At Profound Financial the health and safety of our office staff and clients are our top priority. With the COVID-19 virus having an increasing impact in our community, we want to let you know how our business is addressing this situation.
Currently, our offices are still open for appointments. Here are the proactive steps we have put in place:
- All clients are encouraged to use our Secure Firm Portal to send us files and exchange documents online. If you need an account for our portal please e-mail us a request.
- Our offices are currently open for phone appointments. Please call us at (623)566-9821 if you want to schedule a phone appointment in lieu of a live visit. You can also schedule using our online calendar.
- While we prefer documents are sent in using our secure portal or e-mail if you need to drop-off or pick-up documents please call and schedule a time as our receptionist area is not staffed full-time. If you are experiencing flu-like symptoms and have a scheduled in-person appointment, please let our team know so that we can discuss options with you to ensure our collective well-being.
During this difficult time, we are committed to serving our clients and staff with care and consideration. We will continue to monitor the situation and take precautionary measures to promote the health and safety of our staff and clients.
Thank you for being a valued client and for your continued trust as we manage through this time together. If you have any questions or need further assistance, please call us at (623)566-9821 or email us email@example.com.
Below is the regular updates we've supplied our client's during regarding the economic impact of COVID-19. You can also review our F.A.Q.
Here is a list of GRANTS.
Democrats and Republicans are at a complete impasse over a 4th Coronavirus relief package. As a response President Donald Trump issued one executive order and three memorandums. There have been multiple suggestions that the orders may be challenged in court. The four documents include:
Executive order to extend the unemployment benefits at an amount of $400 with stipulations that states need to cover 25% of the amount by utilizing funds allocated under Coronavirus Relief Fund established by the CARES Act. Funds from Department of Homeland Security Disaster Relief Fund may be used. The list of eligible claimants includes those that received funds under the Pandemic Unemployment Assistance program which ended on July 31st. This was to go into effect retroactively to August 1st. Governor Ducey made a statement on August 8th that they are working diligently to work in the extra $400 unemployment benefits. No timeline on how long it will take to get these changes reflected in DES’ systems were given.
A memorandum to give the ability for employees to defer payroll tax starting on September 1, 2020 through December 31, 2020. This authorized the Treasury Secretary to explore forgiving the deferred tax. The Secretary of Treasury has been directed to issue guidance on the implementation of this program.
A memorandum on foreclosures and evictions to explore funds available and actions that can be taken by the Secretary of Health and Human Services and the Treasury Secretary. The Secretary of Housing and Human Services to take action to promote the ability of renters and homeowners to avoid eviction or foreclosure. Actions taken under the CARES Act to pause foreclosures and evictions has expired. Separate from the memorandum the Federal Housing Finance Agency has extended foreclosure moratorium on at least August 31, 2020.
A memorandum to extend student loan relief by suspending loan payments and temporarily set the interest rates to 0%. The program under the CARES Act is expiring on September 30th. This memorandum extends the benefit until December 31, 2020.
President Trump in a news conference stated that if needed he may change the Executive Order for Unemployment for any state that does not have available funds.
The Chandler City Council has allocated monies from Arizona Coronavirus Aid Relief and Economic Security (AZCARES) to support Chandler businesses that are keeping employees on payroll. The I Choose Chandler Business Hiring and Retention Program will provide qualifying business $1,300 per employee retained or hired since December 31st to a maximum of $10,000. Review the program guidelines https://www.chandleraz.gov/government/city-managers-office/coronavirus-disease-2019-covid-19/business-resources/business-hiring-and-retention-program.
Arizona joined a national network called Reskilling and Recovery Network meant to equip displaced employees with new skills to get back to work. The program is in partnership with American Association of Community Colleges. https://www.nga.org/reskilling/
In Arizona Governor Ducey extended the eviction moratorium until October 31st. $650k was allocated to Community Action Agencies to provide additional staff to process rental assistance. $80 million have already been provided to assist tenants.
PPP Loan Forgiveness
We have quite a bit of time to provide documentation for loan forgiveness. Legislation may change a great deal of the required documentation. Because of that we are not rushing to get the documentation completed.
We usually have five months between our April and September deadlines. Due to April deadline moving to July we only have a month to go before our next deadline. We have hired additional tax preparers to help with this situation.
September 15th is the deadline for S-Corporations and Partnerships that extended in March. Documents need to be to us by September 5th.
October 15th is the deadline for C-Corporations, Individuals, and Trusts that extended in July. Documents need to be to us by October 3rd.
November 15th is the deadline for Non-Profit’s that extended in July.
If you need bookkeeping assistance please add 10 additional processing days.
If you need access to our secure file system so you can send your documents to us please call in or send us a request.
The office is available for drop offs but since we have limited coverage as most are working remotely it’s best to call ahead to ensure someone will be available.
The Federal Pandemic Unemployment Compensation of $600 per week ended on July 25th. The Pandemic Unemployment Assistance will continue for 39 total weeks or a maximum of December 26, 2020. Some states have extended unemployment benefits. Arizona has 13 additional weeks of State unemployment after the first 26 weeks.
The https://www.irs.gov/coronavirus/get-my-payment page on the IRS still works to determine your eligibility and status of your economic stimulus payment. If you were not eligible in ’18 but were in ’19 and filed your ’19 return you will be able to use this option to update your bank information (if you owed). If you received a refund the IRS will use the banking information you used for direct deposit on your ’19 return. If for any reason you do not get a stimulus payment and were eligible you will receive a tax credit on your 2020 tax return.
The CAF Unit (records third-party authorizations) are working on reducing the backlog caused by the IRS closure. We have been struggling to work on tax resolutions due to this issue. The unit released a statement today explaining the time to post authorizations have been extended to 15 days rather than 5.
The mail processing function of the IRS is still scaled back so any mailed correspondence will continue to be backlogged significantly.
The outgoing mail function is also delayed and contain letters printed weeks before they will be mailed. There will be an insert that explains the updated due date.
Most compliance areas have continued operations. If you put your installment agreement on hold it started again on July 16th. If you had direct debit the IRS will continue direct debit. If you need more time due to economic problems relating to COVID you will need to contact the IRS to explain the situation.
If you owe back taxes and are not on an installment agreement. Liens and Levies will start being processed.
Economic Relief negotiations have started to ramp up. But both sides seemed to have dug into their own wish lists. Below are summaries of both bills. Most financial professionals feel the GOP bill does not go far enough while the Dem’s bill goes way too far and is far too expensive. Posturing on both sides suggests a compromise will not be quick.
The primary items that are consistent between both bills is the need to continue unemployment (but argues about how much), and the need for a second stimulus check (again argues about how much). Beyond that the bills are very far apart. In the case of unemployment, the GOP’s feel that the current level of unemployment incentives people to not return to work and wants to drop the amount. The original draft of the Dem’s bill provided a $2000 monthly stimulus payment, but the final bill settled on extending the $600 weekly benefit.
We will keep our eye on the negotiation process as any final relief is desperately needed.
Republican’s H.E.A.L.S Act (Health, Economic Assistance, Liability Protection, and Schools) has a $1 trillion price tag and was released this week.
Unemployment benefits will be extended but only at a rate of 70% of an individual’s previous wage. The plan has a transition period to allow states to update their systems.
A second $1200 stimulus payments identical to the first one except dependents will include dependent adults (such as college students).
The Paycheck Protection loans that are under $150k will not have to submit documentation for forgiveness. Between $150k and $2M will have to certify that the forgiveness amount is correct and fill out a worksheet but would not have to submit documentation.
$190 billion for the second round of PPP loans for businesses under 300 workers that can demonstrate a 50% loss of revenue. To get forgiveness 60% of funds must be used on payroll but remaining funds can be used for supplies, operating expenses, and damage caused by riots. Also, certain 501(c)(6) organizations could apply for funding.
$100 billion for long term loans to seasonal businesses and businesses located in low-income communities.
$10 billion in long term loans for SBA Small Business Investment Companies that invest in small businesses with significant revenue losses from COVID.
$100 billion for schools and universities to open safely tied to opening in-person classes this fall.
Tax provisions include an enhancement to the employee retention tax credit, an increase of business meals deduction from 50% to 100%, and an extension for spending funds in flexible spending accounts. Expansion of the work opportunity tax credit to employers hiring individuals in qualified groups. A new payroll tax credit (safe and healthy workplace credit) for funds spent on testing, cleaning supplies, and protective personal equipment.
Expanded use of state funds allotted under the CARES Act.
Liability protection for business, non-profit, schools, medical providers, or medical professions arising from COVID. The plaintiffs must show the defendant was grossly negligent or engaged in willful misconduct AND violated relevant state/local public health guidelines in place at the time the incident occurred. There is also a cap on damages.
$404 billion of appropriates for schools, vaccine research, hospitals, and health care providers, COVID-19 testing, childcare, community health centers, mental health, and suicide prevention, workplace training on social distancing procedures.
Direct payments to the Pentagon, farmers, Transportation-HUD subcommittee programs including airports.
Funds for overseas vaccine distribution.
Funds for Customs and Border Protection.
Funds for FEMA Grants.
Funds for a new FBI building.
The Democrat’s H.E.R.O.S Act (Health and Economic Recovery Omnibus Emergency Solutions) that the House past on May 12th. This bill has a $3 Trillion price tag and includes over 1,800 pages (the biggest COVID relief bill past is the CARES Act which was 300 pages). The summary only covers
the main topics.
$1200 per person, including dependents, up to a $6000 per household for individuals making less than $75,000.
Changes provisions of the PPP loans (some of which were passed in the Paycheck Protection and Flexibility Act) and the Main Street Lending Program.
Provides $10 billion in grants to small businesses that suffered financial losses because of COVID.
A $13 per hour raise for hazard pay to essential works (doctors, nurses, police, firefighters, social workers, grocery clerks, postal workers, childcare, and cafeteria workers). The pay is a max of $10,000 if they make less than $200,000 per year of $5,000 if they make more than $200,000 per year.
Extension of the $600 weekly federal unemployment benefit until January 31, 2021.
Suspend interest and payments for federal student loans until September 30, 2020 (interest would not accrue) and cancel up to $10,000 for federal AND private loan holders.
Voucher’s for renters and utilities and a ban on evictions for a year following the enactment date.
$75 billion for homeowner’s assistance fund to prevent mortgage defaults. Forbearance on mortgage payments for up to a year. National foreclosure moratorium for one year.
$500 billion in funding to assist state governments with the fiscal impact caused by COVID.
Expansion of the payroll tax credits passed in the CARES Act.
A moratorium on debt collections during the pandemic and 120 days after and suspension of all negative consumer credit information during COVID.
Requirements that businesses receiving aid would provide health insurance to all employees, provide sick pay, limit CEO pay, be neutral in all union organizing activities.
An expansion of Obama Care.
A long list of climate initiatives for airlines that received any relief aid would have to follow.
$300 million each for the National Endowment for the Arts and National Endowment for the Humanities.
$35 million for the Kennedy Center.
Provides banking services for legal cannabis businesses.
Millions for the justice system for COVID testing, juvenile justice, issues, Violence Against Women initiatives, Community Policing services, Second chance Act.
Funds to combat homelessness.
Permanent reform for election laws.
Expansion of the child tax credit to $3000 (currently $2000) and dependent care credits.
Also includes funding for the post office and modifies or expands broadband services, prisons, veterans’ benefits
Provides funding for healthcare and financial assistance for immigrants.
IRS Stimulus Checks
The IRS has taken the get-my-payment site down several times for changes. A client gave a tip that worked for me but not for another client I tried. If you use all capitals in your input it may work. This will allow you to input your banking coordinates if you owed taxes in the past. You will need your AGI from 2018 or 2019 return and the amount you owed from the same return. https://www.irs.gov/coronavirus/get-my-payment The IRS has stated that you will receive your payment via direct deposit several days after you setup your banking coordinates on the site. Between the updates and this tip hopefully everyone will be able to get into the system. This same page can be used to track your payment.
After weeks of waiting for word from the DES they announced that they will be using a private vendor to assist in handling the surge of unemployment benefit claims resulting from COVID outbreak. The new program will begin processing application on May 12th. We've had reports of some people getting the federal amount but it seems to pertain to those that qualify under state and federal guidelines. We have had no reports of those only qualifying for federal amounts getting payments. If you fall in this category let us know when you started receiving payments. Unfortunately the department has been very uncommunicative the last few weeks.
DES annouced changes to it's shared work program. Employers can reduce worker's hours up to 60% (previously 40%) and still qualify for the shared work program. Also unemployment filed under the shared work program will not impact the employers account.
Later today the online list of grants and loans will be split between grants and loans with another split between business, non-profit, and individual. We will also be adding 5 additional programs and expect more to come. Please apply for all that applies to you.
The Paycheck Protection Program and Health Care Enhancement Act Past the Senate on 4/21, the House on 4/23 and was signed by the President on 4/24. It provides an additional $310 billion more for the PPP loans, $10 billion more to the EIDL loans, another $50 billion for the Disaster Loan Program, $75 billion to hospitals and healthcare, $25 billion to research, develop, validate, manufacture, administrator, and expand capacity for Covid-19 testing. The SBA announced they will reopen their sites on Monday.
We also have access to standard SBA loans and Main Street Lending Programs through the Federal Reserve.
IRS and State Tax Agencies
As the IRS and most state tax agencies have either shut down or are operating with a small staff mailed in correspondence is not being opened. With the IRS especially requiring much of there resolutions to be done by phone or through mailed in correspondence tax resolution work has come to a stop. Also the need to file amended tax returns to gain tax refunds due to retroactive changes to the CARES Act while potentially beneficial is not possible as they have to be mailed to the IRS and state agencies. Also filing past years that do not qualify for electronic filing is also not going to be posted.
The Tax Foundation has been keeping track of legislative events for each state. Some states have taken actions to extend deadlines for sales tax report filing and payment. Click on the state to see the specifics of what each state has done. https://taxfoundation.org/state-tax-coronavirus-covid19/#table Arizona past some relief back in late March with the budget proposals and plan to return on May 1st to discuss further actions.
When people are at their most vulnerable is when the the extortionist come out to take advantage. There have been scams surrounding the Stimulus Checks, SBA loan assistance, Unemployment assistance.... if it's out there as a benefit someone will be there to attempt to help you get it. They then steal your identity do not deliver whatever services they offered and leave you with a mess. There have been fake charities asking for donations to assist hospitals to find masks and other PE.
Please do not fall victim to these scammers. I recently received several phone calls from someone that managed to get my credit card information. They claimed to be the Chase Credit Card Fraud department and wanted me to read the verification number from a text they sent me. The text stated that I was "enrolling" in a service. Had I not read the text and just provided the verification I would have enrolled in an electronic wallet for someone else to use to run up my card. The perpetrator used spoofing technology to appear to be calling from the Chase fraud department phone number. I called the fraud department and confirmed there had been no fraudulent charges on my account but there was several attempts to enroll me in an electronic wallet. Scammers are getting more and more sophisticated and they will use public information about you to get into your account. Be suspicious of every call or e-mail you get from individuals wanting your personal information. Also:
- Install AntiMalware and Virus Software on your computers
- Never click on links from unknown sources
- Check the websites and email addresses providing the product or service to make sure they are not impersonating (ie: government sites will end with .gov)
- Verify the authenticity of any Charity you donate to through the IRS website.
- Your 2019 payment hasn't finished processing.
- The system doesn't yet have your data (ie: the get my payment system doesn't have your data)
- You don't usually file a return.
- Your not eligible for a payment
So much more coming soon....
The attached letters are the typical responses being sent from AZ DES. I’ve typed in blue possible responses to help you get the paperwork back to the DES quicker. Make sure in your responses you emphasis “self employment”, “COVID stay at home order” etc. Despite what DES says about not qualifying they are referring to the state unemployment system not the federal amount passed by the CARES Act.
Once the DES releases the funds they will be retroactive to the date you stated that you lost your “job”.
The IRS launched a web tool to input your banking information if the IRS does not have it. However, the original announcement stated it would be for all people that the IRS did not have their direct deposit information. At this time it says it’s available for those that do not normally need to file a tax return. https://www.irs.gov/coronavirus/non-filers-enter-payment-info-here
The IRS is planning to release a new tool on April 17th for tracking your payment. I’ll provide the link as soon as it’s available.
Included on the www.arizonatogether.org website is Pipelinaz.com that has job listings.
Forbes published this article showing several state programs available to small business owners. Sadly Arizona has no programs listed.
Grant Watch has created a page for grants specific to COVID. https://www.grantwatch.com/cat/56/coronavirus-covid-grants.html
The actions by Mitch McConnell to expand the funds available to the SBA for the 7a and 7b loans is at a stalemate after the Senate Democrats blocked the vote. While the republicans want to provide more funds to emergency programs that are likely to run dry the democrats want to amend the bill to provide more funds but add funding for hospitals and state and local governments as well as guarantee the funds will go towards community banks to assist specific communities. The rough start by the SBA is one reason being provided to not throw more funds at the system. However, all actions being taken by the SBA will fix the issues and funds are likely to dry up before a successful negotiation can be achieved. The top leaders on both side’s tendency to dig in may make this a lengthy process. We shall see.
As we are approaching the April 15th deadline please be aware that the following states have chosen to not match the federal extension.
Virginia 5/1 file 6/1 pay a proposal will be voted on during the 4/22 session to waive penalties and interest on payments not received by 6/1. An extension is automatically granted for 6 months without the need to file a form 760IP. The payment is still due on 6/1.
Mississippi 5/15 file and pay you can get an extension to file by filing form 80-106 by 5/15. This does not extend the date to pay.
Idaho 6/15 file and pay. You can get an extension to Oct 15 if you file form 51 by 6/15.
Hawaii 7/20 file and pay – note they specifically state this extension does not apply to estimated payments normally due in April. While there website says you have to file an extension form there publication for individual taxes states a form is not necessary. However if you need to make a payment with an extension file form N-200V.
Colorado 7/15 file 7/15 payment automatic extension is granted until 10/15 without the need for a form.
There are over 5,000 local jurisdictions that require income tax filings. Please contact us individually if we need to research something for you. Some of these local jurisdictions already have what we call “gotcha” regulations to make sure they can charge late filings when businesses file for the first time. Some ways they do this is by making the due date earlier than the federal due date or making the extension not possible unless you file a specific local extension forms (most states use the federal extension form and do not require a separate extension).
Also note that the state of Missouri, Montana, Oregon will be taxing at least a portion of the stimulus check.
Please note that we cannot file your state without preparing your federal.
Updated information on the Paycheck Protection Program. S-Corps will only be able to use the payroll payments and not the net income. The loans amount not forgiven in the guidelines are due in two years but can be refinanced. Those employers utilizing employee leasing arrangements can use the data from the employing leasing company to qualify for the loan. Payment to contractor’s are not going to be included in the payroll cost calculation or the forgiven calculation. Payroll costs does not include the employers share of employment tax but does include any state taxes that the employer pays on the wages. The 8 week period to determine the forgiveness amount starts the day you receive your distribution of funds. Every single bank has a different list of deliverables needed to apply. All the banks are asking that the entire list of deliverables be sent in with the application to avoid delays in processing. The webinar is changing regularly to address all the recent guidelines. Go to www.profoundfinancial.com/webinar/ to check out current times.
All other states have matched the filing and payment deadlines. However, I have not been able to review each state’s requirements in terms of estimated tax payments. We will start tracking each of you that have a deadline different than the feds. Also note that we believe the federal extension after 7/15 will still be 6 months taking us to January. This the worst possible scenario that I can imagine. January is our busiest month due to prepping for the upcoming filing season, finishing the year end payroll reports, preparing and sending W2 and 1099 reports, finalizing bookkeeping for the upcoming filing season, plus several other year end activities.
For employers that still have employees working and have more than 50 employees.
The Families First Coronavirus Response Act (FFCRA) requires employer to provide employees with paid sick leave or expanded family and medical leave for specific reasons related to COVID-19. This applies to employers with fewer than 500 employees. Businesses with less than 50 employees may qualify for an exemption from the requirement to provide leave due to school closings or child care unavailability if the leave requirement would jeopardize the viability of the business as a going concern (your business would close). Employees are eligible for two weeks of paid sick time if they were employed for 30 days. They are also eligible for 10 weeks of paid family leave to care for a child under certain circumstances related to COVID-19.
The qualifying reasons for leave include the below if an employee is unable to work (including telework).
- Subject to quarantine or isolation due to a state, federal, or local order related to COVID-19
- Has been advised to self-quarantine by a health care provider
- Is experiencing COVID-19 symptoms and is seeing medical diagnosis
- Is caring for an individual described it 1 or 2
- Is caring for a child whose school or place of care is closed for reasons related to COVID-19
For reasons 1-4 and 6 above employee is eligible for 80 hours of leave if full time and the employees average of two week periods for part-time
For reason 5 an employee is eligible for 12 weeks of leave (2 weeks sick and 10 weeks expanded family and medical leave) if full time. Part time would be given the same weeks based on their average hours the employee normally works.
For 1,2,3 employees taking leave are entitled to pay at their regular rate or the applicable minimum wage whatever is higher up to $511 per day or $5,110 total.
For 4 and 6 the employees leave is paid at 2/3 their regular rate or 2/3 the minimum wage up to $200 per day and $2,000 total
For 5 employees leave is paid at 2/3 their regular rate or 2/3 the minimum wage up to $200 per day and $12,000 total.
Note if you’ve laid off your employees they are no longer your employees unless you chose to bring them back. As far as I understand this at this time employees that have left your business and filed unemployment would not be able to collect sick leave under this act.
Also note you do not pay social security tax on sick leave pay and there are tax credits available for this pay.
The IRS has closed most of their phone systems. Even the practitioner priority line is closed. I previously told you to call the IRS to put ACH installment agreements on hold. Now you will need to call your bank and ask them to put a stop on the payment until July.
The IRS has updated their guidance that stimulus payments will start being sent as early as Monday or Tuesday of next week. Paper checks will start being mailed on April 20th.
15 days after the stimulus payments are paid you will get a letter from the IRS. The letter will contain information on how to report any failure to receive the payment. Those instructions have not been supplied at this point. Please when you get these letters unless you have NOT received the payment do not send us the letter. IRS letter’s tend to raise panic in everyone that receives them. The letter is being sent to protect against scam artists. If you receive the payment the letter does not require any actions. It’s just an acknowledgement that your payment was officially sent to you. Action is only required if your payment was NOT received.
If you are working in an organization offering essential services and want to take advantage of child care benefits (see 4/7 update); you can find centers offering the service herehttps://www.dol.gov/newsroom/releases/whd/whd20200326https://www.localfirstaz.com/small-business-relief-fundhttps://ofn.org/googlesmallbizfundhttps://ofn.org/googlesmallbizfundhttps://ofn.org/googlesmallbizfundhttps://ofn.org/googlesmallbizfundhttps://housing.az.gov/save-our-home.
DES announced that SNAP participants are experiencing delays in receiving benefits associated with Families First Coronavirus Response Act (FFCRA). They are making programming changes and the changes will be in place next week. In the mean time the certification period is being extended.
If you have not filed for unemployment yet. Indicate on the application that your job loss or loss of hours relates to Covid. The CARES Act allows 39 weeks of unemployment benefits.
Local First Arizona is offering a small business relief fund. They will be providing mini-grants to small, local owned, independent enterprises. Business with 0-3 employees and less than $250k in annual revenue can apply. https://www.localfirstaz.com/small-business-relief-fund.
Opportunity Finance Network in partnership with Google has launched the Grow with Small Business Fund to support small businesses impacted by the Covid crisis. The funds are in the form of a low interest rate loans. The application is not yet available here’s a link to the program: https://ofn.org/googlesmallbizfund. The program is nationwide.
The department of labor has provided a news release explaining the new paid sick leave and expanded family and medical leave under the FFCRA. If you have employees please take a few minutes to read the notice. The law applies to ALL employers with under 500 employees. I will be breaking down the requirements in the next couple of days. https://www.dol.gov/newsroom/releases/whd/whd20200401
The Arizona Department of Housing has a Save Our Home AZ – Foreclosure assistance. Here’s the program https://housing.az.gov/save-our-home. Please note all foreclosure and eviction actions are on hold at the moment.
The CARES Act provided broad relief to federal student loan borrowers including automatic forbearance and 0% interest through September 30, 2020. Auto-debits should stop automatically. You have to call if you want to continue making payments. If you made a payment after the CARES Act was signed into law (March 27th) you can get a refund. Note this is only FEDERAL student loans. Not private loans.
On usa.gov/coronavirus is the government response to Coronavirus separated by agency. Lots of information.
Citizens Bank is providing up to $2M of grants to small businesses at $15k at a time. You needed to be a customer of Citizen’s prior to 2/14/20 to apply. Here’s the application site.
Yesterday Senator Rubio tweeted that Senate Majority Leader McConnell is working with Senate Minority Leader Schumer to approve additional funding for the SBA loans at the Senate’s session on Thursday April 9th. Senator Rubio is suggesting another $200-$250 billion is needed for the PPP program.
The newly released guidelines from the SBA states payments to contractor’s will NOT be included in the payroll calculation for the PPP program because those businesses can apply for funding also. They feel this will help spread the funds around as they would not have the ability to track the contractor’s that got a PPP loan AND continued to be paid through another loan recipient.
S-Corporation loans will be based on the payroll you paid yourself and your employees. We accountants don’t agree with this but that’s the current word.
Loan apps submitted last week may have to be resubmitted. We are reviewing each of them individually and will contact you if the loan didn’t get into the SBA system.
The SBA put some caveats on the 10k loan advance. The amount will be limited to $1,000 per employee or $10,000 whichever is less. It will still be a grant if your later rejected for a loan. The advances will start going out sometime this week.
I spoke with 6 different lenders today including a couple of big ones. None of them have seen any distributions for the PPP program. Despite media reporting.
The underwriting list we received from the SBA is quite intensive and does not appear to be waived based on loan size. It’s actually expanded if the loans are above 350k.
Due to Wells Fargo’s actions back in 2018 they had some unprecedented restrictions placed on them by the central bank. Their abrupt stop on any further loan applications was the results of them potentially violating that restriction. The Fed board voted to allow Wells Fargo to issues PPP loans despite that restriction. This was announced today so Wells Fargo will resume taking PPP applications.
The SBA clarified that the loans must be disbursed by the banks no later than 10 calendar days after the loan is approved. Of course loan approval is our biggest challenge as we’ve had no update on the SBAs new system that will allow loan applications to be delivered to the SBA for review quicker.
Note that the SBA released their Interim Final Guidance for the 7a Paycheck Protection Program last night and stated that “ability to repay is not a factor”.
There is no minimum credit score for the Paycheck Protection Program.
Basic requirements is a self-certification that you’ve been impacted and proof of payroll cost.
STILL no guidance on small business income. Bankers are very frustrated as they do not know how to evaluate the earnings for self-employment. Most agree non-cash items should be adjusted out of the reported income on the tax return.
Any amounts not forgiven will have a 2 year term with interest at 1%.
The webinar has changed considerably. New information is being added constantly. Plus we’ve added a couple of new programs including a DIY program where we help with the financial parts of the application but you submit the application and monitor the SBAs requests. If you’d like to see the webinar again or want to forward it to your fellow business owners go-to www.profoundfinancial.pro/webinar. Please encourage them to get good advice. The amount of bad advice I’ve heard from new businesses coming to us is incredibly frustrating.
The American Bankers Association has released a list of banks that are offering advice or assistance for those impacted by the Economic disaster. The bank’s statements can be found here. Most provide specifics about their social distancing effort but others are providing information about payment deferment, late fee waivers and interest charges. If your having problems with a specific bank I would look to see if they have placed what policy they will be following on this site. For example Wells Fargo has stated that they will provide a 90 day suspension of mortgage payments if your not able to pay and have also suspended any auto repossessions during this period. They do not provide information on if the 90 days’ worth of payments are added to the back of the loan or has to be made up in another way. However at least it’s a start.
Also under the CARES Act is deferment of existing SBA loans along with the availability of new loans. Go here if you’d like to get on our webinar to hear about the loans. All small businesses, sole-proprietors (realtors, photographers, contractor’s) are encouraged to apply. If you saw the webinar even 3 days ago you may want to have another look. Especially after Tuesday when the SBA releases round 2 of the guidelines that all banks and SBA direct lenders will be required to follow for these loans.
Several members of congress have conceded that the $350 billion bill providing the Paycheck Protection Programs will not be enough. An expansion or phase 4 bill is expected. Early estimates have been that the funds will run out in approximately 3-4 weeks. The program however, is available through June 30th. Early posturing suggest a phase 4 bill will require a great deal more negotiation between both political parties. All members are hesitating the need for them to return to Washington to negotiate such a bill. With Covid concerns most of these individuals would prefer to remain at home. At this time there is no rules allowing for Remote Voting. The Senate and House would each have to come up with such guidelines, create a bill allowing for it, and vote on it before such a measure could be approved. Maybe they should get busy!
Under the CARES Act: For those of you that had large improvements to your rental property or tenant improvements in 2018 we can amend 5 years worth of taxes to change the depreciation impact on those expenditures and qualify you for higher immediate refunds. Please get in touch with us in regards to amending the prior years to grab the refunds if you have this situation.
Entrepreneur.com released an article detailing out several state programs as a response to Covid. For example in California you can get a Disaster Relief Loan of up to $1 Million. They also have a jump start loan program for small entrepreneurs, microloan programs, and the Small business Resiliency fund for business owner’s in San Francisco. Arizona programs have been released in prior e-mails this is a tip for my out of state clients. The article with links to each program can be found here.
Candid.org released an article detailing out various charitable efforts by state. In Arizona there is the Community Response Fund that is providing funds to various Arizona nonprofits whose able to provide services to communities impacted by COVID 19. There is also the AZ Cornovirus Relief Fund that provides aid to non-profits that are supporting the most vulnerable and efforts for low-income students with technology so they can transition to the new required online training. The article is here. If you operate a non-profit consider reviewing some of these resources. There is a nonprofit support funding request on arizonatogether.org.
Also on Arizonatogether.org is a list of resources. Including information on applying for AHCCS and KidsCare health insurance, resources for food, and COVID-19 screening tools.
I apologize for those just receiving the update. Apparently our email system was not sending to our database. If you don’t want to receive the update just let me know.
We’ve heard from a few people that some banks are now closing credit cared and lines of credit. I’ve been researching this to determine which banks and why. This isn’t exactly surprising but as I confirm this I will create a list of banks that are doing it. If you were counting on credit lines to fund living expenses while you were out of work please confirm your lines are still open. Do all you can to preserve your cash as there is no guarantee they will remain open.
The IRS has announced that payments will start going out on April 9th. They are estimating this process could take as much as 20 weeks.
The FCC has asked utility providers to make a “Keep Americans Connected” pledge. Stating they will not terminate service to any residential or small business customer because of their inability to pay their bills due to the disruptions caused by the cornovirus pandemic, they will waive any late fees, and they will open Wi-Fi hotspots to any American who needs them. The list of companies that have signed the commitment is here. Cox Communication, Verizon, and CenturyLink have signed the commitment. So far I have not seen any of the local water providers, APS, or SRP. APS has stated on there website that they will not shut off power to customers for non-payment and are waiving late fees. On SRP’s website they have the statement “SRP will not tun off power for non-payment…”
The CARES act amended the Fair Credit Reporting Act to impose new COVID-19 related reporting requirements on furnishers of information to consumer reporting agencies. If a creditor makes an accommodation with respect to one or more payments on a credit obligations the furnisher should continue to report the account as current if the consumers fulfills the terms of the accommodations. If your unable to make full or any payment on mortgages, car notes, credit cards etc. contact the creditor and see what accommodations they will make to save your credit.
Congress is already debating a 4th piece of legislation. However, I don’t expect another assistance package to happen any time in the next month. They want to see how this one will impact people.
For those that have missed the SBA webinar in recent days. A brief video and the schedule of the webinar can be accessed here. The CARES Act provided for trillions of dollars for small businesses to get through this crisis. The biggest portion of the funds is meant for retention of employees. I know that if we don’t get funds to our small businesses they will not survive this situation. It’s critical that as many businesses as possible are saved as that impacts many more people in the form of jobs. The domino effect will be on a massive scale.
Also on our website is a new COVID-19 Update page. All of the update e-mails as well as FAQ will be available here.
The IRS released a statement that there is now a new SCAM related to the Economic Relief payments. There are people offering to assist in updating the new web portal the IRS is developing to input your banking information in order to receive the funds via direct deposit. People are calling, texting, e-mailing, and placing social media posts claiming they are from the IRS and will help you by inputting your information into the IRS portal. This is a phishing scam to obtain your social security number and other personal information. Most government agencies (IRS specifically) will not contact individuals directly or prepare a social media post. Please do not fall victim to this.
Official information from the IRS concerning ongoing compliance actions.
Existing Installment Agreements
If you have an installment agreement all payment due between April 1 – July 15, 2020 are suspended. If your installment agreement is on ACH you will need to contact the IRS in order for it to be put on hold. Interest will continue to accrue. (Did you think the IRS would be nice enough to automatically stop that??? It’s still the IRS!)
New Installment Agreements are still available.
Offers in Compromise Pending Applications you will have until July 15 to provide requested information. The IRS will not close any pending OICs before July 15th without the taxpayer’s consent.
Offers in Compromise Payments can be suspended until July 15 if you request it.
Liens and Levies: The automated lien and levy system and all liens and levies by revenue officers will be suspended.
Also officially changed yesterday. The IRS originally stated that low income taxpayers and seniors that generally do not have to file would only get the stimulus checks if they filed a small return. This created some push-backs as the free-filing resources such as the VITA program managed by the IRS and the programs managed by AARP were not likely to be open. The IRS reversed this position and has stated they will use the 1099 information from the Social Security department to pay out these individuals. However, they are less likely to have direct deposit account information on hand so they will either get a check or will be able to provide that information in the new system the IRS might have ready.
Another scam is those that are imitating state unemployment office websites to obtain your personal information and even charge application fees. Please make sure you’ve gotten to the site by a verified government webpage.
The DES web site has some valuable information and links to other Government and Community agencies providing support. It can be reached by going to des.az.gov/services/cornovirus.
I’m hoping other states have similar research. I apologize for my non-Arizona client’s. If you need some assistance please reach out.
For those of you still working but have childcare needs due to school closures. Governor Ducey announced emergency operational funding to support youth impacted by school closure. The state will enable Boys and Girls Clubs in Arizona to extend program hours from 7am to 6pm and provide kids with breakfast and lunch at no additional charge to its members. Valley of the Sun YMCA extended its spring break camp through April 10th. You can also go here to locate DES sponsored child care providers.
If you feel you will have a hard time paying your mortgage. Please review the information here.
If your tenants are not going to be able to make their rent payments. Send them here.
The Arizona Department of Economic Security stated that the unemployment insurance extension under the CARES Act has not yet been released for payment of benefits. The payment of $600 per week is available to all those that have been impacted including people traditionally unable to qualify for benefits such as self-employed, contract, or gig workers. The benefits also extend normal unemployment benefits an additional 13 weeks. While DES has stated that you can NOW apply they also stated that they are working on updating their site for these changes. If you are self-employed I would fill it out with your company name followed by (self) as employer name and input your average monthly income for the paychecks. I have not yet determined if applying for these benefits will impact your ability to receive the 7a SBA loans or the amount you may receive. I do suspect it will at least impact the amount.
The 7a guidelines were released yesterday and we can start applying as of April 3rd. If you have not seen the presentation about these loans please get on at 3pm and 7pm today. The link is below. If you saw the presentation before please note I’ll be calling you today with crucial updated information. We are learning more and more quite literally every hour. My network of over 1000 other accountants nationwide are all communicating what we are learning and debating our interpretation of the regulations and newly released SBA guidelines. THIS IS NUTS! It’s been going on all night. Calls to the SBA has created extreme problems as the agents do not understand the regulations and are communicating completely misleading information. Calls at the same time with two separate SBA agents have resulted in conflicting information. The SBA has not updated their own agents on the requirements.
The IRS wants you to know:
They are currently producing a web-portal so if they do not have your bank information or if your account is different you can go into the portal and provide updated information so your payment will get direct deposited. I will release the site as soon as it’s available. Considering the agency that is developing this I’m not expecting this to be a quick release and without glitches. The authentication process on the existing IRS portal only works about 30% of the time.
Questions from yesterday I would like to address.
Governor Ducey just mandated a stay at home order for the state of Arizona effective 5pm on Tuesday 3/31.
As a provider of accounting services we are exempted from the order. Therefore coming to our offices to utilize our services are also exempted from the order. However, because we do not manage the lobby area of our offices the lobby will only be staffed part-time after Wednesday 4/1.
While this order is in place if you need to pick up or drop off files/payroll you will need to schedule a time to do so. We prefer at this time that the only in-person activities at the office are picking up payroll and dropping off critical documents that cannot be scanned or faxed.
At 10:30 am and 3pm on 3/31 we will be hosting a webinar for those interested in learning about the SBA loans. We will schedule more tomorrow. If you have a business or rental properties you should consider attending to find out more. That does include self-employed single owner businesses. Even if your business is not yet impacted the forgiveness loan for the payment of payroll can be a game changer not only for your business but the local economy. The immediate payment of 10k of economic relief fund can also help cushion an otherwise tightening budget if your revenues are starting to become shaky. Please reply the time you’d like to attend to get a link to the webinar. If you have friends or family that need this information feel free to invite them to attend. We have hired staff to assist in getting as many loans processed as possible to help as many people as possible. While $2 trillion dollars sounds like a lot of money we expect the funds will be depleted with the millions that are applying.
After much threats and posturing the house swiftly past the CARES bill. President Trump quickly signed it. Here's the big points.
Checks to individuals
If you are single and earned less than $75k of adjusted gross income (Line 7 on form 1040) on your 2018 return or 2019 return if you've already file you will receive $1200. If you have children you will get $500 per child.
If you are married you will get $1200 each as long as the income is under $150k.
Above $75k/$150k is where it gets confusing.
If your above $99k single or $198k married you get nothing.
If your in between $75k and $99k single or $150k and $198k married the amounts get cut down $5 for every $100 above the limit. So a single person making $76k would receive $1100.
The funds will come to you by direct deposit IF you included banking coordinates in your 2018 or 2019 tax return. Otherwise it will be by check.
The payment is not taxable.
The payments will start being sent in approximately three weeks.
If you owe taxes from prior years you will still get the payment.
If your being garnished due to student loan or child support you will still get the payment.
If you have a tax ID number and not a social security number you will NOT get the payment.
If your only income is nontaxable such as state aid or SSI benefits you will NOT get the payment.
Expanded unemployment benefits including an additional $600 per week for each recipient and an additional 13 weeks for those that remain unemployed after state unemployment is no longer available. Includes benefits for self-employed, independent contractors and those with limited work histories.
The 10% penalty will be waived on the distribtuion of up to $100k of funds from a qualified retirement account for cornovirus related purposes made on or after January 1, 2020. Additionally income would be subject to tax over three year and you may recontribute teh income back to a qualified retirement plan. Cornovirus related purpose include 1. you, spouse, or a dependent was diagnosed with COVID 19, you experienced adverse financial consequence as a result of being quarantined, furloughed, laid off, having work hours reduced, being without child care etc due to COVID due to a business you worked for or you owned being impacted by COVID-19.
Minimum Required Distribution
The minimum distribution from retirement account is waived for 2020.
Employer payments of student loans
Temporarily expands the tax exclusion for employer-provided educational assistance to include payments of qualified loas by employers to either an employee or lender. Enables employers to contribute up to $5250 annually towards an employee's student loan while excluding the payment from the employee's income. Only for 2020.
Business Tax provisions
Creation of employee retention credit equal to 50% of up to $10k of qualified wages paid per employee during the crisis by qualified employers. Qualified employers are those whose operations were fully or partially suspended due to shut-down orders related to COVID-19 or gross-receipts declined more than 50 percent when compared to the same quarter in the prior year. THIS CREDIT IS NOT AVAILABLE TO BUSINESSES THAT TAKE OUT SMALL BUSINESS INTERRUPTION LOANS.
Delay of payment of Employer taxes
Employers can defer payment of the employers share of the Social Security tax on employee's wages through December 31, 2020. Half the payment would then be due in 2021 and the last half would be due in 2022.
NOL Limitation lifted
We can now carryback NOLs created in 2018,2019, and 2020 to the preceding five tax years to offset prior year income.
Expanded disaster loans through SBA
SBA's Economic Injury Disaster Loans offer up to $2M in assistance at interest rates of 3.75% with repayments of up to 30 years. Way too much to go into here. Setup an appointment if you need more information.
The senate approved Senator McConnell's bill with a few adjustments. For those that asked you can compare the two primary bills in the links below. The bill is now advancing to the house where a quick approval is not expected.
A quick run down on primary issues impacting most people reading this. $1200 per person and $500 per child up to $75,000 of adjusted gross income based on 2018 taxes unless you have already filed 2019 taxes.
Expansion of unemployment benefits up to a full replacement of your income if you've been laid off due to the current economic situation.
Loan packages for small businesses to keep people employed. As long as it's used for that purposes loans can be forgiven.
There's also money allocated to hospitals and specific hard hit industries.
CARES Act - Bill sponsored by Senator McConnell
Take Responsibility for Workers and Families Act bill submitted to the house
The AZ Legislature approved an emergency $50M budget to handle virus aid. Including expanded unemployment assistance and protecting renters and homeowners from eviction and foreclosure. The bills need to be signed by Governor Ducey. Arizona courts have put all eviction and foreclosure cases on hold.
Attached is a recently published list of the state filing guidelines and whether they are matching or exceeding the federal's tax filing and payment extension to July 15th. Please review your state!!
The tax foundation is a good place to keep up to date of what is happening in different states.
We are doing our best to stay on top of the various legislation that are coming down in response to the Cornovirus outbreak. Below are two that have past as well as some changes to the tax deadlines as well as proposed regulations.
Individuals can defer up to $1 million of federal income tax (including self-employment tax) payments due on April 15, 2020, until July 15, 2020, without penalties or interest. This includes payments due for the 2019 tax year as well as estimates due for the 2020 tax year. Corporations can defer up to $10 million of federal income tax.
Arizona has matched these deadlines.
SBA Disaster Assistance Loans
Small businesses having experienced economic downturn due to the Cornovirus outbreak can apply for low interest loans through the SBA. The process can be complex and does require updated financial information. We are prepared to assist you with this process. Schedule a phone call to walk through the requirements.
The Families First Coronavirus Response Act past on 3/18 includes?
Free Coronavirus testing for all, including the uninsured;
Tax credits for paid sick and paid family and medical leave;
Paid emergency leave with two weeks of paid sick leave;
Up to three months of paid family and medical leave;
Enhanced Unemployment Insurance, to extend protections to furloughed workers;
Strengthened nutrition security initiatives, including Supporting National Action & Planning (SNAP), student meals, seniors’ nutrition and food banks; and
Increased federal investment to support state and local governments and health systems, so that they have the resources necessary to combat this crisis.
Is Economic Relief Coming?
Since 3/19 the Senate has been attempting to pass an emergency economic relief package authored by Mitch McConnell and treasury secretary Seven Mnuchin to provide direct economic relief to individuals and businesses. While the Democrats and Republicans continue to negotiate the primary numbers have stood at a $1200 per person and $500 per child with those numbers decreasing when income reaches $75,000 for single or $150,000 married. Numbers would be based on 2018 tax figures unless you've filed your 2019 taxes.
It also includes $850 billion in funding and loan guarantees for businesses impacted by the outbreak. The funding is meant to allow small businesses to continue paying payroll.
Waives penalties for early withdrawals from retirement accounts. Defers student loan payments. Increases unemployment insurances and provides spending for hospitals and health care providers.
Two procedural votes were blocked by democrats in the senate. There are two republican congressman in self-quarantine and one republican congressmen that tested positive for Covid-19 which is preventing them from overriding the democrats to move for a vote. Democrats primary concern is the funding for businesses not having enough oversight. Although it is unlikely a Senate approved bill would necessarily pass a democratic controlled house as the democrats do not feel the bill provides enough.
On 3/23 the democrats presented their own stimulus package. Which included direct payment to individuals of $1500 per person (including those that have a tax ID number rather than just a social security number) but higher income people would have to pay it back plus $2000 per adult and $1000 per child per month for as long as the crisis continues.
This bill is quite a bit more expensive and broader and includes student loan debt relief, corporate funding with diversity requirements, funding to juvenile justice programs, several climate control objectives, funding for election requirements for the upcoming election, expansion of collective bargaining, funding for immigration, and to colleges and universities. It also includes housing assistance in the form of rent and mortgage relief, emergency paid leave administered by the social security administration, expanded unemployment benefits, and grants to states. Due to the cost and other items included it is unlikely to pass the republican controlled senate.
Considering how far apart these bills are it maybe a while before we see an economic relief package. I will keep you posted.