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Coronavirus Aid, Relief, and Economic Security Act - ‘‘CARES Act’’ - Small Business Tax Provisions

Coronavirus Aid, Relief, and Economic Security Act - ‘‘CARES Act’’ - Small Business Tax Provisions
Small Business Tax Provisions

Employee Retention Credit for Employers Subject to Closure or Experiencing Economic Hardship

This provision would provide a refundable payroll tax credit for 50 percent of wages paid by eligible employers to certain employees during the COVID-19 crisis. The credit is available to employers, including non-profits, whose operations have been fully or partially suspended as a result of a government order limiting commerce, travel or group meetings. The credit is also provided to employers who have experienced a greater than 50 percent reduction in quarterly receipts, measured on a year-over-year basis.

Wages of employees who are furloughed or face reduced hours as a result of their employer’s closure or economic hardship are eligible for the credit. For employers with 100 or fewer fulltime employees, all employee wages are eligible, regardless of whether an employee is furloughed. The credit is provided for wages and compensation, including health benefits, and is provided for the first $10,000 in wages and compensation paid by the employer to an eligible employee. Wages do not include those taken into account for purposes of the payroll credits for required paid sick leave or required paid family leave, nor for wages taken into account for the employer credit for paid family and medical leave (IRC sec. 45S).

· The credit is not available to employers receiving assistance through the Paycheck Protection Program.

The credit is provided through December 31, 2020. Delay of Payment of Employer Payroll Taxes This provision would allow taxpayers to defer paying the employer portion of certain payroll taxes through the end of 2020, with all 2020 deferred amounts due in two equal installments, one at the end of 2021, the other at the end of 2022. Payroll taxes that can be deferred include the employer portion of FICA taxes, the employer and employee representative portion of Railroad Retirement taxes (that are attributable to the employer FICA rate), and half of SECA tax liability.

· Deferral is not provided to employers receiving assistance through the Paycheck Protection Program.
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Coronavirus Aid, Relief, and Economic Security Act - Existing SBA Loan Treatment

Coronavirus Aid, Relief, and Economic Security Act - Existing SBA Loan Treatment

  • The government will pay principal and interest for 6 months on existing SBA 7(a) loans (loans made prior to the enactment of the Act)
  • No application required
  • Beginning with the next payment due after the enactment of the Act

(a) DEFINITION OF COVERED LOAN.—In this section, the term‘‘covered loan’’ means a loan that is—
(1) guaranteed by the Administration under—
(A) section 7(a) of the Small Business Act (15 U.S.C. 636(a))—
(i) including a loan made under the Community Advantage Pilot Program of the Administration; and
(ii) excluding a loan made under paragraph (36) of such section 7(a), as added by section 1102; or
(B) title V of the Small Business Investment Act of 1958 (15 U.S.C. 695 et seq.); or
(2) made by an intermediary to a small business concern using loans or grants received under section 7(m) of the Small Business Act (15 U.S.C. 636(m)).

(b) SENSE OF CONGRESS.—It is the sense of Congress that—

(1) all borrowers are adversely affected by COVID–19;
(2) relief payments by the Administration are appropriate for all borrowers; and
(3) in addition to the relief provided under this Act, the Administration should encourage lenders to provide payment deferments, when appropriate, and to extend the maturity of covered loans, so as to avoid balloon payments or any requirement for increases in debt payments resulting from deferments provided by lenders during the period of the national emergency declared by the President under the National Emergencies Act (50 U.S.C. 1601 et seq.) with respect to the Coronavirus
Disease 2019 (COVID–19).
(1) IN GENERAL.—The Administrator shall pay the principal, interest, and any associated fees that are owed on a covered loan in a regular servicing status—
(A) with respect to a covered loan made before the date of enactment of this Act and not on deferment, for the 6-month period beginning with the next payment due on the covered loan;
(B) with respect to a covered loan made before the date of enactment of this Act and on deferment, for the 6-month period beginning with the next payment due on
the covered loan after the deferment period; and
(C) with respect to a covered loan made during the period beginning on the date of enactment of this Act and ending on the date that is 6 months after such date of enactment, for the 6-month period beginning with the first payment due on the covered loan.
(2) TIMING OF PAYMENT.—The Administrator shall begin making payments under paragraph (1) on a covered loan not later than 30 days after the date on which the first such payment is due.
(3) APPLICATION OF PAYMENT.—Any payment made by the Administrator under paragraph (1) shall be applied to the covered loan such that the borrower is relieved of the obligation
to pay that amount.

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Coronavirus Aid, Relief, and Economic Security Act ‘‘CARES Act’’ - Paycheck Protection Program (PPP)

Following is the information on the PPP as it is availabe on April 2, 2020.  We will update this as important changes occur.

Additional information for review can be found at The U.S. Department of the Treasury


Paycheck Protection Program (PPP) Guidance

The Paycheck Protection Program, part of the new CARES stimulus package, is a federal loan program aimed at helping small businesses who have been severely impacted by COVID-19. The intent of the Paycheck Protection Program is to accomplish two primary goals:

  1. Assist businesses in meeting their near-term operating expenses, and
  2. Provide relief such that the business may maintain its employee base. 

The exciting news is that lenders may begin processing loan applications as soon as April 3, 2020!


Important: The guidelines of the PPP program are very fluid and have seen changes.  The information contained herein is to the best of our knowledge at this time.  As IRx receives any important updates we will communicate those to you.


As a reminder, the main highlights of this loan are:

  • Loans can be up to 2.5 x the borrower’s eligible average monthly payroll costs, not to exceed $10 million
  • Up to 8 weeks of approved expenses may qualify for forgiveness with any remaining balance financed.  The loans will have a maturity of 2 years and an interest rate of .5%
  • Initial loan payment will be deferred 6 months
  • The loan may be used for approved expenses including payroll, rent, mortgage interest, and utilities
    • Note: Due to likely high subscription, it is anticipated that not more than 25% of the forgiven amount may be for non-payroll costs



What should you do now?


At this time we recommend you begin to collect the information outlined below and contact your current SBA lender.  If you do not have an SBA lender we recommend you contact Live Oak Bank or First Financial Bank.


SBA website Paycheck Protection Program information and Application Form


View a short 1:00 video below with IRx Partner Owen BonDurant and his observations and advice at this time.


Information To Collect


Note: The actual initial PPP Application simply requests your Average Monthly Payroll and Number of Jobs along with a list of greater than 20% owners.  The Payroll Information section below provides the detailed information necessary to properly calculate the qualifying Average Monthly Payroll.  The Other Helpful Information section provides a list of items that will be helpful to collect in advance in anticipation of their need as supporting documentation during the course of the loan.


Payroll Information

Payroll reports for calendar year 2019, which will show the following information:


Note: The Included Payroll Costs less the Excluded Payroll Costs will be used to determine the Average Monthly Eligible Payroll Costs x 2.5 = Loan Amount (not to exceed $10 million)

  • Included Payroll Costs:
    • Salary, wage, commission, or similar compensation
    • Payment of cash tip or equivalent
    • Payment for vacation, parental, family, medical, or sick leave
    • Allowance for dismissal or separation
    • Payment required for the provisions of group health care benefits, including insurance premiums
    • Payment of any retirement benefit (401K plans, Simple IRA, SEP IRA’s)
    • Payment of state or local tax assessed on the compensation of the employee
    • 1099s for independent contractors for 2019
  • Excluded Payroll Costs
    • Compensation of an individual employee in excess of an annual salary of $100,000
    • Payroll taxes and income taxes
    • Any compensation of an employee whose principal place of residence is outside of the United States
    • Qualified sick leave wages for which a credit is allowed under section 7001 of the Families First Coronavirus Response Act (Public Law 116–5 127); or qualified family leave wages for which a credit is allowed under section 7003 of the Families First Coronavirus Response Act
  • List of all owners with greater than 20% ownership


Other Helpful Information

  • 2019 IRS Quarterly 940, 941 or 944 payroll tax reports
  • 2019 Tax return or a 2019 financial statement
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Coronavirus Aid, Relief, and Economic Security Act ‘‘CARES Act’’ - Economic Injury Disaster Loan (EIDL)

Coronavirus Aid, Relief, and Economic Security Act ‘‘CARES Act’’ - Economic Injury Disaster Loan (EIDL)
EIDL Program (Economic Injury Disaster Loan)

·        The SBA has a program that potentially is providing up to 30 year loan amortization at a 3.75% rate for disaster recovery on the coronavirus. 

·        The SBA’s disaster relief page lists current states and territories that have been declared a disaster. This is a required step for businesses within those areas to begin to apply for the aid, but the agency recently relaxed those standards. (https://www.sba.gov/page/coronavirus-covid-19-small-business-guidance-loan-resources#section-header-0)

·        This is the link to apply for an Economic Injury Disaster Loan that can provide up to $2 million: https://disasterloan.sba.gov/ela/

·        Below is information on what is required. Late last night/early this morning the  SBA materially  streamlined its disaster loan application process.
1.       There is no pre-registration process requiring  a user name and password.
2.       Go to the site in the link above and log right on and push “apply online”.
3.       Download the 3 forms  identified below.
4.       You no longer fill the forms out on line-you fill them out offline, scan and upload.  
5.       Form 5 is for entities and Form 5-C is for sole proprietorships.
6.       Item 15 on Form 5 asks for the economic  injury you are claiming.
7.       There is no longer a text box to make comments on, so if an applicant desires to be more specific about its economic harm, its loan request  and the  urgency of the loan, especially to retain employees,  the applicant  may want to consider typing  up  a  very short addendum  and attaching  it to Form 5, since all of it is scanned and uploaded.
8.       On the economic jury form  you respond  question on revenues  and self-certify as to size of  company making applicant eligible for the Disaster Loan Program
9.       You  upload the completed Form 5 or 5C (whichever is applicable) and the Economic Injury form.
10.   The other forms listed below (beyond the first three mentioned)  should  be downloaded and completed, so if the SBA loan officer contacts you  for this additional information, which the SBA has the right to ask for, you are prepared.

·        All 50 states have now been classified as disaster areas and the SBA has a program for disaster areas that is potentially providing up to 30 year loan amortization at a 3.75% rate for business disaster recovery on the coronavirus. 

·        The SBA requires you apply online... the system is overwhelmed, so there is no guarantee on timing.  Once you submit, you cannot amend.  Be certain to keep the confirmation number when you submit the application.  Once you submit, it may be several weeks before you hear from the government.

This is the link for guidance from the SBA: https://www.sba.gov/page/coronavirus-covid-19-small-business-guidance-loan-resources#section-header-0
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The Three C,s

The Three C,s
Joe has worked at the pharmacy for several years. He is the best at data entry by far, and is a good moral person, yet his one flaw seems to be he likes to “stir the pot” with the rest of the staff resulting in frequent skirmishes.

Sally is also a good task performer and gets along well with the rest of the staff, however at times she is late and not always completely honest. Jill is an upstanding person who is liked by the staff, yet she struggles to understand essential aspects of her position.

Who is a valuable team member?

Good team members all share three essential traits known as the three C’s, Competence, Character, and Chemistry.

It is clear that competence is demanded in pharmacy. Today’s environment of slim margins dictates that each team member must be able to fill their position in a competent manner. Patient safety can never be compromised. A lack of competence can be overcome by being clear in your expectations and insisting that everyone be good teachers.

Character is also of utmost importance. Team members who have the heart of a servant, are honest and dependable, and have a good work ethic will always convey to your patients that your store is worthy of their trust. Any team member who lacks character can ruin the reputation of the entire store.

It is often the third C that leads to failure. It is nonnegotiable that all team members try to get along with others, be supportive of management decisions, and communicate well with all. Your staff is your most valuable asset, for only they can deliver your promise of excellent service to your patients.

In looking at the above examples, Joe is strong on two of the three C’s yet fails miserably on the other. If he were getting a grade, he would be at 2 out of 3 or 67%. Joe is not valuable at 67%. Helping him understand his shortcomings not only will bring him up to 100%, it will make everyone’s life easier.
Insist that every team member can pass the three C’s test. It certainly starts at the top. Good leaders who consistently show competence, character, and chemistry will set an example that will flow through all layers of the organization.
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