COVID-19 immediate assistance

Available for many small businesses, including sole proprietors or independent contractors with fewer than 500 employees:
3.75% 30-year loan program that comes with an up to $10,000 forgivable cash advance (emergency EIDL grant) COVID-19 ECONOMIC INJURY DISASTER LOAN (EIDL) APPLICATION

Update: June 2020. It may take several weeks before the emergency cash advance to be awarded, and even longer for the loan application to be processed. After about two months, applicants can check on the status by called SBA 800-659-2955 #2.

Update: April 16, 2020. SBA is not accepting EIDL applications, saying that the $10 billion in funding has dried up.
“SBA is unable to accept new applications at this time for the Economic Injury Disaster Loan (EIDL)-COVID-19 related assistance program (including EIDL Advances) based on available appropriations funding.
Applicants who have already submitted their applications will continue to be processed on a first-come, first-served basis.”

Caution: While the new law does not limit a borrower to having only one loan, the Administrator has determined, in consultation with the Secretary, that there will be only one loan per borrower approved (yet, we have heard that some businesses have already received more than one loan). Therefore, you should consider applying to the loan (3.75% EIDL or 1% PPP) that is most beneficial to you and has the best chance of approval. Update: The PPP loan application indicates that an April 3, 2020 outstanding balance of an EIDL may be rolled into and refinanced with a PPP. This leaves open the situation where the EIDL was not approved until after April 3^rd.

Refinance an EIDL into a PPP loan.
The SBA says that EIDL received up through 4/3/2020 may optionally (or mandatorily if the EIDL was spent on payroll costs) be refinanced into a PPP. It is not clear what the status is for EIDL granted after 4/3/2020.

CARES Act Sec 1102(a)(2)(E)(i)(I)(bb) the outstanding amount of a loan under subsection (b)(2) that was made during the period beginning on January 31, 2020 and ending on the date on which covered loans are made available to be refinanced under the covered loan; or

SBA Interim Final Rule (1)(III)(2)(r)(vii). refinancing an SBA EIDL loan made between January 31, 2020 and April 3, 2020. If you received an SBA EIDL loan from January 31, 2020 through April 3, 2020, you can apply for a PPP loan. If your EIDL loan was not used for payroll costs, it does not affect your eligibility for a PPP loan. If your EIDL loan was used for payroll costs, your PPP loan must be used to refinance your EIDL loan. Proceeds from any advance up to $10,000 on the EIDL loan will be deducted from the loan forgiveness amount on the PPP loan

Federal Register: III(1)(b)(iv)(i)(d)(v). Refinancing an SBA EIDL loan made between January 31, 2020 and April 3, 2020 (maturity will be reset to PPP’s maturity of two years). If you received an SBA EIDL loan from January 31, 2020 through April 3, 2020, you can apply for a PPP loan. If your EIDL loan was not used for payroll costs, it does not affect your eligibility for a PPP loan. If your EIDL loan was used for payroll costs, your PPP loan must be used to refinance your EIDL loan. Proceeds from any advance up to $10,000 on the EIDL loan will be deducted from the loan forgiveness amount on the PPP loan.

https://www.sba.gov/sites/default/files/2020-06/How-to-Calculate-Loan-Amounts-508.pdf

Message from the SBA after their computer crashed losing all submitted applications that were not yet backed-up – “Please note the application process for the EIDL program was updated March 30. For those who submitted a COVID-19 EIDL application prior to March 30, unless you have already been approved or are currently working with a loan officer, you should re-apply using the new streamlined application [link] if you have not done so already. The new application is streamlined and faster. Approval notification is estimated at approximately three days.”

Update: Developments during the second week of April: SBA is projecting three weeks until contacting EIDL applicants. But according to an email bulletin sent Monday by the SBA’s Massachusetts District Office, (the controversial link has since been taken down) “EIDL Loan advances will start to be distributed this week. $1,000 per employee up to $10,000 max.” For applicants with fewer than 10 employees, that could mean considerably less than they were planning on. However, the SBA’s main office still hasn’t publicly confirmed that the advances will be scaled down for smaller companies. As of April 7^th, spokespeople for the agency have not responded to multiple requests for clarification. Secretary of the Treasury, Steven Mnuchin, said on Wednesday April 8th that money for PPP loans will be there for small businesses and that he expects Congress to appropriate additional funds later this week.

Update: On April 9^th, Senator Brian Schatz (HI) Senate Banking Housing and Urban Affairs Committee said that unfortunate limitations and changes are being made to EIDL Grants due to the overwhelming interest and high demand by small businesses.

Update: On April 14^th, an email sent to EIDL applicants arriving from news@updates.sba.gov regarding the $10,000 advance:

Dear Applicant,

On March 29, 2020, following the passage of the CARES Act, the SBA provided small business owners and non-profits impacted by COVID-19 with the opportunity to obtain up to a $10,000 Advance on their Economic Injury Disaster Loan (EIDL). The Advance is available as part of the full EIDL application and will be transferred into the account you provide shortly after your application is submitted. To ensure that the greatest number of applicants can receive assistance during this challenging time, the amount of your Advance will be determined by the number of your pre-disaster (i.e., as of January 31, 2020) employees. The Advance will provide $1,000 per employee up to a maximum of $10,000.

You may be eligible for another loan program, the Paycheck Protection Program, which is available through participating lenders. Below is a comparison of the two loan programs:

Paycheck Protection Program Full EIDL Loan

PURPOSE	Forgivable if used for payroll (minimum of 75% of the funds received) and the remaining for certain operating expenses (amount of any EIDL advance is not forgivable)	To meet financial obligations and operating expenses that could have been met had the disaster not occurred (amount of any EIDL advance is forgiven)
TERMS	Up to $10 million 1% interest rate	Up to $2 million 3.75% for businesses 2.75% for non-profits
FORGIVABLE	YES	NO – EIDL Loan YES – EIDL Advance
MATURITY	2 years	30 years
FIRST PAYMENT DUE	Deferred 6 months	Deferred 1 year

To locate a Paycheck Protection Program Lender, please visit: www.SBA.gov/PaycheckProtection.

Information on available resources may be found at www.sba.gov/coronavirus. For more information on these services, please go to www.sba.gov/local-assistance to locate the email address and phone number for the nearest SBA district office and/or SBA’s resource partners.

Editorial: After reading the above email from the SBA, it appears that they have just retroactively made up this new $1,000 per employee limitation. There is no requirement in the law that W-2 employees to be paid by the small business concern (self-employed person) who applied for the emergency loan including the emergency 3-day advance to help cover upcoming rent and debt payments.

(e) EMERGENCY GRANT.— (1) IN GENERAL.—During the covered period, an entity included for eligibility in subsection (b), including small business concerns, private nonprofit organizations, and small agricultural cooperatives, that applies for a loan under section 7(b)(2) of the Small Business Act (15 U.S.C. 636(b)(2)) in response to COVID–19 may request that the Administrator provide an advance that is, subject to paragraph (3), in the amount requested by such applicant to such applicant within 3 days after the Administrator receives an application from such applicant. (2) VERIFICATION.—Before disbursing amounts under this subsection, the Administrator shall verify that the applicant is an eligible entity by accepting a self-certification from the applicant under penalty of perjury pursuant to section 1746 of title 28 United States Code. (3) AMOUNT.—The amount of an advance provided under this subsection shall be not more than $10,000. (4) USE OF FUNDS.—An advance provided under this subsection may be used to address any allowable purpose for a loan made under section 7(b)(2) of the Small Business Act (15 U.S.C. 636(b)(2)), including— (A) providing paid sick leave to employees unable to work due to the direct effect of the COVID–19; (B) maintaining payroll to retain employees during business disruptions or substantial slowdowns; (C) meeting increased costs to obtain materials unavailable from the applicant’s original source due to interrupted supply chains; (D) making rent or mortgage payments; and (E) repaying obligations that cannot be met due to revenue losses. (5) REPAYMENT.—An applicant shall not be required to repay any amounts of an advance provided under this subsection, even if subsequently denied a loan under section 7(b)(2) of the Small Business Act (15 U.S.C. 636(b)(2)).

This is what the Emergency EIDL grant might look like on your checking account:
(this item below was for EIDL application #1,000,XXX submitted on April 1, 2020. They are processing applications one day after the SBA performs a hard hit on your Experion FICO credit file)

(EIDL application #1,500,XXX submitted on April 2, 2020. received its emergency $10,000 on April 28^th)

(EIDL application #1,850,XXX submitted on April 3, 2020. received its emergency $10,000 on April 29^th)

Scheduled for:	04/23/2020
Description:	ACH CREDIT SBAD TREAS 310 MISC PAY NTEPMTEIDG 330## ##### In-process
Amount:	$10,000.00
Transaction type:	DEPOSIT

This is what the follow-on EIDL might look like in your email box:
(this item below was for EIDL application #1,000,XXX submitted on April 1, 2020. The email was received May 22, 2020 with a Subject line: “SBA Application No. 3301000XXX – Submitted Confirmation)
(this item below was for EIDL application #1,500,XXX submitted on April 2, 2020. The email was received May 23, 2020 with a Subject line: “SBA Application No. 3301000XXX – Submitted Confirmation)

Create your SBA Economic Injury Disaster Loan Portal Account

Your SBA Application No. 3301000XXX is ready for the next step. Create your SBA Economic Injury Disaster Loan Portal account to provide additional details or requested documents.

Create Account

Questions? We’re here to help. Call us at 1-800-659-2955 | TTY/TTD: 1-800-877-8339.Office of Disaster Assistance
U.S. Small Business Administration
disastercustomerservice@sba.gov

This is what the follow-on EIDL might look like on your checking account:
(this item below was for EIDL application #1,000,XXX submitted on April 1, 2020. and after the SBA Economic Injury Disaster Loan Portal Account was created on May 22, 2020)

Scheduled for:	06/01/2020
Description:	ACH CREDIT SBAD TREAS 310 MISC PAY RMTCT########## ### ##### F####* *\ In-process**
Amount:	$1,000,000.00
Transaction type:	DEPOSIT

Minority-owned and women-owned small business HEDCO CT forgivable 0% $20,000 application for COVID-19 Business Response Program Line of Credit

Please read more about the Paycheck Protection Program (1% 2-year PPP Section 7(a) loan) and Economic Injury Disaster Loan (3.75% 30-year EIDL) further below.

“Are you talking about the new normal of an hour ago,
or is there a new new normal right now”
The New Yorker Jon Adams

Federal stimulus payment recovery rebate information

IRS will issue a recovery rebate of $1,200 per taxpayer plus $500 for each qualifying dependent child (who is under age 17) based on the amount of AGI from your 2020 tax return. An advance payment will be made during 2019, based on your 2019 tax return, or if that is not available, based on your 2018 tax return or if that is not available, based on your 2019 Form SSA-1099. Any shortfall noticed once the 2020 tax return is filed, will likely be paid at that time. Any over-payment that is noticed once the 2020 tax return is filed, will likely not be clawed back.

IRS will be issuing additional advice in April for people who are not required to file tax returns.

In the case of a single taxpayer or married filing separate, the rebate is reduced by 5% of the amount of AGI over $75,000.
In the case of a Head-of-Household taxpayer, the rebate is reduced by 5% of the amount of AGI over $112,500.
In the case of married jointly taxpayers, the rebate is reduced by 5% of the amount of AGI over $150,000.

For purposes of this title, the credit allowed under this section shall be treated as a credit allowable under subpart C of part IV of subchapter A of chapter 1 and therefore it is a refundable credit, even if you have no tax assessed for the year.

CARES Act FAQs for Recovery Rebate Checks

Updated: April 22, 2020 IRS FAQs for Recovery Rebate Checks

Update: April 8, 2020 – direct deposits are now scheduled for April 14^th. Paper checks are scheduled to hit the U.S. Mail starting April 20^th.

Tip: Taxpayers who have not yet filed their Form 1040 tax return may need to see of they would qualify for a larger recovery rebate based on 2018 or on 2019 or on their SSA-1099 and then file a lower yielding tax return only after the recovery rebate money is in their hands.

Tip: Married taxpayers who have not yet filed their Form 1040 tax return may need to see of they would qualify for a larger recovery rebate by filing married-separate rather than married joint due to one spouse being under the phase-out. But they also need to see if any resulting increase in federal and state tax more than offsets the increased recovery rebate.

Update: April 10, 2020 – If you don’t usually file a tax return, submit your information here to get the Economic Impact Payment.

Direct deposits have started hitting taxpayer accounts late Friday, April 10, 2020. On April 13, Secretary of the Treasury, Steven Mnuchin, said that most direct deposit payments will have been distributed by April 15^th. Paper checks will begin to those with lower AGI, who will receive payments earlier than those with higher AGI (with the highest AGI folks getting their payment as late as September.

Treasury wants stimulus payments to decedents prior to 2020 to be repaid.

The recovery rebate payments seem to be sent out in this order:

If you did not file Form 1040 for 2019, but did file for 2018 AND you had a refund directly deposited into your bank account.
If you did file Form 1040 for 2019 AND you had a refund directly deposited into your bank account.
If you did not file Form 1040 for 2019 nor for 2018, but did have normal monthly retirement Social Security payments directly deposited into your bank account.
After the above, then paper checks are going out, starting with 2018 or 2019 AGIs under $1 and working their way up to AGIs up to $198,000, which are expected to be completed by mid-September 2020.

If you lost your EIP debit card, call the IRS 800-240-8100 (choose option 2, after selecting your language preference)

Update: April 15, 2020 – IRS online tracking tool called Get My Payment shows the status of your payment, including the date your payment is scheduled to be deposited into your bank account or mailed to you. An additional feature on Get My Payment is expected to allow eligible people a chance to provide their bank account information so they can receive their payment more quickly rather than waiting for a paper check.

Update: May 13, 2020 the IRS has stopped using banking information submitted through the website. Mailing of physical checks to the last known address will continue.

A response might look like this:

Payment Status

Bank Account Number: ************####

If you don’t see your payment credited to your account, check with your bank to verify they received it. We will mail you a letter with additional information on this payment.

If you need additional help or do not receive your payment, please visit our Frequently Asked Questions page.

This is what the Recovery Rebate might look like on your checking account compared to what a Social Security deposit might look like:

Scheduled for:	04/15/2020
Description:	ACH CREDIT IRS TREAS 310 TAX REF 200415 In-process
Amount:	$2,400.00
Transaction type:	DEPOSIT

Scheduled for:	04/15/2020
Description:	ACH CREDIT SSA TREAS 310 XXSOC SEC 200415 In-process
Amount:	$X,XXX.00
Transaction type:	DEPOSIT

For security reasons, the IRS plans to mail a letter about the economic impact payment to the taxpayer’s last known address within 15 days after the payment is paid. The letter will provide information on how the payment was made and how to report any failure to receive the payment. If a taxpayer is unsure they’re receiving a legitimate letter, the IRS urges taxpayers to visit IRS.gov first to protect against scam artists.

An alternative response might look like this:

You are eligible for this payment. We do not have enough information to direct deposit your payment at this time.

Direct deposit is the fastest way to receive your payment.

If you would prefer to receive a check or cannot provide us with this information, we will mail your check to the address we have on file for you. If you need additional help, visit our Frequently Asked Questions page.

Then you enter your bank information, AGI and other personal data:
(you are forced to answer that you either received a refund or owed money, even if neither of these are true)

Bank Account Information

You have chosen to have your payment direct deposited into your bank account.

If you need additional help, please visit our Frequently Asked Questions page.

All fields marked with an * (asterisk) are required.

Additional Verification Information

Tools on IRS.gov to Get Your Economic Impact Payment (use this chart for help finding a missing payment)

Update: May 22, 2020 – taxpayer with a 2018 AGI of $37,000 received the $2,400 check by mail on May 22, 2020.

House Democrats propose $2,000 monthly payments to Americans

IRS Get My Payment FAQ

Updated: July 21, 2020 a second round of recovery rebate stimulus checks is being talked about for taxpayers with AGIs less than $40,000. A bill may be introduced this week giving details.

Updated: July 22, 2020 the second round of $1,200 recovery rebate stimulus checks has been agreed to by (Dem) Pelosi and (Rep) McConnell and (Pres) Trump. Aid to schools including universities to help them reopen ASAP. Another round of PPP loans targets to restaurants and other hard-hit businesses. Aid to state and local governments. An extension of the $600/week FPUC through January 2021 ($15,600 per unemployed worker). Businesses and School systems liability shield (calling for a higher legal standard) to protect them against lawyers suing for negligence and COVID-19 illnesses. There is no possibility of a payroll tax cut for workers and their employers with this CARES 4.0, but perhaps later there will be with CARES 5.0. The CARES 4.0 bill is expected this week.

Federal tax return filing information

On April 9^th IRS amplified previous advice dated March 20^th which superseded previous advice (dated March 18^th) and CT as well have now postponed the filing of 2019 tax returns normally due on April 15, 2020 until July 15^th. Taxpayers are not required to file an extension request to qualify for the postponed tax filing or payment dates.

While the Form 1040 taxpayers’ filing date was postponed three months from April 15, 2020 until July 15, 2020, the IRS mandate to pay refunds of Form 1040 over payments remained at 45 days from date of filing or April 15th, whichever is later. Therefore taxpayers may file on July 15, 2020 and because the refund was not paid by June 1, 2020 (six weeks earlier than it was requested by the taxpayer), the taxpayer will be paid interest from April 15, 2020 on any refund eventually claimed and paid by the IRS.

CT has postponed the filing of some 2019 tax returns normally due on March 15, 2020 until April 15^th. Taxpayers were not required to file an extension request to qualify for the postponed tax filing or payment dates.

CT has further “extended” the filing of certain 2019 tax returns and payments until July 15^th. Taxpayers are not required to file an extension request to qualify for the postponed tax filing or payment dates.

Generally, all states are following the July 15^th federal due date postponement except for the following: NC, NH, NJ and VA.

IRS has ~~unofficially~~ addressed the April 15, 2020 due date for filing an extension request to October 15^th, effectively saying:

“If you properly estimate your 2019 tax liability using the information available to you and file an extension form by July 15, 2020, your tax return will be due on October 15, 2020. To ~~avoid~~ [help mitigate or even avoid] interest and penalties when filing your tax return after July 15, 2020, pay the tax you estimate as due with your extension request.”

Filing and Payment Deadlines Questions and Answers

Filing and Payment Deadline Extended to July 15, 2020 – Updated Statement

Treasury and IRS Issue Guidance on Deferring Tax Payments Due to COVID-19 Outbreak

April 7, 2020 AICPA Tax Filing FAQs

April 9, 2020 IRS Notice 2020-23
May 27, 2020 IRS FAQ updated for Notice 2020-23

May 28, 2020 IRS Notice 2020-35

April 9, 2020 IRS extends more tax deadlines to cover individuals, trusts, estates corporations and others

April 9, 2020 CT CPAs Coronavirus: Tips and Help for Individuals

April 9, 2020 CT CPAs Coronavirus: Tips and Help for Businesses

April 9, 2020 RubinBrown LLP COVID-19: Notice 2020-23

The IRS is not currently able to process individual paper tax returns. If you already have filed via paper but it has not yet been processed, do not file a second tax return or write to the IRS to inquire about the status of your return or your economic impact payment. Paper returns will be processed once processing centers are able to reopen.
IR-2020-68, April 9, 2020

Federal income tax payment information

On April 9^th IRS amplified previous advice dated March 20^th which superseded previous advice (dated March 18^th) and has now postponed (interest free) until July 15^thmost tax payments of 2019 tax normally due on April 15, 2020 and most 2020 estimated taxes normally due on April 15, 2020 & June 15, 2020 for the first & second 2020 estimated tax payment installments.

CT has postponed the tax payments of some 2019 taxes normally due on April 15, 2020 until June 15^th.

Automated debits (tax payments) originally scheduled to happen on April 15^th will not be automatically changed to July 15^th. Therefore, to delay the debiting of your bank account: call IRS e-file Payment Services 24/7 at 1-888-353-4537 to inquire about or cancel your payment, but please wait 7 to 10 days after your tax return was accepted before calling. Cancellation requests must be received no later than 11:59 p.m. ET two business days prior to the scheduled payment date of April 15^th. Pay Taxes by Electronic Funds Withdrawal

IRS will be allowing automated debits to happen on July 15^th in lieu of April 15^th, if so requested by the efile practitioner at the time the efile is initially sent to IRS. IRS unveils new People First Initiative; COVID-19 effort temporarily adjusts, suspends key compliance program.

CT has “extended” the filing of certain 2019 tax returns and payments until July 15^th. Taxpayers are not required to file an extension request to qualify for the postponed tax filing or payment dates.

Coronavirus information

Effective March 20, 2020 the IRS has temporarily ceased allowing any face-to-face service throughout the country until further notice.

Effective March 20, 2020 the IRS has temporarily closed the Fresno offices.

Effective March 30, 2020 the IRS has issued an evacuation notice for virtually all their employees.

https://www.coronavirus.gov/

https://clinicaltrials.gov/

National Institutes of Health’s Coronavirus (COVID-19) page

IRS’s Coronavirus Tax Relief page

IRS’s Taxpayer Advocate Service COVID-19 Tax Updates page

IRS’s People First Initiative page

IRS’s Filing and Payment Deadlines Questions and Answers page

CT’s Coronavirus Disease 2019 page

CT’s COVID-19 RESPONSE: FREQUENTLY ASKED QUESTIONS page

Recent legislation

March 6, 2020 Phase 1 bill is $8.3 billion bill for coronavirus vaccine research and development, obtaining more coronavirus test kits and providing loan subsidies for small businesses.

March 18, 2020 Phase 2 bill is $104 billion providing 2 weeks of paid emergency sick leave and family leave for some workers, as well as boosting aid for state unemployment insurance and food assistance and no-cost coronavirus testing. Clarifications.

March 27, 2020 Phase 3 bill is $2.2 trillion + $4 trillion providing medical facilities (hospitals) and equipment, healthcare worker protections, payments to state and local governments to help mitigate effects of the pandemic on their communities, an increase of up to $600 per week in a worker’s unemployment benefits for up to 4 months and some related benefits for gig economy workers, up to a $1,200 stimulus payment to many adult taxpayers and $500 to many child dependents payable on April 6^th and again on May 18^th, more food assistance, more small business loans, payments to support the airline, hotel, casino and maybe cruise line industries and to support shopping mall operators.

April 23, 2020 Phase 3, part II bill is $484 billion for an additional $320 billion for the Paycheck Protection Program; $75 billion for hospitals and health care providers to address coronavirus expenses and lost revenue; 25 billion to facilitate and expand Covid-19 testing; and $64 billion for the SBA disaster relief fund.

April 3, 2020 Phase 4 bill mentioned by Mitch McConnell will need to focus on healthcare. Nancy Pelosi called for a relief package focused to address immediate needs related to the coronavirus pandemic including more money to aid states, cities and small businesses, expanded unemployment benefits and another round of direct cash payments for Americans. Industry leaders suggest future funding to be earmarked for small businesses with under 20 employees, observing that a lion’s share of the funds so far have gone to larger employers who have established banking relationships and their own lawyers to grab the initial round of money.

May 12, 2020 Phase 4 bill as mentioned by House Democrats is to include $500B to aid states and cities. $75B for testing for COVID-19. Another round of $1,200 direct cash payments for individuals (up to $6,000 per family). $200B for hazard pay to essential workers. $25B for the U.S. Post Office. Additional funding for $600 weekly unemployment payments to extend it from July to January. $10,000 of forgiveness of Student Loan Debt. $50B for farmers. $175B for rent, mortgage and utilities assistance. More funds for Medicare for those who lose their employer-sponsored health care. Republicans prefer providing payroll tax cuts for employees, Tax breaks for corporations and other businesses such as Meals & Entertainment (to support the failing restaurant and entertainment industries). Elimination of the long-term capital gains tax. Further postponement beyond the July 15, 2020 for 2019 tax returns and tax payments.

May 27 2020 Phase 3, part III repair bill as mentioned by Senate members is to extend period of PPP loan forgiveness from 8 weeks to 24 weeks and adjust and clarify the 75% payroll requirement by making it 60%.
Fear / Danger: is that businesses are being asked to borrow and pay idle workers with PPP loan proceeds today, expecting forgiveness of the loan in the near future – but changes and “interim final rules” are constantly changing, meaning that those dollars borrowed and paid out today, might never be forgiven, thereby straddling the businesses with substantial debt, due in two years, which will drive them into bankruptcy, thereby forcing the complete closure of their business.

Phase 1 Public Law H.R. 6074 13 page Coronavirus Preparedness and Response Supplemental Appropriations Act, 2020

Phase 2 House Bill H.R. 6201 112 page Families First Coronavirus Response Act (FFCRA)

Phase 3 House Act H.R. 748 883 page Coronavirus Aid, Relief, and Economic Security Act (CARES Act)

Phase 3 House Act H.R. 748 335 page Coronavirus Aid, Relief, and Economic Security Act (CARES Act)

Phase 3 Senate Bill S. 3548 247 page CARES Act (36 page Summary)

Phase 3, part II House Act H.R. 266 11 page Paycheck Protection Program and Health Care Enhancement Act

Phase 4 House Act H.R. 6800 1,815 page Health and Economic Recovery Omnibus Emergency Solutions Act (HEROES Act)

Phase 3, part III House Act H.R. 7010 3-page Paycheck Protection Program Flexibility Act of 2020 (PPPFA)
Update: June 8, 2020 Joint Statement by Treasury Secretary Steven T. Mnuchin and SBA Administrator Jovita Carranza Regarding Enactment of the Paycheck Protection Program Flexibility Act

Information about benefits for employees and employers

Payroll Retention tax credit of up to $5,000 per employee – Small employers with fewer than 500 employees can be provided 50% of the funds needed to provide their employees with paid leave, either for the employee’s own health needs or to care for family members. This legislation enables employers to keep workers on their payrolls while at the same time ensuring that workers are not forced to choose between their paychecks and the public health measures needed to combat the virus. Families First Coronavirus Response Act.

Updated: June 4, 2020. The Paycheck Protection Program Flexibility Act of 2020 (PPPFA) lifted the ban of payroll tax deferral for PPP borrowers whose loans were partially or completely forgiven from deferring payment of payroll taxes. The payroll tax deferral would now be available to all PPP borrowers.

Updated: June 22, 2020. IRS has FAQ posted here: Deferral of employment tax deposits and payments through December 31, 2020

For COVID-19 related reasons, employees may receive up to 80 hours of paid sick leave and expanded paid child care leave when employees’ children’s schools are closed or child care providers are unavailable.

New Draft Form 941 reflecting the COVID-19 changes

An enhanced unemployment benefit of an additional $600 per week of Federal Pandemic Unemployment Compensation (FPUC) may result in some employees actually getting paid more money by choosing to be unemployed, rather than continuing to work at a paying job. The extra federal $600 per week lasts approximately four months or through July 31, 2020, TBD.

This is what the FPUC weekly payment might look like on your checking account:

Scheduled for:	06/02/2020
Description:	ACH CREDIT XXDOL UNEMP COMP XXX 200602 In-process
Amount:	$600.00
Transaction type:	DEPOSIT

Pandemic Unemployment Assistance (PUA) makes federal funds available to those not eligible for state unemployment insurance such as self-employed and independent contractors.

Pandemic Emergency Unemployment Compensation (PEUC) pays an additional 13 weeks after the first 26 weeks are paid through normal state unemployment insurance.

IR-2020-57, March 20, 2020.

N-2020-21, March 27, 2020.

N-2020-22, March 31, 2020.

The employer’s share of payroll taxes will be suspended for two years and other delays on various types of taxes will help ease the burden of tax payments on small businesses. Unfortunately, this provision will severely curtail the growth in the earmarked funds used to pay monthly Social Security to retirees, accelerating the date at which the fund runs out of money to pay retirement benefits.

A drafting error in the 2018 tax act was also corrected to allow a full 100% write-off of certain business fixed assets.

IRC Section 139 business deductible disaster relief payments that are tax-free to your employees (possibly even employees who are your family members)

Sec 139 payments to employees are deductible by the employer, but are tax-free to the employee.
Such “relief payments” generally are any amount paid to or for the benefit of an individual –

to reimburse or pay reasonable and necessary personal, family, living, or funeral expenses incurred as a result of a qualified disaster,
to reimburse or pay reasonable and necessary expenses incurred for the repair or rehabilitation of a personal residence or repair or replacement of its contents to the extent that the need for such repair, rehabilitation, or replacement is attributable to a qualified disaster,
by a person engaged in the furnishing or sale of transportation as a common carrier by reason of the death or personal physical injuries incurred as a result of a qualified disaster, or
if such amount is paid by a Federal, State, or local government, or agency or instrumentality thereof, in connection with a qualified disaster in order to promote the general welfare, but only to the extent any expense compensated by such payment is not otherwise compensated for by insurance or otherwise.

If an employer has a Section 139 plan and there is a disaster such as with coronavirus and the employer wishes to pay for certain types of related expenses that the employee is incurring then the employer gets a deduction and employee has no taxable income.

Sec 139 does not seem to have a related parties limitation. But, there is a 139(h) Denial of double benefit
“Notwithstanding any other provision of this subtitle, no deduction or credit shall be allowed (to the person for whose benefit a qualified disaster relief payment or qualified disaster mitigation payment is made) for, or by reason of, any expenditure to the extent of the amount excluded under this section with respect to such expenditure.” Therefore, there may be an issue with an S-Corp paying an owner-employee if it were to be determined that the s-corp shareholder is getting a tax deduction and the related party employee is getting tax-free income? Or does 139(h) refer to the employee getting tax-free income therefore he cannot tax a tax deductions for anything he spends that money on?

One other hurdle is that such payments cannot be as replacement for income.

The Internal Revenue Service allows employers to assist employees experiencing the effects of certain disasters. This is allowed under Internal Revenue Code section 139. That code section was added under the Victims of Terrorism Tax Relief Act of 2001. Section 139 outlines the requirements for employers who wish to assist employees in a tax efficient manner. The efficiency in this context works for everyone – the employers can make deductible payments to impacted employees, which the recipients do not have to include in their taxable income.

The key concept of section 139 is that “qualified disaster relief payments” are not included in income, which means that said payments are not taxable for the recipients. Indeed, section 139(a) simply states “[g]ross income shall not include any amount received by an individual as a qualified disaster relief payment.” What makes the code section even more appealing is that the payments are deductible for employers, as if they were normal compensation. For simplicity, qualified disaster relief payments “shall not be treated as net earnings from self-employment, wages, or compensation subject to tax” in reference to employment taxes.

Employees affected by these disasters are eligible for employer-provided payments under Section 139. However, the payments can only be made for certain purposes – it is not enough for employees to simply have been impacted by the disaster. A qualified disaster relief payment is an amount paid to (or for the benefit of) qualifying employees.

Example: set up a 139 plan for (three) employees to reimburse them for home office costs such as (modest) portions of rent, utilities, home internet service and a portion of personal cellphone for when they are working at home.

Sub (b) of 139 lays out the conditions for what is a qualified disaster relief payment and nothing there seems to indicate any issue with an S-Corp owner either.

Note, 139(d) excludes such payments as net earnings from self-employment. Even if you want to somehow say that 139 would exclude a self-employed person, such as a S-Corp owner, why then would 139(d) exclude it from SE taxes?

Rev. Rul. 2003-12

https://www.pgdc.com/

Articles discussing IRC Section 139

Tax Loophole Allows Tax-Free COVID-19 Payments to Employees

Little-Known Tax Law Allows Employers To Make Tax-Free Payments To Employees To Cover Covid-19 Expenses

Update: July 9, 2020 COVID-19-Related Tax Credits: How to Claim the Credits FAQs

Payroll Protection (Loan) Programs (PPP)

2-year 1.0% loan for the lesser of up to $10 million or 2.5 times average monthly payroll costs (not including independent contractor payments) incurred during calendar year 2019 (calculations for seasonal and new business can vary)

First monthly loan repayment starts 6-months later (interest accrued immediately). Prepayments are allowed.

Eligibility: Small businesses in all U.S. States and territories, including sole proprietors or independent contractors and eligible self-employed individuals with fewer than 500 employees.

Use of borrowed funds limited to: Paying payroll (up to $100K per employee) and related benefits, interest on mortgage payments or other debt obligations, rents and utilities.

Prohibited use of borrowed funds: Anything not mentioned in the item above PLUS (an EIDL may be eligible to be refinanced into a PPP loan)

Collateral: No collateral from business or its owners.

Loan guarantees: None.

SBA Bulletin 4/3/2020

April 14, 2020, 19 page PDF Business Loan Program Temporary Changes; Paycheck Protection Program – Additional Eligibility Criteria and Requirements for Certain Pledges of Loans

April 14, 2020, 31 page PDF Business Loan Program Temporary Changes; Paycheck Protection Program

April 15, 2020, 31 page PDF Business Loan Program Temporary Changes; Paycheck Protection Program

June 19, 2020, 13 page PDF Business Loan Program Temporary Changes; Paycheck Protection Program Revisions to the Third and Sixth Interim Final Rules

Update: April 16^th SBA is not accepting PPP applications, saying that the $349 billion in funding has dried up.
“The SBA is currently unable to accept new applications for the Paycheck Protection Program based on available appropriations funding. Similarly, we are unable to enroll new PPP lenders at this time.”

Update: May 10^th Arrests made for conspiring to illegally obtain funds through the Payroll Protection Program.

FRIENDLY & COOPERATIVE LENDERS:

Bluevine says that they are an official direct non-bank lender that may be able to process your PPP loan application. When your business is providing information for the qualification process for credit, Bluevine asks for your name, address, and other information to identify you and your business. They may also ask for a driver’s license or other identifying documents. You may also submit financial information from your business banking accounts. To help the U.S. government fight the funding of terrorism and money laundering activities, Federal law requires that financial institutions obtain, verify, and record information that identifies each individual or institution that opens an account or establishes a customer relationship. Additionally, Bluevine uses this information for its decisions and to monitor the performance of customers on an on-going basis. With the Service, you may direct Bluevine to retrieve such business information maintained online or otherwise by third-party financial institutions or organizations authorized to house such information.

SmartLenders NYMBUS says that billions of dollars in PPP relief funds are still available. Apply now. Our teams continue to work around the clock to ensure that every loan application is prepared and submitted to the SBA for the current round of funding. Comment from a customer: My bank was not giving PPP loans anymore… SmartLenders was a pretty easy process and I had no prior relationship with them.

This is what the PPP loan might look like on your checking account:
(this item below was for a PPP application by a self-employed individual who had no employees, submitted on April 30, 2020 and approved and disbursed one day later)
The loan amount is computed: $100,000.00 / 12 = $8,333.33 (truncated to $8,333) * 2.5 = $20,832.50 (truncated to $20,832)

Scheduled for:	05/01/2020
Description:	CREDIT MEMO PPP LOAN DISBURSE #### In-process
Amount:	$20,832.00
Transaction type:	DEPOSIT

Updated: July 21, 2020 another round of PPP loans limited to critically hurt industries is being talked about. A bill may be introduced this week giving details .

Updated: December 8, 2020 for some calculations needed for forgiveness applications:

($100.000 / 52)*8 = $15,384 original owner “8-weeks wage” limit

($100.000 / 12)*2.5 = $20,833 maximum loan amount

($100.000 / 52)*24 = $46,153 revised owner “24-weeks wage” limit

PPP – Small business and sole proprietorship business loans & grants information

This program is for many small businesses with less than 500 employees (including self-employed individuals, sole proprietorships and independent contractors), affected by coronavirus/COVID-19.

The amount borrowed is limited to the lower of $10M or 2.5 times your average monthly payroll costs (these costs include salaries, wages, commissions, employee benefits such as health care, and net earnings from self-employment or other similar compensation)

The CARES Act permits the PPP’s forgivable loans to pay for up to eight weeks of payroll costs, including payroll benefits and other costs. In addition to payroll, recipients also can use PPP funds to pay interest on mortgage payments ~~or other debt obligations~~, rent, and utilities.

EIDL aid can be rolled into a PPP loan — businesses can qualify for both so long as they are not used for the same thing, and the PPP loan must be used for approved expenses in order for it to be forgiven. If the business uses EIDL proceeds to pay for payroll costs, than the EIDL must be rolled into a PPP loan.

100% federal guaranteed. No collateral needed. No personal guarantees required. No borrower or lender fees payable to SBA.
The loan may be (partially) forgiven if your business maintains payroll during the crisis.

SBA Payroll Protection Program webpage

SBA Interim Final Rule #1 (31-page) Business Loan Program Temporary Changes (April 2, 2020)

SBA Interim Final Rule #2 (16-page) Applicable Affiliation Rules (April 3, 2020)

SBA Interim Final Rule #3 (19-page) Additional Eligibility Criteria and Requirements for Certain Pledges of Loans (April 14, 2020)

SBA Interim Final Rule #4 (12-page) Requirements – Promissory Notes, Authorizations, Affiliation, and Eligibility (April 24, 2020)

SBA Interim Final Rule #5 (8-page) Additional Criterion for Seasonal Employers (April 27, 2020)
SBA Interim Final Rule #5 (3-page) Additional Criterion for Seasonal Employers (April 30, 2020)

Paycheck Protection Program (PPP) Borrower’s Information Sheet

Paycheck Protection Program (PPP) Borrower’s Information Sheet #2 (added an item regarding sick leave)

Paycheck Protection Program (PPP) Lender’s Information Sheet

SBA Form 2483 (March 2020) PPP draft of loan application as expected that it will be submitted to your local bank.

SBA Form 2483 (April 2020) SBA PPP Borrower loan application to be submitted to your local bank on or after April 3, 2020.

SBA Form 2483 (June 2020) Revised June 12, 2020, SBA PPP Borrower loan application to be submitted to your local bank.

SBA Form 2484 (June 2020) Revised June 12, 2020, SBA PPP Lender’s application.

Fox Rothschild’s SBA Issues Paycheck Protection Program Guidance

SBA April 3, 2020 FAQs for EIDL and Advance on EIDL and PPP

Paycheck Protection Program FAQs for Small Businesses

SBA’s Massachusetts District Office – April 6, 2020 Coronavirus Relief Options and FAQs

U.S. Treasury April 6, 2020 (updated April 8, 2020 with misspelled link) Paycheck Protection Program Loan FAQs

Very Important – U.S. Treasury May 27, 2020 Paycheck Protection Program Loan FAQs

SBA April 3, 2020 PPP Interim Final Rule

SBA May 6, 2020 FAQ for Lenders and Borrowers

SBA April 15, 2020 Business Loan Program Temporary Changes; Paycheck Protection Program

Very Important – U.S. Treasury April 24, 2020 (better late than never?) How To Calculate Maximum Loan Amounts – By Business Type
(there is a typo in Q. 4 “2019 Schedule K-1 (IRS Form 1065)” should have been written as “2019 Schedule K (IRS Form 1065)”)

U.S. Department of the Treasury The CARES Act Provides Assistance to Small Businesses

Article re: the U.S. Treasury April 6, 2020 FAQ, Clarifying a Number of Issues

SBA Disaster Assistance in Response to the Coronavirus.

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

Main Street Emergency Grant Program.

AICPA’s Emergency funding to offset coronavirus impacts on your business

VOX How small businesses can get money

Discussion on how landlords may qualify for a PPP loan
See Page 104, Part III (A)(3)(a) and (c) and (g) saying that landlords might NOT qualify for a PPP loan

Fox Rothschild Comparison of EIDL and PPP

CliftonLarsonAllen Comparison of EIDL and PPP

KPMG Comparison of EIDL and PPP

Paycheck Protection Program – Calculator (spreadsheet)

Private website SBA.com Paycheck Protection Program (PPP) Loan Calculator

Calculator for most non-seasonal businesses that operated in 2019:
PPP Loan Calculator – Non-seasonal & In business 2/15/19 – 6/30/19 (spreadsheet)

Calculator for new non-seasonal businesses:
PPP Loan Calculator – Nonseasonal & NOT in business 2/15/19 – 6/30/19 (spreadsheet)

Calculator for seasonal businesses that do not operate year-round:
PPP Loan Calculator – Seasonal business (spreadsheet)

Small businesses applying for PPP loans must submit documentation, such as but not limited to payroll processor records or payroll tax filings, that establishes their eligibility for the loans. The interim final rule issued Thursday April 2, 2020 clarified that the SBA will allow lenders to rely on the borrower’s documentation to determine if the borrower is eligible for the loans. Lenders can accept e-signatures and e-consents. Lenders who comply with the obligations laid out in the interim final rule will not be held responsible if the borrower submits fraudulent or inaccurate information.

As of 11:30 AM on Friday April 3^rd there have been 2,330 potentially forgivable loans granted at an average of $381K per loan.
As of 1:30 PM on Friday April 3^rd there have been 4,600 potentially forgivable loans granted at an average of $348K per loan.
As of 2:00 PM on Friday April 3^rd there have been 5,218 potentially forgivable loans granted at an average of $345K per loan.
Later on Friday April 3^rd there have been 6,820 potentially forgivable loans granted at an average of $322K per loan.
By the end of the day, Friday April 3^rd there have been 13,669 potentially forgivable loans granted at an average of $315K per loan.
For day #1, most of the loans were run through local community banks, comprising about 1.2% of the $349 billion of available funds.

By the end of Monday April 6^th with the big banks involved as well, there have been 130K SBA approvals for potentially forgivable loans at an average of $292K per loan.

By the end of Friday April 10^th there have been 600K SBA loans approved for potentially forgivable loans at an average of $268K per loan. At this clip, there are only another 700K loans to be approved until funds run dry. There are approximately 30,000K small businesses to apply for such loans.

Secretary of the Treasury, Steven Mnuchin, said Friday evening (4/3/20) that there is still plenty of money left for lending to small businesses and if the money should run out, he will go back to Congress to get more. President Trump on Saturday said he he would immediately ask Congress for more money if the funds available to small businesses impacted by the coronavirus runs out.

By the end of Wednesday April 15^th there have been 1,525,000 SBA approvals for potentially forgivable loans at an average of $212K per loan. There is only 26B remaining to be approved until funds run dry. That’s enough for about 120K more loans.

At the end of available funding on Thursday April 16^th there have been 1,661,367 SBA approvals for potentially forgivable loans at an average of $203K per loan.

April 7, 2020 – $250 billion add’l funding for these loans is becoming available.

At the end of available funding on Friday May 8^th there have been 2,545,571 SBA round 2 approvals for potentially forgivable loans at an average of $73K per loan.

The PPP loans appear to not providing the desired results as Congress had hoped. In spite of providing two rounds of PPP forgivable loans, according to Bloomberg, 52% of small business “Expect To Be Out Of Business Within Six Months.”

Obviously, we still need more details, so watch for new clarifying SBA, IRS and U.S. Treasury communications and your state government and banking departments regarding this and other coronavirus matters coming out daily.

Update: June 27, 2020 Summary of PPP Approved Lending

PPP – Loan Forgiveness

Very generally: 75% or more of loan proceeds should be disbursed as Form W-2 wages for the eight weeks following the day of receipt of the PPP loan proceeds. The remainder should be paid for interest on mortgages ~~or other debt obligations~~, rent, and utilities.

You must maintain 75% or more of the full-time equivalent employee head-count.
You must maintain 75% or more of each individual employee’s wages.
Any amount not spent as per the above within eight weeks following the day of receipt of the PPP loan proceeds needs to be repaid @ 1% anytime within two years.

For a self-employed individual who had no employees in 2019, very generally the formula is as follows in this example of a 2019 Schedule C that shows net income greater than $100,000 (and therefore is limited to $100,000):

$100,000 / 12 * 2.5 = $20,832 PPP loan proceeds.
$100,000 / 52 * 8 = $15,384 automatically forgiven as “wages” (which is about 73.848% of the PPP loan proceeds).
$5,208 (25% of the PPP loan proceeds) should be paid for interest on mortgage payments ~~or other debt obligations~~, rent, and utilities during the eight weeks following the day of receipt of the $20,832 PPP loan proceeds.
$240 of the PPP loan needs to be repaid @ 1% anytime within two years.

New businesses (before February 15, 2020), Seasonal businesses and Partnerships will have complications not yet addressed by the SBA, U.S. treasury and the Lending bankers.

Update: April 30^th IRS says in Notice 2020-32 that business expenses paid with PPP loan proceeds are not going to be deductible.

Update: December 22^nd Congress says in that business expenses paid with PPP loan proceeds are deductible.

PPP Loan Forgiveness: The Complete Guide

SBA Loan Forgiveness: Business Loan Program Temporary Changes; Paycheck Protection Program – Requirements – Loan Forgiveness

PPP Forgiveness for the Self-Employed (Independent Contractors and Sole Props)

Not in business for all of 2019. Therefore a 2019 Schedule C does not cover 12 months: Awaiting guidance from SBA

Loan forgiveness and grant eligibility: Eligibility is based on specific requirements, Forgiveness available on a portion of the loan proceeds if employers retain employees during specified period considering factors such as full-time equivalents and payroll rate reductions compared to a defined pre-COVID-19 impacted benchmark period. Forgiveness is non-taxable. For entities with prior workforce or compensation reductions, there are exemptions for entities that re-hire and eliminate compensation reductions. However from a practical standpoint, re-hiring and eliminating compensation reductions may need to be completed by April 26 in order to maximize forgiveness under the overall formula. Forgiveness of non-payroll allowable expenses is limited to 25% of total forgiveness.

Update: May 15, 2020: SBA and Treasury Release Paycheck Protection Program Loan Forgiveness Application

Update: May 15, 2020: LOAN FORGIVENESS APPLICATION INSTRUCTIONS FOR BORROWERS Fillable PDF

Update: May 22, 2020: Business Loan Program Temporary Changes; Paycheck Protection Program – Requirements – Loan Forgiveness

Update: May 22, 2020: Business Loan Program Temporary Changes; Paycheck Protection Program – SBA Loan Review Procedures and Related Borrower and Lender Responsibilities

Update: May 13, 2020: AICPA PPP Loan Forgiveness Calculation Steps

Update: June 17, 2020: 5-page PDF SBA PPP Loan Forgiveness Application (Long Form 3508)
Update: June 17, 2020: 7-page PDF Instructions for SBA PPP Loan Forgiveness Application (Long Form 3508)

Easier:
Update: June 17, 2020: 3-page PDF SBA PPP Loan Forgiveness Application (Short Form 3508-EZ)
Update: June 17, 2020: 4-page PDF Instructions for SBA PPP Loan Forgiveness Application (Short Form 3508-EZ)
A borrower is eligible to use Form 3508EZ if the borrower can satisfy at least one of the following: Are self-employed and have no employees. Did not reduce the salaries or wages of their employees by more than 25 percent, and did not reduce the number or hours of their employees.Jun 17, 2020

Ever more easier:
Update: October 8, 2020: PDF SBA PPP Loan Forgiveness Application (Short Form 3508-S)
Update: October 8, 2020: website updated with current version SBA PPP Loan Forgiveness Application (Short Form 3508-S)
Update: October 8, 2020: PDF Instructions for SBA PPP Loan Forgiveness Application (Short Form 3508-S)
A borrower is eligible to use Form 3508S if the borrower only if the total PPP loan amount received from the Lender was $150,000 or less. (originally the requirement was $50,000 or less)

Update: June 30, 2020: [introduced bill, not yet passed by the Senate, not yet law] Senate Bill S. 4117 To provide automatic forgiveness for PPP loans under $150,000.

There are approximately 3.7 million PPP loans in the amount of $150,000 or less, and these account for 85% of all PPP approved loans but only 26% of the PPP funds delivered, according to one of the bill’s co-sponsors, Shelley Moore Capito, R-West Virginia Capito.

The cost of applying for forgiveness for a PPP loan of this size is $2,000 for the small business and $500 for the lender, according to Capito. The legislation, if passed, is projected to save small businesses $7.4 billion and save banks nearly $2 billion.

IRS wants to deny business deduction paid for with PPP forgiven funds

Rev. Rul. 2020-27
A taxpayer that received a covered loan guaranteed under the PPP and paid or
incurred certain otherwise deductible expenses listed in section 1106(b) of the CARES
Act may not deduct those expenses in the taxable year in which the expenses were
paid or incurred if, at the end of such taxable year, the taxpayer reasonably expects to
receive forgiveness of the covered loan on the basis of the expenses it paid or accrued
during the covered period, even if the taxpayer has not submitted an application for
forgiveness of the covered loan by the end of such taxable year.

Members of Congress are working on a bill to clarify the original Congressional Intent:

(3) CLARIFICATION OF TREATMENT OF BUSINESS EXPENSES.—Subsection (i) of section 1106 of
10 the CARES Act (15 U.S.C. 9005) is amended—
11 (A) by striking ‘‘1986, any amount’’ and
12 inserting ‘‘1986—
13 ‘‘(1) any amount’’;
14 (B) by striking the period at the end and
15 inserting ‘‘; and’’; and
16 (C) by adding at the end the following:
17 ‘‘(2) no deduction shall be denied or reduced,
18 no tax attribute shall be reduced, and no basis increase shall be denied, by reason of the exclusion
20 from gross income provided by paragraph (1).’’.

‘‘(h) TAXABILITY.—For purposes of the Internal
14 Revenue Code of 1986—
15 ‘‘(1) any payment made under subsection (c)
16 shall be treated as paid by the person on whose behalf such payment is made,
18 ‘‘(2) no amount shall be included in the gross
19 income of the borrower by reason of a payment
20 made under subsection (c), and
21 ‘‘(3) no deduction shall be denied or reduced,
22 no tax attribute shall be reduced, and no basis increase shall be denied, by reason of the exclusion
24 from gross income provided by paragraph (2).

https://www.cassidy.senate.gov/imo/media/doc/BAI20965.pdf

Many lawmakers of both parties – as well as business groups – have argued that the original intent of the PPP was to allow those deductions, but Treasury Secretary Steven Mnuchin ruled earlier this year that the costs covered by the loans were not in fact deductible. Mnuchin made that case again during a conference call on December 20, 2020 with House Republicans, arguing that allowing such deductions would confer a double benefit on business owners. But, according to a Republican on the call who spoke on the condition of anonymity, numerous GOP lawmakers, including Minority Leader Kevin McCarthy (R-Calif.), spoke up in favor of allowing the deductions. Mnuchin acknowledged lawmakers’ concerns without pledging to address them.

Update: December 22^nd Congress says in that business expenses paid with PPP loan proceeds are deductible.

PPP – Self-employed individuals and independent contractors business loans & grants information

Forgivable SBA 7(a) ~~0.5%~~ 1.0% loans for payroll costs, interest on mortgage payments ~~or other debt obligations~~, rent, and utilities are to be processed though your local bank (who will making the rules) and are guaranteed through SBA, staring April 10, 2020. Loans can be for those costs, retroactive to February 15^th. Businesses receiving loans can have a portion of their borrowing forgiven, namely the portion of operating expenses in the eight weeks following the date of loan origination. Because the SBA expects high demand for the loans, only 25% of the forgiven part of the loan will cover non-payroll costs. Maturity of the loans is two years, and the first monthly payment is deferred for six months

How does this work? Consider this oversimplified example:

You are self-employed, pay no employees, and file a Schedule C as a sole-proprietorship OR a SMLLC or a disregarded husband-wife LLC in a community property state and you file two Schedule C’s.

If your spouse is in the same situation then these two Schedule C’s can mean two PPP loan applications for double the benefits.

The Schedule C business must have been negatively effected by COVID-19 (such as the fact that much of the country is “shut down” and therefore you have a decline in revenues).

Your 2019 Schedule C (whether or not filed yet) shows more than $100,000 net profit which is being subjected to SECA.
(if you earned less than $100,000, then adjust the following dollar amounts in the example, downward, ratably)

Verify that your bank will allow you to apply for a PPP loan. (many, but not all, banks are requiring you to have a business checking account or to open one right now)

Apply with using the PPP 1% loan application and enter $8,333 (100,000 / 12) as your Average Monthly Payroll and $20,832 (8,333 * 2.5) as your Loan Request.

Provide proof of the $100,000 net income by attaching a copy of your actual 2019 Schedule C, OR a proforma draft of your 2019 Schedule C OR a P&L statement for your business.

$15,384 (100,000 / 52 * 8) of the loan proceeds should be automatically forgiven “tax-free.”
The remaining $5,448 balance of the 1% interest rate loan is repaid over 2-years, with the first monthly installment due in six months. (that comes to less than $108.96 interest charged for the entire 2 year loan)

Out of this $5,448, as much as $5,208 (25% of $20,832) might qualify for additional (somewhat taxable) loan forgiveness if spent on interest on business related mortgage payments ~~or other debt obligations~~, rent, and utilities during the eight weeks following the day of receipt of the $20,832 PPP loan proceeds.

Economic Injury Disaster Loan (EIDL)

30-year 3.75% loan for up to $2 million.
The amount of the loan is based on your “actual economic injury” as determined by the SBA, less any recoveries such as insurance proceeds. If you decide that you need more money, you can, under some circumstances, ask for an increase in the loan amount within the two years following your initial loan approval.

The EIDL loans can be based on your FICO credit score.

First monthly loan repayment starts 12-months later (interest accrued immediately). Prepayments are allowed.

Eligibility: Small businesses in all U.S. States and territories, including sole proprietors or independent contractors with fewer than 500 employees (but apparently, unlike PPP, no self-employed individuals, whatever that distinction means).

I work for myself. Am I eligible? Yes. Sole proprietorships, independent contractors, gig-economy workers, and self-employed individuals are eligible for the EIDL program.

Use of borrowed funds limited to: Paying fixed debts, payroll (up to $100K per employee) and related benefits, accounts payable and other expenses that cannot be paid because of the disaster’s impact.

Prohibited use of borrowed funds: Refinancing of debt, payment of other SBA loans or lenders, tax penalties, civil fines, repairs of property or other physical damage, pay dividends or distributions to owners or partners.

Collateral: If available, collateral will be taken on loans greater than $25,000.

Loan forgiveness and grant eligibility: Emergency grant up to $10,000 (EIDL may be eligible to be refinanced into a PPP loan)

Loan guarantees: Waives requirement of personal guarantees on loans less than $200K.

How does SBA count number of “employees”?
In determining a concern’s number of employees, SBA counts all individuals employed on a full-time, part-time, or other basis. SBA will consider the totality of the circumstances. Therefore, besides counting a regular W-2 worker, does the count include casual labor? People given a 1099-MISC in lieu of a Form W-2? Your lawyer’s law firm? Your office’s independent cleaning people? Your plumber, carpenter, landscaper? Your automobile repairman? Your Uber driver?

Can I apply for more than one kind of loan? There is contradictory information regarding this question. One such rule is if you have already received an EIDL loan (between January 31, 2020, and April 3, 2020), you can still apply for a PPP loan so long as you use them for different expenses. You can also refinance a 30-year EIDL loan into a 2-year PPP loan but note that if you do get a PPP loan, the $10,000 grant will be subtracted from the PPP forgiveness amount.

I know that PPP loans can be forgiven. What about EIDL (other than the $10,000 advance)? The short answer is no, outside of that $10,000 advance. But an EIDL loan may be forgiven if it is refinanced under a PPP loan depending on the date the EIDL loan was taken out.

Other than the forgiveness amounts, what’s the real difference between the PPP and the EIDL? Size and use. The EIDL is a loan intended to cover six months of operational expenses. In comparison, the PPP is a loan to primarily help you cover payroll for eight weeks. Also, the EIDL loan application is – allegedly – much more straightforward.

What You Need To Know About Applying For A COVID-19 Economic Injury Disaster Loan (EIDL)

Update: April 27, 2020 Applying for an Economic Injury Disaster Loan (EIDL) from the SBA Is my business eligible to apply for the EIDL?

SBA’s Working Capital Disaster Loans

SBA 3.75% loans for payroll costs, interest on mortgage payments or other debt obligations, rent, and utilities are to be processed though the SBA website and are guaranteed through SBA, since late March 2020. Loans can be for those costs, retroactive to February 15th.

100% federal guaranteed. No collateral needed. No personal guarantees required. No borrower or lender fees payable to SBA.

Update: May 12th The SBA has issued most of the $10,000 emergency advances, and is not processing more of the 3.75% loan applications. Look for an email from disastercustomerservice@sba.gov with the subject line: SBA Application No. 330####### – Submitted Confirmation

Your SBA Application No. 330######### is ready for the next step. Create your SBA Economic Injury Disaster Loan Portal account to provide additional details or requested documents.

Create Account

Questions? We’re here to help. Call us at 1-800-659-2955 | TTY/TTD: 1-800-877-8339.

Office of Disaster Assistance
U.S. Small Business Administration
disastercustomerservice@sba.gov

HHS stimulus payments to healthcare providers

Among the key terms and conditions:

The provider has billed Medicare in 2019; currently provides diagnoses, testing or care for individuals with possible or actual cases of COVID-19 and is currently an eligible Medicare participant.
The funds will be used to prevent, prepare for, and respond to coronavirus and shall reimburse for health care related expenses or lost revenues that are attributable to coronavirus.
The provider will submit reports as needed as determined by the HHS Secretary.
The provider will comply with appropriate recordkeeping as required by Medicare
Providers will not seek to collect from out-of-network patients beyond what otherwise would have been required by an in-network recipient.
Within 30 days of receipt, providers must sign an attestation confirming receipt and agreeing to terms. If a provider cannot or does not wish to comply with the terms and conditions, they must contact HHS within 30 days of receipt and remit the payment to HHS as instructed. As of now, there is no contact information.

ADA Dental advisory

Be ready to apply for SBA loan

House of Representatives passes Paycheck Protection Program and Health Care Enhancement Act

Trader information

The Net Operating Loss (NOL) carryback is back! IRS now mandates a carry back of NOLs incurred during 2018, 2019 and 2020 for five years ( It is not clear yet, if a NOL may optionally be carried back for less than all five taxable years) to obtain refunds of taxes paid in those prior years. EY has opined that since the CARES Act did not modify IRC Section 172(b)(3), a taxpayer, where advantageous, can still waive the carryback and elect to carry NOLs forward to subsequent tax years. Looks like an election to forgo a carryback is April 15, 2021 or October 15, 2021.

‘‘2303 172(b)(1)(D)(v)(II) TIME OF ELECTIONS.—
An election under
paragraph (3) (including an election described in
subclause (I)) with respect to a net operating loss
arising in a taxable year beginning in 2018 or
2019 shall be made by the due date (including
extensions of time) for filing the taxpayer’s return
for the first taxable year ending after the date
of the enactment of this subparagraph.’’

Update: April 9^th Rev. Proc. 2020-24

Update: April 9^th IRS Notice 2020-26

Internal Revenue Code, § 172. Net Operating Loss Deduction

Trader Sec. 475 election information

Generally, a Sec 475 election for calendar year 2020 is due on April 15, 2020 (March 15, 2020 for most entities). ~~Nothing has changed here.~~ IRS wanted to prohibit the use of hindsight in making this particular tax election. Allowing taxpayers more time would necessarily run contrary to this basic principal – but it now (April 9, 2020) appears that the IRS is allowing more time to file the election.

From April 7, 2020 FAQ by the AICPA
Q17: Has an extension of time been granted to file or revoke certain business
elections (such as, method of accounting changes or S corporation elections)?

A17: Notice 2018-18 ~~does not provide relief for filing or revoking business elections~~.
According to the AICPA, this approach is unacceptable given the unprecedented
challenges facing taxpayers and tax preparers during the COVID-19 pandemic.
Mike Desmond, IRS Chief Counsel, has stated that “the IRS is considering the best way
that can be done and is aware taxpayers need guidance soon.” The AICPA continues to
discuss the need for comprehensive relief (including business election) with Treasury and
IRS officials, and is optimistic that business elections will receive needed relief.

Update: On April 9, 2020 the IRS has granted relief, as follows:

This relief includes not just the filing of Specified Forms, but also all schedules,
returns, and other forms that are filed as attachments to Specified Forms or are required
to be filed by the due date of Specified Forms, including, for example, Schedule H and
Schedule SE, as well as Forms 3520, 5471, 5472, 8621, 8858, 8865, and 8938. This
relief also includes any installment payments under section 965(h) due on or after April
1, 2020, and before July 15, 2020. Finally, elections that are made or required to be
made on a timely filed Specified Form (or attachment to a Specified Form) shall be
timely made if filed on such Specified Form or attachment, as appropriate, on or before
July 15, 2020. N-2020-23, April 9, 2020.

Update: April 9, 2020 See Notice 2020-23 III. GRANT OF RELIEF
A. Taxpayers Affected by COVID-19 Emergency

The payment obligations and filing obligations specified in this section III. A (Specified Filing and Payment Obligations) are as follows:

• Calendar year [which by definition have has a due date of March 16, 2020, or September 15, 2020 if a Form 7004 extension is filed] or fiscal year partnership return filings on Form 1065, U.S. Return of Partnership Income, and Form 1066, U.S. Real Estate Mortgage Investment Conduit (REMIC) Income Tax Return;.

Conflicting information:
Update: May 27, 2020 Q. Are the filing deadlines for partnerships and S-corporations whose returns were due to be filed on March 16, 2020, postponed?

A. Notice 2020-23 does not postpone any return filings that were due on March 16, 2020. If a fiscal year partnership or S-corporation has a return due to be filed on or after April 1, 2020, and before July 15, 2020, that filing requirement has been postponed to July 15, 2020. For information about additional relief that may be available to partnerships in connection with the CARES Act legislation, please see Rev. Proc. 2020-23 (PDF).

April 9, 2020 IRS Notice 2020-23
May 27, 2020 IRS FAQ updated for Notice 2020-23.

Some Trader Hedge Funds and Private Equity Firms banned for PPP

April 23, 2020 the SBA has indicated that some Hedge funds and Private Equity Firms are to be barred from obtaining PPP loans.

Hedge funds, private equity firms barred from PPP loans

New Guidance on PPP Loan Eligibility: Hedge Funds, PE Funds, and Businesses with Access to Liquidity

Gift tax information

On March 27^th IRS amplified previous guidance and have now postponed the filing of 2019 gift tax returns normally due on April 15, 2020 until July 15^th. Taxpayers are not required to file an extension request to qualify for the postponed tax filing or payment dates. Under certain circumstances, file IRS Form 8892 to obtain an extension of time to file from July 15^th to October 15^th.

IRA contribution & withdrawal information

IRS has unofficially addressed the April 15, 2020 due date for 2019 IRA contributions, saying:

“Contributions can be made to your IRA, for a particular year, at any time during the year or by the due date for filing your return for that year. Because the due date for filing [2019] Federal income tax returns has been postponed to July 15, the deadline for making contributions to your IRA for 2019 is also extended to July 15, 2020. For more details on IRA contributions, see Publication 590-A, Contributions to Individual Retirement Arrangements (IRAs).”

Up to $100,000 of any coronavirus-related distribution during 2020 will not be subject to the 10% early withdrawal penalty and taxes would be due over the following three years. Generally, a taxpayer has three years (rather than 60 days) to repay the coronavirus-related distribution to completely avoid taxation on it. (but see below for a time period that ends November 30, 2020)

Up to $100,000 (rather than $50,000) can be borrowed from 401(k) accounts. Payment dates for any loans due during the rest of 2020 are extended for a year.

Generally, Required Minimum Distributions (RMD) are waived for the year 2020.

SEC. 40301. WAIVER OF REQUIRED MINIMUM DISTRIBUTIONS FOR 2019 (see page 658 of the HEROES Act NOT law yet)

SEC. 40302. WAIVER OF 60-DAY RULE IN CASE OF ROLL OVER OF OTHERWISE REQUIRED MINIMUM DISTRIBUTIONS IN 2019 OR 2020. – if funds are returned before December 1, 2020 (see page 660 of the HEROES Act NOT law yet) ‘

“(J) WAIVER OF 60-DAY RULE AND ONCE PER-YEAR LIMITATION FOR CERTAIN 2019 AND 2020 ROLLOVERS.—In the case of a distribution during 2019 or 2020 to which, under sub paragraph (E), this paragraph would not have applied had the minimum distribution requirements of section 401(a)(9) applied during such years, the 60-day requirement under subparagraph (A) and the limitation under subparagraph (B) shall not apply to such distribution to the extent the amount is paid into an individual retirement account, individual retirement annuity (other than an endowment contract), or eligible retirement plan (as defined in subparagraph (A)) as otherwise required under such subparagraph before December 1, 2020.”

HSA & MSA contribution information

IRS has unofficially addressed the April 15, 2020 due date for 2019 HSA & MSA contributions, saying:

“Contributions may be made to your HSA or Archer MSA, for a particular year, at any time during the year or by the due date for filing your return for that year. Because the due date for filing [2019] Federal income tax returns is now July 15, 2020, under this relief, you may make contributions to your HSA or Archer MSA for 2019 at any time up to July 15, 2020. For details on HSA or Archer MSA contributions, see Publication 969, Health Savings Accounts and other Tax-Favored Health Plans.”

Charitable contributions

For 2020 Individual taxpayers may deduct $300 charitable contributions “Above-the-Line” in addition to any standard deduction claimed.
For 2020 Individuals may donate and deduct up to 100% of AGI, rather than the old limit of 60% of AGI.

The C-Corporations charity deduction limitation is increased from 10% of taxable income to 25% for 2020.

Mortgage loan forbearance

Borrowers with federally backed mortgages may request temporary loan forbearance for up to 180 days plus an extension for another 180 days of forbearance. You must tell the bank that you are enduring financial hardship as a result of the coronavirus crisis. Once the request is made the act requires the bank to offer a CARES Act forbearance.

The law is not specific what happens once the forbearance period ends. As a result, banks can set different rules about how you must make up the deferred payments. For example: they could be due at the end of the forbearance period as a “balloon payment” or they might be tacked onto the end with an additional year of payments.

While the law forbearance requirements apply to federally backed mortgages, other mortgage relief options may be available based on your state of residence or through independent offerings from your mortgage lender.

States information

The AICPA is keeping a list of states’ tax developments here.

Spidell’s list of states’ tax developments here.

Individual state websites: Federation of Tax Administrators

Federal Reserve information

Federal Reserve announces extensive new measures to support the economy

Fed is buying some corporate debt and accelerates their buying back of U.S. Treasuries, now without limit nice lesson discussing the desired results.

Virus information

Coronavirus Stimulus Bills Phases I, II, III and 3.5

Coronavirus Dashboard

Organisation for Economic Co-operation and Development

The following page will be updated regularly at noon Mondays through Fridays. Numbers close out at 4 p.m. the day before reporting.

TraderStatus.com

COVID-19 immediate assistance

COVID-19 immediate assistance

Federal stimulus payment recovery rebate information

Federal tax return filing information

Federal income tax payment information

Coronavirus information

Recent legislation

Information about benefits for employees and employers

IRC Section 139 business deductible disaster relief payments that are tax-free to your employees (possibly even employees who are your family members)

Payroll Protection (Loan) Programs (PPP)

PPP – Small business and sole proprietorship business loans & grants information

PPP – Loan Forgiveness

IRS wants to deny business deduction paid for with PPP forgiven funds

PPP – Self-employed individuals and independent contractors business loans & grants information

Economic Injury Disaster Loan (EIDL)

HHS stimulus payments to healthcare providers

ADA Dental advisory

Trader information

Trader Sec. 475 election information

Some Trader Hedge Funds and Private Equity Firms banned for PPP

Gift tax information

IRA contribution & withdrawal information

HSA & MSA contribution information

Charitable contributions

Mortgage loan forbearance

States information

Federal Reserve information

Virus information

New Cases by Day – the number of new cases of COVID-19 reported since the beginning of the outbreak.

Cumulative total number of COVID-19 cases in the United States, January 12, 2020 to Yesterday

COVID-19 cases in the United States by date of illness onset, January 12, 2020, to Yesterday

COVID-19 cases in the United States by date of illness onset, January 12, 2020, to March 18, 2020, at 4pm ET

COVID-19 immediate assistance

Federal stimulus payment recovery rebate information

We scheduled your payment to be deposited on April 15, 2020 to the bank account below.

Federal tax return filing information

Federal income tax payment information

Coronavirus information

Recent legislation

Information about benefits for employees and employers

IRC Section 139 business deductible disaster relief payments that are tax-free to your employees (possibly even employees who are your family members)

Payroll Protection (Loan) Programs (PPP)

PPP – Small business and sole proprietorship business loans & grants information

PPP – Loan Forgiveness

IRS wants to deny business deduction paid for with PPP forgiven funds

PPP – Self-employed individuals and independent contractors business loans & grants information

Economic Injury Disaster Loan (EIDL)

HHS stimulus payments to healthcare providers

ADA Dental advisory

Trader information

Trader Sec. 475 election information

Some Trader Hedge Funds and Private Equity Firms banned for PPP

Gift tax information

IRA contribution & withdrawal information

HSA & MSA contribution information

Charitable contributions

Mortgage loan forbearance

States information

Federal Reserve information

Virus information

New Cases by Day – the number of new cases of COVID-19 reported since the beginning of the outbreak.

Cumulative total number of COVID-19 cases in the United States, January 12, 2020 to Yesterday

COVID-19 cases in the United States by date of illness onset, January 12, 2020, to Yesterday

COVID-19 cases in the United States by date of illness onset, January 12, 2020, to March 18, 2020, at 4pm ET