We hope that you are staying safe and healthy through this stressful pandemic. We keep hearing about the impacts on the travel and hospitality businesses. But we are seeing problems with several of our small business clients in just about any industry. Every day things keep changing drastically. The government has been adding programs to help us deal with the adverse economic effects of this virus. Many of the details of these programs have not yet been sorted out. We are being told to be patient. Listed below is new information regarding our office hours and what we know about these government programs.
For the time being our office is closed to the public. This is a measure we have decided to take to protect the health of our employees and their families. You can still drop off returns in our drop box outside our door. Another way to get your information to us is by uploading your documents to our online portal and completing the online organizer.
Most of our staff have been directed to work from home to minimize the number of people in our office at any one time. These changes have significantly disrupted our ability to work in an efficient manner. We appreciate your patience as we all deal with the new logistical and time barriers to getting your returns done.
We are still working hard to get returns completed and out to our customers as quickly as possible. We highly recommend filing if you have refunds and we are prioritizing refund returns as they make their way through our office. If you believe you are getting a refund and have sent your information to us, please let us know and we can prioritize your return.
91-Day Tax Relief for Individuals/Businesses
Both the IRS and MN Department of Revenue have granted a 91-day tax relief extension. The tax return due dates and payment deadlines for returns normally due on April 15th have been extended to July 15, 2020. This was originally announced as a payment deadline extension. It is now a filing extension as well. Therefore, you will not need to extend your tax returns to qualify. All individuals and businesses will have the additional time to file and make payments without interest and penalties.
Observation 1: It appears that quarter 1 estimated tax payments normally due on April 15th are also extended to July 15th, 2020. Second quarter tax payments are still due on 6/15/2020.
Observation 2: Payroll taxes do not appear to be extended. So please continue to file and pay those as you can be liable personally as a business owner.
Observation 3: Minnesota has granted a sales and gambling tax payment extension for 30 days for those businesses who must file/pay monthly. Currently, this only applies to taxes that were due March 20th. Monthly tax filers have a 30-day extension to pay without penalty. Watch for updates at www.revenue.state.mn.us.
Observation 4: Minnesota has granted a 60-day filing extension on request for Minnesota Care returns that were due March 16, 2020. Organizations that request a filing extension by April 15 will have until May 15 to file their return. Instructions for requesting an extension are available on the MN website under COVID-19 Updates.
Observation 5: The announcements do not address penalties tied to late or underpayment of taxes for quarter 1 through quarter 3 of 2019. You may still get notices for those penalties.
Minnesota Unemployment Update
Governor Waltz has signed an executive order to ensure MN affected by the COVD-19 crisis have access to unemployment benefits. He has also ensured that businesses won’t have to pay into the system to cover these additional costs. They are also waiving the 1st week of unpaid benefits requirement.
Observation 1: There is a very good list of frequently asked questions on the following website. https://mn.gov/deed/newscenter/press-releases/?id=423352
Observation 2: Self-employed individuals may qualify. Here is the website that walks you through self-employment and unemployment benefits. https://www.uimn.org/applicants/affectsbenefits/self-employment/index.jsp
Observation 3: S-Corporation owners who opted out of paying into MN unemployment insurance for themselves may not qualify. I recommend you call the MN Unemployment office to see what your options are. The credits explained in the next section may be a better option for you.
Special Update on Business Payroll Tax Credits
The Families First Coronavirus Act has created two new credits available to businesses to help comply with the new mandate to provide family and medical leave as well as sick leave to employees stemming from the Coronavirus disease. This mandate applies to all businesses with less than 500 employees. The credits are applied for on your quarterly payroll tax filings.
Employer Notice: Each covered employer must post in a conspicuous place on its premises a notice of FFCRA requirements. The Federal DOL has more information and posting requirements available on their website https://www.dol.gov/agencies/whd/pandemic
- Family and medical leave (EMFLEA)
- Employers are required to provide paid and unpaid public health emergency leave to employees employed for at least 30 days who are unable to work or telework due to a need to care for a son or daughter under age 18 because a school or place of care has been closed due to an emergency declared by a federal, state or local authority with respect to COVID-19.
- The first 10 days may be unpaid and then paid leave is required.
- The amount of pay cannot be less than 2/3 of an employee’s regular rate of pay based on the number of hours the employee would otherwise be normally scheduled to work.
- The amount is not to exceed $200 per day and $10,000 in aggregate.
- Emergency paid sick time (EPSLA)
- Employers must provide 80 hours (or 10 days) of paid sick time to full-time employees who are unable to work (telework) for specified virus-related reasons.
- Part-time employees are entitled to sick time based on their average hours worked over a 2-week period.
- The amount is immediately available regardless of employee’s length of employment
- The amounts are payable based on the reason for absence
- Subject to a quarantine or isolation order
- Advised by a health provider to self-quarantine
- Experiencing symptoms and seeking diagnosis
- Must be compensated at regular rate up to $511 per day ($5,110 total)
- Employees caring for an individual in the areas above, caring for a son or daughter whose school has closed or child care provider is unavailable, or experiencing a “substantially similar condition” must receive 2/3 of their regular rate up to a maximum of $200 per day ($2,000 total)
- This mandate takes effect April 1, 2019 and expires December 31, 2020.
- How the credits work
- The EPSLA credit for each employee is equal to the lesser of his/her paid leave or
- $511 per day personal sick leave with limit of $5,110 per employee
- $200 per day sick leave care for a family member with limit of $2,000 per employee
- The EMFLEA credit is the amount of their pay limited to $200 per day with a maximum of $10,000 per employee.
- The amounts are increased by the portion of the employers “qualified health plan expenses”
- The amounts are also increased by 1.45% of the qualified wages.
- The credits only apply to wages paid with respect to the period from 3/18/2020-12/31/2020.
- Minor Observation – there appears to be no credit for the additional employer FICA taxes on the qualified wages. However, these wages are not considered wages in the FICA definition.
- The EPSLA credit for each employee is equal to the lesser of his/her paid leave or
- Credits for self-employed individuals
- The act also provides for similar income tax credits to self-employed individuals.
- It covers 100% of a self-employed individual’s sick-leave equivalent amount.
- It covers 67% of a self-employed individuals sick-leave equivalent amount while taking care of a sick family member or taking care of a child’s school closing for up to 10 days.
- Self-employed individuals can also receive as many as 50 days multiplied by the lesser of $200 or 67% of their average self-employment income paid under the EMFLEA.
Observation 1 – In several pieces of guidance we found that these can be adopted immediately. However, the Q1 tax forms have not been updated to get the credit. There is no guidance that we can find that addresses how to do this yet.
Observation 2 – There are ways to get the credit in advance of filing quarterly payroll tax returns, but the details are not yet available.
Observation 3: The DOL had been advised to limit enforcement of these programs for the first 30 days and focus on compliance assistance. If you make good faith attempts to comply with the rules, you should not have to worry about enforcement actions taken against you for doing something incorrectly.
Observation 4: S-Corporation owners appear to qualify for this assistance to cover their own wages. This may be a really good alternative to not qualifying for unemployment.
SBA Disaster Assistance Loans Now Available for Small Businesses
- The U.S. Small Business Administration (SBA) announced it is now offering low-interest federal disaster loans for working capital to small businesses in MN, ND, IA and WI.
- Eligibility is based on the financial impact of COVID-19 on a business. The loans have a rate of 3.75% for small businesses.
- Repayments are based on your ability repay up to 30 years.
- You can apply online by visiting https://disasterloan.sba.gov/ela
Observation: This program is currently being offered only through the SBA website. Which means it may take several weeks to months before you can get the loan. I would recommend reaching out to your banker to see if they have or anticipate having any programs to offer.