Let’s get started with the must-know NEW information that affects small businesses.
Executive Orders #1-4 of Things To Know:
Most people are referring to all of these as Executive Orders – so I will too, in order to keep things less confusing BUT know that there was really only ONE Executive Order signed by the President, the other three are actually memorandums.
1. Executive Order: Payroll Tax Holiday (Memorandum)
Deferral on wages or compensation, as applicable, paid during the period of September 1, 2020, through December 31, 2020, subject to the following conditions:
- Americans earning less than 100k/year (Wages or compensation, as applicable, payable during any bi-weekly pay period generally is less than $4,000).
- Deferred without any penalties, interest, additional amount, or addition to the tax.
Tax Forgiveness
- The Secretary of the Treasury shall explore avenues, including legislation, to eliminate the obligation to pay the taxes deferred pursuant to the implementation of this memorandum.
- If the president is elected in November, he says he will extend and terminate the tax.
PROBLEM – there is still no guidance from the IRS or Treasury Department, so most major employees and payroll companies are waiting to implement. Too many questions!
- Who will have to remit at the end of the deferral period – employer or employee?
- Who will have to collect at the end of the deferral period – employer or IRS?
- What if the employee has terminated who gets stuck with having to pay back, the employer??
2. Extending Enhanced Unemployment Benefits (Memorandum)
- Extended relief of additional unemployment to $400/week in expanded benefits.
- States are asked to contribute 25% of the cost of the additional unemployment.
- Federal government will cover the remaining 75% of the cost.
PROBLEM –
- Some states are feeling the pinch and don’t feel like they can cover 25% of the cost
- Some states are looking for ways around chipping in an EXTRA $100, so the unemployed may only get an extra $300 per week.
- As of 8/15, only AZ had implemented, some states have indicated they will implement – waiting to see what other states do – CA
3. Evictions (Executive Order)
- Renters and homeowners can stay in (HHS and CDC — homes as a protection from Eviction).
- “It is the policy of the United States to minimize, to the greatest extent possible, residential evictions and foreclosures during the ongoing COVID-19 national emergency.”
PROBLEM –
- This isn’t like the CARES act with a real moratorium on eviction
- Language suggests HHS (Health and Human Services) and CDC (Center for Disease Control) “consider” whether temporarily banning evictions is necessary.
- Language instructions HUD (Housing and Urban Development) to identify funds to help renters and homeowners that can’t make housing payments
- No new guidance from HHS, CDC or HUD that I have seen yet
4. Student Loan Borrowers Relief Memorandum)
- Extending the 0% interest rate on student loans to December 31, 2020.
- This is for federal student loans ONLY.
- Extended pause on payments to 1/1/2021
- No interest accruing until 12/31/2020
- May be a good time to keep making payments, if able, as all of your payments will go towards principal and let you pay down your loan faster.
5. PPP Update
Pending bills for easier PPP Forgiveness – Still pending action on proposed bills to provide easier PPP Forgiveness for loans under $150,000
Other pending bills – Still looking at possible extensions, 2nd draws, corrective draws if you weren’t loaned the correct amount in the first place
ANOTHER interim final ruling came out this week
- Owner employers that own less than 5% not subject to the owner employee compensation rule for forgiveness
- Loan forgiveness may not include:
- Rent collected from a sublet
- Most rent paid to a related party
- Mortgage interest paid to a related party
- Home office expenses limited to proration as set forth on 2019 taxes
Congress is out until after Labor Day – so stay tuned!