Most Recent Update – 5/22/2020

The IRS has announced that some stimulus payments may be sent on a prepaid debit card known as The Economic Impact Payment Card instead of paper checks.

If you receive an Economic Impact Payment Card, it will arrive in a plain envelope from “Money Network Cardholder Services.” The Visa name will appear on the front of the Card; the back of the Card has the name of the issuing bank, MetaBank®, N.A.

The IRS began distributing economic stimulus payments in April via direct deposit to taxpayers who had up-to-date information on file. It followed up with payments by paper check starting in mid-May. However, the agency estimated it might take as long as four to five months to mail out the millions of remaining checks. Now it says that sending four million prepaid debit cards will cut down on the time.

Some are viewing the use of the EIP cards as a test for future stimulus payments, if any are forthcoming. If all goes well, this might be a simpler and faster approach to distributing money to taxpayers.

Additional Updates

• The IRS website was improved recently and is reportedly functioning better.
• If you get the “payment status is unavailable” message, try again the next day. (It is being updated every 24 hours.)
• Whether or not you’ve filed 2019 does not affect the “payment status is unavailable” message.
  • We have seen instances with clients, both filed and not filed for 2019, who have gotten the results and non-results message.
• Taxpayer name and address must EXACTLY match your last tax return filing, including abbreviations for St vs Street, etc.
• We recommend using all caps. It has actually changed the response for some.

UPDATE

The IRS started the process of sending stimulus monies via direct deposit. It is not immediate and not everyone will get their electronic deposit at the same time. Our KuberneoCPA team has no insights nor ability to see the IRS processing system, but the IRS has created a system for you to check on it, which you can find here.

Don’t be dismayed if the system says “Payment Status Not Available.” There are a number of reasons that may happen and does not necessarily mean you will not get a payment.

Unfortunately, the IRS system is not without problems. When utilizing that system, many taxpayers are getting the response: your information cannot be found. That response does NOT necessarily mean you don’t have a payment in process. If you have not received a direct deposit and want to check on it, we recommend checking the site once each day. (It is only updated once every 24 hours–overnight–so there’s no need to check back more frequently.)

In certain cases, however, the Get My Payment app will be unable to tell you the status of your payment. You may receive this message for one of the following reasons:

• If you are not eligible for a payment (see IRS.gov on who is eligible and who is not eligible)
• If you are required to file a tax return and have not filed in tax year 2018 or 2019.
• If you recently filed your return or provided information through Non-Filers: Enter Your Payment Info on IRS.gov. Your payment status will be updated when processing is completed.
• If you are a SSA or RRB Form 1099 recipient, SSI or VA benefit recipient – the IRS is working with your agency to issue your payment; your information is not available in this app yet.

Finally, the IRS will mail paper checks on or around April 30th, and letters with specific details about your payment.

Today’s biggest FAQ: Where’s my stimulus payment?

Well, we have some good news…

Stimulus payments are now in process!

You can track the status of your payment or enter your direct deposit information directly on this page on the IRS website.

If you want to know more about the program, including how much you may be eligible to receive, you can find that information on this page.

Have other questions? Read more FAQs about the COVID-19 crisis. If you don’t find what you’re looking for, ask us!

We recently posted about the Payroll Protection Program (PPP). Its predecessor, the Economic Injury Disaster Loan (EIDL), offers similar but perhaps broader benefits, in the form of a loan. They work hand in hand.

And the best news, EIDL Loan advances/distributions are expected to start this week!

Originally, announcements and guidance seemed to indicate that the first $10,000 would be treated as a grant. As it turns out, the grant is limited to $1,000 per employee up to $10,000 max. And whatever amount is granted will reduce the amount of loan forgiveness under the PPP.

Other Coronavirus relief options from the SBA are detailed here.

Stay up to date by checking our Resource Page often. And let us know how we can help you!

Individual banks have a lot of autonomy when it comes to processing SBA Loan Applications, including the PPP. In other words, not every bank will request or require the same information. We obviously don’t have all the answers, but as we help more and more clients, we are beginning to see patterns and common ground.

Accordingly, here’s a list of supporting items that seem to be showing up on many of the lists we’ve seen from banks. If you have this information aggregated in advance, it should make completing your application quicker and easier.

• Completed PPP Application
  • This varies bank by bank
  • Many banks have an online version
• 2019 Fiscal Year End Financial Statements (including Profit & Loss and Balance Sheet)
• Entity information including (but not limited to):
  • Articles of Incorporation/Organization
  • Certificate of Filing
  • By-laws/Operating Agreement
  • Owners’ Drivers License or photo ID (any owner with 20% or more ownership)
• Payroll expense verification documents, including:
  • IRS Payroll Forms 940, 941, or 944 for all quarters in 2019
  • Payroll summary reports (from QuickBooks or payroll service provider) including:
    • Gross wages for each employee
      • Wages in excess of $100,000 are limited to $100,000
      • Include officers, if paid W-2 wages
    • Paid time off, Vacation, FMLA, Group Healthcare for each employee
    • State and local taxes assessed on an employee’s compensation
    • Total of all health insurance premiums paid by the company owner(s) under a group health plan. (Include all employees and the company owners)
    • Number of full-time and part-time employees
      • For the covered period
      • Currently
  • 1099s for independent contractors for 2019 (if applicable)
  • Sum of all retirement plan funding that was paid by the company owner(s) – do not include funding that came from employees out of their paycheck deferrals)
    • Include all employees and the company owner(s)
    • Include 401(k) plans, Simple IRAs, SEP IRAs

This should get you started as you prepare to complete your PPP loan applications for Covid-19 relief. We will keep you posted as we learn more!

We’ve been getting lots of questions about how to navigate a business through the COVID-19 crisis we find ourselves in. We will begin to post the questions and answers here and update it frequently as we learn more about the impact this will have on us in the coming days and weeks.

1. How do I apply for assistance?
   • The government has made various loan options available through the Small Business Administration (SBA). SBA approved banks will process all loans applications. We have provided more information about which loan might be right for your business (and assistance with preparing loan packages) here.
2. Should we revise our budget in light of current events?
   • There is usually no need to revise the budget until or unless your business is directly impacted. In other words, don’t make changes based solely on speculation or fear, but be prepared to pivot based on actual changes to your business. That said, it’s never too early to begin analyzing and preparing so that you can take action decisively.
3. Which vendors should I pay first? And how much should I pay?
   • This is more art than science, and depends greatly on your relationship with your individual vendors. For example, we have seen many clients prioritize local vendors in times of cash shortfalls. One might also prioritize the smaller balances to take advantage of the “waterfall effect.” In other words, if you have a handful of vendors that you could completely pay off this week, then there will be more of next week’s revenue available for your larger vendors. 
4. What options do we have besides layoffs and furloughs? 
   • One option that we have seen work to great effect is to offer a shortened work week with a corresponding reduction in pay. For example, going from 5 workdays to 4 with a corresponding 20% reduction in pay. This would allow you to keep paying more of your employees by spreading out the cuts (rather than cutting folks altogether). This is a good option if you are trying to keep your entire team together in the immediate term. Make no mistake, though, that a 20% pay cut could cripple many in this country, so don’t make the decision to do so lightly. 
5. How do we collect our receivables while maintaining human compassion?
   • Communicate relentlessly. And employ the help of your sales staff and think in terms of your customers’ needs. Open ended questions are a great place to start.  How are you doing? How has this lockdown affected your business? What can we do to help you? Then you can shift to more pointed questions, still keeping their needs at the forefront. Do you need more inventory? Which would help you more, an early pay discount or more time to pay? Coming right out and asking for payment might not communicate the right message. But asking “Do you think you’ll be able to pay the outstanding invoices under the current terms? If not, how can best help you?” would probably be appropriate under most circumstances.
6. Should 1099 independent contractors be included in my PPP application?
   • No. According to the current guidance, only wages for W-2 employees should be included. That can and should include owners who receive W-2 wages, when applicable.
7. If I bank with multiple banks, do I have to apply for an SBA loan through the bank where I have my payroll accounts?
   • Not necessarily. Simply speaking, you are able to apply at any bank that will accept your application. And generally, if your business has a bank account, that bank will likely be able process your application. That said, some banks will only accept an application if you have a business account there. And some banks are giving priority to customers who already have loan accounts. More information about the PPP loan program is available here.
8. If W-2 wages were higher in the first quarter of 2020, can we use that? Or do we have to use 2019 wages?
   • This is likely governed by your specific bank. The guidance seems to indicate you can use current wages, so an average based on a running-12-months might be an option. We are advising clients to have both available (12 months ended December 31, 2019 and 12 months ended March 31, 2020) when completing the PPP application for their specific bank. Here is a list of other supporting items you should have readily available.
9. My bank isn’t accepting new PPP applications. Is there a list of banks that will work with non-customers?
   • Although the SBA has not released an official list, Fortune Magazine made one.
10. I understand that the U.S. Government has extended the tax deadlines, effectively moving Tax Day to July 15, 2020. Does this apply to state returns as well? 
    • Not automatically. It depends on the state and the type of tax (individual, corporate, sales, payroll, etc.). The Florida Department of Revenue, for example, recently sent out email reminders that said, “Employer’s Quarterly Report (Form RT-6) for January, February and March 2020 is due. You must file a report for each quarter, even if no tax is due. To ensure the accurate payment of reemployment benefits, it is vital that reports are filed timely. If you file and pay electronically, you must initiate payment no later than 5 p.m. ET on Wednesday, April 29, 2020. If you file a paper report, your report and payment must be postmarked by Thursday, April 30, 2020.” However, it appears that Florida is waiving penalties for nonpayment in some cases. More details about Florida’s Department of Revenue COVID-19 response can be found here. Pease don’t assume that extensions are automatic or that penalties will be waived. Check with your particular state (and your particular situation) to be sure!
11. What if I have student loans? Do I still have to make my payments?
    • No, at least not for federal student loans. It’s called a forbearance. And it’s automatic. In most cases, your lender will contact you directly (although many of them are behind). You can read about this and other COVID-19 details on the Federal Student Aid website.
12. How do I apply for unemployment?
    • This varies state by state. If you are in Florida, this is the website, and here is a simple PDF we found that might assist you. Most states will be similar. We recommend that you do this early in the morning before the website is overloaded.
13. I applied (or tried to apply) for PPP with my bank, but I haven’t heard much (if anything) in response. Did it work? When should I expect funding? Did I miss the deadline? Will I be left out? 
    • You are not alone! We’ve heard several variations and iterations of this question. And this response from a local Florida bank seems to answer it best, and likely echoes what many other bankers would say if given the chance:
      

      We are participating in the Paycheck Protection Program under the SBA as outlined in the CARES Act passed by Congress. We are keenly aware this program has been somewhat confusing both for banks and for customers. We have been accepting applications and processing them through the SBA online portal. As all banks are, we are awaiting final guidance on loan documentation and authorization information from the SBA. We are aware there are multiple stories in the news and on social media outlining big numbers that are supposedly already funded. However, based on our conversations with actual SBA representatives, we believe the numbers are referring to applications processed through the system, not dollars that have been funded by banks to borrowers. At this point, we continue to process applications received from our clients, but are carefully assessing the volume to ensure we are able to meet our commitments before taking on additional applications. It is our desire to assist as many businesses as we can, but must be prudent to ensure we have the capacity. Please reach out to your relationship banker if you have questions about the PPP program.

14. Where’s my stimulus payment??
    • Well, we have some good news… Stimulus payments are now in process! You can track the status of your payment or enter your direct deposit information directly on this page on the IRS website. If you want to know more about the program, including how much you may be eligible to receive, you can find that information on this page.
15. I received proceeds from PPP or EIDL. How do I account for it?
    • In the event you receive funds from the PPP program, we recommend creating an “Other Account Type.” Choose Other Current Liability and name it Government Assistance Loan (or similar). When it is forgiven, your CPA will have instructions on how to record the change from loan to grant.
    • If you receive an EIDL grant, we recommend creating an “Other Account Type.” Choose Other Income and name it Government Grant (or similar). In the event that additional EIDL loan money is received, those funds should be recorded using the Other Current Liability as noted above.
    • NOTE: Given its wide acceptance among small businesses, these options were written specifically for organizations using Quickbooks as their accounting software, but most accounting packages will have similar options.

If you have a question, comment below or ask us here! More questions and answers coming to this post soon. Please check back often!