COVID-19 Weekly Update – August 19th 2020
Until scientists develop an effective and safe vaccine, and that vaccine is administered to millions of people, our best means of protection from COVID-19 is herd immunity. Recent models hint that the protective effects of a population that has already been infected by the COVID-19 virus may exist at much lower percentages than previously thought. Instead of requiring that 70 to 80 percent of a population be immune, that threshold may be less than 50 percent, or even as low as ten percent. At the very least, some degree of immunity may slow the spread of successive waves of infection. The new models may also help countries determine which groups should have priority in vaccination because they may be the most vulnerable and the most likely to spread the virus.
Herd immunity, globally available vaccines and effective treatments are not yet our reality, so let’s continue to do what we can to keep each other healthy!
CARES ACT UPDATES
Executive Order and Memoranda for Pandemic Relief
Again I want to call attention to one of the memorandums signed by President Trump on August 8 requested that Treasury implement a method for deferring payment of some payroll taxes by employees beginning on September 1 through the end of the year. However, employees, employers and accountants all have questions about how exactly this will work. Since this is a deferral, not a cut in tax rates, who will be ultimately responsible for the taxes when they are due, and how will those deferred taxes be paid?
Will the deferred payroll tax be paid on an employees’ 2020 tax return or via withholding from paychecks? Neither of these options is good for employees. If it’s reconciled on the 2020 tax return, then workers may be surprised when their tax refund is smaller than expected, or if they end up owing tax. Paying the tax in a lump sum or over several paychecks may be a hardship for employees living close to the edge.
Many employers fear that the burden will fall on them. If they pay the taxes that are legally the responsibility of the employees, this may be considered extra compensation for the employees, and the employers will have to withhold additional taxes to pay the taxes that they’re paying on behalf of the employee. Faced with this dilemma, many employers are planning on continuing to withhold taxes and pay them as usual since it is not clear from the memorandum whether this is mandatory or not.
Economic Impact Payments (aka Stimulus Checks)
Non-filers tool available again to receive payments in 2020
The IRS is re-opening the window for non-filers to submit information about children so they can receive a $500 per child economic impact payment (EIP) for children. The IRS used 2018 or 2019 tax returns to determine eligibility for EIPs. But many recipients of federal benefits such as Social Security, VA benefits or railroad retirement are not required to file tax returns. Other non-filers do not have enough income to require filing a tax return. Back in May, the IRS introduced the Non-Filers Tool which allows non-filers to provide information about their children, but it was only available for a very brief period. The IRS has once again made it available, and for a longer window than previously.
- Recipients of federal benefits and who did not previously use it to add their children should enter information about their children by September 30. Payments will be issued by mid-October.
- Those who used the non-filer tool previously don’t need to do anything. Payments will be issued by mid-October.
- Persons who did not file a 2018 or 2019 tax return due to income below filing thresholds should use the non-filer tool by October 15 or will not receive a payment until 2021.
TurboTax error causing problems with EIPs
Some TurboTax users are reporting that a single checked box in their tax returns means they are not getting their stimulus check. That box asks if someone else can claim the taxpayer as a dependent. While it is true that being a dependent of another results in ineligibility for a stimulus check, some are reporting that this checked box was erroneously carried forward from an earlier year and was not correct for the current year. A few are mystified that the box had been checked at all. Unfortunately, for these people, the only currently available solution is to correct the issue when they file their 2020 tax returns.
Paycheck Protection Program (PPP)
New PPP FAQs and procedures
On August 11, the SBA added to their FAQs for procedural issues for the PPP. FAQ 50 states that the payment or non-payment of agent fees for a PPP loan will have no impact on SBA’s guarantee of that loan. FAQ 51 clarifies that vision and dental benefits are included in group health care benefits.
On the same day, the SBA added 3 FAQs to the forgiveness FAQs issued a few days earlier. The new FAQs all deal with the interaction between the PPP and the EIDL programs. The new FAQs clarify that if a business received both a PPP loan and an EIDL advance grant, the EIDL advance grant amount will be subtracted from the forgivable amount of the PPP loan. This means that some borrowers may end up repaying part or all of their EIDL grant. Fortunately, this repayment will be under the more favorable PPP terms of 1% interest.
The SBA also issued an interim final rule that includes procedures for appealing the denial of PPP forgiveness. This guidance includes a list of the information that must be submitted and the mailing address at the SBA where the appeal petition must be sent.
We accounting professionals have continued to ask for specific guidance regarding the uncertainty about deductability of forgiven expenses for our client’s 2020 business entity tax returns. We are still in the dark as, even though this was allowed under the CARES act, the Internal Revenue Service (Service), Notice 2020-32 decisively ruled that expenses allowable to the forgiven PPP loan proceeds are not deductible.
Beware phishing attacks that seem to be from the SBA
A third wave of phishing attacks began in early August that capitalizes on the SBA loans. Like the other campaigns, the emails appear to be from the SBA and request financial or banking information. If in doubt, check with the information on the SBA’s website about fraudulent emails or call the SBA.
Did you mail a check to the IRS to pay your 2019 taxes? If so, the envelope with that check may be in the backlog of millions of other unopened pieces of mail at IRS service centers, but the IRS’ tax collection machine is paying no heed. Reports are surfacing of taxpayers who mailed a check on or before the due date, but because their payment is buried in a mountain of unopened mail, they are receiving IRS notices requesting immediate payment of those taxes, plus interest and penalties. While it’s generally a bad idea to ignore IRS notices, resolving this issue may require spending lengthy time on hold because the IRS collection mechanisms can only be resolved with human intervention.
This is a real concern. If you have received a notice, please contact us immediately with a copy of that notice and the check number and date of mailing. Then follow up with us as soon as you see the payment hit your account. In some cases the IRS has deposited the funds but has not yet applied it to the proper account. If this is the case for you, also send us a copy of the front and back of the cancelled check. It is our process to log all of the details and correspondence into your digital file so we can follow up until the “case” is closed to our satisfaction. So take a deep breath, then upload the notice to your portal, email the details then let us follow up for you.
HELP FOR SMALL BUSINESS
Main Street Lending Program
The Federal Reserve’s Main Street Lending Program reported its largest weekly increase in loans, from $95 million to $226 million as of Wednesday, August 12. Additional FAQs were posted on July 31 for small businesses, and on August 6 for nonprofit organizations. Prospective borrowers should review the Boston Fed’s borrower page, and contact a participating lender.
WORKING FROM HOME
Technology tools have made it possible for many of us to successfully transition from working in offices to working remotely. Harnessing artificial intelligence can further increase our productivity, as this list of tools from Otter.ai demonstrates. This list includes apps that help you find relevant files in Gmail, track time, and reduce background noise on Zoom calls.
As the pandemic wears on, more companies are telling their employees to plan on working from home for the long haul. For example, outdoor gear retailer REI just put its brand-new and now unused corporate headquarters up for sale. But working at home, with the blurring of boundaries between work and home, is leaving many people exhausted at trying to do it all. Instead, as this article in Fast Company explains, a better tactic is to focus on excelling at only the things that really matter. As the authors say, “Now more than ever, we need to use those resources strategically—which means giving up the fantasy that we can excel in every aspect of our lives.” For example, instead of answering every email within two hours, commit to responding within 24 hours and use the time and new-found focus to over deliver on customer engagement.
LIVING WITH AND AFTER THE PANDEMIC
Work in the post-pandemic world
These days, the only certainty seems to be uncertainty, and that enduring uncertainty is taking a toll on the mental health of workers. This article in the Harvard Business Review has ideas for managers to support the mental health of their teams. Here are a few of their tips:
- Be vulnerable by admitting the challenges you’re facing. Model healthy behaviors by openly practicing self-care.
- Connect with others by developing a culture of regular check-ins and ask for ways that you can support them.
- Offer flexibility and acknowledge that a one-size-fits-all approach won’t help everyone (if anyone at all).
- Communicate more than you think you need to so that everyone is on the same page with expectations and priorities.
The silver lining of the pandemic may be that we have the opportunity to create the work environments to support mental health that we should have had all along.
Technology allows us to be connected instantly to anyone, anywhere, at any time. But the downside of that always-on culture can be burnout and a workaholic culture. Instead, the founder of startup Jotform has three tips to help create better work-life balance. Set the tone at the top by not answering calls or emails during family time. Allow team members to set times when they are and are not available. Create a culture of honesty that allows people to set limits on their capacity to contribute.
Back to school
In the absence of national guidelines, school districts are setting their own courses for reopening. A new online newsletter from the New York Times includes a map of where the virus seems to be under control, a brief summary of what’s happening in districts around the country, and news about higher education.
- 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
- Fast Company has a listing of the best productivity apps for 2020
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!