To say that the COVID-19 pandemic took the world by surprise is an understatement. Legislation is moving at a furious pace to ensure companies and their employees have the necessary resources to weather the storm. Here’s what you need to know about the major acts and programs enacted to date.
Families First Coronavirus Response Act
The Families First Coronavirus Response Act was the first step in providing supplemental appropriations during the outbreak and subsequent “stay at home” and quarantine mandates and recommendations. It mandates paid leave to people affected by COVID-19, tax credits, food and nutritional assistance (and more funding to related programs), increases to unemployment benefits, and insurance requirements for virus testing.
What you need to know:
- IRS Filing Deadline Changes:
- Although federal income tax filings are still due April 15, most individuals and businesses can defer tax payments up to 90 days (or July 15), including self-employed taxes and quarterly filings.
- Payments over $1 million for individuals and $10 million for corporations are due June 15.
- The IRS is updating its coronavirus webpage to help answer questions.
- Coronavirus Leave for Government Entities and Private Sector Employers with Fewer than 500 Employees
- Employers must provide up to 12 weeks of job-protecting leave related to coronavirus exposure quarantine, becoming a caretaker for quarantined family members, or caring for minor children affected by coronavirus school closures.
- Employers must provide paid sick leave to self-quarantining individuals, those serving as caretakers for sick or quarantined family members, or caring for minor children affected by school closures.
- Those caring for others receive ⅔ of normal wages.
- Sick and family medical leave is excluded from FICA taxes
- Tax Credits for Employers and Self-Employed
- Employers will receive tax credits for paid time off.
- Similar rules apply to self-employed individuals.
Although these are the most important aspects from an accounting standpoint, The Act covers more areas, including unemployment insurance. This National Law Review article gives more detail about the Act and its provisions.
SBA Loan Provisions
Although this is not a provision of the Family First Act, the opportunity for targeted, low-interest “Economic Injury Disaster Loans” is critical for many of our clients, and deserves a specific call out.
What you need to know:
- To be eligible for loans of up to $2 million for a term of up to 30 years with $25,000 of collateral, businesses must experience losses as a result of COVID-19.
- Existing SBA Loans won’t prevent you from eligibility as long as you have complied with all terms.
- Funds must be used on working capital, paying fixed debts, payroll, accounts payable, or paying bills that COVID-19 has prevented you from paying.
- Loan terms are up to $2 million for a term of up to 30 years requiring $25,000 of collateral
- Interest rates are 3.75% for small businesses and 2.75% for private nonprofits.
This article does a great job of breaking down specifics and listing the required documentation.
If you need assistance pulling together the information you need to apply, WiJiT can help!
Coronavirus Aid, Relief, and Economic Security Act (CARES)
Although this act relates more specifically to individuals than government contractors, we wanted to share the details with you as there are a few things you do need to know. It’s most important to recognize that this $2 trillion act will support our healthcare system, including medical professionals and first responders, boost our economy, increase support to unemployed workers, and keep more people employed.
What You Need to Know:
- Payroll Support for Small Businesses
- $349 billion is allocated to help small businesses (with under 500 employees) and companies in the hospitality industry (food and accommodation) with fewer than 500 employees per location cover payroll through June 30, 2020.
- Sole proprietorships, independent contractors, and other self-employed individuals may also be eligible.
- Coronavirus Relief Fund
- The Act allocates $500 billion to industries that include airlines and businesses critical to national security.
- Mid-Size Businesses (500-10,000 employees)
- The Treasury Secretary has been charged with developing a program in support of mid-size businesses.
In addition to these provisions, the CARES Act allows funds for individuals and tax provisions for both individuals and businesses. This National Law Review article offers important details.
The Bottom Line
We recognize that there is a lot of information to assimilate in terms of how new Coronavirus legislation relates to your business operations, payroll, finances, and accounting practices. WJT can help your business understand how to adjust your accounting systems to track these expenses and, if applicable, help you gather the necessary documentation for SBA applications or CARES tax provisions.
Contact us today to learn how we can help.