COVID-19 UPDATES FROM MARSHALL JONES

In these uncertain times, we want to offer you the assurance that Marshall Jones is working at maximum capacity to service all of your audit, tax and bookkeeping needs, and is actively monitoring legislation at the Federal and State level that could impact you and your businesses.

We urge you to continue to consult with us prior to taking action based on news reports which are sometimes incomplete.  This blog will be updated with only the most impactful and official news and legislation, relevant to you.

While there have been many reports and rumors on tax relief, stimulus packages, and the like, only one major piece of legislation has been signed so far, though more are expected in the coming weeks.  Below is a synopsis of the major provisions in this legislation, with a simple description of how they may affect you and your business.

I. Congress – CARES Act

On March 27, 2020, the “Coronavirus Aid, Relief, and Economic Security Act” or the “CARES Act” was
signed into law, in part to provide a variety of funding streams for economic relief and stimulus to those
economically impacted by the COVID-19 pandemic. We have highlighted some of the more relevant and
impactful parts of this new law below.

Title I – Keeping American Workers Paid and Employed Act

Paycheck Protection Program

• Paycheck Protection Loans, guaranteed by the SBA, available to businesses and 501(c)(3) nonprofits with fewer than 500 employees.  This includes sole proprietorships, independent contractors, and self-employed individuals.
  • Maximum loan will be 2.5 times the average monthly payments of the following items for the 1-year period before the date the loan is made plus total amounts due under other certain SBA loans:
    1. Salary, wage, commission, or similar compensation
    2. Payment of cash tip or equivalent
    3. Payment for vacation, parental, family, medical, or sick leave
    4. Allowance for dismissal or separation
    5. Payment required for the provisions of group health care benefits, including insurance premiums
    6. Payment of any retirement benefits
    7. Payment of State and local tax assessed on the compensation of employees
  • Loan funds may be used for:
    • Payroll costs defined above
    • Other group health care benefits paid
    • Payments of interest on any mortgage obligation (excluding prepaid interest)
    • Rent
    • Utilities
    • Interest on other debt obligations
  • Borrower Requirements
    • Good faith certification by the borrower.
  • Deferral of Repayment
    • Lenders must defer payment of principal and interest to between 6 months and 1 year.
    • There will be no prepayment penalty.

Loan Forgiveness

Borrowers are eligible for forgiveness of loans equal to the sum of the following costs incurred and payments made from February 15, 2020 through June 30, 2020

• Payroll costs defined above
• Payment of interest on mortgage obligations (excluding prepaid interest)
• Rent
• Utilities

Forgivable amount calculated above may be reduced by the following:

• Pro-rata reduction of full-time equivalent employees
• Pro-rata reduction of total salary or wages
• Rehires are taken into consideration for this calculation
• Documentation required to apply for forgiveness include:
  • Payroll tax filings
  • state income, payroll, and unemployment insurance filings
  • Documents verifying payments on covered payments such as cancelled checks and receipts
  • Certification of proper use of funds
• Lender has 60 days to approve forgiveness
• Forgiven amounts will not be taxable

Learn more about the New Clarity Around Preparing for PPP Loan Forgiveness and the updated PPP Act passed by Congress on June 3, 2020.

Emergency EIDL Grants

• From January 31, 2020, through December 31, 2020, businesses and nonprofits are eligible for another type of loan through the SBA.
  • $10,000 advanced may be received 3 days after SBA receives application.
    • Funds are to be used for providing paid sick leave to employees
    • Maintaining payroll to retain employees.
    • Meeting increased costs to obtain materials unavailable from original source.
    • Making rent or mortgage payments.
    • Repaying obligations that cannot be met due to revenue losses.
  • This advance does not have to be repaid even if the loan is denied.

If you are interested in applying for any of the available loans, please let us know.  We are happy to assist you in the application and loan forgiveness process, or help to answer other questions you may have about the available SBA loans.

Title II – Assistance for American Workers, Families, and Businesses

Rebates and Other Individual Provisions

• Individuals unable to work due to COVID-19 for a period of up to 39 weeks from January 27, 2020, through December 31, 2020, are eligible for relief in amounts based upon State calculations.
  • Most individuals will receive an advanced tax credit refund of $1,200 ($2,400 in the case of eligible individuals filing a joint return), plus $500 for each qualifying child.
  • This credit will be phased out by 5% of the amount of adjusted gross income of your 2019 or 2018 tax return that exceeds the following:
    • $150,000 for joint filers
    • $112,500 for head of household filers
    • $75,000 for other tax payers

Other Individual Tax Provisions

• Required Minimum Distributions from Qualified Retirement Plans are waived for 2020.
  • 10% penalty for early retirement plan withdrawal is waived for distributions up to $100,000 for qualified individuals affected by the virus.
    • Cash Charitable contributions during 2020 which are normally limited to 60% of Adjusted Gross Income are not subject to that limitation.
    • Taxpayers who do not itemize are eligible for a $300 cash charitable contribution deduction in arriving at Adjusted Gross Income.
    • Employer provided payments up to $5,250 per employee for student loan repayments are not includable in taxable income for any payments made before 1/1/2021.
    • Net Operating Loss deductions (NOL) previously limited to offsetting 80% of taxable income are allowed to fully offset taxable income in tax years beginning after 2017.
    • NOLs arising in a tax year beginning AFTER 12/31/2018 is eligible to be carried back to each of the FIVE preceding tax years.
    • The limit on Excess Business Losses has been lifted for tax years 2018, 2019 and 2020.  The Excess Business Loss limitation restricted Trade or Business Losses to Trade or Business income plus $250,000 ($500,000 if Married Filing Jointly).

Other Business Tax Provisions

• The payment of the employer portion of payroll taxes (FICA and Medicare) can be deferred until 12/31/2021 for 50% of such taxes and 12/31/2022 for the remaining 50%.
  • The 30% limitation on the deductibility of business interest expense has been increased to 50% for tax years beginning in 2019 and 2020.
    • A technical correction designates Qualified Improvement Property as 15-year property, thus qualifying for 100% Bonus First Year Depreciation deduction effective retroactively for all property placed in service after 12/31/2017.
    • Corporations with Corporate Minimum Tax Credits, can claim 100% of those AMT credits in 2019.

Please know that these tax changes are often complex and face certain restrictions.  Please consult your Marshall Jones advisors for specifics as to how these changes may affect you.

Congress Public Law 116-136

Paycheck Protection Program

Treasury – CARES Act

I. IRS – RELIEF FOR TAXPAYERS AFFECTED BY ONGOING CORONAVIRUS DISEASE 2019 PANDEMIC: NOTICE 2020-18

Filing and Payment Relief

• The 2019 income tax filing and payment deadlines for all taxpayers who file and pay their Federal income taxes on April 15, 2020, are automatically extended until July 15, 2020.
• There will be no interest accruing from April 16^th through July 15^th and no penalties for filings or payments due April 15^th that are completed by July 15^th.
• This relief applies to all individual returns, trusts, and corporations.
• This relief is automatic, taxpayers do NOT need to file any additional forms or call the IRS to qualify.
• Estimated tax payments for quarter one of 2020 that are due on April 15, 2020 are also automatically extended until July 15, 2020.
• Individual and business taxpayers who need additional time to file beyond the July 15 deadline can request a filing extension until September 15 or October 15 based on prior law.

Marshall Jones is closely monitoring all new regulations from the IRS and are prepared to help businesses navigate the impacts and ensure proper compliance. 

If you are due a refund, please send your information in as soon as it is complete so we can get your refund into your hands!

Official IRS Publication

IRS Filing and Payment Deadline FAQs

II. GEORGIA DEPARTMENT OF REVENUE – GEORGIA CORONAVIRUS TAX RELIEF INFORMATION

• The Georgia Department of Revenue is automatically extending the 2019 income tax filing and payment deadline to July 15, 2020
• Vehicle registrations that expire between March 16, 2020 and May 14, 2020 are also being extended through May 15, 2020
• Press release and FAQs on tax relief can be found at the link below

Georgia Tax Relief

AICPA GUIDE TO STATE FILING RELIEF

III. CONGRESS – CORONAVIRUS PREPAREDNESS AND RESPONSE SUPPLEMENTAL APPROPRIATIONS ACT, 2020: PUBLIC LAW NO: 116-123

The U.S. Small Business Administration is offering designated states and territories low-interest federal disaster loans for working capital to small businesses suffering substantial economic injury as a result of the Coronavirus (COVID-19). Upon a request received from a state’s or territory’s Governor, SBA will issue under its own authority, as provided by the Coronavirus Preparedness and Response Supplemental Appropriations Act that was recently signed by the President, an Economic Injury Disaster Loan declaration.

On March 18, 2020, Governor Brian P. Kemp announced that Georgia has received an official statewide disaster declaration from the U.S. Small Business Administration (SBA). This declaration will provide assistance in the form of SBA Economic Injury Disaster Loans to impacted small businesses in all 159 counties in Georgia

GEORGIA SBA PRESS RELEASE

CONGRESS BILL 116-123

SBA DISASTER ASSISTANCE

IV. CONGRESS – FAMILIES FIRST CORONAVIRUS RESPONSE ACT: PUBLIC LAW NO: 116-127

Emergency Family and Medical Leave Expansion Act and Emergency Paid Sick Leave Act

• The current employee threshold for FMLA coverage changed from only covering employers with 50 or more employees to instead covering those employers with fewer than 500 employees.
• It also lowers the eligibility requirement such that any employee who has worked for the employer for at least 30 days prior to the designated leave may be eligible to receive paid family and medical leave. 
• It requires qualifying employers to provide two weeks of paid sick leave to employees affected by coronavirus (for a number of hours determined by an employee’s full- or part-time status) 
• Emergency sick leave is limited to:
  • $511 per day/$5,110 in the aggregate for employees that are in quarantine or seeking a diagnosis for coronavirus; 
  • $200 per day/$2,000 in the aggregate to care for a quarantined family member or to provide childcare.
• It provides employees the right to take up to 12 weeks of job-protected leave if the employee or a family member is in quarantine or if a child’s school or place of care is closed due to the coronavirus; 
• It requires employers to provide no less than 2/3rd of the employee’s usual pay up to $200 per day, $10,000 in total; 
• The 12 weeks of job-protected leave can apply AFTER employees take the provided two weeks of emergency paid sick leave. 

• The Department of Labor has the authority to exempt small businesses with fewer than 50 employees from compliance when “imposition of [the paid sick leave requirements] would jeopardize the viability of the business as a going concern.” The guidance for how to apply for exemption will be released by DOL at a later time.
• Business closures or shutdowns are not covered reasons requiring paid sick leave.

Tax Credits For Paid Sick And Paid Family and Medical Leave

Paid Sick Leave Credit

• For an employee who is unable to work because of Coronavirus quarantine or self-quarantine or has Coronavirus symptoms and is seeking a medical diagnosis, eligible employers (those with fewer than 500 employees) may receive a refundable sick leave credit for sick leave at the employee’s regular rate of pay, up to $511 per day and $5,110 in the aggregate, for a total of 10 days.
• For an employee who is caring for someone with Coronavirus, or is caring for a child because the child’s school or child care facility is closed, or the child care provider is unavailable due to the Coronavirus, eligible employers may claim a credit for two-thirds of the employee’s regular rate of pay, up to $200 per day and $2,000 in the aggregate, for up to 10 days. Eligible employers are entitled to an additional tax credit determined based on costs to maintain health insurance coverage for the eligible employee during the leave period.

Child Care Leave Credit

• In addition to the sick leave credit, for an employee who is unable to work because of a need to care for a child whose school or child care facility is closed or whose child care provider is unavailable due to the Coronavirus, eligible employers may receive a refundable child care leave credit. This credit is equal to two-thirds of the employee’s regular pay, capped at $200 per day or $10,000 in the aggregate. Up to 10 weeks of qualifying leave can be counted towards the child care leave credit. Eligible employers are entitled to an additional tax credit determined based on costs to maintain health insurance coverage for the eligible employee during the leave period.

The expansion of required paid sick leave is designed to be completely reimbursable to the employer through immediate tax credits to payroll taxes

Each of these tax credits has complex qualifications, guidelines and reporting requirements The expansion of required paid sick leave is designed to be completely reimbursable to the employer through immediate tax credits to payroll taxes that could change rapidly and dramatically as the coronavirus outbreak continues.  We will keep you updated as we learn more and ask that you contact us with specific questions.  

116TH CONGRESS BILL 116-127

V. GEORGIA DEPARTMENT OF LABOR – EMERGENCY RULES ADOPTED 03-19-20

The Georgia Department of Labor (GDOL) has adopted an emergency Rule 300-2-4-0.5 Partial Claims, effective March 16, 2020. The rule mandates all Georgia employers to file partial claims online on behalf of their employees for any week during which an employee (full-time/part-time) works less than full-time due to a partial or total company shutdown caused by the COVID-19 public health emergency. Any employer found to be in violation of this rule will be required to reimburse GDOL for the full amount of unemployment insurance benefits paid to the employee.

Filing partial claims results in your employees receiving unemployment insurance (UI) benefit payments faster, usually within 48 hours for claims filed electronically.

Employees for whom you file a partial claim are NOT required to report to a Georgia Department of Labor career center, register for employment services, or look for other work.

On March 19^th, the following additional emergency measures were adopted,

… in the determination of the Commissioner, the account of an employer may not be charged for certain benefits paid for unemployment due to the COVID-19 public health emergency, including benefits paid on partial claims filed online.

The Georgia Department of Labor has links to many help FAQs for employees and employers alike to assist with complying with the rule change.  Please follow this link to access this information.

GEORGIA DOL COVID 19 INFORMATION

GEORGIA DOL EMERGENCY RULES

Is your business in need of virtual accounting services? Contact Marshall Jones online or by phone (404) 231-2001 for more information