Paycheck Protection Program
Round 2 & Other Extended
Benefits
PRESENTED BY:
SHERISE D RITTER, CPA, CGFM, PSA
KYLE NEELD, CPA, CGMA, PSA
MATTHEW SMIERCIAK, CPA
ELIZABETH LACORTE CPA
CAITLIN KOLCZYNSKI, CFP®
FEBRUARY 3, 2021
1
How to Earn CPE Credits
To earn CPE Credit, each attendee must:
• Login individually to the session using your own link as provided to you via email.
• Successfully complete at least 3 of the 5 of the polling questions. • Respond to polling questions within the allotted 60 - 90 seconds.
You will not earn CPE credit if you:
• Login using someone else’s link. • Join only the conference call.
• Fail to successfully complete 3 of the 5 polling questions.
• Fail to remain logged on to the session for a minimum of 50 minutes. • Viewing a recording of this session (CPE is awarded only for live sessions).
Evaluation:
Upon completion of this program you will receive an event evaluation, you must complete it & send back to us via email.
CPE Certificate:
Agenda
•
Background on CAA
•
Coronavirus Response & Relief
o
Individuals, Families &
Businesses
o
Changes to Employee Retention
Credit
o
Continuing PPP & Other Small
Business Support
o
PPP2 – Eligibility, Process,
Forgiveness, etc.
•
How Mercadien Can Help
3
•
$ 2.3 Trillion ($1.4T Omnibus Spending, $900B Stimulus
relief)
•
Signed into law Dec. 27, 2020
•
Consolidates:
o
COVID-Related Tax Relief Act of 2020 (COVIDTRA)
o
Taxpayer Certainty & Disaster Tax Relief Act of 2020 (TCDTR)
•
Funds the Federal Government through
the end of the fiscal year 9/30/21
•
Individual provisions
•
Payroll Provisions
•
Business Tax Provisions
•
PPP Round 2
Coronavirus
5
Assistance to Individuals,
•
Extension of Pandemic Unemployment Assistance to
March 14, 2021 & allows individuals receiving benefits
as of 3/14/2021 to continue thru 4/5/21 as long as they
have not reached their max weeks
•
Increases number of weeks you can collect from 39 to
50
•
Allows Federal support to cover 50%
of cost of UC benefits for employees
of Gov’t & NPOs
•
Restores the Federal unemployment
supplement to $300 per week
(12/26/20 - 3/14/21)
7
•
Provides a refundable tax credit in the amount of
$600 per eligible family member
o
$1,200 per married filing joint returns
o
$600 per qualifying child
•
Credit phased out starting at $75K of
MAGI (single) with $112,500 for head
of household & $150K for MFJ
•
Advance payments based on 2019 income tax
returns
•
Increased deduction for medical expenses
•
Child Tax Credit & Earned Income Credit
•
Charitable contributions for
taxpayers who do not itemize
•
Income limitations for
charitable contributions
•
Education credits
•
Exclusion from income for forgiveness of qualified
principal residence indebtedness
•
Mortgage insurance premiums
•
Retirement plan distributions
9
•
Deductions for expenses paid using PPP loan
proceeds
•
Bringing back the business lunch
•
Qualified disaster relief contributions
•
Flexible Spending Account Plans
•
Extension of Families First Coronavirus Response Act
credits for paid sick & family leave
•
Employer tax credit paid family & medical leave
•
Work opportunity credit
•
Expansion of the Employee
Retention Credit
•
Extension of deferred
payroll taxes
•
Employer payment of
student loans
Payroll Provisions
11
Changes to Employee
Attribute CARES Act Consolidated Appropriations Act
Qualification Business operations fully or
partially suspended as a result of government mandate OR
significant decline in gross receipts (50%)
Significant decline reduced by 20% (compared to same quarter of 2019)
Eligible Period Through December 31, 2020 Extended through 1st 2 quarters
of 2021
PPP Borrowers Not eligible Eligible, retroactive to March 13, 2020 but cannot double dip. Must exclude wages covered with PPP proceeds *
Employer Size No exclusion, limitations on
wages over 100 employees No exclusion, limitations on wages over 500 employees
13
Employee Retention Tax Credit
Attribute CARES Act Consolidated Appropriations Act
Amount &
Limitations of Credit 50% of qualified wages, up to $5,000 for each FTE ($10,000 annual wage limit)
70% of qualified wages, up to $14,000 for each FTE ($10,000 quarterly wage limit)
Qualified Wages Wages include healthcare expenses. Specific guidance on
calculation of FTEs. Depending on FTEs, only count employees not providing services. Cannot use qualified wages for paid family medical leave or those paid with PPP proceeds *
How to Calculate
Gross Receipts No definition applicable for tax exempt entities Tax exempt: contributions, gifts, grants, dues or assessments, sales or receipts from unrelated
business activities, sale of assets, & investment income (e.g.,
interest, dividends, rents & royalties)
Employee Retention Tax Credit
Attribute CARES Act Consolidated Appropriations Act
How to Claim Form 941 – credit against employer’s share of Social Security Form 7200 – request advance
Can Amend Form 941
Important items to
note * IRS has provided FAQs but those have not yet been updated to reflect the CAA. Additional guidance & clarification relating to those employers that paid wages with PPP proceeds expected.
15
Understand the eligibility criteria
Consult with your payroll tax
provider regarding the credits
& your eligibility
Consult with Mercadien as
necessary for clarification on
eligibility determination
Continuing Paycheck Protection
Program & Other Small
17
Clarifying Provisions
of the Program
Attribute CARES Act (Flexibility Act) Consolidated Appropriations Act
Qualification Generally, U.S. businesses, 501(c)(3), veterans
organizations, less than 500 employees
- Now includes 501(c)(6) organizations
- No more than 300 employees for second draws
Maximum Loan
Amount $10 million $2 million for second draws Loan Calculation 2.5 times average monthly
payroll (as defined) Same except for increase to 3.5 times for certain industries (hotels & restaurants)
19
Paycheck Protection Program
Attribute CARES Act (Flexibility Act) Consolidated Appropriations Act
Payroll Costs - Salary, wage,
commission, or similar compensation
- Group Healthcare - Retirement
- State or local payroll tax
Clarified that group healthcare includes group life, disability, vision, or dental insurance
Eligibility Criteria Economic uncertainty
borrower certification Greater than 25% revenue loss in any quarter when compared to same quarter 2019 (does not include PPP proceeds)
Paycheck Protection Program
Attribute CARES Act (Flexibility Act) Consolidated Appropriations Act
Eligible Expenses for
Forgiveness Payroll, mortgage interest, rent & utilities Now includes: - Covered operations expense - Property damage
- Supplier cost
- Worker protection expense (PPE)
Covered Period 8 or 24 weeks Any covered period between 8 & 24 weeks
21
Paycheck Protection Program
Attribute CARES Act (Flexibility Act) Consolidated Appropriations Act
Forgiveness
Application 3 forms- 3508S Loans under
$50,000, documentation required - 3508 EZ No reduction in FTEs or Wages - 3508 all others Changes to 3508S - Loans under $150,000
- Identification of payroll costs on form in lieu of supporting documentation
- Supporting documentation for eligible expenses not required
EIDL Advance
Interplay Deducted from forgiveness amount since it was considered an advance on the loan
Not considered in the forgiveness application. If already applied for forgiveness, additional
forgiveness for EIDL advance forthcoming via reconciliation
•
New Eligible Expenses:
o
Covered operations expenses
- payment of any software, cloud
computing & other human resources & accounting needs.
o
Covered property damage costs
- costs due to public disturbances
not covered by insurance.
o
Covered supplier costs
- expenditures to a supplier pursuant to a
contract, purchase order, or order for goods in effect prior to taking
out the loan that are essential to the recipient’s operations at the
time at which the expenditure was made. Supplier costs of
perishable goods can be made before or during the life of the loan.
o
Covered worker protection expenditures
- PPE & adaptive
investment to help a loan recipient comply with federal health &
safety guidelines or state & local gov’t equivalent requirements.
23
Paycheck Protection Program
•
Loans can be up to 2.5x borrower’s avg. monthly
payroll costs one year prior to the loan, or the
calendar year. Cannot to exceed $2 million.
•
Non-Seasonal Employers:
o
2.5x avg. total monthly payroll costs incurred during the
year prior to the loan date.
o
New entities - 2.5x the sum of avg. monthly payroll costs
incurred.
•
Seasonal Employers:
o
2.5x avg. total monthly payments for payroll costs for
any
12-week period beginning Feb. 15, 2019 thru Feb.
15, 2020.
25
•
NAICS Code 72 (Accommodation & Food Services):
o
3.5x avg. total monthly payments for payroll costs.
o
Businesses with multiple locations that are eligible under the initial
PPP requirements may employ not more than 300 employees per
physical location.
o
Waiver of affiliation rules that applied during initial PPP loans apply
to a second loan.
o
An eligible entity may only receive one PPP second draw loan.
o
Fees are waived for both borrowers & lenders to encourage
participation.
o
For loans less than $150,000, the entity may submit a certification
attesting that the entity meets the revenue loss requirements on or
before the date the entity submits their loan forgiveness
application (non-profits utilize gross receipts to calculate their
revenue loss standard).
•
SBA Form 2483-SD
•
Lender to submit a request thru
SBA website
•
Certifications for 2
nddraw
o
Have not rec’d. another second draw
o
Realized a reduction in gross receipts in excess of 25%
relevant to comparison time period
o
Has used or will use first draw only for eligible expenses
o
Not an ineligible entity
27
•
Now thru
Mar. 31, 2021
o
NOTE:
If you did not take a first draw loan you must do
that before applying for a second draw loan.
o
Lender submission process to the SBA has changed.
1.
Lender submit app to SBA
2.
Validation process takes place
3.
Validation message must be cleared
4.
PPP loan number granted after validation
message is cleared
5.
Hold codes - type of validation message. Second
draw PPP loans will not be approved until first
draw hold codes are resolved.
6.
In 2020 - weren’t running the loans thru a
validation check in first round.
7.
Now SBA is running validation process at front
end
29
Hold Code Specific Issues
#7 - Mismatch of TIN - Provide Proof of Correct TIN
− Copy of 2019 t/r − IRS ein doc
− Copy of SSN card
#8 - Mismatch of Entity Name – Provide Proof Linking Borrower & Principal Names to TIN
− Copy of 2019 tax return − Filed copy of DBA docs − DLN or official id
− Copy of business license
#9 - In Operation After Feb. 15, 2020 - Proof of Operational Status
− Secretary of State entity formation filing − Filed 2019 returns
− Bank acct statements
− Business license verified by issuing municipal authority − Copies of paid invoices before and after 2/15/2020
Section 312:
Increased Ability for Paycheck Protection
Program Borrowers to Request an Increase in Loan Amount
Due to Updated Regulations:
•
Requires Administrator to release guidance to lenders within 17 days of
enactment that allows borrowers who returned all or part of their PPP
loan to reapply for the maximum amount applicable so long that they
have not received forgiveness.
•
Also allows borrowers whose loan calculations have increased due to
changes in interim final rules to work with lenders to modify their loan
value regardless of whether the loan has been fully disbursed, or if Form
1502 has already been submitted.
31
•
If you maintain your workforce, SBA will forgive the
portion of the loan proceeds spent during the new
covered period, given:
Payroll costs must be 60% of the
spend
All other covered expenditures
cannot be more than 40% of
the spend
Must compute the FTE calculations
Must be in compliance with the
salary reduction rules from the first draw
•
Amount of loan forgiveness is reduced if there is a
reduction in the number of employees or a
reduction of greater than 25% in wages paid to
employees.
•
Reductions in employment or wages that occur
during the period beginning on Feb. 15, 2020 &
ending 30 days after enactment of the CARES Act,
shall not reduce the amount of loan forgiveness
IF
by June 30, 2020, the borrower eliminates the
reduction in employees or wages.
33
•
Some banks still have not opened their portals to
accept forgiveness applications
•
Others have suspended their forgiveness portals to
accommodate the new rules & guidance
•
Simplified for loans $150K
or less – have not yet
prepared any using the
new form
Our Experience With Forgiveness
Thus Far
Loan application preparation & review
Cash flow projection to determine funding gaps,
how to apply expenditures to revenue streams &
cost allocation plans
Review cash flow projections prepared by
management
Audit preparation for grant expenditures
Loan forgiveness application preparation & review
General advisory services in connection with
disaster planning & management
35
Contact Us
Sherise D. Ritter, CPA
Managing Director
609-689-2325
Kyle Neeld, CPA
Managing Director
609-689-2360
Matthew Smierciak, CPA
Manager
609-689-2333
Elizabeth LaCorte, CPA
Manager [email protected] 609-689-2355 Caitlin Kolczynski, CFP® Financial Consultant [email protected] 609-689-2454
37
