COVID-19 Weekly Digest (November 11, 2020)
The pandemic hasn’t hit everyone equally economically, as this article in the Wall Street Journal explains. Manufacturing has mostly recovered, but occupations that require face-to-face interaction, such as service industries, tourism, and restaurants, are faring less well. “This divide between manufacturing and services means the pain has fallen, especially heavily on female and immigrant workers and economies with large informal sectors or with heavy exposure to tourism, entertainment, and travel.” Until a vaccine is widely available and distributed, economies and employers that focus on services will struggle.
CARES ACT UPDATES
Another stimulus bill?
Now that the election is over—although there is still some controversy about the outcome and how a transition will be successfully accomplished—both House Speaker Nancy Pelosi and Senate Majority Leader Mitch McConnell have pledged support for another round of financial support for Americans. However, the contents of the new stimulus bill remain unclear. McConnell favors a smaller, limited scope package, while Pelosi continues to push a broader deal that includes another round of stimulus payments and enhanced unemployment benefits. But with an uncertain level of support from President Trump, the outcome is not clear.
New EIP Scam
The IRS is warning about a new text scam that tricks people into revealing their banking information under the guise of receiving a stimulus payment. The IRS is reporting that people have received texts that say the following: “You have received a direct deposit of $1,200 from COVID-19 TREAS FUND. Further action is required to accept this payment into your account. Continue here to accept this payment …” and includes a link to a fake phishing website. The IRS does not send unsolicited texts or emails. Anyone who receives such a text should send a screenshot of the text to phishing@irs.gov. Be sure to include the date, time, and time zone where the message was received, the number that the message came from, and the number that the message was sent to.
Paycheck Protection Program (PPP)
Last week, the SBA sent out a questionnaire to businesses that received PPP loans over $2 million. Some of the questions are causing an uproar among businesses and bankers, according to this article in Politico. This nine-page “loan necessity questionnaire” includes questions that loan recipients did not anticipate about quarterly revenues, capital expenditures, dividend payments, and employee compensation. Banks and business owners alike are concerned that their answers may jeopardize loan forgiveness and cause headaches, mostly if data entry mistakes are made.
This additional scrutiny on the PPP comes as investigators are discovering widespread fraud in the program. The SBA’s inspector general found tens of thousands of businesses that received funds that they were not eligible for, including companies that did not exist before the pandemic, companies that exceeded the 500 employee limit for eligibility, and companies that seem to have received more funding than their actual payroll levels would allow. The SBA also discovered bank accounts or addresses that received multiple loans.
Did your company receive a PPP or EIDL loan? If so, your company’s name, your address, and the amount you received may soon be publicly available. A federal judge recently ordered the SBA to release full details about all PPP and EIDL loans disbursed. Previously, the SBA released full details for loans over $150,000 and loan amounts and states for smaller loans. Now, that judge sided with news organizations who requested that information, reminding the SBA lawyers that the possibility of releasing all loan details was included in a disclaimer included in the loan applications.
Payroll tax deferral guidance
An executive order by President Trump on August 8, 2020, gave employers the ability to defer collection and payment of the employee portion of Social Security taxes from their employees’ paychecks from September 1 through December 31 of this year. Employers who participate are then required to withhold and deposit those deferred taxes starting on January 1, 2021. All payroll taxes deferred during 2020 must be deposited by April 30, 2021. The IRS has now released guidance for reporting the payment of those deferred taxes. As soon as the full amount has been collected from employees, employers report the payment of those taxes on a corrected 2020 W-2, Form W-2c, and provide those W-2c’s to employees promptly for preparing their 2020 tax returns.
TAX ISSUES
The IRS is making it easier for those impacted by COVID-19 to settle up their tax debts. Here are some of those changes:
Short-term payment plans will now run for 180 days instead of 120
The IRS will offer flexible options for repaying on an accepted Offer in Compromise.
Certain new tax balances will be added automatically to existing installment agreements instead of defaulting on those agreements.
Getting approval for new installment agreements will require less paperwork and less substantiation of monthly income and expenses.
Taxpayers can request a delay in the collection process.
No one likes to pay taxes, but at least the IRS is trying to make it a bit easier.
LIVING WITH AND AFTER THE PANDEMIC
Work in the post-pandemic world
While work for some has slowed down, it has sped up for others, who are finding themselves working overtime on a nearly non-stop basis. Avoiding burnout and achieving a better work-life balance requires carving out small bits of “me-time,” as this article in Fast Company explains. Setting up work-free times every day and on weekends eases the guilt you “should be” working. Establishing mandatory health practices, such as drinking more water or getting seven hours of sleep every night, will help you keep going. Rewarding yourself by spending time every day doing things you love can make long hours worthwhile.
