What is essential business? Are my customers an essential business? Who is an essential employee? Am I an essential employee? These are questions that we did not find ourselves asking a couple of months ago, but are now forced to examine. The global pandemic of COVID-19 (Coronavirus) is forcing all of us to examine and look at things under a new light. It is causing many business owners to evaluate personnel and re-examine their budgets for 2020. The transportation industry is not exempt from these conversations and discussions. While freight still needs to be moved, there is a great concern about what should be hauled at this point in time. Concerns over trucks sitting at a dock or being grounded due to jurisdiction lockdowns or states shutting down truck stops, fuel and weight stations are impacting transportation. While freight related to essential business does not seem to be put on hold, non-essential freight is at jeopardy.
While there is a lot uncertainty there are a few things the federal government has done already to help small business and the transportation industry:
The first item to review is the changes to the April 15th tax deadline. The United States Treasury Department announced on March 17 that it would be pushing back the April 15 deadline to pay taxes owed by 90 days, giving Americans three extra months to pay their 2019 income tax bills. This gives millions of individuals and C-Corporation businesses extra time needed to pay these out-of-pocket costs in light of COVID-19.
Treasury Secretary Steven Mnuchin made the unprecedented announcement and explained that individuals can defer up to $1 million of tax liability and corporations will receive an extension on up to $10 million.
The United States Treasury Department followed this later by also extending the filing requirements for corporations, individuals, and trusts to coincide with the July 15th tax due date. At this time, there are still a lot of questions and uncertainty about the details around this extension.
The second item passed was updated criteria released by the U.S. Small Business Administration (SBA) for states requesting disaster loans for small businesses impacted by Coronavirus. The two immediate impacts of this changed criteria are:
A faster and easier qualification process for states seeking disaster assistance. Under the new regulations, states are now only required to certify that at least five small businesses within their state/territory have suffered substantial economic injury, regardless of where those businesses are located. Previously, location was a factor in obtaining this assistance.
More expanded and statewide access to SBA disaster assistance loans for small businesses. Under the new criteria, disaster assistance loans are available statewide, where previously, they were only available to small businesses within counties identified as disaster areas by the Governor.
SBA’s Economic Injury Disaster Loans offer up to $2 million in assistance for each affected small business. These loans can provide vital economic support to small businesses to help overcome the temporary loss of revenue they are experiencing. These loans may be used to pay fixed debts, payroll, accounts payable and other bills that can’t be paid because of the disaster’s impact. The interest rate is 3.75% for small businesses. Terms are determined on a case-by-case basis, based upon each borrower’s ability to repay. SBA offers loans with long-term repayments up to a maximum of 30 years.
The last item for transportation companies to focus on is the Families First Coronavirus Relief Act. In addition to providing free COVID-19 testing, access to meals for children required to stay home from school and extended unemployment insurance, the bill includes benefits for employees and employers impacted by the pandemic, including:
Paid emergency family and medical leave for employees;
Paid sick leave for employees; and
Tax credits for employers for providing paid family and sick leave.
Companies should ensure they are staying updated of the rapidly changing employment framework during this time period as they could be liable to continue to pay employees who are off work because of Coronavirus, as well as being eligible for tax credits to offset these expenses. These requirements include employees that have to be off work for the following reasons:
The employee is subject to a Federal, State, or local quarantine or isolation order related to COVID-19.
The employee has been advised by a health care provider to self-quarantine due to concerns related to COVID-19
The employee is experiencing symptoms of COVID-19 and seeking a medical diagnosis.
The employee is caring for an individual who is subject to quarantine or has been advised to self-quarantine.
The employee is caring for a son or daughter of such employee if the school or place of care of the son or daughter has been closed, or the child care provider of such son or daughter is unavailable, due to COVID-19 precautions.
The employee is experiencing any other substantially similar condition specified by the Secretary of Health and Human Services in consultation with the Secretary of the Treasury and the Secretary of Labor.
The proposed leave and proposed sick leave changes, as well as the adoption of the new tax credits, take effect no later than 15 days after enactment and would remain in place until the end of 2020.
RubinBrown will continue to keep you up to date with relevant news and changing guidelines as they unfold. Please contact your RubinBrown team member if you have questions about how these provisions may affect you.
Readers should not act upon information presented without individual professional consultation.
Any federal tax advice contained in this communication (including any attachments): (i) is intended for your use only; (ii) is based on the accuracy and completeness of the facts you have provided us; and (iii) may not be relied upon to avoid penalties.