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CORONAVIRUS AID, RELIEF AND ECONOMIC SECURITY (CARES) ACT

CARES Act Webinar by The Heroes Group

The Cares ACT Webinar 4-1-2020Miss our webinar on the CARES act?  Find out how this historical piece of legislation is providing liquidity to businesses and helping keep you employed.  You can watch the webinar here.  We've also provided a full listing of each question asked during the webinar and our answers.  If you have a different question, feel free to reach out to your tax or accounting associate or contact us.


Direct Payment to Taxpayers

All residents (who are not dependents of another) and have a valid Social Security number are eligible for a  $1,200 rebate ($2,400 for married couples).  There is also a rebate of $500 per child.  The refund phases out starting at an adjusted gross income of:

  • $75,000 for individual taxpayers
  • $150,000 for married couples
  • $112,500 for heads of households


You don't have to pay it back:

The direct payment to taxpayers is actually an advance payment against your 2020 income tax return. The credit is based on your 2020 adjusted gross income.  This means if you received less than than $1,200 the IRS will adjust it upwards on your 2020 tax return.  However, there is no clawback provision meaning if the IRS gave you too much, then they gave you too much - you don't owe it back.  A great win win.


Good to know:

  • The Treasury has announced that Social Security recipients will not need to file a tax return in order to receive their payment. This is a reversal from past information made available.
  • The IRS has created a portal for non-filers which can be reached through the IRS website.
  • Payments will be based on 2019 tax returns filed, or 2018  tax returns if no 2019 tax return has been filed.


SBA Loan Programs Under the CARES Act

Provision Details

PPP Forgiveness Application and Process

The Small Business Administration issued the PPP Loan Forgiveness Application.  Each lender will have a slightly different process on how loan forgiveness will work.  We recommend you reach out to your lender to find out what their process will look like.  Below is our walkthrough of some key points of the application.


Alternative Payroll Covered Period (APCP)

You are able to use an alternative 8 week period to align your payroll forgiveness period with your payroll schedule.  This only applies if you utilize a bi-weekly payroll schedule (26 year runs per year).  You cannot use the APCP if you pay your employees twice per month.


Affiliate Disclosure

The application has a checklist for the borrower to mark if, together with affiliates, more than $2MM was borrowed.  This ties into the Treasury's FAQ that indicates if more than $2MM was borrowed the SBA will be reviewing the application.


Definition of Payroll Costs

  • Includes paid or incurred (rather than paid and incurred as previously indicated).
  • Costs must be actually PAID during the covered period.
  • For owner-employees, self-employed and general partners, your compensation is limited to eight weeks worth of 2019 compensation and caps, or limits, the amount forgiven to $15,385 (which is approximately equivalent to the $100,000 compensation cap).
  • Group healthcare benefits include employer contributions but do not include any employee contributions.
  • Retirement benefits include employer contributions but do not include any employee contributions.


Calculation of Loan Forgiveness

See Schedule A, which we'll summarize as:

  1. Add payroll and non-payroll (i.e. rent, utilities) costs
  2. Reduce for headcount and wage reductions
  3. Arrive at Potential Forgiveness Amount (PFA)
  4. Take the lower of:
    • PFA,
    • PPP loan amount, or
    • Payroll costs divided by 75%


Wage Reduction Calculation

  • Requires an employee by employee comparison.
  • Requires a base period of January 1, 2020 through March 31, 2020 (not the most recent three months as originally expected).
  • The Schedule A worksheet requires each employee's name and the last four digits of their social security number.  While there's no indication that the SBA requires the lender to provide this information to them, it does require the lender maintain the information in case the SBA does request it.


Headcount Reduction Calculation

  • Two methods allowed for calculating the weekly number of Full Time Equivalent (FTE) employees:
    • The base method - for each employee, dividend the average number of hours paid per week by 40, capped at a maximum of 1.
    • The simplified method - each employee who works 40 hours or more per week is 1 FTE and every other employee is assigned 0.5.
    • You must use the same method consistently, you cannot jump from one to another.  We recommend you use both methods to determine which one is best suited for your business.
  • FTE reductions during the covered period will not reduce your loan forgiveness if they result from:
    • An employee is fired for cause,
    • An employee voluntarily resigns,
    • An employee voluntarily requested (and received) a reduction in their hours.


Required Certifications and Documentation

  • You'll be required to certify that:
    • You verified the amount of payroll and non-payroll costs,
    • The loan was used for authorized purposes,
    • The information and supporting documents are true and complete in all material respects.
  • You must agree that if the SBA requires additional information and/or documentation, you will provide it.  Your failure to provide the information can result in the SBA determining that you were ineligible for a PPP loan in the first place, or that you are not entitled to loan forgiveness.
  • Make sure you understand the list of documents you are required to maintain (i.e. payroll ledgers, calculations, employee communications, etc) as you will be required to provide these to the SBA upon request.  You must maintain the documents for six years after the date the loan is forgiveness or repaid in full.


PPP Borrower Demographic Information Form (Optional)

If you're interested in helping the SBA report certain statistical information about your employees, you can complete this form.  Your lender cannot require you to complete this form.


Paycheck protection program (PPP)

Am I eligible?

  • Businesses with 500 of fewer employees (certain affiliation rules apply except for hotels and restaurant franchises) are eligible.
  • The borrower must have been in business on February 15, 2020.
  • Note that the Treasury has release affiliation rules, meaning a group of companies would be considered together rather than as separate companies fo purposes of the loan and cap limitations.
  • Review the Treasury's Small Business Paycheck Protection Program overview for details.


Where do you apply?

  • Loans will be made by banks authorized to make SBA loans.
    • Eligible lenders can also be found using this tool from the SBA.  Word of caution, we are noticing certain banks aren't showing up even though they are working with the PPP program.
    • Companies like Cross River and Lendio are also processing PPP applications (the process seems pretty straightforward and easy).
  • Use the Payroll Protection Program Application Form (this has been updated)


What documents are the banks looking for?

Currently we are seeing lenders ask for:

  • Spreadsheet showing each employee and how much they make
    • Certain banks are providing a template on this
  • 2019 W3/W2 package
  • 2019 Form 941 for each quarter
  • Healthcare costs
  • Retirement costs

At this point most payroll systems also have a PPP report that you can run (though because of the constant changes we recommend running your monthly and/or quarterly reports too and comparing them to the PPP report to verify accuracy).

If you are using Gusto for your payroll platform, here's a video on how to download items 1 through 3 above:   (we suspect other payroll systems might be similar)

Lenders have been directed to consider whether the borrower was in operation before February 15 and had employees for whom they paid salaries to.

Lenders will also be looking for good faith certification that:

  • The uncertainty of current economic conditions makes the loan request necessary to support ongoing operations.
  • The borrower will use the loan proceeds to retain workers and maintain payroll or make mortgage, lease, and utility payments.
  • Borrower does not have an application pending for a loan duplicative of the purpose and amounts applied for here.
  • From Feb. 15, 2020 to Dec. 31, 2020, the borrower has not received a loan duplicative of the purpose and amounts applied for here (Note: There is an opportunity to fold emergency loans made between Jan. 31, 2020 and the date this loan program becomes available into a new loan).

Final requirements will be announced by the SBA.


How long is the program available?

  • Application period ends June 30, 2020.


How much can I get?

  • 2.5 times your average monthly payroll costs (over the past 12 months), up to $10,000,000.  If you weren't in business during 2019, then the average of January and February 2020 will be used.  Additional rules and information are being provided on this.
  • For employers, payroll costs are defined as:
    • Salaries, wages, commissions or similar compensation
    • Tips
    • Retirement benefits
    • Severance payments
    • State and local taxes on the compensation
  • For sole proprietors, independent contractors and self employed individuals, payroll costs are defined as:
    • The sum of payments of any compensation to or income of a sole proprietor or independent contractor that is a wage, commission, income, net earnings from self-employment, or similar compensation and that is in an amount that is not more than $100,000 in one year, as pro-rated for the covered period.
  • Payroll costs do not include:
    • Compensation based on an annual salary of more than $100,000
    • Payroll taxes and income taxes
    • Compensation if an employee's principal residence is outside the United States
    • Qualified sick leave wages for which a credit is allowed under the Family First Coronavirus Response Act


What can I use the money for?

  • Payroll costs, employee benefits and commissions
  • Interest on mortgages
  • Rent
  • Utilities
  • Interest on debt incurred before February  15, 2020


What are the terms?

  • All loan terms will be the same for everyone
  • Interest rate of 1.00%
  • Term of 2 years
    • No prepayment penalty if paid early
  • No personal guarantee
    • The Treasury has indicated if the proceeds are used for fraudulent purposes, the U.S. government will pursue criminal charges against you
  • No collateral required.
    • Loan cannot be used if you receive the employee retention tax credit.
  • No interest or principal payments are required for the first 6 to 12 months of the loan.  Interest accrues from the day the loan is made.


How does the loan forgiveness work?

  • The borrower can apply for loan forgiveness in an amount equal to the cumulative amount of payroll costs, rent, utilities, and interest paid on mortgages during the eight weeks after the loan is made.
    • The amount forgiven is limited to the extent compensation and headcount are reduced relative to a base period.
    • Amount forgiven will not be taxable to the borrower, which normally occurs for debt forgiveness.


What is the process for loan forgiveness?

The most important part of the PPP is being able to apply for the forgiveness component of the program.  To obtain the forgiveness an application must be filed with your lender.  According to the CARES Act, you must:

  1. File an application
  2. Submit documentation verifying the number of full time equivalent employees on payroll and pay rates, and provide certain federal and state payroll tax and unemployment insurance filings.
  3. Submit documentation evidencing payment of payroll and other allowed costs (i.e. mortgage interest, lease payments and utility payments).  Our understanding at this point is that banks are going to ask for copies of invoices and potentially cancelled checks or other proof of payments.  For payroll costs reports from your payroll vendor along with your Form 941s will be requested.
  4. Submit a certification that the documentation is true and correct along with a statement that the amount for which forgiveness is requested was used to retain employees, make interest payments on a covered mortgage obligation, make payments on a covered rent obligation or make covered utility payments.

Something important to understand is that the lender decides whether to grant forgiveness.  The lender has 60 days from receipt of the forgiveness application to issue a decision.  You are required to keep detailed records - and we recommend you do so.


Good to know

  • If you had layoffs, reduction of workers or reduction of pay and do not fully restore the employees and/or bring their pay back to what it was, then the loan forgiveness amounts will be adjusted accordingly.  Put another way, the money is to keep people employed and earning what they earned prior to COVID-19.
  • We're waiting on guidance on how everything will be handled if you use a co-employer or PEO type service.  The limited information we've seen so far indicates that the money will funnel back to the underlying employer - more to come as we receive guidance.
  • Specific guidance can be found on the Treasury's Paycheck Protection Program (PPP) Information Sheet:  Borrowers and the Treasury's COVID-19 website
  • Further questions can be answered through the Treasury's Paycheck Protection Program (PPP) FAQ page.

Economic injury disaster loan (EIDL)

The CARES Act provides for EIDL loans with an emergency advance of up to $10,000 to small businesses and private non-profits harmed by the Coronavirus within 3 days of applying for an SBA EIDL.  To access the advance you will first need to apply for an EIDL and then request the advance (it's a simple checkbox on the application).


Tell me more about that advance.  Do I really get $10,000 like I've heard?

Good question.   Originally everyone thought the answer was yes.  However, the Small Business Administration (SBA) has announced that because of the number of applications they have received that the advance will be paid at $1,000 per employee, up to a maximum of $10,000.


Do I have to pay the advance back?

The advance does not need to be repaid under any circumstance.  It can be used to keep employees on payroll, pay for sick leave, meet increased production costs, pay business obligations (including debts, rent and mortgage payments).


Am I eligible?

The loan is available to:

  • Small businesses
  • Private non-profits
  • Business entities with 600 or fewer employees
  • Sole proprietorships, with or without employees
  • Independent contractors

In addition, you must have been in business as of January 31, 2020.


How to apply

  • Apply here:  https://covid19relief.sba.gov/#/
  • When you apply, mark the box indicating you are requesting an emergency grant of $10,000
  • The SBA will provide you the grant within 3 days of receiving your application
  • You will not have to repay the grant, even if your application for a loan is denied


If I apply for an EIDL can I also apply for the PPP or other programs?

Sure thing.  However, any forgiveness under the PPP will be reduced by the $10,000 


Tell me more about this loan

  • Emergency loans up to $2,000,000 to assist companies impacted by COVID-19.
  • Waves the requirement of personal guarantees on loans under $200,000.
  • Waves the requirement that the borrow cannot obtain credit elsewhere.
  • Streamlines the loan application process.

Further reading

 
Provisions for Businesses

Provision Details

Deferral of payroll taxes
  • This benefit is not available if any debt is forgiven under the Payroll Protection Program.
  • Can defer payment of the employer's share of the Social Security tax.
  • Must still pay the 6.2% employee portion of the Social Security tax.
  • Deferred
    • Half the amount must be paid by  12/31/2021,
    • Balance by  12/31/2022.

Refundable payroll credits
  • This benefit is not available if any debt is forgiven under the Payroll Protection Program.
  • Refundable payroll tax credit of 50% of the  wages paid by employers to employees during the coronavirus.
  • Available to employers whose:
    • Operations were fully or partially suspended due to a COVID-19-related shut-down order, OR
    • Gross receipts declined by more than 50%when compared to the same quarter in the prior year.
  • The credit is provided for the first $10,000 of compensation, including health benefits, paid to an eligible employee and is provided for wages paid or incurred from March 13, 2020 through December 31, 2020.
  • Important rules:
    • Less than 100 full time employees:   all employee wages qualify for the credit, whether the employer is open for business or subject to a shut-down order.  
    • More than 100 full time employees:  Qualified wages are wages paid to employees when they are not providing services due to the COVID-19 related circumstances.
  • Employers are able to request an advance on the credit using Form 7200.  The form and the instructions are both available from the IRS website.

Student loan contributions
  • Employer may contribute up to $5,250 annually toward an employee’s student loans and such payment would be excluded from the employee’s income.
  • The $5,250 cap applies to both the new student loan repayment benefit as well as other educational assistance (e.g., tuition, fees, books) provided by the employer under current law.
  • Allowed for payments made March 27 through December 31, 2020.

Net operating losses
  • NOLs arising from the 2018, 2019 or 2020 tax year can now be carried back 5 years, which allows you to carry losses back to years where there were higher income tax rates.
  • Removal of 80% taxable income limitation rule.
    • In 2021 the 80% rule goes back into effect
  • No change to capital loss rules (carried back 3 years, carried forward 5 years)

Interest deduction limitation
  • Modification of interest deduction limitation.
  • Increases permitted interest deduction via an increase of the 30% of adjusted taxable income limitation to 50% for 2019 and 2020.
  • Certain limitations apply to partnerships.


Provisions for Individuals

Provision Details

Early withdrawal from retirement account
  • Must have been impacted by COVID-19:
    • Taxpayer, spouse or dependent diagnosed, or
    • if you experience adverse financial consequences as a result of being quarantined, furloughed, laid off, having work hours reduced, being unable to work due to lack of child care
  • No 10% penalty on early withdrawals up to $100,000 on or after 1/1/2020
  • The distribution is still subject to ordinary tax rates
    • Tax paid over a 3 year period
  • The distribution can be repaid back to your retirement plan during the 3 year period (without regard to contribution limits)
    • Presumably you would be refunded any tax paid - we'll update once more guidance is issued.

Retirement plan loans
  • Doubles the current retirement plan loan limits to the lesser of $100,000 or 100% of the participant’s vested account balance in the plan.
    • Individuals with an outstanding loan from their plan with a repayment due from the date of enactment of the CARES Act through Dec. 31, 2020, can delay their loan repayment(s) for up to one year.

Required minimum distributions waived
  • Waves the required minimum distribution (RMD) rules for certain defined-benefit contribution plans and IRAs for the 2020 calendar year.

Charitable contributions
  • $300 above the line deduction for contributions to charitable organizations (only if standard deduction is taken)

Unemployment assistance
  • Pandemic Unemployment Assistance program has been established (through 12/31/2020).
    • Will help those not traditionally eligible for unemployment insurance, INCLUDING self-employed individuals, independent contractors, those with a limited work history and those who are unable to work because of the coronavirus public health emergency.
    • Pays 50% of the unemployment insurance costs incurred by state, local and tribal governments and non-profit organizations, not part of the UI system.
  • Additional $600/week payments for each unemployment insurance or Pandemic Unemployment Assistance recipient through July 2020.
  • Provides funding for the 1st week of unemployment for states to waive the traditional
    “waiting week” before benefits begin.
  • Provides an additional 13 weeks of unemployment to help those who remain unemployed after weeks of state unemployment are no longer available.
  • Employees laid off on or after March 1, 2020  to have access to paid family and medical leave in certain instances (if they are rehired by the employer).  The employee would have had to work for the employer at least 30 days prior to being laid off.

Relaxation of HSA rules
  • For those on a high-deductible health plan (HDHP) with a HSA;
    • Can use it to cover telehealth services prior to a patient reaching the deductible.
    • This means that telehealth and other remote care services could be covered pre-deductible without violating federal rules for HDHPs paired with an HSA.
    • Expires  12/31/2021.
  • Certain over-the-counter medical products are now considered qualified expenses allowing patients to use funds in HSAs, Flexible Spending Accounts, Archer medical savings accounts and health reimbursement arrangements for the purchase of over-the-counter medical products, including those needed in quarantine and social distancing, without a prescription from a physician.
    • Expires 12/31/2021.

 

FAMILY FIRST CORONAVIRUS RESPONSE ACT
 

Required Department of Labor (DOL) poster

The DOL has issued the Employee Rights:  Paid Sick Leave and Expanded Family and Medical Leave Under the Families First Coronavirus Response Act poster.  Employers are required to include this poster with their other labor law posters by April 1, 2020.

The DOL has also put together the Families First Coronavirus Response Act Notice - Frequently Asked Questions that we highly recommend you review.  Pay particular attention to the first item:

Question:

  • Where do I post this notice? Since most of my workforce is teleworking, where do I electronically “post” this notice?

Answer:

  • Each covered employer must post a notice of the Families First Coronavirus Response Act (FFCRA) requirements in a conspicuous place on its premises. An employer may satisfy this requirement by emailing or direct mailing this notice to employees, or posting this notice on an employee information internal or external website.  (emphasis added)

Paid Leave Entitlements

Up to two weeks of paid sick leave paid at:

  • 100% for qualifying reasons #1-3 below, up to $511 daily and $5,110 total;
  • 2/3 for qualifying reasons #4 and 6 below, up to $200 daily and $2,000 total; and
  • Up to 12 weeks of paid sick leave and expanded family and medical leave paid at 2/3 for qualifying reason #5 below for up to $200 daily and $12,000 total.
A part-time employee is eligible for leave for the number of hours that the employee is normally scheduled to work over that period

Eligible Employees

Employees of employers with fewer than 500 employees are eligible for up to two weeks of fully or partially paid sick leave for COVID-19 related reasons (see below).

Employees who have been employed for at least 30 days prior to their leave request may be eligible for up to an additional 10 weeks of partially paid expanded family and medical leave for reason #5 below.


Qualifying Reasons

An employee is entitled to take leave related to COVID-19 if the employee is unable to work, including unable to telework, because the employee:

  1. is subject to a Federal, State, or local quarantine or isolation order related to COVID-19;
  2. has been advised by a health care provider to self-quarantine related to COVID-19;
  3. is experiencing COVID-19 symptoms and is seeking a medical diagnosis;
  4. is caring for an individual subject to an order described in (1) or self-quarantine as described in (2);
  5. is caring for his or her child whose school or place of care is closed (or child care provider is unavailable) due to COVID-19 related reasons; or
  6. is experiencing any other substantially-similar condition specified by the U.S. Department of Health and Human Services.

Payroll credits
  • The law is intended to be neutral for employers, meaning theoretically any cash that is outlaid specifically under this program will be reimbursed via a refundable payroll tax credit.  Expect some delay between when you pay the benefit and receive the credit.
  • Self-employed individuals qualify for the refundable credit too.  Self-employed individuals include those who regularly carry on a trade or business and would be entitled to receive paid leave under the law if they were an employee.
    • This includes independent contractors and partners in partnerships.
  • As a reminder, you cannot double dip.  If you are receiving a credit for this pay elsewhere (i.e. the family and medical leave program) then you cannot claim a credit here too.
  • Employers are able to request an advance on the credit using Form 7200.  The form and the instructions are both available from the IRS website.


Frequently Asked Questions (FAQs)

The Internal Revenue Service has issued additional data and a frequently asked question document related to the tax credits available under the Family First Coronavirus Response Act (FFCRA).  We've listed the top FAQs below.  Please review the full document for the full details.

Question:  Are the sick/family leave wages taxable to employees?
Answer:  Yes. The amounts received by the employee is an income replacement.

Question:  Are the wages tax-deductible to the employer?
Answer:  Yes. Wages paid are an expense of your business.

Question:  Are the tax credits received by the employer taxable to the employer?
Answer:  Yes. The refundable credits are effectively income.

Question:  Are the wages paid subject to federal employment taxes?
Answer:  Yes, they are subject to federal income tax withholding and the employee's share of social security and medicare tax.

Question:  How should employers document an employee's eligibility for qualified leave wages?
Answer:  Employers should require their employees to submit a written request. It should include the employee name, dates for which the leave is requested, a statement for the reason for the leave and written support for such reason and a statement that the employee is unable to work or telework for such reason.


Our Thoughts

If you have any questions or need assistance in implementing these rules we recommend you speak with your attorney or a labor attorney.  If you don't have an attorney we're more than happy to recommend a few attorneys that we've worked with.


Links

 

FEDERAL TAX UPDATES
 
Provision Details

Income tax deadlines
  • The April 15th deadline has been extended to July 15th for all taxpayers that have a tax return or payment deadline on April 15th.  Previous reports indicated certain other limitations, including certain dollar limitations, which have now been rescinded.  Put simply:  Individual taxpayers now have until July 15th to file their taxes, pay their taxes and pay their first quarter estimated tax payment.  Period.
  • Visit our blog post Coronavirus and Taxes: Frequently Asked Questions (FAQ) for more information. 

Estimated tax deadlines
  • The April 15th estimated tax payment for the first quarter has been extended till July 15th.
  • The June 15th estimated tax payment for the second quarter has been extended till July 15th.  This means that both the first and second quarter payments are due on the same date.
2019 IRA contributions
  • You will have until July 15, 2020 to make a 2019 individual retirement contribution (or the date your file your return, whichever is earlier).

Employment tax penalties
  • Notice 2020-22 was issued which includes a waiver of penalties for a failure to make a deposit of employment taxes relating to qualified sick leave and qualified family leave (including qualified health plan expenses) of the Families First Act, and a waiver of penalties for a failure to make a deposit of employment taxes relating to qualified retention wages under the CARES Act. For most employers, the liability for these deposits is reported on the quarterly Form 941 – Employer’s Quarterly Federal Tax Return.
  • The notice applies to deposits of employment taxes reduced in anticipation of credits with respect to:
    • Qualified sick leave and qualified family leave paid with respect to the period beginning April 1, 2020 and ending December 31, 2020.
    • Qualified retention wages paid with respect to the period beginning on March 13, 2020 and ending December 31, 2020.

Existing installment agreements
  • For taxpayers under an existing Installment Agreement, payments due between April 1 and July 15, 2020 are suspended.
  • Taxpayers who are currently unable to comply with the terms of an Installment Payment Agreement, including a Direct Debit Installment Agreement, may suspend payments during this period if they prefer.
  • Furthermore, the IRS will not default any Installment Agreements during this period. By law, interest will continue to accrue on any unpaid balances.

New installment agreements
  • The IRS reminds people unable to fully pay their federal taxes that they can resolve outstanding liabilities by entering into a monthly payment agreement with the IRS. See IRS.gov for further information.

Offers in compromise (OIC)
  • Pending OIC applications
    • The IRS will allow taxpayers until July 15 to provide requested additional information to support a pending OIC.
    • The IRS will not close any pending OIC request before July 15, 2020, without the taxpayer’s consent.
  • OIC Payments
    • Taxpayers have the option of suspending all payments on accepted OICs until July 15, 2020
    • By law interest will continue to accrue on any unpaid balances.
  • Delinquent Return Filings
    • The IRS will not default an OIC for those taxpayers who are delinquent in filing their tax return for tax year 2018.
    • Taxpayers should file any delinquent 2018 return (and their 2019 return) on or before July 15, 2020.
  • New OIC Applications
    • The IRS reminds people facing a liability exceeding their net worth that the OIC process is designed to resolve outstanding tax liabilities by providing a “Fresh Start.”

Non-filers
  • The IRS reminds people who have not filed their return for tax years before 2019 that they should file their delinquent returns.
  • More than 1 million households that haven’t filed tax returns during the last three years are actually owed refunds; they still have time to claim these refunds.
  • Many should consider contacting a tax professional to consider various available options since the time to receive such refunds is limited by statute.
  • Once delinquent returns have been filed, taxpayers with a tax liability should consider taking the opportunity to resolve any outstanding liabilities by entering into an Installment Agreement or an Offer in Compromise with the IRS to obtain a “Fresh Start.”

Field collection activities
  • Liens and levies (including any seizures of a personal residence) initiated by field revenue officers will be suspended during this period.
  • Field revenue officers will continue to pursue high-income non-filers and perform other similar activities where warranted.

Automated liens and levies
  • New automatic, systemic liens and levies will be suspended during this period.

Private debt collection
  • New delinquent accounts will not be forwarded by the IRS to private collection agencies to work during this period.

Field, Office and Correspondence Audits
  • During this period, the IRS will generally not start new field, office and correspondence examinations.
  • The IRS will continue to work refund claims where possible, without in-person contact.
  • The IRS may start new examinations where deemed necessary to protect the government’s interest in preserving the applicable statute of limitations.
  • In-Person Meetings
    • In-person meetings regarding current field, office and correspondence examinations will be suspended.
    • Even though IRS examiners will not hold in-person meetings, they will continue their examinations remotely, where possible.
    • To facilitate the progress of open examinations, taxpayers are encouraged to respond to any requests for information they already have received – or may receive – on all examination activity during this period if they are able to do so.
  • Unique Situations
    • Particularly for some corporate and business taxpayers, the IRS understands that there may be instances where the taxpayers desire to begin an examination while people and records are available and respective staffs have capacity. In those instances when it’s in the best interest of both parties and appropriate personnel are available, the IRS may initiate activities to move forward with an examination — understanding that COVID-19 developments could later reduce activities for an agreed period.
  • General Requests for Information
    • In addition to compliance activities and examinations, the IRS encourages taxpayers to respond to any other IRS correspondence requesting additional information during this time if possible.

Statute of limitations
  • The IRS will continue to take steps where necessary to protect all applicable statutes of limitations.
  • In instances where statute expirations might be jeopardized during this period, taxpayers are encouraged to cooperate in extending such statutes.
  • The IRS will issue Notices of Deficiency and pursue other similar actions to protect the interests of the government in preserving such statutes.
  • Where a statutory period is not set to expire during 2020, the IRS is unlikely to pursue the foregoing actions until at least July 15, 2020.

Links


STATE TAX UPDATES

Income Tax Deadlines


Alabama

  • State Income Tax Filing Extended - The state income tax filing due date has been extended from April 15, 2020, to July 15, 2020. Taxpayers can also defer state income tax payments due on April 15, 2020, to July 15, 2020, without penalties and interest, regardless of the amount owed. This deferment applies to all taxpayers, including individuals, trusts and estates, corporations and other non-corporate tax filers. Other taxes included in the deadline extension are corporate income tax, the Financial Institution Excise Tax (FIET), and the Business Privilege Tax (BPT). Taxpayers do not need to file any additional forms or call the Alabama Department of Revenue to qualify for this automatic state tax filing and payment relief. Individual taxpayers who need additional time to file beyond the July 15 deadline can request a filing extension through the usual methods.


Arizona

  • State Income Tax Filing Extended - The state income tax filing due date has been extended from April 15 to July 15, 2020. This applies to the filing of individual, corporate and fiduciary tax returns. The new deadline means taxpayers filing state tax returns or submitting payments after the previous April 15 deadline will not be assessed late filing or late payment penalties. Taxpayers anticipating they will need more time beyond the new July 15 deadline to file state income taxes should consider filing for an extension by submitting Arizona Form 204 by July 15th. Taxpayers do not need to submit Arizona Form 204 if they have already received a Federal extension from the IRS.


California

  • CA Filings and Deadlines Info - Specific info on type of filing and deadlines can be found on the State of California Franchise Tax Board site here.
  • CA Franchise Tax Board (“FTB”) Issues Relief Provisions for Taxpayers -This relief includes changes to the various tax filing and payment deadlines that occur on March 15, 2020, through June 15, 2020, to July 15, 2020. This includes:
    • Partnerships and LLCs who are taxed as partnerships whose tax returns are due on March 15 now have a 90-day extension to file and pay by June 15.
    • Individual filers whose tax returns are due on April 15 now have a 60-day extension to file and pay by June 15.
    • Quarterly estimated tax payments due on April 15 now have a 60-day extension to pay by June 15.
  • Taxpayers claiming COVID-19 relief should write the name of the state of emergency (for example, COVID-19) in black ink at the top of their tax return to notify FTB of the extension period provided by the relief. If taxpayers are e-filing, they should follow the software instructions to enter disaster information.
    In addition, the FTB will also waive interest and any late filing or late payment penalties that would normally apply.
  •  


Colorado

  • State Income Tax Filing Extended - The income tax payment deadline for all Colorado taxpayers has been extended to July 15, 2020. Income tax returns previously due to be filed April 15, 2020 have been given an automatic six-month extension, now due October 15, 2020. The estimated payment deadline and penalties for the same have been waived until July 15, 2020.


Florida

  • Property Tax Payment Deadline - The property tax payment deadline has been extended to March 31, 2020. Property tax returns for railroad, railroad terminal, private car, freight line and equipment company property has been extended to from April 1, 2020 to April 15.
  • On March 26, 2020, Florida Department of Revenue Executive Director Jim Zingale issued Order of Emergency Waiver/Deviation #20-52-DOR-002 to extend certain filing deadlines for Florida businesses.
  • Quarterly Filers Deemed Adversely Affected by the COVID-19 Outbreak - For taxpayers that are adversely affected by the COVID-19 outbreak, the order extends the due date for March 2020 quarterly sales and use tax returns and payments to Thursday, April 30, 2020. You must file a tax return even if you do not owe tax.
    • If you file a paper return, your return and payment must be postmarked by Thursday, April 30, 2020. 
    • If you electronically pay only or you electronically file and pay at the same time, you must initiate your electronic payment and receive a confirmation number no later than 5:00 p.m. ET on Wednesday, April 29, 2020.

 
Georgia

  • The Georgia DOR closed their offices but has not changed any tax filing due dates.


Massachusetts 

  • State Income Tax Filing Extended - In many instances, taxpayers automatically receive at least six extra months to file their tax returns, as long as they satisfy certain tax payment requirements. See AP 604: Extensions of Time to File Tax Returns. DOR may also waive penalties under certain circumstances if a taxpayer is late in paying their tax obligation and will work with impacted taxpayers to waive such penalties. See AP 633: Guidelines for the Waiver and Abatement of Penalties. In the event mail service is delayed, taxpayers can ensure that returns, payments and refunds are received if submitting them or receiving them by electronic means.
  • In the event the Internal Revenue Service (IRS) issues tax relief to taxpayers with Federal filing obligations, DOR is prepared to follow the IRS in offering similar relief for taxpayers with Massachusetts tax filing obligation.


Michigan

  • MI Waives P&I for sales, use and withholding payments and returns - The Department of Treasury is waiving penalty and interest for the late payment of tax or the late filing of the return due on March 20, 2020. The waiver will be effective for a period of 30 days. Any return or payment currently due on March 20, 2020, may be submitted to the Michigan Department of Revenue without penalty or interest through April 20, 2020. The waiver is limited to sales, use, and withholding payments and returns due March 20, 2020. Any payment or return otherwise due after that date will not be eligible for the current waiver. The waiver is not available for accelerated sales, use, or withholding tax filers. Those taxpayers should continue to file returns and remit any tax due as of the original due dates.


Missouri

  • Individual and Corporate Deadline Extended -The individual income and corporate tax return filing and payment deadline has been extended to July 15, 2020.


Nevada

  • The State of Nevada has no income tax filing requirements at this time.


New York

  • New York State Extends Income Tax Filing Deadline - New York state’s income tax filing deadline is being moved to July 15 to comply with the federal government’s decision to push back the traditional filing date due to the coronavirus outbreak.
  • Announcement from NYC Department of Finance on Deadlines -The NYC Department of Finance wants businesses to comply with the regular filing due date, as a Finance Memorandum was issued stating that the NYC Unincorporated Business Income Tax Returns and Estimated Tax Payments remain due April 15, 2020. However, extensions will still be accepted for those businesses that need more time in light of recent events. In addition, an abatement of penalties will be under the discretion of the NYC Commissioner, who plans to use his authority liberally, but interest remains statutory.
    Likewise, the same holds true for the General Corporation Tax due from S-corporations, which were due March 16, 2020, and Business Income taxes due from C-corporations and Banks, which are due April 15, 2020. Returns and estimated income tax voucher payments are due when required by law, with a liberal abatement of penalties, and an accrual of statutory interest. While the Department did not provide for a blanket extension to a specified date (i.e., NYS extended to July 15th), the Department does plan on approving extension requests. 


Pennsylvania

  • Income Tax Returns Deadline Extended - Pennsylvania’s Department of Revenue announced the deadline for taxpayers to file their 2019 Pennsylvania personal income tax returns is extended to July 15, 2020. Giving taxpayers an additional 90 days to file from the original deadline of April 15, no extension is necessary. This extension applies to both final 2019 tax returns and payments, and estimated payments for the first and second quarters of 2020.
  • PA Waiver of Penalties on Accelerated Sales Tax Payment - The Department of Revenue is waiving penalties for businesses that are required to make Accelerated Sales Tax (AST) prepayments by the deadline of Friday, March 20, 2020. For April sales tax payments, the Department is waiving the AST prepayment requirement and asking businesses to remit the sales tax that they have collected in March.


Rhode Island

  • No updates available at this time


Texas

  • No updates available at this time

 

LOANS, GRANTS + FINANCING UPDATES

SBA Express Bridge Loans

  • Express Bridge Loan Pilot Program allows small businesses who currently have a business relationship with an SBA Express Lender to access up to $25,000 with less paperwork.
  • These loans can provide vital economic support to small businesses to help overcome the temporary loss of revenue they are experiencing and can be a term loans or used to bridge the gap while applying for a direct SBA Economic Injury Disaster loan.
  • If a small business has an urgent need for cash while waiting for decision and disbursement on Economic Injury Disaster Loan, they may qualify for an SBA Express Disaster Bridge Loan.
  • Terms
    • Up to $25,000
    • Fast turnaround
    • Will be repaid in full or in part by proceeds from the EIDL loan
  • Find an Express Bridge Loan Lender via SBA’s Lender Match Tool or by connecting with your local SBA District Office.


General items and documents you will need

These are some general documents you should start putting together or updating related to getting an SBA (or any type) of loan.  This is in addition to any standard loan application or documents required by the SBA or issuing bank.

  • Business financial statements
    • Profit & loss statement (otherwise known as income statement).  Typically on a monthly basis for the past three years
    • Current balance sheet
    • Projected profit & loss statement for the next year, including details on how your business has been impacted
  • Last three federal business tax returns filed
  • Information related to each owner that has a 20% or more ownership interest (sometimes this is limited to anyone owning 50% or more, check with the SBA or your bank):
    • Personal financial statements
    • Statement of liabilities and contingent liabilities
    • Last three federal tax returns filed
    • List of any entity the owner is affiliated or has more than 20% (or 50%) ownership in
  • Copy of business certificates or licenses
  • Loan application history (if you've applied for other SBA loans in the past)
  • Resume for management team
  • Brief information on what the business does, the history and how it plans to work through the current pandemic
  • Projected analysis of the estimated impact of the pandemic and your plans for working through it from a financial standpoint (i.e. expected loss of revenue, growth of revenue, expenses, how you plan on maintaining cash flow, accounts receivable concerns if you sell on credit, and so on).


Florida Small Business Emergency Bridge Loan Program

  • This program is currently available to business owners located in all Florida counties.  The Florida Small Business Development Center has established https://floridadisasterloan.org/ where you can find additional information on the loan, the loan application, etc.


Facebook Grants

  • Facebook is offering up to $100MM in grants to up to 30,000 eligible businesses.
  • You can register your interest for the grants on the Facebook Small Business Grants Program website.
  • More information will be provided as it becomes available.


Other Loan Options

We're having tough conversations with our clients right now.  Do you close shop?  Take out a loan?  What is your next step.  We don't take borrowing money lightly, so understanding your goal (and how you're going to pay back the debt) is imperative when borrowing.  Here's some more resources that could help you on this front.

 

HUMAN RESOURCE (HR) MATTERS

Employment Matters

 

RESOURCE LINKS

 

OFFICE CLOSURE

In order to be as cautious as possible we have closed our office and asked our team members to work remotely until further notice.  We will hold video meetings via Zoom and conference calls as necessary.  We appreciate your understanding in these uncertain times and while we navigation each others schedules and other constraints.

Team members will be available via email, text and phone as they usually are.  You can also call or text our main line at 407-906-4376.

 

DISCLAIMER

The information provided does not replace sound advice from legal, human resource and tax advisors.  Should you have a specific question we recommend you reach out to your advisors as circumstances can often impact the interpretation of various rules and regulations.  While the information provided is believed to have come from accurate sources we cannot guarantee it. Please contact us with any questions.  Thank you.