Edition #9
April 1, 2020
HSC COVID-19 Fast Response Team
We are here to help!

In these uncertain times with multimedia channels reporting conflicting and sometimes incorrect information, our firm is working to add clarity to this situation by providing new and verified information as it becomes available to us. We have also set up a Coronavirus Resource Center on our website for ongoing information. 

In addition, we have created the HSC COVID-19 Fast Response Team to serve our clients in addressing the difficult decisions they are being faced with on a daily basis. This dedicated multi-disciplinary team consists of our tax, payroll, HR, capital markets and accounting professionals. 

If you have questions or would like to speak with this team please contact your HSC team member or Kyle Wininger, CPA, CICA, CVA, CFE at kwininger@hsccpa.com
SBA Forgivable Loan Applications Open 
Friday, April 3rd 

We have been in communication over the last several days about the Paycheck Protection Loan Program that is available as part of the CARES Act. This article is a follow up on what we discussed and to provide the tools we have developed to assist you. We recommend that you reach out to your bank immediately if you haven't already and begin to provide the necessary information that they request.

In the meantime, we wish to provide some guidance which may be of assistance to you. Below are 4 documents:  
  1. A notice from the U.S. Treasury Department Office of Public Affairs. They are indicating that this program is ready to roll out and they are ready to start lending the money starting Friday, April 3rd.
  2. A spreadsheet tool we have created to help employers calculate the amount of the loan available to them based on prior payroll costs. Calculation of loan will be made by taking an average monthly salary expense (and benefits) calculated by 2.5%.    The determination of the average monthly salary expense will be made by using 2019 numbers or a 12 month rolling period.  (IMPORTANT:   which method to use is being debated - we are hearing conflicting information and are awaiting guidance on that determination.)  There is also a tab which describes the information that some (not all) banks have indicated they will require. You will want to get direct guidance from your bank regarding this, we only provide as information to assist you if you want to get a head-start.
  3. The PDF application document is directly from the SBA program and is the application we are being told will be required to be completed when you go to apply with your bank for a loan. We are providing this so you can get started on that process as well.
  4. The PDF borrower information document is information for borrowers that we felt would be helpful to you as you work through this process. It is VERY important that you read this in conjunction with completing the application.
Finally, each bank may require additional source data to support your applications so please work directly with your banking relationships for those specifics.
Based on the SBA form that came out today and a discussion with an official close to the source, as well as new information released from the US Treasury, we have learned some new information which is different or in contradiction to the way the original bill read:
  • Based on guidance from the SBA and their instructions, the loan determination period appears to allow a calendar year 2019 calculation to determine average wages (despite what the legislation states).
  • The term of the unforgiven portion of the loan was changed (from 10 to 2 years). The interest rate changed from 4% to 0.5%.
  • Clarification that compensation over $100,000 to be excluded per employee is on "an annualized basis". This is also defined in the definitions tab. (for example, an employee who worked for 6 months and made $80,000 should have an exclusion adjustment of $30,000).
  • There is still inconsistency within different banks (and we are receiving conflicting information from government officials) of whether 1099's for 2019 independent contractors that would otherwise be an employee of your business qualify for determination of the loan amount and forgiveness. We recognize that this may be important to you and are hoping to receive a definitive answer over the next day or so. In the meantime, we recommend that you work with your financial institution to get their interpretation since they will ultimately approve the loan.
This is all moving very fast (the above guidance was released yesterday) and our team is diligently working to stay on top of it and to help you stay on top of it. We apologize in advance if anything changes along the way but we feel the urgency to get this information out to you now so you can get started.
Thank you for trusting in HSC to assist you as we work through these difficult and uncertain times together.

For more information, contact Scott Touro, MBA at stouro@hsccpa.com
Kentucky Enacts Law to Mirror Federal Tax Filing and Payment Requirements 

Governor Beshear signed SB 150 into law on March 30th. Included in the bill was a provision to completely mirror the federal postponement of the April 15 filing and payment due dates. A law change was necessary in order to remove the statutory imposition of late payment interest.
Applicable section of the bill:
(3) The Department of Revenue shall adhere to any declarations or changes in tax filing and payment requirements provided by the U.S. Treasury Department or the Internal Revenue Service and provide the same to taxpayers for comparable tax filing and payment requirements under Kentucky law, including an extension of time to file a return or report and an extension of time to pay any tax due with that return or report, without the imposition of penalty under KRS 131.180, 141.044, 141.305, or 141.990 on that extended payment, and notwithstanding KRS 131.175 and 141.170, without the imposition of interest under KRS 131.183 or 141.985.

For more information please contact John Rittichier, CPA at jrittichier@hsccpa.com.
Business Aid and Loans: COVID-19 

There is much confusion regarding the loans and aid available to companies.  In general, there are three primary options for middle market businesses:
1) SBA Economic Injury Disaster Loan Assistance (EIDL) - SBA program that existed before COVID-19 that offers up to $2 million in loans for eligible businesses.
2) Paycheck Protection Program - Created through the Coronavirus, Aid, Relief, and Economic Security Act (CARES Act), the Paycheck Protection Program expands SBA support for businesses with loans of up to $10 million.
Borrowers are precluded from receiving SBA funding under the Paycheck Protection Program and an Economic Injury Disaster Loan (EIDL) for the same purpose (i.e., double dipping).
3) Emergency Relief Funding: Midsize Businesses - The CARES Act authorizes a relief program for losses incurred as a result of coronavirus, an amount not to exceed $500 billion, for the Treasury to make loans, loan guarantees and other investments in support of eligible businesses, states and municipalities. This includes special assistance for eligible mid-size businesses (500 to 10,000 employees). We expect guidance on this program to be published in the near future.

These three options are further described in this  helpful overview  provided by RSM US

Please contact our COVID-19 Fast Response Team for any questions you may have at 
Employee Retention Tax Credit for Employers Subject to Closure Due to COVID-19

The CARES Act implemented the Employee Retention Credit, designed to encourage businesses to keep employees on their payroll. The refundable tax credit is 50% of up to $10,000 in wages paid by an eligible employer whose business has been financially impacted by COVID-19.

Does my business qualify to receive the Employee Retention Credit?

For more information,  contact John Rittichier at jrittichier@hsccpa.com or Mike Vogel at mvogel@hsccpa.com.
Virtual National Small Business Town Hall Hosted by Inc. with the U.S. Chamber of Commerce.

Watch a virtual National Small Business Town Hall hosted by Inc. with the U.S. Chamber of Commerce to learn how to get what your company needs from the CARES Act.
RSM Coronavirus Webcasts

RSM Coronavirus Webcast Series

RSM has launched a weekly webcast series on issues related to the Coronavirus. The webcasts are approximately one hour, each Wednesday at 1:00 p.m. EDT.

Dates and times are below:
Wednesday, April 8, 2020 - 1:00 p.m. EDT

Free webcast, no CPE will be provided. 

Click here to register.
Keeping Other Members of Your Team Informed

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Disclaimer: The information contained in this email is for general guidance on matters of interest only. The publication does not, and is not, intended to provide legal, tax or accounting advice.  
Internal Revenue Service rules require us to inform you that this communication may be deemed a solicitation to provide tax services. This communication is being sent to individuals who have subscribed to receive it or who we believe would have an interest in the topics discussed.  

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Harding, Shymanski & Company, P.S.C.
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