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Resources to Help You Survive – and Thrive – During the COVID-19 Pandemic

When the COVID-19 pandemic was just beginning to spread, many of us were hopeful that by mid-summer, things would return to normal. However, most people are realizing that the coronavirus will be with us for some time to come. That’s one of the conclusions from a series of short articles at the New York Times aptly titled Six Months of Coronavirus: Here’s Some of What We’ve Learned. The pandemic has also exposed shortcomings of the American public health system, confirming what Laurie Garrett wrote in her 2001 book, Betrayal of Trust: The Collapse of Global Public Health. On the bright side, though, we’ve learned that the virus doesn’t last long on surfaces, and doesn’t appear to mutate very quickly.

Scientists and medical professionals have also learned treatment methods that are reducing the fatality rate of the virus, and staying inside dramatically and visibly improved air pollution around the world

Seeking out information is the best defense in any crisis, and will help you keep your business, your community, your family and yourself safe!

CARES ACT UPDATES

Portions of the CARES Act, including the enhancements to unemployment will be expiring at the end of July, but few parts of the country have returned to anything like normal yet.Another stimulus program may be on the way, but since Congress isn’t returning to Washington until July 21, it’s hard to predict what that might look like. Changes to the enhanced unemployment payments, an additional round of stimulus payments to individuals, additional help for small business and relief for student loan payments are all under discussion.

Economic Impact Payments (aka Stimulus Checks)

Many people have noted that the prepaid debit cards some people are receiving instead of paper checks look like junk mail. If your tax return is processed in Austin, TX, or Andover, MA, you will get a prepaid debit card if the IRS doesn’t have your banking information. Adding to the scam-like appearance, some people have reported that the debit card they received had their name wrong. Joint filers with different last names have reported that their surnames are mixed up, or that only one is used for both persons. The IRS website has also added a section on these debit cards to its FAQs on Economic Impact Payments, including instructions on what to do if you lose or accidentally destroy your card.

Paycheck Protection Program (PPP)

Once again, the SBA and the Treasury Department waited until Friday evening to release the latest guidance on the Paycheck Protection Program. The latest “interim final rules” formalize the changes made in the recent update to the law and then the following Monday a joint statement from SBA Administrator Jovita Carranza and Treasury Secretary Steven Mnuchin clarified section 8 of H.R. 7010 that their intent was not to have a forgiveness  “cliff”. Businesses now have 24 weeks, instead of just eight, to use the funds, and can spend up to 40% of the loan on non-payroll expenses, instead of the original 25%. Partial forgiveness will be available if the 60% threshold of payroll spending is not met. A new application reflecting these changes is also up on the website. Even though the terms of the PPP were relaxed, more than $130 billion is still available

Business owners are struggling to understand and complete the 11-page forgiveness application, and even bankers say the application is more complex than the CPA exam or the bar exam.  Senate Democrats are urging the SBA and the Treasury Department to simplify the forgiveness process, especially for smaller loans.

As chaotic and confusing as the PPP has been, important lessons have emerged from that will help businesses thrive long afterwards. Keeping an eye on cash is vital, as is having strong relationships with a banker and your accountant.

Bookkeeping questions in the CARES Act

Recording proceeds from the various CARES Act program on their books is another puzzle for business owners and accounting teams. Is money received from the PPP a loan or non-taxable income – or both? What about the Employee Retention Credit – is this income or a reduction to payroll expense? And if payment of payroll taxes is deferred, what will that do to balance sheets? Definitive answers to these questions have not yet been provided. While current accounting rules don’t require disclosure of government support, both the Financial Accounting Standards Board and the AICPA recommend disclosing as much information as possible to stakeholders.

Economic Injury Disaster Loans (EIDL)

The SBA is still working through their backlog of loan requests, and is still only accepting new applications from agricultural businesses.

Fraudsters taking advantage of the CARES Act

Some small business owners are reporting that fraudulent unemployment claims against their businesses have been made under names of fake employees, or under the names of still-employed workers. International fraud rings may be taking advantage of the flood of applications and the quick turnaround time required by the law. Other frauds include fake offers of SBA loans and official-looking requests for recipients to repay their stimulus by loading an Apple gift card. If in doubt, call an official phone number, or ask a friend or family member to evaluate any fishy looking correspondence.

Watch your credit report if you’re deferring payments

Under the CARES Act, borrowers can defer payments on federally-backed mortgages for up to 12 months without any adverse impact on credit scores. Payments on student loans can also be deferred through September. However, lenders may not report that penalty-free deferral correctly, so borrowers should monitor their credit reports carefully. Fortunately, all three credit reporting agencies are making free weekly credit reports available through April 2021 at AnnualCreditReport.com.

HELP FOR SMALL BUSINESS

Main Street Lending Program

The Federal Reserve’s Main Street Lending Program has finally launched after months of preparation. Recent changes that make it easier for small businesses to participate include lowering the minimum loan from $500,000 to $250,000, increasing the payback period from four years to five years, and allowing deferral of principal payments for two years. More details about the program are available from the Boston Federal Reserve, including a page for borrowers, which also includes recordings of webinars. Additional FAQs about that program were posted on June 8, and include instructions on how to apply.

WORKING FROM HOME

Working remotely may have tax consequences for both employees and employers. If you fled to a different state, be aware that some states begin assessing a liability for state income tax as soon as you begin work there. For companies, having payroll in another state may result in nexus in that state, which may lead to a state income tax liability. Check with our office if you have any questions about changes to your state tax status.

Managing remote teams requires a different approach than walking around and checking to see that employees are in the seats and working. While some employers may be considering using software that tracks an employee’s activities, others are recommending a more hands-off approach that emphasizes employee autonomy. Research indicates that employees who have flexibility over their schedules, number of hours worked and location of work report higher satisfaction with their work and positive impacts on well-being. Autonomy in the workplace isn’t anarchy, but it does mean that once expectations and a general structure are laid out, giving employees ownership over their expected contributions can lead to greater success for remote teams now and in the future.

Besides keeping communication channels open with Slack or regular virtual lunch breaks, getting everyone involved in virtual games can help with team building. Consider a virtual escape room, or a quiz party. Or perhaps a workshop to learn a non-work-related skill like watercolor or magic tricks.

LIVING WITH AND AFTER THE PANDEMIC

Going back to work

Facing a hodgepodge of guidance from federal and state government, employment regulators, health agencies and other rule-makers, employers and employees alike are confused about what new rules apply to workplace safety. Employment lawyers and other experts answer common questions in this article in the Wall Street Journal. For example, while the White House guidelines call for a three-phase return to work with precautions in place to protect the most vulnerable of workers, these guidelines do not have the power of law, so employers are not prevented from asking most employees to return. However, employers who do not abide by the CDC guidance run the risk of an OSHA complaint from workers.

A recent report by McKinsey encourages businesses to apply a four-step process to re-imagine the office and work life after COVID-19. First, consider whether usual procedures and processes for getting work done should be reconstructed. Next, think about the degree to which future workers will be remote or not. Some jobs and some employees need not be on-site all the time. Third, evaluate whether the current workspace design supports the ways that productive work and interaction happen. Finally, consider how much and what type of space will be needed.

New CDC Guidance

The CDC recently updated its guidance for remaining healthy and safe. Topic areas include how to stay safe if you go out, including safe use of public transportation. The CDC recommends wearing a face mask when venturing out.

While mask-wearing has become a political marker in some parts of the country, an article posted by the Foundation for Economic Education makes the argument that mask-wearing may bring about a swifter economic recovery if consumers feel safer when venturing out.

GENERAL RESOURCES

• 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!