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During the COVID-19 pandemic, relief efforts from government, corporations and others have taken shape.
The federal government’s response has been massive, from both a consumer and a business prospective. Without consumers, our businesses are dead — and without businesses, our consumers are in a world of hurt. The government’s two-pronged approach considers both. What follows is a summary of some of the programs most pertinent to pest management professionals.
CONSUMERS
⦁ Filing and tax payment extension — The tax return filing and tax payment deadline was extended from April 15, 2020, to July 15, 2020. The extension applies to federal income tax payments and income tax returns due April 15, 2020, with respect to the 2019 tax year, and to quarterly estimated taxes for the 2020 tax year due April 15, 2020. At press time, however, the second estimated payment is still due June 15, 2020.
⦁ Recovery rebate — Individuals who have a Social Security number and are not dependents (single filers and heads of households) may receive $1,200 or $2,400 (joint filers), with an additional rebate of $500 per qualifying child, if they have adjusted gross income (AGI) less than $75,000 (single filers), $150,000 (joint filers), or $112,500 (heads of households) using 2019 tax return information.
The rebates are tax credits that will be applied to 2020 tax returns, but are advanced to taxpayers now based on their 2019 or 2018 AGI. The tax credit will be applied to 2020 tax returns using 2020’s AGI next spring, and taxpayers will receive the difference of the credit if it is in their favor.
For most Americans, no action is required. The IRS will use data from its most current tax returns, or the Social Security Administration, to provide a rebate via direct deposit (if such information is available), or a paper check mailed to the last address it has on file.
⦁ Unemployment benefits — The COVID-19 RELIEF for Small Businesses Act of 2020 expands unemployment benefits through larger federal grants to the states to process and pay claims. The federal government will add $600 per week to recipients’ unemployment checks over and above their state unemployment amounts.
⦁ Paid leave — The COVID-19 RELIEF for Small Businesses Act of 2020 requires employers with fewer than 500 employees to provide paid sick leave to employees who are forced to stay home due to quarantining or to care for a family member or to care for a child if the school or place of care is closed. It compensates employers and the self-employed for this paid leave in the form of a tax credit against payroll tax deposits.
⦁ Penalty-free retirement distributions — Certain taxpayers are permitted to withdraw up to $100,000 from a retirement plan or individual retirement account (IRA) for “coronavirus related distributions” without incurring the 10 percent premature distribution penalty. See IRS.gov for details.
BUSINESSES
⦁ Paycheck Protection Program (PPP) — The U.S. Small Business Administration’s (SBA’s) PPP provides eight weeks of cash-flow assistance through 100 percent, federally guaranteed loans to small employers who maintain their payroll during the pandemic. If the employer maintains payroll, the portion of the loans used for covered payroll costs, interest on mortgage obligations, rent and utilities would be forgiven, which would help workers remain employed — and affected small businesses and our economy to recover more quickly from the COVID-19 pandemic.
⦁ Economic Injury Disaster Loan (EIDL) — The SBA’s EIDL includes a $10,000 advance; if applying for the PPP, the advance will be subtracted from PPP proceeds. It also offers up to $2 million to help overcome the temporary loss of revenue. The loan may be used to pay fixed debts, payroll, accounts payable and other bills that can’t be paid because of the pandemic’s impact. The interest rate is 3.75 percent for small businesses.
The SBA offers loans with long-term repayments to keep payments affordable, up to a maximum of 30 years. Terms are determined on a case-by-case basis, based upon each borrower’s ability to repay.
⦁ Net Operating Loss (NOL) modification — Temporary changes to the NOL carryback rules allow business to carryback certain losses. Under the Tax Cuts and Jobs Act (TCJA) of 2017, NOLs are subject to a taxable-income limitation, and they cannot be carried back to reduce income in a prior tax year. The relaxed rules provide that an NOL arising in a tax year beginning in 2018, 2019 or 2020 can be carried back five years. The provision also temporarily removes the 80 percent taxable income limitation to allow an NOL to fully offset income. These changes allow companies to utilize losses, amend prior-year returns and get immediate cash.
⦁ Payroll tax holiday — Employers and self-employed individuals can defer payment of the employer share of the Social Security tax they otherwise are responsible for paying to the federal government with respect to their employees. Employers generally are responsible for paying a 6.2 percent Social Security tax on employee wages. The provision requires that the deferred employment tax be paid over the following two years, with half of the amount required to be paid by Dec. 31, 2021, and the other half by Dec. 31, 2022.
Remember, we are in this together. And if the past is a good predictor of the future, the pest control industry will fare better than most.
Read more COVID-19 coverage here: MyPMP.net/COVID-19
GORDON owns PCO Bookkeepers, an accounting and consulting firm that caters to pest management professionals throughout the United States. He can be reached at dan@pcobookkeepers.com.
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