Chadwick Boseman

Lack of Estate Planning Turns a Private Life into Public News: Chadwick Boseman

Chadwick Boseman, the actor known for performances in “Black Panther” and “Ma Rainey’s Black Bottom” was only 43 when he died. Despite knowing he was seriously ill from colon cancer, he did not have a will, so Boseman’s family was tasked with managing his estate in a public manner, the direct opposite of how he lived his life.

The estate had significant expenses and it wasn’t too hard for reporters to find the details because there was no will. Court documents obtained by several news sources reveal the estate was initially valued at $3.8 million before taxes, court fees and funeral expenses. The final amount to be divided between his widow and is parents is $2.5 million.

In October 2020, his widow Taylor Simone Ledward petitioned the court to make her an administrator with limited authority of his estate, and then filed a probate case in Los Angeles.

Chadwick did not have an estate plan with trusts that could have provided the family with privacy, reporters and others were able to access court papers to learn details like the exact amount and breakdown spent on his funeral, moneys used to purchase burial spaces for other family members and the court’s determination on several private matters.

You don’t have to be a celebrity for details of your life to be made public. All probate and administration proceedings are public records, and copies of these documents can be obtained by anyone who shows up at the court. Creditors, family members and anyone who wants to pry into the details of your life can obtain these documents. Having an estate plan with the methods and tools best suited for your estate can keep your life private and minimize estate expenses.

But another lesson from the passing of Chadwick Boseman is that families do have the ability—even celebrity families—to treat each other with kindness and respect. His widow asked the court to divide his estate evenly between herself and Boseman’s parents. Most families facing an estate without a will end up in court, battling for an inheritance. Sadly, this is the exception and not the rule with estates. Having an estate plan can prevent the likelihood of your family facing this situation.


Top Six Reasons to Delay Having an Estate Plan

Despite two years of COVID, two-thirds of Americans still lack an estate plan

It doesn’t make sense but is true. While we’ve never so closely known life’s fragility and know the importance of having a will, trust, or Power of Attorney, only a third of Americans have actually sat down with an estate planning attorney to create their estate plan. Many people equate estate planning with estate tax planning. Nothing can be further from the truth. Estate planning, simply stated, is making sure your assets end up with those you want to receive them

Why is this still so difficult for the average person, who stands to benefit both during and after their lifetime and whose family will be far better protected if they have an estate plan?

Mortality. Who wants to think about dying or what their family will do after they are gone? No one. But not addressing your estate plan could leave your family in a world of trouble. Estate taxes are the least of it. What if your estranged sister and brother-in-law inherit everything you own? Without a valid will, clearly stating how you want your assets distributed, it could happen.

We don’t have enough assets to need a will. People of modest means need a will, sometimes even more than people with significant wealth. You have assets worth protecting if you own a home, a retirement account, and a bank account. Without a will, those assets will pass according to the laws of your state. Remember, wealth is relative. Regardless of the value of your estate, preserving assets is the goal.

It’s expensive. Not having a will is far more costly. Without a will, administering your estate can cost more and is more closely supervised by the courts than if you had a will. An administrator’s powers are much more limited when there is no will than the powers of an executor under a will. The court will likely require an estate administrator to post a surety bond to protect the estate heirs. A bond can cost thousands of dollars per year until the estate is settled. When there is a will, the settlement of an estate is easier. If there is no will, a court proceeding known as an Accounting is required.

I don’t have time. Having a will made is something you make time for, just as you make time to see family and enjoy your favorite streaming shows.

Creating a comprehensive estate plan, including a Power of Attorney, Health Care Proxy, HIPAA Release Form, and a Living Will, helps your loved ones avoid arguing about your wishes if a serious medical emergency occurs. It will also save the time and cost of your loved ones from going to court to be named your guardian to act in your best interest. Your healthcare providers can decide based on your expressed wishes, but only if you have completed the proper healthcare documents. Otherwise, your adult children or healthcare providers will determine your end-of-life care; and it may not be the decision you want.

It’s too overwhelming. An estate planning attorney will walk you through the information you need to gather and help guide you and your loved ones through the process. They’ll tell you what you need and why. You have only to follow their instructions.

I have so many questions. We have answers. We are highly experienced estate planning attorneys and have worked with people like you to help them put their wishes into their estate plans and prepare for the future.

The House passed “SECURE 2.0’ on March 29 – Now It’s Up To the Senate

The other day, we sent out information about the SECURE Act and your estate plan. Now the law is on the verge of changing again.

The Securing a Strong Retirement Act (H.R. 2954), known as the SECURE Act 2.0, was approved in the House on March 29 with the most bipartisan approval in recent memory – 415-5. Now it’s headed to the Senate.

A significant change is the age when Required Minimum Distributions (“RMDs”) commences. This may seem odd since Congress is usually looking for tax revenue generated by RMDs. The legislative report says raising the age for RMDs recognizes the increased life expectancies in America. Starting in 2022, you must take distributions beginning at age 73, 74 in 2029, and 75 in 2023. Before the first SECURE Act, the age was 70 ½.

The intent of the SECURE Acts is to increase the ability of Americans to save for a secure retirement. Those are the bold strokes. Expanding coverage, increasing retirement savings, simplifying the retirement system (which is maddeningly complex), protecting Americans and their retirements. Does it accomplish this?

It depends on your situation.

One provision requires employers to automatically enroll eligible workers in 401(k) plans at 3% of salary, which increases to 10%. The employees may opt out, but studies show the chances of an employee saving for retirement as an automatic opt-in is higher than if they have their own savings plan.

Government studies show that only about half of all private-sector workers participate in the retirement plans at work.

Younger workers with higher wages will benefit; the average worker struggling to pay bills will not likely see this as an advantage.

Another advantage for young workers is electing all or some of their employee matches into a Roth 401(k).

For small business owners and nonprofits, provisions in the bill contain inducements to help them with the start-up costs of offering new plans. Another provides tax credits for matching worker contributions.

For part-time employees, a way of life for so many Americans today, access to a retirement savings plan from their employer would be required after two years of service instead of the three-year requirement.

An increase for older workers near retirement allows people ages 62-64 to make catch-up contributions of $10,000 annually. The current limit is $6,500.

The bill includes four revenue-raising provisions to offset costs over the next decade, most of which would take effect in 2023. The biggest offsets would mandate any employee catch-up contributions for employees over age 50 who contribute to Roth-style accounts. Employees may put employer matching contributions into the Roth-style accounts instead of traditional tax-deferred retirement accounts.

Roth accounts are robust savings accounts for the future. They are funded with after-tax contributions, and then withdrawals are not taxable. More Roth-style accounts would mean more revenue in the near term for the federal government. Still, they would also mean less future revenue. The cost of these provisions may become burdensome over the life of the ten-year budget window.

Two bills are pending in the Senate with similar provisions. Will the SECURE Act 2.0 will make it through the Senate? Stay tuned.

Should You Change Your Estate Plan Because of the SECURE Act?

Here’s another reason estate planning is not a one-and-done event. For most people, life is constantly changing. But the laws around estate and tax planning are also changing. Starting in 2022, a new rule, part of the SECURE Act of 2019, may affect estate plans from 2022, especially for those beneficiaries of an IRA or qualified plan, such as a 401(k).

IRAs are a significant source of America’s retirement wealth, and it was just a matter of time before Congress figured out a way to hasten their distribution to collect taxes on this asset. As these changes continue to develop, the accelerating taxation of IRAs becomes more attractive to Congress as a source of revenue.

The Setting Every Community Up for Retirement Enhancement Act, a/k/a the “SECURE Act,” became law on January 1, 2020. The intent was to boost retirement options for employees and make it easier for employers to offer retirement plans to their employees. The new law also changed how estates work, and both estate planning attorneys and our clients need to address these changes in estate plans. I’ve written about this in the past. New facets of the law continue to evolve, and this one may be crucial to many of you.

The SECURE Act ended the use of a “Stretch IRA.” The Stretch IRS allowed beneficiaries to take distributions from an inherited IRA based on their life expectancy. It allowed the bulk of the IRA funds to remain in the tax-deferred retirement account for decades.

After the SECURE Act, heirs must empty IRA accounts within ten (10) years of the original owner’s death. The initial universal understanding of the SECURE Act was a beneficiary could withdraw any amount during the ten years or wait until Year 10 and withdraw the entire balance. In either case, the beneficiary paid income tax on any distribution. Two weeks ago, the IRS issued temporary regulations that let us know everything we thought we knew was wrong.

If the IRA owner dies before age 72, the age Required Minimum Distributions (“RMD”) must begin, the ten (10) year distribution rule remains the same. However, had the account owner already turned 72, the beneficiary must take an RMD as if the account holder was still living and empty the account balance by the 10th year.

Our estate planning law firm is now working with many clients who came to us with large IRAs and are concerned about its impact on their heirs. Their tax picture has changed, and it may have changed for you.

We can no longer push back the taxes due on the inherited IRA for ten years if the IRA owner lives after 72. Children and grandchildren will face a significant income tax liability. Our job is to help clients plan properly to mitigate these results.

One way is to convert the IRA to a Roth IRA. With a Roth IRA, the account holder pays the income tax during conversion, so beneficiaries need not worry about the income tax liability of their inheritance. There are other benefits to a Roth conversion. The IRA owner need not take RMDs during their lifetime. Also, if the estate of the IRA owner is taxable, payment of income tax by the IRA owner reduces their taxable estate.

There are other ways to address this change, including the use of trusts. If you have an IRA and anticipate passing it down to the next generation, we invite you to contact our office to discuss how to protect your heirs from these changes and align it with your estate plan.

This new IRS interpretation of the SECURE Act significantly affects how inherited IRAs work. If the person who dies is already 72, the RMD will now apply to the inherited account for ten years. After the ten years have passed, the remaining balance of the IRA and pay the income tax.

Several other options can reduce the estate tax, income tax, or both. Don’t hesitate to contact our office if you wish to explore your options.

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Elder Law Attorneys Stephen J. Silverberg and Scott B. Silverberg Named to the 2021 Super Lawyers Metro New York Lists — Scott B. Silverberg Named Rising Star 2021

Stephen J. Silverberg has been selected to the New York Metro Super Lawyers list as one of the top New York metro area lawyers for 2021. Each year, no more than five percent of the lawyers in the state are selected by the research team at Super Lawyers to receive this honor. Super Lawyers has named Silverberg to its select list of attorneys for fifteen consecutive years, from 2007 to 2021.

Stephen J. Silverberg is nationally recognized as a leader in the areas of estate planning, estate administration, asset preservation planning and Elder Law. He is a past President of the prestigious National Academy of Elder Law Attorneys (NAELA) and was awarded the credential of NAELA Fellow, the highest honor bestowed by NAELA to “attorneys… whose careers concentrate on Elder Law, and who have distinguished themselves both by making exceptional contributions to meeting the needs of older Americans and by demonstrating commitment to the Academy.” Mr. Silverberg is a past President of the New York State chapter of NAELA and was a founding member of the chapter.

He holds the designation of a Certified Elder Law Attorney (CELA), awarded by the National Elder Law Foundation to fewer than 525 CELAs throughout the United States. Mr. Silverberg is rated AV Preeminent (5.0 out of 5.0), the highest possible designation from Martindale-Hubbell.

Scott B. Silverberg has been named to the 2021 New York Metro Rising Stars list for the second year in a row. To qualify, New York Metro Rising Stars must be 40 years old or younger or have been practicing for less than 10 years. Each year, no more than 2.5 percent of the lawyers in the state are selected by the research team at Super Lawyers to receive this honor.

He is a member of the National Board of Directors of the National Academy of Elder Law Attorneys (NAELA) and a member of the Board of Directors and Treasurer of the New York State Chapter of NAELA. Scott is Vice-Chair of the Practice Management Committee of the Elder Law and Special Needs Section Executive Committee of the New York State Bar Association.  He is also a member of the Nassau County Bar Association.

Scott has attained the L.L.M. (Master of Laws) in Elder Law from Stetson University School of Law. This rigorous program is offered only to Elder Law practitioners who have provide legal services in elder law matters in highly specific areas of the law. Stetson’s L.L.M. Elder Law program faculty comprises many leading attorneys in Elder Law.

Super Lawyers, part of Thomson Reuters, is a rating service of outstanding lawyers from over 70 practice areas who have attained high peer recognition and professional achievement. The annual selections are made using a patented multiphase process that includes a statewide survey of lawyers, an independent research evaluation of candidates and peer reviews by practice area. The result is a credible, comprehensive, and diverse listing of exceptional attorneys. The Super Lawyers lists are published nationwide in Super Lawyers Magazines and in leading city and regional magazines and newspapers across the country. Super Lawyers Magazines also feature editorial profiles of attorneys who embody excellence in the practice of law. For more information about Super Lawyers, visit

New York’s New Power of Attorney – June 13 – A Change for the Better

We are proud of our colleagues and friends in the New York State Bar Association who worked tirelessly – for five years – to negotiate changes to the Power of Attorney (POA) statute. The changes were signed into law in December 2020, and any POA executed on or after June 13, 2021, is enforceable under the new law.

Common Sense Wins Over Minor Errors

The old New York State POA law required that every POA use exactly the same wording as the statute. A misplaced comma or one misspelled word and the document could be rejected. A POA form executed on or after June 13, 2021, must be accepted as long as it substantially conforms to Section 5-1513 of the General Obligations Law.

Mentally Competent Adults May Authorize Another Person to Sign on their Behalf

For people who are physically challenged but have mental capacity, a third party may now sign for the person at the person’s direction. This is an especially important change for people who are physically unable to manage a pen but are mentally competent.

The Statutory Gifts Rider Is Eliminated

In the past, a person’s representative was limited to gifts of $500 a year. Anything over that amount had to be documented with a Statutory Gifts Rider, an unwieldy process that caused a great deal of confusion and costs. There is no longer a need for a Statutory Gifts Rider. The gifting provision may be included in the modifications section of the Power of Attorney form.

Statutory Gifting Ceiling Is Lifted

The basic statutory gifting amount has increased from $500 to $5,000. Any gifts in excess of $5,000 must be expressly authorized by the principal in the Modifications section of the form.

Witness Requirements Clarified

The Power of Attorney must be acknowledged and witnessed by two people who are not named in the instrument as agents or as recipients of gifts. The person who takes the acknowledgement can serve as one of the witnesses. By simplifying the requirements for witnesses, it will be easier for POAs to be executed.

Penalties for Unreasonably Refusing a POA

Banks and financial institutions are notorious for refusing to accept POAs, often blaming the refusal on an internal policy of only accepting the institution’s own POA forms. This caused enormous problems for families, including increased costs, delays, and stress when a properly prepared POA was rejected for no good reason.

Now, these institutions must accept the POA as long as it meets the rules set forth in the statute. An institution has ten (10) days to accept or reject the POA. If it’s rejected, the financial institution is required to explain its decision, in writing. To encourage compliance, a company can be sued for damages and attorney fees if the POA is unreasonably refused.

If you have a POA but it has not been updated in two to four years, we suggest a review. Relationships change and life events like birth, death, divorce, marriage, and other trigger events are always an important time to review your estate planning documents. Call our office at 516-307-1236 to learn more.


Medicare Awareness: An Annual Wellness Exam is Covered; An Annual Physical Examination is Not

People who went for annual physicals throughout their adult lives are surprised to learn that Medicare does not cover an annual physical. It seems counterintuitive–wouldn’t you want to have more care, not less, so you can age well? But Medicare rules are different.

Many people learn about this the first time they go for an annual physical after signing up for Medicare and getting a bill. Figuring out which services Medicare covers and those not covered is confusing. Choosing the wrong coverage can cause substantial costs.

Here is what you need to know about Medicare and annual care. Medicare believes you need an “Annual Wellness Visit”- an overview of your general health.

Medicare Part B covers an individual for an Annual Wellness Visit if:

  • they have had Part B for over 12 months, and
  • have not received an Annual Wellness Visit in the past 12 months.

When making an appointment, it is essential to stick with the right phrase: You want an “Annual Wellness Visit,” not a checkup or an annual physical. Often, the Annual Wellness Visit may uncover a condition requiring further diagnosis. If this happens, the examination and tests for the condition will qualify for payment under Part B.

The doctor will review both you and your family’s medical history and any potential risk factors like diabetes and hypertension during the visit. They will check your height, weight, BMI (Body Mass Index), and BP (blood pressure). They will also ask you to fill out a risk-assessment questionnaire and create a schedule for the next ten years for tests, including colonoscopies, mammograms, and other screenings. During the visit, the healthcare provider will also observe your cognitive functions and look for signs of depression.

A wellness visit is not a physical examination, where your physician performs a literal hands-on examination. Doctors learn a lot by palpating various parts of your body. They check the head and neck, listen to lungs and heart, make sure the eyes track moving objects correctly. Blood work measures vital health indicators like lipid and sugar levels. Urine tests check kidney functions. Usually, you come away with a sense of relief and a vow to take better care of yourself.

So why won’t Medicare pay for an annual physical? When first enacted, Medicare’s primary goal was to cover the medical diagnosis and treatment of the elderly. Preventive services and routine physical checkups are still excluded. That is why Medicare does not cover items like glasses and hearing aids.

Medicare Advantage plans recently received permission to add services not covered by traditional Medicare, physical exams, and other services such as dental care, glasses, and hearing aids. However, not all Medicare Advantage plans offer limited or no expanded care, and the copays and deductibles are often high. It only adds to consumer confusion. Those with traditional Medicare can buy separate vision and dental plans and are usually more comprehensive than those offered by Medicare Advantage.

And add to that a “Welcome to Medicare” preventive visit that patients can have when Medicare coverage begins. But you cannot have both a Welcome visit and an Annual Wellness Visit in the same 12-month period.

Patients are not the only ones confused. Providers do not always know the current rules. Most healthcare providers ask patients to sign agreements to pay for any services not covered by Medicare. That is when the patients get a surprise bill.

This confusion is why we offer a free Medicare consultation for seniors during the open enrollment season. We invite you to call our office at 516-307-1236 for a free consultation about your Medicare coverage. We want people to have the information they need to make an informed decision about their Medicare coverage. Since we are not an insurance agency, we have no bias for or against any insurance plan. Our goal is to make sure our clients have the best coverage.


Medicare Open Enrollment

Medicare Open Enrollment Season and Our Free Medicare Consultations

Open enrollment for Medicare Advantage plans and Part D prescription coverage begins on October 15 and ends on December 7, 2020. When it’s over, whatever decisions you may have made will be set in stone for a full calendar year.

Mistakes are costly, especially for people who require multiple prescriptions. Also, if you do not enroll in Medicare when you are eligible, there is a 10% increase in premiums for every year you failed to enroll (i.e., if you enroll in Part B or D three years late, your annual premium is increased by 30%) for the rest of your life.

Among changes you can make include switching from original Medicare, Part A for hospital insurance and Part B for medical coverage to a private Medicare Advantage plan. You can also change from one Medicare Advantage plan to a different one. And you can join a prescription drug plan under Medicare Part D.

It’s very tempting to shrug your shoulders and go with the same plan you had last year. Don’t. Plan changes, networks change, doctor’s participation in networks change. The plan you had last year might not work this year.

Medicare is challenging to navigate. Over the years, we have made a point of speaking with clients about their Medicare plan when we meet during the enrollment season. In recent years, we’ve noted that it has become even more complicated. This especially true of Medicare Part D. Currently, there are over thirty different Part D plans available on Long Island.

The Center for Medicare and Medicaid Service, the federal agency which runs the programs, introduced the Medicare Plan Finder to assist seniors in August 2019. Unfortunately, the Finder had numerous technical glitches and incorrect information; many seniors could not access the Finder. It proved a hardship to seniors. There were reports of Inflated costs and higher premiums. Complaints came from Medicare enrollees, consumer advocates, U.S. Senators, state insurance commissioners, and even the insurance brokers who sell these plans.

As a public service to assist Seniors in making an informed decision about their Medicare coverage, our office is offering complimentary consultations by phone, video conference, or in office.

We are attorneys. We are not an insurance agency or broker and sell no product. Our review is impartial. We want to help seniors avoid mistakes. Medicare is confusing. We are pleased to help.

A few steps to take, as described by CNBC in the article “Medicare open enrollment is coming up. Three steps to save money this fall.”

1 – Know your plan. Look for a piece of mail from Medicare, “Annual Notice of Change.” This letter will have information about changes to coverage and costs, including premiums, deductibles, and co-pays. If you do not participate in Medicare, you will not receive the letter.

2 – Gather up all of your medical expenses from the last year and a list of the doctors you see regularly and the medications you take. If you use a single pharmacy, they will gladly give you a printed list. You’ll need that to figure out which one will be best for you in 2021.

3 – Your modified adjusted gross income (“MAGI”) from two years ago determines your premiums for Medicare Part B. MAGI includes capital gains, Social Security, and required minimum distributions from retirement funds and 401(k) plans. Your 2019 income determines the premium you’ll pay in 2021. It’s too late to do much about that now, but if you can curtail income in 2020, you may reduce Medicare costs.

We invite you to call our office and request a free consultation to discuss your Medicare coverage. Call our office at 516-307-1236.


Get Your Important Documents, Including Advance Directives, Ready Now

There has never been a time in our lives when the need for an estate plan has been more critical. The sheer numbers of people who have died from COVID-19, in our community and worldwide, is something we have never witnessed. And while it may have seemed at first that the elderly were the most vulnerable, we know better now.

What should you be doing now to protect yourself and your loved ones? At the very least, you need a Will, Power of Attorney, and Advance Care Directive.

Find your most recent Will. If you cannot find it, you need a new one. Now!

Our office is open, and we are working with clients through phone, email, and videoconferences. We take all necessary precautions as recommended by the CDC for anyone who wishes to meet with us in person.

If your Will is over four years old, it probably is out-of-date. Your life may have changed, and it may not reflect new children, grandchildren, spouses, divorces, deaths, etc.

If your Will is out of date, it does not consider the changes in the law that have occurred in recent months. IRA distribution rules for heirs are among many changes that resulted from the SECURE Act (effective January 1, 2020). The CARES Act, passed in response to the economic impact of COVID-19, further modified these rules. What you had intended years ago may not come to pass because of these and other changes.

A will does not take long to create, but not having one creates unnecessary costs and stress for your loved ones.

Power of Attorney – Names a person who manages your finances and may transfer assets in certain situations. A POA allows your designated agent to pay your bills and handle health insurance problems during a medical emergency. Without one, if you are incapacitated, your assets will be inaccessible, and your family will need to undertake a costly Guardianship proceeding.

Healthcare Proxy – Names a person who may make medical decisions if you cannot do so for yourself. Without this document, family members can argue about who should decide what medical care you receive.

Living Will – Tells your health care proxy and family what your wishes are for end-of-life care. Without a Living Will, doctors can keep you alive in a vegetative state for years with no chance of recovery.

Three young women, Karen Ann Quinlan, Nancy Cruzan, and Terri Schiavo, became household names as their families battled over whether to keep them alive by artificial means. Even young adults admitted to intensive care units with COVID-19 are often struck suddenly. There’s no time for them to express their wishes.

We can create a plan tailored to your needs to protect your family. Call our office at (516) 307-1236 or email for a free consultation by phone, video, or in person.

Legislative Update: Paycheck Protection Flexibility Act

The Paycheck Protection Flexibility Act was signed into law on June 5, 2020. The new legislation modifies the Coronavirus Aid, Relief, and Economic Security (CARES) Act.

Here are the details:

Extension of loan utilization period. Originally, the PPP required borrowers to spend their full loan within eight (8) weeks after the loan originated. This was called the “Covered Period.” The new law changes the Covered Period from eight (8) weeks to either twenty-four (24) weeks after the loan origination date or December 31, 2020, whichever one is earlier.

The borrower may spend the entire loan proceeds and request forgiveness before the end of the Covered period.

The goal is to help PPP borrowers to weather the crisis by giving them more time to use the PPP loan on forgivable expenses. These include payroll costs, rent, utilities and interest on real property and personal property debt. Restrictions to what the money can be used for have not changed.

Payroll cost spending requirement. The prior PPL required borrowers to spend at least 75% of their loan proceeds on payroll costs, but the new act changes that requirement to 60%. However, all borrowers must hit this percentage if they are to qualify to have the loan forgiven. Any borrower that does not meet the 60% amount cannot have the loan forgiven and will need to pay it back.

Forgiveness reduction based on full time employees. PPL loans are subject to a reduction calculated by multiplying the forgivable loan amount by a fraction. The numerator of the fraction is the average number of full-time equivalent employees (FTEs) during the Covered Period. The borrower decides which of  two denominators works best:  the average number of FTEs between February 15, 2019 and June 30, 2019, or the average number of FTEs between January 1, 2020, and February 29, 2020.

The new law lets the borrower include any employees terminated between February 15, 2020 and April 26, 2020 who are rehired before June 2020 in the numerator to ensure maximum loan forgiveness. The PPP Flexibility Act extends the rehire provision deadline date to December 31, 2020.

If the PPP borrower meets required conditions, the forgiveness reduction test is eliminated if the borrower is:

1 – Unable to rehire a terminated employee who was an employee of the borrower by February 15, 2020,

2 – Able to demonstrate an inability to hire a similarly qualified employee to replace the terminated employee,

3 – Able to demonstrate an inability to return to the same level of business activity  commensurate with the activity level as of February 15, 2020.

Eliminating the FTE reduction test helped business owners unable to return to full operation because of the coronavirus crisis, but the borrower must still expend at least 60% of the loan on payroll cost, or risk having to pay the loan back.

Payroll tax deferral. The CARES act allows businesses to defer the employer portion of their Social Security payroll tax obligations for 2020 —  one half is due on December 31, 2021 and the second half is due by December 31, 2022. But the CARES act provided that any business receiving PPP loan forgiveness was not eligible to defer Social Security payroll tax obligations. The Treasury Department recently issued guidelines that allow PPP borrowers to defer their Social Security payroll taxes until their forgiveness status was determined.

The new Flexibility Act lets PPP borrowers defer their 2020 Social Security payroll taxes regardless of whether some, part, or all of their PPP loan is forgiven. The employer’s share of the Social Security payroll tax is not treated as a forgivable payroll expense.

Some of the new aspects of the Flexibility Act will be welcome, but the 60% payroll tax requirement remains a challenge for many. If business does not return and permit the borrower to ramp back up before the end of the Covered Period, the loan will not be forgiven, adding another burden to strained businesses.