The IRS has recently released guidance on President Trump’s Executive Order deferring certain payroll taxes. While this guidance comes just before the start of the deferral period and answers some questions, many more remain. Rex Collins CPA, CVA for the HBK Dealership Solutions Coronavirus Crisis Series discusses the payroll tax deferment, PPP Guidance and the effect of the cornavirus on business closures.

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Over the past few weeks, we have seen an ever-increasing pace of transactions, whether these were picking up where things left off in March or were simply buyers exploring new deals.

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“Leadership is found in the action to defeat that which would defeat you.”
— Rev. C. T. Vivian, civil rights activist

Many nonprofits today are focusing more on survivability than sustainability. Large and small, nonprofits have had to “pivot” into the pandemic, a storm no one could have predicted.

The impact has been great. The Center for Civil Society Studies found that 1.64 million nonprofit workers lost their jobs between February and May of 2020. The Fundraising Effectiveness Project’s 2020 First Quarter report shows a 6 percent decrease in charitable giving. BDO’s 2020 Nonprofit Benchmarking Survey shows 69 percent of nonprofits have postponed or cancelled events, 87 percent have encouraged or required staff to work remotely and 57 percent limited or cancelled programs.

Nonprofits need adaptive, creative and considerate financial leadership. They can no longer use past history to project the future; the present is a different world with different priorities.

Cash is king; know your financial condition.

First, nonprofits need to assess their current position, particularly their cash position. Many nonprofits have limited liquidity. Others may have reserves that are tied down by donor restrictions. Some thoughts to consider when recomputing short-term and long-term cash flows:

• What unrestricted liquid assets does the organization have?
• Will donors be willing to release restrictions on previously made donations?
• Are borrowing options available?
• Where does the organization stand with existing or renewing government funding?
• Is there a way to accelerate any revenues?
• Can expenses be reduced or payments delayed?
• What new costs will the organization need to fund for additional program needs, remote working arrangements or other changes related to the post-COVID working environment?

Connect and consider all financial resources.

There are numerous funding opportunities available to nonprofits, such as Payroll Protection Plan funding, CARES Act loans and SBA loans through state jurisdictions. Be aware that the programs are complex and available funds dry up quickly. The National Council of Nonprofits provides an updated listing and resources available at https://www.councilofnonprofits.org/nonprofits-and-coronavirus-covid-19. Nonprofit leaders need to become expert quickly or seek counsel. Many accounting and legal firms have developed teams of experts to help with these challenging decisions.

Understand revenue streams; analyze the knowable future.

Nonprofits need to assess the damage done to existing revenue streams. The in-person, event-based fundraising model cannot be relied upon. Maybe it is time to reassess events anyway. These events can be costly and use up large amounts of staff and volunteer time. Is there a way to generate the same net “profit” with other types of donation requests?

As state and local governments have seen their tax bases shrink, their ability to keep stable funding levels for nonprofits as they balance their own budgets has been compromised. Many states have already told nonprofits their contracts will not be renewed, or will be renewed for shorter periods. Nonprofits receiving government funding would be wise to contact their fiscal agents to better predict these revenues.

Many organizations have seen their capabilities stretched during the crisis. How quickly can program fees be billed and collected? Does the organization have the administrative capacity to support these services?

There is some good news from a recent study of philanthropic individuals by Fidelity Charity, which found that 25 percent of responders planned to increase their donations post COVID and 54 percent planned to maintain prior giving levels. Younger donors plan to give more. Donors will continue to support their favorite charities especially if they know how their funds are being used. The bad news is that volunteers, particularly older volunteers, plan to dramatically reduce their activities. The study also confirmed that almost all donors have concerns about a recession and the state of the current economy. Political uncertainty is giving donors pause as well.

Calculate the impact.

Developing real-time data is vital. Most importantly, nonprofits need to calculate the financial impact of the pandemic. Current accounting for profits and losses must be complete and timely. Cash flow projections are more important than ever and should be fact-based not wish-based. More than likely, budgets will need to be recast.

Just as important as financial impact is mission impact. Programmatic statistics must be documented. How many more meals were provided by a food bank? How many more counseling sessions were provided to the homebound? How much assistance was provided to the newly unemployed?

Programs may need to be evaluated. At this point, some programs may need to be suspended, temporarily or permanently. Leadership should be evaluating how each program contributes to the long-term mission of the organization and its financial impact on the organization.

Collaborating might be the answer.

Consider that collaborating with other nonprofit and for-profit entities might be an answer to a current dilemma. Organizations that work together and share goals often become more productive.

Communicate, communicate, communicate.

Nonprofit leaders will be expected to communicate even if they don’t have all the answers. Employees, volunteers, board members, donors and beneficiaries will look to the leadership for current, reliable information and action plans.

Protect your employees, but be honest with them. Get your HR Department involved in creating policies and processes to accommodate the current environment. Employees main concerns include how and when to report to work, how to report their time, when they will be paid and their expenses reimbursed, and how to report cases of COVID-19. Consult an attorney who specializes in HR matters to assist you. Create an internal committee to foster both participation in the solutions and buy-in from your employees.

Protect your volunteers as if they were your employees. Many will be simply too afraid to continue without reassurances from leadership that their health and safety is being addressed. They are more valuable than ever. Maybe their roles must change, particularly if programs have been suspended. Consider they may have to be retrained to continue to provide donated hours.

Communicate with your board often. Leadership, including the board, will be called on to make difficult decisions. Now is the time to maintain a clear understanding of mission, vision and core values. Remember that boards govern; not manage. The board needs to continue to operate under its existing good governance practices, remain mission-driven and think strategically. Inquiry and analysis, while supporting management will make for better decisions. Boards should balance the need for transparency with the need for confidentiality when communicating with stakeholders.

Donors want to be part of the solution right now. Helping donors understand what your constituents and the organization face allows them to support you in the most effective manner. You can’t just communicate with stakeholders when things are going well. Understanding how the organization is maximizing its impact and leading with its values—the needs of your constituents, staff and volunteers—strengthens the connection and relationship donors feel with your mission.

Finally, communicate with your beneficiaries. Are you open for business or working remotely? How will they be protected if they need services? Have programs been suspended or cancelled? Do they have options to get support elsewhere? Establish a single point of contact or a spokesperson for all public information and media purposes.

What are successful nonprofits doing right now?

• Focusing on mission: Successful nonprofits put mission first, always.
• Identifying what went right and wrong: Even successful nonprofits have made mistakes during this crisis. Identifying and learning from mistakes is key to not repeating them. Identify what proved to be obstacles for the organization and the employees. What worked and did not work? How quickly was the organization able to pivot to a new way of doing business.
• Making a strategic investment: Universally, nonprofits are investing more in technology and training. For operational purposes, investing in internet access, portable equipment have become common ways to conduct business.
• Moving to digital fundraising: Nonprofits are making it easy for donors to give online. Your website is often the quickest way for a donor to find you and make a donation. Spend time developing Facebook and Twitter strategies, as these will be increasingly important. Consider virtual everything: galas, tours, concerts, productions and meet-and-greets. All can be done with a lot less cost than in-person events.

America’s nonprofits are fighting for the needs of our most vulnerable. Some nonprofits have been able to weather the pandemic better than others. The key has been the ability of their leadership to pivot into the crisis rather than away from it.

Are you looking for options other than the Paycheck Protection Program to support your business? HBK Manufacturing Solutions Group’s Jim Dascenzo, CPA and Amy Reynallt, MBA discuss COVID-19 related relief options available for manufacturers.

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Status of and Potential Impact of the Second Stimulus Package. What’s the latest on the new stimulus package? How will it impact your dealership?

Hot topics to include recently passed Executive Orders and their impact on dealers

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Since the Wayfair ruling dealers doing business across state lines have faced complicated tax issues and compliance challenges. Add a pandemic to the mix and what’s a dealer to do? Rex Collins, CPA, CVA, Amy Reynallt and Cassandra Baubie, JD for a look at post Wayfair compliance and collection in a COVID-19 world. We’ll examine the effect the coronavirus on state tax issues, economic nexus, the Wayfair ruling and how it impacts your dealership.

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Late Friday, July 31, the Department of Health and Human Services (HHS) extended the application deadline for Phase 2 general distribution of CARES Act funds for Medicaid, CHIP and dental providers. The deadline, first extended to Monday, August 3, now extends to Monday, August 28, allowing eligible providers additional time to prepare and file their applications.

Along with the extension, HHS released two additional key provisions:

1. A new application would allow certain Medicare providers a second chance for relief funds of up to 2 percent of their annual patient revenues. In April, many of these Medicare providers received automatic payments based on their 2019 Medicare fee-for-service revenue. In the event this payment did not reach the intended goal of 2 percent of that practice’s annual revenues, providers could have applied for additional funding. Beginning the week of August 10, HHS will allow these Medicare providers—including private physician practices, facilities, etc.—who previously missed the opportunity to apply for additional funding. These applications will also be due by Monday, August 28.
2. HHS relied on 2019 data to determine the automatic payments in the original round of funding. In the event a provider or provider practice had a change in ownership in 2020, these payments might have gone to the original owners. Beginning the week of August 10, providers that did not receive funding due to a change in ownership may submit their revenue information, along with documentation proving a change in ownership, by August 28 for consideration for a Provider Relief Fund payment.



The HHS said it is working to address relief payments to new providers in 2020 along with those that have yet to receive funding for a variety of reasons. Those yet to receiving funding include providers that only bill commercially or do not directly bill for the services they provide under the Medicare and Medicaid programs.

As businesses look for ways to weather the COVID-19 pandemic, many firms in the plastics industry have had a unique role as essential businesses, providers of personal protection equipment, or suppliers of single use products. Despite this, industry firms find themselves battling many of the same concerns affecting the general business community. Discover some of the ways the plastics industry is navigating the COVID-19 crisis.

Following Guidelines
Like all businesses, plastics companies must follow the evolving health and safety guidelines set by government entities and health departments, including enforcing social distancing, wearing masks, and monitoring employee health status then taking specific actions if an employee is diagnosed with COVID-19. There are other safety, health and business guidelines to comply with as well, such as those from OSHA, the EEOC, and Department of Labor. More information can be found at state and federal websites including:

• Ohio Coronavirus Resources for Businesses
• Pennsylvania Coronavirus Resources for Businesses
• New Jersey Coronavirus Resources for Businesses
• Florida Coronavirus Resources for Businesses
• OSHA Coronavirus Resources
• EEOC Coronavirus Resources
• DOL Coronavirus Resources

Evolving safety guidelines have led to changes not only in the workplace but to industry events. Trade shows and conferences, including MD&M East, the Society of Plastics Engineer’s ABC 2020 Conference and the Plastics Industry Associations’ Equipment and Moldmakers Leadership Summit are among many events that have been postponed or cancelled. Events that have occurred as scheduled have generally been staged virtually.

Using Economic Relief Options
Plastics News reported that plastics firms have received over $1.6 billion dollars of Paycheck Protection Program (PPP) funds. Funds are still available, and those that have not received a PPP loan but are interested should contact their advisors or lenders as soon as possible. The Small Business Administration (SBA) will no longer approve PPP loans after August 8.

Other key economic relief options available to plastics firms include:

• Economic Injury Disaster Loans (EIDL) available through the SBA. For more information, visit sba.gov/disaster.
• Main Street Lending Program (MSLP) loans available through lenders. Visit https://www. federalreserve.gov/monetarypolicy/mainstreetlending.htm for more information.
• Deferral of payment of the employer’s share of Social Security taxes.
• Employee Retention Credit available to operations that were partially or fully suspended due to a COVID-related shut down order, or that suffered a significant decline in revenue (available only to businesses that did not receive a PPP loan).
• Families First Coronavirus Response Act (FFCRA) tax credits available to offset the cost of employee leave programs.
• State and local relief programs, including grants and loans.

As well, Congress is negotiating additional stimulus funding, which is expected to include funds for some small businesses, though it is unknown what new relief options may be available for plastics businesses.

Shifting Business Operations
To navigate the COVID-19 pandemic, plastics firms have shifted their operations in many ways, including:

• Supporting PPE Needs. While some plastics firms considered essential operations have seen little to no business downturn, others have shifted operations in order to maintain business levels or employee counts or to help with the country’s need for personal protective equipment. Where operations allowed, many plastics businesses used excess capacity and available machine or labor time to produce N95 masks, ventilators, medical tubing and protective face shields.
• Focusing on Cybersecurity. Many plastics firms have historically dedicated their technology budgets to operations, but risks of cybersecurity breaches have grown significantly, especially for those firms with employees working remotely. Ensuring proper training to prevent phishing attacks, reviewing the company’s IT infrastructure, and assessing security protocols for suppliers or customers where EDI or other connections exist have become critical projects for IT departments.
• Evaluating Supply Chains. The industry continues to rely substantially on foreign sources for plastic resins, specialty compounds, molds and tooling, and equipment. Supply chain concerns have escalated due not only to the pandemic but also to turbulence in international relations and the threat of trade wars. Some businesses are re-evaluating their supply chains, considering not only cost and quality, but their ability to get critical goods during the pandemic or other crises. Meanwhile, others have found opportunities to expand their product or service offerings due to increasing demand for domestically produced goods.
• Considering Diversity. Through the Great Recession a decade ago and now during the COVID-19 pandemic, plastics firms have watched some end-user industries thrive while others contracted. Many businesses in industries impacted by both global events are struggling to create sufficient cash or financial reserves to survive. Plastics firms limited to one industry and one or two customers are under increasing pressure to diversify to ensure their longevity.

Innovating to Improve Safety and Health
The pandemic has impacted many businesses’ views of public health, and plastics firms are among those considering how technology can improve the safety and health of employees, customers, and others who visit their facilities. While we are still uncertain whether the coronavirus can live on surfaces, some plastics firms have considered reducing their use of paper or other shared items. Similarly, they are considering touchless technologies established through automation. They are also increasingly using virtual meetings to maintain customer and vendor relationships, reduce travel, and ensure social distancing.

Moving forward, firms may consider using antimicrobial additives, especially if those additives can reduce the transmission of viruses, bacteria or other microbes. They might also consider continuous improvement opportunities, such as the use of additives or other redesigns, to make their products safer or easier to disinfect. Similarly, single-use plastics, including bags, bottles, utensils, straws and containers that have been outlawed in some areas due to environmental concerns have regained popularity due to their perceived safety over reusable products. It will be interesting to watch how human safety and health concerns are balanced with environmental concerns as the pandemic continues.

Planning Ahead
As plastics firms continue to navigate the COVID-19 pandemic, they can consider several actions:

1. Ensure safety protocols for employees, customers and other facility visitors are met. Continually evaluate changing protocols and compliance.
2. Determine what actions to take if an employee is diagnosed with the virus. This may include asking other employees to be tested or to quarantine, cleaning or disinfecting affected areas of their facility, and developing a backup plan for others to take over critical duties that cannot be performed by the affected employee.
3. Understand the availability of economic relief options. Review the programs carefully and consider using those that will best support the business’s needs.
4. Evaluate whether to make changes to product or service offerings. Are the firm’s offerings and customer base diverse enough to ensure the company’s longevity? Reevaluating strategic business plans, forecasts, and budgets may be necessary to ensure ongoing operations.
5. Consider whether cybersecurity measures are appropriate, especially if the firm has employees working remotely. Companies should also consider discussing cybersecurity insurance options with their business insurance providers or requesting external evaluations from professionals who specialize in cybersecurity insurance.
6. Assess supply chains. Does the firm have a backup plan to obtain critical goods or services if current vendors are unable to supply?
7. Consider innovations that improve the safety and health of employees, customers and other visitors to the facility, including reducing or eliminating paper and adding touchless technologies.
8. Consider innovations that can help customers use the firm’s products more safely, including changes to materials, surface finishes and product designs.

For support in navigating the ongoing pandemic, contact a member of the HBK Manufacturing Solutions Group at 330-758-8613 or manufacturing@hbkcpa.com

HBK Dealership Solutions leader Rex Collins CPA, CVA discusses the latest hot topics. What’s in the proposed stimulus package and how will it affect your dealership. Stay in the know in the “new normal”.

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Additional Distribution
The Department of Health and Human Services (HHS) announced the distribution of an additional $5 billion from the Provider Relief Fund (PRF) to Medicare-certified long-term care facilities and state veterans’ homes (nursing homes). The intended purpose of the funding is to improve the nursing homes’ response to COVID-19 and enhance the skillset of front-line workers. To emphasize this purpose, recipient nursing homes must participate in CMS’ Nursing Home COVID-19 Training which will focus on infection control and best practices. Funding received can be utilized to address critical needs such as hiring additional personnel, implementing infection control programs, increasing COVID-19 testing, and providing additional services (i.e. technology for residents to communicate with their families who are unable to visit).

Reporting Guidance
HHS recently issued a reporting timeline for providers who received more than $10,000, cumulatively, from the CARES Act/Provider Relief Fund distributions.

Applicable CARES Act/Provider Relief Fund distributions include:

• Medicare Distribution
• Additional Medicare Distribution
• Medicaid, Dental & CHIP Distribution

• High Impact Area Distribution
• Rural Distribution
• Skilled Nursing Facilities Distribution
• Indian Health Service Distribution
• Safety Net Hospital Distribution

Beginning October 1, 2020, the reporting system will be available to providers to submit and fulfill their reporting obligation. Providers have until February 15, 2021 to report their expenditures through December 31, 2020. Alternatively, providers with unexpended funds through December 31, 2020 have until July 31, 2021 to submit an additional final report.

Detailed instructions and a data collection template are scheduled to be released from HHS by August 17, 2020. The reports are expected to allow providers to demonstrate compliance with the Terms & Conditions of the PRF payments received. The Health Resources and Services Administration intends to provide Question and Answer webinars in advance of the submission deadline; however, the dates of these webinars have not yet been released.

Audit Requirements
In addition to the aforementioned reporting requirement, HHS indicated that providers (for-profit and not-for-profit) that expend $750,000 or more of PRF funds during their fiscal year will be subject to an audit in accordance with Government Auditing Standards. Providers which follow calendar-year reporting should be particularly cognizant of this audit requirement threshold when determining which costs are expended to each period.

What This Means for Providers Now
Providers receiving HHS should begin planning for these reporting requirements. Planning includes gathering the necessary documentation for eligible costs incurred as well as strategically identifying when costs are reported whereas to not trigger an audit, or worse, two audits.

If you have any questions about the above information or would like to further discuss planning opportunities, HBK’s Healthcare Solutions team is here to help. Feel free to contact us at (330) 758-8613 or email me directly at kcrouthamel@hbkcpa.com.