COVID-19

 Payroll and tax related information, and other helpful links, due to the COVID-19 pandemic.

 

Check on the status of your Economic Impact Payment - use this link to update/add bank information and to file a return to receive the payment.

 

July 15, 2020 Federal and Ohio Tax Extensions

 

Coronavirus Aid, Relief, and Economic Security (CARES) Act

As of 3/29/20

Employee Retention Credit - Credit equal to 50% of qualified wages up to $10,000 of wages, per employee ($5,000 max credit per employee)

 Eligible employers

  1. The business is fully or partially suspended during the calendar quarter due to orders from the government limiting commerce, travel, or group meetings due to COVID-19 (Likely this will impact most businesses Q1 2020 and Q2 2020) -OR-
  2. The business experienced a significant decline in gross receipts compared with the same quarter of 2019.
    1. The first eligible quarter = when receipts drop below 50% compared to 2019
    2. The credit continues to future quarters
    3. The last eligible quarter = when receipts are greater than 80% compared to 2019.
    4. Only through 2020.
  • Note – Nonprofits 501(c) only has #1 available to them, and the regs say “shall apply to all operations of such organization”
  • Note – cannot use this credit if taking an SBA loan, including the Paycheck Protection Program.

Qualified Wages

  • Wages paid between 3/12/20 – 12/31/20
  • Employers with average full time 2019 employees 100 or fewer = wages paid to all employees during the applicable periods.
  • Employers with average full time 2019 employees > 100 = wages paid to employees not providing services during the applicable periods.
  • Includes health insurance premiums allocated to these wages
  • Not wages paid under the Families First Act (Sick/childcare pay) or FMLA
  • Not wages that employers get the WOTC
  • Cannot give anyone a raise during that time, or advance pay them…limited to what they would have made the 30 days prior to this.

 Taking the Credit

  • Similar to the Families First sick/child care leave – this will reduce 941 deposits, providing an immediate cash flow offset.
  • Unlike the Families First Act, this act does not specifically say the credit will be considered taxable income...but guidance will probably come out later saying it is.

Paycheck Protection Program - Loans available to business that make a good faith certification that due to the uncertainty of current economic conditions a loan is necessary, and the funds will be used to retain workers/maintain payroll/make qualified payments.

Applications for small business Paycheck Protection Program open April 3 - Journal of Accountancy

If you participate in this Paycheck Protection Program, you would be ineligible for the new Employee Retention Credit, which would cover 50% of employee wages up to $10,000 each ($5,000 credit per employee).

 Eligible Employers

  • Less than 500 employees
  • Includes 501(c)3 and self-employed

 Maximum Loan

  • 2.5 times the average monthly “payroll costs” (defined below) based on the 1 year period before the date on which the loan is made.
  • Seasonal employers can use the 12 week period beginning 2/15/19 or 3/1/19
  • If not in business 2/15/19 – 6/30/19, then use the period 1/1/20 - 2/29/20

 Loan proceeds can be used for expenses during the “Covered Period”  2/15/20 – 6/30/20 Note this date range.

  • “Payroll Costs”
  • Interest on mortgage payments
  • Health Insurance
  • Rent/lease payments
  • Utilities
  • Interest on any other debt obligations that were incurred before 2/15/20.

 Payroll Costs defined

  • Salary, wages, commissions, tips, PTO – excluding compensation of an individual employee whose annual salary is in excess of $100,000.
  • Health insurance premiums
  • Retirement benefits
  • Excludes payments under the Families First act (because those are already being reimbursed)

 Loan Details

  • Must use a bank able to lend under the SBA 7(a) guaranteed lending program – the local banks below qualify…check with your current bank first.
    • Chase Bank
    • Huntington Bank
    • Key Bank
    • Richland/Park National Bank
    • US Bank
  • Loan is at 4% interest, automatic deferral of principal, interest and fees for 5 months.
  • Repayment terms of up to 10 years.
  • No collateral requirement, No personal guarantees, No credit elsewhere tests
  • No SBA fees, but the lender could charge a processing fee.
  • Even if you would need to repay a significant portion of the loan – getting the loan will be much smoother than the other SBA financing options.

Loan Forgiveness - business that maintain payroll continuity from 2/15/20 – 6/30/20 can request forgiveness for some/all of the Paycheck Protection Program loans.

Employers must apply for the forgiveness – it is not automatic.

 Eligible Forgiveness

  • Costs Incurred and Paid during  “covered period” - 8 week period beginning on the date of loan origination. Note – this is a different period than the dates above.  Seems like you can use the loan proceeds for a wider period than what would be forgiven.

 Eligible Costs to be Forgiven – note, these are slightly different than the above

  • “Payroll Costs” – same definition as above
  • Interest on mortgage payments – mortgage had to be in place before 2/15/20
  • Rent/lease payments – agreement had to be in effect before 2/15/20
  • Utilities – services beginning prior to 2/15/20
  • ***NOT - Interest on any other debt obligations that were incurred before 2/15/20.***

 Cancellation of Indebtedness

  • Will not be considered taxable income to the company

 Reduction in Amounts Forgiven

Reductions in workforce, salaries and wages that occur from 2/15/20 – 4/26/20 will be disregarded so long as the reductions are eliminated by 6/30/20

  • Reduction based on reduction in number of employees
    • Average number of FTE employees per month 2/15/19 – 6/30/19 or
    • Average number of FTE employees per month 1/1/20 – 2/29/20
    • Average number of FTE employees per month employed during the covered period (8 weeks) divided by either:
    • Average number of FTE is determined by calculating the average number of FTE for each pay period within a month
    • FTE (Full-Time Equivalent) Employees – the regs do not specify if a full time person is calculated based on 30 hours per week or 40 hours per week. 
  • Reduction based on salary and wages
    • The amount of any salary/wage decrease in excess of 25% of the total salary/wages during the most recent full quarter such employee was employed before the 9 week period.  (Include only employees at less than $100,000 for 2019)

 

Families First Coronavirus Response Act - Effective 4/1/2020. All employers with less than 500 employees must offer PAID sick pay to their employees. 

 

 Ohio Unemployment

 

Ohio Bureau of Workers' Comp

 

Health Insurance Coverage Flexibility for Ohio Employers

 

Richland Area Chamber & Economic Development

 

Plante Moran COVID-19 Resource Center

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