The CARES Act and You

Published by BradyRenner CPAs | April 6, 2020

Dear clients and friends,

As we continue through this period of unprecedented uncertainty, my team and I are working constantly to sift through the latest federal and state updates while we continue to serve your ongoing needs. To that end, we are pleased to share a new update with you that we strongly encourage every client to review thoroughly. Please note that these updates are accurate as of March 31, 2020 and are subject to change or revision as policy updates are announced.

Congress and the CARES Act

Literally so new that the ink has yet to dry, the Coronavirus Aid, Relief & Economic Security (CARES) Act is one of the most significant federal policies we will see in our lifetimes. Every small business owner needs to seriously consider how to utilize this law and its provisions — and this is true whether or not you are currently feeling economic losses relating to the COVID-19 pandemic. There are two primary components:

SBA Economic Impact Disaster Loan (EIDL)

While SBA’s EIDL program predated this situation, the CARES act makes radical changes to open up what was a relatively limited program. Under the new provisions:

  • The EIDL program is available nationwide as every part of the country has been declared an eligible disaster area for this program.
  • Along with incorporated entities, the self-employed, sole proprietors, freelance and gig economy workers are also eligible to apply.
  • EIDLs can be approved based solely on credit score without concern for repayment ability or tax return status, nor does a prior bankruptcy disqualify an applicant.
  • EIDLs below $200,000 can be approved without a personal guarantee, nor is real estate likely to be required as collateral.
  • EIDLs are now accessible without the requirement that credit be unobtainable elsewhere, which means businesses who already have a credit line can still apply.
  • EIDL borrowers are in most cases are eligible to receive a $10,000 emergency grant cash advance that can be forgiven if used for payroll, paid leave or many other applicable business expenses.
  • EIDL has no loan fees, guarantee fees or prepayment fees.

Application is directly to the SBA at or

Paycheck Protection Program Loan Guarantee

Where the EIDL program is directly administered by SBA, the new Paycheck Protection Program is being managed through the national network of more than 1,800 SBA-approved lenders. Under this program:

  • Applicant businesses should be under 500 employees (with some exceptions).
  • Self-employed, sole proprietors, freelance and gig economy workers are also eligible to apply.
  • Loans are given up to a maximum of the lesser of $10 million, or 2.5 times the average monthly payroll costs – including wages for employees making under $100,000, as well as expenses for paid sick leave, healthcare, etc.
  • No personal guarantee or collateral is required for the loan.
  • Payments are deferred up to six to 12 months.
  • For this program, loan forgiveness is applicable if funds are used for payroll costs, rent, utilities, group health insurance or other healthcare costs, and some other applicable operating expenses.
  • There are restrictions associated with changes to workforce size or if you cut employee compensation for those making less than $100,000 per year under certain conditions.

Nonetheless, this essentially amounts to a loan that becomes a grant for most small business owners. We believe every BradyRenner small business client should consider applying for one or both of these programs. In fact, you can apply for both types of loans, as long as they cover different expenses.

CARES Act and Social Security Tax Deferral for Employers

The CARES Act also enables taxpayers to defer paying the employer portion of social security taxes through the end of 2020. Half of the deferred amount will be due at the end of 2021 and the other half will be due at the end of 2022.

Federal Economic Impact Direct Stimulus Payments

The Treasury Department has now confirmed that economic impact direct payments to all taxpayers (with some exceptions for those who do not regularly file) within the next three weeks, and that payments will be distributed automatically.

Tax filers with adjusted gross income up to $75,000 for individuals and up to $150,000 for married couples filing joint returns will receive the full payment. For filers with income above those amounts, the payment amount is reduced by $5 for each $100 above the $75,000/$150,000 thresholds. Single filers with income exceeding $99,000 and $198,000 for joint filers with no children are not eligible.

Eligible taxpayers who filed tax returns for either 2019 or 2018 will automatically receive an economic impact payment of up to $1,200 for individuals or $2,400 for married couples. Parents also receive $500 for each qualifying child.

Retirement Account Withdrawls Up to $100,000

Also included in the new provisions is authorization to allow taxpayers to withdraw up to $100,000 from qualified retirement accounts such as IRA accounts and use the funds for up to three years prior to returning the funds to your retirement account, and receive no tax liability. This is true under specific conditions defined under the term Coronavus-Related Distributions (CVDs).

IRS Auto-Payment Suspension: Action Required

Individual taxpayers should note that if you filed a tax return prior to the IRS deadline extension was announced, and if tax owed was automatically going to be withdrawn from your bank account on April 15th, that auto-withdrawl will still take place unless you call the IRS to cancel it. Call IRS e-file Payment Services 24/7 at (888) 353-4537 to inquire about or cancel your payment, but please wait 7 to 10 days after your return was accepted before calling.

Maryland Personal Property Tax Return Deadline Extension

As anticipated, the State of Maryland has now extended the personal property tax return deadline to July 15, 2020 to be in alignment with federal tax deadline changes.

Questions and Next Steps

As always, please feel free to contact us directly to explore these changes and their impacts on your business and individual tax and financial situations. We are here for you and it remains our greatest honor to serve you, our clients. Thank you.


Matt Brady, CPA


Image Credit: Pictures of Money (Flickr @ Creative Commons)