Tax account Boris Mucheyev provides an update on the latest information from the SBA and Treasury about loan programs.
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Broadcast is now starting. All attendees are in listen only mode. Welcome folks to today’s webinar. All attendees are in listen only mode. We will be taking questions at the end. If you would please submit any questions you have through the questions tab on your software. A replay of today’s webinar will be available on the pill mill website and, uh, especially our Corona virus,
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survival kit page within a couple hours after this. Now I’d like to introduce and hardest president of Peloma. Well, hello everyone. This is Ken Hardison and I’m man, what a miss, uh, this SBA loan program, uh, you know, I’ve been, it’s just on everybody’s mind and I understand why, but there’s so much confusion the one on right now.
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And so, um, you know, we talked about it two weeks ago. We had a gal here and, and, and it, you know, the deal is it’s out there, but there’s so many myths going on and different things. And so what we wanted to do today is have somebody here and we have, uh, Boris Mo chef who is going to,
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uh, he’s a CPA. He’s actually my CPA, uh, from New York. And, uh, he’s gonna talk about tax credits, but also talk about the two different types of loans. And it’ll give you the latest update, which is stuff changes. He tells me about every five or six hours. Cause the SBA don’t know what they’re doing. They keep changing the rules and the guidelines.
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And I think they just print it out this morning. He said, so, uh, Boris taken away kind of lead us through it. Then I’m sort of loaded. People will have questions. I’ll probably have some questions along the way, but this take us through it and uh, kind of give us an update of where we’re at and what’s going on.
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And all this stuff we’re hearing about these banks won’t do it and you gotta do this. You gotta do that. And how do you figure your payroll? I mean, you know, and is it all forgivable? And if there’s different things, you know, what’s the interest rate, things like that. Yeah. Okay. Thanks for introduction, cat.
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Absolutely. Hello everybody. My name is Boris Michelle from the CPM also what Ken said, his CPA and a monitor to be here. Just to help you guys navigate through this crisis to help you, uh, answer a lot of questions. Now, what Ken said is true, a lot of updates have come out. Even I sometimes gave information to clients that was true at that moment.
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And then few hours later, that information was no longer true, just because of the speed of everything is gone. But I think by settling down right now, we’re getting more concrete answers. And even today, treasury department rolled out a clarification with F a frequently asked questions. So I have great updates for everybody. And like Eric said, we are going to take questions at the end.
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And I think we decided we’re going to make this more interactive, where I’m going to give you a brief introduction of what’s going on few updates, and then we’ll open the floor for questions. You guys can ahead and type the questions. I’ll try my best to answer the question to the best of my knowledge, as I know, as of today, the way those answers stand.
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So I think it would be best to start with, um, with really defining the difference between these two types of loans and what is going on. And I want you to understand what is really going on out there because people are thinking that there are forgivable loans that you can get. Now, I want to make clear, there is no forgivable loans,
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right? It is only forgivable if you make it forgivable and I’ll explain to you why I have my whiteboard right here. We have two types of loans, right? The first type of loan was a disaster loan, which came up a few weeks ago, a way before the PTP loan, which is, which was under the Paychex protection, proper blow.
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Okay. So disaster relief. It’s a seven BSBA law. That is something that you have to apply directly through an SBA. We strongly recommend doing this with a professional, even though the first intake form is completely easy, easy, but they will come back with asking a lot more information. Now that loan is done. The regular SBA aides are through SBA website.
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It is up to $2 million at 3.7, 5% up to 30 years. Okay. This loan is not forgivable. And a lot of you heard probably there’s a $10,000 grant. There’s $10,000 advance. We heard that too, but things change a little bit after confirmable SBA and my community that I’m part of the SBA said, it’s, it’s a grant, not a $10,000 advance,
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but up to $10,000, right? I should not say Greg. I said earlier, it’s an advance. It’s up to $10,000 and it doesn’t, you don’t get it right after you apply. For those of you who probably already applied for the disaster loan. I’m sure you’re going to see this money in your bank account within three days, it’s after they process the application.
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After the loan officer is assigned to you. At least that’s what we’ve been hearing. A lot of applications that we submitted for our clients. Haven’t seen the $10,000 yet, but regardless to say it will be there. And if for whatever reason, you don’t get approved for the business, the relief flow, you get to keep that advance, which is up to $10,000,
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which you don’t have to pay back. Okay? So that’s the first law. The second law that came up, came out a Friday before last week, Friday, uh, under the cares, that is a Paychex protection program, right? It’s an SBA loan, which is administered through the bags. So now we have two loans coming from two different places.
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One is from the, uh, the SBA themselves. And another one, the SBA is partner partnering with the banks. So to speak, to give you that loan, there is up to $10 million, but of course the lower off your payroll calculation, which we’re going to talk about in a minute or $10 million. And you have to use the phones for the next eight weeks for eligible expenses,
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which is payroll, rent, mortgage interest. If your business owns that property okay. And utilities, and it can be forgiven to you. But I want you to understand when you take this loan out, when you’re filling out paperwork with your bank or anything of that sort, it is a regular, it is not forgivable to you until you make it forgivable.
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Again. You want to make sure you’re working with a professional or your accountant knows enough about this so that you have to come back to the bank. After eight weeks with an accounting package, showing them, Hey, you gave me the money and have dispersed the money. According to the law, how do you have to disperse it? They came up with clarification as well.
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75% of it needs to be for payroll. The other 25%. That could be for other eligible expenses, such as rent utilities or mortgage. If your property, if your business owns a property, okay, you have to spend 75% of it on payroll. The whole idea of the Paychex protection program is for you to retain employees, not to hire anybody that you fired,
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you will have to rehire them or give them jobs. Meaning to say, there is some specifications there that, you know, you had 15 employees. Now you have three. Maybe you will not be forgetting, right? So again, you want to make sure you follow through with that and work with a professional, this loan that originally that PPP loan was I believe over the term of 10 years for yes.
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I think originally it was over 10 years with a 4% interest rate. Very good with treasury department. I believe it was secretary when you can, when you can, uh, set, uh, said that, um, there’s no need for it to be 4% over 10 years, we’ll do two years at 1% because really people will be applying for forgiveness.
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And if they qualify, we’ll forgive it. So really it’s a two year ago with 1%. Now, a lot of people have questions. Can we apply for both loans? And a lot of people say, no, you can’t. The answer is you can’t okay. You can apply for both loans. As long as you don’t use the funds for the same purpose.
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For example, if you receive the disaster loan, you cannot use it for all the eligible expenses that you can apply for that under the Paychex protection program. Okay. And the reason is because the patients funds from the Paychex protection program has to be used for that purpose. The disaster funds can be used for anything else except growth. Okay? If your business has been impacted by the disaster,
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you can do that. And most of you, if already applied for Paychex protection loan, you probably saw somewhere on the application, it says at bat your Eido economic injury, disaster loan, $10,000 events, most of you probably haven’t received at advanced. Yet you could leave that blank. Some of you, there was a question you can refinance your disaster loan into the PPP law.
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If you already received it. Yes, you can refinance that. Right? But most people, as far as my knowledge, my community, my clients haven’t received this yet. This is still in the works. And they are, my guess is that starting this week and next week we’ll already see this person. So these funds for the disaster alone, the VP alone seems like they’re a little bit of a faster process,
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which is done through your bank, but you want to make sure you calculate your payroll correctly. And I’m going to focus exactly on the calculation of the now the payroll calculation goes like this. Some people say, well, should we use the 2020 numbers? Should we use 2019 numbers just today? Treasury department released the frequently asked questions. They expanded that.
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And they clarify what’s included in the payroll cost calculation basically. So we simply put it for you. Take gross wages for 2019 for the whole year and divide that by 12 months, any employee, including owner, employee that is making more than a hundred thousand dollars, you just kept that cap it at a hundred thousand dollars. Okay. Capital 100,000 hours take the monthly average cost for 2019.
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Multiply it by two and a half. Okay. And plus on top of it, you add any health insurance premiums that you make on the group health plan that I know some of you might be individually reimbursing employees under the HRA plans. As of right now, I haven’t seen any guidance. Those could be added as a benefit everywhere that I’m reading from the law,
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from the act, from the interim final rule and from the frequently asked questions, it’s all referring to group plan. So any group plan, health, insurance, premiums, and other costs you add on top of that payroll cost. Plus you add any contributions that you made for your employees as a business, not what your employee paid from his pocket into the federal,
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not what you as an owner employee paid for your fertile, but what you as a company made, the 3% match or 5% match. You add all of that and multiply that by 2.5, that is the payroll calculation. Now what I’ve seen, there was a lot of confusion online on the web, including big payroll companies, such as ADP, Paychex,
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and Gusto payroll. They came out yesterday and said into your payroll, you can also add employers, FICA taxes. I thought that I was wrong because I went back to the final insert rule. I really read it. I didn’t see anything that says that I could see why it was a confusing language today. Treasury department release a frequently asked questions and they specifically said,
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you cannot add FICA employer taxes into your payroll costs. What is the employer taxes? It’s not what you were holding from your employee, but your portion of the social security Medicare tax that you pay for each employee. So for those of you who are using, as far as my knowledge, these are the three companies, ADP, Paychex, or Gusto.
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Those companies were providing you with a ready made payroll. I strongly encourage you. And you can always call me on this. So anybody that board has said that not to use their reports, their reports are not 100% accurate. I have clients, I witnessed it. I’ve ran the reports yesterday and they were wrong. Number one, the reason is because they are employing the,
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including the fiber calculation, which should not be included. Well, you might think Boris, what’s a big deal. We get more money, right? But remember, when you get more money, you, you have to use the 75% for the payroll in order for it to be, if you fail to do that, you have to pay it all back.
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So we want to make sure we take enough so that we properly calculate what can be forgiven. So we don’t have to pay back. That is why I always stress. What were the professionals submitting? An application online is very easy, right? That intake form, but then knowing all these details and applying for all this forgiveness, that’s where it gets tricky.
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And you want to make sure you’re a hundred percent part proof. So, so coming back to big payroll companies yesterday, I was doing, I was on a former client. Believe it or not at 11:00 PM Eastern time, he, he emailed me. I gave him a call cause they didn’t want to like write a long email explaining what’s going on with the banks.
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And we ran his report on paychecks and they were adding five, which was wrong at the same time, their monthly average, because we couldn’t figure out why, but it was completely off. We think it’s a formula in their system right now. Look, it’s not their fault. Maybe it wasn’t their fault. Maybe it’s not their fault. There has been a lot of changes in the law and the clarification and all that stuff.
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Right. Everybody’s trying to catch up, but just not as up to date as this moment, 1:16 PM Eastern science, as far as my knowledge early in the morning, I saw when the treasury department released FICA taxes can not be calculated in your payroll. And if you’re using payroll companies such as paychecks, ADP, double check their numbers, double job, have your accountant double check.
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Cause I caught mistakes from big companies like that are solved because everybody’s trying to work with the change right. Technology and they’re trying to update and whatever it is. So we’ve caught that. And it’s super important because you want to make sure the money that you take out, you’re able to show that it was spent on a right a right expenses. So it can be forgiven before we move on to the questions.
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One last thing, a lot of people are always confused. It’s two and a half times payroll, or is two and a half cents. Payroll rent, mortgage, and utilities know it’s only two and a half times feel, but the funds that you receive can be used for 75% of the payroll and the other 25% such as mortgage interest, rent and utilities.
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I hope that it’s clear. You guys can ask any questions and I think we can just ask, start with scan if Ken has any questions. Yeah, yeah. I got to clarify. Yeah. Yeah. Uh, I got a couple questions. Uh, one thing I keep several about this and then we’ll ask you about tax credits, but when you’re this contractors independent contractors is that,
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could it, could that play into the payroll? Good, good point. Thank you for reminding me. So no, the treasury has always Claire also clarified that. No, do not add. And that you also clarify that in the Q and a, that they will receive a release today. The frequently asked questions, excuse me, will not include independent contract.
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There’s the reason is, is because independent contractors, although sole proprietors, they work on themselves for themselves. They will be able to apply for the PPP alone on their own. They’re allowed to, I believe their application is not ready. And at least what they said last week is that their application will be ready. It will be a little bit of a different process.
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I don’t know exactly what that looks like for them yet, but if you have contractors employees, now, most of the banks, including my bank has on their application, including the payroll cost any 10 99 contractors that we paid. I bet you in the next 24 hours, if you pull up all those bank applications, that will not be there anymore,
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because that was again, something that everybody initially thought, right. When the, when the law came out initially, but then guidance has been coming on. The treasury has been releasing information and then certain final rule that kind of clarified all of that. Okay. And then when you’re, when you’re trying to pay this, get this, use this money up in eight weeks,
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payroll, do you include to key account insurance contributions at four O one K contributions as voted? Yes. That would be included in that because it’s part of the compensation. So to speak to the employee, which is again, their wages plus their health insurance. And there are, and there are some provisions. So if I’m like $5,000 should have used it up,
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then I’ve got to pay it all back. I don’t know, a hundred percent answer to that yet. Can, that’s a, to be honest with you, that’s what I said early is that I will try to answer the questions that I know for sure or known to be true. As far as that, all I know as of this point, when they released is that the 75% of your funds that you receive can,
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should be used on payroll. So Payroll, payroll, could I give, uh, what can I say if I get down to that point and I’m $5,000 short, can I just give her over her body a bonus that week? That’s a good question. I actually thought about that myself at Spain as well. I don’t know the answer to that yet.
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Right? Because right now they’re just getting the money out. You have to be back in the next two months. So I’m sure they’re going to come up with a clarified guidance. Hey, you cannot, all of a sudden, you know, if you didn’t have bonuses last year, your salary was 80,000 last year, all of a sudden, you know,
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make it 90 for whatever reason, just to make that 75%, right? If that is not the case where you cannot bonus somebody, I don’t know if you can or cannot. I’m not answering that question directly, but let’s say that’s not the case. Then, you know, the best thing that I would recommend, anybody that you laid off or terminated,
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just bring them back. Yeah. That’s the whole idea of the Paychex protection program is for you to bring them back. And if you have to bring them back, it’s not your money. Anyways, you got it from the government to pay them, having made it forgivable. Right. That’s why I said at the beginning, it’s not a forgivable loan until you make it forgivable.
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And then the other thing is keeping this up. Would it be better just to open up a separate checking account, take that grant, whatever that money is, say it’s a hundred thousand, put it in a checking account and then spin it out. And then that way you can just that you got that whole, you got everything just out of that one checking account or is it Great idea?
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100%. Okay. Then my next question is I’ve been hearing all this junk about tax credits that, Hey, it might be better to take the tax credits, but you take the tax credits. You get, you can’t get the PP bit long, but you could get the seven B long. And I don’t even know what the tax credits are. I hear $10,000 per employee,
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but I don’t know. I don’t know Absolutely my understanding of the tax credit for the employee retention tax credit, which we read about up to 10,000. Right. And I’ll tell you about some other ones. So before the cares act was Sunday, uh, excuse me, what signed a week before a Friday before last Friday, baby. Yes. Another law before that,
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a couple of weeks before that, which was called a family’s first Corona virus response act. I think that’s what it was. Okay. So basically in that law, they said, Hey, if you’ve got employees that have COVID or they had some quarantine, then there’s a certain amount of credit. I’m not going to get into details of what that amount of credit is,
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but there’s a certain amount of credit you can claim on your payroll taxes to get that money back because they were staying at home and you pay them for sick leave beyond what you are usually supposed to pay by your state law. For example, in New York, our state, it requires to provide five days of sick pay, right? So if I gave my employee 15 days of sick pay that extra 10 days that I gave them,
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I will be able to claim a certain credit and the payroll tax filings. Okay. Or if the government in the local area was shut down and the schools are closed and your employees have to stay home to watch under their child to watch after their child. And they’re not working remotely and you just continue paying them. You can also claim a certain credit for that.
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Okay. Now, if you look at the PTP application with the bank and says, Hey, you cannot apply. You cannot use the PPP loan for any amount of credit that you will claim. The third credit that came up with the, with the cares, that is the employee retention credit. The way I understand it. Okay, we can talk about this after our call.
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If anybody schedules a call with me, we can check with your accountant the way I understand it. As of right now, we haven’t really dug deep into the details of it. The way I understand it’s up to $10,000 of the salary of the employee. So basically you take six and a half percent of your payroll tax that $620 per year. That’s the credit over four quarters,
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which is about $155 based on my calculation. Yes. So again, that credit is not that much, right? Of course you cannot double dip. You cannot receive the PPP loan and then use the credit in my opinion, right? We should use the PVP loan for as much as possible. Then the credit, if we have to reduce our PVP loan by the credit fine,
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but we should first be applying the PPP loan. Again, we have to take a look at the details as they come up with a, with a clarification, uh, if we’re allowed to do that, but I will use the PPP one. The reason is I want everybody to understand the PPP loan is 100% dollar for dollar forgivable. Whereas any credits that I have to be calculated on your payroll tax filings,
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there’s a certain threshold in the limit that can be done. And it’s only up to payroll tax liability. So for every thousand dollars that you paid your employee, you have to pay payroll taxes of $76 and 50 cents. Okay. So your liability. So that means the maximum credit, even if you’re eligible for it is $76. Whereas the PPP could be a thousand dollars.
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So do you see the difference? Yeah. So, so again, you know, I cannot stress this enough. You want to make sure your accountant is on top of this. If not, you can schedule a call with us. We provide at the end of the call, but that is why it’s important to be able to kind of have that COVID planning or cares that planning for yourself so that you’re properly taking care of it.
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You’re probably thinking these options. You’re not being back and claiming the credit where it’s due. Okay. So yesterday one of our master we’ve been having weekly mastermind meetings while this is going on kind of emergency meetings. Cause everybody’s a lot of our PI lawyers who are members are, or right now they’re doing okay. I mean, what I’m saying is, uh,
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far, cause they got an inventory of cases and they’re working their cases that are criminal and domestic lawyers are in deep trouble because everything’s just stopped. But, but the PR lawyers, we’re going to see problems eight, 18 months because their case, their calls have dropped by 50, 75%. So there’s this thing you have to sign the certification. And one of the lawyers bought it yesterday.
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Since I’m not in trouble right now, I’m going to be, but I’m going to be in trouble, you know, 18 months now, can I sign this truthfully under perjury of law saying that, you know, this, that the coronavirus deal is affected my business. Our argument was it has affected it, but it hasn’t affected it in the future.
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But not as of today, I guess. And you know, I’m going to bring it back to you guys since you guys are a bunch of lawyers, how do you understand that? Right. So I understand it. Okay. And you’re right. I’ve been talking to a PI attorney says, you know, I work with attorneys all over the country.
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I think we’re right now in about 20 States with clients in 20 States right now, all attorneys. And we do have the PI attorneys as well. And this is how I approach this. Okay. This is how I approach this. As far as the PTP loan, I know it’s kinda like, you don’t know what to do, right? Because you still have the cash flow.
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You still have the employees and you do have to certify the checkbox. But then if we look, take a look at the disaster loan, right? The business has been economically injured. Uh, you know, there hasn’t been an economic injury at disaster because costs are not coming in 18 months from now. The business is going to struggle a lot in terms of cashflow.
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If you, I would leave this as, you know, talk to an attorney to decide to you, do you feel comfortable to apply for the PPP loan and certifying that box because you are an attorney can probably argue, you know, because if I’m mistaken, I don’t have the application in front of me. I can pull it up, but I don’t want to be distracted.
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The certificate that the box over there says that, you know, the coronavirus or this disaster had, I have been impacted by it. And the truth is you have been right because your costs are not coming in anymore. There are no customers at the door, but coming back to the disaster alone, and this is an economic injury disaster alone. If you don’t feel comfortable applying for the DPP or in my opinion,
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right? And you, as attorneys can decide whether you want to do this, you can apply for the disaster relief loan because these loans are to be used for business operations and they don’t have so to speak restrictions as does the PPD, as long as this loan is used to cover expenses that were incurred by the disaster, which I’m sure those expenses will come up right now in the next few months.
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And they’re not used for the expansion of the growth of the business public, go ahead and apply for this for sure. Okay. And as again, it depends on your comfort level. And we can always talk with, uh, with, uh, a loan officer and we’re going to explain to them one situation. And one thing I missed here is that when you’re applying for a disaster relief loan,
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I don’t know what their process will be going forward. But when we first rolled it out, one of the applications there, I forgot what form number it was. But there’s a form that says, give us your 36, last 36 months of monthly revenue and then give us projections for the next few months. Right? So the PI attorneys can always put that their projections for let’s say,
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April may will be great because of all those incoming money that’s going to be coming in. And then for example, June, July, and August, you can show projections of drops because there has been no customer, no new customers. And there is no money that’s going to be coming in. So I know for sure that in a disaster applicational, there was such a question.
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There is such a form. Okay. That’s all I have. Alright. Do you want to open up for questions? We still have time. I’d be more than happy to answer anybody’s questions. Yeah. We’ve got several questions. The first one, do you have to be an SBA member in order to get this 70 loan? When you say SBA member,
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I don’t know what you mean, but I will try to answer this question. You don’t have to register with an SBA or create an account you can apply for SBA seven, seven B, which is the zest loan. Anybody who has been impacted by the disaster can apply for it. Again, the process to apply is a simple intake form. But again,
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whether you can do this yourself over a professional who strongly recommend doing it with somebody, because when they come back to you and ask you a whole bunch of questions, it’s going to be a lot. I’ll give you an example. Somebody from my community, uh, let us know last night that their client has been approved for $500,000 SBA, disaster relief,
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or boy, they sent in a baby request list to be able to get that money. They said, we’ll release it to you right away. As long as you provide us these things. And then you’re approved for $500,000. Okay? So you don’t have to be a member. You just have to be a business owner that has been impacted. Very good.
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The next question is, what if I don’t need the money now? Can I still apply? Uh, that’s what we spoke about earlier with Ken. It depends, right? If you are a PI attorney and if you don’t need the money right now, but you will need it later on because the customer’s not coming in, the courts are closed. There is no criminal cases.
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There is no auto accidents, motorcycle accidents out there. Right. Um, that depends on your comfort level, right? I is the business going to be affected in how long I would really kind of weight these things out and we can talk about it privately. Cause it will be kind of like more conversation probably. Um, so yeah, again, it depends.
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If you’re a PI attorney, you will probably dry up and your cashflow in the next maybe six months or five months. Right. But if you are a recession proof business, then you should not be applying for these because in these loans you will be certifying that you, the business has been impacted by disaster. There are some businesses out there. I know,
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for example, the elder law and, um, trust in the States, people in our area of focus, uh, some of them are doing well. People are well during this time and they have been recession proof, so to speak. So they may not be applying for these loans. Okay. Next question is, can you use the money to pay towards an employee profit sharing plan?
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If you’re asking for the PPP loan, what I answered to get early, I believe you can, as of this moment right now, it seems like that you can, you definitely can use that in your calculation to request the payroll amount, but as far as for forgiveness, as far as I understand right now, and I think the entire community is that you,
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yes, you can. But more violence is going to come out on that as well. All right. Someone’s asking for clarification. If you have money in your account, is it okay to get the loan? Um, do you have to pay it back? I have money now, but no business for the next two months. Yes. I’ve had that question asked before,
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and I have clients who are applying for loans even when they have 400 to $500,000 in their bank accounts, because remember you’re going to probably need to use this money for the ongoing operations anyway. So your business has been impacted the way I understand the law. Your business has been impacted by disaster. You applied for the loan. When I got off the phone with SBA,
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we call them numerous times from my office the first week, I think on the second week when they rolled this out, I called the SBA loan officer. I said, Hey, um, what if we don’t get approved? What are qualifications? He said, look, has the business been impacted by disaster? Yes. Go ahead and apply. Done deal.
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All right. Here’s a question that came up during last week’s webinars as well in calculating payroll amount. Can you include money paid as a draw to owners on a K one instead of a W2. If we’re talking about S-corporation owners, as far as I have, as far as I know the answer is no, I haven’t seen anywhere in the writing, in the bill,
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in the law, in the interim final rule and recently Lewis, uh, accuse, anything about draws me specifically referring to payroll. Unfortunately, this is hurting those companies or those individuals. They were S-corporation. They either never took out payroll or they took out the payroll very well. As far as right now, as far as we stand today, the answer is now based on what I’ve seen out there.
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And I haven’t seen anybody using their draws, but I’ve seen that question come up a lot in my community. And like I said, as of right now, the answer is now, right? We’re getting a couple of questions regarding the forgiveability of the PPP, uh, under, under the seven B loan, even though the largest portion of the loan is not forgivable is the initial 10,000 advanced eligible,
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deep to be forgiven. And what restrictions are placed on those funds Is a great question. So I’ve seen a couple of conflicting, um, uh, conflicting things about it in the past couple of days. So the initially the way it was set up as a day, advance is given to you to kind of get you started. Now there’s a disaster economic injury disaster.
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31:09
You’re gonna need the money. They give you the events and it’s added back to your loan when you get the loan. So let’s say your total amount of a loan is $80,000. They give you $10,000 and they gave you 70 later. So they edit the 10,000 to the 80. And then if they give you an advance and they never gave you the loan,
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you were denied for it, then you get to keep the $10,000 that was there originally, as we all understood the law. Now it seems like that that says that they will give you might still be forgivable. Even if you receive additional loan. I don’t know the answer to that 100% the way I understand it. And I keep saying this to everybody is that this is an advance.
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It’s going to be added to your loan amount when you received the loan. Nobody in my community has received in advance of the actual loan amount. Yet for me to be able to tell you that it’s either a grant or it’s an advance added to the loan. Now, if this happens to be a grant and let’s assume that it is even if you received the loan,
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but $10,000 has to be deducted from the PBP calculation of the forgiveness. Okay? So let’s say your forgivable amount is a hundred thousand dollars original. Then in calculating your forgivable amount, you can only calculate $90,000 to be forgiven the other 10,000. You would have to pay back under the PPP. But the good news about this scenario, if that ever happens is that the PVP percentage is only 1%.
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I hope that was helpful. I’m there. Here’s an interesting question. What about the termination of employees who are simply not doing the job? This person needs to replace someone, but doesn’t want to hire a new person. If it kills the forgiveness. That’s a great question. I don’t have a definite answer for you. I spoke about this at one of my clients yesterday,
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his employee quit in March. And when you were applying for the PVP loan and the application, if you guys did that already, you will see, it says number of employees as a February 15th, right? So I don’t know how to answer that question. I think more guidance is going to come out about the forgiveness and clarification. What exactly was there?
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Some employees that left them their own and your payroll is not the same as it wasn’t 2019. And there’s a big chance. Probably it’s not right. There could be a change of employees that could be, you know, employees quit on their own, or you need to replace your employees. I don’t know, a hundred percent answer, but my guess at this point,
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right now, if we use the 75% of the funds for the payroll and we should be fine, of course, it’s not like, you know, getting people, bonuses, a huge races that me and Ken discussed earlier. But again, I believe there will be more clarification on that going forward as a friend. Now, there is no definite answer that I can give you,
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unfortunately. Hmm. This may apply to this next question. Then we have a, uh, this person writes, we have a higher payroll amount this year than we did last year due to adding employees in the last four months, given that can we use the average for the last four months in the calculation, The guidance specifically says 2019, even the release,
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the treasuries are released FAQ say 2019, the only time they would allow you to probably, I think what I read earlier today, and I was reading it early in the morning. So forgive me if I’m not a hundred percent right on this. But, uh, the only time that would allow you to use the 2020 calculations is if you are a seasonal employee,
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uh, excuse me, seasonal employer, or you just started your business in 2020, uh, you know, let’s say January, 2020, then you can calculate your employee, projecting it based on the whole year. Um, and not including 2019. So everything that I’ve seen right now, it’s a 2019 calculation. If you mistakenly request too much money, does the overage just become the loan?
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Yes. I’m getting someone asking if you would restate the three tax credits please. Yes. So before the passing of the cares act, which was a Friday before last Friday, uh, there was another law that was passed, uh, which is called, uh, I was get this book, hold on. Family’s first coronavirus response act. Alright, got it.
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Right. Uh, that one says you have two types of credits available for you to use, right? So, uh, first one is the emergency expanded sick pay and emergency paid family. Leave. The sick pay means let’s say, uh, whatever sick day you pay to your employees above with your required by your state law. For example, in New York city,
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we’re required to give our employees a five basic pay, right? So those don’t count anything above that. If your employees have been diagnosed with Corona or their quarantine, or I believe it also said if their loved ones were born, uh, whoever looks to them had Corolla, that’s coordinating with them and paying them for that time. Did they have to stay home?
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And they’re not working above what you were supposed to pay for their sick pay. That’s the credit you can claim on your next chorus, federal tax filing, the second type of credit. If you had to stay home and care for your child, that’s under the age of 18 because the schools were shut down and you, again, you were not working remotely,
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but your employer continue paid paying you. You as an employer, continued paying them. You can claim that as a credit on your next payroll tax filing. Okay. It is not on your tax return. It is not on your annual taxes, corporate taxes specifically on your, uh, payroll tax, filing forms. If you’re suffering for individual or you’re a sole proprietor,
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right. And working for yourself, thought that credit, um, maybe points you as well. I do think it does. Um, like I said, we haven’t looked too much into those credits, uh, double deep, but that can be applied to you. And that will be done already, not on the payroll tax form, but will be done on your,
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uh, 10 40 next year when you filed. So those are the two credits. The third credit that was passed as part of the care act is a America retention, credit employee retention credit. The way I understood it, people say, Oh, it’s up to $10,000 per employee. No, the way we read it and we have interpreted and I could be wrong,
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which I don’t think I am, but it is basically 6.2%. You find a portion of enforced taxes up to $10,000. So let’s say you can claim the whole thing. It’s $620 per employee per year. Now, can you claim those credits and also did the PPP, or you can be, you just, can’t double that, whatever the credit you claim,
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the rest of the money that excess of the PPD becomes an actual loan. So you under the one with a 1% interest rate. Alright, We have a question from a listener about insurance calculations and the expense. Does that include malpractice insurance? Yeah. Uh, group health group health insurance. I shouldn’t say group health insurance. Only the way I understand the law and everywhere that I read it says health insurance.
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But in specifically the calculation specifically refers to health insurance. Are we interpreting getting as a group plan, only health insurance, but not malpractice. Someone else asks if you have an overage, uh, but you repay the full amount of the unused right away. Is there any penalty? Nope. Another listener is asking, uh, if you can discuss please,
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what exactly is payroll for instance, is it only the rate you pay your employees say $20 per hour? Um, so the forgiveness is based on 75% of that. No, the forgiveness gives me a hundred percent of the payroll. Maybe I was maybe a kind of set of confusing it’s as long as it’s at least 75%. So let’s do, let’s do an example,
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right? Um, let’s do an example. You it’s about a hundred thousand loan based on your calculation for last year, which again, we’re going to, let’s talk about the calculation. You take that 12, you take that monthly average cost of 2019. The monthly average cost includes gross.<inaudible> gross salary, not after tax, not in gross, right?
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With their salaries gross amount. Plus group term, uh, health insurance, plus a group plan, health insurance, excuse me. And plus, um, any employer, retirement contributions. We multiply that by two and a half. Okay. That’s the loan amount. That’s a hundred thousand dollars. Let’s say in this example, then if you incur eligible payroll expenses for the next eight weeks and service a hundred thousand dollars,
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fine, you’re good to go. They’re saying the law said, Hey, and please have 75%. At least spent 75,000 on payroll. If you can’t spend at least 75,000 on payroll, we’ll give you some loopholes spend on rent, mortgage, and utilities so that you don’t have to pay the entire thing back. So the government is being generous. So to speak,
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hope that answers the question. All right. One more question. This is a, for instance, if you had two employees paid in 2019, which the loan amount is based on, but you now have three employees, can the loan still be forgivable if it’s distributed across three employees rather than the two that the loan was based on. Right? So I believe the answer is yes.
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For that. I’m sure we’re going to get more guidance, clarification on that. Which employees is talking about. I believe the answer to the question is yes, because the whole idea of the Paychex protection program is to retain your employees that you had as a February 15th. So 29th year to invoice, then you, your third one in 2020, and then COVID happened and the government doesn’t want you firing them.
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If you fired them, the government wants you to retain them. Right? So the way I understand it and logically makes 100% sense that yes, you can include that in calculation, but I’m sure there’s going to be more guidance than that. Continue, continue talking to your accountant all the time about this every week, give them a call. They’ll call you.
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You give them a call and they’re up to date with these things. If they’re not up to date with these things always finds out, find somebody who’s saying these things and can answer your questions at the top of these things. All right, we’ve got two more questions. We’ve actually gotten a lot of questions folks, but a lot of them are iterations of things that have already been addressed.
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But these two we’ll take two more, um, health insurance. If we reimburse employees for health insurance premiums paid by the employee, can they use the PPP for this either as insurance cost or a part of the employee’s pay. That is a great question. I’ve I’ve touched about this earlier. I don’t know folks. I don’t know the answer to that.
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Unfortunately, I I’ll tell you why. To me it’s like a deer topic, right? Because a lot of my clients and, um, what we do in my firm before the whole COVID-19 was before we started doing the whole care consulting and corporate cares, planning and consulting is that we’ve been doing a lot of tax planning for our clients. Uh, you know,
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most of the attorneys across the country help them save money on taxes. Uh, one of the things we’ve been recommending them is that, um, is that, Hey, you know, they said portion of group, group health plan insurance is shouldn’t be expensive. Is there any other way that I can reimburse my employees individually and take it as a production?
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I always tell them, of course there is. And there’s all types of HRS that we send set up for them to Sarah’s because remember, if you don’t have any reimbursement arrangement with your employees for health insurance, you’re not allowed to take that deduction. That’s already, you’re already not in compliance. So Muslim miscalculation. So we set up a lot of Q Sarah’s and reimbursing accounts,
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which is great because they have a lot of money and group health insurance. We reimburse employees individually, and employees are able to get able together on health insurance. The reason I’m telling you this is because everything that I’ve seen out there in terms of what can be calculated in the calculation and what seems to be in a forgiveness is that group plan health insurance only doesn’t mention anywhere about what you’re reimbursing them specifically.
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Now I could be wrong on this. As of right now, the way I understand the Lloyd’s to know it’s only group, uh, health insurance plans. And you can look at the term final rule. You can look at the frequently asked questions, released that I doesn’t say anything about reimbursements. Unfortunately, they could come up with three and say, Oh,
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you should have included that we did an hour and right. Things change every six hours. And I don’t sleep. Sometimes we were just reading all this stuff. But as of right now, unfortunately not, um, that’s where we stand. I’m sorry. That’s probably not the answer that you want us to hear. We have a listener who is an independent contractor who does research for various firms and she is asking can,
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or how does she apply For which long for the PPP or disaster. But I’ll answer that I’ll answer for both, for the disaster loan. We can do it directly to them. It’s a short intake form, but again, I don’t recommend doing this on your own, the PPP loan. Uh, you can do that through your bank, but also you want to be working with,
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uh, with your accountant because you are going to need yourself that self employment, income calculation for that. As far as the way I understood it when they had a press release last week, I believe is that the PVP loans are not yet available, or maybe I’m wrong on this. You can, you can check me on that are not yet available for anybody.
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Who’s an independent contractor or just a sole proprietor, even though on our current application, there is a box there on top that says a sole proprietor. Um, I don’t believe the application for them is ready because they said it’s going to be ready in April 10th. I haven’t seen anything of much update on that. You can always call your bank and ask them,
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Hey, Hey, can I send the contractor apply? As far as I know right now? No, but it should be available to the next couple of days. Uh, and as far as the disaster alone, if the business has been impacted, you can apply for it. Whether you’re self employed, LLC tenant and contract the right. If you are sole proprietors that just became serious business owner,
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your sales have in effect, you really do need the money. It’s going to keep the operations going. Then you can apply for this today. All right. We’ll put a pause on the questions right there. Uh, Ken, do you have anything, any other questions or anything you’d like to add? Um, no, I don’t. I mean,
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I think this has been very good. This is, I’ve got more answers today that I’ve heard in the last two weeks from anybody. So very good job or, Yeah, not a problem. And I’ll just put up a link. If you don’t mind to COVID-19 tax consulting.com. If you guys have any questions or you want really assistance with Eric with all of this stuff,
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including the 70 and what accounting package you’re going to need for the, for the TPP loan. Um, and if you need assistance with your bank, that we can do that. Some banks actually don’t do it just to, uh, one thing I forgot to mention. I think Wells Fargo stopped accepting applications, uh, bank of America. They are only accepting.
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And like a lot of banks only, you know, if you’re their customer and some banks just not doing it, they just can’t do it for whatever reason. There are other providers out there available. We can help you find those providers if you need, if your bank is not up and running or is able to do this. So I’m going to go ahead and post the link.
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It’s a COVID-19 tax, uh, consulting, uh, Eric, I think it only went to organizes and panelists. I’m not sure if it went to everybody. Could you just go ahead and re share that with everyone? We’ll do doing it now. Yeah. Thank you so much. So guys, go ahead. Uh, unfortunately, or fortunately, right,
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we have a Jewish Passover holiday. So my office will be closed on Thursday and Friday. I opened up a few slots, even though my calendar was closed for the rest of the week. I opened a few slots for tomorrow. If anybody wants to schedule a call and then the rest can be, uh, next week. But if this is an emergency,
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we haven’t done anything at this stuff yet. Go ahead and schedule to speak to me tomorrow. If you have done any of this already, but you’re kind of worried about your accounting package to be forgiven. We can schedule a call. You can schedule a call for next week. Don’t take up a spot that’s available for the people they kind of needed this week.
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47:03
Right? So few spots available for tomorrow. Like I said, use the Jewish Passover. My office will be closed. I do have one. I do have one final question. So the law like pill mill, we don’t use payroll services. What’s the best way to prove that we paid this payroll, this for 2018. Do we, I know this guys because I’m Cannes accountant,
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uh, Lisa, she does payroll through, um, through whatever she’s going through, whatever software she she’s using. I know for sure that she does because we reviewed it. And when dealing, when we’re doing the taxes, we kind of reviewed everything. So you’re fine. You’re good to go. Yeah. Well, I think she does this through QuickBooks,
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but we don’t have no third party, you know, So QuickBooks is a third party. And even if they provided a calculation, I wouldn’t rely on it. Just like I told everybody else here today, ADP Paychex, Gusto bet not the calculation seemed right to me yesterday. And guess what your Struby was correct. When the treasury department wrote a, you know,
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uh, issue that a frequently asked questions today and they clearly said do not include FICA taxes, right? So again, I wouldn’t even, even a vendor who would rely on the calculation. What are we doing with our clients for request at nine 41, nine forties with our own calculation. And that seems to be more right than anything else that I’ve seen out there.
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48:18
Okay. Alright, well, listen, we really appreciate it. I really do. Well. Anybody has any questions, guys? We, I work with scan directly. You can always reach out to Ken as well. I think we’re in the tele seminar before. Right? Um, and um, once things settle down, we can do another seminar.
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I think we are initially, uh, wanted to do this for the tax deductions for home office and some other strategies, but this kind of like a tsunami of this PPP loans and SBAs at the kind of like the redirector our attention, but we will be more than happy to do another tax webinar of Kansas. Okay. With it in few weeks when things sit alone.
48:38
49:03
Yeah, absolutely. All right. Well thank you. And, uh, y’all, this’ll be up on our Corona virus. If you’re not aware we have a coronavirus, uh, survival kit, that’s free to all lawyers just go to<inaudible> dot org. And it’s P I L M a.org. And like, like Eric said, we’ll have this recording on there in a couple of hours,
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but we were daily putting stuff up about how to manage people remotely, how to set up remote, how to be a leader, uh, all this stuff about SBA, uh, just different things all the time. So, uh, it’s, it’s a great resource. Um, and we keep adding to it daily. So thank you, Boris. We got it.
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Thank you guys. Alright, take care. Bye bye. Yeah.
