SBA Releases FAQs for PPP Loan Forgiveness

Yesterday, the U.S. Small Business Administration (SBA) addressed 23 frequently asked questions (FAQs) related to forgiveness on Paycheck Protection Program loans (PPP loans). The FAQs highlight some of the questions we have all been grappling with since the June 2020 revised forgiveness application was released by the SBA. Here are a few of the highlights from the newest FAQs. (more…)

How to Treat COVID-19 Sideline Activities for Taxes (Hobby or Business?)

Today, many people sell homemade products online or work on some unincorporated sideline venture outside of their regular day jobs. Such activities can generate extra spending money. This can be especially helpful for retired people and stay-at-home parents — or for those who been laid off or taken a pay cut, during the COVID-19 crisis. (more…)

KWC Named to Equity Leadership List for Women in Accounting

KWC Certified Public Accountants has been named to the Accounting MOVE Project’s Best CPA Firms for Equity Leadership for the sixth straight year. The list, which is prepared by the Accounting & Financial Women’s Alliance and Wilson-Taylor Associates, Inc., recognizes firms with high proportions of women partners and principals.
 
Since 2010, the Accounting MOVE Project has measured and supported the advancement of women at accounting and consulting firms. MOVE is the only annual benchmarking project that both counts and advocates for women in the profession.
 
The Accounting MOVE Project evaluates CPA firms across the nation based on percentage of women in leadership roles of various levels. The Best CPA Firms for Equity Leadership list is based on MOVE survey results and recognizes firms with at least 33% women partners and principals, as 33% is widely recognized as the tipping point for members of any identity group to have individual impact. The Equity Leadership list recognizes firms that have achieved that milestone through any combination of culture, programs, initiatives and growth.
 
“Women are perfectly positioned to chart new ways to win new types of business, because they take encouragement and direction from incremental wins,” says Joanne Cleaver, President of Wilson-Taylor Associates, Inc., the content strategy firm that manages the Accounting MOVE Project. “In an unpredictable business environment, firms can rely on the deep loyalty that many women earn with ongoing clients, and that create footholds for new practices.”

About the Accounting/MOVE Project Partners

The Accounting & Financial Women’s Alliance promotes the professional growth of women in accounting and finance. Members of the association benefit from opportunities to connect with colleagues, advance their careers, and become industry leaders. For 80 years, the organization has proudly upheld its mission to enable women in all accounting and related fields to achieve their full potential and to contribute to their profession. Visit www.afwa.org for more information.

Strategic communication firm Wilson-Taylor Associates, Inc., has been designing and managing national research projects that measure the progress of women in the workplace since 1998. Its methodology pivots on factors proven to remove barriers so that women can fully participate in driving business results. Led by veteran business journalist Joanne Cleaver, its current and past clients include Women in Cable Telecommunications, the Women’s Transportation Seminar, the Alliance for Workplace Excellence, SitterCity, and many others. Please see Wilson-Taylor’s portfolio of work at www.wilson-taylorassoc.com

KWC CPAs Names New Managing Principal

KWC is proud to announce that Connie Hammell has been named Managing Principal of the firm. Connie succeeds Steve Travis, who has led the firm since 2010, and is the first female Managing Principal in the Firm’s 37 year history.

Connie, who began her career with the firm in 2005 as a staff accountant, oversees the Client Advisory Services group, which provides accounting, outsourcing and technology solutions to a broad range of clients. Internally, Connie has spearheaded the development of the Firm’s coaching program which provides for focused career counseling and professional development for all staff. She feels that it is important to recognize the industry is changing and the need for professionals with a range of backgrounds and expertise will be critical to the Firm’s future.

“One of our primary goals as a firm over my term as Managing Principal was to be an appealing career destination for top level talent that would develop into the next generation of leadership. Connie is a wonderful representative of our success,” said Steve Travis, the firm’s outgoing Managing Principal. “I look forward to serving on the firm’s Executive Committee and continuing in service to clients, knowing the firm’s direction is in good hands.”

“I am excited to serve as Managing Principal of KWC,” said Connie. “I welcome the opportunity to continue Steve’s vision of expanding the strategic services the firm can provide to our clients and our long tradition of developing a firm culture that is dedicated to providing exceptional, responsive client service. In addition, I am committed to building the next generation of problem solvers who will look beyond compliance and help our clients develop and execute on their strategic objectives. “

Over the years, Connie has observed the evolving business environment and the impact that emerging technologies have on how businesses conduct their daily activities. Guided by an interest in understanding these applications and how they could be applied to her clients, she developed a passion for building cloud-based accounting systems for her clients that free up business owners and their staff to focus on achieving their own strategic initiatives. The systems that Connie and her team put in place provide timely and complete data allowing their clients to understand the financial health of their businesses and provide a baseline for growth planning.

Connie is a member of both the American Institute of Certified Public Accountants and the Virginia Society of Certified Public Accountants. She is actively involved in the Rotary Club of Alexandria as well as John Marshall Bank’s Advisory Board, First Night Alexandria’s Board of Directors and Intuit’s Accountant Council. Connie has also been instrumental in the firm’s continued recognition as a progressive workplace, including continued input on behalf of the firm for the Accounting MOVE Project’s Equity Leadership Firms annual survey. As a result, the firm has been recognized as having one of the highest percentages of female principals and managers in the nation for six consecutive years (2015 through 2020).

Congress Passes PPP Flexibility Act, Easing Restrictions

On Wednesday night the Senate passed the “Paycheck Protection Program Flexibility Act” (the Act) which now goes to the President’s desk for signature after the House approved last week. The law attempts to ease restrictions on small businesses as they seek loan forgiveness under the Paycheck Protection Program authorized by the CARES Act.

The Act:

Reduces the amount of the loan required to be spent on payroll from 75% to 60%, thus increasing the amount of funds available for other expenses from 25% to 40%. These expenses still include rent, mortgage payments, utilities, and interest on loans.  Note that this change means that if a PPP loan recipient does not meet the 60% payroll requirement, none of the loan will be forgiven.

Extends the window businesses have to use the funds from eight weeks to 24 weeks.  Any borrower who received a loan before the law’s enactment can elect to use the original eight-week covered period.

Extends the June 30 deadline to rehire workers to December 31, 2020.

Removes the CARES Act provision restricting employers who receive PPP loan forgiveness from deferring payroll taxes incurred between March 27, 2020 and December 31, 2020.

Extends the minimum loan term to five years, enlarging the two-year maturity date imposed by the SBA. This amendment to the PPP would take effect on the date of the law’s enactment and apply to any PPP loan made on or after such a date. Lenders and borrowers are not prohibited from mutually agreeing to modify the maturity terms of prior-disbursed PPP loans.

Eliminates the six-month deferral of payments due under CARES Act and replaces it with a deferral until the date on which the amount of loan forgiveness is remitted to the lender. If a borrower fails to apply for loan forgiveness within 10 months after the last day of the covered period for PPP loan forgiveness, the borrower must begin to make payments of principal and interest.

While the Act addresses many of the concerns expressed by small business since the passing of the CARES Act and the subsequent draconian guidance from Treasury and the SBA , the requirement to spend at least 60%  of loan proceeds on payroll  vs. the current partial forgiveness calculation could be problematic for some recipients.  Republican Sen. Marco Rubio of Florida, who chairs the Senate Committee on Small Business and Entrepreneurship was quoted “people need to know that the way the Treasury has told us they are going to interpret that bill — if you don’t spend 60% of your money on payroll, if you only spend 59.9%, you will get zero forgiveness.”

This bill did not address the IRS decision that denied taxpayer’s ability to deduct expenses paid for by PPP funds.

We will continue to provide additional information as it becomes available. View additional firm updates and resources related to COVID-19 anytime at https://www.kwccpa.com

Fight Internal Fraud With These Precautions

When you read in the paper that a “trusted employee” has been charged with embezzlement, it can be shocking. But then, of course, it makes sense because the theft involved a trusted employee. An employee who isn’t trusted doesn’t have much of a chance to commit fraud. (more…)

Economic Impact Payments Sent to Deceased Taxpayers – IRS Wants Its Money Back…

When Congress passed the Coronavirus Aid, Relief and Economic Security Act (CARES Act), it provided for economic impact payments of up to $1,200 per person be sent to taxpayers. When the Internal Revenue Service (IRS) issued those payments, it referred back to a taxpayer’s 2018/2019 income tax returns to see if a particular individual qualified based on their gross income in those years. One important fact was overlooked – whether the individual was still alive when the economic impact payment was issued. The IRS has now provided guidance if a deceased individual received a payment – basically, the IRS wants its money back. (more…)

Make a Lasting Charitable Gift with a CRT

The novel coronavirus (COVID-19) pandemic may have you thinking about how you can help those whose health and financial security has been imperiled by the virus. Naturally, charities fighting COVID-19 will welcome your donations now. But you may also want to think about making a more lasting gift. With a charitable remainder trust (CRT) you may be able to support a favorite nonprofit and also enjoy lifetime income and current tax benefits. Learn more about how CRT might fit into your estate plan. (more…)

Virginia Waives Interest on Income Tax Payments; Virginia Tax Payments Due June 1

Governor Ralph Northam signed into law amendments to the state budget approved at the recent reconvened session of the Virginia General Assembly. The amendments include a waiver of interest on income tax payments, so long as the payment is made on or before June 1, 2020 (the revised tax payment due date).

A recap of the important dates is as follows:

Individual and corporate income tax payments are now due June 1, 2020.

• Applies to payments originally due between April 1 and June 1, 2020.

o Individual and corporate taxable year (TY) 2019 tax due payments

o Individual and corporate extension payments for TY 2019

o First estimated income tax payments for TY 2020

• No penalties, interest, or addition to tax will be charged if payments are made by June 1, 2020.

For more details, visit https://www.tax.virginia.gov/news/coronavirus-updates

We will provide additional information as it becomes available. View additional firm updates and resources related to COVID-19 anytime at https://www.kwccpa.com.

Update on Paycheck Protection Program Loans under the CARES Act

As COVID-19 continues to impact the world, businesses and individuals are now confronting significant and unique challenges. Successful navigation of these challenges will require comprehensive planning. In addition to our traditional services, we are also offering assistance in these areas. KWC CPAs has created teams with expertise to address specific issues within recent COVID-19 legislation to help our clients meet the tax, financial, and business challenges that coronavirus is creating. We have also created timely client resources and are prepared to help you navigate these complex issues.

Services we are providing to clients currently include:

  • Assistance with Paycheck Protection Program Loans under the CARES Act (see update below)
  • Consult regarding potential loan forgiveness of Paycheck Protection Program Loans
  • Payroll tax deposit delays
  • Payroll tax credits under the Families First Coronavirus Response Act (FFCRA)
  • Employee retention credits
  • Income tax considerations for 2020 of recent COVID-19 tax laws, potential amendments of 2018 and 2019 tax returns to apply for refunds.
  • Recovery rebates
  • Unemployment Benefits (see update below)
  • Small Business Administration (SBA) Economic Injury Disaster Loans

Paycheck Protection Program Loans under the CARES Act

This program has been of great interest by our business and sole proprietor clients. The legislation is very complex, but an understandable summary is provided here by the US Chamber of Commerce.

https://www.uschamber.com/sites/default/files/023595_comm_corona_virus_smallbiz_loan_final.pdf

Banks are currently working with the SBA to administer these loans. To our knowledge at this moment, there is not an application form for this loan available. But you can and should be gathering documentation we anticipate will be required.

Those interested and eligible to apply for the loans should be gathering the following information:

  • Calculate the average monthly payroll costs as defined in the Act for the last 12 months. This is in many cases a complex process due to the definitions of payroll costs in the Act including limitations on compensation over $100,000 to each employee/contractor. Once average monthly payroll costs are calculated that amount multiplied by 2.5 is the maximum amount of loan that can be requested. Note that many conditions apply to the amount of the loan that may end up being forgiven.
  • Determine how many full-time equivalent employees/contractors you had from February 15, 2019 to June 30, 2019 and from January 1, 2020 to February 29, 2020. The lower of the two will be used in loan forgiveness calculation. The average number of full-time equivalent employees is determined by calculating the average number of full-time equivalent employees for each pay period falling within a month.
  • Create a budget for all expenses that commenced 2/15/2020 and run until 6/30/2020. This budget should be as detailed as possible and include all operating costs (Payroll, Insurance, Utilities, Rent/Mortgage Interest, etc.).
  • Complete SBA Form 1919 (pages 2 and 3 only)
  • Gather all organizational documents such as Articles of Incorporation or Formation and any amendments, By-laws, LLC & partnership operating agreements, minutes of all owners meetings for the past two years, any buy/sell agreements, stock certificates, stock register/ledger, etc., schedule of ownership for LLCs & partnerships, etc.

Expansion of Unemployment Benefits by the CARES Act

Under Section 2014 of the Act, individuals who are otherwise eligible for unemployment benefits under state or federal law will receive $600 per week, in addition to their regular unemployment compensation under state law, through July 2020.

Under Section 2105, if a state waives its standard one-week waiting period requirement, thus paying recipients as soon as they become unemployed, the federal government will fund the cost of that first week of benefits.

Under Section 2107, if individuals remain unemployed after their state employment benefits are exhausted, the federal government will fund up to 13 weeks of additional unemployment benefits – thereby increasing to 39 weeks the 26-week maximum common under most states’ unemployment laws – at a weekly rate of $600 during that 13-week period.

Under Sections 2108 and 2109, the Act will provide funding to states that currently have or choose to implement a Short-Time Compensation (STC) program for employers that reduce their employees’ hours in lieu of a lay-off and whereby the employees thus receive a pro-rated unemployment benefit. The federal government will fund 100% of the costs for states that currently have a STC program and 50% for those states that choose to implement one, in each case through Dec. 31, 2020.