Do we need to formally notify SSA that we taking advantage of this provision? I just don’t want to get tax notices later on.
— Yes, we recommend formally notifying the SSA.
— I assume that the question refers to the tax credit related to sick or family leave under the Families First Coronavirus Response Act. This amount may not be used in the computation of the average monthly payroll
— It depends. If you work less than four days a week and earn $504/week or less, you may be eligible to receive partial UI benefits
It further depends on the applicable state law. New York and New Jersey, for example, offer partial unemployment benefits. I believe the individuals would also be eligible for the additional $600 per week under the CARES Act through July 31, 2020. Generally speaking, the CARES Act provides a weekly payment of $600 in addition to unemployment insurance benefits to which an individual is entitled, and the additional $600 is available through July 31, 2020.
— Generally, yes. The $600 per week under the CARES Act is available to employees in addition to unemployment insurance benefits they receive under state law. Accordingly, if an employee is eligible for partial benefits under New York law, the employee would get such partial benefits plus an additional $600 per week. Note that the additional $600 per week is only available through July 31, 2020.
— Our tax department is still reviewing this question.
be calculated individually for each company, or?
— The rules to determine whether these entities are “affiliated” are fairly complicated and heavily dependent on the individual facts. Generally, if all of the companies are owned by the same parent company or person, the companies are affiliated and the number of employees will be aggregated to determine eligibility under the PPP loan program.
— Yes, the portion of the $100,000 paid over the 8 week period after the loan is initiated is forgiven.
— Yes. In general, when an employee qualifies for leave under both the emergency paid sick leave act (EPSLA) and the emergency family and medical leave expansion act (EFMLEA), an employee may first use the two weeks of paid leave provided by the EPSLA. This use runs concurrently with the first two weeks (10 days) of unpaid leave under the EFMLEA, and then the remaining 10 weeks is paid under the EFMLEA.
— With respect to processing EPSLA or EFMLEA leave, your employee must provide you with documentation in support of paid sick leave or expanded family and medical leave, which must include a signed statement containing the following information: (1) the employee’s name; (2) the date(s) for which leave is requested;
(3) the COVID-19 qualifying reason for leave; and (4) a statement representing that the employee is unable to work or telework because of the COVID-19 qualifying reason. Additional documentation may be required depending on the reason for the leave.
If your employee provided oral statements to support their request for paid sick leave or expanded family and medical leave, you are required to document such information.
You are required to retain all of this documentation for at least 4 years. This documentation may be needed to support a later request for tax credits. A more detailed explanation of how you may claim tax credits can be found at https://www.irs.gov/forms-pubs/about-form-7200 and https://www.irs.gov/pub/irs- drop/n-20-21.pdf. You are not required to provide leave if materials sufficient to support the applicable tax credit have not been provided.
— Applications are available online at labor.ny.gov.
— Here is a link to the page with the poster, which I have also attached – https://www.dol.gov/agencies/whd/pandemic.
— There is no definitive guidance, but we suggest you take the payroll for 2019 including year-end bonuses, reducing those employees making more than $100,000 (including year-end bonuses) and reducing them to $100,000, and then dividing by 12.
— The PPP program is open for Section 501(c)(3) organizations,
— The base amount is payroll costs which include compensation, payment for vacation and leave, group health care costs, payment of any retirement benefit or severance, state and local tax assessed on the compensation of employees (limit to
$100,000 for salaries over $100,000). Rent and utilities are not included.
— Most likely yes. We recommend filing an application. The SBA application for PPP loans originally stated that borrowers with 20% or more of foreign ownership were not able to apply for loans. The new application that came out last night does not have this limitation. There is no further guidance in the Interim Final Rules regarding foreign ownership of loan applicants. Historically, the SBA has approved loans to businesses with foreign owners on a case-by-case basis depending on several factors such as physical location, payment of US taxes, etc.
— No, our view is that it must computed on the average monthly payroll for 2019. There may additional guidance from the Treasury or the SBA regarding the base measurement period.
— For EIDL loans above $25,000, the SBA will try to collateralize the loan and take a lien on the assets of the borrower and possibly the guarantor, if there is a guarantee.
— The base period for computation of the principal of the loan is the twelve months of 2019; the forgiveness period is 8 weeks after receiving the loan.
— We recommend applying for both loans as soon as possible.
— It is the average monthly payroll for 2019, multiplied by 2.5.
— At the time the loan is to be funded, you may refuse the money. In the alternative, you can receive the funds and prepay the loan with no prepayment fees.
— The PEO should be able to give you a printout that you can submit to the bank when you apply for the PPP loan.
— Yes, that is correct.
Can you ask the speaker to elaborate on this? Please ask him to explain the reason companies are not able to take advantage of the payroll tax credit under Families First Coronavirus Response Act (Act)?
FFCR Act is different from CARES Act and provide different type of assistance so I am not 100% understanding why companies are not able to take advantage of the payroll tax credit in conjunction with the PPP loan.
— To clarify, companies may not take advantage of the payroll tax credits under the CARES Act and the PPP loans. Companies may take advantage of the payroll tax credits under the FFCRA and apply for the PPP Loan, however payments for sick leave or family leave under the FFCRA are excluded from the determination of payroll costs.
I tried to fill out the application online, but when it came to the question of EIN # for the business entity, the company ID # from the foreign country doesn’t fit in the field, so I was stuck by that question.
— There is no clear guidance regarding this issue. Historically, the SBA has approved loans to businesses with foreign owners on a case-by-case basis depending on several factors such as physical location, payment of US taxes, etc. We recommend you contact the SBA directly if the application won’t process applications without EIN numbers.
— No, you may not.
— There is no definitive guidance but our view is that at no point during the covered period from February 15, 2020 to June 30, 2020 may the applicant have more than 500 employees.
— The EIDL and PPP are separate programs so you may only apply once for an EIDL loan and once for a PPP loan.
— There is no definitive guidance on this but we also assume it means currently as of the date of the application.
— Based on the current guidance, yes.
— The EIDL program is the Economic Injury Disaster Loan program and the PPP program in the Paycheck Protection program.
— Most likely yes. We recommend filing an application. The SBA application for PPP loans originally stated that borrowers with 20% or more of foreign ownership were not able to apply for loans. The new application that came out last night does not have this limitation. There is no further guidance in the Interim Final Rules regarding foreign ownership of loan applicants that came out last
night. Historically, the SBA has approved loans to businesses with foreign owners on a case-by-case basis depending on several factors such as physical location, payment of US taxes, etc.
For purposes of the PPP loans, only the number of employees counts. The application may not employ more than 500 employees, or, if applicable, the size standard in number of employees established by the SBA for the applicant’s industry.
— For purposes of the PPP loans, there is no revenue limit.