COVID-19 Updates

COVID-19 Updates 2020-04-04T15:51:50-04:00

Below please find the information you need to know as a result of COVID-19.


Small Businesses & Sole Proprietors

EMPLOYEE PAID LEAVE RIGHTS

PAID SICK LEAVE & EXPANDED FMLA

  • EMERGENCY PAID SICK LEAVE: UP TO 80 HOURS OF PAID SICK LEAVE
    • You may be required to pay employees up to 80 hours of full sick leave pay, up to $511/day and total of $5,110, if they are:
      • Subject to federal/state/local isolation or quarantine order related to COVID-19
      • Self-quarantined per health care provider advice as a result of concerns re COVID‑19
      • Are seeking medical diagnosis as a result of having symptoms of COVID‑19
    • You may be required to pay up to 80 hours of partial leave pay (up to 2/3 regular pay rate with a max of $200 per day and $2,000 total) if the employee:
      • Is caring for someone who is subject to federal/state/local isolation or quarantine due to COVID‑19
      • Need to care for your child due to school closure or unavailability caused by COVID‑19
  • PAID FAMILY LEAVE: UP TO 12 WEEKS OF PAID FAMILY LEAVE (1ST 2 WEEKS UNPAID)
      • You may be required to pay up to 12 weeks of paid leave for employees who have been employed by you more than 30 days
      • The employee must be unable to work because they must care for a child <18 due to school or childcare closures related to COVID‑19.
      • They would receive 2/3 of your normal rate of pay (max $200/day and total $10,000)
      • They are encouraged to give as much notice as possible but none is required
  • HOW TO PAY FOR THE LEAVE: PAYROLL TAX CREDITS OR ACCELERATED TAX CREDIT PAYMENTS
      • Employers who have paid employees under the new law receive a tax credit.
        • Employers retain from the IRS employment tax payments any amounts they use to pay employees for the new paid sick leave/FMLA. Employers can retain Federal withholding tax or employer/employee FICA and Medicare withholding
      • If the amount you pay out is more than the payroll taxes withheld, the employer can request an accelerated credit payment from the IRS. The DRAFT (at this time – we anticipate it will be finalized on/around 4/1/2020) form, along with instructions and additional information, is available here: https://www.irs.gov/forms-pubs/about-form-7200
EXPANDED SBA DISASTER LOANS (EIDL)

EXPEDITED PROCESSING AND LOW INTEREST RATE WITH REDUCED REQUIREMENTS

  • REDUCED REQUIREMENTS: Up to $25,000 available without collateral or personal guarantee
  • TERMS: These loans are for a maximum of 30 years and may be used to pay fixed debts, payroll, accounts payable and other bills that can’t be paid because of the disaster’s impact. The interest rate is 3.75% for small businesses. The interest rate for non-profits is 2.75%.
  • EXPEDITED PROCESSING:
    • COVID-19 Economic Injury Disaster Loan Application: https://covid19relief.sba.gov/#/
    • If you want to print for your records, you will need to print from each page of the application as you complete them, before it is submitted.
    • Print or write down the application number for future reference.
    • You’ll be assigned a Disaster Assistance loan officer from a small, local bank who may request that you complete additional forms
    • You can apply by mail if preferred.
PAYCHECK PROTECTION PROGRAM (PPP) LOANS

8 WEEKS OF CASHFLOW ASSISTANCE AVAILABLE

  • More extensive than the Disaster loan program, lenders will start processing applications for small businesses and sole proprietorships on Friday, April 3, 2020, and for independent contractors and self‑employed on April 10th.
  • Provides 8 weeks of cashflow assistance to small businesses through 100-percent federally guaranteed loans.
    • No cost to apply and more extensive than the SBA disaster loan
    • Funds can be used for:
      • Payroll and commission payments
      • Group health care benefits/insurance premiums
      • Mortgage, rent and lease payments
      • Utilities
      • Interest on any other debt obligations that were incurred before the covered period
    • Covers expenses dating back from 2/15 to 6/30
    • The loan can be forgiven and essentially turn into a non-taxable grant under certain circumstances
    • No personal or business collateral is required
    • It’s OK if you have access to credit elsewhere
  • Due in two years with no prepayment penalties and 1% fixed rate
  • You have an extended deferment period before you begin repayment
  • The amount you can receive will be based on 2.5 times the average monthly cost of your business’s payroll, mortgage, rent and utility payments over the previous 12-month period, but no more than $10 million
    • If the business did not exist before Jun 30, 2019, the SBA will look at costs in January and February 2020.
    • If you take the loan under the Paycheck Protection Program, you may no longer be eligible for an EIDL SBA loan for the same purpose of covering payroll
  • While the loan can be forgiven, you will still owe money when your loan is due if you use the loan amount for anything other than payroll costs, mortgage interest, rent and utilities payments over the 8 weeks after getting the loan. You will also owe money if you do not maintain your staff and payroll.  The amount that can be forgiven will be reduced in proportion to any reduction in the number of employees retained, and if any wages were reduced by more than 25%. IF YOU RECEIVED THE $10,000 GRANT THROUGH EIDL AS DESCRIBED ABOVE, YOUR FORGIVENESS AMOUNT WILL BE REDUCED BY $10,000.
  • There will be a separate application for forgiveness required to the loan originator – ask your loan officer for additional details regarding loan forgiveness for your loan during the loan application process
  • FIND THE SAMPLE APPLICATION FORM HERE: https://home.treasury.gov/system/files/136/Paycheck-Protection-Program-Application
  • ADDITIONAL GUIDANCE FROM TREASURY ABOUT THE PPP LOAN PROGRAM: https://home.treasury.gov/system/files/136
  • GUIDE FOR BORROWERS AVAILABLE HERE: https://home.treasury.gov/system/files/136/
EMPLOYEE RETENION CREDIT AVAILABLE

IF YOUR BUSINESS HAS BEEN SEVERELY FINANCIALLY IMPACTED BY COVID-19


Individuals

ECONOMIC IMPACT PAYMENTS

ONE-TIME PAYMENTS FOR CERTAIN TAXPAYERS

  • Based on 2019 tax return if filed, 2018 if not (or on SSA information if no income tax filing on record)
  • One-time payment of $1,200 per adult ($2,400 MFJ) and $500 per child under 17
  • Phase-out of the one-time payment begins at AGI=$75K (or $112K HOH or $150K MFJ) and phases out completely at AGI=$99K (or $146.5K for HOH with one qualifying child or $198K MFJ)
    • Check is reduced by $5 for every increase of $100 above the beginning amount
    • Having dependent age children affects the income threshold: for every dependent age child, you would add $10,000 to the top AGI amount for the complete phase-out amount
  • The payments will not be taxable
  • For those who have already set up direct deposit with the IRS, payments could come in as little as 3 weeks
  • Social Security recipients: The IRS will use the information on the Form SSA‑1099 or Form RRB‑1099 for those who didn’t have to file a return in 2018 or 2019. They should receive the payment via direct deposit or check, depending on how they receive their regular benefits.
  • The amount of stimulus payment will be reconciled on the 2020 income tax return, so taxpayers who didn’t receive their full amount should receive a credit on their 2020 return.
  • FOR ADDITIONAL INFORMATION: https://www.irs.gov/newsroom/economic-impact-payments-what-you-need-to-know
EXTENDED FEDERAL INCOME TAX FILING AND PAYMENT DEADLINE
EMPLOYEE PAID LEAVE RIGHTS – EMERGENCY PAID SICK AND FAMILY LEAVE

(beginning 4/2/2020 through 12/31/2020, available if your employer has <500 employees)

  • Emergency Paid Sick Leave: UP TO 80 HOURS OF SICK LEAVE PAY AVAILABLE
    • You may be entitled to up to 80 hours of full sick leave pay, up to $511/day and total of $5,110, if you are:
      • Subject to federal/state/local isolation or quarantine order related to COVID-19
      • Self-quarantine per health care provider advice as a result of concerns re COVID‑19
      • Are seeking medical diagnosis as a result of having symptoms of COVID‑19
    • You may be entitled for up to 80 hours of partial leave pay (up to 2/3 regular pay rate with a max of $200 per day and $2,000 total) if:
      • Are caring for someone who is subject to federal/state/local isolation or quarantine due to COVID‑19
      • Need to care for your child due to school closure or unavailability caused by COVID‑19
  • Paid Family Leave: UP TO 12 WEEKS OF PAID LEAVE AVAILABLE (1ST 2 WEEKS UNPAID)
        • You may be entitled to up to 12 weeks of paid leave if you have been employed by your employer more than 30 days
        • You must be unable to work because you must care for a child <18 due to school or childcare closures related to COVID‑19.
        • You would receive 2/3 of your normal rate of pay (max $200/day and total $10,000)
        • You are encouraged to give as much notice as possible
  • MORE INFORMATION AVAILABLE AT: https://www.dol.gov/agencies/whd/pandemic/ffcra-employee-paid-leave
ENHANCED UNEMPLOYMENT BENEFITS AVAILABLE JAN 27-DEC 31, 2020

EXPANDED BENEFITS AND WAIVER OF WAIT PERIOD AND JOB SEARCH REQUIREMENTS

  • Covered individuals can receive benefits for weeks of unemployment, partial unemployment, or inability to work caused by COVID‑19 beginning January 27 through December 31.
  • Additional $600/week
  • Wait period eliminated
  • Additional 13 weeks of eligibility for a total of 39 weeks
  • FOR ADDITIONAL INFORMATION: va:  http://www.vec.virginia.gov/
RMD WAIVER FOR 2020

RELIEF FOR SENIORS WHILE MARKETS ARE DOWN

  • The RMD requirement for 2020 has been waived
  • You can still use your IRA to make a qualified charitable distribution from your IRA. The funds are transferred directly from your IRA to a charity and are excluded from income, but only for those 70 ½ and older.
NEW 401(K) PLAN OPTIONS

FOR CERTAIN QUALIFYING INDIVIDUALS DIRECTLY IMPACTED BY CORONAVIRUS – CONDITIONS APPLY – consult your plan advisor before taking any distributions

  • NO EARLY PENALTY FOR DISTRIBUTIONS – UP TO $100,000: the participant, spouse or dependent has been diagnosed with COVID-19 or experience adverse financial conditions as a result of being quarantined, furloughed or laid off, etc., they may qualify to make a penalty‑free withdrawal from their 401(K) of up to $100,000
  • REPAY OR ROLLOVER OVER THREE YEARS; The amount may be repaid within three years and treated as a rollover, or included in taxable income over three years instead of all in one tax year
  • INCREASED 401(K) PLAN LOANS: individuals impacted directly by Coronavirus may be eligible to borrow up to $100,000 or 100% of their vested account balance
  • CONDITIONS APPLY:  Please consult your plan administrator to confirm that the employer plan sponsors have decided to allow the increased loans.  Be sure to consult your advisor regarding the timing of distributions and repayment/rollover.

This analysis does not constitute professional advice and is being provided on an informational basis only. All information herein is provided “as is” and with no guarantees of accuracy, completeness or timeliness and without warranties of any kind (express or implied). We may make changes to this information at any time, without notice. Many of the issues addressed in this correspondence are complicated and projected to require regulatory guidance for some provisions to take effect. For advice about whether and how you or your business can benefit from this information, please contact your legal, tax or accounting adviser who is aware of your particular situation.