Currently, the date to both file and pay federal, Pennsylvania, and local income taxes has been automatically extended to July 15, 2020. It is not necessary to file any forms to get the extension. It is automatic. The federal, Pennsylvania and local estimates that would be due on April 15, 2020 and June 15, 2020 are now due July 15, 2020.
There is no extension for filing or payment of payroll taxes.
Business Loan Resources
Agency for Administering State Loan Program in Lebanon County (Not accepting new applicants but could reopen in the future)
COVID-19 Working Capital Access Program (CWCA) (PA State Loan Program Referenced in Link Above)
Paycheck Protection Program (PPP) Administered by the SBA
The loan proceeds are designed to support businesses with payrolls to hire back employees who may currently be receiving unemployment. The company’s potential for receiving “forgiveness” for the loan (essentially turning it into a grant) would require proof of payroll totals covering the 8-week period after the funds are received. Maintaining pre-COVID levels of payroll totals is important to the forgiveness aspect of this loan program. In essence, if you are a non-essential business, you would be securing the loan to pay people to not work during this time but be able to maintain them on your payroll and provide full wages. Businesses still open as essential would need to maintain staff near current levels and salaries (no greater than a 25% decrease) under current guidance for the forgiveness portion. Payroll costs (which are not yet fully defined) must account for 75% of the loan proceeds.
Up to 25% of the loan proceeds can fund rent/lease/mortgage interest payments and utilities.
To obtain loan forgiveness, you'll need to submit an application to your lender sometime after your eight-week covered period. Your covered period begins on the day you received your loan proceeds. Since the forgiveness period is time sensitive, talk to your lender about their due date for completion of the application. While the loan forgiveness will be provided on a tax-free basis, (meaning that even though the loan proceeds were effectively income to your business or organization, that income will not be subject to income tax), guidance is still pending on whether or not expenses paid by PPP funds will be deductible. In addition to payroll, we encourage you to pay all eligible expenses prior to the expiration of your eight-week period. These expenses include mortgage interest, rent, and utilities. Also, consider preparing a cut-off payroll. For example, if you normally pay every two weeks and your eight-week loan period ends June 5 and your normal check date is June 12, consider preparing paychecks for wages earned prior to June 5 on June 5.
As you can see, the requirements for calculating the maximum loan forgiveness can be a bit tricky. For our DIY clients or for some insight on preparing the application, we can send you a video from a large regional accounting firm that walks through an example.
If you are interested in help with estimating how much of the loan will be forgiven, or preparing the loan forgiveness application, please contact us. We will bill at our normal hourly rates for this service.
If you would like our assistance please contact us with these items to get us started
• The amount of your loan
• The date your funds were deposited into your account
• Your pay frequency
• The first day of your first pay period following the date you received your funds
We would like to stress that, however you address your PPP loan requirements, proper documentation and timely management of funds and reporting will be key factors in maximizing loan forgiveness.
These determinations are still unclear and changing daily. The loan however, does provide funding for the business to continue and the interest rate remains low at 1% so it may be your best option at this time.
Summary of Information Needed for COVID-19 Working Capital Access (CWCA) Program
Loans for this program are being approved quickly therefore, the pool of available money will soon be allocated. If you have an interest in one of these loans, please apply as soon as possible.
You will need the following:
- Business financial statements for 2017- 2018
- YTD - P&Ls and cash flow statement
- Tax Returns for 2017 - 2018 (business & personal)
- Copy of W9
- Copy of the articles of entity
- Sales and revenues (GM) before events started - then at a point in the event.
- Being able to show - I have dropped __% in sales and __% in revenues in __ days.
- Personal financial statement with net worth
- Personal credit report - with credit score
- Most recent bank statement - corporate/business
- Narrative (download sample)
Important notes regarding these loans:
- This could take about 10 hours of work.
- Make sure you all your materials together when you submit - do not submit it in pieces but as a completed package.
- Complete all forms, narrative, and all financials - for all 20% owners and above.
- Send a current year - 2020 - P&L for the 6 weeks (to show sales/revenues) before statewide shutdown and include a cash flow statement.
- The narrative is important - follow and answer the key things requested
How much to ask for: figure working capital for 3 months - or the $100,000 - whichever is the lesser. Do not inflate. If you want to keep it simple, just use payroll for 3 months.
The CARES Act expanded the eligibility for collection of unemployment to the self-employed which include:
- S Corporation Shareholders
- Partners engaged in active business (not rentals)
- Sole Proprietors
This will be administered by state. Link for more info
Finally, the following message is from the Fraud department at the IRS. There is a significant increase in scams as it relates to criminals trying to gather information needed for the stimulus payments.
What are they seeing?
As the media has reported, the goal with the stimulus is to issue as many of those payments via direct deposit and use tax information from 2019 or 2018. They are seeing phone calls, text messages, and e-mails phishing for this information not only to individual citizens, but a large uptick in preparers being targeted.
The messaging includes variations of language such as "in order to receive your/your client's stimulus payment via direct deposit, we need you to confirm the banking information" and they are gathering that information via telephone or directing victims to click on a link that takes them to a website where they enter their banking information.
Communication information: Anything you can do to help spread the word that the IRS will not call, text, or email you to verify your banking information for stimulus payments would be helpful.
This page will continue to be updated as new information is released.