COVID-19 and Tax Changes

New Developments – 8/6/20

AICPA continues to ask Congress to include PPP deductibility in upcoming legislation and points out that denying deductions for expenses paid with PPP funds creates other possible issues such as impacting the 199A deduction, treatment of deductions and loan forgiveness if occurring in different tax years and disallowed interest expense under 163(j):

Summary of the new FAQ’s for PPP Loan Forgiveness:

Multifamily property owners with mortgages backed by Fannie Mae or Freddie Mac who enter into a new or modified forbearance agreement must inform tenants in writing about tenant protections during the multifamily property owner’s forbearance and repayment periods.

San Francisco further extends the deadline for businesses to file and pay their Business Registration Fee and Unified License Fees until March 2021.


New Developments – 8/4/20

Treasury Department released new FAQ’s for PPP Loan Forgiveness (Updated Aug. 4) confirming existing guidance and addressing a few open issues, including the meaning of “transportation utility expenses.”

Summary of the Main Street Lending program: Minimum loan size was reduced to $250K to allow more small businesses to participate.

Individuals who qualify for an Economic Impact Payment based on their 2018 or 2019 tax returns do not need to pay back all or part of the payment, if based on the information reported on their 2020 tax returns, they no longer qualify for that amount or would qualify for a lesser amount.

FHFA approved an extension of the temporary policy that allows for the purchase of certain single-family mortgages in forbearance that meet specific eligibility criteria set by Fannie Mae and Freddie Mac The policy is extended for loans originated through August 31, 2020.

The Red Backpack Fund is making grants of $5,000 each to female entrepreneurs in the U.S. to help alleviate the immediate needs and support long-term recovery of those impacted by COVID-19.

Alameda County is making COVID-19 Business Adaptation Grants to small business owners in unincorporated areas of the county. Grants of up to $5,000 are available to support necessary business adaptations related to new COVID-19 requirements:


New Developments – 7/30/20

IRS reminds taxpayers that favorable tax treatment is available to access funds from retirement accounts:

Rehabilitation Credit – The IRS issued Notice 2020-58 (PDF) that provides additional relief to taxpayers in satisfying the substantial rehabilitation test.

Gov. Newsom announced a series of actions to better serve workers that have experienced job loss during the COVID-19 pandemic, including the formation of an Employment Development Department (EDD) strike team, and a renewed focus on processing unpaid claims.

For Artists and Cultural Practitioners – The California Relief Fund for Artists and Cultural Practitioners is distributing $920,000 from the CAC’s general fund in the form of $1,000 grants to help artists and cultural practitioners (including fine and performing artists, teaching artists, culture bearers, and maker-based sole or collective creative entrepreneurs)

PPP and pandemic-related tips for nonprofit preparers, auditors, and board members:


New Developments – 7/29/20

The IRS issued a long-awaited package of guidance regarding the Sec. 163(j) limitation on business interest expense deductions:

Individuals who have lost or destroyed their Economic Impact Payment Card may request a free replacement through MetaBank® Customer Service.


New Developments – 7/28/20

The SBA announced that the Portal to be used by lenders to submit loan forgiveness applications will open on Aug. 10:

The IRS issued temporary and proposed regulations on the recapture of excess employment tax credits under the Families First Coronavirus Response Act and the CARES Act. The regulations cover the reconciling of advance payments of the acts’ refundable employments tax credits and authorize assessments to recapture the credits, when necessary.

The fifth round of the LISC Small Business Relief Grant Program is now open. LISC is making grants ranging from $5,000 to $20,000 to businesses facing immediate financial pressure because of COVID-19. Priority will be given to entrepreneurs of color, women- and veteran-owned businesses, and other enterprises in historically underserved places who don’t have access to flexible, affordable capital.


New Developments – 7/24/20

New Developments – 7/23/20

New Developments – 7/20/20

New Developments – 7/14/20


For the past few months, the world around us and our economy have been rapidly changing due to the COVID-19 pandemic. In reaction, the federal and state governments have instituted new programs and tax changes impacting both individuals and business entities. The changes being made by both federal and state governments are rapidly evolving in response to ever-changing conditions. Below are links to some of the latest information.

As always, the Partners and staff of ASL are here to support our clients and answer any questions or concerns. In this new virtual environment, our employees are working remotely to continue to serve our clients as usual.


Accounting & Advisory Updates

Bay Area Economic Relief

Business Loan Modifications

Business Valuations

California Economic Relief

CARES Act

Community Advantage (CA) Recovery Loans

Crowdfunding

Economic Stimulus Payments

Employer Aid to Employees

Federal Tax Filing Date & Payments

Home Owners

Mandatory Paid Sick Leave and Family Leave

National Grants and Loans

Net Operating Loss

Nonprofits – Provisions and Relief

Paycheck Protection Program

Qualified Opportunity Funds

Rental Property Owners

Retirement Plans

SBA Loans

Start Small Think Big COVID-19 Assistance

State Tax Filing Guidance – Updated 6/18/20

Student Loans


Federal

CARES Act 

On March 27, 2020, the President signed into law, a $2.2 trillion stimulus package (CARES Act) to help both individuals and businesses offset the economic impacts of the virus.

IRS expands relief for coronavirus-related retirement plan withdrawals. Qualified individuals receive favorable tax treatment for those distributions under the CARES Act:

The IRS has advised that new rules under the CARES Act provide flexibility for health care spending that may be helpful in the current environment where more people may need at-home services due to measures to fight the coronavirus.

IRS releases draft Form 941 with numerous changes to report new CARES Act credits and deferrals:

Qualified Improvement Property – Before the CARES Act, prior law required Qualified Improvement Property (QIP) placed in service subsequent to 12/31/2017, to use a 39-year tax life, and the property was not eligible for bonus depreciation. The CARES Act retroactively changed this recovery period to 15 years, which made QIP bonus depreciation eligible through 2026. Partnerships can file amended 2018 and 2019 returns to claim the bonus depreciation but must do so before Sept 30, 2020. All taxpayers can file a Form 3115 to correct QTIP depreciation for tax years 2018 and 2019 and make a catchup adjustment in the current tax year.

CA Conformity – FTB is studying conformity with the federal CARES Act. It has released preliminary information regarding pension related conformity and non-conformity with many other provisions:

Deferral of Payroll Tax Deposits – the employer portion of Social Security tax (not Medicare) can be deferred until Dec 2021 and Dec 2022 with 50% payable each year. Applies to payments due on or after March 27, 2020 and before Dec. 31, 2020.

Due to the recent passing of the PPP Flexibility Act, borrowers of a PPP loan may now continue to defer Social Security tax even after their loans are forgiven.

Self-employed taxpayers can also defer payment of 50% of their Social Security tax with this amount being payable equally Dec 31, 2021 and 2022.

The IRS released a FAQ for retirement plan changes included in CARES Act. New Form 8915-E will be released to be used to calculate the taxable portion of eligible “coronavirus related distributions”. Distributions up to $100K can be taken in 2020 and are taxable ratably over three years. Amounts can be rolled over within the 3-year period. If previously taxed amounts are later rolled over, amended returns will be required.

Employee Retention Credit – On April 3, 2020, the IRS released Form 7200 to claim advance payment of tax credits discussed below.

IRS updated, Determining When an Employer’s Trade or Business Operations are Considered to be Fully or Partially Suspended Due to a Governmental Order FAQs:

IRS updated types of governmental closure orders that qualify employers to claim the Employee Retention Credit (FAQ #28 and #29)

On May 7, 2020, the IRS updated the FAQ’s for the Employee Retention Credit:

  • Changed position on health insurance premiums for furloughed workers. Employers paying health insurance premiums for furloughed workers can treat the premiums as “qualified wages” (FAQ #64 and #65)
  • Employers returning PPP loan funds prior to May 14th under SBA “safe harbor” will be allowed to claim the retention credit (FAQ #79)
  • IRS – COVID-19-Related Employee Retention Credits: Determining Qualified Wages FAQs

The Employee Retention Credit allows a refundable credit against the employer’s portion of Social Security tax (6.20%) for employers that are forced to close or suspend operations due to the pandemic as long as employees are still paid during the shutdown.

Eligible employers, tested on a quarterly basis, are:

  • Any business that was fully or partially shut down due to a government order related to COVID-19

OR

  • An entity with less than 100 employees if the business remained open and gross receipts for any quarter in 2020 were less than 50% of gross receipts from the same quarter of 2019. When gross receipts increase to 80% of the comparable prior year quarter eligibility ends that quarter.

Maximum credit is 50% of employee wages and health insurance costs up to $10,000 of such costs per employee

Employers obtaining a Payroll Protection Loan are not eligible for this credit

Additional info:

  • CARES Act – Business Provisions: significant funding for loans that do not need to be repaid, SBA funding, tax credits, and opportunities to generate refunds from retro-active tax provision changes.
  • CARES Act – Individual and Employee Provisions: cash rebates, tax relief for retirement plan distributions, enhanced unemployment benefits and opportunities to generate refunds from retro-active tax provision changes.

Business Valuation

How the CARES Act has affected business valuation – the AICPA issued a set of FAQs on how to adjust business valuations based on the CARES Act:


Small Business Loans

Treasury Secretary Steven Mnuchin announced the federal government plans to audit any company taking out more than $2 million from the small business loan program.

Paycheck Protection Program (PPP) – Designed to provide a direct incentive for small businesses to keep their workers on payroll by providing each small business a loan up to $10 million for payroll and certain other expenses. If all employees are kept on payroll for eight weeks, SBA will forgive the portion of the loans used for payroll, rent, mortgage interest, or utilities. Up to 100% of the loan is forgivable, but at least 60% of the amount must be used for payroll.

Economic Injury Disaster Loans (EIDL) – The SBA’s Economic Injury Disaster Loan program provides small businesses with working capital loans of up to $2 million at 3.75% (2.75% for nonprofits) to help businesses (and nonprofits) during this economic crisis. Funds can be used to cover current expenses. The loans offer a 1-year deferral on payments and have a maximum 30-year term.

On June 15, 2020, the SBA reopened the Economic Injury Disaster Loan (EIDL) Program for new applications:

Economic Injury Disaster Loan Advance – The SBA closed the EIDL Advance program after granting $20 billion in emergency funding as of July 11, 2020. The EIDL Advance provided $1,000 per employee up to a maximum of $10,000. EIDL loan applications will still be processed even though the Advance is no longer available.

SBA Express Bridge Loans – Enables small businesses who currently have a business relationship with an SBA Express Lender to access up to $25,000 quickly. These loans can provide vital economic support to small businesses to help overcome the temporary loss of revenue they are experiencing and can be a term loans or used to bridge the gap while applying for a direct SBA Economic Injury Disaster loan. If a small business has an urgent need for cash while waiting for decision and disbursement on an Economic Injury Disaster Loan, they may qualify for an SBA Express Disaster Bridge Loan.

SBA Debt Relief

  • The SBA will automatically pay the principal, interest, and fees of current 7(a), 504, and microloans for a period of six months
  • The SBA will also automatically pay the principal, interest, and fees of new 7(a), 504, and microloans issued prior to September 27, 2020

For current SBA Serviced Disaster (Home and Business) Loans in “regular servicing” status on March 1, 2020, the SBA is providing automatic deferments through December 31, 2020.

Additional Small Business Relief Options Information: SBA Coronavirus Relief Options

CA-based small businesses that don’t qualify for Federal Loans, check out the California Disaster Relief Loan Guarantee Program

Community Advantage (CA) Recovery Loans

The SBA has developed a new COVID-19 recovery program, the “Community Advantage (CA) Recovery Loans” for eligible CA Lenders to provide technical and financial assistance to assist small businesses located in underserved areas with retooling their business models for the COVID-19 environment and building financial resiliency against potential future disruptions.


Scams and Fraud Schemes

The SBA warns of potential fraud schemes related to their economic stimulus programs. Be on the lookout for grant fraud, loan fraud, and phishing: SBA Programs – Scams and Fraud Alerts

A few things to note/be aware of:

  1. SBA does not initiate contact on either 7a or Disaster loans or grant
  2. If you are contacted by someone promising to get approval of an SBA loan, but requires payment upfront, suspect fraud
  3. Look out for phishing attacks/scams utilizing the SBA logo. These may be attempts to obtain your personally identifiable information (PII)
  4. Any email communication from SBA will come from accounts ending with sba.gov

FBI Urges Vigilance During COVID-19 Pandemic

Be wary of charity requests in wake of COVID-19. Law enforcement agencies warn the public to be on the lookout for fraudulent schemes, false promises of cures or vaccines as well as people posing as UNICEF, the Red Cross, or other well-known charities.


National Grants and Loans

Business for All

Hello Alice is offering $10,000 grants being distributed on a rolling basis to Black-owned small businesses impacted by the coronavirus.

Small businesses can apply for grants up to $50,000 to support business growth including $10,000 emergency COVID-19 Business for All Grants to help small businesses in crisis.

  • General Business for All Grant applications are due September 25, 2020 at 12:00 am PT
  • Additional info and application: Business for All

Facebook Small Business Grants Program – Unfortunately, the application process has closed for this grant program.

Facebook to provide $100 million in cash grants and ad credits to small businesses (between 2 and 50 employees), with $15 million allocated to support Bay Area small businesses.


FedEx #SupportSmall Grants – Unfortunately, the application period has closed for this program.

FedEx is providing $1 million in grants for small businesses in the U.S. Each grant recipient will receive $5,000, plus a $500 credit from FedEx Office.

  • Eligible small businesses: less than 50 employees; have less than $5 million in annual sales revenue in 2019; and have shipped in the last 12 months and/or plan to ship in the coming 12 months as part of their business. Nonprofits, franchised businesses, direct-seller/reseller businesses, and independent consultants are not eligible to apply for this grant.
  • FedEx #SupportSmall Grants

Fit Pro Relief Fund

Inspire360 has launched the Fit Pro Relief Fund to provide grants of $1,000 to fitness professionals who are experiencing severe financial hardship due to COVID-19. Criteria for eligibility: Five years as a personal trainer or group-exercise instructor, either part-time or full-time; Up-to-date certification as a personal trainer or group-exercise instructor; Income has been severely affected by COVID-19; Have not received any form of government or employer-based financial help (i.e. unemployment, severance, etc)


GoFundMe.org Small Business Relief Fund

GoFundMe is providing matching grants of $500 to small businesses that have been impacted by the COVID-19 crisis. If a small business raises $500 on their GoFundMe and meets the eligibility criteria, they may be considered to receive a $500 matching grant from the GoFundMe.org Small Business Relief Fund:


Kiva US Small Business Loans

Effective immediately, US applicants for a Kiva loan will have access to the following:


LISC’s Small Business Recovery Fund – Unfortunately, the fifth application period is now closed.

LISC is making grants ranging from $5,000 to $20,000 to businesses facing immediate financial pressure because of COVID-19. Priority will be given to entrepreneurs of color, women- and veteran-owned businesses, and other enterprises in historically underserved places who don’t have access to flexible, affordable capital.


Main Street Lending Program

The minimum loan size was reduced to $250K to allow more small businesses to participate.

The Federal Reserve has expanded its $600 billion Main Street Lending Program to serve smaller businesses

The Federal Reserve Board announced that it has modified the Main Street Lending Program to provide greater access to credit for not-for-profit organizations such as educational institutions, hospitals, and social service organizations.


PayPal Empowerment Grant – Unfortunately, the application window has closed for this program.

PayPal is providing grants of up to $10,000 to Black-owned small businesses across the country that have been impacted by COVID-19, the recent recession, or recent unrest.


Poise Bounce Back Grant Program – Unfortunately, the application window has closed for this program.

The Poise Bounce Back Grant Program is awarding 30 individual grants of $15,000 each to help female entrepreneurs bounce back from financial hardships they have experienced as a result of the COVID-19 pandemic.


Red Backpack Fund 

The Red Backpack Fund is making grants of $5,000 to female entrepreneurs across the United States who have been impacted by COVID-19.


Salesforce Care Small Business Grants – Unfortunately, the application process has closed for this grant program.

Salesforce is providing grants of $10,000 to help keep small businesses afloat. Eligible businesses must be for-profit, have between 2 – 50 employees; have been in business for 2 full years as of March 2020; and have an annual revenue between $250k and $2M.


Save Small Business Fund – Unfortunately, due to overwhelming interest, the grant program has reached its capacity and is not accepting new applicants at this time.

A grantmaking initiative offering short-term relief for small employers in the United States. Funded by corporate and philanthropic partners, the Save Small Business Fund is a collective effort to provide $5,000 grants to as many small employers as they can.


Small Business Live Restart Grant Fund – Unfortunately, the application process has ended for this grant. Applicants will be notified of their status by email by July 14.

Grants of $5,000 are available to small businesses across the country that have been financially challenged due to COVID-19.

  • Applicant must be the owner; must have been in business at least 1 year, since June 2019; and meet one of the following criteria: entrepreneur of color, woman entrepreneur, or business annual revenue is less than $1 million
  • Apply here: Small Business Live Restart Grant Fund

Economic Stimulus Payments

People who aren’t required to file a U.S. tax return have until Oct. 15 to alert the IRS if they haven’t yet received a $1,200 stimulus payment:

IRS sent $1.4 billion in stimulus checks to deceased individuals (which accounts for 1.1 million economic stimulus payments). An EIP made to someone who died before receipt of the EIP should be returned to the IRS. If a taxpayer cannot deposit the EIP because it was issued to both spouses and one spouse is deceased, the taxpayer should return the check, and once the IRS receives and processes the returned payment, an EIP will be reissued to the living spouse.

IRS reminds taxpayers to keep Notice 1444, Your Economic Impact Payment – The IRS mails Notice 1444 to the taxpayer’s address on record within 15 days after the payment goes out. Individuals should keep the letter for their tax records, especially if they think their payment amount is wrong. When taxpayers file their 2020 tax return, they can refer to Notice 1444 and claim additional credits, if they are eligible for them.

Economic Impact Payment update for individuals who used the Non-filers: Enter Payment Info Here tool to provide information about one or more qualifying children, but did not get the additional $500 EIP for each qualifying child — The IRS is actively working on a method to fix this error and automatically issue the additional $500 EIP to the impacted individuals as soon as possible.

Filing a 2019 return will not affect your economic impact payment, if you received an economic impact payment based on your 2018 return:

The IRS began distributing economic incentive payments to 80 million individual taxpayers the week of 4/13. The IRS’ “Get My Payment” website is live, where taxpayers can check the status of their Economic Impact Payment:

In Information Release 2020-69, the IRS announced it has created a new website that allows non-filers to request economic impact payments.

Individuals receiving Social Security retirement or disability benefits, or Railroad Retirement benefits, are not required to use this new tool to receive payments. The IRS will rely on Form SSA-1099 and Form RRB-1099 for purposes of determining the amount of the payment. However, if these individuals have dependents, and have not filed a return for 2018 or 2019, they should visit the website; otherwise, their payment will only be issued for the $1,200 for the recipient and not their spouse or any of their dependents.

The IRS issued an information notice discussing why a taxpayer’s Economic Impact Payment may be less than anticipated:

The Internal Revenue Service won’t charge people who received an economic stimulus payment on a prepaid debit card in the mail and threw it away because they thought the envelope was junk mail.

If Get My Payment shows your economic stimulus payment was issued but you have not received it and it has been more than 5 days since the scheduled deposit date (or more than 4 weeks since it was mailed by check) you should initiate a trace on your Payment by calling the IRS at 800-919-9835 or you may submit Form 3911 (PDF):

The IRS alerted nursing home and other care facilities that Economic Impact Payments (EIPs) generally belong to the recipients, not the organizations providing the care.


Provisions and Relief for Nonprofits

PPP and pandemic-related tips for nonprofit preparers, auditors, and board members:

CARES Act and Federal Arts Funding Opportunities for Nonprofit and Commercial Arts Organizations and Individual Artists:

The CARES Act does not forget about the immediate needs and relief for nonprofit organizations. The Act includes several provisions that are unique to the nonprofit industry including loans at reduced interest rates and tax benefits to donors. These provisions are summarized in the link below, together with the other issues of interest to the nonprofit sector.

The SBA has concluded that PPP Loans issued to nonprofits do not represent federal financial assistance. Therefore, these loans will not be subject to Single Audit requirements. However, loans issued under the EIDL program will be considered as federal financial assistance and are required on the SEFA.


Federal Tax Filing Date Moved to July

Treasury Dept. announces that tax filing due date of July 15 will not be moved:

Taxpayers who are owed a refund may receive a second check this year if they took advantage of the July 15 extended filing deadline. Individuals eligible for a refund who didn’t receive one by April 15 will get paid interest, accruing from the original April filing deadline to the date that the refund is issued. The interest rate is 5% through June 30 and 3% after that. The interest payment may come separately from the refund.

IRS reminder: June 15 tax deadline postponed to July 15 for taxpayers who live and work abroad:

On April 9, 2020, the IRS expanded tax filing and payment deadline relief. 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.

  • Notice 2020-23 includes an expanded list of forms that are now due July 15th including Forms 5471, 5472, 3520, and 8938.
  • Delayed filing of Form 990 due May 15th until July 15th. This relief applies to calendar year organizations with a May 15th due date and fiscal year organizations with a June 30, 2019 year-end that previously extended their tax returns.
  • Extends the period to complete a rollover distribution from an eligible retirement plan until July 15, 2020, if the 60-day deadline to complete the rollover falls on or after April 1, 2020, and before July 15, 2020. This could provide welcome relief to taxpayers who took an RMD in February, before the CARES Act suspended the RMD requirement for 2020. These taxpayers now have until July 15, 2020, to recontribute their withdrawals and treat them as a rollover. Unfortunately, taxpayers that received their distributions prior to Feb 1st are not currently included in this relief. Note—the “one rollover every twelve month rule” still applies which may prevent taxpayers from taking advantage of this provision.
  • Relief was included for estimated tax payments due June 15, 2020. That means 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.
  • Also extended were the 45 day identification period and 180 day acquisition period applicable to Code Section 1031 tax deferred exchanges. If either date occurs after April 1st it is now extended to July 15th.
  • For 2016 tax returns, the normal April 15 deadline to claim a refund has also been extended to July 15, 2020.
  • IRS News Releases – IRS extends more tax deadlines to cover individuals, trusts, estates corporations and others

On March 20, 2020, Treasury Secretary Mnuchin announced that the filing due date for returns normally due on April 15th will be moved to July 15th. Later that day the IRS issued formal guidance with Notice 2020-18. Income tax returns are now due July 15th with no need to file an extension request or pay any tax owed for 2019. The new filing date applies to individuals, corporations, trusts, estates, and partnerships.

Aside from income taxes, other tax related payments that are normally due April 15th, such as funding an Individual Retirement Account or a Health Savings Account, can now be deferred until July 15, 2020 and still deducted on your 2019 tax returns.


Deferred Tax Payments

On March 18, 2020, the Internal Revenue Service released Notice 2020-17 granting a 3 month deferral for 2019 and 2020 tax year payments normally due April 15th. Payments for 2019 tax liabilities and estimate #1 for 2020 can be paid on or before July 15, 2020 with no interest or penalty charges. Notice 2020-18 referred to above revoked the ceiling amount on deferrable tax imposed by Notice 2020-17 so currently, there is no limitation on the amount of income tax that can be deferred.

The IRS estimates this tax delay will keep over $300 billion in the economy.

Other taxes that are due April 15th, such as gift tax, excise tax, and payroll tax cannot be deferred under current IRS guidance.


Employer’s Quarterly Federal Tax Return

Form 941, Employer’s Quarterly Federal Tax Return due April 30, 2020 – While most tax and information return due dates were extended until July 15, 2020, the IRS Form 941, Employer’s Quarterly Federal Tax Return, due date was not extended.

  • Taxpayers who have not been approved for PPP loan forgiveness may defer depositing the payment of the employer’s 6.2% share of Social Security taxes and Railroad Retirement Tax for the period March 27, 2020, through December 31, 2020. (CARES Act §2302).
  • Employers claiming the Employee Retention Credit against the employer’s share of Social Security/Railroad Retirement taxes will not claim the credit on their first quarter Form 941. Eligible employers will add the 50% of qualified wages paid to an employee(s) between March 13, 2020, and March 31, 2020, inclusive, to the 50% of any qualified wages paid during the second quarter of 2020 on their second quarter Form 941, 941-SS, or 941-PR.

IRS Collection and Enforcement Relief – People First Initiative 

Update 7/8 – IRS reminds taxpayers who took advantage of the People First Initiative tax relief and did not make previously owed tax payments between March 25 to July 15 that they need to restart their payments.

IRS has announced a “taxpayer relief” program for taxpayers with installment agreements or pending collection action.


IRS Updates

Rehabilitation Credit – The IRS issued Notice 2020-58 (PDF) that provides additional relief to taxpayers in satisfying the substantial rehabilitation test.


The IRS issued a long-awaited package of guidance regarding the Sec. 163(j) limitation on business interest expense deductions:


The IRS has started sending letters to taxpayers who are seeing delays in the processing of their Form 7200, Advance Payment of Employer Credits Due to COVID-19. A taxpayer will receive letter 6312 if the IRS has either rejected their Form 7200 or made a change to the requested amount of advance payment due to a computation error.


During the pandemic, the IRS has released over 500 FAQ’s to provide guidance to taxpayers and often revised these FAQ’s. The Taxpayer Advocate office points out that these FAQ’s are not “legal authority” that can be relied upon to avoid taxpayer penalties. The Advocate is requesting that the IRS identify these FAQ’s as “Internal Revenue Service Information” that can be relied upon to avoid penalties.


Unclaimed income tax refunds worth more than $1.5 billion await an estimated 1.4 million individual taxpayers who did not file a 2016 federal income tax return. In Notice 2020-23, the IRS extended the due date for filing tax year 2016 returns and claiming refunds for that year to July 15, 2020, as a result of COVID-19.


The Treasury and IRS today issued proposed regulations and temporary regulations that provide guidance for consolidated groups regarding net operating losses (NOLs):


Victims of the April tornadoes, severe storms and flooding that took place in parts of Mississippi, Tennessee and South Carolina will have until October 15, 2020, to file various individual and business tax returns and make tax payments.


IRS announces they will generally not start new audits until July 15, 2020:


The Treasury Department and the Internal Revenue Service provided tax relief for certain taxpayers affected by the COVID-19 pandemic involved in new markets tax credit transactions.


The IRS is extending the due dates on its balance due notices because it wasn’t able to mail out the preprinted letters to taxpayers due to office closures:


The IRS has begun to pause collection activities for many taxpayers – Taxpayers on installment agreements may suspend making any payments normally due between April 1 and July 15, 2020.


The IRS is no longer processing paper filed individual income tax returns. Information Release 2020-68 urges taxpayers to e-file personal tax returns as paper returns are no longer being processed due to staff reductions and closures of processing centers:


A possible benefit from filing a 2019 superseded return – The election made on the original return to apply the overpayment towards 2020 estimated tax can be changed so the overpayment can now be refunded. However, be aware that a superseded return for individual taxpayers must be manually filed so it may take some time to be processed. Superseded business returns can be e-filed, greatly speeding up the process.


The IRS released guidance on May 7th (Rev. Proc. 2020-30) telling taxpayers that business activities conducted overseas during a consecutive 60-day period won’t be taken into account for determining a foreign disregarded entity or a foreign branch.

  • U.S. companies that operate foreign entities and individuals working in foreign branches are required to follow additional tax compliance rules.
  • Rev. Proc. 2020-30

The IRS issued proposed regulations (REG-113295-18) to clarify that certain deductions are allowed to an estate or nongrantor trust because they are not miscellaneous itemized deductions:


IRS announced a “beginning of construction” safe harbor for taxpayers developing renewable energy projects and producing electricity from sources such as wind, biomass, geothermal, landfill gas, trash, and hydropower. Safe harbor is also available for taxpayers using technologies such as solar panels, fuel cells, microturbines, and combined heat and power systems.


IRS reminds taxpayers that Forms 1139 and 1045 can be submitted via FAX and provides instructions for claiming a refund of the corporate Minimum Tax Credit:


Cash payments that employers make to charitable organizations providing relief to victims of the COVID-19 pandemic in exchange for sick, vacation or personal leave that their employees forgo will not be treated as compensation, according to new guidance from the IRS.


IRS allows remote signatures on retirement plan elections:


Qualified Opportunity Funds

The IRS provided guidance for Qualified Opportunity Funds (QOFs) and their investors in response to the COVID-19 pandemic:


Net Operating Loss (NOL)

The IRS issued proposed (REG-125716-18) and temporary regulations (D. 9900) to provide guidance for consolidated groups on the treatment of net operating losses (NOLs) after recent statutory changes.

IRS releases FAQ for C Corps carrying back a NOL to a year in which AMT applies:


Mandatory Paid Sick Leave and Family Leave

The IRS issued temporary and proposed regulations on the recapture of excess employment tax credits under the Families First Coronavirus Response Act and the CARES Act. The regulations cover the reconciling of advance payments of the acts’ refundable employments tax credits and authorize assessments to recapture the credits, when necessary.

IRS explains how employers should report the amount of qualified sick and family leave wages paid to employees under the Families First Coronavirus Response Act:

On April 3, 2020, the IRS has released Form 7200 to claim advance payment of tax credits discussed below.

On March 18, 2020, the President signed H.R. 6201 to provide health benefits and mandatory paid time off to care for an employee’s health needs or a family member’s. Employee compensation would be completely paid by an employer tax credit. The paid leave provisions are effective on April 1, 2020, and apply to leave taken between April 1, 2020, and December 31, 2020. Among the significant provisions are:

  • Increased government funding for unemployment benefits and food assistance
  • Requires health plans to provide free COVID-19 testing
  • Creates new mandatory Emergency Sick Leave and Family/Medical Leave programs through Dec. 31, 2020
    • Employers with less than 500 employees must provide:
      • Eighty hours of paid Sick Leave at 100% of an employee’s pay (capped at $511 per day) when the employee cannot work (or telework) because of quarantine or self-quarantine or experiencing COVID-19 symptoms.
      • Eighty hours of paid Sick Leave at 2/3 regular pay (capped at $200 per day) to care for an individual subject to quarantine, self-quarantine or experiencing COVID-19 symptoms, or care for a child whose school is closed or daycare provider is unavailable.
      • Fifty (50) days of paid Family Leave at 2/3 regular pay (capped at $200 per day) to care for a child whose school is closed or daycare provider is unavailable.
    • Guidance issued by the Department of Labor indicates, to qualify, employees must be employed on April 1, 2020 or later and their employer must have work available that they are prevented from performing (at the normal worksite or virtually) due to one of the qualifying reasons discussed above.
    • Employers of fewer than 50 employees can opt-out of providing Family Leave for child care if it would “prevent the business from continuing as a going concern”. Additional guidance is expected soon.
    • Employers can receive a refundable tax credit up to the daily amounts paid to employees ($511 or $200). Operational guidance is expected soon.
    • Employers can use their payroll tax deposits to fund the benefits in lieu of making the deposit with the IRS. Any shortfall will be covered by a refundable credit. Both employee trust fund amounts and employer payroll taxes can be used to fund these new employee benefit payments.
    • Payments to employees would not be subject to employer payroll taxes but will be treated as compensation to the employee.
    • Employers cannot modify or reduce existing sick leave or PTO policies because of these additional benefits.
    • A tax credit is available to self-employed individuals who are in the same circumstances as employees discussed above.
  • For more information: Families First Coronavirus Response Act (FFCRA)

Employer Aid to Employees

Employers looking to assist their employees are able to provide tax-free assistance while still generating a tax deduction. Employers can make tax-free payments to employees, to reimburse for, or pay reasonable and necessary personal, family, or living expenses incurred as a result of a qualifying disaster. Amounts paid cannot be made as income replacement payments. Qualified disaster relief payments can allow employees to receive tax-free income while payments are still deductible expenses of the employer. Eligible expenses can include: medication, medical expenses, hand sanitizer, child care, and home office expenses.

If you are experiencing a reduction in your work force it may be possible to structure a portion of a severance package as a qualified disaster relief payment so employees will receive tax-free income and you can minimize employer payroll taxes.


The IRS released Notice 2020-29 that allows for mid-year changes to employer-sponsored health care coverage, healthcare FSAs and dependent care accounts. The new rules for 2020 will help workers modify the plan choices they made for tax year 2020 last year, however, it is up to the employer to allow these changes. Employees may want to:


Business Loan Modifications

On March 22, 2020, the federal financial institution regulatory agencies and the state banking regulators issued a joint statement providing some relief for borrowers by easing restrictions one might normally face when seeking loan modifications. Borrowers should reach out to their institutions as soon as possible as loans must be current and not in default to qualify for this benefit.


Home Owners

Multifamily property owners with mortgages backed by Fannie Mae or Freddie Mac who enter into a new or modified forbearance agreement must inform tenants in writing about tenant protections during the multifamily property owner’s forbearance and repayment periods.

FHFA announced that Fannie Mae and Freddie Mac (the Enterprises) will extend several loan origination flexibilities until August 31, 2020, to ensure continued support for borrowers during the COVID-19 pandemic.

FHFA approved an extension of the temporary policy that allows for the purchase of certain single-family mortgages in forbearance that meet specific eligibility criteria set by Fannie Mae and Freddie Mac The policy is extended for loans originated through August 31, 2020.

FHFA announced that Fannie Mae and Freddie Mac are allowing servicers to extend forbearance agreements for multifamily property owners with existing forbearance agreements for up to three months, for a total forbearance of up to six months.

FHFA extends foreclosure and eviction moratorium to enterprise-backed, single-family mortgages until at least August 31, 2020 (the current moratorium was set to expire on June 30, 2020):

The Federal Housing Finance Agency (FHFA) is extending several loan origination flexibilities currently offered by Fannie Mae and Freddie Mac designed to help borrowers during the COVID-19 national emergency.

The Federal Housing Finance Agency (FHFA) announced that Fannie Mae and Freddie Mac (the Enterprises) have issued temporary guidance regarding the eligibility of borrowers who are in forbearance, or have recently ended their forbearance, looking to refinance or buy a new home:

Freddie Mac Announces COVID-19 Payment Deferral – The Payment Deferral solution returns a homeowner’s monthly mortgage payment to its pre-COVID amount by adding up to 12 months of missed payments, including escrow advances, to the end of the mortgage term without accruing any additional interest or late fees.

Mortgage lenders are offering mortgage relief options if COVID-19 has impacted your ability to make your monthly mortgage payment.

Residential Mortgage Forbearance – The Federal Housing Finance Agency (FHFA) wants homeowners in forbearance to know they are not required to make lump sum repayments if their mortgages are backed by Fannie Mae or Freddie Mac.


Rental Property Owners

Freddie Mac And Fannie Mae Extend Ban On Evictions And Foreclosures Until June 30th. The current moratorium was set to expire on May 17th:

On March 23, 2020, The Federal Housing Finance Agency announced Fannie Mae and Freddie Mac will offer multifamily property owners mortgage forbearance with the condition that they suspend all evictions for renters unable to pay rent due to the impact of COVID-19.


Retirement Plans 

IRS reminds taxpayers that favorable tax treatment is available to access funds from retirement accounts:

The IRS reminds seniors and retirees that they are not required to take money out of their IRAs and workplace retirement plans this year. The CARES Act, waives required minimum distributions during 2020 for IRAs and retirement plans, including beneficiaries with inherited accounts. This waiver includes RMDs for individuals who turned age 70 ½ in 2019 and took their first RMD in 2020.

Guidance issued Monday (Notice 2020-52) allows plan sponsors who maintain safe harbor 401(k) plans to suspend or reduce contributions by Aug. 31 without conflicting with existing notification requirements. Safe harbor plans are qualified retirement programs funded primarily by employers, rather than traditional 401(k)’s that employees fill with their own money. Current law requires that safe harbor plan sponsors notify participants of any changes at least 30 days before they take effect.

IRS announced that anyone who already took a required minimum distribution (RMD) in 2020 from certain retirement accounts now has the opportunity to roll those funds back into a retirement account following the CARES Act RMD waiver for 2020 and the rollover date has been extended to August 31, 2020.

IRS expands eligibility criteria for taxpayers receiving COVID-19 related distributions from retirement plans and IRA’s. Eligible taxpayers now include an individual who experiences adverse financial consequences as a result of:

  • the individual having a reduction in pay (or self-employment income) due to COVID-19 or having a job offer rescinded or start date for a job delayed due to COVID-19;
  • the individual’s spouse or a member of the individual’s household (as defined below) being quarantined, being furloughed or laid off, or having work hours reduced due to COVID-19, being unable to work due to lack of childcare due to COVID-19, having a reduction in pay (or self-employment income) due to COVID-19, or having a job offer rescinded or start date for a job delayed due to COVID-19; or
  • closing or reducing hours of a business owned or operated by the individual’s spouse or a member of the individual’s household due to COVID-19.
  • Caution – CA has conformed to the COVID-19 distribution changes but currently does not conform to the new $100,000 maximum loan amount. A taxpayer receiving a $100K loan will be treated as receiving the maximum loan allowed of $50K and a $50K distribution.
  • Notice 2020-50 – Guidance for Coronavirus-Related Distributions and Loans from Retirement Plans Under the CARES Act
  • Relief for taxpayers affected by COVID-19 who take distributions or loans from retirement plans

Crowdfunding

SEC temporarily expands access to crowdfunding – The SEC is expediting the offering process for Regulation Crowdfunding for eligible companies by providing relief from certain rules with respect to the timing of a company’s offering and the financial statements required.


Student Loans

Options for student loans during the pandemic:

  • Under the CARES Act, borrowers with Direct Loans or Federal Family Education Loans (FFEL) held by the ED do not need to make any payments until Sept. 30th. Interest on these loans has also been waived through Sept. 30th.
  • To find out whether student loans are covered by the CARES Act, borrowers can contact their loan servicers or visit studentaid.gov.
  • For student loans that aren’t covered by the CARES Act, there are other options:
  • Journal of Accountancy – Options for clients with student loans during the pandemic

Start Small Think Big (SSTB)

Start Small Think Big (SSTB) is offering regional free legal assistance to all small businesses and nonprofits as part of its Rapid Response Project. Through SSTB’s network of professional volunteers, businesses can consult on legal issues related to COVID-19 such as lease agreements, contracts, employment matters, licensing, and regulations. In addition, businesses can speak with financial experts about money issues.


California

Tax Filing & Payments

The Franchise Tax Board announced that it will be complying with the federal three-month deferral so individual, corporate and LLC tax payments due April 15, 2020 can be delayed until July 15, 2020 without penalty or interest charges. In addition, 2020 individual estimated tax payments normally due April 15th and June 15th can be delayed as well. Corporate estimates normally due between March 12th and July 15th can be deferred to July 15th.

California corporate estimated tax payments can be deferred, corporate estimates normally due between March 12th and July 15th can be deferred to July 15th.

Gov. Newsom signed budget bills that contain new tax provisions effective this year:

  • Suspends personal and corporate NOL deductions from Jan 1, 2020 to Dec 31, 2022 for taxpayers with modified AGI or business income over $1 million
  • Caps business tax credits to $5 million annually
  • Exempts new limited liability companies and limited partnerships from the $800 annual minimum franchise tax for the first year of business
  • More budget/tax changes likely to come in August
  • Governor signs tax bill included in budget deal – no CARES Act conformity

Property Tax

Governor Newsom announced property tax relief for individuals and businesses – Executive order for property tax relief providing for a waiver of the required 10% penalty for late payments for those who experienced hardship due to COVID-19. The waiver is in effect until May 2021.

Due date delayed for filing Business Property Statements (Form 571-L) to May 30th (from May 7th)


Housing

Gov. Newsom issued an executive order extending authorization for local governments to halt evictions for renters impacted by COVID-19, through September 30.

Various Bay Area cities have enacted legislation based on this order.

On March 25, 2020 the Governor announced more than 200 banks including, Wells Fargo, Citibank, JPMorgan Chase and US Bank, have agreed to a 90-day grace period for mortgage payments in CA.


CA Employees, Employers, and Payroll Tax Filings and Payments

The Employer Playbook – Governor Newsom announced new support for California’s workforce, including preventative measures, employer education and long-lasting worker. The Employer Playbook provides guidance for employers to support a safe, clean environment for workers and customers.

The California Work Sharing Program – As more businesses begin to open and rehire staff, they may not return to full staffing levels. The California Work Sharing Program can benefit both employers and employees. Employers can participate in the Work Sharing Program so employees with reduced wages can receive partial unemployment benefits.

Impacted employees can qualify for disability or unemployment.

Employers can apply for 60-day deferral of payroll tax deposits.

Covered California has announced another 30-day grace period for small businesses to make premium payments on their employees’ health care plans for the months of April and May:

Workers’ Comp Benefits – Governor Newsom announced an expansion of workers’ comp benefits to workers who contracted COVID-19 since March 19, 2020. Workers can now file a workers’ comp claim under the assumption the virus was caught on the job. Employers can also present evidence against an employee’s claim of infection. This Executive Order is temporary and will expire in 60 days.

Unemployment insurance is available for Californians who are business owners, self-employed, independent contractors, have limited work history, and others not usually eligible for regular state UI benefits:

Pandemic Emergency Unemployment Compensation Phase 2 – In early July, the EDD will start mailing notices to those who used all their UI benefits after July 2018 and before June 2, 2019, who were not included in Phase 1. If you are in this group and you are fully or partially unemployed, you will have to apply for a new UI claim before the EDD can file an extension because your benefit year has expired. If you are not eligible for a new regular UI claim, the EDD will automatically file a PEUC extension on your last UI claim.

Pandemic Emergency Unemployment Compensation – Beginning 5/27, the EDD will automatically review regular UI claims for those with a benefit year that started on or after June 2, 2019, that have run out of all available benefits. If you do not qualify for a new UI claim, the EDD will automatically file a PEUC extension on your last valid regular UI claim.

California State Treasurer’s Small Business Resource List

The Governor’s Office of Business and Economic Development (GO-Biz) has compiled helpful information for employers, employees, and all Californians relating to COVID-19:

Summary of resources for businesses and employers:


Returning California to Work COVID-19 Safety Protocol Fund

State Fund policyholders in a non-essential business that recently re-opened or are planning to resume operations, may be eligible for a grant to help with safety-related expenses.


‘Shelter in Place’ Order

Starting June 18, Californians must wear face coverings in common and public indoor spaces and outdoors when distancing is not possible:

Governor Newsom announced that counties approved for accelerated reopening can begin to reopen hair salons and barbershops. Statewide, retailers and places of worship can reopen with modifications:

Essential Services

The Governor’s statewide order allows specific “Essential Services” to continue to operate. To determine if your business is an “essential service” check the Governor’s list:

On March 31, 2020, Bay Area Health Officers issued an updated ‘stay-at-home’ order with new social distancing protocols for essential services:


Sales Tax

On April 2, 2020, Governor Newsom announced small CA businesses (less than $5 million in taxable annual sales) can take one year to gradually remit up to $50,000 in sales tax collections due to the COVID-19 pandemic.

Businesses must file their returns to be eligible. Once filed, businesses can enter into payment plans that spread the tax liability over 12 months, interest-free.

This new relief is in addition to Governor Newsom’s March 30th executive order allowing the California Department of Tax and Fee Administration (CDTFA) to offer a 90-day extension for tax returns and tax payments for all businesses filing a return for less than $1 million in taxes. That means small businesses will have until the end of July to file their first-quarter returns.

Previously, the California Department of Tax and Fee Administration has been given authority to grant extensions for filing of returns and payment of sales taxes.


CA Residents Economic Relief

Employment Development Department Strike Team – Gov. Newsom announced a series of actions to better serve workers that have experienced job loss during the COVID-19 pandemic, including the formation of an Employment Development Department (EDD) strike team, and a renewed focus on processing unpaid claims.


OnwardCA – the one-stop resource for the people of California impacted by job loss during the COVID-19 Pandemic:


Governor Newsom announces website to help parents locate available childcare providers:


California insurance commissioner orders premium refunds, credits, and reductions for policyholders impacted by the pandemic:


Governor Newsom signed an executive order that temporarily broadens the capability of counties to enroll persons into the California Work Opportunity and Responsibility to Kids (CalWORKs) program using various eligibility verification methods due to social distancing requirements.


Governor Newsom Launches California Connected – California’s Contact Tracing Program and Public Awareness Campaign:


California Relief Fund for Artists

For Artists and Cultural Practitioners – The California Relief Fund for Artists and Cultural Practitioners is distributing $920,000 from the CAC’s general fund in the form of $1,000 grants to help artists and cultural practitioners (including fine and performing artists, teaching artists, culture bearers, and maker-based sole or collective creative entrepreneurs)


California Competes Tax Credit

Governor’s Office of Business and Economic Development announce the fiscal year application periods for the California Competes Tax Credit. Next period opens July 27 – Aug 17 with $80 million of credits available. With fewer taxpayers hiring and expanding, there may be less competition for funding.


California Disaster Relief Loan Guarantee Program 

The Small Business Finance Center partnered with Financial Development Corporations (FDC’s) and Community Development Financial Institutions (CDFIs) to provide loan guarantees for small businesses (less than 750 employees). The program is already in place and businesses can apply immediately:


Local – Bay Area

Bay Area Small Business Resources

Small Business help offered by local companies and the Chamber of Commerce: How Silicon Valley’s small businesses can find help from other companies and chambers of commerce

The Lead Center for the NorCal Small Business Development Center hosts webinars four times per week to share the latest updates on the SBA funding and all the financing programs related to COVID-19. The webinars have Q&A sessions where business owners have the opportunity to directly ask experts questions on various financial relief programs.

San Jose

Electricity bill discounts are available for San José Clean Energy Customers impacted by COVID-19:

Notice to San Jose building owners – The annual reporting deadline for the San Jose Energy and Water Building Performance Ordinance (BPO) is coming up quickly.  Due to COVID-19, this year’s deadline was extended until July 1, 2020.  In future years, the deadline will return to May 1.

San Jose Relaxes Rules to Help Businesses Serve Customers Outside – Under the relaxed rules, many businesses without existing permits for outdoor operations or seating can register free of charge to expand their operations outside in privately owned outdoor areas, such as a parking lot, and use public sidewalks for temporary seating.

The City of San Jose has compiled a list of funding sources available to small businesses ranging from disaster loans discussed above to grants to low interest commercial loans.

The Mayor of San Jose announced the launch of a website to be a central clearinghouse for the community’s response to the economic changes caused by the pandemic.

The city’s Office of Economic Development has set up an email for businesses related information and support:

San Francisco 

San Francisco further extends the deadline for businesses to file and pay their Business Registration Fee and Unified License Fees until March 2021.

Mayor London Breed Announces Shared Spaces Program to Support Neighborhood Activity and Local Businesses:

  • The program will allow individual businesses or local merchant associations to apply for a no-cost, expedited permit to share the sidewalk or parking lane for business purposes.
  • Shared Spaces Program: Use the sidewalk or parking lane for your business

The San Francisco Office of Economic and Workforce Development (OEWD) is offering one-hour virtual info sessions on Tuesdays and Thursdays to provide support to businesses impacted by COVID-19 and considering work stoppages, layoffs, or furloughs, and employees experiencing a layoff.


COVID-19 Child Care Project

Eligible private family childcare providers will receive emergency funding to cover staff salaries, rent and other operating expenses that are usually covered by tuition:


Eviction Moratorium 

San Mateo County Extends Eviction Moratorium for Residential and Commercial Renters Through End Of August:

The city of San Jose Extends Eviction Moratorium to August 31, 2020. The moratorium prevents evictions based on non-payment of rent for residential tenants affected by the COVID-19 pandemic. Affected tenants must pay at least 50% of unpaid rent that accrues during the moratorium within six months of the end of the eviction moratorium, and the remaining 50% must be paid within one year of the end of the moratorium. Landlords may not charge affected tenants any penalties, fees or interest on unpaid rent that accrues during the eviction moratorium.

San Francisco landlords will be permanently barred from evicting tenants if they can’t pay rent due to coronavirus-related issues, like job loss or getting sick from the virus, under legislation passed by the Board of Supervisors Tuesday.

Santa Clara County has extended a moratorium on small-business evictions through July 28, 2020. Landlords cannot evict tenants for nonpayment of rent, if the tenant can prove they were financially harmed by the COVID-19 pandemic. The moratorium applies to both residential and commercial tenants.

The Santa Clara County Board of Supervisors voted to extend the urgency ordinance establishing a temporary moratorium on evictions. In line with an updated Executive Order issued by Governor Gavin Newsom, the urgency ordinance has been extended to July 28.

Businesses or residents having difficulty with rent and eviction associated with COVID-19 can connect with the Law Foundation. An attorney can answer questions about the Santa Clara County eviction moratorium, completely free of charge.


Great Plates Delivered Program

The program encourages restaurant recovery, bolsters food distribution efforts, and provides up to 30,000 meals per week to eligible seniors and high-risk vulnerable populations.


Mandatory Emergency Paid Sick Leave Ordinances

April 7, 2020 – San Francisco and San Jose officials approved local mandatory emergency paid sick leave ordinances for essential employees within the city, affected by the coronavirus. The ordinance is aimed at filling gaps created by the Families First Coronavirus Response Act.

The San Jose Emergency Paid Leave Ordinance applies to employers with more than 500 and less than 50 employees. However, the benefit is only available for employees who leave their residence to perform essential work, and who have worked at least two hours within the geographic boundaries of the City of San Jose.

The San Francisco Emergency Paid Leave Ordinance applies to private employers who have 500 or more employees nationally. An “employee” is any person providing labor or services for remuneration who is an employee under California Labor Code Section 2750.3, including part-time and temporary employees who perform work as an employee within the geographic boundaries of the City. Employers that are covered by the FFCRA are not covered by the Ordinance.


Regional Nonprofit Emergency Fund – As of July 2020, applicants will be waitlisted due to a low availability of funds.

To streamline grant making and simplify the application process for Santa Clara County nonprofits, Silicon Valley Strong is partnering with Silicon Valley Community Foundation’s Regional Nonprofit Emergency Fund to fund grants to nonprofit organizations serving one or more of the 10 counties.


San Francisco African American Small Business Revolving Loan Fund – Unfortunately the application window has closed.

Mayor London Breed announced $1.5M to establish San Francisco’s first African American Small Business Revolving Loan Fund. The fund will start with a $1.5 million investment from Give2SF, the city’s existing coronavirus relief fund. The zero-interest loans of up to $50,000 will include flexible repayment terms and loan forgiveness options.


San Francisco Artists Relief Fund – Unfortunately the application cycle is now closed.

This program invests in working artists and arts and cultural organizations financially impacted by COVID-19 through a combination of grants and low-income loans.


San Francisco Hardship Emergency Loan Program – Unfortunately, the deadline to submit an SF HELP Inquiry Form expired on Thursday, June 18.

Provides small businesses (total annual revenues under $2,500,000) up to $50,000 in zero interest loans. These loans will have a flexible repayment schedule and the terms will be determined on a case-by-case basis, based upon each borrower’s ability to repay.


San Francisco Neighborhood Mini-Grants – Unfortunately, as of May 22, 2020, this program is closed.

The Neighborhood Mini-Grants will provide $1,000 – $10,000 in grants for urgent economic relief for neighborhood-serving small businesses and women-owned businesses impacted by COVID-19.


San Francisco Small Business Resiliency Fund – Unfortunately, this grant fund has closed at this time.

Grants for up to $10,000 for San Francisco businesses affected by COVID-19 with 5 employees or fewer.


San Francisco Women-Owned Small Business Mini Grant Program – Unfortunately, the application window has closed for this program.

Grants of $2,000 are available to women-owned small businesses in San Francisco that have been affected by COVID-19.


Santa Clara County Financial Assistance Program – Sacred Heart Community Service

Additional funding is now available through the COVID-19 Financial Assistance Program administered by Sacred Heart Community Service. This round will focus on serving those in the community who are most in need of assistance.


Santa Clara Energy Efficiency Grant Program

To help Santa Clara small businesses and nonprofits affected by COVID-19, Silicon Valley Power is offering grants to help fund energy efficiency upgrades. These upgrades will help lower business operating costs by reducing electric consumption.


Santa Clara Small Business Assistance Grant Program

The City of Santa Clara has committed up to $1.1 million in one-time funds to offer immediate financial assistance to nonprofits and small businesses in the City of Santa Clara to aid in maintaining their business and workforce. Awards will be made on a first-come, first-served basis.

  • For a $10,000 grant award, applicants must have at least one and no more than 25 full-time employees that has been deemed non-essential.
  • For a $5,000 grant award, applicants must have at least one and no more than 25 full-time employees that has been deemed essential.
  • City of Santa Clara Small Business Assistance Grant Program

Silicon Valley Strong Small Business Grants – Unfortunately, the application process has closed for this grant program.

The grant program will provide working capital grants of $10,000 to 142 eligible small businesses in San Jose that have suffered financial loss due to the COVID-19 crisis. The grant can be used for payroll, rent, and other overhead costs.


Small Business Relief Fund

The Small Business Relief Fund, hosted by the Silicon Valley Community Foundation, provides technical assistance as well as loan and grant funding to provide relief and/or liquidity for self-employed individuals and small businesses.


TMC Small Business, Big Heart Grant Program

The TMC Small Business, Big Heart Grant Program is making grants to small businesses with a physical location in Oakland, San Francisco, and Los Angeles. Community members can nominate a small business for a grant by sharing on TMC’s Facebook or LinkedIn page why they matter to the community and adding #TMCSmallBizBigHeart. Nominated business owners will be entered into a lottery for grants of up to $10,000.


Working Solutions Special Recovery Loans

Working Solutions Special Recovery Loans, for start-ups & existing businesses in all nine San Francisco Bay Area counties – 5% fixed interest rate; Waived application fee; Reduced closing fee; Interest-only during the first 12 months (principal deferred); 5-year term; No prepayment penalties


Alameda County Business Adaptation Grants

Alameda County is making COVID-19 Business Adaptation Grants to small business owners in unincorporated areas of the county. Grants of up to $5,000 are available to support necessary business adaptations related to new COVID-19 requirements:


Property Tax Deadlines

The Santa Clara County Property Tax deadline remains the same, April 10th. Partial payments will be accepted. Taxpayers not paying the full amount by the due date can submit a request for the abatement of penalties. In addition, in-person payments are temporarily unavailable; you can make payments online, via the mobile app or USPS mail.

Counties will use all existing authority to cancel penalties and other charges for homeowners, small businesses, and other property owners that are unable to pay their property taxes due to circumstances caused by COVID‐19 on a case‐by‐case basis.

San Mateo and Kern counties announced second installment of property taxes is now due May 4, 2020, and San Francisco county announced second installment of property taxes is now due May 15, 2020.


Other States

Other states have enacted various measures to delay tax filing and payments beyond April 15th.


Accounting & Advisory Updates

Provider Relief Fund payments are required to be included in the federal funding that determines whether nonfederal entities meet the $750,000 threshold for single audit requirements and whether for-profit entities are required to meet audit requirements:

To assist preparers and auditors, the AICPA has published nonauthoritative guidance with answers to FAQs for state and local government financial statement accounting and auditing matters related to the COVID-19 pandemic.

FASB issued a proposal July 9, 2020 that would delay the effective date of the board’s new standard on long-duration insurance contracts by one year in an effort to provide relief to insurance companies affected by COVID-19.

FASB issued a staff Q&A document to clarify how to apply the U.S. GAAP Financial Reporting Taxonomy to disclosures related to the effects of the coronavirus pandemic and relief efforts.

The AICPA Peer Review Board has granted CPA firms with original due dates between Jan. 1 and Sept. 30, a six-month peer review deadline delay option to provide them with relief during the coronavirus pandemic…now what?

A nongovernmental entity may account for a Paycheck Protection Program (PPP) loan as a financial liability in accordance with FASB ASC Topic 470, Debt, or under other models, if certain conditions are met

FASB approved a pair of new accounting standards for convertible instruments and nonprofit gifts-in-kind, while also voting to defer the effective date of its long-duration insurance standard:

FASB issued an Accounting Standards Update that grants a one-year effective date delay for certain companies and organizations applying the revenue recognition and leases guidance. Early application continues to be permitted.

4 key COVID-19 audit risks for 2020 year ends:

COVID-19 Pandemic alters lease accounting landscape:

Hedge accounting may be more beneficial after FASB’s changes:

FASB delays revenue recognition effective date for private companies and nonprofits:

Tips for audit committees during the pandemic:

The effective dates of GASB Statement No. 87, Leases, and Implementation Guide No. 2019-3, Leases, have been postponed by 18 months:

CPA firms will be granted six-month extensions for peer reviews, corrective actions, and implementation plans with original due dates between Jan. 1 and Sept. 30 of this year:

The SBA has concluded that PPP Loans issued to nonprofits do not represent federal financial assistance. Therefore, these loans will not be subject to Single Audit requirements. However, loans issued under the EIDL program will be considered as federal financial assistance and are required on the SEFA.

The effective dates of three AICPA ethics interpretations will be extended by one year:

The AICPA made a broad range of legislative recommendations to encourage economic recovery in the wake of the COVID-19 pandemic.

The AICPA Auditing Standards Board formally extended the effective dates of seven new auditing standards, SAS Nos. 134–140 by one year:


Please contact us here at ASL if you have any questions or concerns.