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…)
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…)
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.
A recently extended tax credit could make it easier for some businesses to expand their payrolls again after the COVID-19 pandemic. The Taxpayer Certainty and Disaster Tax Relief Act, part of the 2021 appropriations bill that was signed into law on December 27, 2020, includes a five-year extension of the Work Opportunity Tax Credit (WOTC).
The WOTC is designed to encourage businesses (and non-profit entities) to hire individuals from certain targeted groups that have traditionally faced employment barriers. After many companies were forced to reduce their workforces significantly in 2020, the number of people who could qualify for one of these groups has grown, especially those who qualify as recipients of long-term unemployment benefits. (more…)
The COVID-19 pandemic has created an array of financial, operational, and production challenges for businesses across many industries. Decreasing demand for products/services, constantly changing government regulations, and erratic consumer spending have left many facing unique challenges. Unfortunately, the renewable energy industry has not escaped the pandemic’s reach. According to the International Energy Agency’s (IEA), The Impact of the COVID-19 Crisis on Clean Energy Progress, the pandemic has had an adverse impact on renewable energy investments. Although the causes for the delay are multi-faceted, how the industry recovers and thrives is largely based on government policies and expenditures to implement change. The good news is, several important tax incentives were recently extended and more are awaiting Congressional approval. We have summarized them below. (more…)
I was once again at my annual Board retreat (virtual, alas!) for the Builders’ Exchange of Santa Clara, and came away with some fascinating data – both historical and predictive. Like many of us, I was curious to understand the impact of COVID-19 on this industry in 2020. These were the top takeaways from this meeting: (more…)
Action Is Required
The state run CalSavers program was enacted in 2016 to provide employees an opportunity to build retirement savings and let employers avoid administrative fees and fiduciary responsibilities. An email outreach program was launched towards the end of 2020, so you may have received a communication similar to the one below stating that you are required to register for the CalSavers retirement plan program. Currently, this requirement only applies to California employers with more than 100 employees, therefore registration may not be required at this time. (more…)
A like-kind exchange, commonly referred to as a “1031 exchange”, allows for the deferral of gains from the sale or exchange of business or investment property, as long as the exchanged properties are considered like-kind. Any money or property received that is not like-kind is ineligible for gain deferral and is considered a taxable event. After the 2017 Tax Cuts and Jobs Act (TCJA), the classification of like-kind was limited to include only real property. With the new, narrower definition of like-kind, the IRS issued proposed regulations in June 2020 that defined real property for the first time for purposes of Internal Revenue Code Section 1031. Recently, the IRS issued final regulations that adopted most of these proposed regulations, with some notable changes and clarifications. Below is a summary of the most recent changes. (more…)
When the 2017 Tax Cuts and Jobs Act (TCJA) dropped the corporate tax rate to 21 percent, it triggered a new wave of interest in a somewhat obscure provision of the Internal Revenue Code, Section 1202, which could enable shareholders of qualifying businesses to avoid paying federal income tax on the gains they realize from the sale of their stock. (more…)