NAVIGATING THE CORONAVIRUS PANDEMIC RESPONSE: Steven A. Eichenberger, CPA OVERVIEW OF TAX AND OTHER BUSINESS IMPACTS David A. Richardt, CPA Brent M. Holman, CPA
BGBC PARTNERS, LLP Wher Wh ere Ar Are We We To Today? 316 MILLION PEOPLE IN 42 STATES ARE UNEMPLOYMENT CLAIMS OF APPROX. 17 OVER 460,000 CASES AND MORE THAN UNDER SOME SORT OF STAY AT HOME MILLION AS OF 9 APRIL 2020. EQUATES TO 16,000 DEATHS – ORDER WITH ONLY ESSENTIAL BUSINESSES AN UNEMPLOYMENT RATE OF ABOUT 20% IN NEW YORK OPERATING ‐ THAT IS 95% OF US APPROXIMATELY 15% POPULATION. 2 00/00/0000
BGBC PARTNERS, LLP US US Gov Gov’t U. U.S. Go Governm rnment Response sponse Appr Approach: oach: Economi onomic Economic impact of COVID ‐ 19 is worldwide Stim Stimulus, ulus, Loan Loan Assis Assistance ance & Tax Re Ta Relief U.S. objectives are to: Keep people Help small businesses Inject capital into the employed survive U.S. economic system 3 00/00/0000
Ag Agenda enda • High ‐ level summary of the Acts providing relief • Overview of new loan facilities available to businesses • Overview of payroll related relief • Overview of administrative relief and tax modifications 00/00/0000 4 BGBC PARTNERS, LLP
BGBC PARTNERS, LLP Families Fir Fa First Cor Corona onavirus virus Re Response Act Act (FF (FFCRA) • Employer tax credits • Signed into law on 18 March 2020 • Applies to businesses with <500 employees ‐ • Expansion of Family & Medical Leave Affiliation rules based on DOL guidelines • Emergency Paid Sick Leave 5 00/00/0000
Corona Cor navirus virus Ai Aid, d, Relie lief, and and Econom onomic Security (CA Security (CARES) Act Act • Employee Unemployment Benefit expansion • Signed into law on 28 March 2020 • Provides $2 trillion of relief funding • Tax enhancements • Employer assistance • Affiliation rules based on SBA and IRS guidelines • Including loan facilities • Additional payroll tax credits/deferral 00/00/0000 6 BGBC PARTNERS, LLP
Sm Small all Business Business Adm Adminis nistration tion Lo Loan ans Economic Impact Disaster Loan (EIDL): • For businesses under 500 employees • Request an advance (grant), up to $10,000, payable within 3 days of receipt of the EIDL application • Advance is not required to be repaid, even if the loan is subsequently denied • Low interest rates and no guarantee required (if under $200,000) 00/00/0000 7 BGBC PARTNERS, LLP
Small Sm all Business Business Adm Adminis nistration tion Lo Loan ans Payroll Protection Program (PPP) Loan: • For businesses under 500 employees. • Provides a loan based on 2.5 x average monthly payroll costs. • Loan is forgiven if used to pay payroll, rent, mortgage interest and utilities. • Low interest rates and no guarantees required 00/00/0000 8 BGBC PARTNERS, LLP
Impacts of Im of Legisla Legislatio ion: n: Em Emplo ployee ee Pay Pay and and Em Emplo ployer er Assis Assistance ance Families First Coronavirus Response Act Coronavirus Aid, Relief, and Economic (FFCRA) Security (CARES) Act Employee Focused – Emergency Family and Medical Employer Focused – PPP Loans Leave Expansion Act (EFMLEA) Employer Focused – Employee Retention Payroll Tax Employee Focused – Emergency Paid Sick Leave Act Credit (EPSLA) Employer Focused – Payroll Tax Deferral Employer Focused – Payroll tax credit for required Employee Focused – Expanded Unemployment leave under Act Benefits BGBC PARTNERS, LLP 00/00/0000 9
Impacts of Im of Legisla Legislatio ion: n: Em Emplo ployee ee Pay Pay and and Em Emplo ployer er Assis Assistance ance Families First Coronavirus Response Act (FFCRA) Employee Focused – Emergency Family and Medical Leave Expansion Act (EFMLEA) Employee Focused – Emergency Paid Sick Leave Act (EPSLA) Employer Focused – Payroll tax credit for required leave under Act BGBC PARTNERS, LLP 00/00/0000 10
Required DOL Poster FFCRA Notice ‐ FAQs BGBC PARTNERS, LLP 11 00/00/0000
Family & Me Fa Medi dical cal Lea Leave • Effective as of 1 April 2020 and provides 12 ‐ week period of job ‐ protected leave • Requires employers with less than 500 employees to provide paid and unpaid public health emergency leave to certain employees. (Effective through 12/31/2020) • Leave available to persons employed at least 30 days who are unable to work or telework due to a need for leave to care for a son or daughter under age 18 due to school or childcare closures as a result of a public health emergency. (i.e. COVID ‐ 19) 12 00/00/0000 BGBC PARTNERS, LLP
Fa Family & Me Medi dical cal Lea Leave • First 10 days of leave are unpaid, then paid leave is required. Note: Employees may choose to use any available paid leave during the first 10 days • Leave pay is calculated based on not less than two ‐ thirds employee’s regular rate of pay and number of hours regularly worked, not to exceed $200/day and $10,000 in the aggregate. 13 00/00/0000 BGBC PARTNERS, LLP
Em Emer ergency ncy Pa Paid Sick Sick Lea Leave • Effective 1 April 2020 • Requires employers with less than 500 employees to provide 80 hours of paid sick time to full ‐ time employees unable to work or telework due to specified virus ‐ related reasons. (Effective through 12/31/2020) • Immediately available to employees regardless of length of employment. • Sick leave for part ‐ time employees based on average hours worked over a 2 ‐ week period 14 00/00/0000 BGBC PARTNERS, LLP
Em Emer ergency ncy Pa Paid Sick Sick Lea Leave • Department of Labor authorized to exempt businesses with less than 50 employees under certain circumstances. • Employer cannot require employee to find substitute worker or use other sick leave before this sick time. • Maximum amounts payable vary based on the reason for the absence. 15 00/00/0000 BGBC PARTNERS, LLP
BGBC PARTNERS, LLP Em Emer ergency ncy Pa Paid Sick Sick Lea Leave – P – Pay and and Ta Tax Cr Credits edits (Sum (Summary) ry) Reason Basic Rate Limitation Max Days Max Credit Category 1 – Quarantine order Regular Pay $511/day 10 $5,110 Category 2 – HC provider advises Regular Pay $511/day 10 $5,110 employee ‐ > self ‐ quarantine Category 3 – COVID ‐ 19 symptoms, Regular Pay $511/day 10 $5,110 seeking diagnosis Category 4 – Caring for category 1 or 2/3’s of regular $200/day 10 $2,000 2 individual pay Category 5 – Caring for son or 2/3’s of regular $200/day 60* $12,000 ($2,000 sick leave + $10,000 daughter – closed school/daycare pay FML) Category 6 – Substantially similar 2/3’s of regular $200/day 10 $2,000 condition specified by HHS pay * Combines the (1) Paid sick leave, and (2) Family medical leave 16 00/00/0000
BGBC PARTNERS, LLP Em Emer ergency ncy Pa Paid Sick Sick Lea Leave – P – Pay (D (Details) ails) • Employees must be compensated at regular rate up to $511/day ($5,110 total) if: o Employee subject to a quarantine or isolation order; o Employee advised by health provider to self ‐ quarantine; o Employee experiencing symptoms & seeking diagnosis. • Employees compensated at two ‐ thirds regular rate up to $200/day ($2,000 total) if: o Caring for someone subject to a quarantine or isolation order; o Caring for someone advised by health provider to self ‐ quarantine; o Caring for someone experiencing symptoms & seeking diagnosis; o Caring for a son or daughter whose school or childcare is closed. 17 00/00/0000
BGBC PARTNERS, LLP Em Emer ergency ncy Pa Paid Lea Leave – T – Tax Cr Credits edits (D (Details) ails) The credits have 3 components: 1. EPSLA credit for each employee is amount of leave pay up to $511/day while employee caring for him/herself, or $200/day if caring for family member or child whose school/childcare is closed. EMFLEA credit for each employee is amount of leave pay up to $200/day with a $10,000 maximum. 2. Amount of EMFLEA & EPSLA credits increased by the portion of employer’s “qualified Health Plan expenses” properly allocable to qualified sick leave and family leave wages, limited to the amount excluded from the employee’s gross income. 3. Amount of EMFLEA & EPSLA credits increased by 1.45% Medicare tax to which employee’s leave wages are subject. 18 00/00/0000
BGBC PARTNERS, LLP Em Emer ergency ncy Pa Paid Lea Leave – T – Tax Cr Credits edits (D (Details) ails) • Tax credits are refundable to the extent they exceed employer’s payroll tax liability. • Employers don’t receive credit if employee is already receiving paid family & medical leave under IRC § 45S. • Credits also available to self ‐ employed individuals. • Rules in effect for payroll periods 4/1/2020 through 12/31/2020. • Wages paid under EFMLEA & EPSLA not considered wages for Social Security Tax purposes. 19 00/00/0000
Im Impacts of of Legisla Legislatio ion: n: Em Emplo ployee ee Pay Pay and and Em Emplo ployer er Assis Assistance ance Coronavirus Aid, Relief, and Economic Security (CARES) Act Employer Focused – PPP Loans Employer Focused – Employee Retention Payroll Tax Credit Employer Focused – Payroll Tax Deferral Employee Focused – Expanded Unemployment Benefits BGBC PARTNERS, LLP 20 00/00/0000
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