Relief from not making employment tax deposits due to COVID-19 tax credits
The IRS has issued guidance providing relief from failure to make employment tax deposits for employers that are entitled to the refundable tax credits provided under two laws passed in response to the coronavirus (COVID-19) pandemic. The two laws are the Families First Coronavirus Response Act, which was signed on March 18, 2020, and the Coronavirus Aid, Relief, and Economic Security Act (CARES) Act, which was signed on March 27, 2020.
Employment tax penalty basics
The tax code imposes a penalty for any failure to deposit amounts as required on the date prescribed, unless such failure is due to reasonable cause rather than willful neglect.
An employer’s failure to deposit certain federal employment taxes, including deposits of withheld income taxes and taxes under the Federal Insurance Contributions Act (FICA) is generally subject to a penalty.
COVID-19 relief credits
Employers paying qualified sick leave wages and qualified family leave wages required by the Families First Act, as well as qualified health plan expenses allocable to qualified leave wages, are eligible for refundable tax credits under the Families First Act.
Specifically, provisions of the Families First Act provide a refundable tax credit against an employer’s share of the Social Security portion of FICA tax for each calendar quarter, in an amount equal to 100% of qualified leave wages paid by the employer (plus qualified health plan expenses with respect to that calendar quarter).
Additionally, under the CARES Act, certain employers are also allowed a refundable tax credit under the CARES Act of up to 50% of the qualified wages, including allocable qualified health expenses if they are experiencing:
A full or partial business suspension due to orders from governmental authorities due to COVID-19, or
A specified decline in business.
This credit is limited to $10,000 per employee over all calendar quarters combined.
An employer paying qualified leave wages or qualified retention wages can seek an advance payment of the related tax credits by filing Form 7200, Advance Payment of Employer Credits Due to COVID-19.
Available relief
The Families First Act and the CARES Act waive the penalty for failure to deposit the employer share of Social Security tax in anticipation of the allowance of the refundable tax credits allowed under the two laws.
IRS Notice 2020-22 provides that an employer won’t be subject to a penalty for failing to deposit employment taxes related to qualified leave wages or qualified retention wages in a calendar quarter if certain requirements are met. Contact us for more information about whether you can take advantage of this relief.
More breaking news
Be aware the IRS also just extended more federal tax deadlines. The extension, detailed in Notice 2020-23, involves a variety of tax form filings and payment obligations due between April 1 and July 15. It includes estimated tax payments due June 15 and the deadline to claim refunds from 2016. The extended deadlines cover individuals, estates, corporations and others. In addition, the guidance suspends associated interest, additions to tax, and penalties for late filing or late payments until July 15, 2020. Previously, the IRS postponed the due dates for certain federal income tax payments. The new guidance expands on the filing and payment relief. Contact us if you have questions.
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Answers to questions about the CARES Act employee retention tax credit
The recently enacted Coronavirus Aid, Relief, and Economic Security (CARES) Act provides a refundable payroll tax credit for 50% of wages paid by eligible employers to certain employees during the COVID-19 pandemic. The employee retention credit is available to employers, including nonprofit organizations, with operations that have been fully or partially suspended as a result of a government order limiting commerce, travel or group meetings.
The credit is also provided to employers who have experienced a greater than 50% reduction in quarterly receipts, measured on a year-over-year basis.
IRS issues FAQs
The IRS has now released FAQs about the credit. Here are some highlights.
How is the credit calculated? The credit is 50% of qualifying wages paid up to $10,000 in total. So the maximum credit for an eligible employer for qualified wages paid to any employee is $5,000.
Wages paid after March 12, 2020, and before Jan. 1, 2021, are eligible for the credit. Therefore, an employer may be able to claim it for qualified wages paid as early as March 13, 2020. Wages aren’t limited to cash payments, but also include part of the cost of employer-provided health care.
When is the operation of a business “partially suspended” for the purposes of the credit?The operation of a business is partially suspended if a government authority imposes restrictions by limiting commerce, travel or group meetings due to COVID-19 so that the business still continues but operates below its normal capacity.
Example: A state governor issues an executive order closing all restaurants and similar establishments to reduce the spread of COVID-19. However, the order allows establishments to provide food or beverages through carry-out, drive-through or delivery. This results in a partial suspension of businesses that provided sit-down service or other on-site eating facilities for customers prior to the executive order.
Is an employer required to pay qualified wages to its employees? No. The CARES Act doesn’t require employers to pay qualified wages.
Is a government employer or self-employed person eligible?No.Government employers aren’t eligible for the employee retention credit. Self-employed individuals also aren’t eligible for the credit for self-employment services or earnings.
Can an employer receive both the tax credits for the qualified leave wages under the Families First Coronavirus Response Act (FFCRA) and the employee retention credit under the CARES Act? Yes, but not for the same wages. The amount of qualified wages for which an employer can claim the employee retention credit doesn’t include the amount of qualified sick and family leave wages for which the employer received tax credits under the FFCRA.
Can an eligible employer receive both the employee retention credit and a loan under the Paycheck Protection Program? No. An employer can’t receive the employee retention credit if it receives a Small Business Interruption Loan under the Paycheck Protection Program, which is authorized under the CARES Act. So an employer that receives a Paycheck Protection loan shouldn’t claim the employee retention credit.
For more information
Here’s a link to more questions: https://bit.ly/2R8syZx . Contact us if you need assistance with tax or financial issues due to COVID-19.
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IRS Announces Operational Changes via “People First Initiative” During COVID-19
IRS Announces Operational Changes via “People First Initiative” During COVID-19
The IRS recently announced the “People First Initiative” which will provide immediate relief to taxpayers during the COVID-19 crisis. The initiative’s projected start date is April 1, and it will run at least through July 15, 2020.
Some key points of the initiative include:
Payments due between April 1 and July 15 will be suspended for taxpayers who are under an existing Installment Agreement. Suspending payments is also an option if you are currently unable to comply with the terms of an Installment Payment Agreement, including a Direct Deposit Installment Agreement. The IRS will not default any Installment Agreements during this period. However, by law, interest will continue to accrue on any unpaid balances.
Taxpayers have until July 15 to provide requested additional information needed to support a pending offer in compromise (OIC). In addition, no pending OIC requests will be closed before July 15 without the taxpayer's consent. Taxpayers have the option of suspending all payments on accepted OICs until July 15 although again, by law, interest will continue to accrue on any unpaid balances.
In addition, the IRS will not default an OIC for those taxpayers who are delinquent in filing their tax return for tax year 2018. However, taxpayers should file any delinquent 2018 return (and their 2019 return) on or before July 15.
Liens and levies, including new automatic and systematic ones, will be suspended along with any seizures of a personal residence initiated by field revenue officers. However, officers will continue to pursue high-income non-filers and perform other similar activities as warranted.
In addition, the IRS will:
Suspend new certifications to the Department of State for taxpayers who are seriously delinquent during this period
Not be forwarding new delinquent accounts to private collection agencies to work during this period
Not start new field, office, and correspondence examinations. (New examinations may be started if it is deemed necessary to preserve the applicable statute of limitations.)
As a taxpayer, you have until July 15 to respond to the IRS and verify that you qualify for the Earned Income Tax Credit or to verify your income. You are encouraged to exercise your best efforts to obtain and submit all requested information. If unable to do so, please reach out to the IRS indicating the reason such information is not available. Until July 15, the IRS will not deny these credits for a failure to provide requested information.
You can expect more information from the IRS shortly. We’ll keep you updated. In the meantime, contact us with any questions you have about your situation.
U.S. President Signs H.R 748 (CARES Act) Economic Stimulus Package to Assist with COVID-19
U.S. President Signs H.R 748 (CARES Act) Economic Stimulus Package to Assist with COVID-19
Congress has passed, and the President has signed H.R. 748 – Coronavirus Aid, Relief and Economic Security Act, commonly known as the CARES Act. This law provides $2.2 trillion of support to the U.S. economy. It is the single most expensive piece of legislation ever passed. There is relief for both individuals and businesses in the Act.
Individual Relief:
Recovery Rebates
The bill provides for immediate cash refunds of credits against 2020 income taxes equal to $1,200 per adult and $500 per child.
These amounts are phased out by $5 for every $100 of Adjusted Gross Income (AGI) above the threshold as follows:
Single Filers: $75,000 - $99,000
Head of Household Filers: $112,500 - $136,500
Joint Filers: $150,000 - $198,000
To be eligible for the rebate the individual must:
Not be a non-resident alien,
Not be able to be claimed as a dependent on another person’s tax return,
Not be an estate or trust, and
Must have a valid social security number for all individuals claimed.
AGI will be measured using the taxpayers 2018 tax return or the 2019 return if already filed.
No action will be required on the part of the taxpayers to claim this rebate. Funds will be sent electronically to taxpayers who have provided banking information with their tax returns and paper checks to those who have not.
Enhanced Deduction for Charitable Giving (2020)
The bill provides an “above the line” tax deduction of $300 for cash charitable donations made by individuals in 2020 giving taxpayers that do not itemize their deductions an additional tax benefit.
It also eliminates the 50% of AGI limit on deducting charitable donations as an itemized deduction on Schedule A making 100% of the deductions immediately deductible.
Corporations, whose deduction is normally limited to 10% of taxable income, is now limited to 25% of taxable income.
Non-Cash donations of food inventory, normally limited to 15% of AGI, are now increased to 25%.
Student Loans Paid by Employers
Taxpayers, whose employers pay some, or all, of their student loan debt as part of their compensation will be able to exclude those payments from taxable income up to $5,250. The loan must have been incurred by the employee for the education of the employee only. Qualifying payments can be made to the employee or directly to the lender. Only payments made by the employer after the enactment of this Act through December 31, 2020 are eligible for this exclusion.
Waiver of the 10% Early Retirement Distribution Penalty on Coronavirus-Related Distributions
The normal 10% penalty for early withdrawal from retirement plans has been waived for distributions up to $100,000 directly related to the coronavirus. The distributions must be made in 2020 to an individual (or spouse of an individual) diagnosed with the COVID-19 virus by an approved CDC test or to an individual who experiences adverse financial consequences as the result of a quarantine, business closure, layoff or reduced work hours due to the virus. Any qualifying distribution also qualifies to be taxed over a 3-year period and may be re-contributed back to the retirement account without regard to annual contribution caps, if made within 3 years.
Temporary Waiver of Required Minimum Distributions for Certain Accounts
The bill waives all 2020 required minimum distributions regardless of whether the taxpayer has been impacted by the virus.
Unemployment Insurance Provisions
Benefit Expansion - Unemployment assistance programs have been expanded through December 31, 2020 to cover individuals who were not previously eligible for benefits. Self-employed, independent contractors, limited work schedule, and others who are unable to work as a direct result of the coronavirus are now eligible for benefits.
Emergency Increase in Unemployment Compensation Benefits – The federal government will add $600/per week to the maximum allowable state unemployment benefits for up to four months.
Business Relief:
Employee Retention Credit
Eligible employers who retain their employees will receive a credit against payroll taxes equal to 50% of the qualified wages paid to employees who are not working due to the employers full or partial cessation of business or a significant decline in gross receipts. These credits will be claimed quarterly with a maximum credit of $10,000 per employee in aggregate for all quarters. Wages paid between March 12, 2020 and December 31, 2020 are eligible for the credit and the requirement to be directly affected by the Coronavirus does not apply. Any employer that receives an SBA 7(a) loan under the terms of the Paycheck Protection Program will not be eligible for these credits.
Employer Payroll Tax Payments Delayed Through the End of 2020
Payroll taxes due for the pay period beginning on the effective day of the Act and ending on December 31, 2020 are deferred. This includes 100% of the employer portion of payroll taxes (Soc. Sec. & Medicare) and 50% of the self-employment taxes incurred by self-employed individuals. The amount of payroll taxes withheld from employees’ wages remains due on the normal due dates. 50% of the deferred taxes will be due December 31, 2021 with the balance due on December 31, 2022. Any employer that receives an SBA 7(a) loan under the terms of the Paycheck Protection Program, and the loan is forgiven, under that program will not be eligible for this deferment.
Modification of Business Net Operating Loss (NOL) Carry Back Rules
Corporate taxpayers that generate business net operating losses in tax years 2018, 2019, and 2020 are now eligible to carry those losses back 5 years. Taxpayers may amend or modify tax returns filed for tax years 2013 – 2018 to apply for refunds of taxes paid in the respective year.
Temporary Suspension of Section 461(I) Excess Business Loss Limit
Corporate taxpayers (including Sole-Proprietorships and pass-through entities) that generate business net operating losses are no longer subject to a maximum loss carryback/carryforward limit. The bill also allows losses arising in tax years 2020 and prior to fully offset income (no longer subject to the 80% limitation).
Temporary Increase of Section 463(J) Business Interest Deduction Limit
For business taxpayers that are subject to the business interest expense limitation (generally average annual gross receipts more than $26 million) the deduction limitation of 30% of taxable income (before interest expense) has been increased to 50%. This will allow a larger tax deduction for businesses that carry debt.
Minimum Tax Credits
Alternative Minimum Tax (AMT) Credit Carryforward’s from years prior to 2018 are allowed to be claimed as refundable credits up to 50% of the excess minimum tax in tax years 2018-2020. Any unused AMT credit through 2020 becomes fully refundable in 2021. This Act makes all unused AMT credits fully refundable in 2019 and allows taxpayers to claim these credits back in 2018, if beneficial.
Correction of Qualified Improvement Property Recovery Period
This bill allows property classified as “qualified improvement property” (recovery period of 20 years or less) now eligible for 100% bonus depreciation. Largely seen as an oversite in the original 2017 TCJA Act this provision has been on the list of needed corrections since. This change applies retroactively to property acquired after September 27, 2017 so there are opportunities to amend 2017 and 2018 tax returns to take advantage of this correction, if advantageous.
Exclusion of Forgiven Loan Debt from Taxable Income
Any small business loans, mortgage obligations, or other loan obligations that are forgiven by the lender during the applicable period are excluded from taxable income.
The CARES Act is a massive bill that contains many other provisions not covered above.
Please see our separate post related the SBA Loan Program Revisions under the Paycheck Protection Program section of the CARES Act.
FMD will continue to monitor and advise on the various aspects of this bill as they unfold. Feel free to reach out to your FMD professional advisor at any time.
Please visit our website for continuing updates on all COVID-19 related matters.
COVID-19 – The CARES Act Provides Modifications to SBA Loan Programs
COVID-19 – The CARES Act Provides Modifications to SBA Loan Programs
Paycheck Protection Program
H.R. 748 - The CARES Act, contains a provision referred to as the “Paycheck Protection Program” that centers on providing employers that keep employees on payroll with 100% SBA backed Program 7(a) loans to fund payroll and other business fixed costs during this period of uncertainty.
Businesses Eligible for Loans:
Small businesses with less than 500 employees
Sole-proprietors, independent contractors, self-employed individuals
Business must have been operational on February 15, 2020 and had employees for whom it paid salaries and payroll taxes or paid independent contractors
Maximum Loan Amount:
The amount a business can borrow is calculated at 2.5 times the business average monthly payroll costs incurred in the prior year
Max. Loan amount under the 7(a) program is $10 Million, through December 31, 2020
SBA “Express Loan” Maximum’s have increased to $1 Million through December 31, 2020 ($350K max. thereafter)
Payroll Costs Include:
Normal gross wages
Vacation, holiday parental, family, medical & sick leave
Employer portion of any State or Local payroll taxes (Soc. & Medicare excluded)
Group health care benefits
Retirement benefits
Total payroll costs cannot exceed $100,000 per employee annually
Amounts paid to Independent Contractors, not to exceed $100,000 each
Allowable Uses of Loan Proceeds:
Employee Salaries excluding compensation in excess of $100,000 per employee
Paid Sick or medical leave
Group health care benefit costs and insurance premiums
Mortgage interest payments
Rent payments
Utility payments
Interest on any other debt in existence on February 15, 2020
Loan Terms:
Sets a max interest rate of 4%
No prepayment fees apply
Waives both borrower and lender fees
Waives collateral and personal guarantee requirements
Waives credit elsewhere test
Provides 100% government guarantee of 7(a) loans until December 31, 2020; 75% guarantee for loans more than $150,000 and 85% for loans equal to or less than $150,000 after December 31, 2020.
Requires lenders to provide complete payment deferment relief for a period of not less than 6 months and not more than 1 year
Loan Forgiveness Provisions:
Borrowers are eligible for loan forgiveness up to the amount spent by the borrower during an 8-week period after the origination of the loan on the following costs:
Payroll costs (subject to the max $100,000/employee compensation calculation above)
Interest payments on any mortgage in place prior to February 15, 2020
Rent on any lease in force prior to February 15, 2020
Utilities
Interest on any other debt in existence on February 15, 2020
Eligible forgiven amounts will be reduced proportionally by the reduction in Average Full Time Equivalent (FTE) employees retained as compared to the period February 15, 2019 – June 30, 2019 (or an alternate measure date of January & February 2020). The forgiven amount may also be reduced by any reduction in pay for any employee beyond 25% of their earnings during the fourth quarter of 2019. (i.e. You must maintain approximately the same number of employees (FTE) and pay them at least 75% of their 2019 fourth quarter earnings to be eligible for full debt forgiveness)
Any debt forgiven under the terms of this program will be excluded from taxable income
Any loans not forgiven or repaid in full after one year will maintain a max. term of 10 years at a rate of 4%
This Act also enables these loans to be applied for, and administrated by, banks rather than directly through the U.S. Small Business Administration. If you are interested in applying for one of the SBA 7(a) loan programs, please contact your local bank representation as soon as possible to discuss the application and funding process.
There are many other details that apply to the Paycheck Protection Program and the SBA 7(a) Loan Programs that we are not able to cover here. As always, if you have any questions or require any assistance with completing the loan application process, please reach out to your FMD professional advisor at any time.
Please visit our website for continuing updates on all COVID-19 related matters.
SBA offering loans to small businesses hit hard by COVID-19
SBA offering loans to small businesses hit hard by COVID-19
Every company has faced unprecedented challenges in adjusting to life following the widespread outbreak of the coronavirus (COVID-19). Small businesses face particular difficulties in that, by definition, their resources — human, capital and otherwise — are limited. If this describes your company, one place you can look to for some assistance is the Small Business Administration (SBA).
New loan, relaxed criteria
The agency has announced that it’s offering Economic Injury Disaster Loans under the Coronavirus Preparedness and Response Supplemental Appropriations Act, which was recently signed into law.
Here’s how it works: The governor of a state or territory must first submit a request for Economic Injury Disaster Loan assistance to the SBA. The agency’s Office of Disaster Assistance then works with the governor to approve the request. Upon completion of this process, affected small businesses within the state gain access to information on how to apply for loan assistance.
To speed the process, the SBA has relaxed its usual disaster-loan criteria. A state or territory now needs to certify that at least five small businesses have suffered substantial economic injury anywhere in the state. Previously, at least one of the companies had to be in each of the disaster-declared counties or parishes.
Along similar lines, once the submission process is completed, Economic Injury Disaster Loans will be available across the state. Under previous criteria, only businesses in counties identified as disaster areas could obtain financial assistance. Given the expected widespread and economically drastic effect of the coronavirus, most states will have likely garnered approval by the time you read this.
Amount, interest and terms
Economic Injury Disaster Loans offer up to $2 million in financial assistance to help small businesses mitigate their revenue losses. You could use the money to pay overhead costs such as utilities and rent, keep up with accounts payable and cover payroll.
For qualifying small businesses, the interest rate is 3.75%. Some nonprofits may also be eligible for this assistance. For them, the interest rate is 2.75%. The specific loan terms will vary according to each borrower’s ability to pay. The agency does say that it “offers loans with long-term repayments in order to keep payments affordable.”
Mitigate and manage
Bear in mind that these loans are just one form of assistance offered by the SBA. Your small business may qualify for other loans, and there might be training programs that benefit your company. Our firm can help you assess your financial situation in light of the coronavirus crisis and formulate a strategy for mitigating and managing your risks going forward.
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Michigan Employers Contemplating Potential Layoffs
Michigan Employers Contemplating Potential Layoffs
As we all try to navigate these unprecedented times, employers are being faced with tough choices. Due to the unique situation, some Michigan policies have been changed. As you try to do what’s best for your employees and your business, here are some things to consider.
The Michigan Work Share Program allows employers to keep employees working with reduced hours, as opposed to laying people off. If your business qualifies, the impacted employees will work less hours while receiving partial unemployment benefits to help cover the difference. Find out if your business qualifies here.
Michigan’s Department of Labor and Economic Opportunity is encouraging employers to place employees on temporary leave as opposed to termination. During these uncertain times, it is unclear how furloughed workers will be able to receive federal resources. Placing them on temporary leave will allow employees to remain eligible for UI benefits in Michigan, and they may remain eligible for federal assistance. It is also important to note that under the governor’s order, “an employer or employing unit must not be charged for unemployment benefits if their employees become unemployed because of an executive order requiring them to close or limit operations.” You can find the steps for placing employees on temporary unpaid leave here.
Michigan employees eligible for unemployment benefits can file online at Michigan.gov/UIA or by calling 866-500-0017. A fact sheet explaining how to claim unemployment benefits can be found here. Under the governor’s executive order 2020-10, unemployment benefits are expanded to include sick, quarantined, and immunocompromised workers, as well as those caring for loved ones and first responders who have been exposed to COVID-19. Benefits have also been increased from 20-26 weeks. The application period has been extended from 14 to 28 days. There are also fewer requirements due to the suspension of in-person registration and work search requirements.
If you operate a business outside of Michigan, we encourage you to check your applicable state websites for info on this topic related to COVID-19.
As the situation continues to evolve, be aware that new details are coming out daily. We’ll keep you updated on the FMD COVID-19 Updates page. In the meantime, contact us with any questions you have about your situation.
Michigan Governor Gretchen Whitmer ‘Stay Home, Stay Safe’ Executive Order Announced
Michigan Governor Gretchen Whitmer ‘Stay Home, Stay Safe’ Executive Order Announced
As of 11 a.m. today, Governor Gretchen Whitmer has announced a mandatory three-week statewide ‘Stay Home, Stay Safe’ Executive Order 2020-21 effective March 24 at 12:01 a.m. continuing through April 13 at 11:59 p.m. All non-essential businesses in the State of Michigan are to be closed until that time. A list of essential businesses can be found at www.Michigan.gov/coronavirus.
The MICPA has requested that CPA firms be deemed as an essential business. As of now, Fenner, Melstom & Dooling, PLC has not been granted the essential business status. Our office will be formally closing effective today at 5 p.m. to comply with this executive order.
Our main phone line will be available during normal business hours. We will continue to make every effort to provide a high level of service to our clients during this challenging period. The majority of our team has already been working remotely, so we intend to continue to process tax returns as the information comes to us. Please make every effort to send your FMD Advisor your information electronically via the Sharefile link on our website. We will continue to process mail as it comes in. This setback will slow down our normal processing time, and we ask for your patience.
As many of you may have already heard, on Friday, March 20, Treasury Secretary Steven Mnuchin confirmed that the April 15 tax filing deadline has officially been extended to July 15 to mirror the extended payment due date. The first 2020 tax estimates (normally due April 15, 2020) have been postponed until July 15, 2020. Common sense would dictate that this extension would also apply to the second quarter tax estimates due June 15, 2020, but we do not have clear guidance on this at this time. The AICPA is keeping a list of states’ tax developments here.
FMD will continue to monitor this very fluid situation and post updates on our COVID-19 Updates page as they become available.
Please stay safe and healthy.
Coronavirus (COVID-19): Tax relief for small businesses
Businesses across the country are being affected by the coronavirus (COVID-19). Fortunately, Congress recently passed a law that provides at least some relief. In a separate development, the IRS has issued guidance allowing taxpayers to defer any amount of federal income tax payments due on April 15, 2020, until July 15, 2020, without penalties or interest.
New law
On March 18, the Senate passed the House's coronavirus bill, the Families First Coronavirus Response Act. President Trump signed the bill that day. It includes:
Paid leave benefits to employees,
Tax credits for employers and self-employed taxpayers, and
FICA tax relief for employers.
Tax filing and payment extension
In Notice 2020-18, the IRS provides relief for taxpayers with a federal income tax payment due April 15, 2020. The due date for making federal income tax payments usually due April 15, 2020 is postponed to July 15, 2020.
Important: The IRS announced that the 2019 income tax filing deadline will be moved to July 15, 2020 from April 15, 2020, because of COVID-19.
Treasury Department Secretary Steven Mnuchin announced on Twitter, “we are moving Tax Day from April 15 to July 15. All taxpayers and businesses will have this additional time to file and make payments without interest or penalties.”
Previously, the U.S. Treasury Department and the IRS had announced that taxpayers could defer making income tax payments for 2019 and estimated income tax payments for 2020 due April 15 (up to certain amounts) until July 15, 2020. Later, the federal government stated that you also don’t have to file a return by April 15.
Of course, if you’re due a tax refund, you probably want to file as soon as possible so you can receive the refund money. And you can still get an automatic filing extension, to October 15, by filing IRS Form 4868. Contact us with any questions you have about filing your return.
Any amount can be deferred
In Notice 2020-18, the IRS stated: “There is no limitation on the amount of the payment that may be postponed.” (Previously, the IRS had announced dollar limits on the tax deferrals but then made a new announcement on March 21 that taxpayers can postpone payments “regardless of the amount owed.”)
In Notice 2020-18, the due date is postponed only for federal income tax payments for 2019 normally due on April 15, 2020 and federal estimated income tax payments (including estimated payments on self-employment income) due on April 15, 2020 for the 2020 tax year.
As of this writing, the IRS hasn’t provided a payment extension for the payment or deposit of other types of federal tax (including payroll taxes and excise taxes).
Contact us
This only outlines the basics of the federal tax relief available at the time this was written. New details are coming out daily. Be aware that many states have also announced tax relief related to COVID-19. And Congress is working on more legislation that will provide additional relief, including sending checks to people under a certain income threshold and providing relief to various industries and small businesses.
We’ll keep you updated. In the meantime, contact us with any questions you have about your situation.
COVID-19: SBA Disaster Declaration Makes Loans Available
COVID-19: SBA Disaster Declaration Makes Loans Available
3/21/2020
The U.S. Small Business Administration is offering small businesses and non-profit organizations located in Michigan and other designated states and territories Economic Injury Disaster Loans (EIDL). These loans are low interest federal disaster loans for working capital that come directly from the U.S. Treasury – not thorough a sponsoring bank. A complete list of all designated disaster areas is posted on the SBA website.
Qualifying Businesses Are:
Businesses directly affected by the disaster.
Businesses that offer services directly to affected businesses.
Other businesses indirectly related to the industry that are likely to be harmed by the disaster.
Non-Qualifying Businesses Are:
Agricultural enterprises as defined in Section 18(b)(1) of the Small Business Act.
Religious Organizations.
Charitable Organizations.
Gambling Concerns/Casinos & Racetracks.
Criteria for Approval:
Business must have an “acceptable credit history”.
Business must be deemed to have the ability to repay the loan.
Physically located in a declared county.
Proof that business is suffering working capital losses due to the declared disaster.
Eligible businesses and non-profits can qualify for loans up to $2 million.
Interest rates for disaster loans are 3.75% for small businesses and 2.75% for Non-Profit Organizations with terms up to 30 years.
Loan funds can be used to pay other fixed debts, payroll, trade accounts payable, and other bills that could have been paid on the normal course of business had the disaster not occurred.
Loans are not intended to pay for “Lost Sales/Profits” or Expansion.
Collateral:
Loan more than $25,000 will require collateral.
SBA will take real estate as collateral when available.
Loans will not be declined for lack of collateral but will require borrowers to pledge whatever is available.
How do I Apply?
Applicants go directly to the SBA’s Disaster Assistance Program site at: https://disasterloan.sba.gov/ela/
There is no cost to apply.
Max unsecured Loan is $25,000.
Complete SBA Loan App (SBA Form 5).
Complete Tax Information Authorization (IRS Form 4506T).
Provide copies of the most recent Federal Income tax return filed for the applicant.
Provide a schedule of applicant liabilities (SBA Form 2202).
Provide a personal financial statement for business owners/principal’s (SBA Form 413).
Other info may also be requested during the application process.
Electronic on-line filing will expedite the process vs. submitting paper applications.
SBA Customer Service Line: 1-800-877-8339
As always, if you have any questions or require any assistance with completing the loan application process please reach out to your FMD professional advisor at any time. Please check back frequently to this page for COVID-19 updates from FMD.
U.S. Tax Filing Deadline Moved to July 15
U.S. Tax Filing Deadline Moved to July 15
3/21/2020
As anticipated, on Friday, March 20, Treasury Secretary Steven Mnuchin confirmed that the April 15 tax filing deadline has officially been extended to July 15 to mirror the extended payment due date. Procedural details are still forthcoming, but at this time, it appears that no extensions will be required to be filed on April 15. The AICPA is keeping a list of states’ tax developments here. (Reminder: The extension to pay does not apply to individual taxpayers with balances due in excess of $1 Million and corporate taxpayers with balances due in excess of $10 Million. Amounts due in excess of these limits should still be paid by April 15, 2020.)
Taxpayers that expect to receive refunds from the government are encouraged to file their tax returns as soon as possible. Filing them electronically and providing the taxpayers bank account information with the return, to accept these refunds will afford taxpayers the opportunity to receive the quickest refunds.
Both individual and corporate taxpayers that normally are required to pay quarterly tax estimates also benefit from these extensions. The first 2020 tax estimates (normally due April 15, 2020) have been postponed until July 15, 2020. Common sense would dictate that this extension would also apply to the second quarter tax estimates due June 15, 2020, but we do not have clear guidance on this at this time. If you are a business owner and your tax estimates are based on the profitability of your business, please contact your tax advisor for assistance in calculating these estimates, especially if your business has been negatively affected by this situation. Please refer to the AICPA list for guidance on each state’s 2020 estimate payment requirements as well.
We will continue communicating with you through our news alerts. Please check back frequently to this page for COVID-19 updates from FMD. If you have any questions or concerns, do not hesitate to reach out to your FMD professional.
H.R. 6201 - Families First Coronavirus Response Act Signed into Law by President Trump 3/21/2020
H.R. 6201 - Families First Coronavirus Response Act Signed into Law by President Trump
3/21/2020
Late Wednesday evening (March 19, 2020), President Trump signed into law the H.R. 6201 - Families First Coronavirus Response Act. This bill provides additional benefits to qualifying employees and payroll tax credits to employers that are required to provide family or emergency sick leave benefits to employees as a result of this crisis. The bill shall take effect no later than 15 days after the March 18 signing date (April 2, 2020). As of this writing, there has been no official notification that the bill is in force prior to April 2. The act, if unchanged, will sunset on December 31, 2020.
EMERGENCY FAMILY MEDICAL LEAVE EXPANSION ACT (EFMLA):
The act is a temporary amendment to the existing FMLA Act and requires all employers with less than 500 employees to provide up to 12 weeks of leave to employees that have been employed for 30 days if the employee needs time off work to care for a child under age 18 whose school or other place of care is closed or unavailable due to a public health emergency. The first two weeks are unpaid. The next 10 weeks are paid at a rate of 2/3 the employees normal pay rate, not to exceed $200 per day ($10,000 per employee (50 workdays X $200/Day). Employees may elect to use unused accrued vacation or accrued sick leave during the first 10 days.
EMERGENCY PAID SICK LEAVE (EPSL):
This act requires all employers with less than 500 employees to provide 80 hours (2 weeks) of paid sick leave to employees that qualify under one of the following six criteria:
1. Subject to a federal, state, or local quarantine or isolation order related to COVID-19.
2. Advised by a health care provider to self-quarantine due to COVID-19 concerns.
3. Experiencing COVID-19 symptoms and seeking medical diagnosis.
4. Caring for an individual subject to a federal, state, or local quarantine or isolation order or advised by a health care provider to self-quarantine due to COVID-19 concerns.
5. Caring for the employee’s child if the child’s school or place of care is closed or the child’s care provider is unavailable due to public health emergency; or
6. Experiencing any other substantially similar condition specified by the Secretary of Health and Human Services in consultation with the Secretary of the Treasury and the Secretary of Labor.
Sick leave will be paid at the employee’s regular rate with a cap of $511/day ($5,110 total) if they fall into criteria 1-3 above and 2/3 the employees regular rate with a cap of $200/day ($2,000 total) if they qualify under criteria 4-6 above.
TAX CREDITS FOR EMERGENCY FMLA AND EMERGENCY PAID SICK LEAVE:
Employers subject to the two new emergency provisions above are eligible for refundable payroll tax credits against the employer portion of Social Security and Medicare taxes paid as follows:
EMFLA: 100% refundable payroll tax credit of the amount of EMFLA wages paid each quarter up to an aggregate amount of $10,000 per calendar quarter.
EPSL: 100% refundable payroll tax credit of the amount of EPSL wages paid each quarter.
Presumably these credits will be claimed when employers file their Quarterly Forms 941 – Employers Quarterly Federal Payroll Tax Return.
OTHER PROVISIONS:
The Secretary of Labor has the authority to issue regulations to exempt small businesses (Fewer than 50 employees) when the requirements under this act “would jeopardize the viability of the business as a going concern”. As of now there have been no such regulations published.
FMD will continue to monitor any changes made to this Act and provide updates as necessary. Please check back frequently to this page for COVID-19 updates from FMD. If you have any questions, please consult your FMD Professional Advisor at any time.
Integra International & FMD Are Here For You
Integra International & FMD Are Here For You
3/19/2019
Our Managing Partner, Brian J. Hunter, is the Global Chair for Integra International. His timely update is below.
As the COVID-19 pandemic scenario unfolds, the level of economic uncertainty increases.
Now is the time for us to work together to weather the storm ahead.
Integra-International is here for you.
As members we need to stick together to:
Help navigate through the disruption
Respond to the changing dynamics and
Be ready to emerge from the crisis ready to seize opportunity.
Primarily, we urge you to take precautions to protect the health and welfare of your employees and your families.
Secondly, we remind you that our collective success depends on the survival of our own clients. Our clients need us now more than ever.
As firms, we need to consider developing alternative procedures to manage current work-loads and retain quality service delivery.
Here are some key drivers to remain operational:
Act fast and decisively.
Move towards ‘remote working’.
Get set-up to host virtual meetings.
Keep in constant contact with your customers.
Maintain employee morale.
Your employees are the face of your firm, and they will play a key role in the survival of your organization.
We will continue communicating with you through our news alerts. Please check back frequently to this page for COVID-19 updates from FMD. If you have any questions or concerns, do not hesitate to reach out to your FMD professional.
IRS Postpones April 15 Tax Payments for 90 Days
IRS Postpones April 15 Tax Payments for 90 Days
3/19/2020
This Tuesday afternoon, Treasury Secretary Steven Mnuchin announced that individual taxpayers can delay paying their Federal income taxes on as much as $1 million in taxes owed for up to 90 days. Ordinarily, individual income taxpayers must submit their 2019 tax returns by April 15.
This delay will push the due date to July 15. This relief is for federal returns. We expect states will follow suit, and we will continue to monitor the various state tax filing requirements and keep you informed.
The AICPA is keeping a list of states’ tax developments here.
We will also be monitoring the official Coronavirus Tax Relief information from the IRS.
We will continue communicating with you through our news alerts. Please check back frequently to this page for COVID-19 updates from FMD. If you have any questions or concerns, do not hesitate to reach out to your FMD professional.
COVID-19 Update from Fenner, Melstrom & Dooling, PLC
COVID-19 Update from Fenner, Melstrom & Dooling, PLC
3/19/2020
As we all move through these unprecedented times with COVID-19, we want to thank you for your business and the confidence you place in our firm. With these ever-changing conditions, we want to provide you the comfort of knowing that we remain committed to providing our clients exceptional communication and service during these unsettling times.
Following guidance from health officials, we are encouraging our team members to work remotely. We have made major investments in technology and remote working tools to provide our team the ability to work remotely and to ensure the security of your information. We are committed to the same high level of service to our clients from our remote locations.
Our lobby entrance will be closed to outside visitors and guests until March 31 to help protect our staff. However, should you need to stop by or drop something off, please call 248-258-8900 upon arrival to our office, and a member of our team will be available to assist you. Individual appointments should be scheduled directly with your FMD professional. Please submit documents to us electronically. Alternatively, please send via mail or overnight delivery.
We will continue communicating with you through our news alerts. Please check back frequently to this page for COVID-19 updates from FMD. If you have any questions or concerns, do not hesitate to reach out to your FMD professional.