Important Legislation Regarding PPP Loans

Just released by Robert W. Wood, contributor to Forbes.com states “Expenses with PPP money are tax deductible, Congress reverses IRS.” According to Mr. Wood;

Can you deduct business expenses? Of course. But can you deduct them if you use forgiven PPP loan money to pay for them? Until now, the debate has raged, with the IRS saying multiple times “no way, no tax deduction.” But finally, Congress has come to the rescue and said that the whole point of the program was to provide needed loan money for wages and other key expenses. The loan forgiveness was key too, saying that despite normal tax rules, if the loan is forgiven, that will not be income. Now the third piece of the puzzle is finally in place, you can still claim normal tax deductions for business expenses paid with PPP money. The latest COVID relief law states that “no deduction shall be denied or reduced, no tax attribute shall be reduced, and no basis increase shall be denied, by reason of the exclusion from gross income provided by [the loan forgiveness provision that says forgiven PPP loans will not count as income].”

The text of the new legislation can be found here. There has been uniform agreement from business that allowing tax deductions should be the rule, which is hardly surprising. But the IRS position has been unmovable. From the beginning, the IRS relied on what it said were traditional tax principles, the tax agency saying that it would be an impermissible double tax benefit to have income on debt forgiveness not to taxed as income, and then to also allow tax deductions for the expenses paid with the forgiven loan money. Some tax lawyers and academics sided with the IRS in this debate. In fact, some groups and news sources objected strongly to allowing the tax deductions, even saying that a change to allow the tax deductions would be a $100 billion tax deduction to the wealthy, or a a $120 billion windfall to the top 1%. Now that the Congress had the last word on this long-debated and highly controversial topic, it is not clear whether all the talk will stop.

But businesses that snapped up the PPP loan money and that spent the money on wages and rent have been wringing their hands as the 2020 tax year comes to a close. The Paycheck Protection Program was the centerpiece of the CARES Act, providing loans to businesses of up to $10M. If you comply, you don’t even have to pay your loan back. What’s more, there is not even any forgiveness of debt income when your loan is forgiven, something that normally is a standard tax result from a forgiven loan. So far, so good, but can businesses claim tax deductions for business expenses? In Notice 2020-32, the IRS denied tax deductions even for expenses that are normally fully deductible. The IRS says allowing a deduction would be a double dip. Congress quickly moved to reverse the IRS in the Small Business Expense Protection Act, S.3612 - 116th Congress (2019-2020). That bill languished until now.

The IRS hasn’t been kind to PPP loans, and to stop people from claiming deductions and then later getting forgiveness, the IRS said no again. The IRS released Revenue Ruling 2020-27 to address situations where a loan is not yet forgiven but might be in the future. In the ruling, the IRS described two situations. In the first, a borrower pays payroll and mortgage interest that are valid PPP expenditures. The borrower applies for forgiveness in November 2020 and satisfied all the requirements under the CARES Act to have it forgiven, but it doesn’t yet have an answer as to whether it will be forgiven.

In the second case, the borrower paid the same type of expenses with its PPP loan, but expects to apply for forgiveness in 2021. In both cases, the IRS says the business cannot deduct these business expenses. The businesses both have a “reasonable expectation” that the loans will be forgiven. The IRS also released Rev. Proc. 2020-51, which provides a safe harbor for PPP borrowers whose loan forgiveness has been partially or fully denied and who wish to claim deductions for otherwise eligible payments on a return, amended return, or administrative adjustment request. All of the IRS releases are out the window now.

For further information from The National Law Review Click HERE. If you have any questions with regards to your specific circumstance feel free to reach out to us by our contact us page on our website.

BJ Kane & Co. Services Reminder

B.J. Kane & Co., P.C. was established in 1986 as a CPA Firm catering to healthcare professionals, located in Northern Virginia, just fifteen minutes from Washington, DC.

Our firm has valuable insight into both taxes and health care, and serves some of the largest health care providers in the Washington Metropolitan area.

Our team has expertise in tax planning and preparation, business consulting, compensation formulas, estate and financial planning, and management advisory services. We use our wide range of strategic business alliances to benefit our clients, and are known for cultivating long-term relationships and expanding top practices. 


We are dedicated to taking our clients to the next level.

Apply for the Rebuild VA Grant Fund Link Correction

In the blog post and newsletter we sent out yesterday, the link to apply for this Grant Fund was incorrect. Here are two links that contain the link to the application as well as a link to the FAQ. We do apologize for the inconvenience. If you have further questions or problems accessing the link feel free to reach out to us at info@bjkane.com.

Governor Northam Invites Small Businesses and Nonprofits to Apply for Up to $100,000 from Rebuild VA Grant Fund

According to Governor Ralph Northam Rebuild VA was launched in August and businesses can still apply. Below is an announcement that was released on October 28th.

Program allotted additional $30 million, eligibility expanded

RICHMOND—Governor Ralph Northam today announced that Rebuild VA, a grant program to help small businesses and nonprofit organizations affected by the COVID-19 pandemic, will expand eligibility criteria and increase the amount of grant money businesses receive.

Rebuild VA launched in August with $70 million from the federal Coronavirus Aid, Relief, and Economic Security (CARES) Act. Governor Northam is directing an additional $30 million to support the expansion of the program. Businesses with less than $10 million in gross revenue or fewer than 250 employees will be eligible under the new criteria, and the maximum grant award will increase from $10,000 to $100,000.

“We started Rebuild VA to help small businesses and nonprofit organizations navigate the impacts of the COVID-19 pandemic,” said Governor Northam. “These changes to the program will ensure that we can provide additional financial assistance to even more Virginians so they can weather this public health crisis and emerge stronger.” 

Rebuild VA will now be open to all types of Virginia small businesses that meet size and other eligibility requirements, from restaurants and summer camps, to farmers and retail shops. Businesses that previously received a Rebuild VA grant will receive a second award correlated with the updated guidelines.

Rebuild VA is administered by the Department of Small Business and Supplier Diversity (SBSD) in partnership with the Department of Housing and Community Development and the Virginia Tourism Corporation, and the Virginia Economic Development Partnership. Eligible businesses and nonprofits must demonstrate that their normal operations were limited by Governor Northam’s Executive Orders Fifty-Three or Fifty-Five, or that they were directly impacted by the closure of such businesses. In September, the program expanded eligibility to supply chain partners of businesses whose normal operations were impacted by the pandemic. 

Rebuild VA funding may be utilized for the following eligible expenses:

  • Payroll support, including paid sick, medical, or family leave, and costs related to the continuation of group health care benefits during those periods of leave;

  • Employee salaries;

  • Mortgage payments, rent, and utilities;

  • Principal and interest payments for any business loans from national or state-chartered banking, savings and loan institutions, or credit unions, that were incurred before or during the emergency;

  • Eligible personal protective equipment, cleaning and disinfecting materials, or other working capital needed to address COVID-19 response.

For additional information about Rebuild VA and how to submit an application, click on the apply button.

If you or your company needs assistance in applying for Rebuild Va, feel free to reach out to our office at info@bjkane.com.

CARES Act Provider Relief Fund

The Provider Relief Funds supports American families, workers, and the heroic healthcare providers in the battle against the COVID-19 outbreak. HHS distributes $175 billion to hospitals and healthcare providers on the front lines of the coronavirus response.

CARES Act Provider Relief Fund: For Providers

The Provider Relief Fund supports healthcare providers in the battle against the COVID-19 pandemic. Through the Coronavirus Aid, Relief, and Economic Security (CARES) Act and the Paycheck Protection Program and Health Care Enhancement Act (PPPCHE), the federal government has allocated $175 billion in payments to be distributed through the Provider Relief Fund (PRF).

Qualified healthcare providers, services, and support may receive Provider Relief Fund payments for healthcare-related expenses or lost revenue due to COVID-19. Separately, the COVID-19 Uninsured Program reimburses providers for testing and treating uninsured individuals with COVID-19.

These distributions do not need to be repaid to the US government, assuming providers comply with the terms and conditions.

How to Apply for Phase 3 General Distribution

CARES Act Provider Relief Fund: General Information

Phase 1 General Distribution

HHS distributes $50 billion to providers who bill Medicare fee-for-service to provide financial relief during the coronavirus (COVID-19) pandemic. These funds are allocated proportionally to providers' share of 2018 patient revenue. On April 10, 2020, HHS immediately distributed $30 billion to eligible providers throughout the American healthcare system.

CARES Act Provider Relief Fund: Phase 2-3 and General Information

General Distribution ($50 billion)

$50 billion is allocated proportionally to providers' share of 2018 net patient revenue. The allocation methodology is designed to provide relief to providers who bill Medicare fee-for-service, with at least 2% of that provider's gross patient revenue regardless of its payer mix. Payments are determined based on the lesser of 2% of a provider's 2018 (or most recent complete tax year) net patient revenue or the sum of incurred losses for March and April.

Information about the Initial $30 Billion Distribution and Targeted Distributions

Reporting Requirements and Auditing

All recipients of Provider Relief Fund (PRF) payments must comply with the reporting requirements described in the Terms and Conditions and specified in future directions issued by the Secretary.

For Recipients of Payments more than $10,000

Recipients of Provider Relief Fund (PRF) payments exceeding $10,000 in the aggregate must report required information, including intent, use of funds, and other data elements. For more details:

These final reporting requirements do not apply to:

  • Nursing Home Infection Control distribution recipients

  • Rural Health Clinic Testing distribution recipients

  • Health Resources and Services Administration (HRSA) Uninsured Program reimbursement recipients

Separate reporting requirements may be announced in the future.

Auditing

The recipients of Provider Relief Fund payments may be subject to auditing to ensure the accuracy of the data submitted to HHS for payment. Any recipients identified as having provided inaccurate information to HHS will be subject to payment recoupment and other legal action. Further, all recipients of Provider Relief Fund payments shall maintain appropriate records and cost documentation including, as applicable, documentation described in 45 CFR § 75.302 – Financial management and 45 CFR § 75.361 through 75.365 – Record Retention and Access, and other information required by future program instructions to substantiate that recipients used all Provider Relief Fund payments appropriately.

Upon the Secretary's request, the recipient shall promptly submit copies of such records and cost documentation. The recipient must fully cooperate in all audits the Secretary, Inspector General, or Pandemic Response Accountability Committee conducts to ensure compliance with applicable Terms and Conditions. Deliberate omission, misrepresentation, or falsification of any information contained in payment applications or future reports may be punishable by criminal, civil, or administrative penalties, including but not limited to revocation of Medicare billing privileges, exclusion from federal health care programs, and/or the imposition of fines, civil damages, and/or imprisonment.

Please refer to the Terms and Conditions associated with each payment distribution and the Reporting Requirements and Auditing FAQs for more details.

CARES Act Provider Relief Fund: FAQs

CARES Act Provider Relief Fund: For Patients

If you have insurance

Private insurers must waive insurance plan members' cost-sharing payments for COVID-19 diagnostic testing and certain related items and services.

Some private insurers, including Humana, Cigna, UnitedHealth Group, and the Blue Cross Blue Shield system, have agreed to waive cost-sharing payments for insured patients' COVID-19 treatment.

If a patient has insurance and seeks COVID-19 treatment from an out-of-network provider that has received General or Targeted Distributions from the Provider Relief Fund, the provider has agreed not to seek to collect out-of-pocket payments more significant than what the patient would have otherwise been required to pay if an in-network provider had provided the care.

If you do not have insurance

Suppose you are uninsured and receive COVID-19-related testing and/or treatment services. In that case, your provider may have submitted a claim to the Health Resources & Services Administration (HRSA) to reimburse these services. Providers who participate in and are reimbursed from the HRSA COVID-19 Uninsured Program are not allowed to "balance bill" individuals who do not have health care coverage (uninsured).

If you receive a bill in which a portion of that bill is paid for by HRSA, you may not be responsible for the remainder of the bill if the rendered service was for COVID-19 testing and/or treatment.

If you received a bill and were charged for COVID-19 testing and/or treatment services and the statement shows HRSA reimbursement for those services, please contact your health care provider to discuss how best to resolve your bill's payment. (If your provider has questions, they can visit the HRSA COVID-19 Uninsured Program site .)

Please note that if your provider didn't submit a bill for your COVID-19-related testing and/or treatment to the HRSA COVID-19 Uninsured Program or the care was not eligible for reimbursement from the program, you may be responsible for full payment of the bill.

Back Taxes and Tax Forms Update

Back Taxes

IRS is hitting pause on sending out many balance-due notices, in response to criticism from lawmakers. IRS will stop mailing out second notices o taxpayers with outstanding tax debt. It is taking this step to avoid confusion for taxpayers who responded to IRS’s first balance-due notice by mailing a payment. Much of that correspondence is still sitting unopened in the agency’s mail backlog. Also, IRS is postponing many new tax lien notices through Sept. 30.

Forms

The 2020 Form 1040 will look slightly different from the 2019 version, based on a draft released by IRS. The return will have two new line items: One for the above-the-line deduction for cash charitable contributions of $300 or less by non-itemizers. The other allows eligible filers who qualify for stimulus payments to reconcile the amount they received against the recovery rebate credit they otherwise entitled to. These two changes apply only for 2020. Additionally, whether filers have transacted in virtual currency has been moved from Schedule 1 on last year’s 1040 to page 1 of the 2020 return. If you have any questions or need clarification, please feel free to reach out to us at info@bjkane.com.

HHS Provider Relief Fund Available

Good news for Dental practices that didn’t qualify for the HHS Provider Relief Fund. According to the ADA;

Dentists who were previously ineligible for relief can now apply to receive funding from the U.S. Department of Health and Human Services' Provider Relief Fund.

The American Dental Association worked closely with HHS and the Health Resources and Services Administration, which administers the fund, to implement this for dentists. As a result of this advocacy, eligible dentists will receive a reimbursement of 2% of their annual reported patient revenue.

"The ADA Council on Government Affairs was proud to advocate for this important funding that will provide badly needed relief to dentists during the pandemic. We thank HHS for their support," said Dr. Phillip Fijal, council chair.

Dentists have until Aug. 3 to apply for funding through the Enhanced Provider Relief Fund Payment Portal.

The following dental providers are eligible:

• Dentists who have directly billed their state Medicaid/Children’s Health Insurance Programs or Medicaid managed care plans for health care-related services during the period of Jan. 1, 2018, to Dec. 31, 2019.
• Providers who own an included subsidiary that has either directly billed their state Medicaid/CHIP programs or Medicaid managed care plans for health care-related services during the period of Jan. 1, 2018, to Dec. 31, 2019.
• Providers who have either directly billed health insurance companies for oral health care-related services, or who own an included subsidiary that has directly billed health insurance companies for oral healthcare-related services.
• Licensed providers who do not accept insurance and have either directly billed patients for oral health care-related services, or who own (on the application date) an included subsidiary that does not accept insurance and has directly billed patients for oral health care-related services.

Eligible providers must also meet all of the following requirements:

• Not have received payment from the $50 billion General Medicare Distribution.
• Have filed a federal income tax return for fiscal years 2017, 2018 or 2019 or be an entity exempt from the requirement to file a federal income tax return and have no beneficial owner that is required to file a federal income tax return (for example, a state-owned hospital or health care clinic).
• Have provided patient dental care after Jan. 31.
• Not have permanently ceased providing patient dental care directly or indirectly through included subsidiaries. However, dental offices that shut down during the pandemic are eligible.
• If the applicant is an individual, have gross receipts or sales from providing patient dental care reported on Form 1040, Schedule C, Line 1, excluding income reported on a W-2 as a statutory employee.

HHS will use a curated list of dental practice Taxpayer Identification Numbers to determine eligibility, but it will work to validate applicants who are not on the list. Providers with TINs on the list must meet other eligibility requirements, including operating in good standing and not being excluded from receiving federal payments. When entering their TIN in the portal, dentists should not use dashes as this will result in their number not processing correctly.

Dentists who previously received payments from the Medicare general distribution or the Medicaid and CHIP distribution — even if they rejected and returned the payment — are not eligible to apply now, but they may be eligible in future distributions of the fund, according to HHS. The ADA has been advocating for this eligibility restriction to be lifted.

For more information about the ADA's advocacy efforts during the COVID-19 pandemic, visit ADA.org/COVID19Advocacy.

If you need more information you can email us directly at Info@BJKane.com or contact Malika Azargoon at Malika@zardentalconsulting.com or call  (703) 255-0400.

Telemedicine and Tax Considerations During COVID-19

Telemedicine’s remote delivery of services also brings up some interesting employment tax-related considerations. As a general rule, the value of cash and noncash benefits provided to an employee by an employer is taxable income unless otherwise excluded.

Such expenses can be excluded from income for employees if the expense is a working condition fringe benefit under section 132 of the Internal Revenue Code. This benefit includes property or services provided to an employee, which the employee can deduct as a trade or business expense. For employees to get reimbursed, they need to include these amounts as income and they need to follow an accountable plan that explains the business reason, provides substantiation, and includes reasonable amounts. In addition to computers and other tech equipment needed for job performance, these expenses can also extend to cell phones, travel costs and, in some cases, uniforms.

Since telemedicine can be delivered from medical office locations as well as home offices, it’s necessary to determine which should be used as the “tax home.” If most of the time, services are delivered from a home office, it’s the tax home. This is important because a home office may be in another state or tax jurisdiction, which means different withholding rules may apply.

Since a public emergency was declared, these additional expenses fall within section 139 of the Internal Revenue Code, which is a provision enacted during the tragic events of 9/11. Section 139 allows individuals to give money to others to cover their additional expenses incurred as a result of the national disaster or emergency. Individuals are not taxed on the amounts they received. And in most instances, those that had given the amounts could deduct it. Employers have been using this provision for additional expenses incurred due to the COVID-19 emergency. Such expenses may include additional childcare, safety, sanitation and other expenses, such as masks, gloves, and other protective gear. Expenses related to working from home like increased utilities or home office supplies are also covered.

New PPP guidance from SBA might change your forgiveness calculation 

Who is your landlord? New PPP guidance from SBA might change your forgiveness calculation 

According to the Washington Business Journal;

New rules issued this week by the Small Business Administration could make some Paycheck Protection Program borrowers’ rent or mortgage interest payments ineligible for forgiveness.

Generally, the rules of the federal Covid-19 stimulus program deem rent and mortgage interest as expenses that count toward loan forgiveness so long as 60% of the proceeds are spent on payroll. But this week, the federal agency overseeing the program announced a new position on those outlays for businesses that have a landlord-tenant agreement between related parties.

The rule, issued Aug. 24, states rent paid to a related party is eligible for forgiveness only if the amount of forgiveness requested for that expense is “no more than the amount of mortgage interest owed on the property during the covered period that is attributable to the space being rented by the business.” The agreement had to be in place before Feb. 15.

Parties are considered related if they have any common ownership, no matter the size.

“Now you have to look to the level of mortgage interest expense during the covered period that lessor incurred,” said Terry Hoover, a partner at accounting firm Wipfli LLP. “That is the upper limit of how much rent can be included.”

To demonstrate the rent amount – if any – eligible for forgiveness, the SBA said the borrower must provide its lender mortgage interest documentation to back up the payments.

The agency went further to say mortgage interest payments to a related party will not be forgiven.

“PPP loans are intended to help businesses cover certain non-payroll obligations that are owed to third parties, not payments to a business’s owner that occur because of how the business is structured” the SBA reasoned. “This will maintain equitable treatment between a business owner that holds property in a separate entity and one that holds the property in the same entity as its business operations.”

But some advisers say these new regulations penalize some businesses and place them in a vulnerable position.

Hoover said a common arrangement in family-held businesses is that family members in a senior generation own real estate and lease it to their company. The next generation of the family often has a minority or majority interest in the company. If the real estate has been held for years, the debt on it might have been paid down or paid off.

“In that situation, unfortunately, if it’s a debt-free property that is being leased, then the rent that’s paid during the covered period is not an eligible forgivable cost,” Hoover said. “It effectively penalizes situations where people have managed their real estate conservatively and not maintained a large amount of debt against it.”

The issue the SBA said it was trying to protect against may arise, Hoover said. But the new rule will have a negative impact on many other businesses with different circumstances – such as generational operations.

Hoover added that the rule is a deviation from the agency’s prior position, which did not indicate otherwise qualifying mortgage interest payments would not be eligible for forgiveness.

“There are certainly valid financing agreements that were in place on Feb. 15 between related parties that were necessary in order to support the business, and yet the interest expense owed on those obligations is completely excluded from potential forgiveness,” Hoover said.

He added that the new rules apply to all borrowers who have not yet received notification from their lender about approval of their forgiveness application. Given the hesitation by many lenders to start processing forgiveness applications with potential program changes forthcoming, that’s most of the 5.2 million businesses that used the PPP for funding, Hoover said.

The SBA opened a portal Aug. 10 to accept forgiveness applications from lenders. The SBA will not say how many applications have been submitted so far, but lenders have said they are waiting to see what lawmakers decide about potential automatic forgiveness for loans of certain sizes.

Hoover said the SBA’s new regulation could affect the forgiveness calculation for businesses, particularly those that used the shorter eight-week covered period versus those using the full 24 weeks.

“The longer one chooses to let their covered period run, then, generally speaking, the more ability a borrower would have to compensate for this change if it applies to them and still end up with maximum potential forgiveness,” he said.

 

 

Tax and Stimulus Update

Congress and the White House want to pass the next stimulus bill quickly.

They will do it, but it won’t be easy. Some of the major sticking points include additional funding for states and localities, unemployment benefits, and liability protection for businesses and others from coronavirus-related lawsuits.

Among tax items that have a good chance of making it into final legislation:

A second round of stimulus checks for individuals. Tax breaks for businesses to help cover part of the cost of making their premises safe for workers and customers. Expanded employee retention tax credits for employers who are affected by COVID-19 but keep paying workers. Funding and tweaks to Payroll Protection Program loans. Plus relief for workers with unused funds in their health flexible spending accounts.

Could the Schedule A medical expense deduction be expanded?

A House proposal would lower the current 7.5% AGI threshold to 5% for 2020 and 2021 in light of the COVID-19 pandemic. This idea has bipartisan support on Capitol Hill.

Leasing a vehicle to use in your business is a bit cheaper, tax-wise, in 2020.

If a car worth more than $50,000 is first leased for business during the year, the lessee must pay income tax each year on an amount spelled out in IRS tables. For example, on a three-year lease for a $60,000 car first put in service this year, you reduce the size of your tax deductions for the lease payments on the vehicle

by $22 in 2020, $49 the next year, and $72 in 2022. See Rev. Proc. 2020-37.

A man whose tax debt that is discharged in bankruptcy gets another win:

A private tax-debt collector owes him damages, a federal court decides. 

IRS uses private companies to collect inactive tax receivables owed by individuals. In 2016, a bankruptcy court discharged the man’s liabilities, including taxes that he owed to IRS. Collection efforts should have ceased at that time. But instead, the IRS hired a private collector to collect the man’s taxes. The man sued, and the bankruptcy court has now ruled that the collector owes him $3,644 for attorneys’ fees and the emotional distress (in re Starling, D.C., N.Y.).

Can’t pay your taxes and worried about penalties?

File your return regardless. Ask IRS about penalty abatement if you owe late filing or payment penalties. Under its first-time abatement program, IRS will OK a waiver of the fines for filers who paid or arranged to pay the tax and who have been tax-compliant for three years.

Making an offer to settle your federal tax debt at less than what you owe?

There are two payment options: Lump sum cash, which requires 20% The total offer amount to be paid upfront, with the remaining balance to be paid in five or fewer installments within five months of the date your offer is accepted. Periodic payment requires that your first payment be made with the offer, with the remainder remitted in monthly installments over 6-24 months. Check out IRS’s Form 656 booklet for forms and eligibility requirements. IRS also has an online tool at https://irs.treasury.gov/oic_pre_qualifier.

Keep this rule in mind if the service accepts your offer in compromise: 

You must timely file returns and pay taxes for five years, starting with the date of IRS’s acceptance of the request and ending through the fifth year, including extensions. Take this case involving a couple who entered into an offer-in-compromise agreement with IRS in 2013, paid off their offer in 2016, but then failed to pay their 2015 taxes. IRS revoked the compromise offer and ordered the couple to pay the full amount

they originally owed, less than they already paid in (Sadjadi, 5th Cir.).

Promises to settle your IRS tax debts for pennies on the dollar are just that: Promises.

 Firms that hawk these types of tax-debt relief plans are referred to by the IRS as “offer in compromise mills.” IRS says these companies charge hefty up-front fees and churn out applications that most of their clients cannot qualify for the offer and compromise.

IRS is still behind on issuing tax refunds.

Tax refunds include direct-deposit refunds and paper checks owed to people who filed returns after the IRS shut its offices because of the coronavirus pandemic. IRS statistics bear this out. As of July 17, the service processed 6.8% fewer direct-deposit refunds and 5.1% fewer total refunds than last year. Refunds on paper returns take the longest. To check on your refund status, use “Where’s My Refund” on IRS’s website.

Employer leave donation programs to COVID-19 charities get IRS’s blessing.

Employers allow their employees to forfeit their accrued but unpaid vacation or sick days for cash payments that the employer donates in 2020 to charitable organizations, which will assist victims of the coronavirus pandemic. Workers won’t be subject to payroll or income taxes on the value of the donated leave. Still, they also are not able to take charitable deductions on their individual income tax returns. According to the Internal Revenue Service, employers can write off the payments as charitable contributions or business expenses.

Tax Refund Insights

Are you wondering where your refund is based on a paper return you filed?

 Due to limited IRS staffing, there are significant delays in the processing of paper returns were filed in March or late. IRS is advising taxpayers not to call about the status of a filed return paper or electronic. 

It is essentially a waiting game for your refund.

The good news is that the IRS will pay interest on delayed tax refunds.

For returns filed by July 15, the interest will run from April 15 through the refund date. The Service says that it may send out refunds and interest payments separately.

529 Relief

What if you use 529 funds for your kid’s education…

And the money is refunded because the school closes for COVID-19:

The tax law waives tax and penalties if, after a distribution is made from a 529 account, the student gets a refund. To get relief, you must redeposit the funds into a 529 account for the same beneficiary within 60 days of receiving the refunds.

Payroll Tax Credit Update

There is a payroll tax credit available to businesses in 2020 that are economically or financially hurt by the coronavirus but continue to keep employees on the payroll. Employers must suffer economic hardship from the COVID-19 pandemic to qualify for the credit. Eligible employers are those who had to close their business or reduce hours because of governmental order, or whose gross receipts in a given quarter have declined by over 50%, compared to the same quarter in 2019. Tax-exempt groups qualify as well. However, states, local, and cities do not, nor do employers who get a loan under the Paycheck Protection Program. The credit is 50% of up to $10,000 in qualified wages paid per employee or a maximum credit of $5,000 per worker annually. Qualified wages are wages paid from March 13 through December 31 of this year and depend on the number of employees in 2019. For companies averaging more than 100 employees, qualified wages are wages paid to employees who aren’t providing services. For smaller firms, all wages are qualified. Qualified wages also comprise the firm’s cost of employer-provided health care, including the employer’s cost of health coverage for unpaid, furloughed workers. Qualified wages do not include wages computed in figuring the new payroll credit for providing mandated paid sick and family leave to workers affected by COVID-19. The credit offsets the employer’s 6.2% share of Social Security taxes and the excess refundable. Employers claim the credit on Form 941. They can get the breaks quickly by reducing employment tax deposits otherwise owed to IRS by the amount of payroll credits the business qualifies for. Employment taxes that can be reduced include withheld federal income tax and the employees’ and employer’s shares of Social Security tax and Medicare tax. Companies can also seek advance payment for credits above payroll deposits by filing new Form 7200. Employers can fax the 7200 to IRS at 855-248-0552. Employers will need to reconcile the payroll tax credits, reduced deposits, and any advance payments they got when they file their quarterly Form 941. The Service has provided guidance on this credit in a set of FAQ covering 17 topics, which are available online by visiting www.irs.gov. One series of questions addresses how the credit interacts with other payroll credits. However, The House’s new stimulus bill would significantly enhance the credit. The proposed changes are: Increasing the maximum payroll credit to $12,000 per worker per quarter (up from $5,000 per worker per year now). Extending the credit to eligible State and Local government employers and allowing employers that take out PPP loans to qualify for the credit.

Senate Nears Deal to Extend PPP Spending Window

WASHINGTON—The Senate worked to coalesce on a deal that would double the amount of time businesses have to spend loans obtained through the Paycheck Protection Program, which is designed to help keep workers on payroll during the coronavirus epidemic.

“We have an agreement in principle on the basis of the language. We’re awaiting technical feedback from our Democratic colleagues,” Sen. Marco Rubio (R., Fla.) told reporters, with senators aiming to pass it as early as Thursday through unanimous consent before leaving Washington until June.

The change to the program would extend the time period to 16 weeks, and must be approved by the House. Under the current rule, the earliest recipients of PPP funds must finish using them by May 29.

Separately, House Democrats are expected next week to bring to the floor a bill to change the $660 billion program’s time frame, and change accessibility requirements. To become law, either bill would have to pass both chambers and be signed by the president.

The Resilience of the Concierge Medicine Practice (Featuring Brian Kane, CPA)

Please join us for this fast paced webinar that will outline everything you need to know about The Concierge Medicine Practice.

Webinar title: The Resilience of the Concierge Medicine Practice

Webinar tagline: A Model for Thriving Professionally, Personally and Financially in Uncertain Times

 REGISTER HERE

Description/Learning objectives: For physicians committed to their independence, the COVID-19 crisis has been a pressure test, starkly revealing the weaknesses and vulnerabilities of traditional practices. The pandemic has also served as a genuine catalyst for change, providing physicians with a compelling reason to consider the professionally fulfilling and economically sustainable alternative of concierge medicine.

 

In this informative webinar, learn how the financial, clinical and operational hallmarks of a concierge practice are key to its resilience during COVID-19 and healthcare reform…and why the model is strong enough to withstand other challenges yet to come in a constantly evolving healthcare system.

 

Join us for a revealing, fast-moving discussion with:

  • Concierge physicians John Valenti, MD and Shalini Kaneriya, MD, who share their personal journeys of change to the membership medicine model, and how their practices continue to sustain during the pandemic.

  • Brian Kane, CPA, founder of BJ Kane & Co., a financial advisor who specializes in setting up efficient and profitable private practices for physician clients.

  • Terry Bauer, CEO of Specialdocs Consultants, a pioneer in transitioning and supporting successful concierge practices nationwide for almost two decades.

Details to follow, so follow us on our social media pages, @BJKaneandCo. Presented by Medical Economics and Specialdocs Consultants.

EIDL

Notice: Lapse in Appropriations

SBA is unable to accept new applications at this time for the Economic Injury Disaster Loan (EIDL)-COVID-19 related assistance program (including EIDL Advances) based on available appropriations funding. 

Applicants who have already submitted their applications will continue to be processed on a first-come, first-served basis.

For more information go to coronavirus-covid-19

Important PPP update

Many of you have applied for the PPP loan being offered by the government/SBA and expect your funds to be available within the next couple of weeks.  B.J. Kane & Company, P.C. is advising all of our clients to make sure that any and all PPP funds are deposited into a dedicated Corporate checking account. This means that most of you will probably need to open a second checking account with your current bank.  The purpose of having a dedicated PPP account is to have clear and concise tracking of all PPP funds and not to comingle these funds with any other Corporate monies.  At some point, the government/SBA will want records and documentation that PPP funds were only used for payroll, rent, and utilities. This will be much easier to prove with a dedicated checking account and will minimize the chances of having to pay back the loan, provided all other requirements were met.  Once you open your dedicated PPP checking account, please remember to give your new checking account information to your payroll processing company as well.

 

If you have any questions or need additional advice, please feel free to reach out to your primary point of contact at B.J. Kane & Company, P.C.  Wisihing you all continued health and safety!  

Medicare Accelerated and Advance Payments Program for Providers During COVID-19 Emergency

Medicare is accepting and processing the Accelerated/Advance Payment Requests during COVID-19 emergency.  Most providers will be able to receive up to 100% of the Medicare payment amount for a three-month period.  MD, DC, and PA Medicare (MD, DC, PA) carrier (Novitas) will calculate the maximum payment amount.  VA Medicare (Palmetto GBA) has a different form and VA divisions need to specify the request payment amount.

 The request form will be completed with your Medicare PTAN and Group NPI combination.  CMS will issue the payment check and recoupment of payment from your Medicare PTAN and Group NPI combination. 

 

The below link shows an informational fact sheet on the accelerated/advance payment program:

Fact Sheet

 

CMS anticipates that the payments will be issued within seven days of the provider’s request.