US Tax News August 2020

Below is a summary of the Federal COVID-19 related updates from August 2020.

US Tax Updates
US Treasury Department releases new FAQ’s for PPP Loan Forgiveness (Updated Aug. 11) confirming existing guidance and addressing a few open issues. Continue Reading
The Tax Cuts and Jobs Act offered several tax benefits to “small business” taxpayers that were not “tax shelters”. The applicable definition of a “tax shelter” prevented many entities from qualifying. IRS has modified the applicable definition of a “tax shelters”. Continue Reading
The CARES Act changed the rules for NOL’s, allowing taxpayers to carryback NOL’s from tax years 2018 and 2019. The carryback is mandatory so taxpayers not wanting to carryback their NOL must elect to waive the carryback period. The NOLs for 2018 and 2019 must be waived on the return for the first year ending after March 27, 2020. This requires taxpayers with fiscal years ending on or after March 31, 2020 to waive the carryback on their 2019 returns that will be filed in the coming months. Continue Reading
On Saturday, August 8, President Trump issued 1 executive order and 3 memorandums to provide financial relief as negotiations for another stimulus bill stalled. The legality of these orders may be challenged. The President’s actions will:
1. Direct the Treasury Secretary to use his authority to defer employee portion of social security tax (6.20%) effective Sept 1 to Dec 31, 2020 for employees earning less than $104K annualized. Treasury Secretary is instructed to determine how to make this deferral permanent. Continue Reading Memorandum
2. Provide a $400 weekly supplemental unemployment benefit with states funding 25%. Many questions remain unanswered—can unused FEMA funds be used to fund this program; how will states provide funding for this when they are looking to the federal government for funding to supplement their existing budget shortfalls; will the unemployed still get $300 if a state does not participate in the program. Continue Reading Memorandum
3. Defer student loan payments an additional 3 months to December 31, 2020. Continue Reading Memorandum
4. Provide “assistance” to renters and homeowners by setting vague guidelines for HUD and Treasury Department to establish “assistance” programs and CDC and HHS to consider measures halting evictions. Continue Reading Executive Orderr
5. Continue Reading Summary of Orders
The SBA PPP Forgiveness Platform went live August 10, 2020, to begin accepting Lender submissions. Major banks are delaying accepting applications from their borrowers. Continue Reading
Taxpayers requesting an automatic tax accounting method change need to include their original Form 3115 with the tax return for the year of change. Effective July 31, the required duplicate copy may be faxed to the IRS instead of mailing it. Continue Reading
Executive Order deferring employee Social Security tax withholding is causing confusion. Lacking guidance from the US Treasury, employers are unsure when the deferred tax will be payable and if it the employee/employer or both will have liability for payment. Continue Reading
COVID-19 Pandemic-related FAQs for health care entities. The following representative FAQs and topics have been compiled to aid (1) practitioners as they perform financial statement audit engagements of health care clients in these uncertain times and (2) health care financial statement preparers. Continue Reading
The SBA announced the updated interest rates for the 504 Loan Program offered by Certified Development Companies (CDC). Small businesses can now apply for the lowest interest rates since July 2018 as the program is now allowing 20 and 25-year interest rates at 2.214% and 2.269%. Continue Reading
Qualified Improvement Property Changes Create Tax Savings - Through a technical correction provided in the CARES Act, Qualified Improvement Property (QIP) placed into service in 2018 or later, is now considered 15-year property and eligible for 100% bonus depreciation. This technical correction opens the door to new saving opportunities for qualifying taxpayers. Continue Reading