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…)
Action Required On December 1, 2020
In September 2020, California enacted Senate Bill 1447, the Small Business Hiring Tax Credit (SBHTC) to provide financial relief to qualified businesses and encourage hiring and retaining employees. The tax credit is $1,000 per increase in full-time equivalent (FTE) employee up to a maximum credit of $100,000 per employer. Unlike most tax credits, this credit can benefit unprofitable businesses that do not have an income tax liability as the credit can also be applied to offset the payment of sales and use tax deposits. The credit will be administered by the California Department of Tax and Fee Administration (CDTFA) which is requiring employers to reserve an allocation of the credit beginning December 1, 2020. (more…)
One of the changes businesses will see during the upcoming tax season is a redesign of the 1099 series of information reporting forms. This year, taxpayers must use a new Form 1099-NEC (Nonemployee Compensation) to report payments to nonemployees such as independent contractors, freelancers, and other service providers, rather than reporting them on Form 1099-MISC as they did in years past.
While the new Form 1099-NEC is relatively simple to complete, the redesign also triggered several rule and deadline changes that affect other information reporting forms. (more…)
While stimulus checks and forgivable loans have received a lot of attention during the COVID-19 shutdown, businesses and individuals should not overlook other available relief provisions that could help them reduce taxes and improve cash flow. Several of these measures could enable a taxpayer to file amended federal tax returns to recover taxes paid in previous years and request a refund. (more…)
This November, voters will be deciding many national and state issues. Californians will be asked to make important decisions on measures impacting commercial property owners and residential homeowners. California Proposition 15, also called the “split roll tax” would require commercial and industrial properties to be taxed on current market value. California Proposition 19 would change certain property tax exemptions and transfer rules. If either proposition passes, the changes will not only impact how property tax is calculated but also result in significant tax increases for many property owners. The State Legislative Analyst estimates that in 2025 property tax revenues could be $8 to $12 billion higher if Proposition 15 is enacted. (Official Voter Information Guide – Prop 15) (more…)
One consequence of the long-term shift toward a service-based economy is a change in how states determine the corporate income tax, sales tax, and employee payroll withholding requirements for companies that are active in multiple states. The lack of a consistent nationwide approach can create complexities for companies that have facilities, sales, or personnel in multiple jurisdictions.
Further, the rise in telecommuting during the COVID-19 pandemic has focused additional attention on the issue. So far, only a handful of states have issued specific guidance regarding the tax questions that arise when a company’s employees work remotely from other states. Telecommuting employees can create income tax, sales tax, and payroll withholding issues for their employers. (more…)
Below is a summary of the Federal COVID-19 related updates from August 2020. (more…)
The Paycheck Protection Program (PPP) launched in early April with little guidance provided to both borrowers and lenders. Many businesses acted quickly to determine their maximum loan amounts and submit their applications before funds would run out. Recently, there has been scrutiny related to certain recipients of the funds. In light of this, we want to ensure you are aware of the certifications that borrowers were attesting to on their loan applications. Specifically, borrowers were representing that “current economic uncertainty makes this loan request necessary to support the ongoing operations of the applicant”. (more…)
The CARES Act contains several provisions to get cash directly into the hands of taxpayers who are either currently employed or not working. These sources of cash include:
- Economic Impact Payments (Cash Rebates)
- Distributions from retirement plans such as 401(k) or IRA accounts
- Unemployment benefits
- Emergency Sick and Family Leave is required under the Families First Act