COVID-19 Update (06/25/2020)
As businesses across the country slowly reopen, the IRS is also beginning to send employees back. So far, employees in seven states (Kentucky, Texas, Utah, Georgia, Minnesota, Tennessee and Missouri) are back at work, and by June 29, employees in Indiana, Ohio, California, Oregon and Puerto Rico will be also. That’s a good thing, because those employees have a backlog of more than 11 million pieces of unopened mail to process. The IRS has also suspended some of its collection and audit activities through July 15, and plans on reducing in-person audits even after that date.
Small blessings such as a bit more leniency from the IRS are always welcome, as we move forward together!
CARES ACT UPDATES
Tax impact of CARES Act
The intention of the CARES Act was to put money in the pockets of individuals and business owners quickly, but some of the provisions may bring unwelcome surprises when it’s time to pay taxes. For example, the deadline for filing individual tax returns was delayed from April 15 to July 15. That delay also meant that the dates for paying the first two installments of quarterly estimated taxes were pushed back to July 15. So in just a few weeks, taxpayers who pay estimated taxes will be paying half of what they owe for 2020 plus whatever they may still owe from their 2019 taxes. This might be a challenge, given the COVID-19 business slowdowns everyone has endured.
Also, the expansions to unemployment programs may result in more people owing taxes for 2020 than normal. Unemployment compensation is taxable income, but not everyone is aware that they have to specifically request that federal tax be withheld from the payments by filing Form W-4V. Usually unemployment benefits are meager enough that they may not add much to a recipient’s taxable income. However, the expansion to unemployment means that the average weekly benefit is nearly $1,000.
Economic Impact Payments (aka Stimulus Checks)
By early June, the IRS had processed over 159 million Economic Impact Payments totaling nearly $267 billion. However, many people haven’t received them. Even though the IRS continues to add FAQs to its website, particularly with new advice for people whose payment has been issued, but the check has been lost, destroyed or stolen, that information isn’t always sufficient. This article in the Washington Post clarifies what to do if you discarded your prepaid debit card stimulus payment, and how to trace payments that the IRS system says have been issued.
In addition, the IRS recently issued an advisory reminding nursing homes and care facilities that the economic impact payments belong to the recipients, not the facilities. Also, these payments should not be counted as income to determine eligibility for federal benefit or assistance programs.
Paycheck Protection Program (PPP)
Once again, the SBA and Treasury waited until Friday to release updated guidance on the PPP. This time, however, it was also released in draft format a few days earlier to give people a few more days to digest it, as Brian Thompson did on Forbes. The newest guidance clarifies that freelancers and other solo self-employed persons can expect to receive 100% forgiveness if they choose the 24-week measurement period, which is automatic for anyone who applies after June 5. The SBA also released a simplified forgiveness application, Form 3508EZ, and instructions specifically designed for very small businesses and the self-employed. Funds are still available for this program, but applications will be accepted only through June 30.
If you received a PPP loan of more than $150,000, your name and the amount you received will be made public. That’s according to an agreement made between the SBA, Treasury and Senate leaders.
Economic Injury Disaster Loans (EIDL)
Starting on June 15, the SBA began accepting applications for Economic Injury Disaster Loans from all types of businesses, not just agricultural operations. Businesses can receive a $10,000 emergency grant, or a loan, possibly up to $2 million. However, due to the high demand for resources, loans may be capped at $150,000.
HELP FOR SMALL BUSINESS
Main Street Lending Program
The Federal Reserve’s Main Street Lending Program is now underway, and additional FAQs were posted on June 20. Some organizations may find this a better alternative than the PPP due to the lack of ambiguity about whether the proceeds are a loan or free money. To make it easier for small businesses to participate, the minimum loan has been decreased from the original $500,000 to $250,000, and the payback period has been increased from four years to five years. More details about the program are available from the Boston Federal Reserve, including a page for borrowers, which also includes recordings of webinars.
WORKING FROM HOME
Working from home blurs the lines between work and life, and since the COVID-19 shutdown, burnout has become a bigger problem. Employees are spending more time working – or at least logged in – than before, and with most businesses still not fully open, taking time for oneself can feel harder to justify. Creating routines for work and focusing on results, rather than hours put in, can help keep everyone productive and reduce stress.
According to some measures, employee productivity has increased 47% in 2020. Prodoscore, which measures employees’ use of telephones, customer relationship management systems, email and chat, found that usage of all of these tools has increased. Their data also indicated that assumptions about the 40-hour work week productivity of remote workers may need to be re-examined. For example, they found that Tuesday, Wednesday and Thursday are the most productive days of the week, and that the most productive time of the day is between 10:30 am and 3:00 pm.
Working from home might be the way more of us work in the future. According to a recent survey of CFOs by Gartner, nearly three out of four CFOs surveyed indicated that they would be keeping part of their workforce at home permanently.
LIVING WITH AND AFTER THE PANDEMIC
Going back to work
Before reopening your office, consider whether your employees are still productive and whether your customers’ needs are being met. If the answer to both is ‘no,’ then here are four things to consider before bringing everyone back to the office. Create a plan. Gather input from employees. Communicate your plan, and, finally, be flexible and patient.
Riding in elevators may need a few adjustments to keep everyone safe. Fewer people, wearing masks, not touching anything and avoiding talking should reduce risk of transmission sufficiently, according to public health experts.
Reopening is tricky, especially with a patchwork of rules and guidance between states and cities, and entrepreneurs are making it up as they go. Opening slowly, planning for additional expenses and keeping a close eye on financials are tactics that some have used to successfully navigate the new unknowns.
Keeping employees safe is a big concern to employees, especially since nearly one in four Americans is at risk for serious complications if they contract COVID-19. That’s according to recent analysis by the Kaiser Family Foundation.
A full economic recovery may not happen until people are confident that the pandemic has been contained, according to Fed Chairman, Jerome Powell. According to Powell, after a first phase of sharp economic contraction, we may be entering a second phase, marked by large increases to re-employment. The third and final phase of recovery may take the longest. This last stage requires Americans to feel comfortable engaging in activities that require close contact or large gatherings.
The office of the future
Offices and workspaces are likely to be redesigned with attention to cleanliness and keeping employees safe. Keypads to open doors may be replaced with apps on phones. Businesses may experiment with keeping some team members at home on a rotating basis to facilitate social distancing. And to encourage team members to come into the office at least part of the time, businesses may invest in making their offices more appealing, perhaps by adding outdoor work spaces.
- Payroll, HR and benefits company Gusto has put together An Employer’s Guide to Navigating the Coronavirus
- Accounting Today has a special page for articles on COVID-19
- The best source for up-to-date and accurate health information is the Center for Disease Control (CDC)
- The CDC also has recommendations for businesses and employers
- The Red Cross has pointers to help young adults stay safe
- Entrepreneur put together a listing of free tech resources for remote work
- Kiplinger has a state-by-state guide to absentee ballot voting.
- The Consumer Financial Protection Bureau has warnings about COVID-related scams
We sincerely hope that you and your family are well and remain well. If you have any questions or concerns, don’t hesitate to reach out to us. We are all in this together!