Guidance Released on Deferring Employee Social Security Taxes

Hannah E. Mudd

By Hannah E. Mudd



The IRS released guidance for employers regarding President Trump’s August 8, 2020 memorandum on withholding, deposit, and payment of employee Social Security taxes for the period of September 1, 2020 through December 31, 2020. Secretary of the Treasury Steven Mnuchin has since confirmed the deferral as voluntary and that employers may choose to continue to withhold and deposit employee Social Security taxes under the normal schedule.

The guidance clarifies that employees eligible for deferral are those with wages (for FICA purposes) of less than $4,000 per bi-weekly pay period or an equivalent amount for other pay periods. The deferral of eligibility determination must be made on a payroll-by-payroll basis. Any compensation not considered wages for FICA purposes does not count when making the determination of eligibility. It is also important to remember that ‘wages’ considered are not based on gross pay but are based on the amount of wages after nontaxable deductions. Continue reading »

President Trump Signs Paycheck Protection Program Flexibility Act

Marcia Swihart Orgill

By Marcia Swihart Orgill



The Paycheck Protection Program Flexibility Act (Flexibility Act) makes key changes to the Paycheck Protection Program (PPP) that provide borrowers with more flexibility to obtain loan forgiveness, including extending the time period to spend PPP loan proceeds, reducing the payroll expenditure requirement for PPP loans, and extending the time period to restore employment and wage levels. The following is a summary of the modifications the Flexibility Act makes to the PPP.

1. Extension of Time to Spend Loan Proceeds. The Flexibility Act extends the covered period that a borrower must spend its loan funds from eight weeks after the loan origination date to 24 weeks or until December 31, 2020, whichever is earlier. The Flexibility Act allows borrowers that already received a PPP loan prior to enactment of the Flexibility Act to elect an eight week covered period, which may be beneficial for borrowers who have already spent most of their PPP loan proceeds and are near the end of their original eight week covered period.

2. Payroll Expenditure Requirement. The Flexibility Act reduces the payroll expenditure requirement from 75% to 60%. The remaining 40% of loan funds may still only be used for payments of interest on any covered mortgage obligation, rent and utilities.

In an Interim Final Rule issued on April 3, the SBA established the requirement that at least 75% of the PPP loan proceeds be used for payroll costs. If less than 75% of the of loan funds are spent on payroll costs, the SBA Loan Forgiveness Application requires a borrower to reduce the amount eligible for loan forgiveness. In changing the payroll expenditure requirement to 60%, the Flexibility Act added the following language to the CARES Act: “To receive loan forgiveness”, a borrower “shall use at least 60% of the covered loan amount for payroll costs.” Based on this language it is not clear whether a borrower will still be able to obtain partial loan forgiveness if the 60% threshold is not obtained. Continue reading »

PPP Loan Forgiveness Application Now Available

Marcia Swihart Orgill

By Marcia Swihart Orgill



Updated 7/6/2020

The Small Business Administration (SBA) and the Department of Treasury have released the Paycheck Protection Program (PPP) Loan Forgiveness Application.

The application deadline for the Paycheck Protection Program has been extended to August 8, 2020. Updated loan forgiveness instructions and forms are available here:

PPP Loan Forgiveness Application Instructions for Borrowers

PPP Loan Forgiveness Application Form – Revised June 16, 2020

Self-Employed: Continue reading »

Safe Harbor Deadline for Repayment of PPP Loans Extended from May 14 to May 18

Marcia Swihart Orgill

By Marcia Swihart Orgill



On May 13, 2020, the Small Business Administration (SBA), in consultation with the Department of the Treasury, extended the safe harbor deadline to repay Paycheck Protection Program (PPP) loans to May 18, 2020. Previously in its PPP Loans Frequently Asked Questions (FAQs), the SBA reminded borrowers to carefully review the required certification on the PPP loan application that “[c]urrent economic uncertainty makes this loan request necessary to support the ongoing operations of the Applicant.”

ppp loanIn further guidance, the SBA provided that any borrower of a PPP loan that repays the loan in full by the specified safe harbor deadline will be deemed by the SBA to have made the required certification concerning the necessity of the loan request in good faith.  According to the newly issued FAQ #47, Continue reading »

Additional SBA Guidance Regarding PPP Loan Business Necessity Certification and New Safe Harbor for PPP Loans of Less than $2 Million

Marcia Swihart Orgill

By Marcia Swihart Orgill



The Small Business Administration (SBA), in consultation with the Department of Treasury,  announced additional guidance regarding the required good faith certification borrowers must make concerning the necessity of the Paycheck Protection Program (PPP) loan request. In PPP loan applications, borrowers must certify in good faith that current economic uncertainty makes the loan request necessary to support their ongoing operations.

ppp loan

In an update to its PPP Loan Frequently Asked Questions (FAQs) on May 13, the SBA provides a new safe harbor for any borrower that, together with its affiliates, received a PPP loan of an original principal amount of less than $2 million. These borrowers will be deemed to have made the required certification concerning the necessity of the loan request in good faith.

As previously announced by the SBA, borrowers with PPP loans in the amount of $2 million or more, and other designated PPP loans, are subject to review by the SBA for compliance with the requirements of the PPP Interim Final Rules and the Borrower Application. According to Question 46 of the updated FAQs, Continue reading »

Safe Harbor Deadline for Ineligible Borrowers to Return Paycheck Protection Program Loans is Extended to May 14

Marcia Swihart Orgill

By Marcia Swihart Orgill



ppp loanUPDATED 5/6/2020

The Small Business Administration (SBA), in consultation with the U.S. Treasury,  published retroactive guidance regarding the loan necessity certification a borrower must make on its application for a Paycheck Protection Program (“PPP”) loan.

In its update to the list of Frequently Asked Questions (FAQs) about PPP loans issued on April 23, the SBA explained that prior to making an application for a PPP loan “all borrowers should carefully review the required certification that ‘[c]urrent economic uncertainty makes this loan request necessary to support the ongoing operations of the Applicant.’” In making this good faith certification, the Treasury stated that all borrowers must take “into account their current business activity and their ability to access other sources of liquidity sufficient to support their ongoing operation in a manner that is not significantly detrimental to the business.”

Although the SBA guidance specifically questions loans made to public companies with substantial market value and access to capital markets, the guidance applies to both public and private companies.

The generality of the SBA guidance left many borrowers confused. There were news articles published about small businesses that were concerned about expending PPP loan funds despite perceived operational needs.  In a likely response to this confusion, the SBA updated its FAQs about PPP loans on May 5, indicating that it was going to provide additional guidance regarding how it would review the business certainty certification.  Additionally, the FAQ update provides that a borrower will be deemed to have made the business necessity certification in good faith if the borrower applied for the PPP loan prior to the issuance of the FAQ and repays the loan in full by May 14, 2020. The original safe harbor repayment deadline way May 7. Continue reading »

Non-deductibility of Expenses Paid with Forgiven Paycheck Protection Program Loans

Marcia Swihart Orgill

By Marcia Swihart Orgill



tax deduction

According to new guidance issued by the IRS in Notice 2020-32, no deduction is allowed for otherwise deductible expenses if they are paid with PPP loan funds that are forgiven and the income associated with the forgiveness is excluded from the taxpayer’s income. The basis for the IRS’ disallowance of the tax deduction for such expenses is Internal Revenue Code (IRC) Section 265(a).

IRC Section 265(a) provides that a deduction is not allowed for any amount otherwise deductible that is allocated to one more classes of income which are wholly exempt from income taxes. The IRS ruled that the CARES Act’s exclusion from income of forgiven PPP loan amounts results in a “class of exempt income” under Section 1.265-1(b)(1) of the Treasury Regulation. Therefore, the payment of such expenses is non-deductible from income because such payment is allocable to tax exempt income. Continue reading »

Can You Appeal Your Real Estate Taxes in 2020?

William J. Bruin, Jr.

By William J. Bruin, Jr.



The COVID-19 pandemic has caused an extreme financial hardship on most, if not all, Missouri families. As such, many owners of real estate are investigating how best to reduce outstanding financial obligations and save resources wherever possible.

Given this crisis, one obvious area to investigate would be outstanding tax liability. The Internal Revenue Service has extended the filing deadline for federal income taxes from April 15, 2020 to July 15, 2020. However, what about real estate taxes, which are generally due on December 31 of each year? This is another area to investigate and quite possibly take timely and appropriate action.

Missouri reassesses all real estate every odd-numbered year (e.g. 2019, 2021, etc.).  In even- numbered years, such as 2020, local Missouri assessors normally allow their values to remain unchanged from the prior odd-numbered year (2019).

If you failed to file an appeal in 2019 on a timely basis, can you now appeal in 2020? The general answer is yes, you can appeal your real estate taxes in an even-numbered year (e.g., 2020). However, the assessor takes the position that the valuation for your property in 2020 will be based upon the fair market value of the property as of January 1, 2019.

The local assessor determines both the fair market value and the subclassification of all real property. Real property is assessed under a two-year cycle. The value placed on a property for an odd-numbered year is placed on the property for the next even-numbered year. However, the assessor has the right to increase the value in an even-numbered year due to recent construction. Continue reading »

Recent Tax Sale Emphasizes Importance of Periodic Review of Your Entity’s Registered Agent and Contact Information

David A. Zobel

By David A. Zobel



A recent turn of events in a San Francisco neighborhood should prompt you and your entity to confirm that your contact information is up-to-date. As reported by the San Francisco Chronicle, residents of a private street, lined with multi-million dollar homes, recently learned that their street had been purchased by real estate investors at a tax sale after the homeowner’s association failed to pay its annual $14 property tax bill for several decades. The association claimed it was unaware of its tax obligations because the county tax bills were apparently sent to the address of a former accountant who hadn’t worked for the homeowners since the 1980s. The residents have filed a lawsuit seeking to undo the tax sale and while their success in that endeavor is uncertain, two things are certainly true—this was a costly and completely avoidable mistake.

While it is prudent to review all of your entity’s contact information to make sure creditors, vendors, and others can easily and consistently communicate with your entity, there are two specific records that are critically important—the contact information of your registered agent and the mailing address for your local real estate taxes. Continue reading »

Your Entity’s Governing Documents

David A. Zobel

By David A. Zobel



Authored by David A. Zobel with contribution from Michael J. McKitrick

Part 4 of a 12-part series on Legal Considerations for Your Missouri Leasing Business: What You Should Consider Now, Later, and Throughout the Process

Simply put, every company should have an agreed-upon, written set of rules identifying how the company is to be run and by whom. The names for these sets of rules vary depending upon the type of entity you have, e.g. operating agreements, partnership agreements, and shareholder agreements, but they are generally known as the company’s governing documents.

Common issues described and controlled by these governing documents include:

  • Ownership structure of the company including the source and amount of owner contributions)
  • Capital contributions and division of profits and losses
  • Roles and restrictions of the owners in managing the company
  • Decision-making process for the company including notice and voting procedures
  • How and where the company’s books and records will be kept
  • Policy regarding transfer of owner interests
  • Dispute resolution
  • Wind up and dissolution of the company

Additionally, if certain owners make special agreements with the company, including arrangements for the company to use an owner’s vehicles, tools, or other personal property, the nature and scope of those arrangements should be stated in a written, signed agreement. This helps avoid confusion as to the extent of company assets and observance of corporate formalities. Continue reading »