On Friday, May 15^th, the House voted to approve a $3 trillion coronavirus relief bill, the Health and Economic Recovery Omnibus Emergency Solutions Act, or HEROES Act (the Act). The vote was split, 208-199, largely along party lines. Republicans have come out against the Act, and it is widely accepted that the Act will not pass the Senate. The White House has also indicated that it would veto the bill. However, the passage of the Act by the House signals the first step in negotiations between the House, Senate, and the Trump administration on the next coronavirus relief bill.

The Act is incredibly lengthy, with a total of 1,815 pages, and is generally believed to contain a Democrat “wish list” of provisions. While many of these provisions are not likely to make it into the final negotiated bill, some provisions may come out of negotiations with very few changes. Here’s a high-level look at some of the tax provisions contained in the Act:

• More Stimulus Payments – the bill would provide another round of stimulus payments, keeping the amount at $1,200 per person, but increasing payments for children to $1,200 and providing that this increased payment would be available for all dependents. This fixes the issue we saw in the CARES Act where many college students who were still claimed as dependents were not entitled to stimulus payments.
• Reinstatement of Excess Business Loss Limitations – the Tax Cuts and Jobs Act (TCJA) of 2017 created a limit on the amount of business losses that non-corporate taxpayers could deduct. That limitation was removed by the CARES Act. The HEROES Act attempts to reinstate the limitation.
• Expansion of the Employee Retention Tax Credit – this is one provision that many believe could make it in to the final bill. Under the HEROES Act, the credit would be increased from 50% to 80%, and the cap would be increased from $10,000 to $45,000.
• Elimination of State and Local Tax Deduction Limit – the $10,000 SALT deduction limitation was first introduced by the TCJA in 2017. The HEROES Act would eliminate the deduction limit for 2020 and 2021.
• Elimination of Required Minimum Distributions for 2019 – since most people have already taken their 2019 RMD’s, the bill would allow for a 60-day rollover to allow individuals to put the funds back into the plan.
• Deduction of Expenses Generating PPP Loan Forgiveness – under the CARES Act, PPP loan forgiveness income is tax free. However, the IRS issued guidance that business expenses used in calculating loan forgiveness (payroll, rent, interest, and utilities) are non-deductible.  The Act would override the IRS ruling making these expenses tax deductible.

Please contact your HBK advisor if you would like to discuss what these provisions may mean to you. We will continue to monitor tax legislation and provide updates as necessary.

The IRS recently released FAQs on coronavirus-related relief for retirement plans and IRAs (found here: https://www.irs.gov/newsroom/coronavirus-related-relief-for-retirement-plans-and-iras-questions-and-answers). Specifically, this page provides insight as to the position the IRS may take with respect to the special distribution options, rollover rules for retirement plans, and the permissible loans from certain retirement plans found in the CARES Act.

The FAQs provide details as to what constitutes a coronavirus distribution, and what the requirements are in order to be a qualified individual. The FAQs also detail the loan relief under the CARES Act. Some key questions answered in the FAQs are as follows:

• Coronavirus distributions will generally be included in income ratably over three years, beginning with the year 2020, assuming that 2020 is the year that the distribution is received. A taxpayer may elect to include the entire distribution in gross income for the year of the distribution.
• Coronavirus distributions can be repaid within three years after the date that the distribution was received. If the distribution is repaid, the taxpayer will have the option to file an amended federal income tax return to claim a refund of the tax attributable to the amount of the distribution that was previously included in income. If the three-year repayment period is not yet closed, no income would need to be included for years remaining after the distribution has been repaid.
• Employers have the option to adopt the distribution and loan rules under the CARES Act. An employer can decide to what extent they decide to amend the plan provisions to allow for the coronavirus related distributions. Even if an employer does not treat the distribution as coronavirus-related, a qualified individual is able to treat a distribution that meets the requirements of a coronavirus-related distribution as coronavirus-related on the individual’s federal income tax return.
• Retirement plan administrators may rely on an individual’s self-certification that they meet the requirements to be classified as a qualified individual unless the plan administrator knows the individual does not meet the requirements.
• Qualified individuals can designate eligible distributions from retirement plans on Form 1040 when filing their income tax returns. Form 8915-E (which is expected to be available before the end of 2020) will be used to report the amount of the coronavirus distribution included in income for the year as well as the repayment of these distributions.
• Retirement Plan Administrators will be required to report the coronavirus-related retirement plan distributions on Form 1099-R even if the repayment takes place in the same year. The IRS is expected to provide more information on how to report these distributions at a later time.

If you have any questions about whether any of the provisions in the CARES Act apply to you, or any questions regarding the recently released FAQs, please contact your HBK Tax advisor.

As part of its $2.2 trillion aid package, Congress appropriated $100 billion in financial relief to healthcare providers. The funds are being distributed through the Department of Health and Human Services (HHS) to hospitals, public entities, not-for-profit entities, and Medicare- and Medicaid-enrolled suppliers and institutional providers to cover unreimbursed healthcare-related expenses or lost revenues due to the coronavirus pandemic. Funds are provided as a grant, given compliance with the criteria as listed on the HHS website, including that they cannot be used for the same expenses as proceeds from a Paycheck Protection Program (PPP) loan or Economic Injury Disaster Loan (EIDL).

HHS distributed an initial $30 billion of the $50 billion general distribution fund between April 10 and 17. While providers were not required to submit an application for these funds, they are required to verify receipt of the funds through the HHS general distribution portal.

On April 24, HHS began distributing the remaining $20 billion. Certain providers were automatically sent an advance payment based on the revenue data they submit in Centers for Medicare and Medicaid Services (CMS) cost reports. Providers who receive their money automatically still need to submit their revenue information through the HHS general fund portal.

On April 27, HHS opened the general fund portal for providers who received automatic payments to report revenue. Providers that did not receive the automatic advance may be eligible for additional funds by accessing the general distribution portal and providing IRS tax filings and estimates of lost revenues in March and April of 2020. Providers that have not already confirmed receipt of monies from the original $30 billion distribution will need to complete the verification, then reenter the portal to proceed with an additional application.

To be eligible, a provider must:

• Have received a Provider Relief Fund Payment by 5:00 pm EST, Friday April 24.
• Attest to having received the payment via the Provider Attestation Portal, and agree to the Terms and Conditions on the attestation portal.

Providers should be prepared to provide the following:

• A provider’s “Gross Receipts or Sales” or “Program Service Revenue” as submitted on its federal income tax return
• Estimated revenue losses in March 2020 and April 2020 due to COVID
• A copy of the provider’s most recently filed federal income tax return
• A listing of the Tax Identification Numbers of any of the provider’s subsidiary organizations that have received relief funds but that do not file separate tax returns

If you have questions, we’re here to help. Contact us at (330) 758 – 8613; or email me at jzarlenga@hbkcpa.com.

The U.S. Department of Health and Human Services has begun distributing $30 billion in relief funding to healthcare providers. The money is part of the $100 billion designated for healthcare providers and organizations in the CARES Act.

The news of the distributions was released today, April 10, by HHS as the first payments were arriving in providers’ accounts—or the central billing accounts for provider groups. The money is considered the first tranche of the $100 billion; expectations are for the additional tranches to be designated for hospitals, other providers, and to provide enhanced support in rural or otherwise under-served communities.

The funds are cash payments, not loans, and do not need to be repaid. Nor do they affect applications for or participation in other COVID-19 relief programs, including the Families First Coronavirus Response Act, the Paycheck Protection Program under the CARES Act, and Centers for Medicare and Medicaid Services (CMS) Accelerated and Advance Payment Program.

Eligibility is restricted to providers and facilities that receive Medicare fee-for-service (FFS) reimbursements and is determined by their 2019 Medicare FFS reimbursement totals. HHS paid $484 billion in Medicare FFS reimbursements last year, making the $30 billion being distributed slightly above 6 percent of that amount. A provider can estimate their payment by dividing their 2019 Medicare FFS payments received, excluding Medicare Advantage, by $484 billion, and multiplying that amount by $30 billion. We have received early reports that providers are receiving up to 9 percent of their 2019 Medicare FFS reimbursement totals.

Providers must attest to receiving the funds and agree to the HHS terms and conditions within 30 days of receipt of payment (see https://www.hhs.gov/sites/default/files/relief-fund-payment-terms-and-conditions-04092020.pdf). Note, the HHS will open these attestation submissions the week of April 13, 2020. As well, providers must agree not to seek collection of out-of-pocket payments from a COVID-19 patient that are greater than what the patient would have otherwise been required to pay if the care had been provided by an in-network provider.

We’re here to help. Call us with your questions or concerns at 239-482-5522; or email me at mdeluca@hbkcpa.com.

For more details from HHS, visit https://www.hhs.gov/provider-relief/index.html.

What does the federal government’s COVID-19 Response legislation mean to retirement plans? The recently passed Coronavirus Aid, Relief, and Economic Security Act or the CARES Act, contains relief and assistance for qualified retirement plans and their participants. These retirement plan enhancements include dramatically expanded hardship distribution provisions, significantly larger participant loans and numerous other features that plan sponsors should be aware of. HBKS Retirement Plan Group’s, National Practice Leader, Dean Piccirillo, CFP®, CRPS®, AIFA®, Retirement Plan Manager, Rod Diaz, CRPS®, AIFA® and Bob McNulty, CPC. Mr. McNulty is the President of M2B Retirement Plan Consulting, LLC, a national third-party retirement plan administrator explain in this webinar. Download the presentation materials here.

In his public COVID-19 briefing on Tuesday, March 31, President Trump proposed a $2 billion infrastructure bill as the next piece of legislation to boost a post-pandemic U.S. economy. Although many lawmakers agree with the President, exactly what projects should be done and, more importantly, where the money will come from are points of contention.

The President proposed that the country should take advantage of historically low interest rates to borrow inexpensively to finance the infrastructure work. In a tweet he said, “With interest rates for the United States being at ZERO, this is the time to do our decades long-awaited Infrastructure Bill. It should be VERY BIG & BOLD, Two Trillion Dollars, and be focused solely on jobs and rebuilding the once great infrastructure of our Country! Phase 4.”

Rumors have the White House and Congress discussing ideas for a fourth round of stimulus due to the coronavirus outbreak. House Speaker Nancy Pelosi told reporters, “The President said during the campaign—and since—infrastructure was a priority for him. So that’s why we believe that in terms of recovery, that’s probably the most bipartisan path that we can take.”

The bill could be a boon to a construction industry currently under severe duress due to projects lost to the pandemic. According to the website The Hill, lawmakers “suggest the bill could include updates to public drinking water systems and hospital capacity, as well as upgrades to rural broadband in light of increased teleworking and online schooling during the pandemic. The upshot would include additional jobs at a time when unemployment filings are skyrocketing into the millions.”

The dictates indicate the nation is on a path to getting what has been rumored for years, an infrastructure support bill that will have bipartisan support. The Phase 4 bill could allow the U.S. to move forward with the work that everyone seems to agree we need, but no one has been willing to commit to. While we only have a tweet and comments to the media to confirm such a commitment, we seem to be moving in the direction of an infrastructure bill.

According to levelset.com, a website that advocates for construction businesses, the CARES Act, which was signed into law on March 27, contains elements of stimulus for the construction industry. In an April 2 posting, the site noted: “In particular, contractors who work on healthcare and public works projects could see a sharp uptick in jobs as infrastructure and hospital projects get off the ground quickly. In most states and cities so far, construction, in general, is considered an essential business, and projects are being allowed to continue even as governors issue stay-at-home orders.” The site points to $100 billion in emergency grants to hospitals that could be used for new construction projects to increase patient capacity, and another $150 million “to prevent, prepare for, and respond to coronavirus, domestically or internationally, including to modify or alter existing hospital, nursing home, and domiciliary facilities in State homes.”

We will continue to provide infrastructure legislation updates as more information becomes available. Meanwhile, if you have questions or concerns, call HBK CPAs & consultants at (330) 758-8613; or email me at mkapics@hbkcpa.com.

Amy Dalen, JD and Ben DiGirolamo, CPA, JD as they cover the individual and business tax provisions within the recently passed CARES Act.

Topics discussed include:
Individual Stimulus Payments
Retirement Plan Provisions
Employee Retention Tax Credit
Payroll Tax Deferral
Expanded NOL Provisions

Download the presentation.

The CARES Act, the phase 3 federal legislation addressing the COVID-19 crisis that was signed into law March 27, includes two key provisions for Medicare Part A and Part B providers and suppliers:

• The Act provides sequestration relief for the period of May 1, 2020 to December 31, 2020, a pause in reimbursement reductions that should result in an average 2 percent increase in Medicare reimbursement throughout the eight-month period.
• The Centers for Medicare & Medicaid Services (CMS) has expanded its Accelerated and Advance Payment Program (AAPP), which is designed to advance funds when there is a disruption in claims submission or claims processing, to a broader group of providers and suppliers for the duration of the public health emergency.

About the AAPP expansion
The AAPP expansion, as distinguished from the SBA loan programs addressed by the legislation, allows eligible providers and suppliers to request up to 100 percent of their Medicare payments in advance for a three-month period. Certain types of hospitals are eligible for additional relief. Given what is known today, each state-specific Medicare Administrative Contractor (MAC) to which a provider or supplier must apply will work to review and issue payments within seven calendar days of receiving the request.

Most non-hospital providers and suppliers will not be required to start repayments of accelerated funds until 120 days after the date of issuance. In the interim, all Medicare claims within that 120-day window will be paid in full. At the end of the 120-day period, claims submitted by a provider or supplier will go to offset its advanced balance until the balance is paid in full or 210 days after funding, whichever comes first. The repayment will be applied automatically.

Submission forms can be found on each individual MAC website, and will vary by contractor. The required Information should be easy to access, and the only calculation are the Medicare payment amounts for the three-month period. Electronic submissions are available, and will reduce processing time, but requests can also be submitted by fax, email, or mail.

While a Paycheck Protection Program (PPP) loan might be more attractive to some organizations, given that the anticipated loan forgiveness would typically cover the majority of private practice overhead, the AAPP program may offer:

• More immediate near-term financing to carry a practice before PPP loans are funded
• Additional funding should the PPP funds be insufficient to carry the provider
• The advantage of no stated limitations on how loan proceeds may be used
• A virtually interest-free loan for 120 days

Given that these funds must be repaid in a relatively short time frame, it is essential that each practice considers such factors as practice size; specialty; the revenue mix among Medicare, private-pay, and third-party reimbursements; current and future 2020 cash flow planning; seasonality; and physician compensation allocations and formulas.

Click for a fact sheet featuring highlights of the program and a MAC sheet by state.

We’re here to help. Call us with your questions or concerns at (239) 482-5522 or email me at mdeluca@hbkcpa.com.

The resource guide below provides details for some of the most important provisions of the Coronavirus Aid, Relief, Economic Security (CARES) Act.

CARES Act Resource Guide

President Trump has signed into law the historic $2 trillion stimulus package named the Coronavirus Aid, Relief and Economic Security (CARES) Act. The Act aims to aid the American public and economy as we fight the devastating spread of COVID-19. The legislation is the largest emergency aid package in U.S. history and will provide immediate cash to most U.S. employers and citizens. Please see read our previous article discussing the Act’s tax and financial provisions. We will be publishing comprehensive articles on these provisions in the upcoming weeks.