By: William B. Gorlin, PE, SE Vice President Entertainment Division McLaren Engineering Group
 
With Covid-19 forcing the entertainment industry to reimagine a “new-normal” for the upcoming summer season, business owners are scrambling for innovative and safe ways to generate socially distanced events. The biggest challenge centers around how to bring the public together, while avoiding tightly packed gatherings and providing a new standard of cleanliness demanded by both patrons and local authorities. One solution gaining much traction across the nation is the resurgence of the drive-in movie theater and the evolution of other automobile-centered performances.
 
Once considered a kitsch relic of American culture, drive-ins are now being hailed for their ability to provide a show-going experience that adheres to our current pandemic health protocols. Prepaid spots, delivered refreshments, and hundreds of people sitting inside their own cars to watch a film, seems like a perfect solution to preserve summer revenue while keeping patrons socially distanced and entertained. With only about 300 operating drive-ins left around the country, numerous local businesses (many inexperienced in the production of such events) are taking a leap and converting existing lots and open spaces into pop-up drive-ins - but is it really safe?
 
To ensure true safety, precautions for these events cannot solely focus on COVID-19 related measures. While many owners and event producers will inevitably be emphasizing the social distancing aspect, there are other traditional safety concerns that cannot be overlooked. Makers of these local pop-up productions need to also consider fire safety, security, weather safety, and structural safety. Protecting the public from preventable dangers, such as LED screen supports that are vulnerable to high winds, is equally as important as adhering to pandemic health guidelines.
 
For these pop-up drive-ins, tight schedules and limited budgets put events at risk for lapses in overall safety measures. When developing a live event production, owners who are not familiar with the logistics and complexity of such an undertaking, may underestimate the costs associated with the equipment and related safety planning. Likewise, in today’s lean market, event production companies may be hungry for work and could be vulnerable to cutting corners to provide a quick and inexpensive solution. With local officials and businesses eager to bring economic activity back to life, it is important to understand that skimping on traditional safety measures and only focusing on COVID-19 precautions, can cost owners and patrons more in the long run.
 
When all factors are considered, the drive-in experience can be a great option for entertainment events this summer season and well into the future. However, when pop-up events are created with only COVID-19 measures in mind, patrons are at risk for other potential hazards. Pop-up events and specialty productions should always involve experienced professionals who understand local guidelines and are well versed in important industry standards like the ones listed below:
 

• The Event Safety Guide : A Guide to Health, Safety and Welfare at Live Entertainment Events in the United StatesThe Event Safety Guide, published by the Event Safety Alliance, latest edition
• ANSI ES1.19-2018 “Safety Requirements for Special Event Structures”
• ANSI E1.21-2020 “Entertainment Technology – Temporary Structures Used for Technical Production of Outdoor Entertainment Events”
• ANSI E1.50-1-2017 “Entertainment Technology – Requirements for the Structural Support of Temporary LED, Video & Display Systems”
• The Event Safety Alliance Reopening Guide, published May 2020

By: Joseph Imperato, Sr., Partner, XSolutions Consulting Services, LLC

The COVID-19 Pandemic caught all of us offguard and has thrown our economy into disarray. The world is a much smaller place, and something happening on the other side of the globe can travel around the world at lightning speed and hit us seemingly from all sides.

COVID-19’s business lesson is: we need to be prepared, and the best way for your business to do that is to create, test, and keep evergreen a Disaster Recovery Plan (DRP).

The statistics are frightening. PhoenixNap reports that 75% of small businesses do not have a Disaster Recovery Plan. With this statistic in mind, now you can understand how our whole economy is in free fall because of an unexpected and unplanned event. We need to do better.
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XSolutions is here to help. We’ve fully updated our FREE Disaster Recovery Plan Template, adding tabs for a Pandemic Workspace Plan, Server Recovery List, Cloud Applications Backup info, and more.

Our template is in Microsoft Excel format; each tab represents a specific topic. There are 20 tabs, all hyperlinked, so navigation is super easy. There is no registration, just download and use it.

You can use the template as a starting point by filling in the information about your company, and since the workbook is not password protected, you can add tabs as the need arises. This template will allow you to get a written DRP up and running very quickly.
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Don’t be part of the majority of small businesses that ignore this significant managerial responsibility. Start planning now for the next Pandemic and anything else that may come your way. Plan to survive and thrive when the next disaster strikes.

XSolutions is an Elite Partner of Datto, the world leader in Hybrid-Cloud Business Continuity solutions whose systems protect 460+ Petabytes of data with over 1400+ employees and 9 offices around the globe. Call (845) 362-9675 and let us introduce you to the ultimate defense against data loss—whatever the cause.

By: Joel Boff, CPA, CGMA, Partner, David Meyrowitz, CPA, Partner, Ginny Boyce, CPA, Director, Lisa Caputo, CPA, Manager, CohnReznick

Shuttered dining rooms and “takeout-only” policies have become commonplace these past few weeks as the hospitality industry continues to cope with the devastating impact of COVID-19. Restaurateurs are also struggling to make sense of the operational changes necessary for re-opening. An April 20 Business Insider article reports that a National Restaurant Association survey found 8 million restaurant workers had been laid off or furloughed due to the coronavirus pandemic, with restaurants expected to see $240 billion in losses by the end of the year.

While this is all terrible news for the restaurant industry, a number of different programs have been enacted at the federal and state levels that offer coronavirus relief to eligible taxpayers, including restaurants. Here are some of these programs, along with updated tax policy changes, and how they can offer restaurant operators a bit of financial relief.

SMALL BUSINESS ADMINISTRATION PROGRAMS (PPP AND EIDL)

On April 24, the U.S. government passed a new $484 billion stimulus package that included $310 billion in new funding for the Small Business Administration’s (SBA) Paycheck Protection Program (PPP) and another $60 billion for its Economic Injury Disaster Loan (EIDL) program. The initial $349 billion in funding for the PPP was exhausted in under two weeks as the SBA reported processing more than 1.6 million loans during that time.

Paycheck Protection Program (PPP)

The PPP is designed to help small businesses (fewer than 500 employees) with funding to pay up to eight weeks of payroll costs, including benefits. The funds can also be used to pay mortgage interest, rent, and utilities. The maximum loan amount for each qualifying business is the lesser amount of:

• 2.5 times the average monthly payroll costs during a specific period (calendar year 2019 for most)
• $10 million

Restaurants and franchises are waived from the SBA’s current affiliation rules within certain criteria, and a PPP loan may ultimately be fully or partially forgiven if a restaurant uses the loan to continue paying salaries and benefits to employees and other costs such as rent (subject to specific rules limiting forgiveness amounts by expense type).  

Economic Injury Disaster Loans (EIDL)

The EIDL program provides small businesses with up to $2 million in coronavirus-related economic relief in certain states and territories. The loans are available to small businesses and private nonprofit organizations to provide working capital and ease economic injury due to a temporary loss of revenue. Funds can be used to pay fixed debts, payroll, accounts payable, and other bills. There are specific rules to follow if applying for both EIDL and PPP loans.
The interest rate for these SBA loans is 3.75% for small businesses and 2.75% for nonprofits. Loan conditions are determined on a case-by-case basis with repayment terms of up to 30 years.

​TAX DEFERMENT AND CREDIT PROGRAMS

Employee Retention Credit

The Employee Retention Credit is designed to encourage businesses to keep employees on payroll. An alternative to the PPP, this refundable tax credit is 50 percent of up to $10,000 in wages paid by an eligible employer whose business has been hurt financially by COVID-19 (i.e., the maximum per-employee credit is $5,000).

To qualify for this credit, the employer’s business must be fully or partially shut down by government order due to COVID-19 during a calendar quarter, or gross receipts must be less than 50 percent of the comparable quarter in 2019. Eligibility is calculated each calendar quarter. If the employer's gross receipts exceed 80 percent of a comparable quarter in 2019, the employer, at the end of that quarter, would no longer qualify for the credit. This credit is not available if a restaurant receives a PPP loan.

Payroll tax deferment

The Coronavirus Aid, Relief, and Economic Security (CARES) Act  permits employers to defer their share of 2020 Social Security payroll taxes, with 50% of the deferred taxes due by Dec. 31, 2021, and the other half due by Dec. 31, 2022. This payroll tax deferral would help restaurants retain some immediate liquidity but does not release them from payment responsibility. Consequently, restaurateurs could be dealing with a large tax bill in 2021 and 2022 if 2020 tax payments are deferred. If the restaurant is seeking a PPP loan, the tax deferral can only be extended up to the date the restaurant has secured this loan.

FFCRA tax credits for employers and the self-employed

The Families First Coronavirus Response Act  (FFCRA) provides employers with tax credits against the employer-provided portion of FICA for those covering paid time off for employees. The credit allows for up to $511 per day paid to employees caring for themselves or $200 per day for those caring for family members. The credits are refundable to the extent that they exceed the employer’s payroll tax and are in effect through Dec. 31, 2020.

MODIFIED TAX PROVISIONS UNDER THE CARES ACT

The CARES Act contains several tax provisions that could benefit restaurants and hospitality companies. The benefits ultimately received depend on certain facts, including the company’s legal entity structure.

Alternative minimum tax (AMT)

Restaurants and other businesses taxed as C corporations can fully recover any remaining alternative minimum tax (AMT) credits in tax years beginning in 2019. Alternatively, an election may be made to take the AMT credit fully in tax years beginning in 2018 if not yet filed.

Food donations and other charitable giving

The limitation for corporations on tax deductions for food donations has increased from 15 percent to 25 percent of taxable income. Restaurants can donate food to their communities while earning an enhanced tax benefit that could immediately reduce income taxes currently due.

The COVID-19 pandemic has raised many questions about charitable giving, including the tax rules relative to employer-sponsored charities or establishing a relief fund to help employees impacted by the crisis. Read our answers to commonly asked questions about charitable giving in the age of coronavirus.  

Net operating losses (NOLs)

For C corporations, any net operating losses (NOLs) incurred in 2018, 2019, and 2020 can be carried back five years to generate tax refunds. The 2017 Tax Cut and Jobs Act limited NOL usage to 80 percent of taxable income. The CARES Act removes this limitation for these years, offering businesses the ability to obtain a refund of prior-year taxes. The CARES Act also delays the application of the excess business loss limitation of Internal Revenue Code (IRC) Section 461(l) applicable to pass-through business owners and sole proprietors to tax years beginning after Dec. 31, 2020. Accordingly, all restaurants incurring a tax loss in 2018 or 2019 should review their facts to see if it makes sense to file an NOL carryback.

Section 163(j) business interest expense deductions 

The CARES Act raises the Section 163(j) limit of interest deductions from 30 percent to 50 percent of adjusted taxable income for 2019 and 2020. However, since many restaurants are organized as partnerships for tax purposes, these entities should be careful, as the 50 percent deduction only applies to 2020 and not to 2019 for partnerships. Special rules apply to partners receiving excess business interest expense in 2019, so we recommend that you consult your tax advisor to see how these changes could help you.

Qualified improvement property

Qualified improvement property (QIP), with certain limitations, generally refers to improvements made to nonresidential real property after the date the property was first placed in service. The CARES Act corrects a drafting error contained in the Tax Cuts and Jobs Act  (TCJA), retroactively making QIP 15-year property that is eligible for 100 percent bonus depreciation. While state depreciation rules may differ, this correction could help multi-unit operators making property improvements, allowing those with QIP expense in 2018 and 2019 to potentially file amended federal income tax returns.

As  always, we encourage you to consult with your tax advisor when reviewing these programs and determining their potential benefits to you based on your specific tax situation.
For additional information, visit our Coronavirus Resource Center.

By: Deena B. Rosendahl, Esq., Partner, Kaufman Semeraro & Leibman, LLP

In the coming weeks, states such as New York and New Jersey are likely to see a relaxation of Shelter in Place Orders and non-essential business restrictions. We’ve been hearing it for weeks – this will not be a “flip the switch” and it’s business as usual. Rather, a re-opening of business will occur in stages with due consideration given to employee numbers, new health requirements, leave requirements, and other considerations.  Although exact legal requirements for any re-opening have not yet been announced, business owners should not wait for those orders to start the planning process. All businesses preparing to re-open are urged to implement a well thought-out plan with relevant policies adopted to ensure a successful and safe return to business operations.

Although your state’s Governor will be issuing Orders for the re-opening of local businesses, any plan for re-opening will not be a “one size fits all.” Rather, your plan should be uniquely tailored to your physical workspace, type of business, services offered, client needs, and employee makeup. Plans must comply with local government Orders, and Employers are also urged to consider guidance issued by the Center for Disease Control, OSHA, and the Equal Employment Opportunity Commission. Any plan must also ensure compliance with ADA and state/local anti-discrimination laws.

Involve all of your critical business partners in your decision-making process. Any re-opening will create legal, human resources, and economic concerns. Therefore, your plan should be derived from an “all hands on deck” effort. Any plan for re-opening and continued operation during the pandemic should be adopted by written policies advising your Employees of your new protocols. Written policies not only inform Employees of your new procedures, but they serve as a protection for the business in its ongoing operations. Clear written policies notifying Employees of a change in business protocols permit Employers to enforce new policies, provide protection against claims of federal/state and local laws, and serve as a valuable tool in managing operations.

Regardless of your industry, all Employers should consider policies addressing:

• Health screening of your Employees, visitors, and customers before allowing them to enter your workplace.
• Setting schedules for returning workers along with revised attendance policies.
• How to implement and enforce social distancing.
• Use of common area spaces such as kitchens, conference rooms & waiting areas.
• Meeting, conference, and travel protocols.
• Responding to Employee concerns regarding COVID-19 and your workplace.
• Accommodating Employees in a high-risk category.
• Workplace cleaning and hygiene protocols.
• Requiring the use of personal protective equipment.
• Identifying and responding to a positive COVID-19 case in the workplace.

For example, any policy concerning identifying and responding to a positive COVID-19 case in the workplace must include a plan for isolation, notifying exposed co-workers and others, maintaining confidentiality and ADA compliance, paid and unpaid leaves of absences, and an eventual return to work protocol.
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Re-opening your business is not as simple as unlocking your doors and welcoming everyone back. Having a well thought-out plan with policies in place will benefit you as a business owner, your employees, and the business as a whole during this transition. Please contact Deena B. Rosendahl at (551) 552-2045 or [email protected] to begin planning your re-opening.