Levin & Tabon LLP, CPAs

Originally dated April 5, 2020 Aloha, A quick very positive update this morning as many of us are considering the PPP loans. There may be a much better alternative than those loans for most small business owners and independent contractors.... Here’s the details from the Hawaii Department of Labor: Pandemic Unemployment Assistance This new program, which is modeled on Disaster Unemployment Assistance (DUA), will provide unemployment benefits to individuals who do not qualify for regular unemployment compensation and are unable to work because of COVID-19. Eligibility includes self-employed workers, including gig-workers and independent contractors, part-time workers, and those with limited work histories. Benefits under this program are available to individuals for up to 39 weeks, and assistance shall be available for weeks beginning on or after January 27, 2020. The program is state administered, but fully federally funded. U.S. DOL will provide funding to states through agreements with those states, and payments pursuant to those agreements will be distributed on a monthly basis. All regulations that apply to DUA, unless otherwise noted, apply. The program is effective through December 31, 2020. As PPP loans only cover about 8 weeks of payroll, and have two levels of detailed applications (apply for the loan and later apply for forgiveness), we now think for many of you that applying for this enhanced unemployment is a far better way to go. Also, you CANNOT accept both a PPP loan and this enhanced form of unemployment compensation, so you may want to stop or cancel your preparations for the PPP loans. This program is NOT YET ACTIVE, you’ll have to follow the labor department’s site for a launch date, but I’ll try and inquire Monday and pass along when this is expected to be live. Either way, benefits are retroactive to January 27th or whenever your business shut down. Latest projections from show Hawaii peaking around May 4th. and tourism isn’t likely to restart for months after that. Thus the significantly longer benefits of the Pandemic Unemployment Assistance is likely to be far better for you if your business has shuttered. Generally, it appears that if your business is functioning during this Pandemic then the PPP loans are the best choice. However, if you’re completely shuttered and have no work for your employees during May and June, then go for unemployment instead. Encourage your employees to apply for regular unemployment, and then file yourself for this Pandemic Unemployment program when it starts. If your employees are more like independent gig workers, they would also apply under this soon to be launched program and not regular unemployment. You’ll be making a critically important decision here, make it carefully. As always, if you’re unsure what to do, please email us to specifically discuss your situation. Stay safe! Doug, Leizl, Linda, Lani, Bonnie, Maryalice, Pamela, Renee, and Don

Originally dated April 3, 2020 Aloha, Update today on a variety of topics related to the current COVID-19 crisis. Let’s start with the bad news, then work our way through more options to get help if you need it....Continue reading

Originally Dated March 30, 2020 Aloha, Pleased to report some good news today.... We were made aware earlier of an SBA Loan (which is really a grant that doesn’t have to be repaid) for $10,000. I applied for my wife’s B&B today and it only took about 10 minutes The funds are supposed to arrive in 3 days. All of our client businesses qualify, regardless of how small, if they were in business on January 31st. Brian Schatz’s office sent two links out today. This first one explains the provision in detail: https://www.schatz.senate.gov//sba-economic-injury-disaste This is the link to actually apply: https://covid19relief.sba.gov/#/ It seems unbelievable, but it’s legit. Individuals got $1200, but businesses are getting $10,000 in stimulus to help us survive this. There are other provisions on the way as well, including a payroll funding loan, which we’ll share as they come up, but you should definitely apply for this one if you have a business of any size or kind, including rentals. If you need help with this application let us know, but it’s relatively easy and doesn’t require any paperwork. Mahalo! Doug, Leizl, Linda, Maryalice, Pamela, Lani, Bonnie, Renee, Bosca, and Don.

Aloha, Great news! Sunday morning I sent out an email advising that Pandemic Unemployment Assistance could be far better than PPP loans. This applied to those of you whose business was shut down and wasn’t likely to return for months. The largest selling point was that it lasted for 39 weeks instead of 8. However, I cautioned that the Labor Department’s website wasn’t ready, so you had to wait.... However, you can now apply for those benefits. As promised I tried to reach the Department of Labor today for clarification, and just heard back from their Media Contact. I am forwarding the email with his guidance below. It includes a link to apply for unemployment benefits for Self-Employed individuals right now. I also found this important guidance in the U.S. Department of Labor’s guide to implementing this program: Self-employed individuals as defined in 20 C.F.R 625.2(n) means individuals whose primary reliance for income is on the performance of services in the individual’s own business, or on the individual’s own farm. These individuals include independent contractors, gig economy workers, and workers for certain religious entities. This definition is very broad which allows almost everyone to apply. I am surprised that it did not include restrictions I expected regarding the receipt of wages from your business or the proving of sole proprietorship income levels. It also included farms. However, be careful with rentals, as it does not appear to apply to rental real estate you own as an investment. There may be an exception if the real estate is your primary reliance for income, AND your performance of services is necessary for the continuing operations of the entity. An example might be a Bed and Breakfast, but it could apply to others who do nothing but manage real estate. You should consider if your situation matches this guidance before applying, and the next criteria may disallow if you’re receiving any rents. Everyone will also have to meet this criteria: The individual’s place of employment is closed as a direct result of the COVID-19 public health emergency. For example:If a business is shut down due to an emergency declaration or due to necessary social distancing protocols, the unemployment of individuals who worked in the business would be considered a direct result of COVID-19. Thus if your business is partially operational, this enhanced unemployment program would not be for you. I have not seen the actual application, but suspect it’s geared towards employees and not the self employed. If you have questions about it as you go or need information to fill it out please let us know and we’ll be happy to help. That’s it for today. As a reminder please continue to get your tax records to us as soon as possible so we can queue your returns and assess when the best time to file you is this year. Stay safe! Doug, Leizl, Linda, Lani, Bonnie, Maryalice, Pamela, Renee, and Don

Originally dated April 1, 2020 Aloha Again, As promised, here’s a summary of the 2nd phase of the SBA government Loan Program, called the Payroll Protection Program (PPP). This program is for employers, not sole proprietors without employees or Gig workers, but there are loan/grant plans coming for those next week.... What I think is really special about the PPP program is again complete forgiveness of the loan. It won’t even be considered taxable income. The limit on how much you can borrow is roughly 250% of your average monthly wages for the last year. That’s basically the same limit on what can be forgiven. To qualify for forgiveness you must spend the funds on wages employing those same positions for an 8 week period before June 30th. Any amounts less than the average will not be forgiven. If you do maintain your employee’s wages at the same level as the average for 8 weeks, that will use 200% of the 250% of average wages. The remainder (50% of average wages) must be used for mortgage, rent, or utilities to be forgiven. If you’ve already taken the $10,000 grant, that’s also deducted from the amount that will be forgiven. While we’re on that topic, if you haven’t already you should apply for your $10,000 advanced SBA grant at https://covid19relief.sba.gov/#/ . We’re wondering whether or not the SBA will be able to send the money in three days as required, let us know if you got it. So who does this work for? Primarily all employers who can put their people to productive work for 8 weeks this spring. Even if the business is partially or completely shuttered, if you pay the wages in an 8 week period you qualify for forgiveness. Plus you get the other 50% to use against rent, mortgage, or utilities. If you think about it, the 8 weeks of wages are for your employees, the other 50% is for your business. These forgivable loans are NOT applied for at SBA.gov. You apply for them at your local bank. Here’s the links for the big four on Maui: Central Pacific Bank - https://www.cpb.bank/ppp First Hawaiian not yet available. American Savings Bank - https://www.asbhawaii.com/business/sba-ppp Bank of Hawaii not yet available. You may be able to find other banks as well, this is not an endorsement of these banks by any means. I’ve attached a borrower information sheet from the U.S. Treasury that has more details, including many important ones that didn’t make this summary. Please read it. As always, we’re here to help you with whatever you need for the loan application. One last note, you really have to do this by May 1st. Why? If you don’t there won’t be 8 weeks left to pay those wages. Stay safe, Doug, Leizl, Linda, Maryalice, Pamela, Lani, Bonnie, Renee, and Don