It’s a sad state of affairs in our country when scammers are preying on each state’s unemployment funds. We first posted info on this big problem a few months ago at: https://www.schwartzaccountants.com/2020/06/ma-is-now-being-inundated-with-fraudulent-unemployment-claims/. Beyond notifying your state unemployment department immediately upon learning that a fraudulent unemployment claim was filed under your name, here are some additional prudent steps to take:
- Start by changing the passwords for your various bank and credit cards accounts
- Next, put a credit freeze on through the 3 credit agencies listed below. This will prevent new accounts from being opened in your name. Please note that freezing your credit can be a bit of an annoyance later. For instance, should YOU wish to open a valid account, you will likely need to go online and pause each credit freeze.
- And consider an identity theft protection subscription like Lifelock (lifelock.com). There are several programs that monitor your credit. In fact, AAA members get free credit monitoring as part of their membership.
Please be aware of a recent scam involving people impersonating the Small Business Association. The imposters claim to be conducting “site visits” on behalf of the SBA. When contacted, the SBA states that they do not conduct site visits.
- SBA does not initiate contact on either 7a or Disaster loans or grants. If you are proactively contacted by someone claiming to be from the SBA, suspect fraud.
Additional scams involving the SBA and loans have sprung up since the COVID-19 Relief Act. You can read about other scams at:
Q: I have an assistant who has two small kids and has not been coming to the office since she does not have babysitting. She wants to know if she is eligible to still be paid by my office and, if so, how do we go about paying her and do we get a tax credit on the wages paid?
A: According to our firm’s payroll manager Greta:
In this case, your employee may be eligible for two-thirds of her pay for 12 weeks capped at $200 per day and $12,000 in the aggregate. If paid, the company would receive a dollar for dollar tax credit against their federal Payroll Taxes. However, your practice appears to be eligible for the small business exemption since you have fewer than 50 employees, possibly relieving you from this portion of the emergency paid Sick/Leave Act FFCRA.
A small business can be exempt from certain paid sick leave and expanded family and medical leave responsibilities if providing an employee such leave would jeopardize the viability of the business as a going concern as long as the:
1. employer employs fewer than 50 employees;
2. and the leave is requested because the child’s school or place of care is closed, or childcare provider is unavailable, due to COVID-19 related reasons; and an authorized officer of the business has determined that at least one of the following three conditions is satisfied:
a. The provision of paid sick leave or expanded family and medical leave would result in the small business’s expenses and financial obligations exceeding available business revenues and cause the small business to cease operating at a minimal capacity;
b. The absence of the employee or employees requesting paid sick leave or expanded family and medical leave would entail a substantial risk to the financial health or operational capabilities of the small business because of their specialized skills, knowledge of the business, or responsibilities; or
c. There are not sufficient workers who are able, willing, and qualified, and who will be available at the time and place needed, to perform the labor or services provided by the employee or employees requesting paid sick leave or expanded family and medical leave, and these labor or services are needed for the small business to operate at a minimal capacity.
If you determine you qualify for this exemption, then to elect this small business exemption simply document why your business with fewer than 50 employees meets the criteria and keep that documentation on file in your office. Otherwise, please abide by the regulations of the FFCRA available at: https://www.dol.gov/agencies/whd/pandemic/ffcra-employer-paid-leave#_ftn6 , pay your employee to stay home and take a tax credit against payroll taxes submitted each pay period.
According to the HHS at: https://www.hhs.gov/coronavirus/cares-act-provider-relief-fund/reporting-auditing/index.html:
“All recipients of more than $10,000 of Provider Relief Fund (PRF) payments are required to comply with the reporting requirements described in the Terms and Conditions and specified in future directions issued by the Secretary.”
Required reporting includes lost revenues and/or expenses attributable to coronavirus, as well as other assistance and subsidies received during 2020.
• January 15, 2021: reporting system opens for providers
• February 15, 2021: first reporting deadline for all providers on use of funds
• July 31, 2021: final reporting deadline for providers who did not fully expend PRF funds prior to December 31, 2020
View the summary of reporting guidelines for payments exceeding $10,000 – PDF. Or Download the Final Reporting Data Elements – PDF. This document updates and supplements the July 20, 2020 Post-Payment Notice of Reporting Requirements.
The SBA recently issued Form 3508S (https://home.treasury.gov/system/files/136/PPP-Loan-Forgiveness-Application-Form-3508S.pdf) which greatly simplifies the loan forgiveness application for practices that received PPP Loans of less than $50k.
If you complete the forfeiture calculation simplify Initial the box next to each of the 7 questions, including the first question that asks the practice owner to confirm:
• The dollar amount for which forgiveness is requested does not exceed the principal amount of the PPP loan and:
– was used to pay costs that are eligible for forgiveness (payroll costs to retain employees; business mortgage interest payments; business rent or lease payments; or business utility payments);
– includes payroll costs equal to at least 60% of the forgiveness amount;
– if a 24-week Covered Period applies, does not exceed 2.5 months’ worth of 2019 compensation for any owner-employee or self-employed individual/general partner, capped at $20,833 per individual; and
– if the Borrower has elected an 8-week Covered Period, does not exceed 8 weeks’ worth of 2019 compensation for any owner-employee or self-employed individual/general partner, capped at $15,385 per individual.
According to the instructions available at: https://home.treasury.gov/system/files/136/PPP-Loan-Forgiveness-Application-Form-3508S-Instructions.pdf, practice owners with PPP loans of less than $50k still need to submit additional paperwork with their lenders including:
Documentation verifying the eligible cash compensation and non-cash benefit payments from the Covered Period or the Alternative Payroll Covered Period consisting of each of the following:
1. Bank account statements or third-party payroll service provider reports documenting the amount of cash compensation paid to employees.
2. Tax forms (or equivalent third-party payroll service provider reports) for the periods that overlap with the Covered Period or the Alternative Payroll Covered Period:
a. Payroll tax filings reported, or that will be reported, to the IRS (typically, Form 941); and
b. State quarterly business and individual employee wage reporting and unemployment insurance tax filings reported, or that will be reported, to the relevant state.
3. Payment receipts, cancelled checks, or account statements documenting the amount of any employer contributions to employee health insurance and retirement plans that the Borrower included in the forgiveness amount.
Documentation verifying existence of the obligations/services prior to February 15, 2020 and eligible payments from the Covered Period.
1. Business mortgage interest payments: Copy of lender amortization schedule and receipts or cancelled checks verifying eligible payments from the Covered Period; or lender account statements from February 2020 and the months of the Covered Period through one month after the end of the Covered Period verifying interest amounts and eligible payments.
2. Business rent or lease payments: Copy of current lease agreement and receipts or cancelled checks verifying eligible payments from the Covered Period; or lessor account statements from February 2020 and from the Covered Period through one month after the end of the Covered Period verifying eligible payments.
3. Business utility payments: Copy of invoices from February 2020 and those paid during the Covered Period and receipts, cancelled checks, or account statements verifying those eligible payments
Practices with loans of less than $50k might as well reach out to their lender about submitting a Form 3508-S along with the applicable supporting documentation to have your loan forgiven as long as the full amount of the PPP loan was spent on qualifying payroll and facility costs. More info is available at: https://home.treasury.gov/news/press-releases/sm1148.
Last week, the U.S. Department of Health and Human Services (HHS), through the Health Resources and Services Administration (HRSA), announced $20 billion in new funding for providers on the frontlines of the coronavirus pandemic. Most healthcare practice owners should be eligible for Phase-3 as follows:
• Providers who previously received, rejected or accepted a General Distribution Provider Relief Fund payment are invited to apply for additional funding that considers financial losses and changes in operating expenses caused by the coronavirus. Providers that have already received payments of approximately 2% of annual revenue from patient care may submit more information to become eligible for an additional subsidy.
• An expanded group of behavioral health providers confronting the emergence of increased mental health and substance use issues exacerbated by the pandemic are now eligible for relief payments. Working with the Substance Abuse and Mental Health Services Administration (SAMHSA), HRSA developed a list of the nation’s behavioral health providers now eligible for funding, which includes, for example, addiction counseling centers, mental health counselors, and psychiatrists.
• Previously ineligible providers, such as healthcare practices that began practicing in 2020, are also invited to apply, including Medicare, Medicaid, CHIP, dentists, assisted living facilities and behavioral health providers that began practicing January 1, 2020 through March 31, 2020.
Learn more by reading the HHS Press Release on the New Phase 3 Provider Relief Funding at:
HHS has issued Instructions for this Phase-3 subsidy available at: https://www.hhs.gov/sites/default/files/provider-distribution-instructions.pdf.
Additional info on the program is available at:
To complete the application on your own, go to https://cares.linkhealth.com/dashboard/#/ and use the login credentials set up when you applied for the initial subsidy of 2% of your 2019 practice collections.
Practice owners who received the PPP loan earlier this year had 24 weeks to spend the funds on certain payroll and facility expenses to qualify for full forgiveness of that loan. For many of our clients, the 24-week Covered Period has recently ended.
Did you know that you have 10 months following the end of the Covered Period to file the paperwork with your lender to apply for full forgiveness of the PPP loan? We are generally recommending that our clients do NOT rush to complete the loan forgiveness paperwork. Believe it or not, the PPP loan forgiveness rules are still fluid as follows:
1. The SBA is considering waving the requirement for businesses that borrowed less than $150k in PPP funds to file any type of forgiveness application with their lender.
2. Perhaps the EIDL grant will also be forgiven for businesses that borrowed less than $150k. Currently, you?re required to repay that grant of $1k per employee received last spring as part of the PPP Loan forgiveness process.
We have prepared the PPP loan forgiveness application for a few clients so far and have found the paperwork to be extremely labor intensive. For that reason, we will charge our clients who request our assistance with their application the following:
? If we provide both accounting and payroll services to your practice $ 750
? If we provide accounting services but not payroll services $1,500
? If we don?t provide accounting or payroll services to your practice $2,500
Since the rules are fluid, you still have 10 months before the paperwork is due, and there is a decent chance that no paperwork will ultimately be required, why rush to start the PPP Loan forgiveness paperwork at this time?
With the pandemic impacting the economy to the extent it has for much of the year, many practice owners found themselves collecting unemployment for the first time in their lives. Although unemployment insurance (UI) is a government program helping taxpayers out of work, expect to pay federal and state income taxes on any benefits received. Same goes for the Pandemic Unemployment Assistance (PUA) many received in addition to their state?s UI benefit.
To help plan for the taxes owed on this income, taxpayers can voluntarily choose to have 10% of their periodic UI received withheld for federal income taxes by providing a completed Form W-4V (https://www.irs.gov/pub/irs-pdf/fw4v.pdf) to the paying agency, instructing the agency to withhold taxes.
Please note that having 10% withheld for federal income taxes may not be enough in most cases. If you are in a higher tax bracket (12%, 22%, 24% or higher), you will most likely be under-withheld for federal taxes and might consider making quarterly estimated tax payments and/or having additional federal and state income taxes withheld from your pay once employed again. You can submit your estimated tax payments by check with a payment voucher via mail or electronically online via this IRS website:
The SBA made it very easy for practice owners to receive an EIDL loan of up to $150k with a fixed 3.75% interest rate over a 30-year term. And a lot of practice owners decided to accept this EIDL loan.
As we posted: https://www.schwartzaccountants.com/2020/05/more-info-about-eidls/, there are various pitfalls that come along with this SBA loan. For starters, the sole purpose of the EIDL loan is to help businesses survive through an Economic Injury or Disaster.
The instructions issued by the SBA specifically prohibit many other uses of EIDL funds including:
? Paying dividends or bonuses
? Expanding your facility
? Purchasing equipment
? Relocating your practice
Please note that the healthcare lending community isn?t very keen on these loans either, since having an EIDL makes it more difficult for you to refinance your existing practice debt to another lender.
If you took the EIDL loan, please consider paying off the EIDL once your practice returns to pre-Covid profitability and you are almost 100% certain that you won?t rely on these funds in the future.
To repay the EIDL loan:
1. Go to the website: pay.gov
2. Create a new account (Choose ?Create Company Account?.
3. Once account is created, you will need your EIDL loan number
4. After completing the set-up, you can pay back your loan either in full or by partial payments
For individual taxpayers who filed an extension, the deadline to submit your final 2019 tax return is Thursday, October 15.
A few tips to remember:
? You can file your return any time before that date.
? If you?re due a refund, make sure you muse direct deposit to receive your refund.
? If you owe taxes, you can pay online from a checking or savings account at IRS Direct Pay.
? Pay any balance due as soon as possible to reduce interest and penalties for late payment (the deadline to pay for 2019 income taxes due was July 15, 2020).
? If you missed the deadline to request an extension (July 15, 2020), you should file and pay as soon as possible. This will help reduce your interest and any penalties you may receive.