CFP Board, FPA, FSI to Congress: Restore tax deductions for advice now

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A unique alliance of five planning and brokerage nonprofits is pushing Congress to restore and expand tax deductions for financial advice for all Americans during the coronavirus crisis.

The CFP Board, the FPA, FSI, NAPFA and the Investment Adviser Association have banded together to lobby Congress to speed this relief for investors seeking guidance from financial planners. Congress repealed the deduction in 2017 in the Tax Cuts and Jobs Act under very different economic circumstances.

That repeal looked “inconsequential” during the bull market, CFP Board CEO Kevin Keller says in a statement. But no longer.

“In this moment of crisis,” Keller says, “millions of Americans, including many near retirement, are watching the money they worked so hard to earn and to save evaporate virtually overnight. It is crucial that they have affordable access to competent, ethical advice now and in the foreseeable future.”

Prior to the repeal, the tax deduction only applied to people whose fees for advice exceeded 2% of their adjusted growth income. The alliance wants the deduction restored for all clients regardless of how much they pay.

“Many criticized that limitation as unfairly benefitting upper-income households more than middle-income households,” the alliance says in the release.

Now, as a “matter of tax fairness,” it must be reinstated, FSI President and CEO Dale Brown adds, “regardless of income.”

The five associations say they tried and failed to persuade Congress to include the change in the $2.2 trillion coronavirus emergency stimulus package, the largest aid package in American history, which was signed into law on March 27. That relief will come to Americans in three phases covering aid to hospitals, public agencies, state emergency funds, unemployment insurance, small businesses and nonprofits, among other recipients.

Now the alliance is asking that expanded deductions be included in the “phase 4” relief legislation expected to be considered by Congress.

“Investors and savers are certainly anxious in this environment and unsure about whether they will be able to meet their financial goals,” says Karen Barr, president and CEO of the IAA. Planners, she says, are “working hard to help American taxpayers make wise decisions about their finances in the coming months as the longer-term economic impact [of the pandemic] becomes clear.”

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