The CARES Act: Retirement Distributions – Monday, April 6, 2020 3:33PM

Yes, we have known about this since the passing of the CARES Act 10 days ago but have been reluctant to mention it.  But you’re hearing about it from other sources and we want you to have correct information, so the time has come. 

Under the new provisions, if you experience “adverse financial consequences” as a result of the coronavirus situation, which includes office closure, you are permitted to take a distribution from your retirement plan of up to $100K and be exempt from the usual 10% early distribution penalty.  In addition, if you recontribute the distribution within 3 years of receiving it, you will avoid tax on the distribution entirely.  If you choose not to recontribute, the distribution will be treated as income ratably over the 3 year period after receipt of the funds and subject to ordinary tax.  Eligible retirement plans include IRAs, SEPPs, 401Ks, Profit Sharing Plans, and a few others. 

While this provision can be very helpful if used properly, it can also be risky.  If you take an ordinary loan from a bank, you will be forced to pay it back or suffer adverse consequences.  No one is going to force you to pay this back.  Yes, you will take a tax hit if you don’t; but it won’t negatively impact your credit rating and no one will come for your assets.  Paying it back will be entirely up to your self-discipline.  But failure to recontribute the funds could cost you years of financial security as you near retirement age.  Additionally you will be missing out on market growth over the time period in which you don’t have these funds invested.  For these reasons, we generally recommend you exhaust other financing options before going down this road.   

In addition to the loosened distribution provisions, if your retirement plan allows loans to be taken against it, the maximum loan allowed has been increased from $50K to $100K.

Wells Fargo – Monday, April 6, 2020 2:17PM

We are getting news today that some PPP 7(a) applications from various banks are already being approved and funds may be distributed quickly!  On the bad news front, Wells Fargo is no longer accepting applications.  If that is your local bank and you have not already submitted your application, you will have to find another source.    

“Wells Fargo & Co said late Sunday that it will cap its participation in the U.S. government’s small business coronavirus rescue program at $10 billion due to regulatory constraints.”  Read in Reuters:

Texas Business Personal Property Renditions – Monday, April 6, 2020 11:13AM

If you own business personal property (equipment, furniture, etc) in a Texas county, Business Personal Property renditions are due soon.  The due date this year would have been 4/15/2020.  Many, but not all, counties have automatically extended the deadline to 5/15/2020.  Either way the due date is right around the corner.  If you have not engaged us to prepare your BPP forms this year and need to do so, please contact us immediately with your blank form (if you have it) and information on new purchases during 2019.  With the COVID chaos surrounding everything, we would advise you to act on this sooner rather than later, so our busy office has plenty of time to make sure you are well taken care of. 

If you opened a new practice in 2019 and have no idea what this means…SURPRISE.  Contact us and we’ll be happy to update you more thoroughly.  If you are on our Monthly Core Services program then you have one less thing to worry about—we are already taking care of you. 

PPP & EIDL the Battle Continues – Sunday, April 5, 2020 3:24PM

The ADA has again raised a concern, as have some bankers, that you cannot apply for both the EIDL and PPP loan.  We have battled this rumor once already but it keeps rearing its ugly head.  Our understanding, as confirmed by reliable sources, is that you can apply for both the EIDL and PPP loan, you just can‘t use them for the same purpose.  This is consistent with the link below from the US Senate Committee on Small Business & Entrepreneurship.  For this reason we are suggesting you setup a different bank account for each loan so that you can track how the funds are used.  What we are not recommending is that you buy into the hysteria that the ADA is inadvertently causing.  We know everyone is working under the best of intentions of trying to help their members, clients, etc, but let’s all stay calm.  We know that the rules are changing day by day at the moment.  All we can do is work within the information we currently have and know that tomorrow it could all be different.

Oregon Update – Sunday, April 5, 2020 3:23PM

On March 29th we reported that Oregon had already mandated its dental practices to be closed until September 20, 2020.   The following day we received information from the Director of Government Affairs for Oregon that the September 20, 2020 reopen date was believed to be a drafting error, and that they are operating with the understanding that dental offices will be able to reopen in June.  We were expecting final confirmation on this issue but to date have not received anything.  Likely it is, in fact, a drafting error and no one is eager to own it.  Let us hope so!

PPP 7(a) Documents – Saturday, April 4, 2020 9:24PM

Word is coming from many of you regarding the documents required to submit a PPP application. They are all over the board ranging from detailed monthly payroll registers to Articles and Bylaws to tax returns to your first-born child. Some applications are requesting detailed costs for your expected use of the funds. There is little consistency, save one-Forms 941 for all of 2019 and possibly through first quarter 2020 will be required.  State unemployment forms are sometimes being requested as well. 

Whatever they ask, just play along. But don’t expect a quick answer. Many banks are simply gathering the applications and still need to submit them to SBA. Some banks have already temporarily suspended accepting applications because of overload. And there are still many questions about the process that remain unanswered.  But don’t fear. Things will fall into place in due time.

Texas Comptroller News – Friday, April 3, 2020 2:35PM

News below from the Texas Comptroller.  The extension from 5/15/20 to 7/15/20 is for both filing and paying Texas Franchise Tax.

The COVID-19 pandemic is disrupting life for people and businesses nationwide. To provide Texas franchise taxpayers some relief, the Texas Comptroller of Public Accounts is automatically extending the due date for 2020 Texas franchise tax reports to July 15, 2020 to be consistent with the Internal Revenue Service (IRS).  The due date extension applies to all franchise taxpayers. The extension is automatic, and franchise taxpayers do not need to file any additional forms.

PPP 7(a) Rollout Begins – Friday, April 3, 2020 11:30AM

Some banks have opened their PPP programs though several will not open until Monday or at some unknown point next week.  REMEMBER:  Start with your  bank—where you currently have a relationship for checking or lending.  Many banks are not accepting applications from outside customers or are not prioritizing them highly.  If your bank is not yet accepting applications, don’t panic.  Although funds are expected to go quickly, we are not concerned you would be in real jeopardy of missing out at this point.  So stay calm.

DO NOT GO to your local branch.  The banks are handling this all online or by phone.  The banks are under tremendous pressure to get these underway so let’s give them every consideration by following their preferred process and treating them kindly.  Remember your southern manners…you catch more flies with honey.

PPP 7(a) UPDATED TERMS – Thursday, March 2, 2020 11:45PM

The PPP program has been appealing from the start because of its potential to be totally or partially forgiven. But its appeal is growing. According to the latest Treasury Regs, the terms for the PPP loans have been set. In the beginning they were expected to be 4% annual interest over 10 years. They are now set at 1% annual interest over 2 years.  We know you’re particularly focused on trying to attain 100% forgiveness on the PPP proceeds. But even if that’s not accomplished…1% interest?? Not Much analysis required there. Those are good terms. 

PPP 7(a) Application FAQs – Thursday, April 2, 2020 2:00PM

There are LOTS of questions surrounding the PPP 7(a) Application process.  Unfortunately there are still more questions than answers.  We have talked to countless professionals across the country.  The banks aren’t sure, the SBA regs aren’t finalized…there are few clear answers.  But maybe this will help a bit.

Q:  The rollout is supposed to be tomorrow, 4/3/2020.  Will the banks actually be ready? 

A:  Unknown.  Last night appeared unlikely.  Today it is a possibility. 

Q:  The PPP funds are limited to $349 billion.  How soon will they run out?

A:  Unknown.  But funds are expected to go quickly.  You should move quickly once the process is finalized if you want to participate in this program.

Q:  Do I have to use the SBA standard application or is the application my bank sent me acceptable? 

A:  Unknown.  In a rush to please their clients, many banks moved forward developing their own applications.  Rumor this morning is that SBA will require its standard application.

Q:  Is the SBA application that was circulating a day ago the final version?

A:  No.  It changed at least four times yesterday and will likely change more today.  We have no confidence the final version is yet released.

Q:  Should I wait for the approved application process that will be finalized by SBA and my lender?

A:  Most likely yes.  Use the applications you have received or seen as a guide and be ready with the same information for the final application.

Q:  Will the entire loan be forgiven?

A:  Unknown.  The regulations for this portion do not have to be finalized until 4/12.  Details prior to that date will be largely speculative.  Wait for real information; don’t listen to the “noise.” 

Q:  Can or should I engage you to prepare the application for us? 

A:  No.  For efficiency we are recommending you prepare these yourself to the extent possible.  We are here for you to help fill in your unknowns.  We, like our other ADCPA colleagues around the country, do not have the capacity to prepare these for all our clients in the time frame we are recommending you get them submitted.  We are not at all saying we are too big or too busy for you!  But when everyone literally needs something on roughly the same day, we have to be realistic about capabilities.

Q:  What if I don’t get this loan for whatever reason—funds run out, my practice didn’t qualify, etc?

A:  It will all be ok.  You still have the SBA EIDL loan as an option to get you through.  Once the Corona scare is over, it is expected that practices in Texas will be running again at max capacity, and even after hours and weekends making up missed appointments.  EIDL funds, LOC funds, personal funds, if needed, will help get you through this valley.  There could be additional relief coming as well.  Once you are on the other side, you should have plenty of revenue to pay your bills and repay your loans.

Q:  I’m hearing from other professionals that PPP may not be great for me.  Is this loan a good idea? 

A:  Every situation is different.  If used properly it is a perfectly good part of an overall strategy.  Is there a situation in which it might be unhelpful?  Sure; but we’ll direct you in the best timing and use of the funds to the best of our ability.

PPP 7(a) Use of Funds – Tuesday, March 31, 2020 9:54PM

We are hearing lots of confusion about the use of PPP funds so let’s try to clear that up.  There are 2 facets that should be discussed. 

  1. Permitted use
  2. Forgivable portion

The primary purpose of this loan is to help pay your employees while revenues are down.  That is why it is called a Payroll Protection Program and perhaps we should begin calling it that versus PPP.   Because of its purpose, the use of proceeds is restricted to just a few items.  Allowable uses are:

  • Monthly Payroll Costs (there are limitations on this for highly compensated employees)
  • Health Insurance Premiums
  • Retirement expenses
  • Loan Interest
  • Rent
  • Utilities

You will have to certify under risk of criminal fraud charges that you will use the funds for only these purposes on your application. 

This means you are not permitted to:

  • Pay yourself back for loans you made to the business.
  • Pay down principal on loans.
  • Put a down payment on your new Mercedes.

Calculating the forgivable portion is more complex and ultimately will be based on multiple factors. 

Funds must be used:

  • To pay the above permitted items.
  • During the 8 week period immediately after the origination of the loan. To the extent it is used after that 8 week period, that portion cannot be forgiven.
  • For expenses incurred during the 8 week period. Meaning you can use it, for instance, for May rent.  But you can’t prepay rent for July-December.  You can pay 401K matching and profit sharing for payroll during the 8 weeks, but not your balance due for 2019.  It must be for expenses that belong to this 8 week time period.  Documentation must be kept for 3 years substantiating the use of funds.

To qualify for forgiveness:

  • You must have at least the same number of employees by 6/30 as you did on 2/15.  To the extent you have fewer employees, a portion of the loan becomes unforgivable.
  • Your employees must be making the same wages by 6/30 that they were on 2/15. To the extent staff wages are lower than on 2/15, a portion of the loan may become unforgivable.

PPP 7(a) SBA APPLICATION – Tuesday, March 31, 2020 4:35PM

The SBA is beginning to send out formal information on the PPP loan application process.  As of now, each individual bank seems to have its own application process; and frankly, some of them are inaccurate.  This Paycheck Protection Program Application Form may become the required application with all lenders but that is not yet confirmed.  At the very least it is a good example of what you should be prepared to provide and certify.

SBA 6 Month Relief – Tuesday, March 31, 2020 1:52PM

If you have an existing SBA loan taken out prior to 3/27/20, unrelated to the COVID crisis, the CARES Act provides a subsidy for loan payments whereby the SBA will pay the principal, interest and associated fees for 6 months.  This is alleged to be automatic relief but we would encourage you to reach out to your lender for details and confirmation. 

PPP 7(a) BY 4/3/20 – Monday, March 30, 2020 2:07PM

Reports are currently that the PPP 7(a) loans should be ready for application by 4/3/20.  We shall see if they can meet that.  The starting place for these should be your local bank, in most cases.  We have heard from Chase specifically that they will only be accepting applications from customers with active accounts in February 2020.  Live Oak Bank is one of the few who has sent out their expected document request list—below.  We suspect most banks will require the same.

In preparation for the PPP, customers can start gathering the following:

  1. 2019 Tax Returns and/or 2019 P&L and Balance Sheet
  2. Last 4 quarters of Payroll Tax Forms (941)
  3. Verification of the number of employees and payroll incurred over the most recent 12 months.

No, we don’t know what they mean by item #3 either.  Once determined we will update you.

NEW COVID-19 SBA LINK – Monday, March 30, 2020 8:04AM

As of late Sunday evening, the website for the SBA EIDL loan application has changed.  Applicants are now able to request the $10K advance/grant and are receiving a 10 digit confirmation number.  The ADCPA has reached out to SBA to see if everyone must apply or reapply through this new website.  It was too late to receive an answer yesterday and we don’t know when one will be received.  Since the grant funds are limited, we are recommending

If you have not applied, NOW is the time.

If you have already applied, do so again as a precaution, unless we hear otherwise.  Even if there is no need to reapply for the full loan, this may be the new process to request the $10K grant.


Look for the 10 digit confirmation number (example #350023500)  as assurance you have properly completed the process. 

Information you will need:

  1. All Business Information – such as Legal Name, Address, Federal ID # (EIN),etc.
  2. Your Name, Date of Birth and SSN, Home address and Cell #, etc.
  3. Annual Fee Income from 2019 and annual cost of sales from 2019.
  4. Date the practice was established – date current ownership began.
  5. Fees Charged to complete the EIDL Application or Agreed Upon, place $0 for now.
  6. You do NOT need any Tax Information nor Tax Returns at this time.

There are already discussions that they may increase the allocated $10 billion depending on needs, as Pelosi has been interviewed that more support is needed.)  

This does not change the PPP 7(a) loan application.  That will be done directly with your private bank.  Begin contacting them to see if they will be providing this loan and if they have the process ready or a waiting list.

Temp Lay-off Considerations – Sunday, March 29, 2020 5:39PM

If you provide health insurance or retirement benefits to your staff and are considering unemployment for any/all of your team, contact your health insurance provider and retirement administrator first to determine how the layoff may affect these benefits.  A temporary layoff may allow you to retain insurance benefits for your staff but do not assume so.  If they will be without health benefits, they would need to be informed.  Likewise with your retirement plan—a temporary layoff where the staff is rehired within the same plan year is likely to be permitted without negative repercussions, but do not assume. 

CARES Act Update – Sunday, March 29, 2020 3:50PM

The CARES Act passed Friday includes a provision for Recovery Rebate stimulus payments directly to taxpayers.  This means checks or direct deposits put back in your hand if your income is not too high.  The rebate payments will be based on the 2018 personal return, or 2019 if already filed.  The rebate amount begins to be reduced for single filers with adjusted gross income (AGI)  over $75K and is completely eliminated at AGI over $99K.  The phase-out for joint filers begins at AGI of $150K and is eliminated at AGI over $198K.

Amount to expect

  • Single filers:  $1200
  • Joint filers:  $2400
  • Qualifying children:  $500 each