Update March 30, 2020
We know everyone is still sorting through the details of what assistance options are available to small businesses as part of the COVID-19 related stimulus packages recently signed into law. We wanted to provide an update on what we currently know and what our recommendations are for small businesses.
The SBA has expanded their Economic Injury Disaster Loan Program. Certain companies may qualify for a $10,000 advance on these loans that does not have to be repaid. The 10,000 forgivable advance is limited and will be done on a first come, first serve basis for those who qualify. We believe it would be beneficial for you to determine your eligibility and complete the streamlined application online as quickly as possible to secure your spot in line.
There will also be assistance available through the Paycheck Protection Program (“PPP”) that is part of what was signed into law on March 27. PPP loans are 100% federally guaranteed loans for small businesses intended for companies to maintain their payroll levels and allow partial loan forgiveness, as described below. The loans are available until June 30, 2020 for eligible companies to cover the cost of:
- Health care benefits and related insurance premiums
- Employee compensation (with some limitations for employees with salaries over $100,000 and exclusions for employees based outside the U.S.)
- Mortgage interest obligations (but not principal)
- Rent and utilities
- Interest on debt incurred prior to the loan
The maximum amount of a PPP loan available to each borrower is equal to the lesser of: (a) $10 million, or (b) 2.5 x its average total monthly payroll costs, as defined in the Act. Unlike most typical SBA loans, the PPP Loans are unsecured loans requiring no collateral, no personal guarantee, and no showing that credit is unavailable elsewhere. The PPP loan, to the extent not forgiven, has a maximum 10-year term and the interest rate may not exceed 4%. PPP loans will be made available through SBA-approved lenders, who must offer a 6-12 month deferment on payment of principal, interest, and fees.
A borrower of a PPP loan is eligible for loan forgiveness for amounts spent during the 8-week period after the origination date, subject to proper documentation, on (i) rent, (ii) defined payroll costs, (iii) mortgage interest, and (iv) utilities, not to exceed the principal of the loan. The amount of the PPP loan forgiveness may be reduced if the borrower reduces the number of employees or salaries and wages (for employees with annual salaries less than $100,000) during the 8-week period following the origination of the loan.
We recommend you contact an SBA-approved lender if you are interested in seeking assistance through the Paycheck Protection Program.
Update March 20, 2020
Treasury Secretary Steven Mnuchin has announced that President Trump has directed the IRS to move the filing date from April 15 to July 15. Previously, the IRS had moved the payment deadline, but increasing uncertainty regarding the Coronavirus appears to have led to a change in the actual filing deadline. This would permit taxpayers to wait until July 15th before filing anything, without the need for filing an extension.
Update March 18, 2020
There has been much speculation surrounding the impact of the Coronavirus (COVID-19) pandemic on the U.S. tax filing deadline. At a Tuesday White House briefing, Treasury Secretary Steven Mnuchin announced new relief measures that are effective immediately. The IRS released Notice 2020-17 on March 18, 2020 providing more detailed guidance on this issue.
The Internal Revenue Service (IRS) has extended the tax payment deadline for 2019 income taxes for individuals who owe up to $1 million (regardless of filing status) and corporations that owe up to $10 million.
Eligible taxpayers can defer payment for up to 90 days without accruing interest or penalties. This puts the new tax payment deadline at July 15. As of now, the tax filing deadline remains April 15. The relief provided does not grant an extension of time to file your return. Any normal extensions must still be filed in order to avoid late filing penalties. The payment deferral allowed by the IRS does not apply to states. Individual states will still need to decide whether they will follow suit in granting similar payment relief. The deferral allowed by the IRS applies only to 2019 income tax due and the first quarter 2020 estimated payment due on April 15, 2020.
Our firm will continue to operate with the goal of having tax filings completed by April 15th for clients who timely provide us with information to file.
At this time, our office will remain open for pick-up and drop-off of tax information. However, we will not be meeting with clients as we do our part to combat this virus. We are available by phone or email to discuss any questions.