March 27, 2020 – The downtown Cincinnati GCADA Deputy Registrar Office and Hamilton Co. Clerk of Courts Office will be open limited hours Mondays through Fridays for dealer work beginning Monday, March 30, 2020.
The Clerk of Courts Office hours will be 8 a.m. to noon by appointment. Dealers should call ahead to (513) 946-6450.
Our GCADA Deputy Registrar Office hours will be 8 a.m. to 11 a.m. Contact the office at (513) 721-3271 or Charlie Howard at (513) 516-6762.
NADA circulated the following preliminary summary of the $2 trillion relief bill passed late last night by the U.S. Senate.
The U.S. House is expected to vote on and pass the bill tomorrow. Currently, the House adjusting its voting process in light of the pandemic.
NADA indicates the bill provides a great deal of assistance for small businesses, with minimal eligibility requirements. Much more information regarding the assistance application process, benefits, requirements and more will forwarded in the coming days.
A completely new, temporary lending program to aid small business The bill will provide $349 billion to support loans through a new Paycheck Protection Program, which Congress designed to keep employees on the payroll and save small businesses. The Small Business Administration (SBA) will stand up a completely new program that will only nominally be part of the existing SBA Section 7(a) loan program. To expedite the funding of the new loans, the Treasury Department and SBA will expand the number of participating banks and credit unions, and captive finance companies may also be included.
Minimal eligibility requirements Any business operational on February 15, 2020, that paid salaries and payroll taxes will be eligible, but there is a limit of no more than 500 employees. Fortunately, the bill includes provisions to waive normal affiliation rules which should be applicable to many dealers. For dealers, there will be no test for total revenue.
Borrower certification to obtain loan Borrowers will be required to make a good-faith certification that the loan is necessary due to economic conditions caused by COVID-19 and that it will use the funds to retain workers and maintain payroll, lease and utility payments.
Loans have terms NOT found in traditional bank loans Lenders will not require application fees, closing costs, collateral or personal guarantees. The maximum interest rate will be 4%, and the first six months’ payments (principal and interest) will be automatically deferred. Finally, the lenders are not expected to perform credit analysis, because the loans will be 100% guaranteed by the SBA.
Maximum loan amount The maximum amount will be 250% of an employer’s average monthly payroll (based on a 12-month look back from the date of the loan), but NOT MORE than $10 million.
Permitted uses of the loan The loan can be used for “payroll costs,” which include salary, commission, or similar compensation (up to an annual rate of pay of $100,000 per employee); employee group health care benefits, including insurance premiums; retirement contributions; and covered leave from February 15, 2020, to June 30, 2020. Permitted uses also include payments of interest on mortgages, rent, utilities and interest on any other debt obligations that were incurred before February 15, 2020.
Loans may be forgiven In general, borrowers will be eligible for loan forgiveness equal to the amount of certain expenses spent during an eight-week period after the origination date of the loan. These expenses are payroll costs, interest payments on any secured debt incurred prior to February 15, 2020, payment of rent on any lease in force prior to February 15, 2020, and payment on any utility for which service began before February 15, 2020.
Percentage of employee retention related to amount of loan forgiveness The amount forgiven will be reduced proportionally by any reduction in employees retained compared to the prior year, and by the reduction in pay of any employee in excess of 25% of the employee’s prior-year compensation. However, to encourage employers to rehire any employees who have already been laid off due to the COVID-19 crisis, borrowers that rehire previously laid-off workers by June 30, 2020, will still qualify and not be penalized for having a reduced payroll during the loan period.
No effect on federal Income tax Canceled indebtedness under this program will not be included in the borrower’s taxable income.
Loan amounts not forgiven Any loan amounts not forgiven at the end of one year will be carried forward as an ongoing loan with terms of a maximum of 10 years at 4 percent interest or less.
The CARES Act contains many dealer-friendly tax provisions that will assist dealers in maintaining liquidity during the disruptions caused by the ongoing coronavirus outbreak.
Net operating loss (NOL) carryback Dealers will be permitted to offset losses in 2018, 2019 and 2020 against profits from the prior five years. NOL carryback was previously eliminated by the Tax Cuts and Jobs Act (TCJA) in 2017. This provision may provide dealers with losses in 2020 with substantial refunds. Losses that are used to offset pre-TCJA profits, which were taxed at a higher rate, will be refunded at pre-TCJA tax rates, providing an additional boost.
Modification on losses for taxpayers other than corporations TheTCJA generally limited the amount of losses noncorporate taxpayers, including pass throughs, could claim to $500,000. Under the bill this limitation is suspended, allowing dealers to utilize excess business losses along with the new NOL carryback provisions to access critical cashflow.
Qualified improvement property (QIP) technical fix The TCJA intended for businesses to deduct improvements made to retail property immediately under the TCJA’s bonus depreciation provisions, but due to a drafting error the depreciation lifespan was set at 39 years. This bill corrects this error retroactive to 2018. Dealers with significant outlays on QIP in previous years should consider amending their 2018 and 2019 returns to claim the deductions and receive a refund.
Interest deductibility limit increased. The TCJA limited the deductibility of business interest to 30% of a dealership’s adjusted taxable income, except for floor plan financing interest, which remained 100% deductible. The bill allows businesses to deduct up to 50% of their adjusted taxable income for 2019 and 2020. Dealers should note that, coupled with the proposed IRS rules on the interplay between bonus depreciation and floor plan financing interest, if their total business interest, including floor plan financing interest, amounts to less than 50% of adjusted taxable income for these years, they may also be able to avail themselves of the bonus depreciation provisions in TCJA. Dealers unable to use full expensing in 2019 due to interest expenses between 30% and 50% of their adjusted taxable income may be able to generate refunds by filing an amended 2019 return.
Employee retention credit Dealers who have been forced to close their business due to a government-mandated shutdown will be allowed a refundable payroll tax credit for retaining their employees. The credit is generally available to dealers whose operations have been fully or partially closed due to a government mandate and whose gross receipts have declined by more than 50%. For dealers with 100 or fewer employees, all employee wages qualify for the credit regardless of whether the business is shut down or not. The credit is limited to the first $10,000 of compensation paid per employee. This credit is available through the end of 2020.
Delay of payroll taxes The bill allows businesses to delay the 6.2% employer portion of the Social Security payroll tax for the remainder of 2020. The delayed tax liability would then be paid back apportioned equally over the following two years.
As further details become available, NADA will release a more extensive summary of these provisions. For any questions, contact legislative@nada.org.
The U.S. Dept of Labor’s Wage and Hour Division (WHD) announced its first round of published guidance March 24, 2020 to provide information to employees and employers about how each will be able to take advantage of the protections and relief offered by the Families First Coronavirus Response Act (FFCRA) when it takes effect on April 1, 2020.
FFCRA will help the United States combat and defeat COVID-19 by giving all American businesses with fewer than 500 employees funds to provide employees with paid leave, either for the employee’s own health needs or to care for family members. The legislation will ensure that workers are not forced to choose between their paychecks and the public health measures needed to combat the virus while at the same time reimbursing businesses.
The guidance – provided in a Fact Sheet for Employees, a Fact Sheet for Employers, U.S. Dept of Labor Questions and Answers document and a Fisher Phillips FFCRA FAQ document – addresses critical questions, such as how an employer must count the number of their employees to determine coverage; how small businesses can obtain an exemption; how to count hours for part-time employees; and how to calculate the wages employees are entitled to under this law.
“Providing information to the American workforce is a top priority for the Wage and Hour Division,” said Administrator Cheryl Stanton. “With so many workers and so many employers struggling to find their way in these trying conditions, providing guidance on a rolling basis will allow workers and businesses to prepare for the law to go into effect on April 1, 2020. We remain committed, and are working around the clock to provide the information and tools for employees and employers alike.”
The guidance announced today is just the first round of information and compliance assistance to come from WHD. A workplace poster required for most employers will be published later this week, along with additional fact sheets and more Q&A.
WHD provides additional information on common issues employers and employees face when responding to COVID-19, and its effects on wages and hours worked under the Fair Labor Standards Act and job-protected leave under the Family and Medical Leave Act at https://www.dol.gov/agencies/whd/pandemic.
For more information about the laws enforced by the WHD, call 866-4US-WAGE, or visit https://www.dol.gov/agencies/whd.
For further information about COVID-19, please visit the U.S. Department of Health and Human Services’ Centers for Disease Control and Prevention.
By Frank Panzeca – Clark Schaefer Hackett
As you likely know, President Trump recently unveiled specific funding programs designed to make businesses more resilient to Coronavirus-related economic disruptions.
As part of the Coronavirus Preparedness and Response Supplemental Appropriations Act, the SBA will work directly with state governors to provide targeted, low-interest disaster recovery loans to businesses that have been severely impacted by the Coronavirus.
This announcement has sparked many questions. The details are still developing, but here’s what we know now:
Process for Accessing SBA’s Coronavirus (COVID-19) Disaster Relief Lending
Upon a request received from a state’s or territory’s governor, SBA will issue under its own authority, an Economic Injury Disaster Loan declaration.
The governors of Kentucky, Indiana, Ohio and Michigan (among many other states) have applied for approvals.
There are many areas within our region already eligible to apply and more states and territories are being added daily.
You can check to see if your county is in an approved designated area by using this search tool. Search carefully as there can be multiple different area classifications depending on your state and county.
Applicants must also meet the SBA’s definition of a small business. To help you understand if your business meets the requirements, here is a link to the SBA’s table of small business size standards.
Although you can seek guidance on the program from your banker, it does not have the ability to apply for you. Businesses seeking access to these funds will have to apply directly to the U.S. Government.
It is critical that you take the time to accurately complete the filing process. The most common process delays are from invalid filings.
Once the application is submitted, assuming the forms are correctly filled out, the SBA is estimating two to three weeks for approval and an additional week for funds to be disbursed. Filing the application can be daunting but we can assist you with certain parts of the process.
Again, the details around this program are evolving. We are following the developments closely and will offer updates as information becomes available. Contact a CSH advisor with questions at (513) 241-3111.
Other info to use as needed:
The forms and links required for submission are provided below:
Anecdotal feedback from lenders:
Courtesy of Clark Schaefer Hackett
Many employers are being impacted by COVID-19.
Some have voluntarily shut down or limited operations, while others have been mandated to close by the states where the reside.
While things are changing rapidly, employers sponsoring 401(k) plans and defined benefit plans should consider the following issues:
Don’t change or alter a plan participants salary deferral contribution election without a newly executed election form. A participant has the right to cease contributions at any time (please refer to your plan document). The plan sponsor must have written participant direction to cease or change salary deferral contributions.
Plan sponsors to are encouraged to contact their plan service provider or QPAC with questions about plan sponsorship.
Courtesy of OADA
In an effort to further reduce community spread of COVID-19, Ohio Gov. Mike DeWine and Health Dept. Director Amy Acton have issued an executive order that only certain businesses may remain open to serve essential functions.
Businesses considered “non-essential” will be required to close as of Monday, March 23, 2020 at 11:59 p.m.
Businesses needed for transportation, including “gas stations, auto supply, auto repair, farm equipment, construction equipment, boat repair and related facilities and bicycle shops and related facilities” are listed among the businesses considered essential.
In an effort to further reduce community spread of COVID-19, Ohio Gov. Mike DeWine and Health Dept. Director Amy Acton have issued an executive order that only certain businesses may remain open to serve essential functions.
Businesses considered “non-essential” will be required to close as of Monday, March 23, 2020 at 11:59 p.m.
Businesses needed for transportation, including “gas stations, auto supply, auto repair, farm equipment, construction equipment, boat repair and related facilities and bicycle shops and related facilities” are listed among the businesses considered essential.
The executive order also requires social distancing in Section 15. This includes designating six-foot distances with signage, tape, or by other means. Also, businesses are required to have separate operating hours for vulnerable populations, post hours of operation on their website, and implement other measures for the safety and health of employees and customers.
Dealers are also required to follow the CDC’s Guidance for Businesses and Employers in Section 18 of the Order, including actively encouraging employees to remain home until they are fever free for 72 hours, performing routine environmental cleaning, respiratory etiquette, and hand hygiene by all employees.
For additional guidance, dealers should consult the CDC’s Interim Guidance for Businesses and Employers: CLICK HERE for information.
OADA appreciates the Governor’s commitment to the health and safety of Ohioans and applauds his administration for taking steps to reduce community spread of this COVID-19 pandemic.
OADA had advocated that members remain open for sales and service to serve the essential needs of our customers, including local governments and municipalities, the trucking industry, and others. We are committed to continuing to serve our communities, while maintaining precautions to protect their health and well-being.
OADA believes that this order permits dealers to be open for sales and service functions. However, if dealers have any questions regarding the scope of what services they may continue to offer, please contact your legal counsel for additional guidance.
NADA priorities to help auto and truck dealers improve liquidity and cash flow are included in the Senate Republican bill, S. 3548, the “Coronavirus Aid, Relief, and Economic Security (CARES) Act.”
NADA has been working to include these important small business provisions in the CARES Act bill and needs your help to ensure these provisions stay in the final bill.
Please urge your Senators to support the provisions below to restore small business liquidity and keep dealership employees on the payroll. These provisions would:
Please focus first on your Democratic Senators to help build bipartisan support for these small business provisions, which if enacted,would provide relief to help small business dealers cover expenses and make payroll during this unprecedented time.
NOTE: This alert relates to legislation pending in the Senate and needs your action now. In related news, yesterday the U.S. Treasury Department issued an announcement regarding temporary paid sick leave and new Family and Medical Leave Act provisions that were enacted last week. Later today, NADA will send all dealers guidance about the new paid leave law and the tax reimbursements that will cover the costs of employee leave. Please watch for that guidance.
Negotiations on the next Coronavirus Response bill are moving rapidly in the Senate with major decisions being made today.
NADA priorities to help auto and truck dealers improve liquidity and cash flow are included in the Senate Republican bill, S. 3548, the “Coronavirus Aid, Relief, and Economic Security (CARES) Act.”
NADA has been working to include these important small business provisions in the CARES Act bill and needs your help to ensure these provisions stay in the final bill.
Please urge your Senators to support the provisions below to restore small business liquidity and keep dealership employees on the payroll. These provisions would:
Provide nearly $300 billion in small business interruption loans for paid sick or medical leave, employee salaries, mortgage payments, and any other debt obligations;
Provide a process for small business borrowers to obtain loan forgiveness equal to the payroll cost and costs related to debt obligations from March 1 through June 30, 2020;
Increase eligible small businesses to include businesses with 500 or less employees; and
Help continue operations for businesses by delaying payment of employer payroll taxes; relaxing limitations on firm’s use of losses from prior years, and other tax relief to help dealers keep employees on payroll.
Please focus first on your Democratic senators to help build bipartisan support for these small business provisions, which, if enacted, would provide relief to help small business dealers cover expenses and make payroll during this unprecedented time.
NOTE: This alert relates to legislation pending in the Senate and needs your action now. In related news, yesterday the U.S. Treasury Department issued an announcement regarding temporary paid sick leave and new Family and Medical Leave Act provisions that were enacted last week. Later today, NADA will send all dealers guidance about the new paid leave law and the tax reimbursements that will cover the costs of employee leave. Please watch for that guidance.
Many employers are being impacted by COVID-19.
Some have voluntarily shut down or limited operations, while others have been mandated to close by the states where the reside.
While things are changing rapidly, employers sponsoring 401(k) plans and defined benefit plans should consider the following issues:
401(k) Plans:
Don’t change or alter a plan participants salary deferral contribution election without a newly executed election form. A participant has the right to cease contributions at any time (please refer to your plan document). The plan sponsor must have written participant direction to cease or change salary deferral contributions.
Plan sponsors need to continue to make salary deferral contributions on a timely basis to the plan trust. Late contributions will require the calculation of lost earnings for impacted plan participants and the plan sponsor is subject to a 15% excise tax on the lost earnings.
Laid off employees, those who are expected to come back to work at some point in the future, are not eligible for distribution under the plan. Employees terminated and not expected to be rehired may take distribution of their vested account balance after the separation occurs (please refer to the plan document for distribution timing).
Employers sponsoring an automatic enrollment plan must continue to withhold at default rates for active participants. Plans must be amended and notices must be distributed to eligible participants to stop automatic enrollment features.
Loan payments should continue to be withheld for participants with outstanding loans.
Mandatory safe harbor matching contributions can only be stopped with a plan amendment and a notice to eligible plan participants. Employees must also be given the opportunity to change their salary deferral election.
Plans with a discretionary matching contribution may cease future matching contributions. Written notice to employees is highly recommended. Employees must also be given the opportunity to change their salary deferral election.
Financial hardship withdrawal options: At this time there has been no changes to the financial hardship withdrawal provisions regarding COVID 19. Current taxation and rules apply, although many expect discussion regarding the IRS waiving the 10% early withdrawal penalty on hardship withdrawals during the COVID-19 time period. As of the date of this guidance we can make no assurance to any such waiver.
Defined Benefit Pension Plans:
Plan sponsors may feel the need to freeze the accrual of additional benefits under the plan until economic conditions improve.
Plans must be amended to freeze benefit accruals before eligible plan participants earn a benefit under the plan in the current year. Most plans require 1,000 hours of service to accrue a benefit. Some require as little as 500 hours or less.
Plan participants must receive a notice regarding the freeze at least 15 days prior to the date benefits accrue under the plan.
Plan sponsors to are encouraged to contact their plan service provider or QPAC with questions about plan sponsorship.
|
