FAQ: Deadlines, Passed and Pending Legislation

Greetings from our home offices! We hope that you and yours are faring well during this crisis. Our team at BSB is working our normal tax season hours and we are doing our best to provide you with the service levels that you have come to expect from us as your trusted professionals.

We have gotten many requests for information about programs, new and old, that can help mitigate the economic damage that the COVID-19 virus has brought to our world. Some programs are now in place and the biggest one, the CARES Act, should be law very soon.

Tax return filing deadlines and payment information:

April 9, 2020: More tax deadlines were extended to cover individuals, trusts, estates, corporations and more. Included is relief for estimated tax payments due June 15, 2020. This means that any individual or corporation that has a quarterly estimated tax payment due on or after April 1, 2020, and before July 15, 2020, can wait until July 15 to make that payment, without penalty.

https://www.irs.gov/newsroom/irs-extends-more-tax-deadlines-to-cover-individuals-trusts-estates-corporations-and-others

March 20, 2020: the IRS announced that the traditional April 15 filing date has been extended until July 15, 2020. https://www.irs.gov/coronavirus/coronavirus-tax-relief-and-economic-impact-payments-for-individuals-and-families

We’ve seen some corresponding action from state governors:

Maryland

DC

Virginia

Federal legislation that has been passed:

The Families First Coronavirus Response Act was enacted on March 18, 2020.  This Act is intended to give funds to all businesses with fewer than 500 employees to provide employees with paid sick leave.  These funds come in the form of a payroll tax credit. 

For paid leave, a credit of regular pay of 100% of an employee’s pay for up to 80 hours when an employee is unable to work because they are quarantined, unable to work, experiencing COVID-19 symptoms, and are seeking medical diagnosis. This credit is capped at $511 per day and $5,110 in aggregate for a total of 10 days.

For more information see: https://www.irs.gov/newsroom/treasury-irs-and-labor-announce-plan-to-implement-coronavirus-related-paid-leave-for-workers-and-tax-credits-for-small-and-midsize-businesses-to-swiftly-recover-the-cost-of-providing-coronavirus

SBA EILD loans.  With the declaration of a disaster, the existing SBA Disaster Loan Assistance program is available to more businesses, non-profits, homeowners, and renters.  See:   https://disasterloan.sba.gov/ela/information/eidlloans

CARES Act Highlights

On March 27, 2020, the CARES Act was signed into law. Highlights of the CARES act include:

SBA Paycheck Protection Program:  The CARES Act provides the SBA with $349 billion for the 7(a)-lending program through December 31, 2020 and increases the government guarantee to 100% through December 31, 2020. Business, include sole proprietors and non-profits, can apply for a SBA 7(a) loan of up to $10,000,000 tied to the payroll costs incurred by a business in determining the size of the loans.  Proceeds from these loans used by the borrower during an 8-week period after the origination date of the loan on payroll costs, interest payments on a mortgage, payment of rent, and payment on utilities will be forgiven.  Eligible payroll costs can’t include compensation above $100,000 in wages.  Any amount not forgiven will be subject to a maturity of 2 years at an interest rate of 1%.  Contact your bank to explore this program asap. For more information: https://www.sba.gov/funding-programs/loans/coronavirus-relief-options/paycheck-protection-program-ppp

Employee retention credit for employers:  a refundable payroll tax credit for 50% of wages paid during the COVID-19 crisis.  Eligible employers, including non-profits, are those whose operations have been fully or partially suspended as a result of government action limiting commerce, travel, or meetings, or have those that have experienced a reduction of 50% in quarterly receipts.  Wages are capped at the first $10,000 of wages paid to an employee after March 12, 2020 and before Jan 1, 2021.  Wages used for purposes of the Families First Act (above) are not eligible. In addition, business that receive a Small Business Interruption Loan through the Paycheck Protection Program cannot receive the credit. For more information: https://www.irs.gov/newsroom/faqs-employee-retention-credit-under-the-cares-act

Delay payment of employer payroll taxes:  The CARES Act allows taxpayers to delay the payment of the employer portion of Social Security taxes incurred after March 12, 2020 through the end of the calendar year. Employers must pay 50% of the deferred amount by December 31, 2021, and the remainder by December 31, 2022

Net operating losses (NOL’s):  NOL’s can offset all taxable income without limit.  NOL’s can now be carried back into each of the preceding 5 years.

Individual recovery rebate/credit:  An eligible individual is allowed a credit for 2020 equal to the sum of $1,200 (or $2,400 for those filing a joint return), along with an additional credit of $500 per qualifying child.  This credit is phase out for taxpayers with AGI of $75,000 or higher on a single return or $150,000 on a joint return.

No 10% penalty on a retirement plan distribution:  No 10% penalty will be imposed on a distribution from a qualified plan made before December 31, 2020 on distributions not exceeding $100,000.

RMD requirement waived for 2020:  Required minimum distributions are suspended for the 2020 calendar year.

We know this is a lot to take in all at once.  We are doing our best to provide you with as much information as possible.  We look forward to working through these trying days.  Please enjoy the time apart from society to bond with family, exercise, read, and be as productive as possible.  Don’t forget those less fortunate.  Buy a few extra cans of food and drop them by the local food bank!

The professionals at BSB are here to answer any questions you may have. Please reach out to us today!