Federal Emergency Relief Bills Could Provide Help To Some Racing Businesses

The federal government has passed a flurry of relief bills last week aimed at helping workers and businesses through the economic fallout from the COVID-19 crisis, and some of them could help the racing industry.

In a conference call hosted by the National Thoroughbred Racing Association (NTRA), experts tried to sort out the ever-evolving requirements of several new programs created by three relief bills passed last week.

Jen Shah, CPA for Dean Dorton, cautioned that the government issues new guidance and clarification on these programs daily, but provided a snapshot of what we know as of this week.

Based on federal legislation passed last week, employers with 500 or fewer employees are now required to provide up to two weeks of paid sick leave to workers who are ill or cannot come to work due to quarantine or shelter-in-place orders. Employees also must be given paid leave to care for a family member or a child, including children whose school or daycare is closed due to COVID-19. There is an exemption for employers of 50 or fewer who can demonstrate the leave requirements would jeopardize the viability of he small business. This applies only to employees, not independent contractors.

The government will offer payroll tax credits to employers which should offset 100 percent of the costs incurred by offering that paid leave. Those credits would likely be dealt with on second quarter payroll tax returns. The goal, according to Shah, is to make these new requirements a “net zero cash impact,” although of course the employer will be required to outlay cash and wait for reimbursement.

An employer retention credit will also be available for employers who are required to fully or partially suspend operations due to the pandemic, as well as those who are down at least 50 percent in gross receipts from the same period in 2019. That credit is permanent, and would not require repayment.

There are two loan programs that can help some racing businesses: the Economic Injury Disaster Loan and the Paycheck Protection Program. EIDLs have been around since before the coronavirus pandemic, but recent legislation has increased funding to them. In order for a business to be qualified to get an EIDL, they must be qualified as a “small business” based on gross receipt or employee number standards set forth by the Small Business Administration. Racing stables, trainers, and jockeys with less than $12 million in gross average annual revenue would be considered small businesses per that guidance, Shah said.

EIDLs allow loans of up to $2 million with long repayment terms, up to 30 years. Small businesses can also apply for up to $10,000 in an emergency advance that does not have to be repaid. Collateral is required for loans $25,000 and greater. Specific businesses, including farms and those that take more than one third of their gross annual revenue from pari-mutuel wagering (like racetracks) would not be eligible for this program.

The Paycheck Protection Program is available to businesses with 500 employees or fewer, or the self-employed. 501(c)3s would be eligible. Allowable uses for these loans include payroll or overhead like utilities, rent, or mortgages. Tax-free forgiveness of all or part of the loan is possible, depending upon the way the funds are spent and the maintenance of employee levels.

Those making use of the employer retention credit are not eligible to get Paycheck Protection Program loans. Employers getting a loan through one program cannot take a loan through the other program to cover costs in the same business.

Shah said it appears horse owners or racing stables that have no payroll because they hire trainers or boarding facilities could qualify for EIDLs if their average gross revenues are low enough.

Trainers with employees could apply for any of the programs.

It’s unclear which programs a farm could take advantage of, but they may be able to use the Paycheck Protection Program.

Aftercare and other non-profits that are 501(c)3 can use any of the programs outlined.

Independent contractors or employees that work through a 1099 form can themselves apply for EIDL.

Racetracks may be able to participate in the employee retention tax credits.

Shah encouraged the hundreds of listeners on the call to consult their tax or financial advisors to get clarification on their individual situations.

“I’m encouraging people who think they may qualify to consider applying sooner rather than later for these provisions,” said Shah.

Employers or businesses who may qualify for more than one type of program should weigh their options to find out which is most beneficial.

More information and application materials are available at www.sba.gov.

The post Federal Emergency Relief Bills Could Provide Help To Some Racing Businesses appeared first on Horse Racing News | Paulick Report.

DYFD Winter - 300x90

Comments are closed.