As you are all well aware, the ongoing pandemic happening in our country and around the world involving COVID-19 has caused quite an interruption in daily life, as well as our local, federal, and worldwide economy. In response to this, Congress has been working on multiple relief bills for the American people.
As things progress rapidly through the government, we are hoping to provide relative information to each of you in regards to operating your businesses in these trying times.
Congress and Senate Bills Analysis
Last week, Senate Republican leaders released their version of a stimulus package, named the “Coronavirus Aid, Relief, and Economic Security Act” or the “CARES Act.” This week, House Democratic leaders proposed an alternative, “Take Responsibility for Workers and Families Act.” These bills are still being worked on, and we expect there to be some compromise. Reports are that something should be finalized tomorrow, but it may take the rest of the week to reach a resolution. Here are a few of the items that the bills have in common, and we would expect to make it through in the final form in some fashion. Many of these were outlined in our earlier communications, so we won’t bog down this update with too many tedious details.
The Senate bill is calling for checks up to $1,200 per adult, and $500 per child, amounts determined based on your 2018 AGI. In the House bill, checks would be up to $1,500 per adult, and $1,500 per child (up to three children). There is also a phaseout based on 2018 AGI.
Small Business Assistance
Both the House and Senate versions of the bill aim to provide small business loans for companies to continue their payroll. This is a key item for most of our clients to monitor, and we are monitoring it closely as well. Mnuchin has previously indicated that loans used for payroll support could be forgiven if businesses retain employees through June 30, 2020. The House version also indicates that qualifying small businesses and independent contractors (1099 workers) would be eligible for zero percent interest loans.
Paid Family and Sick Leave
Both the House and Senate bills expand previously passed bills, including the brand new Families First Coronavirus Response Act. We are monitoring this closely as well, as it is likely to provide employer relief on the condition of maintaining payroll.
These are the 3 items that we have found to be most closely tied to our clients, and we wanted to communicate these items to you. Please give us a call or email if you would like to discuss, or if you are feeling overwhelmed by all of this information. We are working diligently to stay up to date, as we also continue our day to day operations of providing client service.
Given our concentration of clients in Lubbock and the surrounding communities, we wanted to pass along the most recent guidance on essential vs. non-essential businesses and closings that have come with the fourth disaster declaration for the city by Mayor Dan Pope. This link will provide more in-depth details, but a snapshot of essential businesses (those that can continue to operate) is listed below.
Businesses considered essential:
- grocery, convenience and package stores
- pharmacy and drug stores
- day-care facilities
- health care providers and facilities
- pet food & veterinary care
- vehicle fueling, parts, repair and maintenance
- homeless shelters and non-profit providers of essential services;
- essential government services and facilities;
- banks, financial and professional services;
- office buildings;
- transit and airport facilities and services;
- residential buildings, hotels and motels – except group meeting spaces;
- manufacturing, distributing and logistics;
- residential, commercial and industrial construction
- jobs and job-sites and related supply chains within stated occupancy limits;
- laundromats & dry cleaners;
- call centers
Payroll Tax Credits
The Treasury, IRS, and Labor Department have advised that small and midsized employers can start taking advantage of the two new refundable payroll tax credits aimed at providing coronavirus-related leave to their employees. This is part of the aforementioned Families First Coronavirus Response Act. This is for employers with fewer than 500 employees. The kicker on this, in contrast to what is working through Capitol Hill now, is that it is for leave due to COVID-19 related reasons.
To take advantage of the paid leave credits, businesses can keep and access funds they would otherwise pay to the IRS in payroll taxes. If those amounts aren’t enough to cover the cost of paid leave, employers can seek an expedited advance from the IRS by submitting a streamlined claim form that will be released next week.
For an employee who’s unable to work because of coronavirus quarantine or self-quarantine or has coronavirus symptoms and is seeking a medical diagnosis, eligible employers can 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’s 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 coronavirus, eligible employers can 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.
Along with the sick leave credit, for an employee who’s unable to work because of a need to care for a child, eligible employers can receive a refundable child care leave credit. The 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 process and system for this should become more clear through this week and into next. We are hoping for a good guideline and explanation before the end of the month, with many payrolls set to hit on March 27th and March 31st.
Again, please do not hesitate to reach out to any of us here at BB&T, we will continue to monitor all developments and keep you all informed to the best of our ability.