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.
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.