Tag Archives: COVID-19

New Federal Tax Relief related to COVID

The latest information related to COVID relief is in the form of two new Federal bills that provide extended financial relief.

The Bipartisan COVID-19 Emergency Relief Act of 2020:

This bill has several payroll provisions that include a second PPP loan through the SBA (Small Business Administration) based on limited eligibility.  The qualifications of this loan are small businesses with less than 301 employees and with lost revenue of 30% or more during any 3-month period of 2020.  The expenses covered in this bill extend safety operations and cover supplier costs, facility “modifications.”  PPP loans of $150,000 or less are eligible for a much more streamlined forgiveness process.

Unemployment is included in this Act as well.  It extends all unemployment insurance programs by 16 weeks, beginning January 1, 2021.  Any Federal supplement to unemployment received is also extended expanded for the same period, by $300 per week.

The Bipartisan State and Local Support and Small Business Protection Act of 2020:

This bill provides $160 billion in governmental relief designated for State, municipal and tribes.  Additionally, it pushes back the deadline to spend the CARES Act Coronavirus Relief Funding to December 31, 2021.

There is guidance included in this bill to provide “liability protection” for businesses.  Those businesses trying to follow current health standards, would not be responsible under federal unemployment law due to COVID-19 exposure and working environment changes.

Retroactive Rate Increase – NC Medicaid

NC Medicaid issued Special Bulletin COVID-19 #124 on Wednesday, August, 19, 2020.  This bulletin outlines the specifics regarding a retroactive rate increase for any fee-for-service codes that are billed through NCTracks.  The increase will retro to March 1 and will incorporate any service codes that have not already received a rate increase through a Managed Care Organization (MCO).

The service codes are defined in COVID-19 Special Bulletin #99.  If you have any questions, please contact our office for additional information.

Key Highlights of the CARES Act and the FFCRA Relief Provisions

We have compiled the following useful and concise information for your reference as you consider the various planning opportunities available to address the impact of the COVID-19 situation on nonprofit organizations.  After studying the recently enacted law and interacting with other professionals, by parsing through the voluminous CARES Act, Families First Coronavirus Response Act (“FFCRA”) and relevant peripheral materials, the following includes the highlights of the relevant relief available to you via the government stimulus packages:

FINANCING & GRANTS

  • Loans available under the CARES Act provide the largest measure of assistance available via what is termed the “PPP”.  The borrowing amount is capped at a formula calculating the average monthly “Total payroll” incurred in a trailing 12-month period.  “Total payroll” includes employee compensation (not to exceed $100,000 annually per capita) + health insurance (employer share only) + PTO.  PPP loans will be obtained through traditional lending relationships (local / national banks) and NOT the SBA; best bet is to work with lenders with whom a borrowing relationship already exists as it may help expedite the process.   Our understanding is that local lenders will have finalized the application process and be in a position to initiate the approval process beginning April 3.  We recommend contacting lenders with whom the organization already enjoys a relationship as many banks are refusing to process the PPP applications for new customers without any other current bank connections.
  • Forgiveness of any “PPP” loans received under the CARES Act will be available if proceeds are used for payroll, rent, utilities AND employee labor force or employee compensation after April 1 remains consistent with a pre-April 1 “measurement period”.
  • An alternative loan program will be created in the future [“Midsize Business Loan Program”] will be established for organizations with > 500 employees whom plan to retain workforce.  No details have yet been released on this program.
  • Independently, “Disaster Relief Loans” (referred to as “EIDL”) are available under the more traditional borrowing program offered by the SBA.  The on-line loan application is available at https://covid19relief.sba.gov/#/.
  • What is interesting and somewhat confusing, the EIDL program administered by the SBA also includes a grant opportunity for up to $10,000 for businesses that have been severely effected by COVID-19.  The grant does not require repayment, nor does it obligate the recipient to execute an EIDL loan; furthermore, it does not preclude the business from also applying for the PPP.  Most prospective borrowers will apply for the grant through the SBA (which should be received on an expedited basis according to the Federal government’s stimulus objectives) while simultaneously applying for the PPP through their local lender.
  • NC-based businesses may also apply for loans of < $50,000 under the “NC COVID-19 Rapid Recovery Loan” program administered by a consortium of local lenders and stakeholders, and funded by the “Golden Leaf Foundation”.  The loans will have favorable repayment terms and the application process is available on-line.

 

EMPLOYMENT

  • Payroll tax deferment is available for employer FICA and Medicare due 4/1/20 – 12/31/20.  Any tax amounts deferred must be repaid in no less than 50% < 12/31/21 and the remaining 50% < 12/31/22.
  • Payroll tax credit is available on up 50% of up to $10,000 of wages per employee (or $5,000 of credit per quarter) by meeting certain workforce retention criteria [50% of wages paid to retained labor force during period when business gross revenues decline > 50% or experienced at least a partial shutdown].  Any employer whom receive a PPP loan and loan forgiveness will be precluded from qualifying for an equivalent amount of payroll tax credit.
  • EFMLA [“Family leave”] and EPSL [“Sick leave”] benefits paid out to qualifying employees will generate a payroll tax credit (rather than the normal deduction).  These “leave” and “sick pay” provisions provide a benefit to employees who file claims with compensation (at least in part) for up to 12 weeks in aggregate.  The mandatory leave provisions may not be applicable to anyone in the healthcare industry, however if a business already has family leave policies in place as part of their employee benefits, the policies should be be adhered to with regard to relevant claims made by employees whom are incapable of working due to COVID-19 issues.
  • Employees whom are separated from service via layoff can qualify for Unemployment Insurance.  Filings are now made via on-line platform by the terminated employee directly.  Under NC Law, even employees whom were not fully terminated but experienced severe decrease in work hours may qualify to receive partial benefits.  Anyone properly terminated would be ineligible for EFMLA or EPSL; in addition, employees severed from service whom were participants in the group health plan will need to offered COBRA coverage.  [Note for exit- counseling purposes and temporary layoff planning, a terminated employee is typically not required to self-pay the monthly premium amount until after a 59-day grace period; therefore, if a business anticipates rehiring the terminated employee < 59 days following the expectation of a return to business activity suspended due to COVID-19, there may not be any additional premium cost to the employee nor significant interruption in health care coverage.  [However, each business should consult with its health plan advisor or representative to verify no other “breaks in service” nor “on-board delays” in coverage would apply under the terms of the group plan in place.]

 

CHARITABLE CONTRIBUTION MODIFICATIONS

  • Individual taxpayers beginning in 2020 tax year may make a $300 tax-deductible contribution to public charities, and without any of the standard itemized deduction limitations.
  • Normal Itemized Deduction AGI limitations [60% for 2019] are lifted in 2020
  • Corporate Contribution Limitation [10% of net income for 2019] is increased to 25% for cash and food donations

 

CARES Act Relief Pertaining to Retirement Accounts

  • The Act allows for “coronavirus-related” distributions from defined contribution retirement plans, such as 401(k), IRAs, and 403(b) plans, of up to $100,000, with the early 10% withdrawal penalty suspended. Income associated with these distributions would be subject to tax over a three-year period rather than in the current year. Taxpayers would be able to choose to repay their retirement plans after receiving these distributions if they wish.
  • Coronavirus-related distributions include those made to individuals who have been diagnosed with COVID-19, a spouse or dependent of such individual, or those who experience adverse financial consequences as a result of the pandemic.
  • The amount that an individual may borrow from a qualified plan is temporarily increased from $50,000 to $100,000.
  • The Act suspends required minimum distributions (RMDs) in the year 2020 for various retirement plans, including IRAs, 403(a) and 403(b) plans, and 457(b) plans. Therefore, the 50% penalty associated with not taking an RMD is suspended in 2020.
  • The RMD suspension covers first RMDs from 2019, which individuals may have deferred until April 1 of this year. Similarly, RMDs are waived for plan participants who turned 70 ½ in 2019 (prior to the enactment of the SECURE Act) and are required to take an RMD prior to April 1 of this year. Though we are waiting on official guidance from the IRS, we expect that if an RMD has already been taken in 2020, the plan participant has up to 60 days to deposit it back into a qualified retirement account. We expect further guidance on a number of questions raised by the Act, including the treatment of 2019 RMDs taken in 2020.

 

Details continue to be released and we will keep you posted as to any new developments, and of course feel free to contact us should you need further information.

 

 

Key Highlights of the COVID-19 Relief Programs

by Tony Pandiscia

We have compiled the following useful and concise information for your reference as you consider the various planning opportunities available to address the impact of the COVID-19 situation on your business operations.  After studying the recently enacted law and interacting with other professionals, by parsing through the voluminous CARES Act, Families First Coronavirus Response Act (“FFCRA”) and relevant peripheral materials, the following includes the highlights of the relevant relief available to you via the government stimulus packages:

  • Loans available under the CARES Act provide the largest measure of assistance available via what is termed the “PPP”.  The borrowing amount is capped at a formula calculating the average monthly “Total payroll” incurred in a trailing 12-month period.  “Total payroll” includes employee compensation (not to exceed $100,000 annually per capita) + health insurance (employer share only) + PTO.  PPP loans will be obtained through traditional lending relationships (local / national banks) and NOT the SBA; best bet is to work with lenders with whom a borrowing relationship already exists as it may help expedite the process.   Our understanding is that local lenders will have finalized the application process and be in a position to initiate the approval process by April 3.
  • Forgiveness of any “PPP” loans received under the CARES Act will be available if proceeds are used for payroll, rent, utilities AND employee labor force or employee compensation after April 1 remains consistent with a pre-April 1 “measurement period”.
  • Independently, “Disaster Relief Loans” (referred to as “EIDL”) are available under the more traditional borrowing program offered by the SBA.
  • What is interesting and somewhat confusing, the EIDL program administered by the SBA also includes a grant opportunity for up to $10,000 for businesses that have been severely effected by COVID-19.  The grant does not require repayment, nor does it obligate the recipient to also apply for an EIDL loan; furthermore, it does not preclude the business from also applying for the PPP.  Many businesses will apply for the grant through the SBA (which should be received on an expedited basis according to the Federal government’s stimulus objectives) while simultaneously applying for the PPP through their local lender.
  • NC-based businesses may also apply for loans of < $50,000 under the “NC COVID-19 Rapid Recovery Loan” program administered by a consortium of local lenders and stakeholders, and funded by the “Golden Leaf Foundation”.  The loans will have favorable repayment terms and the application process is available on-line.
  • Payroll tax deferment is available for employer FICA and Medicare due 4/1/20 – 12/31/20.  Any tax amounts deferred must be repaid in no less than 50% < 12/31/21 and the remaining 50% < 12/31/22.
  • Payroll tax credit is available up to $10,000 by meeting certain workforce retention criteria [50% of wages paid to retained labor force during period when business gross revenues decline > 50%]
  • EFMLA [“Family leave”] and EPSL [“Sick leave”] benefits paid out to  qualifying employees will generate a payroll tax credit (rather than the normal deduction).  The mandatory leave provisions may not be applicable to anyone in the healthcare industry, however if a business already has family leave policies in place as part of their employee benefits, the policies will need to be adhered to with regard to relevant claims made by employees whom are incapable of working due to COVID-19 issues.
  • Employees whom are separated from service via layoff can qualify for Unemployment Insurance.  Filings are now made via on-line platform by the terminated employee directly.  Under NC Law, even employees whom were not fully terminated but experienced severe decrease in work hours may qualify to receive partial benefits.  Anyone properly terminated would be ineligible for EFMLA or EPSL; in addition, employees severed from service whom were participants in the group health plan will need to offered COBRA coverage.  [Note for exit- counseling purposes and temporary layoff planning, a terminated employee is typically not required to self-pay the monthly premium amount until after a 59-day grace period; therefore, if a business anticipates rehiring the terminated employee < 59 days following the expectation of a return to business activity suspended due to COVID-19, there may not be any additional premium cost to the employee nor significant interruption in health care coverage.  [However, each business should consult with its health plan advisor or representative to verify no other “breaks in service” nor “on-board delays” in coverage would apply under the terms of the group plan in place.]

Details continue to be released and we will keep you posted as to any new developments, and of course feel free to contact us should you need further information.

COVID-19 Links

In an effort to streamline the ever-changing world we live in with the COVID-19 virus, here are some links that are all related to updated tax changes, small businesses, individual sick leave, and other filing requirements.  As more information is released, it will be added at the top of this list.

 

 

 

Have you been using zoom?  https://www.forbes.com/sites/leemathews/2020/04/13/500000-hacked-zoom-accounts-given-away-for-free-on-the-dark-web/#58a7fbc858c5

US Dept of Treasury Grants Additional Income Tax Filing and Payment Relief https://www.irs.gov/pub/irs-drop/n-20-23.pdf

New NonProfit Extensions https://home.treasury.gov/news/press-releases/sm970

CDC Recommendations https://www.cdc.gov/coronavirus/2019-ncov/index.html

COVID-19 Relief Tracker https://www.forbes.com/sites/briannegarrett/2020/03/20/small-business-relief-tracker-funding-grants-and-resources-for-business-owners-grappling-with-coronavirus/#1e1e001bdd4c

There’s hope for Small Businesses! https://www.wraltechwire.com/2020/04/03/bank-of-america-accepting-virus-crisis-loan-applications-receives-10000-in-first-hour/

Key Highlights of the CARES Act and the FFCRA Relief Provisions https://www.langdoncpa.com/?p=4717&preview=true

SBA loans more difficult than we thought https://www.langdoncpa.com/2020/04/03/sba-loans-may-be-more-difficult-than-we-thought/

Employer tax credits, and more https://www.journalofaccountancy.com/news/2020/apr/irs-new-employer-tax-credits-form-employee-retention-credit-guidance-coronavirus.html

More Assistance for Nonprofits https://www.councilofnonprofits.org/trends-policy-issues/loans-available-nonprofits-the-cares-act-public-law-116-132

NC Press Release: Deferred Interest https://www.langdoncpa.com/2020/04/01/press-release-nc-deferring-interest/

Applications for Small Business Paycheck Protection Program https://www.journalofaccountancy.com/news/2020/mar/paycheck-protection-loan-for-small-businesses-coronavirus-pandemic.html

Employer questions answered! https://www.dol.gov/agencies/whd/employers

SBA debt relief related to COVID-19 https://www.sba.gov/page/coronavirus-covid-19-small-business-guidance-loan-resources#section-header-4

Gift tax returns extended too! https://www.journalofaccountancy.com/news/2020/mar/gift-gst-tax-returns-postponed-filing-deadlines-coronavirus-pandemic.html

Assisted Living Resources for COVID-19 https://www.ncala.org/covid-19.html

How much COVID-19 stimulus will I receive? https://www.cnbc.com/2020/03/27/the-stimulus-payment-calculator-tells-you-how-much-money-you-could-get.html

Possible Increase for VA Nursing Facilities https://www.vhca.org/publications/careconnection/march-26-2020/vhca-vcal-seeking-additional-funding-for-nf-care-under-covid-19-emergency/

COVID-19 Resources for Non-Profits https://www.ncnonprofits.org/resources/pandemicresources

The CARES Act questions answered https://www.journalofaccountancy.com/news/2020/mar/cares-act-economic-relief-coronavirus-tax-provisions.html?utm_source=mnl:alerts&utm_medium=email&utm_campaign=25Mar2020&utm_content=headline

NC DHHS provides additional COVID-19 support https://www.ncdhhs.gov/news/press-releases/nc-medicaid-increases-support-protect-those-most-risk-serious-illness-covid-19

Clarification on NC Tax Deadlines https://www.ncacpa.org/wp-content/uploads/2020/03/Frequently-Asked-Questions-COVID-final.pdf?utm_source=Google&utm_medium=Referral&utm_campaign=NCACPA&_zs=fG9HX&_zl=MMK22

Employers using Payroll Tax Credits for Paid Leave due to Coronavirus https://www.accountingtoday.com/news/employers-can-begin-using-payroll-tax-credits-for-paid-leave-for-coronavirus

CMS extends Cost Report Deadlines https://www.palmettogba.com/palmetto/providers.nsf/ls/JM%20Part%20A~BMYLSN5443?opendocument&utm_source=J11AL&utm_campaign=JMALs&utm_medium=email

Small Business Q&A https://sbshrs.adpinfo.com/covid19-faqs

IRS push back tax FILING deadline https://abc11.com/business/tax-day-pushed-back-amid-viral-outbreak-mnuchin/6031749/

Bill to address paid sick leave related to COVID-19 (FFCRA) https://www.forbes.com/sites/tomspiggle/2020/03/17/the-families-first-coronavirus-response-act-what-it-does-for-employees-who-need-paid-sick-leave/#615dd2f06f1a

HUD and Single Audit Extension https://www.whitehouse.gov/wp-content/uploads/2020/03/M-20-17.pdf?utm_medium=email&SubscriberID=111017000&utm_source=GAQC20&Site=AICPA&LinkID=8741972&utm_campaign=GAQC_AlertMAR20&cid=email:GAQC20:GAQC_AlertMAR20:https%3a%2f%2fwww.whitehouse.gov%2fwp-content%2fuploads%2f2020%2f03%2fM-20-17.pdf:AICPA&SendID=266068&utm_content=A20MAR400_GAQC_Alert401

IRS Press Release “Payment Relief” https://www.langdoncpa.com/2020/03/19/official-guidance-for-tax-deadlines/

Single Audit Submission Info https://www.whitehouse.gov/wp-content/uploads/2020/03/M-20-11.pdf

US Department of Labor defines FMLA related to COVID-19 https://www.dol.gov/agencies/whd/fmla/pandemic

IRS extends PAYMENT deadline https://www.cnbc.com/2020/03/17/treasury-and-irs-to-delay-tax-deadline-by-90-days.html

https://www.cpapracticeadvisor.com/tax-compliance/news/21129660/2020-tax-season-payment-deadline-extended-to-july-15-as-nation-fights-coronavirus-irs-news?utm_source=CPA+Other+Communications&utm_medium=email&utm_campaign=CCSN200317002&o_eid=9442A3978623C7T&rdx.ident=[object+Object]