On November 16, the Federal Reserve removed the coin order cap for quarters, thanks to steady deposits from financial institutions and stable U.S. Mint production. As a result, financial institutions now can place orders for quarters without limitations.

Although the situation is not yet fully resolved, coin circulation is improving. Efforts to boost coin circulation have enabled the Federal Reserve to increase coin order caps consistently since the allocation program was implemented in mid-June of last year. The decision to lift and/or increase limits is driven by the Federal Reserve’s goal to distribute as many coins as possible into the economy in a fair and equitable manner.

Clearly, the nation’s coin circulation challenges remain, since the underlying conditions that led to these challenges in 2020 continue.

“While efforts to get coin moving have succeeded, all coin supply chain partners need to remain diligent to keep coin moving,” according to a statement from FedCash Services, which helps ensure that depository institutions have sufficient supplies of currency and coins to meet public demand. “We ask all FedCash Services customers to do their part and to continue to order only what they need to meet near-term demand and to deposit any excess coin to the Federal Reserve. We will continue to monitor U.S. Mint production, coin deposits and orders, and Federal Reserve inventories in our monthly review of order allocation caps.”

The Federal Reserve’s coin allocation program began on June 15, 2020. Coin order caps are unique by coin denomination and are based on available inventory. Since last June, the Federal Reserve has increased coin order limit amounts seven times.

As of this writing, allocation caps also have been completely lifted for pennies and dimes.

“The coin shortage has certainly had an impact on our members, according to our most recent survey,” said Coin Laundry Association President and CEO Brian Wallace. “In fact, about two-thirds of the laundromat owners who responded reported feeling some impact from the disruption in the flow of quarters, due to the pandemic.

“The CLA has been engaged in direct advocacy with the government departments responsible for trying to remedy the situation. And, with the reported removal of allocation limits, we expect to see a much stronger flow of quarters at the retail level.”

CLA Continues to Promote Laundromats’ ‘Essential’ Status

In light of the second surge of the COVID-19 virus in recent weeks, due at least in part to the busy holiday season, the Coin Laundry Association has been active in attempting to keep laundromats open. The association has doubled down on its efforts on behalf of the industry – even as many states impose tighter restrictions on what types of businesses can stay open, as well as shortening the hours of operation for those that do remain open.

Last March – through the work of the CLA, along with an ad hoc group of manufacturers and other industry leaders – the Cybersecurity & Infrastructure Security Agency added laundromats to its list of essential businesses and included laundromat workers as part of the critical infrastructure workforce.

“We have been letter writing and in close contact with various officials across the country at the state and local levels, advocating for laundromats to remain open and available to their communities,” explained CLA President and CEO Brian Wallace. “It’s worth noting that ‘essential’ is not a permanent status. We need to continue to earn that status every day.”

CLA Advocates Vaccine Priority for Laundromat Staff

With the first COVID-19 vaccines now getting to frontline healthcare workers and those living and working in nursing home facilities, the further prioritization of essential workers for vaccination has become the next hurdle.

The Centers for Disease Control’s Advisory Committee on Immunization Practices said the next phase should favor those 75 years and older, as well as certain designated essential workers, which could include teachers, child-care providers, emergency workers, food processors and farm laborers.

“I think laundromats stand to possibly get lost in the shuffle,” said Coin Laundry Association President and CEO Brian Wallace. “We’re not talking about a lot of workers, when compared to millions of teachers or grocery store clerks.

“However, the approximately 120,000 essential laundromat employees remain hard at work in the nearly 30,000 laundromats throughout the U.S. and have been instrumental in delivering stepped up cleaning and disinfection procedures and socially distanced customer management – as well as, of course, the critical public health service of clean clothes for tens of millions of families each and every week through the pandemic. Maintaining a safe and healthy household begins with clean clothes and linens – now more than ever.

“Priority in immunization for these essential workers will be crucial in making sure our industry can continue offering safe access to self-service laundry facilities,” he continued. “Vaccinating laundromat workers also supports efforts to ensure equity in the immunization process as our workers come from the diverse, largely low-income neighborhoods they serve.”

To that end, the CLA has reached out to the ACIP, making the argument that laundromat workers are not only essential, but should be prioritized as the highest possible level for immunization – based on the essential public service they provide, as well as the fact that they have contact with the public on a daily basis.

The CLA also has been in touch with the National Governors Association, again presenting the same strong case for laundromat workers being given the highest possible prioritization for receiving the vaccine.

In addition, given the very public nature of the laundromat business, the CLA also is viewing the current situation as an ideal opportunity for laundry owners to reach out to their communities and educate their customers as to the importance of getting vaccinated.

“We want to advocate for laundromat workers to be vaccinated among the leading essential workers and as close to the front of the line as possible,” Wallace explained. “But we also want to look into what role the industry can play in sharing important information about the vaccination within the communities that we serve.”

COVID Relief: What It Means for You and Your Business

President Trump has signed the $900 billion Consolidated Appropriations Act – or COVID-19 relief bill – which provides stimulus payments to eligible individuals, extended weekly unemployment benefits and more than $300 billion in aid for small business.

This legislation also provides for tax deductibility of business expenses paid with forgiven Paycheck Protection Program loans, makes available a new round of PPP funding, and offers businesses facing severe revenue reductions the opportunity to apply for a second loan.

In addition, PPP borrowers with loans of $150,000 or less can utilize a simplified forgiveness application.

Some key provisions within the bill include:

1. Aid for small businesses struggling as a result of the pandemic.

Provides additional funding to the SBA for first and second PPP forgivable small-business loans.

• Makes additional Economic Injury Disaster Loan Grants available to businesses in low-income communities.
• Creates $15 billion in dedicated funding for live performance venues, independent movie theaters and cultural institutions.
• Sets aside $12 billion to help businesses in low-income and minority communities.

2. Economic impact payments of $600 for individuals earning up to $75,000 per year and $1,200 for married couples making up to $150,000 per year, as well as a $600 payment for each child dependent.

3. Assistance for unemployed individuals.

• Provides workers receiving unemployment benefits a $300 per week supplement from December 26, 2020, until March 14, 2021.
• Extends the Pandemic Unemployment Assistance Program, expanding coverage to the self-employed, gig workers and others in nontraditional employment, and the Pandemic Emergency Unemployment Compensation program, which provides federal funding for workers whose state benefits have run out.

4. Emergency rental aid and an extension of the national eviction moratorium through January 31, 2021.

5. Funding for colleges and schools, including support for HVAC repair and replacement to mitigate virus transmission, and for child-care assistance.

6. Emergency food assistance.

7. Allows a 100 percent business expense deduction for meals (rather than the current 50 percent) as long as the expense is for food or beverages provided by a restaurant. This provision is effective for expenses incurred after December 31, 2020, and expires at the end of 2022.

With regard to the new round of PPP, the program contains many similarities to the first round, but with several important differences. Previous PPP recipients may apply for another loan of up to $2 million, provided they meet the following criteria:

• 300 or fewer employees.
• Have already used or will use the full amount of their first PPP loan.
• Can show a 25 percent gross revenue decline in any 2020 quarter, compared with the same quarter in 2019.

PPP2 also will permit first-time borrowers from the following groups:

• Businesses with 500 or fewer employees that are eligible for other SBA loans.
• Sole proprietors, independent contractors and eligible self-employed individuals.
• Nonprofits, including churches.
• Accommodation and foodservice operations with fewer than 300 employees per physical location.

As with PPP1, the costs eligible for loan forgiveness in PPP2 include payroll, rent, covered mortgage interest and utilities. PPP2 also makes the following potentially forgivable:

• Covered worker protection and facility modification expenditures, including personal protective equipment, to comply with COVID-19 federal health and safety guidelines.
• Expenditures to suppliers that are essential at the time of purchase to the recipient’s current operations.
• Covered operating costs, such as software and cloud computing services and accounting needs.

To be eligible for full loan forgiveness, PPP borrowers must spend no less than 60 percent of the funds on payroll over a covered period of between eight and 24 weeks – the same parameters PPP1 had when it stopped accepting applications last August.

PPP borrowers may receive a loan amount of up to 2.5 times their average monthly payroll costs in the year prior to the loan or the calendar year, the same as with PPP1 – but the maximum loan amount has been cut from $10 million in the first round to the previously mentioned $2 million maximum.

The relief package also specifies that business expenses paid with forgiven PPP loans are tax-deductible. This supersedes IRS guidance that such expenses could not be deducted.

Lastly, the new legislation has created a simplified forgiveness application for loans up to $150,000:

• The borrower submits a one-page certification including information regarding the number of employees retained as a result of the PPP loan, an estimate of the payroll costs incurred in the covered period and the total loan amount.
• The borrower must maintain supporting documentation related to such employment for four years and other costs for three years.
• The legislation repeals the requirement that borrowers must deduct EIDL advances from forgiveness amounts.

Source: Mann, Weitz & Associates

State Business Taxes: What to Expect in 2021

Although nearly every state is facing a decline in expected revenue, there is some good news.

Those declines are not as severe as experts originally predicted. However, these declines most likely will invoke some sort of revenue response from states – including increased taxes, decreased spending or a combination of both.

“There are a number of big questions lingering for states as they head into the next budgeting cycle,” said Morgan Scarboro, tax policy manager and economist for MultiState Associates, which is a full-service state and local government relations company based in Alexandria, Va. “Will there be a new wave of COVID-19 cases and additional shutdowns needed? Will consumer spending pick up? Legislators likely will be forced to make budget and spending decisions without answers to all of these questions.”

What does this mean for 2021 tax policy?

New tax proposals have been discussed, with some lawmakers bracing for novel tax proposals, according to Scarboro. The conversation includes taxing digital goods, as well as economic nexus with more employees being forced to telework. Of course, sales tax base expansion likely will come up in some states.

Clearly, states will want revenue quickly and may not want to risk implementing a new tax type that would face litigation and delay revenue collection, so they may turn to raising the tax rate on existing taxes to make up for some of those revenue gaps.

MultiState Associates sees five states standing out as being at the “highest risk” for increasing business taxes – California, Colorado, Connecticut, New York, and Oregon. Many of these are not surprising and have historically been high risks for business tax increases. However, fraught budget pictures, partisan makeups and legislative favorability toward tax increases mean taxpayers must be on guard.

California in particular rejected Proposition 15 – a ballot measure that was projected to increase taxes on commercial property by $6.5 billion to $11.5 billion – so legislators may pursue alternative taxes to raise revenue from the business community.

In addition, MultiState predicts 11 states as being at “significant risk” for increased business taxes – Delaware, Hawaii, Illinois, Iowa, Michigan, New Jersey, New Mexico, Pennsylvania, Rhode Island, Virginia and Washington. These are not the highest risk states, but still pose a significant threat for business taxes.

Many of these states are governed by Democratic trifectas and will be facing significant revenue challenges in 2021. Notably, Illinois voters rejected a progressive individual income tax at the ballot, which many in the state were counting on to make up for declining revenue. Without that revenue, legislators in the state likely will consider new ways to raise taxes.