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December 2020
Prepared and Distributed by The Midwest Hardware Association, Inc.
What Is It About Hardware People?
By John Haka, MHA Managing Director
As most of you know from an announcement sent out a few weeks back, I will be retiring as the Managing Director of the Midwest Hardware Association on December 31.

I had never even heard of the Wisconsin Retail Hardware Association when I first interviewed for an Accountant position back in 1989. Luckily, I got the gig! Fast forward 31 years to 2020. The hardware association that I never even knew existed in 1989, has become more than my place of employment. It has become a vocation and my profession.

When I first began, there were 17 other state and/or regional hardware associations scattered across the country. After the Wisconsin Retail Hardware Association merged with the Illinois Retail Hardware Association (1992) and the Minnesota-Dakotas Retail Hardware Association (2009), today’s MHA is now the single remaining hardware-only association that is still around. It goes to show that MHA is something special, so please don’t ever take it for granted.

It’s impossible for me to thank the many, many fine individuals who I have had the privilege to get to know and to work with over the past three decades. What makes the hardware industry so special? That one is simple. It’s the people.

I can’t really explain what it is about the DNA of hardware people that sets them apart. I’ve tried, but I can’t do it. I can only share a few thoughts, or “truisms”, that I’ve settled on during my time at MHA.

      Hardware people don’t generally cause problems.
      Instead, they like helping to solve them.

      Hardware people don’t back down from a challenge.
      They figure out ways to work through it.

      Hardware people aren’t just small business owners.
      Often, they are part of the engrained fabric of the communities they serve.

      Hardware people can be very serious when it comes to running their stores.
      But they love to smile, tell jokes, have fun and laugh.

      Hardware dealers are proud of their stores and what they do.
      But they are quick to be humble and let you know they don’t do it alone.

      Hardware people don’t mind making a little profit now and again.
      But their biggest joy comes from helping others.

      Hardware people aren’t just another business associate.
      They are your supporter and your friend.

Thank you for allowing me to be part of this great industry, and this great association, for the past 31 years. To work with you, and to represent you, has been both a privilege and a great honor. I know you will continue to support MHA as our new Managing Director, Jody Kohl, and the great team of people working with her, guide MHA down new paths. Those new paths will make us better, and will allow this unique and cherished association to flourish. Flourish in such a way that MHA will still be here to promote, assist, and advocate on behalf of the next generation of great independent hardware retailers. That’s my hope.

Thank you for everything MHA. It has been truly rewarding.
MHA Annual Meeting Cancelled
Due to the nationwide COVID-19 pandemic, and based upon the recommendations of state and federal health officials, this year’s Annual Meeting of the Midwest Hardware Association has been cancelled. We hope conditions will improve during the upcoming year so that an Annual Meeting may be held once again in 2021.
Illinois Minimum Wage Increases January 1

In 2019, Governor JB Pritzker signed into law Public Act 101-0001 that gradually increased Illinois’ minimum wage starting in January 2020 and running through January 2025, as the state works its way to a $15.00 per hour minimum wage. Below is a chart of scheduled increases.


As the chart references, on January 1, 2021, the statewide minimum wage will increase to $11.00 per hour for adults and $8.50 per hour for youths, which are defined as individuals under the age of 18.

MHA members should note that youth wage does come with some exceptions. Any individual under the age of 18 that works more than 650 hours for an employer in a given year is required to be paid the normal (full) minimum wage.

For example, if an employer hires a worker under the age of 18 on April 30, 2020, the window of time to calculate the 650-hour limit runs through April 30, 2021. If that worker reaches 650 hours on April 15, 2021, they must be paid the regular, full minimum wage going forward. Assuming the employer continues to employ that worker after April 30, 2021 that worker would continue to receive the full minimum wage.

Once a worker reaches the 650-hour threshold with an employer in a twelve-month period, the employer should pay the worker no less than the full minimum wage paid to those 18 years of age absent any other exemptions that could apply.

Also, new employees age 18 years and older may be paid up to $.50 an hour below the minimum wage for their first 90 days of employment. After that, an employee must be paid at least the full minimum wage (for anyone 18 years of age or older) or the youth wage (for those under 18 years of age.)
MHA Employee Travel Suspended: Member and Staff Safety Main Concern

The Midwest Hardware Association is committed to employee and member safety. As COVID-19 positive numbers increase in many of our areas, we have made the decision to suspend most business travel. We will support and serve you via phone and/or Zoom video for this year’s tax season and year-end. Accountants will be contacting you soon to schedule meetings.

We appreciate your understanding and patience as we continue to navigate through this. MHA will continue to monitor the situation and provide additional guidance as more information becomes available.
Small Businesses May Face Tax Surprise With Forgiven PPP Loans
By Rachel Vasquez, Wisconsin Public Radio

Small business owners across the Midwest and the country may be forced to pay higher taxes after receiving forgiveness of loans received through the federal Paycheck Protection Program (PPP).

The program, created last spring under the federal coronavirus aid bill, gave small businesses loans to cover payroll expenses in an effort to keep workers in their jobs and to help them cover other business expenses, like rent or utilities. In general, if those small businesses were able to keep their workers employed and maintain salary levels, the federal government would forgive the loan.

But, in mid-November, the U.S. Treasury Department and the IRS announced that if a business paid for expenses with money from a PPP loan that has been or will be forgiven, businesses cannot deduct those expenses from their taxes—deductions that would otherwise be routine in past years.

Without being able to deduct those expenses, many small businesses will be faced with a higher tax bill, a reality Republicans and Democrats in Congress say is not what lawmakers intended when they created the program.

A “Kick in the teeth” for Businesses
Depending on the size of a business’ PPP loan and the structure of the company, accountants said the ruling could cost small businesses thousands, tens of thousands, or even hundreds of thousands of dollars in some cases. That’s despite the fact that most of the businesses that took part in the program didn’t know they’d be hit with the increased costs when they signed up.

“This issue was nowhere within sight for business owners at the time that they applied for and received their PPP loans,’ said Terry Hoover, a partner at Wipfli, an international accounting and consulting firm with offices in Appleton. “It truly is a bit of a case of a “gotcha” for businesses that proceeded to accept the loan on one basis of understanding of the tax outcome and now being presented with a very different basis.”

Jon Neal, a CPA and founder of the Milwaukee-area accounting firm, The Neal Group, said it was a “kick in the teeth” for businesses. “Some restaurants have seen, like, an 80 percent decrease in revenue,” Neal said. “And now to tell them that they’re going to have to pay taxes on the $100,000 of PPP money just doesn’t sit right."

Hoover noted this does not apply to self-employed individuals with no employees who took PPP loans. Those businesses will still be allowed to deduct expenses as they usually would.

Lawmakers, Business Groups Push Back
In a joint statement on Nov. 19, U.S. Senators Chuck Grassley, R-Iowa, chair of the Senate Finance Committee, and Ron Wyden, D-Oregon, ranking member of the committee, urged the Treasury Department to reconsider the ruling, saying the department, along with the IRS, was ignoring the intent of Congress.

“Since the CARES Act, we’ve stressed that our intent was for small businesses receiving Paycheck Protection Program loans to receive the benefit of their deductions for ordinary and necessary business expenses,” Grassley and Wyden wrote. “Regrettably, Treasury has now doubled down on its position in new guidance that increases the tax burden on small businesses by accelerating their tax liability, all at a time when many businesses continue to struggle and some are again beginning to close. Small businesses need help maintaining their cash flow, not more strains on it.”

On December 3, hundreds of trade groups sent a letter to leadership in Congress urging them to pass legislation before the end of the year to correct what they called “an avoidable catastrophe for millions of small businesses.”

“The effect of this (IRS) ruling is to transform tax-free loan forgiveness into taxable income, raising the specter of a surprise tax increase of up to 37 percent on small businesses when they file their taxes for 2020,” the letter said.

Both the U.S. House and Senate have introduced bipartisan legislation that would allow businesses to deduct their expenses as normal. It remains unclear if the bills will be included in a broader stimulus package being discussed in Congress that, until recently, had been stalled for months.

The issue is yet another challenge stemming from a program meant to help businesses impacted by sweeping stay-at-home orders early on in the pandemic, in addition to businesses suffering after losing customers who simply chose to stay home for fear of catching or spreading COVID-19.

Many businesses initially struggled to understand the regulatory requirements they needed to follow to have the loans forgiven. The program was also criticized for primarily helping businesses with pre-existing banking relationships, leaving out many businesses owned by people of color.

For business owners that are affected by the IRS ruling, Neal recommended talking to an adviser who is familiar with the program and its requirements. Past that, Neal said business owners can reach out to their elected officials in Washington and “pray that it does get fixed.”

MHA members using the association’s accounting and tax preparation services are encouraged to contact their MHA accountant to discuss how PPP loan forgiveness may impact their specific situation.
Minnesota Passes Business Relief and Extends Certain Unemployment Benefits
On Monday, the Minnesota’s Legislature passed relief for businesses impacted by Executive Order 20-99 and other COVID-19 executive orders, as well as relief for Minnesotans with unemployment benefits that are set to expire soon.

The relief for businesses is generally targeted toward stores that were forced to close or experienced a steep decline in revenue. Hardware stores in Minnesota were declared essential and, for the most part, have remained open since the pandemic hit in March.

However, since the economy is so intertwined, relief to some small businesses within a community will have a ripple effect that will ultimately impact locally owned hardware stores, as well.

Here is a summary of what passed in the $216.8 million business relief package:

  • $88 million to businesses closed to the public under Executive Order 20-99 and experiencing at least a 30% sales decline (compared to 2019) that provide on-site food and beverages including bars, restaurants, breweries and wineries as well as bowling alleys and fitness or sports recreation centers. Relief amounts ($10,000 - $45,000) will be based on number of workers and be administered directly by the Minnesota Department of Revenue with distribution as soon as possible.

  • $114.8 million directly to Minnesota counties for grants to eligible businesses and nonprofits impacted by any executive order related to COVID-19. Each county would receive a minimum of $256,250 or $19.25 per capita amount based on its 2019 population. Each Minnesota county will administer these relief funds including making eligibility decisions and can add their own eligibility requirements with disbursement of funds by March 13, 2021.

  • $14 million for movie theaters and multipurpose convention centers with a capacity of at least 1,500 people. A per screen formula will be used to help movie theaters and several factors would be considered for convention center allocations. This relief will be administered by the Minnesota Department of Employment and Economic Development.

Monday’s action also included important unemployment support for Minnesota’s workers, including:

  • An extension of unemployment benefits for individuals who exhaust their regular or pandemic unemployment benefits between December 19, 2020, and April 3, 2021, if an individual is eligible to receive additional unemployment benefits.

  • Eligibility includes Minnesotans unemployed, partially unemployed, or unable to work due to lack of work and meet the requirements for regular unemployment benefits established in Minnesota Statutes.

To see the full text of the passed bill, please click here.
Sales Trends October 2020
Here are the most recent Illinois, Minnesota-Dakotas, and Wisconsin hardware store sales trends, gathered from association members using the MHA's monthly accounting services. The figures derived for each region include sales data from the following number of stores:

Illinois - 23 stores
Minn.-Dakotas - 13 stores
Wisconsin - 78 stores
ILLINOIS MEMBERS: Sexual Harassment Training Requirement REMINDER
By Alec Laird, MHA Illinois Lobbyist and Vice President, Government Relations for the Illinois Retail Merchants Association

Public Act 101-0221 was signed into law by Governor Pritzker in August 2019. Under this Act, Illinois employers are required to train employees on sexual harassment prevention by December 31, 2020, and on an annual basis thereafter. This requirement applies to all employers with employees working in this state. Employers must either develop their own sexual harassment prevention training program that equals or exceeds the minimum standards for sexual harassment prevention training outlined in Section 2-109(B) of the Illinois Human Rights Act (IHRA), or they may use the FREE model training provided by the IDHR. The model training may be found at the Illinois Department of Human Rights Training Institute at https://www2.illinois.gov/dhr/Training/Pages/State-of-Illinois-Sexual-Harassment-Prevention-Training-Model.aspx.

Employers should keep an internal record of training compliance to be made available for IDHR inspection upon request. Records that reflect compliance may include, but are not limited to, a certificate of participation, a signed employee acknowledgement, or training sign-in worksheets. A record of training should include the names of employees trained, the date of training, the sign-in worksheets, copies of certificates of participation issued, and a copy of all written or recorded materials that comprise the training as well as the name of the training provider, if applicable. Records may be paper based or electronic.)
Meet The New Senators-Elect In Wisconsin
By Misha Lee, MHA Wisconsin Lobbyist

Wisconsin Senate Republicans have expanded their majority to a 21-12 seat margin by picking up two additional seats previously held by Democrats. Overall for the 2021-22 legislative session, there will be 8 new freshman State Senators out of 33 members, including 5 Republicans and 3 Democrats. That number will increase next year to 9 when a special election is called to fill the vacant seat in the 13th Senate District, as outgoing Senator Scott Fitzgerald (R-Juneau) takes over as a new U.S. Representative for Wisconsin’s 5th Congressional District.
 
The new incoming class of senators includes a number of familiar faces, including several former Assembly representatives, a past candidate for Governor, a former cabinet Secretary-designee, and a handful of small business owners.
 
The upcoming session officially begins on January 4, 2020, when all members will be sworn in to office. Governor Evers is then scheduled to give his annual State-of-the-State address in a virtual format on Tuesday, January 12th at 7:00 pm and biennial State Budget address on February 16th.
 
Meet the new Wisconsin Senate members:













Joan Ballweg
(R-Markesan)
  • Elected to the Assembly in 2004. Leadership positions: Majority Caucus Chair 2011-2013)
  • Member of Joint Finance Committee, Chair of Agriculture Committee
  • Former Mayor and School Teacher
  • Owner of a farm equipment business














Julian Bradley
(R-Franklin)
  • Served as chair of the Republican Party of La Crosse Co. and to the Wisconsin GOP executive committee
  • Chair of Senate Utilities, Technology & Telecommunications Committee
  • Former Manager at a telecommunications firm and insurance company management













Mary Felzkowski
(R-Irma)
  • Elected to Assembly in 2012
  • Leadership positions: Assistant Majority Leader 2019
  • Member of Joint Finance Committee, Chair of Senate Insurance, Licensing & Forestry Committee
  • Former President of Tomahawk Mainstreet Inc.
  • Insurance agency owner













Brad Pfaff
(D-La Crosse)
  • Former Secretary-designee of the Department of Agriculture, Trade and Consumer Protection
  • La Crosse County Board of Supervisors
  • Held leadership positions with USDA Farm Service Agency










Kelda Roys
(D-Madison)
  • Served in the Assembly from 2009-2011
  • Small business owner, attorney, and former Executive Director of NARAL Pro-Choice Wisconsin
  • Candidate for Governor













Melissa Sargent
(D-Madison)
  • Elected to Assembly since 2012
  • Previously served on the Dane Co. Board of Supervisors
  • Small business owner













Rob Stafsholt
(R-New Richmond)
  • Elected to Assembly since 2017
  • Small business owner of rental and real estate investment company
  • Chair of Senate Sporting Heritage, Small Business & Rural Issues Committee
  • Farmer











Eric Wimberger
(R-De Pere)
  • Served in the U.S. Marine Corps
  • Semi truck driver
  • Chair of Senate Veteran and Military Affairs Committee
  • Attorney and owns a law practice
Service Spotlight
Business Forms & Supplies
Remember to make MHA your first contact for business forms and supplies. MHA members can purchase a variety of forms/supplies such as:

  • Gift Certificates
  • Purchase Order/Receipt Books
  • Employment Applications
  • Labels and Tags
  • Personalized Envelopes and Letterhead
  • Checks and Deposit Slips

Testimonial

“MHA makes it so easy to order/re-order checks and envelopes. Within two minutes, I can call the office, tell them my name and store, and ask to order/re-order my computer-generated checks with the self-sealing, dual window envelopes. It doesn’t get any easier than that. I wish the rest of my daily tasks went that smoothly!”

Beth Grill
Gus Bock’s Ace Hardware
Dyer, IN

For more information about MHA’s Business Forms & Supplies, please contact Judy Borski by phone (800-888-1817 ext. 361) or by email judyb@midwesthardware.com.