Updates and Resources for Business

Available loan funds from the SBA and its PPP program have been depleted as of April 15; there is urgency to expand this program with NEW funding that will need to be authorized by Congress.  NAMM, along with thousands of other businesses and organizations, is urgently advocating for this funding renewal. NAMM members should continue to work with their bankers to possibly complete a preliminary loan application, so they are “in line” when funds become available.  At the very least, NAMM members should stay in close touch with the SBA-affiliated lenders and prepare for when loan funds are available again.  Also, and as always, NAMM members should reach out to their Members of Congress (in DC and via their local/regional offices) and share the realities of this time and urgency for these needed funds to bridge businesses to a post-pandemic revival period.

Filing and Payment Deadline Extended
The deadlines to FILE and PAY federal income taxes are extended to July 15, 2020. Filing and payment deadline FAQ.

Employee Retention Credit
The Employee Retention Credit is a refundable tax credit against certain employment taxes equal to 50% of the qualified wages an eligible employer pays to employees after March 12, 2020, and before January 1, 2021. You can get immediate access to the credit by reducing the employment tax deposits you are otherwise required to make. Also, if your employment tax deposits are not enough to cover the credit, you may get an advance payment from the IRS. More details here.

Paid Leave Tax Credits for Small Businesses
The Families First Coronavirus Response Act gives all American businesses with fewer than 500 employees funds to provide employees with paid leave, either for the employee's own health needs or to care for family members. To take immediate advantage of the paid leave credits, businesses can retain and access funds that they would otherwise pay to the IRS in payroll taxes. If those amounts are not sufficient to cover the cost of paid leave, employers can seek an expedited advance from the IRS by submitting a streamlined claim form to be released soon.

Economic Impact Payments for Individuals
U.S. citizens, permanent residents, and resident aliens are likely eligible for an Economic Impact Payment if they have a valid Social Security number, are not be claimed as a dependent by another taxpayer, and have an adjusted gross income under certain limits. Eligible individuals can use this chart for simple directions.

For more details and resources, visit the IRS Economic Impact Help Site

Recently the SBA added to its FAQ on the Paycheck Protection Program. Below is a summary of some of the more important guidance:

• In addition to the ‘number of employees’ test, you may qualify based on traditional SBA standards (such as the gross receipts test for staffing companies) or you may qualify based on the SBA’s ‘alternative size standard,’ which is a tangible net worth less than $15 million and average net income after taxes (excluded carry-over losses) for the two full fiscal years less than $5 million. Affiliate rules apply. Note that the application is not set up for either of these standards so borrowers will still need to figure that out with their lender.
• Lenders can rely on borrower’s certification as to the affiliate rules. Thus, the lender will not need to verify affiliate calculations or analysis.
• Payroll costs should use gross wages, not net wages. There was considerable confusion over this, and many lenders were applying a different standard.
• Minority shareholders with control can waive or relinquish control and no longer be deemed an affiliate.
• The $100,000 cap in “payroll costs” applies only to compensation. Benefits above the $100,000 may be counted.
• Eligible borrowers that use professional employer organization (PEO) or other payroll providers to process payroll and report payroll taxes may still report the employees towards their payroll. Any documentation provided by the payroll provider that indicates wages and payroll taxes reported to the IRS will be considered acceptable PPP loan payroll documentation. In addition, borrowers should obtain a Schedule R (Form 941) allocation schedule or other statements from payroll provider documenting the amount of wages and payroll taxes.
• Borrowers may use the previous rolling 12 months or calendar year 2019 when calculating payroll costs for the loan amount. To calculate the number of employees, borrowers may use the average number of employees per pay period over the same time periods.
• No need to refile applications based on new guidance. Borrowers may rely on laws, rules, and guidance available at the time of the relevant application. If the loan has not been processed, borrowers may revise applications based on new guidance.
• Lenders do not need to reverify Know-Your-Customer information for existing customers.

Impact Payments Information, and SBA/PPP Loan Application and Guidelines (Updated April 3, 2020)

IRS Economic Impact Payments:

The Internal Revenue Service has setup a website with up-to-date guidance to help taxpayers, businesses and others affected by the coronavirus. Distribution of economic impact payments to individuals will begin in the next three weeks and will be distributed automatically, with, hopefully, no action required for most people. Social security recipients, who are not typically required to file a tax return, will automatically receive economic impact payments. For guidance, see Economic Impact Payments: What You Need To Know.

Paycheck Protection Program:

Small businesses and eligible non-profit organizations, and Veterans organizations described in the Small Business Act, as well as individuals who are self-employed or are independent contractors, are eligible if they also meet program size standards.

• For a top-line overview of the program: Click Here
• Paycheck Protection Program – Interim Final Rule - Here (Updated April 2, 2020)
• Information for borrowers: Here
• Application for borrowers: Here (updated April 2, 2020)
• Information for lenders: Click Here
• Application for lenders: Here (updated April 2, 2020)

The Treasury Department has indicated that applicants can begin obtaining loans from participating lenders as soon as Friday, April 3, 2020 (for small businesses and sole proprietorships). Independent contractors and self-employed individuals can begin applying for loans to cover their payroll and other certain expenses through existing SBA lenders on Friday, April 10. To apply, borrowers must complete the application and submit payroll documentation. Visit www.sba.gov for a list of SBA lenders.

Paid Family and Medical Leave:

March 28, the U.S. Department of Labor (DOL) published more guidance to provide information to employees and employers about how each will be able to take advantage of the protections and relief offered by the Families First Coronavirus Response Act (FFCRA) when it goes into effect on April 1, 2020. More information here. Note: to get full picture visit the DOL site (what’s covered and what’s not) and IRS site (how to get the payroll tax credit).

Unemployment Assistance:

The Families First Coronavirus Recovery Act (FFCRA), authorizes the U.S. Department of Labor to disburse $1 billion in grant funding to states for the administration of unemployment insurance programs. The funding is available to states in two allocations. As of April 1st, 23 states have applied for the first round of funding, and DOL is working with the Department of Treasury to certify the funds.

• Each state administers a separate unemployment insurance program, but all states follow the same guidelines established by federal law. For more information regarding rules in your state, contact your state’s unemployment insurance program.
• The FFCRA also authorized emergency paid sick leave and an expansion of the Family and Medical Leave Act. On April 1, 2020, DOL issued a temporary rule codifying in regulation previously issued guidance regarding the implementation of the new leave benefits.

On March 27, the President signed into law, the $2 Trillion Coronavirus Aid, Relief, and Economic Security (CARES) Act, providing access to financial relief for businesses during the current economic crisis. NAMM has provided a summary of member-relevant key provisions and time-sensitive employer, employee and independent contractor action items.