April 27, 2020

COVID-19 Government Relations Daily Summary

The information included in this daily summary provides you with updates and developments on regulatory and legislative developments since our April 17th COVID-19 (0-9) Update.  Readers are encouraged to look at previous daily summaries cataloged in our electronic library.

Responses to FAQs

Illinois Department of Revenue
PPP & Economic Stimulus Payments-Taxable Income

Question:     Will the Illinois Department of Revenue treat the PPP Loan Forgiveness as tax exempt?

Answer:        YES--based on the rolling conformity rule.

Discussion:   Illinois is a “rolling conformity” state meaning Illinois automatically adopts changes to the Internal Revenue Code in absence of legislative action to the contrary.   Section 1106(i) of the CARES Act specifies that the forgiven loan amount of the PPP program is not federally taxable income. 

Question:      Will the Illinois Department of Revenue treat the Federal Stimulus Payments as tax exempt?

Answer:        YES-based on rolling conformity rule.

Discussion:   Federal Stimulus Checks officially called the “2020 Recovery Rebate for Individuals”  are structured as refundable tax credits and are therefore not considered as Federal Taxable Income.  The rolling conformity rule would therefore not include it as adjusted gross income for state tax purposes.

Note:           IDOR has not posted official guidance on this topic.

Illinois Attorney General
Charitable Filing Extensions

Question:     Will the Illinois Attorney General’s Office extend 990 filings to July 15th to reflect the IRS Extensions?

Answer:       YES-when requested.  See discussion and takeaway below. 

Discussion:  The IRS granted relief through Notice 2020-23 on April 9th and Revenue Procedure 2018-58 that pertain to exempt organizations. Notice 2020-23 does state that it applies to tax payments, returns, and other form filing obligations due to be performed originally OR pursuant to a valid extension on or after April 1, 2020 and before July 15, 2020 in Section III.A, Grant of Relief.  Notice 2020-23 doesn’t explicitly mention the Form 990 (although it does mention the Form 990-T and Form 990-PF, which is likely due to an income or excise tax payment due with those returns and not just a filing requirement), it does go on to state that the relief extends to any person performing a time-sensitive action listed in Revenue Procedure 2018-58 (attached) on or after April 1, 2020 and before July 15, 2020.  On page 80 of Revenue Procedure 2018-58, the Form 990 is listed as a time-sensitive act.  The IRS website, there is a FAQ section which clarifies that this relief does in fact apply to returns that were previously extended and have an extended due date landing in the time frame set forth in Notice 2020-23.

Takeaway:  See 14 IAC 400.60(h) Solicitation for Charity Act-Annual Reports for Charitable Organizations.  Our analysis of Section 400.60(h) extends initial and extended Attorney General Charity Filings under this section to July 15th.  The Charitable Trust Bureau will soon be posting formal guidance on the Attorney General’s website

Question:      Are Charitable extensions from the Attorney General automatic similar to the IRS?

Answer:        No.  Charitable extensions from the Illinois Attorney General’s Office are not automatic.  YOU MUST REQUEST AN EXTENSION.  See our April 17th Daily Summary, on extension request. 


Governor Extends Stay-At-Home Order to May 30th
Modified Executive Order

Governor Pritzker announced that the stay-at-home order (Executive Orders 2020-05/2020-10) will be extended to May 30th.   He also announced modifications to Executive Orders currently in place permitting some forms of outdoor recreation, allowing garden centers to open and non-essential stores can resume sales so long as customers picked up their purchase as curb side.  Beginning May 1st, people will be required to wear a face-covering or a mast when in a public place where a six-foot social distance cannot be maintained.  Essential businesses will be required to provide masks to their employees and take other steps to expand social distancing such as staggering work hours and limiting production to essential items. As of this writing, the Governor’s referenced Executive Order  has not been issued.  See draft executive order and see DECO resource page that includes information on opening golf courses.

Supplemental Note:   Employers and essential businesses should read the draft EO to ensure required employee protections and compliance.  The Illinois Attorney General’s Workplace Rights Bureau and Illinois Department of Labor will be investigating employee complaints relating to an employers safe and sanitary workplace practices
Illinois Workers' Compensation Commission
Essential Employees Guaranteed Workers’ Compensation during COVID-19 Suspended

The Sangamon County Circuit Court issued a Temporary Restraining Order  staying the Illinois Workers' Compensation Commission from enforcing an emergency rule that guaranteed workers compensation during COVID-19.  Business organizations legally challenged the Illinois Workers' Compensation Commission’s authority to issue emergency rules creating a rebuttable presumption that First Responders and Front-Line Workers who claim injury due to COVID-19 will automatically presumed that the employee contracted the virus in the course of their employment.  Governor Pritzker announced that the Workers' Compensation Commission will rescind the rolled outemergency order. The next court hearing is scheduled for May 4th.    

Illinois Department of Employment Security
Pandemic Unemployment Compensation

Last week, the Illinois Department of Employment Security rolled out the Federal Pandemic Emergency Unemployment Compensation (FPEUC) program, which provides up to 13 weeks of federally funded benefits to individuals who have exhausted their regular state unemployment benefits.  IDES waived the waiting week for claimants and implemented the FPEUC which provides an additional $600 each week in federally funded benefits to eligible Illinoisans.  The CARES Act also created the Federal Pandemic Unemployment Assistance (FPUA) for Self-employed Workers, Freelancers, and Independent Contractors.  This program will not be available until early May.  IDES has contracted with Deloitte to develop an online application process for FPUA.   

Illinois Supreme Court
Issues Order Limiting Freezes on Personal Bank Accounts

The Illinois Supreme Court issued an emergency order which limits freezes on personal bank accounts during the COVID-19 pandemic.  The emergency order temporarily relieves debtors of the burden of asset freezes, up to the $4,000 exemption provided by law.  This order provides relief for Illinois residents with judgments against them an who have little or no recourse to address freezes that have been imposed on their bank accounts.   

Illinois Department of Financial & Professional Regulation
Payment Relief for Student Loan Borrowers

The Illinois Department of Financial and Professional Regulation announced that Illinois has secured relief options with twenty private student loan servicers to expand on the protections of the federal government granted to federal student loan borrowers.  The CARES Act provided relief to students with federal loans; however, the Act left out student loan borrowers with federal loans not owned by the US Government as well as loans made by private lenders. See FAQs.

President Signs COVID-19 3.5 Disaster Legislation
 (H.R. 266) Paycheck Protection Program

On Friday, (April 24th) President Trump signed House Resolution 266 entitled the Paycheck Protection Program and Health Care Enhancement Act into law as “Phase 3.5” of the coronavirus response.  This legislation replenishes the depleted Paycheck Protection Program with $310 billion in new funding and also provides $75 billion for healthcare, including relief for health care providers and $25 billion for coronavirus (COVID-19) testing.
There are no tax provisions included in this legislation.  $30 billion of the PPP Program must be set aside for PPP loans made by Insured Depository Institutions and Credit Unions that have assets between $10 billion and $50 billion , and $30 billion for loans made by Community Financial Institutions, Small Insured Depository Institutions and Credits Unions with less than $10 billion.

Small Business Administration
Paycheck Protection Program

Treasury Issues Guidance on Paycheck Protection Program (PPP)

The Department of the Treasury posted a new interim final rule on the Paycheck Protection Program to supplement previously released interim final rules with additional guidance.  The interim final rule discusses PPP eligibility issues for investment funds and portfolio companies.  Treasury also updated PPP FAQs.  FAQ#31 was added to address whether businesses owned by large companies with adequate sources of liquidity to support business operations qualify for PPP loans. 

AICPA Addresses CPA-Lender Issues Related to PPP Agents
The AICPA has developed an informational document with recommendations for the CPA-lender relationship relating to firms assisting clients that are seeking PPP funding.  SBA rules provide for an agent to assist applicants with the PPP program.  With the rapid pace of the loan program, there has been some uncertainty in instances between CPA firms and lenders.  ICPAS has been working with stakeholder organizations in communicating to our respective members and has also written to the Regional Administrator of the Small Business Administration and the members of the Illinois Congressional Delegation. 

Federal Reserve Bank
Main Street Lending Program

The Federal Reserve has announced that it is establishing a Main Street Lending Program to support lending to small and medium sized businesses that were in good financial standing before the onset of the COVID-19 crisis.  The Program will operate through two facilities:  the Main Street New Loan Facility: the Main Street Expanded Loan Facility and the Main Street Expanded Loan Facility.  See more.