Payroll

Since being established as part of the Coronavirus Aid, Relief and Economic Security Act in March 2020, the Paycheck Protection Program (PPP) has been the subject of additional stimulus bills, legal guidance and interim final rules. In the latest development, Congress passed the Paycheck Protection Program Flexibility Act of 2020, which is a bill that provides borrowers with greater flexibility in spending PPP funds without compromising forgiveness eligibility. President Donald Trump signed the bill into law on Friday, June 5, 2020.   What is included in the bill? The bill, which passed with a bipartisan vote, makes the following amendments to the PPP to provide relief to borrowers: Loan repayment terms—The bill extends the minimum loan term for unforgiven PPP loans from two years to five years. Payroll costs vs. nonpayroll costs— For forgiveness eligibility, the bill reduces the portion of PPP funds that must be spent on payroll costs from 75% to 60%, and raises the nonpayroll cost limitation from 25% to 40%. Covered period extension—The bill extends the covered period during which borrowers must spend the PPP funds to be eligible for forgiveness from eight weeks to 24 weeks from the date of origination of the loan. Payroll tax deferment—The bill permits borrowers to defer payroll taxes without being penalized while still remaining eligible for loan forgiveness. Extension of rehiring safe harbor—The bill extends the rehiring safe harbor by six months to provide borrowers with additional time to restore payroll levels or rehire employees without facing a reduction in the amount of forgiveness for which they are eligible. The original date was June 30, 2020, and the new date is Dec. 31, 2020. In addition to the provisions above, the bill provides loan forgiveness eligibility exemptions for borrowers that are not able to rehire an employee or a replacement. There are also exemptions for loan forgiveness eligibility for borrowers that are not able to return to the same level of business due to complying with COVID-19-related orders or circumstances. What’s next? Borrowers should review the bill carefully and speak to their lender should they have any questions. In addition, borrowers should direct any questions regarding their PPP loan to their lender. We will continue to monitor any additional developments regarding the PPP and deliver updates as necessary. For more information about the PPP, contact Pinkerton Insurance Group.

BORROWERSThe Paycheck Protection Program (“PPP”) authorizes up to $349 billion in forgivable loans to small businesses to pay their employees during the COVID-19 crisis. All loan terms will be the same for everyone. The loan amounts will be forgiven as long as: The loan proceeds are used to cover payroll costs, and most mortgage interest, rent, and utility costs over the 8 week period after the loan is made; and Employee and compensation levels are maintained. Payroll costs are capped at $100,000 on an annualized basis for each employee. Due to likely high subscription, it is anticipated that not more than 25% of the forgiven amount may be for non-payroll costs. Loan payments will be deferred for 6 months. When can I apply? Starting April 3, 2020, small businesses and sole proprietorship’s can apply for and receive loans to cover their payroll and other certain expenses through existing SBA lenders. Starting April 10, 2020, independent contractors and self-employed individuals can apply for and receive loans to cover their payroll and other certain expenses through existing SBA lenders. Other regulated lenders will be available to make these loans as soon as they are approved and enrolled in the program. Where can I apply? You can apply through any existing SBA lender or through any federally insured depository institution, federally insured credit union, and Farm Credit System institution that is participating. Other regulated lenders will be available to make these loans once they are approved and enrolled in the program. You should consult with your local lender as to whether it is participating. Visit www.sba.gov for a list of SBA lenders. Who can apply? All businesses – including nonprofits, veterans organizations, Tribal business concerns, sole proprietorship’s, self-employed individuals, and independent contractors – with 500 or fewer employees can apply. Businesses in certain industries can have more than 500 employees if they meet applicable SBA employee-based size standards for those industries (click HERE for additional detail). For this program, the SBA’s affiliation standards are waived for small businesses (1) in the hotel and food services industries (click HERE for NAICS code 72 to confirm); or (2) that are franchises in the SBA’s Franchise Directory (click HERE to check); or (3) that receive financial assistance from small business investment companies licensed by the SBA. Additional guidance may be released as appropriate. What do I need to apply? You will need to complete the Paycheck Protection Program loan application and submit the application with the required documentation to an approved lender that is available to process your application by June 30, 2020. Click HERE for the application. What other documents will I need to include in my application? You will need to provide your lender with payroll documentation. Do I need to first look for other funds before applying to this program? No. We are waiving the usual SBA requirement that you try to obtain some or all of the loan funds from other sources (i.e., we are waiving the Credit Elsewhere requirement). How long will this program last? Although the program is open until June 30, 2020, we encourage you to apply as quickly as you can because there is a funding cap and lenders need time to process your loan. How many loans can I take out under this program? Only one. What can I use these loans for? You should use the proceeds from these loans on your: Payroll costs, including benefits; Interest on mortgage obligations, incurred before February 15, 2020; Rent, under lease agreements in force before February 15, 2020; and Utilities, for which service began before February 15, 2020. What counts as payroll costs? Payroll costs include: Salary, wages, commissions, or tips (capped at $100,000 on an annualized basis for each employee); Employee benefits including costs for vacation, parental, family, medical, or sick leave; allowance for separation or dismissal; payments required for the provisions of group health care benefits including insurance premiums; and payment of any retirement benefit; State and local taxes assessed on compensation; and For a sole proprietor or independent contractor: wages, commissions, income, or net earnings from self-employment, capped at $100,000 on an annualized basis for each employee. How large can my loan be? Loans can be for up to two months of your average monthly payroll costs from the last year plus an additional 25% of that amount. That amount is subject to a $10 million cap. If you are a seasonal or new business, you will use different applicable time periods for your calculation. Payroll costs will be capped at $100,000 annualized for each employee. How much of my loan will be forgiven? You will owe money when your loan is due if you use the loan amount for anything other than payroll costs, mortgage interest, rent, and utilities payments over the 8 weeks after getting the loan. Due to likely high subscription, it is anticipated that not more than 25% of the forgiven amount may be for non-payroll costs. You will also owe money if you do not maintain your staff and payroll. Number of Staff: Your loan forgiveness will be reduced if you decrease your full-time employee headcount. Level of Payroll: Your loan forgiveness will also be reduced if you decrease salaries and wages by more than 25% for any employee that made less than $100,000 annualized in 2019. Re-Hiring: You have until June 30, 2020 to restore your full-time employment and salary levels for any changes made between February 15, 2020 and April 26, 2020. How can I request loan forgiveness? You can submit a request to the lender that is servicing the loan. The request will include documents that verify the number of full-time equivalent employees and pay rates, as well as the payments on eligible mortgage, lease, and utility obligations. You must certify that the documents are true and that you used the forgiveness amount to keep employees and make eligible mortgage interest, rent, and utility payments. The lender must make a decision on the forgiveness within 60 days.

The $2 trillion stimulus bill intended to help offset the financial burdens created by coronavirus disease 2019 (COVID-19) will soon be passed into law. More specifics will be announced when this bill is signed into law.   The bill proposes to send direct payments to Americans. This article contains answers to questions you may have about those payments. How much should I expect? Payments are based on income (as indicated on tax forms you’ve submitted). Individuals making under $75,000 will receive $1,200. Couples making under $150,000 who joint-filed will receive $2,400. Those making $112,500 or less who filed as “head of household” will also get the full $1,200. Families will also receive an additional $500 per child. If you made over $75,000, you will receive less. For every $100 on income beyond $75,000, you will receive $5 less in your check. Individuals making $99,000 and couples making $198,000 won’t receive anything. When will I get the payment? The Treasury Department said money will be sent “within three weeks” for direct deposits, which would be a little before April 18. Paper checks could take much longer to be sent out. Where will they send the money? The Treasury Department will use information provided from your 2019 tax return (or 2018, if you haven’t yet filed taxes this year). How is it being sent? The payments will be sent the same way you received your last tax refund. If that was a direct deposit, that will be the method. Otherwise, the IRS will mail a check to your last known address. How many payments are there? This bill only authorizes a one-time payment, but congressional leaders suggested the possibility of additional payments in another bill at a later date. I made over $99,000 when I filed taxes, but I’ve since been laid off. Will I get a payment? Likely not, but you can apply for it when you file your 2020 tax return. The IRS is expected to create a way to handle these situations. Will people on Social Security get a payment? Yes, provided they received Form SSA-1099 in 2019. Is the payment taxable? No.

On Wednesday, March 25, 2020—after days of debate—Congress agreed to a $2 trillion economic rescue package designed to provide financial assistance to Americans and their families, and billions of dollars in loans for businesses. Voting is expected midday. The package is the largest fiscal stimulus in modern U.S. history and is the government’s most recent response to coronavirus disease 2019 (COVID-19). What is included in the stimulus package? While the final bill has yet to be released, there have been some publicly debated points. The economic rescue package includes a plan to provide two waves of direct financial assistance to Americans, a plan to stabilize the airline industry, a plan to provide small businesses with funds and a plan to issue loan guarantees to other hard-hit sectors in the economy. The package also includes provisions to extend unemployment insurance, increase funding for Medicaid and add additional assistance for small businesses throughout the country. “This is not a moment of celebration, but one of necessity.” – Sen. Chuck Schumer Direct Financial Assistance to Americans The stimulus package would provide two waves of direct payments to all Americans, coming weeks apart. American adults making up to $75,000 would receive $1,200 each and $500 per child. Married couples earning up to $150,000 would receive $2,400. Adults making more than $75,000 but less than $99,000 would receive less, and adults making more than $99,000 would not receive any government financial assistance. Stabilizing the Economy The economic relief package proposal includes the following funds to stabilize various sectors of the economy: Airline industry: $50 billion Small businesses lending program: $350 billion Hospitals: $130 billion State and local governments: $150 billion What’s next? The economic relief package has been agreed to by Congress, but not yet passed. We will continue to monitor the situation for developments and provide updates.

If your employment has been negatively impacted as a result of the mitigation efforts in Florida to stop the spread of COVID-19, you may be eligible to receive Reemployment Assistance. Individuals who may be eligible for Reemployment Assistance may include: Those who are quarantined by a medical professional or a government agency, Those who are laid off or sent home without pay for an extended period by their employer due to COVID-19 concerns, or Those who are caring for an immediate family member who is diagnosed with COVID-19. What is Reemployment Assistance? Reemployment Assistance provides temporary wage replacement (unemployment insurance) benefits to eligible individuals who are out of work through no fault of their own. Am I eligible for Reemployment Assistance? If you have a history of wages in the state of Florida, you are actively able and available to seek and accept new employment, and you are currently unemployed or work reduced hours through no fault of your own, you may be eligible to receive Reemployment Assistance benefits. How do I file a Reemployment Assistance claim? Reemployment Assistance claims are handled by the CONNECT system. You can file your claim by accessing CONNECT through www.floridajobs.org in the Reemployment Assistance Service Center in the right hand corner of the page. People who need assistance filing a claim online because of legal reasons, computer illiteracy, language barriers, or disabilities may call 1-800-681-8102. What will I need to complete a application? You will need the following information to complete an application: Social Security Number Driver’s License or State ID Your last 18 months of employment (including name, separation reason, earnings, and dates of work) Work authorization (if not a US citizen) DD-214 member 2, 3, 4, 5, 6, 7, or 8 (if a military employee) SF 8 or SF 50 (if a federal employee) What happens after I file a claim? Your claim has two levels of review after you complete an application: Your history of wages are reviewed to determine if you have earned enough to qualify for benefits Any issues (such as job separation) found during your application are reviewed to determine eligibility You must login to the CONNECT system every two weeks to request benefit payment. Your first date to return to CONNECT is provided at the end of your application. You must request benefits even while your claim is being reviewed. During your request, you will need to report your job searches, work and any earnings. How do I receive payments after filing a claim and requesting benefits? If you are determined eligible after all reviews are complete, payments will be distributed by direct deposit or through the Way2Go debit card based on your initial application. Debit cards are mailed after the first payment is processed and may take 7-10 business days to receive by mail. Payments take 1-2 business to arrive after being processed.