The Employee Retention Credit was enacted in March 2020 as part of the CARES Act. It was enhanced and expanded when business relief legislation passed in December 2020 making it a more valuable option to generate cash flow. The amount of the credit was significantly increased, employers are now allowed to claim the credit until June 30, 2021, and the restriction that prevented employers with PPP loans from claiming this credit was repealed retroactively to March 2020. This repeal offers a significant opportunity for PPP loan borrowers to now benefit from this credit.
For employers eligible in 2020, the credit can be claimed on amended payroll tax returns and offset the employer portion of Social Security tax, but any excess credit is fully refundable. For 2021, employers can reduce their current federal payroll tax deposits and even request an advanced refund from the IRS. (more…)
The Consolidated Apportionment Act of 2021, signed by President Trump in late December, authorized $285 billion of funding for a new round of PPP loans. Loans are available to borrowers that previously received a PPP loan and to first-time borrowers. The SBA released application forms last week and opened their lender portal this week to a limited number of lenders to help underserved businesses get first access to PPP funds.
The SBA’s Portal will open Friday, January 15th for lenders with assets under $1 billion, and opens Tuesday, January 19th for all other lenders. Eligibility requirements have changed from the previous program. (more…)
The COVID-Related Tax Relief Act of 2020 signed by President Trump on Sunday, December 27, 2020, offers many opportunities for borrowers. More implementation guidance is expected from both the SBA and Treasury Department regarding unanswered questions and issues that will develop as the program is implemented but for now, borrowers should consider how they may benefit from these provisions. (more…)
Round 2 of the Small Business COVID-19 Relief Grant Program will begin accepting applications for one week only from February 2 at 8:00 am through February 8, 2021 at 6:00 pm
The California Small Business COVID-19 Relief Grant Program announced that it will take applications from California small businesses impacted by COVID-19 for grants of between $5,000 and $25,000. The application period begins at 6 a.m. on December 30, 2020, and continues until 11:59 p.m. on January 13, 2021. The program will award $500 million to eligible entities.
Eligible businesses are those with between $1,000 and $2.5 million in annual gross revenues based on their most recently filed tax return, and include sole proprietorships and nonprofits. (more…)
On December 21, 2020, Congress finally delivered much needed relief to American taxpayers. After many months of contentious negotiations, Congress passed, and President Trump signed into law, a $900 billion COVID-19 relief package with tax benefits for both individuals and business entities. Also included was a long-awaited change to the Paycheck Protection Program that will allow borrowers to deduct expenses paid with PPP funds as well as additional funding for another round of PPP loans.
We want to provide you with a brief summary of the key provisions of the bill. Watch your email and our website for additional information as we analyze the 5,600-page Consolidated Appropriations Act of 2021.
As always, please contact us if you have any questions. (more…)
As businesses and individuals continue to feel the financial impacts of the COVID-19 pandemic, some taxpayers might be considering tapping into their tax-qualified retirement accounts, either to keep their businesses operating or to meet personal cash needs. Certain provisions of the Coronavirus Aid, Relief, and Economic Security (CARES) Act made this strategy more accessible for many taxpayers.
Business owners, plan administrators, and individual taxpayers considering such a move should familiarize themselves with the CARES Act’s special rules, as well as the general advantages and disadvantages of using retirement accounts to manage temporary cash shortfalls. (more…)
As this very unusual year comes to a close, we can look forward to the prospects and challenges waiting for us next year. Until then, there are many tax planning opportunities available to individuals and business entities that can be implemented before December 31, 2020.
Congress is currently working on another stimulus package with provisions that will provide assistance to business entities and no significant tax changes for individuals. It is uncertain if this legislation will be enacted before the end of the year. Watch our website for further details.
Please contact us to discuss any of the ideas discussed below. (more…)
With the end of 2020 approaching, it is time to prepare for what promises to be an unprecedented tax season. Here are some of the key issues that business owners, financial officers, and tax executives should consider now.
Note: This is by no means a complete list, and the tax consequences of some pandemic relief programs might change. (more…)
The CARES Act clearly states that a forgiven PPP Loan would not be treated as taxable income. However, it did not specify if the eligible expenses would be deductible. In April, the IRS issued Notice 2020-32 taking the position that these expenses would not be deductible. The Notice did not address how a taxpayer would report these non-deductible expenses if they were incurred in one tax year and loan forgiveness occurred in a subsequent tax year. (more…)