**Last updated on April 2, 2020
During days like these with so many unknowns and unreliable information floating around the internet, it can feel next to impossible to find solutions and resources available to small businesses. Munro-Delotto Law, LLC has compiled the following information in an effort to help small businesses find the resources they need to stay afloat in this period of uncertainty. As part of your Rhode Island and Connecticut communities, we’re here to help.
*This post discusses some federal assistance available to small businesses in the U.S., but it is primarily geared toward Rhode Island businesses. See the blog post directly below for Connecticut resources. A post geared toward Massachusetts businesses is forthcoming.
Munro-Delotto Law, LLC is combining information from several sources, some with new and evolving laws, so we will do our best to summarize the laws accurately as applied to COVID-19. However, the information provided is for educational purposes only and does not substitute for competent legal advice. We reserve the right to modify, update, and do not warranty the information provided.
Federal Help for Businesses
The U.S. Small Business Administration announced it is offering low-interest federal disaster loans for working capital to Rhode Island small businesses suffering substantial economic injury as a result of the Coronavirus (COVID-19).
For more information: https://www.sba.gov/page/coronavirus-covid-19-small-business-guidance-loan-resources
Applicants may apply online, receive additional disaster assistance information and download applications at: https://disasterloan.sba.gov/ela. Applicants may also call SBA’s Customer Service Center at (800) 659-2955 or email email@example.com for more information on SBA disaster assistance.
Currently, the federal government is looking into a combination of loans, direct checks (individual economic stimulus package), and liquidity for small businesses. Deferment of IRS payments is also a possibility, where small businesses may be able to defer up to $10 million in taxes. For the most up to date information on this, check with your accountant or tax attorney. Additionally, the Trump Administration is reviewing actions daily to aid businesses in recovery to mitigate the impact and financial losses. We are hopeful for more information to come, and will keep this page updated with the latest federal developments.
[April 2, 2020 Update] $350 billion allocated for new Paycheck Protection Program
The Paycheck Protection Program (PPP) is a new loan program for small businesses. The program will be administered by the Small Business Administration (SBA), which will fully guarantee loans provided by approved lenders to eligible entities.
Eligibility: Small businesses (fewer than 500 employees) impacted by the pandemic and economic downturn to make payroll and cover other expenses.
Expense coverage period: From February 15 to June 30. Businesses must have been in operation, with employees, on February 15, 2020.
Maximum Loan Amount: PPP loans will be provided in amounts approximately equivalent to ten weeks of payroll costs. Loan amounts are determined based on 250% of average monthly payroll costs, taking into consideration average wages paid during a one-year period preceding the loan, up to a limit of $10 million. There are alternate periods for seasonal employers and those not in business in the prior year. It can cover employees making up to $100,000 per year.
- Payroll costs; Costs related to the continuation of group health care benefits during periods of paid sick, medical or family leave, and insurance premiums; Employee compensation; Payments of interest on any mortgage obligation; Rent; Utilities; Interest on any other debt obligations incurred before February 15, 2020
Loan forgiveness: Up to 100 percent of the PPP loan is forgivable (to the extent that employers maintain specified employment and wage levels), and the loan amounts forgiven are excluded from taxable income for federal income tax purposes. The loan will be fully forgiven if the funds are used for payroll costs, interest on mortgages, rent, and utilities (however, the SBA has announced that due to likely “high subscription,” at least 75 percent of the forgiven amount must have been used for payroll).
To determine the amount that will be forgiven, the average number of full-time equivalent employees per month will be compared to either the prior-year period or January through February of 2020, with alternate calculations for other circumstances such as seasonal, and comparisons for wages. Repayment of a proportionate part of the loan may be required if earnings of any employee is reduced by 25% or more compared to the most recent full quarter of employment before the covered period. In addition, reductions in the number of employees or compensation occurring between February 15 and April 26, 2020 will not be considered in reducing the loan forgiveness amount if reversed by June 30, 2020.
Applying for PPP Loans:
Employers can apply through any existing SBA lender or through any federally insured depository institution, federally insured credit union, and Farm Credit System institution that is participating. Other regulated lenders will be available to make these loans once they are approved and enrolled in the program. Employers should consult with your local lender as to whether it is participating in the program.
[April 2, 2020 Update] SBI Economic Injury Loan
Small business owners can find out more information about the SBA’s Economic Injury Disaster loans at SBA.gov/Disaster and https://www.sba.gov/page/coronavirus-covid-19-small-business-guidance-loan-resources.
SBA Economic Injury (EI) Disaster Loans are offering up to $10,000.00 advance. If you have already applied they say to re-apply using the new streamlined form which allows a request for the advance. Streamlined application: https://covid19relief.sba.gov/#/
The program will be administered by the Small Business Administration (SBA), which will fully guarantee loans provided by approved lenders to eligible entities. The loan advance will provide economic relief to businesses that are currently experiencing a temporary loss of revenue. Funds will be made available within three days of a successful application. Details below:
The U.S. Small Business Administration (SBA) is offering low-interest federal disaster loans for working capital to small businesses suffering substantial economic injury as a result of the coronavirus 2019 (COVID-19). Here are some facts about the loans:
- Small business owners in all U.S. states and territories are currently eligible to apply for such loans.
- The interest rate is 3.75% for small businesses. The interest rate for non-profits is 2.75%.
- These loans offer up to $2 million in assistance for small businesses experiencing a temporary loss of revenue.
- The loans may be used to pay fixed debts, payroll, accounts payable and other bills that can’t be paid because of COVID-19’s impact.
- Small businesses are encouraged to apply online for the loan.
General EIDL Approval Criteria:
- Credit history. Applicants must have a credit history acceptable to the SBA.
- Repayment ability. The SBA must determine that the business has the ability to repay the EIDL.
- Eligibility. The business must be physically located in a disaster designated-area (currently, all U.S. states and territories) and have suffered working capital losses due to the declared disaster.
An eligible business that applies for an EIDL can also obtain an emergency advance of up to $10,000 within three days of when the SBA receives the EIDL application. To access the advance, businesses must first apply for an EIDL and then request the advance. The advance does not need to be repaid under any circumstance, and may be used to keep employees on payroll, to pay for sick leave, meet increased production costs due to supply chain disruptions, or pay business obligations, including debts, rent and mortgage payments.
Certain Rules Are Waived:
Until December 31, 2020, the following EIDL rules are waived:
- Any rules related the personal guarantee on advances and loans of no more than $200,000 for all applicants;
- The requirement that an applicant needs to be in business for the one-year period before the disaster, except that no waiver may be made for a business that wasn’t in operation on January 31, 2020; and
- A requirement that an applicant be unable to obtain credit elsewhere.
Other Rules that May Be Waived:
The SBA also has the authority, but isn’t required to:
- Approve an applicant based solely on their credit score and wouldn’t require an applicant to submit a tax return or a tax return transcript for such approval; or
- Use alternative appropriate methods to determine an applicant’s ability to repay.
Interplay with PPP:
An employer that applies for an EIDL (regardless of whether related to COVID-19) may also apply for a PPP loan, so long as both loans are not used for the same purpose or are otherwise duplicative. An employer can also refinance an existing EIDL into a PPP loan by adding the amount of an EIDL to the sum of the payroll costs. However, any advance amount received under the EIDL Grant Program would be subtracted from the amount forgiven of the PPP loan.
Small businesses should work with an experienced financial advisor to carefully assess all of the available assistance programs to determine the interplay and best option for their specific circumstances. More information is available here. For questions, contact the SBA disaster assistance customer service center at 1-800-659-2955 (TTY: 1-800-877-8339) or e-mail firstname.lastname@example.org.
[April 2, 2020 Update] SBA Express Loans
Businesses and nonprofit organizations with fewer than 500 employees, sole proprietorships and independent contractors that have suffered economic injury due to COVID-19 may be eligible for a loan under the existing SBA “Express” Loans program. The SBA Express Loans program helps small businesses obtain loans in a faster and easier way (usually within 36 hours). These loans provide businesses with revolving lines of credit for working capital purposes.
The CARES Act expands the allowable uses for loans under this program to permit payroll support, including paid sick leave, supply chain disruptions, employee salaries, mortgage payments and other debt obligations, to provide immediate access to funds for affected small businesses. The CARES Act increases the maximum loan amount for SBA Express loans from $350,000 to $1,000,000, until December 31, 2020. The CARES Act also reduces the cost of participation in the program by providing fee waivers, an automatic deferment of payments for up to one year, and no prepayment penalties.
[April 2, 2020 Update] Debt Relief for Other SBA Loans
small businesses with current non-disaster SBA loans, under the CARES Act, the SBA will cover all loan
payments on these loans, including principal, interest and fees, for six
months. This relief will also be available to new borrowers who take out loans
within six months of March 27, 2020. PPP Loans and EIDLs are not eligible for
this debt-relief program.
The loans eligible for this relief include those guaranteed by the SBA, such as the SBA Business Loan Program (including the Community Advantage Pilot Program, but excluding PPP Loans) or Title V of the Small Business Investment Act. Loans made by an intermediary to a small business using loans or grants received under the SBA’s Microloan Program are also eligible.
Business helping businesses: Microsoft is offering Microsoft 365, specifically the E1 Trial license, available at a reduced fee or free for businesses for six months. Microsoft is making this E1 Trial license available in response to the increased need for employees to work from home in response to the COVID-19 (coronavirus) outbreak. To learn what’s available with an E1 license, visit https://www.microsoft.com/en-us/microsoft-365/business/office-365-enterprise-e1-business-software?rtc=1&activetab=pivot%3aoverviewtab. Microsoft regularly updates and answers most frequently asked questions about this offer here: https://docs.microsoft.com/en-us/microsoftteams/faq-support-remote-workforce.
In addition, Cox Communications and Verizon are both offering relief for residential and small business customers in response to COVID-19. To learn more about Cox Communications’ program, visit https://cc1d0ced-f6cd-4b0f-b40f-b3800c378993.filesusr.com/ugd/b28b67_d8daaa27e4704dbba62f0b1d5f122101.pdf. You can find out more information on Verizon’s relief here: https://cc1d0ced-f6cd-4b0f-b40f-b3800c378993.filesusr.com/ugd/b28b67_368f35ba4d804bc59976f907577f2ed4.pdf.
State-based Resources for Rhode Island Businesses
In addition to federal resources, Rhode Island is working to provide its own to businesses within the state. The U.S. Small Business Administration, in conjunction with RI Commerce Corporation, is providing disaster relief funding to aid in business recovery and mitigate revenue loss. Governor Raimondo’s disaster declaration request was also approved for the state, making low-interest loans available for small businesses. For more information on the application process, business owners can call the SBA or 401-521-help.
Health and government officials are working together to maintain the safety, security, and health of all Rhode Islanders. For the latest information about Coronavirus (COVID-19) please visit the official page of the Rhode Island Department of Health. People with general questions about COVID-19 should call 401-222-8022. If you are dialing after business hours, please call 211.
[April 2, 2020 Update] RI Bridge Loan Information
Small Business Loan: The Governor announced that the state launching a short-term bridge loan program for restaurants and small businesses (up to 10 employees). This program was developed in partnership with the Local Initiative Support Corporation and the Rhode Island Hospitality Association. It’s funded by $1M from Commerce’s Small Business Loan Fund and $1M from Bank Newport. To be eligible, the business must have first applied for the federal SBA emergency disaster loan. Businesses can apply starting Friday, April 3, 2020 through the LISC website. You can also call 521-HELP.
Effective Friday, March 20, Governor Raimondo signed an executive order allowing restaurants to sell takeout beer and wine with food orders. The order was effective immediately and is currently in place until March 30. The executive order allows local restaurants to sell up to two bottles of wine or 144 ounces of beer in their original, sealed containers. According to the RI Hospitality Association, restaurants cannot deliver alcohol to customers.
A second executive order, also effective as of March 20, was signed by the Governor in response to feedback from the RI Police Chief’s Association regarding the current strain on their resources and the increase of gun sales within the state. The order increases the current time period of seven days for police departments to conduct background checks for firearm purchases to 30 days.
As of Wednesday, March 18, the RI Public Utilities Commission has directed all electric, gas, water, and wastewater utilities regulated by the RIPUC to temporarily stop certain collections activities, including service terminations for nonpayment. The moratorium extends to 4/15/2020 for residential customers and 3/31/2020 for all other customers, with the RIPUC revisiting the necessity of a continued moratorium prior to its expiration. Billing will continue to occur as scheduled.
In addition to the above resources, the RIABR (RI Alliance for Business Resilience) is a fantastic resource for industry leaders in the state. https://www.riabr.org.
Paid Medical/Sick Leave
[April 2, 2020 Update] Emergency and Family Medical Leave Act (EFMLA) under the Families First Coronavirus Response Act (FFCRA)
Required paid sick leave: consult the (federal) Family Medical Leave Act (as amended by the Families First Coronavirus Response Act passed in March 2020 – see below) and the state specific Rhode Island Healthy and Safe Families and Workplaces Act (“RI HSFWA”), RIGL § 28-57-1 et seq.
Our current understanding of the Families First Coronavirus Response Act, a federal law (not Connecticut-specific) is as follows:
TIME WORKING TO QUALIFY: An employee who has been employed for at least 30 calendar days. Note that this is a much lower threshold than the 12 month/1,250 hour tenure requirement that otherwise applies to FMLA leave.
SIZE OF BUSINESS TO QUALIFY: Private employers with fewer than 500 employees, and most public employers. For smaller employers, this bill could introduce FMLA coverage to their workplace. It is unclear if there are exclusions for emergency responders and/or businesses with less than 50 employees where the requirements would jeopardize that business as a going concern. Traditional FMLA did not apply unless 50 or more employees – Munro-Delotto Law, LLC will continue looking into this exclusion.
UPDATE ON EXEMPTIONS: The Department of Labor also has the authority to issue regulations exempting employers with fewer than 50 employees from certain aspects of the sick leave requirement if that requirement would jeopardize the viability of the business. Thus, exemptions should apply as they do with the existing FMLA – make sure to document why your business with bewer than 50 employees meets the criteria set forth by the Department, which will be addressed in more detail in forthcoming regulations. Specifically the guidance states the following about exemptions:
An employer, including a religious or nonprofit organization, with fewer than 50 employees (small business) is exempt from providing (a) paid sick leave due to school or place of care closures or child care provider unavailability for COVID-19 related reasons and (b) expanded family and medical leave due to school or place of care closures or child care provider unavailability for COVID-19 related reasons when doing so would jeopardize the viability of the small business as a going concern. A small business may claim this exemption if an authorized officer of the business has determined that:
- The provision of paid sick leave or expanded family and medical leave would result in the small business’s expenses and financial obligations exceeding available business revenues and cause the small business to cease operating at a minimal capacity;
- The absence of the employee or employees requesting paid sick leave or expanded family and medical leave would entail a substantial risk to the financial health or operational capabilities of the small business because of their specialized skills, knowledge of the business, or responsibilities; or
- There are not sufficient workers who are able, willing, and qualified, and who will be available at the time and place needed, to perform the labor or services provided by the employee or employees requesting paid sick leave or expanded family and medical leave, and these labor or services are needed for the small business to operate at a minimal capacity.
A small business is exempt from certain paid sick leave and expanded family and medical leave requirements if providing an employee such leave would jeopardize the viability of the business as a going concern. This means a small business is exempt from mandated paid sick leave or expanded family and medical leave requirements only if the:
- employer employs fewer than 50 employees;
- leave is requested because the child’s school or place of care is closed, or child care provider is unavailable, due to COVID-19 related reasons; and
- an authorized officer of the business has determined that at least one of the three conditions described in above is satisfied.
Further information can be found here: https://www.dol.gov/agencies/whd/pandemic/ffcra-questions
QUALIFYING CONDITIONS FOR PAID SICK LEAVE: – paid leave seems to only cover COVID-19-related actual medical or caregiver leave BUT covers every employee caring for a child of the age needing care if school/childcare are unavailable. Munro-Delotto Law, LLC will be verifying this.
The Act requires emergency sick leave for employees who cannot work for any of the following reasons:
A. The employee is subject to a Federal, State, or local quarantine or isolation order related to COVID-19;
B. The employee has been advised by a health care provider to self-quarantine due to concerns related to COVID-19;
C. The employee is experiencing symptoms of COVID-19 and seeking a medical diagnosis;
D. The employee is caring for an individual who is either (1) subject to a Federal, State, or local quarantine or isolation order related to COVID-19 or (2) has been advised by a health care provider to self-quarantine due to concerns related to COVID-19;
E. The employee is caring for a son or daughter of such employee if the school or place of care of the son or daughter has been closed, or the childcare provider of such son or daughter is unavailable, due to COVID-19 precautions;
F. The employee is experiencing any other substantially similar condition specified by the Secretary of Health and Human Services in consultation with the Secretary of the Treasury and the Secretary of Labor.
REQUIRES JOB PROTECTION: The FMLA’s job restoration requirements generally apply, with limited flexibility for employers with fewer than 25 employees – 25 employees and more require job restoration.
REQUIRES PAID FAMILY LEAVE AFTER AN INITIAL 10 DAYS PAID SICK LEAVE: Paid Leave Requirement: Unlike FMLA leave under the 1992 Act, this act provides for paid leave for various durations for each of the new qualifying conditions. In more detail:
The first 10 days of leave are paid sick leave. This is paid at 100% of regular hourly rate or salary for the duration where the qualifying condition is (A), (B), or (C) above and at two-thirds of regular hourly rate or salary for the duration where qualifying condition is (D), (E), or (F).
After 10 days of sick leave have been taken, the employer must provide paid family leave for an additional 10 weeks for qualifying conditions (including children being out of school – see duration below). Paid family leave is paid at two-thirds an employee’s regular rate of pay for the number of hours the employee would otherwise be normally scheduled to work. Subject to the specific conditions of forthcoming Treasury Department regulations, 100% of the emergency FMLA and paid sick leave wages may be reimbursed via payroll tax credits. Munro-Delotto Law, LLC is looking into the specifics.
PAYRATES: Sick pay is 100% of regular hourly rate or salary for the duration where the qualifying condition is (A), (B), or (C) above and two-thirds of regular hourly rate or salary for the duration where qualifying condition is (D), (E), or (F).Family leave is two-thirds normal rate. Tipped workers is likely minimum wage.
For leave reasons (A), (B), or (C): employees taking leave shall be paid at either their regular rate or the applicable minimum wage, whichever is higher, up to $511 per day and $5,110 in the aggregate (over a 2-week period).
For leave reasons (D) or (F): employees taking leave shall be paid at 2/3 their regular rate or 2/3 the applicable minimum wage, whichever is higher, up to $200 per day and $2,000 in the aggregate (over a 2-week period).
For leave reason (E): employees taking leave shall be paid at 2/3 their regular rate or 2/3 the applicable minimum wage, whichever is higher, up to $200 per day and $12,000 in the aggregate (over a 12-week period—two weeks of paid sick leave followed by up to 10 weeks of paid expanded family and medical leave).
Part Time: Part-time workers are paid the amount they typically earn in a two-week period.
Duration of Leave
For reasons (A)-(D) and (F): A full-time employee is eligible for up to 80 hours of leave, and a part-time employee is eligible for the number of hours of leave that the employee works on average over a two-week period.
For reason (E): A full-time employee is eligible for up to 12 weeks of leave at 40 hours a week, and a part-time employee is eligible for leave for the number of hours that the employee is normally scheduled to work over that period.
No Carryover: Emergency paid sick time provided by the Act does not carry over from one year to the next.
No Payout at Termination: Paid sick time not used at the time of an employee’s termination, resignation, or retirement does not need to be paid out to the employee.
May be Used Before Other Paid Leave: Employers may not require an employee to use other paid leave provided by the employer to the employee before the employee uses paid sick time provided for by the Act.
Expanded Definition of family members to include: foster, adoptive, step, parent of domestic partner, parental in-laws, guardians, and those who stood in loco parentis.
Part Time: Part-time workers are paid the amount they typically earn in a two-week period.
For business owners and those Self-employed (Applies to all US states): According to the New York Times, people who are self-employed or otherwise own a small business can also receive paid leave, assuming they pay taxes. According to the New York Times, self-employed people should calculate their average daily self-employment income for the year, then claim the amount they take as a tax credit (they can reduce their estimated quarterly tax payments in the meantime). Check with your accountant however as our accountant could not yet confirm this development.
Effective Date: The Act takes effect April 1, 2020 and applies to leave taken between April 1, 2020 and December 31, 2020.
[April 2, 2020 Update] Additional information & guidance
Full guidance available here: https://www.dol.gov/agencies/whd/pandemic/ffcra-questions
Interplay between New FMLA (paid) and Normal Unpaid FMLA Leave: Guidance states that an employee is eligible for paid sick leave regardless of prior FMLA taken through the year. However, for employers covered by FMLA prior to April 1, 2020, if the employee has taken prior FMLA (unpaid leave) the New FMLA paid leave for the family leave provision (i.e. children home from school) is reduced by the amount of time already taken. If the employer only became covered by FMLA on or after April 1, 2020, then no reductions for prior FMLA leave would apply. Remember also, the Emergency Paid Sick Leave under the EFMLEA (2 weeks sick pay) potentially applies to all employees but the expanded family leave (the longest coverage time – up to 12 weeks – applies only in situations where a child is home from school or daycare).
Interplay between new Federal Paid Sick Leave and State Paid Sick Leave laws: In short, having and taking one, either the Emergency Family and Medical Leave Expansion Act, or applicable state paid leave, will not disqualify the employee from qualifying for and taking the other.
Calculating Part-Time employee hours for purposes of sick leave or expanded family/medical leave: Use the average number of work hours in a two-week period and that is the paid sick leave time for two weeks – use that calculation for expanded family leave as well. First try to use the hours normally schedule but if unknown or varied, use six-moth average; if that is not possible as the employee has not been there for six months, use either the agreed upon hours at hire or an average for less time that is reasonable. Remember, employee does not qualify `for EXPANDED PAID FAMILY/MEDICAL LEAVE if not employed for 30 days prior to the leave but DOES qualify for the two weeks paid sick leave because it covers employees regardless of length of employment.
Overtime: This amount must also be paid if the employee normally is scheduled to work more than 40 hours per week HOWEVER since the cap is 80 hours of sick leave (and there are caps on medical leave as well), this would just mean that the overtime hours would be paid the first week with less than 40 ours the next week for sick leave. For illustration, if the employee works 60 hours per week typically, you would pay 60 hours the first week, but since sick leave is capped at 80 hours, the second week they would only be paid 20 hours at the payment rate as determined by the act. If overtime hours are varied, like the part time employee, use an average or other reasonable method stated above.
Tipped, Commissioned, Piece-rate Employees: These must be factored into calculating pay – so pay is the average regular pay (including tips, commission, etc) for up to six months.
Can one take both types of leave: You may be eligible for both types of leave, but only for a total of twelve weeks of paid leave. You may take both paid sick leave and expanded family and medical leave to care for your child whose school or place of care is closed, or child care provider is unavailable, due to COVID-19 related reasons. The Emergency Paid Sick Leave Act provides for an initial two weeks of paid leave. This period thus covers the first ten workdays of expanded family and medical leave, which are otherwise unpaid under the Emergency and Family Medical Leave Expansion Act unless you elect to use existing vacation, personal, or medical or sick leave under your employer’s policy. After the first ten workdays have elapsed, you will receive 2/3 of your regular rate of pay for the hours you would have been scheduled to work in the subsequent ten weeks under the Emergency and Family Medical Leave Expansion Act.
Please note that you can only receive the additional ten weeks of expanded family and medical leave under the Emergency Family and Medical Leave Expansion Act for leave to care for your child whose school or place of care is closed, or child care provider is unavailable, due to COVID-19 related reasons.
What documents do employers need if an employee takes paid
leave: You must provide to your employer documentation in support of
your paid sick leave as specified in applicable IRS forms, instructions, and
Your employer may also require you to provide additional in support of your expanded family and medical leave taken to care for your child whose school or place of care is closed, or child care provider is unavailable, due to COVID-19-related reasons. For example, this may include a notice of closure or unavailability from your child’s school, place of care, or child care provider, including a notice that may have been posted on a government, school, or day care website, published in a newspaper, or emailed to you from an employee or official of the school, place of care, or child care provider. Your employer must retain this notice or documentation in support of expanded family and medical leave, including while you may be taking unpaid leave that runs concurrently with paid sick leave if taken for the same reason.
Please also note that all existing certification requirements under the FMLA remain in effect if you are taking leave for one of the existing qualifying reasons under the FMLA. For example, if you are taking leave beyond the two weeks of emergency paid sick leave because your medical condition for COVID-19-related reasons rises to the level of a serious health condition, you must continue to provide medical certifications under the FMLA if required by your employer.
Can Leave Be Taken Intermittently: Yes. For more information see questions 20/21/22 at Federal Guidance (https://www.dol.gov/agencies/whd/pandemic/ffcra-questions)
If the business is closed can employees take paid leave? No, if closed after April 1, 2020 which is the effective date but employees of a closed business are eligible for unemployment. No, if furloughed after April 1, 2020. However, employees would be eligible for unemployment.
Reduction of hours: If reduced by company paid leave cannot supplement (but unemployment can). But if an employee cannot work their full schedule due to a qualifying reason, then hours up to the work schedule worked prior to the leave can be supplemented by paid leave.
Interplay between Unemployment and Paid Leave: An employee, GENERALLY, is either on one or the other and cannot be on both. However, check with the state for the interplay as the Federal Government has provided some flexibility to states.
Interplay of Employer-Provided Paid Leave and FFCRA Paid Leave: The employee can choose to use existing paid vacation/PTO time instead but the employer must agree. But the employer cannot force the employee to take employer-provided leave instead of FFCRA leave if they do not agree.
UPDATE: PAID LEAVE TAX CREDIT
Under the law, employers with fewer than 500 employees are allowed a credit against employer Social Security tax liability equal to 100 percent of the qualified sick leave wages paid by the employer, subject to the caps discussed above. The credit is increased by certain specified health expenses (such as, employer-paid health plan premiums) that are excluded from employees’ income.
The tax credit effectively reduces the amount of federal employment taxes that must be deposited with the IRS, usually within a few days of the payroll date. This is intended to provide the funds needed to pay sick and family leave benefits under the law. However, in some cases, such as complete closure of a business, the Treasury Department and IRS will process claims for advance payments of the tax credit.
Because the credit is fully refundable, employers will receive reimbursement of the amount paid, subject to the caps, even if their tax liability is less than the amount paid out in the required leave. Emergency paid sick leave and PHEL wages paid are also exempt from Social Security taxes otherwise imposed on the employer.
Rhode Island Paid Sick Leave
Details on the Rhode Island HSFWA Law, which has been in place since before the COVID-19 outbreak, are as follows:
What: Allows certain employees in Rhode Island to accrue a minimum of one hour of paid sick and safe leave time for every thirty-five (35) hours worked up to a maximum of forty (40) hours per year.
Acceptable uses of time:
(1) An employee’s mental or physical illness, injury, or health condition; an employee’s need for medical diagnosis, care, or treatment of a mental or physical illness, injury, or health condition; an employee’s need for preventive medical care;
(2) Care of a family member with a mental or physical illness, injury, or health condition; care of a family member who needs medical diagnosis, care, or treatment of a mental or physical illness, injury, or health condition; care of a family member who needs preventive medical care;
(3) Closure of the employee’s place of business by order of a public official due to a public health emergency or an employee’s need to care for a child whose school or place of care has been closed by order of a public official due to a public health emergency, or care for oneself or a family member when it has been determined by the health authorities having jurisdiction or by a health care provider that the employee’s or family member’s presence in the community may jeopardize the health of others because of their exposure to a communicable disease, whether or not the employee or family member has actually contracted the communicable disease; or
(4) Time off needed when the employee or a member of the employee’s family is a victim of domestic violence, sexual assault, or stalking.
Qualifying employers: All employees employed by an employer of eighteen (18) or more employees.
Qualifying employees/exemptions: All employees (exempt and non-exempts) in qualifying employers except not municipal workers, not nurses on per diem (if conditions are met) and not construction if employees are under a CBA and conditions are met.
Businesses with 17 or less employees: Same rules of accrual and use but leave is unpaid.
Accrual and Use: Accrual starts first day but use can have waiting periods applied by company.
Carry-over: Carry over from year to year allowable but employee stops accruing once at the max of 40 hours and max on use per year of 40 hours.
Payout at Separation: Employers is not required to pay out unused balances at separation.
Anti-retaliation provisions: Do not retaliate or discriminate based on use.
Rhode Island Parental & Family Medical Leave Act: (State “FMLA”): This is unpaid leave with job protection and anti-retaliation provisions; this state law largely duplicates federal FMLA, but has different qualification and allows for additional weeks of benefits.
Eligible Employers: Requires that employers of 50 or more employees grant an unpaid leave of absence, upon the request of an eligible employee.
Employees Eligible: Employees are eligible to apply for leave if they are full-time employees who work an average of 30 hours a week or more and have been employed continuously for at least 12 months.
Purpose of Leave: The leave required to be provided under the Act must be for one or more of the following reasons:
1. Birth of a child of an employee.
2. Placement of a child 16 years of age or less with an employee in connection with the adoption of such child by the employees.
3. “Serious illness” of the employee or the employee’s parent, spouse, child, mother-in-law, or father-in-law. (Serious Illness is defined to mean a disabling physical or mental illness, injury, impairment or condition that involves in-patient care in a hospital, nursing home, or hospice, or out-patient care requiring continuing treatment or supervision by a health care provider).
Length of Leave: For 13 consecutive weeks in any two calendar years, under certain conditions.
Anti-retaliation provisions: Do not retaliate or discriminate based on use.
Unemployment, TDI, & TCI Information for Employers
General Unemployment Information: Employees who have lost their jobs or had their hours cut due to the COVID-19 outbreak are eligible for unemployment benefits, including teachers affected by school closures.
To apply for unemployment insurance, visit https://dltweb.dlt.ri.gov/UIClaims2013/intro/index.aspx?AC=yes and for more information about filing, visit http://www.dlt.ri.gov/ui/fileclaim2.htm. You can also do this over the phone by contacting the DLT at (401) 243-9100 to file a new claim or refile your claim during normal business hours.
DLT will waive the seven-day waiting period for UI claims related to COVID-19. Employees must note that their unemployment claim is due to the COVID-19 outbreak.
General requests for assistance can be made by emailing email@example.com or calling (401) 462-2020.
[April 2, 2020 Update] Unemployment Changes
Coronavirus Aid, Relief and Economic Security (CARES) Act – FEDERAL UNEMPLOYMENT CHANGES
The Federal plan, as it has been explained, includes many substantial changes that could benefit small businesses, or more specifically the owners and the employees. The Federal plan will modify the typical state-funded and administered unemployment by adding features that are applicable to all states; how these are applied within each state’s plan will vary as states administer their own programs. Changes that should apply are:
Increases in Benefit Length and Amount:
- Additional 13 weeks of coverage funded by federal government to be paid after state benefit runs out if the person is still out of work
- Additional $600 per week
(beyond states standard benefit) for four months
where applicablefunded by federal government
- Federally funding the first week (or whatever the waiting period is) so as to provide a benefit when there is normally a waiting period
Example: So, if an employee normally earns $385 a week under a state employment plan, under the new legislation, the worker could expect $985 a week for four months ($600 in extra relief plus state benefits), followed by up to 23 weeks of $385 a week in standard state benefits. Unemployment benefits are generally taxable.
Broader Qualification Groups – funded by federal government:
- Now self-employed workers (independent contractors/gig- like Uber and Lyft drivers/freelance) qualify (Labor Department should publish guidance about the specifics such as the documentation needed to prove wages and work history; tax forms such as 1099s and some sort of payment stub should suffice). Some business owners may qualify for unemployment – guidance to come. The guidance should clarify if gig workers can get benefits for a severe decline in income, rather than outright job loss.
- Now people seeking part-time work qualify (may not have before).
- Now workers who can’t reach their place of work as a result of COVID-19 qualify.
- Now those don’t have sufficient work history to otherwise qualify for benefits qualify.
- Those who quit their job as a “direct result of COVID-19” also qualify; normally people who quit their jobs don’t normally qualify for unemployment.
Expanded benefits would last through December 2020. Also stated maximum duration of unemployment benefits to 39 weeks — or, almost 10 months.
Under the guidance, federal law permits significant flexibility for states to amend their laws to provide UI benefits in multiple scenarios related to COVID-19. For example, federal law allows states to pay benefits where: (1) An employer temporarily ceases operations due to COVID-19, preventing employees from coming to work; (2) An individual is quarantined with the expectation of returning to work after the quarantine is over; and (3) An individual leaves employment due to a risk of exposure or infection or to care for a family member. In addition, federal law does not require an employee to quit in order to receive benefits due to the impact of COVID-19.
An individual receiving paid sick leave or paid family leave is still receiving pay. Thus, generally speaking, the individual is not “unemployed,” so the individual is ineligible for unemployment insurance. The Department’s Employment and Training Administration will continue to assist any states seeking assistance in implementing these flexibilities.
For more information about the COVID-19, please visit: https://www.cdc.gov/coronavirus/2019-ncov/index.html.
Layoff vs Furlough
The Federal plan willmake a distinction between furlough (temporary layoff) and a layoff which matters for purposes of benefits. In the case of a furlough, an employer can continue to pay medical benefits and the employee can retain benefits. By contrast, employees who are laid off cannot participate in the employer’s medical plan and can sign up for COBRA for medical benefits. According to Susan Houseman, director of research at the W. E. Upjohn Institute for Employment Research, furloughed workers can both collect unemployment and also be eligible for benefits.
Source: https://www.cnbc.com/2020/03/26/coronavirus-relief-bill-what-to-know-about-unemployment-benefits.html We are currently awaiting federal guidance and we will update this with more detail when such guidance is released.
Employees with More Than One Job
It is not clear, but unlikely, that unemployment will cover the additional lost income due to the lost of one job but not the other when the employee has more than one job.
Tipped employees are eligible for unemployment benefits and will receive benefits based on any wages they have claimed for taxation purposes.
Tipped employees are eligible for unemployment based on total amount of wages claimed. When filling out the unemployment form, they should claim their hourly base wage, however, DLT will calculate their benefit amount based on all wages claimed.
In limited circumstances, business owners may also be eligible for benefits.
Employees directly impacted by COVID-19 no longer must be actively searching for work to qualify for unemployment assistance (and thus no requirement they are immediately employable such as if sick, assumedly). May not be charged back to employer’s insurance due to state of emergency
TDI & TCI: Filing & General Information
TDI is available for anyone self quarantining or that is sick from COVID-19 .
For more information about TDI please visit http://www.dlt.ri.gov/tdi/tdifaqs.htm. You can apply here: https://dltweb.dlt.ri.gov/TDIReserve/Home.
• Be sure to clearly indicate on your application that you have been impacted by COVID-19.
• For COVID-19 related claims, DLT will waive the seven-day minimum amount of time that claimants must be out of work to qualify for TDI/TCI benefits.
• For individuals under quarantine, DLT will waive the required medical certification, and instead will allow them to temporary qualify via self-attestation that they were under quarantine due to COVID-19.
Benefits may be available for you to care for yourself or a family member that has been impacted through Temporary Caregiver Insurance (TCI). Apply at www.dlt.ri.gov.
For questions on temporary disability insurance (TDI), unemployment insurance (UI), and other benefits, please review the COVID-19 Workplace Fact Sheet found at the link above. Requests for assistance can also be made by emailing firstname.lastname@example.org or calling (401) 462-2020. They are intended to provide support to people regarding COVID-19 and employment issues. The phone line is staffed Monday to Friday during business hours.
DLT Information for Employers
If you are temporarily ceasing or limiting operations as a result of COVID-19, please contact the Department of Labor and Training to discuss how it can provide assistance. DLT stands ready to assist with questions about Unemployment Insurance, Paid Sick and Safe Leave or other programs and resources available. (SEE BELOW FOR FULL, UPDATED INFORMATION ON THE RI WorkShare PROGRAM as of April 1, 2020)
Requests for assistance can be made by emailing email@example.com or calling (401) 462-2020. Please be sure to provide your business’ name, a point of contact, telephone number and email address. A DLT team member will respond to inquiries in the order they are received.
[April 1, 2020 Update] *What is WorkShare?
The Rhode Island WorkShare program, administered by the Department of Labor and Training, allows for employers with two or more employees to keep the employer’s workforce in place during a temporary layoff situation; WorkShare allows employers to reduce work hours of a large group of employees as opposed to laying off employees, thereby risking losing valued employees permanently to other employment opportunities. Employees whose hours and wages are reduced would be eligible to receive a portion of their regular unemployment insurance benefits to compensate for the lost wages. Note that employers that have shut down operations completely are not eligible for the WorkShare program; the program compensates employees for a reduction in hours only. WorkShare claimants are able to collect up to fifty percent (50%) of their weekly benefit rate. The average weekly UI payment is about $368 (you can see the DLT’s payment calculation chart here: http://www.dlt.ri.gov/ui/pdfs/WorkShare/SharedWorkPaymentCalc.pdf). Assuming that a worker regularly worked a forty (40) hour week and their hours have been reduced to twenty (20) hours, a worker earning the average payment would receive about $184 in WorkShare benefits and half of their regular weekly compensation from their employer.
Interested employers must apply for the WorkShare program by faxing a completed DLT application (found here: http://www.dlt.ri.gov/ui/pdfs/WorkShare/WSApplicationPkt.pdf) to 401-462-8506; employers will receive a response from the DLT within 48 hours. Any employees who currently work for the employer submitting the WorkShare application and who would normally be eligible to receive regular unemployment insurance benefits in Rhode Island are eligible to receive WorkShare.
Employers facing downturns work with the DLT to establish a WorkShare plan, which articulates the amount of the work reduction (in hours), which units will be impacted, and information about the affected employees. Employers must continue to provide the same fringe benefits or must reduce all of their employees’ benefits by the same amount, but employers can have their entire operation participate or dictate which specific units, shifts or departments will participate in the program. Per RIGL §28-44-69, the amount of work hours may be reduced from 10%-50%. If workers are covered by a collective bargaining agreement, their union must approve the WorkShare plan prior to implementation. For non-union workplaces, employers must establish that they have informed each of the affected employees about the plan prior to implementation. In the event that no work is performed during a week when an employer is on WorkShare, covered employees would receive a full week of UI benefits in lieu of their WorkShare benefits. Benefit costs are charged to employers in the same manner as they are with regular UI.
The DLT provides additional information on this program in its one-pager, found here: http://www.dlt.ri.gov/ui/pdfs/WorkShare%20COVID19%20One-Pager.pdf
For more information on WorkShare, visit www.dlt.ri.gov/ui/ws.htm.
Private Insurance Information for Employers
Private business interruption insurance: A business interruption insurance policy should list or describe the types of events it covers. Events that are not described in the policy are typically not covered. You should determine if the policy requires your business interruption to last for a certain time period before you are entitled to any policy benefits.
Business interruption coverage typically can only be triggered if you have property loss that leads to the business interruption. One example could be that a fire in your office has caused you to suspend your business activities. Because coverage varies across policies, you will need to read your particular policy and consult your broker or insurer or its agent for more information. Also consider checking with a contract litigation attorney to read the contract to see if this unique circumstance might be argued to be within coverage. Lack of case law (since we have never dealt with a pandemic) means there is always a chance. If you do not carry this insurance there may be coverage under another insurance policy such as part of a Business Owners Policy.
Force Majeure Events and Clauses:
If you have contractual obligations to vendors or third-party contractors, review contracts for force majeure clauses.
A force majeure event refers to the occurrence of an event which is outside the reasonable control of a party and which prevents that party from performing its obligations under a contract. English common law has no general concept of force majeure (save for the limited doctrine of contractual frustration, which is addressed below). A party’s ability to claim relief for a force majeure event therefore depends upon the terms of the contract, and the force majeure provision in particular. Force majeure provisions are express terms and will not ordinarily be implied into contracts governed by English law. A party affected by such an event of force majeure will typically be relieved from performing the obligation affected for the duration and to the extent affected and may be entitled to compensation.
As with all matters dependent upon the terms of the contract, each force majeure provision must necessarily be considered on its precise terms and in its specific context.
Events Capable of Constituting Force Majeure:
The “test” for force majeure usually requires the satisfaction of three distinct criteria:
1. the event must be beyond the reasonable control of the affected party;
2. the affected party’s ability to perform its obligations under the contract must have been prevented, impeded or hindered by the event; and
3. the affected party must have taken all reasonable steps to seek to avoid or mitigate the event or its consequences.
Many contractual provisions set out a specific list of force majeure events which are deemed to be events of force majeure beyond the control of the parties, such as “pandemics,” “epidemics” or “diseases.” A specific reference to a “pandemic” will make it easier to bring a force majeure claim but will still require the other criteria for a force majeure test to be satisfied.
However, if the provision does not include language to that effect, then it will be necessary to consider whether COVID-19, or its impact on a business or a project, is captured by a different concept, such as an “Act of God,” “action by government” or a catch-all provision. Most force majeure provisions contain “catch-all” language in respect of events which are “outside the reasonable control of the party affected”. It seems fairly clear that a pandemic such as COVID-19 would qualify as force majeure under such a provision.
Additional Assistance for Staff and Individuals
Health insurance special enrollment period:
A special enrollment period for Rhode Islanders without health insurance is now available through April 15th, 2020, to qualified individuals who are uninsured. Visit HealthSourceRI.com to enroll, or call customer support or use our web chat function between 8:00 a.m. and 6:00 p.m. Monday – Friday at 1-855-840-4774.
For anyone who is concerned that they need to be tested for coronavirus — or anyone who is seeking care because of coronavirus exposure — coverage will start retroactively.
Moratorium on evictions:
On March 17, 2020, Chief Justice Paul Suttell issued Executive Order 2020-4. The Executive Order provides, among other things, that non-emergency matters in Rhode Island courts will not be heard until after April 17, 2020. This includes evictions. There is an exception in the Executive Order for emergency situations, which can include matters involving violence or other safety risks. If an eviction case can fairly be characterized as an “emergency,” it may still go forward. The Executive Order does not prohibit a landlord from sending out required notices (such as rent demands) or from giving you a complaint that has been filed. The Executive Order simply means the case will not go forward until after April 17, 2020. The Executive Order does extend filing deadlines for 30 days. This means if your landlord files an eviction with the court before April 17 you will have additional time to file your response when the courts reopen.
Even though new eviction cases are temporarily halted, sometimes landlords try to evict people without going to court. Evictions without a court order are still illegal.
Moratorium on some foreclosures:
On March 18, 2020, the Federal Housing Finance Agency directed Fannie Mae and Freddie Mac to suspend foreclosures and evictions on single-family homes for at least 60 days. The precise details of this directive are not yet clear. If you are having trouble paying your mortgage (or any bills) contact the company you owe money to so you can find out whether they have a forbearance policy. The sooner you do that, the better.
The Federal Housing Finance Agency regulates Fannie Mae, Freddie Mac and the 11 Federal Home Loan Banks. These government-sponsored enterprises provide more than $6.3 trillion in funding for the U.S. mortgage markets and financial institutions. Additional information is available at www.FHFA.gov, on Twitter, @FHFA, YouTube, Facebook, and LinkedIn.
Relevant Tax Information*
*Please note that Munro-Delotto Law does not employ a tax attorney; the following is additional information for businesses to look into with their own accountant or tax attorney.
FEDERAL Business Tax Filing / Payment Deadlines:
FEDRAL FILING DEADLINE CHANGED to JULY 15, 2020
U.S. Treasury Department and Internal Revenue Service (IRS) issued guidance allowing all individual and other non-corporate tax filers to defer up to $1 million of federal income tax (including self-employment tax) payments due on April 15, 2020, until July 15, 2020, without penalties or interest. The guidance also allows corporate taxpayers a similar deferment of up to $10 million of federal income tax payments that would be due on April 15, 2020, until July 15, 2020, without penalties or interest.
[April 2, 2020 Update]
Business Tax Provisions explained by an accountant:
- Employers are eligible for a 50 percent refundable payroll tax credit on wages paid up to $10,000 during the crisis. It would be available to employers whose businesses were disrupted due to virus-related shutdowns and firms experiencing a decrease in gross receipts of 50 percent or more when compared to the same quarter last year. The credit is available for employees retained but not currently working due to the crisis for firms with more than 100 employees, and for all employee wages for firms with 100 or fewer employees. More info summarized by ADP: https://sbshrs.adpinfo.com/covid19-cares-act
- Employer-side Social Security payroll tax payments may be delayed until January 1, 2021, with 50 percent owed on December 31, 2021 and the other half owed on December 31, 2022. The Social Security Trust Fund will be backfilled by general revenue in the interim period. More info summarized by ADP: https://sbshrs.adpinfo.com/covid19-cares-act
- Firms may take net operating losses (NOLs) earned in 2018, 2019, or 2020 and carry back those losses five years. The NOL limit of 80 percent of taxable income is also suspended, so firms may use NOLs they have to fully offset their taxable income.
- The bill also modifies loss limitations for non-corporate taxpayers, including rules governing excess farm losses, and makes a technical correction to the treatment of NOLs for the 2017 and 2018 tax years.
- • Firms with tax credit carryforwards and previous alternative minimum tax (AMT) liability can claim larger refundable tax credits than they otherwise could.
- • The net interest deduction limitation, which currently limits businesses’ ability to deduct interest paid on their tax returns to 30 percent of earnings before interest, tax, depreciation, and amortization (EBITDA), has been expanded to 50 percent of EBITDA for 2019 and 2020. This will help businesses increase liquidity if they have debt or must take on more debt during the crisis.
- Technical corrections to the depreciation treatment of qualified improvement property (QIP).
- The excise tax applied on alcohol used to produce hand sanitizer is temporarily suspended for tax year 2020.
- Aviation excise taxes are suspended until January 1, 2021. We estimate this will reduce federal revenue by about $8 billion in 2020
TAX FILING DEADLINE NOW July 15 for filing deadline AND payments. Quarterly payments to DOL due by April 30, 2020 may be extended.
State-specific modifications: The state’s April income tax filing deadline will be pushed back to July 15 to align with the IRS’ newly extended federal tax deadline, Raimondo confirmed Friday.
Municipal Tax Extensions: So far, Warwick, Cranston, and Newport have apparently extended municipal tax deadlines for residents and businesses. Many municipalities are in the process of granting extensions. Other municipalities may follow suit. Smithfield has extended the deadlines for property tax payments from March 31 to April 30.
Policies NOT modified: The Governor announced did not offer sales tax extension to businesses impacted by the COVID-19 crisis and it was due March 20, 2020. If you need an extension, we recommend that you contact the RI Department of Taxation at 401-574-8955. You should also email them at firstname.lastname@example.org. There may be an opportunity to limited relief.
Business Continuity Planning for Employers
• Identify staff members who can accurately assess how your company functions, both internally and externally.
• Determine which employees, materials, procedures and equipment are essential to keep the business operating and which functions are critical to survival and recovery.
• Include emergency payroll, expedited financial decision making and accounting systems to track and document costs in the event of an unexpected business incident and assign each task to a manager who will be responsible for that function for the duration of the event.
• Establish procedures for succession of management including at least one person who is not at the company headquarters, if possible.
• Practice worst case scenario planning- it is very possible someone from your leadership team will be unavailable; plan for contingency if that person serves a critical role.
• Decide which employees will be involved in pulling together your emergency business plan. Include co-workers from all levels in your organization as active members of the emergency management team; don’t overlook interns and new employees-they may recognize a vital function that could be overlooked. Consider a broad cross-section of employees but focus on employees with expertise vital to daily business functions.
Communications and Emergency Planning for Employees: Your employees are your most valuable asset. Open lines of communication are essential before, during and after any incident. Include preparedness information and virus updates in newsletters, on company intranet, periodic employee emails and other internal communications tools. Consider setting up a password-protected page on the company website, an email alert or a call-in voice recording to communicate with employees throughout the incident. Designate an 800-number or conference line that can be used to communicate in the event of a quarantine with designated call times and personnel.
Detail how your organization plans to communicate with employees, local authorities (identify point of contact for emergency services and first responders), customers and others for the duration of the event. Give employees information on how you will communicate when and how to report to work following the incident.
It is also important to communicate with local, state and federal authorities what emergency assistance is needed for you to continue essential business activity. If you are able to provide assistance to the community, communicate with officials and first responders what your company is prepared to do to help in the recovery effort.
Check with your IT provider to ensure key employees have the right tools to work remotely:
- VPN Access (to access server)
- Printer/Scanner/Fax or e-Fax
- Keyboard and mouse
[April 2, 2020 Update] Coronavirus Aid, Relief, and Economic Security (CARES) Act – Other Federal Changes
- Recovery Rebate for individual taxpayers. The bill would provide a $1,200 refundable tax credit for individuals ($2,400 for joint taxpayers). Additionally, taxpayers with children will receive a flat $500 for each child. The rebates would not be counted as taxable income for recipients, as the rebate is a credit against tax liability and is refundable for taxpayers with no tax liability to offset. The rebate phases out at $75,000 for singles, $112,500 for heads of household, and $150,000 for joint taxpayers at 5 percent per dollar of qualified income, or $50 per $1,000 earned.
It phases out entirely at $99,000 for single taxpayers with no children and $198,000 for joint taxpayers with no children (see Chart 1). 2019 or 2018 tax returns will be used to calculate the rebate advanced to taxpayers, but taxpayers eligible for a larger rebate based on 2020 income will receive it in the 2020 tax season. Taxpayers with higher incomes in 2020 will see the overpayment associated with their rebate forgiven. For example, a single taxpayer with $100,000 in 2019 income would not receive an advance rebate but would receive the $1,200 credit on their 2020 return if their income for the year fell below the phaseout. On the other hand, a single taxpayer with $35,000 in income receives a $1,200 advance rebate but would not have to pay the rebate back on the 2020 return if they make $100,000 this year. This is structurally similar to the 2008 rebate design. We estimate the rebate will decrease federal revenue by about $301 billion in 2020, according to the Tax Foundation General Equilibrium Model. This credit is one-time, but policymakers may consider additional rebates if the downturn is prolonged.
- Creates a $300 partial above-the-line charitable contribution for filers taking the standard deduction and expands the limit on charitable contributions for itemizers.
- Waives the 10 percent early withdrawal penalty on retirement account distributions for taxpayers facing virus-related challenges. Withdrawn amounts are taxable over three years, but taxpayers can recontribute the withdrawn funds into their retirement accounts for three years without affecting retirement account caps. Eligible retirement accounts include individual retirement accounts (IRAs), 401Ks and other qualified trusts, certain deferred compensation plans, and qualified annuities. The bill also waives required minimum distribution rules for certain retirement plans in calendar year 2020.
- Certain employer payments of student loans on behalf of employees are excluded from taxable income. Employers may contribute up to $5,250 annually toward student loans, and the payments would be excluded from an employee’s income.
Other state and federal links:
• City of Providence, COVID-19 Information (http://www.providenceri.gov/pema/faqs-covid-19/)
• COVID-19 Global Cases Map (https://www.coronavirusworldnews.com/map/)
• World Health Organization Novel Coronavirus Disease 2019 Information (https://www.who.int/emergencies/diseases/novel-coronavirus-2019)
We will be updating this information as the crisis continues (or as we think of more relevant information to compile) so please feel free to let us know that you would like this ongoing information.
Paige Munro-Delotto Ph.D., Esq.
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