Insights

Employee or Independent Contractor Status Clarified Further by The U.S. Department of Labor

Corporate Transparency Act Ruled Unconstitutional. The Impact On Beneficial Ownership Information Reporting.

Reminder of Annual Election of New York State and New York City Pass-through Entity Tax (PTET)

House Passes Bill Expanding Child Tax Credit and Business Breaks

Updates on the Paycheck Protection Program (PPP)

COVID-19 Business Update

Below are additional clarifying updates on the Paycheck Protection Program (PPP):

  • It appears that borrowers can qualify for the PPP with more than 500 employees assuming they meet the qualifications of SBA’s definition of a Small Business Concern which can vary by industry. In addition, larger businesses can qualify if they pass the SBA’s alternative size standard as of March 27, 2020 which means they 1) have a maximum tangible net worth of not more than $15 million, 2) the average net income after federal taxes excluding carryover losses for the two fiscal years before the date of the application is not more than $5 million dollars.
  • Payroll costs limited to $100,000 has been clarified to be $100,000 annually including ONLY cash compensation, and not including non-cash benefits such as employer contributions to a defined benefit or defined contribution retirement plan, and payments for the provision of employee benefits consisting of group health care coverage including insurance premiums.
  • Companies that use Professional Employer Organizations (PEOs) to process their payrolls are still eligible for payroll inclusion on the PPP computations, and forgiveness.
  • Borrowers can use the aggregate payroll costs using data from the previous 12 months or calendar year 2019.
  • Again, independent contractor costs are NOT includable in the application for defined payroll.
  • In determining payroll costs includable in the basis for determining the loan, one should not include federal tax Imposed on employees or employer’s wages for federal unemployment insurance and should not reduce the gross payroll for federal withholding. Also, borrowers should not include any of the employers share of FICA or Medicare. The Treasury is saying the gross payroll should be used.