Help for you: Individuals and Businesses
DS+B has updates here about individual or business impacts due to the COVID-19 pandemic. Learn about your tax, audit and advisory needs as well as actions you can take proactively. Please contact your CPA directly for urgent concerns or questions. We are here to help.
JUNE 26, 2020 — SBA Issues New Interim Final Rule for Paycheck Protection Program
New Interim Final Rules regarding the Paycheck Protection Program loan forgiveness and SBA Loan Review Procedures were issued earlier this week. The new interim final rule changes key provisions to conform to the Flexibility Act. Click here to read more.
JUNE 20, 2020 — New MN Small Businesses Relief Grant Program Taking Applications June 23, 2020
Minnesota small businesses can apply for the new Minnesota Small Business Relief Grants Program starting Tuesday, June 23, 2020 through Thursday, July 2, 2020. Eligible businesses will be awarded the $10,000 grants via a randomized, computer-generated lottery process. Funds can be used for working capital to support payroll expenses, rent, mortgage payments, utility bills, and other similar expenses incurred since March 1, 2020. Click here to learn more about eligibility, program distribution requirements, and how to access the online application form.
JUNE 19, 2020 — Rising Unemployment Fraud, PPP Flexibility Act and More IRS Updates
Rising Unemployment Fraud
Across the U.S., states, including Minnesota, have reported increased levels of fraudulent unemployment filings related to COVID-19. Learn what to do if you are a victim of a fraudulent unemployment claim.
PPP Flexibility Act Eases Rules for Borrowers
Small businesses and other entities that have received loans from the Paycheck Protection Program now have 16 additional weeks to spend the funds and qualify for full forgiveness of the loans. New legislation enacted on June 5 also lowers the percentage of PPP spending required to be on payroll to 60% from 75% and moves the date to get FTEs back up to December 31, 2020. This is just a summary of the new adjustments. Click here to read all the adjustments.
Opportunity Funds Investment Deadline Extended
Investors who incur a significant capital gain now have until December 31, 2020 to reinvest in a qualified opportunity fund to achieve a tax break. Read more.
IRS Interest Rates Decrease for Third Quarter
Changes in the rates for overpayments and underpayments have decreased for the calendar quarter beginning July 1, 2020. Click here for specifics.
JUNE 5, 2020 — Federal Tax Deadline Approaching and New Details on Claiming COVID-19 and CARES Act Credits
July 15, 2020 Federal Tax Deadline is Just a Few Weeks Away
The extended deadline for filing and paying federal income and estimated income taxes is coming up on July 15th. The IRS recently published updated FAQs to clarify eligibility, required forms and deadlines, and to respond to other common inquiries about filing and payment deadlines.
IRS FAQs on COVID-19-Related Tax Credits for Required Paid Leave
Recently the IRS issued a news alert sharing frequently asked questions about COVID-19-Related Tax Credits for Required Paid Leave. These tax credits cover certain costs of providing employees with required paid sick leave and expanded family and medical leave for reasons related to COVID-19, from April 1, 2020 through December 31, 2020.
CARES Act Employee Retention Credit FAQs
The Employee Retention Credit under the CARES Act encourages businesses to keep employees on their payroll. The refundable tax credit is 50% of up to $10,000 in wages paid by an eligible employer whose business has been financially impacted by COVID-19.
MAY 19, 2020 — PPP Loan Forgiveness Application and Reopening Businesses
PPP Loan Forgiveness Application
On May 15, 2020, the SBA and U.S. Treasury issued their four-part Paycheck Protection Program Loan Forgiveness Application. You can download the application here and view the early guidance that is clarifying things like qualifying FTEs, incurred expenses, and safe harbor around the 75% use of funds for payroll. More guidance is needed and expected in the coming days. View the application here.
IRS FAQs on Economic Impact Payments
Recently the IRS issued a news alert about frequently asked questions with the Economic Impact Payments. It clarified that the payments are not considered income and will not reduce potential 2020 refunds, among other helpful answers that taxpayers want to know. Read the new FAQs here.
Reopening Minnesota Guidelines
The State of Minnesota Department of Employment and Economic Development has created a new web page with news and resources to help business owners follow phases of reopening under state-issued guidelines.View their page here.
Let us know if you have any questions about any of these updates.
MAY 14, 2020 — PPP Update on Safe Harbor Rules, Repayment Extended
Adding to new FAQ guidance, recipients of PPP loans have until Monday, May 18, 2020, to return/repay funds in full as a safe harbor on the good faith certification of loan necessity.
Applicants do not have to file for this deadline extension, as it was designed to give them more time to consider additional FAQ guidance released May 13, 2020.
In new FAQs #46 and #47 (page 16), the U.S. Treasury and SBA have clarified the Interim Final Rules that “all borrowers must certify in good faith that ‘[c]urrent economic uncertainty makes this loan request necessary to support the ongoing operations of the Applicant.’”
In FAQ #46, the SBA, “in consultation with the Department of the Treasury, has determined that the following safe harbor will apply to SBA’s review of PPP loans with respect to this issue: Any borrower that, together with its affiliates, received PPP loans with an original principal amount of less than $2 million will be deemed to have made the required certification concerning the necessity of the loan request in good faith.
Question #47 provides an automatic extension of the safe harbor repayment deadline. It states that the SBA is extending the repayment date for this safe harbor to May 18, 2020, to give borrowers an opportunity to review and consider FAQ #46. Borrowers do not need to apply for this extension. This extension will be promptly implemented through a revision to the SBA’s interim final rule providing the safe harbor.
PPP loan recipients that choose to use loan funds for payroll expenses and other eligible expenses should still carefully document use as part of the future loan forgiveness application. In addition, the SBA emphasized in its new guidance that recipients of loans greater than $2 million will face closer review during the loan forgiveness process and possibly face penalties and referrals to other regulatory agencies if the loan is ultimately deemed unnecessary under PPP program guidelines. They offer a final option to such borrowers of immediately paying the loan in full in order for borrowers to avoid administrative enforcement and referrals.
Let us know if you have any questions on this new guidance or documentation of your PPP loan fund usage. We are here to help.
MAY 1, 2020 — PPP Update and Another County Tax Extension
In addition to the SBA reopening the second round of Paycheck Protection Loan applications this week, here are a couple state and federal news updates.
Large PPP Loans Will Receive Full SBA Review
This week, Treasury Secretary Steven Mnuchin announced that the federal government will conduct a full review of any PPP Loans over $2 million to mitigate any malfeasance by large companies. More than 200 publicly listed companies were identified as having received Small Business Administration (SBA) relief funding.
He also announced, however, that the average loan size by the PPP has fallen to less than $100,000.
Dakota County Extends Property Tax Payment Deadline to July
The Dakota County Board of Commissioners approved to allow qualifying taxpayers financially impacted by the COVID-19 crisis additional time to pay their first-half property taxes. First half 2020 property tax payments can be made through July 15, 2020 without penalty for qualifying property. Qualifying property includes:
- Non-escrowed residential property
- Non-escrowed agricultural, vacant rural and open space property
- Non-escrowed commercial and industrial property
- Non-escrowed apartments
Taxpayers who escrow their first half taxes through a mortgage or escrow agency as well as properties classified as utility, railroad, machinery and transmission lines would not qualify for the property tax payment extension. Property owners who are able to pay their property taxes by the May 15 due date are encouraged to do so to help support the county, school, and city responses to COVID-19.
See our blog post on other county property tax extensions. To see if your county has announced a property tax payment extension, go to your county’s website.
For more guidance on cash flow or tax planning, touch base with your DS+B professional, and visit https://www.dsb-cpa.com/expertise/business-owners-entrepreneurs/
April 21, 2020 — Emergency Funding Updates and Staff Management
As of this writing, we are waiting to hear about more funding for the SBA’s Paycheck Protection Program, but small businesses or other eligible entities can continue to work with local lenders and apply in anticipation of additional funding.
There are other new programs emerging to support small businesses that you can read about here. We also recently wrote about the differences between layoffs and furloughed employees. Read the blog post here.
PPP Loan Funding
Congress announced it is close to a deal to fund another $300 billion or more into the Paycheck Protection Program to assist small and rural businesses. Additional set-aside monies are being discussed to prop up the Emergency Injury Disaster Loan [EIDL] program through the U.S. Small Business Administration.
Small businesses with 500 or fewer employees and other eligible entities are encouraged to fill out the short PPP loan application form and work with their local participating lender for possible future funds. Again, the PPP funding has the potential to be 100% forgivable if used primarily for payroll-related expenses.
Your employer payroll calculation is a critical part of the application to determine funding levels, and guidance is available here. Let us know if you have questions.
Main Street Lending Program
The Federal Reserve recently announced a Main Street Lending Program to support lending to small and medium-sized businesses that were in good financial standing before the onset of COVID-19. The program will operate through two facilities: the Main Street New Loan Facility (MSNLF) and the Main Street Expanded Loan Facility (MSELF).
See MSNLF (new loans)
See MSELF (upsized existing loans)
U.S. businesses are eligible for loans if they meet either of the following conditions: (1) the business has 10,000 employees or fewer; or (2) the business had 2019 revenues of $2.5 billion or less. Loans would have a four-year maturity, and principal and interest payments on the loans will be deferred for one year. Eligible lenders may originate new loans (under MSNLF) or increase the size of (or “upsize”) existing loans (under MSELF) made to eligible businesses.
April 16, 2020 — PPP Funding Update
The SBA is currently unable to accept new applications for the Paycheck Protection Program based on available appropriations funding. Please contact your DS+B partner with additional questions.
April 14, 2020 — Tax Extensions and Relief Clarity
As we receive more clarification on IRS deadlines and federal and state relief programs, we are providing updates here each week. Here are some of those briefings and bulletins to view for your individual or business situation. This is only for information. Contact your DS+B partner for specific guidance.
IRS Extensions – More relief and payment extensions
Last month, the IRS announced that taxpayers generally have until July 15, 2020, to file and pay federal income taxes originally due on April 15. As part of additional relief, no late-filing penalty, late-payment penalty, additional tax or interest will be due for deadlines originally on or after April 1, 2020 until July 15, 2020.
As a result, the extensions generally now apply to all taxpayers that have a filing or payment deadline falling on or after April 1, 2020, and before July 15, 2020. Individuals, trusts, estates, corporations and other non-corporate tax filers qualify for the extra time. This means that anyone, including Americans who live and work abroad, can now wait until July 15 to file their 2019 federal income tax return and pay any tax due. If taxpayers need additional time to file beyond July 15, 2020, they should seek guidance on filing for an extension. Filing an extension to file is not an extension to pay any taxes owed.
However, besides the April 15 estimated tax payment previously extended, the IRS is now extending relief to estimated tax payments due June 15, 2020. This means that any individual or corporation that has a quarterly estimated tax payment due on or after April 1, 2020, and before July 15, 2020, can wait until July 15 to make that payment, without penalty.
For 2016 tax returns, the normal April 15 deadline to claim a refund has also been extended to July 15, 2020.
Payroll Tax Deferrals – New guidance for PPP recipients
The IRS has updated guidance on CARES Act payroll tax deferral for businesses taking the PPP Loan for the period before the loan is forgiven. Employers who have received the PPP Loan, but not loan forgiveness yet, may defer deposit and payment of the employer’s share of Social Security tax.
The deferral period begins on March 27, 2020 and ends on the date the lender issues a decision to forgive the loan. Once the employer receives notice that the PPP Loan is forgiven, the payroll tax deposit can no longer be deferred. The total deferred amount would be paid at 50 percent on December 31, 2021, and 50 percent on December 31, 2022, with no interest or penalties assessed.
This is a deferral of payroll tax, not a forgiveness of payroll tax. For questions about first quarter payroll returns or guidance on second quarter, contact us at DS+B.
PPP loan forgiveness – How and when to track your payroll costs
According to guidance from the SBA on PPP loan coverage amounts, tracking of payroll costs covers eight weeks beginning the first day that PPP loan funds are received by the employer. Once the loan is approved, your lender has 10 days to deliver the funds.
It is vitally important to track all payroll costs and other eligible expenses paid for by PPP funds over that eight-week tracking period. It is also recommended that funds are kept in a separate bank account to support payment tracking and documentation through bank statements.
- Tips to support payroll cost tracking and future loan forgiveness:
- Properly record timesheets and payroll expense verification documents
- Keep supporting documents easily accessible, including payroll summary reports and breakdowns of payroll benefits costs
- Track and organize payroll costs daily or weekly to keep documents in order
- Record employee paid time off by employee and PTO type
- Remember, family leave covered by the Families First Coronavirus Response Act is not included in eligible PPP costs. Record this type of leave separately.
- Employee paid time off (including vacation pay, sick leave, paternal leave, and family leave) is included in your PPP payroll costs, so it may be eligible for loan forgiveness
- 75% of eligible costs must be used for payroll to qualify for loan forgiveness
- Maintaining consistent staffing and wages is critical during this tracking period
NOL Carrybacks – Further guidance to waive or reduce carrybacks
This week, the IRS posted a set of questions and answers to help companies claim net operating losses (NOLs) and tax credits for prior years so they can get faster tax refunds in the midst of COVID-19, per the CARES Act.
In addition, the IRS provided guidance on waiving the carryback period for taxpayers with NOLs in Revenue Procedure 2024.
The IRS has granted a six-month extension of time to file Form 1045 or Form 1139, as applicable, with respect to the carryback of a net operating loss that arose in any taxable year that began during calendar year 2018 and that ended on or before June 30, 2019. For partnerships with NOLs, they can file amended partnership returns using a Form 1065, U.S. Return of Partnership Income, by checking the “Amended Return” box and issuing amended Schedules K-1, Partner’s Share of Income, Deductions, Credits, to each of its partners. According to the IRS, partnerships filing these amended returns should write “FILED PURSUANT TO REV PROC 2020-23” at the top of the amended return.
Since NOLs can be a complex area of tax law — made more complex with CARES Act provisions, contact your DS+B partner for further guidance on your needs.
April 13, 2020 — Reapply for EIDL Advance through New SBA Portal
If you applied for EIDL prior to April 1, 2020 via email or through the mail, you need to reapply through the new SBA portal to receive the $10,000 advance. In an effort to streamline the process and improve security for applicants, the SBA updated the process so business owners and private not-for-profits can apply directly online.
The SBA is asking for businesses to apply for the advance online even if they already submitted an EIDL application via email or through the mail. Applying for the advance will not slow or impact the status of their EIDL applications and you will maintain your position in the queue. However, in order to receive the advance, you must apply again.
The Economic Injury Disaster Loan advance funds will be made available within days of a successful application, and this loan advance will not have to be repaid.
April 7, 2020 — Identify Your Financial Blind Spots
Whether or not you have applied for federal and state aid yet to sustain you through this challenging economic period, a severe downturn in consumer spending impacts every business.
We have encouraged our clients to apply for a federal Paycheck Protection Program loan. But once the application is filed, there are other things you can do to stay focused and identify any financial or other blind spots.
With your employees:
Check in with them. Are they and their families doing all right? Do they need anything? If they are unable to leave their homes, do they have a means of getting supplies? How can you, as an employer and concerned person, help?
With your customers:
Check in with them. Are they struggling in any way? Are they experiencing cash flow or supply chain concerns? Are there ways that you can ease their burden in the short-term to sustain them for the future?
With your suppliers:
Check in with them. Are any dealing with quarantine or their own supply chain issues? Do they have cash flow concerns? Are there ways that you can work together to sustain each other?
By reaching out and asking for ways that you can help, you will strengthen these critical relationships while also locating any weaknesses in your business structure. Also, if you are unsure of whether or not to apply for state or federal emergency loans, or which ones are right for your business, DS+B can help.
MARCH 31, 2020 — SBA Emergency Grants Through EIDL Program
In response to the Coronavirus (COVID-19) pandemic, small business owners in all U.S. states, Washington D.C., and territories are eligible to apply for an Economic Injury Disaster Loan (EIDL) advance of up to $10,000.
This advance, available directly through the U.S. Small Business Administration until December 31, 2020, is meant to provide fast economic relief to small businesses of not more than 500 people, including sole proprietors and independent contractors, non-farm agricultural cooperatives and non-governmental nonprofits that are currently experiencing a temporary loss of revenue due to the pandemic.
Funds can be used to cover:
- Paid sick leave to employees unable to work due to the direct effect of COVID-19;
- Maintaining payroll to retain employees during business disruptions or substantial slowdowns;
- Increased costs to obtain materials unavailable from the applicant’s original source due to interrupted supply chains;
- Making rent or mortgage payments, and
- Repaying debt obligations that cannot be met due to revenue losses.
An online application determines whether the applicant is eligible for a loan under the SBA’s Economic Injury Disaster Loan Program for entities impacted by COVID-19.
According to the SBA website, the application process takes approximately two hours, and funds will be made available within three days of a successful application.
Regardless of whether or not the applicant qualifies for an EIDL loan under section 7(b)(2) of the Small Business Act, this loan advance will not have to be repaid. If the applicant moves forward with an EIDL loan under Section 7(a), the advance would be deducted from any loan forgiveness amount in the future.
For more information or to apply, visit the SBA’s EIDL application page:
MARCH 30, 2020 — CARES Act Provisions
President Trump signed the much-anticipated U.S. $2 trillion emergency economic stimulus package on Friday, March 27, 2020. It is known as the Coronavirus, Aid, Relief, and Economic Security Act (CARES Act), H.R. 748. The full text of the law is available in the Resources section on this page.
Our team is going to be monitoring all IRS pronouncements and clarifications as they relate to this important legislation. We will be updating our website when additional information is received.
Read our Coronavirus economic stimulus package blog post for more details.
MARCH 26, 2020 — COVID-19 UPDATE
Accounting and Tax Services Deemed a Critical Industry
On March 25, Minnesota Governor Tim Walz issued a two-week stay at home order. He identified those industries which are deemed critical. This list included accounting, tax preparation, bookkeeping and payroll services. At DS+B, we had already implemented the ability for our staff to work from home while continuing to serve our clients. We are accepting tax packets by mail and through our online portal. We expect to continue uninterrupted service for our clients.
MARCH 24, 2020 — COVID-19 UPDATE
In this update, read about Minnesota tax filing extensions, payroll tax credits, quarterly financial statement reporting, health care coverage for COVID-19 testing and treatment and budgeting guidance.
Minnesota Tax Filing Extended to July 15, 2020
On March 23, 2020, the Minnesota Department of Revenue has extended federal and state tax filing deadlines from April 15, 2020 to July 15, 2020, following approval by the Internal Revenue Service. Note: This grace period does not apply to Minnesota state estimated tax payments for individual income taxes due April 15, 2020, for the 2020 tax year. The April 15, 2020 due date for Minnesota corporate franchise tax payments, partnership, fiduciary, or S-corporation income estimated tax payments also remains the same. Read more in our blog post.
For updates about state tax filing for other states, find your state tax agency at https://www.taxadmin.org/state-tax-agencies.
Gov. Walz Signs Executive Order for DEED Forgivable Loan Program
By executive order on March 23, 2020, Gov. Tim Walz has directed the Minnesota Department of Employment and Economic Development (DEED) to develop a forgivable loan program, awarding grants to nonprofit corporations to fund forgivable loans to small businesses regardless of the business or entity structure.
Called the Small Business Emergency Loan Program, it would provide zero-interest forgivable loans of $2,500 to $35,000 at the discretion of the DEED Commissioner to address financial impacts of COVID-19 on small businesses in the state. Restrictions apply, but up to 50% of the loan may be forgiven two years after loan disbursement if the business is operating at similar levels at that time.
To read the full executive order, go here.
Payroll Tax Credits Available to Cover Paid Leave
Following the passage of the U.S. Families First Coronavirus Response Act, the IRS has issued a press release providing details about refundable payroll tax credits for small and midsize employers impacted by COVID-19.
Employers with 500 or fewer employees can receive a dollar-for-dollar tax offset against payroll taxes for covering expanded paid employee leave rules.
Eligible employers receive 100% reimbursement, including:
- Applicable health insurance costs
- No payroll tax liability
- Self-employment equivalent credits
The payroll taxes that are available for retention include withheld federal income taxes, the employee share of Social Security and Medicare taxes, and the employer share of Social Security and Medicare taxes with respect to all covered employees. Note that employers with fewer than 50 employees are eligible for certain exemptions from the paid leave requirements.
If there are not sufficient payroll taxes to cover the cost of qualified sick and child care paid leave, employers will be able file a request for an accelerated payment from the IRS. The IRS expects to process these requests in two weeks or less.
View the IRS press release for more details.
Plan Ahead For Financial Statement Reporting
The AICPA’s Center for Plain English Accounting just released a report that is free to the public regarding financial reporting matters impacted by COVID-19. The report is designed for practitioners to evaluate whether or not consequences of the pandemic represent “subsequent events” as well as recording certain asset impairments or losses as part of financial reporting. You can download the report here.
High-Deductible Health Plan Coverage
The Internal Revenue Service has advised that high-deductible health plans (HDHPs) can pay for 2019 COVID-19 related testing and treatment without jeopardizing their status. This means that they can cover the cost of testing for or treatment of COVID-19 before plan deductibles have been met. The notice only applies to HSA-eligible HDHPs.
Food for Thought on Budgeting
With 2020 forecasting all but impossible, here are some tips to weather the current uncertainty in your budget. Keep in mind:
- Forecasting is for decision-making; forecast only as far as you can with certainty
- Approve new projects or activities based on time horizons and existing cash flow
- Give teams permission to revise timelines and budgets as more information becomes available
- Don’t shoot the messenger; maintain a healthy culture for those reporting to you.
For more guidance on revised budgeting or financial forecasts, touch base with your DS+B professional, and visit https://www.dsb-cpa.com/expertise/business-owners-entrepreneurs/
MARCH 19, 2020 — COVID-19 UPDATE
Over the past few days, your team at DS+B has mobilized to continue serving you, and we are still accepting tax packets by mail as well as through our online portal. You can still call your CPA directly. Our cell phones connect directly to office lines, whether team members are working remotely or optionally in the office. We are here for you and expect to continue our service uninterrupted.
Now, here are some important updates today for individual, business tax or audit and advisory services as you navigate the impact of COVID-19. Check back to our website and social media channels for these daily updates. As always, you can contact us for assistance.
Tax Filing and Federal Payment Extension
Please note that the IRS and state tax authorities still require tax filing by the Wednesday, April 15 deadline. The recent 90-day extension to July 15, 2020, refers to individual federal tax payments owed after filing, up to $1 million in 2019 taxes owed. As of this writing, there is no change to state tax payment deadlines in Minnesota, and we are monitoring other state tax news for our clients who operate in multiple states. For C Corporations, income tax payment deadlines are being automatically extended until July 15, 2020, for up to $10 million of their 2019 tax due. This relief also includes estimated tax payments for tax year 2020 that are due on April 15, 2020. If you need an extension of time to file your taxes, DS+B can advise you or you can visit the IRS.gov site. Individual taxpayers can request a filing extension by electronically filing Form 4868 through their tax professional, tax software or using the Free File link on IRS.gov. Businesses must file Form 7004.
For updates about state tax filing for your state, find your state tax agency at https://www.taxadmin.org/state-tax-agencies.
Business Interruption Insurance
We recently published a blog post about how your CPA can help you with business interruption insurance claims. We advise you to contact your insurance provider as soon as possible if you anticipate a business interruption in connection with COVID-19. See our blog post.
Managing Employees and Staffing
We are recommending that business owners who are impacted by partial or complete shutdown of operations to potentially continue to employ FTE employees at least 10-15 hours a week. This arrangement will supplement state emergency unemployment benefits for partially furloughed employees and support retention of your talent. Please contact us with questions or contact your state employment and economic agency about how to manage staffing on a limited scale if your business is partially or completely shut down.
Emergency Business Financing
If you are a business owner experiencing a partial or complete closure now or in the coming weeks, the Small Business Administration is offering emergency financing relief. More information is available at this link.
Paid Emergency FMLA Leave Legislation
The U.S. Senate passed legislation put forward by the U.S. House of Representatives and signed by President Trump that will require certain employers to provide paid emergency FMLA leave and paid sick time. Specific provisions relevant to covered employers include:
- Companies with 500 and fewer employees are covered by the bill.
- Employers with fewer than 50 workers could apply for an exemption from providing paid family and medical leave and paid sick leave if it “would jeopardize the viability of the business.”
- Employers may exclude employees who are health care providers or emergency responders from both sets of benefits.
- The law takes effect approximately April 2, 2020, and would sunset on December 31, 2020.
The Families First Coronavirus Response Act includes refundable tax credits for employers that are impacted. In addition, the Department of Treasury is reported to be exploring means within its administrative powers to allow small businesses the liquidity and cash flow they need to maintain operations.
We will continue to update you on this legislation and how to respond.
For continued updates on COVID-19 impacts from the IRS, you can also go to:
We hope you and your staff and loved ones remain safe and healthy. We are ready to help with any questions or concerns. Again, watch for daily updates here on our website.