COVID-19 and Tax Changes

New Developments – 6/1/20

The Red Backpack Fund is making grants of $5,000 to women entrepreneurs across the US who have been impacted by COVID-19. The latest round is now open, with applications due by Monday, 6/8 at 9:00AM PDT:

Governor Newsom issued an executive order extending authorization for local governments to halt evictions for renters impacted by the COVID-19 pandemic, through 7/28:

Help for Restaurants in the “New Normal” – The City of San Jose is hosting a webinar to guide restaurants and other food establishments through best practices to be more efficient with inventory management, table distancing, take-out protocol, and other factors to consider for re-opening safely and responsibly, on Thursday, 6/4 at 3PM PDT.

Santa Cruz County announced dine-in restaurant service, as well as barbershop and hair salon services will resume immediately.

COVID-19 Pandemic alters lease accounting landscape:

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


New Developments – 5/29/20

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

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:

San Mateo County Health Officer issued a revised shelter in place order to allow, with restrictions and safety measures, places of worship to hold services and retail stores to allow customers inside, beginning June 1, 2020.


New Developments – 5/28/20

House passed the Paycheck Protection Program Flexibility Act today. The Senate is expected to vote next week but likely the Senate bill will have different provisions than the House approved today

Ten billion dollars in Paycheck Protection Program Round 2 funds are being set aside to be lent exclusively by Community Development Financial Institutions (CDFIs) in an effort to boost businesses in underserved communities.

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.

Mayor London Breed Announces Timeline and Plan for Safely Reopening San Francisco


New Developments – 5/27/20

Significant changes to the Paycheck Protection Program may be coming soon. The House is expected to vote tomorrow, 5/28 on legislation that will:

  • Extend the 8 week Covered Period to 24 weeks or until Dec 31st (whichever comes first)
  • Extend the loan period to 5 years from 2 years
  • Eliminate the rule that no more than 25% of proceeds can be spent on non-payroll costs
  • Allow employers receiving the PPP loan to defer employer payroll taxes until the end of 2020 rather than until the date their loan is forgiven

Proposals in the Senate would modify the program to:

  • Extend the Covered Period to 16 weeks
  • Allow forgiveness for spending on Personal Protective Equipment

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.

The Santa Clara City Council approved an additional $300,000 in funding for the City’s Small Business Assistance Grant Program for total funding of $1.1 million. The City has awarded 110 grants, worth $795,000 in total funding, to small businesses and nonprofits located in Santa Clara and financially impacted by COVID-19.


New Developments – 5/26/20

New Developments – 5/22/20

New Developments – 5/21/20

New Developments – 5/20/20

New Developments – 5/19/20

New Developments – 5/18/20

New Developments – 5/15/20

New Developments – 5/14/20

New Developments – 5/13/20


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

Crowdfunding

Economic Stimulus Payments

Employer Aid to Employees

Federal Tax Filing Date & Payments

Home Owners

IRS Collection and Enforcement Relief

Mandatory Paid Sick Leave and Family Leave

National Grants and Loans

Nonprofits – Provisions and Relief

Paycheck Protection Program

Rental Property Owners

SBA Loans

State Tax Filing Guidance – Updated 5/20/20

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 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.

The IRS has clarified that entities deferring payroll tax deposits under this program and receiving a Paycheck Protection Plan loan can continue to defer payroll tax deposit until they are notified by their lender that all or a portion of their loan has been 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.

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.

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 75% 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.

The EIDL loan portal reopened for agricultural businesses only – For other businesses, the SBA stopped accepting new applications on April 15, 2020 and will be processing those applications on a first-come, first-served basis.

Economic Injury Disaster Loan Advance – Small business owners in all U.S. states, Washington D.C., and territories are eligible to apply for an Economic Injury Disaster Loan advance of up to $10,000. The loan advance will provide economic relief to businesses that are currently experiencing a temporary loss of revenue. Funds will be made available within three days of a successful application, and this loan advance will not have to be repaid.

View a comparison chart of the PPP and EIDL: SBA Relief Programs

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


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.


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.


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.


Verizon Small Business Recovery Fund – Unfortunately, the application period for round 3 grants is now closed.


Business for All

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


Kiva US Small Business Loans

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


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. The latest round is now open, with applications due by Monday, 6/8 at 9:00AM PDT:


Main Street Lending Program

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

  • The minimum loan amount will now be $500,000 for new loans and priority loans, down from the originally proposed $1 million
  • Four-year terms, with a range of around 2.5% to 4%, with interest and payments deferred for a year.
  • Companies that have received a PPP loan can still be eligible for Main Street funding
  • To apply: go through partner banks to either take out new Main Street loans or receive boosts to existing loans
  • Federal Reserve – Main Street Lending Program
  • Main Street Lending Program FAQ

FedEx #SupportSmall Grants

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.
  • The application process is now open: FedEx #SupportSmall Grants

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.


Economic Stimulus Payments – IRS Launches Tool for Non-Filer Economic Impact Payments & “Get My Payment” Site is Live

Updated Economic Stimulus Payments FAQ

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:


Provisions and Relief for Nonprofits

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.


Tax Filing Date Moved to July

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

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:


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.


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.

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.


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:


Mandatory Paid Sick Leave and Family Leave

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

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.


IRS Collection and Enforcement Relief

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


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

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.


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

Executive order from the Governor delaying evictions and foreclosures.

Various 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 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.

The SBA San Francisco District Office is hosting a series of free webinars that provide an overview of SBA Disaster Loan programs on Tuesdays at 3:00PM (PST) and Thursdays at 11:00AM (PST).

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:

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:


‘Shelter in Place’ Order

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:

Reopening the Bay Area – Most counties are easing restrictions from stay-at-home health orders. Here’s a look at where each county stands under Gov. Gavin Newsom’s multi-phased plan to reopen California.

On April 27, 2020, 6 Bay Area counties announced they would be extending their ‘shelter in place’ orders through the end of May, with a few revisions that go into effect on May 4, 2020:

  • Construction will be allowed to resume as long as specific safety measures are in place; certain businesses that operate primarily outdoors may reopen (i.e. retail nurseries, landscapers and gardeners), some outdoor recreational facilities can reopen (but not contact sports or high-touch surfaces) and employees of a business allowed to operate can access childcare programs that are allowed to operate.
  • Order of the Health Officer of the County of Santa Clara

Effective Thursday, March 19, 2020, the Governor instituted a “shelter-in-place” order for all individuals living in the State of California, restricting “non-essential businesses” from opening and limiting “non-essential” travel.

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:

El Dorado County Issues Order to Stop Non-Essential Travel to Lake Tahoe Basin


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

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 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

Eviction Moratorium 

San Jose Extends Eviction Moratorium – San Jose City Council has extended a temporary ban on residential evictions until June 30th (originally through the end of May):

In addition, San Jose added businesses to eviction moratorium but rejected proposal of 3 month rent suspension for residents impacted by the pandemic:


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

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.


Bay Area Small Business Resources

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

San Jose is one step closer to allowing outdoor dining after its city council passed a proposal to allow seating areas to expand into street parking.

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:

Small Business help offered by local companies and the Chamber of Commerce:

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.

San Francisco extends the deadline for businesses to pay their Business Registration Fee by four months to September 30, 2020, and further extends the deferral of Unified License Fees for businesses to September 30, 2020.


Small Business Resiliency Fund

On April 2, 2020, Mayor London Breed announced there will be an additional $1 million to expand the COVID-19 Small Business Resiliency Fund. As of March 29th, the application process has closed. If you already submitted an application, it will be reviewed. Review process is currently taking two weeks due to volume.


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.


San Francisco Hardship Emergency Loan Program – Unfortunately, SF HELP stopped accepting applications on Wednesday, April 22, 2020 at 11:59 PM. Awards are in process.

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.


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


San Francisco Neighborhood Mini-Grants 

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.


Silicon Valley Relief Fund – Unfortunately, the program has reached maximum capacity based on available funds. Residents can add their name to the ‘Interest List’ and if additional funding becomes available, eligible households on the Interest List will be contacted with information on how they can complete an application:

The Santa Clara County Homeless Prevention System launched an $11 million relief fund to assist residents with rent and other basic needs.


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

The 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.


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.


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:


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

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.