SME CPA https://www.smecpa.com Wed, 20 May 2020 12:18:34 +0000 en-US hourly 1 https://wordpress.org/?v=5.3.3 https://www.smecpa.com/wp-content/uploads/2019/07/cropped-logo-32x32.png SME CPA https://www.smecpa.com 32 32 PPP Forgiveness Application https://www.smecpa.com/ppp-forgiveness-application/ https://www.smecpa.com/ppp-forgiveness-application/#respond Wed, 20 May 2020 12:02:26 +0000 https://www.smecpa.com/?p=1374 On May 15th the U.S. Small Business Administration (SBA) released the link to the “Paycheck Protection Program Loan Forgiveness Application,” which contains information on PPP Loan forgiveness along with instructions for completing the application form. The SBA said its form and instructions are designed to reduce compliance burdens and simplify the process for borrowers.  The form…

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On May 15th the U.S. Small Business Administration (SBA) released the link to the “Paycheck Protection Program Loan Forgiveness Application,” which contains information on PPP Loan forgiveness along with instructions for completing the application form.

The SBA said its form and instructions are designed to reduce compliance burdens and simplify the process for borrowers.  The form and instructions provide details on how to apply for forgiveness of PPP loans, consistent with the (CARES) Act, P.L. 116-136.

The application and instructions are the first detailed guidance from the SBA and U.S. Treasury regarding details of computing PPP loan forgiveness. While this guidance does not answer some questions borrowers may still have about the program, it does provide some additional clarity on a few key items:

  • Flexibility in the “incurred” and “paid” language in the CARES Act to include eligible payroll and non-payroll expenses both paid OR incurred during the eight-week period after receiving the PPP loan. The form instructions state that non-payroll expenses incurred during the 8-week covered period must be paid by the next billing cycle in order to be included as eligible expenses;
  • Interpretation for the calculation of full-time equivalents is relatively borrower-friendly, with 40 hours being used as the base to determine FTEs;
  • An explicit statement that covered rent obligations includes leases on both real and personal property;
  • Options for borrowers who use a biweekly or more frequent payroll schedule to allow for the calculation of payroll costs using an “alternative payroll covered” period that aligns with the borrower’s regular payroll cycle;
  • An indirect bar on using bonuses to owner-employees to fill shortfalls in eligible payroll costs for loan forgiveness and an inference that bonuses are acceptable if paid to rank-and-file employees due to a lack of any such language as it relates to other employees (further guidance is expected on this issue);
  • Implementation of statutory exemptions from loan forgiveness reduction based on a rehire date by June 30, 2020;
  • An additional new exemption from the loan forgiveness reduction for borrowers who made a good-faith, written offer to rehire employees, which the worker(s) declined; and,
  • Step-by-step instructions on how to perform the calculations required by the CARES Act to conform with eligibility requirements for loan forgiveness.

The SBA plans to release regulations and guidance in the coming days to assist borrowers as they complete their loan forgiveness applications. When final guidance is released, our team will make available a new estimator for forgiveness. The new guidance updates several of the assumptions made in the previous model released. More specifically, this recent guidance made significant changes to the FTE calculations, Covered Period start date, and the 25% reduction calculation. These changes will likely improve eligibility of forgivable amounts.

If you need assistance SME CPAs is here to help you clarify how this current guidance applies to your situation.

706.722.5337 Augusta 803.648.6047 Aiken

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5 things you should do once you receive your PPP loan. https://www.smecpa.com/5-things-you-should-do-once-you-receive-your-ppp-loan/ https://www.smecpa.com/5-things-you-should-do-once-you-receive-your-ppp-loan/#respond Thu, 14 May 2020 16:12:25 +0000 https://www.smecpa.com/?p=1370 1. Only Use Money From The Loan on Forgivable Expenses You must track what you spend this money on in order to be able to apply for forgiveness. Recipients must not lose sight of the legal restrictions on the use of these fund. The SBA issued a Rule that requires PPP applicants to certify funds…

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1. Only Use Money From The Loan on Forgivable Expenses

You must track what you spend this money on in order to be able to apply for forgiveness. Recipients must not lose sight of the legal restrictions on the use of these fund. The SBA issued a Rule that requires PPP applicants to certify funds are being used for the following:

  • Payroll for 8 weeks after receiving the loan
  • Rent or mortgage interest for 8 weeks
  • Approved Utilities

This requirement comes with a warning: knowingly using the funds for unauthorized purposes may lead to charges of fraud.  In fact, there are a few potential federal crimes that could apply for misusing funds or even making false statements about the intended use of the funds.  

2. Work Closely With your Tax Professional to Maximize Your Forgivable Amount.

Loan recipients should work closely with their tax professionals to ensure that they maximize the forgivable amount of the loan. This requires proper documentation of the allocation of the funds.

3. Which Brings Us to Document Everything.

Keep records on every penny you spend from the PPP loan. Have documentation to show the number of employees you have and how you have not laid anyone off since February 15th. If you did lay or furlough employees after receiving the loan, you have from April 26th until June 30th to hire them back, in order to get full forgiveness. Make sure you understand every expense that you can allocate to the PPP, and that at least 75% of the PPP loan is used for payroll.

4. Look for Additional Savings Under the CARES Act.

Everything happened so quickly and there was a mad dash for borrowers to get their foot in the door and secure their funds. But since the dust has settled a little borrows need to take the time to consider other tax breaks under the CARES Act or even better revisit the second point, and consult your tax professional. Here are a few potential tax breaks.

  • The CARES Act specifically increased the ability to deduct net operating losses – referred to as NOLs. This idea allows taxpayers to file amended returns and get cash refunds now.
  • The CARES Act loosened the rules that limit business interest deduction. Allowing some taxpayers to deduct additional business interest expenses.
  • The CARES Act accelerates the ability for corporations to use alternative minimum tax (AMT) credits. Under the new provisions, companies are able to claim AMT credits for as early as the 2018 tax year.  

5. Don’t forget to file an application with the bank after the 8-week Period to Request Forgiveness of Your Loan.

Finally, PPP borrowers will need to file an application with their bank after the 8-week period.  If you have followed all of these steps, this process should be an easy process.  Banks are required to make the forgiveness determination within a 60-day period after the application is submitted. 

Keep in mind that a representative of the business will be required to submit a certification providing, among other things, that the amount for which forgiveness is requested was used for appropriate purposes. 

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Georgia Retraining Tax Credit https://www.smecpa.com/georgia-retraining-tax-credit/ https://www.smecpa.com/georgia-retraining-tax-credit/#respond Wed, 06 May 2020 15:01:09 +0000 https://www.smecpa.com/?p=1355 Retraining tax credits enable Georgia businesses to offset their investment in employees. Whether retraining workers to use new equipment or new technology or upgrading the company’s competitiveness with ISO 9000 training, companies can afford more training, more often, thanks to Georgia’s tax credit program. If your business has purchased or upgraded software, equipment or any…

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Retraining tax credits enable Georgia businesses to offset their investment in employees. Whether retraining workers to use new equipment or new technology or upgrading the company’s competitiveness with ISO 9000 training, companies can afford more training, more often, thanks to Georgia’s tax credit program. If your business has purchased or upgraded software, equipment or any technology, you may already qualify for a retraining tax credit that immediately reduces or eliminates your state income tax burden.

Retraining tax credits can be used to offset up to 50 percent of a company’s Georgia corporate income tax liability. If the earned credit exceeds that limit, then the unused credit can be carried forward for up to 10 years and applied to future years’ tax liability. Any business that files a Georgia income tax return is eligible for the retraining tax credit.

Businesses can receive a tax credit of 50 percent of their direct training expenses, with up to $500 credit per full-time employee, per training program. The annual maximum of the credit amounts to $1,250 per employee. Eligible expenses include:

  • costs of instructors and teaching materials
  • employee wages during retraining
  • reasonable travel expenses

Based on approved Retraining Tax Credits this year, over 90% were awarded to companies related to upgraded software or new software, including to help them manage:

  • Customer conversations (e.g., CRM)
  • Business processes (e.g., ERP)
  • Patient health information (e.g., EHR or EMR)
  • Marketing activities
  • Inventory, documents or storage
  • Project details and workflows
  • Billing or payments

As always, we are here to help. If you think your business may qualify or would like to discuss this opportunity further, please contact your CPA.

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Recent Tax Developments Impacting Non-Profit Organizations https://www.smecpa.com/recent-tax-developments-impacting-non-profit-organizations/ https://www.smecpa.com/recent-tax-developments-impacting-non-profit-organizations/#respond Tue, 21 Apr 2020 13:43:55 +0000 https://www.smecpa.com/?p=1342 Deadline Changes In response to COVID-19, the IRS recently released guidance on revised due dates and other provisions that impact non-profit entities. In Notice 2020-23, the IRS specifically extends the payment and filing deadlines for Forms 990-T and 990-PF. The notice also broadly provides relief for the full list of “time-sensitive actions” listed in Revenue…

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Deadline Changes

In response to COVID-19, the IRS recently released guidance on revised due dates and other provisions that impact non-profit entities. In Notice 2020-23, the IRS specifically extends the payment and filing deadlines for Forms 990-T and 990-PF. The notice also broadly provides relief for the full list of “time-sensitive actions” listed in Revenue Procedure 2018-58. This relief postpones the deadline to July 15 for most actions required to be taken by taxpayers from April 1 through July 14. The relief is granted to forms listed in Revenue Procedure 2018-58 but not otherwise identified in Notice 2020-23, so the relief includes Form 990. As a result of this guidance, Forms 990, 990-T, and 990-PF that were originally due between April 1 and July 14 are now due on July 15. Any payments associated with these forms that were due between these dates are now due on July 15 as well. Notice 2020-23 grants automatic relief to affected taxpayers; they do not have to file extensions or send documents to the IRS to obtain relief.

Changes to Charitable Contribution Tax Deductions

In addition to the changes to the filing and payment deadlines, there are other significant changes that incentivize charitable giving. The Coronavirus Aid, Relief, and Economic Security (CARES) Act creates two changes for donors to non-profits. The first change allows a taxpayer to take an “above-the-line” tax deduction for up to $300 of charitable contributions, beginning in 2020, if the taxpayer does not claim itemized deductions on his or her tax return. With the recent increase in the standard deduction, less taxpayers are itemizing. This new tax law provides a distinct benefit to these taxpayers.

The second change eliminates the cap on how much a donor can deduct in charitable gifts in a single year, for the 2020 tax year. Under the 2017 Tax Cuts and Jobs Act, individuals were previously able to deduct contributions valued at no more than 60 percent of their adjusted gross income (AGI), with the excess carried over to future years. The elimination of this cap allows donors to deduct contributions in 2020 equal to 100 percent of their AGI for the year. In addition to the changes to individual donation limits, the new tax law also benefits corporations by increasing the limit on the charitable contribution deduction from 10 percent to 25 percent of taxable income. These new laws could provide a boost to donations in 2020, as taxpayers seek to maximize their charitable contribution deductions.

Contact us at SME if you have questions about how these new regulations will impact your organization.

Kelly McCauley, CPA

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What you need to know about the PPP and EIDL loans https://www.smecpa.com/what-you-need-to-know-about-the-ppp-and-eidl-loans/ https://www.smecpa.com/what-you-need-to-know-about-the-ppp-and-eidl-loans/#respond Fri, 17 Apr 2020 19:43:22 +0000 https://www.smecpa.com/?p=1336 Have you applied for a PPP or EIDL loan and have you received your funds or you’re waiting for them? You may be asking yourself “What do I do now? How will I calculate the forgiveness portion of the PPP loan? My employees are currently drawing unemployment? Do I take them off and start paying…

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Have you applied for a PPP or EIDL loan and have you received your funds or you’re waiting for them? You may be asking yourself “What do I do now? How will I calculate the forgiveness portion of the PPP loan? My employees are currently drawing unemployment? Do I take them off and start paying them? Some of my employees are on the Family Leave Act. How does that impact my PPP loan?”. Click on the link below to view our webinar, were we address these and more questions relating to the SBA loans that businesses have applied for. Thank you to Ed Enoch with Enoch Tarver Law Firm for joining us and giving your expertise.

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Here’s how much individuals will get from the Economic Impact Payments https://www.smecpa.com/heres-how-much-individuals-will-get-from-the-economic-impact-payments/ https://www.smecpa.com/heres-how-much-individuals-will-get-from-the-economic-impact-payments/#respond Wed, 15 Apr 2020 14:31:12 +0000 https://www.smecpa.com/?p=1333 Employed full or part time? Unemployed? A temporary or gig worker? Retired or disabled? Receive public benefits? Have no income? Most U.S. residents – under certain income levels – will receive the Economic Impact Payment if they are not claimed as a dependent of another taxpayer and have a Social Security number. Here’s how much…

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Employed full or part time? Unemployed? A temporary or gig worker? Retired or disabled? Receive public benefits? Have no income? Most U.S. residents – under certain income levels – will receive the Economic Impact Payment if they are not claimed as a dependent of another taxpayer and have a Social Security number.

Here’s how much the payments will be:

  • Eligible individuals will receive up to $1,200.
  • Eligible married couples will receive up to $2,400.
  • Eligible individuals will receive up to $500 for each qualifying child.

Taxpayers will receive a reduced payment if their adjusted gross income is between:

  • $75,000 and $99,000 if their filing status was single or married filing separately
  • $112,500 and $136,500 for head of household
  • $150,000 and $198,000 if their filing status was married filing jointly

Eligible taxpayers who filed tax returns for either 2019 or 2018 will automatically receive an Economic Impact Payment.

Payments will also be automatic for people who receive Social Security retirement, disability (SSDI), or survivor benefits or Railroad Retirement benefits who don’t normally file a tax return. Those receiving these benefits who aren’t claimed as a dependent on someone else’s return or required to file a tax return are eligible for a $1,200 payment. However, people in this group who have qualifying children under age 17 will need to provide information using the Non-Filers: Enter Payment Info tool to claim the $500 payment per child.

The IRS encourages people to share this information with family and friends. Some people who normally don’t file a tax return may not realize they’re eligible for an Economic Impact Payment.

For additional and updated information, visit the Coronavirus Tax Relief page on IRS.gov.


More information:
Economic Impact Payment
Adjusted Gross Income
Economic Impact Payments e-Poster
Do I Need to File a Tax Return?
Whom May I Claim as a Dependent?
What Is My Filing Status?

Share this tip on social media — #IRSTaxTip: Here’s how much individuals will get from the Economic Impact Payments. https://go.usa.gov/xvKm8

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TAX RELIEF PROVIDED BY THE CARES ACT https://www.smecpa.com/tax-relief-provided-by-the-cares-act/ https://www.smecpa.com/tax-relief-provided-by-the-cares-act/#respond Thu, 02 Apr 2020 15:50:37 +0000 https://www.smecpa.com/?p=1304 We hope that you are keeping yourself, your loved ones, and your community safe from COVID-19 (commonly referred to as the Coronavirus). Along with those paramount health concerns, you may be wondering about some of the recent tax changes meant to help everyone coping with the Coronavirus fallout. In addition to the summary of IRS…

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We hope that you are keeping yourself, your loved ones, and your community safe from COVID-19 (commonly referred to as the Coronavirus). Along with those paramount health concerns, you may be wondering about some of the recent tax changes meant to help everyone coping with the Coronavirus fallout. In addition to the summary of IRS actions and earlier-enacted federal tax legislation that I previously sent you, I now want to update you on the tax-related provisions in the Coronavirus Aid, Relief, and Economic Security (CARES) Act, Congress’s gigantic economic stimulus package that the President signed into law on March 27, 2020.

Recovery rebates for individuals. To help individuals stay afloat during this time of economic uncertainty, the government will send up to $1,200 payments to eligible taxpayers and $2,400 for married couples filing joints returns. An additional $500 additional payment will be sent to taxpayers for each qualifying child dependent under age 17 (using the qualification rules under the Child Tax Credit).

Rebates are gradually phased out, at a rate of 5% of the individual’s adjusted gross income over $75,000 (singles or marrieds filing separately), $122,500 (head of household), and $150,000 (joint). There is no income floor or ‘‘phase-in’’—all recipients who are under the phaseout threshold will receive the same amounts. Tax filers must have provided, on the relevant tax returns or other documents (see below), Social Security Numbers (SSNs) for each family member for whom a rebate is claimed. Adoption taxpayer identification numbers will be accepted for adopted children. SSNs are not required for spouses of active military members. The rebates are not available to nonresident aliens, to estates and trusts, or to individuals who themselves could be claimed as dependents.

The rebates will be paid out in the form of checks or direct deposits. Most individuals won’t have to take any action to receive a rebate. IRS will compute the rebate based on a taxpayer’s tax year 2019 return (or tax year 2018, if no 2019 return has yet been filed). If no 2018 return has been filed, IRS will use information for 2019 provided in Form SSA-1099, Social Security Benefit Statement, or Form RRB-1099, Social Security Equivalent Benefit Statement.

Rebates are payable whether or not tax is owed. Thus, individuals who had little or no income, such as those who filed returns simply to claim the refundable earned income credit or child tax credit, qualify for a rebate.

Waiver of 10% early distribution penalty. The additional 10% tax on early distributions from IRAs and defined contribution plans (such as 401(k) plans) is waived for distributions made between January 1 and December 31, 2020 by a person who (or whose family) is infected with the Coronavirus or who is economically harmed by the Coronavirus (a qualified individual). Penalty-free distributions are limited to $100,000, and may, subject to guidelines, be re-contributed to the plan or IRA. Income arising from the distributions is spread out over three years unless the employee elects to turn down the spread out. Employers may amend defined contribution plans to provide for these distributions. Additionally, defined contribution plans are permitted additional flexibility in the amount and repayment terms of loans to employees who are qualified individuals.

Waiver of required distribution rules. Required minimum distributions that otherwise would have to be made in 2020 from defined contribution plans (such as 401(k) plans) and IRAs are waived. This includes distributions that would have been required by April 1, 2020, due to the account owner’s having turned age 70 1/2 in 2019.

Charitable deduction liberalizations. The CARES Act makes four significant liberalizations to the rules governing charitable deductions:

  1. Individuals will be able to claim a $300 above-the-line deduction for cash contributions made, generally, to public charities in 2020. This rule effectively allows a limited charitable deduction to taxpayers claiming the standard deduction.
  2. The limitation on charitable deductions for individuals that is generally 60% of modified adjusted gross income (the contribution base) doesn’t apply to cash contributions made, generally, to public charities in 2020 (qualifying contributions). Instead, an individual’s qualifying contributions, reduced by other contributions, can be as much as 100% of the contribution base. No connection between the contributions and COVID-19 activities is required.
  3. Similarly, the limitation on charitable deductions for corporations that is generally 10% of (modified) taxable income doesn’t apply to qualifying contributions made in 2020. Instead, a corporation’s qualifying contributions, reduced by other contributions, can be as much as 25% of (modified) taxable income. No connection between the contributions and COVID-19 activities is required.
  4. For contributions of food inventory made in 2020, the deduction limitation increases from 15% to 25% of taxable income for C corporations and, for other taxpayers, from 15% to 25% of the net aggregate income from all businesses from which the contributions were made.

Exclusion for employer payments of student loans. An employee currently may exclude $5,250 from income for benefits from an employer-sponsored educational assistance program. The CARES Act expands the definition of expenses qualifying for the exclusion to include employer payments of student loan debt made before January 1, 2021.

Break for remote care services provided by high deductible health plans. For plan years beginning before 2021, the CARES Act allows high deductible health plans to pay for expenses for tele-health and other remote services without regard to the deductible amount for the plan.

Break for nonprescription medical products. For amounts paid after December 31, 2019, the CARES Act allows amounts paid from Health Savings Accounts and Archer Medical Savings Accounts to be treated as paid for medical care even if they aren’t paid under a prescription. And, amounts paid for menstrual care products are treated as amounts paid for medical care. For reimbursements after December 31, 2019, the same rules apply to Flexible Spending Arrangements and Health Reimbursement Arrangements.

Business only provisions

Employee retention credit for employers. Eligible employers can qualify for a refundable credit against, generally, the employer’s 6.2% portion of the Social Security (OASDI) payroll tax (or against the Railroad Retirement tax) for 50% of certain wages (below) paid to employees during the COVID-19 crisis.

The credit is available to employers carrying on business during 2020, including non-profits (but not government entities), whose operations for a calendar quarter have been fully or partially suspended as a result of a government order limiting commerce, travel or group meetings. The credit is also available to employers who have experienced a more than 50% reduction in quarterly receipts, measured on a year-over-year basis relative to the corresponding 2019 quarter, with the eligible quarters continuing until the quarter after there is a quarter in which receipts are greater than 80% of the receipts for the corresponding 2019 quarter.

For employers with more than 100 employees in 2019, the eligible wages are wages of employees who aren’t providing services because of the business suspension or reduction in gross receipts described above.

For employers with 100 or fewer full-time employees in 2019, all employee wages are eligible, even if employees haven’t been prevented from providing services. The credit is provided for wages and compensation, including health benefits, and is provided for the first $10,000 in eligible wages and compensation paid by the employer to an employee. Thus, the credit is a maximum $5,000 per employee.

Wages don’t include

  1. Wages taken into account for purposes of the payroll credits provided by the earlier Families First Coronavirus Response Act for required paid sick leave or required paid family leave,
  2. Wages taken into account for the employer income tax credit for paid family and medical leave (under Code Sec. 45S) or
  3. Wages in a period in which an employer is allowed for an employee a work opportunity credit (under Code Sec. 51).

An employer can elect to not have the credit apply on a quarter-by-quarter basis.

The IRS has authority to advance payments to eligible employers and to waive penalties for employers who do not deposit applicable payroll taxes in reasonable anticipation of receiving the credit. The credit is not available to employers receiving Small Business Interruption Loans. The credit is provided for wages paid after March 12, 2020 through December 31, 2020.

Delayed payment of employer payroll taxes. Taxpayers (including self-employeds) will be able to defer paying the employer portion of certain payroll taxes through the end of 2020, with all 2020 deferred amounts due in two equal installments, one at the end of 2021, the other at the end of 2022. Taxes that can be deferred include the 6.2% employer portion of the Social Security (OASDI) payroll tax and the employer and employee representative portion of Railroad Retirement taxes (that are attributable to the employer 6.2% Social Security (OASDI) rate). The relief isn’t available if the taxpayer has had debt forgiveness under the CARES Act for certain loans under the Small Business Act as modified by the CARES Act (see below). For self-employeds, the deferral applies to 50% of the Self-Employment Contributions Act tax liability (including any related estimated tax liability).

Net operating loss liberalizations. The 2017 Tax Cuts and Jobs Act (the 2017 Tax Law) limited NOLs arising after 2017 to 80% of taxable income and eliminated the ability to carry NOLs back to prior tax years. For NOLs arising in tax years beginning before 2021, the CARES Act allows taxpayers to carryback 100% of NOLs to the prior five tax years, effectively delaying for carrybacks the 80% taxable income limitation and carryback prohibition until 2021.

The Act also temporarily liberalizes the treatment of NOL carryforwards. For tax years beginning before 2021, taxpayers can take an NOL deduction equal to 100% of taxable income (rather than the present 80% limit). For tax years beginning after 2021, taxpayers will be eligible for:

  1. A 100% deduction of NOLs arising in tax years before 2018, and
  2. A deduction limited to 80% of taxable income for NOLs arising in tax years after 2017.

The provision also includes special rules for REITS, life insurance companies, and the Code Sec. 965 transition tax. There are also technical corrections to the 2017 Tax Law effective dates for NOL changes.

Deferral of noncorporate taxpayer loss limits. The CARES Act retroactively turns off the excess active business loss limitation rule of the TCJA in Code Sec. 461(l) by deferring its effective date to tax years beginning after December 31, 2020 (rather than December 31, 2017). (Under the rule, active net business losses in excess of $250,000 ($500,000 for joint filers) are disallowed by the 2017 Tax Law and were treated as NOL carryforwards in the following tax year.)

The CARES Act clarifies, in a technical amendment that is retroactive, that an excess loss is treated as part of any net operating loss for the year, but isn’t automatically carried forward to the next year. Another technical amendment clarifies that excess business losses do not include any deduction under Code Sec. 172 (NOL deduction) or Code Sec. 199A (qualified business income deduction).

Still another technical amendment clarifies that business deductions and income don’t include any deductions, gross income or gain attributable to performing services as an employee. And because capital losses of non-corporations cannot offset ordinary income under the NOL rules, capital loss deductions are not taken into account in computing the Code Sec. 461(l) loss and the amount of capital gain taken into account cannot exceed the lesser of capital gain net income from a trade or business or capital gain net income.

Acceleration of corporate AMT liability credit. The 2017 Tax Law repealed the corporate alternative minimum tax (AMT) and allowed corporations to claim outstanding AMT credits subject to certain limits for tax years before 2021, at which time any remaining AMT credit could be claimed as fully-refundable. The CARES Act allows corporations to claim 100% of AMT credits in 2019 as fully-refundable and further provides an election to accelerate the refund to 2018.

Relaxation of business interest deduction limit. The 2017 Tax Law generally limited the amount of business interest allowed as a deduction to 30% of adjusted taxable income (ATI). The CARES Act generally allows businesses, unless they elect otherwise, to increase the interest limitation to 50% of ATI for 2019 and 2020, and to elect to use 2019 ATI in calculating their 2020 limitation. For partnerships, the 30% of ATI limit remains in place for 2019 but is 50% for 2020. However, unless a partner elects otherwise, 50% of any business interest allocated to a partner in 2019 is deductible in 2020 and not subject to the 50% (formerly 30%) ATI limitation. The remaining 50% of excess business interest from 2019 allocated to the partner is subject to the ATI limitations. Partnerships, like other businesses, may elect to use 2019 partnership ATI in calculating their 2020 limitation.

Technical correction to restore faster write-offs for interior building improvements. The CARES Act makes a technical correction to the 2017 Tax Law that retroactively treats

  1. A wide variety of interior, non-load-bearing building improvements (qualified improvement property (QIP)) as eligible for bonus deprecation (and hence a 100% write-off) or for treatment as 15-year MACRS property or
  2. If required to be treated as alternative depreciation system property, as eligible for a write-off over 20 years.

The correction of the error in the 2017 Tax Law restores the eligibility of QIP for bonus depreciation, and in giving QIP 15-year MACRS status, restores 15-year MACRS write-offs for many leasehold, restaurant and retail improvements.

Accelerated payment of credits for required paid sick leave and family leave. The CARES Act authorizes IRS broadly to allow employers an accelerated benefit of the paid sick leave and paid family leave credits allowed by the Families First Coronavirus Response Act by, for example, not requiring deposits of payroll taxes in the amount of credits earned.

Pension funding delay. The CARES Act gives single employer pension plan companies more time to meet their funding obligations by delaying the due date for any contribution otherwise due during 2020 until January 1, 2021. At that time, contributions due earlier will be due with interest. Also, a plan can treat its status for benefit restrictions as of December 31, 2019 as applying throughout 2020.

Certain SBA loan debt forgiveness isn’t taxable. Amounts of Small Business Administration Section 7(a)(36) guaranteed loans that are forgiven under the CARES Act aren’t taxable as discharge of indebtedness income if the forgiven amounts are used for one of several permitted purposes. The loans have to be made during the period beginning on February 15, 2020 and ending on June 30, 2020.

Suspension of certain alcohol excise taxes. The CARES Act suspends alcohol taxes on spirits withdrawn during 2020 from a bonded premises for use in or contained in hand sanitizer produced and distributed in a manner consistent with FDA guidance related to the outbreak of virus SARSCoV- 2 or COVID-19.

Suspension of certain aviation taxes. The CARES Act suspends excise taxes on air transportation of persons and of property and on the excise tax imposed on kerosene used in commercial aviation. The suspension runs from March 28, 2020 to December 31, 2020.

IRS information site. Ongoing information on the IRS and tax legislation response to COVID- 19 can be found at www.irs.gov/coronavirus.

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Families First Coronavirus Response Act. https://www.smecpa.com/families-first-coronavirus-response-act/ https://www.smecpa.com/families-first-coronavirus-response-act/#respond Fri, 20 Mar 2020 16:07:56 +0000 https://www.smecpa.com/?p=1290 As the novel coronavirus (COVID-19) continues to sweep the nation, the “Families First Coronavirus Response Act” (the Act) was approved by Congress and signed into law by the President on March 18, 2020 in an attempt to intended to ease the economic consequences stemming from the novel coronavirus disease (COVID-19) outbreak by providing family and…

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As the novel coronavirus (COVID-19) continues to sweep the nation, the “Families First Coronavirus Response Act” (the Act) was approved by Congress and signed into law by the President on March 18, 2020 in an attempt to intended to ease the economic consequences stemming from the novel coronavirus disease (COVID-19) outbreak by providing family and medical leave, and sick leave, to employees and providing tax credits to employers and self-employees providing the leave during this global pandemic. Several of the Act’s provisions will affect employers navigating the unstable business landscape as well as their employees, who are also impacted by the COVID-19 outbreak. The Act, in part, implements changes to the federal Family and Medical Leave Act establishing a federal emergency paid leave benefits program to provide payments to employees taking unpaid leave due to the COVID-19 outbreak, requires employers to provide paid sick time leave, permits tax credits for amounts paid to employees on leave, and allows for additional funding to state unemployment insurance trust funds.

H.R. 6201 FAMILIES FIRST CORONA VIRUS RESPONSE ACT

The Act takes effect on April 2, 2020 and most provisions will expire on December 31, 2020.

EMERGENCY FAMILY AND MEDICAL LEAVE EXPANSION ACT

Covered Employers:

  • Private-sector employers with fewer than 500 employees
  • Health care providers or emergency responders are excluded
  • Department of Labor will have the authority to exempt employers with less than 50 employees if it would jeopardize the viabilityof the business as a going concern

Eligible Employees

  • Worked for the employer for at least 30 calendar days
  • Includes full-time or part-time

Reasons to Take Leave

  • Qualifying need related to a public health emergency
  • Unable to work (or telework) due to the need to care for a child under the age of 18 if the child’s school, place of care, or child care provider is closed due to a public health emergency (including coronavirus)

Leave Amount

  • Up to 12 weeks
  • First 10 days may consist of unpaid leave
  • Remainder of the leave must be paid

Use of Other Accrued Leave

  • Employees may elect to substitute any accrued vacation leave, personal leave, or medical or sick leave for the initial 10 days of unpaid leave
  • Employer may not require an employee to substitute any such leave  

Salary Continuation

  • Paid for each day the employee is out of work after the initial 10-day period for the remainder of the leave period
  • Paid no less than two-thirds of their regular rate of pay based on the number of hours the employee would otherwise have been scheduled to work
  • Amounts paid to an employee do not have to exceed $200 per day, or $10,000 in the aggregate.

Job Protection

  • Public health emergency leave is job-protected
  • Exemption from this requirement for employers with fewer than 25 employees
    • Position no longer exists due to economic hardship related to Coronavirus
    • Reasonable efforts to restore to equivalent position
    • Reasonable efforts to contact if position becomes available

EMERGENCY PAID SICK LEAVE ACT

Covered Employers

  • Private-sector employers with fewer than 500 employees
  • Certain public agencies employing one or more individuals

Eligible Employees

  • All employees are covered; No other requirements

Reasons to Take Leave

  • Unable to work (or telework) due to the employee
    • being subject to federal, state, or local quarantine or isolation;
    • being told by a health care provider to self-quarantine;
    • having symptoms and seeking a medical diagnosis
    • having to care for an individual subject to a federal, state, or local quarantine or isolation; 
    • having to care for a child of any age if the child’s school, place of care, or child care provider is closed due to the public health emergency.

Leave Amount and Pay

  • Full-time employees – up to 80 hours of emergency paid sick leave
  • Part-time employees – average hours during a 2-week period 
  • For their own care – paid at regular rate of pay for the hours normally scheduled to work 
  • To care for a family member – paid at 2/3 of their regular rate of pay for the hours normally scheduled to work  

Limits

Employee – Paid leave does not have to exceed $511 per day or $5,110 aggregately

Caring for a family member – Paid leave to the employee does not have to exceed $200 per day or $2,000 aggregately

Use with Other Paid Leave – An employer may not require an employee to use other paid leave provided by the employer to the employee before the employee uses emergency paid sick leave.

Notice – Employers must post a notice regarding employee’s rights under the law. The Department of Labor has been tasked with creating a model notice available no later than 7 days after the date of enactment of the Act.

Carry Over – This sick leave cannot be carried over from one year to the next.

TAX CREDITS

For Paid Sick and Paid Family and Medical Leave

Payroll tax credit covers 100% of the wages paid to employees under the Emergency Family and Medical Leave Expansion Act and the Emergency Paid Sick Leave Act

  • Qualified paid sick leave wages are capped at $511 per day ($200 per day if the leave is for caring for a family member or child)
    • Capped at 10 days per employee in each calendar quarter
    • Qualified emergency family leave wages are capped at $200 per day for each individual up to $10,000 total per calendar quarter

Payroll tax credit for those employers that sponsor group health plans may be increased by the amount of “qualified health plan expenses” excluded from an employee’s gross income and that are allocable to qualified sick leave wages or qualified family leave wages in accordance with regulations to be prescribed by the Department of Treasury at a future date. 

EMERGENCY UNEMPLOYMENT INSURANCE STABILZATION ACT OF 2020

Emergency Grants – Available to states to provide additional funding to use in the processing and payment of unemployment insurance benefits. 

Notification – States must require employers to provide notification of potential unemployment insurance eligibility to laid off workers. 

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How to handle the Georgia Department of Labor’s partial claims process https://www.smecpa.com/how-to-handle-the-georgia-department-of-labors-partial-claims-process/ https://www.smecpa.com/how-to-handle-the-georgia-department-of-labors-partial-claims-process/#respond Thu, 19 Mar 2020 17:17:14 +0000 https://www.smecpa.com/?p=1283 On March 18th Governor Brian P. Kemp and the Georgia Department of Labor (GDOL) addressed an increase in the number of partial claims filed as a result of businesses reducing work hours or temporarily closing their doors in light of recent developments regarding COVID-19. The GDOL is mandating that GA employers file partial claims online…

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On March 18th Governor Brian P. Kemp and the Georgia Department of Labor (GDOL) addressed an increase in the number of partial claims filed as a result of businesses reducing work hours or temporarily closing their doors in light of recent developments regarding COVID-19.

The GDOL is mandating that GA employers file partial claims online on behalf of their employees for any week during which an employee (full-time/part-time) works less than their normal hours due to COVID-19. This can result in heavy penalties for employers that don’t meet the requirements including repaying any unemployment claims their employees received.

Filing partial claims results in employees receiving unemployment insurance (UI) benefit payments faster, usually within forty-eight hours for claims filed electronically. Employees for whom a partial claim is filed are not required to report to a GDOL career center, register for employment services, or seek other work. All Georgia employers will share in the cost of unemployment benefits paid to employees temporarily displaced due to COVID-19.

Below is the official press release from the GDOL with links on how to handle the partial claims.

The Georgia Department of Labor (GDOL) has adopted an emergency Rule 300-2-4-0.5 Partial Claims, effective March 16, 2020. The rule mandates all Georgia employers to file partial claims online on behalf of their employees for any week during which an employee (full-time/part-time) works less than full-time due to a partial or total company shutdown caused by the COVID-19 public health emergency. Any employer found to be in violation of this rule will be required to reimburse GDOL for the full amount of unemployment insurance benefits paid to the employee. Download the How Employers File Partial Claims Desk-Aid found on the GDOL Alert Page and follow the step-by-step instructions.

Please continue to monitor our website at gdol.ga.gov for any updates to these guidelines.

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IRS grants postponing tax payment deadlines. https://www.smecpa.com/irs-grants-postponing-tax-payment-deadlines/ https://www.smecpa.com/irs-grants-postponing-tax-payment-deadlines/#respond Wed, 18 Mar 2020 13:57:39 +0000 https://www.smecpa.com/?p=1275 On March 20th Treasury Secretary Steve Mnuchin announced that federal filing and payments for taxes have been extended to July 15th. It is expected that state departments of revenue will follow the Feds by extending the April 15th tax filing deadline; but, at present, this action has not been taken. Remember that this only applies to your federal…

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On March 20th Treasury Secretary Steve Mnuchin announced that federal filing and payments for taxes have been extended to July 15th. It is expected that state departments of revenue will follow the Feds by extending the April 15th tax filing deadline; but, at present, this action has not been taken. Remember that this only applies to your federal taxes. Continue reading for our quick look.

This move was made in response to the existing and anticipated financial impacts of COVID-19. Treasury Secretary Mnuchin said that the move could allow households to hold onto hundreds of billions of dollars for a bit longer than they otherwise could.

Federal:

Quick Look

Filing and Payment deadlines deadline extended to July 15th

Relief Includes estimated tax payments that are due on April 15th

Penalties and interest will begin to accrue on any remaining balance as of July 16th.

Eligible taxpayers include individuals that owe $1 million or less in income tax, and certain corporations, including some small businesses, that owe $10 million or less in income tax. At this point income tax returns or extensions must still be filed by April 15.

The IRS has not yet released details of how the payment extension will work. Look for additional information once it becomes available.

Georgia:

Quick Look

Filing Deadline extended to July 15th


Payment Deadlines extended until July 15th

Georgia DOR Website Posting:

“Due to concerns regarding COVID-19, the DOR is encouraging all taxpayers to conduct their business with the DOR through online services. The DOR offers a number of motor vehicle and tax related services online, without the need of in-person interactions.”

All administrative hearings before the Georgia Office of State Administrative Hearings Judges have been cancelled for March 16 through March 31, 2020. These cancellations are for all hearing locations in every county of the State of Georgia. All hearings will be rescheduled. Statewide Judicial Emergency and order Legislature: General Assembly has suspended its session indefinitely.

South Carolina:

Quick look

Filing deadline extended until July 15th

Payment deadlines extended until July 15th

News release highlights:

The South Carolina Department of Revenue (SCDOR) is offering more time to file returns and pay taxes due April 1, 2020 – June 1, 2020 to assist taxpayers during the COVID-19 outbreak. Tax returns and payments due April 1 – June 1 will now be due June 1, 2020. Penalty and interest will not be charged if payment is made by June 1. This includes South Carolina Individual Income Taxes, Corporate Income Taxes, Sales and Use Tax, Admissions Tax, and other taxes filed and paid with the SCDOR. The SCDOR is automatically applying this tax relief for all applicable returns and payments; you don’t need to take any additional action. The SCDOR encourages taxpayers, some of whom may be working from home, to: • Use our available online services. Visit MyDORWAY, our free online tax system, at MyDORWAY.dor.sc.gov to securely manage your South Carolina taxes from a smartphone or computer. • Help protect yourself and prevent the spread of COVID-19 by calling or emailing us instead of visiting in person. Find the phone number or email address you need at dor.sc.gov/contact. • Consider filing your Individual Income Taxes electronically, which is safer and faster. Visit dor.sc.gov/iit-filing to learn more. After you file, check your refund status online at dor.sc.gov/refund. Visit IRS.gov for federal tax relief information. Visit the SCDOR’s website at dor.sc.gov/emergencies and review SCDOR Information Letter 20-3 for more information. Connect with the SCDOR on Facebook and Twitter for up-to-date news and announcements.

For updates from Georgia DOR visit https://dor.georgia.gov/

South Carolina up-to-date information concerning tax relief for persons and businesses impacted by COVID-19, visit www.dor.sc.gov.

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