SACC-SFL trust member Mulchan CPA shares the following highlights of the three COVID-19 relief packages recently signed into law by the US Administration:
#1 COVID-19 relief package Coronavirus Preparedness and Responses Supplemental Appropriations Act [H.R. 6074]:
Focus: Emergency health funding
March 6 – $8.3 billion bill to fight the coronavirus outbreak, with funding for the CDC, production of vaccines and supplies, R&D and global health programs.
#2 COVID-19 relief package Families First Coronavirus Response Act [H.R.6201]:
Focus: Individual relief
March 18 – Legislation enacted to provide relief for workers at companies with less than 500 employees, and easing restrictions on nutrition programs.
- Expanded the Family Medical Leave Act (FMLA) and enacted Emergency Paid Sick Leave Act (EPSLA) – goes into effect April 1, 2020 and expires December 31, 2020. Also see information below regarding employer requirements to inform employees.
- 10 days of paid leave at full pay if employee cannot work (including telework) due to:
- Symptomatic employee seeking diagnosis
- Caring for someone in these situations
- Ordered isolation or quarantine
- 12 weeks at 2/3 pay for child care due to closures
- Tax credits for employers who have paid sick and family leave and analogous credit for self employed individuals.
- Max tax credit $5,110 (EPSLA)
- Max tax credit $10,000 (FMLA)
- Provisions include easing restrictions on federal supplemental nutrition assistance program (SNAP).
#3 COVID-19 relief package Coronavirus Aid, Relief, and Economic Security Act (CARES) [H.R. 748]:
Focus: Economic relief and stimulus
March 27 – Provisions provide taxpayers with liquidity through cash payments, pushing back tax payment dates and reducing current and prior year tax liabilities.
- Cash payments of $1,200 single/$2,400 MFJ plus $500/qualifying child for qualifying individuals.
- $300 above-the-line charitable deduction – allowing individuals who do not qualify to itemize deductions to take a tax deduction for gifts to charitable organizations.
- Employee retention credit of 50% of up to $10,000 wages/employee paid from 3/13/20-12/31/20. The credit is provided through a refundable payroll tax credit for qualifying employers (the credit is available only to businesses that do NOT receive SBA loans).
- Deferred payroll taxes to end of year 2021 and 2022.
- Retroactive relief from several limits on tax deductions put in place with the tax reform in 2017, including allowing net operating loss (NOL) carry-backs for tax years 2018-2020.
- Paycheck Protection Program (PPP)
- SBA Sec. 7(a) – loans up to $10M, for businesses with 500 or fewer employees, to pay for payroll costs, mortgage interest payments, rent and utilities.
- The amount of the loan is limited to the lesser of $10M or the borrower’s average total monthly payroll costs (*with some limitations) for the 1-year period ending on the date the loan is made, multiplied by 2.5, plus any refinanced loan under the EIDL program. The loan cannot be obtained if taxpayer also receives the employee retention tax credit.
- No collateral is required and the government may forgive the amounts paid for qualifying expenses for up to 8 weeks.
- The loan proceeds may be used for payroll costs*, interest payments on mortgages, rent, utilities, and interest on debt incurred before 2/15/2020.
- The borrower must have been in operation on 2/15/2020, and the application period ends 6/30/2020.
- Economic Injury Disaster Loans (EIDL)
- SBA Sec. 7(b) – emergency loans of up to $2M.
- $10,000 emergency grant (within three days of submitting an application), which is not required to be paid back. The grant would reduce any loan forgiveness under the PPP.
- The act waives the personal guaranty requirement on loans under $200,000.
TBC – Additional relief is expected as there is now talks about #4 COVID-19 relief package…
Please visit the links below for more information:
Employers are also advised to consult with their HR department to make sure their employees are informed of their employee rights under the Families First Coronavirus Response Act (FFCRA or Act).
The Families First Coronavirus Response Act (FFCRA or Act) requires certain employers to provide their employees with paid sick leave and expanded family and medical leave for specified reasons related to COVID-19. These provisions will apply from April 1, 2020 through December 31, 2020.
The picture is a notice poster from the US Department of Labor, which illustrates employees rights under the new law enacted to protect employees effected by the COVID-19 pandemic.
All employers must conspicuously post a notice regarding the requirements of the EPLSA in physical work locations. However, considering that many employees are now working remotely, the Department adds that an employer may satisfy the notice requirement by emailing or direct mailing the notice to employees, or posting this notice on an employee information internal or external website.
SACC-SFL would like to thank Mulchan CPA for this valuable information!