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COVID-19 UPDATE

(Update: 3/30/2020, 12:15pm)
 
Clients and Friends:
 
The CARES Act was signed into law on March 27, 2020 and contains provisions to provide economic relief to businesses and individuals impacted by the Coronavirus outbreak. Key provisions included in the new law are direct financial assistance through loans and tax credits, revisions to payroll tax deposit requirements and suspension of retirement plan required minimum distributions.
 
It is likely there will be an overwhelming flood of applications for the various loan programs and we recommend that applications be completed and submitted as soon as possible. It is our expectation that there may be delays in the underwriting process and the possibility that there will not be enough funds available for those who wait too long to apply, so time is of the essence.
 
Here are the time-sensitive issues we believe will apply to most businesses and individuals: 
 
BUSINESSES LOAN PROGRAMS
  • The Paycheck Protection Act (PPL)  allows impacted businesses to borrow up to $10 million to make payroll and other expenses. These loans may be forgiven, tax-free, if used for qualifying expenses. Business owners should contact their bank to begin the application process as soon as possible.
  • In addition to the PPL, businesses may also apply for an Economic Injury Disaster Loan (EIDL) of up to $2 million, which includes a $10,000 grant. The EIDL program is administered by the U.S. Small Business Administration.
  • The Pennsylvania Industrial Development Authority (PIDA) is administering the COVID-19 Working Capital Access Program (CWCA) for small business operations. The program offers loans up to $100,000 with a 0% interest rate for all businesses other than agricultural producers. More information on the CWCA program can be found here.
  • Our firm is available to assist with the completion of application forms or to prepare and/or compile any required additional documentation.
 
PAYROLL TAX DELAY
  • The new law allows 50% of 2020 employer payroll tax payments (Social Security, Medicare and Federal Unemployment) to be delayed until December 31, 2021, with the other 50% due on December 31, 2022. It should be noted that this applies only to employer taxes; all amounts withheld from employees for Social Security, Medicare and federal income taxes will continue to be paid in accordance with existing payroll tax deposit regulations. We will be contacting payroll service providers such as ADP, Paychex, etc. to determine their status on updating their systems and how they will assist employers with implementation of the new payment provisions.

 

 INDIVIDUALS

  • "Recovery Rebates" will be issued to taxpayers as part of the CARES Act legislation. Although payments are set at $1,200 per taxpayer ($2,400 for joint filers), they are subject to a phaseout for taxpayers with Adjusted Gross Income (AGI) above certain levels. For taxpayers who have not yet filed their 2019 tax returns, the amount of the rebate will be calculated using AGI reported for 2018. Taxpayers do not have to do anything to receive the rebates, they will be issued without any further action required.
  • Required Minimum Distributions (RMDs) from IRAs have been suspended for 2020. RMDs are now also waived for IRA owners who turned 70½ in 2019 and have not yet taken their 2019 initial RMD, normally due by April 1, 2020.

 

We are committed to guiding you through this most challenging environment and want to assure you that your personal and business financial and tax concerns are our top priority. We are ready to assist you as necessary to complete loan application submissions as soon as possible and to answer any questions you have regarding the numerous provisions of the new law. Please contact us at your earliest convenience so we can get started.
 
Best regards,
 
Mark R. Exler, CPA, PFS
President
 

(UPDATE: 3/30/2020, 8:00am)

Clients and Friends:

The Coronavirus Aid, Relief, and Economic Security (CARES) Act, which passed the Senate by a 96-0 vote late on Wednesday, represents a $2 trillion aid package designed to help the economy recover from the effects of the coronavirus pandemic. The House of Representatives is set to vote today on the measure to clear the way for the President to sign the bill into law.

The most significant provisions of the bill provide for a variety of direct relief measures for individuals and businesses including:

  • $454 billion in emergency lending to businesses, states, and cities. Firms taking loans must not engage in stock buybacks for the duration of the loan plus one year and must retain at least 90 percent of its employment level as of March 24, 2020. Loans also come with terms limiting employee compensation and severance pay for firms taking loans.
  • Relief for small businesses - $350 billion allocated for the Paycheck Protection Program to help businesses with fewer than 500 employees impacted by the pandemic and economic downturn to make payroll and cover other expenses from February 15 to June 30. Notably, small businesses may take out loans up to $10 million-limited to a formula tied to payroll costs-and can cover employees making up to $100,000 per year. Loans may be forgiven if a firm uses the loan for payroll, interest payments on mortgages, rent, and utilities and would be reduced proportionally by any reduction in employees retained compared to the prior year and a 25 percent or greater reduction in employee compensation.
  • Expanded unemployment benefits for workers, including a $600 per week increase for up to four months and federal funding of benefits provided to those not usually eligible, such as the self-employed, independent contractors, and those with limited work history. The bill also provides incentives to states to repeal any "waiting week" provisions that prevent unemployed workers from getting benefits as soon as they are laid off by fully funding the first week of benefits for states that suspend such waiting periods. Additionally, the bill funds an additional 13 weeks of unemployment benefits through December 31, 2020 after workers have run out of state unemployment benefits.
  • $150 billion in a Coronavirus Relief Fund for state and city government expenditures incurred due to dealing with the coronavirus public health emergency. The fund would be allocated by population proportions, with a minimum of $1.25 billion for each state.

 

While the focus of the legislation is not tax, highlighted tax provisions include the following:

Individual Tax Provisions:

  • Recovery rebates: The bill provides for payments to taxpayers - "recovery rebates" - which are being treated as advance refunds of a 2020 tax credit. Under this provision, individuals will receive a tax credit of $1,200 ($2,400 for joint filers) plus $500 for each qualifying child. The credit is phased out for taxpayers with adjusted gross income (AGI) above $150,000 (for joint filers), $112,500 (for heads of household), and $75,000 for other individuals. The credit is not available to nonresident aliens, individuals who can be claimed as a dependent by another taxpayer, and estates and trusts. Taxpayers will reduce the amount of the credit available on their 2020 tax return by the amount of the advance refund payment they receive.
  • Retirement plans: Taxpayers can take up to $100,000 in coronavirus-related distributions from retirement plans without being subject to the 10% additional tax for early distributions. Eligible distributions can be taken up to Dec. 31, 2020. Coronavirus-related distributions may be repaid within three years. Eligible taxpayers are defined as having been diagnosed with SARS-CoV-2 virus or COVID-19 disease or whose spouse or dependent has been diagnosed with SARS-CoV-2 virus or COVID-19 disease or who experiences adverse financial consequences from being quarantined, furloughed, or laid off, or who has had his or her work hours reduced, or who is unable to work due to lack of child care. Any resulting income inclusion can be taken over three years. The bill also allows loans of up to $100,000 from qualified plans, and repayment can be delayed.

The bill temporarily also suspends the IRA required minimum distribution rules for 2020.

  • Charitable deductions: The bill creates an above-the-line charitable deduction for 2020 (not to exceed $300). The bill also modifies the AGI limitations on charitable contributions for 2020, to 100% of AGI for individuals and 25% of taxable income for corporations.

Business Tax Provisions:

  • Payroll tax credit refunds: The bill provides for advance refunding of the payroll tax credits enacted last week in the Families First Coronavirus Response Act. The credit for required paid sick leave and the credit for required paid family leave can be refunded in advance using forms and instructions the IRS will provide. The IRS will waive any penalties for failure to deposit payroll taxes if the failure was due to an anticipated payroll tax credit.
  • Employee retention credit: The bill creates an employee retention credit for employers that close due to the coronavirus pandemic. Eligible employers are allowed a credit against employment taxes equal to 50% of qualified wages (up to $10,000 in wages) for each employee. Eligible employers are employers who were carrying on a trade or business during 2020 and for which the operation of that business is fully or partially suspended due to orders from an appropriate governmental authority limiting commerce, travel, or group meetings due to the COVID-19 outbreak. Employers that have gross receipts that are less than 50% of their gross receipts for the same quarter in the prior year are also eligible, until their gross receipts exceed 80% of their gross receipts for the same calendar quarter in the prior year. For employers with more than 100 employees, wages eligible for the credit are wages that the employer pays employees who are not providing services due to the suspension of the business or a drop in gross receipts. For employers with 100 or fewer employees, all wages paid qualify for the credit.
  • Payroll tax delay: The bill delays payment of 50% of 2020 employer payroll taxes until Dec. 31, 2021; the other 50% will be due Dec. 31, 2022. For self-employment taxes, 50%will not be due until those same dates.
  • Net operating losses: The bill temporarily repeals the 80% income limitation for net operating loss deductions for years beginning before 2021. For losses arising in 2018, 2019, and 2020, a five-year carryback is allowed (taxpayers can elect to forgo the carryback).
  • Interest limitation: For tax years beginning in 2019 and 2020, Sec. 163(j) is amended to increase the adjusted taxable income percentage from 30% to 50%. Also, taxpayers can elect to use 2019 income in place of 2020 for the computation.
  • Qualified improvement property: The bill also makes technical corrections regarding qualified improvement property under Sec. 168 by making it 15-year property.

 

I realize that this is quite a large amount of information and you may have questions regarding the new law. Please keep in mind that until such time as the new legislation is actually signed into law, it is possible that there may be changes to various provisions and we will keep you informed as more details become available. In the meantime, please do not hesitate to contact our office to discuss how the CARES Act may be applicable to you.

Best regards,

Mark R. Exler, CPA, PFS

President


 

(UPDATE: 3/22/2020, 6:30pm)
 
Clients and Friends:
 
PENNSYLVANIA POSTPONES INDIVIDUAL DEADLINE TO JULY 15, 2020 - LOCAL DEADLINES REMAIN UNCHANGED
 
Yesterday, the Pennsylvania Department of Revenue announced the deadline for taxpayers to file their 2019 Pennsylvania personal income tax returns has been postponed to July 15, 2020. All penalties and interest on 2019 personal income tax payments through the new deadline will be waived. The postponement also applies to estimated payments for the first and second quarters of 2020. No specific guidance was provided with regard to any other taxes such as corporate or fiduciary income tax returns.
 
Regarding local income taxes, the Lancaster County Tax Collection Bureau announced earlier today that it will also waive penalties and interest on 2019 individual income tax payments through the new federal and state deadline of July 15, 2020. Similar to the state changes described above, the postponement also applies to estimated tax payments for the first and second quarters of 2020. Since it is up to each local taxing authority to make the declaration, we will have to wait to see if other Pennsylvania municipalities follow suit.
 
OFFICE OPERATIONS
 
As we previously announced, we closed our Craig Street office at the end of business on Thursday as a result of Governor Tom Wolf's order to all "non-life-sustaining" businesses.
 
On Friday, Pennsylvania subsequently removed CPA firms from the list of businesses classified as "non-life-sustaining" and are now permitted to remain open. In light of the rapidly changing environment, we decided to remain closed through this weekend with the intention of reopening our office tomorrow.
 
Unfortunately, we have been made aware that a member of our staff may have been exposed to the virus and is now exhibiting symptoms. Accordingly, and out of an abundance of caution, we have made the difficult decision to keep our office closed until further notice.
 
We will continue to operate as best as we can in a remote fashion, but we also want to be sure that you understand certain practical limitations placed on the firm in this type of work environment. Although it has always been our intention to provide remote work capabilities for our staff as an occasional option to in-office work, especially during the off-season, our plan to implement this remote capability was never intended to allow us to completely shift all firm functions to remote locations and we are doing our best to provide you with the highest level of attention and service until such time as we can return to our headquarters.
 
In light of this change in our operations, please send us your tax data immediately. Although we will continue to pick up our mail delivery at the Oakland post office on a regular basis,  we strongly encourage you to utilize electronic delivery of your tax documents and will work to assist you in this regard upon request.
 
In the meantime, we wish good health for you and your family and look forward to getting past this most challenging of times. Please do not hesitate to contact us anytime.
 
Best regards,
 
Mark R. Exler, CPA, PFS
President
 
 

 

(UPDATE: 3/20/2020, 5:45pm)
 
Clients and Friends:
 
Here's our latest update:
 
FEDERAL FILING DEADLINE POSTPONED - PENNSYLVANIA DEADLINE UNCHANGED
 
Earlier today, US Treasury Secretary Steven Mnuchin announced that the April 15, 2020 tax filing deadline has been postponed to July 15, 2020 for both individuals and businesses. This order allows taxpayers to have their returns automatically extended to the new due date without the need to file any federal extension paperwork.
 
Although this is good news, we still have yet to receive guidance from the Commonwealth of Pennsylvania or the City of Pittsburgh with regard to their tax filing and payment deadline changes. Prior to yesterday's mandatory business closing announcement by Pennsylvania Governor Tom Wolf, The Pennsylvania Institute of Certified Public Accountants (PICPA) sent him a formal notice asking that Pennsylvania defer until no earlier than June 15, 2020 both the state filing and payment due dates, along with a waiver of any related penalties and interest during that time. It is our hope that both state and local taxing agencies will provide this requested relief.
 
OFFICE OPERATIONS
 
We have initiated the move to a virtual work environment, using applications that allow us to remotely access all applications and data currently hosted on our firm's network servers located inside our Craig Street office. Our network administrator and primary software vendors are working together to migrate our entire network operation to a cloud-based system and hope to move our most critical applications to the virtual environment over the course of the next few weeks.
 
TAX RETURN PREPARATION AND FILING SERVICES
 
Until we have completed the transition to a virtual work environment or such time as we are permitted to return to our office, whichever is sooner, we are implementing the following policies regarding tax return processing:
 
  1. 1. All physical client files will be removed from our office and taken home by the staff member assigned to prepare the return remotely.
  2. 2. We have halted delivery of mail to our office and will be picking up mail at the post office as often as practicable. We strongly encourage the use of digital methods of providing us documents such as the File Exchange feature of our secure client portal system or via ShareFile secure email.
  3. 3. Clients will be contacted by email or telephone if additional documents are needed or if we have any questions.
  4. 4. Clients who can provide us with documentation via digital delivery and elect to have their returns processed in a fully digital manner (i.e.paperless) via our client portal system will be given priority in regard to tax return completion until we are able to physically return to our office.
  5. 5. We still urge our clients to send us their tax data immediately.

 

Once again, we want to express our sincere appreciation for your cooperation and understanding throughout this difficult time. We will continue to keep you posted as this situation continues to develop.
 
Best regards,
 
Mark R. Exler, CPA, PFS
President

 

(UPDATE: 3/19/2020, 8:00pm)
 
Clients and Friends:
 
Late this afternoon, Pennsylvania Governor Tom Wolf announced the mandatory closing of all "non-life-sustaining" businesses throughout the state effective tonight at 8:00pm. Enforcement of this policy will begin on Saturday, March 21, 2020.
 
Accordingly, we will be closing our offices at the end of business today in order to comply with the Governor's order.
 
As we have communicated to you over the course of the past few weeks, we are fast-tracking the implementation of remote operations for the firm, but as of today we do not expect to have a fully functional remote operation in the short term.
 
To further complicate matters, in addition to the Governor's closure order, the April 15, 2020 federal tax filing deadline remains unchanged. If there is no change to this deadline in the coming days, we will begin the process of filing extensions for all clients who have not yet filed their tax returns. As explained in our previous communications, any balances that would have been due on April 15, 2020 have been postponed until July 15, 2020.
 
Additionally, we have received limited guidance from state and local taxing agencies with regard to revisions to their tax return filing and payment due dates. In particular, we have received no guidance from Pennsylvania or the City of Pittsburgh at this time. We are hopeful, however, that state and local taxing agencies will fall in line with any changes made at the federal level and that they will accept the federal extension filings.
 
You can contact us via the following:
 
  • By email - email addresses for our staff can be found at https://www.exler.com/our-team. If your email is urgent, please be sure to note it in the subject line or your email.
  • By telephone - our telephone directory can also be found at https://www.exler.com/our-team. If your call is not answered right away, please leave a detailed voice mail message and we will get back to you as soon as possible.
  • Send us a message on our Facebook page at https://www.facebook.com/exlercpa
 
We will continue to keep you informed as conditions warrant. We wish for all of you to stay safe and healthy and thank you for your continued understanding during this most challenging time.
 
Best regards,
 
Mark R. Exler, CPA, PFS
President

 

(UPDATE: 3/18/2020, 4:20pm)
 
Clients and Friends:
 
Although we reported yesterday that the April 15, 2020 federal tax filing deadline had been postponed until July 15, 2020, it appears that the initial reports we received in regard to this matter may not have been accurate.
 
The most current information we have confirms that only the April 15, 2020 tax payment deadline has been postponed for 90 days. The April 15, 2020 tax filing deadline, however, has not been changed at this point and all taxpayers must file their returns by the due date or file for extensions as appropriate.
 
To be clear, the federal filing deadline for 2019 individual income tax returns remains unchanged at April, 15, 2020.
 
In light of this latest information, we strongly urge you to send us your tax data now if you have not done so yet.
 
We will continue to update you on any changes as we receive relevant information. Thank you again for your patience and understanding.
 
Best regards,
 
Mark R. Exler, CPA, PFS
President
 

(UPDATE: 3/17/2020, 5:30pm)

 
Clients and Friends:
 
Minutes ago, Treasury Secretary Steven Mnuchin announced that individuals and businesses will have until July 15, 2020 to file and pay their taxes this year, following up on an earlier announcement today that postponed April 15, 2020 tax payment deadlines for millions of individuals and businesses. All individual taxpayers qualify for this extension and do not have to file any special paperwork or extension forms, as the deadline will be automatically extended.
 
Although it appears that taxpayers will be granted an additional 90 days to file their federal returns, we have still not received any guidance from state or local authorities.
 
We believe it is likely that state and local taxing agencies will follow the new federal policy. We will, however, continue to process tax returns with the assumed 4/15/2020 filing deadline until we receive confirmation of any such deadline revisions.
 
IMPORTANT - We continue to urge you to send us your tax data now if you have not done so yet.
 
We will continue to issue further guidance to you as this situation develops. Thank you again for your patience and understanding.
 
Best regards,
 
Mark R. Exler, CPA, PFS
President

(Update: 3/17/2020, 4:00PM)

Clients and Friends:
 
Earlier today, the US Government postponed the April 15, 2020 tax payment deadline for millions of individuals and businesses for 90 days.
 
Please note that this change only relates to the deadline for making required federal tax payments, IT DOES NOT EXTEND THE DEADLINE FOR FILING YOUR INCOME TAX RETURN.
 
As outlined in previous communications, we have received no information regarding revisions to tax filing deadlines from state or local authorities.
 
Until such time when tax return filing deadlines have been officially postponed, the April 15, 2020 deadline remains in effect and we continue to urge you to send us your tax data now if you have not done so yet.
 
We will issue further guidance as this situation develops and thank you for your continued understanding during this difficult time.
 
Best regards,
 
Mark R. Exler, CPA, PFS
President
 

(UPDATE: March 16, 2020, 3:00pm)

Clients and Friends:
 
I am writing to update you with the latest information regarding firm operations, as the fluid nature of the Coronavirus outbreak warrants that we provide frequent, clear communications during this most important time of the tax filing season.
 
First, on behalf of the firm, I wish for all of you the blessing of continued good health and that if you or a loved one have been infected, we offer our best wishes for a speedy and full recovery. I am pleased to report that everyone in our office is well and we are utilizing best practices to keep our staff safe.
 
STAY INFORMED
 
I encourage you to stay up to date on all advisories issued by the various federal, state & local authorities and follow any directives in accordance with guidance provided. 
 
Important Links:
 
 
 
IF YOU ARE AN EXLER & COMPANY, INC. CLIENT:
 
NO CHANGE IN FILING DEADLINE
You may have heard that automatic extensions of filing deadlines for federal tax returns is under consideration, but as of today there have been no official announcements from the Trump administration or the Internal Revenue Service in regard to this matter. Additionally, we have received no guidance from state or local taxing authorities with regard to any revisions to their tax filing deadlines.
 
NO CHANGE IN OPERATIONS - PLEASE SEND US YOUR TAX DATA!
Subject to any mandatory business closures that may be implemented by government authorities in the future, we will continue firm operations as usual and assume there will be no change in any tax filing deadlines. Therefore, we once again ask that you provide us with your tax return information as soon as possible via electronic delivery or US Postal Service as we are discouraging in person visits to our office.
 
ADDITIONAL UPDATES
As previously mentioned, events and circumstances relating to the Coronavirus outbreak are changing frequently and we will make every effort to update you as conditions dictate and we thank you again for your cooperation and understanding during this difficult period.
 
If you have any questions, please contact us. 
 
Best regards,
 
Mark R. Exler, CPA, PFS
President
 

 

March 13, 2020

Clients and Friends:

At Exler & Company, Inc., the health and safety of our employees and clients is of paramount importance. For this reason, we are taking specific precautions to protect our staff and visitors during the current outbreak of Coronavirus. With more confirmed cases being reported, we are considering the potential impact and how we can best protect our clients and staff.

According to the most recent information from the CDC, for most people, the immediate risk of being exposed to the virus that causes COVID-19 is low. However, we want you to feel comfortable working with our firm during this important and critical time of year. This communication will outline how we are working to minimize potential risk as we work towards April 15th together.

Electronic Options - To protect both our staff and our clients against virus spread, we are recommending that when possible, we conduct information sharing using electronic options rather than face-to-face meetings. While seeing your tax advisor in person can help to alleviate stress around this time of year, we can accomplish an equivalent level of service and personal attention with telephone and a variety of electronic options. Beginning today, we will contact all clients with scheduled office visits to arrange an electronic alternative.

 
To provide us with tax information and documents electronically, we offer our clients 3 options:
 

- Send items via the File Exchange feature available through your Client Portal at www.exler.com. 

- Complete your Tax Organizer online via your Client Portal. You can also drag and drop files directly into your online Tax Organizer.

- Send files by using our Citrix Sharefile service by clicking HERE.‚Äč

- If you don't have a registered Client Portal, please contact us and we'll get you set up in just a few minutes.

 

Additionally, we urge you to take advantage of the option to use our eDelivery and eSignature services to electronically receive and sign your individual tax returns this year. As an added bonus, after we e-file your federal return, you often can begin tracking your refund (if applicable) as soon as 24 hours after the IRS accepts your tax return. eDelivery and eSignature are secure, quick and easy. Please contact us if you would like to use eDelivery and eSignature.
 
Remote Considerations - Because we are taking the spread of this virus so seriously, we are working on a plan of action in the event that our physical office needs to close, including the implementation of a virtual work environment for our staff which will allow them to work remotely for as long as necessary.
 

Important Request for Client Tax Data - as the COVID-19 outbreak continues without any certain outcome, we are asking that clients provide us with their tax data AS SOON AS POSSIBLE. Even if you don't think you have all of your tax documents, we ask that you provide us with what you do have IMMEDIATELY. As we move toward the April 15th deadline, we will contact clients who delay in providing their information and prepare extensions of time to file as appropriate.

 
Please rest assured that we are monitoring this developing situation closely and have attempted to offer a variety of methods to complete your returns this year. If any major changes occur, such as the need for an office closure, we will update you immediately with details.
 
Thank you for your patience and trust in Exler & Company, Inc. during these unusual and trying circumstances. If you have any questions or further concerns, please do not hesitate to contact our office at your earliest convenience.
 
Best regards,
 
Mark R. Exler, CPA, PFS
President