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The MSBA Taxation Section hosted a timely webinar on the CARES Act on April 8th, 2020 that was virtually attended by more than 400 attorneys. “The Paycheck Protection Program and Important CARES Act Benefits to Help You and Your Clients” was moderated by Glen Frost, founding partner of Frost Law, and his co-faculty included Janice Shih of Maryland Volunteer Lawyers Service, Eli Noff and Matthew Kraeuter, both with Frost Law, who shared important information on small business loan programs available to lawyers and their clients and other businesses, as a result of the recent stimulus package passed in response to the pandemic.

Ms. Shih led off with a discussion of the 2020 Rebate Tax Credit which could provide up to $1200 to individuals or $2400 to married couples filing jointly. After reviewing eligibility criteria, Ms. Shih described how the federal government will be opening an online portal for taxpayers to provide direct deposit information for these payments, if they have no address on record, as it’s hoping to get them out as soon as possible. Ms. Shih reviewed the People First Initiative, under which the Internal Revenue Service will ease compliance actions during the pandemic, and will suspend payments owed between April 1st and July 15th of this year. during the pandemic. Finally, Ms. Shih advised of an IRS policy change this week under which it will allow its employees to accept certain documents with electronic images of signatures, and they can also accept documents via email and to transmit documents to taxpayers using SecureZip or other established secure messaging systems.

Eli Noff provided an overview of what he called “the crown jewel” of the CARES Act, the Paycheck Protection Plan (PPP), which provides low interest, federally guaranteed loans, to cover a small business’s payroll for an eight week period. These loans will be forgiven when used for payroll costs, interest on mortgages, rent, and utilities, and loan payments are deferred for six months. Mr. Noff emphasized what were eligible expenses, and advised that loan forgiveness was dependent on an employer maintaining or quickly rehiring employees. Viewers posed many questions about whether subcontractors and independent contractors were considered in the eligible payroll, and learned they are not. Mr. Kraeuter advised that employers can apply for both the PPP and an Economic Injury and Disaster Loan (EIDL), and addressed the differences between the two resources. While the PPP is a guaranteed loan from a bank or credit union, an EIDL is a direct loan from the Small Business Association to companies with fewer than 500 employees. For both programs, faculty noted that banks and the SBA are struggling to process the volume of applications being submitted.

Mr. Frost advised that Congress was considering a second, supplemental stimulus for these programs based on the need and interest from businesses struggling with the impact of the pandemic, and it may happen as soon as this week. Finally, Mr. Frost advised viewers that there is a misconception that these programs are to help businesses that have closed, when in fact, the purpose is to prevent just that, and if a business does close due to the COVID-19 crisis, it will simply be left with a low interest loan. Mr. Frost and his firm will be planning a follow up presentation to track the supplemental legislation next week. The video of the PPP/EIDL can be viewed below.