Posted 5-9-20 - RCR-Blog 3

TOPICS

• Re-opening for business schedule
• Unique liability issues incurred by reopening
• Repayment

REOPENING SCHEDULE

A 50 State Compendium:

https://www.lexology.com/library/detail.aspx?g=c32ea1ab-3e46-41fb-8848-ed2894476ba5

Ohio:

Beginning May 1, 2020, all medically necessary procedures that do not require an overnight stay in a healthcare facility may move forward. Dental services and veterinary services may also proceed if a safe environment can be established. Beginning on May 4, 2020, manufacturing, distribution, and construction businesses may reopen if these businesses can meet mandatory safety requirements for customers and employees. Also on May 4, 2020, general office environments may reopen if these businesses can meet mandatory safety requirements for customers and employees. Beginning on May 12, 2020, consumer, retail and services, may reopen if these businesses can meet mandatory safety requirements for customers and employees. Dine-in restaurants and bars, personal appearance and beauty businesses, entertainment, recreation, and gyms will remain closed. Gov. DeWine announced that he will form two separate advisory groups to develop best practices for reopening these businesses. Read more: https://coronavirus.ohio.gov/Stay-Safe-Ohio-Order.pdf.

https://coronavirus.ohio.gov/wps/portal/gov/covid-19/responsible-restart-ohio/welcome/responsible-restart-ohio

UNIQUE LIABILITY ISSUES INCURRED BY REOPENING

PROPOSED FEDERAL REMEDY

When is it safe for people to go back to work?

That's the question both employers and workers are asking, as businesses around the country start to open doors shuttered by the coronavirus. Workers want assurances they aren't putting themselves at risk. And employers want to know they won't be sued if workers get sick. Senate Majority Leader Mitch McConnell, R-Ky., says liability protection for employers must be included in the next round of pandemic relief legislation.

"If there's any red line, it's on litigation," McConnell said Tuesday. "The litigation epidemic has already begun. As of the end of last week, one report had it that 771 lawsuits had already been filed. This is going to impact our ability to begin to get back to work."

Worker rights' advocates say shielding employers from liability is unnecessary and could actually backfire. "If the laws simply give immunity to corporations, there will be absolutely no incentives to ensure that they create a safe work environment," said Remington A. Gregg, a lawyer with the watchdog group Public Citizen. Granting legal immunity, he says, will "sabotage the effort to get workers and consumers back. If people don't trust that stores, offices, and workplaces are safe, they will refuse to return."

McConnell has not detailed what kind of legal protection employers are looking for. The U.S. Chamber of Commerce, which is lobbying for the liability shield, says it could be narrowly tailored.

"No one wants to protect bad actors here," Neil Bradley, the chamber's chief policy officer, told Morning Edition

"A business does its best to comply with those recommendations - that should be a safe harbor for them against those type of frivolous (https://www.npr.org/2020/05/05/850485387/as-states-economies-reopen-businesses-worry-about-liability-lawsuits). "But businesses that are trying to do the right thing shouldn't be second-guessed a year later in a court of law." Bradley suggested employers would only be shielded from lawsuits if they followed the guidelines of the Centers for Disease Control and Prevention and the Occupational Safety and Health Administration, the federal workplace safety agency.

Bradley said. "If they are willfully forcing workers to work in unsafe conditions, then they don't have that liability protection."

PROPOSED OHIO REMEDY

A complete safe harbor provision for businesses has little chance of making it through the Democratic-controlled House, but there are ways to limit liability without eliminating safeguards and lawsuits. A broad outline of safety measures that must be met before reopening, coupled with provisions for worker safety, could allow for some limited liability protections for businesses.

Other possibilities are an inspection process and certification for businesses, or limits on areas of potential litigation to reduce frivolous lawsuits that would be costly for small businesses to defend.

The bottom line is that compromise will be necessary to protect not only businesses but also the workers who are needed to keep them running. If some form of business liability protection needs to be passed in order to get emergency funding for state and local governments, then congressional leaders should quickly find a middle ground.

Pittsburgh Post-Gazette reprinted in the Columbus Dispatch 05-08-2020

https://www.dispatch.com/opinion/20200508/other-viewpoints-find-middle-ground-on-business-liability

ALABAMA

https://www.cbs42.com/news/health/coronavirus/legislature-proposes-bill-that-would-give-businesses-immunity-from-covid-19-lawsuits/

RETURN TO WORK

What Key Liabilities Should We Be Concerned About?

Generally speaking, employers are protected from liability for injury or illness to employees arising out of the scope of employment by the workers' compensation regime, a system governed by state law; workers' compensation is typically the exclusive remedy for tort liability against employers. However, in some jurisdictions, an employer found to have acted negligently in maintaining a safe workplace may lose the protection of workers' compensation. For example, pursuant to the Occupational Safety and Health Act (OSHA), employers have a "general duty" to maintain a safe working environment. Although there is no individual cause of action under OSHA, a violation of OSHA, such as a failure to follow specific OSHA rules for personal protective equipment, could be used in some jurisdictions to establish "negligence per se" in a wrongful death or injury action or might result in an "intentional" action by the employer that could void workers' compensation protection for the employer.

https://www.lexology.com/library/detail.aspx?g=73c33e70-c944-4722-86f8-319e3d65a6f2

PRIVACY

• Senate to Introduce "COVID-19 Consumer Data Protection Act"
• Blog Security & Privacy // Bytes
• On April 30, 2020, four Republican Senators[1], including the Chairman of the U.S. Senate Committee on
• Commerce, Science & Transportation, announced that they intend to introduce federal privacy legislation to
• regulate the collection and use of personal information in connection with the Coronavirus pandemic.
• COVID-19 Consumer Data Protection Act (the "Act")
• https://www.lexology.com/library/detail.aspx?g=ca80bba6-4f6a-4c02-8f20-5c0edb67bd78

RESTAURANTS

Can restaurants mitigate the liability risk of operating during a pandemic? This advice may not prevent you from being sued, but it could improve your chances of a  lawsuit. Drew Bell, Randall Bassett | May 06, 2020

https://www.nrn.com/print/394659

PAPERWORK AT:

https://www.sba.gov/funding-programs/loans/coronavirus-relief-options/paycheck-protection-program#section-header-7

REPAYMENT

• DEPARTMENT OF TREASURY
• Office of the Comptroller of the Currency
• 12 CFR Part 3
• [Docket No. OCC-2020-0018; RIN 1557-AE90]
• FEDERAL RESERVE SYSTEM
• 12 CFR Part 217
• Regulations Q
• [Docket No. R-1712; RIN 7100-AF86]
• FEDERAL DEPOSIT INSURANCE CORPORATION
• 12 CFR Part 324
• RIN 3064-AF49
• Regulatory Capital Rule: Paycheck Protection Program Lending Facility and Paycheck
• Protection Program Loans.  www.npr.org

Or

SMALL BUSINESS ADMINISTRATION [Docket No. SBA-2020-0015] 13 CFR Part 120 Business Loan Program Temporary Changes; Paycheck Protection Program RIN 3245-AH34 AGENCY: U. S. Small Business Administration. ACTION: Interim Final Rule.

OR

https://www.jdsupra.com/legalnews/federal-bank-regulators-issue-interim-64281/

• SBA Other program debt relief
• U.S. Small Business Administration
• https://www.sba.gov/funding-programs/loans/coronavirus-relief-options/paycheck-protection-program
• https://www.sba.gov/funding-programs/loans/coronavirus-relief-options/sba-debt-relief#section-header-
• SCORE Small Business Resources Hub
• www.score.org/coronavirus

 

PPP Loan Forgiveness: What We (Think) We Know, What's Still Unclear and What Borrowers Can Do Now

UPDATED: MAY 4, 2020

Now that small businesses and organizations have received Paycheck Protection Program (PPP) funding, with more to come from the PPP Refill, attention has turned to the next and most vital phase: loan forgiveness. If borrowed funds are spent as intended on payroll, mortgage interest, rent, and utilities in the eight weeks after receipt, those expenditures are potentially eligible for complete, tax-free forgiveness.

The CARES Act defines payroll costs as:

• Salary, wages, commissions or tips (capped at $100,000 annually for each employee); PLUS
• Payment for vacation, parental, family, medical or sick leave; PLUS
• Allowance for separation or dismissal; PLUS
• Payment for the provision of employee benefits consisting of group health care coverage, including insurance premiums and retirement; PLUS
• Payment of state and local taxes assessed on the compensation of employees; PLUS
• For an independent contractor or sole proprietor: wage, commissions, income or net earnings from self-employment or similar compensation.

Excluded from payroll costs are:

• Employee income tax withholdings and FICA taxes (both employer and employees), but only for 2/15/2020 through 6/30/2020
• Compensation of employees with a principal residence outside the United States
• Qualified sick and family leave wages for which a credit is allowed under sections 7001 and 7003 of the Families First Coronavirus Response Act
• Independent contractors (1099-MISC)
• https://www.rklcpa.com/ppp-loan-forgiveness-known-unknown-action-items/
• https://www.rklcpa.com/major-ppp-loan-forgiveness-issue-clarified-new-guidance-fte-haircut-reduction/
• https://www.concordmonitor.com/Some-NH-Businesses-Worry-About-What-They-ve-Agreed-to-With-PPP-Loans-34238762

SHOULD YOU TAKE THE LOAN

Congress designed the Paycheck Protection Program to use traditionally defined small businesses and certain other employers as conduits to move dollars from the federal treasury into the hands of American workers as quickly as possible to help offset the loss of income for many workers affected by business shutdowns during the COVID-19 pandemic and to help some small businesses with fundamental expenses needed to "keep the lights on" during this time. The law was hastily conceived and its immediately effective implementing rules were constructed piecemeal without the benefit of traditional notice and comment rulemaking. The statute signaled that a number of companies who would not typically qualify for a SBA Section 7(a) loan could qualify for a PPP loan regardless of their ability to access to other forms of capital and for some others, if they used NAICS code 72, without taking into account some of the traditional affiliation rules. Unfortunately, the demand far exceeded the $349 Billion of appropriated funding. Many foresaw this demand, which leads to a race to the bank. Companies with access to lawyers and accountants quickly assembled loan applications. When some small businesses left out complained, the media learned that some successful applicants were not customarily regarded as small businesses, and some public companies, facing intense media scrutiny, decided to announce publicly that they would return approved PPP funds. Treasury also responded by first issuing FAQ 31 and later issuing FAQ 37 which cautioned many to rethink certifications made when applying for PPP loans and cautioned prospective borrowers to rethink whether they want to apply for such funds during the second $310 Billion allocation of funding. The key certification that Treasury has highlighted as it responded to the initial backlash is the PPP requirement that borrowers must be able to certify in good faith that the PPP loan is necessary to support ongoing operations taking into account current business activity and their ability to access other sources of liquidity. At the same time, recognizing confusion that has arisen in the market, Treasury dangled a carrot for business owners who wanted to re-evaluate the nature of their certification: any borrower returning funds by May 7, 2020, may do so-no questions asked. While this action offered some comfort, it created further anxiety as well, among both approved PPP borrowers and possible applicants for the next round.

• myLaswCLE   05/07/2020 email. May 11, 2020 • 2 - 3PM ET | Register Online

 

FORMS AT:

https://www.sba.gov/funding-programs/loans/coronavirus-relief-options/paycheck-protection-program#section-header-7

 

STATE TAX IMPLICATIONS OF WORKING AT HOME

• Morgan Lewis & Bockius LLP
• Remote Working Implicates State Payroll Tax, Corporate Income/Franchise
• Tax Nexus Concerns
• Employers should be aware that remote working arrangements during the coronavirus (COVID-19) pandemic
• may inadvertently trigger state payroll tax registration and filing requirements for their businesses, and possibly
• trigger corporate income/franchise tax "nexus" with another state, subjecting the business to that state's tax regime. https://www.lexology.com/library/detail.aspx?g=64994ff0-35aa-4c75-b51b-9f7cfd710ca5

 

GENERAL REFERENCES

The Justice Department has opened an investigation into companies that applied for emergency loans under the Paycheck Protection Program, and businesses that provided misleading information could face jail sentences, experts say.

https://www.marketwatch.com/amp/story/guid/090D518A-8BAF-11EA-96CD-32344473F3E7

• 2^nd Round Opened at 10:30 A.M. May 8, 2020.
• Paycheck Protection Program: Hereʼs how small businesses
• can apply for the second round of loans with $484 billion in new funding
• By Michael Bonner | mbonner@masslive.com

https://www.masslive.com/business/2020/04/paycheck-protection-program-heres-how-small-businesses-can-apply-for-second-round-of-loans-with-484-billion-in-new-funding.html  Updated Apr 27, 2020; Posted Apr 27, 2020

_______________________________________________________________________

Posted 5-4-20

Update About Loan Forgiveness

We found what we think is the most up-to-date information about the state of loan forgiveness if you've received the PPP loan through your bank. See https://www.rklcpa.com/ppp-loan-forgiveness-known-unknown-action-items.

Also, see https://home.treasury.gov/system/files/136/PPP%20--%20Overview.pdf

_____________________________________________________________________________

Posted 4-24-20

COVID-19 Help for Small Business:

 

We know that like us you are a small business, and you may be struggling.

Regardless if you have employees or not, you may qualify for free money from the government.

We recently received the following information from a banker friend who has so far processed over $25 million in loans. He wrote this to us to tell us how it works, and we wanted to pass it along:

1. After Trump signs, the SBA will open lending up again. It will go fast so be ready.
2. Everything you need to know is on the Treasury Website https://home.treasury.gov/policy-issues/cares/assistance-for-small-businesses
3. You will need your most recent tax return, W3, W2's, 1099s, business license or something proving you were in business on 2/15/2020, a summary of your utility expenses (make an average monthly use number).
4. 75% OR MORE of the money MUST be used for payroll or employees
5. 25% OR LESS may be used for utilities.

The application is here https://home.treasury.gov/system/files/136/PPP-Borrower-Application-Form-Fillable.pdf

Here is how you get it for free:

1. Contact your CPA. They will get paid a 1% fee for doing the paperwork.
2. Contact your bank. Let them know the CPA will do your paperwork and get it to them.
3. Contact your CPA a second time and put them on rush. They only get about 48hr before this bubble will pop.
4. Once you have your SBA Approval Number. You get 10 days to sign with your bank. That's the easy part.
5. After you sign, you get 8 weeks to spend ALL OF THE MONEY on your employees as payroll (and up to 25% on utilities).
6. Within 60 days of the 8th week, file for forgiveness with your bank. Once done, the SBA will send a check to the bank paying them 5% along with the amount borrowed. You pay nothing. The bank will send the 1% to your CPA.*

We hope this helps!

*This is in no way advice that has been confirmed to be accurate. Please consult your own advisors.