Frequently Asked Questions on the Organizational and Individual Impact of COVID-19

We’ve compiled some of the most frequently asked questions we’ve received in relation to COVID-19.

• What type of relief is available for my organization?
• What type of relief is available for me personally?
• How do I handle loan forgiveness?
• How does COVID-19 impact my state and local tax filings?
• How do I track the screening of my employees, per CDC guidelines?
• How will COVID-19 affect my audit?
• What do I do with the income already collected from a cancelled event or fundraiser?
• Can a school district continue to use federal funds to pay staff under federally funded positions such as Title I-funding staff, IDEA-funding staff, etc.?
• What happens if I have loss of business income due to business interruption?
• Is there something I can do right now to protect my business?

RELIEF INITIATIVES

What type of relief is available for my organization?
The CARES Act represents the largest economic stimulus bill in recent history. It includes provisions for businesses to aid in economic recovery and protection. A new relief package was also passed in late April to provide additional funding to those affected by COVID-19

These include:

• Employee retention credit. This refundable payroll tax credit equals 50% of wages paid by employers during the coronavirus pandemic.
• Deferral of employer’s share of payroll taxes. Employers and self-employed individuals can defer payment of the employer’s share of Social Security tax for the 2020 tax year.
• SBA loans. The Economic Injury Disaster Relief Loans program provides working capital for small businesses and nonprofits unable to meet ordinary and necessary financial obligations because of COVID-19.
• Paycheck Protection Program 7(a) Loan. Borrowers can apply for the Paycheck Protection Program Loan through an SBA-approved partner. This financial assistance is designated mainly for small businesses to cover payroll costs and keep employees during this uncertain time.

Additional Resources:

• The CARES Act Has Been Passed—What You Should Know
• What You Need to Know About the SBA Loan and Relief Efforts
• How COVID-19 is Directly Impacting Your Payroll
• Additional Relief Legislation is Here: What You Can Do Now

What type of relief is available for me personally?
U.S. residents will receive tax rebate payments of $1,200 per person, with $500 for each qualifying child under the age of 17. There are rebate phaseouts based on amount of income.

The IRS has begun to deposit relief payments for taxpayers. To learn more about your rebate check, visit the Get My Payment app. This app allows you to:

1. Check your payment status
2. Confirm your payment type whether deposit or check
3. Enter bank account information for direct deposit if you payment hasn’t already been sent.

The Families First Coronavirus Response Act also mandates expanded family and medical leave, as well as paid sick leave for various coronavirus-related absences. This coverage is specifically mandated for private employers with fewer than 500 employees.

Additional Resources:

• The CARES Act Has Been Passed—What You Should Know
• What You Need to Know About the Tax Effects of Mandatory Leave Under the New Coronavirus Act
• Planning in a Time of Uncertainty: How COVID-19 is Affecting You Financially

How do I handle loan forgiveness?
There are key steps that need to be taken when it come to loan forgiveness under the PPP loan program. What you do in the eight-weeks following receipt of funds will directly impact the amount of loan forgiveness you receive.

Steps include understanding what the funds can and can’t be used for, proper documentation and tracking of expenditures and applying for forgiveness.

Additional Resources:

How to Maximize Your Loan Forgiveness

What You Need to Know About the SBA Loan and Relief Efforts

RECORDED WEBINAR: SBA & Other Relief Provisions

RECORDED WEBINAR: How to Maximize Your PPP Loan Forgiveness

BUSINESS AND ORGANIZATIONAL IMPACTS

How does COVID-19 impact my state and local tax filings?
States are taking on a significant burden in the wake of COVID-19. To begin, they have to deal with individual decisions on tax relief and response to the pandemic.

Learn more: State and Local Responses to the COVID-19 Pandemic

In addition, states are spending exorbitant amounts of money on unforeseen expenses, that are necessary and unavoidable during this time of crisis, but not included in their budgets or emergency funds.

With the uncertainty of when the country will reopen for business, states are looking for ways they can generate revenue to replenish the non-budgeted cash outflow. One easy revenue generating tool is an audit.

Learn more: States are Looking for More Tax Money: How to Protect Yourself

How do I track the screening of my employees, per CDC guidelines?
Essential workers are more vital than ever. If your organization operates in an essential industry, it’s important to keep your team safe. The CDC has recommended screening your workers daily with a few survey questions. But how do you track their answers? The easiest way is in a software you already use.

We built a complimentary add-on for Salesforce to help track employee answers through the COVID-19 pandemic. Here’s a preview of how it works.

How will COVID-19 affect my audit?
With social distancing rules put in place to help limit the spread of COVID-19, the way annual audits are conducted will need to be reviewed.

Specific areas to look at include:

• Inventory Observations
• Financial Reporting

What do I do with the income already collected from a cancelled event or fundraiser?

Gift Cards
Question: We are cancelling an upcoming event due to COVID-19. Rather than refund money to patrons that have already purchased tickets, we would like to issue gift cards or gift certificates for patrons to use at future events. How should this be treated under current revenue recognition standards?

Answer: If you issue a gift card or a gift certificate to be used for a future event or performance rather than refunding the money to the patron, you will recognize a contract liability for the funds that you have already received. You will need to recognize the related revenue when the performance obligation is complete. This would be when the patron uses their gift card or gift certificate.

If you are a nonprofit organization and the patron releases you from the obligation to perform under the contract, you could recognize contribution revenue at that time you are released from the obligation.

Cancelled Fundraisers
Question: Many student activity events and trips are already or likely to be cancelled because of COVID-19. How should districts handle the money that has been collected via fundraisers or deposits?

Answer: First, districts need to work with their travel agency to see if the trip can be refunded if cancelled. If they can get the funds back, here are some considerations:

• Fundraised monies are generally considered contributions, and it may not be necessary to return these funds to community members. Rather, many districts are informing their communities that the money will be segregated from general operations and will be used for something similar at a later date.
• If money was paid in the form of a deposit, such as parents paying a sum of money towards the event, the money should be refunded to the parent or applied to a future student event. If repaid to the parent, the entry should debit the related revenue account, resulting in no revenue or expenditure reported for the deposit.
• If districts do not have a policy in place to address these types of scenarios, it’s highly recommended that school boards work with stakeholders as well as legal counsel to create and adopt a policy for future cases.

Additional resource: Guidance Released on Student Activities Impacted by COVID-19

Can a school district continue to use federal funds to pay staff under federally funded positions such as Title I-funding staff, IDEA-funding staff, etc.?
There is not a definitive answer that can be applied to all entities; however, federal agencies may allow entities to charge payroll to active federal awards if it is consistent with their emergency policies and procedures.

Learn more: How to Ensure Grant Compliance in the Wake of COVID-19

What happens if I have loss of business income due to business interruption?
The relief provisions and loans are not intended to cover loss of business income due to business interruption. Instead, your business should look to business interruption insurance.

Additional Resource: COVID-19 and Business Interruption Insurance

Is there something I can do right now to protect my business?
COVID-19 is impacting the way many organizations run. While there is no one-size-fits-all answer to this, there are several things to consider and discuss with your leadership team as we navigate this new “normal”:

• Tracking key items like cash flow, benchmarking, lending and cost analysis
• The impact of financial modeling
• Business continuity planning
• The impact of remote working arrangements on your organization and its security

Additional Resources:

• Questions to Consider Regarding COVID-19’s Impact on Your Business
• Financial Modeling Can Help Management Make Better Decisions
• Why a Business Continuity Plan Is More Vital Than Ever
• Business Security a Threat Amid COVID-19 Coronavirus Spread
• Cybersecurity Concerns with Remote Workers in the Wake of COVID-19