The White House and Senate leaders agreed on the highly anticipated $2 trillion dollar massive stimulus package Coronavirus Aid, Relief and Economic Security (CARES). The proposed legislation will make its way through the Senate and move along for House approval. The President anticipates signing by end of this week. While much of the finer details and procedures have not yet been formally released to the public, we wanted to provide you with a high-level overview. We will keep you apprised of further details as we receive more information.
Highlights of the package are as follows (not comprehensive):
- $367 billion for an expanded federally guaranteed loan program:
- The legislation provides federally-guaranteed loan programs for small businesses that pledge not to lay-off their workers.
- The loans would be available through June and would be forgiven if the employer pays its workers for the duration of the crisis.
- In addition, the legislation includes $10 billion in SBA emergency grants along with up to $10 million of emergency relief per business.
- Allocations of $17 billion will be provided for the SBA to cover six months of payment for businesses with existing SBA loans.
- Unemployment insurance- expanded:
- Significant expansion of unemployment benefits increasing the duration by 13 weeks coupled with a four-month period of enhanced benefits which includes an additional $600 per week beyond what state unemployment programs pay.
- In total, unemployed workers may be eligible for unemployment benefits up to 39 weeks.
- The program now encompasses self-employed/subcontractors/freelancers/furloughed employees and “gig” workers such as Lyft and Uber drivers.
- A one-time check of $1,200 to Americans who make up to $75,000 of AGI (adjusted gross income). Married couples earning up to $150,000 of AGI receiving $2,400.
- An additional $500 per child will also be included. The payment would phase-out entirely once AGI is over $99,000 for single taxpayers and $198,000 for couples without children.
- Individuals with no or little tax liability would receive the same amount
- White House officials indicated direct payments could happen as soon as April 6th.
- $500 billion for a major corporate liquidity program through the Federal Reserve
- $100 billion for hospitals
- $150 billion for state and local governments
- $30 billion in emergency education funding
- $25 billion in emergency transit funding and creates an employee retention tax credit to incentivize businesses to keep workers on payroll during the crisis
- $25 billion in direct financial aid to struggling airlines and $4 billion for air cargo carriers
- The bill bans stock buybacks for any corporation that accepts government loans during the term of their assistance plus one year
As this is a fluid situation, we will continue to provide you with updates on progress and changes to the bill as they happen.
Most healthcare providers are anticipated to offer new coverage regulation for furloughed and reduced hour employees. Be sure to check with your provider for their specific program details.
Local Massachusetts News
The MSCPA sent a letter to Commissioner Brown urging Massachusetts to follow federal guidance in extending the state tax deadline to July 15th.
Click the link to see a copy of the letter:
For the latest updates from the Mass DOR on the COVID-19 response, click this link:
Here is how to keep informed on all the local, Massachusetts updates regarding COVID-19:
– Phone (Text Alerts): To get up-to-date alerts, text “CODVIDMA” to 888-777
– Phone (via call): (Massachusetts) Dial 211 – Informational and referral
hotline, 24 hours/day, 7 days/week. All calls are free and confidential.
Interpreter services available in multiple languages.
– Online: https://mass211.org/
Small Business News
As details slowly emerge from the stimulus package which was agreed upon in the early hours this morning, we are starting to see how encompassing the support might be for all those affected by the COVID-19 pandemic. Some early details outlining the SBA Stimulus Loan Program are listed below. We will pass along any additional details as they are made available.
SBA Stimulus Loan Program Detail
* $350 billion in lending authority for SBA 7(a) loans
* Borrowers can get this SBA 7(a) loan OR an EIDL (direct SBA disaster loan), but not both
* Loan sizes of up to $10MM, calculated by taking the average total monthly payments by the applicant for payroll, mortgage payments, rent payments, and payments on any other debt obligations incurred during the one-year period before the date on which the loan is made (except for applicants with seasonal employees, in which the payroll is based on the average total monthly payments for payroll from 3/1/19 through 6/30/19)
* Loan proceeds are only for payroll support including medical leave, costs related to health benefits, employee salaries, mortgage payments, rent, utilities, and any other debt payments incurred before the covered period. (These relief loans are not eligible for business acquisitions, real estate purchases, or other typical 7a loan proceeds)
* 100% government-guarantees on these SBA relief loans made through 12/31/20
* Available for currently eligible SBA borrowers AND not-for-profits
* Delegated (underwriting) authority will be made for SBA participating lenders to expedite loan processing
* Borrower guarantee fees will be waived
* Provides a “process” (TBD) by which borrowers will be eligible for loan forgiveness in an amount equal to their payroll cost and costs related to debt obligations for the period between 3/1/20 and 6/30/20. The amount of forgiveness will be reduced proportionally by the number of employees laid off during this time, and it will also exclude employees making in excess of $100k from this “forgiveness” calculation
Keep in mind these are early details which are subject to change once the entire package is released. But this should provide a general idea of the scope.
SBA Disaster Economic Injury Disaster Loan (EIDL) program
Areas eligible for SBA disaster loans – Small business owners in all U.S. states and territories are currently eligible to apply for a low-interest loan due to Coronavirus (COVID-19).
SBA encourages small businesses to apply as soon as possible.
SBA has implemented an expedited processing method for loans under $500,000 where submission of the current tax returns is not required for small businesses. Even though, the business owner is not given the option to select the requested loan amount, the SBA loan specialists shall determine the working capital needs based on the historical data and submitted documents.
A signed form IRS 4506-T for the applicant business, 20% or greater owners/principals and any affiliates would still be required for these loans. Note, all EIDL loans (no matter the approved loan amount) shall require a personal guaranty of all 20% or greater owners of the business; when there’s no single individual owner with greater than 20% ownership in the business, a personal guaranty shall be required from at least one of the owners of the business. SBA looks for reasonable assurance of repayment ability. If the business has a loss for example in 2018 but has a good 2019, then the business shall need to make its best case for why there is a reasonable assurance of repayment ability given its most recent trends prior to the disaster.
Applicants may apply online, receive additional disaster assistance information and download applications at: disasterloan.sba.gov/ela/Information/ApplyOnline
Applicants may also call SBA’s
Customer Service Center at (800) 659-2955 or email email@example.com for more information on SBA disaster assistance.
(*Note – They are experiencing high volumes of traffic so the site may be slow or unavailable due to undergoing maintenance)
COVID-19 Important Unemployment Information – Temporary Workplace Shutdowns
Update about unemployment benefits and Coronavirus (COVID-19)
Emergency regulations have been filed to assist with temporary workplace shutdowns. It should be noted that owners receiving W-2 wage within their business were also addressed. Per Mass.gov, the emergency legislation allows people impacted by COVID-19 to collect unemployment benefits if their workplace is shut down and expects to reopen. This applies to all employees (full and part time) who are impacted by such shutdowns. Claimants are urged to file unemployment claims online.
File for benefits online – The quickest way to file a successful unemployment claim is through the UI online portal which can be viewed here.
For steps and screen shots on filing a new unemployment claim online please see the link below.
For more information and helpful FAQ answers common questions about eligibility, payment, and account information:
Note: LWD & DUA will be hosting daily virtual town hall meetings to take constituents affected by COVID-19 through a step-by-step process of achieving a successful unemployment claim. For more information and to sign up:
Eastern Bank announced they will provide over $10 million in funding to help offset the impact of the coronavirus in the communities they serve.
- Eastern Bank Charitable Foundation will target $3 million in financial support to area nonprofit partners focused on COVID-19 relief, while Eastern Bank has created two loan funds that will provide a total of $7 million to individual and small business customers experiencing financial hardship as a result of the coronavirus crisis. We will eliminate restrictions for Community Partners who have postponed or cancelled their events this year and we will also continue to honor our current Community Donation commitments to our philanthropic partners for 2020.
The two new Eastern Bank loan programs are specifically:
The (Eastern Bank) Consumer Impact Loan Fund will provide an additional $2 million in lending for existing individual customers in need.
- Low interest and flexible repayment terms, with 0% interest and no payments for the first three months and low fixed rate of 3.99% thereafter
- Customers can borrow up to $5,000
The (Eastern Bank) Small Business Impact Loan Fund will provide an additional $5 million in lending to existing small business customers in need of working capital to help fund their operations.
- Low payment and flexible terms, with interest only payments for the first six months and low interest rate of 3.99%
- Customers can borrow up to $25,000
For more information, please call 1-800-EASTERN (327-8376) or email: firstname.lastname@example.org
Tax Related News
The Treasury announced last week that they are extending the Tax Filing Deadline from April 15th to July 15, 2020
This follows the announcement earlier last week, that tax payments were being deferred by 90-days, without interest or penalties. This latest change now sensibly aligns tax payments with the new tax filing deadline of July 15, 2020.
“We are moving Tax Day from April 15 to July 15,” Secretary Steven Mnuchin tweeted. “All taxpayers and businesses will have this additional time to file and make payments without interest or penalties.”
What to do if you have already filed your 2019 and have an automatic withdrawal scheduled for 4/15?
The IRS will not automatically delay he payment to 7/15
but you can cancel the payment by contacting the U.S. Treasury Financial Agent at (888) 353-4537. Requests can be made up until 11:59PM (EST), two business days prior to your scheduled payment date. You can then reschedule the payment or pay via check to the IRS.
What about trusts and estates taxes? Yes, the relief applies to payments due from trust and estates (forms 1041). However, normal filing and payment due dates continue to apply to estate and
gift taxes (forms 706 and 709).
Tax deadline extension also provides additional time for IRA contributions.
With the tax filing deadline being extended to 7/15, the deadline for making contributions to your IRA for 2019 are also extended to 7/15/20.
The tax deadline extension also means you can put more money into a health savings account (HSA) for the 2019 tax year. HSA contributions are also tax deductible and funds can be distributed at any time to cover qualified medical costs. You must be currently enrolled in a high deductible health plan to contribute to an HSA. If you’re single, you can save a maximum of $3,500 for the year, and if you have a spouse or dependents on your health plan, you can save up to $7,000 for 2019. There’s also an additional $1,000 catch-up limit for savers 55 and older.
What impact does the deadline extension have on the second-quarter payment?
As of now, the second-quarter payment is still due on June 15th. This could change, so watch for further announcements.