At Fry, Trowbridge and Associates, P.C. the health and safety of our office staff and clients are our top priority. With the COVID-19 virus having an increasing impact in our community, we want to let you know how our business is addressing this situation.
Currently, our offices lobby's are closed until April 7, however, we have drop box at the West end of the building and at our Angola office. We are assessing the situation daily and will determine on April 7 if the policy will need to be extended. Our staff is working daily in the office. Here are the proactive steps we have put in place:
- All clients are encouraged to use our Secure Firm Portal to send us files and exchange documents online. You can access the portal via our website or https://www.securefirmportal.com
- Our offices are not taking appointments until after April 7. However, we are prepared to take our teamwork virtual. Please call us at (260)463-2390 if you want to schedule a phone appointment in lieu of a live visit.
To accommodate any concerns, our clients and staff may have we have taken the following additional steps:
- We have increased the cleaning and sanitation of our offices.
- We have added additional alcohol-based sanitizer around our office.
- We informed our staff if anyone is feeling ill (fever or cough), they need to stay home.
If you are experiencing flu-like symptoms and have a scheduled appointment, please let our team know so that we can discuss options with you to ensure our collective well-being.
During this difficult time, we are committed to serving our clients and staff with care and consideration. We will continue to monitor the situation and take precautionary measures to promote the health and safety of our staff and clients.
Thank you for being a valued client and for your continued trust as we manage through this time together. If you have any questions or need further assistance, please call us at (260)463-2390 or email us firstname.lastname@example.org
Update of Covid Tax Law:
March 20, 2020
FAQs Regarding COVID-19 and Human Capital, Tax Impact
In these unprecedented times, employers have to absorb information quickly and make decisions impacting their business, human resources, and communities. The business landscape is evolving rapidly as federal, state, and local authorities announce community action plans. Legislation will dictate many of the decisions employers make with little lead time.
These frequently asked questions were designed to provide general guidance related to your human resources function and the related tax implications of this Act. Every employer’s situation is different, and the particular facts and circumstances of your situation should be evaluated.
Frequently Asked Questions:
- What is the Families First Coronavirus Response Act?
Also known as HR 6201, the Families First Coronavirus Response Act is legislation created in response to the coronavirus outbreak, which provides free coronavirus screening, limited paid leave time, expanded Family and Medical Leave Act (FMLA), and greater unemployment benefits for individuals impacted by the coronavirus.
- How does the Families First Coronavirus Response Act impact employers?
There are several areas in which employers will need to take action as it relates to their human capital and compensation for employees affected by the coronavirus.
Emergency Paid Leave requires employers to provide paid sick time of up to 80 hours for full-time employees who need time off for the following circumstances:
- Quarantine order by federal, state, or local authorities related to COVID-19
- Employee must self-quarantine as advised by a health care provider
- Employee is experiencing COVID-19 symptoms and is seeking medical diagnosis
- Employee is caring for an individual who is quarantined
- Due to school or child care closures, an employee is unable to work to care for children
The paid sick time benefits will be capped at $511 per day for the employee’s own care, and $200 per day to care for another individual. Employees should be paid at the higher of the following:
- Regular rate of pay
- Federal minimum wage
- Local minimum wage
- Part-time employees should be paid for the average number of hours they would normally work over a two-week period.
Paid Family Leave (E-FMLA) is for employees who cannot work (or telecommute) due to child care concerns related to the coronavirus. If a minor child’s school or care facility is closed, the employee will be eligible for up to $200 per day, with a maximum of $10,000 through the end of the year. Employees are eligible for E-FMLA if they have been employed for 30 days.
- What is a covered employer under the Families First Coronavirus Response Act?
All employers with fewer than 500 employees are covered under this Act. The Act provides exceptions for employers of health care providers. The legislation allows the Department of Labor to issue regulations granting employers with fewer than 50 employees an exemption from providing paid benefits if it “would jeopardize the viability of the business.”
- When do employers need to begin paying employees these benefits required by the Families First Coronavirus Response Act?
The requirements will begin April 2, 2020.
- Do employers receive a tax credit under the Act?
The Act allows employers to claim a limited refundable tax credit that would equal benefits paid to employees for E-FMLA subject to the maximum per employee. There is also a credit for paid sick leave.
Details About the Refundable Employment Tax Credits
Q: Will employers be reimbursed for the leave they pay eligible employees under the Families First Coronavirus Response Act?
A: Employers will be reimbursed for every dollar of leave they pay to eligible employees under the Families First Coronavirus Response Act. The paid leave will be offset by a refundable federal employment tax credit. Since the credit is refundable, employers will receive full reimbursement for the paid leave regardless of their actual employment tax liability.
Q: Is a tax credit available for both sick leave and emergency family medical leave paid pursuant to the Families First Coronavirus Response Act?
A: There are two credits available to employers: a credit for paid sick leave and another credit for emergency family medical leave. The mechanics of the two credits are very similar.
Q: Can an employer receive a credit for qualified health plan expenses allocable to the paid leave?
A: Employers can receive an increase in the credits described above for qualified health plan expenses allocable to the leave they provide under the Families First Coronavirus Response Act. Qualified health plan expenses are amounts paid or incurred by an employer to provide and maintain a group health plan to the extent such amounts are excluded from the gross income of employees.
Q: Can employers deduct the benefits they pay employees under the Families First Coronavirus Response Act from gross income for income tax purposes?
A: Employers cannot deduct the amounts they pay eligible employees under the Families First Coronavirus Response Act if they receive a tax credit for the amounts paid. An employer can, however, elect to forego the credit and, in that case, the employer could deduct the amounts paid as they normally do for wages.
Q: Are self-employed individuals eligible for the tax credits?
A: Self-employed individuals are eligible for the tax credits if they would be eligible to receive paid leave as an employee.
Q: Are the tax credits for self-employed individuals limited to self-employment taxes?
A: The tax credits for self-employed individuals is available to offset all income taxes including self-employment taxes.
Q: Are the tax credits for self-employed individuals refundable?
A: The tax credits for self-employed individuals is refundable. Accordingly, if the credits are more than the self-employed individual’s income tax liability they will receive a refund.
Q: What if a self-employed individual is also an employee and receives benefits under the Families First Coronavirus Response Act that were paid by an employer?
A: A self-employed individual cannot receive leave benefits under the Families First Coronavirus Response Act paid by an employer and also receive tax credits on those same benefits as a self-employed individual (i.e., no double dipping).
Q: Will employers have to pay FICA taxes on the benefits paid to employees under the Families First Coronavirus Response Act?
A: Employers will not pay FICA taxes on leave paid pursuant to the Families First Coronavirus Response Act. Employers will not report Social Security (OASDI) tax on the benefits. Employers will report Medicare tax, but they will receive a dollar-for-dollar credit for the Medicare tax.
Q: Will employees pay income tax and FICA on the paid leave they receive pursuant to the Families First Coronavirus Response Act?
A: Employees will pay income tax and Medicare tax on any paid leave they receive under the Families First Coronavirus Response Act. They will not, however, pay Social Security (OASDI) tax.
Q: Are the benefits provided under the Families First Coronavirus Response Act permanent?
A: No, the benefits will expire December 31, 2020.
- How do employers handle jobs that cannot be done remotely when businesses are permitted to continue operations?
Consider how to increase social distancing guidelines to create a six-foot distance between employees, which should include implementing procedures in all areas, including breakrooms, entrance points, restrooms, and other common areas. In addition, implement handwashing requirements and sanitation practices within the workplace. Review Occupational Safety and Health Administration (OSHA) resources.
- How many hours is an employer obligated to pay an hourly-paid employee who works a partial week because the employer’s business closed?
Per the Fair Labor Standard Act (FLSA), employers are not required to pay nonexempt (hourly) employees who are unable to work due to business closure. If employees are covered by a collective bargaining agreement, this document should be reviewed for provisions that may require payments to be made.
- Are employers required to pay exempt employees during office or business closures?
Exempt, salaried employees generally must receive their full salary in any week in which they perform work. Employers that have a paid time off or vacation plan can require exempt employees to use this time off, provided the employee continues to receive their normal weekly salary.
- Are employees eligible for unemployment benefits (UI) during business closures?
Federal law permits states to have flexibility with their unemployment benefits related to COVID-19. Each state administers its UI benefits differently, and employers should review state specific information. Indiana is allowing employees laid off due to Covid-19 immediate eligibility for benefits.
- Can an employer take the body temperature of employees?
Generally, measuring an employee's body temperature is a medical examination. Because the Centers for Disease Control and Prevention and state and local health authorities have acknowledged community spread of COVID-19 as a pandemic, employers may measure employees' body temperature. However, employers should consider privacy measures and apply screening practices consistently.
March 19, 2020
UPDATE RELATED TO THE CORONAVIRUS TAX AND EMPLOYER RELATED ITEMS
We wanted to provide you with the most current tax related changes possible. Please understand this is a very fluid situation. The items below are directly from the House bill, which has now been signed. There has one bill passed – which is detailed below. There are also at least 2 other bills working through Congress that are related to this. In addition, the IRS will need to issue regulations on how this will be implemented. We will send updates out as soon as they are available.
Extension of payments due April 15, 2020 for Individuals and Corporations
On March 18, 2020, President Trump ordered the U.S. Treasury Department and the Internal Revenue Service to issue guidance allowing all individual and other non-corporate tax filers to defer up to $1,000,000 of federal income tax (including self-employment tax) payments due on April 15, 2020, until July 15, 2020, without penalties or interest. The guidance also allows corporate taxpayers a similar deferment of up to $10,000,000 of federal income tax payments that would be due on April 15, 2020, until July 15, 2020, without penalties or interest.
What this means is that if you owe tax on April 15, 2020 for 1) your 2019 Individual Income Tax Return, 2) your first quarter estimated tax payment for 2020 due April 15, 2020, or 3) your corporation tax estimate due April 15, 2020, you can now wait until July 15, 2020 to pay these taxes.
The extension is automatic and there is no penalty for not filing or paying – if the tax is paid by July 15, 2020.
We are also monitoring the related state tax situations. Most states will follow suit with the IRS extensions.
We are also uncertain about those that will have a 2nd quarter estimated tax payment due June 15. At this point, our plan is to have the returns completed before June 15 so the 2nd quarter estimate is known and can be paid, if required.
Another area of confusion relates to those corporations who are not on a calendar year (such as January 31) or Not-For-Profit organizations whose tax year ends December 31 and whose tax return is due May 15th. The NFP’s will also likely require an automatic extension of time to file.
House passes coronavirus relief bill that contains employer tax credits
On March 16, 2020, the House passed, by unanimous consent, an updated version of the coronavirus relief bill that it originally passed on March 14. The bill, H.R. 6201, the Families First Coronavirus Response Act (the Act), provides: a) paid leave benefits to employees; b) tax credits for employers and self-employed taxpayers; and c) FICA tax relief for employers. This bill was signed into law by President Trump on March 18, 2020.
Early on March 14, the House passed H.R. 6201, the "Families First Coronavirus Response Act" (the "Act") to provide emergency supplemental appropriations and support Americans during the COVID-19 pandemic. Parts of the Act provide for emergency family and medical leave benefits, emergency paid sick leave benefits, and employer and self-employed tax credits and exclusion from employer FICA tax with respect to the payment of those benefits. The bill also provides free screening, paid leave and enhanced unemployment insurance benefits for people affected by COVID-19. The vote was 363-40.
It is worth noting that Republican senators were concerned that the bill might hurt small businesses, and Senator Mitch McConnell, R-Ky, said lawmakers are working on another bill that would include relief for small businesses. McConnell said he would not adjourn the Senate until the third COVID-19 economic stimulus package is passed. We will inform you through our tax update service and Facebook as this bill is passed.
As of March 18, 2020, there is what has been passed:
Employer tax credits. The Act provides tax credits to employers to cover wages paid to employees while they are taking time off under the bill's sick leave and family leave programs.
Under the bill, many employers will have to provide 80 hours of paid-sick-leave benefits for several reasons, including if the employee has been ordered by the government to quarantine or isolate or has been advised by a health care provider to self-quarantine because of Covid-19. Employees could also use paid sick leave when they have symptoms of Covid-19 and are seeking a medical diagnosis, if they are caring for a relative who is in quarantine or isolation, or their child’s school or child care service is closed because of the public health emergency. Paid-sick-leave benefits will be immediately available when the law takes effect and capped at $511 a day for a worker’s own care and $200 a day when the employee is caring for someone else. The benefits expire on December 31, 2020.
The sick leave credit for each employee would be equal to his wages, limited to $511 per day while the employee is receiving paid sick leave to care for themselves, or $200 if the sick leave is to care for a family member or child whose school is closed. An additional limit applies to the number of days per employee: the excess of 10 days over the aggregate number of days taken into account for all preceding calendar quarters.
The bill will only provide such leave when employees can’t work because their minor child’s school or child care service is closed due to a public health emergency. Workers who have been on the payroll for at least 30 calendar days will be eligible for paid family leave benefits, which will be capped at $200 a day ($10,000 total) and expire at the end of the year.
The family leave credit for each employee is limited to $200 per day with a maximum of $10,000.
The credits are refundable to the extent they exceed the employer's payroll tax. For those who use QuickBooks, if you have employees who qualify for the sick leave, we strongly suggest setting up a new payroll item called “Covid-19 Sick Leave”. If you use a payroll service, please work with them to track these payments.
We assume these credits will be taken on form 941 and impact the EFTPS payments made by employers. As of today, there has not been any clarifications issued by the Department of the Treasury.
Employers don't receive the credit if they're also receiving the credit for paid family and medical leave in Code Sec. 45S.
These rules apply only to wages paid with respect to the period beginning on a date selected by the Secretary of the Treasury which is during the 15-day period beginning on the date of the enactment of the Act, and ending on December 31, 2020. (Act Sec. 7001; Act Sec. 7003)
Comparable credits for self-employeds. The Act also provides for similar refundable credits against the self-employment tax. It covers 100% of a self-employed individual's sick-leave equivalent amount, or 67% of the individual's sick-leave equivalent amount if they are taking care of a sick family member, or taking care of a child following the child's school closing. The sick-leave equivalent amount is the lesser of average daily self-employment income, or $511/day to care for the self-employed individual, or $200/day to care for a sick family member or child following a school closing. (Act Sec. 7002)
Self-employed individuals could receive a family leave credit for as many as 50 days multiplied by the lesser of $200 or their average self-employment income. (Act Sec. 7004)
These rules apply only to days occurring during the period beginning on a date selected by the Secretary of the Treasury, which is during the 15-day period beginning on the date of the enactment of this Act, and ending on December 31, 2020. (Act Sec. 7002 and Act Sec. 7004)
Employer FICA exclusion. Under the Act, sick leave and family and medical leave paid under the Act will not be considered wages under Code Sec. 3111(a) (employer tax - old age, survivors and disability insurance portion of FICA; 6.2%). (Act Sec. 7005)
The tax changes in the updated version include:
...The original bill provided that sick leave and family and medical leave paid under the Act are not considered wages under Code Sec. 3111(a) (employer tax - old age, survivors and disability insurance portion of FICA; 6.2%). (Act Sec. 7005(a)) The updated version includes that provision and also provides an employer credit for the 1.45% hospital insurance portion of FICA with respect to sick leave and family and medical leave paid under the Act. (Act Sec. 7005(b)). This means that the salary paid to employees who qualify for the sick-leave above are not considered wages and not subject to Social Security Tax withholding or matching (6.2% each) or Medicare Tax withholding or matching (1.45% each). We are not certain how this will be reported, but should be kept track of separate from the employee’s normal wages.
...The amount of the sick leave credit and the amount of the family and medical leave credit are increased by the portion of the employer's "qualified health plan expenses" that are properly allocable to qualified sick leave wages. Qualified health plan expenses means amounts paid or incurred by the employer to provide and maintain a group health plan, but only to the extent that such amounts are excluded from the gross income of employees by reason of Code Sec. 106(a). (Act Sec. 7001(d); Act Sec. 7003(d)). This means that if an employer continues to provide health insurance coverage to an employee during periods of sick leave, the employer will receive a tax credit for these payments. Employers should keep track of these payments separately to ensure they receive the applicable credit.
Indiana Unemployment Insurance –
Some employers may find it necessary to temporarily lay employees off due to Covid-19. The following is the most current information available from the Indiana Department of Workforce Development.
Q1: If an employer temporarily lays off employees due to the loss of production, lack of demand for their products/services or out of precaution caused by COVID-19, will the employees be eligible for unemployment insurance benefits?
A1: Indiana unemployment benefits are available to any individual who is unemployed through no fault of his/her own. If an employer must lay off employees due to the loss of production caused by the coronavirus, individuals may be eligible for unemployment benefits if they meet the monetary criteria and the weekly eligibility criteria. Employees must stay in contact with their employer and be available to work when called back.
Q2. How much is an individual entitled to receive in unemployment benefits?
A2: To determine an individual’s weekly payment, divide the total wages earned in the four quarters (12 months) prior to the last quarter the individual worked by 52. Then multiply the sum by 0.47. For example, if the individual earned a total of $30,000 in the four quarters prior to the last quarter worked: $30,000 ÷ 52 = $576.92 x 0.47 = $271 (weekly benefit amount). The weekly benefit amount should be rounded down to the next whole dollar amount and will not exceed $390.
Q3: When will an individual receive his/her first unemployment insurance payment?
A3: An individual should receive his/her first payment within three weeks if there are no issues on the claim for benefits. There is a one week waiting period for payment of unemployment insurance. This means that benefits are not paid for the first week of eligibility. Individuals must still file a voucher for that week.
Employees can apply for unemployment benefits at https://www.in.gov/dwd/
Note to employers: it is likely if you have claims on your unemployment account that your experience rate will increase for 2021 and several following years.
Small Business Administration (SBA) assistance
The SBA offers SBA Economic Injury Disaster Loans (EIDL).
What's an EIDL?
- The SBA EIDL program can provide low-interest loans of up to $2M to businesses and private non-profits.
- EIDLs may be used to pay fixed debts, payroll, accounts payable and other bills.
- The interest rate is 3.75% for small businesses without credit available elsewhere. The interest rate for non-profits is 2.75%.
- EIDLs have long-term repayment options, up to a maximum of 30 years. Terms are determined on a case-by-case basis, based on borrower's ability to repay.
How do I apply or get additional help:
- Online at SBA.gov/disaster
- Still need help? Call the SBA's Disaster Customer Service Center at 800-659-2955 or email email@example.com. Individuals who are deaf or hard-of-hearing can call 800-877-8339.