Embedded Files
Scam Alert: Government Relief Checks Trigger Latest Coronavirus Scam
BREAKING (March 30, 2020, 4:00pm PT)
Economic impact payments: What you need to know:
The IRS has issued News Release IR-2020-61, answering several questions about the procedures it will follow to issue the advance credit payments. The IRS answers the following questions —
● Who is eligible to receive a payment?
● How will the IRS know where to send my payment?
● What if my direct deposit information has changed?
● What if I don’t normally file a tax return?
● Will I have to file a tax return to receive the payment? How?
● I need to file, so how long will the payments be available?
The IRS wants to use direct deposit for these payments. If a taxpayer’s banking information has changed since filing the return, the IRS plans to develop a web-based portal within the next few weeks for taxpayers to update their information.
The IRS has revised its News Release IR-2020-61 regarding advance credit payments under §2101 of the CARES Act —
(1) The IRS has removed language previously included in the News Release about a web-based portal for filing a “simple” return. Instead, the IRS now says that the web-based portal that it is developing will be used by individuals to provide their banking information;
(2) If the IRS uses the information on Forms SSA-1099 or RRB-1099 to determine the payment, recipients will only receive $1,200 without an addition of $500 for each dependent; and
(3) Individuals without Forms SSA-1099 or RRB-1099 who did not file a 2018 or 2019 return should file returns as soon as possible with direct deposit banking information on the return in order to receive an advance credit payment.
The IRS has published a list of 17 Frequently Asked Questions (FAQs) regarding the Employee Retention Credit allowed under §2301 of the “Coronavirus Aid, Relief, and Economic Security Act” or “CARES Act” (P.L. 116-136). Here’s the link:
https://www.irs.gov/newsroom/faqs-employee-retention-credit-under-the-cares-act
Employee Retention Credit available for many businesses financially impacted by COVID-19: Application Enrollment Currently Open
The Treasury Department and the Internal Revenue Service today launched the Employee Retention Credit, designed to encourage businesses to keep employees on their payroll. The refundable tax credit is 50% of up to $10,000 in wages paid by an eligible employer whose business has been financially impacted by COVID-19.
PROGRAM INFORMATION: https://www.irs.gov/newsroom/irs-employee-retention-credit-available-for-many-businesses-financially-impacted-by-covid-19
APPLICATION FORMS: https://www.irs.gov/forms-pubs/about-form-7200
FAX COMPLETED FORM TO: (855) 248-0552.
PAYCHECK PROTECTION PROGRAM (PPP): Application Enrollment STARTS APRIL 3, 2020 (Starts April 10, 2020, for independent contractors and self-employed individuals). Although the program is open until June 30, 2020, we encourage you to apply as quickly as you can because there is a funding cap and lenders need time to process your loan.
PROGRAM INFORMATION: https://home.treasury.gov/system/files/136/PPP--Fact-Sheet.pdf
APPLICATION FORM: https://home.treasury.gov/system/files/136/Paycheck-Protection-Program-Application-3-30-2020-v3.pdf
You can apply through any existing SBA 7(a) lender or through any federally insured depository institution, federally insured credit union, or Farm Credit System institution that is participating. LOCAL ASSISTANCE & OFFICES: https://www.sba.gov/local-assistance
The Paycheck Protection Program authorizes up to $349 billion in forgivable loans to small businesses to pay their employees during the COVID-19 crisis. All loan terms will be the same for everyone. The loan amounts will be forgiven as long as the loan is used to cover payroll costs, most mortgage interest, rent, and utility costs incurred over the 8-week period after the loan is made; as long as employee and compensation levels are maintained. Payroll costs are capped at $100,000 on an annualized basis for each employee. Due to likely high subscriptions, it is anticipated that not more than 25% of the forgiven amount may be for non-payroll costs. Loan payments will be deferred for 6 months.
COVID-19 Economic Injury Disaster Loan & Loan Advance: Application Enrollment Currently Open
In response to the Coronavirus (COVID-19) pandemic, small business owners in all U.S. states, Washington D.C., and territories are eligible to apply for an Economic Injury Disaster Loan advance of up to $10,000. The SBA's Economic Injury Disaster Loan program provides small businesses with working capital loans of up to $2 million that can provide vital economic support to small businesses to help overcome the temporary loss of revenue they are experiencing.
ONLINE PROGRAM INFORMATION AND APPLICATION: https://covid19relief.sba.gov/#/
The loan advance will provide economic relief to businesses that are currently experiencing a temporary loss of revenue. Funds will be made available within three days of a successful application, and this loan advance will not have to be repaid.
Economic Injury Disaster Loans are also available to residents in declared disaster areas. To view the full list of disaster declarations, click here. To apply for a disaster loan unrelated to COVID-19, click here.
The FBI is warning people that there is a new stimulus check scam circulating. People are receiving text messages, supposedly from Costco, offering "$110 goodies," and other hooks, to get recipients to sign bogus surveys. The information from these surveys can be used to steal your identity, commit financial fraud, or inject malware into your computer. Do not click on these emails and warn your family and clients to avoid them as well.
Here is the press release from the FBI for more information. https://www.ic3.gov/media/2020/200320.aspx
Other cybercriminals are taking advantage of the pandemic to rob you, steal your identity, and compromise your data. Be on the lookout for emails from:
The CDC and other organizations offering links to new info about coronavirus
Charities asking for donations
Airline relief funds
Fake cures and vaccines
Financial relief and stimulus checks
Fake testing kits
Do not lick on links, download documents, or respond to suspicious emails. You can Google the subject line of an email to see if there are reports of it being spam or phishing. There are other signs of phishing and tips to avoid scams on the Federal Trade Commission's consumer information page. https://www.consumer.ftc.gov/articles/how-recognize-and-avoid-phishing-scams
The IRS released a similar warning and instructions for reporting online, phishing, and other scams. Read their message here. https://content.govdelivery.com/accounts/USIRS/bulletins/284881a?reqfrom=share
To get the most accurate information about coronavirus, you can count on www.cdc.gov, www.coronavirus.gov, and https://www.who.int/emergencies/diseases/novel-coronavirus-2019.
Share this information with your family, colleagues, and friends. Falling prey to a scam during this stressful time is a complication that no one should have to deal with.
Broad Overview for Individuals and Businesses
Broad Overview for Individuals and Businesses
Key takeaways
Key takeaways
The federal income tax deadline for filing 2019 tax returns has changed from April 15 to July 15, 2020. The deadline for making 2019 IRA and HSA contributions has also been moved to July 15, 2020.
Required minimum distributions (RMDs) from some retirement accounts for 2020 have been waived.
The 10% early withdrawal penalty will be waived on aggregate distributions of up to $100,000 from certain workplace retirement plans and individual retirement accounts (IRAs) for COVID-19-related purposes. The individual can elect to pay the federal income tax on the distribution over 3 years or has the option to repay the distribution within a 3-year period to an eligible retirement plan.
Recent legislation included several provisions aimed at helping student loan borrowers and students who receive financial aid.
Congress has passed 3 bills aimed at mitigating the economic impact of COVID-19 and putting money into the economy. The most recent is the Coronavirus Aid, Relief, and Economic Security (CARES) Act. At about $2 trillion, it's the largest economic stimulus legislation in American history since the New Deal in the 1930s.
“The CARES Act is Washington’s massive stimulus effort to provide relief for families, individuals, small businesses, and major sectors of our economy impacted by the coronavirus outbreak,” says Jim Febeo, Fidelity Investment’s Head of Federal Government Relations.
“For individuals it makes retirement funds available for emergency spending needs and delays mandatory distributions. It also enables broader use of health savings accounts, and provides help on student debt."
Earlier this month, the Families First Coronavirus Response Act expanded paid sick leave and family leave, strengthened unemployment insurance and food assistance, and enhanced protections for health care workers. It was signed into law by the President on March 18 and takes effect April 2. The funding available for this bill was $3.5 billion.
In early March, the Coronavirus Preparedness and Response Supplemental Appropriations Act was passed, authorizing more than $8 billion in funding for health care research and emergency funding for the Department of Health and Human Services (HHS) and the US Agency for International Development (USAID) in support of domestic and international response efforts respectively.
Here's a broad look at some of the key provisions in recently passed legislation as well as additional changes the federal government has implemented to help individuals.
1. Deadlines have changed
1. Deadlines have changed
The deadline for filing and payment of 2019 federal income taxes has been moved from April 15 to July 15, 2020, by the Internal Revenue Service (IRS).
The IRS confirmed that July 15, 2020, will also be the deadline to make 2019 contributions to IRAs and health savings accounts (HSAs). Deadlines associated with contributions to workplace savings plans are not affected.
2. Direct payments to many Americans
2. Direct payments to many Americans
The CARES Act includes a provision to send most Americans direct payments of $1,200, or $2,400 for joint filers, plus $500 for each child.
The amount of the payments will be reduced for those with higher incomes. For individuals filing taxes as singles, the reduced amount begins at an adjusted gross income (AGI) of $75,000 per year and is completely phased out at $99,000. For joint filers, the reduced amount begins at $150,000 and payment is eliminated at $198,000.
Your AGI will be determined by your 2019 tax filing (or 2018, if 2019 is unavailable).
3. Some retirement account rules have been relaxed
3. Some retirement account rules have been relaxed
The CARES Act offers some help to those with retirement accounts.
Required minimum distributions (RMDs) for 2020 are suspended for certain defined contribution plans and IRAs to help retirement accounts try to recover from stock market losses. This includes the first RMD, which individuals may have delayed from 2019 until April 1, 2020.
Affected, eligible participants in workplace retirement plans and IRA owners can take an aggregate distribution in 2020 of up to $100,000 from all retirement accounts without incurring the usual 10% early withdrawal penalty. The affected participant or IRA owner (including a spouse or dependent) would need to either be diagnosed with SARS-COV-2 or COVID-19 or experiencing adverse financial consequences as a result of an event, including but not limited to quarantine, furlough, lay-offs, reduced work hours, no available childcare, business closing or reduced business hours (self-employed), or other factors determined by the Secretary of the Treasury.
In addition, the income tax on the distributions may be spread evenly over 3 years. Or, the distribution may be repaid to an eligible retirement plan within a 3-year period.
Loan repayments for affected participants in workplace retirement plans may be delayed for one year. These changes will be in effect through 2020.
Note that your plan may offer other withdrawal options.
4. Paid sick and family leave available for more workers
4. Paid sick and family leave available for more workers
Paid leave is required for more employees by the Families First Coronavirus Response Act. These provisions apply to businesses of 500 employees or less. Businesses with 50 employees or less may be exempt from the paid leave provisions.
Eligible employees must be allowed up to 2 weeks (or 80 hours) of paid sick time:
At their regular rate of pay if the employee is unable to work due to quarantine or experiencing COVID-19 symptoms and seeking a medical diagnosis.
Or, at two-thirds their regular rate of pay to care for someone who is ill or to take care of a child whose school has been closed as a result of COVID-19.
The CARES Act caps these payments at $200 or $511 per day or an aggregate payment of $2,000 or $5,110, depending on the reason for leave.
Family leave was expanded under the Families First Coronavirus Response Act. Affected employees are entitled to up to 10 additional weeks of leave with job protection to recover from illness, at two-thirds their regular rate of pay, to care for sick family members, or to care for school-age children whose school has been closed.
The CARES Act capped family leave payments at $200 per day and $10,000 in aggregate.
For more information, visit DOL.gov.
5. Unemployment insurance has been expanded
5. Unemployment insurance has been expanded
The Families First Coronavirus Response Act provides up to $1 billion in aid to the unemployment insurance system.
The CARES Act also expands unemployment insurance. Under the provisions in the bill, more people will qualify for benefits and the amounts of weekly benefits will be increased.
If you are self-employed, there are benefits now available to you. Check with your state unemployment department for more details. See the following:
https://www.cnbc.com/2020/03/18/how-to-file-for-unemployment-due-to-coronavirus.html
https://taxfoundation.org/unemployment-compensation-changes-cares-act/
6. Tax credits for the self-employed may be available
6. Tax credits for the self-employed may be available
The Families First Coronavirus Response Act includes help for people who are self-employed. It includes a tax credit for sick leave and family leave of up to $200 a day or 67% of average daily pay.
It also allows for up to $500 a day for emergency paid sick leave for quarantine or testing for COVID-19, or 100% of average daily pay.
7. Federal student loan payments, interest waived
7. Federal student loan payments, interest waived
On March 13, the president announced that interest would be waived on federal student loans. Legislation codifying that order is retroactive to March 13. Learn more at Studentaid.gov.
The CARES Act suspends payments on federal student loans for 6 months. The act waives any interest on the loans for 6 months as well.
The missed months of payments will be recorded as if the borrower had made a payment for the purposes of loan forgiveness programs.
The act makes emergency financial aid available to some students, up to the amount of the maximum Federal Pell Grant for the year.
Federal work-study payments can be made to qualifying students who have been unable to complete their work under the program due to COVID-19.
Students who are forced to withdraw from school due to the outbreak may have the portion of their loan covering that semester canceled. Requirements to return portions of grants or loan assistance will be waived for students who had to withdraw from school as well.
A provision in the CARES Act provides an income tax exclusion for individuals who get student loan repayment assistance from their employer for a limited period of time.
At the K–12 level, states may apply to waive certain federal education requirements for this school year.
8. More funding available for health care and expanded coverage
8. More funding available for health care and expanded coverage
Testing for COVID-19 must be covered by private health insurance without cost sharing. Any vaccines for COVID-19 must be covered as well without cost sharing.
The CARES Act provides funding for health care providers and suppliers, including extra Medicare payments to hospitals to cover COVID-19 treatment and extra funding to community health centers.
The act expands coverage of telehealth services under Medicare. It also allows high-deductible health plans with health savings accounts (HSAs) to cover telehealth services even if patients have not met their annual deductible.
For health savings accounts, health flexible spending accounts, and health reimbursement arrangements, the act includes over-the-counter (OTC) medicines (without a prescription) and feminine products as qualifying medical expenses that can be reimbursed by these accounts.
9. Above-the-line deduction for charitable contributions
9. Above-the-line deduction for charitable contributions
The CARES Act allows for a $300 above-the-line deduction for charitable contributions made to 501(c)(3) organizations for taxpayers who take the standard deduction or those who itemize. It also relaxes the limit on charitable contributions for itemizers—increasing the amount that can be deducted from 60% of adjusted gross income to 100% of gross income.
These changes go into effect beginning in the 2020 tax year.
The legislation does not provide for enhanced deductions to 509(a)(3) charitable organizations (commonly known as sponsoring organizations) or donor advised funds.
General Information for Individuals & Business Owners
General Information for Individuals & Business Owners
TIMELINE OF PASSAGE OF COVID-19
RELATED LEGISLATION AND ASSOCIATED
TAX LAWS AFFECTED
TIMELINE OF PASSAGE OF COVID-19
RELATED LEGISLATION AND ASSOCIATED
TAX LAWS AFFECTED
Families First Coronavirus Response Act
Families First Coronavirus Response Act
On 3/18/2020, H.R. 6201, the “Families First Coronavirus Response Act” (P.L. 116-127) was enacted. The purpose of this Act is to allow small and midsize employers to claim two new refundable payroll tax credits designed to immediately and fully reimburse them, dollar-for-dollar, for the cost of providing Coronavirus-related leave to their employees.
The tax-related provisions of this Act are in Division G, starting on page 33. They are:
Section - Brief Description
Sec. 7001 – Payroll credit for required sick leave - Tax credit for employers for 100% of qualified sick leave wages paid
Sec. 7002 – Credit for sick leave for certain self-employed individuals - Tax credit against self-employment tax for qualified sick leave equivalent
Sec. 7003 – Payroll credit for required paid family leave - Tax credit for employers for 100% of qualified family leave wages paid
Sec. 7004 – Credit for family leave for certain self-employed individuals - Tax credit against self-employment tax for qualified family leave equivalent
Sec. 7005 – Special rule for tax on employers - Payroll tax exemption for qualified sick leave and qualified family leave
On 3/17/2020, the Joint Committee of Taxation issued its Technical Explanation of these provisions (JCX-10-20).
On 3/20/2020, the IRS issued News Release IR-2020-57, describing the provisions of this Act. Subsequently, on 3/27/2020, the IRS issued Notice 2020-21, stating that the tax credits in Secs. 7001(g) and 7003(g) would apply to wages paid during the period April 1 to December 31, 2020.
The U.S. Department of Labor has addressed 59 questions on its website regarding this Act: https://www.dol.gov/agencies/whd/pandemic/ffcra-questions
Coronavirus Aid, Relief, and Economic Security Act (CARES Act)
Coronavirus Aid, Relief, and Economic Security Act (CARES Act)
On 3/27/2020, H.R. 748, the “Coronavirus Aid, Relief, and Economic Security Act” or “CARES Act” was enacted. It is a massive piece of legislation that is estimated to cost the Federal government $2.2 trillion. The purpose of this Act is to provide relief to employers to keep workers paid and employed.
Sec. 1102 (starting on page 6) authorizes the Small Business Administration (SBA) to guarantee loans made to certain businesses with 500 or less employees to cover employee salaries, paid sick or medical leave, insurance premiums, and mortgage, rent, and utility payments. The covered loan period is 2/15/2020 to 6/30/2020.
Sec. 1106 (starting on page 17) establishes eligibility requirements for forgiveness of the loans made under Sec. 1102. Loan forgiveness is obtained by filing an application with the lender. The loans that are eligible for forgiveness are include amounts spent on payroll costs for an 8‑week period, mortgage interest, rent and utilities. Sec. 1106(i) states that the loan forgiveness is excluded from gross income. There are many special rules and limitations.
Employers who want to obtain loans for these expenses should contact their bank immediately to start the process and to find out which documents that the bank will need (probably financial records and tax returns), because soon, banks will be inundated with requests for these loans.
The tax-related provisions for individuals are in Secs. 2201-2206, starting on page 55. Here’s a brief description:
For Individuals -Brief Description
Sec. 2201 – Recovery rebates - $1,200 ($2,400 MFJ) plus $500 per child, phased out by 5% of AGI over $75,000 single/MFS, $150,000 MFJ, $112,500 HOH, advance rebates to be paid based on 2019 return (if filed), or 2018 return (if 2019 not yet filed)
Sec. 2202 – Retirement plan distributions - No 10% excise tax for up to $100,000 coronavirus-related distributions from retirement plans
Sec. 2203 – RMD waiver - No RMDs required to be taken during 2020 for defined benefit plans, qualified deferred compensation plans and IRAs
Sec. 2204 – Charitable contributions - $300 of cash contributions deductible “above the line” for 2020
Sec. 2205 – Contributions limits - 60% limit on cash contributions suspended for 2020
Sec. 2206 – Student loans - Employer’s payment after 3/26/2020 of up to $5,250 of student loans excluded from income
The tax-related provisions for businesses are in Secs. 2301-2308, starting on page 67, Here’s a brief description:
For Businesses - Brief Description
Sec. 2301 – Employee retention credit - Employer refundable credit against employment taxes for 50% of up to $10,000 qualified wages paid to each employee (many limits and special rules)
Sec. 2302 – Delayed payment of employer payroll taxes - Deposits of employer’s 6.2% share and self-employed individual’s 6.2% share of Social Security tax due after 3/26/2020 will be due 50% by December 31, 2021, and 50% by December 31, 2022
Sec. 2303 – Net operating losses - For 2018 to 2020 years, NOLs may be carried back 5 years and the 80% taxable income limitation is delayed until 2021
Sec. 2304 – Excess business losses - IRC §461(l)(1) limitation on excess business losses is suspended for years before 2021
Sec. 2305 – Corporate credit for prior year minimum tax - Election to take 100% of credit in 2018 or 2019
Sec. 2306 – Limitation on business interest - Increase in limitation from 30% to 50% of taxable income for years 2019 and 2020
Sec. 2307 – Qualified improvement property - Qualified improvement property in IRC §168(e) is classified as 15-year recovery property
Sec. 2308 – Excise tax on hand sanitizer - 2020 exemption for alcohol used to produce hand sanitizer
The Senate has issued a 35-page section-by-section summary of the CARES Act.
A Senate subcommittee has issued a brochure entitled “The Small Business Owner’s Guide to the CARES Act”.
Individual-Specific Information
Individual-Specific Information
The IRS has released an extensive Filing and Payment Deadlines Questions and Answers that answers frequently asked questions related to the relief provided in the Notice 2020-18. See also: https://www.irs.gov/newsroom/tax-day-now-july-15-treasury-irs-extend-filing-deadline-and-federal-tax-payments-regardless-of-amount-owed
Will states follow the federal extension?
It depends, some states have. Forbes has an article tracking the state tax office closings, filing delays and extensions.
How do the payroll credits work?
There is relief for employees and midsize businesses provided under the Families First Coronavirus Response Act (Act). The Act gives businesses with fewer than 500 employees funds to provide employees with up to 80 hours of paid leave, either for the employee’s own health needs or to care for family members. More details can be found in IR-2020-57.
Notice 2020-18 provides that the federal income tax filing due date is automatically extended from April 15, 2020, to July 15, 2020.
Taxpayers can also defer federal income tax payments due on April 15, 2020, to July 15, 2020, without penalties and interest, regardless of the amount owed. Please note, the limitations provided in Notice 2020-17 are no longer applicable.
This deferment applies to all taxpayers, including individuals, trusts and estates, corporations and other non-corporate tax filers as well as those who pay self-employment tax. If your client has already scheduled a payment, at this time the IRS has not provided a way to change the due date. If changes are needed, the only option is to cancel the payment and choose another payment method.
Taxpayers do not need to file any additional forms or call the IRS to qualify for this automatic federal tax filing and payment relief. Individual taxpayers who need additional time to file beyond the July 15 deadline can file an automatic extension to Oct. 15.
This relief is only available for:
Federal income tax payments (including payments of tax on self-employment income) for a 2019 tax return
Federal estimated income tax payments (including payments of tax on self-employment income) due on April 15, 2020, for the 2020 taxable year
The IRS posted its Filing and Payment Deadline Questions and Answers page. These Q&As address the federal filing and payment extension to July 15, and include additional information on the extension to Oct. 15, first quarter estimated tax payments, IRAs and HSAs.
Answers include:
Contributions to IRAs and HSAs have been extended to July 15.
Second quarter 2020 estimated income tax payments are still due on June 15. First quarter 2020 estimated income tax payments are postponed from April 15 to July 15.
The relief does not change the estimated tax requirements or estimated tax penalty for 2019.
When a state orders nonessential businesses to close – are tax offices considered essential or nonessential? This is defined by each state. We recommend closely reading your state’s official stay-at-home order.
State Responses to COVID-19 regarding coordination with Federal extensions
State Responses to COVID-19 regarding coordination with Federal extensions
California Franchise Tax Board COVID-19 Information Page
The FTB has posted the following new FAQs about conformity to various portions of the CARES Act:
Q: Are the payments that individuals receive from the federal government (i.e., $1,200 [$2,400 for individuals filing a joint return] and $500 per qualifying child) under the recently enacted federal CARES Act subject to California income tax?
A: No, these payments are not subject to California income tax.
Q: Is the emergency increase in unemployment compensation benefits (in the amount of $600 per week) that individuals receive under the recently enacted federal CARES Act subject to California income tax?
A: No, these payments are not subject to California income tax.
Q: Are the modifications for net operating losses (NOLs) in the recently enacted federal CARES Act applicable for California income and franchise tax purposes?
A: No, these modifications for NOLs do not apply for California income and franchise tax purposes.
Q: Does California conform to the federal early withdrawal penalty waivers for distributions from qualified retirement accounts under the recently enacted federal CARES Act?
A: Yes, the federal early withdrawal penalty waivers for distributions from qualified retirement accounts under the federal CARES Act also applies for California income tax purposes.
Employer-Specific Information
Employer-Specific Information
Proper Pay and Leave Practices
ADA and Equal Opportunity Employer Guidance During a Pandemic
Pay Replacement For Workers Who Miss Work
Summary of Emergency Leave Law
Employer Layoff Notice Requirements for COVID-19
In-Service Distributions, Hardship Distributions, and Loans from Retirement Plans
Requirements for Layoffs and Reduced Schedules
Department of Labor Guidance on New Leave Law
Mandatory Labor Department Posting For Employers With Under 500 Employees
How to Claim the New Tax Credits
Podcast Episode 50 Topic: Four Things Employer Should Know About COVID-19 Heading Into April
New Guidance from DOL about Paid Sick Leave and Emergency FMLA
Retirement Plan Provisions of CARES Act
New EDD Guidance on Mass Layoffs and Closures
Social Distancing Protocols Now Required For Some
IRS, Treasury & Labor Guidance
Small and midsize employers can begin taking advantage of two new refundable payroll tax credits designed to immediately and fully reimburse them, dollar-for-dollar, for the cost of providing COVID-19-related leave to their employees. This relief to employees and small and midsize businesses is provided under the Families First Coronavirus Response Act (Act).
The act gives businesses with fewer than 500 employees funds to provide employees with up to 80 hours of paid leave, either for the employee’s own health needs or to care for family members. There are two credits available:
Paid sick leave credit
For an employee who is unable to work because of COVID-19 quarantine or self-quarantine or has COVID-19 symptoms and is seeking a medical diagnosis, eligible employers may receive a refundable sick leave credit for sick leave at the employee's regular rate of pay, up to $511 per day and $5,110 in the aggregate, for a total of 10 days (up to 80 hours).
For an employee who is caring for someone with COVID-19, or is caring for a child because the child's school or child care facility is closed, or the child care provider is unavailable due to COVID-19, eligible employers may claim a credit for two-thirds of the employee's regular rate of pay, up to $200 per day and $2,000 in the aggregate, for up to 10 days (up to 80 hours). Eligible employers are entitled to an additional tax credit determined based on costs to maintain health insurance coverage for the eligible employee during the leave period.
Child care leave credit
In addition to the sick leave credit, for an employee who is unable to work because of a need to care for a child whose school or child care facility is closed or whose child care provider is unavailable due to COVID-19, eligible employers may receive a refundable child care leave credit. This credit is equal to two-thirds of the employee's regular pay, capped at $200 per day or $10,000 in the aggregate. Up to 10 weeks of qualifying leave can be counted towards the child care leave credit. Eligible employers are entitled to an additional tax credit determined based on costs to maintain health insurance coverage for the eligible employee during the leave period.
Using the credits
Under guidance that will be released next week, eligible employers who pay qualifying sick or child care leave will be able to retain an amount of the payroll taxes equal to the amount of qualifying sick and child care leave that they paid, rather than deposit them with the IRS.
The payroll taxes that are available for retention include withheld federal income taxes, the employee share of Social Security and Medicare taxes, and the employer share of Social Security and Medicare taxes with respect to all employees.
If there are not sufficient payroll taxes to cover the cost of paid qualified sick and child care leave, employers will be able file a request for an accelerated payment from the IRS. The IRS expects to process these requests in two weeks or less.
KPMG report: Employers providing employee hardship assistance related to coronavirus (COVID-19)
Late-breaking FTB and Department of Labor guidance (03-26-20)
Here are details of the most recent guidance from the California Franchise Tax Board and the Department of Labor.
Canceling an April 15 FTB payment
Taxpayers who scheduled the payment through Web Pay on the FTB's website must go to their MyFTB online account to cancel the payment. If the taxpayer doesn't have a MyFTB account, they must call (916) 845-0353 .
New payments may be scheduled online using Web Pay.
DOL guidance on small employers, employer-paid sick leave, and family leave benefits
The U.S. Department of Labor has issued FAQs on the new mandated employer-paid sick leave and family leave benefits. Highlights from the FAQs include:
The effective date for providing these benefits is April 1, 2020, and applies to employer-paid leave taken between April 1, 2020, and December 31, 2020. It does not apply retroactively; and
The small business exemption for businesses with fewer than 50 employees applies only to child-care related paid sick leave and family leave benefits, and only if paying the benefits would jeopardize the viability of the business's going concern. Currently the DOL is only asking small businesses to retain documentation regarding their qualification for the small business exemption. Nothing should be sent to the DOL at this time.
The FAQs are available at: www.dol.gov/agencies/whd/pandemic/ffcra-questions
The DOL has provided the notice employers must provide to their employees. It is available at:
www.dol.gov/sites/dolgov/files/WHD/posters/FFCRA_Poster_WH1422_Federal.pdf
Valuable Information for Employers (from Paychex)
Valuable Information for Employers (from Paychex)
List Of State & Federal Tax Office Closings, Filing Delays & Extensions Due To Coronavirus
List Of State & Federal Tax Office Closings, Filing Delays & Extensions Due To Coronavirus
The House of Representatives passed the CARES Act on Friday, March 27, 2020
and President Trump has signed it into law. (Updated at 1:45pm 3/27)
The House of Representatives passed the CARES Act on Friday, March 27, 2020
and President Trump has signed it into law. (Updated at 1:45pm 3/27)
Read the Senate Finance Committee Report
President signs stimulus bill (03-27-20)
The President has just signed the Coronavirus Aid, Relief, and Economic Security Act (CARES Act, H.R. 748). In addition to the tax provisions we previously reported, the CARES Act provides for Payroll Protection loans of up to $10 million to COVID-19 impacted businesses. The loans:
Are guaranteed 100% by the Small Business Administration (no personal guarantees or collateral required);
Must be taken out between February 15, 2020, and June 30, 2020;
May be forgiven for amounts used to cover basic operating expenses such as payroll costs, rent and mortgage, and utilities for up to two months from the loan origination date (excluded from COD income); and
Have a maximum maturity rate of 10 years and 4% interest if not forgiven.
Also, in response to the questions we've had about the amounts of the stimulus checks individuals will receive, here is a helpful link to compute the payments:
www.kiplinger.com/tool/taxes/T023-S001-stimulus-check-calculator-2020/index.php
For your reference, here is a list of CARES Act tax provisions:
Tax credit rebates of up to $1,200 per individual and $500 per child that are phased out for taxpayers with AGI over $75,000 ($150,000 MJF and $112,500 HOH) and will be "rapidly advanced;"
Deferral of 50% of an employers' payroll tax deposits for 2020 (with 50% of deferred amount due by December 31, 2021, and 50% due by December 31, 2022);
A refundable employer retention credit equal to 50% of qualified wages against quarterly employment taxes, to offset up to $10,000 of wages paid per employee in 2020;
The reinstatement of NOL carrybacks for the 2018–2020 taxable years, and repeal of the 80% taxable income limitation for the 2018–2020 taxable years;
A TCJA technical correction that classifies qualified improvement property as 15-year recovery period, allowing the bonus depreciation deduction to be claimed for such property retroactive as if it was included in the TCJA at the time of enactment;
Penalty-free withdrawals of tax retirement funds of up to $100,000 (income recognized over a three-year period);
A temporary waiver of RMD requirements in 2020;
Increased individual and corporate charitable contribution deductions for 2020;
The deferral of excess business loss limitations until 2021;
Deferral of an employer's 2020 minimum contributions to its single-employer defined benefit pension plan until January 1, 2021;
An increase in the business interest deduction limitations from 30% to 50% of adjusted taxable income for the 2019 and 2020 taxable year;
An exclusion from income for employer-payments made on employee student loans paid before January 1, 2021;
The acceleration of the corporate credit for prior-year minimum tax liability, allowing 100% of the credit to be claimed in 2019 (2018 at the election of the taxpayer); and
A COD exclusion of small business Payroll Protection loans forgiven under the Act.
The full text of the CARES Act is available at: www.congress.gov/bill/116th-congress/house-bill/748/text
BREAKING (3/30/2020 4:30pm PT)
BREAKING (3/30/2020 4:30pm PT)
Stimulus payments
The payment is an advance payment of a 2020 tax credit;
The maximum credit is $1,200 per individual ($2,400 MFJ) plus $500 per qualifying child under 17 years old;
The credit is phased out by 5% ($5 for every $100 over the limit) for AGIs exceeding:
$150,000 for MFJ — phased out at $198,000 if there are no children;
$112,500 for HOH filers — phased out at $146,500 if the HOH has one child;
$75,000 for all other taxpayers — phased out at $99,000; and
For every child claimed, add an additional $10,000.
For people who have already filed their 2019 tax returns, the IRS will use this information to calculate the payment amount. For those who have not yet filed their return for 2019, the IRS will use information from their 2018 tax filing to calculate the payment. The stimulus payment will be deposited directly into the same banking account reflected on the return filed;
For taxpayers who did not provide direct deposit information, in the coming weeks the Treasury plans to develop a web-based portal for individuals to provide their banking information to the IRS online so that individuals can receive payments immediately as opposed to checks in the mail; and
For individuals who did not file a 2018 or 2019 return, the IRS is developing a simplified process for them to file.
Here is a link to the IRS's FAQs on these payments:
www.irs.gov/newsroom/economic-impact-payments-what-you-need-to-know
Payroll Protection loans
In addition to the tax provisions we previously reported, the CARES Act provides for Payroll Protection loans of up to $10 million to COVID-19 impacted businesses:
The loans are guaranteed 100% by the Small Business Administration (no personal guarantees or collateral required);
Businesses with 500 or fewer employees can borrow 2.5 times their average monthly payroll, up to a maximum of $10 million;
The loans may be forgiven for amounts used to cover basic operating expenses such as payroll costs, rent and mortgage, and utilities for up to eight weeks from the loan origination date;
Loan forgiveness will be reduced by reductions in employee compensation or layoffs of employees over the last year;
The canceled debt will not generate taxable income;
Businesses that take these loans will not qualify for the Employer Retention Credit;
Any loan amount that isn't forgiven has a maximum term of 10 years and a maximum interest rate of 4%; and
At press time, the SBA had not provided information to banks on the loan process, but we expect that to happen soon.
CARES Act Summary
CARES Act Summary
NATP-CARES-Act-Summary-HR748.pdfFrom Intuit/QuickBooks for Employers:
From Intuit/QuickBooks for Employers:
The Small Business Owner's Guide to the CARES Act
The Small Business Owner's Guide to the CARES Act
The_Small_Business_Owner_s_Guide_to_the_CARES_Act.pdfOverview Employer Paid Leave
Requirements and Tax Credit Provisions
Overview Employer Paid Leave
Requirements and Tax Credit Provisions
HR6201OverviewPaidLeave.pdfIRS: Employee Retention Credit available for many businesses financially impacted by COVID-19
IRS: Employee Retention Credit available for many businesses financially impacted by COVID-19
The Treasury Department and the Internal Revenue Service today launched the Employee Retention Credit, designed to encourage businesses to keep employees on their payroll. The refundable tax credit is 50% of up to $10,000 in wages paid by an eligible employer whose business has been financially impacted by COVID-19.
Does my business qualify to receive the Employee Retention Credit?
The credit is available to all employers regardless of size, including tax-exempt organizations. There are only two exceptions: State and local governments and their instrumentalities and small businesses that take small business loans.
Qualifying employers must fall into one of two categories:
The employer's business is fully or partially suspended by government order due to COVID-19 during the calendar quarter.
The employer's gross receipts are below 50% of the comparable quarter in 2019. Once the employer's gross receipts go above 80% of a comparable quarter in 2019, they no longer qualify after the end of that quarter.
These measures are calculated each calendar quarter.
How is the credit calculated?
The amount of the credit is 50% of qualifying wages paid up to $10,000 in total. Wages paid after March 12, 2020, and before Jan. 1, 2021, are eligible for the credit. Wages taken into account are not limited to cash payments, but also include a portion of the cost of employer provided health care.
How do I know which wages qualify?
Qualifying wages are based on the average number of a business's employees in 2019.
Employers with less than 100 employees: If the employer had 100 or fewer employees on average in 2019, the credit is based on wages paid to all employees, regardless if they worked or not. If the employees worked full time and were paid for full time work, the employer still receives the credit.
Employers with more than 100 employees: If the employer had more than 100 employees on average in 2019, then the credit is allowed only for wages paid to employees who did not work during the calendar quarter.
I am an eligible employer. How do I receive my credit?
Employers can be immediately reimbursed for the credit by reducing their required deposits of payroll taxes that have been withheld from employees' wages by the amount of the credit.
Eligible employers will report their total qualified wages and the related health insurance costs for each quarter on their quarterly employment tax returns or Form 941 beginning with the second quarter. If the employer's employment tax deposits are not sufficient to cover the credit, the employer may receive an advance payment from the IRS by submitting Form 7200, Advance Payment of Employer Credits Due to COVID-19.
Eligible employers can also request an advance of the Employee Retention Credit by submitting Form 7200.
Where can I find more information on the Employer Retention Credit and other COVID-19 economic relief efforts?
Updates on the implementation of this credit, Frequently Asked Questions on Tax Credits for Required Paid Leave and other information can be found on the Coronavirus page of IRS.gov.
April 7, 2020: Guidance issued on Paycheck Protection Program loan payroll cost computation (04-07-20)
The Small Business Administration issued FAQs on April 6 in response to demands from banks and borrowers to provide greater clarity as to what information is required for purposes of obtaining a Paycheck Protection Program loan. Many of these FAQs address how a business should determine its payroll costs.
Among other questions answered, the FAQs clarify that:
Businesses should not include payments made to independent contractors in their payroll costs;
The $100,000 per-employee compensation cap only applies to wages and salaries paid. Retirement and health care benefits, and state and local payroll taxes, are added in on top of the $100,000 salary limit for purposes of determining a business's payroll costs with respect to an employee;
An employer may choose between two lookback periods for purposes of determining their average monthly payroll costs and number of employees:
2019; or
The 12-month period prior to the date of application;
Payroll costs are not reduced by taxes imposed on an employee, and are required to be withheld by the employer such as income tax withholding and the employee's share of FICA. However, you do not increase the payroll costs by the payroll tax paid by the employer. You will use gross wages. For example, an employee who earned $4,000 per month in gross wages, from which $500 in federal taxes were withheld, would count as $4,000 in payroll costs. There is no addition for the employer-side federal payroll taxes imposed on the $4,000. (Note: This guidance is contrary to previous guidance, and what was included in the act, so it possible we will see further clarification on this issue.);
If a borrower applied using guidance that had been previously released, they are not required to adjust their applications to reflect these changes. Borrowers and lenders may rely on the laws, rules, and guidance available at the time of the relevant application.
The FAQs are available at:
https://home.treasury.gov/system/files/136/Paycheck-Protection-Program-Frequenty-Asked-Questions.pdf
In addition, the SBA has produced a summary of the affiliation rules that apply to Paycheck Protection Program loans.
The SBA's affiliation summary is available at:
https://home.treasury.gov/system/files/136/Paycheck-Protection-Program-Frequenty-Asked-Questions.pdf
Coronavirus Emergency Loans
Small Business Guide & Checklist
Coronavirus Emergency Loans
Small Business Guide & Checklist
023595_comm_corona_virus_smallbiz_loan_final_revised.pdfCARES Act Update Title I Highlights
CARES Act Update Title I Highlights
CARES Act Title I highlights 3-30-2020.pdfResources for Small Business Owners
Resources for Small Business Owners
COVID-19 and the Fair Labor Standards Act Questions and Answers
What You Should Know About the ADA, the Rehabilitation Act and COVID-19
- Remote Meeting Tools
Zoom — Free (with some limitations)
Webex — Free
MS Teams — Free (nearly fully functional, but time limited)
Google Meet — Free to Gsuite users
Google Hangouts — Must have a Google account
Joint Committee on Taxation Analysis Reports:
Joint Committee on Taxation Analysis Reports:
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