COVID-19 UPDATE #2 All information presented in this webinar is as of today, March 27th.

AGENDA:➢ Update on Senate Bill-Signed or Pending?!?➢ Tips on Government Checks- tax year, filing status, mail/direct deposit➢ What should you be doing? ➢ Where can you find the latest info?➢ Should clients fire their employees?

• Unemployment - Feds add $600, State to be lenient• Paid Sick Leave and Family Leave – with employer credit• Employer Retention Credit

➢ SBA loan requirements- updated • Application Process• Use of funds - ability to defer income• Recordkeeping• $10K advance option

COVID-19 UPDATE #2The tax filing due date has been extended from April 15 to July 15. All taxpayers, individuals, corporations, other non-corporate filers and those who pay self-employment tax, can also defer income tax payments. It is automatic- nothing needs to be filed. Extensions can be filed by 7/15 to extend to 10/15.➢ This includes employer payroll taxes, not the filing of employer payroll tax returns.➢ Contributions to IRAs and HSAs have been extended to July 15.

➢ Second quarter 2020 estimated income tax payments are still due on June 15. First quarter 2020 estimated income tax payments are postponed from April 15 to July 15.

➢ The relief does not change the estimated tax payment requirements or estimated tax penalty for 2019.

For those tax returns that have already been filed with a direct withdrawal date of April 15th, you can contact the Treasury to alter if you have POA on file. You will need the primary SSN, the amount of the payment, and the bank account information.

We are following all UT announcements and alerts regarding software updates for these new deadlines. As of today, you will not be able to file with a payment date post 4/15. We will keep you posted!

COVID-19 UPDATE #2CARES Act – Other Tax Provisions

✓ Special rules for use of retirement funds (waives the 10% early withdrawal penalty for distributions up to $100,000).

✓ Temporary waiver of required minimum distribution rules.

✓ Allowance of partial above-the-line deduction for up to $300 of charitable contributions in 2020.

✓ Modification of limitations on charitable contributions during 2020.

✓ Employee retention credit for employers subject to closure due to COVID-19.

✓ Delays payment of employer payroll taxes.

✓ Modifications for net operating losses.

✓ Modification of limitation on losses for taxpayers other than corporations.

✓ Modification of credit for prior year minimum tax liability of corporations.

COVID-19 UPDATE #2GOVERNMENT CHECKSThe Coronavirus Aid, Relief, and Economic Security (CARES) Act, or the “phase three” of the coronavirus bill. ➢ Adults would get $1,200 each increased by $500 for each qualifying child. The benefit would start decreasing at a rate

of $5 for every additional $100 in income. The phaseout starts at $75,000 in adjusted gross income for singles, $112,500 for heads of household, and $150,000 for married couples filing jointly; it would phase out entirely by $99,000 for singles and $198,000 for couples (with no children).

CONSIDER:➢ The IRS will look first at the 2019 tax return, if filed, otherwise the 2018 return will determine the

amount the taxpayer will receive. Taxpayers who have not filed in either year will not receive a check.➢ Clearly, delinquent filers should file asap! Depending on the client situation, some clients may wait to

file 2019 so the IRS will defer to their 2018 return. Others may want to file 2019 as their benchmark. ➢ We do NOT know when the IRS will be looking at returns to determine the dollar amount! So act fast

if your clients need to file. Once the e-file return is accepted by IRS, it goes to their database. ➢ For those taxpayers that do not have a filing requirement the IRS working is on an option.➢ We expect money to be sent out in about 2-3 weeks. ➢ The IRS will send money via direct deposit to the bank account shown on the return. If banking

information is not present, checks will be mailed to the address on the tax return. Prepare your clients for delays if they closed their bank account or moved to another address.

COVID-19 UPDATE #2ADP Resources:

http://communications.adpinfo.com/LP=233

http://www.adp.com/smallbizcovid19

http://explore.adp.com/covid-19-resources

COVID-19 UPDATE #2EMPLOYMENT QUESTIONS:✓ Should you fire your employees and let them collect unemployment?✓ Reduce them to Part-Time? Furlough?✓ Is it better to pay them and get the money back in credit under FFCRA?✓ What if you already fired them but now want to take advantage of FFCRA?✓ Unemployment checks are done at state level, BUT feds are adding $600 through July 31st.✓ Some employer’s insurance rates will be affected by EEs filing for unemployment.✓ Retention Credit- who qualifies? Can’t participate in both SBA loan and retention credit.

We have GREATLY relaxed qualifiers! Feds first opened unemployment to “nearly” everyone and states are encouraged to follow. (Self-employed and S-Corp shareholders with wages are included. Partners? Shareholders without wages?)

https://www.forbes.com/sites/advisor/2020/03/25/what-you-need-to-know-about-expanded-unemployment-benefits-for-covid-19/#57b2667436e4

COVID-19 UPDATE #2

In general, it REQUIRES employers with less than 500 employees to provide a certain amount of paid sick and paid leave to employees affected by COVID-19 and provides affected employers with a corresponding employment tax credit. The Act is broken into 3 Categories: Emergency Family and Medical Leave Act Expansion, Emergency Paid Sick Leave, Tax Credits for Paid Sick and Paid Family and Medical Leave.

These payments are taxable wages for income and employment tax purposes. Such payments are subject to Medicare taxes, but the tax credit is increased by the amount of employer Medicare taxes (i.e., 1.45%) paid on such wages.

Emergency FMLA Act: Employees who have been employed for at least 30 calendar days are eligible for up to 12 weeks of job protected leave, under both the FMLA and the FFRCA is limited to 12 weeks total. Also is available only when an employee is unable to work (or telework) due to a need to care for a child under 18 if the child’s school or child-care provider is closed due to public health emergency with respect to COVID-19. Must pay two-thirds the employee’s regular rate of pay, subject to a limit of $200 per day, and up to a total amount of $10,000.

The bill takes effect within 15 days of enactment, i.e., no later than April 2, 2020. The paid sick and paid family leave provisions, and tax credits created by FFCRA, will sunset effective December 31, 2020

COVID-19 UPDATE #2

Emergency Paid Sick Leave Act: Employers with 500 or fewer employees and government entities must offer, regardless of how long they have been employed. Applies to employees who are unable to work (or telework) and meet any of the following:1. Subject to a quarantine related to COVID-19; 2. Advised to self-quarantine related to COVID-19; 3. Experiencing symptoms of COVID-19 and seeking a medical diagnosis; 4. Caring for an individual who is subject to quarantine; 5. Caring for a son or daughter if the school or child-care provider is closed; (exception for businesses with fewer than 50 EEs)6. Any other substantially similar condition as specified by HHS.

Paid sick leave is capped at $511 per day (and a total of $5,110) for employees in categories 1-3 above, and two-thirds of wagesup to $200 per day (and a total of $2,000) for employees in categories 4-6 above.

Paid Family Leave and Paid Sick Leave Tax Credits: Employers with less than 500 employees are allowed a credit against employer Social Security tax liability equal to 100% of the qualified sick leave wages paid by the employer, subject to the limits.The credits are refundable to the extent they exceed the employer's payroll tax.

COVID-19 UPDATE #2Families First Coronavirus Response Act Flowchart

COVID-19 UPDATE #2Families First Coronavirus Response Act – Exemption

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. 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 childcare unavailability if the leave requirements would jeopardize the viability of the business as a going concern. This exemption ONLY applies to Family Leave Pay. Employers must apply; this is not automatic.

Qualifying employees may now take up 12 weeks of FMLA job-protected leave if they are unable to work because they themselves have COVID-19, are caring for their child who is under 18 and whose school or place of care has closed or are caring for another individual with COVID-19. This is a significant provision considering how many schools have closed across America. Employers with at least 25 employees must reinstate employees who take expanded FMLA leave to the same or equivalent position. Those with fewer than 25 employees must still make an effort to reinstate the employee, but they do have added flexibility.

COVID-19 UPDATE #2PADGETT UPDATE ON Section 7(a) SBA LOANS:We believe that the SBA loans currently available are not the loans being discussed currently in the Senate. It’s our hope and belief that those loans, if included in the final bill, could be more favorable to your clients and should have a simplerand faster application process than what is currently available.

Loan Application: In general, based on wage related forms. • Specifically covers Sole Props based on net income from SE. If you are a sole prop with payroll, then it is based on net

income for SE and payroll. • QUESTIONS- would partners qualify? Do the fall under “net income for SE”….or an S-Corp that didn’t take salary?

Broad category called “income” but no clarification provided.

Max Loan Amount is equal to the lesser of 10 million or 2 ½ times the average aggregate payroll over 12-month period before Feb 15th. We hope for calendar year 2019….waiting on guidance.

Forgiveness Expenses Includes: Payroll/Ind. Contractors, Rent, Utilities, Mortgage Interest, Debt Interest all existing beforethe Bill. With proof that the loan is for such sources, income can be deferred. It does not need to be the same employee. Reduction of salary of 25%? Full-time equivalents? Consider taking a loan amount equal to what you want forgiven.

THIS IS WHERE YOU CAN HELP! You can assist in the documentation needed to obtain loan.

COVID-19 UPDATE #2NEWS FROM IRS:

• Due to staff limitations, the PPS line, the e-Services Help Desk line and the e-Services, FIRE and AIR system

help desks are closed until further notice.

• Please make IRS.gov your first option for answers to questions.

• The IRS is temporarily suspending acceptance of new Income Verification Express Services (IVES) requests

at this time and is experiencing delays with existing IVES processing as well as CAF number authorizations.

• Practitioners with e-Services accounts and with client authorization can access the Transcript Delivery System

to obtain prior-year transcripts.

• Taxpayers should use Where’s My Refund? and Get Transcript, both common requests.

• Additionally, we are unable to answer any questions as yet on stimulus payments.

• Normal operations will resume as soon as possible. Please check IRS.gov for updates. We apologize for the inconvenience during this difficult period.