Proposition 22 – Moving the Future of Work Forward in California

Proposition 22 – Moving the Future of Work Forward in California

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Proposition 22 – Moving the Future of Work Forward in California

Setting a new standard for independent work!

As Election Day approaches, you’ll be hearing more about Proposition 22, an initiative on this year’s ballot to protect app-based jobs and services in California. We want to explain why 72% of ride-share driver and delivery people support Prop 22 and why we’re joining them in advocating for it.

For too long, we’ve accepted an outdated and unfair employment system that forces every worker into 1 of 2 categories: either an employee with more benefits but less flexibility, or an independent contractor with more flexibility but almost no safety net. That needs to change—and we have a responsibility to help create a better future for work.

Drivers prefer to be independent contractors by a 4:1 margin because they can decide how, where, and when they work. No traditional job affords the same freedom to fit work around family, health, or education.

But choosing flexible work shouldn’t mean foregoing basic benefits. We believe drivers and delivery people deserve better. We’re advocating for Prop 22 because of what it would provide, including:

  • A minimum earnings guarantee that is 120% of minimum wage and includes an additional $0.30/mile for expenses, with no upper limit on drivers’ ability to earn more
  • Occupational accident insurance to cover medical bills in case of injury while driving or delivering
  • Healthcare contributions for drivers who work at least 15 hours a week
  • Public safety protections such as mandatory safety courses and legal protection from discrimination and sexual harassment

Drivers and delivery people would receive these benefits and protections while keeping their flexibility to work when, where, and for however long they want. That’s why groups like the California NAACP, the California Small Business Association, the Latin Business Association, and dozens of others are joining drivers in supporting Prop 22.

Voting Yes on Prop 22 will set a new standard for independent work in California. We encourage you to learn more about Prop 22 and why so many drivers support it.

Learn more about Prop 22❯







PPP Interim Final Rule Update

PPP Interim Final Rule Update

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PPP Interim Final Rule Update

Finally, we have are given some guidance that will ease some minds but aren’t favorable for all the PPP Loan Borrowers. Let’s hope more will follow soon!

Recently the Small Business Administration (SBA) provided a new Interim Final Rule (IFR) giving a little guidance to business owners that are seeking forgiveness. The 2 major changes include owner-employee limitations and the related party rent payments. It doesn’t address the needs of every business owner that is seeking the forgiveness of their Paycheck Protection Program Loan but it’s a start.

  • Owner-Employee of a S or C Corp with less than 5% isn’t subject to the compensation rule since they don’t have any meaningful ability to influence decision on the loan allocations. This is for corporate entities and not partnerships or limited liability companies. So, for those that are shareholders with 5% or more will be subject to the owner-employee limitations.
  • The major change is that the related party rent payments are now limited to mortgage interest, and payment of mortgage interest to a related party is now disallowed.

    The IFR provides four examples that make clear that:
    1) rent paid to the borrower from a subtenant reduces the eligible rent expense,
    2) mortgage interest for a mortgage that covers property subject to a lease to a third party must be reduced pro rata by the percentage (by fair market value) of the property which is leased out
    3) for shared spaces, utility payments must be similarly allocated
    4) home office expenses are limited to proration as set forth on 2019 taxes (or as expected for 2020 taxes if a new business).

  • A new cap on loan forgiveness is available for rent paid to related parties to no more that the amount of mortgage interest owed on the property during the covered period in question that is attributable to the space being rented by the business, and only to the extent that both the lease and the mortgage were in place prior to Feb. 15, 2020.

According to attorneys, Holland&Knight, “The term “related party” is not addressed in the statutory language of the CARES Act or previously in prior rules and is thus described in the IFR as including “any ownership in common between the business and the property owner.”

So, until there is more guidance it is advised you to remind your clients to keep invoices and expenses documented and in order.

Forbes Article
US Department of Treasury








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Hang in there and take a short breather! The last many months it’s felt like everyone’s rushed to meet deadlines around PPP but now disagreements between the lawmakers has put everything to a screeching HALT.

There’s a HALT on the next round of Coronavirus Relief for small businesses.  A HALT on Small Business Association (SBA) accepting new applications and now many CPAs are recommending business owner’s HALT on filing for forgiveness.  

$659 billion was provided to SBA to be distributed to small business for relief due to the pandemic effecting the health of these businesses. This program expired on August 8th with an estimated amount of over $100 billion remaining in the program to be disbursed. We all had expected answers on the guidelines for forgiveness, with the expectation that loans of $150,000 or less to just be automatically forgiven.

History of the loans and status:

In April, Paycheck Protection Program (PPP) was created from The CARESs Act which put $349 billion to the SBA. The average PPP loan value is just over $100,000 (based on cumulative national average). Later, Congress added $310 billion for PPP and Health Care Enhancement Act and the majority of what’s been distributed from this are loans under $50,000. 

SBA opened their platform to file for forgiveness but no ones rushing to do it because their holding out on answers about the deductibility issues and the possibility their loan might already be granted forgiveness. 

If you’re looking for answers, on Aug 11th the SBA posted an 18 page Frequently Answered Questions about the Paycheck Protection Program Loans but there are still lots of unanswered questions. 

So what do we do while we we’re at a halt?
Prepare and get our ducks in a row!

Even without answers on important guidelines that will effect what and how we file, we know our ducks (aka clients) need to get their documents and receipts together and maintained until we’ve answer and ready for our next steps.


 Source: American BankerAmerican Action Forum, CNBC   




    EIDL Borrowers Beware of the Rewarded Whistleblowers!

    EIDL Borrowers Beware of the Rewarded Whistleblowers!

    EIDL Borrowers Beware of the Rewarded Whistleblowers!

    It’s just not worth it! Whistleblowers are everywhere because they are protected and rewarded. So is accepting the loan without serious review really worth taking the money?

    There are so many specific rules and regulations that many EIDL borrowers had failed to understand before accepting the loan which could put you in a situation to tell your client that their best course of action is to return the money immediately before whistleblowers report them.

    As accounting professionals, we want to help our clients do the right things with managing their finances and sometimes we have to say the things they don’t want to hear but need to be said. If your client has accepted or is considering to apply and accept the EIDL, your eagle eye and mother’s concerning voice should be used when consulting your client.

    So besides recommending that your client read all the details carefully and suggest they consult an attorney if needed, it’s important for you to know some of the important points like these: (just to name a few)

    • Businesses can’t take out dividends for over 30 years if they received an EIDL loan and do not repay it in full.
    • There’s fine print about a collateral agreement in the application for loan amounts greater than $25,000.
    • EIDL applications are still being accepted but the $10,000 advance on the loan that could be considered a grant, is no longer available.
    • All EIDL borrowers’ private details will be available in the public records because of the Freedom of Information Act, enumerated at 5 U.S.C. § 552. Violating a loan covenant can cause the interest rate on that loan to increase or even cause it to be considered in default.




    Being in Demand During Unprecedented Times

    Being in Demand During Unprecedented Times

    Being in Demand During Unprecedented Times

    With PPP Forgiveness guidelines still needing clarity and coronavirus continuing to rage on… What can you do now to be the super-hero at the end of the day?

    The guidelines are still murky on PPP Forgiveness, clients are nervous about having to pay back the loan while trying to stay in business and the coronavirus is still raging on… and you are being sought out as the professional in this field. What can you do now to be the super-hero at the end of the day?

    With more than 4 million small businesses participating in the Paycheck Protection Program (PPP), many are waiting to hear what the next step is. Meanwhile, unanswered questions are causing concern such as what are the potential tax problems for the loan I received? or am I meeting the requirements for loan forgiveness? and the list goes on. However, there has never been a higher demand for accountants as these business owners seek someone to help them prepare. 

    What can you do to help your clients?

    • Be educated and keep updated: We are all in uncharted territory so new guidelines will continue to be revealed as we progress through the coronavirus pandemic and economic downturn. Review provided resources like the AICPA tool that was created to help automate the PPP loan forgiveness process and the AICPA state filing tax relief chart. The PPP Forgiveness Tool states it will be updated to reflect additional guidance as its given, however, the tool is not currently updated. Likely it is because a second PPP initiative is currently in discussions to relax the forgiveness requirements for loans up to $100,000 to $150,000. AICPA stated they will update the latest state relief chart for you to download as developments happen. The current as of when this blog is written is dated 7/17/20.
    • Prepare in advance: Think ahead and create a strategy. Some CPA experts are recommending to their clients to defer income into next year and increase expenses this year for next year if possible. On a personal note, prepare yourself and get your CPE credits done while you have time, organize your office, and potentially prepare to hire help.
    • Communicate and be honest with your clients: Unfortunately, we can’t always give our clients the firm answers they seek but you can let them know that you are staying on top of the updates news from the American Institute of Certified Public Accountants (AICPA), IRS and government. One thing for sure you can tell them is how important it is more than ever to keep receipts and documentation as well as, keep current on bookkeeping now because you know you’ll be busy when final guidance is given and filing is required.
    • Mark your calendar when specific release dates are given: Although some timelines get pushed back, a notification will at least serve as a reminder to check in on the updates. For instance, Congress goes into recess on Aug 8th and the SBA will not begin accepting PPP forgiveness submissions from lenders until it goes live on Aug 10th. There currently is not a deadline date to have the application for forgiveness submitted but guidelines state the submission must be completed before 10 months after the end of the covered period. If it is not submitted, the loan needs to be repaid.




    Covid Lawsuits and Claims Against Employers Increasing Nationwide

    Covid Lawsuits and Claims Against Employers Increasing Nationwide

    Covid Lawsuits and Claims Against Employers Increasing Nationwide

    Watch out! Among everything else employers are facing during this pandemic to stay afloat, you can add liability lawsuits to the list. 

    “Did you know that, “As of mid-June, more than 230 lawsuits directly related to labor and employment violations have been filed (including 30 class action suits). California leads the nation with 32 employment lawsuits already filed.” – Littler

    As businesses are struggling to stay open and operational, the workplace liability lawsuits are piling up in the courts nationwide. It’s imperative for employers to stay up to date with federal, state, and local regulations during the pandemic to make sure they have an understanding of their employee’s rights.

    There various types of lawsuits currently being filed against employers, but we wanted to inform all of you of the top 3 being seen across the nation.

    Top 3 Types of COVID Lawsuits Against Employers:

    1. Paid Leave Claims – Employers are seeing a rise in claims from employees alleging they were denied leave they were entitled to by way of the Families First Coronavirus Response Act (FFCRA). Employers need to makes sure their leave programs coordinate with these new regulations.
    2. Discrimination Claims – Americans with Disabilities Act, which governs what medical information employers can seek from employees. With that said, laws that prohibit discrimination on the basis of age, pregnancy, and other bases are areas employers should be careful. Particularly where employers are beginning to return their employees to the workforce, they should be mindful of potential legal “pitfalls” even where they believe they are acting in an employee’s best interests.
    3. RIFS and Downsizing ClaimsEmployers that have been forced to downsize their workforces should be mindful of the federal Worker Adjustment and Retraining Notification (WARN) Act. Under the WARN Act, employers may be required to provide 60 days’ notice to workers when they are laid off for an extended period, or when the employer closes its business. It is unclear as to what exemptions they may have when related to Covid-19.


    We know that some of you may have HR questions relating to complying with Covid workplace regulations, so we wanted to present a resource for our CPA MOMS community.

    We have partnered nationally with ADP who is a trusted advisor in the HR/Payroll industry and it’s their priority to ensure you have the proper tools and expertise necessary to safely re-open and maintain your business. Our national rep, Rachel, is helping clients cut costs and gain access to more hands-on support during this tumultuous time.

    If you are interested in setting up a free consultation or getting more information, please fill out the contact form and she will get in touch you as soon as possible: CPA MOMS ADP Contact Form