by Pete McAllister | Accounting News, News, Tax, Tax Planning - Individual
As Congress begins working on a new coronavirus relief bill, the White House looks to target aid more specifically and cap the overall expense of the package at $1 trillion. Here’s what else we know about a second stimulus package.
Direct Stimulus Payment
Another round of stimulus checks could be coming to American households, but the amount is yet to be determined. While early talks of a second stimulus package were largely jobs focused, recent nationwide spikes of confirmed coronavirus cases have some states rolling back their reopening plans. The effect could be further layoffs for American workers and economic hardship for families, which increase the urgency for additional cash payments. However, the amounts and income thresholds could differ from the first round of stimulus checks, which were approved for individuals whose income was no greater than $75,000 and for married couples whose combined income was no greater than $150,000. Payments were phased out for incomes above those thresholds. It remains unclear at this point how Congress will move forward with this.
Changes to Unemployment Benefits
The CARES Act approved a weekly $600 bonus unemployment benefit to workers who’ve been laid off or furloughed as a result of COVID-19. This is in addition to state-provided unemployment benefits. However, this $600 weekly bonus is set to expire at the end of the month. Some lawmakers would like to see it extended while others would like unemployment benefits to be capped at no more than 100% of a worker’s compensation when employed. Though the additional unemployment benefit has proven to be a financial lifeline to workers who were suddenly laid off or furloughed, the risk is that it potentially incentivizes citizens to stay unemployed.
Back to Work Bonuses
Some lawmakers have put forth proposals for return-to-work bonuses. Such legislation could be an alternative to extending the enhanced unemployment bonus. So far talks of this bonus indicate a weekly $450 bonus for a limited time targeted at unemployed workers who return to work.
More Relief for Businesses
The CARES Act introduced the Paycheck Protection Program (PPP), which provided businesses that have been impacted by COVID-19 with forgivable loans. The second stimulus package could include an extension of the PPP, but some lawmakers would like to repurpose its unused funds for other kinds of assistance, which would be more clearly targeted at businesses that need the help. The White House also continues to advocate for tax breaks to promote new hires.
Liability Protection for Employers
The second stimulus package could see liability protections for employers who could possibly face lawsuits related to COVID-19, but any bill that permits sweeping immunity for employers will likely receive pushback from some lawmakers.
State and local aid, infrastructure spending, payroll tax cuts, and a tax credit for domestic travel are further probable points of discussion when Congress returns from recess.
by Daniel Kittell | Accounting News, Tax, Uncategorized
On Tuesday, March 27, the House of Representatives approved the JOBS Act with a vote of 380 to 41. The bill, which amends portions of the Sarbanes-Oxley Act, will now go to President Obama who has indicated he will sign the legislation.
The Jumpstart Our Business Startups (JOBS) Act has been touted as the latest attempt to revive and stimulate the economy, with its key element focused on applying a concept called crowdfunding to small businesses. Crowdfunding is a term used to encourage donations of money to help artists and non-profit ventures. One element of this program has been that often those who donate get some token gift in return for their donation.
Taking crowdfunding to the small business arena, investors will be able to put money into small businesses in exchange for a share of equity without the company needing to jump through all of the hoops normally required by the Securities and Exchange Commission (SEC) of companies that want to issue shares of stock.
This is excellent news for investors who would like to take part in initial public offerings (IPOs) that would normally only be offered to certain qualified institutional investors and for small companies looking to grow capital without having the restrictions that were previously in place.
Here are the key elements of the JOBS Act:
Small privately-held companies with revenue under $1 billion (or $2 billion if the company provides potential investors with audited financial statements) will be able to sell up to $50 million in shares as part of a public offering without having to register with the SEC.
New public company start-ups with revenue up to $1 billion are excused from having an outside audit of internal controls for five years.
Small Companies will be able to have as many as 2,000 shareholders (previous limit was 500) or 500 unaccredited investors without registering with the SEC. According to the SEC, an accredited investor is an individual with a net worth of over $1 million not including primary residence, has earnings of at least $200,000 – or $300,000 for joint earners – for the past two years, or is a general partner, director, or executive officer of the company issuing the security.
A crowdfunding investor is limited to investing in all private companies that are governed by this Act the lessor of $10,000 or 10 percent of his income if the investor earns less than $100,000 a year.
Businesses will be able to use advertisements to solicit new investors.
You should be talking to your clients about these points:
Because SEC registration is no longer required for these small private companies, the standard disclosures to investors will not be required. Companies that want to take advantage of these new rules should consider what types of disclosures they expect to make that will encourage but not mislead potential investors.
Companies considering using crowdfunding techniques need to develop controls to prevent potential fraud and abuse. An accountant is well-suited to help the companies develop these controls.
Remind clients that assurances to potential investors should include descriptions of the controls that will guarantee the safety of investments.
Websites already exist that provide a platform for companies to make themselves available for crowdfunding investments. Sites such as Launcht, Crowdfunder, 40Billion, MicroVentures, and many more help businesses reach a wide audience. Accountants can help their clients choose the right site for their business and also monitor progress and performance.
Clients who are interesting in investing in small companies using crowdfunding techniques should be aware of potential fraud and abuse. Encourage them to learn as much as they can about the companies, their products, their history, and their leaders, before investing. Also work with your clients to explain how they should oversee the investments they make.
Full Article: http://www.accountingweb.com/topic/cfo/obama-expected-sign-jobs-act-whats-it-you
