COVID/Stimulus and Tax Archives - Page 2 of 2

Coronavirus-Related Tax Relief for the Real Estate and Agricultural Industries

Published: April 13, 2020

Through various mechanisms, the federal government has issued several forms of tax relief to real estate and agricultural businesses impacted by the current COVID-19 pandemic. The majority of the tax relief was included in the Coronavirus Aid, Relief, and Economic Security Act (the “CARES Act”). However, the Internal Revenue Service has also issued guidance providing additional relief. This discussion is intended to serve as a high-level summary for professionals in the real estate and agricultural industries seeking tax relief.

a. Net Operating Loss Carrybacks. When a taxpayer’s total deductions exceed its gross income for a given year, the taxpayer has a net operating loss (or NOL). Taxpayers who incurred NOLs in tax years 2018 and 2019 were not permitted to carryback those losses to generate a refund of taxes paid during previous tax years. Now, under the CARES Act, taxpayers will have a 5-year carryback of NOLs incurred in 2018, 2019 or 2020. Accordingly, if your business generated an NOL in 2018 or 2019 and had earned taxable income in prior years, you may be able to amend your tax returns and receive an immediate tax refund. Similarly, any 2020 NOL can be used to generate a refund of prior year taxes when tax returns are filed next year. Note that, by separate guidance, the IRS is permitting amended returns for certain partnerships which were previously precluded from filing amended returns.

b. Retail Glitch / Qualified Improvement Property Fix. “Qualified Improvement Property” is essentially any improvement made to an existing non-residential building. The 2017 Tax Cuts and Jobs Act (“TCJA”) inadvertently eliminated bonus depreciation for Qualified Improvement Property. To remedy this, the CARES Act includes a technical correction reinstating the bonus depreciation deduction for taxpayers effective as of tax year 2018. Taxpayers can immediately amend their 2018 and/or file 2019 tax returns and claim these additional deductions to produce a tax refund.

c. Modification of Limitation on Business Interest. Current tax law limits taxpayers’ net interest expense deduction to 30% of adjusted taxable income. “Electing real property trade or businesses” (“ERTBs”) are exempt from this 30% limitation. However, electing ERTB status decreases the amount of depreciation available to such business for income tax purposes.

The CARES Act modified the 30% limitation for tax years 2019 and 2020. For partnerships, the 30% limitation continues to apply for the 2019 tax year. However, partners of the partnership may deduct 50% of the 2019 disallowed excess business interest expense on their 2020 returns without regard to the applicable percentage limitations. Additionally, the partnership’s 2020 limitation is increased from 30% of adjusted taxable income to 50% of adjusted taxable income. For taxpayers other than partnerships, the 30% limitation is increased to 50% for tax years 2019 and 2020.

Additionally, the IRS has issued guidance allowing businesses to withdraw a previous election to be treated as a real property trade or business, thereby allowing the business to potentially optimize the amount of interest expense deductions and depreciation deductions.

d. Extensions of Time-Sensitive Actions (Section 1031 Exchanges and Qualified Opportunity Zones). As you may be aware, the deadline to file and pay 2019 federal income taxes has been extended to July 15, 2020. Additionally, in recent guidance, the IRS is permitting certain taxpayers engaged in active section 1031 exchanges to extend the 45-day identification period or the 180-day period to complete the exchange until July 15, 2020. If you are engaged in an exchange and either the 45-day period or the 180-day period falls between April 1 and July 14, 2020, the applicable period is automatically extended to July 15, 2020.

Similarly, the Qualified Opportunity Zone tax incentive program permits taxpayers to reinvest capital gains within 180 days of realizing such gains into a Qualified Opportunity Fund and thereby defer recognition of the realized gains. If your 180-day investment period falls between April 1, 2020 and July 14, 2020, you have until July 15, 2020, to invest any realized capital gains into a Qualified Opportunity Fund and realize the full benefits of the Qualified Opportunity Zone tax incentive program.

e. Losses incurred by Owners of Pass-through Entities. The TCJA imposed limits on the amount of business losses non-corporate taxpayers could use to offset non-business income for tax years starting in 2018. The CARES Act has withdrawn these limits, allowing owners of businesses conducted through pass-through entities generating large losses to offset unlimited amounts of personal non-business income through 2020. Taxpayers who incurred significant business losses in 2018 or 2019 which exceeded the permitted limits should file amended returns to claim refunds. This provision may be of particular importance to individuals with large real estate portfolios.

f. Employee Retention Tax Credits. Eligible employers will receive a refundable credit against payroll taxes. To be eligible, the employer must have (i) had its business operations fully or partially suspended by governmental order or (ii) suffered a 50% reduction in year-over-year gross receipts (comparing calendar quarters). The credit can be as much as $5,000 per employee. This credit cannot be used by certain SBA loan recipients.

g. Deferral of Employer’s Share of Payroll Taxes. Employers and self-employed individuals will be permitted to defer payment of the employer share of social security taxes for the remainder of the year. One-half of deferred payroll taxes must be paid by the end of 2021 and the remainder must be paid by the end of 2022. Recipients of loan forgiveness under the SBA Paycheck Protection Program will not be permitted to defer payment of payroll taxes.

Small Business Provisions of CARES Act

Published: March 28, 2020

On March 27, 2020, President Trump signed into law the Coronavirus Aid, Relief, and Economic Security Act (the CARES Act).

There is no shortage of coverage and commentary on the CARES Act, so we are focusing here on provisions most likely to provide immediate cash flow to small and medium-sized businesses.

I. Lending Programs

a. Paycheck Protection Program (PPP) and Loan Forgiveness.

The CARES Act creates the PPP which allows the Small Business Administration (SBA) to provide $349,000,000 of federally backed loans to eligible businesses. The SBA must issue regulations regarding the PPP within 15 days after the enactment of the CARES Act. More details:

1. Timing. The loans can be made through June 30, 2020.

2. Lenders. The loans will be made by lenders under Section 7(a) of the SBA and other designated lenders. Borrowers should reach out to their normal banking contacts as a first point of contact.

3. Eligible Borrowers. Businesses, self-employed individuals, independent contractors and non-profits with less than 500 employees as well as certain businesses in the accommodation or food services industries with multiple locations if no one location employs 500 employees are eligible.

4. Forgiveness/Repayment. The loans are eligible for forgiveness. Any unforgiven amount will be repayable within 10 years, with optional payment deferral lasting between 6 months and 1 year.

i. PPP loans can be forgiven (and excluded from gross income) if the loan proceeds are used for the following purposes during the eight-week period following loan origination (the “covered period”): payroll costs (i.e., payroll costs for employees up to $100,000 per employee on annualized basis), mortgage interest payments, rent, and utility payments.

ii. If the borrower reduces salaries or its number of employees during the covered period (i.e., the eight-week period following loan origination), then the forgivable loan amount is reduced proportionately:

1. A reduction in the number of employees will be determined by comparing the average number of full-time equivalent employees (FTEEs) per month during the covered period to (ii) either (at the borrower’s election):

a. The average number of FTEEs per month employed from February 15, 2019 to June 30, 2019, or

b. The average number of FTEEs per month employed from January 1, 2020 until February 29, 2020, or

c. For seasonal employers, the average number of FTEEs per month employed from February 15, 2019 until June 30, 2019.

2. Only reductions in wages in excess of 25% of an employee’s salary or wages during the employee’s most recent full quarter of employment before the covered period are considered. Additionally, employees receiving compensation in excess of $100,000 are excluded.

iii. If you have already reduced salaries or workforce, you can rehire employees or end salary reductions before June 30, 2020 and receive full loan forgiveness.

iv. The SBA must issue guidance and regulations regarding PPP loan forgiveness within 30 days after the enactment of the CARES Act.

5. Other Loan Terms. The loans bear interest at a maximum rate of 4%, have no pre-payment penalty, and require no personal guarantees or collateral. If borrowers use the loan proceeds for the intended purposes, the SBA will have no recourse against the borrower.

6. Required Certifications. Borrowers must certify, among other things, that current economic conditions make the loan necessary, and that the loan proceeds will be used to retain workers and maintain payroll, or make mortgage payments, lease payments, or utility payments.

7. Maximum Loan Amount. Each loan is capped at the lesser of (i) $10 million or:

i. The average total monthly payroll costs incurred in the one-year period before the loan is made (or for seasonal employers the average monthly payroll costs for the 12 weeks beginning on February 15, 2019, or from March 1 to June 30, 2019) multiplied by 2.5, plus the outstanding amount of any SBA Disaster Loans received this year, or

ii. Upon request by an applying business that was not in business during the period from February 15 to June 30, 2019, the average total monthly payroll payments from January 1 to February 29, 2020, multiplied by 2.5, plus the outstanding amount of any SBA Disaster Loans received this year.

b. Economic Stabilization to Distressed Industries.

1. Overview. Title IV of the CARES Act provides $500 billion for loans, loan guarantees, and other investments to support states, municipalities, and “eligible businesses” (i.e., any air carrier or U.S. business that has not otherwise received adequate economic relief in the form of loans or loan guarantees). Out of such amount, $454 billion is designated for loans, loan guarantees, and other investments in Federal Reserve programs or facilities to support to eligible businesses, states, and municipalities. Such “programs and facilities” include the Primary Market Corporate Credit Facility (PMCCF), the Secondary Market Corporate Credit Facility (SMCCF) and the Term Asset-Backed Securities Loan Facility (TALF). The remainder of the $500 billion amount is designated for air carriers specifically ($25 billion), cargo air carriers ($4 billion), and businesses critical to national security ($17 billion).

2. Mid-Sized Business Lending Facility. Title IV of the CARES Act requires the Treasury Secretary to endeavor to seek the implementation of a federal loan program or facility that provides financing to banks and other lenders that make direct loans to eligible businesses including, nonprofit organizations, with between 500 and 10,000 employees. More details:

i. Maximum annual interest rates will be 2%, and for the first 6 months of the loans (or for such longer period as the Treasury Secretary may determine) no principal or interest will be due or payable.

ii. Borrowers must certify that:

1. Due to economic conditions the loan is necessary to support the recipient’s operations,

2. The funds will be used to retain at least 90% of the recipient’s workforce, at full compensation and benefits, until September 30, 2020,

3. The recipient intends to restore at least 90% of its workforce that existed as of February 1, 2020, and to restore all compensation and benefits to its workers no later than four months after the termination date of the public health emergency declared by the Secretary of Health and Human Services on January 31, 2020 relating to COVID-19,

4. The recipient is an entity or business domiciled in the United States with significant operations and employees located in the United States,

5. The recipient is not a debtor in bankruptcy proceedings,

6. The recipient will not outsource or offshore jobs through the period ending two years after repayment of the loan,

7. The recipient will not abrogate existing collective bargaining agreements through the period ending two years after repayment of the loan, and

8. The recipient will remain neutral in any union organizing effort for the term of the loan.

iii. Through the period ending one year following repayment of the loan, the recipient must comply with the following limitations on compensation:

1. With respect to employees whose total compensation exceeded $425,000 in 2019 the borrower cannot: (i) pay compensation in any 12 consecutive months exceeding their total 2019 compensation and (ii) make severance payments or other benefits upon termination that exceeds twice the total 2019 compensation amount;

2. With respect to officers or employees whose total 2019 compensation exceeded $3 million, the borrower cannot pay total compensation in excess of $3 million plus 50% of the excess over $3 million of that person’s total 2019 compensation.

iv. Also through the period ending one year following repayment of the loan, the recipient must not (i) buy back any of its (or any parent company’s) stock that is listed on a national securities exchange, except to the extent required under a contractual obligation that is in effect as of the date of enactment of the CARES Act or (ii) pay dividends or make other capital distributions with respect to the common stock of the business.

3. Main Street Lending Facility. The Federal Reserve will establish a Main Street Business Lending Program to support small and mid-sized businesses, complementing efforts by the SBA. We will provide additional information when it becomes available.

II. Tax Relief

a. Net Operating Loss Carrybacks. When a taxpayers’ total deductions exceed its gross income, the taxpayer has a Net Operating Loss (or NOL). Taxpayers who incurred NOLs in tax years 2018 and 2019 were not permitted to carryback those losses to generate a refund of taxes previously paid. The CARES Act will provide taxpayers a 5-year carryback of NOLs incurred in 2018, 2019 or 2020. Accordingly, if your business generated an NOL in 2018 or 2019 and had earned taxable income in prior years, you may be able to amend your tax returns and receive an immediate tax refund. Similarly, any 2020 NOL can be used to generate a refund of prior year taxes when tax returns are filed next year.

b. Retail Glitch / Qualified Improvement Property Fix. “Qualified Improvement Property” is essentially any improvement made to an existing non-residential building. The 2017 Tax Cuts and Jobs Act inadvertently eliminated bonus depreciation for Qualified Improvement Property. The CARES Act includes a technical correction reinstating the bonus depreciation deduction for taxpayers effective as of tax year 2018. Taxpayers can immediately amend their 2018 and/or file 2019 tax returns and claim these additional deductions to produce a tax refund. According to the Wall Street Journal, this provision could deliver as much as $30 billion dollars in tax refunds to restaurateurs, retailers, and hoteliers.

c. Employee Retention Tax Credits. Eligible employers will receive a refundable credit against payroll taxes. To be eligible, the employer must have (i) had its business operations fully or partially suspended by governmental order or (ii) suffered a 50% reduction in year-over-year gross receipts (comparing calendar quarters). The credit can be as much as $5,000 per employee. This credit cannot be used by certain SBA loan recipients.

d. Deferral of Employer’s Share of Payroll Taxes. Employers and self-employed individuals will be permitted to defer payment of the employer share of social security taxes for the remainder of the year. One-half of deferred payroll taxes must be paid the end of 2021 and the remainder must be paid by the end of 2022. Recipients of loan forgiveness under the SBA PPP loan program will not be permitted to defer payment of payroll taxes.

e. Losses incurred by Owners of Pass-through Entities. Owners of businesses operated through pass-through entities can use an uncapped amount of losses from those entities to offset personal non-business income through 2021. Taxpayers who incurred significant business losses in 2018 or 2019 which they were previously unable to offset against capital gains and other non-business income can file amended returns to claim refunds.

f. Modification of Limitation on Business Interest. Current tax law limits taxpayers’ interest expense deduction to 30% of adjusted taxable income. The CARES Act will increase this deduction for tax years 2019 and 2020 to 50% of adjusted taxable income.

g. Retirement Plans. Taxpayers with certain retirement plans may withdraw up to $100,000 free of 10% early withdrawal penalties. Ordinary income taxes payable with respect to any distributions can be paid over a three-year period. Alternatively, the taxpayer can repay the distribution within a three-year period.

If you have questions about this overview or how the CARES Act might impact your business, please contact Jim Clarke at (916) 558-6084.

Federal Stimulus in Response to COVID-19

Published: March 25, 2020

On Wednesday, March 25, the Senate and the White House reached a deal regarding a $2 trillion coronavirus economic stimulus package.

The Senate plans to vote on the legislation on March 25. Then the House will need to pass it before it goes to the President to sign it into law. For the House to pass it quickly on Wednesday, the vote would need to happen by a voice vote without any objections from any member of the House, otherwise the legislators will need to return to D.C. for a vote. The House reconvenes on Thursday, March 26.

The text of the legislation has not been released. Although details on the provisions are scant, sources indicate the legislation contains the following:

$500 billion for loans and assistance to companies, including $50 billion for loans to airlines and state and local governments
$350 billion in aid to small businesses, mostly in the form of loans through the Small Business Administration and banks; such loans used for payroll, mortgage, and rent expenses will be eligible for forgiveness
Direct payments to individuals in the amount of $1,200 for each adult, and $500 for each child under age 17 (subject to phase outs starting at the following amounts for the following types of taxpayers based on 2019 adjusted gross income (AGI): individuals with AGI of $75,000, couples filing jointly with AGI of $150,000, and heads of household with AGI of $112,500)
Unemployment insurance expanded to provide $600 per week for four months in addition to state benefits, and expanded eligibility to benefit more workers
Treasury oversight over who gets money and how they use it
Limits on companies receiving aid: prohibited stock buybacks during the term of the loan and the following year, limits on executive bonuses, required measures to protect workers
Required disclosure by Treasury Department regarding terms of loans or other aid to companies
Prohibitions on companies receiving aid where such companies are owned by certain politicians or government officials
$100 billion directly to hospitals and health care providers, $250 million in hospital grants, and payments for vaccines and test kits

We will be tracking these developments and providing updates.

Webinar: The Impact of New Coronavirus Legislation on Business

When: Apr 2, 2020

On April 2, 2020, Chris Chediak and Jim Clarke of Weintraub Tobin joined with Jose Blanco and Brian Hoblit of CVF Capital Partners and Ben Brown of BFBA LLP to present a webinar on the implications of new laws, regulations, and initiatives in response to the COVID-19 pandemic, including the Coronavirus Aid, Relief, and Economic Security (CARES) Act.

Presenters covered economic forecasts, low-interest and potentially forgivable loans, tax benefits to privately-held companies, guidance for employers, and updates for real estate owners and landlords.

Details of various programs were still evolving the day of the presentation, and in fact, continue to do so. Panelists and other professionals from the three presenting companies continue to monitor changes and update clients as new information becomes available.

You may find updated information here:

Weintraub Tobin COVID-19 Resources

CVF Capital Partners Blog

BFBA LLP COVID-19 Updates

Webinar Resources:

Webinar PowerPoint (PDF)
PPP Application (PDF)
Loan Calculator (Excel)
Webinar Recording (YouTube) Please note that information on these issues is constantly changing and being updated, and some of the information presented in this webinar has already changed. Please check with your professional advisors to make sure that you have the most recent information.

Business and Tax Relief in Response to COVID-19

Published: March 24, 2020

by Jim Clarke

As COVID-19 imposes challenges on our communities, Weintraub is tracking developments to help you deal with the pandemic’s business and legal implications.

I. SBA Economic Injury Disaster Loans

A. Overview

The U.S. Small Business Administration (SBA) is providing low-interest working capital loans of up to $2 million to small businesses and nonprofits affected by COVID-19 in presidential and SBA-declared disaster areas. Borrowers can use the loans to cover accounts payable, debts, payroll and other expenses where COVID-19 has affected the borrower’s ability to pay. These loans have an interest rate of 3.75% for small businesses and 2.75% for nonprofits. Loan repayment terms vary by applicant, up to a maximum of 30 years. SBA press release.[1]

B. Eligibility and How to Apply

State governors must request access to the Economic Injury Disaster Loan program for businesses located in their states. As of March 20, businesses in the following states can apply: Arizona, California, Colorado, Connecticut, Delaware, District of Columbia, Florida, Georgia, Illinois, Indiana, Louisiana, Maine, Maryland, Massachusetts, Michigan, Montana, Nevada, New Hampshire, New Jersey, New Mexico, New York, North Carolina, Ohio, Pennsylvania, Rhode Island, South Carolina, Tennessee, Utah, Virginia, Washington and West Virginia. Apply online.[2] See California-specific SBA fact sheet here.[3]

II. Federal Reserve Programs (forthcoming)

A. Main Street Business Lending Program

The Federal Reserve expects to announce the establishment of a Main Street Business Lending Program to support lending to eligible small and medium-sized businesses, complementing efforts by the SBA. See Federal Reserve press release.[4]

B. New Facilities

The Federal Reserve is establishing (i) two facilities to support credit to large employers – (A) the Primary Market Corporate Credit Facility (PMCCF) for new bond and loan issuance and (B) the Secondary Market Corporate Credit Facility (SMCCF) to provide liquidity for outstanding corporate bonds; and (ii) a third facility, the Term Asset-Backed Securities Loan Facility (TALF), to support the flow of credit to consumers and businesses. The TALF will enable the issuance of asset-backed securities (ABS) backed by student loans, auto loans, credit card loans, loans guaranteed by the SBA, and certain other assets. See Federal Reserve press release referenced above.

III. Federal Tax Relief

A. Reimbursement for Wages Paid to Employees on Leave

1. Background

On March 18, 2020, President Trump signed the Families First Coronavirus Response Act (Act) into law. See full text here.[5] The Act provides paid family and medical leave and sick leave to employees of employers with fewer than 500 employees, and provides tax credits to employers to reimburse them for providing such paid leave. The Act imposes leave requirements on employers via two separate acts within the act: (1) the Emergency Paid Sick Leave Act (EPSLA), and (2) the Emergency Family and Medical Leave Expansion Act (EFMLEA).

2. Tax Credits to Reimburse Employers

The Act provides tax credits to employers to cover wages paid to employees while they are taking time off under the EPSLA and the EMFLEA. The credits have three components:

(i) The EPSLA credit for each employee is equal to the lesser of the amount of the employee’s leave pay or either (1) $511 per day while the employee is receiving paid sick leave to care for themselves, or (2) $200 per day if the sick leave is to care for a family member or child whose school is closed (i.e., the same amounts at which the employer’s obligations to pay for leave are capped under the EPSLA). An additional limit applies to the number of days taken into account for purposes of the caps described in the preceding sentence – the excess of 10 days over the aggregate number of days taken into account for all preceding calendar quarters. The EMFLEA credit for each employee is the amount of the employee’s leave pay limited to $200 per day with a maximum of $10,000 (i.e., the same amounts at which the employer’s obligations to pay for leave are capped under the EFMLEA).

(ii) The amount of the EPSLA and EMFLEA credits are increased by the portion of the employer’s “qualified health plan expenses” allocable to qualified sick leave wages or qualified family and medical leave wages. Qualified health plan expenses means amounts paid or incurred by the employer to provide and maintain a group health plan (defined in IRC Section 5000(b)(1)), but only to the extent that such amounts are excluded from the gross income of employees by reason of IRC Section 106(a).

(iii) The credits allowed to employers for wages paid under the EPSLA and EMFLEA are increased by the amount of the tax imposed by Code Sec. 3111(b) (1.45% hospital insurance portion of FICA) on qualified sick leave wages, or qualified family leave wages, for which credit is allowed under Section 7001 or 7003 of the Act.

The credits are refundable to the extent they exceed the employer’s payroll tax. Employers do not receive the credit if they are also receiving the credit for paid family and medical leave provided for in IRC Section 45S. See IRS news release here.[6]

B. Tax Filing/Payment Extensions

IRS tax filings and payments now are not due until July 15, 2020. See IRS guidance here.[7] This applies to any taxpayer that is an individual, trust, estate, partnership, association, company, or corporation. This relief applies to federal income tax payments (including payments of tax on self-employment income) and federal income tax returns that were originally due on April 15, 2020, in respect of the taxpayer’s 2019 taxable year. This relief also applies to federal estimated income tax payments (including payments of tax on self-employment income) that were originally due on April 15, 2020 for the taxpayer’s 2020 taxable year.

C. High-Deductible Health Plans Can Cover Coronavirus Costs

Health plans that otherwise satisfy requirements to be a high deductible health plan (HDHP) under the Internal Revenue Code will not fail to be an HDHP merely because the health plan provides health benefits associated with testing for and treatment of COVID-19 without a deductible, or with a deductible below the minimum deductible (self only or family) for an HDHP. See IRS notice here.[8]

IV. California Tax Relief

A. Tax Filing/Payment Extensions

California tax filings and payments now are not due until July 15, 2020, matching the new IRS deadline. See California Franchise Tax Board information here.[9] The new July 15 due date applies to individuals as well as entities, and applies to estimated annual fee payments for 2020 due from entities, and estimated fee payments due from individuals (for both the first quarter and the second quarter). Regarding estimated tax payments due from C corporations, S corporations, and exempt organizations, if the estimated tax payment was originally due on or between March 15, 2020 and April 15, 2020, the new due date is July 15, 2020.

California Governor Gavin Newsom issued an executive order on March 12 suspending for 60 days after such date the filing requirements applicable to the taxes and fees administered by the Department of Tax and Fee Administration (CDTFA). This applies to individuals and businesses unable to file a tax return or make a payment on time as a result of a state or local public health official’s mandatory or recommended social distancing related to COVID-19. CDTFA administers a number of taxes, including sales and use taxes, fuel taxes, cigarette and cannabis taxes, and insurer taxes. See executive order here.[10]

V. California Employment Development Department (EDD)

A. Work Sharing Program

Employers seeking to avoid layoffs can apply for the Work Sharing Program. This program aims to enable employers to retain employees by reducing hours and wages that can be partially offset with unemployment insurance benefits. See Work Sharing Program web site here.[11]

B. Potential Closure or Layoffs

Employers planning a closure or layoffs as a result of COVID-19 can seek assistance from the EDD’s Rapid Response program, under which Rapid Response teams meet with employers to discuss needs, avoid layoffs, and provide services to workers facing job losses. See fact sheet here.[12]

C. Tax Assistance

Employers experiencing a hardship as a result of COVID-19 may request up to a 60-day extension of time from the EDD to file their state payroll reports and/or deposit state payroll taxes without penalty or interest. For questions, employers may call the EDD Taxpayer Assistance Center at (888) 745-3886.

VI. Other California Resources. The California Governor’s Office of Business and Economic Development has compiled information for employers, employees and all Californians as it relates to COVID-19. See webpage here.[13]

VII. Local Government

A. San Francisco

The City of San Francisco has established the San Francisco COVID-19 Small Business Resiliency Fund. Businesses with 1 to 5 employees can apply for up to $10,000 in emergency funding to help cover rent and employee salaries. To be eligible, the business must show that it lost at least 25% of revenue, that it has less than $2.5 million in gross receipts, and that it is properly licensed to operate in San Francisco. See application materials here.[14] San Francisco has also imposed a moratorium on evictions for small and medium-sized businesses (less than $25 million in annual gross receipts). It is effective for 30 days starting March 17, and the mayor can extend it for an additional 30 days. See press release here.[15]

B. Los Angeles

The City of Los Angeles has established a Small Business Emergency Microloan Program. Businesses and microenterprises in Los Angeles that are responsible for providing low-income jobs can get an emergency microloan of $5,000 to $20,000. The loans have repayment terms of 6 months to 5 years, and carry an interest rate of either (i) 0% for a term of 6 months to 1 year (Option 1) or (ii) 3% to 5% for a term of up to 5 years (Option 2). To be eligible, the business must satisfy requirements including having principal business owners with “reasonable and responsible” credit histories, committing to use the loan for working capital only, and having its primary business operation located within the City of Los Angeles. If a business owner owns 20% or more of the business, such owner must guarantee the loan. Apply online.[16] Los Angeles has also imposed a moratorium on evictions of businesses impacted by COVID-19 through March 31. See press release here.[17]

C. San Diego

San Diego Mayor Kevin L. Faulconer announced on March 18 an economic relief package worth approximately $4 million. It aims to reduce fees, provide certainty, and offer support to local employers affected by COVID-19.

The new programs and measures that are part of the package include (i) a new San Diego Small Business Relief Fund (for microloans to small businesses, funded by the City of San Diego and other partners that the city will seek to increase the fund); (ii) Tax Certificate Deferral Program (to ensure business owners are not penalized for late renewal submissions for up to 120 days, and provide for a one-year forgiveness period for Business Tax Certificate penalties and surcharges when reestablishing delinquent accounts); (iii) Commercial Utility Deferral (to help business owners by suspending water billing fees, removing penalties for late payments, and ensuring no commercial account shut-offs); (iv) extension of all building permits (for 180 days, with further extensions available upon review). See new release here.[18]

D. Sacramento

The City of Sacramento has a Small Business Economic Emergency Relief Loan Program. However, as of March 21, 2020, the city is no longer accepting new applications. If additional funding becomes available, the city will reopen the portal for submitting applications. See information regarding such loan program and other Sacramento area resources here.[19]

[1] https://www.sba.gov/about-sba/sba-newsroom/press-releases-media-advisories/sba-provide-disaster-assistance-loans-small-businesses-impacted-coronavirus-covid-19

[2] https://www.sba.gov/funding-programs/disaster-assistance

[3] https://www.yolocounty.org/home/showdocument?id=62346

[4] https://www.federalreserve.gov/newsevents/pressreleases/monetary20200323b.htm

[5] https://www.congress.gov/bill/116th-congress/house-bill/6201/text

[6] https://www.irs.gov/newsroom/treasury-irs-and-labor-announce-plan-to-implement-coronavirus-related-paid-leave-for-workers-and-tax-credits-for-small-and-midsize-businesses-to-swiftly-recover-the-cost-of-providing-coronavirus

[7] https://www.irs.gov/pub/irs-drop/n-20-18.pdf

[8] https://www.irs.gov/pub/irs-drop/n-20-15.pdf

[9] https://www.ftb.ca.gov/about-ftb/newsroom/covid-19/extensions-to-file-pay.html

[10] https://src.bna.com/stxd/ca200313-UPD1370-D01

[11] https://www.edd.ca.gov/Unemployment/Work_Sharing_Program.htm

[12] https://www.edd.ca.gov/pdf_pub_ctr/de8714rrb.pdf

[13] https://business.ca.gov/coronavirus-2019/

[14] https://oewd.org/covid-19-small-business-resiliency-fund

[15] https://sfmayor.org/article/mayor-london-breed-announces-moratorium-commercial-evictions-small-and-medium-size

[16] https://ewddlacity.com/index.php/microloan-program

[17] https://www.lamayor.org/mayor-garcetti-orders-moratorium-commercial-evictions-related-novel-coronavirus

[18] https://www.sandiego.gov/mayor/news/releases/mayor-faulconer-outlines-economic-relief-package-san-diego-businesses-affected-covid-19

[19] https://www.cityofsacramento.org/Economic-Development/Economic-Relief

IRS to Provide Tax Relief to Some Employers in Light of Families First Coronavirus Response Act

Published: March 22, 2020

by Meagan D. Bainbridge
The Labor & Employment Law Blog

On March 20, 2020, the Department of Treasury, IRS, and Department of Labor announced plans to provide some relief for small and midsize employers in light of the recently passed Families First Coronavirus Response Act. Specifically, it was announced that employers will have access to refundable payroll tax credits designed to provide reimbursement for the cost of providing COVID-19 related leave to their employees.

Among the refundable tax credits are:

(1) withheld federal income taxes;

(2) the employee share of Social Security and Medicare taxes; and

(3) the employer share of Social Security and Medicare taxes for all employees.

The full announcement can be found here: https://www.irs.gov/newsroom/treasury-irs-and-labor-announce-plan-to-implement-coronavirus-related-paid-leave-for-workers-and-tax-credits-for-small-and-midsize-businesses-to-swiftly-recover-the-cost-of-providing-coronavirus.

We anticipate that more comprehensive guidance will be announced shortly. When it is, we will provide an update. Until that happens, if you have any questions, please do not hesitate to reach out to any of our Labor and Employment attorneys for guidance.

For more Weintraub Tobin COVID-19 resources, visit our update page.