TH3 CPA: COVID-19 Update- March 20th
The Tax filing deadline has now been extended to July 15th. This means the filing and payment due date are both now July 15th for 2019 taxes.
Families First Coronavirus Response Act Update
On March 18th, the Corona Virus Response Act was signed into law. These provisions will not go into effect for at least 15 days from March 18th (April 2nd) and will expire on December 31, 2020.There are still many unknowns and clarifications that need to be made by the Department of Labor and Secretary of Labor. We believe these requirements below are for staff that are employed by your business (but could be later clarified).
We are advising clients to consult with an employment attorney for specific questions as they are specialists. Our goal is to relay information to you as we receive it. We are not attorneys and this is not legal advice for your business.
Employers with less than 500 employees would be required to pay an additional two weeks (80 hours or for part time employees average hours in a two week period) for paid sick leave at their regular rate of pay up to $511/day. The employee must meet one of the following three conditions which would not allow them to work:
1. The employee is subject to a federal, state or local quarantine or isolation order related to COVID-19.
2. The employee is quarantined at the direction of the health authority or healthcare provider to prevent the spread of COVID-19.
3. The employee is experiencing symptoms of COVI-19 and is seeking a diagnosis.
Employers with less than 500 employees would be required to have an additional two weeks of paid sick leave for two-thirds of their employees' usual pay up to the daily limit of $200 (not to exceed $2,000/employee). The employee must meet one of the following three conditions which would not allow them to work (there is a small business exclusion for condition #5 below for businesses under 50 employees that would jeopardize the viability of the business that the ADA is lobbying for an exemption):
4. The employee is caring for another person who is subject to #1 or #2 above
5. The employee is caring for a child or another person due to closure of a school or other facility due to COVID-19.
6. The employee is experiencing similar conditions that have been specified by the US Department of Health and Human Services.
Emergency Paid Leave
The bill includes an emergency paid leave amendment for employees who are unable to work due to school or daycare closures. Employers with less than 50 employees may be exempt if the Secretary of Labor finds this requirement would put the businesses’ viability in question.
1. Employees are eligible if they have been employed for 30 days or more and are unable to work in order to care for children under 18 whose school or daycare has been closed due to COVID-19.
2. Unpaid leave for the first 10 days (employees may us PTO) .Paid Leave would take effect on the 11th day continuing up to 10 weeks.
3. Employees are eligible for two-thirds their regular pay (based of average number of hours worked per week over the past 6 months).
4. Starting with the 11th day, benefit cannot exceed $200 per day or a total of $10,000 per employee.
5. The Employer must restore the employee to their position after the leave is completed.
6. Employers with fewer than 25 employees may not be required to rehire the employee if the economic conditions have impacted the business, the employer makes a reasonable effort to let the employee know when an equivalent position exists in the 12 months following the leave, or they make a reasonable effort to restore the employee to a similar position.
Sick and Emergency Paid Leave Tax Credit
The bill includes tax credits for employers that provide the emergency paid sick leave listed above. The credits will not exceed the daily maximum rate for the conditions listed above (i.e $511/day for conditions 1 -3 or $200/day for conditions 4 - 6. The credit taken cannot exceed the tax imposed during any individual quarter. If the credit exceeds the quarterly tax, it will be treated as an overpayment and refunded.
We are receiving calls from clients about these new loans. Practically speaking, at this time this would not be the best option for the majority of our clients. The SBA Loan rate is 3.75% and the current interest rate for a business line of credit is 3.25%. We would recommend using or establishing a line of credit for your business first (get as much as you can).