New Paid Leave Requirements

Starting April 1, 2020, businesses with fewer than 500 employees will need to provide employees with paid time off a variety of reasons relating to the COVID-19 pandemic. This is in response to the Families First Coronavirus Response Act. Click here to read more about the U.S. Department of Labor’s employer requirements.

Also you need to post notice of these changes in a similar manner to other poster requirements. If your team is working remotely, you need to email them the notice.

Click here to read the U.S. Department of Labor’s FAQs about the new requirements.

Employee Retention Program

The Treasury Department’s Employee Retention Credit program launched this week. The program is designed to encourage businesses that don’t qualify for the SBA’s Payment Protection Program to keep employees on their payrolls.

Learn more about this loan here.

Employee Retention Credit FAQs

(Source United States Senate Committee on Finance)

What businesses qualify for the employee retention credit? Any employer, regardless of size, is eligible for the credit during calendar year 2020 if the business: (1) is fully or partially suspended due to a governmental order related to COVID-19, or (2) experiences a significant decline in gross receipts (i.e., a reduction of 50 percent of gross receipts from the same quarter in 2019). The credit also applies to tax-exempt organizations if the operation of the organization is fully or partially suspended due to the circumstances described in (1) above. The credit generally does not apply to governmental employers, including the U.S. Government, state and local governments, or any agency of the foregoing.

Is the credit limited to businesses affected by COVID-19? Yes. The credit only applies to qualified wages paid by a business whose operations have been fully or partially suspended pursuant to a governmental order related to COVID-19, or have experienced a significant decline (i.e., 50 percent) in gross receipts, as described above, during the period from March 13, 2020 through December 31, 2020.

Does the credit only apply to small businesses? No. For eligible employers with 100 or fewer full-time employees, the credit applies to all employee wages. In contrast, eligible employers with greater than 100 full-time employees may only take into account qualified wages paid to employees when they are not providing services due to a governmental order related to COVID-19.

How much is the credit? How is it calculated? The credit is equal to 50 percent of the qualified wages paid by the employer with respect to each employee. The amount of qualified wages with respect to any employee for all calendar quarters in 2020 cannot exceed $10,000. In other words, there is a $5,000 total cap on the credit per employee for the 2020 tax year.

How much of an employee’s compensation counts toward the credit? Do health care costs count? The definition of qualified wages differs depending on the size of the business. For employers with more than 100 full-time employees, qualified wages include wages paid to employees when they are not providing services due to a governmental order related to COVID-19. If an employee is performing services on a reduced schedule, wages paid to the employee are only treated as qualified wages if they exceed what the employee would have otherwise been paid for the services performed. In that case, employers will receive a credit for the difference between the total wages paid to the employee and the amount the employer would have paid for the reduced hours or services actually provided by the employee.

For eligible employers with 100 or fewer full-time employees, all employee wages qualify for the credit, whether or not the employee is providing services to the employer.

Regardless of business size, qualified wages include certain healthcare costs paid by an employer to maintain a group health plan.

Qualified wages do not include wages taken into account for purposes of the payroll tax credit for required paid sick leave or paid family leave as provided in Division G of H.R. 6201, the Families First Coronavirus Response Act (FFCRA). This exception prevents both credits from applying to the same wages paid by an employer.

Does it matter if the business is a corporation? Does it apply to limited liability companies (LLCs), S corporations, partnerships, and sole proprietors? The credit is available to corporations as well as pass-through entities, such as LLCs, S corporations, partnerships, and sole proprietors. The credit also is available to most tax-exempt organizations. Although the credit is available to all entity types, the business must meet the eligibility requirements – see Q&A1 above.

Do I have to wait until my business files its 2020 tax return to claim the credit? No. The tax credit may be claimed against the employer portion of employment taxes, including Social Security and Railroad Retirement payroll taxes. To the extent the credit exceeds the employer portion of employment taxes due, the credit is treated as an overpayment and is refundable to the employer. The IRS is expected to provide guidance regarding the process for claiming the credit and receiving the refund. See Coronavirus Tax Relief on the IRS.gov website.

Does the business have to pay back the credit? No. As long as the employer meets the requirements for the credit (described in the Q&As above), the employer does not have to repay the credit or the resulting refunds.

What if the business claims the FFCRA credit for mandatory sick leave and/or family leave? If the business claims the FFCRA credit for mandatory sick leave and/or family leave, the wages associated with the FFCRA credit are not eligible as qualified wages for the employee retention credit. This prevents both credits from applying to the same wages paid by an employer.

Is the credit available if the business receives one of the new SBA loans under the CARES Act? The credit is not available to employers receiving a small business interruption loan under the SBA’s Paycheck Protection Program (CARES Act section 1102).

How long is the credit available? The credit is available for qualified wages paid from March 13, 2020 through December 31, 2020.

Where can I get more information on the Employer Retention Credit? The IRS is expected to provide guidance regarding the credit, which will be available on the IRS.gov website – see Coronavirus Tax Relief.

*The above information was prepared by Republican Finance Committee staff for informational purposes and should not be relied on for legal advice. Employers should consult the IRS or a tax advisor to address questions related to their specific circumstances.

FAQ for SBA loans and the CARES Act

The Coronavirus Aid, Relief, and Economic Security (CARES) Act allocated $350 billion to help small businesses keep workers employed amid the pandemic and economic downturn. Known as the Paycheck Protection Program, the initiative provides 100% federally guaranteed loans to small businesses.

Importantly, these loans may be forgiven if borrowers maintain their payrolls during the crisis or restore their payrolls afterward.

The administration soon will release more details including the list of lenders offering loans under the program. In the meantime, the U.S. Chamber of Commerce has issued this guide to help small businesses and self-employed individuals prepare to file for a loan.

Download the Guide and Checklist here.

Paycheck Protection Program

Under the CARES Act, the Small Business Administration is offering The Paycheck Protection Program. The program is offering small loans on favorable terms for payroll necessities. It is intended to: 1) help small businesses cover their near-term operating expenses during the worst of the crisis, and 2) provide a strong incentive for employers to retain their employees.
Click here for more information on the Paycheck Protection Program.

Investigating economic warfare actions by Saudi Arabia and Russia

Six U.S. Senators submitted a letter to The Honorable Mike Pompeo at the Secretary of State, asking him to begin investigating economic warfare actions by Saudi Arabia and Russia against the United States. This action is a critical step in restoring our nation’s oil prices to a stable level. The six senators were Sen. Kevin Cramer (R-ND), Sen. Lisa Murkowski (R-AK), Sen. Dan Sullivan (R-AK), Sen. James Inhofe (R-OK), Sen. John Hoeven (R-ND), Sen. Cindy Hyde-Smith (R-MS). You can view the entire letter here.

Summary of the Coronavirus Aid, Relief and Economic Security (CARES) Act (Senate Substitute Amendment to H.R. 748)

After countless hours of negotiation between Congressional leaders and the White House, a final deal on the third coronavirus-related bill was reached and approved by the Senate just before midnight on March 25, 2020. The Senate approved the measure with a vote of 96-0; and the House is expected to pass the bill on Friday. The nearly $2 trillion stimulus measure – the Coronavirus Aid, Relief and Economic Security (CARES) Act has relief for both the private and public sector, as well as individual Americans. Below is a summary of the CARES Act1, beginning with emergency appropriations for the various federal agencies.

Emergency Appropriations for Coronavirus Health Response and Agency Operations

The grant and loan funds contained within the CARES Act universally may be used “to prevent, prepare for, and respond to coronavirus.”

To see an overview report of the entire bill, click here. OEPA will be reviewing the CARES act and will soon release information focused on small business provisions.

SBA Disaster Loan Program

This information is correct as of 3/23/2020

Anyone interested in applying for this program will apply directly with the SBA. This loan program is NOT being funneled through Banks like the typical SBA 7A or SBA 504 loan programs are.

Click here for the SBA Disaster Loan Program.

Click here to download the presentation from SBA representatives that explains the program and provides some guidance on how to apply. Click here for a quick 3-step overview of the process.

Below is a list of required documents that SBA will ask to be provided with your application for the Disaster Loan Program.

Required Documentation

The following documents are required to process an SBA Disaster Loan Application and reach a loan decision. Your SBA Loan Officer and Case Manager will assist you to ensure that you submit the proper documentation. Approval decision and disbursement of loan funds is dependent on receipt of your documentation.

Businesses

  1. Business Loan Application (SBA Form 5) completed and signed by business applicant.
  2. IRS Form 4506-T completed and signed by Applicant business, each principal owning 20% or more of the applicant business, each general partner or managing member and, for any owner who has more than a 50% ownership in an affiliate business. (Affiliates include business parent, subsidiaries, and/or businesses with common ownership or management).
  3. Complete copies, including all schedules, of the most recent Federal income tax returns for the applicant business; an explanation if not available.
  4. Personal Financial Statement (SBA Form 413) completed, signed and dated by the applicant (if a sole proprietorship), each principal owning 20% or more of the applicant business, each general partner or managing member.
  5. Schedule of Liabilities listing all fixed debts (SBA Form 2202 may be used).
  6. Complete copies, including all schedules, of the most recent Federal income tax returns for each principal owning 20% or more of the applicant business, each general partner or managing member, and each affiliate when any owner has more than a 50% ownership in the affiliate business. Affiliates include, but are not limited to, business parents, subsidiaries, and/or other businesses with common ownership or management.
  7. If the most recent Federal income tax return has not been filed, a year-end profit and loss statement and balance sheet for that tax year is acceptable.
  8. A current year-to-date profit and loss statement (typically within 90 days)
  9. Additional Filing Requirements (SBA Form 1368) providing monthly sales figures.

Congress Reaches Agreement On A Coronavirus Relief Package: Tax Aspects Of The CARES Act

Tony Nitti | Forbes

A nation desperate for any reason for optimism got just that on Wednesday evening, with word that Congress had finally agreed upon a stimulus package designed to reverse the devastating impact of the COVID-19 pandemic. The Senate overwhelmingly passed the Coronavirus Aid, Relief, and Economic Security (CARES) Act, and the House is set to do the same on Friday, paving the way for the President to sign the bill into law.

In addition to providing a large cash infusion to hospitals and broader access to COVID-19 testing to individuals, the CARES Act aims to boost the economy with over $2 trillion in relief, ranging from individual rebates and small business loans to increased unemployment benefits and a wide variety of tax breaks.

In this space, we focus primarily on the tax aspects of legislation — and we’ll certainly do so here — but we’d be remiss if we didn’t first address, in more general terms, the most immediate forms of relief provided by the CARES Act: the individual stimulus payments and small business loan provisions.

Small Business Loans

In a move designed to keep small businesses afloat, the CARES Act provides that businesses with fewer than 500 employees — including sole proprietors and nonprofits— will have access to nearly $350 billion in loans under Section 7 of the Small Business Act during the “covered period,” which runs from February 15, 2020 through June 30, 2020. The loans, which are referred to as “paycheck protection loans” and are fully guaranteed by the federal government through December 31, 2020 (returning to an 85% guarantee for loans greater than $150,000 after that date), are generally limited to the LESSER OF:

  • the sum of 1) average monthly “payroll costs” for the 1 year period ending on the date the loan was made (an alternative calculation is available for seasonal employers) multiplied by 2.5, and 2) any disaster loan (discussed below) taken out after January 31, 2020 that has been refinanced into a paycheck protection loan, and
  • $10 million.

Payroll costs, in turn, are the sum of the following:

  • wages, commissions, salary, or similar compensation to an employee or independent contractor,
  • payment of a cash tip or equivalent,
  • payment for vacation, parental, family, medical or sick leave,
  • allowance for dismissal or separation,
  • payment for group health care benefits, including premiums,
  • payment of any retirement benefits, and
  • payment of state or local tax assessed on the compensation of employees,

Payroll costs do not include, however:

  • the compensation of any individual employee in excess of an annual salary of $100,000,
  • payroll taxes,
  • any compensation of an employee whose principal place of residence is outside the U.S., or
  • any qualified sick leave or family medical leave for which a credit is allowed under the new Coronavirus Relief Act passed last week.

Example. Rob’s Car Wash applies for a paycheck protection loan on May 1, 2020. The business had $1.2 million in payroll costs for the period May 1, 2019 through May 1, 2020, for a monthly average of $100,000. Rob’s Car Wash is entitled to a fully guaranteed federal loan —assuming it’s made before December 31, 2020 — equal to the LESSER OF:

  • $250,0000 ($100,000 in average payroll costs * 2.5), or
  • $10 million.

The loans will have a maximum maturity of 10 years and an interest rate not to exceed 4%. Proceeds may be used to cover payroll, mortgage payments, rent, utilities, and any other debt service requirements. The standard fees imposed under Section 7 of the Small Business Act are waived, and no personal guarantee is required by the business owner.

An additional provision in the CARES Act provides for possible deferment of repayment of the loans for a period of at least six months, but not to exceed a year.

Read More.

Investigation Anti-dumping from Saudi Arabia & Russia

Senator Inhofe has submitted a letter to the Department of Commerce, signed by nine other oil and gas state U.S. Senators asking them to begin investigating anti-dumping actions against Saudi Arabia and Russia. Senator Inhofe was joined by Sen. Roger Wicker (R-MS), Sen. Kevin Cramer (R-ND), Sen. Lisa Murkowski (R-AK), Sen. Mike Rounds (R-SD), Sen. John Barrasso (R-WY), Sen. James Lankford (R-OK), Sen. John Hoeven (R-ND), and Sen. Dan Sullivan (R-AK). View the letter here.

We’re proud that both Oklahoma Senators have signed this letter.

Energy Sector Considered Essential Critical Infrastructure

Click HERE to read the letter from the U.S. Department of Homeland Security Cybersecurity & Infrastructure Security Agency (CISA) which has deemed U.S. oil and gas production as essential.