Law in the Marketplace: Take advantage of the CARES Act

For the Monitor
Published: 6/29/2020 12:35:07 PM

This is the first in a series of Law in the Marketplace columns with practical tips on using federal and New Hampshire laws and orders to deal with the COVID-19 pandemic.

Retirement plans

Over the years, many thousands of New Hampshire business owners have made substantial federally tax-deductible contributions to SEP-IRAs and other business-related retirement plans.

But until now, numerous strict rules and penalties have governed withdrawals from these plans.

However, the federal law entitled the Coronavirus Aid, Relief, and Economic Security (CARES) Act, signed on March 27, waives most or all of those restrictions and provides special, tax-payer-friendly COVID-19 rules governing these withdrawals and re-contributions.

If there is a COVID-19 recession, the value of the assets in these plans may decrease significantly. Thus, many New Hampshire business owners should consider withdrawing some or all of the cash value of their plans even now in order to protect themselves, their families and their employees during the recession.

But they shouldn’t do so unless they first check about the CARES Act with their lawyers and with their accountants and other financial advisers.

 

FAmilies First Act

The federal Families First Coronavirus Response Act (FFCRA), signed on March 18 provides two major benefits to employees:

-- Full pay for some employees. The FFCRA requires employers to pay their employees at their regular rate if the employees are unable to work or telework because of a federal, state or local Coronavirus order, such as hairdressing and fitness businesses, or because the employees must self-quarantine or are infected with COVID-19.

-- Two-thirds pay for other employees. It requires employers to pay their employees two-thirds of their regular pay if they are unable to work not because of government laws or orders but because they are caring for a person subject to a coronavirus order or because they must self-quarantine or are caring for a child whose school or place of care has been closed due to Covid-19 or whose caregiver is unavailable because of COVID-19.

If you are an employee entitled to FFCRA benefits, make sure you receive them.

For further FFCRA information and updates, visit businesslaw.handponist.com/blog

A COVID-19 LLC for governors?

The paragraph below has been written for governors and their aides, but it may interest other readers as well.

Among the most horrifying coronavirus issues in the U.S. are the lack of COVID-19 test kits and personal protective equipment; the lack of ventilators for COVID-19 victims; the need of the 50 states to compete against one another and even against the federal government to buy these supplies; and the resulting price gouging by sellers. I’m an LLC lawyer. Unless the White House promptly adopts a federal solution, I suggest the 50 governors form an LLC in which, as members, they all agree to purchase these COVID-19 supplies as a single legal entity and to share them proportionately by state population. This may prevent federal and state competition and price gouging and expedite the availability of the supplies. Each governor will naturally want the LLC to be governed by his or her own state laws, but Delaware law is the obvious compromise. Delaware is a tiny state but it has a great LLC act, great contract laws and a great law for resolving LLC disputes fairly and expeditiously.

John Cunningham is a Concord tax and business lawyer. He has published “Limited Liability Company Operating Agreements” and “Maximizing Pass-Through Deductions under Internal Revenue Code Section 199A”. Both are the leading books in their fields. If you have business or tax questions you’d like addressed in this monthly column, call himat 856-7172 or email lawjmc@comcast.net.




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