Tuesday, 14 April 2020 / Published in ROBS 401(k)

The impact of the COVID-19 pandemic is changing the way everyone is doing business. The National Association of Government Guaranteed Lender’s Spring Conference has moved to a virtual format. NAGGL’s Virtual Spring Conference (May 6-8) offers over a dozen LIVE sessions and interactive discussions led by industry leaders and invited SBA policymakers on topics that address how to best help your borrowers along the road to recovery while effectively managing your portfolio.

The conference connects attendees with hundreds of 7(a) lenders across the country during the event, but NAGGL just announced that starting today, you can connect with a select group of industry product and service provider professionals in the Virtual Exhibit Hall.

DRDA CPAs & Business Consultants is proud to once again sponsor and exhibit at this important industry event. We spotlight our BORSA (Business Owner’s Retirement Savings Account) Plan at this conference as many of our BORSA clients are leveraging their retirement funds – tax and penalty-free – with an SBA 7(a) or 504 loan to start or purchase a business.

To learn more about the BORSA Plan please visit our site at borsa401k.com. If you have questions, please reach out to Suzy Granger at 281-954-6023 or suzy@drdacpa.com

Friday, 27 March 2020 / Published in Business Lending, Small Business, Tax

A breakdown of all the federal programs and aid for small business coronavirus assistance.

Three separate packages approved by Congress and signed by President Trump over the past weeks combined offer a variety of assistance to businesses. Here’s a breakdown of what’s in those packages and how your business can take advantage of these relief efforts.

Coronavirus Preparedness and Response Supplemental Appropriations Act

What is it?

Signed into law on March 6, The Coronavirus Preparedness and Response Supplemental Appropriations Act provides $8.3 billion in emergency funding for federal agencies to respond to the coronavirus outbreak, enabling the U.S. Small Business Administration to offer $7 billion in disaster assistance loans to small businesses impacted by COVID-19.

What does it mean for small business?

The SBA is offering designated states and territories low-interest federal disaster loans to small businesses suffering substantial economic harm as a result of the coronavirus.

These loans may be used by small businesses to pay fixed debts, payroll, accounts payable and additional bills that can’t be paid because of COVID-19’s impact. The interest rate is 3.75% for small businesses without other available means of credit. The interest rate for non-profits is 2.75%. Businesses with credit available elsewhere are not eligible.

The SBA loans come with long-term repayments, up to a maximum of 30 years, in an effort to keep payments affordable. Loan terms are determined on a case-by-case basis, according to individual borrower’s ability to repay.

The SBA has amended its disaster loan criteria to help borrowers still paying back SBA loans from previous disasters. By making this change, deferments through December 31, 2020, will be automatic. Hence, borrowers of home and business disaster loans do not have to contact SBA to request deferment.

Where can I learn more?

SBA Coronavirus Small Business Loan Page

Coronavirus (COVID-19): Small Business Guidance & Loan Resources

Families First Coronavirus Response Act

What is it?

Signed into law on March 18, the Families First Coronavirus Response Act (FFCRA or Act) contains eight divisions designed to provide assistance to covered employees and households with eligible children affected by COVID-19. Key components of the Act include:

  • Mandatory emergency paid sick leave for covered employees who, as a result of COVID-19, are quarantined, symptomatic or caring for a symptomatic individual, or caring for a child whose school has been closed.
  • An expansion of unemployment benefits.
  • Modifications to the USDA nutrition and food assistance programs.
  • New requirements for coronavirus diagnostic testing.
  • A temporary increase in the Medicaid federal medical assistance percentage (FMAP).

What does it mean for small business?

The FFCRA affects small businesses in two key ways:

  • Paid sick and family leave. The law requires all private businesses with fewer than 500 employees to provide emergency paid sick or family leave for employees affected by the coronavirus outbreak.
  • Employer tax credits. The law provides employers with fewer than 500 employees with refundable payroll tax credits to cover the cost of providing the paid sick leave and the paid FMLA leave to their employees. Specifically, the law states that:
    • Employers will receive 100% tax credit against their payroll tax liability up to the capped amount of benefits they must pay.
    • Health insurance costs are also included in the credit.
    • Self-employed individuals receive an equivalent credit.
    • If an employer is owed more than the capped amount and a refund is owed, the IRS will send the refund as quickly as possible.
    • Reimbursement will be quick and easy to obtain.

Where can I learn more?

Coronavirus Aid, Relief, and Economic Security Act (CARES Act)

What is it?

The CARES Act, which is expected to be passed by both houses of Congress and signed by the President in the near future, has a number of components aimed at helping small businesses survive and recover from losses suffered during the coronavirus outbreak. Key components of the CARES Act include a loan program from the SBA, changes to unemployment benefits and changes to business tax filing requirements.

What does it mean for small business?

Anticipated key components of the CARES Act include:

  • Small Business Paycheck Protection Program: A new lending program that allows businesses to borrow enough to cover monthly payroll costs for businesses for up to 2.5 months. If used for payroll, mortgage interest or other qualified expenses, these loans will be forgiven as long as the employer continues to employ its workers or rehires them when they reopen for business.
  • Business tax provisions: Employers can defer payment of the employer share payroll taxes.
  • Payments for individuals: It is anticipated those who make less than $75,000 a year will receive direct payments of $1,200 per individual ($2,400 joint return) plus $500 per child. This will phase out for incomes above $75,000 ($150,000 joint filings).
  • Unemployment assistance: If your business is closed because of coronavirus and your employees cannot work from home, or your employees are unable to work due to illness or the need to take care of someone who is ill with the virus, they can collect unemployment.

Where can I learn more?

Small Business Administration’s COVID-19 page

More info on IRS tax changes can be found here.

More information on filing for unemployment assistance can be found at the U.S. Department of Labor, though you or your employees will need to file through your state’s unemployment program.

Friday, 27 March 2020 / Published in Small Business

Emergency Family and Medical Leave Expansion Act – Impacts You if You Have Less Than 500 Employees

Expanded Coverage and Eligibility – The Act significantly amends and expands FMLA on a temporary basis.

  • For this emergency FMLA leave expansion provision only, the current employee threshold for FMLA coverage would change from only covering employers with 50 or more employees to instead covering those employers with fewer than 500 employees.  As a result, thousands of employers not previously subject to the FMLA may be required to provide job-protected leave to employees for a COVID-19 coronavirus-designated reason.
  • Any employee who has worked for the employer for at least 30 days prior to the 1st day of designated leave may be eligible to receive paid family and medical leave The Act now includes language allowing the Secretary of Labor to exclude healthcare providers and emergency responders from the definition of employees who are allowed to take such leave, and to exempt small businesses with fewer than 50 employees if the required leave would jeopardize the viability of their business. ( We don’t yet know if there is a process for this exemption or how that will work.)
  • Eligible Reason for Emergency Leave –The only reason an employee request and take this emergency FMLA expansion leave is to allow the employee, who is unable to work or telework, to care for the employee’s own child (under 18 years of age) if the child’s school or place of care is closed or the childcare provider is unavailable due to an official public health emergency. This is the only qualifying need for Emergency FMLA .
  • Amount of FMLA Expansion Leave – Up to 12 weeks of job-protected leave 
  • The first 10 days of Emergency FMLA may be unpaid. During this 10-day period, an employee may voluntarily elect to substitute any accrued paid leave (like vacation or sick leave) to cover some or all of the 10-day unpaid period.
  • After the 10-day period, the employer generally must pay full-time employees at two-thirds the employee’s regular rate for the number of hours the employee would otherwise be normally scheduled.
  • The Act limits this pay entitlement to $200 per day and $10,000 in the aggregate per employee. 

Calculating Pay for Non-Full Time Employees – Employees who work a part-time or irregular schedule are entitled to be paid based on the average number of hours the employee worked for the six months prior to taking Emergency FMLA. Employees who have worked for less than six months prior to leave are entitled to the employee’s reasonable expectation at hiring of the average number of hours the employee would normally be scheduled to work. 

Job Restoration – Employers with 25 or more employees will have the same obligation as under traditional FMLA to return any employee who has taken Emergency FMLA to the same or equivalent position upon the return to work.

However, employers with fewer than 25 employees are generally excluded from this requirement if the employee’s position no longer exists following the Emergency FMLA leave due to an economic downtown or other circumstances caused by a public health emergency during the period of Emergency FMLA. This exclusion is subject to the employer making reasonable attempts to return the employee to an equivalent position and requires an employer to make efforts to return the employee to work for up to a year following the employee’s leave.

Effective Date and Expiration – This program will become effective April 2nd and remain in effect until December 31, 2020. 

Emergency Paid Sick Leave Act

This paid leave act is in addition to any paid leave a company already provides, and employers cannot make this run concurrent with their Company paid sick leave – it is in addition to.  Companies are prohibited from changing their own leave policies in response to this paid leave act.

Reasons for Paid Sick Leave –This Act allows an eligible employee to take paid sick leave if they are unable to work or telework for ONLY these reasons.

Because the employee is: 

1.    subject to a federal, state or local quarantine or isolation order related to COVID-19; 

2.    advised by a health care provider to self-quarantine due to COVID-19 concerns

3.    experiencing COVID-19 symptoms and seeking medical diagnosis; 

4.    caring for an individual subject to a federal, state or local quarantine or isolation order or advised by a health care provider to self-quarantine due to COVID-19 concerns; 

5.    caring for the employee’s child if the child’s school or place of care is closed or the child’s care provider is unavailable due to public health emergency; or 

6.    experiencing any other substantially similar condition specified by the Secretary of Health and Human Services in consultation with the Secretary of the Treasury and the Secretary of Labor.

Paid Sick Leave Eligibility – This provision requires employers with fewer than 500 employees to provide full-time employees (regardless of the employee’s duration of employment prior to leave) with 80 hours of paid sick leave at the employee’s regular rate for Reasons 1, 2 and 3 noted in the reasons for Leave (or two-thirds the employee’s regular rate to care for qualifying reasons numbers 4, 5, or 6 listed above). An important change to this section provides an exception for employers who are healthcare providers or emergency responders at their election.

Cap on Paid Sick Leave Wages – The Act places limits on paid sick leave.

  • Paid sick leave wages are limited to $511 per day up to $5,110 total per employee for qualifying leave that is to care for themselves (reasons 1, 2, 3) 
  • and  $200 per day up to $2,000 total to care for others (leave reasons 4, 5 & 6).

Carryover and Interaction with Other Paid Leave – This paid sick leave will not carry over to the following year and may be in addition to any paid sick leave currently provided by employers.

Calculating Rate of Pay – Employees who work a part-time or irregular schedule are entitled to be paid based on the average number of hours the employee worked for the six months prior to taking paid sick leave. Employees who have worked for less than six months prior to leave are entitled to the average number of hours the employee would normally be scheduled to work over a two-week period. A business employing fewer than 500 employees is required, at the request of the employee, to pay a full-time employee for 80 hours of mandated emergency paid sick leave instead of the initial 10 days of unpaid leave permitted by the Emergency Family and Medical Leave Expansion Act (summarized above).

Effective Date and Expiration – This program will become effective April 2nd and remains in effect until December 31, 2020. 

Tax Credits For Paid Sick And Paid Family And Medical Leave

This section provides a series of refundable tax credits for employers who are required to provide the Emergency Paid Sick Leave and Emergency Paid Family and Medical Leave described above.

These tax credits are allowed against the employer portion of Social Security taxes. While this limits application of the tax credit, employers will be reimbursed if their costs for qualified sick leave or qualified family leave wages exceed the taxes they would owe.

  • Employers are entitled to a refundable tax credit equal to 100% of the qualified sick leave wages paid by employers for each calendar quarter in adherence with the Emergency Paid Sick Leave Act.
  • The qualified sick leave wages are capped at $511 per day ($200 per day if the leave is for caring for a family member or child) for up to 10 days per employee in each calendar quarter. 
  • Similarly, employers are entitled to a refundable tax credit equal to 100% of the qualified family leave wages paid by employers for each calendar quarter in accordance with the Emergency Family and Medical Leave Expansion Act. The qualified family leave wages are capped at $200 per day for each individual up to $10,000 total per calendar quarter. Only those employers who are required to offer Emergency FMLA and Emergency Paid Sick Leave may receive these credits.

(We anticipate more information will be coming soon for employers regarding how to apply for these credits)

Notice Requirements for Employers

Employers will also be required to provide notice to their employees through postings and policies. (We anticipate more information will be coming soon for employers on this requirement soon)

In addition to this federal Act, many states are proposing similar emergency legislation to enact or expand their own paid sick leave or family and medical leave laws to cover coronavirus-related issues. Some of these state laws may be in addition to these new requirements at the federal level.  

We will continue to monitor this rapidly developing situation and provide updates as appropriate.

FAQ’s

Can an employee who takes emergency paid sick leave be required to find a replacement worker?

The paid sick leave provisions state that an employer may not require an employee to find a replacement worker when the employee takes such leave.

Must an employer pay out unused emergency paid sick leave if the employee separates from its employment?

An employer is not required to pay unused paid sick leave if an employee separates from employment.

Are employers with 500 or more employees obligated to provide paid sick or leave benefits?

They have no such obligation under this bill. However, they still must comply with obligations under state or local paid sick leave or paid family and medical leave laws and administer sick or paid time off or paid leave provided under company policies or collective bargaining agreements.

Friday, 27 March 2020 / Published in Small Business

The Department of Labor released the required employer notice yesterday.  Below are links to the posters, along with posting guidelines and fact sheets regarding the Families First Coronavirus Response Act (FFCRA).  The Act goes into effect April 1st (this was clarified yesterday from the original April 2nd date.) Be sure you are in compliance by April 1st.

 Posters

·         Employee Notice Employee Rights: Paid Sick Leave and Expanded Family and Medical Leave under The Families First Coronavirus Response Act (FFCRA)

·         Posting Guidelines Families First Coronavirus Response Act Notice – Frequently Asked Questions    

Fact Sheets

·         Families First Coronavirus Response Act: Employee Paid Leave Rights

·         Families First Coronavirus Response Act: Employer Paid Leave Requirements

FAQ’s

·         Families First Coronavirus Response Act: Questions and Answers

·         COVID-19 and the Fair Labor Standards Act: Questions and Answers

·         COVID-19 and the Family and Medical Leave Act: Questions and Answers

Wednesday, 25 March 2020 / Published in Uncategorized

The IRS has announced that small and midsize employers can begin taking advantage of two new refundable payroll tax credits provided by the Families First Coronavirus Response Act (the Act). The credits are designed to give businesses with fewer than 500 employees funds to provide coronavirus-related paid leave, either for an employee’s own health needs, or to care for family members. Under the Act, employees receive up to 80 hours of paid sick leave for coronavirus-related reasons and expanded paid child care leave when schools are closed or child care providers are unavailable. To take immediate advantage of the paid leave credits, employers can retain and access funds that they would otherwise pay to the IRS in payroll taxes. If those amounts are not sufficient to cover the cost of paid leave, employers can seek an expedited advance from the IRS by submitting a streamlined claim form that will be released in the near future. News Release IR 2020-57.

Families First Coronavirus Response Act (Act), signed by President Trump on March 18, 2020.

Corona-virus related reasons is a very broad category and does not require the employee to technically be sick. A shelter in place restriction issued by a government entity qualifies.

Saturday, 21 March 2020 / Published in Tax

Late in the evening on Friday, March 20, 2020, the Treasury Department and the IRS issued Notice 2020-18, restating and expanding relief provided in Notice 2020-17. Notice 2020-18 provides guidance on how Affected Taxpayers can defer tax filings AND tax payments due to the coronavirus (COVID-19). The term “person” includes an individual, a trust, estate, partnership, association, company or corporation, as provided in section 7701(a)(1) of the Code. For an Affected Taxpayer, the due date for filing Federal income tax returns and making Federal income tax payments due April 15, 2020, is automatically postponed to July 15, 2020. Affected Taxpayers do not have to file Forms 4868 or 7004. Another significant change is there is no limitation on the amount of the payment that may be postponed. As you may recall the previous release limited the amount of payment deferral to $1,000,000 for individuals and $10,000,000 for corporations.

The relief provided in this section III is available solely with respect to Federal income tax payments (including payments of tax on self-employment income) and Federal income tax returns due on April 15, 2020, in respect of an Affected Taxpayer’s 2019 taxable year, and Federal estimated income tax payments (including payments of tax on self-employment income) due on April 15, 2020, for an Affected Taxpayer’s 2020 taxable year.

IMPORTANT NOTE – This does not provide deferral or relief for Affected Taxpayer’s second quarter 2020 estimated tax payment normally due June 15, 2020.

Link to IRS Notice 2020-18:

Relief for Taxpayers Affected by Ongoing Coronavirus Disease 2019 Pandemic Notice 2020-18

IMPORTANT NOTE – Many states and local municipalities are simultaneously providing, or have already provided, their own relief.

Link to AICPA State Tax Filing Guidance for Coronavirus Pandemic:

State Tax Filing Guidance for Caronavirus Pandemic – Update 3/20/20 – 12 noon et.

As always we appreciate the opportunity to serve you. If you have any questions or if we may be of any assistance to you please do not hesitate to contact us directly.

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