A Message from Kevin:
First and foremost, I hope you are all safe and healthy. These are going to trying times for the next month or so. I hope you all stay safe and are able to weather the storm that is descending on us all. We here at Sundberg Nicks are all safe and healthy and continuing to work. With the orders coming down to self-isolate and increase social distancing we are continuing to get work done with the impending deadline. For me, being told lock yourself in a room for 4 weeks with little human interaction sounds like the normal March 15 to April 15 I have been living for the last 32 years. Who knew that I would be training my whole life for this?
A Message from Michael:
With everything that is going on with this pandemic we wanted to let our clients know that we are here for them, and to provide the best advice that we can on how to navigate these tricky times. Given the fact that everything is changing so quickly, we are trying to stay on top of all of the changes, while at the same time trying to complete tax returns and normal day to day operations. Inevitably this is going to affect everyone, however we at Sundberg Nicks will continue to stay true to our values and continue to develop long term relationships however we can.
A Message for our Clients:
With all the orders for businesses to close, advice needs to be given to deal with the extraordinary circumstances we are all going through. Here are some thoughts on this:
This is changing fast, anything we are saying now could be different the next day. Keep that in mind when reading. Daily we seem to be adapting to what is going on. Call if you have questions.
The deadline for filing and paying all federal taxes due 4-15-2020 is now due 7-15-2020 (including 1st Qtr. Estimates). Oregon is saying that they will follow the federal guidance. If you live in a state outside Oregon, check your local department of revenue as California granted an extension to 6-15-2020. Localities may have different due dates. Excluded from this are any payroll and excise taxes. Still pay those on time unless instructed to do otherwise. We have checked the City of Portland website and it is still unclear if they are now following the new 7-15-2020 deadline. Click here for guidance from the City of Portland: https://www.portlandoregon.gov/revenue/article/757214.
Click here for guidance from Oregon Department of Revenue: https://www.oregon.gov/dor/Pages/COVID19.aspx. Please contact us later if you are wondering about this tax deadline. Hopefully we will be given guidance on this soon.
Right now there appears to be no extension for 2nd Qtr. estimates due 6-15-2020. Remember that estimates made are based on the lesser of 100%/110% of 2019 tax liability or 90% of the current year tax liability. With many of you seeing a major negative impact on your 2020 revenue, that may mean that no 2nd Qtr. Estimated tax payments may be required.
People have asked about IRA contribution due dates. To be safe, we are telling people to still fund by 4-15-2020. If you read Internal Revenue Code (IRC) 219(f)(3), the due date for IRA contributions is the due date of the tax return. Since the extension was granted to 7-15-2020, that would imply 7-15-2020 is the due date, but to be safe we are still telling people to fund IRAs by 4-15-2020. We do not want you to miss an important funding date.
We will be extending things that are not done by 4-15-2020 to be safe. We do not want to get notices about late filing due to some computer glitch.
We will likely be extending more than normal this year as a result of what is going on. We will still push to get as much done by 4-15-2020 as possible, but with these changes that are coming out so fast, there are not enough hours between now and 4-15-2020 to get everything done.
Any SEP contributions, Defined Benefit Contributions, 401(k) profit sharing that is normally due with the due date (including extensions) are still due by their normal due dates. Part of the reason we are extending returns normally due 4-15-2020 is to make sure that we have the later date to fund retirement plans that are not IRAs.
New Tax Law Changes
These are coming out fast. We are only discussing things that as of 3-22-2020, have been signed into law. There are many things in committee that are being discussed, but until these are signed into law there is not much point to discuss this as they will likely change when the other House of Congress discusses things and negotiations start.
In the most recent tax act signed into law on March 17, 2020 there are several tax credits available for paid time off that is required to be paid as a result of COVID-19. There are many things here that can be discussed, so a conversation is more appropriate than detailing those here. There is a credit that is available for up to 100% of wages paid to employees (including owners and self-employed) required to be laid off as a result of COVID-19. Prior to relying on this 100% credit in your planning, we recommend you call our office to discuss this credit and how it can assist with your cash flow in the coming months. For offices that are shut down, we would recommend laying off employees and having them claim unemployment.
General Business Items with the directives to close for 2 weeks (or non-emergency medical being asked to close until 6-15-2020 in Oregon):
What do you do if you have loan payments that are due with a decrease in income? Talk to banks right away and early. Banks are sending out messages saying they are there for you. Now is the time to prove it. They are saying they will defer payments and go to interest only. If you have a Line of Credit (LOC) advance on it now. The interest is a small price to pay for the security from having this. In 2008, banks pulled LOC with little or no warning. Having the cash now in your bank account is a good thing.
If you do not have a LOC, get one (if you can).
Call your landlord about rent abatements and deferrals. If the landlord refuses, it may be wise to contact a real estate attorney to look over your lease to see if there is anything in the lease that could be done. We have heard from attorney contacts there could be some help in the law and we strongly recommend contacting an attorney to go over this possibility.
If you are being forced to lay off people due to this issue, We recommend contacting a labor law expert to make sure you are not inadvertently violating any law. If people are being laid off, they will likely be eligible for unemployment (owners included if they are paying into the state unemployment system). Employees with accrued time off can use that at this time. They are not required to, and they can save it for later. There are also workshare programs in most states if you have people continuing to work part time.
There are also health insurance premiums to consider and we recommend you discuss these options with your insurance broker. If you do lay off your employees you need to offer them COBRA so that they can continue to receive health insurance.
There could be disaster relief from the SBA that is available. The SBA has opened up a program which will permit qualified small business owners to get working capital loans of up to $2 million. Our understanding of the program is that the interest rate is fixed at about 2.65% for 20-30 years. We would suggest that you apply for this credit. There is no information on how long these loans will be available, so we suggest you act quickly. You should consider borrowing more than you anticipate needing – you can always pay it back if you don’t use it, but for now, it is very inexpensive money and a good safety net to have. Here is the link: www.sba.gov/disaster. We would urge you to take advantage of this resource right away, regardless of what relief the bank may be able to offer. Utilizing this resource will enable you to stay current with suppliers and vendors, which will be important to maintain a good relationship with the people you will depend on once you resume operations.
This is going to be hard for everyone. No one wants to go through this right now. There will be sacrifices that will need to be made by all parties for us to get through this crisis with a minimal amount of impact. You are not alone. Right now the priority needs to be saving your business so people have jobs to come back to, versus trying to hold on to employees too long because you want to be nice. While admirable to feel this way, it is better to have a job to come back to when this is all over.
Hoping everyone stays safe and healthy
Kevin and Michael
Sundberg Nicks CPAs, LLC