The Back to Work Toolkit is a joint project led by Madrona alongside the Seattle Venture Community, Leading Tech, Retail and Aerospace Companies in the Region and the Seattle Metropolitan and Bellevue Chambers of Commerce. The goal is to provide a toolkit to help companies plan reopening their offices and getting back to work.
Learn more — https://www.backtoworktoolkit.com.
Many businesses have been able to access financial assistance through two loan programs funded by the U.S. Congress, the EIDL and PPP loan programs. Both programs are summarized below. There may be other loan programs available to your business depending on the location of your business.
¹ Based upon comments by SBA officials on April 30th, the SBA is not taking new EIDL applications.
² Please note, although the PPP was replenished by Congress, even the additional funding is expected to be rapidly exhausted.
For the portion of a Paycheck Protection Program, or PPP, loan that is forgiven, the IRS stated that no tax deduction will be allowed for the expenses that are used in the calculation of the loan forgiveness (Notice 2020-32, April 30).
Congressmen Chuck Grassley, Richard Neal, and Ron Wyden wrote a letter to the Treasury Department stating the original intent of the CARES Act was to allow for the deduction of these expenses and the IRS Notice ignores the intent of the PPP loan program which was to exclude loan forgiveness from income and to provide a tax benefit to small businesses that receive a loan; they did not intend to provide a neutral tax treatment for loan forgiveness.
The Treasury Department has given businesses which received a PPP loan and subsequently reevaluated their need and/or eligibility extended time to return the loan proceeds from May 7 to May 14, according to the Treasury FAQs released in question number 43. The FAQs, are still not clear as to the circumstances under which a loan is required to be returned, which complicates the decision. The language provided in the CARES Act simply states that a taxpayer must self-certify that the current economic uncertainty makes the loan request necessary to support ongoing operation of the business.
More guidance is expected through the FAQs, but businesses should be aware that there is no objective standard for determining whether or not a loan was necessary. The SBA and Treasury have stated that they intend to scrutinize certain PPP borrowers, including evaluating whether or not their certifications of need were made in good faith.
The FAQs in question 40 include updated guidelines around a worker’s refusal to return to work. The business must have made a good faith, written offer of rehire, and the employee’s rejection of that offer must be documented by the borrower.
This update comes after small businesses asked the SBA and Treasury for relief because some employees declined to return to work. Employees have stated that they are worried about safe working conditions or that they’ll make more money by receiving temporary increased unemployment benefits.
An exception for rehires in the CARES Act provides that businesses that laid off workers between February 15 and April 27 can rehire those employees by June 30 and thereby eliminate any potential reduction of their PPP loan forgiveness. This would include employees who initially refuse to return to work but ultimately decide go back; as long as the employees go back before June 30, a business would meet this exception.
Two options are available to businesses who pay employees, the Employee Retention Credit and the Payroll Tax Deferral. Both options are summarized below. Note that the ERC provides an actual credit while the PTD defers a portion of social security taxes.
Yes, you can apply for both - however, you can’t “double dip” and get funds from both loan programs for the same purpose. If you get an EIDL for purposes other than payroll costs between January 31, 2020 and the date the PPP Loans are first made available, you may still be eligible for a PPP Loan as long as it is not used for the same purposes.
Your business cannot receive both the Employee Retention Payroll Tax Credit and a PPP Loan.
This decision will depend on a number of factors, including how much you qualify for, how you plan to use the funds, and whether you expect to benefit substantially from forgiveness under PPP. We recommend:
Yes, employers can continue to defer the payroll taxes as described above up until the date they receive a forgiveness letter from their PPP loan lender.
The following section provides a variety of tax provisions that may be helpful to businesses and individuals – everything from delaying the due dates for filing and paying taxes to deducting losses and charitable contributions.
The IRS issued a notice (Notice 2020-23) supplementing prior notices and guidance that automatically postpones the deadline for any person with a Federal payment obligation or a Federal tax return filing obligation on or after April 1 2020, and before July 15, 2020 as identified in the notice (https://www.irs.gov/pub/irs-drop/n-20-23.pdf). In summary:
This is not a comprehensive list, refer to the above notice for additional tax forms that have been extended.
³ As a deduction from adjusted gross income