The Supreme Court on June 29 declined to grant an application to vacate a stay of eviction proceedings based upon the nationwide eviction ban imposed by the Centers for Disease Control and Prevention (CDC). The application was brought by the Alabama Association of Realtors, who contended that the CDC lacks the authority to impose such a sweeping moratorium, which implicates the property rights of thousands of land owners across the country. Although the court denied the Association’s application, four of the court’s more conservative justices—Thomas, Alito, Gorsuch, and Barrett, voted to vacate the stay. Justice Brett Kavanaugh joined Chief Justice John Roberts and the court’s liberals denying the application, but his concurring opinion argues that the CDC exceeded its existing statutory authority in issuing the nationwide eviction moratorium. Kavanaugh wrote that the CDC plans to end the moratorium in a few weeks, allowing for “additional and more orderly distribution of the congressionally appropriated rental assistance funds.” Kavanaugh concluded that the CDC lacks the authority to extend the eviction ban past July 31 absent “clear and specific congressional authorization (via new legislation).” The case is Alabama Association of Realtors, et al. v. Department of Health and Human Services, et al., No. 20A169.
Just recently, the controversial and fast tracked bill A-5777 originally touted by lawmakers as a feasible plan to terminate New Jersey’s public health emergency over Covid-19 was abruptly pulled from a planned vote scheduled on May 20, 2021 due to rampant backlash from state lawmakers in both major parties as well as opposition from prominent NJ business organizations. The proposed bill would purportedly revoke nearly all of Gov. Phil Murphy’s executive orders related to the pandemic, but it wouldn’t necessarily eliminate all remaining restrictions as drafted. Instead, the bill sought to keep 15 of Gov. Murphy’s executive orders until January 2022 – including a moratorium on evictions and utility shutoffs, as well as whatever current masking and social distancing measures were currently in place.
The bill in its original form would have also allowed Gov. Murphy to revoke or alter any of his remaining orders before the end of the year without getting any input from the Legislature. This perceived attempt at unfettered power garnered a stark response from Republican lawmakers who remarked that such a measure would continue a “dictatorship” that Gov. Murphy has enjoyed for more than a year and that the bill ‘looks more like Stockholm syndrome than true oversight by a supposedly co-equal branch of government.” The New Jersey Business & Industry Association (NJBIA) immediately criticized the bill noting that it was bad for business and “did nothing to limit Gov. Phil Murphy’s unilateral power well beyond the health crisis.” The NJBIA’s chief complaint with the original bill was the continuation of Executive Order 192, which mandates that employers abide by certain health and safety standards through the end of the year. In practical terms, the continuation of EO 192 means that employers would have to continue daily health screening of workers and it would continue a mask mandate to be imposed indoors in places of business while many other states have gotten rid of the mandate entirely.
However, on May 24, 2021, New Jersey announced that it would lift its mask mandate on Friday, May 28, 2021 and no longer require masks indoors after already having lifted its outdoor mask mandate. During the formal announcement, Gov. Murphy stressed that businesses and private offices may continue to require employees and customers to wear masks and they will still be required in certain settings including health care, public transportation, airports, train stations, public-facing state offices and some private worksites. Plus, masking will continue at public and private elementary schools, child care facilities, and youth summer camps in accordance with CDC recommendations as children under age 12 are not yet eligible to be vaccinated and children 12 to 15 have only been eligible for vaccination for less than two weeks. New Jersey will also lift its six-foot social distancing requirements on May 28th and remove all indoor gathering limits on June 4, 2021. All in all, the lifting of these major restrictions translates into a much welcomed return to “normal” for the majority of New Jerseyans who have endured a long road to recovery during this unprecedented pandemic.
Yesterday, Wednesday 12/9, a bipartisan group of the US Congress released a summary of the proposed new Emergency Covid Relief Act of 2020. While this proposal is not yet law, and the White House has introduced a competing proposal, further negotiations are likely. However, the summary of this proposed new bipartisan legislation includes the following relief provisions:
- An additional $300 billion to the SBA (Small Business Administration) for second PPP loans to small businesses impacted by the Covid-19 pandemic who have 300 or fewer employers and have suffered a 30% revenue loss in any quarter of 2020.
- Business expenses paid for with the proceeds of the PPP loan will be tax deductible, consistent with Congressional intent under the earlier CARES Act, and even though PPP loan forgiveness is already not taxable income, resolving what has been a point of contention between Congress, the Internal Revenue Service, and tax experts.
- PPP loan forgiveness would be further simplified for those small businesses with PPP loans of $150,000 or less.
- The federal government would provide a $300 weekly supplement to state unemployment benefits for an additional 16 weeks (under the proposal, this increase would not be retroactive).
It is still anyone’s guess what any final federal COVID relief legislation will look like, but S&E continues to monitor developments in this area and will keep you informed.
Steven K. Eisenberg, Esquire, MBA
Chief Executive Officer and Founder of Stern & Eisenberg
At Stern & Eisenberg, we are always looking for ways to grow and enhance our ability to support all of our clients’ needs through our existing footprint. Part of our effort includes supporting our attorneys’ efforts to develop their abilities and knowledge in additional jurisdictions.
It is with great pleasure to announce that Steven K. Eisenberg has recently been sworn into the practice of law in the additional states of West Virginia and Maryland. He looks forward to working with the other Stern & Eisenberg attorneys licensed in those states. With the help of our Stern & Eisenberg attorneys, Steven soon will join the Federal Bars (District Courts and Bankruptcy Courts) in both states. Steven is also finalizing his admission to the New York State Bar.
The S&E family is dedicated to professional advocacy, creative solutions and legal services for our clients, partners, and community with determined integrity and intensity serving the State of Delaware, Pennsylvania, New Jersey, New York, Pennsylvania, West Virginia and (Maryland).
Steven K. Eisenberg, Chief Executive Office and Founder of Stern & Eisenberg has an extensive background in real estate and corporate matters including acquisition and sale of businesses and assets. His practice also focuses on the representation of lenders and servicers in the enforcement and protection of their interests in the legal process, including foreclosure, bankruptcy, evictions, title claims, loan modifications, and litigation. Having experience previously representing borrowers, Steven brings his unique perspective to the representation of his servicer, lender and business clients. Steven is now licensed to practice law in New Jersey, Pennsylvania, West Virginia, Maryland, and the District of Columbia. He is Martindale-Hubbell AV rated.
If you are confused about the various Pennsylvania unemployment programs, which include several unemployment assistance programs that were part of the federal CARES pandemic relief legislation enacted back in March, you are not alone.
The federal CARES pandemic relief legislation created three unemployment benefits programs (administered through state unemployment offices): (1) the Pandemic Unemployment Assistance (“PUA”) program, providing unemployment benefits for certain individuals who are unemployed as a result of COVID-19 and who traditionally were ineligible for unemployment, such as gig-economy workers, independent contractors, and self-employed individuals otherwise ineligible for regular or traditional state unemployment benefits; (2) the Pandemic Emergency Unemployment Compensation (“PEUC”) program, providing 13 additional weeks of regular or traditional state unemployment benefits for individuals whose state unemployment benefits would otherwise expire; and (3) the Federal Pandemic Unemployment Compensation Program (“FPUC”) program, providing $600/week of additional unemployment benefits (if the individual received other unemployment benefits in that week.
Congress provided funding for the PUA and PEUC programs through the end of the year. Unfortunately for those receiving unemployment benefits, Congress and the President failed to agree on a replacement or extension of the $600/week FPUC program, and that program expired at the end of July. In response, on August 8, 2020, the President issued an executive memo establishing a new Lost Wages Assistance (“LWA”) program.
What is the LWA program? It is a program administered federally through the FEMA (Federal Emergency Management Agency) Disaster Relief Fund as a grant program to the states, with the funds to be paid to eligible individuals through their state unemployment programs. The LWA program was designed to provide a $400/week “lost wages” benefit, $300/week of which is to come from the federal government, with the remaining $100/week to come as a match from the states (at least, those states that elect to participate). Unlike the FPUC, it is only available to eligible individuals impacted by the coronavirus pandemic who are already receiving more than $100/week of unemployment benefits. Further guidance from the federal government appears to allow states to meet the state’s match with that state’s underlying spending on traditional unemployment programs. This LWA benefit is available for weeks of unemployment ending on or after August 1, 2020 and ending on or before December 27, 2020, although as it is a FEMA grant program, it could end earlier if FEMA exhausts the funds allocated to this program or if Congress enacts new unemployment relief legislation.
FEMA appears to have begun approving states for the LWA program to provide the $300/week federal benefit, including Pennsylvania according to a press release from FEMA issued on Monday 8/24/20. However, it is not clear how long it will take for this LWA Program to be implemented in Pennsylvania, with FEMA announcing in its press release that it “…will work with Pennsylvania Gov. Tom Wolf to implement a system to make this funding available to Pennsylvania residents.”
If you are an unemployed Pennsylvania resident, regular or traditional state unemployment benefits, benefits from the PUA program, and extended benefits from the PEUC program may be available to you. In addition, the $300/week LWA benefit should become available to Pennsylvania residents when implemented. See the Pennsylvania state unemployment program website, www.uc.pa.gov for more information. We continue to monitor developments in this area and will post updates as they become available.
While the IRS has taken the position (IRS Notice 2020-32) that qualified expenses paid using PPP loan proceeds are not deductible for federal income tax purposes, the issue is far from resolved and the subject of continued debate. Click here for more information.
While the IRS has taken the position (IRS Notice 2020-32) that qualified expenses paid using PPP loan proceeds are not deductible for federal income tax purposes, the issue is far from resolved and the subject of continued debate.
In a letter to Congress on August 4, 2020, copy available here, https://www.ada.org/~/media/ADA/Advocacy/Files/200804_Main_Street_Loan_Forgiveness.pdf?la=en, a consortium of some 170 business interests and lobbying groups (ranging from the Air Conditioner Contractors of America to the American Dental Association, and including the American Institute of CPAs) demanded that any new COVID-19 relief legislation affirm the deductibility of these qualified expenses (i.e. wages and rents paid using PPP loan proceeds).
Why is this issue crucial to small business PPP borrowers? Because any PPP loan forgiveness may be effectively negated if qualified expenses paid with forgiven PPP loan proceeds are not tax deductible. As their letter notes as an example, “If a business has $100,000 of PPP loans forgiven and excluded from its income, but then is required to add back $100,000 of denied business expenses, the result is the same as if the loan forgiveness was fully taxable.” Proposals have been introduced in Congress to “reverse” the IRS position. However, currently all COVID-19 relief efforts are stalled. A real practical concern raised by those concerned with this issue is that with the extension of the time to use PPP loan proceeds to 24 weeks, a small business using PPP loan proceeds for qualified expenses in 2020 may not obtain forgiveness until sometime well into 2021. Without that forgiveness in hand, can that business deduct the qualified expenses paid using loan proceeds in 2020?
In the absence of further relief or guidance on this issue, small business taxpayers and their tax advisors will have to decide whether to take an aggressive approach, in light of IRS Notice 2020-32, or comply with the IRS’s position and face losing most or all of the benefits of PPP loan forgiveness. We continue to monitor developments in this area, and will provide updates on these critical issues as they become available.
The US Judicial Panel on Multidistrict Litigation, in a much anticipated Order issued yesterday, rejected attempts by two groups of policyowners, one in Pennsylvania and the other in Illinois, to centralize hundreds of federal cases filed by business owners seeking insurance coverage for business interruption losses related to the COVID-19 pandemic. The Panel sided with insurance companies, and even some policyowners, who objected to consolidating these lawsuits into a single venue. While finding that consolidation may still be appropriate for cases against specific insurers, the Panel found that, generally, nationwide consolidation of cases involving many insurers (more than 100), who may have differing policy provisions, lack common elements that could complicate discovery efforts and slow down proceedings. The Panel, did, however, signal that it would consider “targeted” consolidation involving cases against a single insurer or group of affiliated insurers where common elements among policy provisions might be found. As there can be substantial variation in policy provisions for pandemic related business interruption coverage, it is important if you are a business owner to review your policy. If you have questions about your business insurance coverage, contact one of our experienced attorneys at Stern & Eisenberg, PC, Thomas E. Shea and Zachary Champion.
In addition to the suspension of required minimum distributions (RMDs) for 2020 available to retirement account owners as a result of the federal CARES Act that we discussed in our last post, this COVID-19 relief legislation also provided some additional relief efforts to help retirement account owners. First, retirement plan owners who were directly affected by the COVID-19 pandemic may take an IRA distribution this year of up to $100,000 and spread the income tax on that distribution out over 3 years (2020, 2021 and 2022). Also, if you are under 59.5 years of age and impacted by the COVID-19 pandemic, you can avoid the 10% penalty on early withdrawals. These relief provisions have created some interesting, albeit aggressive tax planning opportunities with IRAs. One possible, but aggressive strategy, is for an IRA owner to do a Roth IRA conversion and spread the income tax cost of the converted amount (up to $100,000) over 3 years. Another aggressive strategy is for an IRA owner directly impacted by the COVID-19 pandemic to make a deductible IRA contribution in 2020, then take a taxable distribution from the IRA this year. The deduction for the contribution is taken in 2020, but the taxes on the distribution can be spread out over 3 years. Although these strategies appear to comply with the CARES Act provisions, whether or not Congress intended to allow such strategies as part of this COVID-19 relief legislation has been a matter of some debate, and future IRS guidance on these strategies may be forthcoming. To learn more on how the CARES Act may impact your estate and retirement plan planning, please contact us today.
Join our Director of Estate Planning, Thomas E. Shea, Esquire, and Delaware Attorney, Darlene Blythe, Esquire, for an introduction to Estate Planning, and why COVID-19 has brought the importance of estate planning to the forefront.
- What is an Estate Plan, what is the purpose, and who needs one?
- The basic elements of an Estate Plan
- What you need to do to get the process started
- Advanced Estate Planning
Did you know that the federal CARES Act that became law earlier this year as part of the federal government’s COVID-19 relief efforts included a number of short-term changes designed to enhance the durability of retirement plan savings as well as emergency provisions to ease COVID-19 related hardships. Specifically, the CARES Act suspended all required minimum distributions (RMDs) for 2020 (you can still take them if you want to or need to but are not required to take your RMD in 2020). As RMDs are based on retirement account values as of the end of the prior year, this relief provision may be helpful to those with retirement plans who have other sufficient sources of income and do not need to take RMDs and who may want to give their retirement plan funds time to recover from the current market volatility. This suspension of RMDs for 2020 may also create opportunities for those considering converting their traditional IRA to a Roth IRA. If you already took out an RMD for 2020, you may be able to return the RMD to your plan or other retirement plan, but under current IRS guidance you must act by August 31, 2020. We will cover additional CARES Act provisions impacting retirement plans in future posts. To learn more on how the CARES ACT may impact your estate and retirement plan planning, please contact us today.