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Coronavirus Aid Relief and Economic Security Act (CARES Act)

Dear Clients & Friends,

We are going to TRY to relay to you the best information up to date that we have been able to glean so far on the Coronavirus Aid Relief and Economic Security Act (CARES Act) or as we like to refer to it as the "CPA & Accountants Retirement Entitlement Act" but at this point we are not going anywhere. According to the experts that are interpreting the CARES Act it is very "fluid" which means the IRS is continually interpreting and sometimes even changing their position on certain items. We are not guaranteeing anything in this letter and it cannot be used as individual tax advice.

The CARES Act is HUGE & has numerous tax law changes. With that in mind, in our opinion there are five very important parts of the Act that we feel you need to be aware of now.

1.    Stimulus Payments

Hopefully you have seen our letter from Monday, March 30, 2020 where we tried to cover this portion of the CARES Act. If not, it is still available on our Facebook page (Embry & Watts, CPAs) and numerous other outlets. After this letter, we had two recurring questions that we think we now have the answer to.

First, will someone who is 17 years old or older & claimed as a dependent on someone else's tax return (For Example 19 year old in college, worked part-time job, filed a return but still claimed on parent's return, or Mom claimed on Adult Child's return, etc.) get a stimulus payment? That answer is NO.

Second, will people receiving SSI benefits get a stimulus payment? YES. We assume it will be sent automatically without having to file a tax return just like regular Social Security Benefits recipients.

2.    Economic Injury Disaster Loan (EIDL) – Section 7(b) of SBA

·       Very Important!!!!! This is on a First Come First Served basis so time is of the essence. If you decide to do this, DO IT NOW!!!!

·       This Grant Application is only available through the SBA website.

·       Most Important Part of this loan is that it includes a box that an applicant can check to request an emergency grant of up to $10,000 which the SBA must provide within 3 business days of Grant request. This grant will not have to be repaid even if you are not approved for the loan.

·       Our understanding is, if you get the Grant of up to $10,000 & are later offered an SBA Loan you are not required to actually take the loan, although you obviously can if needed.

·       Instead of trying to explain this Loan/Grant to you we are going to refer you to an approximately 20 minute YouTube video that we think does an excellent job of describing the procedure & is hosted by a CPA. This is through "Clear Value Tax".    He also has several other good videos that explain other parts of the Act. They are worth your time to watch.

3.    Paycheck Protection Loan – Section 7(a) of SBA

·       Not as Urgent as the EIDL above but the next most urgent.

·       This loan process starts tomorrow – Friday, April 3, 2020.

·       This loan will be provided by SBA approved banks. We have contacted both banks here in Morgantown, Morgantown Bank & Trust and Limestone Bank, have confirmed they will be participating in this program. Our advice is to call them to get an appointment setup. PLEASE be patient because this has been thrown in their laps at the last second and is VERY complicated.

·       Loan proceeds are limited to 2.5x average monthly payroll cost.

·       Provides small businesses with funds to pay up to 8 weeks of payroll costs.

·       Funds can also be used to pay interest on mortgage, rent, & utilities.

·       It would appear that if at least 75% of the loan is used for Payroll & the rest is used for the 3 items above then this total loan will be forgivable which means it’s a grant or "Free Money".

·       How can I request loan forgiveness? Documentation must be provided to the Bank/Lender that includes the qualified expenses during the 8 week period subsequent to the loan closing.

·       Check with your banker & see what documentation you will need to get the loan & then what you will need to provide in 8 weeks to get this loan forgiven.

·       This loan is not supposed to exceed 4% interest.

·       Again, as in #2 above, there is a good video to help explain more details at "Clear Value Tax". Paycheck Protection Program Forgivable Loan Application Form - Stimulus Package


Paycheck Protection Program Forgivable Loan Application Form - Stimulus ...

We're going to cover the Paycheck Protection Program Forgivable Loan Application Form as it stands on April 1st,...


4.    Employee Retention Payroll Tax Credit

·       Allows eligible employers to receive a 50% payroll tax credit of up to $5,000 ($10,000x50%) per employee for qualified wages paid from March 13, 2020 through December 31, 2020.

·       Eligible Employers, including some non-profits, are those whose operations have been fully or partially suspended as a result of a government order limiting commerce, travel, or group meetings. It also includes eligible employers who have experienced more than a 50% reduction in quarterly receipts.

·       This credit is applied against the employer's payroll tax liability & if the credit amount exceeds the employer's liability then the excess is refundable.

·       The good thing about this credit is that there appears to be no rush or urgency, you do not have to go through the SBA or your bank, etc. It should just be taken on your Federal Payroll tax reports which we assume will be reworked to handle this.

5.    Unemployment Benefits

·       CARES provides that unemployed individuals get an extra $600 per week for up to four months on top of state unemployment benefits. WOW!!!

·       Our understanding is this applies to certain owners of businesses & self-employed individuals who have never been eligible to receive unemployment benefits. Uncharted waters for all of us.

·       We were not able to obtain as much hard information on this benefit especially since it piggy backs with the State but our advice is to contact our local Unemployment office in Bowling Green at 270-746-7425. Again, PLEASE be patient, these people have had a ton of extra work thrown on them!!! Pretend you are doing their job & treat them like you would want to be treated!!!


This letter is for information purposes only & does not represent law or an official interpretation. In applying for these benefits we suggest the proverbial "Let the Buyer Beware". Ask questions of your banker/lender, SBA, Unemployment, etc because there are indications that some of these benefits might limit and/or eliminate you from getting other benefits.

We have spent almost a week on this (as well as trying to do tax returns for our clients) and we are still learning details by the second. This letter, though it appears rather large, only scratches the surface. We are providing this to our Friends as well as our Clients because we want our City, County, Region, State and beyond to receive all that we are eligible for so that we come out the back side of this as strong as possible & ready to get back to life & work as usual.


Kendall R. Embry, CPA

Embry & Watts

Certified Public Accountants


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