Coronavirus Updates

The Paycheck Protection Program (PPP) is a loan designed to provide a direct incentive for small businesses to keep their workers on the payroll. Given the unprecedented impact of the coronavirus pandemic, these loans provide businesses with immediate access to working capital to replace lost revenue and help them weather the crisis until normal operations can resume.

The PPP, part of the Coronavirus Aid, Relief, and Economic Security (CARES) Act, authorized $349 billion in forgivable SBA loans to small businesses to pay their employees during the COVID-19 crisis. Loans cover 24 weeks of operating cash-flow by using 100% federally guaranteed funds. After exhausting the first round of funding by April 16th, a second round of $320 billion was made available on 4/27/2020.

The US Small Business Administration (SBA) will forgive loans if all employees are kept on the payroll for 24 weeks and the money is used for payroll, rent, mortgage interest, or utilities. The Paycheck Protection Program will be available from early April through 6/30/2020.

The PPP program is intended to help retain workers. The loan can be used to cover payroll costs for full-time and part-time staff (wages, salaries, commissions, bonuses, payroll taxes, company-paid retirement contributions, company-paid healthcare benefits, covered leave), and most rent, mortgage interest, and utility expenses over the 24-week period after the loan is made (i.e., when the lender disburses the funds).

Payroll costs are capped at $100,000 per employee.

NOTE: Per SBA Interim Final Rules released 4/2/2020, Independent Contractors are NOT counted under employersas part of PPP loan calculation or forgiveness. See those rules here. Independent contractors can apply for their own PPP based on these rules.

This program is for any small business with less than 500 employees (including sole proprietorships, independent contractors, self-employed persons, and nonprofits) affected by coronavirus/COVID-19 that was in business with employees and/or payroll expenses as of 2/15/2020.

Small businesses in the food and hospitality industry with more than one location could be eligible at the store and location level if the store employs less than 500 workers.

Starting on or shortly after April 3rd, loans were available to small businesses including sole proprietorships. Starting April 10th, independent contractors and self-employed individuals could apply.

The maximum loan amount is 2.5 times average monthly payroll expenses up to $10 million. Payroll expenses include wages, salaries, commissions, bonuses, retirement contributions, healthcare benefits, covered leave, and other payroll-related expenses (state unemployment costs).

For existing businesses, the loan amount is based on average payroll expenses for 2019. Seasonal businesses may elect to use average monthly payroll between 2/15/19 and 6/30/19. New businesses base it on average payroll for 1/1/20 to 2/29/20. IMPORTANT: Payroll costs over $100,000 per year per employee are excluded.

Note: SBA released Interim Final Rule guidelines late on April 2nd that clearly state that Independent Contractors are NOT counted under employers as part of PPP loan calculation or forgiveness. See those rules here.

Self-employed people can apply for the PPP based on these guidelines.

No collateral or personal guarantees are required. Neither the government nor lenders will charge small businesses any fees. The loan is made to the business; as such, the loan does not affect your personal credit report. Additionally, the SBA “credit elsewhere” requirement is waived, meaning there is no need for the business to prove you’ve looked for credit somewhere else before applying for the PPP loan.

The PPP loan uses a simplified and streamlined application process that does not require personal financial statements or other heavy paperwork burden for underwriting purposes.

The borrower must certify in good faith that the loan is necessary because of the economic uncertainty caused by COVID-19 and will be applied to maintain payroll. The borrower must also certify that they are not receiving similar assistance for the same purpose from another SBA program.

This loan has a maturity of 2 years (if funds were approved before June 5th, 2020) or 5 years (if after June 5th) and an interest rate of 1%. Loan payments will also be deferred until SBA forgiveness is determined and funds remitted to the lender, or until 10 months after the covered period ends. There is no early payment/prepayment penalty.

You can apply through any existing SBA 7(a) lender or federally insured depository institution, federally insured credit union, or Farm Credit System institution that is participating. Contact your business bank or other approved lender.

You’ll need to complete the Paycheck Protection Program loan application and provide payroll documentation to an approved lender. Get exact details and forms from your lender.

Prepare the application and related attachments in digital (electronic) formats. Payroll documentation should detail the list of employees, annual compensation, and country of residence. Requested documentation may include (depending on your lender):

• 2019 941 payroll filings
• 2019 W2s or W3
• 2019 Year-end Balance Sheet and Income Statement
• 2019 State Unemployment Tax Return
• 2019 Corporate or Partnership tax return including Schedlue K-1
• Articles of Incorporation or Organization
• Corporate Bylaws or Certificate of Good Standing with the Secretary of State
• Operating Agreement or Partnership Agreement
• Rent/lease agreements
• Mortgage documentation
• Utility statements

For sole proprietors and self-employed people, in addition to the above, you may need (depending on your lender):

• 2019 Form 1040 Schedule C
• 2019 Form 1099-MISC
• 2020 Invoice, Bank Statement, Financial Statement or other evidence that you were in business on 2/15/2020

YES, the loan will be fully forgiven if the funds are used for payroll costs, interest on mortgages, rent, and utilities. (At least 60% of the forgiven amount must have been used for payroll.) Forgiveness is based on the employer maintaining or quickly rehiring employees and maintaining salary levels. Forgiveness will be reduced if full-time headcount declines, or if salaries and wages decrease.

The borrower is eligible for loan forgiveness for the 24-week period after the loan’s origination date in the amount equal to the sum of payroll costs (excluding compensation above $100,000), mortgage interest, rent, and utilities. The amount forgiven cannot exceed the amount borrowed, and not more than 40% of the forgiven amount may be for non-payroll costs.

Loan forgiveness will be proportionally reduced if the average number of employees is reduced, or the total employee salary or wages is reduced by more than 25%, during the covered period in 2020 as compared to the same period in 2019 (February 15-June 30).

If your business has already laid employees off, you can still qualify for loan forgiveness if you hire employees back to pre-crisis levels by December 31, 2020. You do not have to re-hire laid-off employees; these can be new (different) employees. The lender will look at the number of employees and the amount of payroll.

Note: Per SBA Interim Rule Final guidelines released late 4/2/2020, Independent Contractors are NOT counted under employers as part of PPP loan calculation or forgiveness. See those rules here.

Sole proprietors and self-employed people’s loan forgiveness is based on 2.5/12 of their 2019 Schedule C net income, plus payroll, rent, mortgage and other real or personal property interest, and utilities as described here.

Small businesses will need to apply for forgiveness and provide documentation of payroll and expenses to ensure the funds were used to retain employees and pay qualified expenses. Lenders have up to 60 days to issue a decision.

No. The canceled loan amount does not count towards gross income for tax purposes.

YES! These loans go first-come, first-served. If you have not yet been approved or funded, we recommend that you apply as soon as possible if you qualify. There will be no more loans after 6/30/2020.

SBA disaster loans have more documentation. Those are direct loans with the SBA (not through a bank lender). Disaster loans greater than $25,000 require a personal guarantee and collateral.

If you previously took an EIDL prior to 4/3/2020, you can roll that loan amount into the PPP loan. If you don’t have an existing EIDL loan, you can apply for both an EIDL and a PPP provided they are used for different purposes. However, the grant portion from the EIDL Advance reduces the PPP forgiven amount accordingly. Generally, for employers with payroll, or self-employed individuals, the PPP would be more favorable.

Yes.

Each business could be eligible for a PPP loan, provided it meets the qualification criteria.

Small businesses should strongly consider applying for the Paycheck Protection Program (PPP) described in the FAQ above, especially if you have employees. PPP loans are also available to sole proprietors, independent contractors and self-employed individuals.

For small businesses who have no or low payroll, the SBA Economic Injury Disaster Advance Loan (EIDL) may be more beneficial. Details here.

Contact your accountant to help you decide which is better in your particular situation.

The US Chamber of Commerce has this very helpful page.

The US Small Business Administration (SBA) is offering low-interest loans to small businesses in specific designated areas. Here is a helpful document. Learn more here.

Many states are also offering low-interest loans and other relief or assistance. Here is a useful document from the AICPA listing state-specific relief. (Press Ctrl + F keys to search for your state.)

Here is the Tax Foundation’s web page on state responses to Coronavirus.

Forbes put this list of small business relief resources together.

Our cloud-based accounting software partner Xero has put this helpful list of small business support resources together.

See this document which summarizes the recent changes enacted by the Families First Coronavirus Response Act, Emergency Family and Medical Leave Expansion Act, and Emergency Paid Sick Leave Act.

Generally, private sector employers with under 500 employees must provide paid sick and paid family leave to employees affected by COVID-19. However, there are corresponding tax credits. An exemption may be requested of the Department of Labor for employers with under 50 employees.

A summary can be found here with more information here. This Department of Labor FAQ page can also help. Update 4/9/20: The Department of Labor has issued these guidelines regarding FFCRA.

There are many resources available to guide you. We found this page, this series of FAQs, and this particular FAQ from ADP to be helpful.

Yes, the IRS has extended the tax FILING deadline from 4/15/2020 to 7/15/2020.

Many states are also aligning their deadlines with the IRS. See table below for summary, and see this very helpful document for more details (put out by the American Institute of Certified Public Accountants (AICPA)).

STATEDEADLINENOTES

Federal tax payments have also been extended 90 days to July 15th. There will be no fines or penalties if federal taxes due are paid by July 15th, 2020.

See IRS Payment Deadline Extension webpage.

State responses have varied. See this very helpful document put out by the American Institute of Certified Public Accountants (AICPA).

You can search for your state’s updated information (by holding down the Ctrl key on your keyboard and pressing the F key (Ctrl+F = “Find”)).

All FEDERAL tax payments, including estimated tax payments that are due on 4/15 have been extended to 7/15.

Illinois has not extended filing for Q1 and Q2 estimated tax payments, which remain 4/15 and 6/15 respectively.

Reach out to us if we prepared your return, and it included estimated tax payments, but your financial situation has changed substantially, so that we can advise you properly.

Yes, if you have all your tax documents, file now. Especially if you are getting a refund, this will put cash into your pocket quickly.

Yes, you have until July 15th to pay the federal government, per the 2nd FAQ above.

State responses have varied. See this very helpful document put out by the American Institute of Certified Public Accountants (AICPA).

You can search for your state’s updated information (by holding down the Ctrl key on your keyboard and pressing the F key (Ctrl+F = “Find”)).

Reach out to your tax professional and we can discuss options, including getting you into a “Currently not collectible” status, setting up an installment payment plan, or filing an “Offer in Compromise.”

Yes, the deadline for making 2019 contributions to individual retirement accounts (IRAs), as well as health savings accounts (HSAs) and Archer medical savings accounts (MSAs) is now July 15, 2020.

The IRS encourages anyone with a tax filing obligation who hasn’t filed a tax return for 2018 or 2019 to act now.

For non-filers, including those receiving Social Security, the IRS and Treasury Department reversed their position on 4/1/2020, NOT requiring filing of a 2018 or 2019 return. Treasury officials said the IRS will use existing SSA-1099 and RRB-1099 forms to make the payments to seniors. They’ll get a direct deposit if there is a bank account on file; otherwise they’ll receive a check in the mail.

Taxpayers: Get information on your Economic Impact Payments here at the IRS website, where you can check your payment status, confirm your payment type, and enter or update bank information.

Non-filers can learn more and enter their information here.

Yes if you have a tax filing obligation; no if you just receive social security.

On 4/1/2020 the IRS REVERSED their original position requiring seniors and others who typically do not file returns to be required to submit a simple tax return to receive the stimulus payment. Treasury officials said the IRS will use existing SSA-1099 and RRB-1099 forms to make the payments to seniors. They’ll get a direct deposit if there is a bank account on file; otherwise they’ll receive a check in the mail.

Taxpayers: Get information on your Economic Impact Payments here at the IRS website, where you can check your payment status, confirm your payment type, and enter or update bank information.

Non-filers can learn more and enter their information here.

Taxpayers: Get information on your Economic Impact Payments here at the IRS website, where you can check your payment status, confirm your payment type, and enter or update bank information for direct deposit.

For people receiving Social Security or Railroad Retirement, if you currently receive a paper check, unfortunately you will receive a paper stimulus check.

File for unemployment benefits online.

Find your state’s unemployment program here. The CARES Act provides enhanced unemployment benefits due to the COVID-19 situation.

There are many industries hiring – including grocery stores, delivery services, and online retailers.

Taxpayers: Get information on your Economic Impact Payments here at the IRS website, where you can check your payment status, confirm your payment type, and enter or update bank information.

Here are the highlights of the CARES Act (Coronavirus Aid, Relief, and Economic Security Act):

The payment amount is reduced by $5 for each $100 of income above the $75,000/$150,000 thresholds. The table above gives examples at various income levels.

The government will automatically direct deposit funds for taxpayers if your most recently filed tax return used direct deposit. Otherwise, paper checks will be mailed. The first round of electronically distributed stimulus payments are expected to start the week of April 13th; the IRS expects to begin issuing paper checks the week of May 4. The IRS is working on setting up a portal for taxpayers to enter direct deposit information to get the stimulus payment more quickly. Learn more here.

Check amounts will be based on your 2019 tax return (if completed) or your 2018 tax return. If you did not file a 2018 or 2019 tax return, the government will look at your Social Security Benefits. However, the IRS does advise to take steps now to file 2018 and/or 2019 returns. There are provisions in the bill to include those who don’t earn enough to file returns.

The government hopes to release these funds in April, but logistics might take longer.

Additionally, there are Child Tax Credits for children age 16 and younger of $500 per child, which phase out for higher income levels.

Finally, there is federal unemployment assistance of $600 per week added to your state’s unemployment benefits for up to 4 months.

Here’s a New York Times FAQ Link about the stimulus package (CARES Act).

Contact your lender. They may make arrangements with you.

Some jurisdictions are also waiving penalties for late payments on property taxes. Contact your county clerk.

NOTE: Check with your financial advisor to determine how these may apply to you.

Retirement Distributions: Ordinarily, if you withdraw money from your retirement account, you are taxed on the money withdrawn plus a 10% withdrawal penalty if you are under 59 ½ years old. If you were affected by COVID-19, the CARES Act temporarily (i.e., for 2020) waives the 10% tax on early withdrawals of up to $100,000 and provides an option to repay the distribution over a 3 year period, and allows payment of the tax over the same 3 year period.

Plan Loans: Retirement plans may allow participants to take loans from their account balances. The CARES Act doubles the current loan limits from 50% to 100% of the participant’s vested account balance (up to $100,000).

Waives Required Minimum Distributions (RMDs): The CARES Act waives RMDs which would otherwise be due during the 2020 calendar year, including the 2019 initial RMDs which would otherwise have been due by April 1, 2020. The waiver does not include RMDs for Defined Benefit Plans.

Single Employer Funding Relief: The CARES Act delays contributions to Defined Benefit and Money Purchase Plans due in calendar year 2020 (including quarterly contributions) until January 1, 2021. Interest must be paid on delayed contributions.

• You can upload documents securely to your tax professional by using our secure upload or your portal.

• You can drop off documents to us during office hours, or use the drop-box outside our office 24/7.

• You can mail documents to us. We highly recommend using a service with tracking, like FedEx, UPS, or US Postal Service. In many cases, you can even schedule a pickup online.

It is recommended per CDC and public health guidelines to engage in social distancing. For your health and safety, we are cancelling or rescheduling in-office meetings.

We can do a virtual meeting where we have face-to-face interaction and can show you your tax return on the computer screen, or we can explain things by phone, if you prefer.

The majority of our clients have their tax returns delivered electronically. You can review, download and save your tax return, and estimated tax payment vouchers (if applicable). The electronic system allows you sign, pay your tax preparation fee, and pay any government tax payments owed (including estimated tax payments) electronically. The system also sends automated reminders about estimated tax payments due.

We can also FedEx your tax return to you and you can mail back signed efile authorization forms with payment.

Lastly, our office is still currently open for drop-off and pick-up interactions. See our office hours on our contact page.

Yes.

Individuals should get started here by filling out our new client organizer, and we’ll get in touch right away.

Businesses should schedule a brief virtual consultation here so we can better understand your needs.

Learn more about our Individual and Entity tax preparation services.