The Treasury Department has issued some guidance on Coronavirus Economic Relief for Transportation Services (CERTS) reporting. The first report for how you spent CERTS funds through Dec. 31, 2021, is due by Feb. 15, 2022.
Here is a recap of how funds should be spent:
Payroll costs are required to be at least 60% of total spending. Non-payroll costs should not be more than 40% of total spending.
Payroll costs include:
- Paid time off
- Health insurance
- Retirement benefits
- State or local payroll taxes
- Compensation to a sole proprietor
- Compensation to an independent contractor
Non-payroll costs include:
- Purchasing personal protective equipment (PPE) and other costs of protecting workers and customers from COVID-19.
- Costs to operate and maintain capital equipment/facilities, such as rents, leases, insurance and interest on regularly scheduled debt service (NOT the principal).
- Restored compensation, which is defined as lost pay and benefits.
There are items for which recipients may not use CERTS funds. These include:
- Payment/prepayment of principal debt
- Capital expenditures
- Delinquent taxes
- Compensation in excess of an annualized $100,000 salary ($8,333 per month)
- FICA taxes
- Compensation for an employee residing outside of the United States
- Any wages used for Families First Coronavirus Response Act (FFCRA) sick leave credit.
- Any wages used for qualified family leave credit.
- Any bonus in excess of inflation.
- Any expense used for any other federal programs.
Please note that, unlike forgiven Paycheck Protection Program (PPP) loans and Economic Injury Disaster Loan (EIDL) advances, CERTS grants are taxable. Check with your accountant to find out how this may impact your income tax returns.
According to Treasury Department information, recipients will need to do the following when reporting each period:
- Verify CERTS grant information — report any discrepancies.
- Report total amount spent on eligible expenses.
- Report subsidiary and affiliate information.
- Report amount spent by eligible category and entity.
- Certify recalls and rehires.
- Certify additional items, including payroll priority.
- Specific certifications will be required if the recipient has not spent 60% on payroll costs.
- Report changes in control, if any.
- Reports bankruptcy updates, if applicable.
Each recipient must retain records to support how the CERTS grant funds were used. This is an important part of compliance reporting and for supporting reported amounts if audited.
UMA Member Tracy Fickett, CPA, operates BUSBooks, a specialty accounting firm dedicated to the motorcoach industry. If you have a question, you can reach her at email@example.com.