COVID-19

April 1st, 2020

WhippleWood will be hosting a presentation Friday, April 3rd at 2:30 Mountain time through Zoom to answer your questions about the CARES Act, the SBA disaster loan program, and how we can assist your small business in the application process. Below is the Zoom link:

https://zoom.us/meeting/register/vJYkde2uqj0r_Jn2GGI30uKmyWaP2yyWNg

After registering, you will receive a confirmation email containing information about joining the meeting. Please allow yourself 5-10 minutes before the beginning of the presentation to log in and resolve any technical difficulties.

If you have any questions or encounter any issues logging in, please contact Amy Eden at amy@whipplewoodcpas.com.

During the presentation, please utilize the comments function in Zoom for questions and comments.

Thank you!

–Your friends and advisors at WhippleWood CPAs

March 30th, 2020

The latest developments on the COVID-19 pandemic as of March 30th, 2020:

  • Beware of Criminals in (Virtual) IRS Clothing. Scams already are underway to defraud individuals slated to receive payments resulting from passage of the CARES Act, the Coronavirus Aid, Relief, and Economic Security Act. Because the intention is, as much as possible, to issue payments via direct deposit and use tax information from 2019 or 2018, phishing is happening via phone calls, text messages, and e-mails. The IRS will not call, text, or email you to verify banking information for stimulus payments. The messaging includes variations such as “in order to receive your/your client’s stimulus payment via direct deposit, we need you to confirm the banking information.” The information may be sought via telephone or directing victims to click on a link to a website where they enter their banking information.

The extension period for filing returns and paying taxes also provides an opportunity for criminals to take advantage of identity theft because there’s an expanded time frame before the real taxpayer files. Criminals may file fraudulent zero balance returns if it’s determined people who don’t normally file need to file a return to receive the stimulus payment. The possibility of criminals filing returns with a low balance due also is likely so that they have a filing record that can be used to allow them access to stimulus funds. A small balance due is worth it for a larger stimulus payment.

Go to https://www.consumer.ftc.gov/blog/2020/03/checks-government to see the Federal Trade Commission information on checks from the government.

  • As we continue to analyze the CARES Act, we have discovered some additional provisions we have not yet discussed that could be very helpful to some of our clients:
    • SBA Loans
      • Banks are encouraged to defer payments and extend the maturities on SBA loans other than those made under the Paycheck Protection Program. This covers loans made under §7(a), §7(m), and Title V.
      • The SBA will also make 6 months of principal, interest, and fee payments on these loans for the 6 months after the deferral period or for loans that aren’t deferred beginning immediately
      • These provisions also apply to new loans made through September 27, 2020.
    • Bankruptcy
      • CARES Act makes some changes easing the bankruptcy process. You may want to consult your lawyer regarding the Bankruptcy Act provisions to gauge the details of those changes.
    • Unemployment Insurance
      • CARES Act extends unemployment insurance to most individuals who were not previously covered by unemployment insurance and are unemployed because of the COVID-19 crisis.
      • Increases unemployment insurance payments by $600 per week.
      • Allows unemployment insurance payments to begin immediately without a waiting period starting with the first week of unemployment.
      • Extends unemployment insurance coverage for an additional 13 weeks
    • Recovery Rebates
      • Provides an individual credit of $1,200 (or $2,400 for married filing joint) plus $500 per qualifying child.
      • Credit to by paid out by IRS during 2020
      • Credit phases out starting at AGI of
        • $150,000 for married joint return taxpayers
        • $75,000 for individual taxpayers
        • $112,500 for head of household
      • Advance payment of credit will be made based on 2019 tax return or if that return has not been filed the 2018 tax return
      • We will need to do further research to determine whether the credit is recaptured if an advance payment is made and the individual does not qualify because of 2020 AGI. We assume that it is subject to recapture with the filing of the 2020 return.
    • Coronavirus Related Adjustments to Qualified Plans
      • Coronavirus Related Adjustments to Qualified Plans
      • Taxpayers who experience adverse financial consequences as a result of the effects of the Coronavirus on their employment can withdraw up to $100,000 from their qualified retirement plans (including IRAs)
      • The income from the distribution is spread into income over three years.
      • The individual has three years to repay the distribution and not be taxed on it.
      • The CARES Act also increases the amount of loans that can be taken from 401(k) plans.
      • The CARES Act waives the required minimum distributions from qualified plans for 2020.
    • Charitable Contributions Changes
      • An individual who does not itemize deductions can deduct up to $300 above the line for charitable contributions.
      • Individuals can deduct charitable contributions up to 100% of their AGI
      • Corporations charitable contribution limitation is adjusted to 25% of income (from 10%)
    • Employer Educational Assistance
      • Allows Educational Assistance Programs of employers to also make payments of principal or interest on qualified education loans incurred by employees for the education of the employee. As long as these payments fall under the other limitations they are not taxable to the employee.
    • AMT Credits for C Corporations
      • Allows C Corporations to receive a refund of all AMT Credits in 2018.
    • Student Loan Provisions
      • CARES Act suspends all payments due for part D and Part B student loans through September 30, 2020
      • No interest accrues on the loans during the suspension
    • Defined Benefit Plans
      • Extends the due date for all required defined benefit plan contributions (including for cash balance plans) for 2020 to January 1, 2021
      • Contribution amounts will need to be increased for interest
    • Home Mortgage Forbearance
      • A borrower with a federally backed mortgage loan who is experiencing a financial hardship due directly or indirect to the COVID-19 emergency can receive a forbearance on the loan. Loans include
        • FHA
        • Freddie Mac
        • Fannie Mae
        • VA
        • Department of Agriculture
        • Guaranteed under section 184 or 184A of the Housing and Community Development Act
        • Insured under section 255 of the National Housing Act
      • The forbearance is for up to 180 days and will be extended for an additional period up to 180 at the request of the borrower
      • During the forbearance period interest only accrues on the loan to the extent that it would accrue if the borrower made all payments on time
      • 30 day forbearance available for loans for multifamily properties with federally backed loans.
        • Two additional 30 day periods can be made at the request of the borrower
        • Owner cannot evict tenants or make additional charges to tenants for nonpayment of rent
        • Owner cannot require a tenant to vacate a dwelling unit while under the forbearance
    • Moratorium on Eviction Filings
      • The lessor of a covered residential property may not evict an tenant for nonpayment of rent or make additional charges for nonpayment of rent during the 120-day period beginning with the date of enactment (3/27/2020)
      • A covered property is on that participates in a covered housing program or has a federally backed mortgage loan

Let us know if you have any questions regarding today’s developments. We will continue to keep you up to date regularly.

March 27th, 2020

The latest developments on the COVID-19 pandemic as of March 27th, 2020:

The House passed and President Trump signed today the Coronavirus Aid, Relief, and Economic Security Act, or “CARES Act.” The $2.2 trillion bill establishes a $349 billion lending program for small businesses, increases unemployment insurance payments, and includes benefits for those who are unemployed because of the virus and normally would not qualify. Below is a summary of the landmark legislation:

  • SBA 7(a) Loan Program
    • SBA §7(a) Paycheck Protection Program (Loans to Small Businesses under Section 1102 of Act)
      • Loans must be made between February 15 and June 30, 2020.
      • Eligible recipients include:
        • Businesses
        • 501(c)(3) nonprofit organizations, veterans organizations, or Tribal businesses
        • Self-employed individuals
      • Employers are eligible if they have 500 or fewer employees
        • Number of employees can be higher based on NAICS Code of business
        • If NAICS code begins with 72, then number of employees is per physical location
        • Number of employees is not on FTE basis. Each employee is counted no matter how many hours they work.
      • Borrower Requirements
        • Borrower must certify that the uncertainty of current economic conditions makes the loan request necessary to support its ongoing operations
        • Borrower must acknowledge that the funds will be used to retain worker and maintain payroll or make mortgage payments, lease payments, and utility payments
        • Borrower can only have one loan for these purposes.
      • Maximum Loan Amount
        • 2.5 times the sum of monthly average payroll costs incurred for 1 year period before the date on which the loan is made
          • Seasonal employers can elect to use average from 12 week period beginning either February 15, 2019 or March 1, 2019.
        • Maximum loan amount is $10 million
        • Payroll costs include amounts paid up to a prorated amount of $100,000 per individual per year:
          • Salaries and wages
          • Cash tips or equivalent
          • PTO
          • Payments of group healthcare benefits
          • Payments of retirement benefits
          • State and local taxes on compensation (I presume this is only employer taxes)
          • Income of a sole proprietor or independent contractor
            • Self-employment earnings
            • Or wage, commission, income, or similar compensation (this seems a little vague)
        • Loan proceeds can be used to pay the following:
          • Payroll costs including group health care benefits
          • Interest on mortgage obligations
          • Rent
          • Utilities
          • Interest on other loan obligations incurred before February 15, 2020
      • Loans are non-recourse and do not require collateral
      • Maximum term is 10 years from the date that the borrower applies for loan forgiveness (see below)
      • Maximum interest rate is 4%
      • Payments on the loan are deferred for a minimum of 6 months and a maximum of 1 year.
      • There are no prepayment penalties on the loan
    • Loan Forgiveness (Section 1106 of CARES Act)
      • Covered period is the 8-week period beginning on the loan origination date
      • Amount forgiven is payments of the following during the covered period:
        • Payroll costs
        • Interest payments on mortgages
        • Rent
        • Utilities
      • Forgiveness is reduced by the reduction in FTE employees from a base period
        • Base period is either February 15, 2019 through June 30, 2019 or January 1, 2020 through February 29, 2020
        • Reduction does not apply to the extent that the employer rehires FTE employees by June 30, 2020
      • Forgiveness is also reduced by any wage reductions of 25% or greater for any employee from the most recent full payroll quarter
        • Reduction does not apply to any employee who received an annualized pay greater than $100,000 for any pay period in 2019
        • Reduction does not apply to the extent that the employer eliminates the reduction in pay by June 30, 2020
      • Forgiveness cannot exceed the principal amount of loan
      • The loan forgiveness amount is excluded from the recipient’s gross income.
  • Employee Retention Credit (Section 2301 of CARES Act)
    • Employers receiving an SBA §7(a) loan are ineligible.
    • Credit applies for periods that a trade or business is fully or partially suspended during the calendar quarters due to orders from an appropriate governmental authority and during the time period when has a significant decline in gross revenue
      • The time period begins with the first calendar quarter beginning after 2019 for which gross receipts are less than 50% of the same quarter in the prior year.
      • The time period ends at the end of the first calendar quarter when the revenues return to over 80% of the same quarter for the prior year.
    • Credit is 50% of qualified wages (including qualified health plan expenses) for each employee
      • Only the first $10,000 of wages for each employee is eligible for the credit.
      • Credit is against the employer payroll taxes but any excess credit is refundable.
      • Credit is reduced by the payroll credit for required paid sick leave
  • Delay of Payment of Employer Payroll Taxes (§2302 of CARES Act)
    • Employers receive loan forgiveness on an SBA §7(a) loan are ineligible
    • Covers employer FICA taxes from date of enactment through December 31, 2020
    • Payment is deferred until
      • December 31, 2021 for 50% of the amount deferred
      • December 31, 2021 for the remaining 50%
    • If an employer directs a PEO or payroll processing firm to defer the payments that PEO or payroll processing firm is not liable for the taxes. Only the employer is liable.
  • Modifications to Net Operating Losses (§2303 of CARES Act)
    • The law allows a five-year carryback of losses generated in 2018, 2019, and 2020.
      • A taxpayer can elect not to apply the five year carryback period. The election is to be made on the 2020 return and is irrevocable
    • For years through 2020, 100% of income can be offset by NOL carryover or carrybacks
    • Income in years after 2020 can be offset by
      • 100% of NOLS generated 2016 or prior
        • If there are income amounts not offset by 2016 and prior NOLs, that income can be offset 80% by NOLs generated 2017 and later.
  • Qualified Improvement Property (§2307 of CARES Act)
    • Changes qualified improvement property to 15 year property
    • As a result qualified improvement property is eligible for bonus depreciation
    • Change is retroactive to the adoption of the 2017 tax act
    • Prior returns can be amended to claim the depreciation

Let us know if you have any questions regarding today’s developments. We will continue to keep you up to date regularly.

March 26th, 2020

In anticipation of the Coronavirus Aid, Relief, and Economic Security (CARES) Act, you should consider submitting application information to get a jump start on the process for obtaining an SBA loan under the CARES Act. An overwhelming response is expected when the program is available so anything that can be done to be ahead of the curve should be.

Since the corresponding SBA regulation under the CARES Act hasn’t been written yet, we don’t know the exact or final requirements. Once the legislation is approved, SBA will finalize regulations and requirements to access the funding. Any additional information will be collected at that time and loans will be processed in the order complete applications are received. Following is the checklist of information required to get started:

  • 2019, 2018, and 2017 Business Federal Income Tax Returns (complete copies)
    • If 2019 Business Tax Returns are not available, provide a 12/31/2019 Balance Sheet and Profit & Loss and a 2016 Business Tax Return
  • 2019, 2018, and 2017 Personal Federal Income Tax Returns for all principals who own 20% or more of the business
    • If 2019 Personal Returns are not available, provide the 2016 Return along with all W-2’s and 1099’s for 2019
  • Current Personal Financial Statement from any owner of 20% of more of the business
  • SBA Initial Information Form
  • Business Debt Schedule

If available, include the following:

  • 02/29/2020 Business Financial Statements (Balance Sheet, Year-to-Date Profit & Loss, and Aging of Accounts Receivable & Payable)
    • Internally prepared is acceptable, does not need to be CPA Compiled

WhippleWood will be hosting a webinar tomorrow, March 27th, at 2:00 Mountain time through Zoom to answer your questions about the CARES Act and the SBA disaster loan program, and how we can assist your small business in the application process. Below is the Zoom link and meeting info:

https://zoom.us/j/865511999?pwd=MVQyWDJMamxsVWJBU2g4Nm1kQVRIUT09

Meeting ID: 865 511 999

Password: 510602

One tap mobile

+16699006833,,865511999#

March 25th, 2020

The latest developments on the COVID-19 pandemic as of March 25th, 2020:

The Senate is expected to pass tonight The Keeping American Workers Paid and Employed Act. It would provide $377 billion to help prevent workers from losing their jobs and small businesses from going under due to economic losses caused by the COVID-19 pandemic. The Paycheck Protection Program would provide 8 weeks of cash-flow assistance through 100 percent federally guaranteed loans to small employers who maintain their payroll during this emergency. If the employer maintains its payroll, then the portion of the loan used for covered payroll costs, interest on mortgage obligations, rent, and utilities would be forgiven, which would help workers to remain employed and affected small businesses and our economy to recover quickly from this crisis. This proposal would be retroactive to February 15, 2020 to help bring workers who may have already been laid off back onto payrolls.

  • Paycheck Protection Program
    • The bill would provide $350 billion to support loans through a new Paycheck Protection Program for:
      • Small employers with 500 employees or fewer, as well as those that meet the current Small Business Administration(SBA) size standards;
      • Self-employed individuals and “gig economy” individuals; and
      • Certain nonprofits, including 501(c)(3) organizations and 501(c)(19) veteran organizations, and tribal business concerns with under 500 employees.
    • The size of the loans would equal 250 percent of an employer’s average monthly payroll. The maximum loan amount would be $10 million.
    • Covered payroll costs include salary, wages, and payment of cash tips (up to an annual rate of pay of $100,000); employee group health care benefits, including insurance premiums; retirement contributions; and covered leave.
    • The cost of participation in the program would be reduced for both borrowers and lenders by providing fee waivers, an automatic deferment of payments for one year, and no prepayment penalties.
    • Loans would be available immediately through more than 800 existing SBA-certified lenders, including banks, credit unions, and other financial institutions, and SBA would be required to streamline the process to bring additional lenders into the program.
    • The Treasury Secretary would be authorized to expedite the addition of new lenders and make further enhancements to quickly expedite delivery of capital to small employers.
    • The maximum loan amount for SBA Express loans would be increased from $350,000 to $1 million. Express loans provide borrowers with revolving lines of credit for working capital purposes.
  • Entrepreneurial Assistance
    • The bill would provide $265 million for grants to SBA resource partners, including Small Business Development Centers and Women’s Business Centers, to offer counseling, training, and related assistance to small businesses affected by COVID-19.
    • $10 million would be provided for the Minority Business Development Agency to provide these services through Minority Business Centers and Minority Chambers of Commerce.
  • Emergency EIDL Grants
    • The bill would expand eligibility for entities suffering economic harm due to COVID-19 to access SBA’s Economic Injury Disaster Loans (EIDL), while also giving SBA more flexibility to process and disperse small dollar loans.
    • The bill would allow businesses that apply for an EIDL expedited access to capital through an Emergency Grant—an advance of $10,000 within three days to maintain payroll, provide paid sick leave, and to service other debt obligations.
    • $10 billion would be provided to support the expanded EIDL program.
  • Small Business Debt Relief
    • The bill would require SBA to pay all principal, interest, and fees on all existing SBA loan products, including 7(a), Community Advantage, 504, and Microloan programs, for six months to provide relief to small businesses negatively affected by COVID-19.
    • $17 billion would be provided to implement this section.

Let us know if you have any questions regarding today’s developments. We will continue to keep you up to date regularly.


Today Congress reached agreement on a COVID-19 relief bill, which likely will be placed into law within the next 48 hours.

Included in this bill will be $350 billion of relief for small businesses. The best information that we have is that small businesses will be eligible to apply for a 7a SBA loan through their bank that will be 90% guaranteed by the government. The goal is to turn around these loans in days. This loan is to cover payroll and other costs specific to the statute. There is a forgivable portion of the loan that will be triggered under specific conditions, but we do not know many specifics at this time. Please stand by and reply to this email with a simple “Yes, I would like to engage WhippleWood in helping me with the SBA 7a loan” if you are going to need help.

We do not know our exact process yet, but we expect to ask for a retainer to help clients with the loan. As we have hundreds of small business clients, our plan is to help every one of our clients as needed. We expect we will ramp up quickly and become experts on this process within a few days. We expect the fees for this service to be a minimum of $3,500.

Alternately, you can work with your bank directly and get the loan on your own. We can provide you tax return information and financials through our portal and will have our firm coordinators help you with access if you have trouble. Please call our main line (303-989-7600) to request help.

At a minimum, you will need your latest personal and business financials statements and tax returns along with historical information. We are here to help you in any way we can, so please let us know what we can do for you.

March 24th, 2020

The latest developments on the COVID-19 pandemic as of March 24th, 2020:

  • State tax day postponements. After the Treasury department announced its postponement of the 4/15 tax deadline, some states followed suit. Some have not. Below is a summary of whether states have adjusted their deadline to 7/15:
STATE PAYMENTS RETURNS NOTES
Alabama Yes Yes
Alaska No No
Arizona Yes Yes
Arkansas Yes Yes Individuals only
California Yes Yes
Colorado Yes Yes
Connecticut Yes Yes
Delaware Yes Yes
Florida No No Governor said FL would be “flexible”
Georgia Yes Yes
Hawaii No No
Idaho No No Both postponed to 6/15
Illinois No No
Indiana Yes Yes
Iowa Yes Yes Postponed to 7/31
Kansas Yes Yes
Kentucky Yes Yes
Louisiana Yes Yes
Maine No No
Maryland Yes Yes
Massachusetts No No
Michigan No No
Minnesota Yes Yes
Mississippi No No Both postponed to 5/15
Missouri Yes Yes
Montana Yes Yes Individuals only
Nebraska Yes Yes
Nevada No No No personal income tax
New Hampshire No No
New Jersey No No Bill awaiting governor signature
New Mexico Yes Yes Postponed to 7/25
New York Yes Yes Per Budget Director
North Carolina Yes Yes
North Dakota Yes Yes
Ohio No No State is considering
Oklahoma Yes Yes
Oregon Yes Yes Individuals only
Pennsylvania Yes Yes Individuals only
Rhode Island Yes Yes
South Carolina Yes Yes
South Dakota No No No personal income tax
Tennessee No No
Texas No No No personal income tax
Utah Yes Yes
Vermont Yes Yes
Virginia Yes No
Washington N/A N/A no income tax
West Virginia No No
Wisconsin Yes Yes
Wyoming N/A N/A no income tax
District of Columbia Yes Yes

Let us know if you have any questions regarding today’s developments. We will continue to keep you up to date regularly.

March 23rd, 2020

The latest developments on the COVID-19 pandemic as of March 23rd, 2020:

  • Sick leave credit clarification. The Families First Coronavirus Response Act takes effect on April 2 and covers all companies with up to 500 employees. The employee has to use 10 work days of unpaid leave or other PTO before the employer is eligible to take the credit for that employee. As a result, an employee is not eligible to start accruing the benefits for the credit until April 16 in most cases. Once the employer has pay periods that include days where the employee is eligible, that employer can begin reducing the payroll deposits by the amount of credit that applies to those pay periods.
  • And another. Employers will be able to offset both employer taxes and employee withholding deposits with the sick leave credit. Thus, they can offset their entire 941 liability with the credit. The IRS also announced that they will have an expedited refund process for employers who’s credit exceeds their deposit liability. They expect to process these refunds within two weeks from the filing date.
  • Beware of unemployment scams. Be sure to carefully review unemployment documents you receive from your state department of labor. The documents should list only those employees who should actually receive unemployment benefits. You have a limited time to file an appeal. In Colorado, it must be received by the state within 20 calendar days of the date the Notice of Decision was mailed. If the 20th calendar day is a Saturday, Sunday, or legal holiday, the due date of the appeal becomes the next business day.
  • Update on postponed tax payments. Friday’s announcement that the 4/15 tax deadline had been postponed to 7/15 left some unanswered questions, one of which was the affect on the previous decision to allow deferral to 7/15 of tax payments up to $1 million. Treasury clarified today that there will be no limitation on the amount of the payment that may be postponed to 7/15.
  • (From BBSI) Laying off employees? If you are worried the only option is to lay off your employees, there are actually several options to consider. See below for pros and cons to each one:
    • Work Share:  These allow you to retain your employees but reduce the number of hours they work. Employees have their lost wages made up through a portion of their weekly unemployment compensation payments. You will need to send an application to the state to get this process started.  For more information on Colorado’s workshare program, click here.
    • Furlough:  If you offer benefits, this may be one option to retain your employees because while they are on a partial or full “leave without pay,” they continue to keep their benefits. You should make special arrangements to collect benefit deductions if they pay a portion of the benefits premiums. For salaried workers, extra care should be taken to avoid violating wage and hour laws. This option may help retain talent while they are able to collect unemployment.
    • Lay Off -Job Attached:  This is a termination of employment where you expect them to return within 16 weeks from the date of termination. Employees know that once you are able to hire them back you will call them. They are, therefore, not required to provide the CO Department of labor a regular update on their job search activities. For more information on this option, click here.  (NOTE:  If you lay off more than 50 employees, you must comply with the federal WARN Act. The state threshold for employers obligated to comply with WARN is 100 employees. For more information on that law, click here.)
    • Lay off:  This is termination of employment where you do not know when they will return to work. Employees are eligible for unemployment benefits. If employees need access to the website to get the process started, send them this link: Start a Claim with CO Unemployment
  • City and County of Denver stay at home order. Mayor Michael Hancock officially issued a stay at home order today for all residents and businesses within the city and county of Denver. It begins tomorrow at 5pm and is effective through April 10th. Here is a link to the official Public Health Order.

Let us know if you have any questions regarding today’s developments. We will continue to keep you up to date regularly.

March 20th, 2020

It’s a challenge to keep up with rapid developments in the COVID-19 crisis. We will be sending email updates as often as necessary to help you stay informed and navigate the impacts to yourself and your business. Here’s the latest:

  • WhippleWood has taken steps internally to respond to COVID-19. Our team continues to remain available and working toward upcoming deadlines. We are prepared to fully utilize technology to protect our staff, clients, and their families. Our cloud-based work environment allows us to safely and securely work from home while minimizing any physical interactions. We can also honor client meetings via remote connection. We’re doing everything we can to stay healthy and practice social distancing to prevent the spread of COVID-19. We encourage all of you to do the same and please reach out via phone or email.
  • Federal tax payments can be deferred until July 15, 2020. The Internal Revenue Service and the Department of the Treasury recently released guidance on how taxpayers can defer tax payments of up to $1 million until July 15, in response to President Trump’s emergency declaration granting relief amid the coronavirus pandemic. The guidance permits all individual and other non-corporate tax filers to defer up to $1 million of federal income tax (including self-employment tax) payments that would be due on April 15, 2020, until July 15, 2020, without incurring penalties or interest. It specifically notes that the current relief does not change any other payment or filing deadlines. The guidance also provides corporate taxpayers a similar deferment of up to $10 million of federal income tax payments that would be due on April 15, 2020, until July 15, 2020, without penalties or interest. The guidance doesn’t change the April 15 filing deadline, but allows most taxpayers to avoid interest and penalties on their tax payments until July 15.
  • Highlights of Phase II coronavirus legislation. The Families First Coronavirus Response Act takes effect on April 2 and covers all companies with up to 500 employees. It requires paid sick time for employees who are unable to work or telework due to six specific reasons:
    1. The employee is subject to a federal, state, or local quarantine or isolation order related to COVID-19;
    2. The employee has been advised by a health care provider to self-quarantine due to concerns related to COVID-19;
    3. The employee is experiencing symptoms of COVID-19 and seeking medical diagnosis;
    4. The employee is caring for an individual who is subject to a federal, state, or local quarantine order, or an individual who has been advised to self-quarantine due to concerns related to COVID-19;
    5. The employee is caring for the employee’s son or daughter, if the child’s school or child care facility has been closed or the child’s care provider is unavailable due to COVID-19 precautions (Note: this effectively includes any employees with children, since all schools are closed); or
    6. The employee is experiencing any other substantially similar condition specified by the Department of Health and Human Services in consultation with the Department of the Treasury and the Department of Labor.

The calculation of the benefits gets a little complicated:

  • There is an initial period of 10 days of unpaid leave before the benefits begin. An employee can use any accrued vacation, personal time, or sick leave to be paid during that period.
  • The caps on the amount of pay that an employee may receive under the Act depend on whether it is the employee’s own condition or based on the employee’s caregiver status:
    • Emergency sick time relating to an employee’s own condition (see 1–3 above) is calculated based on the employee’s regular rate or applicable minimum wage, whichever is greater, but is limited to $511 per day and $5,110 total.
    • Emergency sick time relating to situations where the employee is acting as a caregiver (see 4–6 above) is calculated based on two-thirds of the employee’s regular rate or applicable minimum wage, whichever is greater, but is limited to $200 per day and $2,000 total.
  • Employees who work a part-time or irregular schedule are entitled to be paid based on the average number of hours the employee worked for the six months prior to taking emergency Family and Medical Leave Act (FMLA) time. Employees who have worked for less than six months prior to leave are entitled to the employee’s reasonable expectation at hiring of the average number of hours the employee would normally be scheduled to work.
  • Employees are covered if they have worked for the employer for at least 30 days prior to the leave.
  • The Act allows the Secretary of Labor to exclude health care providers and emergency responders (although the Act itself does not exclude these workers). In addition, it allows the Secretary of Labor to exempt small businesses with fewer than 50 employees if the required leave would jeopardize the viability of their business (the Act authorizes the exemptions but does not require them).
  • Employers with 25 or more employees are required to return any employee who has taken the emergency leave to the same or equivalent position upon their return to work.

The Act also includes refundable tax credits to reimburse employers who must provide the coverage. The credits offset the employer’s portion of Social Security taxes. In addition, employers are supposed to be reimbursed if their qualified leave wages exceed the taxes they would owe. It’s not yet clear how that works.

  • SBA disaster loans are available to small businesses. Colorado was just declared a disaster area, in addition to many other states, in response to the COVID-19 pandemic. This allows small business to apply for low interest, long-term loans through the Small Business Administration. More information, including the process to apply for the loans, can be found at https://disasterloan.sba.gov/ela/.
  • WhippleWood can help you and your business manage its response to the COVID-19 crisis. Please reach out to us and let us how we can assist at 303-989-7600 or email your client relationship manager.

We will keep you up-to-date regularly as the situation develops.