The Common Law
COVID-19 and Austin – answering your legal questions (part 3)
"The Common Law," which typically runs monthly, has started to address your COVID-19 questions on a weekly basis. You ask. "The Common Law" will do its best to answer for as long as we remain in a period of uncertainty. Here are more questions and quick answers:
Coronavirus has postponed the normal tax reporting deadline past April 15, right? What's the new deadline to submit a tax return for 2019?
Correct. The IRS postponed the standard April 15 deadline to provide 2019 tax returns. As of the writing of this article, the current new deadline is July 15. Periodically review the IRS website (www.irs.gov) to track future announcements on possible tax deadline extensions.
What do I need to do to get my stimulus check of $1,200?
President Trump signed the Coronavirus Aid, Relief, and Economic Security Act (often called the CARES Act) into law on March 27. The CARES Act directs one-time payments (referred to as "recovery rebates" of up to $1,200 a person).
Most Americans will not need to take any action – the process will be automatic. The federal government should direct deposit the funds or send you a check if you qualify. You do not have to sign up or submit a form to receive a stimulus check.
It is important, however, that you have a valid social security number (people without a valid security number are not eligible). It's also important that you have submitted a 2019 or 2018 tax return because your most recent return will be used as the basis for determining whether you qualify. Americans that have a valid social security number, have submitted their 2019 or 2018 tax return, and have an adjusted gross income less than $75,000 qualify to receive the maximum amount of $1,200. Reduced payments will be sent to single filers who reported earnings between $75,000 and $99,000, or married filers who reported earnings between $150,000 and $198,000. There's also the possibility for a $500 per child payment.
If you haven't submitted a recent tax return, the IRS still offers an opportunity for non-filers to enter their information to potentially qualify. Go to the IRS website (www.irs.gov) for more information.
Under the Government's new stimulus package, I've heard that the government will give my small business money with no requirement for repayment. Is that true? How much can I get?
Possibly yes. Read last week's column to learn more about the Paycheck Protection Program (PPP). If you are eligible for the PPP, it's possible you may be able to qualify for loan forgiveness equal to the amount you spend on certain items (primarily payroll) during an 8-week period. Whether your small business will be eligible for loan forgiveness will depend on a number of factors, including how you spend the government funds.
Regarding how much your small business can borrow, loans can be up to 2.5 times the borrower's average monthly payroll costs, not to exceed $10 million. The PPP is not a one-size-fits-all program. Talk with your company's banker and/or lawyer to see whether its eligible, how much can be borrowed, and how you should spend the funds to increase the likelihood that all (or some) of the funds will be forgiven.
My small business has applied for the Paycheck Protection Program. But I've also heard there's another government program that will pay up to $10,000 to help struggling small businesses. What is that program?
You are likely thinking of the Economic Injury Disaster Loan Emergency Advance program (EID). The EID provides a loan advance of up to $10,000 of economic relief to businesses that are currently experiencing temporary difficulties. Funds will be made available following a successful application. These funds will not have to be repaid. Research whether your business qualifies. There is excellent information on the U.S. Small Business Administration website (https://covid19relief.sba.gov/#/).
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Marrs, Ellis & Hodge LLP, www.jmehlaw.com.
The material in this column is for informational purposes only. It does not constitute, nor is it a substitute for, legal advice. For advice on your specific facts and circumstances, consult a licensed attorney. You may wish to contact the Lawyer Referral Service of Central Texas, a non-profit public service of the Austin Bar Association, at 512-472-8303 or www.austinlrs.com.