-19 vary for COCPA CPA members. Those who work for a not-for-profit are more concerned 6

NewsAccount | September/October 2020

with reevaluating their budgets and business plans to ensure long-term stability (66%) than CPAs in other sectors, especially when compared to those who work in public accounting (21%).

Compared to other sectors, those in public accounting are more concerned with helping clients/employers meet government deadlines (46%) and collecting tax information from clients (34%).

Six percent of COCPA members are experiencing complete disruption to their work due to COVID-19. This is the same as the benchmark average (6%) for all 18 state CPA societies. Individuals working in the education/academia sector (75%) are more likely than their counterparts in any other sector to indicate COVID-19 has been extremely or completely disruptive to their workplace. Individuals who work for companies with 101-500 (11%) or over 500 (10%) employees are more likely than their counterparts at smaller companies, specifically single person companies (<1%), to find COVID-19 completely disruptive.

COCPA members are less likely (11%) than the aggregate group average (13%) to indicate that COVID-19 has greatly decreased their business operations. CPAs who work in the not-for-profit (33%) and business and industry/corporate finance (25%) sectors are statistically significantly more likely than their counterparts working in any other sector to indicate that business had greatly decreased due to COVID-19.

COVID-19 IMPACT ON BUSINESS OPERATIONS 22% 20% 18% 16% 13%

14% 12%

11%

10% 8% 6% 4% 2% 0% COCPA

INSIGHTS There is no playbook for how to respond to COVID-19’s impact on the economy and professional lives of CPAs. The diversity within the membership creates a challenge for COCPA as the resources needed to navigate an uncertain future vary greatly. Plunging demand for services is likely to impact small- and medium-sized businesses at a greater rate

As the world sheltered in place and individuals were required to go online to perform many of the tasks previously conducted in-person, many people discovered a more efficient way to work and communicate. than larger ones. In addition, some sectors such as retail, hospitality, food service, and entertainment will take longer to recover than others.

We also believe pandemic habits may be here to stay. As the world sheltered in place and individuals were required to go online to perform many of the tasks previously conducted in-person, many people discovered a more efficient way to work and communicate.

COCPA will need to increase its flexibility and agility in order to respond to the rapidly changing environment. People are likely to turn to online solutions to gain continuing education credits and obtain the information they need to perform their jobs. COCPA will continue to compete with other organizations as members seek convenient and low-cost options. While unemployment is not as high for CPAs as it is in other sectors, many firms and businesses will lose clients as businesses close and individuals look to save money.

Average

returning to their offices full-time and how they are navigating the new normal of working with clients, customers, and colleagues. Avenue M offers the following recommendations for consideration primarily based on the key findings from this report.

• Help not-for-profits navigate reevaluating their budgets and business plans to help ensure long-term sustainability. The COCPA is exploring opportunities to collaborate with the Colorado Nonprofit Association to assist nonprofits.

• Share data with members and keep them updated on how the profession is doing. This survey is the first of three, and the results will be shared going forward, as well.

• Create new opportunities for COCPA CPAs to learn from one another on hot topic issues. New “Ask the Expert” programs are being developed for general and targeted audiences. And, additional CONNECT communities are being created to provide opportunities for online discussion and learning.

• Test new payment options to provide members with more flexibility for maintaining their membership and participating in programs. During the spring 2020 membership renewal cycle, options for dues waiver, delayed payment, and conversion from annual to monthly subscription were offered. Members are encouraged to contact the COCPA Member Services Team for assistance.

As NewsAccount went to press, the second Quick Pulse sentiment survey was launched. Watch for those results in the November/ December issue. Share your thoughts, experiences, and suggestions for improvement by emailing Mary E. Medley, CEO, at mary@cocpa.org.

Avenue M Group, LLC, avenuem.org, with offices in Chicago, New York, and Denver, is a full-service market research and consulting agency with in-depth expertise in examining why individuals believe in brands, organizations, and missions.

Members are highly likely to be interested in how other COCPA members are responding to the pandemic, including when they are September/October 2020 | www.cocpa.org

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COLORADO ECONOMY

Colorado Economic Update: The COVID Edition

BY NATALIE ROONEY

Data confirm what we already know: The Colorado economy has been hard hit by COVID-19. Yet, some good things are happening when you dig in, take a look at the numbers and hear what the Centennial State’s economic experts have to say.

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s the Associate Dean for Business and Government Relations, Senior Economist, and Faculty Director of the Business Research Division at the University of Colorado, Boulder, Richard Wobbekind oversees the quarterly release of the University of Colorado Leeds Business Confidence Index. Typically, economists rely on monthly data to make their forecasts and predictions, but COVID19 has changed how they examine data and make their forecasts due to rapidly changing scenarios.

“This has been so unusual,” Wobbekind says. “The government never shut down the economy before.” Forecasts based on monthly data became useless as the situation changed daily. “We began doing ‘COVID economic discussions’ instead,” Wobbekind says. “There is so much uncertainty. All we can continue to do is say what we think is happening from what the data tell us.”

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“This has been so unusual.”

Economists began relying on high frequency data, which is anecdotal and not as comprehensive but provided a better snapshot.

“We were trying to see how bad things were getting, but on the flip side, as things were recovering, that high frequency data was helping us see weekly when things were recovering without waiting for monthly numbers,” Wobbekind says.

While the Q3 data from the Leeds Business Confidence Index looked dramatically better than Q2, the Q3 index score of 44.3 still indicated an overall pessimistic outlook.

For comparison purposes, a score of 50 is considered neutral. The index was at 50.8 in the first quarter of 2020, the last quarter recorded before the pandemic. The index

NewsAccount | September/October 2020

declined to its lowest recorded level in its 17-year history — 29.7— in Q2.

Q3 Index respondents didn’t feel positive about capital expenditures or hiring. In fact, they were the two lowest readings in the survey. Capital expenditures are showing negative growth nationally for 2020 and are even down in 2021 models, Wobbekind notes.

“Capital expenditures and hiring are where you get future growth. Those two things and the magic of them working together are where you get your GDP growth. Sales and profits are good in Colorado and nationally, but the survey says companies aren’t going to invest and hire. They’re going to wait and see.”

COLORADO’S DRAMATIC JOB LOSS Prior to COVID-19, the only weekly data economists examined came from initial unemployment claims, which are released each Thursday for the prior week. Typically, Wobbekind studies a four-week moving average of those numbers. “You don’t want to hang your hat on one week,” he says. But the virus changed that thinking. “Weekly numbers showed us how quickly things went bad and how much better they’re becoming over time.”

Weekly unemployment data also show continuing claims. “That gives us a sense of how many people continue to be on unemployment,” Wobbekind explains.

Colorado’s unemployment rate hit 11.3% in April, its highest-ever level since the state began tracking unemployment levels in 1976.

The prior record was 8.9% in the fall of 2010, during the fallout from the Great Recession.

In May, 21,000 jobs returned to the hardhit leisure and hospitality sector - still far off the year over year numbers and down almost 38 percent compared to 2019. “The pandemic has been devastating for that particular group,” Wobbekind says.

High frequency data provided additional important information, including flight volume from Denver International Airport (DIA).

“DIA was sending us its weekly flights and TSA volume which we’d normally never use,” Wobbekind says. Open Table began producing weekly state level restaurant reservation data.

As of mid-July, Colorado’s unemployment rate stood at 10.5 percent, more than 2.5 percentage points higher than at the worst point in the Great Recession.

WHAT WILL RECOVERY LOOK LIKE? Wobbekind says the original expectation of many economists was a V-shaped recovery that would take six months to get the U.S. back to pre-COVID numbers. Then it appeared as if the recovery might be W-shaped where certain industries, but not all, might bounce back with decent job numbers. Now, as uncertainty about a second coronavirus wave persists, thinking has evolved to a recovery that looks like the Nike swoosh symbol. “A second wave and people showing fear again could really slow down the recovery for some industries, like restaurants,” he says. “Studies tell us that a lot of small businesses, especially restaurants, have very little operating capital. They can only operate for a few months without reserves before they fade into the distance.”

The Colorado Department of Labor and Employment (CDLE), reported that Colorado’s unemployment rate rose slightly to 10.5 percent in June. During the same period, the national unemployment rate declined 2.2 percentage points to 11.1 percent. As of the last week of June, Colorado had the 34th lowest unemployment rate in the U.S. Additional data points for June: • Colorado’s labor force grew by 100,200 to 3,169,300. The labor force participation rate rose by 2.1 percentage points to 68.7 percent. But it is still below the February ratio of 69.4 percent.

• The number of individuals employed in Colorado increased by 80,100 to

2,835,500, which represents 61.4 percent of the state’s 16+ population. While Colorado’s employment-to-population ratio has improved since April, when it was 58.3 percent, it still falls well below the February level of 67.7 percent.

• Colorado counties with the highest unemployment rates in June were: Gilpin (19.7%), San Miguel (17.1%), Summit (16.6%), Pitkin (16.0%), and Eagle (15.7%).

County-level unemployment rates are not seasonally adjusted and are directly comparable to Colorado’s June unadjusted rate of 10.7 percent.

Other startling statistics demonstrate COVID-19’s impact on Colorado. In 2019, 64.5 million passengers traveled through DIA. In April 2020, traffic was down 95 percent - and down 86 percent year over year.

Colorado’s economy is trending upward faster than much of the nation even with its heavy reliance on leisure and hospitality.

About half of the jobs lost during the first half of the pandemic have returned in the

sectors that have been hard hit, but other sectors are very resilient.”

Silverstein says people are trying to figure out where to take their skill sets and how to fit back into the economic system. High touch industries like leisure and hospitality, which include restaurants and lodging, arts and culture, and personal services, remain the most challenged. “When we don’t know how the pandemic is moving, people in these fields don’t know whether their skills will be demanded two months from now or twelve,” she explains. “It’s a really challenging time. During the Great Recession, we knew that business, as a whole, would eventually improve, but this is a public health crisis.

We’re constrained to operating within the health restrictions, and it’s not predictable.”

A few key areas are driving economic activity in the Metro Denver and Front Range areas.

“The tech industry is vibrant, especially with the move to remote work,” Silverstein says.

Colorado already had the highest concentration of remote workers – 8.6 percent

Colorado’s economy is trending upward faster than much of the nation even with its heavy reliance on leisure and hospitality. health care sector, but only 16 percent have returned in accommodations and food services, according to data from the Colorado Department of Labor and Employment.

More than 100,000 Colorado businesses received money from the federal Paycheck Protection Program (PPP). “That helps with a couple of months of survival,” Wobbekind says. “But I don’t know when or if we’re going to see another wave of PPP. If there’s another wave of the virus, the picture isn’t going to be pretty.”

UNCERTAINTY TINGED WITH BRIGHT SPOTS Patty Silverstein, President and Chief Economist for Development Research Partners, encourages CPAs to understand how their clients and their clients’ industries are doing. “One of the key measures we look at to determine the direction of the economy is what’s happening with employment,” she says. “There are

according to the Census Bureau – prior to the pandemic. “High tech companies had to kick into high gear to ensure people were connected. Fortunately, we have a high concentration of those companies located here, so that was a bright spot in our economic activity,” she notes.

Additional workers will continue to be needed in health care as elective surgeries resume.

“Our health care workers have been rock stars throughout,” Silverstein says. Denver also has a strong concentration of bioscience companies which have ramped up to find cures and treatments for COVID-19. “Companies are doing what they can to research and be ready to mass produce whatever is determined as the solution,” she says.

Even aviation, which was nearly crippled by the dramatic drop in passenger travel, has seen increases in air cargo.

Another positive: Wobbekind says employment offers for many CU graduates haven’t been rescinded but rather have been delayed. “They asked students to start in September instead of June or July, so they CONTINUED ON PAGE 10

September/October 2020 | www.cocpa.org

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COLORADO ECONOMY CONTINUED FROM PAGE 9 were pushed back, but not pulled.” Part of the delay has to do with the difficulty of onboarding new employees in a virtual environment. “It’s just not the same as being across the hall and able to talk to them right away when you’re trying to mentor them as they learn,” he says.

because they were following a passion for cooking or selling a product. It’s an industry filled with passion and one that is going to be challenged. It’s just so important to know your clients, know whether they’re the ones who will struggle, or if they’re operating in a bright spot.”

COMMERCIAL REAL ESTATE: THE END OF OFFICE SPACE? What happens to commercial office space in a remote work world? Will buildings sit empty while we all continue to work from home in our jammies? Probably not, says Silverstein. While business leaders might wonder if they need as much space and consider reducing costs by continuing remote work, life won’t continue this way forever.

People have proven they’re effective working from home, but many can’t wait to get out of the house and back to the office.

“It’s so important to know your clients, know whether they’re the ones who will struggle, or if they’re operating in a bright spot.”

Co-working and shared office spaces were trending upward prior to the pandemic which pointed out the greater need for flexibility, Silverstein says. “Right now, we just don’t know what office space will look like.

Will companies need to keep larger offices because there’s now a need for more square footage per employee?” she asks. “Space per employee shrank for a while, but spaces might need to grow because of social distancing for those who return to the office.”

The demand for industrial space has grown as the logistics industry has expanded, and that’s a trend Silverstein says we’ll continue to see. The Metro Denver marketplace has long served a lot of logistics operations because of the convenience of the I-70/I-25 crossroads. “People have become accustomed to ordering something and having it on their doorstep in a couple of days. The only way you can do that is to have logistical centers move closer to the population,” she says. “While it made sense for logistical centers to be concentrated near DIA and metro regions, you’ll see logistics operations spreading across the state.”

The commercial spaces hardest hit ultimately will be retail brick and mortar stores.

While there’s still a human desire to touch and feel items before purchasing, people are discovering they don’t need to do that as much or as often, Silverstein says. Restaurants also are going to be highly challenged until a cure is found and people feel comfortable returning. “Those marketplaces in particular are highly susceptible to business failure. It’s sad. Those are so many of our entrepreneurs who moved into that sector 10

WILL THERE BE A 2020-2021 SKI SEASON? Face it, Colorado. Your active selves want to know if you’re going to be able to ski this winter. Wobbekind says models predict that the tourism industry will take the longest to bounce back. Vail Resorts’ Epic Pass includes free Epic Coverage for the 2020-2021 season – which provides refunds associated with certain personal events, including illness, job loss, and injury. It also expands coverage to protect from certain resort closures, such as any due to COVID-19. Will that be enough to tempt skiers to purchase?

Models also predict that convention and tourism business won’t return until 2021 as even smaller meetings have been cancelled for 2020. “I don’t think we’ll see bounce back in tourism and conventions until the middle of next year or beyond,” Wobbekind says. “So much of it depends on people’s comfort with flying and how quickly we open air traffic to international travel.”

CONSULTING THE CRYSTAL BALL Thanks to a general recovery in Q3, pent up consumer demand, and a high level of unemployment compensation from the state and federal levels, a lot of cash is floating around out there right now, says Wobbekind. “But if you can’t partially or completely reopen venues, there’s nowhere to spend.” This is easily seen in the high monthly savings rate.

The National Bureau of Economic Research dates the COVID-19 recession as beginning in February 2020. The energy industry already was suffering mightily as we entered 2020 thanks to downward pressure on energy prices. Slowing job growth of 40,000 was predicted for Colorado this year. Now, with all of the uncertainty, Colorado likely will end up with job losses from 120,000 to 150,000, a total Wobbekind calls brutal.

NewsAccount | September/October 2020

“That’s more in one year than the entire job loss from the recession,” he says. “It will take a long time to get back to the same employment levels as before.” The current expectation is that won’t happen until the second half of 2022.

Currently, the U.S. unemployment rate is predicted to be under 10 percent by the end of 2020 and under six percent by the end of 2021 with Colorado’s rate expected to be lower than the U.S. rate each year. U.S. unemployment was 3.5 percent before the COVID-19 pandemic began, and Colorado’s unemployment was 2.5 percent.

Colorado was in a strong position prior to COVID and was one of the top five states for economic and job growth. Now, the Centennial State is sitting somewhere in the top 15.

Mountain communities that rely heavily on tourism have been particularly hard hit with some counties having close to 40 percent of their employment in tourism in the high country. “Since tourism has been hit hardest, those areas have the toughest issues to address,” Wobbekind says.

In general, Silverstein says analysis points to recovery at some point in 2021. “My view was and remains that the recession would last a minimum of four months and a maximum of eighteen months. It’s looking more like eighteen right now. We’re pegging May 2021 as when we really start to see some inflection points in activity.” She says this is mainly because of the need for a vaccine or cure, which takes time for trials and production to be in place. “That’s still a long way off.

Our economy isn’t going to move into a solid position until the health issues move into a solid position.”

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Alpa (Keily) Evans Account Executive T: 800.652.1772 Ext. 6720 D: (650) 263-8246 E: aevans@camico.com W: www.camico.com

Accountants Professional Liability Insurance may be underwritten by CAMICO Mutual Insurance Company or through CAMICO Insurance Services by one or more insurance company subsidiaries of W. R. Berkley Corporation. Not all products and services are available in every jurisdiction, and the precise coverage afforded by any insurer is subject to the actual terms and conditions of the policies as issued. © CAMICO Services, Inc., dba CAMICO Insurance Services. All Rights Reserved.

THE NOVEMBER BALLOT

The Gallagher Amendment 2.0: A Closer Look

BY PAMELA M. FEELY, CPA, MBA, AF

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uring the late 1970s and early 1980s, Colorado home prices were rising. Interest rates were north of 12 percent. Coloradans became concerned seniors would not be able to stay in their homes because increased property taxes were forcing them out of those homes. In 1982, the Colorado legislature referred to the voters an amendment to the Colorado Constitution to limit residential property taxes. The voters overwhelmingly supported it.

The amendment basically requires commercial interests to pay 55% of the total property taxes statewide. Homeowners pick up 45% of the bill. Using the processes adopted in the referred measure, Coloradoâ&#x20AC;&#x2122;s actual property value in 19831 was over $66 billion dollars. Residences composed over $35.4 billion, and the remaining $31.1 billion came from commercial interests. Assessed values combined were just over $17.1 billion dollars. Homes accounted for $7.4 billion, and the remaining $9.7 billion dollars were attributable to businesses. Taxes were computed at the 21% rate on homes and the constitutionally mandated 29% for the business community.

Simply put, homes pay roughly $45 while the business community pays $55 for every $100 of property tax collections. Currently, this ratio applies regardless of the number of homes added during the year.

The residential assessment rate stayed at 21% until 1987. Between 1986 and 1987, Colorado experienced huge economic and population growth, and actual value for homes increased 116.99%. Business value grew as well, but not as fast - growing by 69.53%. So the residential assessment rate was dropped to 18% for 1987 taxes and 16% for 1988.

From 1988 until 1995, both residential and commercial values changed in reasonable percentages. By 1995, residential home values and units grew 34.66% over 1994. Residential units and value increased each year through 2003. Every two years, the RAR (residential assessment rate) was adjusted downward, shifting more of the burden to the commercial community. Total valuation was $478.5 billion with residences valued at $371 billion.

In 2003, a ballot initiative would have frozen the RAR at 8.04%. Colorado legislators realized by continuing to lower the RAR, the state was backfilling more of the funds for schools. Also, the business community was contributing over $3 for every $1 homeowners paid. The ballot initiative overwhelmingly failed in part because the actual RAR adjustment came in at 7.96%.

Originally the Gallagher amendment provided a mechanism for the RAR to float up when needed to maintain the 45/55 ratio. The first opportunity to have the RAR float up occurred after passage of the Taxpayers Bill of Rights (TABOR) in 1992. TABOR provides that the

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RAR cannot be raised without a vote of the people. In 2005, 2007, 2011, 2013, and 2015, the legislature chose to maintain the 7.96% RAR instead of asking voters for an increase.

Property values lag the greater economy by a few years. After the 2008-2009 financial crisis, it took until 2011 for property values to drop. Total actual value in 2010 was $697 billion and $640 billion in 2011. Residential values dropped to $488 billion from $536 billion. Fire districts, school districts, and other special districts felt the pain of less revenue.

As the economy recovered with increased jobs and population growth, more and more residential dwellings were built. By 2015, residential value grew by 18.93% with explosive growth along the Front Range. The first RAR reduction in 14 years occurred, dropping to 7.2% in 2017 and 2018. Continued residential growth in 2018 saw the RAR drop to 7.15%.

The 2019 total value was over a trillion dollars for the first time. Residential values are $874 billion while the commercial sector is $225 billion. The last decade of residential construction explosion has spread the 45% residential percentage over more units while requiring the business community to pay more. For 2020 and 2021, the business community pays $4 for every $1 a homeowner pays.

In addition, the growth in values is uneven across the state with the 11 Front Range counties generating the majority of the residential growth. Colorado is a growing state, and the population is expected to continue to grow. The state demographer expects the state will include over seven million people by 2035.2 The Front Range is where 84% of the population will live.

Property values for the next RAR adjustment are being finalized as this article goes to press. Expectations are the RAR will decrease below 6% without the passage of the Gallagher Repeal on the 2020 ballot.

Repeal means basically stabilizing the RAR at 7.15% and commercial property at 29%. Legislators say they will not be able to raise the RAR without going to the voters.

Thereâ&#x20AC;&#x2122;s much more to come. Stay tuned.

Pamela M. Feely, CPA, MBA, AF, is past president of the West Metro Fire Protection District and a past director for the Fire & Police Pension Association. She currently serves on the Colorado Fire Commission. She is co-author of A Penchant for Pensions, A Guide to the Actuarial Valuations for Public Pension Plans, released in July 2018. Contact her at pamfeely@aol.com.

Excerpts from 2019 Annual Report to the Governor and General Assembly, Table 9, pages 15 and 16.

https://demography.dola.colorado.gov/population/population-totals-colorado-substate/#population-totals-for-colorado-and-sub-state-regions

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LEGISLATIVE ADVOCACY

Why It Matters: Being Involved in the State Legislative Process

BY NATALIE ROONEY

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ne of the Colorado Society of CPAs’ most important activities is working with state legislators to understand, amend, and pass legislation that helps Colorado businesses succeed. Here is how the COCPA legislative advocacy program works and how you can become involved.

YOUR EYES AND EARS AT THE STATE CAPITOL Lobbying tends to have negative connotations, but really, it’s just the process by which legislators are educated about complex issues of proposed and existing legislation.

They rely on the experts, like CPAs, to help them understand the varied ways legislation they’re creating or considering in advance of votes can impact the bigger picture.

each legislative session, and throughout the session, Furman reviews every introduced bill. If there is a pending issue, he discusses potential impact with COCPA leadership and what might need to be done. If the COCPA wants to take action, there are ongoing discussions about whether to support a bill, seek to amend it, or work to defeat it through the legislative process.

Furman encourages COCPA members to become involved in the legislative process.

“You want to have a voice on issues that impact you, and we understand CPAs, their clients, or their employers have full-time jobs and their own organizations to run. I’m at the Capitol for you, and I stay on top of the issues and bills that could impact your

Legislators rely on the experts, like CPAs, to help them understand the varied ways legislation they’re creating or considering in advance of votes can impact the bigger picture.

Often the holistic impact of legislation is not entirely evident, especially when dockets are full and with more limited opportunities for interaction given the environment, such as a pandemic.

Daniel Furman is an attorney and partner with Hall & Evans LLC, Denver, and COCPA legislative counsel. “I advocate for the COCPA on legislative bills before the Colorado General Assembly,” he explains.

“Whether we’re supporting, opposing, or trying to get a bill amended, I work to represent the COCPA’s best interests.”

As the COCPA’s eyes and ears at the Capitol, Furman lets the Society know if he hears rumors or sees draft legislation that might impact CPAs, their clients, or the business community. In January, at the beginning of

day-to-day business operations,” he explains.

“I monitor bills moving through the process and provide you with a voice in that process.

I alert CEO Mary Medley (also registered with the Colorado Secretary of State to lobby on the COCPA’s behalf) and the COCPA team to involve COCPA members when your expertise is key. And, when you’re needed to reach out to your legislators or provide your perspective, your time is well spent.

You haven’t invested sometimes long hours hanging around the Capitol waiting for a committee meeting to convene or to testify on a particular bill.”

UNUSUAL SESSION CREATES LEGISLATIVE EMERGENCY As with many things in 2020, this year’s legislative session was unusual. Typically, the

session begins in early January and runs for 120 consecutive days, into early May. Legislation makes its way through the system just as you learned on Schoolhouse Rock. Laws begin as bills, are assigned a number, have one or more sponsors, get introduced, are considered by House and Senate committees, may be defeated in committee, perhaps amended, referred out of committee for floor debate, with final action taken on third reading in each house before going to the Governor for signature. It can take months (or even years) to get a bill passed.

This year, COVID-19 shortened the scheduled 120-day session by nearly 40 days and forced a ten-week hiatus. When the session finally reconvened on May 26, it had gone beyond the standard 120 consecutive days through an extension the Colorado Supreme Court deemed necessary. In making its decision, the Supreme Court cited the flexibility needed by a part-time, citizen legislature in times of crisis. Extensions of Colorado lawmaking terms are necessary, the majority said, so that “citizen legislators do not have to choose between representing their constituents in the General Assembly and supporting their communities through the crisis at home.”

During this year’s extended session, a few unusual things happened. The State of Colorado, like all other states, has been desperate for money in the pandemic cash crunch.

Furman began hearing rumors of a bill on tax credits and exemptions in connection with the Tax Cuts and Jobs Act of 2017.

On Sunday, June 7, Furman first saw draft legislation that became House Bill 20-1420.

“We immediately realized this bill would repeal multiple tax credits and exemptions that would affect many different industries,” Furman explains. He swiftly reached out to one of the bill sponsors and asked for a virtual meeting. “We could tell he didn’t have a complete understanding of all of the bill’s implications - and those implications were huge.”

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September/October 2020 | www.cocpa.org

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LEGISLATIVE ADVOCACY CONTINUED FROM PAGE 13 wood, became familiar with the COCPA’s legislative efforts. He learned then about the important role members play in reviewing legislation, reaching out to legislators, and testifying before a legislative committee often on short notice but typically with a few weeks of notice, not a few days.

On June 10, when HB20-1420 already was speeding through the Colorado House, Seigneur received the email asking for input and help – STAT! “The legislation would have retroactively changed Colorado tax law to be inconsistent with federal tax law,” he says.

“Timing was critical. It appeared the bill was being run through the session under a cloak of darkness and in under forty-eight hours.”

Seigneur reviewed the information and reached out to his legislators using links and

“Everyone’s voice needed to be heard. The legislators needed to understand this was a huge issue.”

Over the next few days, chaos ensued. The bill was being rushed through because the legislative session was tentatively scheduled to adjourn on Friday, June 12. Keeping in mind that normal legislation takes months to get through the system, this legislation, with far-reaching impacts on CPAs and their clients, was on track to go to a final vote in fewer than five days.

At the COCPA, Medley was working with two COCPA members to identify the technical issues with the proposed language and reaching out to COCPA members for help. It was critically important for CPAs to contact their legislators and help them understand how damaging HB20-1420 could be.

The bill was moving fast. It was introduced on Monday, June 8, and was assigned to the House Finance Committee for hearing the next day. Representatives from multiple industries testified against it, including Medley who expressed concerns about how CPAs could implement some of the provisions and advise their clients in the middle of an already fraught - and extended - filing season.

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That day, just one day after the bill was introduced, the committee passed it on a party line vote.

“There was so much confusion, and it was just so unusual that this bill was introduced in the same week the legislature was set to adjourn,” Furman emphasizes. “So many tax credits were being proposed for repeal, and every industry was trying to fix its problem and protect its interests. We had to act fast, but we weren’t getting a lot of traction.”

Keep in mind, this all was happening when everyone was supposed to be physically distancing. Masks were required, temperatures were being taken before anyone could enter the Capitol, and protests were taking place every evening outside the building. “But we had to go to the Capitol and speak up,” Furman says. “Everyone’s voice needed to be heard. The legislators needed to understand this was a huge issue.”

COCPA MEMBERS ON IT During his time as COCPA Chair in 2009 - 2010, Ron Seigneur, CPA/ABV, managing partner at Seigneur Gustafson, LLP, Lake-

NewsAccount | September/October 2020

materials COCPA provided. “Our goal was to explain that this is not the appropriate way to legislate tax law,” Seigneur says. “It’s important for CPAs to be good community citizens. We’re the trusted advisors for many of our clients. They respect our advice and input.”

Dave Taylor, CPA and tax partner at ACM LLP (now BDO LLP), Denver, already was involved when the COCPA sent out the urgent plea for members to contact their state senators about the fast-moving legislation. At the same time, one of Taylor’s partners in the firm’s Northern Colorado office was working with a local business group and wanted to know if what he was reading in the proposed legislation was correct. Taylor sat in on conference calls with the group and its lobbyist.

“The bill was moving way too fast,” Taylor says. “We wanted the legislators to slow down and make smart policy.” Over just a few days, he spoke with lobbyists from various organizations to provide plain language arguments about why the bill needed to die or slow down.

At that point, the sponsors were beginning to realize the bill might be in trouble, especially after Governor Polis signaled he might veto the bill if it weren’t amended to address the business community’s concerns.

Ultimately, Senate Democrats agreed to strip out repeal of several longstanding tax exemptions. They also agreed to pare back changes to exemptions stemming from the 2017 Tax Cuts and Jobs Act. For example, owners of pass-through businesses — like a limited liability company, partnership, or sole proprietorship — can take a deduction of 20% off their qualified business income if they have income below $500,000 for a single tax filer and $1 million for joint filers. The change means only about 1% of current tax filers will no longer be eligible for the break. Colorado’s small businesses, which used the break to hire more workers, will continue to benefit.

Medley adds, “The sponsors of HB20-1420 promoted it as the solution for returning dollars to the Colorado Education Fund, which had been cut drastically to balance the state budget. When we sent out the email call to action, some members asked, ‘How could the Society be against funding to educate our kids?’ That wasn’t our intention. We needed to sound the alarm on the methods being proposed.” Medley says member involvement in understanding the proposed legislation and outreach to legislators, along with Furman’s political savvy and legislative relationships, plus heavy lifting by the business community - especially the Colorado Chamber of Commerce and Loren R. Furman, Senior Vice President, State and Federal Relations - were key. “COCPA member Pam Feely, CPA, Lakewood, is my star example when it comes to outreach.

She contacted every legislator she knew the same day. And, they listened.”

“Most of the potential harm was avoided,” Furman says. “We’ll see some version of this bill in the next legislative session, and we’ll deal with it then. It was just so chaotic and required so much time, energy, and commitment in a very short window, which doesn’t make for effective public policy,” Furman says. “The COCPA had the necessary folks on the ground, paying attention at the Capitol. Thanks to members’ efforts and critical leadership from other business organizations, we were able to achieve a less extreme outcome.”

CPA/PAC BOARD SEEKS NEW MEMBERS & YOUR SUPPORT CPA/PAC, the CPA Political Action Committee, contributes to state legislative candidates only. Every two years, the PAC Board meets to review the Colorado House and Senate candidates running for office and determine who to support for election to the Colorado General Assembly. Those decisions are based on support of business issues and business-friendly legislation, leadership position(s) on committees which typically consider the profession’s issues, and likelihood of election. In July, the Board contributed to 21 candidates for $7,400 total.

A “natural person” (an actual human being) may contribute a maximum of $625 per House of Representatives election cycle (every two years). Make your personal check payable to CPA/PAC, and mail it to Terry Cervi, COCPA, 7887 E. Belleview Ave., Ste. 200, Englewood, CO 80111-6076. Contributions are not tax deductible and cannot be reimbursed by your employer.

The CPA/PAC Board is seeking new members. For details and to volunteer, email Mary E. Medley, mary@cocpa.org.

LEGISLATORS NEED YOUR EXPERTISE Cheri Jahn served in the Colorado legislature for 16 years. In the Colorado Senate, she represented the 20th district, which includes the city of Wheat Ridge, from 2011 until 2019.

Prior to that, she was a member of the Colorado House of Representatives from 2001 through 2008. She wrapped up her service in 2019 when she was term-limited from running again. She affirms the important role CPAs play in the legislative system and for legislators themselves. “As a legislator, you certainly don’t know everything, and it’s important to learn,” she says. “Every industry is different.”

While Jahn says lobbyists like Furman play a key role in the process, it was the CPAs themselves – her constituents – from whom she wanted to hear. “The lobbyists do a great job, but the people who work in CPA firms and small businesses are the ones who bring a whole different perspective to the process,” she says. “A legislator is going to listen twice as hard and learn more about what it’s like to run one of these businesses when they hear directly from CPAs, especially if that CPA is from the legislator’s district. For the process really to work, it truly has to be a representative government. That means connecting constituents with their legislators.”

The most important thing: Remember legislators are regular people. “There’s no need to be fearful,” Jahn says. “As a CPA, you have expertise the legislator doesn’t have, so making phone calls, emailing, or going to

the Capitol in person and explaining why and how something affects you as a CPA, your clients, or your business is impactful.” She also encourages attending town hall meetings and building relationships with local legislators “so you have an existing relationship when you need it.”

YOUR VOICE MATTERS If you really want to make your vote count and your voice heard, Jahn encourages CPAs to connect with legislators and participate in the legislative process. “It’s imperative to be involved,” she says.

Jahn encourages COCPA members to donate to the CPA Political Action Committee (CPA/ PAC) and explains that although PACs have earned a bad reputation, it isn’t about the money. “A PAC is about engaging candidates, learning more about them, and understanding their issues. In turn, you have the opportunity to explain the issues you’re dealing with and how those issues affect you, your clients, and your employer. You’re educating legislators about the issues before them.”

Taylor says the 2020 session showed him how a few people working together can make a difference. “You don’t have to be a few thousand people; that was eye-opening for me,” he says. He encourages COCPA members to get involved in Colorado’s legislative process and the COCPA’s efforts. “If you just raise your hand and say, ‘I’m available,’ people will take you up on the offer. It’s an easy and impactful way to leverage your expertise and help shape public policy.”

September/October 2020 | www.cocpa.org

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DIVERSITY, EQUITY, & INCLUSION

Bias By Any Other Name is Still Bias: Consciously Seeking Unconscious Bias

BY NATALIE ROONEY

Is it possible to figure out consciously something that we’re doing unconsciously? That might sound like a trick question, but the answer is yes, according to Nita Mosby Tyler, Ph.D. You might recognize Dr. Mosby Tyler from her presentation at COCPA’s 2018 Leadership Summit, her Tedx Mile High presentation, or most recently as one of the contributors to Denver’s 9NEWS Voices of Change series. Here, she shares her thoughts on bias, how we can uncover our own biases, and why it’s all so important.

WHAT IS BIAS? Whether we want to admit it or not, we all have biases, and they affect us in myriad ways. Whether it’s stereotypes about race, gender, religion, etc., as humans we hold certain beliefs about people who are different from us. Even people who think they hold a neutral view have some sort of unconscious bias.

THE TRICK TO MITIGATING BIAS We talk about implicit or unconscious bias without ever talking about explicit or conscious bias, says Dr. Nita Mosby Tyler. “I think there’s something wrong with that. We want people to mitigate what they’re doing unconsciously, when the fact of the matter is, if it’s unconscious, you don’t know you’re doing it.”

Our biases, which can stem from media exposure, our upbringing, or societal factors, are unavoidable. And, while these biases are not indicative of a person’s morality, they can still be harmful to those around us.

Mosby Tyler offers this trick to mitigating bias: Name your conscious bias to find the direct correlation to what might be unconscious.

Implicit bias (also called unconscious bias) refers to attitudes and beliefs that occur outside of our conscious awareness and control. An implicit bias may run counter to a person’s conscious beliefs without the individual even realizing it. For example, it is possible to express an explicit liking of a certain social group or approval of a certain action, while simultaneously being biased against that group or action on an unconscious level. Implicit biases and explicit biases might be different for the same person.

Explicit biases are biases we are aware of on a conscious level - for example, feeling threatened by another group and delivering hate speech as a result.

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NewsAccount | September/October 2020

Mosby Tyler has worked to identify her own unconscious biases. “I had to ask myself what prejudices or stereotypes I have about other people or other systems,” she says. Through the process, she had to acknowledge she had a prejudice about people who she assumed didn’t want to learn from her. “I can spot them a mile away. So, what might I be doing unconsciously against someone I’ve identified like that? I don’t even attempt to engage. I ignore them. I don’t make eye contact.”

That’s what Mosby Tyler shares with everyone about how to mitigate bias quickly. “The key is you have to admit it,” she says.

THE FEAR BEHIND OUR BIAS Underneath every one of our biases is fear.

• State Basis Fear: You’re afraid because of something that has happened to you before.

• Trait Basis Fear: You’re afraid because of a perceived danger, a gut feeling, or something that happened to someone else.

We’re operating with both of these fears in play at all times.

And, 85 percent of the time, we operate from the trait basis.

“We’re afraid of something we have no experience in, but we still have a fear,” Mosby Tyler explains. “People need to explore these fears,” she adds. “Can you imagine if we got our fear in check? It would be so much easier to tackle bias.”

Mosby Tyler shares a personal story to demonstrate fear.

She and her husband, a pastor, frequently dine out. They started to notice that if they were seated at a restaurant and a white woman was seated nearby, with her purse hanging on the back of her chair, the woman would slowly move her purse away from them. Mosby Tyler and her husband began counting how many times this phenomenon occurred. White women moved their purses 240 times over the course of two years.

“I don’t think all of these women are racists,” Mosby Tyler says. “I also don’t think that all of them have been robbed by a pastor and his wife. The bias is around blackness and safety, criminality, and theft, but it unconsciously makes them move their purses without looking up or batting an eye. That’s how unconscious bias plays out.”

Mosby Tyler points out that we don’t even have to look at science and statistics to see how the tentacles of unconscious bias and fear combine to create harmful, hurtful behaviors. “It chips away at a part of me that someone thinks I would steal her purse,” she says. “It creates pain, but there’s no real way to tackle it. It’s not my way to confront someone. My healing comes by telling the story.”

DIVERSITY FATIGUE & IMPOSTER SYNDROME The concepts of diversity fatigue and imposter syndrome play important roles in discussions and actions surrounding bias and racial injustice.

Diversity fatigue is associated with the amount of energy, time, and resources it takes to solve complex problems around diversity, equity, and inclusion, which makes it harder to stay committed to initiatives for the long term.

“We have to teach that there is this thing called diversity fatigue and then name what our own diversity fatigue is rooted in because we all have a story,” Mosby Tyler explains.

“I grew up in the south. I have been talking about diversity since I was four. That’s why I’m tired.”

It’s important to consider: • Where is your diversity fatigue coming from? What’s your story?

• What triggers it?

• Once your fatigue is triggered, how does your body react?

Underneath every one of our biases is

FEAR .

“Someone is looking at you and making a judgment on your body language,” Mosby Tyler says.

An example is police officers who have diversity fatigue.

They see the same thing over and over; they get triggered; and their bodies react. And then we spin a narrative on what that means. “We need to be conscious of our visceral reactions, which are on the rise in today’s environment,” Mosby Tyler says.

Another increasing issue is imposter syndrome, which is that negative voice inside our heads that tells us we’re not good enough, smart enough, or credible enough to do something in the moment. “The white community will say, ‘I’m not the expert, so I shouldn’t say anything,’” Mosby Tyler says. “So now, with these two risk factors – diversity fatigue and imposter syndrome – people feel paralyzed about what they can and should do. We don’t need that. We need everyone mobilized and speaking from their vantage point.”

DEEP, REFLECTIVE WORK Admitting our own biases is deep reflective work. It’s private. It’s not really comfortable to share it with others because some of it might be racist or homophobic, and that’s incredibly difficult to admit.

“Work like this requires a commitment to tell yourself the truth and face it,” Mosby Tyler says. “Admitting your prejudices is some of the deepest reflective work you can do.”

Using her own biases as an example, Mosby Tyler says, “How on earth would I share when I think someone doesn’t even want to learn? That’s stereotyping, but I had to admit I pigeonholed people when they gave any sort of sign, and my implicit bias kicked in. I didn’t want to have anything to do with them, and that’s a problem. How many teachers do we have like that who stop teaching? How many doctors, or people in any other field, who might have the same bias I have? This process calls for commitment to tell yourself the truth. It’s a challenge.”

DO NO HARM The best way to uncover biases is to back into the process.

When you decide you want to do this work, start with your unconscious bias – whatever that may be – and first make a commitment that you never want to do anything or react in a way that would harm someone.

Next, tell yourself the truth so you can get to that commitment. “You are committing to exploring anything you might be doing unconsciously that might be hurting people,” Mosby Tyler explains.

CONTINUED ON PAGE 18 September/October 2020 | www.cocpa.org

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DIVERSITY, EQUITY, & INCLUSION CONTINUED FROM PAGE 17 There are many other examples of how biases cause harm. Mosby Tyler pulls from another painful memory: In first grade, her teacher put all the Black children into the lowest reading group without ever testing their reading skills. “That created so much harm in my life,” she says. “That’s where the teacher thought Black kids belonged. Now you’re in a performance system, and you have to fight and prove your way out of it.”

In the 1940s, researchers conducted what became known as “the doll tests” to study the psychological effects of segregation on African-American children. Four dolls, identical except for color, were used to test children’s racial perceptions. The children, ages three to seven, were asked to identify both the race of the dolls and which color doll they preferred. A majority of the children preferred the white dolls and assigned positive characteristics like smart, nice, good, and beautiful to them. The children used words like dumb, mean, bad, and ugly to describe the black dolls.

I have felt like I’ve had to prove I’m as good my whole life. I’ve absorbed these biases over time.

“Even at a young age, these Black children had a bias toward whiteness,” Mosby Tyler says. “Think about how far back your bias can go and how it might look when you age. What does a three-year old

30 years experience in public accounting 25 years of service with Lang & Company, CPAs 9 years experience as a business broker for CPAs Providing buyer consultation as well as full service business broker services

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think about himself or herself in the world eventually if they think about white as being better? That is imposter syndrome. That’s my story, too, from being in the lowest reading group and not knowing if I were as good as white kids. I have felt like I’ve had to prove I’m as good my whole life. I’ve absorbed these biases over time. It goes back to this profile of normal and that things described as excellent, good, and beautiful are white. Well, I’m never going to be white, and if the model of goodness is white, I’ve already lost. Those are the biases we have to get out of the way.”

CHIPPING AWAY AT THE PROCESS Creating change is where imposter syndrome really plays a role.

People use the word ‘dismantle,’ and that feels too big,” Mosby Tyler says. “I can’t dismantle this Titanic.”

Instead, Mosby Tyler suggests thinking about chipping away – each person doing his or her part in bite-sized pieces. “Me times you times the next person – that’s how we get a system dismantled,” she says.

“We’re chipping away at systems that don’t work for all of us. That’s how I stay sane and focused on the little part I can do. We have to get in the business of asking ourselves ‘What can I do?’”

An important point is this isn’t the time for white people to ask their Black friends what they should be doing to help. “That’s painful,” Mosby Tyler says. “You have to do the work, see where inequity exists, and figure out how you can help chip away, no matter how big or small. That’s your work. Look at ways to chip away at inequity, make a way for someone to have a place at a table that they didn’t have before, whatever that is. No one should be absent of things to do because there’s so much to do.”

A WORLD WHERE EVERYBODY WINS Why do we all need to care about bias? Because we all potentially have something lurking in our brains that could cause us to make decisions that aren’t thought through or are subjective. How might our biases affect how we interact (or not), hire (or not), and promote (or not) in the workplace? How do our biases affect our friendships, relationships, and hold us back from great things? How do our biases hurt others without our even knowing? That’s why we all need to care. Once we realize and recognize our own biases, we can begin to actively challenge them.

Mosby Tyler would love it if everyone could see themselves in the same boat while understanding there are different lived experiences happening in the boat. “We’ve got to get everyone thinking ‘we’re in this together,’” she encourages. “I’m not sure it’s completely the case yet. I’m not sure white people want to be in the boat with us because that means facing oppression,” she explains. “But we have to envision being in the boat together so we can lift it. That is the work: Getting people to understand we are, in fact, in this together, and then to really believe it. I want white people and Black people and young people and all of the diversity that is so beautiful to be side-by-side, so we all win. I don’t want people of color to win at white people’s expense. I want everybody to win. I want to see that before I die.”

tom@thomaslangcpabroker.com Colorado Real Estate License and CPA license Member of the Colorado Society of CPAs Past Board Member of Colorado Association of Business Intermediaries

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Learn more about Nita Mosby Tyler, Ph.D., her book, White People Really Love Salad: What My Childhood Taught Me About Diversity, Equity & Inclusion, and her work at The Equity Project LLC by visiting theequityprojectllc.com. Her TedX Talk is now featured on the Ted Platform at www.ted.com/talks/nita_ mosby_tyler_want_a_more_ just_world_be_an_unlikely_ally.

HUMAN RESOURCES

Mental Health: A Foundation for Achievement

BY LISA HACKARD, CPA This article is the second in a series addressing mental health in the workplace. In the July/August 2020 NewsAccount, Lisa Hackard shared her story and the events that led her to become a passionate promoter of mental health. In this article, she shares her discussions with two mental health professionals, Amy Lopez, PhD, LCSW, and Alex Yannacone, MA, of the Helen and Arthur E. Johnson Depression Center at the University of Colorado Anschutz Medical Campus. They explore the importance of mental health as the foundation for professional and personal achievement.

T

here are many aspects to health, intertwined and interdependent, contributing to and detracting from our overall well-being. As accountants, we talk easily about physical health, particularly in areas of achievement like summiting Mount Quandary, running a marathon, shooting par at Sanctuary Golf Course, and racking up a dozen powder days during ski season.

We also talk about physical ailments, such as food allergies or broken bones, especially those resulting from our achievements. Culturally, these are comfortable for us. Most of us easily offer sympathy and accommodations for these ailments, modify menus for those with allergies, carry things for others, and provide alternatives to walking or traveling for our colleagues who are injured.

However, in our profession, like many others, we’re often uncomfortable acknowledging our mental health achievements and challenges or offering compassion to others. Yet we know mental health is just as important as physical health; perhaps even more so in the context of our ability to succeed in our professional and personal lives. With multiple competing priorities, fixed deadlines, and high standards for quality, our profession demands that we manage not only our stress but also that of others. As protectors of the capital markets, we are charged with keeping a steady hand on the wheel during times of dynamic change.

We’ve all been grappling with disruptive changes resulting from COVID-19. This persistent virus has turned our world upside down and challenged us in numerous ways as we maintain our professional responsibilities, manage our households, and cope with associated child care, education, and elder care issues. We’ve also had to come to grips with the reality that when we return to our workplaces, things likely will not be as they were before. This ongoing stress is compounded by the daily onslaught of headlines bringing news of more societal, political, and

Now, more than ever, we need the vocabulary, courage, and confidence to cope with stress and strengthen our mental health and well-being to navigate through the challenges ahead. economic turbulence unlike anything most of us have ever seen. Now, more than ever, we need the vocabulary, courage, and confidence to cope with stress and strengthen our mental health and well-being to navigate through the challenges ahead.

WHAT IS “MENTAL HEALTH”?

Mental health includes our emotional, psychological, and social well-being, according to MentalHealth.gov. It affects how we think, feel, and act, and it helps determine how CONTINUED ON PAGE 20

September/October 2020 | www.cocpa.org

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HUMAN RESOURCES CONTINUED FROM PAGE 19 we handle stress, relate to others, and make choices. Mental health is important at every stage of life, from childhood and adolescence through adulthood.

Adolescent, and Adult Licensed Clinical Social Worker Amy Lopez, PhD, LCSW, of the Helen and Arthur E. Johnson Depression Center at the University of Colorado Anschutz Medical Campus, says that because the concept of mental health is used in such a broad way, people can be confused about what the term means. “This lack of clarity can lead to stigma, reluctance to seek care, and frustration as people may not know how best to describe what is happening in their lives,” explains Lopez, adding that, “the good news is there are years of scientific studies and evidence-based treatments and methods to help people manage or resolve mental health symptoms and enhance well-being, to live happier and more meaningful lives.”

The Johnson Depression Center’s Director of Education and Community Programs Alex Yannacone, MA, acknowledges that life can be stressful, and that stress can have a negative impact on our personal and professional lives. “Many of us grapple with how best to manage our stress and balance our self-care.

It can be simple if we learn how to tune in and pay attention,” she says.

Yannacone explains that stress can be positive. “It can motivate us, drive us, and help us accomplish tasks and projects in innovative and developmental ways. When stress piles up, however, it can negatively affect our performance. We may become agitated, bounce around from project to project without accomplishing much, and end up burning out or breaking down,” she says.

accountable for our planned actions.

2. Unfixable stressors are those we do not have control over, such as a change of policies or expectations at work, including the recent stay at home order and COVID-related requirements. Here, we want to have healthy self-care habits and a support team to help us manage our reactions to these issues.

3. Overreactions are current stressors over possible events in the distant future, such as where the company might be in five years. Here, we want to give the stressors perspective, acknowledge their distant possibility, and break them down into smaller steps toward a long-term goal or assess their impact on us in the present time.

Yannacone recommends daily check-ins to identify and categorize stressors to determine actions, to anticipate stressful times, and to develop a plan for coping and creating self-care habits to build resiliency.

“Self-care habits are not just important – they’re critical to our overall mental wellness,” Yannacone says, explaining that self-care habits are intentional actions to take care of ourselves. “Self-care should not be another chore or task, nor does self-care need to be time consuming. Those who prioritize self-care tend to be healthier, have positive outlooks about who they are and what they contribute to, and most importantly, they’re more productive during stressful times.”

PRIORITIZING SELF-CARE We can look at our self-care habits in six different categories:

STEPS TO FINDING BALANCE So how do we find that balance? According to Yannacone, the first step is awareness tuning in and listening to what our stressors are telling us and why those messages are important. “Once we listen to the messages behind our stressors, we can begin to address them in productive ways,” she advises.

The second step is categorizing our stressors so we can address them with meaningful action: 1. Fixable stressors are those we have control over, such as a project due at the end of the week. Here, we want an action plan to address the stressor so we can break it down into manageable steps and ask others to hold us 20

Physical

(taking care of our body)

Psychological

BUILDING RESILIENCY THROUGH SELF-CARE I’ve learned the importance of building resiliency through self-care habits. When faced with pressures in the past, I often compromised my sleep, nutrition, exercise, and relationships to focus on tackling the challenge at hand. Ironically, those compromises made it harder for me and those around me because of the negative impacts on our collective mental health. Today when challenges arise, I’m more experienced in scaling back my habits to devote enough time to the matter at hand but not to the point of compromise.

Maintaining baseline habits is essential to persevering in the right way. For example, instead of exercising for an hour each morning, I’ll cut back to at least 30 minutes three times per week. Or, instead of sleeping seven to eight hours a night, I commit to no less than six. At least quarterly, I assess where I’m doing well and where I’d like to make changes. With the pandemic, I’ve shifted my habits to include daily gratitude practice and outdoor physical activity, limits on the

Spiritual

(identifying meaning in life)

Relationship

(taking care of our minds)

(prioritizing meaningful relationships)

Emotional

(developing new skills, managing time effectively, balancing workload, arranging comfortable work space)

(addressing feelings when they arise)

“When we evaluate our current habits in these categories, we can identify where we’re doing well and where we’d like to

NewsAccount | September/October 2020

improve. For example, we may find we’re eating well and exercising regularly but struggling to prioritize relationships. This can be adjusted with a small shift, such as calling a friend once a week or going on a date with our partner once a month,” says Yannacone. “It‘s important to recognize where we can improve and what are realistic expectations for making those improvements. When we create achievable self-care goals for something we care about, we are better at following through and seeing meaningful improvement over time.”

Professional

time I spend reading or watching the news, and sticking to a regular sleep schedule. The intentionality and energy I put into caring

for myself makes me a better leader, colleague, mother, and friend.

I’ve also learned the power of identifying how stress affects me and the benefits I get from sharing my stress signs with those with whom I work and live. As they see my stress signs before I do, I’ve asked them to tell me so I can adjust, listen to the message behind the stressors, and move to meaningful action. I encourage those around me to do the same, and I am honored to lead a team that values the benefits of watching out for our stress signs and kindly acknowledging them. This habit has helped propel us smoothly through a number of challenging projects.

INTEGRAL PART OF CORPORATE CULTURE At KPMG, we recognize that health and well-being are not just a priority, but a business imperative and integral part of our “Heads Up” culture as well. We offer access to employee assistance programs for our partners, employees, and members of their households along with a regular cadence of workshops on stress management, selfcare/resiliency, happiness, mental health, and more. These are in line with our core values of integrity, courage, excellence, together, and for better. We are committed to continuous improvement, including supporting health and well-being as part of the foundation for achievement.

“Every step is an end, and every step is a fresh beginning.” – JOHANN WOLFGANG VAN GOETHE STEPS TO BEGIN THE JOURNEY I invite you to take the following steps forward in your mental health and wellness journey: •

Assess your self-care habits using the six categories, and identify at least one new habit to focus on developing over the next month.

•

Identify how stress affects you, and ask others to help you notice when they see signs of stress. Categorize your stressors, and learn how to recognize the signs so you can move toward meaningful action.

•

Lead by example, and learn about the mental health resources available through your employer, health care provider, and community. Tap into these resources, explore how they can benefit you, and champion their use with employees, colleagues, and others.

Lisa Hackard is an Audit Partner with KPMG LLP, also serving as the National Chair of KPMG’s ‘Abilities in Motion’ Business Resource Group, whose 1,800+ members in chapters throughout the U.S. are raising awareness and supporting people with disabilities and those who are caregivers for people with disabilities.

Contact her at lhackard@kpgm.com.

Amy Lopez, PhD, LCSW, is a licensed clinical social worker and instructor at the Helen and Arthur E. Johnson Depression Center at the University of Colorado Anschutz Medical Campus where she provides individual, family, couples, group therapy, and telehealth to adults and children experiencing depression, anxiety, mood difficulties, or life stressors.

Alex Yannacone, MA, has an extensive background in implementation and training for prevention and intervention of mental health services and education.

As the Director of Education and Community Programs at the Helen and Arthur E. Johnson Depression Center at the University of Colorado Anschutz Medical Campus, she provides programs and training addressing mental health issues across Colorado.

STRATEGIC

INSIGHT to advance your business

October 28, 2020 Webcast • CPE: 8.0

Register today at COCPA .ORG/INDUSTRYCPAS September/October 2020 | www.cocpa.org

21

HUMAN RESOURCES

Ready? Dressed? Returning?

Work as What You Do v.

Where You Do It

BY NATALIE ROONEY

Some people would like to work from home forever. Others never stopped working at the office.

And others are ready to get back to the peace and quiet of their office routine. COCPA members share their organizations’ plans for work as they continue to navigate the ever-changing COVID-19 landscape.

O

n March 9, 2020, SM Energy’s emergency management team first met to monitor the rapidly developing COVID-19 pandemic. By March 11, the team was ready to test remote work, but the situation evolved so quickly, all office-based personnel began working from home on March 16. It’s remained that way ever since, says SM Energy Controller Pat Lytle, CPA, CGMA. ACM LLP* employees made a seamless transition to remote work, says CFO Kristin Holthus, CPA. It was a change for tax teams, but auditors already were used to working off-site. ACM’s IT team set up everyone and addressed a few connectivity issues. Holthus says she has been impressed with how well everyone has maintained productivity.

As an owner and audit director of a small CPA firm in Durango, Michelle Sainio, CPA, of FredrickZink & Associates (FZA), says there were few issues transitioning employees to working remotely. Most already had the ability. Five individuals, including the owners, were able to remain in the office to handle day-to-day necessities during the stay at home orders. Several employees were faced with working remotely while educating their children.

TO RETURN OR NOT TO RETURN SM Energy has not set a date for employees to return to the office.

“We’ve said we are not going to be the first to go back,” Lytle says. “We continue to monitor the data.”

At an audit committee meeting, Lytle presented how the SM Energy accounting department has been successful at working from home.

“The first quarter was challenging as we all got used to the process, but we’ve had no missed deadlines, no material control failures, no significant changes in our internal controls. All processes have been completed on time including both our first quarter and second quarter 10-Q filings. It all has been very deliberate,” he says.

As an oil and gas company, SM Energy’s field personnel are considered essential, and they have continued to work using all of the necessary precautions and safety measures. If SM Energy employees need to access one of the offices in Denver or Houston, they must get approval from a supervisor, answer seven questions to ensure they’re not currently sick, and commit to following strict office protocols.

Holthus says overall, ACM is completely capable of remaining on 100 percent remote operations. “Why rush?” she asks. “We’re risk averse.

We’d rather be laggards in this situation and wait.” Holthus adds that

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NewsAccount | September/October 2020

even if safer at home orders are lifted, any planned openings may be pushed back so as not to disrupt tax deadlines.

The handful of ACM staff going into the office to perform critical tasks, or because they don’t have an appropriate place to work at home, must agree to follow protocols. They include requesting and receiving authorization to work in the office, wearing masks, sanitizing, and logging in when they enter and exit. The firm created online training to show what office life should look like - where masks must be worn and the number of people who can be in a certain area at a time. Employees must give notice - a specified number of days in advance - before coming to the office so a schedule can be created.

Holthus says when safer at home policies are lifted, ACM will investigate voluntary return to the office. “We will be safer at home as long

“People are still wary, and we want them to consider their personal risk and comfort level when assessing their return to the office.” as Colorado says we should. People are still wary, and we want them to consider their personal risk and comfort level when assessing their return to the office. Our offices are following and adhering to local and statewide guidance.”

Sainio says once return to work was permitted, the firm made sure everyone was following all protocols: monitoring temperatures and logging and reporting any symptoms. In the early days of the office closure, clients weren’t permitted in the office at all. Documents could be left in a drop box. “If they wanted to meet with us personally, we met them outside,” she says.

Now, as the FZA team has returned to the office, client meetings are permitted, but by appointment only. And if clients want to enter the office, they must follow the same protocols as staff. Any health information collected is placed in a confidential file.

While Sainio says being at home with families and kids was nice, and the staff stayed connected via video conferencing, everyone missed the personal connections. “This experience made us realize how much we all enjoy being around each other.”

WORK TRAVEL: GROUNDED “For now, all non-essential business travel remains restricted,” Holthus says. If auditors must visit a client site, a formal request and review process is followed. Employees must wear masks even if masks aren’t required by the client. Safety protocols and procedures are reviewed with each team member providing essential services at a client location. “We’re working to understand our clients’ environments and determining if it’s safe and appropriate for our employees to go on site,” Holthus says. “We’re trying to do all non-local work virtually. It’s amazing how many procedures can be done with clients that way.”

Sainio says the FZA audit team typically travels some, but that all came to a halt in March. Before resuming in July, the firm coordinated with clients and employees. “We don’t want to put anyone in a position where they’re not comfortable,” she says. “We’re all being flexible and taking precautions seriously.”

Corporate travel for SM Energy has been on hold since March, but some employees’ relocations to different regions are moving forward. The company is following strict protocols when these moves are required.

POSITIVES AND NEGATIVES Lytle says there have been positives and negatives to working at home, and some areas will need more focus if remote work turns into an even longer-term situation. “On the positive side, people have gotten a portion of their lives back by not spending time traveling to and from work every day,” he says. “They’re spending time with their families they wouldn’t otherwise have.” People also have indicated

they feel healthier because they’re exercising more. But many are experiencing the challenges of home school when they’re not really set up for it. “Educating your kids and spending time with them are two different things,” Lytle says. “The education piece is tough.”

SM Energy has received positive feedback about how technology has paved the way for smooth communications among employees.

“We’ve been able to meet effectively,” Lytle says, “and our productivity and engagement have been good.” What Lytle and his team miss is bumping into each other in the hall and having those quick, casual chats. “We need to find ways to have those conversations,” he says.

“We miss the face to face environment. We’re finding ways, but it’s just different.”

Lytle says the virtual environment also makes it challenging to maintain the creativity and entrepreneurial spirit that typically is a part of in-person brainstorming. “We need to figure out how to collaborate more effectively. We still feel like we need to be in the office for those sorts of things.”

Training and education are picking back up after a hiatus. At the beginning of work at home, SM Energy postponed training to focus on core processes like quarter close. In May, the company’s Leadership Journey program resumed in a virtual format. “We’re getting back to a lot of our normal activities.”

BACK TO SCHOOL Colleges and universities around the country are dealing with an entirely different set of circumstances as they welcome students back to campus. Most schools have changed their in-person academic calendar to end at Thanksgiving. The last week of classes and finals will take place remotely to avoid students traveling over the long holiday weekend and then returning to campus unknowingly infected with COVID-19.

CONTINUED ON PAGE 24 September/October 2020 | www.cocpa.org

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HUMAN RESOURCES CONTINUED FROM PAGE 23 From the outset of the pandemic, the University of Denver (DU) began planning for fall. A committee representing academic units across the university convened to discuss space, HR accommodations, and class modalities.

DU plans to welcome students back to campus on Sept. 14, right on schedule. Lisa Victoravich, Ph.D., CPA, associate dean and professor at the Daniels College of Business, has been involved in the DU task

The priority is providing first-year students with an in-person experience, but many classes will be taught in a hybrid format. force and is chairing a Daniels-specific committee. She explains the school’s big picture approach is to offer a mix of online and in-person classes depending on the class, its material, and the students.

The goal is to be highly flexible. The priority is providing first-year students with an in-person experience, but many classes will be taught in a hybrid format. Instead of two days a week in person, students might attend one day online and one day in person, reducing the number of people coming to campus each day.

DU also is preparing classrooms to accommodate physical distancing.

A 60-person space will now hold only 18 people at a time. Spaces that traditionally might not have been used for classes are being converted. Departments may find themselves using different buildings than they’ve used before. “It’s a complete reconfiguration of our spaces,” Victoravich says.

Higher level online training is being provided for faculty who will be delivering courses virtually. “In the spring, we went online at the last minute,” Victoravich says. “Faculty are better now than they were then, but we all want to improve.”

Victoravich says it has been challenging to find the balance between faculty who want to teach in a certain modality and what classes need to be in person. “We’ve worked closely with HR to make it all happen.”

DU students will be required to wear masks, even when they’re outside. A mask requirement is being added to the student code of conduct. Residence halls will be open, including a new 300-room building. An older residence hall will be turned into a quarantine facility for students who test positive for COVID-19, show symptoms, or are waiting for test results. The school is contracting with a provider to conduct rapid testing on campus.

Once school resumes, students will be tested before returning to campus, and they will monitor their symptoms on an app. DU continues to discuss how to accommodate students who become ill over the course of the quarter. Will they attend virtually? Will they be able to interact?

At Colorado Mesa University (CMU), Grand Junction, Suzanne OwensOtt, DBA, CPA, and professor of accounting, also has been preparing for students’ return to campus. “In early April, our leadership began discussing plans for fall semester,” she says. “We want students here, 24

NewsAccount | September/October 2020

and they want to be here. We’re doing everything in our power to do that in a safe way.”

Before the first day of school, Aug. 17, all CMU students and faculty took a COVID-19 test to provide a baseline and determine the prevalence of the virus. The school will be using ongoing “pool” testing whereby samples from multiple people are combined and tested as a group. If there’s a positive test in the pool, each individual will be tested individually.

Any faculty member who didn’t feel comfortable returning to in-person instruction was able to convert classes to an online format - no questions asked. “They can continue to work from a distance,” Owens-Ott says.

Faculty opting to teach in person are physically distanced in the classroom. Owens-Ott teaches a senior level audit class with just 20 students. “I can keep them six feet apart from each other and keep myself six feet apart from them,” she says.

If a classroom doesn’t allow for physical distancing, a hybrid method is used, splitting days of the week. Students come to class on assigned days and learn virtually on their off days. “Our goal is to be face-toface with students for anything that requires discussions, hands-on activity, or working on problems,” Owens-Ott explains. “We’re pushing lectures to a virtual environment.”

Everyone is required to wear masks. Students are asked to stay in their “Mavily” – their campus family based on the school mascot, the Mavericks. When students return “home” to their dorms, they can remove their masks.

Each time students and faculty log onto the campus computer system, they attest to not having symptoms and that they haven’t left the county. If they cannot attest to those things, they use a daily symptom tracker to assure that they have not been in contact with anyone who has COVID-19. If a student needs to be tested, the daily symptom tracker app connects them with the appropriate resources on campus.

CMU is encouraging students and faculty to stay on campus until the scheduled Thanksgiving break. “We’re asking students not to take road trips or go home on weekends because they risk bringing the virus back,” Owens-Ott says. “We know we’ll get cases, but our goal is to keep people safe and minimize the spread as much as possible.” If and when COVID-19 cases do occur, CMU has contracted with a local hotel to quarantine students.

While Owens-Ott says she is concerned that students may still travel over weekends, overall, she’s comfortable with the school’s plans and is looking forward to the school year.

THE NORMAL FOR NOW At SM Energy, “We’re going to be flexible with people and their commitments and obligations while focusing on the health and safety of our employees,” Lytle says. “We’ve seen that office staff can be effective from home, and we have every confidence that can continue.

When we have a clearer picture of the future and can make more informed decisions, we’ll do so. But as of now, we feel there’s just no rush. We’ve seen other companies return too quickly and have to exit again. It’s hard to navigate right now. We’re trying to be thoughtful about it.”

supporting our clients,” she says. “For the foreseeable future, we plan to continue to be flexible in this changing environment.” Weekly video town hall meetings have kept employees updated on new developments.

“This will change our outlook on the opportunity to have more out of office schedules than we did before.”

For now, ACM has no plans to scale down its Denver office space. A recent major renovation and a ten-year lease were undertaken to support future growth, but that doesn’t keep employees from taking this opportunity to shine and show their continued interest in telecommuting. “Some people thrive in this environment while others need to be reached out to a bit more,” Holthus says. “This will change our outlook on the opportunity to have more out of office schedules than we did before.”

In Durango, life marches forward, even in a pandemic, Sainio says.

The firm has had some staffing transitions in the past months. Internships have been on hold to ensure there’s actual space in the office.

“It was easier to shuffle people around this summer because some people don’t work as much after busy season,” she explains. “It has helped to be able to use that empty office space.” Sainio says video conferencing continues to work well, but she doesn’t want to lose the personal touch with clients. “There’s still a lot of value in reaching out and having that face-to-face contact.”

SM Energy’s current office lease in Denver will end in May 2022.

“When all of this started, we happened to be right in the middle of evaluating our office space options,” Lytle says. “We’ve always been an office-based culture, but now our discussions have changed drastically. We’re having conversations I never thought we’d have.”

As SM Energy continues to consider future plans, Lytle says the company remains most focused on the health and safety of its employees.

“We don’t want to compromise,” he says. “We’ve taken thoughtful precautions for our field employees and have no timetable to return to the office until we can bring people back in a safe way.”

Along with considerations about square footage, Lytle points out that homes aren’t generally set up for home office spaces that can accommodate things like standing desks, large monitors, and docking stations. “How do you make decisions about all of these items based on everyone’s living arrangements?” he asks.

How are you handling work these days? Share your story with the NewsAccount team for possible publication, and send your tips for working in new ways to Mary E. Medley, mary@cocpa.org.

In 2019, SM Energy invested in Cisco Telepresence and set up the system in a conference room with stadium-style seating to allow for large, face-to-face meetings between office locations. “The world has changed. Now we’re all on our desktops using Microsoft Teams,” Lytle says. “There are so many components and facets still to figure out.”

*ACM became the Rocky Mountain Region offices of BDO USA, LLP, effective Aug. 1, 2020.

Holthus agrees that daily changes make for challenging decision making. “Communication and awareness are the foundation of how we approach interactions with clients and employees. We are working to keep our people safe as we’re focusing simultaneously on September/October 2020 | www.cocpa.org

25

STATE TAXATION

2020 Colorado Tax Legislation Update

BY MARK KOZIK AND BRUCE M. NELSON

L

et us be frank. This has been a crazy year for the state legislature. The pandemic not only interrupted the legislative calendar, but also it wreaked havoc on the goals of both the Democrats and the Republicans.

Instead of meeting for the traditional 120 days, the Colorado General Assembly met for only 84 days, and even that was split into two periods separated by a couple of months. The first period, which began as normal on January 8, recessed on March 14 due to the pandemic. By the time the legislature reconvened on May 26, the economic landscape had changed dramatically, leaving legislators with the task of cutting over $3 billion out of a $30 billion budget before they adjourned on June 15.

Given the overall situation, some tax-related legislation that might have been introduced never was. Some that was introduced evolved significantly during the legislative process, and some that wasn’t on anyone’s radar at the beginning of the session ended up being enacted. The consequences to Colorado taxpayers are many, with, perhaps, the most significant being the decoupling of several state income tax provisions from the corresponding federal provisions enacted in the Coronavirus Aid, Relief, and Economic Security Act (CARES Act), signed into law, March 27, 2020. Before we address that nightmare, let’s begin with sales tax legislation.

SALES/USE TAX CHANGES House Bill (HB)20-1020 - State and State-Administered Local (maybe) Sales Tax Exemption for Long-Term Lodging: Current law imposes Colorado state and state-administered local (state-collected city/town, county, and special district) sales tax on short-term stays (fewer than 30 consecutive days) of lodging at hotels, motels, guest ranches, auto camps, trailer courts, and the like. However, stays of 30 or more consecutive days by “any occupant who is a permanent resident” of the establishment are exempt from sales tax.

This bill deletes the word “occupant” and replaces it with “natural person.” What difference does this make? None, in the case of an individual who prefers to live in a hotel rather than a house or apartment. But let’s say Jack and Jill Airlines permanently reserves 10 rooms at a local hotel for its pilots and flight attendants. The identity

26

of the individual crew members who stay each evening varies, but arguably the rooms are “occupied” by the same occupant, Jack and Jill Airlines, that rents the rooms. The Colorado Department of Revenue (CDOR) traditionally has held that this type of arrangement is exempt from sales tax.

However, the legislature determined that this treatment does not reflect the “presumed original purpose” of the legislation when it was enacted in the 1950’s. Further, the legislature stated that “it is the intent of the general assembly to simplify the collection and administration of taxes for the state of Colorado and to relieve taxpayers’ confusion and vendors’ administrative burdens by repealing tax expenditures that are not meeting their original purpose...”

So, effective Jan. 1, 2021, to qualify for this exemption, the permanent resident must be a “natural person,” not an “occupant.” Jack and Jill Airlines is not a “natural person,” so unless a particular Jack and Jill employee enters into an agreement for a stay of 30 or more consecutive nights in a room, the exemption no longer applies. The room rental will be taxable.

Colorado law provides that state and state-administered local sales tax provisions shall generally be the same. [See Colorado Revised Statute (CRS) §29-2-105(1).] However, CRS §29-2-105(1)(d) provides several exceptions to this uniformity requirement, where state-administered local sales tax is imposed on items that are exempt at the state level unless the local jurisdiction affirmatively adopts the exemption.

NewsAccount | September/October 2020

Given the overall situation, some tax-related legislation that might have been introduced never was.

Among the more common of these items are food sales, sales of electricity, and the sale of machinery and machine tools used in manufacturing. Prior to this amendment, the longterm lodging exemption applied at both the state and the state-administered local levels.

It was not one of those state-level exemptions that applied at the local level only if the local jurisdiction affirmatively adopted it.

Pursuant to this amendment, however, the exemption will apply at the state-administered local level unless such a jurisdiction affirmatively elects to tax it. Notice that (1) this is the opposite of the non-uniform exemptions described above, where the item exempt at the state level is taxable at the local level unless the local level affirmatively adopts the state-level exemption and (2) the long-term lodging exemption is not included in the CRS §29-2-105(1)(d) list with the others where the state-administered local level may or may not follow the state level treatment.

Remember, the stated intent of the amendment was to relieve taxpayer confusion and vendor administrative burden. And don’t forget that none of this discussion applies to home rule cities. [See CRS §§39-26-102(11) and 39-26-704(3)(a) and (b). See also Department of Revenue Form DR 1002, which presumably will show whether a particular state-administered local jurisdiction does or does not impose its sales tax on long-term lodging.]

HB20-1022 - Sales and Use Tax Simplification Task Force: This bill extends the Sales and Use Tax Simplification Task Force (created by HB17-1216) for another five years and modifies the scope of its duties by including, among other things, studying “‘feasible solutions,’ which are solutions that are practical, revenue-neutral, and do not require constitutional amendments or voter approval” for sales and use tax simplification between the state and local governments; considering possible streamlined licensing and medical device exemptions; and simplifying procedures for collecting tax on motor vehicles, issuing building permits, claiming and administering exemptions, and sales tax collection and compliance.

The Task Force also will review the complexity of the state’s sales taxes in special districts; standardized definitions; options for eliminating branch reporting; the adoption of a sales tax exemption for the isolated sale of business assets; the new sales tax sourcing rules; the electronic filing project; and the change to the vendor fee by HB19-

1245. [See CRS §39-26-802 and, generally, §§39-26-801 through 804.]

HB20-1023 - Address Database System for Sales and Use Tax: The Department of Revenue is implementing a new geographic information system database (GIS database) that will determine the sales/use tax jurisdictions and rates based on individual addresses. The database is to operate with a 95% accuracy rate, and taxpayers that use it to determine jurisdictions and tax rates will be held harmless for any “tax, charge, or fee liability to any taxing jurisdiction” that would otherwise result from errors in the database. The new Sales and Use Tax (SUTS) lookup system is now live, and rollout is underway. Once it is fully operational, the electronic database provisions of CRS §39-26-105.3, which provides for thirdparty jurisdiction and rate databases, will be repealed. [See new CRS §§39-26-105.2 and -105.3(8).]

HB20-1427 – Cigarette Tobacco and Nicotine Products Tax refers a ballot measure to the voters in the November 2020 election that, if passed, would allow the state to impose additional taxes on cigarettes, vaping devices, and other tobacco products.

A couple of items that were proposed in the 2020 session but did not pass are worth mentioning.

HB20-1025 – Sales Tax Exemption for Energy Used in Industry would have restricted the sales tax exemption for industrial energy [CRS §39-26-102(21)(a)] to apply only when the energy is used by a metered machine. The bill failed.

SB20-099 – Sales Tax Collection Threshold would have increased the current $100,000 threshold for sales tax economic nexus to $200,000. The bill failed.

INCOME TAX CHANGES HB20-1003 – Rural Jump-Start Zone Modification: The Rural Jump-Start Zone Program started in 2016. It provides a variety of tax benefits to qualified businesses that locate in distressed counties. In addition to any local incentives, a qualified business may be eligible for a 100 percent Colorado income tax credit on income derived from activities in the zone for four consecutive years (with a possible extension for four additional years) and a potential Colorado state-administered sales and use tax refund on the purchase of tangible personal property acquired by the business and used exclusively in the zone.

The sales/use tax refund is available for four

consecutive years (with a possible extension for four additional years). In addition, new employees may be eligible for a 100 percent personal income tax credit on Colorado income tax attributable to their work in the zone for four consecutive years (with a possible extension for four additional years).

[See CRS § 39-30.5-105.]

Until Sept. 14, 2020, to qualify for Rural Jump-Start Zone benefits, the business must be new to the state; hire at least five employees; not directly compete with the core function of any business already in Colorado; add to the economic base; and export goods and services outside the county where it locates. Effective Sept. 14, 2020, the “anti-competition” zone is limited to the rural jump-start zone where the new business locates, along with a distressed county contiguous to the zone. [See CRS §39-30.5103(7) for details.]

HB20-1003 also extends the term of the program to cover tax years beginning on or after Jan. 1, 2016, and before Jan. 1, 2026. [See CRS §§39-30.5-101 through 108.]

HB20-1024/HB20-1420 – Colorado Corporate Net Operating Loss Deduction: CRS §39-22-504(1)(a) states that, “A net operating loss deduction shall be allowed in the same manner that it is allowed under the Internal Revenue Code except as otherwise provided in this section.”

For tax years beginning before Jan. 1, 2018, Colorado corporate net operating losses could/can be carried forward 20 years (the same as the federal period). [CRS §39-22504(3)(a).]

For tax years beginning on or after Jan. 1, 2018, but before Jan. 1, 2021 (calendar years 2018, 2019, 2020), Colorado corporate NOLs could/can be carried forward indefinitely (to match up with the federal indefinite carryforward period enacted by the Tax Cuts and Jobs Act of 2017 (TCJA)). [CRS §39-22-504(3) (a).]

For tax years beginning on or after Jan. 1, 2021, Colorado corporate NOLs can only be carried forward 20 years, which is decoupled from the continuing indefinite federal carryforward period. [CRS §39-22-504(3)(b).]

Colorado corporate NOL carrybacks are not allowed for any year. [CRS §39-22-504(3).]

HB20-1420, discussed later in this article, addresses the application of the 80 percent taxable-income limitation on federal NOLs to Colorado NOLs. [See CRS §§39-22-504(1) CONTINUED ON PAGE 28

September/October 2020 | www.cocpa.org

27

STATE TAXATION CONTINUED FROM PAGE 27 (a) and (b).] [See CRS §39-22-504(2) regarding Colorado individual NOLs (briefly discussed below) and CRS §39-22-504(4) regarding Colorado NOL rules for financial institutions).]

HB20-1109 – Extension of Income Tax Credit for §529 Plans: In 2018, the Colorado legislature created a state income tax credit for employers who contribute to an employee’s §529 plan (a plan to accumulate funds that can be applied toward tuition for certain higher education expenses). The credit is equal to 20 percent of the contribution, with a maximum credit of $500 for each employee per year. Under current law, the credit is available for tax years beginning on or after Jan. 1, 2019, but before Jan. 1, 2022. [See CRS §39-22-539.] This bill extends the credit availability to tax years beginning prior to Jan. 1, 2032.

For federal income tax purposes, the TCJA expanded qualifying §529 distributions to include elementary and secondary tuition expenses for public, private, or religious schools. HB20-1034 proposed adjusting Colorado’s statute to cover payments for elementary and secondary tuition expenses as well, but the bill died in committee. [See CRS §39-22-104(4)(i)(III).]

HB20-1420 - Tax Fairness Act (TFA) is the most significant change to Colorado income taxes since the state adopted single sales-factor apportionment in 2009.

Although federal taxable income is still the starting point in computing Colorado taxable income, the TFA decouples the state from federal taxable income in several substantive ways. Specifically, the TFA adds back to federal taxable income several elements of federal relief included in the CARES Act. The effect of these changes is to negate certain increased federal income tax deductions that would otherwise operate to reduce Colorado taxable income. These add backs are provided for in CRS §39-22-104(3) (for individuals) and CRS §39-22-304(2) (for corporations). They include: • Corporate Net Operating Losses - For tax years beginning on or after Jan. 1, 2018, the TCJA removed the 20-year carryforward period that was otherwise generally applicable to federal NOLs, instead allowing an indefinite carryforward period. However, it also limited the deduction of these NOLs to 80 percent of federal taxable income in the year deducted.

The CARES Act suspended the 80 percent taxable-income limitation for 28

federal NOL deductions that would otherwise apply in taxable years beginning on or after Jan. 1, 2018, but before Jan. 1, 2021 (calendar years 2018, 2019, 2020).

Note that this federal relief is only available for federal NOL deductions taken in these three years.

Absent Colorado legislation, the CRS §39-22-504(1)(a) wording that, “[a] net operating loss deduction shall be allowed in the same manner that it is allowed under the Internal Revenue Code except as otherwise provided in this section” would presumably limit the deduction of the Colorado NOL to 80 percent of Colorado taxable income before the Colorado NOL deduction. Likewise, the CARES Act relief from the 80 percent limitation for federal NOL deductions taken in 2018, 2019, and 2020 would presumably relax the deduction of the corresponding Colorado NOL to 100 percent of Colorado taxable income before the loss is deducted in those three years.

However, the Colorado legislature decoupled from the CARES Act’s suspension of the 80 percent taxable-income limitation. In other words, it wanted to retain the 80 percent taxable-income limitation on the deduction of those NOLs in 2018, 2019, and 2020. It enacted CRS §39-22-504(1)(b), which provides that the 80 percent taxable-income limitation shall apply for Colorado purposes to NOLs incurred after Dec. 31, 2017 without regard to the CARES Act’s threeyear relief.

In June 2020, the CDOR issued “CARES Act Tax Law Changes & Colorado Impact,” an 11-page memorandum which explains the Colorado NOL provisions and provides some helpful Frequently Asked Questions and charts. In addition, it states: Although Colorado adopts the Internal Revenue Code on a rolling basis, Colorado’s definition of “Internal Revenue Code” does not incorporate federal statutory changes that are enacted after the last day of a tax year (and thus, neither do Colorado statutory references to “federal taxable income”). Accordingly, federal statutory changes enacted after the end of a tax year do not impact a taxpayer’s Colorado tax liability for that tax year.

On June 2, the CDOR issued emergency rules substantially saying the same thing.

[See DOR Rule 39-22-103(5.3).]

NewsAccount | September/October 2020

Although the federal suspension of the NOL deduction limitation applies for 2018, 2019, and 2020, the underlying federal legislation, itself, was enacted in 2020, so under the rules noted, Colorado does not pick up on the suspension for 2018 and 2019, and the 80 percent taxable-income limitation on the deduction of Colorado NOLs in 2018 and 2019 remains in place.

The limitation applied for federal at the time of those deductions (2018 and 2019), and the CARES Act relief from the taxable income limitation does not apply to Colorado for those years. And although the federal relief would otherwise apply to the Colorado NOL deducted in 2020, that relief is blocked by CRS §39-22-504(1)(b), enacted by the TFA. For 2021 and later, the federal 80 percent taxable-income limitation comes back, and it will likewise apply at the Colorado level under CRS §39-22-503(1)(b).

• Individual Net Operating Losses - The 80 percent taxable-income limitation on federal NOL deductions is generally implicit in an individual’s Colorado taxable income. [See CRS §§39-22-504(2) and 39-22-104.] CRS §39-22-104(l) blocks application of the CARES Act relief from the 80 percent limitation that would otherwise apply for taxable income for tax years beginning or ending on or after the enactment of the CARES Act but before Jan. 1, 2021 (calendar year 2020 and possibly two fiscal years, such as the fiscal year ending June 30, 2020, and the fiscal year beginning July 1, 2020). The timing of the CARES ACT enactment (March 2020) blocks Colorado relief from the 80 percent limitation that would otherwise apply for 2018 and 2019. Going forward for 2021 and later, the federal limitation will again be implicit in an individual’s Colorado taxable income. [See CRS §39-22-504 and the CDOR discussion, “CARES Act Tax Law Changes & Colorado Impact,” for additional information on individual NOLs.] • Excess Business Losses - The TCJA provided for an excess business loss limitation (IRC §461(I)) for tax years beginning on or after Jan. 1, 2018, of $250,000 ($500,000 if MFJ). [The amounts are $255,000 and $510,000, respectively, for 2019, and $259,000 and $518,000 for 2020.] The CARES Act suspends that limitation for tax years beginning on or

after Jan. 1, 2018, but before Jan. 1, 2021 (for calendar year taxpayers, 2018, 2019, and 2020).

The difference must be added back in computing Colorado taxable income for tax years beginning or ending on or after the enactment of the CARES Act but before Jan. 1, 2021 (calendar year 2020 and possibly two fiscal years, such as the fiscal year ending June 30, 2020, and the fiscal year beginning July 1, 2020). [See CRS §39-22-104(3)(m).] The CARES Act suspension of the limitation for federal purposes for 2018 and 2019 is blocked for Colorado purposes under the rules, as described above, that federal changes do not apply for Colorado purposes in years before the federal change is enacted.

• The TCJA imposed a 30 percent limitation (based on “adjusted taxable income,” as defined) on business interest deductions for tax years beginning on or after Jan. 1, 2018. The CARES Act increased the TCJA limitation to 50 percent for tax years beginning on or after Jan. 1, 2019, but before Jan. 1, 2021. HB20-1420 blocks the increased deduction available under the CARES Act for tax years beginning or

ending on or after the enactment of the CARES Act but before Jan. 1, 2021 (calendar year 2020 and possibly two fiscal years, such as the fiscal year ending June 30, 2020, and the fiscal year beginning July 1, 2020). [See CRS §39-22-104(3) (n).] The CARES Act suspension of the limitation for federal purposes for 2019 is blocked for Colorado purposes under the rules, as described above, that federal changes do not apply for Colorado purposes in years before the federal change is enacted. A similar add-back applies to corporations for the same tax year(s).

[See CRS §39-22-304(2)(i).]

• For tax years beginning on or after Jan. 1, 2021, but before Jan. 1, 2023, the federal §199A deduction for single taxpayers with an adjusted gross income exceeding $500,000 ($1,000,000 for MFJ) must be added back. Taxpayers filing a federal Schedule F (Profit or Loss from Farming) are excluded from this add back. [See CRS §39-22-104(3)(o).]

numbers (for themselves, their spouses, and/or their dependents). For tax years beginning on or after Jan. 1, 2022, the EITC increases from the current rate of 10 percent to 15 percent of the federal EITC. [See CRS §39-22-123.5.]

Gov. Jared Polis signed HB20-1420 on July 11, 2020, but its impact is going to be felt for some time.

Mark Kozik is Of Counsel with Holland & Hart, LLP, Denver, Colorado. Bruce M. Nelson, CPA, is a frequent COCPA author/instructor with more than 35 years’ experience in state and local tax.

He is the Editor-in-Chief of the Journal of State Taxation. This article does not necessarily represent the opinions of the authors’ employers, should not be considered the rendering of tax or legal advice, and is not intended to provide specific guidance or advice for any issue in any particular jurisdiction.

• For tax years beginning in 2021, the bill extends the Colorado Earned Income Tax Credit (EITC) to resident individuals who may not have valid social security

An Update on October 22, 2020 Current Developments WEBCAST | CPE: 8.0 critical insights for improving government audit in the Governmental Gain quality at the annual COCPA Governmental Conference. year, there are new and emerging developments.

Industry Every This conference will give you clarity about the “new now” and help you anticipate what’s next.

Register today at COCPA.ORG/GOVERNMENTAL September/October 2020 | www.cocpa.org

29

EDUCATIONAL FOUNDATION OF COCPA

Foundation Awards $107,500 in Scholarships The Educational Foundation of COCPA Board of Trustees awarded $2,500 scholarships to 43 juniors, seniors, and graduate students for the 2020-2021 academic year - $107,500 spread across 12 Colorado colleges and universities. Congratulations to the following future members of the profession.

BDO (formerly ACM LLP Scholarship) Savanna Harris, University of Colorado Boulder

2020-2021 EDUCATIONAL FOUNDATION OF COCPA BOARD OF TRUSTEES

BKD LLP Lydia Lawton, University of Colorado Colorado Springs

Patrick Lytle, CPA, President SM Energy Company, Denver

Crowe Scholarship Haley Butler, University of Colorado Denver

Laura Theiss, CPA, Vice President SingerLewak LLP, Denver

David Dirks Memorial Scholarship Brittany Jones, Metropolitan State University of Denver

Ingrid Stiver, CPA, Treasurer PwC LLP, Denver Diego Baca, CPA, Past President EY LLP, Denver

Deloitte Scholarship Justine Babbitt, University of Northern Colorado

Kathleen (KED) Davisson, CPA University of Denver, Denver

Eide Bailly LLP Scholarship Bridget Kalicki, University of Colorado Colorado Springs

Theresa DiPonio Hilliard, CPA Tafoya Barrett, Durango

EY LLP Scholarship Michael Kaufman, University of Denver

Alexandra (Alexie) Tune, CPA Deloitte LLP, Denver

Gordon Scheer Scholarship Connor Howard, University of Colorado Colorado Springs

Lisa Kutcher, CPA Colorado State University, Fort Collins Mary Medley, CEO Colorado Society of CPAs, Englewood Alicia Gelinas, CPA Executive Director Educational Foundation of COCPA, Englewood

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Mark J. Smith Family Foundation Kelly Callender, University of Colorado Colorado Springs Braylee Cassavaugh, Colorado Mesa University Lexus Girard, University of Denver Moss Adams LLP Scholarship Aria Klooster, Fort Lewis College Otto and Betty Butterly Scholarship Majarlika Diane Villaruel-Mariano, University of Denver Plante Moran Scholarship Tram Dang, Colorado State University Fort Collins Clayton Nielsen, University of Colorado Boulder Thomas Rosenbaum, University of Denver Caleb Thetford, Colorado State University Fort Collins Past Presidents Scholarship Brent Meyer, University of Colorado Colorado Springs PwC LLP Scholarship Sarah Phan, University of Denver

Hugh C. Braly Scholarship Michael Mussi, University of Colorado Colorado Springs

SingerLewak LLP Scholarship Kyle Wickstrom, University of Northern Colorado

KPMG LLP Scholarship Madalynne Baker, University of Denver Peyton Kidwell, University of Denver

Wipfli LLP Scholarship Andrew Yang, University of Colorado Boulder

NewsAccount | September/October 2020

General Scholarships Briana Davine, Colorado State University Fort Collins Jessica Dettman, University of Denver Mazie Finley, Colorado State University Pueblo Mea Fisher, University of Colorado Boulder Nick Huggins, Regis University Megan King, University of Denver Bryce Klose, University of Colorado Boulder Evan McCarthy, University of Denver Astride Mukabagula, University of Colorado Colorado Springs Lucia Nava Suarez, Colorado Mesa University Tom Oexeman, University of Denver Colleen Peterson, University of Denver Gisel Ponce De Leon, Colorado Mesa University Angela Reed, Colorado State University Fort Collins Anna Schnelbach, University of Denver Ivana Todorchevska, Colorado Mountain College Natalie Vaughan, University of Denver Evan Wiemers, University of Denver Andrew Young, University of Denver

SAVE THE DATE

Established CPAs can make a difference for aspiring CPAs by giving to the Educational Foundation. Your dollars provide scholarship support for highly qualified accounting students at Colorado colleges and universities. Invest in the future of the CPA profession in Colorado.

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Kathy Brents

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MOVERS & SHAKERS LACY D. BOGAN, CPA Gov. Jared Polis appointed Lacy D. Bogan, CPA, Ernst & Young LLP, Denver, to the Colorado State Board of Accountancy for a four-year term, effective, Aug. 1, 2020.

PAULA MANN, CPA & JOHNNIE R.BEJARANO, CPA, CGMA At their Aug. 5 meeting, the State Board members elected Paula Mann, CPA, Gunnison, to serve as Chair and re-elected Johnnie R.Bejarano, CPA, CGMA, to serve as Vice Chair for the 2020-2021 year.

BDO USA, LLP & ACM LLP BDO USA, LLP, announced the addition of 167 professionals through its combination with ACM LLP, effective, Aug. 1, 2020. BDO will maintain ACM’s four existing offices in Denver, Northern Colorado, Boulder, and Laramie, Wyo. DALBY, WENDLAND & CO., P.C. Dalby, Wendland & Co., P.C., announced the following promotions: Sabrina J. Hoyt, CPA, to Principal; Jennifer S. Wright, EA, to Tax Manager; Katie J. Taylor, CPA, to Tax Supervisor; Paige A. Curtiss, CPA, to Tax Senior; Megan S. Loberg, CPA, to Tax Senior; Macy E. Fleming to Audit Senior; and Nicole S. Mattingley to Audit Senior.

BROOKE HIPP Brooke Hipp, BDO LLP, Denver, was selected as one of the Titan 100 for 2020. The program recognizes a premier group of 100 CEO’s and C-level executives in the Colorado metropolitan area who demonstrate exceptional leadership, vision, passion, and influence in their fields. Hipp was named in the Accounting and Finance category.

KELLY WATSON, CPA Kelly Watson, CPA, Watson Coon Ryan LLC, Greenwood Village, was selected for the 2020 AICPA Leadership Academy.

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IN MEMORIAM We extend our sympathy to the families and friends of the following COCPA members:

“There’s learning from books. And then there’s learning by doing.”

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Gerold Bauer Member since 1994 Littleton, Colorado

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At BDO, we believe in helping people thrive, every day. That core purpose extends to both the clients and businesses we serve, as well as the people we work with. At BDO, we’ll make it a priority to offer you the mentorship, flexibility, and opportunity you need to grow and develop as a professional— today, tomorrow, and for the rest of your career. Because when our own people thrive, they can help make sure our clients do, too. facebook.com/bdo.usa

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