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Our business blog focuses on issues affecting Virginia, D.C. and Maryland business owners as well as those in other jurisdictions throughout the country. We provide timely insight and commentary on federal and state rules and how they affect you. If you are interested in having us cover a specific topic, please let us know.

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Tax Implications of PPP Loan Forgiveness

Paycheck Protection Program (PPP) loans taken out in connection with the coronavirus (COVID-19) crisis that were subsequently forgiven raise a number of tax questions. A PPP loan may be forgiven in an amount equal to the sum of: (1) payroll costs; (2) interest (but not principal) payments on covered mortgage obligations (for mortgages before February 15, 2020); (3) any payment for any covered rent obligation (for leases beginning before February 15, 2020); (4) covered utility payments (for utilities that were turned on before February 15, 2020), during the covered period.

Creditors’ Rights Questions During COVID-19 – Part 1

As the coronavirus pandemic carries on, many creditors, including landlords and lenders, are wondering to what extent they can enforce leases and contracts, given various relief programs that have been instituted by federal, state, and local governments, such as eviction and foreclosure moratoriums. Below are a couple of scenarios describing such circumstances and answers to address each.

Q:          My commercial tenant has been shut down or forced to reduce operations because of COVID-19, and now the tenant cannot pay its rent. Can I sue to evict?

The IRS Chief Counsel’s Informal Guidance Clarifies Some Issues Left Open after Notice 2020-65 Regarding the “Payroll Tax Holiday”

IRS Office of Chief Counsel monthly payroll industry call on September 3, 2020

In addition to Notice 2020-65 and Instructions to Form 941 which we outlined in our recent blog, the IRS Office of Chief Counsel for employee benefits, exempt organizations and employment tax provided informal but insightful guidance on its monthly IRS payroll industry call held on September 3, 2020. The informal guidance was directed in part toward clearing up confusion that remained even after the IRS’s issuance of Notice 2020-65 over whether, or to what extent, employers could simply ignore the “payroll tax holiday” created by the President’s August 8, 2020, Executive Order.

IRS Releases Instructions to Form 941 Expanding on Prior Guidance on Deferral of Social Security Tax

On October 1, 2020, the IRS released instructions for Form 941 providing additional guidelines for reporting deferred Social Security taxes pursuant to the President's Memorandum (discussed previously on our blog) and IRS Notice 2020-65

Background

On August 8, 2020, the Presidential Memorandum directed the Secretary of the Treasury to use his authority pursuant to section 7508A of the Internal Revenue Code to defer the withholding, deposit, and payment of certain payroll tax obligations.

IRS Guidance - President's Memorandum Deferring Payroll Tax Obligations for Four Months

On August 8, 2020, President Trump signed a Presidential Memorandum directing the Treasury Department to defer the employee's portion of Social Security taxes due to the COVID-19 pandemic for wages paid from September 1, 2020 through December 31, 2020 (see our blog). The deferral applies only for wages less than $4,000 for any bi-weekly period, or the equivalent any other pay period.

8 Common Business Bankruptcy Questions

Financial and economic challenges due to the coronavirus pandemic have resulted in a growing number of bankruptcy filings for both individuals and businesses. A number of creditors’ rights challenges arise when a business or individual whom you transact with files for bankruptcy.

Here are examples of several scenarios currently impacting landlords, tenants and business owners and the basics that you should know when faced with such a scenario. Remember, however, that every bankruptcy is different, and it is important to review the bankruptcy case and possibly consult an attorney to advise on the nuances of the case and your rights.

President's Memorandum to the Secretary of Treasury Defers Payroll Tax Obligations for Four Months

On August 8, President Donald J. Trump, signed the memorandum (the President’s Memorandum) directing the Secretary of Treasury to defer the withholding, deposit, and payment of the 6.2 percent payroll tax during the period of September 1, 2020 through December 31, 2020 for wages less than $4,000 during any bi-weekly pay period (i.e., $104,000 annually) on a pre-tax basis. The Department of the Treasury is expected to provide additional guidance later in August.

Beyond PPP - Financing Options for the Restaurant Industry

The Small Business Administration administered Paycheck Protection Program (“PPP”), designed to incentivize small businesses to keep their workers on payroll, will stop receiving new applications on August 8, 2020. Franchisees and independent restaurant operators would be well advised to now consider financing alternatives in light of the impending PPP application deadline.

COVID Impact on GovCon Deals in 2020

This year has been fraught with global health concerns for everyone and financial burdens on businesses and individuals. But, has the government contracting space been impacted as well or is it business as usual? According to data reported on mergr.com, the number of closed mergers and acquisitions deals in the government contracting industry in the first half 2020 was down 14%, compared to the first half 2019. The average reported deal value was $594 million, while the average reported enterprise value (EV) to revenue ratio was 4.9x.

4 Tips for Pursuing Principal Forgiveness of a PPP Loan

The Paycheck Protection Program (“PPP”) has been a highly popular relief program for small businesses passed in response to the COVID-19 pandemic. The PPP allows small businesses to obtain government-backed loans from private lenders which, if spent properly on payroll, rent, utilities and/or mortgage interest, can be all or partially forgiven. Over the last month, small businesses have been hastily flocking to lenders to obtain loans from the limited pool of funding, and lenders have been diligently working to properly review, document, and fund the loan requests. Up to this point, there has been little instruction from the SBA regarding the mechanics of the loan forgiveness feature that is soon to become a critical phase at the “back end” of the program.