On August 28, 2020, the Internal Revenue Service (“IRS”) issued Notice 2020-65 (the “Notice”) as its guidance on implementing the Memorandum on Deferring Payroll Tax Obligations in Light of Ongoing COVID-19 Disaster signed by President Trump on August 8, 2020 (the “Payroll Tax Memo”). As described in a previous post, the Payroll Tax Memo
The plethora of economic policy commitments to support business in the UK and the US in the face of COVID-19 can be difficult to navigate. Our lawyers recently held a webinar in conjunction with PLI to provide an overview of the various support schemes implemented in the UK and the US, focusing on UK schemes such as the Coronavirus Business Interruption Loan Scheme (“CBILS”); UK Coronavirus Job Retention Scheme (aka Furlough Scheme); the COVID Corporate Financing Facility (“CCFF”); and on Financial Conduct Authority (“FCA”) reforms and working capital assistance for UK listed companies. It also considered emergency relief measures in the US, including the Federal Reserve’s Paycheck Protection Program Liquidity Facility.
Continue Reading COVID-19: UK and US Economic Support Mechanisms
The US Small Business Administration (“SBA”) has now formalized certain borrower-friendly changes to the Paycheck Protection Program (“PPP”) provided for by the PPP Flexibility Act. A new Interim Final Rule (“IFR”) follows an informal joint press release on June 8, 2020 by the Department of the Treasury and SBA that previewed program changes. The SBA also issued a revised PPP Borrower Application Form and a revised PPP Lender Application Form conforming certain certifications to the program revisions and making other changes. Revised forgiveness application forms and instructions have not yet been released, but are anticipated in the near future.
Continue Reading SBA Issues New Rule, Revised Borrower/Lender Application Forms Implementing PPP Flexibility Act
Mayer Brown partner Terence Tung is quoted in The Times regarding China’s recent steps using the pandemic to impose a national security law that may threaten Hong Kong’s special legal status.
International firms with broad legal service offerings will be resilient and rise above any challenges
— Terence Tung
Read the full article (subscription required).…
On April 29, 2020, the City of Los Angeles adopted the COVID-19 Right of Recall Ordinance and the COVID-19 Worker Retention Ordinance, both of which come into effect on June 14, 2020. Two weeks later, on May 12, 2020, the Los Angeles County adopted its own COVID-19 Right of Recall Ordinance and COVID-19 Right of Retention Ordinance, applying in the unincorporated areas of the County of Los Angeles, both of which became effective immediately.
Continue Reading COVID-19 Related Worker Retention and Right of Recall Protections Adopted for Airport, Event Center, Hotel, and Commercial Property Employees in Los Angeles City and County
While the second round of Paycheck Protection Program (“PPP”) funding remains available for new applicants, the first round is about to enter a new phase—loan forgiveness. Under the PPP, up to the full amount of the loan may be forgiven if the borrower spends proceeds on eligible payroll, mortgage, rent, and utilities expenses in the eight weeks following loan origination (subject to certain limitations, including that not more than 25% of forgiveness may be based on eligible non-payroll expenses). Forgiveness will be reduced for employer reductions in headcount and for certain reductions in salaries/wages in excess of 25% for any employee making less than $100,000 on an annualized basis during the eight-week period as compared with pre-COVID-19 conditions. To facilitate the forgiveness process, the SBA has now issued a PPP Forgiveness Application (SBA Form 3508). Borrowers that plan to seek forgiveness should carefully review the form and its instructions in advance of submission to their lenders or current servicers.
Continue Reading US SBA Paycheck Protection Program (PPP) Forgiveness Application
On May 18, 2020, the US Small Business Administration (SBA) released its twelfth interim final rule (IFR #12) on treatment of entities with foreign affiliates and purporting to “clarify” its own prior “guidance” noting that:
“Some market participants have indicated that there may be uncertainty regarding whether PPP applicants must include employees of foreign affiliates in their employee counts, because SBA has previously issued guidance stating that an entity is eligible for a PPP loan if it has 500 or fewer employees whose principal place of residence is in the United States. See 85 FR 20811, 20812 (April 15, 2020).”
Today, just one day before the safe-harbor deadline for returning Paycheck Protection Program (PPP) loans, SBA released new guidance (FAQ # 46) on the good-faith certification of economic uncertainty. While this new guidance does not provide the clarity that many borrowers were seeking, it appears to reduce the risks associated with this certification by adopting a new safe harbor for loans under $2 million and limiting the potential penalties for loans above $2 million.
Continue Reading New SBA Guidance May Reduce the Risks to Borrowers Making the Certification of Necessity for Paycheck Protection Program Loans
The US Small Business Administration has extended the safe harbor period for PPP loan return until May 14, 2020, stated that it will provide further guidance regarding the PPP necessity certification, and added confusion regarding the employee-size standard.
In yesterday’s FAQ #43, the US Small Business Administration (SBA) stated:
- Question: FAQ #31 reminded borrowers to review carefully the required certification on the Borrower Application Form that “[c]urrent economic uncertainty makes this loan request necessary to support the ongoing operations of the Applicant.” SBA guidance and regulations provide that any borrower who applied for a PPP loan prior to April 24, 2020 and repays the loan in full by May 7, 2020 will be deemed by SBA to have made the required certification in good faith. Is it possible for a borrower to obtain an extension of the May 7, 2020 repayment date?
Over the last week, the Department of Labor, together with the Treasury Department, released several key pieces of guidance temporarily relieving deadlines for participants and beneficiaries in health, disability, other welfare and pension plans, and liberalizing enforcement policies and deadlines applicable to plans and plan sponsors. The guidance is likely to be welcome relief for…