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CARES Act: What You Need To Do NOW!
April 2, 2020 at 2:00PM – 3:00PM

Agenda• Coronavirus Impact Resources & Updates• Tax• Loan Programs• HR• Message from our Managing Principal, Wendy Kelly• Q&AOur Experts

Dan Walsh, CPA
Manager, Tax
dwalsh@cdhcpa.com

Yoko Yamamoto, CPA, CVA
Principal, Valuations & T.P.
yyamamoto@cdhcpa.com

Aki Edwards, CPA, PHR
Sr. Manager, HR
aedwards@cdhcpa.com

Tax Topics - Individual

Individuals• Recovery Rebates
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Retirement Fund Withdrawals
Required Minimum Distribution (“RMD”)
Charitable Contributions
Student Loans
Loss Limitations
Extensions of time to file and pay

Dan Walsh, CPA
Manager, Tax
dwalsh@cdhcpa.com

Recovery Rebates• A credit for 2020 income taxes is available for $1,200 per person, or$2,400 for joint returns.
• 5% phase-out for high-income taxpayers• Begins at $75,000 for single or married filing separately (MFS) and$150,000 for joint filers.
• Full phase-out occurs at $99,000 for single taxpayers and $198,000 for
joint filers.
• An advanced credit will be issued soon based on the income reported on
the 2019 tax return, or 2018 if the 2019 tax return has not been filed.

Retirement Fund Withdrawals• A taxpayer is eligible to take a penalty-free withdrawal up to $100,000
from a qualified retirement account if any of the below conditions aremet.
• Taxpayer, spouse, or dependent is diagnosed with the virus.
• Adverse financial consequences• Furloughed• Laid off• Unable to work due to child-care• Closing a business due to the virus

Required Minimum Distribution (“RMD”)• For calendar year 2020, there are no RMDs required.
• The Setting Every Community Up for Retirement Enhancement (“SECURE”)
Act became law as of January 1, 2020. Under this law, the below retirement
information changed.
• The required age for minimum distributions increased from 70 ½ to 72.
• There is no longer an age limit for IRA contributions, which was set to 70½ before this act.
• Inherited IRA’s must be paid out within 10 years. Before, this could bespread over the course of the beneficiary’s life.
• Withdrawals under the age of 59 ½ are subject to a 10% penalty, however,there are certain exceptions to this. One new exception added is up to a
$5,000 withdrawal after the birth or adoption of a child.
• Part time employees are now eligible for a 401(k) plan if they work atleast 500 hours over 12 months. Under the old rules, this was 1,000
hours.

Charitable Contributions• For income tax year 2020, there is now an unlimited amount of charitable
contributions allowed as itemized deductions.
• Donations to donor advised funds do not qualify.
• Any taxpayer who does not itemize is allowed up to a $300 deduction incomputing adjusted gross income (“AGI”).

Student Loans• Certain student loans are eligible
for payment deferral throughSeptember 30, 2020.
• Interest shall not accrue
during this deferral.
• Employers are allowed to pay an
employee or lender for any
principal or interest on eligible
student loans up to $5,250
through January 1, 2021. This
would be labeled a nontaxable
fringe benefit to the employee.

Loss Limitations• Business losses reported on an individual’s income tax return occurring
after December 31, 2017 are limited to $250,000 ($500,000 for joint
filers).
• Postponed until tax years beginning January 1, 2021.
• Net Operating Losses (NOLs) generated after December 31, 2017 throughDecember 31, 2020 are eligible for a 5 year carryback.

Extensions of Time to File and Pay• Under IRS Notice 2020-17 and 2020-18, taxpayers with tax returns andpayments of April 15, 2020 received postponed dates of July 15, 2020.
• Payments under $10,000,000 for C corporations are postponed.
• Payments for other taxpayers is up to $1,000,000.
• Extended due dates (October 15, 2020) do not change.
• Gift tax returns have also received extensions of time to file and pay.
• All other informational returns due on April 15th have not received an
extension of time to file.
• Payments to Individual Retirement Accounts and Health Savings Accounts
are also postponed through July 15, 2020.

Tax Topics - Business
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Employee Retention Credit
Charitable Contributions
Employer Payroll Tax Deferral
Net Operating Loss (“NOL”)
Alternative Minimum Tax (“AMT”) Credit
Business Interest Expense Limitation
Qualified Improvement Property (“QIP”)
Payroll tax credit for sick and family leave
Loan Forgiveness

Dan Walsh, CPA
Manager, Tax
dwalsh@cdhcpa.com

Employee Retention Credit• Eligible employers can receive a 50% credit on employee wages up to a
$10,000 limit to offset against Social Security payroll taxes.
• Only the employer’s portion of Social Security can be offset.
• Eligible Employers:• Business is fully or partially suspended• If gross receipts compared to the 2019 tax year quarter havedecreased by at least 50%.

Charitable Contributions• Corporations are allowed a charitable
contribution deduction up to 25% of taxable
income.
• Previously limited to 10% of taxable income.

Employer Payroll Tax Deferral• The employer portion Social Security payroll taxes are allowed to bedeferred through December 31, 2020.
• Half of the deferral must be paid by December 31, 2021 with theremainder due by December 31, 2022.
• If debt if forgiven under the CARES act, then no deferral is allowed.
• A credit will likely be available on the quarterly payroll returns, however,no guidance has been issued yet.

Net Operating Loss (“NOL”)• Any losses generated after December 31, 2017 are subject to an
80% taxable income limitation.
• This has been amended to be losses generated for years
beginning on or after January 1, 2021.
• Carryback of losses is available• 5 year carryback• Applies to losses generated in tax years after December 31,
2017 through December 31, 2020

Alternative Minimum Tax (“AMT”) Credit• Any AMT previously paid was refundable
for 50% each year for 5 years beginningwith tax year 2018.
• Amended for 50% refundable each 2018and 2019.
• An election can be made to make thecredit 100% refundable in 2018.

Business Interest Expense Limitation• Interest expense can be limited if interest exceeds 30% of adjusted taxable
income.
• Amended to be 50% of adjusted taxable income for tax years 2018 and2019.
• An election can be made to use the adjusted taxable income of 2019 fortax year 2020.

Qualified Improvement Property (“QIP”)• Technical correction to the Tax Cuts and Jobs Act (TCJA)• Property placed in service meeting the following criteria is eligible for a 15
year recovery period.
• Interior improvements• Non-structural• No elevators or escalators• Non-residential real property

Payroll Tax Credit For Sick and Family leave• Under the Families First Coronavirus Response Act, businesses are alloweda tax credit for 100% of the qualified sick wages, family leave, and related
health plan expenses through December 31, 2020.
• Paid Sick Leave• Maximum of 10 days for full time employees• Shall not exceed $200 ($511 if under government quarantine, havesymptoms of the virus, caring for others with the virus, or caring for achild where a school or daycare has been closed)• Paid Family Leave• Shall not exceed $200 per day, or $10,000 in the aggregate per
employee• Credits can be used to offset the employer’s Social Security payroll taxes.
• Any deduction for which a credit is received is non-deductible.

Loan Forgiveness• A loan under the Small Business Act is eligible for forgiveness if used topaid the following items.
• Payroll costs• Interest payments on a mortgage (principal payments not allowed) on
real or personal property• Rent• Utilities – electricity, gas, water, transportation, telephone, or internet• Amounts treated as cancellation of debt will be considered non-taxable.
• As shareholders, members, and partners are not liable for these loans,losses cannot be taken against this debt.

Loan Topics• Paycheck Protection Program• Economic Injury Disaster Loan (EIDL)• Illinois Small Grants & Loan AssistanceYoko Yamamoto, CPA, CVA
Principal, Valuations &Transfer Pricing
yyamamoto@cdhcpa.com

CARES Act – Small Business Provisions
Loan Programs Through
Small Business Administration (SBA)• Paycheck Protection Program• To provide a direct incentive for small businesses to keep their workers on
payroll.
• SBA will forgive loans if all employees are kept on the payroll for eightweeks and the money is used for payroll, rent, mortgage interest, orutilities.
• Economic Injury Disaster Loan (EIDL)• SBA is offering designated states and territories low-interest federal
disaster loans for working capital to small businesses suffering substantial
economic injury as a result of Coronavirus (COVID-19).
• Small businesses in all states and territories are eligible.

Paycheck Protection Program (PPP)Paycheck Protection Program (PPP)
Lenders

Refer to “Active Lenders – IL” file

Maturity scheduleMax. 1０ years after application for loan forgiveness.
Changed to 2 Years

Interest rate

Not to exceed 4％ during the covered period.
Changed to 1%

Payment deferral

Not less than 6 months and not more than 1 year

Allowable uses

Payroll cost
Health care benefits (including paid sick or medical
leave and insurance premium)Mortgage interest
Rent
Utility
Interest on other debitPaycheck Protection Program (PPP)Economic Injury Disaster Loan (EIDL)

Economic Injury Disaster Loan (EIDL)IL Small Business Grants and Loan Assistance• Hospitality Emergency Grant Program• Bar and restaurants, 2019 revenue is less than ＄1 million• ＄10,000 to＄25,000 grant• Hotels, 2019 revenue is less than＄8 million• Max＄50,000 grant• Small Business Emergency Loan Fund
• For businesses outside of City of Chicago• 2019 revenue is less than＄3 millison• Less than 50 employee• Max＄50,000 loan
• Downstate Small Business Stabilization ProgramHR Topics• Responding to employee notification• Family First Coronavirus Response Act(FFCRA)• Payroll and Attendance Tracking• Reduction in Force (RIF) andAlternatives• Federal Worker Adjustment andRestraining Notification Act (WARN)• CARES Act Enhanced Unemployment
Insurance Benefits

Aki Edwards, CPA, PHR
Sr. Manager, HR
aedwards@cdhcpa.com

How to respond when an employee
notifies you infection to Covid-19
Responding to the Employee: Help them coordinate taking leave or paid time off until they recovered Ask with whom he/she has been in contact with over the last 2 weeks
Notifying Employees and Customers:
 Directly notify any co-workers or customers who may have been exposed.
 Notify the rest of the company by email or letter that an employee has
tested positive for COVID-19.
 Remember to keep the employee’s identity protected Consult with your county or city public health department
 Be sure to include what steps your company will be taking to protect thehealth of other employees.
Extra Cleaning of the office All surfaces that the infected employee may have touched should be
disinfected. Arrange extra cleaning. Follow CDC cleaning recommendations.

Family First Coronavirus Response Act (FFCRA)
Emergency Paid Sick Leave Act

Covered Employers: all private employers with fewer than 500 employees, andall government employers
10 Days Emergency Paid Sick Leave Benefits: Employees of Covered Employers(regardless of how long an employee has been employed by an employer) areentitled to 10 days of paid sick leave if the employee is unable to work (ortelework) for the following reasons:(Part-time employees are entitled to typical number of hours of work in a typical two-week period)

1.
2.
3.
4.
5.

Federal, State, or local quarantine or isolation order related to COVID-19
Advised by a health care provider to self-quarantine related to COVID-19
Experiencing COVID-19 symptoms and is seeking a medical diagnosis
Caring for an individual subject to an order described in (1) or (2)Caring for a child whose school or place of care is closed (or child care provider isunavailable) for reasons related to COVID-19
6. Experiencing any other substantially-similar condition specified by the Secretary of
Health and Human Services, in consultation with the Secretaries of Labor and Treasury.

Family First Coronavirus Response Act (FFCRA)
Emergency Paid Sick Leave Act

Pay Rate
Reason for leave

Daily pay rate/cap

Total pay cap

1. Quarantine or isolation order
2. Advice from health care provider to selfquarantine

Regular rate of pay up to a cap of $511

$5,1103. Experiencing symptoms of COVID-19 andseeking a medical diagnosis
4. Caring for an individual subject to quarantine
or isolation order, or who has been advised by ahealth care provider to self-quarantine
5. Caring for own child whose school or place ofcare has closed, or whose care provider isclosed or unavailable
6. Experiencing other substantially similar
condition specified by HHS

Two-thirds regular rate of pay, up to a capof $200$2,000Family First Coronavirus Response Act (FFCRA)

Emergency Family and Medical Leave Expansion Act
Covered Employers: all private employers with fewer than 500 employees, andall government employers
Emergency Paid FMLA Benefits: Employees of Covered Employers who have beenon the job for at least 30 days (“Eligible Employees”), will have the right to takeup to 12 weeks of job-protected leave under the FMLA if they are unable to work
(or telework) to care for a child of an Eligible Employee if the child’s school orplace of care has been closed, or the child care provider is unavailable, due to
COVID-19.
Pay Rate:• First 10 Days are unpaid• Two-thirds regular rate of pay, up to a cap of $200 per day (Total Pay cap$10,000)

Attendance Tracking under COVID-19
Track time off more rigorously
Talk to your payroll company and use the correct earnings code
Qualified sick leave wages for refundable tax credit:
1. ESL: Emergency Paid Sick Leave for taking care of yourself due to Covid-19 Illness
2. EFSL: Emergency Paid Sick Leave for taking care of someone in your family due to
Covid-19 Care
3. EFMLA: Emergency Family and Medical Leave for child care

Family First Coronavirus Response Act (FFCRA)
Employer Notice
Requirements:•

Notice must be posted inconspicuous places on theorganizations premises where notice
to employees are customarily posted•

If employees are working remotely,
you should send them a copy of thenotice via email

Alternatives to Reduction in Force (RIF)
Furlough
A furlough is a mandatory suspension
from work without pay. This option
requires employees to work fewer
hours or no hours.
Employers typically provide:o Expectation regarding when
they will return to worko Continuation of employee
benefits

General Rules:
Hourly Non-Exempt : only getpaid hours they actually work
Salaried-Exempt: must receive fullweekly salary for any workweek inwhich they perform any work,without regard for the number ofdays or hours worked

Alternatives to Reduction in Force (RIF)
LayoffA layoff is a temporary suspension of
employment for business reasons not
related to an individual’s
performance. In this case, thecompany believes that this condition
will change and intends to recall the
person when work again becomes
available.

Important Note:
If an employer wants to allow
employees to maintain benefit
coverage for a defined period oftimes, as a incentive to remain
available for recall, they need tocheck their health insurance benefit
plan documents for employee’s
eligibility to remain on thecompany’s plan during layoff. Plans
may be amended for short-term
accommodation.

Reduction in Force (RIF)
Reduction in ForceA RIF is the permanent elimination ofa position also referred to as apermanent layoff. A temporary layoff
may become a RIF.

Important Note:
Rapid Response Services areavailable to employers in the caseof a permanent closure or mass
layoff at a plant, facility orenterprise, or in the event of anatural or other disaster that
results in mass job dislocation.
https://www.dol.gov/agencies/eta/
layoffs/contact

Federal Worker Adjustment and Retraining
Notification Act (“WARN”)
The Worker Adjustment and Retaining Notification Act (WARN) generally requires
employers with 100 or more full-time employees provide 60 Days advance written
notice to affected employees and state and local government officials of “plantclosing” or a “mass layoff”
Events Triggering Notice Obligations
1.

2.

Plant Closing: A plant closing is defined as the permanent or temporary shutdown of a site of
employment that results in an employment loss for 50 or more employees during any 30-day
period. This can include the shutdown of one or more facilities or operating units at a single site of
employment if the shutdown affects 50 or more employees.
Mass Layoffs: A "mass layoff" is defined as a reduction in force that is not a plant closing, but which
results in an employment loss at a single site of employment for:
 500 or more employees or At least 50 or more employees at least 33% of active full-time employees

Important Note: WARN Act Compliance assistance services are available toemployers. https://www.dol.gov/agencies/eta/layoffs/employers

State Mini- WARN Acts
In addition to the Federal WARN Act, some jurisdictions have mini-WARN Acts
including but not limited to: City of Philadelphia
 California
 Hawaii
 Illinois
 Iowa Main Massachusetts New Jersey New York
 Tennessee
 Wisconsin

For example, Illinois law applies to employers with 75 or more employees andcan be triggered with just 25 employment losses.

CARES Act –Enhanced Unemployment
Insurance Benefits
The Act provides funding for an additional $600 per week in unemployment benefits
to workers in participating states through July 31, 2020. The $600 supplemental
benefit is in addition to what workers currently receive under state law.

For example, in Illinois, the regular weekly unemployment benefit amount isapproximately 47 percent of a worker’s prior average weekly wage, with a maximum
weekly benefit of $471 per week for an individual with no dependents.
An Illinois worker making $17 per hour and working full-time earning $680 per week($17 x 40 = $680) is eligible for an unemployment insurance benefit of $320 per week,
without any dependent allowances, provided sufficient base period earnings, andassuming no offsets. The Act’s $600 per week supplement increases the weekly
unemployment benefit for this typical worker from $320 to $920 through July 31,
2020.

Our Experts

Dan Walsh, CPA
Manager, Tax
dwalsh@cdhcpa.com

Yoko Yamamoto, CPA, CVA
Principal, Valuations & T.P.
yyamamoto@cdhcpa.com

Aki Edwards, CPA, PHR
Sr. Manager, HR
aedwards@cdhcpa.com

Thank you for joining us!
We can help!
 Tax implications
 Do you qualify for relief
 Which program is the best fit for you Completing and submitting loan applications
 Projections on PPP loan forgiveness amount Furlough, Layoff, RIF Assistance HR Hotline

Wendy Kelly, CPA
CEO & Managing Principal
wkelly@cdhcpa.com

We can help!

Dan Walsh, CPA
Manager, Tax
dwalsh@cdhcpa.com

Yoko Yamamoto, CPA, CVA
Principal, Valuations & T.P.
yyamamoto@cdhcpa.com

Aki Edwards, CPA, PHR
Sr. Manager, HR
aedwards@cdhcpa.com