COVID-19 Update

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. 

Suggested Timeline

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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 :

L)      No 10% additional tax for coronavirus-related retirement plan distributions

• The 10% additional tax does not apply to any coronavirus-related distribution, up to $100,000
• A coronavirus-related distribution is any distribution made to a qualified individual
• A qualified individual is an individual:
• Who is diagnosed with COVID-19 by a test approved by the CDC
• Whose spouse or dependent is diagnosed with such virus by such a test
• Who experiences adverse financial consequences as a result of being quarantined, being furloughed or laid off or having work hours reduced due to such virus or disease, being unable to work due to lack of child care due to such virus or disease, closing or reducing hours of a business owned or operated by the individual due to such virus or disease, or other factors as determined by the Secretary of the Treasury

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

• For this purpose, the term "eligible individual" means any individual who does not elect to itemize deductions
• The term "qualified charitable contribution" means a charitable contribution:

○          Which is made in cash

○          To an IRS recognized charitable organization

• For those that are able to itemize on their tax return the 60% of AGI limitation has been removed for 2020.  No connection to COVID- 19 required.
• N)      Other Miscellaneous Items
• Package includes $45 billion for the Federal Emergency Management Agency’s disaster relief fund
• $31 billion to support local schools and colleges
• $25 billion for the nation’s transit systems
• $25 billion for more food stamp funding

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:

1. 1. To quarantine or
2. 2. Seek a diagnosis or preventive care for coronavirus

B. Two weeks of paid sick leave (sick leave), paid at two-thirds the employee’s regular rate, capped at $200 per day, if:

1. 1. To care for a family member for such purposes
2. 2. To care for a child whose school has closed, or
3. 3. Childcare provider is unavailable due to the coronavirus

C. The above section applies to:

1. 1. Employers with fewer than 500 employees
2. 2. Cannot exceed the aggregate of 10 days
3. 3. Full-time employees are entitled to two weeks (80 hours)
4. 4. Part-time employees are entitled to the typical number of hours they work in a two-week period

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:

1. 1. Employer has fewer than 500 employees
2. 2. The employee has been on the job for at least 30 days
3. 3. To adhere to a requirement or recommendation to quarantine due to exposure to or symptoms of coronavirus
4. 4. To care for an at-risk family member who is adhering to a requirement or recommendation to quarantine due to exposure to or symptoms of coronavirus
5. 5. To care for a child of an employee if the child’s school or place of care has been closed the child-care provider is unavailable, due to a coronavirus
6. 6. Capped at $200 per day

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:

1. 1. The IRS issued guidance allowing all individuals and other non-corporate tax filers to defer up to $1 million of federal income tax (including self-employment tax) payments due on April 15, 2020, until July 15, 2020, without penalties or interest.
2. 2. The guidance also allows corporate taxpayers a similar deferment of up to $10 million of federal income tax payments that would be due on April 15, 2020, until July 15, 2020, without penalties or interest.
3. 3. The relief provided is available with respect to Federal income tax payments (including payments of tax on self-employment income) due on April 15, 2020, in respect of an Affected Taxpayer’s  2019 taxable year, and
4. 4. The relief provided is available to defer for Federal estimated income tax payments (including payments of tax on self-employment income) due on April 15, 2020, until July 15th for an Affected Taxpayer’s  2020 taxable year.

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

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KENTUCKY ISSUES

• The Kentucky General Assembly unanimously passed SB 150, which in addition to several other items, extends the filing deadline and waives penalties and  interest for Kentucky’s income tax returns

•  

3/21/2020             1. During a press conference this morning, March 16, 2020, Gov. Beshear announced changes to the unemployment process.

• A. Kentucky will eliminate the one-week waiting period where no benefits are provided
• B. Kentucky is waiving the requirement for applicants to search for work while the coronavirus state of emergency is in effect. https://kentucky.gov/Pages/Activity-stream.aspx?n=GovernorBeshear&prId=93

3/21/2018				Notes for Filing for Kentucky Unemployment:
	1)	File a claim.
		A)	By calling (502) 875-0442 between 7:30 am – 5:30 pm, Mon-Fri
		B)	Online at kcc.ky.gov
	2)	You will need your:
		A)	social security number
		B)	Your address, and
		C)	Your phone number
	3)	You will also need:
		A)	Company names
		B)	Addresses
		C)	Dates and phone numbers
		D)	For the past 18 months
	4)	You should request a check on the date you’re given when you’ve completed your claim.
	5)	This should be approximately 13 days from completing your claim.  (There is NO way to speed up this time frame)
	6)	You should then have a check approximately three days later.
	7)	When you request a check, it will be for the prior two weeks.
	8)	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).
	9)	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

1. 1) seeking unemployment, put “Laid off/lack of work due to coronavirus”
2. 2) If you are filing a claim because you went from full time to part time, put “Lack of work due to coronavirus”.
3. 3) As mentioned above, it is possible to receive benefits even if you went from full time to part time.
4. Under that scenario, when requesting a check, you will also need your hours worked and gross pay received for the two weeks you are requesting
5. 4) an unemployment check.
6. 5) Your unemployment benefit will then be reduced by the amount in this information.
7.  

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

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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:

• Policy contains an “all risk” coverage triggered by all perils not excluded by the policy
• Policy expressly extends coverage to losses caused by “communicable or infectious diseases” without requiring physical damage to the insured’s property Policy specifically excludes  coverage for losses caused by quarantinable disease, or by “contaminants” defined with sufficient breadth to include viruses such as COVID-19
• Policy provides coverage for interruptions resulting from a “civil authority” prohibiting access to the insured’s premises as a result of damage to other property caused by a covered loss

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):

• Gyms
• Theaters
• Hair and Nail Salons
• and other places people congregate

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:

1. A) Review tenant financial situation before offering help to tenants that may not need the help
2. B) Possibly apply the Security deposit to the first month that rent is missed. Some tenants view the security deposit as lost money. They can restore it later.
3. C) Collecting CAM and abating base rent if necessary
4. D) Only defer rent, as it is unclear if the government will provide an incentive later to the tenant that may put them in a position to repay the landlord
5. E) Consider abatement of late fees or accrued interest
6. F) A promissory note could be signed personally by a tenant for the deferred rent if the lease expires soon
7. G) Consider having tenant sign promissory note outlining payment terms for any missed rental amount

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/