COVID-19 and Tax Updates – Recent Developments

New Developments – 2/18/21

As required by law, all first and second Economic Impact Payments issued; eligible people can claim Recovery Rebate Credit

The IRS provided greater flexibility, due to the pandemic, to employee benefit plans offering health flexible spending arrangements (FSAs) or dependent care assistance programs. Under the COVID-related Taxpayer Certainty and Disaster Tax Relief Act of 2020, these plans now have additional discretion in 2021 and 2022 to adjust their programs to help employees better meet the unanticipated consequences of the public health emergency.

PPP Updates:

Governor Newsom announced a package of immediate actions that will provide needed relief to individuals, families, and businesses during the COVID-19 pandemic:

  • The agreement partially conforms California tax law to new federal tax treatment for loans provided through the Paycheck Protection Program, allowing companies to deduct up to $150,000 in expenses covered by the PPP loan. All businesses that took out loans of $150,000 or less would be able to maximize their deduction for state purposes. Larger firms that took out higher loans would still be subject to the same ceiling of $150,000 in deductibility. More than 750,000 PPP loans were taken out by California small businesses. This tax treatment would also extend to the Economic Injury Disaster Loans as well. With this agreement in place, it seems unlikely AB 281 (addressing PPP conformity) will be enacted.
  • Immediate Relief for Small Businesses Quadrupled – from $500 million to more than $2 billion, for grants up to $25,000 for small businesses impacted by the pandemic, and also allocates $50 million for cultural institutions
  • The agreement provides for two years of fee relief for roughly 59,000 restaurants and bars licensed through the state’s Department of Alcoholic Beverage Control that can range annually from $455 to $1,235.
  • Governor Newsom, Legislative Leaders Announce Immediate Action Agreement for Relief to Californians Experiencing Pandemic Hardship

The California EDD released new information resources to help people who received a Form 1099G prepare their 2020 tax returns.

New Developments – 2/12/21

FHFA announced that Fannie Mae and Freddie Mac are extending the moratoriums on single-family foreclosures and real estate owned (REO) evictions until March 31, 2021.

Taxpayers who don’t have their Notices 1444 and/or 1444-B, Your Economic Impact Payment, can view the amounts of their Economic Impact Payments through their personal IRS online account.

FASB responded to an urgent pandemic-related accounting concern by voting to provide private companies and not-for-profits with an alternative to the requirement to monitor and evaluate goodwill impairment triggering events throughout the fiscal year and potentially measure a goodwill impairment at the date of triggering events.

New Developments – 2/8/21

The IRS provided a safe harbor under which “eligible educators” can deduct unreimbursed expenses for COVID-19 protective items as educator expenses under Sec. 62(a)(2)(D) ( Proc. 2021-15).

New IRS form available for self-employed individuals to claim COVID-19 sick and family leave tax credits under FFCRA:

KKR Small Business Builders program will make grants of $10,000 to eligible small businesses across the country through the Hello Alice platform. To be eligible, a business must have between 5 and 50 employees, less than $7 million USD in annual revenue, demonstrated need for support, a strong plan for moving forward, and be in good standing with the IRS or their local regulatory body.

California recently extended its qualified statewide residential eviction moratorium to June 30, 2021. The new law, SB 91, replaces California’s COVID-19 Tenant Relief Act of 2020 (AB 3088 / “the Act”), signed by Governor Newsom on August 31, 2020, and adds several new features beneficial to both landlords and tenants:

  • Landlords MUST Notify Tenants of the New Law By February 28, 2021 to Preserve Landlords’ Right to Relief
  • SB 91 provides instructions for allocating $1.4 billion in federal emergency rental assistance funds: soon, landlords providing housing to residential tenants have the option to apply for government funding covering up to 80% of rent accumulated during the specified period of April 1, 2020 and March 31, 2021, for tenants who demonstrated they could not pay their rent due to the COVID-19 pandemic.

New Developments – 2/4/21

SBA issues FAQs for Shuttered Venue Operators Grants

A taxpayer who receives a Form 1099-G from the EDD but never received unemployment insurance (UI) or pandemic unemployment assistance (PUA) benefits is likely a victim of fraud.

CA Relief Grant is now accepting a second round of applications. Round 2 closes Monday, February 8 at 6 pm PST

States’ rolling conformity to the Code and CARES Act – Further analysis must be undertaken in some rolling conformity states, such as Colorado, Maryland, and Oregon, to determine whether and to what extent specific CARES Act provisions are in fact adopted on a rolling basis.

New Developments – 1/29/21

PPP Application Update—Second draw borrowers need to experience a 25% decline in gross receipts for one quarter of 2020 vs the same quarter of 2019. The gross receipts test should include the gross receipts of any affiliated entities.

The SBA announced that it is taking steps to improve the agency’s first-draw PPP loan review process so that small businesses seeking a second-draw loan have as much time as possible to access those funds. If clients are applying for a second PPP loan they should consider submitting their Forgiveness Application for the First Draw after the Second Draw is approved.

IRS updates FAQs on paid sick leave credit and family leave credit:

The FTB has just clarified that EIDL (Economic Injury Disaster Loan) advance grants are taxable to California:

New Developments – 1/26/21

Employee Retention Credit Updates—

SBA created a website for the Shuttered Venue Grant Program:

  • The Shuttered Venue Operators (SVO) Grant program was established by the Economic Aid to Hard-Hit Small Businesses, Nonprofits, and Venues Act, signed into law on December 27, 2020. The program includes $15 billion in grants to shuttered venues.
  • Eligible applicants may qualify for SVO Grants equal to 45% of their gross earned revenue, with the maximum amount available for a single grant award of $10 million. $2 billion is reserved for eligible applications with up to 50 full-time employees.
  • Shuttered Venue Operators Grant

Governor Newsom announced an agreement to extend the eviction moratorium in California through June 30, 2021 – protecting tenants and small landlords.

San Mateo County to Consider $1M Fund for Restaurants, Breweries, Wineries

New Developments – 1/25/21

Round 2 of the Small Business COVID-19 Relief Grant Program will begin accepting applications for one week only from February 2 through February 8, 2021.

Possible Property Tax Relief for Commercial Landlords – Santa Clara County Assessor’s office presented a webinar last week to discuss reassessment of commercial property that has declined in value due to the pandemic.

New Developments – 1/22/21

Opportunity Zone Funds and Investors granted deadline relief in Notice 2021-10.

PPP Conformity–Legislation has been introduced (AB 281) to conform California law to federal law allowing the deduction of expenses paid with forgiven PPP debt. The author of the legislation is the same assemblywoman that introduced the prior California conformity bill.

EDD starting to send 7.8 million Forms 1099-G reporting unemployment benefits paid in 2020:

Main Street America and Brother International have teamed up to launch the ‘At Your Side’ Small Business Grant Program to provide grants of $5,000 to $10,000 to brick-and-mortar small businesses in designated Main Street districts as they work to adapt and recover from COVID-19.

New Developments – 1/20/21

2019 Forms 5471 and 5472 – Taxpayers Receiving Penalty Notices in Error

  • Some taxpayers who have timely filed their 2019 Form 5471, Information Return of U.S. Persons With Respect To Certain Foreign Corporations, and/or Form 5472, Information Return of a 25% Foreign-Owned U.S. Corporation or a Foreign Corporation Engaged in a U.S. Trade or Business, are receiving IRS late filing penalty notices in error. The issue appears to be caused by the IRS’s system not accounting for the extended time to file returns due to COVID-19 and automatically generating the penalty notices. The AICPA has made the IRS aware of this system error. If you encounter this issue, the AICPA recommends a call to the Practitioner Priority Service line and provide proof of a timely-filed extension

PPP Updates – The SBA and Treasury on Tuesday published updated Paycheck Protection Program loan forgiveness guidance and forms, including a one-page application for borrowers that received a PPP loan of $150,000 or less.

The SBA and Treasury released two other PPP loan forgiveness applications:

  • Form 3508
  • Form 3508EZ
  • Borrowers must submit payroll and nonpayroll documentation when applying for loan forgiveness with those forms, which provide lists of the required documents.

In addition, the SBA and Treasury released Form 3508D, which certain individuals must use to disclose controlling interest in an entity applying for a PPP loans.

60,000 Paycheck Protection Program loans approved in first week submitted by nearly 3,000 lenders, for over $5 billion:

The IRS has issued guidance (Notice 2021-11) to address how employers who elected to defer certain employees’ payroll taxes can withhold and pay the deferred taxes throughout 2021 instead of just the first four months of the year.

Certain individuals will not be subject to the Sec. 6654 penalty on the underpayment of estimated income taxes if the underpayment is solely attributable to the recent repeal of the excess business loss limitations, the IRS announced on Tuesday

New Developments – 1/19/21

The SBA and Treasury issued an 18-page document detailing how Paycheck Protection Program borrowers should calculate revenue reduction and maximum loan amounts for second-draw PPP loans.

In addition, the SBA and Treasury issued three pieces of guidance over the weekend:

The FHFA announced that Fannie Mae and Freddie Mac will extend the moratoriums on single-family foreclosures and real estate owned (REO) evictions until February 28, 2021.

New Developments – 1/15/21

IRS announced that the nation’s tax season will start on Friday, February 12, 2021, when the tax agency will begin accepting and processing 2020 tax year returns.

Round 2 of California Small Business COVID-19 Relief Grant Program Opens Feb. 2 Through Feb. 8, 2021

  • Note: If you applied during the first round, received a confirmation email and were notified of the outcome, you do NOT need to re-apply. Your application will be included for consideration in the second round.
  • California Relief Grants

Californians impacted by COVID-19 are now starting to see the availability of up to 11 weeks of additional unemployment benefits from two federal programs. The California Employment Development Department (EDD) is automatically re-opening Pandemic Unemployment Assistance (PUA) and Pandemic Emergency Unemployment Assistance (PEUC) claims for those who had a balance remaining on those claims when the federal CARES Act expired on December 26.

New Developments – 1/14/21

The application window for the Paycheck Protection Program will open Friday for lenders with $1 billion or less in assets. The opening, which will take place at 6:00AM PT, applies for both first- and second-draw PPP loans.

The IRS will not be sending copies of the new Form 1099-NEC, Nonemployee Compensation, to California or any other state. (The IRS will continue to send all other Forms 1099 to the states.) As a result, businesses must send copies of Form 1099-NEC directly to the FTB, even if a copy was filed with the IRS. This applies only to the Form 1099-NEC.

Mayor London Breed Announces New $62 Million Relief Plan for Small Businesses – The $62 million plan will provide a combination of grants and very low to zero-interest loans, which will complement and expand existing local, state, and federal initiatives.

  • Proposed Grant Program ($12.4 million): The proposed grant program will provide immediate relief to help stabilize small business operations by offering grants of $5,000 to $20,000, based on the number of employees that each employer had in February 2020.
  • Proposed Loan Program (Up to $50 million): This planned loan program is aimed at supporting businesses by providing working capital, especially to those left out of existing relief programs. This will include businesses that normally generate more than $2.5 million in annual revenue, including many restaurants.
  • Mayor London Breed Announces New $62 Million Relief Plan for Small Businesses

Partial plan termination relief provided by Congress – The Consolidated Appropriations Act, 2021 (CAA), includes a temporary rule providing COVID-related relief from certain partial plan terminations.

Deterring and detecting fraud at a time of heightened risk

New Developments – 1/11/21

PPP Update – The SBA and Treasury released borrower loan application forms on January 8, for the rebooted Paycheck Protection Program. The program is expected to be open to all (non preferential) borrowers “soon”.

The Fearless Fund COVID-19 Relief Business Grant Program is making grants of $10,000 to women of color entrepreneurs across the country.

New Developments – 1/8/21

The SBA has announced that the Paycheck Protection Program will reopen the week of January 11 (The closing date for the new PPP is March 31). The following new PPP funds will be available to borrowers:

  • New “second draw PPP loans” for businesses with fewer than 300 employees and have experienced a 25% decline in gross receipts in any quarter of 2020 vs 2019. (Top-line Overview of Second Draw PPP 1/8/2021)
  • Supplemental funding for original PPP loans where the loan amount would have changed due to new rules that have been released; or businesses that did not originally apply for first draw PPP loans. (Top-line Overview of First Draw PPP 1/8/2021)
  • Only community financial institutions (Community Development Financial Institutions, minority deposit institutions, certified development companies, microloan intermediaries) will be able to submit first draw PPP loan applications to the SBA on Monday, January 11, and second draw PPP loan applications on Wednesday, January 13. The PPP program will then open to all other participating lenders “shortly thereafter”.
  • It is uncertain how many “community financial institutions” will be participating as PPP lenders.
  • Anticipated new application forms have not yet been released by the SBA.

The SBA and Treasury issued guidance late Wednesday night for the reconstituted Paycheck Protection Program. The guidance came in the form of two interim final rules:

Guidance on Accessing Capital for Minority, Underserved, Veteran and Women-Owned Business Concerns:

San Jose extends paid sick leave protections. Under the new emergency ordinance, employees will receive 80 hours of paid sick leave per year and part-time employees can receive leave two-weeks worth of leave. The leave can be used regardless of how long a local employee has worked for a company.

Mayor London Breed’s legislation to provide $5 million in fee and tax waivers and deferrals for San Francisco businesses passed at the Board of Supervisors. The legislation gives businesses additional time to pay certain business taxes and fees, and also fully waives some fees for a subset of small businesses that have been particularly hard-hit by COVID-19, including entertainment and nightlife venues and restaurants.

San Jose Contractors and subcontractors are required to comply with the December 16, 2020 Revised Santa Clara County Mandatory Directive for Construction Projects. Under the directive, contractors/subcontractors are responsible for submitting a jobsite-specific social distancing protocol; providing personal protective equipment; reporting COVID-19 positive cases and complying with contact-tracing efforts; designating and supporting the work of a jobsite-specific COVID-19 supervisor; and more.

Recorded Webinar to Help Guide Applications to California Relief Grants for Small Businesses. In this webinar available on YouTube, the Small Business Development Center explains the application process, and answers questions from business owners.

NBC Nonprofit Grant Program – Project Innovation will award exceptional non-profit programs that are addressing one of the four community issue areas: Culture of Inclusion, Youth Education and Empowerment, Next Generation Storytellers, and Community Engagement.

New Developments – 1/6/21

The Treasury Department and IRS issued Revenue Ruling 2021-2 today withdrawing previous guidance and conforming to the deduction of expenses paid with forgiven PPP loans authorized by the CAA of 2021.

  • Guidance: Rev. Rul. 2021-2
  • NOTE: California has not conformed to CAA so expenses continue to be non-deductible.

SBA Extends COVID-19 Economic Injury Disaster Loan Application Deadline through Dec. 31, 2021

In response to COVID-19, the IRS is allowing employers to switch from the vehicle lease valuation method to the cents-per-mile method (57.5 cents for 2020, 56 cents for 2021) for determining the value of an employee’s personal use of a vehicle during the pandemic (Notice 2021-7)

California Small Business COVID-19 Relief Grant Program Deadline Extended: Applications for Round 1 are now due by Wednesday, January 13 at 11:59 pm. The start of approval notifications will begin on January 15.

Governor Newsom proposes $4.5B for Equitable Recovery for California’s Businesses and Jobs in 2021 Budget:

  • Mitigating the SALT deduction limitation for S-corporation shareholders by allowing S corporations to elect to pay a 13.3% state income tax. This would reduce the amount of income passed on to shareholders, who would get a state tax credit equal to 13.3% of their passed-through income. The mechanism would allow the S-Corp to deduct the state tax that would have been paid by the shareholder in effect avoiding the $10K SALT cap.  IRS has issued guidance indicating this is an acceptable approach to avoid the $10K SALT cap imposed on individual taxpayers.
  • COVID-19 Relief Grant Program – The proposal would double the size of the state’s current COVID-19 Relief Grant Program for small businesses, with a plan to add another $575 million to the program. The expansion would bring the total size of the program to $1.1 billion in grants to help small businesses (see #1 above)
  • The second round of funding is expected to launch, though the state has not yet set a date for when the application window will begin.
  • Fee Waivers – The Budget proposes $70.6 million for fee waivers to individuals and businesses most impacted by the pandemic – including barbers, cosmetologists, manicurists, bars and restaurants. These waivers will assist those who have not been able to operate or are operating at reduced capacity during the pandemic.
  • California Jobs Initiative:
    • $430 million for the California Competes Tax Credit
    • $100 million to expand the Main Street Tax Credit (Small Business Hire Credit) to encourage hiring new employees and rehiring former employees
    • $100 million for small business loans and disaster loans through the California Infrastructure and Economic Development Bank’s (IBank)
    • $100 million to expand the sales tax exclusions to reduce the cost of manufacturing equipment in order to promote innovation and meet the state’s climate goals
  • Governor Newsom to Propose $4.5 Billion for Equitable Recovery for California’s Businesses and Jobs in 2021 Budget

California law, AB 685 (COVID-19 notifications) went into effect Jan. 1, 2021 and expires in two years:

  • Imposes new reporting requirements for employers regarding COVID-19 cases. AB 685 requires that employers provide a written notice to all employees and employers of subcontracted employees who were on the premises at the same time as a “qualifying individual” within the “infectious period” that they may have been exposed, as well as information about COVID-19 related benefits available under federal, state, and local laws like workers compensation benefits, COVID-19-related leaves, company sick leave, state-mandated leave, supplemental sick leave and anti-retaliation protections. Further it requires companies to notify their local public health agency of an “outbreak” within 48 hours, defined as at least three probable or confirmed COVID-19 cases within a 14-day period.
  • AB-685 COVID-19: imminent hazard to employees: exposure: notification: serious violations

Governor Newsom Announces Golden State Stimulus – Golden State Stimulus $600 rapid cash support will go to recipients of the state’s Earned Income Tax Credit in 2019, as well as those filing with Individual Taxpayer Identification Numbers this year who meet the eligibility criteria.

  • Governor Newsom also proposes extending the state’s eviction moratorium and expediting distribution of California’s $2.6 billion share of federal rental assistance to assist low-income tenants
  • Governor Newsom Announces Golden State Stimulus

Santa Clara County Launches Loan Program for Small Businesses – a low-interest loan program of up to $100,000 now available for qualifying establishments.

  • Three- or five-year term options with a 4.25 percent interest rates for small businesses with 50 or fewer full-time employees.
  • Qualifying businesses also require revenues of under $2.5 million in 2019 and at least a 25 percent reduction in revenues compared to a prior one-year period
  • California Rebuilding Fund

New Developments – 12/28/20

The California Small Business COVID-19 Relief Grant Program has announced that it will take applications from California small businesses impacted by COVID-19 for grants of between $5,000 and $25,000.

  • Eligible businesses are those with between $1,000 and $2.5 million in annual gross revenues based on their most recently filed tax return, and include sole proprietorships and nonprofits, and have been operating since at least June 1, 2019.
  • Application period opens December 30, 2020 at 8:00 AM PST and closes January 8, 2021 at 11:59 PM PST
  • Round 2 will be announced in the near future. Any applicants who are eligible but are not awarded a grant in Round 1, will automatically be considered for Round 2. (Applying through multiple organizations will delay the application from being processed)
  • Owners of multiple businesses, franchises, locations, etc. will be considered for only one grant and are required to apply for the business with the highest revenue.
  • California Small Business COVID-19 Relief Grant Program

5 accounting considerations for divestitures and carveouts:

The Office of Management and Budget issued new guidance for Single Program Audits of various COVID-19 relief programs:

Financial fraud risks to watch for amid the pandemic:

New Developments – 12/27/20

President Trump signed into law the $900 billion COVID-19 relief bill passed Dec. 21 by Congress.

New Developments – 12/21/20

Congress just posted the text of its funding bill and bipartisan Covid-19 stimulus plan. Senate Majority Leader Mitch McConnell said the Senate will likely stay and vote tonight on the massive relief package. The House is expected to vote tomorrow with the President is expected to sign the legislation shortly thereafter.

The $900 billion COVID-19 economic relief package includes:

  • The legislation clarifies that business owners can write-off expenses paid for with forgiven PPP loans, giving small companies a tax break that could amount to more than $100 billion.
  • $284 billion for a new round of Paycheck Protection Plan loans –new borrowers and entities that previously received a loan would be eligible for this program but repeat borrowers would be subject to stricter eligibility requirements.
  • $600 direct payments to individuals making less than $75,000 a year or couples making less than $150,000 and $600 per child.
  • Federal unemployment insurance benefits will be extended for 10 weeks through mid-March, with each week supplemented by a $300 payment
  • $15 billion to reinstate payroll reimbursements to airlines, which expired two months ago, as well as $1 billion for airline contractors.
  • An expansion of the business meals deduction.
  • A renewal of the employee retention tax credit for businesses that keep workers on their payrolls.
  • $25 billion for emergency rental assistance, and it extends the CARES Act’s eviction moratorium until Jan. 31.
  • Extends tax credits for renewable energy projects, including wind and solar production.
  • Congress to Vote on New COVID-19 Stimulus Deal

The IRS explained how expanded tax benefits can help both individuals and businesses give to charity before the end of this year.

As of December 18, people coming in from outside the Bay Area counties must quarantine for 10 days.

Forecasting and impairment tips for an unprecedented time:

FASB proposes goodwill evaluation relief for some private companies, NFPs – evaluating triggering events in interim financials

New Developments – 12/16/20

IRS announces a delay in processing Form 7200 Advance Payment of Employer Credits:

  • Employers will experience a delay in receiving payments associated with Form 7200, Advance Payment of Employer Credits, processed between late-December and mid-January due to standard end-of-year close out. The IRS will continue to accept and process valid Forms 7200 during this time, and the payment of valid requests during this time will begin to be processed on January 21, 2021. Employers will still receive Letter 6312, Form 7200 Response, if the Form 7200 cannot be processed.

When taxpayers get ready to file their federal tax return there are new things to consider when it comes to which credits to claim and what deductions to take. These things can affect the size of any refund the taxpayer may receive.

The Bay Area region as a whole on Wednesday dropped below 15% remaining ICU capacity and will be under the state’s stay-at-home order effective just before midnight Thursday.

New Developments – 12/14/20

The CARES Act (Section 1112) authorized SBA to pay lenders 6 months of principal, interest, and fees on behalf of borrowers with loans under the 7(a) and 504 programs and Microloans.  On December 8, the SBA released an Informational Notice clarifying the tax treatments of these payments. Payments are taxable income to the borrower and should be reported by the lender on Form 1099-MISC, Box 3.  Borrowers can continue to deduct interest and fees.

The Port of San Francisco Micro-LBE Hardship Emergency Loan Program will provide zero-interest loans of up to $25,000 for eligible Port contractors, subcontractors/subconsultants, and tenants. This program is a collaboration between the Port of San Francisco and service provider Main Street Launch.

New Developments – 12/11/20

PPP FAQ Updated December 9 – As previously announced, SBA is reviewing all loans of $2 million or more, and other loans as appropriate, for eligibility, fraud or abuse, and compliance with loan forgiveness requirements. As part of this process, SBA is providing a Loan Necessity Questionnaire to lenders for them to provide to PPP borrowers that, together with their affiliates, received loans of $2 million or more. Upon request from their lender, borrowers should return the completed questionnaire to their lender within 10 business days of receipt.

  • The questionnaire asks for financial data for periods after the loan was received but the SBA notes–This certification is required to have been made in good faith at the time of the loan application, even if subsequent developments resulted in the loan no longer being necessary. In its review, SBA may take into account the borrower’s circumstances and actions both before and after the borrower’s certification to the extent that doing so will assist SBA in determining whether the borrower made the statutorily required certification in good faith at the time of its loan application.
  • Q53: Paycheck Protection Program Loan Frequently Asked Questions

The Federal Housing Finance Agency announced that Fannie Mae and Freddie Mac will extend several loan origination flexibilities until January 31, 2021. The flexibilities were set to expire on December 31, 2020.

Federal unemployment benefits set to expire soon – Federal unemployment payments that have been available for workers who don’t qualify for regular state unemployment benefits and for those who run out of all of their state benefits are set to expire after December 26, 2020.

Lake Tahoe is shutting down to tourists on Friday, December 11, and will remain closed for at least three weeks:

Bay Area Playgrounds Reopening After State Changes Course:

In March 2020, Mayor Breed extended the deadline for businesses to pay their 2020 Unified License Fee from April 30, 2020 to March 1, 2021. Given the pandemic’s continued impact on businesses, Mayor Breed announced the deferral of the Unified License Fee for 2020 will further extend until October 31, 2021. To provide additional relief and time, the Unified License Fee for 2021 will also be deferred from March 1, 2021 to October 31, 2021.

San Francisco is launching the San Francisco Latino Small Business Fund, which includes $3.2 million to expand the San Francisco Hardship and Emergency Loan Program (SF HELP) that will provide zero interest loans of up to $50,000 to approximately 80 small businesses. The funds are intended to mitigate the impacts of COVID-19 on Latino-owned businesses and small businesses in neighborhoods that serve the Latino community.

San Francisco locally owned businesses that either hold or have applied for a Shared Spaces permit are eligible to receive up to $5,000 in reimbursement from the City, which will help businesses that have been forced to close outdoor operations as a result of the recent Stay at Home Order and prepare for an eventual reopening.

New Developments – 12/8/20

The California Department of Tax and Fee Administration (CDTFA) has implemented Governor Newsom’s request for sales tax payment and filing relief:

  • Taxpayers’ returns due between December 1, 2020, and April 30, 2021, for all but the largest taxpayers, will be extended. Taxpayers reporting less than $1 million in tax on a return originally due during this timeframe are not required to seek an extension from CDTFA; relief will be provided automatically.  Additionally, for these taxpayers, interest and penalties will not accrue on return amounts due, provided payments are made and returns are filed within three months of the original due date.
  • Fourth quarter 2020 and first quarter 2021 returns, for all but the largest taxpayers, will be extended and are now due April 30, 2021, and August 02, 2021, respectively. For taxpayers required to make monthly prepayments against their fourth quarter tax and fee obligations, the October prepayment remains due on November 24, 2020. The November prepayment that is normally due on December 24 is now due on March 24, 2021.
  • Annual filers scheduled to file returns in January 2021 or April 2021, the filing deadlines will be extended and are now due April 30, 2021, and July 15, 2021, respectively.
  • Return due dates for taxpayers reporting less than $1 million in tax on their return that file on a monthly basis with an original due date between December 1, 2020, and April 30, 2021, have been extended for three months. Interest and penalties will not accrue provided the returns are filed and amounts due are paid within three months of the original due date. Taxpayers below the $1 million threshold are not required to seek an extension from CDTFA; relief will be provided automatically.  The due date for monthly filers’ October 2020 return remains November 30, 2020.
  • Taxpayers with a liability of $1 million or more must request an extension if they are unable to file and pay by their due date. These requests are evaluated on a case-by-case basis and they will be notified if their extension has been approved or denied.
  • Effective December 1, 2020, small business taxpayers with less than $5 million in taxable annual sales, can take advantage of a 12-month, interest-free, payment plan for up to $50,000 of sales and use tax liability only. All payment plans must be paid in full by April 30, 2022, to qualify for zero interest. Businesses with $5 million or more in annual taxable sales in sectors particularly impacted by operational restrictions due to the pandemic may also apply for this 12-month interest-free payment plan. Please note: This relief only applies to sales and use tax due on returns with original due dates between December 1, 2020 and April 30, 2021. A business that previously took advantage of the 12-month, interest-free payment plan that must be paid in full by July 31, 2021, may also request to participate in this new 12-month interest-free payment plan.
  • Small Business Relief Payment Plans for Sales and Use Tax

The IRS is warning people to be aware of a new text message scam. The thief’s goal is to trick people into revealing bank account information under the guise of receiving the $1,200 Economic Impact Payment.

Some Bay Area counties (Alameda, Contra Costa, Marin, Santa Clara, San Francisco and the City of Berkeley) voluntarily implemented the State’s Regional Stay at Home order to significantly reduce gatherings and additional activities in an effort to stabilize COVID-19. The order went into effect Sunday, December 6 at 10PM, and will remain in place until January 4:

New Developments – 12/1/20

To assist taxpayers during the COVID-19 pandemic, Congress enacted legislation permitting businesses to elect to carry back net operating losses (NOLs) arising in 2018, 2019, or 2020 five years.

Updated FAQs: Employee Retention Credit under the CARES Act – Special Issues for Employers: Taxation and Deductibility of Tax Credits

The eBay Up & Running Grant Program will make grants of $10,000 (including cash, eBay credits, coaching through eBay Seller School, and more) to eBay small business sellers.

California is developing a new $500 million COVID Relief Grant program for small businesses impacted by the pandemic. The program would provide grants of up to $25,000 to small businesses and nonprofits. The funds would be distributed through community development financial institutions and could arrive by early next year, according to the governor’s office.

San Mateo and San Francisco Counties rolled back to the most restrictive Purple Tier, which means there are new restrictions for retail and restaurants.

Santa Clara County officials announced new changes to existing directives. The newest and most strict addition to restrictive measures strongly discourages leisure and non-essential travel, and requires persons entering the county to quarantine for 14 days upon return from travel of more than 150 miles.

New Developments – 11/20/20

PPP Update:

The IRS issued new FAQs to address eligibility to claim the Employee Retention Credit when an entity acquires a target Company that has participated in the PPP Loan program. Under provisions of the CARES Act, a PPP borrower cannot claim the Employee Retention Credit but special rules will apply for M&A activity.

The IRS reviewed its collection activities to see how it could provide relief for taxpayers who owe taxes but are struggling financially because of the pandemic. The agency is expanding taxpayer options for making payments and other ways to resolve tax debt.

The California Rebuilding Fund will begin accepting applications today (November 20). Loans of up to $100,000 are available and early applications are encouraged.

Gavin Newsom issued a limited stay-at-home order due to the rise in COVID-19 cases. Non-essential work and gatherings must stop from 10pm to 5am in counties in the most restrictive purple tier. This will take effect at 10pm on Saturday and remain for 1 month.

Santa Clara County’s Commercial Tenant Eviction Moratorium has been further extended through March 31, 2021. Once the moratorium expires, all tenants will have up to six months to repay at least 50% of the past-due rent and a further six months to completely pay all past-due rent they owe. The County requires a landlord to inform a tenant of their repayment rights under the moratorium before starting a repayment plan with the tenant.

New Developments – 11/16/20

The SBA announced the updated interest rates for the 504 Loan Program offered by Certified Development Companies (CDC). The program now allows for 10, 20, and 25-year interest rates at 2.231 percent, 2.364 percent, and 2.399 percent, respectively. Small businesses can now apply for a 504 loan at these low-interest rates.

California has released guidance for people traveling into and out of the state:

Santa Clara County will be moved to the State’s Red Tier beginning Tuesday, November 17, requiring the closure of indoor dining and imposing limits on certain other high-risk activities:

The California Rebuilding Fund has been created to aggregate funding from private, philanthropic, and public sector sources – including an anchor commitment from IBank – to address the capital and advisory needs of California’s small businesses as they re-open and recover from COVID-19. The California Rebuilding Fund is intended to serve the smallest of small businesses that make up an essential part of the California economy.

  • Loans to the small businesses could have a 5-year term with a 4.25 percent interest rate, with an interest-only period for the first 12 months and fixed monthly payments for the remainder of the term (these are preliminary terms and subject to change as the Fund is being created, but the goal will be prime +1).
  • Small businesses are eligible if they have 50 or fewer full-time employees and less than $2.5 million in annual revenue and meet the Fund’s standard underwriting guidelines.
  • Apply here: California Rebuilding Fund
  • Webinar with additional details is scheduled for Tuesday, December 1 at 3PM: California Rebuilding Fund Webinar Registration

Salesforce has launched the San Francisco Small Business Grants program to make grants of $10,000 to qualifying small businesses located in San Francisco. Eligible businesses must be for-profit entities; have 2-50 employees; have been in business since at least November 2019; and have annual revenues between $25,000 and $2 million.

The Silicon Valley Heritage EXPO on November 20 is an on-line digital event designed to stimulate commerce while showcasing the best of the area’s diverse cultures through food, arts and crafts, entertainment, and business. The event incorporates a marketplace to generate commerce for the region’s small businesses (free to the first 500 businesses).

New Developments – 11/12/20

The IRS reminds taxpayers how the CARES Act changes deducting charitable contributions.

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

Mayor London Breed announced a $3.5 Million expansion of the San Francisco Hardship and Emergency Loan Program (SF HELP). The program will provide zero interest loans of up to $50,000 to approximately 80 small businesses as San Francisco continues on the road to economic recovery.

Due to an increase in COVID-19 cases, San Francisco will roll back the reopening of indoor dining, reduce capacity of fitness centers and movie theaters beginning Saturday, November 14, and will pause approval of plans for indoor instruction for high schools.

SF Shines for Reopening Program – Businesses in certain San Francisco neighborhoods can get up to $5,000 reimbursed for their storefront’s COVID-19 safety measures, such as barriers and furniture.

Contra Costa and Santa Cruz counties have fallen back to the more restrictive red reopening tier:

Emergency Rental Assistance applications for Santa Clara renters are due by November 14, 2020:

New Developments – 11/6/20

The Treasury Department has indicated it will “shortly” be issuing guidance related to the deductibility of expenses paid with PPP funds. Guidance is expected to take the position that at year-end, if a borrower has a “reasonable expectation” of forgiveness, expenses would not be deductible. This guidance would apply even if the borrower did not apply for forgiveness until the following tax year.

  • Congress may act to overrule the IRS’s position and allow the deduction of expenses.
  • Precedent exists to take a position contrary to the expected Treasury guidance.

The IRS is warning taxpayers of a new text scam created by thieves that trick people into disclosing bank account information under the guise of receiving the $1,200 Economic Impact Payment.

The IRS urged any eligible self-supporting college student who doesn’t need to file a tax return to register by November 21 so they can receive an Economic Impact Payment before the end of the year.

San Francisco Restaurants, gyms, and personal services must post a checklist of their ventilation methods.

New Developments – 11/2/20

SBA will be “reviewing” PPP loans over $2 million. Part of the review will evaluate the borrower’s “need” for the loan.  To assist with this process, the SBA has announced two new PPP forms: Form 3509, Paycheck Protection Program Loan Necessity Questionnaire (For-Profit Borrowers); and Form 3510, Paycheck Protection Program Loan Necessity Questionnaire (Non-Profit Borrowers). The forms will be sent to borrowers with loans totaling more than $2 million, and ask a number of questions to establish the borrower’s need for the PPP funds.

IRS has issued guidance to employers for reporting employee social security tax deferred under President Trump’s August Executive Order. Employers will need to prepare amended W2’s for tax year 2020 when the deferred tax is withheld in 2021. IRS has revised Form 940 to account for payment of the deferred withholding.

The IRS announced a new program, the Taxpayer Relief Initiative, to help taxpayers who are unable to pay their taxes because of the pandemic.

The Federal Reserve Board announced changes designed to make Main Street Lending Program loans available to smaller businesses and not-for-profits. The board reduced the minimum loan amount on three of the five Main Street loan facilities from $250,000 to $100,000. To encourage provision of the smaller loans, the board waived transaction fees for all loans under $250,000.

COVID-19 and withdrawals from retirement plans – Taxpayers under financial duress caused by the pandemic can avoid penalties.

Deducting losses in the CARES Act’s window. Current losses can temporarily be carried back for a quick refund.

The San Mateo County Board of Supervisors launched the Small Property Owner Assistance Program to make grants of up to $6,000 to eligible property owners who have been impacted by the COVID-19 pandemic.

FASB’s staff published an educational paper that provides guidance to borrowers on how to account for debt modifications and restructurings, which have been common this year as a result of the coronavirus pandemic.

New Developments – 10/28/20

CA residents who owe rent from March 2020 through today because they were affected by COVID – lost their job, got sick, or had hours cut – are protected from being evicted by taking a few simple steps:

San Francisco – More allowances for offices, gyms, and personal care with new health order. Everyone must wear face coverings. Non-essential offices can reopen with limited capacity. Indoor gyms have increased capacity. Some personal care services that involve the face are allowed.

Contra Costa, Marin, San Mateo, and Santa Cruz counties have moved from the red tier to the orange tier on the state’s reopening blueprint. The change allows for some indoor business operations to resume with restrictions.

New Developments – 10/23/20

The IRS set November 10 as “National EIP Registration Day,” as the agency and partners across the country launch a final push to encourage everyone who doesn’t normally file a tax return to register to receive an Economic Impact Payment.

For Restaurants in San Francisco or San Jose – The DoorDash Local Restaurant Grants program is making grants of $5,000 to small businesses in select cities across the country. The grants are part of DoorDash’s Main Street Strong initiative to help restaurants recover and succeed amidst pandemic-related challenges.

  • In the Bay Area, restaurants must be located in San Francisco or San Jose in order to be eligible.
  • Eligible restaurants must be also: have 3 stores or fewer currently operating; have $3 million or less in 2019 annual revenue per store; and employ 50 people or fewer per store.
  • Applications are due by Friday, November 6: DoorDash Local Restaurant Grants program

Free PPE available for San Jose nonprofits:

Access to Capital for Small Businesses in San Jose – Help With Recovery in the Time of COVID:

Rental Assistance Available For Santa Clara Renters:

New Developments – 10/21/20

FHFA announced that Fannie Mae and Freddie Mac (the Enterprises) will extend several loan origination flexibilities until November 30, 2020.

COVID-19 Lessons for Nonprofits Podcast:

Employment Development Department – Updated Top Unemployment Insurance FAQs of the Week (updated Oct. 16).

Victims of the California wildfires that began on September 4 now have until January 15, 2021, to file various individual and business tax returns and make tax payments:

Under the new risk reduction order, all businesses and governmental entities in Santa Clara County must submit a revised social distancing protocol using the online webform, available at

  • All businesses must complete, submit and implement the revised social distancing protocols by October 28, 2020.
  • Businesses must do so even if they have already completed a social distancing protocol under a prior Health Officer Order. Businesses may not operate after October 28 without first submitting a Revised Social Distancing Protocol.

Now that San Francisco is assigned to the State’s Yellow tier, the City will move forward on reopening offices and expanding capacity at business, including fitness, dining, places of worship, personal services, recreation, and more

The Contra Costa County Micro-Enterprise Relief Fund to make grants of $1,000 to $10,000 to micro-businesses impacted by COVID-19. Eligible businesses are for-profit entities with a maximum of 5 employees and less than $250,000 in annual revenue that are operating in Contra Costa County cities (with the exception of Walnut Creek, Concord, Pittsburg, and Antioch, which are not covered by the Contra Costa CDBG service area).

Tips for single audits amid pandemic uncertainty:

New Developments – 10/13/20

FAQs on PPP Loan Forgiveness Updated October 13, 2020: The PPP loan forgiveness application forms (3508, 3508EZ, and 3508S) display an expiration date of 10/31/2020 in the upper-right corner, but this does not mean October 31, 2020 is the deadline for borrowers to apply for forgiveness. Borrowers may submit a loan forgiveness application any time before the maturity date of the loan, which is either two or five years from loan origination. However, if a borrower does not apply for loan forgiveness within 10 months after the last day of the borrower’s loan forgiveness covered period, loan payments are no longer deferred and the borrower must begin making payments on the loan. Note—these loan terms apply even if the original note signed by the borrower contain different terms that were applicable when the note was signed.

Many states have provided one additional month of filing relief for corporate tax returns beyond the federal Oct. 15 deadline:

  • Five states (Delaware, Kansas, Maine, New Jersey, and Vermont) provided automatic one additional month of filing relief for corporate extended state tax returns filed by Nov. 16, 2020.
  • Eleven states (Alabama, Georgia, Idaho, Mississippi, Missouri, Nebraska, North Carolina, Rhode Island, Tennessee, Utah, and West Virginia) responded that they would consider granting relief on a case-by-case basis for corporate extended state tax returns filed by Nov. 16, 2020, if the taxpayer requests in writing abatement of late-filing penalties due to reasonable cause.
  • Journal of Accountancy – Several states provide one-month filing relief for corporate deadlines

The deadline to register for an Economic Impact Payment using the Non-Filers tool is extended to November 21, 2020.

The California Department of Public Health (CDPH) released new guidance Friday that now allows private gatherings to include up to three households. The guidance states the gatherings must take place outdoors and keeping the gathering smaller as it lowers the risk of contracting COVID-19.

As of October 13, 2020, Santa Clara County announced the County is in the Orange Tier (Tier 3) of the State’s COVID-19 framework. This means the County Risk Reduction Order will go into effect on October 14, 2020.

  • Orange Tier under the revised County order would allow indoor dining and indoor gatherings to resume locally, but with the Red Tier’s limitations of 25% capacity or 100 people, whichever is fewer.
  • Indoor gatherings will be allowed including social, religious, political, ceremonial, athletic, and other types of gatherings under the Orange Tier.
  • Santa Clara County announced the County is in the Orange Tier

San Francisco announces plan to expand elements of the Shared Spaces program beyond the pandemic, support businesses with grants to support reopening, delay impact fees, initiate a basic income program for arts:

The Oakland CARES Act Home-Based Business Grant Program is making grants of $2,000 to $4,000 to home-based, for-profit small businesses in Oakland that have been negatively impacted by COVID-19.

New Developments – 10/9/20

PPP Update – The SBA issued a new PPP Forgiveness Application Form 3508S and 3508S Instructions for those small businesses that secured a PPP loan of $50,000 or less. The most significant benefit of the new form is that employee reductions and salary reductions are no longer penalized. Additionally, the new form does not require submitting mathematical calculations on how the funds were spent, but it still requires the borrower to submit to the lender evidence (bank statements, invoices, etc) that the funds were properly spent. Interestingly, the SBA also reduced the lender’s responsibility to “verify” the evidence submitted.

  • Because the maximum PPP loan amount is $50,000, this new loan forgiveness application will be most beneficial to self-employed,  gig workers and businesses with just a few employees. There are approximately 3.57 million outstanding PPP loans of $50,000 or less, totaling approximately $62 billion of the $525 billion in PPP loans.
  • There is still a possibility that the SBA/Congress may authorize a streamline forgiveness process for loans over $50K and under $150K.
  • SBA just recently began approving PPP forgiveness applications and remitting forgiveness amounts to lenders last week on October 2, 2020.
  • New PPP Loan Forgiveness Application Form 3508S
  • New PPP Loan Forgiveness INSTRUCTIONS for Form 3508S​​​​​
  • New IFR for Loan Forgiveness of Small Loans

The IRS reminds taxpayers to check tax withholdings now, as the last quarter of 2020 begins, to avoid a surprise when filing next year. Some things to consider that will affect taxes owed in 2020 include: Coronavirus tax relief, Disasters such as wildfires and hurricanes, Unemployment compensation, etc.

Employment Development Department – Updated Top Unemployment Insurance FAQs of the Week (updated Oct. 9).

California’s Employment Development Department says it will start paying out the sixth and final week of the Lost Wages Assistance program next week (October 12).

New Developments – 10/8/20

PPP Update – The SBA released guidance Wednesday clarifying that lenders must recognize the previously established extended deferral period for payments on the principal, interest, and fees on all PPP loans, even if the executed promissory note indicates only a six-month deferral.

The Employment Development Department (EDD) on Tuesday announced the successful installation of a new identity verification tool that is helping speed the processing of new claims.

Californians impacted by wildfires that started in August, in several California counties, now have an extended deadline of November 30, 2020, to file for federal Disaster Unemployment Assistance (DUA).

Nonprofit Grant – The City of San Jose Emergency Operations Center (EOC) is releasing a grant application for nonprofit organizations that serve San Jose communities negatively impacted by COVID-19. Awards to organizations will range from $5,000 to $150,000.

New Developments – 10/6/20

New guidance issued by the SBA describes the procedures required for changes of ownership of an entity that has received Paycheck Protection Program funds.

The IRS is giving individuals who do not normally file a tax return and have not received an economic impact payment an additional five weeks to enter their information on the Non-Filer: Enter Payment Info Here tool on the IRS website.

The Employment Development Department is set to begin accepting new claims after a two-week pause.

New Developments – 10/2/20

Employers who file Form 7200, Advance Payment of Employer Credits Due to COVID-19, to claim an advance payment of credits are required to include on the form the name and EIN of the third party payer they use to file their employment tax returns (such as the Form 941) if the third party payer uses its own EIN on the employment tax returns.

LISC Rural Relief Small Business Grants – Grants will be made in amounts ranging from $5,000 to $20,000. LISC will use the funding to provide grants to businesses facing immediate financial pressure because of COVID-19. Rural communities are defined as having a population of 50,000 or less.

Santa Clara County Businesses – If one of your employees is sick and is exhibiting symptoms of COVID-19, they must stay home from work and get tested for COVID-19. If an employee tests positive, you are required to report the case within four (4) hours.

Oakland CARES Fund for Artists and Arts Nonprofits – The CARES Arts Fund is making grants of up to $3,000 for individual artists and grants of up to $20,000 for small arts nonprofits (based on budget size)

Mayor London Breed authorized a 60-day extension of the San Francisco’s commercial eviction moratorium, from September 30 to November 30, 2020.

The City of San Jose Parks, Recreation and Neighborhood Services will provide eligible residents information and resources on affordable and low-cost home internet services, $10 to $20 per month, with the first two months free.

New Developments – 9/30/20

IRS provides final regulations on income tax withholding on certain periodic retirement and annuity payments made after Dec. 31, 2020.

Eligible individuals can visit and use the Get My Payment tool to find out the status of their Economic Impact Payment.

The IRS launched a redesigned page on to help business owners navigate the federal tax steps when closing a business.

San Francisco indoor dining and indoor worship at 25% capacity, up to 100 people, are allowed beginning today (September 30):

CA playgrounds Allowed to Reopen Following Certain Guidelines:

New Developments – 9/28/20

Federal benefit recipients who don’t normally have a filing requirement but do have qualifying children must register by Wednesday, Sept. 30 to receive a $500 catch-up payment per child. Other non-filers have until Thursday, October 15 to register for their Economic Impact Payment.

Reconstructing records after a disaster is important for several reasons including insurance reimbursement and taxes. Most importantly, records can help people prove their disaster-related losses. More accurately estimated losses can help people get more recovery assistance like loans or grants.

Newsom signed an executive order for the counties of Del Norte, Los Angeles and Mendocino that extends the deadline for impacted residents to file a claim for property tax postponement; and directs the Franchise Tax Board, Board of Equalization, Department of Tax and Fee Administration and the Office of Tax Appeals to provide extensions to impacted residents and businesses for filing, audits, billing, notices and assessments, among other provisions.

Sonoma County Small Business Stabilization Grant Program to provide grants of $2,500 to $15,000 to local small businesses.

The City of Oakland CARES Act Small Business Grant Program is making grants of $10,000 to businesses located in Oakland that have been adversely impacted by COVID-19.

Mayor London Breed announced a new temporary permit program to ensure safer outdoor entertainment and amplified sound activity as a part of San Francisco’s gradual reopening. The new JAM or “Just Add Music” permit will help businesses, organizations, and individuals hold responsible entertainment activity at Shared Spaces and other outdoor locations.

New Developments – 9/24/20

During Small Business Week, the IRS reminds business owners and self-employed individuals of the employer credits available to them during COVID-19.

Victims of Hurricane Sally that began on September 14 now have until January 15, 2021, to file various individual and business tax returns and make tax payments:

Requesting my Economic Impact Payment FAQs updated related to filing returns:

Gov. Newsom signed an executive order to extend authorization for local governments to halt evictions for commercial renters impacted by COVID-19 through March 31, 2021

The San Jose Public Library Offers Hotspot Checkout to Members. This service is available to all SJPL members at select SJPL locations at no cost.

City of San Jose Coronavirus Relief Fund: Arts Organizations – This relief grant program is intended to help mitigate COVID-19 related financial impacts by reimbursing San José nonprofit arts and cultural organizations for specific and documentable expenses and income losses due to the pandemic.

City of San Jose Coronavirus Relief Fund: Artists – Individual artists and sole proprietor arts businesses can receive up to $2,000 to help mitigate COVID-19 related financial impacts.

The Oakland CARES Nonprofit Grant Program is making unrestricted grants of up to $25,000 to Oakland-based nonprofits that have suffered negative economic impacts due to COVID-19.

New Developments – 9/23/20

House passes HR 8337 to extend funding of the federal government until Dec. 11, 2020. Unfortunately, economic stimulus and tax provisions were not included in the bill.

Estates and Trusts – On Sept 21, the IRS issued final regulations that provide guidance for decedents’ estates and non-grantor trusts clarifying that certain deductions of such estates and non-grantor trusts are not miscellaneous itemized deductions.

PPP loan forgiveness: What CPAs should be doing now – The wise course is to begin preparing the forgiveness application and stay on top of documentation requirements but also be patient with the process as substantial areas are settled:

During Small Business Week, September 22-24, the Internal Revenue Service wants individuals to consider taking the home office deduction if they qualify.

What to do if you received a letter (IRS Notice 1444-A) from the IRS telling you that you have to act to claim an Economic Impact Payment by October 15.

San Mateo and Alameda counties moved to the next level in the state’s phased coronavirus recovery plan, clearing the way for gyms and indoor dining.

Report on San Jose’s Business Support & Economic Recovery Efforts, March Through August 2020:

New frequently asked question guidance for health care entities on pandemic-related questions have been added to a list that was first posted Aug. 3:

New Developments – 9/22/20

To prevent confusion, the IRS notified lenders that they should not file cancellation-of-debt information returns or furnish payee statements under Sec. 6050P to report the amount of qualifying forgiveness with respect to covered loans made under the PPP:

Artist Relief is an emergency initiative organized to distribute grants of $5,000 to artists facing dire financial emergencies due to COVID-19.

EDD to stop processing new unemployment applications for 2 weeks to allow the department to catch up on existing backlog of claims and questions.

Newson signed two new laws (SB 1159 and AB 685) impacting cases of COVID-19 in the workplace.

The PowerUp Fund will be making grants of $5,000 to eligible Latinx-owned small businesses in California, Texas, and New York. Grants will be paired with coaching support and resources to help recipients overcome the COVID-19 economic downturn and continue to grow.

A new San Francisco health directive allows for more indoor activities to reopen. They include: indoor museums, indoor zoos, indoor aquariums, indoor art galleries

New Developments – 9/18/20

The IRS Taxpayer Advocate Service has released an online tool that businesses can use to help determine which relief provisions they can qualify for:

Victims of the Oregon wildfires and straight-line winds that began on September 7 now have until January 15, 2021 to file various individual and business tax returns and make tax payments.

AICPA urges passage of ‘PPP 2’ legislation – The PPP funded more than 5.2 million loans for a total of $525 billion but stopped accepting new applications on Aug. 8. The program closed with almost $134 billion of congressionally approved funds remaining unspent.

Economic Impact Payment – The IRS will continue to process 2019 tax returns and issue payments to individuals who have not already received a payment and have not already been determined to be ineligible based on their 2018 tax returns.

Corporate governance in COVID-19: Cybersecurity and technology considerations

Governor Newsom signed SB 1383, which ensures that California workers affected by COVID-19 can take time to care for themselves or a sick family member and keep their workplaces and communities healthy and safe.

Governor Newsom signed two bills as part of his worker protection package:

  • SB 1159 expands access to workers’ compensation and makes it easier for first responders, health care workers and people who test positive due to an outbreak at work to get the support they need, including necessary medical care and wage replacement benefits.
  • AB 685 ensures timely notification to employees and local and state public health officials of COVID-19 cases at workplaces. This notification will help workers take necessary precautions such as seeking testing, getting medical help or complying with quarantine directives.
  • Governor Newsom Signs Legislation to Protect California’s Workforce Amid the COVID-19 Pandemic

Employment Development Department – Updated Top Unemployment Insurance FAQs of the Week (updated Sept. 18).

The San Jose Unified School District said it will continue distance learning through December:

The Santa Clara County and State orders allow some park amenities to reopen with new protocols in place.

San Francisco will move forward with indoor dining at 25% capacity, up to 100 people, once classified as “orange” on the State’s tiered system, which will occur no sooner than the end of the month.

New Developments – 9/16/20

A bipartisan group of House lawmakers put forward their own plan to deliver badly needed coronavirus relief. The House Problem Solvers Caucus has assembled a roughly $1.5 trillion plan that includes a second round of stimulus checks, unemployment aid and small business loans that they say would last through at least next spring.

The IRS recently updated the FAQ’s discussing the deferral of the employer portion of Social Security tax clarifying a few items. This deferral is available to both employers and self-employed taxpayers.

  • Employers cannot get a refund by electing to defer taxes previously deposited (FAQ 9)
  • Employers can claim both the deferral and the Payroll Tax Research Credit so the credit can generate a refund for the tax deferred (FAQ 14)
  • Guidance to pay the deferred amounts prior to their 2021 and 2022 due dates (FAQ 29)
  • Self-employed taxpayers cannot generate a refund on their 2020 individual income tax returns by electing to defer the employer portion of social security tax. The election is a deferral of payment not a deferral of liability so once the payment has been made it cannot then be deferred. Estimated tax payments should be adjusted to account for the deferral so the taxpayer does not have an overpayment on their tax returns. (FAQ 30)
  • Deferral of employment tax deposits and payments through December 31, 2020 FAQs

The IRS reminds taxpayers and tax practitioners of the procedures for requesting expedited handling of requests for letter rulings under Rev. Proc. 2020-1, 2020-1 I.R.B. 1 (January 2, 2020)

The City of San Jose has set aside $3.8M of its federal Coronavirus Relief Funds to provide grants of up to $15,000 to small businesses located in San Jose to cover the business owner’s unpaid or pending rent from March 1, 2020 through December 30, 2020:

People cited for health order violations in San Mateo County can appeal by submitting a form along with the fine amount within 14 days of receiving the citation.

New Developments – 9/14/20

Californians who borrow up to $100,000 from their 401(k) retirement accounts won’t face state tax penalties if they repay the loans within five years under a new state law. Governor Newsom signed B. 276 on September 11, to bring California’s tax treatment of retirement account loans in line with the federal coronavirus relief law.

  • The law took effect immediately to match the CARES Act (Public Law 116-136), which allows individuals to borrow up to $100,000 from their 401(k) retirement accounts and repay within five years without penalty.
  • Without the law, the second $50,000 of such a loan would be considered a distribution subject to income tax and early withdrawal penalties

FTB updates FAQs to announce California’s treatment of telecommuting employees for franchise tax nexus purposes:

  • California will not treat an out‐of‐state corporation whose only connection to California is the presence of an employee who is currently teleworking in California due to Executive Order N‐33‐20 (shelter in place order) as being actively engaged in a transaction for the purposes of financial or pecuniary gain or profit.
  • California will not include the compensation attributable to an employee who is currently teleworking due to Executive Order N‐33‐20 in the minimum payroll threshold set forth in California Revenue & Taxation Code section 23101(b)(2)(4).
  • Teleworking and the “Stay at Home” order FAQ

The EDD started processing payments under the Lost Wage Assistance (LWA) program on Monday, Sept. 7. This extra $300 weekly benefit funded by the federal government will be available for 5 weeks retroactively to July 26 so the maximum benefit will be $1,500:

New Developments – 9/11/20

Some tax practitioners have expressed concern that they will not be able to meet the Sept. 15 deadlines for a variety of reasons related to COVID-19. The AICPA understands that the IRS is willing to work with taxpayers who need relief. Practitioners that have made a good-faith effort to meet the filing deadlines on behalf of their clients, but are unable to do so due to COVID-19, should write “COVID-19” in an attachment to the return briefly describing the reason they cannot meet the deadlines, or, if possible, should write “COVID-19” at the top of the tax return to indicate the need for penalty relief.

As part of National Small Business Week, the SBA and cosponsors will host all virtual events September 22-24, 2020. This year’s National Small Business Week activities will include numerous educational panels providing retooling and innovative practices for entrepreneurs as our nation’s small businesses look to pivot and recover.

San Francisco indoor personal services and indoor gyms and fitness centers with limited capacity, hotels, and other lower risk indoor and outdoor activities will move forward on Monday, September 14

New Developments – 9/10/20

6 more IRS forms can be filed with e-signatures: Form 706, U.S. Estate (and Generation-Skipping Transfer) Tax Return; Form 706-NA, U.S. Estate (and Generation-Skipping Transfer) Tax Return; Form 709, U.S. Gift (and Generation-Skipping Transfer) Tax Return; Form 1120-ND, Return for Nuclear Decommissioning Funds and Certain Related Persons; Form 3520, Annual Return To Report Transactions With Foreign Trusts and Receipt of Certain Foreign Gifts; and Form 3520-A, Annual Information Return of Foreign Trust With a U.S. Owner

Due to the Coronavirus pandemic, millions of Americans received or are currently receiving unemployment compensation, many of them for the first time. It’s important for these individuals to know that unemployment compensation is taxable.

Newsom signed AB 1867 today, legislation that immediately extends critical paid sick days protections to California’s workforce.

New Developments – 9/9/20

Governor Newsom signed bills today to support small businesses:

  • SB 1447 – allows businesses with fewer than 100 employees to claim a credit against their personal and corporate income taxes each taxable year, beginning this year, of $1,000 for each “net increase (FTE) in qualified employees”, up to $100,000. New employees must be hired during July 1 to Nov 30 so a portion of the eligible hiring period has passed. This credit offers a benefit to unprofitable businesses as it can be used to offset sales and use tax liability starting in 2021. To claim the credit taxpayers must register their request with CDTFA. The application period is scheduled to open Dec 1, 2020.
  • AB 1577 – allows small businesses to exclude amounts of PPP loan forgiveness from gross income for state taxes but expenses paid with forgiven amounts are not deductible. This bill was enacted to create conformity with federal law and current IRS guidance.
  • SB 115 – accelerates $561 million in state bond funding to help jumpstart construction projects
  • Governor Newsom Signs Bills to Support Small Businesses Grappling with Impact of COVID-19 Pandemic, Bolster Economic Recovery

Santa Clara County is now in the red tier, according to the State’s Blueprint for a Safer Economy framework for its COVID-19 response.

  • The following businesses and activities are allowed to resume:
    • Personal care services: allowed to open indoors with modifications
    • Museums, zoos, aquariums: allowed to open indoors at 25% capacity
    • Gyms and fitness centers: allowed to open indoors at 10% capacity
    • Shopping malls: allowed to open indoors at 50% capacity (previously open at 25% capacity)
  • K-12 schools can open after the County has been in the Red Tier for 14 days.
  • Indoor dining, indoor movie theaters, and indoor gatherings remain prohibited in Santa Clara County

New Developments – 9/8/20

AICPA lists factors employers should consider when deciding to implement the temporary (Sept-Dec) deferral of employee social security tax :

IRS releases draft of new Form 941 to account for temporary deferral of employee social security tax

Later this month, the IRS will start mailing letters to roughly nine million Americans who typically don’t file federal income tax returns who may be eligible for, but have not registered to claim, an Economic Impact Payment.

AB 2257 – Gov. Newsom has signed into law a bill that exempts more occupations from AB 5. The changes in AB 2257 exempt many occupations in media, music and other industries from AB 5’s requirements.

New relief for renters, homeowners, and small landlords. Legislation took effect August 31 that protects many Californians who are unable to pay their rent or mortgage because of the COVID-19 pandemic.

The Yerba Buena Community Benefit District (YBCBD) has established a Small Business Support Fund to provide grants of up to $2,500 to small, ground-level, storefront businesses in the Yerba Buena neighborhood of San Francisco. Grants will be awarded on a first-come, first-served basis until all funds are expended.

Employment Development Department – Updated Top Unemployment Insurance FAQs of the Week (updated Sept. 4):

New Developments – 9/2/20

The IRS has reopened the registration period for individuals who receive Social Security, Supplemental Security Income, Railroad Retirement or veteran’s benefits, but didn’t receive $500 per child earlier this year when they received their own Economic Impact Payment.

On September 1, the Santa Clara City Council approved funding for several programs. After securing funds from the CARES Act fund of $1.59 million and allocating an additional $1.5 million, the Council is now investing a total of $3.1 million in more local relief efforts to support residents and businesses in Santa Clara.

Nongovernmental health care entities’ pandemic-related issues Technical Q&A:

COVID-19 work changes create cyber-security issues:

New Developments – 9/1/20

The new charitable deduction for non-itemizers – A one-time deduction of up to $300 can be taken directly on individual returns.

Most states rely in some form on the Code for administrative ease, but they do not automatically conform to all its provisions and, therefore, may or may not conform to each Code-related provision of the CARES Act:

The IRS is holding a free webinar designed to give an overview of Opportunity Zones and to discuss related tax benefits for investors.

Governor Newsom is expected to sign a COVID-19 retirement plan loan conformity bill – AB 276 conforms to the CARES Act provision that increases the amount of loans that may be taken from qualified plans from $50,000 to $100,000 without the withdrawal being considered a taxable distribution.

Californians who haven’t paid their rent since March 1 because of the coronavirus can stay in their homes through at least Jan. 31 under a new state law Gov. Gavin Newsom signed late Monday — one day before statewide eviction protections are set to expire.

Mayor London Breed announced the delivery of over one million surgical masks, 600,000 face shields, and 150,000 bottles of hand sanitizer for distribution to businesses and workers in the city’s most vulnerable communities, including in the Mission, Bayview, and Chinatown.

Mayor London Breed announced the next steps in San Francisco’s reopening of businesses and activities.

New Developments – 8/31/20

IRS issued very limited guidance for employers to comply with the August 8th Executive Memorandum deferring employee social security tax withholding and deposits. Tax is deferred for Sept 1 to Dec 31st and needs to be deposited from Jan 1 to April 30, 2021. Employee’s tax is deferred but employer remains liable for the deposits owed in 2021. Treasury Secretary Munchin has indicate this deferral can be elective for employers. Guidance does not indicate if it is elective for employers and/or employees. It is also unclear how the tax will be paid if employees are no longer employed in 2021 or the employer ceases business.

Lenders should account for the forgivable portion of a Paycheck Protection Program (PPP) loan as an interest-bearing loan until the receipt of payment for that loan from the SBA, according to a Technical Question and Answer posted by the AICPA.

The IRS announced it will temporarily allow the use of digital signatures on certain forms that cannot be filed electronically.

In mid-August interest payments were sent to nearly 14 million individual taxpayers. People who got these payments filed their 2019 federal income tax returns by the July 15 deadline and were owed refunds.

IRS released additional guidance outlining the tax filing and payment relief for taxpayers impacted by California wildfires.

PPP Loan Forgiveness Conformity Bill (AB 1577) has been approved by the legislature and sent to the Governor for signature. Bill provides that PPP Loan forgiveness would be excluded from taxable income. The bill also specifies that expenses paid with forgiven loan proceeds would not be deductible.

California has a new blueprint for reducing COVID-19 in the state with revised criteria for loosening and tightening restrictions on activities. Find out how businesses and activities can open in your county on August 31:

LISC Small Business Relief Grants – The Round 6 application period is now open. Applications must be submitted by Monday, September 7th at 8:59PM PT.

New Developments – 8/27/20

President Trump issued another Executive Order requesting Government agencies opening new offices to look at opening in Opportunity Zones:

The IRS will soon send catch-up Economic Impact Payment checks to about 50,000 individuals whose portion of the EIP was diverted to pay their spouse’s past-due child support.

The FHFA announced that Fannie Mae and Freddie Mac will extend buying qualified loans in forbearance and several loan origination flexibilities until September 30, 2020.

California released new guidance for keeping kids safe in educational and supervised care settings when they are in a cohort. A cohort is a stable group of no more than 14 children with no more than two supervising adults.

Employment Development Department – Updated Top Unemployment Insurance FAQs of the Week (updated Aug. 26):

San Mateo County is making grants to licensed child care centers and family child care homes as well as public recreation and school district-operated programs in the county that have been adversely impacted by COVID-19. Grants will cover one month of operating expenses (up to $10,000 for family child care homes and $55,000 for child care centers).

New Developments – 8/25/20

PPP Loans: Treasury Department released new IFR on Aug. 24 addressing related party issues:

  • Owner-employees with less than a 5 percent ownership stake in a C- or S-Corporation are not subject to the owner-employee compensation rule
  • The amount of loan forgiveness requested for non-payroll costs may not include any amount attributable to the business operation of a tenant or sub-tenant of the PPP borrower or, for home-based businesses, household expenses
    • Example: A borrower rents an office building for $10,000 per month and subleases out a portion of the space to other businesses for $2,500 per month. Only $7,500 per month is eligible for loan forgiveness.
    • Example: A borrower works out of their home. When determining the amount of nonpayroll costs that are eligible for loan forgiveness, the borrower may include only the share of covered expenses that were deductible on the borrower’s 2019 tax filings, or if a new business, the borrower’s expected 2020 tax filings
  • Rent payments to a related party are eligible for loan forgiveness as long as:
    • the amount of loan forgiveness requested for rent /lease payments to a related party is no more than the amount of mortgage interest owed on the property during the Covered Period that is attributable to the space being rented by the business, and 
    • the lease/mortgage were entered into prior to February 15, 2020
  • Mortgage interest payments to a related party are not eligible for forgiveness
  • IFR – Business Loan Program Temporary Changes; Paycheck Protection Program – Treatment of Owners and Forgiveness of Certain Nonpayroll Cost
  • Journal of Accountancy – New PPP forgiveness guidance addresses owner-employee compensation, rent-related costs

Facebook is making grants of up to $4,000 (comprising $2,500 in cash and $1,500 in optional advertising credits to use on the Facebook platform) to Black-owned small businesses across the country that have experienced challenges from COVID-19. Applications are due by Monday, August 31 at 6PM PDT:

Covered California has opened a special enrollment period for those affected by the wildfires, pandemic, job loss through Aug. 31:

New Developments – 8/24/20

Victims of the California wildfires that began Aug. 14 now have until Dec. 15, 2020 to file various individual and business tax returns and make tax payments. Currently, this includes Lake, Monterey, Napa, San Mateo, Santa Cruz, Solano, Sonoma and Yolo counties in California, but taxpayers in localities added later to the disaster area will automatically receive the same filing and payment relief.

IRS announced on Friday that it will stop sending CP-501, CP-503 and CP-504 Notices to taxpayers due to the large backlog of unprocessed mail. IRS will evaluate when it will resume mailing these Notices.

Journal of Accountancy podcast: Teleworking and state and local taxes – the huge implications for state and local taxes raised by workers more often untethered from the employer’s physical location, sometimes in another state.

The President’s Memo on Aug 8th authorized the Lost Wage Assistance program to give unemployed workers an extra $400 weekly benefit. CA has been approved for $4.5 billion of funding to provide workers a $300 benefit. CA will not be providing any portion of the extra $100 benefit that states must fund. It is uncertain when the benefit will be received by workers currently collecting benefits and how long this extra benefit will last (EDD indicated at least 3 weeks).

New Developments – 8/20/20

The IRS urges taxpayers to be on the lookout for scam artists trying to use the economic impact payments as cover for schemes to steal personal information and money. The IRS doesn’t initiate contact with taxpayers by email, text messages or social media channels to request personal or financial information – even related to the economic impact payments.

If a taxpayer used the Non-Filers tool to register for an Economic Impact Payment, they cannot now file their tax return electronically. The Economic Impact Payment’s Non-Filers tool was not intended for use by taxpayers who also needed to file a tax return for tax year 2019.

The LISC-Lowe’s Neighborhood Business Grants program will be making grants ranging from $5,000 to $20,000 to small businesses in the San Francisco Bay Area (as well as other select locations across the country).

New Developments – 8/18/20

IRS announces taxpayers can (finally) e-file amended individual income tax returns (Form 1040X). Currently, only Forms 1040X for tax year 2019 can be e-filed but the IRS will expand program to include other years.

The IRS and the Treasury Department plan to send interest payments averaging $18 to approximately 13.9 million individual taxpayers who filed their 2019 federal income tax returns on time and are receiving tax refunds.

With millions of Americans now receiving taxable unemployment compensation, many of them for the first time, the IRS today reminded people receiving unemployment compensation that they can have tax withheld from their benefits now to help avoid owing taxes on this income when they file their federal income tax return next year.

The Ladies Who Launch Program provides grants ranging from $5,000 to $25,000 to women entrepreneurs, along with a year-long program providing mentorship and advisory support.

Hello Alice Food and Beverage Recovery Sprint: The food & beverage industry was one of the hardest-hit industries during the pandemic. Participants will join fellow small business owners and experts from PepsiCo for a free three-week Sprint starting on August 10 and going through August 28, to learn all about recovery and the necessary pivots in order to thrive in the food & beverage industry post COVID-19. Sprints are free and fast-paced educational programs on Hello Alice.

New Developments – 8/17/20

IRS updates status of operations:

  • Power of Attorney processing is taking 15 days rather than 5 days. IRS is working on accepting digital signatures by early 2021.
  • Payments submitted to IRS may still be unopened. They will be posted as of date received not the date processed
  • Continued delay in responding to taxpayer correspondence
  • Continued delay in processing paper-filed returns
  • IRS Operations During COVID-19: Mission-critical functions continue

2020 Required Minimum Distributions (RMDs) – If you have taken required minimum distributions from a retirement account in 2020 or are planning to, don’t miss this relief provision and potential tax-saving opportunity. Action required by August 31, 2020.

New Developments – 8/14/20

The SBA announced the updated interest rates for the 504 Loan Program offered by Certified Development Companies (CDC). Small businesses can now apply for the lowest interest rates since July 2018 as the program is now allowing 20 and 25-year interest rates at 2.214% and 2.269%.

The IRS continues to look for ways to help people who were unable to provide their information in time to receive Economic Impact Payments for their children. As part of that effort, the IRS announced today it will reopen the registration period for federal beneficiaries who didn’t receive $500 per child payments earlier this year.

San Jose Al Fresco Expands: New City-owned public space is being made available for business operations — Parks and Plazas, City-owned Parking Lots, and Street Closures.

The City of San Jose offers a Business Tax Amnesty Program to individuals and entities that have never registered their business, are behind on paying their business tax, or have underreported their employee counts, square footage, or number of rental properties. The period to apply for Amnesty runs through September 30, 2020.

Santa Clara County has extended an eviction moratorium on commercial tenants through August 31, 2020, though it may be extended by the County Board of Supervisors.

You can now search the County of Santa Clara’s business database to see which businesses are following Social Distancing Protocols.

New Developments – 8/12/20

Updated PPP FAQs address health insurance, EIDL, other issues:

Along with more than 180 organizations, the AICPA signed a letter requesting PPP loan forgiveness-related expenses remain deductible.

Economic Impact Payment Updates:

  • The IRS will continue to process 2019 tax returns and issue payments to individuals who have not already received a payment and have not already been determined to be ineligible based on their 2018 tax returns.
  • If the IRS has determined that a taxpayer was not eligible for a payment based on the taxpayer’s 2018 tax return, and then the taxpayer files a 2019 tax return that shows eligibility, the IRS will not issue a payment in 2020 based on the 2019 tax return.
  • If the IRS used an individual’s 2018 tax return to determine the amount of the individual’s payment, and the individual later files a 2019 tax return that indicates the individual is eligible for a higher amount, the IRS will not issue an additional payment for the difference.
  • IRS Economic Impact Payment Information Center

Pandemic-related FAQs for health care entities:

Now is a good time for people to begin thinking about next year’s tax return. Here are some suggestions to help taxpayers keep good records:

San Jose Community Development Block Grant (CDBG) Microenterprise Grant Program, administered by Opportunity Fund, will make grants of $15,000 to eligible small businesses physically located in the City of San Jose. Applications are due by Friday, August 28 at 5:00 PM:

The Santa Clara City Manager recently issued direction to the Community Development Department to allow the outdoor operation of salons and recreational uses in Santa Clara that are in compliance with State and County health safety protocols.

Santa Clara County will impose fines on businesses and individuals that violate health orders, following the lead of other Bay Area neighbors to enforce mask-wearing, social distancing and other rules aimed at stopping the spread of coronavirus.

New Developments – 8/10/20

On August 8, 2020, the President issued 1 executive order and 3 memorandums to provide financial relief as negotiations for another stimulus bill stalled. The legality of these orders may be challenged. The President’s actions will:

  1. Direct the Treasury Secretary to use his authority to defer employee portion of social security tax (6.20%) effective Sept 1 to Dec 31, 2020 for employees earning less than $104K annualized. Treasury Secretary is instructed to determine how to make this deferral permanent.
  2. Provide a $400 weekly supplemental unemployment benefit with states funding 25%.  Many questions remain unanswered—can unused FEMA funds be used to fund this program; how will states provide funding for this when they are looking to the federal government for funding to supplement their existing budget shortfalls; will the unemployed still get $300 if a state does not participate in the program.
  3. Defer student loan payments an additional 3 months to December 31, 2020
  4. Provide “assistance” to renters and homeowners by setting vague guidelines for HUD and Treasury Department to establish “assistance” programs and CDC and HHS to consider measures halting evictions.

The SBA PPP Forgiveness Platform went live August 10 to begin accepting Lender submissions. Major banks are delaying accepting applications from their borrowers.

Taxpayers requesting an automatic tax accounting method change need to include their original Form 3115 with the tax return for the year of change. Effective July 31, the required duplicate copy may be FAXed to the IRS instead of mailing it.

The state has issued interim guidelines for colleges and universities so they can reduce risk if in-person instruction resumes.

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

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.

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.

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:

New Developments – 7/23/20

The next COVID-19 Stimulus Bill is not expected to pass before August. Topics in discussion include:

  • Second stimulus check; Expanded unemployment; Aid for state and local governments; Payroll tax cut; Reopening schools; Liability protection for businesses and employers; Second round of PPP Loans with stricter eligibility requirements; Automatic forgiveness of existing “small” PPP Loans
  • Forbes: Second Stimulus: The Latest On Government Relief

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

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:

New Developments – 7/20/20

While you may be anxious to apply for PPP forgiveness, here are five factors affecting the forgiveness application process:

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.

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.

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.

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.

Access to Capital in Response to COVID-19 – Free webinar for small business owners and nonprofits. The webinar will cover helpful tips on navigating through the application process for Small Business Administration (SBA) Microloan, 7(a) & 504 loan programs:

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

AICPA is sponsoring a scholarship for CPA exam candidates to help offset the cost of the exam and prep classes:

California has issued new guidance for personal care services that are permitted to operate outdoors.

New Developments – 7/14/20

Santa Clara County Public Health Department confirmed with the State that Santa Clara County will be required to close additional indoor operations aligned with those counties on the Monitoring List for 3 consecutive days, effective July 15. Industries include, worship services, fitness centers, offices in nonessential sectors, nail salons, tattoo parlors, hair salons, shopping malls.

In about two weeks, millions of Americans could lose $600 a week in extra federal unemployment benefits:

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.

New Developments – 7/13/20

The SBA closed the EIDL Advance program after granting $20 billion in emergency funding as of Saturday. 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.

Effective immediately, CA is closing some indoor business operations statewide and additional indoor business operations in counties on the Monitoring List for 3 consecutive days.

  • Statewide indoor closures include restaurants, bars and breweries, wineries & tasting rooms, movie theaters, family entertainment centers, zoos and museums, and cardrooms.
  • CA County Variance Info

New Developments – 7/10/20

The California Franchise Tax Board (FTB) updated information regarding combining estimated tax payments for individual income and corporate income tax purposes. The information includes:

  • Taxpayers can combine the first and second quarterly estimated tax into one payment which is due on July 15;
  • If taxpayers’ combined estimated tax payment is more than $20,000, they must make all future payments to the FTB electronically; and
  • Taxpayers may request a waiver of the electronic payment requirement by completing FTB 4107
  • COVID-19 frequently asked questions for tax relief and assistance

The Senate and House passed legislation to help nonprofits during the COVID-19 pandemic by ensuring they receive federal help for unemployment payments upfront, instead of being reimbursed later. Next, the President must sign off on it.

New Developments – 7/9/20

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:

IRS is reminding people that contributions to traditional Individual Retirement Arrangements (IRAs) made by the postponed tax return due date of July 15, 2020, are deductible on a 2019 tax return.

The Federal Housing Finance Agency (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.

FASB issued a proposal on 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.

New Developments – 7/8/20

People First Initiative – 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.

New Developments – 7/7/20

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.

The County of Santa Clara announced the State of California approved its variance this morning, meaning: outdoor dining can continue in Santa Clara County and the new local health order announced by County Public Health Officer Dr. Sara Cody last week will now go into effect on Monday, July 13.

New Developments – 7/6/20

The Paycheck Protection Program has reopened after President Trump signed legislation extending the program. The new deadline to apply for a loan is August 8, 2020. There is approximately $129 billion in funding remaining.

The SBA released details of all PPP loans, $150,000 and above. Details include: borrower names, addresses, type of entity, lender, number of jobs retained and range of loan proceeds.

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.

The Red Backpack Fund’s next round of applications has opened. Every month (April – August), GlobalGiving vets applications and selects 200 new Red Backpack Fund grantees. The next and final round will be Aug. 3 – 10, 2020. Majority-women owned and led businesses and nonprofits in the U.S., with annual revenues less than $5M, at least one paid employee, and with fewer than 50 individuals on staff, are eligible to apply.

New Developments – 7/2/20

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

Taxpayers who were mailed a debit card for their Economic Impact Payment but haven’t activated it yet will receive a letter in early July reminding them that they can activate it to access their money or obtain a free replacement card if needed.

Verizon is calling on woman-owned small businesses to deliver virtual classes and events. Selected small business owners will receive $5,000 to deliver two 30- to 60-minute live virtual events, which will be recorded and distributed broadly to Verizon’s employee base.

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

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.

New Developments – 7/1/20

The Senate and the House approved a 5-week PPP extension, which would extend the application period to Aug. 8. Next, it goes to the President for approval, before going into effect.

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:

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.

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

Newsom has ordered a three-week closure of bars and indoor operations of restaurants and certain other businesses in Santa Clara, Contra Costa and 17 other counties as the state deals with increasing cases of COVID-19. The order also covers indoor operations of movie theaters, wineries, tasting rooms, family entertainment centers, zoos, museums and cardrooms. Bars in these 19 counties must close all operations.