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COVID-19 Key Financial Provisions

Payroll Protection Program Forgivable Loans
with up to 100% forgiveness provision

The Coronavirus Aid, Relief, and Economic Security Act (CARES Act, H.R. 748, the Act) provides for 100% US insured loans to small business (under 500 employees). This is called the Paycheck Protection Plan (PPP).

Expanded Unemployment Insurance

The Federal CARES Act has significantly expanded unemployment eligibility and benefits.

Stimulus Payment checks

Information about the Coronavirus Tax Relief and stimulus payment checks are available on the IRS website.

Retirement Distribution Rules

There are three provisions in the CARES act that directly affect your Individual Retirement Account (IRA):

The suspension of the RMD rules apply to all taxpayers who are otherwise required to receive an RMD in 2020. The other two provisions apply only to IRA owners affected by the coronavirus, either physically or economically.
Distributions of up to $100,000 from your IRA
The CARES Act allows any IRA owner, regardless of age, to take up to $100,000 from their IRA in 2020 and receive special treatment if they were affected by the coronavirus.
The special treatment is that you can elect to report the distribution evenly over 2020, 2021 and 2022. Also, you will not have to pay the tax on the distribution if you choose to repay the distribution to an IRA or other eligible retirement plan within three years of the distribution. Finally, if you are under 59 1/2, you will not be subject to the 10% excise tax on early withdrawals.

Sick Leave

The Families First Coronavirus Response Act (FFCRA or Act) requires certain employers to provide their employees with paid sick leave or expanded family and medical leave for specified reasons related to COVID-19.

The Department of Labor’s (Department) Wage and Hour Division (WHD) administers and enforces the new law’s paid leave requirements. These provisions will apply from the effective date through December 31, 2020. Generally, the Act provides that covered employers must provide to all employees:

Two weeks (up to 80 hours) of paid sick leave at the employee’s regular rate of pay where the employee is unable to work because the employee is quarantined (pursuant to Federal, State, or local government order or advice of a health care provider), and/or experiencing COVID-19 symptoms and seeking a medical diagnosis; or

Two weeks (up to 80 hours) of paid sick leave at two-thirds the employee’s regular rate of pay because the employee is unable to work because of a bona fide need to care for an individual subject to quarantine (pursuant to Federal, State, or local government order or advice of a health care provider), or care for a child (under 18 years of age) whose school or child care provider is closed or unavailable for reasons related to COVID-19, and/or the employee is experiencing a substantially similar condition as specified by the Secretary of Health and Human Services, in consultation with the Secretaries of the Treasury and Labor. A covered employer must provide to employees that it has employed for at least 30 days:

Up to an additional 10 weeks of paid expanded family and medical leave at two-thirds the employee’s regular rate of pay where an employee is unable to work due to a bona fide need for leave to care for a child whose school or child care provider is closed or unavailable for reasons related to COVID-19. Covered Employers: The paid sick leave and expanded family and medical leave provisions of the FFCRA apply to certain public employers, and private employers with fewer than 500 employees.

Most employees of the federal government are covered by Title II of the Family and Medical Leave Act, which was not amended by this Act, and are therefore not covered by the expanded family and medical leave provisions of the FFCRA.

Visit the Department of Labor for more information. https://www.dol.gov/agencies/whd/pandemic/ffcra-employer-paid-leave

Family and Medical Leave Act

However, federal employees covered by Title II of the Family and Medical Leave Act are covered by the paid sick leave provision. Small businesses with fewer than 50 employees may qualify for exemption from the requirement to provide leave due to school closings or child care unavailability if the leave requirements would jeopardize the viability of the business as a going concern.

Qualifying Reasons for Leave Under the FFCRA, an employee qualifies for paid sick time if the employee is unable to work (or unable to telework) due to a need for leave because the employee

Under the FFCRA, an employee qualifies for expanded family leave if the employee is caring for a child whose school or place of care is closed (or childcare provider is unavailable) for reasons related to COVID-19.

Visit the U.S. Department of Labor website Families First Coronavirus Response Act: Questions and Answers. https://www.dol.gov/agencies/whd/pandemic/ffcra-questions

EIDL (Economic Disaster Injury Loans)

The SBA is offering unsecured loans up to $25,000 with this program.  Due to the coronavirus pandemic, they are offering a loan advance of $10,000, which essentially is a grant as it is not required to be paid back.

It apparently may affect the forgiveness of debt on PPP loans, most likely reducing the forgiveness by the amount of the grant. As wording is not clear on this matter, further analysis will be required.

Also, if you receive an EIDL loan in addition to a PPP (forgivable) loan, the proceeds cannot be used for the same purposes, so extreme caution and meticulous recordkeeping must be adhered to if you go this route, as you may jeopardize the debt forgiveness of the PPP loan.

Visit the SBA website relating to the EIDL loans for more information.

COVID-19 Working Capital Access (CWCA) Program

The CWCA Program is administered by the Pennsylvania Industrial Development Authority (PIDA) and provides critical working capital financing to small businesses located within the Commonwealth that are adversely impacted by the COVID-19 outbreak. Visit Pennsylvania government website.

Updated: April 5, 2020

In need of accounting services? Please contact our office to talk to one of our professionals about your accounting needs and how we may be of service.

Bassman, Adelman & Weiss, PC
630 Sentry Parkway East, Suite 200
Blue Bell, PA 19422
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