SEVEN12 Management has pooled together this collection of resources for our member associations to access the information required to navigate these difficult times. We highly recommend you consult an attorney to ensure you take maximum advantage of relief programs, at the state and federal level, that have been instituted to assist businesses across the country. The page will be continuously updated as additional details, resources, and information become available.
President Trump recently released federal guidelines for re-opening America. He indicated that many states may be able to re-open as early as May 1, however, there are state-specific guidelines and staggered starts as individual state governors make the decision for their state. Additionally, as each state, and often each county, have varying levels of restrictions, the law firm AkinGump has created an interactive map where individuals can view state and county level orders.
The CARES Act has multiple government programs businesses may be able to take advantage of in the coming weeks. Many of the business-specific component parts of the CARES Act interact, overlap, or conflict with one another. The S-Corp Association, has put together a useful slide exhibiting the interaction between all these programs.
Paycheck Protection Program - for employers with 500 or fewer employees.
Congress recently passed legislation extending the deadline for applying for a PPP loan from June 30 to August 8. The Small Business Administration also released a statement on the disclosure of information on PPP loans and borrowers, and a document explaining the loan data being disclosed. To view the SBA press release, click HERE and to view key aspects of Paycheck Protection Program loan data, click HERE.
According to the SBA, all loans over $2 million will be reviewed (which they distinguish from being audited) and information on loans which were returned or cancelled will not be disclosed. For loans over $150,000, the agency has disclosed the borrowers’ names, addresses, Congressional Districts, and any demographic information that the borrower had voluntarily provided. For loans under $150,000, borrowers’ names and addresses will not be published. Rather, the data on those loans have been released by state, identifying NAICS codes, lenders’ names and Congressional districts. To view the Treasury document, click HERE, then click on “download” in the upper right of the page.
Federal Reserve Announces Launch of the “Main Street Lending Program”
The Boston Fed recently issued a press release announcing that “the Main Street Lending Program is Fully Operational” and encouraged lenders “to begin submitting qualifying loans.” To view the Fed’s press release, click HERE. More information is available on the Boston Fed website: www.bostonfed.org/mslp
You can access a searchable-by-state database of participating lenders HERE.
Business Tax Relief: The law has several tax provisions designed to increase liquidity and cash flow for businesses, including deferral of tax payments and a temporary net operating loss carryback. The McGuire Woods law firm has prepared a good summary of the tax provisions.
Some key items to note:
Delay of payment of employer payroll taxes. The bill allows employers to delay paying the employer share of Social Security tax (typically 6.2% of wages) they would otherwise owe for the rest of this year. Half of the delayed amount would be due on December 31, 2021, and the other half would be due on December 31, 2022. This provision will provide significant cash flow help for companies. The Joint Committee on Taxation has estimated it will result in temporary deferral of approximately $350 billion of tax liability.
Net operating loss changes. The 2017 tax reform law eliminated net operating loss carrybacks and imposed taxable income limits on the use of such losses. The CARES Act allows losses from 2018, 2019, or 2020 to be carried back five years, thus potentially making available tax refunds from prior years in which companies paid taxes. The CARES Act also temporarily removes the taxable income limitation to allow NOLs to fully offset income. This change will provide critical cash flow and liquidity. The Joint Committee on Taxation has estimated this change will provide $89 billion of near-term tax savings for companies and $25 billion of net savings over the next ten years.
Credit for Prior Year Minimum Tax Liability of Corporations. The 2017 tax reform law repealed the corporate alternative minimum tax (AMT) and made available refundable credits for past AMT liability over several years ending in 2021. The CARES Act accelerates the availability of these credits and will result in $3.2 billion of credits being made available this year. This acceleration of credits will help the cash flow of affected companies that have past AMT credits.
Modification of limitation on business interest deduction. The 2017 tax law generally limited business interest deductions to 30% of adjusted taxable income. The CARES Act increases that limit to 50% for 2019 and 2020. For companies with significant borrowings, this change could result in meaningful tax savings. The Joint Committee on Taxation has estimated this change will result in a cumulative $13.3 billion of tax savings over the next ten years.
The U.S. Department of Labor’s Occupational Safety and Health Administration (OSHA) recently released an alert listing safety tips that employers can follow to help protect manufacturing workers from exposure to the coronavirus. This follows OSHA issuing guidance for the package delivery workforce, retail workers, ten steps all workplaces can take to reduce risk of exposure to coronavirus, and OSHA Guidance on Preparing Workplaces for COVID-19. These alerts, guidance materials, and other OSHA resources relating to COVID-19 can be found here.
The law firm McGuireWoods has released a brief document entitled “Preventing COVID-19 Exposure, and Employer Liability, in the Workplace,” which can be found here.
The U.S. Department of Labor recently published additional guidance for workers and employers on how the protections and requirements of the Fair Labor Standards Act (FLSA), the Family and Medical Leave Act (FMLA), and the Families First Coronavirus Response Act (FFCRA) affect the workplace as workplaces reopen amid the coronavirus pandemic. The guidance from the Department’s Wage and Hour Division (WHD) includes commonly asked questions and answers that address critical issues in all three laws.
This guidance is the latest addition to compliance assistance materials the WHD has published. These materials include a Fact Sheet for Employees, a Fact Sheet for Employers and a Questions and Answers resource about paid sick and expanded family and medical leave under the FFCRA. WHD has also produced two guidance posters, one for federal workers and one for all other employees, that fulfill notice requirements for employers obligated to inform employees of their FFCRA rights; Questions and Answers about posting requirements; and simple Quick Benefits Tips to determine how much paid leave the FFCRA allows workers to take.
WHD provides additional information on common issues employers and employees face when responding to the coronavirus and its effects on wages and hours worked under the Fair Labor Standards Act and job-protected leave under the Family and Medical Leave Act at https://www.dol.gov/agencies/whd/pandemic.
Unemployment Insurance: The CARES Act includes a massive expansion of UI, including increased benefits and extending coverage to employees not normally eligible. A good summary of the UI and other employee benefit programs has been prepared by the Akin Gump law firm.
Essential Workforce: The Cybersecurity and Infrastructure Security Agency (CISA) has updated their Memorandum on Identification of Essential Critical Infrastructure Workers During COVID-19 Response. This updated guidance reaffirms that wholesaler-distributor personnel, truck drivers and warehouse workers, among other industries SEVEN12 members represent, are deemed essential workers.
The CISA guidance is meant to help state and local officials determine how to protect their communities while also ensuring the security and resiliency of critical infrastructure. Ultimately state governors and local official guidance will vary based on state and region. The National Governors Association (NGA) has created a COVID-19 resource page of state and territorial actions.
Here is a template letter to provide to your drivers and employees that they can use to get to work and conduct work as employees, drafted by NAW, the National Association of Wholesaler-Distributors. Please be aware that this letter is self-certifying and not an official federal document. You should review any document that you provide to your employees with your own counsel. Click here to see the letter.