Tax Update amid Virus Outbreak – 5
Dear Friends and Family,
Tax Day has come and gone! Or did it? That is the question! What I can tell you is that we treated April 16th as the first official holiday for Badger, Sumrall & Co. since New Year’s Day and the office officially closed. We are back to work and processing tax and other work as quickly as possible. We continue to encourage you to submit your tax information as quickly as you can, especially if you are expecting refunds.
Money from the Payroll Protection Program loans has been trickling out to some of our clients but, the program’s initial $349 billion has run out. The ever-agreeable Democrats and Republicans in Congress have approved more funding; passed by the Senate and we await the House response.
Meanwhile, we know of no client who has received the promised $10,000 grant from the SBA Emergency Injury Disaster Loan program. Recently, the SBA sent emails to applicants explaining that the loan amount would be capped at $1,000 per employee listed on the application. The email went on to explain that the advance “will be transferred into the account you provide shortly after your application is submitted.” Many of you applied nearly three weeks ago and have yet to receive the grant. We are waiting for the new definition of SHORTLY AFTER.
Stimulus Check Update
As part of the April 15th, not Tax Day celebration, the IRS launched a new website for taxpayer’s to track the status of their stimulus check and to register as non-filers to expedite receipt of their stimulus by providing banking information. A non-filer is someone who did not submit a return in either 2018 or 2019 and/or does not have banking information on file with the Service. If you receive direct deposit payments from OPM, Social Security or another government agency it is presumed your banking information is on file with the IRS. There have been many complaints about the site, especially for Mac users (no, only kidding). The link to the website is provided below.
https://www.irs.gov/coronavirus/economic-impact-payments
We really do not have much insight into the length of time it will take to receive your payment or in what order the IRS is issuing payments. As of this writing, I too do not have a payment. I am assuming I have messed up my tax return somehow! Keep watching your account. Hopefully the money is on its way.
Paycheck Protection Program
Now that the program loans are being funded, what do we do next? There are certain rules on how you can use the funds to receive full forgiveness of the debt. Any amounts not forgiven will be payable at 1% annual interest with maturity in two years. During the “covered period” (eight weeks from the date the loan is funded), funds from the loan may be used for payroll, rent, interest on debt incurred prior to February 15, 2020 and utilities. The amount of forgiveness is also reduced by not retaining employees during the covered period, reducing employee pay below 25% of their first quarter salaries and spending more than 25% of the loan proceeds for items not considered payroll (rent, interest, utilities). We have developed a worksheet to with track the proper expenses as well as project the use of funds in order to maximize forgiveness. We will be publishing more detail guidance on the forgiveness program soon. In the meantime, a link to an article from Inc.:
https://www.inc.com/jared-hecht/4-steps-to-get-your-ppp-loan-forgiven.html
As always, please do not hesitate to call with any questions and concerns.
We are all in this together – The Badger, Sumrall & Co. Team