COVID-19 Weekly Digest (August 05, 2020)

It’s no surprise to most Americans that the U.S. economy has suffered greatly from the impact of the COVID-19 pandemic. But what may surprise you is the extent of the decline: a record 32.9% contraction during the second quarter of 2020, the biggest drop since 1947. The virus is still spreading across much of the country, and for 19 straight weeks, more than 1 million people have submitted new claims for unemployment benefits.

Among the dire news, there have been a few bright spots, as an article in USA Today points out, with a listing of 100 positive things that have happened so far in 2020. For example, drive-in movie theaters are showing a resurgence, adoption, and fostering of homeless animals has risen, and museums around the world have opened for virtual tours.

Focusing on the positive while also taking precautions to keep safe will help us get through these difficult days!

CARES ACT UPDATES

CARES ACT 2

With the House and Senate running out of time before their next recess, we are still waiting to see what the next economic recovery plan contains. The second round of stimulus checks is likely and may go out as soon as a week after a deal is finalized. Another likely component may be a second round of PPP loans to small businesses. However, part of the impasse in getting a deal through both houses centers around unemployment benefits. The expansion of benefits under the original CARES Act included a $600 per week additional payment on top of regular state benefits. This additional payment expired on July 31. Competing proposals include decreasing the additional federal unemployment benefit over the next several months or capping the total benefit at a specific percentage of a person’s previous income.

Paycheck Protection Program (PPP)

The deadline to apply for funding under this round of the PPP is August 8, and the SBA will begin accepting applications for loan forgiveness on August 10. However, according to experts at a recent AICPA Roundtable, there’s no reason to rush to apply. There is a good possibility that Congress will relax forgiveness requirements in the relief package currently under discussion. The SBA and Treasury still have not issued answers to a series of FAQs for how forgiveness will work. Plus, the real application deadline is 10 months after the end of the covered period, which may be 24 weeks after receiving the funding.

Economic Injury Disaster Loans (EIDL)

Since June 15, the SBA’s EIDL loan program has been accepting applications for loans with interest rates of up to 3.75% for businesses and up to 2.75% for nonprofits. However, although loans of up to $2 million were initially authorized, loans have been capped at $150,000 with little communication to applicants about the reduction. The unexpected limitation has been a hardship to some business owners who were expecting to receive much more. In addition, many small business owners are unsure about accepting an EIDL loan, or how accepting the funds will impact them in the long run, especially when the loan comes due. One tip for those considering accepting the funding is to invest some of the proceeds in hiring an accountant for a thorough review of a business’ financials.

Rollover Relief for Unwanted RMDs

Under the CARES Act, retirees do not need to take required minimum distributions (RMDs) from retirement accounts during 2020. In addition, back in June, the IRS announced that anyone who had already taken any unwanted RMDs could roll all of the funds back into a retirement account penalty-free, as long as this was completed by the later of August 31, 2020, or 60 days after the funds were received. That date will be here sooner than you think, so make sure you take advantage of this opportunity to save on your 2020 tax bill and let your funds continue to grow.

TAX ISSUES

Employees working in a different state than their employer may run into state tax problems. States and local tax districts follow a patchwork of rules with varying filing thresholds and requirements. For example, a “California-based business with remote employees in Texas would have to comply with the Texas franchise, sales, and other tax laws. A resident of Florida temporarily working in New York would be liable for New York income tax.” Thirteen states have agreed not to enforce rules for workers who are working in that state due to the pandemic, but others have not. If this applies to you, we suggest you contact our office to ensure you won’t have a state tax surprise for 2020.

LIVING WITH AND AFTER THE PANDEMIC

Work in the Post-Pandemic World

Are there upsides and downsides to working remotely? To answer this, Harvard Business Review began surveying remote workers across the country in mid-March and following up at two-week intervals. They found consistent upsides, such as an increase In productivity, shorter meetings, and more time with family as workers found their groove of working at home. However, with everyone at home, the chance encounters between people who usually don’t work closely together, but who have the opportunity to meet up randomly in hallways or in break rooms, vanish, and with that, the possibility for unique perspectives on problems. Also, onboarding new team members becomes more challenging, as does building the kinds of relationships that help to define the culture of a workplace.

Back to School

As schools prepare to reopen, with varying models of remote, in-person, and hybrid teaching, the biggest worry for parents is the safety of their children. The handful of summer camps that opened have learned a few lessons for how complicated it will be. Summer camps, like schools, have always had to find ways to keep infectious agents at bay. One camp in Maine enforced social distancing, required masks to be worn outside of cabins, and kept campers and staff in tight social bubbles—and did not have a single case of COVID-19 all summer. At the other extreme, at a camp in Georgia, 260 of 597 campers tested positive for the virus. Daily health monitoring, frequent hand washing, additional cleaning, and extra ventilation also seem to help. However, all of these extra precautions take a toll on staff’s stress levels and cost more, which will be a challenge for schools and child care facilities.

We sincerely hope that you and your family are well and remain well. If you have any questions or concerns, don’t hesitate to reach out to us. We are all in this together!