Recently enacted California tax legislation included both good news and bad news for business owners. Senate Bill 113 (SB 113) contained a number of key and favorable changes made retro-active for the 2021 tax year. California Senate Bill 114 (SB 114) reinstated a mandatory COVID-19 supplemental sick leave requirement for employers. (more…)
IRS Issues Additional Guidance for 2020 and 2021 Employee Retention Credit
Earlier this month, the IRS released Notice 2021-49 and Revenue Procedure 2021-33, to provide additional guidance for employers claiming the Employee Retention Credit (ERC) in 2020 or 2021. This guidance provided answers to several unresolved issues including: (more…)
PPP Update for Borrowers of $150,000 or Less
The SBA announced that PPP borrowers of $150,000 or less (for either first draw or second draw loans) have access to a simplified loan forgiveness process:
- SBA Loan Forgiveness Portal – Borrowers are able to submit their loan forgiveness application directly to the SBA through a streamlined portal as of August 4, 2021, rather than to their lender/bank.
- The lender/bank must opt-in to participate in this program. Therefore, check with your lender to see if you can utilize the SBA Portal. Currently, nearly 900 banks representing over 2 million borrowers have agreed to participate, however, it is expected that most large financial institutions will not participate and continue to use their proprietary portals. The SBA has provided a list of participating lenders.
- The Portal will allow borrowers to complete Form 3508S which was recently revised.
- The SBA set up a PPP customer service team to answer questions and directly assist borrowers with their forgiveness applications. The customer service team is available by calling (877) 552-2692, Monday – Friday, 5:00 AM – 5:00 PM PDT.
Paycheck Protection Program Updates – July 2021
PPP Loan Payments May Be Due for Some Borrowers – PPP loan borrowers have ten months after their “Covered Period” ends (anywhere between 8 and 24 weeks after receiving loan proceeds) before loan payments are required. Borrowers can apply for forgiveness at any time before the loan matures but will need to start making payments if they apply after this ten-month period. For those who received a PPP loan at the beginning of the COVID pandemic, it may be close to the end of their ten-month window, and payments may be required soon. (more…)
Remote Workers – New Work Arrangements Raise Tax Questions
In addition to causing untold health and economic damages, the COVID-19 pandemic has had a profound—and possibly permanent—impact on many longstanding workplace practices. For example, although working from home began as a temporary emergency response, a number of high-profile companies now say they plan to continue the practice in their post-pandemic operations.
Choosing to maintain remote worker arrangements as a permanent fixture raises a number of questions. In addition to evaluating how a dispersed workforce will affect corporate culture, efficiency, morale, and productivity, companies must also consider the possible tax consequences of having employees work from home. (more…)
COVID-19 Recovery - Time to Take Another Look at the Employee Retention Credit
After a series of rule changes and expansions to various COVID-19 relief programs, many companies are reconsidering certain federal benefits they had previously ruled out. The employee retention credit (ERC) is a prime example.
The initial intent of the ERC was to make it easier for a business to keep employees on the payroll if it was forced to close or partially suspend operations due to a mandatory government shutdown order or if it experienced significant revenue loss during the pandemic. While the basic structure and purpose of the program remain unchanged, both the eligibility criteria and the size of the potential benefits have changed significantly. (more…)
Employee Retention Credit Update - Action May Be Required
The Employee Retention Credit (ERC), was enacted in March 2020 as part of the CARES Act and has since been modified twice by Congress to provide greater benefits to employers. Currently, eligible employers may claim a credit equal to 70 percent of the “qualified wages” paid to employees, up to a maximum credit of $7,000 per employee per quarter. If the credit exceeds amounts owed for payroll taxes the excess is fully refundable so it can generate cash for your business. (more…)
American Rescue Plan Act of 2021 - Relief for Individuals, Employees, and Businesses
President Biden signed the $1.9 trillion American Rescue Plan Act of 2021 (ARPA) into law on March 11, 2021. Unlike previous stimulus legislation, ARPA provides some economic relief to both businesses and individuals but the main purpose was to provide funding for government agencies and social programs. We have compiled a summary of the tax related provisions below. We will keep you updated as we continue to analyze the Act’s impact on our clients. (more…)
2020 and 2021 Employee Retention Credit (ERC) Overview
In March 2021, the IRS issued Notice 2021-20 containing a series of FAQs to provide guidance for employers claiming the Employee Retention Credit for calendar quarters in 2020. In the guide below, are references to the FAQs addressing specific areas of the 2020 ERC. The Notice addresses only 2020 ERC rules as the IRS plans to release additional guidance for 2021 ERC soon.
Click here to view the 2020 and 2021 Employee Retention Credit (ERC) Overview (more…)