News + Updates | Category: Updates

COVID-19 Update 3/31/2020

To The Valued Clients and Business Partners of Bertz, Hess & Company: 

As promised in the last Bertz, Hess & Company message to our clients and business partners, we wanted to update you on some developments over the last few days.  These items may apply to you, your family, your business and/or non-profit entity.  Many of the details have yet to be finalized, but we expect many of the provisions below will be in the final version of these legislative actions. Some of the highlights are as follows:

CARES ACT OVERVIEW

Everyone seems to be talking about the new CARES Act (The Coronavirus Aid, Relief, and Economic Security Act, H.R. 748), which passed the Senate by a 96-0 vote late on Wednesday and was voted on, and signed into law on Friday. 

There will likely be changes to the CARES Act, but currently, it contains a variety of items affecting individuals, businesses and non-profits as part of a $2 trillion aid package designed to help the economy. Some details of the CARES Act in its current form are covered in a Journal of Accountancy article that you can access here

Some highlights from that article are as follows:

Recovery rebates: Providing individuals with a tax credit of $1,200 ($2,400 for joint filers) plus $500 for each qualifying child. The credit is phased out for taxpayers with adjusted gross income (AGI) above $150,000 (for joint filers), $112,500 (for heads of household), and $75,000 for other individuals.

Payroll tax credit refunds: The bill provides for advance refunding of the payroll tax credits enacted last week in the Families First Coronavirus Response Act.

Employee retention credit: This is a credit for employers that close down as a result of the coronavirus pandemic. Eligible employers are allowed a credit against employment taxes equal to 50% of qualified wages (up to $10,000 in wages) for each employee. Eligible employers are employers who were carrying on a trade or business during 2020 up until the operations were fully or partially suspended due to orders from an governmental authority limiting commerce, travel, or group meetings due to the COVID-19 outbreak. Employers that have gross receipts that are less than 50% of their gross receipts for the same quarter in the prior year are also eligible, until their gross receipts exceed 80% of their gross receipts for the same calendar quarter in the prior year. For employers with more than 100 employees, wages eligible for the credit are wages that the employer pays employees who are not providing services due to the suspension of the business or a drop in gross receipts. For employers with 100 or fewer employees, all wages paid qualify for the credit.

Retirement plans: Taxpayers can take up to $100,000 in coronavirus-related distributions from retirement plans without being subject to the Sec. 72(t) 10% additional tax for early distributions. Eligible distributions can be taken up to Dec. 31, 2020. Coronavirus-related distributions may be repaid within three years. For these purposes, an eligible taxpayer is one who (or that taxpayer’s spouse or dependent) has been diagnosed with SARS-CoV-2 virus or COVID-19 disease, or who experience adverse financial consequences from being quarantined, furloughed, or laid off, or who has had his or her work hours reduced, or who is unable to work due to lack of child care. Any resulting income inclusion can be taken over three years. The bill also allows loans of up to $100,000 from qualified plans, and repayment can be delayed.

Charitable deductions: The bill creates an above-the-line charitable deduction for 2020 (not to exceed $300). The bill also modifies the AGI limitations on charitable contributions for 2020, to 100% of AGI for individuals and 25% of taxable income for corporations. The bill also increases the food contribution limits to 25%.

Payroll tax delay: Employers can delay payment of 50% of 2020 employer payroll taxes until Dec. 31, 2021; the other 50% will be due Dec. 31, 2022. For self-employed individuals, the payment of self-employment taxes falls under the same timeline.

Pennsylvania has provided some guidance on unemployment compensation for employees and self-employed individuals in the COVID-19 guidance which you can access here. At the time of this e-mail, Pennsylvania has not issued guidelines for filing for unemployment if you are self-employed, but has indicated that special instructions are forthcoming.

LOANS AVAILABLE TO BUSINESSES AND NON-PROFITS

Here’s what we are hearing from some of our more reliable sources about loans and grants under CARES:

SBA Disaster Assistance for Businesses and Not-For-Profit Entities

  1. The SBA has approved disaster relief funds.  
  2. These funds are provided directly from the SBA and bypass the banks entirely. The best resource for these requests would be to reach out to your SBA district office for guidance. The website SBA.gov will also have up to date information.  
  3. A quick primer on these funds:  up to $2MM to a borrower that is able to show direct hardship and a fixed interest rate of 3.75% for up to 30 years if that amortization makes sense.  One big change is that these funds will also be available to non-profits at a fixed interest rate of 2.75%.
  4. The quickest path to approval is to assemble as complete a package as possible.
  5. Businesses should be prepared with the documentation needed to apply. For example, they will be asked for federal business and personal tax returns, and historical and projected revenue. All businesses are able to review the SBA Disaster Business Loan Application paper forms and requirements  at https://disasterloan.sba.gov/ela/Information/PaperForms. A complete and thorough application will be eligible for funding (an incomplete application will delay the process.)
  6. The most up-to-date website on SBA’s Disaster Assistance in response to Coronavirus (COVID-19)is: https://www.sba.gov/disaster-assistance/coronavirus-covid-19  

Paycheck Protection Program under CARES

  • This program will be administered by the banks, not direct like the SBA Disaster Assistance program.
  • The program is designed to help keep your workers on the payroll.  If you have gone through layoffs, you will be able to hire them back.
  • The dollar amount you will receive will be based on the average monthly payroll using the previous 12 months then multiplied by 2.5.  Payroll means payroll and direct expenses related to payroll such as 401k contributions from the employer, employer contribution for healthcare, and other expenses that have a direct tie in.  Other aspects of monthly overhead is(we are being told by the SBA) not a part of that calculation.  Those expense are covered under the SBA’s disaster relief fund. SO YOU MAY WANT TO START TO GATHER THAT INFORMATION NOW!
  • This program refers to the product as a loan but is in essence a grant.  There is a possibility that some could be a grant and a combo of a loan.  For example, if the formula above leads you to ask for $500,000 and for whatever reason, application not completed correctly, inadequate information supplied, the SBA could say your $500,000 will come as a $420,000 grant and an $80,000 loan at 3.25% over a yet to be determined timeframe.
  • We hope to have details and more clarity on this program by next week.

THREE THINGS TO REMEMBER AS IT RELATES TO THE SBA DISASTER LOANS AND THE PAYCHECK PROTECTION PROGRAMS: 

First, as noted several times above, the information is changing and is being updated constantly   

Second, if you think the two loan/grant programs above would apply to your business, we would recommend you start compiling the payroll information noted above now, or as soon as possible.  Documentation will be key in the process. 

Third, some of the CARES Act relief programs are mutually exclusive, meaning that if you take advantage of one program, you might be excluded from another, so please be careful as you evaluate your options.

Governor Wolf’s Order & New Developments in the COVID-19 Crisis

A MESSAGE FROM BERTZ, HESS & COMPANY:

First and foremost, the partners and staff of Bertz, Hess & Company want to wish you, your employees and your families the best of health and safety as we navigate the COVID-19 situation.

By order of the Governor of Pennsylvania, we were advised originally that we could not have employees at our physical office location, because Governor Wolf mandated that all “non-life sustaining” businesses close their physical locations.  Shortly thereafter, that order was revised, and we are now allowed by law to have staff in our physical location. 

However, in the public interest, as well as the best interest of the health and safety of our clients and our staff, our physical offices are effectively closed, and any staff present in the office is on an “as-needed” basis to conduct limited activities which cannot be executed efficiently from a remote location.  Therefore, for all intents and purposes, our physical office is closed, but our staff are working remotely during this time and are doing everything they can to keep your work moving along in an efficient manner.
 
If you have already sent your 2019 tax information to us already, we are continuing to work on your tax returns and have every intention of getting them done in a timely manner.
 
If you have not submitted your tax information to us, please note that our ability to receive documentation, except through mail, at our physical location is very limited, so please do not attempt to drop off anything at our physical location. We are encouraging the use of the US Mail and electronic means wherever possible to get your information to us. If you need to get additional information to your preparer, please contact them by email and they will help you make arrangements to send your documents electronically or make other arrangements, if needed.

Please be aware that you are still able to reach us by email and phone, and any voicemails left on our office voicemail are delivered immediately to our e-mail, and we are able to check voicemails from remote locations, and will do so on a regular basis.

NEW DEVELOPMENTS RESULTING FROM THE COVID-19 CRISIS

We also wanted to take a moment to make you aware of some new developments related to the COVID-19 crisis. New information is being released on a constant basis, and many of the details are still being hammered out by our legislators, but here is a summary of what we know:

TAX DEADLINE EXTENSION

Treasury Secretary Steven Mnuchin announced Friday that President Trump has directed him to move Tax Day to July 15, giving taxpayers more time to file their taxes in the midst of the coronavirus pandemic.

Earlier this week, the administration moved the payment deadline to July 15. All taxpayers now have three extra months to pay, without interest or penalties. But those expecting refunds should file as soon as possible. Several States have already committed to move their deadline to match the revised Federal deadline, including Pennsylvania.

Accordingly, with the deadlines moved to align to July 15th, there is no need file an extension or take any action by April 15th.  

THE FAMILIES FIRST CORONAVIRUS RESPONSE ACT (H.R. 6201)

The Families First Coronavirus Response Act (H.R. 6201), enacted on Wednesday, March 18, 2020, provides a comprehensive financial aid package for employers and employees. This is the second package from Congress dealing with the Coronavirus outbreak. The effective date of the package is April 1, 2020.

This package provides certain benefits to employees impacted by the Coronavirus, who work for businesses which employ under 500 people.  It also provides certain tax credits to those employers to help offset the cost of compliance.  There are certain exemption provisions for employers with less than 50 employees, but in general, the provisions of the bill apply to those employers with 1 to 500 employees.  To get the latest information on this package from the Department of Labor, please go here.

As we get more details on the above actions, as well as recent new developments, such the Stimulus Bill agreement reached this morning, and the PIDA Working Capital Assistance Fund loan program, we will be reaching out to you periodically to keep you informed on how these developments affect you, your families and your businesses.

If you have any questions about the above items, please reach out to your Bertz, Hess contact person, or you can send an e-mail to our informational e-mail address info@bertzhess.com
 
We sincerely appreciate your continued partnership,
THE PARTNER GROUP AT BERTZ, HESS & CO, LLP
Scott Frick, Laura Bender and Tom Wobber
 

New Partner at Bertz, Hess & Co.

The firm is pleased to announce that Thomas A. Wobber, CPA has been promoted to partner as of January 1, 2014.  Tom is a 1994 graduate of Loyola University and has over 15 years’ experience with a wide range of both for-profit and not-for-profit clients with assets ranging from $500,000 to $2.5 billion.

Prior to joining Bertz, Hess & Co., LLP in 2009, his experience included 5 years with an international accounting firm, 8 years with a national accounting firm and 3 years in private industry.  Tom’s expertise includes audits, reviews, compilations, internal control, and management consulting with extensive experience in many industries, including real estate, manufacturing and distribution, and non-profit organizations. 

Tom is a member of the American Institute of Certified Public Accountants (AICPA) and the Pennsylvania Institute of Certified Public Accountants (PICPA).  Outside his normal work schedule, he is an active volunteer with the 4-H clubs, and serves as board member for both non-profit and for-profit entities.

Merger Announcement

We are pleased to announce the merger of two of Lancaster County’s most client-centered Certified Public Accounting Firms, Bertz & Company, LLP, founded in 1945, and Hess & Hess, LLC, founded in 1978, into Bertz, Hess & Company, LLP.  The combined firm will have 30 team members.

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