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COVID-19 Resource Page

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Email Blasts

 

Webinars

- April 1, 2020

CARES Act for Dentists/Doctors

Click HERE to access the recording.

- April 15, 2020

Q&A Session 2

Click HERE to access the recording.

- April 18, 2020

Dental Office Leases During COVID-19 (featuring Brian Mills at CARR Healthcare Realty)

Click HERE to access the recording.

- May 6, 2020

PPP Update / Preparing to Reopen Your Practice

Click HERE to access the recording. Click HERE to download the PowerPoint slides.

- May 20, 2020

PPP Loan Forgiveness Information

The recording will be available shortly.

- May 21, 2020

Preparing your Dental Practice for the New Normal, Part 2

Click HERE to access the recording. Please note that this webinar was not presented by Phillips Accountancy and we did not participate due to scheduling issues. This recording is being provided as a courtesy only. If you have any additional questions related to this subject matter, please contact Tim@Lifestoneco.com.

 

Miscellaneous

SBA's Economic Injury Disaster Loan (EIDL): How to Apply & How to Check Your Status

Need a copy of your IRS Tax Transcript? Click here.

Economic Stimulus Check Calculator

 

 

An Update regarding Coronavirus // March 12, 2020

To our valued clients and staff:

According to the most recent information from the CDC, for most people, the immediate risk of being exposed to the virus that causes COVID-19 is thought to be low. However, we want you to feel confident that Phillips Accountancy Corporation is doing our part to keep our clients and staff safe.

While we truly enjoy meeting our clients for face-to-face visits this time of year, we do want to let you know that there is an option to convert all in-office tax appointments to phone appointments instead. There are no appointments that must be handled in-office; everything can be handled remotely should that be your preferred manner of doing so. We only ask that you send us your tax documents at least 24 hours ahead of your meeting. If you are feeling in any way ill – with or without a fever – please kindly change your appointment to a phone appointment.

If you are not unwell and would still rather meet with us in person, please forgive us for greeting you with a warm smile and a wave, instead of a handshake. This request relates directly back to CDC guidelines and is meant to protect you and your family as much as it is to protect us and ours.

When thinking about how to send us documents for your tax return preparation, please know that we continue to strongly recommend the use of our Secure Client Portal, which can be accessed directly from our website: www.Phillips-Corp.com. If you would like step-by-step instructions on how to use the portal, please reply to this email. We've also expanded our e-signature capability this year to make our processing faster and more efficient.

Like many other companies, we're taking guidance from the CDC, which recommends regular and rigorous cleaning as one of the most important preventive measures we can take to help prevent the spread of Coronavirus (COVID-19). We are closely monitoring developments and staying apprised of all protocols recommended by government agencies in order to provide the appropriate safety protocols for everyone.

We also wanted to make you aware of the extra precautions we are taking to ensure that our wonderful team and all our clients stay healthy while visiting us during this time of heightened concern about Coronavirus (COVID-19). On top of the standard cleaning procedures that our building provides as part of our lease, we have taken additional proactive measures including a thorough wipe-down of all touch-points, such as door handles, countertops, desks, copier screens and client seating with commercial-grade disinfectant at the end of each day. We have always had hand-sanitizer available in our reception area for clients and staff, but we've taken the added step of ordering additional hand sanitizer for our staff-only kitchen/breakroom.

It is important that we maintain clarity of mind and faith in the systems in place to protect us. We are doing everything we can to maintain a safe environment in order to keep our staff and clients safe. We strongly encourage you to keep yourself safe too and follow the advice from the CDC.

Thank you for your continued trust in Phillips Accountancy Corporation. We look forward to getting past this with you.

Sincerely,

Phillips Accountancy Corporation

 

COVID-19 Update from Phillips Accountancy // March 16, 2020

Dear Client,

First, please be sure to read this entire message. It contains a great deal of information. Only a few days ago we reached out to share what we were doing to keep our staff and our clients safe. At the time, we had no idea what the next few days would bring. Schools have closed, sports seasons are canceled, concerts and music festivals postponed. The situation is changing rapidly, to say the least.

Based on Governor Newsom's mandate, we have made the difficult decision to convert all in-office appointments to telephone appointments. This change is being made across the board without exception. If you have an upcoming tax appointment with one of our staff, please understand that it will necessarily be held by telephone only. In order to facilitate this and have a productive meeting, please be sure to send us your tax documents at least 24 hours ahead of the appointment.

Our dentist clients may have already heard the latest recommendation from the California Dental Association, that being: "[CDA] strongly recommends that dentists practicing in California voluntarily suspend nonessential or non-urgent dental care for the next 14 days" (emphasis added). For small offices, this recommendation hits especially hard, but the information in this email is applicable to small businesses of any type.

 

Payroll Taxes

The California EDD has granted a 60-day extension of time for businesses in the state to file their state payroll reports and/or to deposit state payroll taxes without penalty or interest. It is possible to use this extension to maintain adequate reserves of cash during this time but be careful not to spend what you cannot replace by the end of the 60-day extension. If you wish to utilize this extension, please contact your payroll company or the EDD Taxpayer Assistance Center at (888) 745-3886.

 

Income Taxes

In accordance with Governor Newsom's March 15th Executive Order, the Franchise Tax Board has already extended several tax deadlines for California taxpayers who are "affected" by the COVID-19 pandemic. This relief includes moving the various tax filing and payment deadlines that occur onMarch 15, 2020, through June 15, 2020, to June 15, 2020. This includes:

  • Partnerships and LLCs who are taxed as partnerships whose tax returns are due on March 15 now have a 90-day extension to file and pay by June 15.
  • Individual filers whose tax returns are due on April 15 now have a 60-day extension to file and pay by June 15.
  • Quarterly estimated tax payments due on April 15 now have a 60-day extension to pay by June 15.

The FTB's June 15 extended due date may be pushed back even further if the Internal Revenue Service grants a longer relief period. On that note, we expect (but do not guarantee) that the Treasury Department will follow suit in extending the filing season for Individual taxpayers, beyond the ordinary deadline of April 15th.

 

Staffing Concerns

Employment law attorney Anita York (partner at Scott & Whitehead) has put out the following information that may be helpful to you. Please note that we are not a law firm and while this information was written by an attorney (Ms. York), it should not be construed as legal advice:

  • You are not required to pay employees if you close down (unless you close mid-day, in which case you must pay them for 50% of their scheduled workday).
  • Unemployment insurance does apply to time off due to employer-initiated temporary "furloughs" for employees who are off work entirely. The Governor has signed an Executive Order waiving the usual 7-day waiting period for time off for this purpose. Here is a link to the EDD website about unemployment insurance, SDI and PFL payments that may be available for employees: https://www.edd.ca.gov/about_edd/coronavirus-2019.htm
  • Unemployment insurance does apply to time off due to employer-initiated temporary hours reductions between 10% and 60%. In this situation, the employer sets it up under EDDs "Work Sharing" program, which makes it very easy for their employees to apply. Here is a link the EDD's Work Sharing Program website: https://www.edd.ca.gov/unemployment/Work_Sharing_Program.htm
  • Of course, unemployment insurance would also apply to lay-offs if you do not re-open or return all employees to work.
  • If you remain open, unemployment insurance may apply to time off work due to school closures and childcare issues. The employee would have to apply through EDD.
  • California State Disability Insurance (SDI) applies to time off for if the employee is home sick with COVID-19 or if they are home due to exposure. The Governor has signed an Executive Order waiving the usual 7-day waiting period for time off for this purpose.
  • California Paid Family Leave (PFL) applies to time off work due to the illness of someone for whom the employee is the caregiver. PFL does not apply to time off work due to school closures or office closures (at least, not currently).
  • If you close, I advise against requiring employees to use their own vacation or PTO for time off at this time, but rather, suggest that you give them the option.
  • As you may know, the House of Representatives has sent an Emergency Coronavirus Bill to the Senate. As currently drafted, it is our understanding that it includes a 14-day paid sick leave mandate that will apply to employers with 500 or fewer employees. It will only apply if the employee is home sick with COVID-19 or if they are home due to exposure. The 14-day paid sick leave mandate will not apply to time off work for any other reason. Employers with fewer than 50 employees will be reimbursed for this sick leave mandate with a tax credit. The bill will undoubtedly be modified before it is finalized, hopefully sometime this week.

The above information is not an attempt by Phillips Accountancy Corporation at giving legal advice. Phillips Accountancy is not a law firm and the information itself was written by Anita York, Esquire as a courtesy for our clients. If you would like more information about the employment law aspect of this, please contact the law office of Scott & Whitehead at (949) 222-0166 or visitwww.EmployerLaw.com.

 

In Summary

You can probably imagine that with both tax season (for now) and concerns over coronavirus to contend with, we are being inundated with phone calls and emails from clients. We promise that anytime we have new information of relevance to you, we will be sure to distribute it as soon as it is feasible. As COVID-19 becomes a matter of increasing global concern, we remain available to meet your compliance and advisory needs, as we always have, by phone, fax and email. Thank you.

Sincerely,

Your friends at Phillips Accountancy Corporation

 

Updated COVID-19 Info from Phillips Accountancy  // March 17, 2020

Dear Clients,

We have been closely following the situation involving the Coronavirus pandemic. We sincerely care about our clients along with their loved ones and staff, and we're once again updating you with actionable information to consider for your family and your business. Please read this email in its entirety. It contains the most correct and up-to-date information as of the time the email was sent, however, as the situation is changing constantly, we will continue to send you email updates. This email contains the pertinent information from the previous emails as well as new information.

If you have any friends or colleagues who might benefit from this information, please forward this email to them and then urge them to join our newsletter list to get future updates. Anyone can join our newsletter directly from our website, at www.Phillips-Corp.com.

 

Phillips Accountancy Office Procedure

As an accounting firm engaged in the preparation of income tax returns for individuals and businesses, Phillips Accountancy is exempt from the new directive set forth by the Orange County Health Officer (link). We are still operational at this time. However, in order to maintain “Social Distancing” within our office, approximately half of our staff members are working remotely from their homes using military-grade encryption technology.

Based on Governor Newsom's mandate as well as the OC Health Officer's legal Directive, we are converting all in-office appointments to telephone appointments. This change is being made across the board without exception. If you have an upcoming tax appointment with one of our staff, please understand that it will necessarily be held by telephone only. In order to facilitate this and have a productive meeting, please be sure to send us your tax documents at least 24 hours ahead of the appointment. You can send us information via our secure client portal as well as by email, fax, and mail. Please do not attempt to drop off documents at our office; we are not accepting visitors at this time.

 

Financial Considerations

If there was ever a time to take a close look at your personal and business financial situation, now is that time. Since we do not know how long this situation will last, it is imperative that you maintain an adequate amount of cash to weather the storm. Consider opening a line of credit if needed or confirm with your bank the process of drawing on any line of credit you may already have. If your practice has any outstanding loans, consider asking those banks if they would consider deferring payments entirely or at least allow you to make interest-only payments. Finally, don't wait any longer to reduce spending – do it now.

 

Income Taxes

Treasury Secretary Steven Mnuchin announced today (3/17/20) that the Treasury Department and the IRS are providing a nationwide 90-day extension of time to make tax payments. This delay gives taxpayers additional time to pay outstanding tax liabilities without interest or penalties. Individual taxpayers can defer payments up to $1 million while businesses can defer payments up to $10 million.

Unfortunately, in terms of the federal government's guidance, this is where the clarity ends. We do not yet know the following:

  • In order to qualify for this extension, will taxpayers or businesses need to still file a return?
    • If so, this means that there is only an extension of time to pay, and not an extension of time to file.
  • Is the IRS itself expected to reduce hours or staffing to deal with this pandemic and keep its own workforce safe?
    • If so, this would dramatically slow down the processing time for tax returns, and by extension, the processing time for tax refunds.

In accordance with Governor Newsom's March 15th Executive Order, the Franchise Tax Board has already extended several tax deadlines for California taxpayers who are "affected" by the COVID-19 pandemic. This relief includes moving the various tax filing and payment deadlines that occur on March 15, 2020, through June 15, 2020, to June 15, 2020. This includes:

  • At this point, all dentists that are following the CDA recommendations (as well as businesses following their local health agency directives to "shelter-in-place") are considered "affected".
  • All business entities whose tax returns were due on March 15 now have a 90-day extension to file and pay by June 15.
  • Individual filers whose tax returns are due on April 15 now have a 60-day extension to file and pay by June 15.
  • Quarterly estimated tax payments due on April 15 now have a 60-day extension to pay by June 15.

The FTB's June 15 extension due date may be pushed back even further considering that the IRS has granted a longer extension period.

 

Staffing Concerns

Among the many issues facing employers is the possibility of furloughs. For dental offices, this is more than just a possibility. But what is a furlough? A furlough involves reducing the days or weeks that an employee may work, unlike a layoff which is usually permanent. When employees are furloughed, do not expect them to do any work – including checking email and voicemail.

Employment law attorney Anita York (partner at Scott & Whitehead) has put out the following information that may be helpful to you. Please note that we are not a law firm and while this information was written by an attorney (Ms. York), it should not be construed as legal advice:

 

  • If you pay yourself as an employee of the company – that is, you receive a W-2 at the end of the year – then you are also entitled to Unemployment Insurance (which is sometimes just called "Unemployment"). Additionally, if you pay your spouse or your children as employees of your practice, they may also qualify for unemployment.
  • You are not required to pay employees if you close down (unless you close mid-day, in which case you must pay them for 50% of their scheduled workday).
  • Unemployment insurance does apply to time off due to employer-initiated temporary "furloughs" for employees who are off work entirely. The Governor has signed an Executive Order waiving the usual 7-day waiting period for time off for this purpose. Here is a link to the EDD website about unemployment insurance, SDI and PFL payments that may be available for employees: https://www.edd.ca.gov/about_edd/coronavirus-2019.htm
  • Unemployment insurance does apply to time off due to employer-initiated temporary hours reductions between 10% and 60%. In this situation, the employer sets it up under EDD's "Work Sharing" program, which makes it very easy for its employees to apply. Here is a link the EDD's Work Sharing Program website: https://www.edd.ca.gov/unemployment/Work_Sharing_Program.htm
  • Of course, unemployment insurance would also apply to lay-offs if you do not re-open or return all employees to work.
  • If you remain open, unemployment insurance may apply to time off work due to school closures and childcare issues. The employee would have to apply through EDD.
  • California State Disability Insurance (SDI) applies to time off for if the employee is home sick with COVID-19 or if they are home due to exposure. The Governor has signed an Executive Order waiving the usual 7-day waiting period for time off for this purpose.
  • California Paid Family Leave (PFL) applies to time off work due to the illness of someone for whom the employee is the caregiver. PFL does not apply to time off work due to school closures or office closures (at least, not currently).
  • If you close, you are advised against requiring employees to use their own vacation or PTO for time off at this time, but rather, suggest that you give them the option.
  • As you may know, the House of Representatives has sent an Emergency Coronavirus Bill to the Senate. As currently drafted, it is our understanding that it includes a 14-day paid sick leave mandate that will apply to employers with 500 or fewer employees. It will only apply if the employee is home sick with COVID-19 or if they are home due to exposure. The 14-day paid sick leave mandate will not apply to time off work for any other reason. Employers with fewer than 50 employees will be reimbursed for this sick leave mandate with a tax credit. The bill will undoubtedly be modified before it is finalized, hopefully sometime this week.

The above information is not an attempt by Phillips Accountancy Corporation at giving legal advice. Phillips Accountancy is not a law firm and the information itself was written by Anita York, Esquire as a courtesy for our clients. If you would like more information about the employment law aspect of this, please contact the law office of Scott & Whitehead at (949) 222-0166 or visit www.EmployerLaw.com.

Employers dealing with coronavirus worries can add another concern – federal workplace safety regulators expect them to track infections or risk being fined. The Occupational Safety and Health Administration issued the guidance in early March, equating COVID-19, the illness caused by the new coronavirus, to other infectious diseases such as tuberculosis and hepatitis A.

 

In Summary

You can probably imagine that with both tax season and concerns over coronavirus to contend with, we are being inundated with phone calls and emails from clients. We promise that anytime we have new information of relevance to you, we will be sure to distribute it as soon as it is feasible. If a question is asked of us that could be answered in this email, please excuse us for directing you back to this email.

As COVID-19 becomes a matter of increasing global concern, we remain available to meet your compliance and advisory needs, as we always have, by phone, fax and email. Thank you.

 

Sincerely,

Your friends at Phillips Accountancy Corporation

 

IRS Tax Deadlines Update from Phillips Accountancy // March 19, 2020

Dear Clients,

As the situation surrounding COVID-19 continues to evolve, we want to take this opportunity to assure you that we are here to serve you. The last thing you need to worry about right now is tax filing deadlines, payment dates, and other compliance headaches, and so we have made it our mission to stay on top of changes so that we can keep you updated.

Please read this email in its entirety. This email contains the pertinent information from the previous emails as well as new information. Anytime there is a notable change that would affect dental/medical practice owners, we will update you here. Because some people are being added to this email newsletter list only recently, we are including the information and sections from previous emails. If a section has no changes from a previous email (that is, all the information is still correct), then we have noted so in the section header so that you can easily skip past what you've read previously.

If you have any friends or colleagues who might benefit from this information, please forward this email to them and then urge them to join our newsletter list to get future updates. Anyone can join our newsletter directly from our website, at www.Phillips-Corp.com.

 

Income Taxes

This afternoon (3/18/20), the Treasury Department and the IRS have issued an order clarifying what President Trump and Treasury Secretary Mnuchin stated on March 17th. This official action gives taxpayers additional time to pay outstanding tax liabilities without interest or penalties. Individual taxpayers can defer payments up to $1 million while businesses can defer payments up to $10 million.

However, this is only an extension of time to pay. The IRS' filing deadlines themselves remain unchanged. There are never any penalties for an extension of time to file. As a reminder, the tax deadlines are as follows:

 

ORIGINAL FILING DEADLINES:

March 16

April 15

May 15

Partnerships

Individuals

Nonprofits

S-Corporations

C-Corporations

 

 

Estates

 

 

EXTENDED FILING DEADLINES:

September 15

September 30

October 15

November 16

Partnerships

Estates

Individuals

Nonprofits

S-Corporations

 

C-Corporations

 

 

So just to be clear, these filing deadlines are still in place. All federal income tax returns remain subject to the tax return filing deadlines above. What was granted with the Treasury Department's new guidance was an extension of time to pay any tax due without penalty or interest. The new deadlines to pay taxes due are now as follows:

 

INDIVIDUALS (FORM 1040):

 

2019 Income Tax Payment

2020 – 1st Quarter Estimate

2020 – 2nd Quarter Estimate (CA ONLY)

Originally Due:

April 15, 2020

April 15, 2020

June 15, 2020

Now Due On:

July 15, 2020

July 15, 2020

July 15, 2020

 

BUSINESSES (FORM 1120, 1120S & 1065):

 

2019 Income Tax Payment

2020 – 1st Quarter Estimate

2020 – 2nd Quarter Estimate (CA ONLY)

Originally Due:

April 15, 2020

April 15, 2020

June 15, 2020

Now Due On:

July 15, 2020

July 15, 2020

July 15, 2020

 

The Franchise Tax Board of California has extended their tax deadlines by an additional 30 days (beyond their original extension of 60 days) in order to match the federal government's deadlines. Additionally, the state is granting an extension of time to pay 2nd Quarter tax estimates – something that the IRS is not yet granting.

 

IRS Closing Some Offices

In order to contain the spread of coronavirus, the Internal Revenue Service is closing some offices, beginning with Northern California, Seattle, Puerto Rico, and New York. These closures include some taxpayer assistance offices. Expect more closures in the coming days and weeks. As a result of these closures, tax return processing may be slower than usual, along with tax refund payments.

 

In Summary

You can probably imagine that with both tax season and concerns over coronavirus to contend with, we are being inundated with phone calls and emails from clients. We promise that anytime we have new information of relevance to you, we will be sure to distribute it as soon as it is feasible. If a question is asked of us that could be answered in this email, please excuse us for directing you back to this email.

As COVID-19 becomes a matter of increasing global concern, we remain available to meet your compliance and advisory needs, as we always have, by phone, fax and email. Thank you.

 

Sincerely,

Your friends at Phillips Accountancy Corporation

 

Coronavirus Update & Your Business // March 26, 2020

Dear clients,

A lot has changed in the few days since the last email blast, and I apologize for the delay. Our office spent the end of last week and the beginning of this week enacting our Disaster Response Plan (DRP), which is an action plan we put in place that was intended to allow us to maintain service continuity and operations in the event of a natural disaster. Currently, our staff is all working out of their homes and we are communicating with each other through electronic means. This allows us to continue providing services to our clients during this chaotic time, but unfortunately, collaborating amongst ourselves is no longer as easy as getting up and walking to the next office. If you experience a slight delay in our responses, please excuse us but most importantly, please don't let it dissuade you from sending us your questions! It's through your questions that we learn what the most important issues are that you're facing.

If you have any friends or colleagues who might benefit from this information, please forward this email to them and then urge them to join our newsletter list to get future updates. Anyone can join our newsletter directly from our website, at www.Phillips-Corp.com.

 

The Families First Coronavirus Response Act

On March 18th, President Trump signed this into law. I'm sure you've read a lot about this, from all sorts of different sources. Hopefully, this section will clear up some questions.

 

Emergency Sick Leave

Currently, the law states that any employer with less than 500 employees must provide up to 80 hours (10 days) of paid sick leave to all employees if one of the following six eligibility criteria is met:

  1. The employee is subject to a federal, state or local quarantine or isolation order related to COVID-19.
  2. The employee has been advised by a health care provider to self-quarantine due to concerns related to COVID-19.
  3. The employee is experiencing symptoms of COVID-19 and seeking a medical diagnosis.
  4. The employee is caring for an individual who is subject to an order or quarantine;
  5. The employee is caring for a son or daughter of such an employee if the school or place of care of the son or daughter has been closed or the childcare provider of such son or daughter is unavailable due to COVID-19 precautions.
  6. The employee is experiencing any other substantially similar condition specified by the Secretary of Health and Human Services in consultation with the Secretary of the Treasury and the Secretary of Labor.

Under this section of the new law, it seems that there is no required qualification for employees to meet; all employees are eligible, and the employer cannot require their staff to use regular sick leave first. Employees who are diagnosed with COVID-19 or are quarantined are entitled to earn the full amount of their full regular wages, up to $510/day or $5,110/total; those who are caring for sick relatives are entitled to 2/3 of the regular wages, up to $200/day.

 

Public Health Emergency Leave

Any employee that has worked for you for at least 30 days and finds himself or herself unable to work because their childcare is unavailable or their child's school is closed is not entitled to 12 weeks of protected leave – 10 weeks of which must be paid at two-thirds the employee's regular wages. This paid leave is capped at $200 per day and $10,000 in total.

At the conclusion of the Public Health Emergency Leave, employers with over 25 employees must return the employee to the same or equivalent position. However, employers with fewer than 25 employees are exempt from this requirement if:

  • The employer makes a reasonable effort to restore the employee to an equivalent position; and
  • The employee's position no longer exists due to economic conditions; and
  • The employer makes a reasonable effort to contact the (now former) employee if an equivalent position becomes available within a year.

Employers are to be reimbursed for these new mandatory employee benefits and certain associated costs such as health insurance premiums within three months with a payroll tax credit.

Some employers may be exempt by the Department of Labor, and the ADA is pushing for the exemption to include dentists as well, however, even with the reimbursements, this well-intentioned and bi-partisan law hurts all small business owners at a critical time. We expect the Department of Labor to release more guidance on this new law in the coming days, and we will be sure to keep you informed.

 

Unemployment Insurance Concerns

We have been receiving a lot of questions regarding Unemployment Insurance (UI, or simply "Unemployment"). A step-by-step guide to filing a claim for UI will be released shortly, however, here are some of the most frequently asked questions that we've received:

My general dentistry practice is a Schedule C (not incorporated). Can I file for UI?

Generally, no. With the new stimulus package, it may be possible later to file for UI. You'll want to go to the state website (link) and do the estimate and see if it's allowed at that point.

I work as an Endodontist at multiple offices. How do I file for Unemployment?

It depends. If you're paid as an Employee (you receive a W-2), you qualify automatically. If you are paid as an Independent Contractor (you receive a 1099) and you take those earnings through your corporation and pay yourself a salary from that corporation, you also qualify. If you take earnings through your corporation and haven't taken a salary, you probably don't qualify. If you are paid as an Independent Contractor and report your income on your personal return as a Schedule C, then you do not qualify currently, however, the government may make concessions later.

Am I taxed on my Unemployment?

You will be taxed at the federal level, but not at the state level.

If I file for Unemployment, won't I end up paying more payroll taxes in the long run?

We predict that all employers will see a rate increase regardless of whether any of their staff file for UI benefits. The reason is that many, many Californians are filing a claim for these benefits, and this will deplete the UI fund, so to speak. To replenish those funds, we expect all employers to see their UI rates increase in the coming months.

The UI application is asking if I am "self-employed". How do I answer that?

You are self-employed if you file business income and expenses on a Schedule C of your personal tax return (Form 1040). If you are an officer of a corporation and you receive a salary (W-2), you are not self-employed.

What are the Pros and Cons of filing for Unemployment Insurance?

At this point and with the information available, we don't see any reason for doctors or dentists not to file for unemployment if their office is closed due to the COVID-19 pandemic. The Pro is that you will receive the benefit that you have been paying in to for years. There are a handful of very high earners who would not benefit by filing a UI claim (such as those with a multitude of revenue streams), but these instances are few and far between.

 

Taxes

Tax Deadlines

As of March 21st, the Treasury Department and Internal Revenue Service announced that the federal income tax filing due date ("Tax Day") is automatically extended from April 15, 2020, to July 15, 2020. Nothing will need to be filed to qualify for this new tax deadline; it has been granted to all individual income taxpayers by default. Individual and Business taxpayers who need additional time to file beyond the July 15 deadline, can request a filing extension as usual.

The Franchise Tax Board of California has also extended their tax deadlines by an additional 30 days (beyond their original extension of 60 days) to match the federal government’s deadlines.

 

Tax Payments

Individual taxpayers can defer payments up to $1 million while businesses can defer payments up to $10 million. The new deadlines to pay taxes due are now as follows:

INDIVIDUALS (FORM 1040)

 

2019 Income Tax Payment

2020 – 1st Quarter Estimate

2020 – 2nd Quarter Estimate (CA ONLY)

Originally Due:

April 15, 2020

April 15, 2020

June 15, 2020

Now Due On:

July 15, 2020

July 15, 2020

July 15, 2020

 

BUSINESSES (FORM 1120, 1120S & 1065)

 

2019 Income Tax Payment

2020 – 1st Quarter Estimate

2020 – 2ND Quarter Estimate (CA ONLY)

Originally Due:

April 15, 2020

April 15, 2020

June 15, 2020

Now Due On:

July 15, 2020

July 15, 2020

July 15, 2020

Additionally, the state of California is granting an extension of time to pay 2nd Quarter tax estimates – something that the IRS is not yet granting.

 

Installment Agreements

As of March 25th, taxpayers under an existing Installment Agreement with payments due between April 1 and July 15, 2020 can choose to suspend their payments. Taxpayers who are currently unable to comply with the terms of an Installment Payment Agreement, including a Direct Deposit Installment Agreement, may suspend payments during this period if they prefer. Furthermore, the IRS will not default any Installment Agreements during this period. By law, interest will continue to accrue on any unpaid balances. More information is available on the IRS website.

 

Small Business Loans – This section contains information courtesy of Lendeavor

Government Loans

Small business owners in all U.S. states and territories are currently eligible to apply for a low-interest loan from the Small Business Administration (SBA). The SBA's Economic Injury Disaster Loan program provides small businesses and nonprofits that have been severely impacted by COVID-19 with working capital loans of up to $2 million that can provide vital economic support to small businesses to help overcome the temporary loss of revenue they are experiencing.

This is a government program not affiliated with any bank. This program is not a bank participation loan. It is financed and funded directly through the SBA Disaster relief program. You will need to apply directly with the SBA, and there are specific requirements to qualify for the relief funds. Please note that patience is needed as many details are being worked out and the call volume is significant.

 

Private Lenders

There do exist other avenues for urgent small business loans, through well-known banks like Bank of American Practice Solutions as well as the less well-known online lender, Lendeavor (which is recommended by our firm). Many dentists are using this downtime caused by COVID-19 as an opportunity to address longer-term debt and cash-flow solutions, and some industry leaders have already offered their customers the option to temporarily defer payments on their practice and commercial real estate loans. For example, Lendeavor has offered its customers a voluntary deferment of up to 60 days. For many dentists, this grace period will be enough. However, other dentists are still looking for longer-term financial solutions.

Lines of credit are always a great solution for quick access to cash. For lines of credit, dentists should start with the bank that already handles its business banking. Lines of credit should only be used as a tool to help manage the day to day cash-flow of a business, but for many dentists, a line of credit coupled with a 60-day payment deferral may be enough.

By now most healthcare professionals know that rates are very low, and they can refinance their business debt at a lower rate. But, more importantly, loan consolidation or a recasting of debt can be a powerful tool to significantly improve business cash-flow. With rates being very low, and with many dentists being offered grace periods on their existing loans, now is a great time for any doctor or dentist to truly assess long term cash-flow solutions.

For those that want to explore other options for managing their existing debt, contact Jason Schneller at Lendeavor to go over different options for debt consolidation and working capital to see what makes the best sense for you: 818-561-8106 | jason.schneller@lendeavor.com

 

Rent – This section written as a courtesy for our clients by Cecilia Chen, Esq.

Contact your landlord immediately to inquire about ways your rent payment can be suspended during this shutdown period, and perhaps extend your lease term by the similar period of rent suspension.

How sympathetic your landlord might be will depend on how leveraged they might be, meaning if they have loan repayments that are also due and not suspended during this time. California Governor Newsom has directed all evictions including commercial tenants to be halted during this time. It is important to keep in mind however that any non-payment of rent constitutes a material default under your lease that can cause you to lose many significant rights under your lease. In particular, it might trigger the inducement recapture clause that will obligate you to repay all tenant improvement allowance and free rents that might have offered to you at the signing of the lease. Skipping rent payments should not be done lightly.

This, however, is an excellent time to contact your business insurance companies and see what coverages you might have. Business interruption insurance typically covers a loss of income due to damage to property that is covered under the policy, as long as the cause of the property damage is a “covered cause of loss,” such as a fire or windstorm. While the COVID-19 pandemic and other pandemics are not typically listed as a “covered cause of loss”, certain specialized insurance policies and endorsements issued specifically in health care industries provide insurance coverage for losses caused by "communicable or infectious diseases" without requiring physical damage to the insured property. Check your policies and see what coverages you might have and talk to your insurance agent.

For those of you who are leasing your office from a landlord who previously sold you the dental practice, those sellers have the good fortune of having sold their practices at the right time and have a responsibility to help their successors through this challenging time. Remind them that their actions will determine how they will be remembered by their patients and the community and consult with your attorney on how to best negotiate the lease.

Contact attorney Cecilia Chen for more information: www.PracticeAtty.com or (855) 850-4111.

 

Disaster Response Planning

Lastly, I'd like to touch on the Disaster Response Plan mentioned earlier. Experts recommend businesses of all sizes and in all industries to have some sort of disaster response or disaster recovery plan. If you don't currently have one, now is a good time to begin planning on out. If you could have foreseen this pandemic and planned for it, what would you have done differently? What procedures would you have had in place to fall back on? Here's a great resource from Ready.Gov on drafting a DRP. We paid an IT security firm to help us create one and I would be happy to send you the referral if you're interested, but the truth is, some templates and guides can be found online for free. The wording and the structure aren't important; all that matters is that you've thought through what you would do when or if another disaster strikes.

 

In Closing

We at Phillips Accountancy have decided that what's most important to us is standing behind the dental and medical communities that we serve. If a colleague of yours forwarded this to you, and you're not one of our clients but you still have additional questions, email us at info@phillips-corp.com. We're on your side whether you're our client or not. This is an immensely difficult time for all of us, but we will get through it together. Thank you.

 

Sincerely,

 

Andrew Phillips, PAFM; Business Manager

PHILLIPS ACCOUNTANCY CORPORATION

 

Unemployment Resources // March 30, 2020

Unemployment benefit calculator

How to file for unemployment in CA - A Step-By-Step Video Guide!

After you file


Alternatives to laying off your employees

Responding to Unemployment Insurance claims

Comprehensive CA Employer's Guidebook (not COVID-19 specific)

 

 

Top 40 Frequently Asked Questions // April 3, 2020

Over the past week, we received hundreds of questions by phone and email; far more would ever have had time to answer individually. After reading all 524 client emails (just in the past week-and-a-half alone), we decided it would be most efficient to answer some of the most common questions in this format. Thus, these are the Top 40 Frequently Asked Questions, grouped into the following four categories: Unemployment Insurance, SBA Disaster Loan, PPP Loan, and Miscellaneous.

Of course, we are always eager to answer our clients' questions on an individual basis, however, right now we are receiving so many questions and a great many of them are asking the same thing. The problem with this is that it leaves us with no time in our (already extended) workday to address other concerns, or to research new developments. Thus, if you ask us something that is covered in this list (or in a previous email or webinar), please excuse us for directing you back to where it was answered previously.

Additionally, we will be holding a live "Q&A Session" at least once or twice a week for the foreseeable future, but again, we will not be answering questions that have already been asked and answered. It remains your responsibility to use the resources we make available to you, and we sincerely appreciate you doing so.

Should you have any questions which you believe have not been answered, please reply to this email for possible inclusion in our next webinar or email blast. Thank you.


Unemployment Insurance

1) I own a dental practice that is now closed. Is there a problem for myself or my wife filing for unemployment?

No, if you and your wife have been paid as an employee through your practice you should file for unemployment.

2) We have to layoff our employees and make them eligible for rehire before April 1st or we might be on the hook for up to 12 weeks of pay for them. Can you please guide me on what I need to do?

At this point, the furlough does not have to have an exact return date. You will not be "on the hook for 12 weeks of pay".

3) Regarding the Families First Act, if our staff is already furloughed, can they now ask for sick leave if the office is closed or do they continue with unemployment? We have 2 that have school-aged kids at home that would qualify. I told them to ask for vacation pay if they’d like.

They continue with unemployment. If they are furloughed they do not get the sick leave. They also should not be paid vacation pay while on furlough.

4) The front desk lady is home because she has two young kids to take care of (they are out of school). Do I have to pay her half of 2/3 of her salary or am I exempt because I have less than 25 employees? I need some guidance, please.

We highly recommend speaking to employment law attorney Anita York for any specific questions. Her contact info is Anita@EmployerLaw.com

5) I am a sole proprietor, I work at another office two days a week and get a Form 1099 from there. Given that I do have my own practice with rent, payroll, etc, I should apply as a sole proprietor, not an independent contractor?

You most likely want to apply as a sole proprietor first.

6) As an employee of my corporation, can I file for unemployment in addition to applying for the paychecks protection loan?

Yes, but you will need to start paying yourself your standard payroll once the loan is funded.

7) Does the PPP program loan factor in an employee's unemployment compensation received? It seems like the employees could be double-dipping if they get unemployment checks and also full pay from their dental office via a PPP plan.

Once the employee is receiving payroll from you they are no longer eligible for unemployment. They would again be employed and ineligible for unemployment benefits.

8) How do I know if I'm self-employed?

If you are not incorporated and report your income directly on your Schedule C, you are then self-employed.

9) When entering the past income, it is broken down by quarter? Does that mean I entered $5,000 for each quarter starting Sep 2018 to Dec 2019? So the total adds up to $20,000 per year? (A bit confused on this, because we only process one payroll in Nov each year for the total amount $20,000).

You must enter the payroll based on when it was actually paid. So if you process one payroll for 20k in November, you would only have wages for the 4th quarter. Please keep in mind the EDD already has this information from your quarterly tax filings and it must match.

10) For my 1st office closure pay period (March 16-31), should I pay all of my employees for 10 days with the normal 7.5 hrs/day plus may salary and expect to be reimbursed (tax credit or SBA 7a loan)?

No, you are only forgiven for wages paid after the loan is funded if you are planning on using the PPP Loan. If you use the tax credit you are not eligible to file for the PPP Loan at any point.

11) I furloughed most of my employees but told everyone to file UI. Should I only pay the people actually working, any requested PTO hours and let Unemployment Ins. pay the remainder?

Yes.

12) They ask for net earnings of 3 mo over the last 2 yrs. Is that just what is on my W2, or do I also include my distributions, then add it to w2 earnings?

It is only what is on your W-2.

13) My team is furloughed, voluntarily, and as yet no one is sick, they are just laid off. Do I still need to pay then COVID-19 sick pay if no one was sick at the time of furlough and if they are still not sick outside of the two-week incubation period following furlough? In other words, if they get sick while temporarily laid off, do they still get sick pay?

If your staff is laid off or furloughed, you are not required to pay them sick pay.

14) How will my unemployment insurance withholding rate affect the payroll cost later if they all apply for the unemployment insurance for partial benefit?

Most likely, due to this crisis, everyone's rates will be raised. This is not a reason to not file unemployment. It is still our recommendation to furlough your staff if your office is essentially closed.

15) As an independent contractor, should I be applying for unemployment insurance or small business loan?

You most likely want to apply for both.

16) Should I allow the staff to use accrued sick leave and vacation pay if they want?

Your staff should be on furlough. If they are not on furlough, they can use vacation or PTO but you do not want to pay out sick leave unless they claim to be sick.

17) If some or all of my staff want to go on unemployment (it appears that with the $600 added CARES supplement most will make more money on unemployment, is this correct?), do I still apply for the PPP?

Your staff does not have the ability to decide whether or not they want to be on unemployment. If they refuse work they have essentially quit and are no longer eligible for unemployment.

18) My dental corporation wants me to come in once a week (Full day) for emergency appointments. Correct me if I’m wrong: If I am obliged to work, I assume I can’t apply for unemployment and receive those benefits?

You can report the wages received and still get unemployment. It will be reduced by the hours worked that specific week but would be back at the normal rate as soon as you no longer have work. Underemployed individuals are still eligible for unemployment.


SBA Economic Injury Disaster Loan (EIDL)

19) Who qualifies and doesn't qualify for an SBA disaster loan? If you have business lines of credit do you still qualify for this fixed-rate loan?

All small businesses qualify and you can have open lines of credit and still qualify. They are also allowing you to have recent open SBA Loans.

20) Should the loan be under my personal name or corporation?

The loan should be applied for your practice or business. For most clients, this will be their corporation. If you are not incorporated then and only then it would under your personal name. Please remember it is a business loan, not a personal loan.

21) I entered P&L expenses on the COGS line, should I attempt to modify my application and change it to a zero?

If you applied before 3/29/20, there is a new simplified form to apply with. You could apply again with the correct amounts. If you applied after 3/29/20 it most likely won't be a problem but we don't have exact guidance of what to do.

22) Is the quick application all that is required for the grant or do I need to submit all the documents listed on the portal?

For your application to be considered complete, I would go ahead and submit all the requested documents.

23) Can you apply for the payroll protection loan and if needed apply for the EIDL at a later date?

We are generally recommending applying for the EIDL first. If you want to apply for it later that should be fine. However, you will most likely miss out on the 10k grant.

24) Is any portion of the EIDL forgivable? What is the $10,000 grant, is that forgivable?

The $10,0000 grant is forgivable if used for payroll, rent, interest, utilities. It is the only portion of the EIDL that is forgivable.

25) In regards to the $10,000 grant from the SBA, do you know if it is a separate application from the Economic Income disaster loan?

The grant is not a separate application. You must fill out the EIDL application to be eligible for the grant.


CARES Act Paycheck Protection Program (PPP) Loan

26) As a sole proprietor, what figure do I use to calculate my payroll costs or salary?

Sole Proprietors would include net earnings from self-employment up to 100k as "payroll costs".

27) If employees go on unemployment for 4 weeks and I apply for the PPP, and employees return to payroll in May, will the forgiveness provision still apply?

75% of the forgiveness portion of the loan has to be spent on payroll. Therefore, if you get funded right away you most likely will not meet that 75% mark if the staff doesn't come back for another month. The best option would be to delay receiving the money even if it means delay applying for the loan until you are ready to bring staff back.

28) Since employer pension contributions should be included when calculating payroll expense, should I include my 2019 employer contributions in my calculation even though I haven't made the 2019 payment to my 401K Profit Sharing Plan yet? If so, during the first 12 wks after receiving the loan, should I make sure that I make a pro-rata 2020 employer contribution to the plan in order to maintain 75% of the previous year's payroll expense?

In our opinion, you should use your 2019 employer retirement contribution as part of the payroll costs. The reason for that is most likely the lender is going to be reviewing financials or tax returns so that is the figure they will see. Also, yes you can use the forgivable portion to pay the contribution. You just want to make sure you are using 75% for payroll costs.

29) For the payroll protection loan, if a portion of that is forgiven, that means I will not require to pay that portion back to the bank?

Yes, the portion that is not forgiven will be required to pay back. The loan terms right now are 1% for 2 years with the first payment deferred for six months.

30) Since we have an S corp for the practice and LLC for the real estate, can we apply one for each business entity?

As the LLC most likely does not have employees, it would not qualify for the PPP Loan. It might qualify for the EIDL however that is not a forgivable loan.

31) Do you recommend that I go and apply for the PPP loan as soon as the application process starts or wait as the money we might get should be spent with restrictions on time and ways?

As of today (4/3/20), our understanding is that the loan application process will take a couple of weeks but then the loan will be funded very soon after approval. Given this information, we would recommend not applying until you are somewhat close to opening your practice so that you can use the PPP funds to help you restart your business and ramp up production. However, a hesitation with this plan might be whether the funds may run out. Our firm belief is that the government will release more funds but, of course, there is no guarantee of this. We will keep our clients updated on this matter as we learn more.

32) If I use last year's payroll, it will be actually smaller than what it is currently. My associate's annual salary is about $108,000.00 so really I should get an additional $8,333/month for her. Can I use figured costs with her additional salary or will they only look at W-3? There is a part you initial on loan, which states if you give fraudulent numbers that it is a crime. If I submit my W-3 they will see the actual number I put in is higher.

No, you have to use the actual payroll numbers from the previous 12 months. They will be looking at source documents and we DO NOT recommend falsifying these forms.

33) After we decide to use the PPP, if an assistant makes $1100 by hourly income, can we give her $400 in “bonus” if she usually made $1500 before the COVID-19?

For the payment to be forgiven, it would need to be paid thru payroll. You can pay her the full $1500 thru payroll as a taxable wage.


Miscellaneous

34) I just heard that business taxes may have to be redone because of the new tax laws. Is that true?

The provisions of the Cares Act do not affect the 2019 business tax returns.

35) I wanted to confirm the payment date for the 100-ES. Is it still due on 4/15?

ALL tax payments due on 4/15/20 for both the IRS and FTB have been delayed to 7/15/20.

36) My daughter [name removed], age 22 and a full-time student has worked at Nordstrom for almost 2 years. We are not sure if she filled as a dependent. If so can we switch, since you have not filled her tax return yet? I believe Nordstrom corrected her W-4 recently after submitting her W2. Will she be eligible for $1200 for COVID-19 as a full-time student?

Having someone as a dependent does not mean they aren't eligible for the $1200 check. Qualified children (under age 17) will not be receiving any checks. Their parents will receive $500 per child with a maximum of 2 children. For a 22-year-old dependent, they would need to make sure they have filed a tax return even if they were claimed on another or the IRS will be posting a "simple" tax return shortly that they can fill out to get the check.

37) Have any of your clients had success with a specific lender? Or do you recommend one?

We highly recommend using the lender that your practice already banks with as you will have an established relationship with them. This is not the time to switch banks.

38) Does [name removed] and I qualify for the $1200 payout?

Please check your 2019 tax return for your Adjusted Gross Income (AGI). The income limits are as follows: Filed single income at or below 75k and MFJ income at or below 150k, each taxpayer will receive the full 1200. If your income is higher than this, please use this calculator to find out your stimulus amount.

39) Since the tax deadline has been extended from April to July, does that mean the IRA contribution for 2019 is also postponed to July?

Yes, IRA contributions and HSA contributions have been postponed to 7/15/20.

40) If we are offered an SBA loan, not a CARE one, what effect would that have on us for our personal taxes as it passes from the corporation to us personally? As an example, is it considered 500k income and we would need to make big tax payment on it?

Loan proceeds are never taxable as you eventually will have to pay it back.

 

 

Brief COVID-19 Update // April 30, 2020

For a time in March and early April, things were changing so rapidly, we could hardly keep up. The last thing we wanted to do was prepare a thorough analysis of a topic, e-blast it out to you (our clients), only to have it change again the next day. Hopefully, you have been participating in our webinars and reading these news blasts and our weekly Tax Tips, as we have had a ton of positive feedback from all of those.

My goal with this particular email update is to keep things simple. Of course, if you have questions about any other Coronavirus-related topic, please visit our website at www.Phillips-Corp.com. We have set up a COVID-19 Resources page that lists every email blast and webinar to date, along with a short, animated video that covers just the basics of the situation. The great thing about the animated video is that it will change as new information is released, so please bookmark that page of our website and check back often.

AICPA Recommends a Delay in Start of 8-Week Forgiveness Period

The American Institute of CPA's (AICPA) has played an immense role in making well-thought-out recommendations to government bodies like the Treasury Department throughout this entire crisis, and I would like to point out yet another recommendation that we believe will soon become part of the official guidance.

Here is the (partial) text of their press release, issued just this morning (4/29/20):

"The AICPA on Wednesday issued a series of recommendations it would like to see the U.S. Small Business Administration (SBA) adopt and issue as guidance for small businesses to use in calculating loan forgiveness under the Paycheck Protection Program (PPP)."

The most promising of these recommendations, at least as it affects the medical and dental communities, was: "The 8-week period should commence once local stay-at-home restrictions are lifted, not when loan proceeds are received, so small businesses have adequate funds to ramp up operations."

To be clear, this was only a small part of the series of recommendations that the AICPA brought forth to the Treasury Department, but if the past is any indication, there is a strong likelihood that these recommendations may become official guidance. We expect to know more about this in the coming days, and we will send out another email blast at that time.

In the meantime, we will be hosting a few more webinars in the next couple of weeks. Stay tuned to your email to learn about when they take place so that you can register. And finally, last week I held a video interview with Brian Mills over at CARR Healthcare Realty on the subject of Dental Office Leases During COVID-19. At just over 20 minutes long, the interview was short but packed with information. You can watch it on-demand on our website or by clicking here.

We at Phillips Accountancy know that what matters most is standing behind the dental and medical communities that we serve. If a colleague of yours forwarded this email to you, and you're not one of our clients but you still have additional questions, email us at info@phillips-corp.com. We are on your side whether you're our client or not. This is an immensely difficult time for all of us, but we will get through it together. Thank you.

Sincerely,

Andrew Phillips, PAFM; Business Manager

PHILLIPS ACCOUNTANCY CORPORATION

 

PPP Loan Forgiveness Information // May 20, 2020

At last, the PPP Loan Forgiveness application has been released by the Treasury Department. If you have been following our emails and webinars, you might know that we have been eagerly awaiting this form from the Treasury Department so that we can properly answer a number of questions that are critical to business owners. Unfortunately, yet again, the guidance just released on May 15 does not answer all questions and once again, the American Institute of CPA's has written a letter on behalf of all accounting professionals seeking final guidelines. We will keep abreast of the situation and will notify our clients of any updates.

To address the guidance that has been released thus far, Bob Phillips will be holding another webinar this coming Wednesday (5/20) at 1:00 pm. You can sign up for this webinar by clicking HERE. If you cannot attend the webinar live, a link to the recording will be provided on our website by Thursday afternoon.

 

In the meantime, there are three key aspects of the PPP Loan Forgiveness Application worth mentioning immediately:

(1) Eligible Payroll Costs – According to the application, "Payroll costs are considered paid on the day that paychecks are distributed, or the Borrower originates an ACH credit transaction. Payroll costs are considered incurred on the day that the employee’s pay is earned. Payroll costs incurred but not paid during the Borrower's last pay period of the Covered Period are eligible for forgiveness if paid on or before the next regular payroll date."

Essentially, this means that the Borrower will receive forgiveness not only on the payroll that is actually paid out but also what is accrued if it is paid by the next regular pay date. So if the end of the forgiveness period for the Borrower is 7/7 but their next paycheck date is 7/15, they can still apply for forgiveness for any wages earned up to (and including) 7/7. This rule also applies to eligible nonpayroll costs.

(2) Amounts Paid to Owners – Referring to any amounts paid to owners (defined as "owner-employees, self-employed individuals, or general partners"): "This amount is capped at $15,385 for each individual or the eight-week equivalent of their applicable compensation in 2019,whichever is lower."

If a Borrower's 2019 salary was below $100,000, and he or she increased it now for the purpose of utilizing the PPP funds, the additional wages paid do not appear to be forgivable.

As an example: if 2019 W-2 wages were $60,000, the average 8-week wage would be $9,230.80. Any wage paid in addition to this amount would not be forgivable, even though it is less than the $15,385 maximum.

$60,000 annual salary / 52 weeks in a year = $1,153.85 average weekly wage

$1,153.85 average weekly wage x 8 weeks in covered period= $9,230.80

(3) Payroll Service Fees – According to the Loan Forgiveness Application, payroll costs are determined by the Interim Final Rule posted on the Treasury Department website. Per that ruling, payroll service fees (such as those paid to your payroll service provider) are not included as a forgivable payroll cost.