CORONAVIRUS (COVID-19) BUSINESS IMPACT UPDATES
We will be updating this document as new information is available. It is intended that this document is a source for your reference. There will be facts and links to the available information. There will also be questions that are business relevant but do not yet have available answers or direction. Please let us know if you have additional questions so we can be watching and updating as information is available. The original information is current as of March 16th, 2020. Updated information will noted with the date it was added to the far left.
Below is a link for an outline of possible relief your business could benefit from and a possible time frame for attention.
FEDERAL ISSUES
3/27/2020 1) The House and the Senate have now passed the Coronavirus Aid, Relief, and Economic Security Act CARES Act, H.r. 748. The President has just signed and the law will go into effect 15 days later, although some parts have effective dates sooner than that.
3/31/2020 2) The CARES Act will provide an advanced credit, known as the stimulus check, to eligible individuals. The amount is $1,200 per individual and $500 per qualified child. Income thresholds apply; please see the attached FAQ for more details.
3/31/2020 3) The paid sick leave and emergency FMLA benefits are set to go into effect. April 2nd, 2020 will be 15 days after the Coronavirus Family First Act was signed, but the Department of Labor has issued additional guidance using April 1st as the effective date. This has created some uncertainty on the effective date. However, the Department of Labor did provide some additional details on the benefits and how they will be applied. The link below is for FAQ, including a poster that is required to be displayed in a common area.
https://www.dol.gov/agencies/whd/pandemic/ffcra-poster-questions
3/27/2020 4) The House and the Senate have now passed the Coronavirus Aid, Relief, and Economic Security Act CARES Act, H.r. 748. The President has just signed and the law will go into effect 15 days later, although some parts have effective dates sooner than that.
What’s in the $2.2 Trillion CARES Act :
A) $1,200 per adult and $500 per child ($290B)
B) Increase in Unemployment Insurance Benefits ($260B)
C) $500 Billion Lending Program ($500B)
D) Emergency Aid for Small Businesses ($377B)
Made available through SBA lenders
E) Interest deduction limit increased from 30% to 50%
F) Employee retention credit for employers
G) Delay of payment of employer payroll taxes
H) Business owners can claim NOL Carryback
• This provision provides that NOLs arising in a tax year beginning after Dec. 31, 2018 and before Jan. 1, 2021 can be carried back to each of the five tax years preceding the tax year of such loss
I) Bonus depreciation technical correction for qualified improvement property (FINALLY)
J) Hospitals, expanded healthcare spending ($180)
• Includes $100 billion fund for hospitals and providers hit hardest by the outbreak
K) Emergency Aid for State and Local Governments ($175B)
L) No 10% additional tax for coronavirus-related retirement plan distributions
3/31/2020 M) $300 above-the-line charitable deduction
The CARES Act adds a deduction to the calculation of gross income, in the case of tax years beginning in 2020, for the amount (not to exceed $300) of qualified charitable contributions made by an eligible individual during the tax year
○ Which is made in cash
○ To an IRS recognized charitable organization
O) Suspend Federal Student Loan Payments through Sept 30 w/No Accrual of Interest
1. The House has passed a bill for economic relief. Most of the bill is focused on businesses with 500 or less employees. A link to the bill is attached below. This bill has been sent to the Senate. Below is a summary of the bill.
https://rules.house.gov/bill/116/hr-6201
A. Two weeks of paid sick leave (sick leave), paid at the employee’s regular rate, capped at $510 per day, if:
B. Two weeks of paid sick leave (sick leave), paid at two-thirds the employee’s regular rate, capped at $200 per day, if:
C. The above section applies to:
D. After two weeks of paid leave, employees will be eligible to receive a benefit from their employers for an additional 10 weeks (amendment to FMLA (family leave)) that will be no less than two-thirds of the employee’s usual pay, if:
E. NOTE> There is a loophole for small businesses on paid family leave: Employers with fewer than 50 workers can apply for an exemption through the Labor Department from having to provide paid family leave if it “would jeopardize the viability of the business.” It is unclear how lenient the Trump administration will be, and there is no additional guidance on this at this time (there is no small-business loophole for sick pay).
3/21/2020 The Senate passed and President Trump has signed the Families First Coronavirus Response Act. The Senate version was unchanged from the House bill in regards to provisions for workers. Please review the highlights above. The final bill allows for a refundable credit to employers who have paid leave to qualified employees. The credit applies to the employer portion of FICA tax. WSW is working on gathering information on how this will be presented on the forms and how/when refunds are made if qualified benefits exceed the FICA tax due on the quarterly return. The law is set to go into affect on April 2, 2020.
https://www.paychex.com/articles/compliance/families-first-coronavirus-response-act
2. Steven Mnuchin, U.S. Secretary of the Treasury, stated on Wednesday March 11, 2020 that he has proposed an extension to the tax deadline to the Trump administration. Trump stated himself they were looking at delaying the deadline. Details have not been made available. However, the U.S. Treasury does have regulatory power to move the deadline in disaster situations. There is precedence for extensions (i.e. - Puerto Rico and the U.S. Virgin Islands after Hurricane Maria). Questions remain on if this gets done and if it does; how long will the extension be? Will it include an extension in the time to pay? WSW is continuously monitoring for updates.
States are making decisions on extensions as well. Please follow the following link to see information on states that may be of importance to you. https://www.aicpa.org/content/dam/aicpa/advocacy/tax/downloadabledocuments/coronavirus-state-filing-relief.pdf
3/18/2020 IRS GRANT OF RELIEF
First, to eliminate any confusion, the FILING DUE DATE for individual tax returns is still April 15, 2020, whether that be a filed return, or if needed, filing an extension. The taxpayer must file one or the other by April 15th. The relief the IRS has granted is listed below:
AGAIN, this does NOT extend the filing date requirement of April 15th. Please look for additional communications from WSW about extensions, available via email and our website.
https://www.irs.gov/pub/irs-drop/n-20-17.pdf
3/21/2020 The filing date for all individual and corporate tax returns has been moved from April 15, 2020 to July 15, 2020. The new guidance restates and expands previous IRS notification and now includes additional time to file and pay and for all individuals, trusts, estates, associations, and corporations regardless of amount of tax owed.
KENTUCKY ISSUES
3/27/2020 KENTUCKY WAIVES INTEREST FOR PAYMENTS EXTENDED TO JULY 15, 2020
3/21/2020 1. During a press conference this morning, March 16, 2020, Gov. Beshear announced changes to the unemployment process.
3/21/2018 |
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Notes for Filing for Kentucky Unemployment: |
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File a claim. |
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By calling (502) 875-0442 between 7:30 am – 5:30 pm, Mon-Fri |
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Online at kcc.ky.gov |
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You will need your: |
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social security number |
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Your address, and |
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Your phone number |
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You will also need: |
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Company names |
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Addresses |
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Dates and phone numbers |
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For the past 18 months |
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You should request a check on the date you’re given when you’ve completed your claim. |
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This should be approximately 13 days from completing your claim. (There is NO way to speed up this time frame) |
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You should then have a check approximately three days later. |
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When you request a check, it will be for the prior two weeks. |
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Prior to the change announced on March 16, 2020 by the governor, if this were your first time requesting a check, you would only get paid for one of the two weeks requested (this was called a one-week waiting period). |
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With this change, there is no longer a one-week waiting period and you will be paid for both weeks. |
WSW is monitoring for more details on what impact this may have on employers rates and further details for individuals.
Additional Unemployment Information Due to Covid-19:
If you lost your job due to either being laid off or for lack of work due to COVID-19, when filling out the claim, when it requests your reason for
3/21/2020 2) Kentucky's governor has stated that Kentucky will mirror the federal's delayed filing. Questions still remain about local returns. WSW is monitoring for updates.
For additional states and updates please the link below:
https://www.aicpa.org/content/dam/aicpa/advocacy/tax/downloadabledocuments/coronavirus-state-filing-relief.pdf
BUSINESS ISSUES
1. Business interruption coverage is unlikely to cover losses due to Coronavirus or government manidated shutdown. Please consult with your insurance provider.
A Business interruption coverage is typically included as part of a company’s commercial property insurance policy and is most commonly triggered when “direct physical loss of or damage to” insured property occurs during natural disasters, such as hurricanes or earthquakes. Similarly, contingent business interruption coverage can apply to losses associated with other events, such as disruptions to the business’s customers or suppliers, while a policy’s civil authority coverage can be triggered when a government limits access to a specific geographic area, impairing access to the policyholder’s premises.
In the event of claims related to the coronavirus, policy wording is critical, as insurers will contend that the health crisis does not meet the “direct physical loss” requirement contained within many standard policies. However, some courts, while not wholly consistent across jurisdictions, have held that commercial property that becomes uninhabitable or otherwise not fit for use, qualify as having suffered the requisite physical loss and, depending on the specifics of the policy, could be covered. Businesses should be proactive and seek insurance expertise to determine whether the coronavirus has triggered coverage in their specific policy.
Type of Wording to Look for:
3/18/2020 2) More businesses are being asked to change their business model or to close during this time. Below is a partial list of businesses the Kentucky governor ordered closed yesterday (seems reasonable to think this will be true in many states at some point):
https://kentucky.gov/Pages/Activity-stream.aspx?n=GovernorBeshear&prId=95
3/18/2020 3) With these businesses closing, and others, in mind WSW understands that many of you may have to cut some, or all, employees' hours or shutdown completely. While you have many options on what these layoffs and shutdowns look like in your business - one option are loans to employees who may need assistance. If an employee loan is done most states require it in writing before the loan is given. Attached is a sample loan agreement and an example of what pay roll would look like if a loan equal to an employee's normal net paycheck was provided. This sample agreement also gives businesses the flexibility to have the loan paid off with other funds if, at a later date, a government agency provides reimbursement to employers who provided funds to their employees during a shutdown.
3/18/2020 4) WSW was made aware that some land lords have received force majeure letters from national retail tenants. These tenants have provided notice that they believe that the pandemic has created unforeseeable circumstances that may limit their ability to pay rent. With business closing, this may become the case. Below are possible steps to take in response. WSW's suggestion is to have a plan and to review that plan with your legal counsel. Possible steps to take:
3/18/2020 5) If you are a tenant and are adversely affected by the coronavirus pandemic please review item #4 carefully.
3/21/2020 6) The Small Business Association is offering disaster assistance due to the Coronavirus (COVID-19). If you are in an affected area (see the attachment, which includes all of Kentucky), then you could qualify for the Economic Injury Disaster Loan Program. This program is offering a low interest loan (maximum rate of 3.75%) with a term up to a maximum of 30 years, with a maximum loan amount of $2M (to be determined by the SBA). If this is something that you would be interested in pursuing, we have provided a link below to begin the loan process. If you have questions, or would like for us to fill out the application for you, please contact our office for further details.
Most counties in Indiana our included as well. Please verify you location using the link below:
https://disasterloan.sba.gov/ela/