Wednesday, March 18, 2020
By Chuck Mullen, Chairman, and Sue Peirce, Principal
“It’s all so surreal.”
“Two weeks ago seems like a lifetime ago.”
“I can’t believe this is happening.”
In the midst of this developing crisis, as our clients and friends struggle to keep pace with the many competing priorities of health, family, and business, we at Apple Growth Partners are dedicated to being a resource by helping you navigate the multitude of ever-changing tax and business laws. As of today, March 18, we have handpicked the following topics as the most pertinent of the day for Ohio organizations with regards to COVID-19:
Federal Loans for business affected by COVID-19: The U.S. Small Business Administration (SBA) is offering designated states and territories (Ohio is likely to be approved by Friday) low-interest federal disaster loans to cover working capital (payroll, accounts payable, existing bank debts, etc.) to small businesses in an industry affected by COVID-19. The actual amount of the loan is limited to the economic injury determined by the SBA, less business interruption insurance and other recoveries. Once Ohio is qualified for the program, the Ohio Development Services Agency will work with SBA to notify entities that can apply for loans. SBA will also consider potential contributions that are available from banking relationships, owners, and affiliates. Contact your banker first to determine your eligibility as SBA will require the borrower to pledge collateral that is available. Here is the link to apply.
Commercial contracts: Call your attorney…about contracts where nonperformance is due to COVID-19; is this virus a force majeure (unforeseeable circumstance preventing fulfillment)? Seek a legal opinion for relief.
Ohio Unemployment express relief for employers and employees: Employees laid off as a result of COVID-19 of due to decreased production, forced closure, or other factors relating to COVID -19…. can receive immediate benefits even though not actively seeking work. The one-week waiting period for benefits is waived. Unemployment benefits for these employees are being charged to the general mutualized tax account to reduce the likelihood of the employees’ unemployment affecting the employer’s future unemployment tax rate.
Federal Tax Relief: Individual tax due 4/15/20, up to $1 million, can be deferred up to 90 days. Likewise, corporate income tax due 4/15/20, up to $10 million, can be deferred up to 90 days. The filing of tax returns still is required by the due dates; this is merely a tax payment deferral. At this time, no guidance has been issued as to whether the first quarter 2020 estimate is still due on April 15th.
Families First Coronavirus Response Act (Breaking news): Covers all companies with up to 500 employees. There is not a 50-person minimum as with the Family Medical Leave Act (FMLA), and self-employed can receive some benefit. This bill goes into effect 15 days after the President signs it. The Senate today passed a bill requiring employers with less than 500 employees to grant two weeks paid sick leave for six qualifying reasons related to COVID-19:
- The employee is subject to a federal, state or local quarantine or isolation order related to COVID-19;
- The employee has been advised by a health care provider to self-quarantine due to concerns related to COVID-19;
- The employee is experiencing symptoms of COVID-19 and seeking medical diagnosis;
- The employee is caring for an individual who is subject to a federal, state or local quarantine order, or the individual has been advised to self-quarantine due to concerns related to COVID-19;
- The employee is caring for the employee’s son or daughter if the child’s school or childcare facility has been closed or the child’s care provider is unavailable due to COVID-19 precautions; or
- The employee is experiencing any other substantially similar condition specified by Health and Human Services in consultation with DOL and Treasury
How Do Employees Benefit?
- Normal FMLA is unpaid, but under the FFCRA, employees who are on sick leave because they are sick can receive their full pay, up to $511 per day, or $5,110 total.
- Leave taken to care for children whose schools or daycares have closed is paid at two-thirds the employee’s regular rate of pay, with a maximum of $200 per day or $10,000 total.
- Employers cannot force you to use up your vacation or other sick time before receiving this benefit.
- There is a 10-day waiting period before this benefit applies. Employees can use existing sick or vacation time to cover these days.
How Do Employers Recover the Costs?
Employers receive tax credits for 100 percent of what they pay out to employees, with the above-noted limits.
- For employers with 50 or fewer employees, the Secretary of Labor can exempt the business from these requirements. No details are available.
- Employers with fewer than 25 employees do not have to restore employees to their previous positions.
And another bill has been proposed by the Treasury Department, to provide relief to distressed industries, with a price tag of $1 trillion, it’s moving through Capitol Hill….stay tuned.
These next weeks and months are sure to throw many curveballs our way toward all of us. But this crisis will eventually pass, and our businesses and management will be judged by how well we stay focused through it all. We are here to help you, the business leader, to be able to focus on keeping your business healthy. Reach out to us any time, with any question; we are all in this together.