Track Your Economic Impact Payment in the New IRS Portal

The IRS is planning to create a new, online portal called “Where’s My Economic Impact Payment” where people can obtain details about their payment from the economic stimulus package and also provide their banking information.

Background

After the CARES Act passed through Congress, Treasury and the IRS had estimated there would be 171 million rebate payments under the Act and that 101 million of these would have to be paid by paper check (through the mail) unless the IRS received direct deposit information for those recipients before the check was sent.

The Treasury Department is expected to take the first step on Friday, April 10th which involves clearing the payments that will be directly deposited. Banks expect a Treasury Department transmission Friday to confirm the money will reach the correct accounts. The IRS is meant to start processing the payments on Monday, April 13th and direct deposits would show up in recipients’ bank accounts on Wednesday.

As a refresher, the payments are up to $1,200 for individuals, $2,400 for couples and an extra $500 for children.

For those who do not yet have direct deposit information on file with the IRS, there are three options to handle that before a paper check ends up in the mail:

• For any individuals required to file a 2019 federal tax return who have not done so already – File your 2019 tax return, including all requested bank information on the return
• For individuals who are not required to file a federal tax return – File a simple tax form and answer a few questions, including all requested bank information. (Update: The “Non-Filers: Enter Payment Info” form is now available here.)
• For individuals who already filed their 2018 or 2019 tax return without their banking information – Provide your banking info in a new online portal

Treasury has announced they’ll be starting to mail paper checks at the end of April, rather than the beginning of May as originally planned. About 5 million checks will be sent each week, so it could take up to 20 weeks for all checks to be issued. However, the Treasury will also simultaneously continue making direct deposits each week for individuals providing their banking information.

Details on the IRS Economic Impact Payment Portal

As of now, the IRS is planning to open the new portal for economic impact payments during the week of April 13th.

This portal will allow taxpayers (after authentication) to find the status of their economic impact payment. If no payment or check has been issued for them yet, they can input their banking information to ensure it comes as quickly as possible via direct deposit. If you’ve ever experienced the Where’s My Refund portal that taxpayers can use to track the status of their federal tax refund, this will be a similar setup. Aside from the above mentioned information, no other updates will be provided through the portal.

The IRS is planning to create a new, online portal called ‘Where’s My Economic Impact Payment’ where people can obtain details about their payment from the economic stimulus package and also provide their banking information. Background After the CARES Act passed through Congress, Treasury and the IRS had estimated there would be 171 million rebate payments under the Act and that 101 million of these would have to be paid by paper check (through the mail) unless the IRS received direct deposit information for those recipients before the check was sent. There are three options for individuals who want to provide direct deposit information to the IRS before a paper check ends up in the mail:

For any individuals required to file a 2019 federal tax return who have not done so already – File your 2019 tax return, including all requested bank information on the return
For individuals who are not required to file a federal tax return – File a simple tax form and answer a few questions, including all requested bank information
For individuals who already filed their 2018 or 2019 tax return without their banking information – Provide your banking info in a new online portal

Treasury has announced they’ll be starting to mail paper checks at the end of April, rather than the beginning of May as originally planned. About 5 million checks will be sent each week, so it could take up to 20 weeks for all checks to be issued. However, the Treasury will also simultaneously continue making direct deposits each week for individuals providing their banking information. Details on the IRS Economic Impact Payment Portal As of now, the IRS is planning to open the new portal for economic impact payments during the week of April 13th. This portal will allow taxpayers (after authentication) to find the status of their economic impact payment. If no payment or check has been issued for them yet, they can input their banking information to ensure it comes as quickly as possible via direct deposit. If you’ve ever experienced the Where’s My Refund portal that taxpayers can use to track the status of their federal tax refund, this will be a similar setup. Aside from the above mentioned information, no other updates will be provided through the portal.

One of the benefits included in the COVID-19 epidemic stimulus package is the ability for an employer to defer payment of the employer’s share of certain federal payroll taxes. The deferral applies to the employer’s 6.2% share of the Social Security (OASDI) payroll tax.  The deferral does not apply to the employer’s 1.45% share of the hospital tax.

The deferral is optional, applies to employers of any size and applies to wages paid between March 27, 2020 and December 31, 2020.

The deferred payments will be due 50% before December 31, 2021 and the balance before the end of 2022.

For self-employed individuals, the deferral applies to 50% of the self-employment tax liability (including any related estimated tax liability).

Employers who receive Small Business Administration loans that are forgiven under the CARES Act (so that the Federal government effectively gave the employers loan funds that they did not have to repay in order to fund as much as eight weeks of their payroll costs) are not eligible for this payroll tax deferral. However, after that eight-week period is complete, deferral may resume.

If you have questions related to deferring a portion of your payroll taxes, please give this office a call.

In the face of the growing COVID-19 pandemic, Congress has passed the Paycheck Protection Program, a $349 billion effort to support small businesses and facilitate their ability to continue paying their employees through the crisis period. The law authorizes the granting of forgivable loans, all of which will carry the same terms.

In order for the amount borrowed to be forgiven, borrowing businesses must meet the following requirements:

• They must maintain current employment levels and compensation levels
• The monies borrowed must be used to pay for specific items, including rent or mortgage interest, utility costs, and most importantly payroll costs over the 8 weeks following the granting of the loan

In passing the law, Congress is anticipating a very high level of interest and participation, and as the goal of the program is to encourage continued employment, they have mandated that no more than 25% of the amount eligible for forgiveness can be allocated to non-payroll costs. The per employee payroll costs have a maximum amount set at $100,000 annualized. In recognition of the economic challenges ahead, there is a six-month deferral of all loan payments.

When does the loan program begin?

There will be a staggered start for application of the loans, as follows:

• Sole proprietor businesses and other small businesses will be able to begin applying for and receiving loans from existing SBA lenders on April 3, 2020. These loans are meant to cover payroll and other specific expenses.
• Self-employed individuals and independent contractors will be able to begin applying for and receiving loans from existing SBA lenders on April 10, 2020. These loans are meant to cover payroll and other specific expenses.

Who will be making these loans?

While these loans are initially being offered exclusively through existing SBA lenders, other regulated lenders are pending approval and enrollment. Applications can be submitted through these, as well as any participating federally insured credit union, federally insured depository institution, and any Farm Credit System. For a complete list of participating lenders, visit www.sba.gov.

Who is eligible to apply for these loans?

The Paycheck Protection Program specifies that businesses with 500 or fewer employees can apply: this broad category includes sole proprietors and self-employed individuals, nonprofit and veterans’ organizations, independent contractors and Tribal business concerns alike. The loans are also available to businesses with more than 500 employees in certain named industries (click HERE for additional detail), depending upon the employee-based size standards that the SBA has established for their industry.

Notably, small businesses that are in the hotel and food industry or that are franchises in the SBA’s Franchise Directory will see the affiliation standards set by the SBA waived for this program. The same is true for those receiving financial assistance from small business investment companies licensed by the SBA. Hotel and food industry professionals can click HERE for NAICS code 72 to confirm, while franchises in the directory can click HERE for more information.

Application Requirements

All applications for loans under the Paycheck Protection Program must include the required documentation and be submitted to approved lenders no later than June 30, 2020 using the application that can be found HERE. Applications must include payroll documentation.

In order to expedite receipt of cash that will allow businesses to continue paying their employees, the SBA is waiving the Credit Elsewhere requirement, and all of the related standard requirements that some or all of loan funding comes from other sources.

Is there a deadline to apply for this program?

The deadline for application to the program is June 30, 2020, but there is a funding cap that may result in it closing earlier. Because of this and the time that will be needed to process each loan, potential borrowers are being encouraged to get their application in sooner rather than later.

Can a business take out more than one loan under the Paycheck Protection Program?

No. There is only one loan available per organization.

Are there restrictions on what the loans can be used for?

The loan proceeds are specifically meant to be used for the cost of payroll and benefits, interest on any mortgage obligations or rental/lease agreements that were incurred prior to February 15, 2020, and utilities that had service established prior to the same date.

For the purpose of the program, payroll costs are defined as gross salary and wages; commissions and tips up to a maximum annualized basis of $100,000 per employee. For businesses operating as independent contractors or sole proprietors, payroll costs are defined as wages; commissions or income, or net earnings from self-employment up to a maximum annualized basis of $100,000 for each employee.

Is there a loan limit?

As indicated above the amount of the loan that can be attributed to payroll costs has a maximum of a $100,000 annualized basis for each employee. Beyond that limitation, maximum loan amounts will be based upon up to two months of average monthly payroll costs plus an additional 25 percent. The calculation will be based upon the previous year’s reported payroll, up to a maximum of $10 million. Businesses that are new, seasonal, or that operate on time periods different from the established standard will be able to calculate on other time periods as applicable.

What determines the amount of the loan that will be forgiven?

Repayment of the loan will be based upon what the business used the loan amount for. If the monies were spent on anything other than the prescribed expenses (payroll, utilities, mortgage interest or rent) over the 8-week span following the loan’s delivery, the money will need to be repaid. Additionally, of those expenses no more than 25% can be allocated for the utilities, mortgage or rental costs. Businesses that apply for and accept the loan without the required maintenance of staff and payroll will be required to repay the loan, with the terms of that maintenance strictly defined as follows:

• Decreasing full time employee headcount will result in a reduction of loan forgiveness
• Decreasing salaries and wages of any employee that made less than $100,000 annualized in 2019 by more than 25% will result in a reduction of loan forgiveness
• Failure to restore full-time employment and salary levels for changes made between February 15, 2020 and April 26, 2020 will result in a reduction of loan forgiveness

Is loan forgiveness automatic?

No. To be approved for forgiveness of your loan you are required to provide the lender servicing your loan with a request that verifies all payments of allowable expenses under the Paycheck Protection Program, as well as the number of full-time equivalent employees and their pay rates. Upon submission you must also certify the veracity of the information you’ve provided and confirm that the loan amount was used for the allowable expenses. The decision about whether the loan will be forgiven must be made within 60 days.

What are the terms of the loan?

Interest on the loan has been set at a 1% fixed rate, with all payments deferred six months if necessary. It should be noted that deferral does not eliminate the accrual of interest. The loan is due two years after it is granted, though repayment can be made ahead of time with no prepayment penalties or fees. Borrowers need not pledge collateral and no personal guarantee is required either.

What happens if I use the loan for purposes other than those specified?

Forgiveness will not be an option for those who use the loan for purposes other than the prescribed expenses. Further, any fraudulent use of monies provided under the Paycheck Protection Program will result in criminal charges being pursued by the federal government.

What kind of certifications are required under the program?

The focus and goal of the Paycheck Protection Program is to incentivize businesses to maintain their current level of employment so that American workers can keep on working and supporting themselves and their families. To that end, the approval process requires certification in good faith for all of the following points:

• That the COVID-19 pandemic crisis has led the business to need the loan to continue operating
• That the money received will be used for the purpose of keeping employees on the payroll, as well as to help with making payments for mortgage, leases and utility service obligations
• That you have not already received a loan under the Paycheck Protection Program and will not apply for another

The certification process requires the borrower to provide documentation regarding staffing and payroll, including the exact number of full-time equivalent employees, payroll costs, and the amounts owed for covered mortgage interest, rent, and utilities that are due eight weeks following receipt of the loan. Borrowers should be aware that the monies loaned must be largely spent on payroll costs, and that no more than 25% can be spent on the other permitted expenses.

Beyond the specific requirements listed above, potential borrowers must certify that the data and supporting information that they submit with their application is true and accurate. Applicants that knowingly make false statements in order to obtain a Paycheck Protection Program loan put themselves at risk of criminal action. Similarly, by submitting their applicant for a loan, potential borrowers acknowledge that the supporting tax documents that they submit will be used to calculate the amount that they are eligible to borrow and must correspond exactly to IRS tax records. Information submitted to a lender will be shared with authorized representatives of the SBA, including those in the agency’s Office of Inspector General. This information sharing allows adherence with SBA reviews and SBA Loan Program Requirements.

How can we help you?

If you are planning to apply for the PPP, or have any questions about the program, please contact our office ASAP. There will be a high volume of applicants and we are here to help you through the process. We can help you wade through the SBA finance options and collect financial data needed to apply for the assistance.

To help businesses retain employees and keep them employed during the COVID-19 crisis, Congress has provided a refundable employer retention credit available to all qualifying employers regardless of size, including tax-exempt organizations.

To qualify for the credit, employers must fall into one of two categories:

1. Business Operations Curtailed: Eligible employers were carrying out a trade or business during 2020, and the operation of that business is fully or partially suspended due to orders from an appropriate governmental authority limiting commerce, travel, or group meetings due to the COVID-19 outbreak.
2. Gross Receipts Declined 50%: Eligible employers have gross receipts that are less than 50% of their gross receipts for the same quarter in 2019; employers remain eligible until their gross receipts exceed 80% of their gross receipts for the same 2019 calendar quarter.

However, an employer who secures an SBA Paycheck Protection Loan created by the CARES Act is ineligible for the employer retention credit, as a Paycheck Protection Loan can be forgiven for wages paid during an 8-week period, thereby leading to double dipping on CARES Act benefits if the business tried to use both benefits.

The employer retention credit is a refundable payroll tax credit for 50% of qualified wages up to a maximum wage of $10,000 per employee. Wages taken into account are those paid starting March 13, 2020 through December 31, 2020 and include a portion of the cost of health care provided by the employer. No credit is available with respect to an employee in any period for which the employer is allowed a Work Opportunity Credit for that employee.

Qualifying wages are based on the average number of a business’s employees in 2019.

• Employers with 100 or fewer employees: If the employer had 100 or fewer employees on average in 2019, the credit is based on wages paid to all employees, regardless of whether they worked. If the employees worked full time and were paid for full-time work, the employer still receives the credit.
• Employers with more than 100 employees: An employer that had more than 100 employees on average in 2019 is allowed a credit only for wages paid to employees who did not work during the calendar quarter.

Wages do not include amounts for payroll credits provided for required paid sick leave or required paid family leave for which the government is reimbursing the employer.

Employers can be reimbursed for the credit immediately by reducing their required deposits of payroll taxes withheld from employees’ wages by the amount of the credit.

Eligible employers will report their total qualified wages and the related health insurance costs for each quarter on their quarterly employment tax returns or Form 941 beginning with the second quarter of 2020. If the employer’s employment tax deposits are not sufficient to cover the credit, the employer may receive an advance payment from the IRS by submitting Form 7200, Advance Payment of Employer Credits Due to COVID-19.

Employers must carefully consider which tax benefit or combination of tax benefits works best for their particular set of circumstances, particularly the choice between the retention credit and the SBA paycheck protection loans, since a business cannot qualify for both.

Please contact this office with questions or call for a tele-appointment to determine the best course of action for your business.

In these times of uncertainty, governments all over the world are taking unprecedented action to support people who have been adversely affected by the COVID-19 pandemic. On March 12th, the U.S. Department of Labor released updated eligibility criteria for unemployment insurance (UI) programs to include people that have become unemployed as a direct result of the coronavirus outbreak.

Eligibility for the program has now been extended to include:

• People who are unable to work because their employer has temporarily halted operations due to the outbreak
• People who have had to quit their jobs in order to care for vulnerable family members who are susceptible to the virus
• People who have had to quit their jobs because they are at risk of being exposed to the virus and infecting vulnerable family members
• People who have had to go into quarantine, but are fully expecting to return to work after the quarantine period is over. 

Who else is included?

A later revision of the policy on March 30th extended the policy to include –

• Self-Employed people
• Independent Contractors
• Gig Workers
• People with a limited work history

How long will these benefits be extended for?

Unemployed workers will receive an additional $600 per week in benefits for up to six months. This is an increase on what would normally have been received – the average at present is around $300 a week.

Unemployment insurance is usually given for around 4 months (although this does vary between states). As a result of the new government guidelines, people who are eligible will get an additional 13 weeks added to the time provided by their specific state.

Although this change is being funded on a federal level, it will be administered via your specific state. Please scroll down to find your state for all the latest links to find out more information about how to apply and track any existing claims.

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