Dear Ozfield Clients,
There have been many developments regarding taxes, financials and other individual and small business-related news which I hope to summarize for you. I will also be including links in this article to help you understand how you can utilize these developments.
Issue #1: Tax Deadline
Summary: For individuals and C Corps Tax Deadline has been moved to July 15th. No guidance from states, many states are still April 15th. We get extensions for our existing clients, if you are a new tax client and need an extension, send an email to email@example.com with your information.
Due to COVID-19, the treasury department has been instructed by the Federal Government to extend the tax due date. IRS has recently released guidance stating that there will not be any penalties or interests charged for people and companies who have to pay by April 15, until July 15. That effectively means that you will have until July 15th to file and pay for your 2019 tax returns with the IRS. We haven’t received such guidance regarding Illinois or other state tax returns that are due. If you can, you should still file by April 15th, if you are unable to, then we will get an automatic extension for you to file so that you won’t be charged late filing penalties. Tax forms affected by this development are 1040, 1040-SR, and 1120.
If you were our client for last year’s taxes, we will automatically get an extension for you if we don’t hear from you by April 15th. We do this to avoid late filing penalties that you might incur, and we are under no obligation to do so, but we do it to provide you with a peace of mind. If you are a new tax client, please send us an email at firstname.lastname@example.org with your name, last name, social security number and birthday so that we can get an extension for you as well.
Partnerships and S-Corporations were due on March 15th, for existing clients we already got extensions for you.
Issue #2: Stimulus payments to individuals and families
Summary: Each individual will get $1,200 and families will get $2,400 + $500 per kid. The full payment is capped at $75K per individual or $150K per family. Make sure your address is up to date with the IRS.
In order to stimulate the economy and help those in need, the federal government is working towards an agreement on a $1 Trillion stimulus package. The current terms of the stimulus package are as follows:
In order to get the stimulus payment delivered to you, you will need to make sure your address with the IRS is current. If you have moved since 2018, we highly recommend filing out the change of address form with the irs. The link for the form is here: https://www.irs.gov/pub/irs-pdf/f8822.pdf
This is a simple form you can fill out on your own. If you need help, we can help you for a service fee of $50.
Issue #3: Small Business Administration Loans from SBA.GOV due to COVID-19
Summary: SBA offers Economic Injury Disaster Loans for up to $25K with no collateral, up to $2M with collateral. Low interest rates. Can’t refinance existing debt with this money, and you will need insurance.
To help small businesses make payroll and keep their businesses active, the federal government has instructed SBA to offer Economic Injury Loans with a capped interest rate, for example maximum interest rate in Illinois is 3.75%. Currently all 50 states qualify for this incentive, and more information can be reached at the following address: https://disasterloan.sba.gov/ela/
Collateral is required for loans over $25,000 and SBA takes real estate as collateral when it is available. SBA will not decline a loan for lack of collateral, but SBA will require the borrower to pledge collateral that is available.
The law limits EIDLs to $2,000,000 for alleviating economic injury caused by the disaster. The actual amount of each loan is limited to the economic injury determined by SBA, less business interruption insurance and other recoveries up to the administrative lending limit. SBA also considers potential contributions that are available from the business and/or its owner(s) or affiliates. If a business is a major source of employment, SBA has the authority to waive the $2,000,000 statutory limit.
EIDL cannot be used to fefinance long term debts and has insurance requirements on the loan. To get more information about this program, please speak with your bank and let us know if you will be needing any documentation regarding your loan application.
Issue #4: Mortgage / Rent Assistance / Credit Card Payments / Auto Loans
Summary: No Federal or State Guidance regarding rent / mortgage assistance. Future developments are expected. Call your bank / banker and credit card companies if you won’t be able to make a payment.
Although there is no federal or state guidance regarding Mortgage Forbearance and Rent Assitance, many financial institutions are offering help based on what they have decided their clients need. I personally received a phone call from my bank stating that if I will need to go into forbearance due to COVID-19, my bank has a program for delaying payments up to 90 days. At this point I am not sure how other banks are dealing with this, but if you are currently in financial trouble, and won’t be able to make payments, please call your bank / banker in order to make sure that they have a program first prior to skipping a payment. Otherwise skipped payments may violate your agreement, and you may go into foreclosure and have a deragotary mark on your credit. This information may apply to your credit card payments as well as auto loans as well.
Issue #5: Insurance Payments
There has also been no federal or state guidance regarding insurance payments. But many insurance companies are offering help in terms of flexibility options in order to reduce the burden on their clients. This only applies to legitimate cases of hardships. Please contact my office if you are currently insured with us and need help regarding your policy.
Issue #7: Trucking Companies and Hours of Service Rules
FMCSA recently suspended hours of service regulations for direct releif efforts of the COVID-19 outbreak. Illinois has also waived overweight permits if the hauled load supports emergency relief efforts inteded to meet the needs of food, medical supplies, equipment regarding COVID-19 and personnel that provides medical or other emergency services. Many rest areas have been closed in different states, so the companies and drivers need to stay vigilant regarding their drivers’ rest.
We will share more information with you as it becomes available.
Orkun Ozkaymak CPA