Coronavirus – Latest Updates

We understand that everyone is concerned about Coronavirus. And we are as well, which is why we are taking precautions to keep our clients and our staff safe. While the threat of Coronavirus exists, we are asking both clients and staff who feel unwell or have sick loved ones to refrain from visiting PorterKinney onsite. If you have tax documents to deliver or need to communicate with our team, please do so through your client portal.

In addition, we highly recommend that you visit the Washington State Health Department website for current guidelines on good hygiene practices to prevent the spread of COVID-19 and other respiratory diseases. Please be sure to reach out to us with concerns or questions. We are here to help!

Latest Federal Updates

June 6, 2020

Paycheck Protection Program Update

As promised, we have kept a close watch on new legislation that affects the Paycheck Protection Program (PPP) and have an important update for you.

Recent legislation (titled HR7010) has passed, offering adjustments to PPP loans—particularly regarding forgiveness calculations. Key changes are as follows:

  • Covered time period extended—The period of time to use loan money has been extended from 8 to 24 weeks. This means that you have more time to apply funds to qualified expenses that maximize loan forgiveness.
  • Social Security payments deferred—Originally under the Cares Act, employers who received the PPP Loan could not also defer employer social security tax payments. HR7010 adjusted this. Now, any employer with social security payments due between March 27, 2020 and December 31, 2020 can pay half of the amount due by the end of 2021 and the remainder by the end of 2022.
  • Loan payment deferral extended—The original 6-month deferral for repayment of PPP loans has been extended to 10 months. Payments are only required on the amount of the loan that is not forgiven.
  • Payroll threshold adjusted—Originally, the Department of Treasury and the SBA determined that 75 percent of a PPP loan had to be used for payroll in order for the loan to be forgiven. The 75 percent threshold has been adjusted to 60 percent. Loan forgiveness will only be granted if 60 percent of funds are used for payroll. This could still be subject to change; we will keep you posted.
  • Safe harbor date extended—The original Cares Act included safe harbor exceptions to restore or attempt to restore full-time employees and any pay reductions by June 30, 2020. These exceptions still exist, but the date to restore has been adjusted to December 31, 2020.
  • Loan term date extended—All new PPP loans effective after the passing of HR7010 will have a five-year term. Businesses that received a loan prior to the new legislation can adjust the loan term from two to five years. Individuals will need to work with their lender to amend loan terms.

CARES Act for businesses update

March 29, 2020

The following represents a summary of the recently signed into law CARES Act—also referred to as the Stimulus Package. Specifically, we are providing a summary of the Paycheck Protection Program.

Title 1 of the CARES Act, entitled “Keeping American Workers Paid and Employed Act,” provides relief for small businesses and their employees who are adversely affected by the COVID-19 outbreak. The key provision in this Act is the Paycheck Protection Program—an emergency lending facility to provide small business loans on favorable terms to borrowers impacted by the current economic state.


CARES Act for individuals update

March 28, 2020

The following represents a summary of the recently signed into law CARES Act—also referred to as the Stimulus Package.

Recovery check distribution amounts—Single taxpayers will receive $1,200 and joint taxpayers will receive $2,400. There is an additional $500 for each qualifying child.

The recovery check is considered a credit for 2020, but paid in advance.

The amount is reduced (but not below zero) by 5% of each dollar a person’s adjusted gross income (AGI) exceeds. Consider the following:

  • Married filing joint: $150,000 (AGI over $198,000 does not qualify)
  • Head of household: $112,500 (AGI over $146,500 does not qualify)
  • Single: $75,000 (AGI over $99,000 does not qualify)

Consider the following example:

  • A married couple with no children has an AGI of $190,000.
  • $190,000 is $40,000 above the $150,000 amount shown above.
  • The couple’s check is reduced by 5% of $40,000, which is $2000.
  • Therefore, they would receive a check for $400. (i.e., $2400 – $2000 = $400)

Other key details for recovery check eligibility include:

  • Nonresident aliens are not eligible for the rebate.
  • If a taxpayer has an outstanding debt (which the IRS would typically offset a refund by paying that debt), recovery dollars will not be used to offset that debt.
  • Amount will be direct deposited into the account on the last filed return. Every taxpayer will receive a letter indicating their recovery check was dispersed. If the letter is not received, there will be a specific phone number to call to have the check re-issued.
  • AGI will be accessed from 2019 returns if filed at the time of determination. Otherwise, 2018 returns will be used. Taxpayers who have not filed a return will not receive a check unless they did not file because they only have SSA-1099 or RRB-1099 (social security). The Treasury Department will review those forms for 2019 and issue the appropriate amount via check.

UNEMPLOYMENT – KEY POINTS

Any employee who was furloughed or part of a layoff is eligible for state unemployment. Details are as follows:

  • Unemployment amount via the state typically ranges from 30-50% of the standard wage, depending on the state.
  • The amount a person will receive for unemployment over four months will be the amount the state would already provide, but increased by $600 per week through July 31, 2020. For example, if a person is eligible for $300 weekly, they will receive $900 per week over four months or through July 31, 2020, whichever comes first.
  • If an employee is already unemployed due to COVID-19, the $600 weekly additional payment will be paid retroactively.
  • Self employed individuals, independent contractors, and gig workers are eligible for unemployment under this program.

RETIREMENT DISTRIBUTIONS – KEY POINTS

Ability to withdraw up to $100,000 retirement in 2020 for COVID-19-related purposes without 10% penalty—The distribution is taxable over a 3-year period unless electing to pay it back within 3 years. This essentially equates to a loan unless it is not paid back within the 3-year timeframe. This rule applies to individuals:

  • Diagnosed with COVID-19
  • Who have family (spouse or dependent) who have been diagnosed with COVID-19
  • Who have adverse financial consequences in relation to COVID-19
  • Who include the distribution in taxable income (unless they elect the 3-year payback)

Waived required minimum distributions (RMD) from individual retirement accounts—The required minimum distribution for 2020 has been waived.

This also applies to retirees who turned 70 1/2 in 2019 and are required to take their RMD by 4/1/20. If the retiree that turned 70 1/2 in 2019 still intends to take their RMD, this must happen by April 1, 2020—otherwise, the same penalty for late withdrawal will be applied.

Above-the-line charitable contribution—For tax year 2020, if a taxpayer does not itemize deductions, they can deduct up to $300 in addition to standard deduction for cash charitable contributions (no stock contributions).

Charitable contribution limitation by AGI—The 60% adjusted gross income limitation has been removed for 2020 (other than from donor advised funds).


U.S. Small Business Administration (SBA) offering disaster assistance in response to COVID-19

March 21, 2020

Under the recently enacted Coronavirus Preparedness and Response Supplemental Appropriations Act (the Act), small businesses that have suffered substantial economic injury as a result of COVID-19 can apply for low-interest federal disaster loans through SBA. Small businesses and nonprofits can apply for working capital loans of up to $2 million.

We’ve highlighted the following key details of the Act for you here, but you can also learn more by visiting the COVID-19 disaster assistance page on SBA’s website.

  • State governors must first request access to the Economic Injury Disaster Loan program. Once the declaration is made, information on the application process for disaster loan assistance will be made available to affected small businesses within the given state.
  • Loans carry an interest rate of 3.75% for small businesses and 2.75% for nonprofits.
  • Loans can be used to cover accounts payable, debts, payroll and other bills.
  • Loans can be offered with long-term repayments in order to keep payments affordable—up to a maximum of 30 years. Terms are determined on a case-by-case basis.
  • Businesses will apply for loans online and select “Economic Injury” as the reason for seeking assistance.
  • SBA offers disaster assistance via its customer service center. If you have questions or want to check if your state is eligible, contact U.S. Small Business Administration via phone at 800-659-2955 (TTY: 800-877-8339) or e-mail disastercustomerservice@sba.gov.

The Coronavirus situation is changing rapidly, as are the updates to various relief efforts. We will continue to monitor news and keep you updated as clarification is provided.

If you have questions, be sure to reach out to us. Our entire team is here to support and guide you!


Family and Medical Leave Act (FMLA) expanded to provide relief to those affected by COVID-19

March 20, 2020

“The Families First Coronavirus Response Act” (FFCRA), which goes into effect April 2, 2020 and expires December 31, 2020, responds to the coronavirus outbreak by providing additional assistance in the areas of COVID-19 testing, sick leave, food assistance, and more. We’ve compiled key details of FFCRA that we believe you need to know.

In summary, the Act:

  • Requires private insurance plans to provide free COVID-19 testing
  • Requires employers to provide emergency paid sick leave to workers affected by COVID-19 and expands family and medical leave.
  • Offers increased funding for state unemployment insurance, food stamp and nutritional programs.

More specifically, here’s what The Families First Coronavirus Response Act means for both business owners and employees in the areas of sick leave and expanded family and medical leave.

  • Employees are eligible for up to two weeks of sick leave (full pay for self, 2/3 pay for family care) for illness, quarantine or school closures.
  • Employees are eligible for up to 12 weeks of FMLA leave for school closures (10 days unpaid and then up to 10 weeks at 2/3 pay).
  • FMLA expansion covers:
    • Employers with fewer than 500 employees
    • Employees who have been employed for at least 30 calendar days (some exclusions may apply)
    • Employees who must care for children under the age of 18 in the event of school and place-of-care closures or if care provider is unavailable due to a public health emergency with respect to COVID-19.
  • Emergency paid sick leave covers:
    • Employers with fewer than 500 employees
    • All employees no matter the length of employment (some exclusions may apply)
  • 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.

The Coronavirus situation is changing rapidly, as are the updates to various relief efforts. We will continue to monitor news and keep you updated as clarification is provided.

If you have questions, be sure to reach out to us. Our entire team is here to support and guide you!


Tax filing extension

March 20, 2020

On March 20, Treasury Secretary Mnuchin announced that the tax filing deadline has been extended to July 15, 2020. According to Mnuchin, “All taxpayers and businesses will have this additional time to file and make payments without interest or penalties.”

Note that this is a follow-up announcement to Notice 2020-17 that had previously only extended the payment deadline until July 15, 2020.


Tax update: Treasury Department and IRS defer tax payment deadline 90 days

March 19, 2020

The Treasury Department and the IRS have announced special payment relief in response to the COVID-19 pandemic. This information is contained in Notice 2020-17. Key details are as follows:

  • The income tax paymentdeadline for individual returns is automatically extended until July 15, 2020 for up to $1 million of 2019 tax due.
  • Payment relief applies to all individual returns—including self-employed individuals and all entities other than C Corporations (e.g., trusts or estates).
  • For C Corporations, the income tax payment deadline is also automatically extended until July 15, 2020 for up to $10 million of 2019 tax due.
  • Tax payment relief also includes estimated tax payments for 2020 that are normally due April 15.
  • Postponement of tax payments applies to federal returns only.
  • While payments can be deferred, the filing deadline has NOT been extended. Taxpayers are expected to file returns by April 15, 2020, or file an extension.
  • The IRS encourages Americans who can file their taxes before April 15, 2020 to do so in order to take advantage of any refund due to them.

Our firm continues to monitor announcements from the IRS regarding additional changes to filing and payment due dates and will keep you informed.

If you have questions, be sure to reach out to us. Our entire team is here to support and guide you!

Disclaimer: While PorterKinney PC has made every attempt to ensure the accuracy of this document, it is not responsible for any errors or omissions, or for the results obtained from the use of the information in this presentation. This document been prepared for information purposes and general guidance only and does not constitute legal, accounting or other professional advice. Circular 230 Notice: The information included in this presentation is not intended or written to be used, and it cannot be used, by any taxpayer for the purpose of (1) avoiding tax-related penalties or (2) promoting, marketing, or recommending to another party any tax related matters.