Section 2202 of the CARES Act Provides for a Delay in the Required Deposit of Employer Payroll Taxes.
Who is an employer? The term “employer” is defined in Section 3401 of the Internal Revenue Code and the associated Treasury Regulations. It is clear from this definition that the term employer includes organizations exempt from tax, including religious and charitable organizations, educational institutions, clubs, social organizations and societies, the Federal government, as well as state and local governments.
An employer may delay the deposit of “Applicable Employment Taxes,” which includes the tax imposed on the employer under Internal Revenue Code Section 3111(a) (the employer portion of the OASDI payroll tax). The taxes for which the deposit may be deferred are the taxes incurred from the date of enactment (March 27, 2020) through the end of 2020. Of the taxes to be deferred, 50 percent of the deferred taxes are required to be deposited by the end of 2021. The remaining 50 percent is required to be deposited by the end of 2022.
Contact your engagement partner to assist you in considering the impact of this deferral on your cash flows and your financial reporting requirements.
CARES Act – PPP Loans
Some entities may qualify for emergency federal loan programs. Organizations with the lesser of 500 employees or the applicable size standard established by the SBA can apply for the CARES Act Paycheck Protection Program (PPP) Loans. These loans may cover two and a half months of payroll costs up to a maximum of $10 million. Keep in mind that a portion of these CARES Act Loans may qualify for forgiveness of debt. These PPP loans are being distributed through certain banks and credit unions.
Following from Government Finance Officers Association CARES Act Economic Relief Plan Summary
COVID-19 Relief Fund
The CARES Act includes $150 billion in direct aid specifically for COVID-19 expenses to states, tribes, territories, and local governments with populations exceeding 500,000. Most of the funding will go to states using a population-based formula. Local governments with populations exceeding 500,000 may apply for direct funding, those with populations less than 500,000 would apply through their state. These funds are to be for the following expenses – necessary expenditures due to public health emergency resulting from the pandemic; expenditures were not accounted for in the most recent budget, and expenses incurred March 1, 2020, through December 30, 2020.
GFOA Award Programs
A government may request a 30-day extension of the submission deadline for the Certificate of Excellence in Financial Reporting program, Popular Annual Financial Reporting program, or the Distinguished Budget Presentation Award program by completing the form located here.
Local Government Grant Programs
- HUD/CDBG - $5 billion Community Development Block Grant funding available to address COVID-19 as it relates to services for senior citizens, the homeless, and public health.
- Department of Justice (DOJ) - $850 million for the Byrne Justice Assistance grant program to assist state and local law enforcement and jails prevent, prepare for, and respond to COVID-19.
- Department of Health and Human Services (HHS) - $1.5 billion for the Center for Disease Control’s (CDC) State and Local Preparedness Grants for state and local preparedness and response activities. Funds provided under this can be used for grants for the rent, lease, purchase, acquisition, construction, alteration, or renovation of non-federally owned facilities to improve preparedness and response capability at the state and local level.
- $1 billion for the Community Services Block Grant Program for grants to states and local community-based organizations to provide a wide range of human, social services and emergency assistance.
- $100 billion for the Public Health and Social Services Emergency Fund for necessary expenses to reimburse eligible health care providers for healthcare-related expenses or lost revenues attributable to COVID-19.
- Department of Agriculture (USDA) - $8.8 billion in additional funding for child nutrition programs which, among others, includes the National School Lunch Program and the School Breakfast Program.
Transportation & Infrastructure
- Federal Transit Administration - $25 billion allocated in proportion to FY2020 program apportionment. All COVID-19 related operating and capital-related costs are eligible. The expressed goal of keeping transit systems running.
- Federal Aviation Administration - $9.9 billion in total available to commercial airports through the Airport Improvement Program (AIP). $9.4 billion for airports to prevent, prepare for and respond to COVID-19 $.5 billion to raise federal funding share to 100% for projects funded with FY20 AIP funding. $100 million for 100% funding for general aviation airports
- Education Stabilization Fund - Consists of $30.75 billion to be distributed among States, local schools, higher education institutes and other entities providing educational services that were impacted by COVID-19: $3 billion is to be distributed among governors of each State to provide emergency support for the continued operation of educational institute services. State Governors will receive funds in the form of Emergency Education Relief grants. $13.5 billion is to be utilized for elementary and secondary education. $14.25 billion for higher education. The higher education emergency relief fund will be utilized for the activities of higher education institutes pertaining to the preparation, prevention, and response to the impact experienced from COVID-19. Safe schools and citizenship education will receive $100 million in funds (available through 09/30/2021) for the preparation, prevention, and response to the COVID-19 (domestic or international).
Unemployment Insurance Impact
Many government entities are self-insured for New York State unemployment coverage. Self-insurance for unemployment costs results in additional negative financial impact if temporary or permanent layoffs have been implemented. Alternative considerations to minimize the impact of unemployment costs include, but are not limited to, staff job sharing, and reassignment of responsibilities, as opposed to a direct layoff of personnel who will apply for unemployment benefits.
A Single Audit deadline deferral has been granted for recipients and sub recipients with fiscal year-ends through June 30, 2020. The extension is for a period of six months to allow governments to extend the completion and submission of the Single Audit reporting package. Governments should maintain documentation of the reason for the delayed filing if elected.
The Governmental Accounting Standards Board (GASB) announced that it has added a project to its current technical agenda to consider postponing all Statement and Implementation Guide provisions with an effective date on or after reporting periods beginning after June 15, 2018. Most notably, those pronouncements include Statement No. 84, Fiduciary Activities, and Statement No. 87, Leases, as well as their related Implementation Guides. The Board plans to consider an Exposure Draft for issuance in April and finalize the guidance in May 2020. Stay tuned!
NYS Authorities Budget Office (ABO)
Executive Order No. 202.11 allows the director of the Authorities Budget Office to disregard reporting deadlines during the current state of emergency. For the duration of the Governor's Emergency Declaration and pursuant to his Order, the ABO will disregard reporting deadlines and encourages all public authorities to make reasonable efforts to submit the required reports as timely as is practicable.
For additional information or questions related to any of the information we provide, please directly contact a member of your Bonadio client service team. If you are not currently a Bonadio client, please contact one of the following team leaders.
Annual Update Document
Since the state statute governs deadlines for the submission of this report, the due dates cannot be waived. However, if your due date is less than 120 days after the end of your fiscal year, you can apply for an extension by filing with the OSC here. If you are still unable to comply with extended dates, you must file as soon as possible.
For more information please reach out to Ken Pink or the following names below:
The information and advice we are providing for this matter relates to COVID-19 legislative relief measures. Because legislative efforts are still ongoing, we expect that there may be additional guidance and clarification from regulators that could modify some of the advice and information provided to you, after the conclusion of our engagement. We therefore make no warranties, expressed or implied, on the services provided hereunder.