Overview of the CARES Act and Paycheck Protection Program with Partner Vincent Gotko
Overview of the CARES Act and Paycheck Protection Program with Partner Vincent Gotko
Recently, our partner Vincent Gotko presented to the Birmingham Bloomfield Chamber about legislation passed due to COVID-19. Gotko’s presentation focused on the CARES Act recently signed in to law.
Viewers can learn more about how the CARES Act impacts businesses and individuals, as well as get more information on the Paycheck Protection Program. This program was passed on March 27, 2020. The intended purpose of the fund is to continue paying employees. Loan forgiveness options are available. More information and an overview of the program can be found here:
https://www.youtube.com/watch?v=javRS5uO5r8
Another important topic impacting many businesses is employee tax credits for employers. This includes the employee retention credit, credit for required paid sick leave, and credit for required paid family leave. The last two are part of a separate act passed just before the CARES Act. More information about these credits and how to use them can be found here: https://www.youtube.com/watch?v=FGta8BfFsow
You can find a summary of COVID-19 legislation here: https://www.youtube.com/watch?v=EPnFl5GP58I
This video goes over individual provisions regarding special rules for the use of retirement funds: https://www.youtube.com/watch?v=Oy0uKCovJj8
This video provides more information on the changes to charitable contribution deduction rules: https://www.youtube.com/watch?v=grls5L5csPQ
If you want to learn more about the modifications for net operating losses impacting businesses, click here: https://www.youtube.com/watch?v=-m4PGZvFOBE
This video covers the delayed payment of employer payroll taxes:
https://www.youtube.com/watch?v=SbZftbeD-0k
For more information about the importance of hiring a CPA and how CPAs can help during this time, click here: https://www.youtube.com/watch?v=vZqw-QzO67c
More information about Fenner, Melstrom & Dooling, PLC can be found here: https://www.youtube.com/watch?v=4e5Rysy4Vrg
For more information and to better understand the full picture, Mr. Gotko’s full presentation can be viewed here: https://www.youtube.com/watch?v=iOsJnfEh8dQ.
If you need more assistance determining how these new laws and programs impact you and your business, a trusted Fenner, Melstrom & Dooling, PLC advisor would be happy to answer your questions. Fill out the form on our contact page or give us a call, and we will help you determine your plan moving forward. These are unique times, but we are getting through it together!
FMD is monitoring the progress of this bill closely and we will post and update as soon as we know more. In the meantime, please continue to visit our website for continuing updates on all COVID-19 related matters.
H.R. 7010 Passes U.S. Senate Without Revision - Paycheck Protection Program Flexibility Act of 2020 (PPPFA)
H.R. 7010 Passes U.S. Senate Without Revision - Paycheck Protection Program Flexibility Act of 2020 (PPPFA)
Late in the day on June 3, 2020, the U.S. Senate passed H.R. 7010 by unanimous consent with virtually no changes to the bill passed six days earlier by the U.S. House of Representatives. It is anticipated the President will sign the bill into law as soon as possible.
As we highlighted in our previous post, the most significant provisions of this new bill are as follows:
1. Extends the covered period from 8 weeks to 24 weeks from date of loan origination or December 31, 2020, whichever comes first. (Loan recipients who received a PPP loan prior to the enactment of this bill may elect to retain their original 8-week covered period.)
2. Replaces the June 30, 2020 “safe harbor” rehire date with the December 31, 2020 date.
3. Eliminates the proportional reduction of forgiveness if:
A. an employer can document in good faith they are unable to re-hire the same, or equally qualified, employees they had on February 15, 2020 on or before December 31, 2020, or
B. the employer is able to document an inability to return to their same level of business activity at or before February 15, 2020 due to compliance with guidance issued by the Secretary of Health & Human Services, the Director of the Centers for Disease Control and Prevention or the Occupational Safety and Health Administration during the period March 1, 2020 to December 31, 2020, related to the COVID-19 pandemic.
4. Reduces the amount of PPP Loan proceeds required to be spent on payroll related costs from 75% down to 60%.
5. Establishes the repayment deferral period for unforgiven PPP loan proceeds to end when the amount of loan forgiveness is remitted to the lender (presumably by the SBA).
6. Extends the repayment period of any unforgiven PPP loan amounts from 2 years to a minimum of 5 years.
7. Requires loan repayments to begin 10 months after the last day of the covered period if no application for forgiveness is filed with the lender.
8. Allows PPP loan recipients to be eligible to participate in the payroll tax payment deferral provisions of the CARES Act.
Although the bill was not changed by the Senate, we have seen the U.S. Small Business Administration make many interesting interpretations of various provisions of the PPP Loan Program and the proposed forgiveness calculations since the CARES Act was passed. It is anticipated we will see a new round of Frequently Asked Questions (FAQs) and Interim Final Rules to provide additional guidance on this bill.
FMD is monitoring the progress of this bill closely and we will post and update as soon as we know more. In the meantime, please continue to visit our website for continuing updates on all COVID-19 related matters.
U.S. House of Representatives Passes H.R. 7010 to Modify PPP Loan Forgiveness Calculation (Paycheck Protection Program Flexibility Act of 2020)
U.S. House of Representatives Passes H.R. 7010 to Modify PPP Loan Forgiveness Calculation (Paycheck Protection Program Flexibility Act of 2020)
On May 28, 2020, the U.S. House of Representatives passed H.R. 7010 that provides several modifications to the calculation of PPP loan forgiveness and repayment terms. The bill passed with an overwhelming 417 to 1 vote.
The bill is now in the U.S. Senate for review and debate, so it is not law yet; however, it is clear from the House vote that the legislature is listening to small business owners who are struggling to meet the 8-week covered period spending and re-hire provisions. This 8-week period is particularly challenging for businesses located in states where mandatory stay at home orders are still in place and for those industries that operate where customers and employees interact in close physical proximity (i.e. restaurant/bars, gyms, salons, tattoo shops).
The significant provisions of the new bill are as follows:
1. Extend the covered period from 8 weeks to 24 weeks from date of loan origination or December 31, 2020, whichever comes first.
2. Extend the June 30, 2020 “safe harbor” rehire date to December 31, 2020.
3. Eliminate the proportional reduction of forgiveness due to an employer’s inability to re-hire enough full-time equivalent (FTE) employees due to shutdown orders on or before December 31, 2020.
4. Reduce the amount of PPP Loan proceeds required to be spent on payroll related costs from 75% to 60%.
5. Extend the repayment deferral period of unforgiven loan proceeds from 6 months to 1 year.
6. Extend the repayment period of any unforgiven PPP loan amounts from 2 years to a minimum of 5 years.
7. Require loan repayments to begin 10 months after the last day of the covered period, if no application for forgiveness is filed.
8. Allow PPP loan recipients to be eligible to participate in the payroll tax payment deferral provisions of the CARES Act.
The above provisions will likely be modified by the Senate but are a good indication of where the actual final law may end up.
FMD is monitoring the progress of this bill closely, and we will post an update as soon as we know more. In the meantime, please continue to visit our website for continuing updates on all COVID-19 related matters. www.fmdcpas.com