Postponement of the PPP Loan Forgiveness Application
We continue to provide updates to our clients regarding the PPP loan forgiveness application process. We recommend that all PPP loan borrowers continue to wait for further loan program updates from Congress and the SBA before submitting your loan forgiveness application to your bank. As of right now, each PPP loan borrower can utilize a 24-week covered period for payroll costs and other covered expenses. Once the 24-week period is over, the PPP loan borrower has a 10-month loan payment deferment period before the first payment is due and the loan forgiveness application can be submitted anytime during this 10-month period.
The potential changes to the loan forgiveness process include a blanket automatic forgiveness for loans less than $150,000 and possible changes to the taxability of the loan forgiveness to the business. As of right now, if the PPP loan is forgiven by the SBA, the expenses used to obtain the loan forgiveness are not tax deductible to the business, meaning a higher taxable income. This needs to be considered prior to submitting your loan forgiveness application and we urge you to reach out for tax planning if you decide to seek loan forgiveness before year-end.
Most Recent Guidance from the SBA
On October 7th, the SBA released the PPP Loan Forgiveness Application Form 3508S, for business owner’s who’s PPP Loan is less than $50,000. If your bank reaches out for you to complete this application, please contact our office for guidance. We recommend postponing your forgiveness application even if under the $50,000 loan amount.
Details - SBA Form 3508S requires fewer calculations and less documentation for eligible borrowers. Borrowers that use SBA Form 3508S are exempt from reductions in loan forgiveness amounts based on reductions in full-time equivalent (FTE) employees or in salaries or wages. SBA Form 3508S also does not require borrowers to show the calculations used to determine their loan forgiveness amount. However, SBA may request information and documents to review those calculations as part of its loan review process.
Please contact our office if you have any questions regarding the PPP loan forgiveness applications or process.
CPA Partners, LLC
It is hard to believe that telemedicine has been a clinical reality for almost 60 years, if you count from the literally space-age technologies NASA developed to monitor astronauts' health in the 1960s.
Now, telemedicine has both expanded in availability and contracted to a more local level, becoming an important part of many hospitals, home health agencies, private physician practices, as well as our homes. In 2015, according to the American Telemedicine Association, more than 15 million Americans received some type of remote medical care via technologies such as remote monitoring, video conferencing with physicians and smart phone chronic disease management apps. It may be even harder to believe, then, that in those 60 years, the IRS hasn't yet settled on a way to tax telemedicine – a lingering question that exposes the providers exploring it to potential audit and accounting risks.
To date, the IRS has not issued any guidance or rulings regarding telemedicine UBI, specifically. For now, tax-exempt healthcare organizations participating in telemedicine are subject to the IRS rules and principles that apply more broadly to UBI and healthcare activities – some of which, frankly, don't neatly fit, and some of which require careful documentation to avoid triggering UBI status.
Traditionally, the IRS has focused on whether an individual is receiving a healthcare service or an ancillary service. Healthcare services to individuals are considered substantially related to a hospital's exempt purposes. On the other hand, if the service is an ancillary service such as diagnostic lab testing or the provision of pharmaceuticals, then the income is excluded only if the person is a patient of the hospital, and then this is based upon an exception to UBIT for the convenience of the hospital's patients. There are also exceptions for casual sales or services to small hospitals at or below costs.
Interestingly, most of the tax uncertainty of UBI comes not from the definition of "telemedicine" but from the formal definition of "patient." IRS Revenue Ruling 68-376 defines a patient as:
In this current definition, the operative theme appears to be either that the person is or has been physically in the hospital or an affiliate, or that the person is receiving care or treatment by a hospital professional. Therefore, the question becomes whether the person receiving remote care delivered by a hospital physician or hospital professional becomes a patient of the hospital or, more significantly, is the service being provided considered substantially related to the hospital's healthcare mission.
In telemedicine, of course, the entire point is often to deliver care outside the traditional setting.
Given the uncertainty, tax-exempt healthcare organizations must be diligent in documenting how the care provided meets the organization's exempt purpose by:
Another piece of evidence may be whether the malpractice insurance covers the activity.
Further, state-level definitive tax guidance has not been issued in this area. Currently, as the Federal government is doing, states are following traditional rules in regards to UBI. From most states' perspective, if any of the telemedicine activity generates UBI and crosses state lines, the income may require apportionment among the states based on activity in the respective states and the hospital may have to file a tax return in that state. The organization needs to address where the sale of the personal services occurs, where the patient is located, and where the services are being performed. Some states look to where the cost of performance are incurred, and other states look to where the time is spent performing the services in determining if there is nexus and requirements to report items in those states. While the provision of a cyber space consultation may be considered related to exempt purposes, questions could arise as to whether the sale of pharmaceuticals to the out of state patient create UBI and also, whether the sales are subject to sales tax.
The traditional patient and non-patient criteria for determining UBI is dated, both the IRS and the states need to reexamine the definitions of a patient as well as the definition of providing healthcare services.
The IRS has released an advanced version of Announcement 2020-12 clarifying that lenders that make Paycheck Protection Program (PPP) loans that are later forgiven under the “Coronavirus Aid, Relief, and Economic Security Act” (Pub. L. No. 116-136) (CARES Act) should not file information returns or furnish payee statements to report the amount of qualifying forgiveness.
Announcement 2020-12 [PDF 13 KB] explains that lenders should not file information returns or furnish payee statements under section 6050P to report the amount of qualifying PPP loan forgiveness.
Penalty relief may be available
Lean on us for assistance
Secure key documents and make copies
Document valuables and equipment
Employers should check fiduciary bonds
Used the Non-Filers tool after May 5? No action needed.
Didn't use the IRS Non-Filers tool yet? Provide information by September 30.
Other Non-Filers can still get a payment; must act by October 15.
Other important notices involving Economic Impact Payments:
Here are some types of payments taxpayers should check their withholding on:
The Treasury Department and the IRS will send interest payments to about 13.9 million individual taxpayers who timely filed their 2019 federal income tax returns and are receiving refunds.
The interest payments, averaging about $18, will be made to individual taxpayers who filed a 2019 return by this year's July 15 deadline and either received a refund in the past three months or will receive a refund. Most interest payments will be issued separately from tax refunds.
In most cases, taxpayers who received their refund by direct deposit will have their interest payment direct deposited in the same account. About 12 million of these payments will be direct deposited.
Everyone else will receive a check. A notation on the check − saying "INT Amount" − will identify it as a refund interest payment and indicate the interest amount.
By law, these interest payments are taxable and taxpayers who receive them must report the interest on the 2020 federal income tax return they file next year. In January 2021, the IRS will send a Form 1099-INT to anyone who receives interest totaling at least $10.
This provision is different from the long-standing 45-day rule, generally requiring the IRS to add interest to refunds on timely-filed refund claims issued more than 45 days after the return due date.
Instead, this year's COVID-19-related July 15 due date is considered a disaster-related postponement of the filing deadline. Where a disaster-related postponement exists, the IRS is required, by law, to pay interest, calculated from the original April 15 filing deadline, as long as an individual files a 2019 federal income tax return by the postponed deadline − July 15, 2020, in this instance. This refund interest requirement only applies to individual income tax filers − businesses are not eligible.
Interest is paid at the legally prescribed rate that is adjusted quarterly. The rate for the second quarter ending June 30 was 5%, compounded daily. Effective July 1, the rate for the third quarter dropped to 3%, compounded daily.
Where the calculation period spans quarters, a blended rate applies, consisting of the number of days falling in each calendar quarter. No interest will be added to any refund issued before the original April 15 deadline.
Here are this year's scams:
Threatening Impersonator Phone Calls:
Social Media Scams:
EIP or Refund Theft:
Scams targeting non-English speakers:
Unscrupulous Return Preparers:
Offer in Compromise Mills:
Fake Payments with Repayment Demands:
Payroll and HR Scams:
The following are the basic "Security Six" protections that everyone handling sensitive data, should use:
1. Anti-virus software
3. Two-factor authentication
4. Backup software/services
5. Drive encryption
6. Virtual Private Network
Paying by check, money order or cashier's check:
Additional electronic payment options:
Expending amounts for construction of real property
IRS Provides Answers Regarding COVID Related Tax Relief for Qualified Opportunity Funds and Investors
Non-Filers tool on IRS.gov helps millions; special feature remains available through October 15
The Small Business Administration (SBA) released two new interim final rules on the Paycheck Protection Program (PPP). One set covers the requirements for loan forgiveness, confirming and expanding upon the previously released loan forgiveness form and instructions and the other addresses the SBA’s procedures for reviewing applications for loans and loan forgiveness. Key takeaways from both sets of rules are below. The guidance is effective immediately.
Separately, the House and Senate introduced bipartisan bills to amend the PPP. Both bills propose to expand the covered periods in which borrowers can use loan proceeds and qualify for forgiveness, and remove the limit on the amount of non-payroll costs that can be forgiven. The Senate bill would also allow expenses funded with forgiven loan proceeds to be deductible, overriding Notice 2020-32 previously issued by the IRS. While numerous members of the House indicated support for such a provision, the House bill does not include a similar provision. The House is expected to vote on its bill this week, but timing for the Senate is less certain at this time.
Requirements for loan forgiveness
Cash compensation eligible for forgiveness is generally limited to $15,385 per employee over the eight-week covered period in 2020 ($100,000 limit multiplied by (eight-week covered period divided by 52-week year)), however, the interim rule imposes an additional limit on “owner-employees,” being the lesser of $15,385, or 8/52 of 2019 compensation in total, across all businesses. The “across all business” requirement may come as a surprise to many and may serve to further limit the amount of owner compensation eligible for forgiveness.
Unfortunately, the term “owner-employees” is not defined for this purpose. It presumably includes S corporation shareholders in accordance with general tax principles. This additional limitation could render substantial amounts paid by borrowers under previous guidance no longer eligible for forgiveness. It is also unknown whether attribution rules will apply to pull in related-party salaries into a single limitation. Consider a family business taxed as an S corporation. If the business has a sole equity shareholder whose family members are salaried employees, it is unclear whether attribution rules would apply and additionally limit the forgiveness of the amounts paid to the family members.
The rules include new limitations on health insurance for owners. In general, noncash compensation paid to employees, such as retirement and healthcare contributions made on their behalf, is additionally eligible for forgiveness, and these amounts do not count toward the above-mentioned limit on cash compensation.
The interim rule provides these additional amounts cannot increase the compensation cap described above for amounts paid for self-employed individuals, including Schedule C filers and general partners.
However, the interim rule does not discuss S corporation owner-employees for this purpose. It is unclear whether this exclusion reflects a policy position or a drafting error.
Bonuses and hazard pay as well as salaries, wages and commission payments to furloughed employees during the covered period are eligible for loan forgiveness, subject to the $100,000 limit prorated for the covered period.
A full-time equivalent (FTE) employee is defined as one who works 40 hours or more on average each week. The rule provides the methodology for calculating FTEs by dividing the average number of hours paid for each employee per week by 40 and capping the result at 1.0. This echoes the guidance included in the loan forgiveness application. For part-time employees, employers have the choice of computing FTEs by average actual hours during the covered period or they can use a default FTE of 0.5 for each part-time employee regardless of actual hours worked.
Prepayments of eligible costs other than mortgage interest are eligible for forgiveness.
The guidance also addressed documentation requirements for employers regarding reduced headcounts if they attempt to rehire the same employee but the employee rejects the offer. Specifically, in calculating the loan forgiveness amount, a borrower may exclude any reduction in FTE employee headcount that is attributable to an individual employee if:
i. The borrower made a good faith, written offer to rehire such employee (or, if applicable, restore the reduced hours of such employee) during the covered period or the alternative payroll covered period;
ii. The offer was for the same salary or wages and same number of hours as earned by such employee in the last pay period prior to the separation or reduction in hours;
iii. The offer was rejected by such employee;
iv. The borrower has maintained records documenting the offer and its rejection; and
v. The borrower informed the applicable state unemployment insurance office of such employee’s rejected offer of reemployment within 30 days of the employee’s rejection of the offer.
Loan application review procedures
Borrowers are responsible for the accuracy of the PPP forgiveness calculation as well as the supporting loan forgiveness application and documentation.
The SBA may review PPP loans of any size and at any time. Specifically whether:
– The borrower was eligible for the loan, based on the Coronavirus Aid, Relief, and Economic Security (CARES) Act and guidance available at the time the loan was applied for,
– The loan amount was calculated correctly,
– The loan proceeds were used for eligible costs, and
– The borrower is eligible for the amount of loan forgiveness applied for.
Borrowers will have the opportunity to respond to questions posed by the SBA and/or the lender during the loan review process.
Lenders must approve or deny an application for loan forgiveness within 60 days of submission. Borrowers will have an opportunity to appeal a denial of PPP loan forgiveness under soon-to-be-issued guidance.
Borrowers must retain documentation supporting the PPP loan and corresponding forgiveness for six years after the loan is forgiven or repaid in full.
Keep your cadence
Document, document, document
Other PPP resources
Watch out for scams related to Economic Impact Payments
The Department of the Treasury and the Internal Revenue Service have issued final regulations, which can be found here, clarifying the reporting requirements generally applicable to tax-exempt organizations.
This document contains final regulations updating information reporting regulations under section 6033 that are generally applicable to organizations exempt from tax under section 501(a) to reflect statutory amendments and certain grants of reporting relief for tax-exempt organizations required to file an annual Form 990 or 990-EZ information return that have been made since the previous regulations were adopted.
The final regulations reflect statutory amendments and certain grants of reporting relief announced by the Treasury Department and the IRS in prior guidance to help many tax-exempt organizations generally find the reporting requirements in one place.
Among other provisions, the final regulations incorporate the existing exception from having to file an annual return for certain organizations that normally have gross receipts of $50,000 or less. That exception was previously announced in Revenue Procedure 2011-15. The regulations also provide that the requirement to report contributor names and addresses on annual returns generally applies only to returns filed by Section 501(c)(3) organizations and Section 527 political organizations. All tax-exempt organizations must continue to maintain the names and addresses of their substantial contributors in their books and records. This change will have no effect on transparency, as contributor information that is open to public inspection will be unaffected by this regulation.
The final regulations allow tax-exempt organizations to choose to apply the regulations to returns filed after September 6, 2019.
Tax pros can choose from up to 30 webinars beginning in July
View presentations from past forums
WASHINGTON — The Internal Revenue Service today reminds employers affected by COVID-19 about three important new credits available to them.
Employee Retention Credit:
The employee retention credit is 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.
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 who take small business loans.
Qualifying employers must fall into one of two categories:
1. The employer's business is fully or partially suspended by government order due to COVID-19 during the calendar quarter.
2. 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.
Employers will calculate these measures each calendar quarter.
Paid Sick Leave Credit and Family Leave Credit:
The paid sick leave credit is designed to allow business to get a credit for an
employee who is unable to work (including telework) because of Coronavirus
quarantine or self-quarantine or has Coronavirus symptoms and is seeking a medical diagnosis. Those employees are entitled to paid sick leave for up to 10 days (up to 80 hours) at the employee's regular rate of pay up to $511 per day and $5,110 in total.
The employer can also receive the credit for employees who are unable to work due to caring for someone with Coronavirus or caring for a child because the child's school or place of care is closed, or the paid childcare provider is unavailable due to the Coronavirus. Those employees are entitled to paid sick leave for up to two weeks (up to 80 hours) at 2/3 the employee's regular rate of pay or, up to $200 per day and $2,000 in total.
Employees are also entitled to paid family and medical leave equal to 2/3 of the employee's regular pay, up to $200 per day and $10,000 in total. Up to 10 weeks of qualifying leave can be counted towards the family leave 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 are entitled to immediately receive a credit in the full amount of the required sick leave and family leave, plus related health plan expenses and the employer's share of Medicare tax on the leave, for the period of April 1, 2020, through Dec. 31, 2020. The refundable credit is applied against certain employment taxes on wages paid to all employees.
How will employers receive the 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.
Updates and other information can be found on the Coronavirus page of IRS.gov.
WASHINGTON — The Internal Revenue Service today issued proposed regulations that
provide guidance for estates and trusts clarifying that certain deductions of
estates and non-grantor trusts are not miscellaneous itemized deductions.
The Tax Cuts and Jobs Act (TCJA) prohibits individual taxpayers from claiming
miscellaneous itemized deductions for any taxable year beginning after December 31,
2017, and before January 1, 2026.
Specifically, the proposed regulations clarify the following deductions are
allowable in figuring adjusted gross income and are not miscellaneous itemized
• Costs paid or incurred in connection with the administration of the estate or
trust which would not have been incurred otherwise.
• Deductions concerning the personal exemption of an estate or non-grantor trust.
• Deductions for trusts distributing current income.
• Deductions for trusts accumulating income
Finally, the guidance clarifies how to determine the character, amount and manner
for allocating excess deductions that beneficiaries succeeding to the property of a
terminated estate or non-grantor trust may claim on their individual income tax
For more information about this and other TCJA provisions, visit IRS.gov/taxreform.
WASHINGTON — House Democratic leaders are pushing for another round of stimulus payments of up to $1,200 per person in new coronavirus relief legislation that's headed for a vote Friday.
The eligibility criteria in the HEROES Act are similar to those in the first round approved in late March, with some expansions.
The legislation would provide up to $1,200 in payments (or $2,400 for married couples), with an extra $1,200 per dependent up to a maximum of three.
The income thresholds are the same as in the CARES Act, with money for people making up to $99,000 and couples up to $198,000. The amount would start to reduce from $1,200 above thresholds of $75,000 and $150,000, respectively.
House Speaker Nancy Pelosi, D-Calif., said Tuesday that for many Americans, the new direct payments are "necessary for their survival" and that they would serve as a "stimulus to the economy."
The legislation makes all dependents eligible for the extra $1,200, rather than just children younger than 17. That includes households with full-time students younger than 24 and adult dependents. People who are overdue on child support would not lose their payments, which were garnished in the first round, and the money would not be subject to transfer to pay debts.
The legislation would remove the CARES Act's requirement of a Social Security number, meaning immigrants who file returns with a taxpayer identification number (or TIN) could get money.
As under the CARES Act, the direct deposits or checks would be based on 2019 tax returns. For those who haven't filed yet, they would be based on 2018 returns. Seniors who are on Social Security would also get benefits based on information on file, and other non-filers would be able to apply.
The $3 trillion legislation would also include funding for:
• Extending the $600-per-week unemployment benefits in CARES 2 through January.
• Nearly $1 trillion in aid to state and local governments.
• Hazard pay for some essential workers.
• Expanding coronavirus testing, contract tracing and treatment.
• Enhancing tax credits for employers to keep workers on their payrolls.
• Providing full COBRA subsidies for those who lost their employer-provided health care coverage.
• Additional money for the U.S. Postal Service.
• Support to help renters and homeowners make monthly rent, mortgage and utility payments.
The 1,815-page legislation is likely headed for a vote in the Democratic-led House on Friday. But its prospects in the Republican-run Senate are far from certain.
Michael Zona, a spokesman for Senate Finance Committee Chairman Chuck Grassley, R-Iowa, called the overall legislation "DOA in the Senate," although he didn't comment specifically on the stimulus money.
"Sen. Grassley will work with his colleagues on Phase 4 legislation if it becomes necessary," Zona said in an email. "It's too early to say what that legislation might encompass. It would need to address any ongoing problems in an effective manner."
A summary from House Democratic leaders said the cash would act as "cushioning the economic blow of the coronavirus crisis with a second round of more substantial economic impact payments."
The first round of payments provided a lifeline to many people struggling during the pandemic. The new Democratic-led bill comes as the coronavirus continues to ravage the economy with mass shutdowns that have led about 33 million Americans out of work to file for jobless benefits.
Pinellas County has initially identified up to $35 million in emergency relief funds to support the small businesses hardest hit by the COVID-19 pandemic. Funds are available as part of the Coronavirus Aid, Relief, and Economic Security (CARES) Act federal stimulus package.
Pinellas County will provide emergency financial support through the Pinellas CARES Small Business Grant for qualified small businesses that are negatively impacted by the COVID-19 pandemic due to orders to close or limit operations. This program is intended to help offset the significant, temporary loss of revenue to these qualified businesses during this pandemic, and to assist businesses in retaining and paying employees.
The program will offer one-time $5,000 grants to qualifying small businesses to cover expenses such as employee wages, vendor bills and rent. The emergency relief is targeted specifically to help local brick and mortar businesses cover immediate financial needs. Grants are strictly limited to businesses located physically within Pinellas County. Funds can only be used to reimburse the costs of business interruption caused by required closures provided those costs are not paid by insurance or by another federal program.
Regardless of whether a business is or is not eligible for this program, it may still qualify for other existing funding programs. Visit www.pced.org/covid19loans for a list of federal and state programs assisting businesses impacted by the COVID-19 pandemic.
Businesses are eligible for a one-time $5,000 grant from Pinellas County if:
The business occupies commercial space within Pinellas County.
Has at least 1, but no more than 25, full-time equivalent (FTE) employees, including the business owner. The firm can have many more part-time employees as long as the total weekly hours of all employees does not exceed 1,000 (25 FTE x 40-hour work week).
The business has been operating since at least October 1, 2019 and was still in operation on February 29, 2020.
Firm is expected to return to full operations after local and state emergency guidelines during COVID-19 are rescinded.
Eligible business types:
Bars, pubs and nightclubs as described in Governor’s Executive Order 20-68.
Short-term lodging establishments and vacation rental management companies that collect and remit Tourist Development Taxes.
Non-essential businesses covered under Section 5 of the “State of Florida & Pinellas County ‘Safer-at-Home’ Guidance” document.
Places of public and private assembly covered under Section 2 of the “State of Florida & Pinellas County ‘Safer-at-Home’ Guidance” document.
These business types were selected because they were either required to close due to the Governor’s or Pinellas County Board of County Commissioners’ (BCC)’s orders or were severely impacted by those orders, as in the case of food service and lodging establishments. While restaurants may remain open for carryout or delivery, the orders still resulted in a significant loss of employment and revenues. Many restaurants were not able to adapt or retain employees and closed entirely.
The lodging industry depends heavily on Pinellas County’s beaches, museums and attractions – all of which were closed by the orders. Non-essential travel is also restricted by government orders. Hotel occupancy is typically around 90% at this time of year; recent occupancy levels have been as low as 17%.
The Pinellas CARES Small Business Grant is a companion to the grant programs that are currently offered by Pinellas County’s municipal partners. Businesses that have already applied or received funding from municipal grant programs are still eligible for this program. Owners with more than one eligible business may submit an application for each legal entity.
We estimate that approximately 6,500 businesses in Pinellas County would qualify for this grant. There are sufficient funds for each of these firms to receive a $5,000 grant.
Firms with more than 25 full-time equivalent (FTE) employees. Pinellas County has limited funding. Small businesses tend to be in a more precarious financial condition. The County intends to preserve and promote small local businesses as evidenced by the BCC’s implementation of the Small Business Enterprise (SBE) program.
Publicly traded companies. These firms are owned by the stockholders, who may not be local residents and are not involved in the day to day operations of the company.
Home-based businesses. These firms are technically not required to close under the Governor’s or the BCC’s orders. Many could continue to operate within Center for Disease Control (CDC) social distancing guidelines or through online sales or activities. Home-based businesses also tend to have very few employees and do not pay the additional rent or utilities expenses of brick and mortar businesses.
Non-profit organizations. 501(c)(3) organizations are by definition “charitable organizations” and receive funding primarily from private donors and governmental sources. Other 501(c) organizations are involved in lobbying activities and/or are supported primarily by member dues, rather than by sales of products or services.
Firms with unpaid code enforcement liens against them.
Firms with an owner, officer, partner, or principal actor who has a felony or financial mismanagement conviction within the last two years for which he or she is still serving a sentence (including prison, parole, and probation).
Applications will be submitted using a digital online portal.
Applicants will be required to attach supporting documentation to prove their business location, status and employee count, and to demonstrate recent business income and expenses.
Applicants will be required to digitally sign the application and attest, under penalty of perjury, that all information submitted is truthful.
Completing the application should take approximately 10-15 minutes, if the applicant has the necessary documentation at hand.
April 28 to May 3, 2020: Program outreach and education.
May 4 to June 1, 2020: Application portal open for submissions from eligible Pinellas County small businesses.
WASHINGTON - In the second big wave of stimulus payments, the IRS will send money over the next few days to people who recently provided their direct-deposit information.
These payments will include tax filers who successfully used the Internal Revenue Service website's "Get My Payment" tool to add bank information by midday on April 22, according to the IRS and people who don't file tax returns but instead receive Social Security or Social Security disability benefits, according to the Treasury Department.
The payments most likely will follow the pattern that occurred when the government sent the first round of direct deposits two weeks ago. Some people saw the money in their accounts within hours. Nearly all the payments had arrived 3-5 business days after noitce. This time around, that would mean payments arriving by April 29.
The IRS hasn't released amounts, but this round of payments will put the $292 billion program of one-time payments -- $1,200 per adult and $500 per child -- well beyond its halfway point. As of April 17, the IRS had sent out 88 million payments totaling $158 billion, according to data released Friday.
People who receive Supplemental Security Income or veterans benefits and don't file tax returns should get their payments by early May.
That is all much faster than the pace of payments for the previous round of stimulus checks in 2008.
"The IRS, Treasury and partner agencies are working nonstop to get these payments out in record time to Americans who need them," Chuck Rettig, IRS commissioner, said in a statement Friday.
The rest of the money may be delivered more slowly. Those who can give the IRS their direct-deposit information will place themselves in future rounds of electronic payments. The IRS is expected to gather the data each Wednesday and send it the next day to the Bureau of the Fiscal Service, the office that makes payments, according to Jesse Solis, a spokesman for Republicans on the House Ways and Means Committee. The payments would then reach individuals no later than the following Wednesday.
But those who receive paper checks could wait for up to several months, because the government's check-printing capacity is limited to about 5 million a week or a bit more.
Some payments may be made on debit cards, according to the Treasury. People who have questions will have trouble reaching the IRS, which is urging people not to call and is warning taxpayers that it isn't opening mail right now.
Those who are still waiting for the payments have complained about error messages on the IRS website, problems with returns prepared by tax-preparation companies, payments to deceased individuals and missing money for children.
The IRS said it is aware of those problems and is trying to address them. Some taxpayers who had had trouble with the IRS website said Friday that it is now working for them.
$310 billion increase (total of $659 billion) for Paycheck Protection Program
• Sets aside the following amounts:
o $30 billion for loans made by Insured Depository Institutions and Credit Unions that have assets between $10 billion and $50 billion; and
o $30 billion for loans made by Community Financial Institutions, Small Insured
Depository Institutions, and Credit Unions with assets less than $10 billion
• No changes to eligibility for the PPP (No c(6) fix)
$10 billion increase (total of $20 billion) for EIDL Grants and an additional $50 billion to
support EIDL Loans
• Allows agricultural enterprises as defined by section 18(b) of the Small Business Act (15
U.S.C. 647(b)) with not more than 500 employees to receive EIDL grants and loans.
$75 billion increase (total of $175 billion) for reimbursement to hospitals and healthcare
• Same language as the CARES Act
$25 billion for COVID-19 tests
• Covers expenses to research, develop, validate, manufacture, purchase, administer, and
• $11 billion for states and localities and includes ability to cover cost of testing for
• $1 billion for CDC for contact tracing
PINELLAS PARK, FL — The City of Pinellas Park is assisting small businesses that have been negatively impacted by the coronavirus.
To ensure the resiliency of local businesses and assist in job retention, the City of Pinellas Park established a Small Business Relief Fund to provide grants to eligible small businesses for working capital.
Applications are now being accepted, and city staff members are taking questions regarding the application process.
Financial assistance, in the form of grants (not loans), in the amount of$2,500 may be available. These grants will be awarded to eligible, qualified small businesses based on the availability of funds, program guidelines and the submission of all required information and supporting documentation.
Assistance for completing the application is available by contacting Amanda Conte with the Economic Development Team at 727-369-5619.
Hard copies of the application are available at the outside pickup box at the Technical Services Building and can be dropped off in the outside drop box. Hard copies will have a longer process period.
The funding for this program is limited, so applications will be processed on a first-come, first-served basis and will close once funds are depleted.
Senate to convene; House could act as soon as Thursday, April 23rd.
The White House and Congress have agreed on a new pandemic relief plan providing funds for a tapped-out small business aid program and aid for coronavirus testing and overwhelmed hospitals. President Donald Trump said he’d sign the measure and begin discussions on a next round of stimulus.
Senate Minority Leader Chuck Schumer and House Minority Leader Kevin McCarthy confirmed the agreement.
The Senate is scheduled to meet at 4 p.m. Tuesday for a pro forma session, and the measure could be approved then if text is completed and all senators agree to approve it by unanimous consent. If that happens, a House vote as soon as Thursday is expected, House Majority Leader Steny Hoyer announced early Tuesday.
“We do have a deal, and I believe we will pass it this afternoon at 4 p.m.,” Schumer said on CNN. “They are still dotting the i’s and crossing the t’s, but every major issue was resolved.”
McCarthy, appearing later on Fox News, said, “There is a deal that is done.”
Trump in a tweet urged Congress to approve the package, adding, “After I sign this Bill, we will begin discussions on the next Legislative Initiative with fiscal relief to State/Local Governments for lost revenues” and other spending.
The new package would replenish the Paycheck Protection Program for small businesses, which was part of the $2 trillion stimulus approved late last month and ran out of money last week. Passage would allow the government to take new applicants for the program, which provides forgivable loans to small business that keep employees on the payroll for eight weeks.
The basic outline of the plan was announced Sunday: In addition to the PPP funding, it was to include $75 billion for hospitals, with a significant portion aimed at those in rural areas; and $25 billion for virus testing.
The Paycheck Protection Program (PPP) funds have been exhausted. In less than two weeks, $349 billion has been claimed by around 1.6 million small business owners. While that may seem like a lot, 1.6 million is a mere 6% of America’s small businesses. This means 94% of small business owners, many of whom have applications pending with lenders, have been left to fend for themselves.
There has been a lot to learn over the past two weeks as a nation, as an industry, and as business owners. It’s important to take a closer look at the Paycheck Protection Program, and most importantly, what needs to be done next.
From the get-go, this program was ambitious. Financial institutions, small business owners and government agencies alike knew there would be challenges, delays and failures. But with less than a week’s notice (and fewer than 12 hours to build the final application) financial institutions around the country created some semblance of a formal process and began accepting applications.
To put this into perspective, in all of 2019, the SBA processed 60,000 loans. Somehow, that was accomplished in less than 14 days.
It became apparent fairly early on in the program’s launch that many segments of small business owners may find themselves with nowhere to turn. Big banks, if they participated in the program at all, prioritized their customers first. Small business owners without a prior relationship with an SBA-approved lender began to feel left in the cold. Many of these businesses turned to online marketplaces and non-bank SBA lenders.
For the program as a whole, the average PPP loan size was just under $240,000. For business owners who came to fintech lenders, the average was just over $82,000—one third the national average. This is due to the fact that fintech lenders’ super power is processing smaller loan amounts at a higher volume. Community banks, on the other hand, specialize in processing large amounts at a lower volume; this is not what Main Street needs right now.
The fact that fintech and non-bank lenders have been approved to participate in the distribution of PPP loans will make a world of difference if and when more funds are appropriated. Small businesses would have benefited more had these lenders been approved earlier in the process (most of them weren’t approved until the money had actually run out), but they can take heart knowing that more high-tech options will be available in the next phase.
In addition, the SBA didn’t approve every FDIC bank and credit union—only those that were SBA-licensed lenders.
Another problem that plagued many financial institutions around the country was getting “pristine” applications to submit to the SBA. Ever-changing requirements led to many business owners’ applications bouncing back from the SBA. Most lenders found out early on that the PDF application that was released by Treasury was missing a few important data points (date of birth, business start date, and 6-digit NAICS industry code) that were needed to submit the application through E-Tran.
The rules also changed days into the launch of the program about whether a business owner could submit an application to more than one financial institution. This created a lot of confusion and trepidation for business owners who wanted to ensure they followed the guidelines to a tee, while also ensuring they secured a place in line with the fastest-moving loan processor.
What Comes Next?
The priority now is Congress approving additional PPP funds. The increase is already in discussion and has bi-partisan support to some degree, but it is time to get it passed and get these funds into the hands of the nation’s small business owners.
Until then, financial institutions are preparing for the second wave of approvals. Ideally, the SBA will also approve all banks, credit unions, and legitimate fintech lenders to participate in this next round so that those small business customers that were placed at a disadvantage in the first round will become the priority in round two. With SBA’s early E-Tran problem resolved, I am confident the next wave of capital distribution will be much faster. Business owners who did not get funded in the first round should work now to ensure their applications are in pristine condition.
You May Need: Your 2019 return, if filed, and your 2018 return
This application will give you information about: Your payment status, your payment type, and whether we need more information from you, including bank account information
Use the following link from the IRS to view your payment; Get My Payment
Didn't File a Return in 2018 or 2019?
If you have a filing requirement and have not filed a tax return for 2018 or 2019, you must file a 2019 tax return to receive the payment.
If you are not required to file a 2018 or 2019 tax return, visit Non-Filers: Enter Payment Info Here.
April 10th 2020 was the first day independent contractors and self-employed individuals can apply for the $349 billion Paycheck Protection Program. Although the program emphasizes keeping workers on payroll, it is open to the nearly 26 million solo entrepreneurs in the U.S. who pay themselves by distributions, too. It gives small businesses access to forgivable loans to cover payroll or wages they pay themselves over the eight weeks following the signing date.
Application – Contact your local banker to request their application form and required document list
Eligibility – Must have begun operations prior to February 15, 2020
Cost Covered – Mortgage (rental office lease & utilities – for self-employed individuals that have a home office, business use of home can be covered) rent, office lease, utilities, payroll costs (if applicable) and net self-employment earnings
Documentation Required – 2019 tax return, including Schedule C. and/or Schedule 1.
If your 2019 tax return is not complete, attach the 2019 financial statements along with a 2018 tax return.
All 2019 Form 1099-MISC.
2019 payroll tax forms 940/941 (if you pay employees)
Any other documents that can
Loan forgiveness –8 weeks following receipt of funds. You must spend 75% on payroll costs, remaining 25% must be spent on business portion (home office calculation) of mortgage, rent and utilities.
Loan Amount - Ask your banker to provide a template to calculate loan amount, below is the calculation:
Without Employees - 2.5 times your average monthly payroll costs – Take the net –self-employment income from Schedule C, Line 31, (not exceeding $100,000) – divide by 12 months, and multiply by 2.5 to obtain loan amount
With Employees - Take the net –self-employment income from Schedule C, Line 31, add back employee wages, employer health insurance costs for employees, employee retirement plan contribution for employees (Not to exceed $100,00) Divide the net total by 12, and times by 2.5 to obtain loan amount
The first of the Economic Impact Payments promised to American taxpayers were direct deposited on Saturday, the IRS announced. The agency promised more payments would come "very soon."
"We know many people are anxious to get their payments; we'll continue issuing them as fast as we can," according to a statement on Twitter.
"Anxious" likely doesn't begin to cover it for the estimated 17 million Americans who filed for unemployment benefits over the past month. Here are some of the FAQs about the stimulus package;
1: What do I have to do to receive my rebate?
For most Americans, nothing. The IRS will use bank account information from tax filings to direct deposit stimulus checks. If you need to update your information, you should be able to do so with the "Get My Payment" web application.
2. How does the government determine how much I’ll get?
The government will base the amount you receive on the adjusted gross income, or your income minus certain deductions, that you reported on your most recent taxes. If you haven’t filed your 2019 taxes yet, they’ll look at what you reported for 2018.
Individuals who earn up to $75,000 a year will be eligible for a one-time maximum relief payment of $1,200. If your salary is more than $75,000 but less than $99,000, you’re eligible for a reduced payment. The government will base the amount you receive on a sliding scale, with the amount falling by $5 for every $100 in income above $75,000.
3. Does the amount change if I’m married?
If you’re married and filing jointly, you’re eligible for a $2,400 check, as long as your adjusted gross income is less than $150,000 a year. If you and your partner earn more than $150,000 but less than $198,000, you’re still eligible for a reduced payment based on the same sliding scale, which subtracts $5 for every $100 in income you earn over that $150,000 threshold.
4. If I’m a parent, do I get more money?
If you’re a parent, you may also receive up to an additional $500 per child, no matter your filing status. To qualify, your child must meet the same eligibility guidelines for the child tax credit.
If you’re a single parent, which usually means you file your taxes as a “head of household,” you’re eligible for the full $1,200 check, as long as you earn less than $112,500 a year. If you make more than $112,500 but less than $136,500, your check will be reduced using the same sliding scale.
5. Do I qualify if I don’t have an income?
If you’re retired or if you’re disabled, you’re still eligible to receive that $1,200 check, as long as your Social Security benefit income doesn’t exceed the individual limit.
Here’s how you’ll get paid
If you set up direct deposit with the IRS, the government will send your relief payment to the bank account they have on file, meaning you should receive the funds more quickly.
If you don’t have direct deposit set up, your check will be sent to you in the mail.
Donald Trump’s top adviser on coronavirus testing said that by May the U.S. will be in the “ballpark” of the diagnostic capacity it needs, should the president decide to recommend parts of the country relax economy-crushing social distancing practices.
Admiral Brett Giroir said in an interview Saturday the U.S. is working on four forms of diagnostics it needs to reopen the economy: widespread surveillance to catch new flare-ups; testing of people who have specific symptoms; contact-tracing for confirmed cases; and antibody testing to know who’s recovered from the virus, which he said is weeks away.
“By May we’ll have a lot more testing than we do now,” Giroir said. “By May, we certainly will be in the ballpark. Whether we are exactly there depends on some factors, including how much is circulating and where regionally this falls out. That is the correct answer, I can’t give you a yes or no.”
Trump tapped Giroir, an assistant secretary at the Department of Health and Human Services, to accelerate U.S. testing for the virus last month. The government’s delays in fielding a functional test in January and February prevented containment of the outbreak when it first erupted, leaving public health authorities all but blind to the spread of the virus across the country for weeks.
While the U.S. has now tested more than 2.2 million people for the virus, fewer than 100,000 nationwide had been tested by March 19, less than a week after Giroir was appointed, according to the Covid-19 Tracking Project.
Anthony Fauci, director of the National Institute for Allergy and Infectious Diseases, who serves on Trump’s coronavirus task force, said last month that the shortage of testing was a “failing.”
The U.S. has now surpassed Italy in total deaths from the virus, making it the global epicenter. Even so, there are signs of optimism in hot spots such as New York that have Trump eyeing an easing of measures that have hundreds of millions of Americans in near-lockdown. Giroir said testing is ramping up and didn’t rule out a May reopening.
Testing is one factor as Trump weighs the “biggest decision” of his life -- when to begin loosening economically punishing stay-at-home orders that have slowed the virus’s spread.
The president, who has said he won’t let the “cure” for the coronavirus pandemic be worse than the problem itself, said Friday he’ll announce an “opening our country” council on Tuesday to guide any reopening.
Trump is anxious to reopen “at the earliest responsible moment,” Vice President Mike Pence has said. Hopes to return American life to normal by Easter Sunday were abandoned on March 30 on the advice of Trump’s infectious disease experts. The current advisory runs until the end of this month, setting up a momentous decision for May 1.
The president has touted total testing numbers as a mark of success, but shortages of Covid-19 tests remain a problem.
Trump’s health secretary appointed Giroir, who serves as an assistant secretary for health, on March 13 to marshal more widespread testing capacity. Testing has so far been aimed at particular groups, such as health care workers and nursing home residents, who are among the most at risk from the virus.
Minorities at Risk
Giroir said the administration is discussing adding minority groups to the priority list, as they’re more likely to have conditions that raise the chances of the virus being fatal. That trend has been seen in cities including Chicago, Detroit, New Orleans and Washington D.C.
“We are considering expanding that group. That’s an active discussion,” he said. It’s especially so because some minorities may not know they have health conditions that put them at higher risk, he added.
“My opinion is we probably need to be more explicit about minorities being a high priority, because they may not know they have hypertension or diabetes or other things,” he said.
Giroir described the wide range of testing that would help track the disease’s spread if social distancing guidelines are rolled back in some or all of the country.
“We are going through, test by test, item by item, test-tube by test-tube, swab by swab, distribution mechanism by distribution mechanism, statewide, nationwide, globally,” he said.
The first type of necessary testing is baseline surveillance, which he likened to a radar system, “to see what’s circulating where.” This would require hundreds of thousands of tests monthly, including of people with no symptoms.
A second batch will be testing people with symptoms. this would require millions of tests per month, because you want five or ten tests conducted for every positive one, he said. “Somewhere between 10 and 20% is probably a sweet-spot number to know that you’re oversampling the population,” Giroir said, referring to test positivity rate.
Authorities will also need to do contract-trace testing -- on average, testing five people per confirmed case.
In total, “you’re talking about millions of tests per month -- more than we’re doing now, particularly when you open up the country and have active surveillance and active track-and-trace, but certainly within the realm of what we believe is going to be industrially possible,” he said.
The U.S. is also racing to develop antibody testing, with laboratory tests ongoing at the U.S. Centers for Disease Control and Prevention. The goal is a finger-stick blood test that will signal who has had the virus. “That will be available in the course of weeks,” Giroir said.
“Once we are, this will give some information about who has had the virus and is presumably immune,” he said, cautioning: “Just having an antibody does not absolutely guarantee that you’re immune to getting this again.”
Pence has touted the looming availability of the antibody test. “When validated, we’re confident that the production will scale up to tens of millions of tests very quickly,” Trump said Friday.
Trump has taken particular interest in a new rapid test by Abbott Laboratories, which delivers results in as little as five minutes. The president took an Abbott test himself.
The company, which unveiled the device in late March, already has 18,000 toaster-sized testing machines in use and is shipping 50,000 tests a day. “We expect the production of that to double,” Giroir said.
‘Test is Not a Test’
The U.S. has about 200 higher-volume m2000 machines, according to Abbott spokesman John Koval, and has shipped out a million tests. Trump’s administration has grumbled about health facilities not using that platform enough. Giroir said Saturday they hope to triple usage of that platform in May to 60% from 20% now.
Coordination is complicated, he said, with a range of tests and different needs in different regions. “A test is not a test is not a test,” he said. “The picture is much more available now. I think we know exactly where the industrial production is, the exact roadblocks to many.”
The U.S. continues to have spot shortages of swabs, the small sticks used to collect medical samples, including for Covid-19 testing. This week it will receive a shipment of 1.75 million swabs to distribute, Giroir said. “We are making sure that the public health labs are completely flush in swabs, we are making sure that the community based testing sites are flush in swabs,” he said.
There are other hurdles to reopening. Pence has stressed the need to see major communities coming down off their caseload peaks, as well as the development of therapeutics and the issuance of guidelines for businesses to open. CDC Director Robert Redfield has said the U.S. will also need to convince Americans that it’s safe to begin to ease restrictions.
The U.S. is, in effect, signaling a targeted approach in lieu of widespread, across-the-board testing for anyone that wants it.
“That is physically impossible and it’s a poor strategy, because testing negative one day doesn’t mean you wouldn’t be positive the next day,” Giroir said. “So, testing everyone is not a strategy.”
Treasury, IRS launch new tool to help non-filers register for Economic Impact Payments
To help millions of people, the Treasury Department and the Internal Revenue Service launched a new web tool allowing quick registration for Economic Impact Payments for those who don’t normally file a tax return.
The non-filer tool, developed in partnership between the IRS and the Free File Alliance, provides a free and easy option designed for people who don’t have a return filing obligation, including those with too little income to file. The feature is available only on IRS.gov, and users should look for Non-filers: Enter Payment Info Here to take them directly to the tool.
“People who don’t have a return filing obligation can use this tool to give us basic information so they can receive their Economic Impact Payments as soon as possible,” said IRS Commissioner Chuck Rettig. “The IRS and Free File Alliance have been working around the clock to deliver this new tool to help people.”
The IRS reminds taxpayers that Economic Impact Payments will be distributed automatically to most people starting next week. Eligible taxpayers who filed tax returns for 2019 or 2018 will receive the payments automatically. Automatic payments will also go in the near future to those receiving Social Security retirement or disability benefits and Railroad Retirement benefits.
How do I use the Non-Filers: Enter Payment Info tool?
For those who don’t normally file a tax return, the process is simple and only takes a few minutes to complete. First, visit IRS.gov, and look for “Non-Filers: Enter Payment Info Here.” Then provide basic information including Social Security number, name, address, and dependents. The IRS will use this information to confirm eligibility and calculate and send an Economic Impact Payment. Using the tool to get your payment will not result in any taxes being owed. Entering bank or financial account information will allow the IRS to deposit your payment directly in your account. Otherwise, your payment will be mailed to you.
“Non-Filers: Enter Payment Info” is secure, and the information entered will be safe. The tool is based on Free File Fillable Forms, part of the Free File Alliance’s offerings of free products on IRS.gov.
Who should use the Non-Filers tool?
This new tool is designed for people who did not file a tax return for 2018 or 2019 and who don’t receive Social Security retirement or disability benefits or Railroad Retirement benefits. Others who should consider the Non-Filers tool as an option, include:
Lower income: Among those who could use Non-Filers: Enter Payment Info tool are those who haven’t filed a 2018 or 2019 return because they are under the normal income limits for filing a tax return. This may include single filers who made under $12,200 and married couples making less than $24,400 in 2019.
Veterans beneficiaries and Supplemental Security Income (SSI) recipients: The IRS continues to explore ways to see if Economic Impact Payments can be made automatically to SSI recipients and those who receive veterans disability compensation, pension or survivor benefits from the Department of Veterans Affairs and who did not file a tax return for the 2018 or 2019 tax years. People in these groups can either use Non-Filers: Enter Payment Info option now or wait as the IRS continues to review automatic payment options to simplify delivery for these groups.
Social Security, SSDI and Railroad Retirement beneficiaries with qualifying dependents: These groups will automatically receive $1,200 Economic Impact Payments. People in this group who have qualifying children under age 17 may use Non-Filers: Enter Payment Info to claim the $500 payment per child.
Students and others: If someone else claimed you on their tax return, you will not be eligible for the Economic Impact Payment or using the Non-Filer tool.
Coming next week: Automatic payments begin
Eligible taxpayers who filed tax returns for either 2019 or 2018 and chose direct deposit of their refund will automatically receive an Economic Impact Payment of up to $1,200 for individuals or $2,400 for married couples and $500 for each qualifying child. Individuals who receive Social Security retirement or disability benefits, SSDI or who receive Railroad Retirement benefits but did not file a return for 2019 or 2018 will automatically receive a payment in the near future.
Coming next week: Get My Payment shows Economic Impact Payment date, helps with direct deposit
To help everyone check on the status of their payments, the IRS is building a second new tool expected to be available for use by April 17. Get My Payment will provide people with the status of their payment, including the date their payment is scheduled to be deposited into their bank account or mailed to them.
An additional feature on Get My Payment will allow eligible people a chance to provide their bank account information so they can receive their payment more quickly rather than waiting for a paper check. This feature will be unavailable if the Economic Impact Payment has already been scheduled for delivery.
More Information on Economic Impact Payments
The IRS will post additional updates on IRS.gov/coronavirus on these and other issues.
Americans have received conflicting information on when they will receive stimulus checks, but there’s good news: Checks will be hitting their bank accounts soon.
The government is prioritizing the first few waves of payments in the coming weeks toward low-income Americans and Social Security beneficiaries, Greene-Lewis says, the first wave of $1,200 stimulus payments is on track to be paid the week of April 13.
“Direct deposit is the quickest way that people will receive their money,” Greene-Lewis says. “Then the IRS will work on issuing the paper checks.”
Treasury Secretary Steven Mnuchin said on April 2 the first stimulus payments would arrive in some taxpayers’ accounts via direct deposit within two weeks. Then Larry Kudlow, senior economic adviser, said checks could go out this week or next.
About 80% of Americans are eligible to receive a stimulus payment, according to the IRS. Cash will be distributed by the agency, so Americans who have received prior tax refunds via direct deposit will get rebate checks faster than those waiting on paper checks. The IRS is expected to start sending paper checks on April 24.
Most U.S. adults with a Social Security number will receive a payment, as long as they aren’t claimed as dependents by someone else. If you don’t have direct deposit, a check will be mailed to the address on file.
If you haven’t set up direct deposit with the IRS, you can register through an online portal the agency expects to open soon. If your address has changed, you can notify the IRS by mailing a 8822 change of address form or call the IRS to report your new address. It may take time to process change of address forms in the next few weeks, so experts suggest calling.
How do I get relief money?
The emergency stimulus checks could be as much as $1,200 per person, $2,400 for married couples filing taxes jointly and $500 per dependent child.
Income amounts for the payments made this year are based on 2019 tax returns, or 2018 tax returns for people who haven’t filed their 2019 return yet.
Those who are eligible for relief payments don’t have to do anything to get it, and if they filed a 2018 or 2019 tax return with direct deposit information on it, the money will be deposited there when the IRS issues payments.
Do Social Security recipients need to file a tax return?
Social Security income recipients don’t need to file a return to get their stimulus payment. It will be calculated based on information from their SSA-1099 Social Security Benefit Statement for 2019 or RRB-1099 Social Security Equivalent Benefit Statement and deposited by the IRS.
Low-income Americans on Social Security who don’t file a return are still eligible, says Dina Pyron, financial services partner and global TaxChat leader at Ernst & Young. As long as they receive a SSA-1099 form, the IRS knows where to find them since they have their address or pay them the way they receive Social Security.
What if I didn't earn enough to file a return?
There are as many as 10 million Americans who aren’t required to file a tax return. To be sure, low income families without a bank account will likely wait longer for their stimulus money. While only 6% of people in the U.S. don’t have a bank account, according to data from U.S. Financial Health Pulse, those who make less than $30,000 a year have an unbanked rate of 17%, or about 12 million people.
“Once again, the greatest burdens will be shouldered by the most vulnerable among us, when instead we should be doing everything to give them a leg up,” Jennifer Tescher, president and CEO of Financial Health Network, a non-profit authority on consumer financial health, said in a note.
20 most frequently asked questions on tax filing and payment relief.
Q1: Due to office shutdowns in major cities, taxpayers and tax preparers may not timely receive or respond to IRS communications/notices that are sent by mail. Will the IRS provide any relief for late responses due to COVID-19?
Unfortunately, the IRS has not expressly announced any relief for affected taxpayers in regards to correspondence. Treasury and IRS are being urged to provide generous and automatic relief for issues related to administrative actions such as expiring statues of limitations, the processing of correspondence and other actions not already covered by previous relief related to COVID-19.
Q2: If the United States has been declared a disaster area by the President, why is section 7508A relief not granted?
Typically, when the President invokes the Robert T. Stafford Disaster Relief and Emergency Assistance Act, taxpayers are granted broad payment and filing relief under section 7508A. However, the IRS’s approach to COVID-19 has not been consistent with how the agency treated tax payment and filing deadlines over the last several years following a federally-declared disaster.
Q3: Has the IRS provided e-signature authorization on all forms (such as, Form 8879) to allow e-filing without needing to meet with the taxpayer in person?
On March 27, the IRS issued a memorandum saying they would temporarily accept digital signatures on certain documents to protect their employees. However, it is unclear whether this relief also applies to Form 8879, which would allow millions of taxpayers to e-file their returns. It is important for the IRS to take whatever measures are possible to allow taxpayers and their preparers to utilize technology, such as e-signatures, to keep a safe distance from others during the pandemic. (Unofficially, IRS has explained that the new policy only applies to the specific collection forms listed in their memorandum.)
Q4: Has IRS announced filing or payment relief for Form 706? How can IRS expect taxpayers and practitioners to file estate tax returns (which are paper) when offices are under mandatory shut down?
Notice 2020-20 and IRS FAQ #7 only offer relief for gift taxes and the GST tax. We are expecting further guidance and relief in this area.
Q5: Was relief for estimated tax payments limited to individuals and corporations (or does it also apply to estates, trusts, S corporations and other entities)?
Notice 2020-18 provides relief to any taxpayer defined as a “person,” which also included estates, trusts, S corporations and other entities. However, relief has only been granted for estimated tax payments with an April 15 due date, and not on any other date. IRS FAQ #1 confirms that estimated payments on any other date is not deferred.
Q6: How will IRS treat 2019 overpayments and excess Q1 payments?
The IRS has not provided definitive guidance. It is reasonable that 2019 overpayments and excess Q1 payments would be credited to the next payment due. We expect additional FAQs to be issued soon to address this concern.
Q7: Has the IRS indicated whether they are considering relief for Q2, Q3 and Q4?
The IRS has not officially provided relief for any payments other than Q1. Treasury and the IRS are being urdged to develop a contingency plan for deadlines occurring after July 15.
Q8: Given that the IRS has not provided filing/payment extensions to many types of returns and the extreme difficulty of some taxpayers to meet their filing deadlines, is a zero-extension valid?
Currently, the IRS has not provided a response regarding the validity of zero-extensions. Treasury and the IRS are urged to offer generous and automatic relief for other issues related to administrative actions such as expiring statues of limitations, the processing of correspondence, and other actions not already covered by previous relief related to COVID-19.
Q9: Has IRS provided relief for partnership and corporation filings for fiscal year filers with the year ending January 31, 2020?
Notice 2020-18 only granted filing and payment relief if the fiscal year filer had a payment or return due date of April 15 (regardless of extension). IRS FAQ #1 and FAQ # 5 confirm. This approach however is inconsistent with how tax deadlines have been dealt with in the past in a disaster zone. The Treasury and IRS are urged to grant broad relief for all taxpayers with a payment or return due date between March 3 and July 15.
Q10: The CARES Act suspended required minimum distributions (RMDs) for 2020. What if individuals already took their RMD for 2020? Are they permitted to contribute the amount back into their IRA?
If an individual already took out their RMD for 2020, there is an opportunity to recontribute it as a rollover if it is recontributed within the 60-day rollover period.
Q11: Has IRS provided filing or payment relief for Form 709? If yes, does the relief extend to GST elections on the return?
Notice 2020-20 extended filing and payment for Form 709 to July 15 and we think that if the GST election out of automatic allocation is on a timely filed gift tax return, including on a Form 709 filed by the postponed 7/15 deadline, the IRS should treat the election as valid. However, Notice 2020-20 did not specifically address elections.
Q12: With the IRS shutting down many critical services, like that PPS line and various help desks, how are tax preparers expected to resolve issues that only the IRS can resolve?
We understand that the IRS is dealing with an unpredictable crisis and they must do what they can to keep their employees safe. However, these shutdowns will not permit taxpayers and their advisors to get the help they need to file their returns.
Q13: Has the IRS granted any relief for non-income tax payments, such as payroll or excise tax deposits?
Currently, there’s no relief for non-income tax payments under recentlyissued IRS guidance (except for gift tax and GST tax in Notice 2020-20). This approach is entirely inconsistent with how the IRS has treated tax payment and filing deadlines over the last several years following a federally-declared disaster.
Q14: Has the IRS provided any relief for information reporting forms (such as Form 3520 and Form 5471)?
Notice 2018-18 does not provide relief for information reporting forms. Mike Desmond, IRS Chief Counsel, has stated that “We have received hundreds of additional comments in terms of time-sensitive dates in the internal revenue laws that are not covered by that April 15 payment and filing deadline extension. Those are all being triaged here, and we’re considering all of them.”
Q15: Has the IRS provided any relief for related information returns that are filed with a return that was granted an automatic extension (such as Form 1040)?
Notice 2018-18 does not provide relief for information returns. IRS FAQ #10 specifically states that relief only applies to the filing of Federal income tax returns due April 15, 2020. However, the IRS did grant an extension of time to file to FATCA information returns. The guidance does not specifically grant relief to FBAR filings; however, an automatic extension is available without the need to file a form.
Q16: Does the postponement of the 4/15 deadline apply to “timely elections”?
Notice 2018-18 does not provide relief for timely elections.Mike Desmond, IRS Chief Counsel, has stated that “We have received hundreds of additional comments in terms of time-sensitive dates in the internal revenue laws that are not covered by that April 15 payment and filing deadline extension. Those are all being triaged here, and we’re considering all of them.”
Q17: Has an extension of time been granted to file or revoke certain business elections (such as, method of accounting changes or S corporation elections)?
Notice 2018-18 does not provide relief for filing or revoking business elections. Mike Desmond, IRS Chief Counsel, has stated that “the IRS is considering the best way that can be done and is aware taxpayers need guidance soon.”
Q18: How do I know if a state has provided any filing or payment relief? Are most states following federal relief?
Most states are following federal relief measures, but it is important to check state specifics when filing.
Q19: Has IRS provided filing or payment relief for the Form 990 series returns?
Currently, there is no relief for filing or payments related to Form 990 series. Similar to other relief measures that do not fall on April 15, the Treasury and IRS are urged to follow normal disaster-guidance procedures, and offer broad relief. We expect additional relief measures and FAQs soon.
Q20: Has IRS provided filing or payment relief for citizens living abroad (or is their return still due June 15th?)
The current guidance and accompanying FAQs do not specifically address this situation. Expect additional FAQs to hopefully address more issues that practitioners are encountering.
Watch out for schemes tied to economic impact payments
WASHINGTON — The Internal Revenue Service today urged taxpayers to be on the lookout for a surge of calls and email phishing attempts about the Coronavirus, or COVID-19. These contacts can lead to tax-related fraud and identity theft.
"We urge people to take extra care during this period. The IRS isn't going to call you asking to verify or provide your financial information so you can get an economic impact payment or your refund faster," said IRS Commissioner Chuck Rettig. "That also applies to surprise emails that appear to be coming from the IRS. Remember, don't open them or click on attachments or links. Go to IRS.gov for the most up-to-date information."
Taxpayers should watch not only for emails but text messages, websites and social media attempts that request money or personal information.
“History has shown that criminals take every opportunity to perpetrate a fraud on unsuspecting victims, especially when a group of people is vulnerable or in a state of need,” said IRS Criminal Investigation Chief Don Fort. “While you are waiting to hear about your economic impact payment, criminals are working hard to trick you into getting their hands on it. The IRS Criminal Investigation Division is working hard to find these scammers and shut them down, but in the meantime, we ask people to remain vigilant.”
Don’t fall prey to Coronavirus tricks; retirees among potential targets
The IRS and its Criminal Investigation Division have seen a wave of new and evolving phishing schemes against taxpayers. In most cases, the IRS will deposit economic impact payments into the direct deposit account taxpayers previously provided on tax returns. Those taxpayers who have previously filed but not provided direct deposit information to the IRS will be able to provide their banking information online to a newly designed secure portal on IRS.gov in mid-April. If the IRS does not have a taxpayer’s direct deposit information, a check will be mailed to the address on file. Taxpayers should not provide their direct deposit or other banking information for others to input on their behalf into the secure portal.
The IRS also reminds retirees who don’t normally have a requirement to file a tax return that no action on their part is needed to receive their $1,200 economic impact payment. Seniors should be especially careful during this period. The IRS reminds retirees – including recipients of Forms SSA-1099 and RRB-1099 − that no one from the agency will be reaching out to them by phone, email, mail or in person asking for any kind of information to complete their economic impact payment, also sometimes referred to as rebates or stimulus payments. The IRS is sending these $1,200 payments automatically to retirees – no additional action or information is needed on their part to receive this.
The IRS reminds taxpayers that scammers may:
- Emphasize the words “Stimulus Check” or “Stimulus Payment.” The official term is economic impact payment.
- Ask the taxpayer to sign over their economic impact payment check to them.
- Ask by phone, email, text or social media for verification of personal and/or banking information saying that the information is needed to receive or speed up their economic impact payment.
- Suggest that they can get a tax refund or economic impact payment faster by working on the taxpayer’s behalf. This scam could be conducted by social media or even in person.
- Mail the taxpayer a bogus check, perhaps in an odd amount, then tell the taxpayer to call a number or verify information online in order to cash it.
Reporting Coronavirus-related or other phishing attempts
Those who receive unsolicited emails, text messages or social media attempts to gather information that appear to be from either the IRS or an organization closely linked to the IRS, such as the Electronic Federal Tax Payment System (EFTPS), should forward it to firstname.lastname@example.org.
Taxpayers are encouraged not to engage potential scammers online or on the phone. Learn more about reporting suspected scams by going to the Report Phishing and Online Scams page on IRS.gov.
Official IRS information about the COVID-19 pandemic and economic impact payments can be found on the Coronavirus Tax Relief page on IRS.gov. The page is updated quickly when new information is available.
Takeaway #1 – Individuals
Takeaway #2 – Small Businesses
Who is eligible for the economic impact payment?
How will the IRS know where to send my payment?
The IRS does not have my direct deposit information. What can I do?
I am not typically required to file a tax return. Can I still receive my payment?
I have a tax filing obligation but have not filed my tax return for 2018 or 2019. Can I still receive an economic impact payment?
I need to file a tax return. How long are the economic impact payments available?
Where can I get more information?
How will my revenue be impacted, and for how long?
How will my collections be impacted?
What expenses can I pay now, defer, or eliminate?
How much flexibility do I have in vendor payment terms?
What relief aid and/or financing programs are available, and how do I know which program will provide the most benefits?
ASC 350 - Goodwill & Indefinite-Lived Intangibles
ASC 360 – Long-Lived Assets
Triggering Event Examples (ASC 360-10-35-21)
A significant decrease in the market price of a long-lived asset (asset group).
Macroeconomic conditions (e.g., deterioration in general economy).
A significant adverse change in the extent or manner in which a long-lived asset (asset group) is being used or in its physical condition.
Industry and market considerations (e.g., deterioration in the environment in which the company operates).
A significant adverse change in legal factors or in the business climate that could affect the value of a long-lived asset (asset group), including an adverse action or assessment by a regulator.
Cost factors (e.g., increases in raw materials, labor).
An accumulation of costs significantly in excess of the amount originally expected for the acquisition or construction of a long-lived asset (asset group).
Overall financial performance (e.g., negative or declining cash flows).
A current-period operating or cash flow loss combined with a history of operating or cash flow losses, or a projection or forecast that demonstrates continuing losses associated with the use of a long-lived asset (asset group).
Other relevant entity-specific events (e.g., changes in management or key personnel).
A current expectation that, more likely than not, a long-lived asset (asset group) will be sold or otherwise disposed of significantly before the end of its previously estimated useful life. The term “more likely than not” refers to a level of likelihood that is more than 50 percent.
Events affecting a reporting unit (e.g., change in composition of net assets, expectation of disposing all or a portion of the reporting unit).
The Coronavirus Aid, Relief, and Economic Security Act (“CARES Act”) Key Takeaways
On March 25, 2020, the Senate unanimously passed (96-0) the Coronavirus Aid, Relief, and Economic Security Act (“CARES Act”), commonly known as “Phase Three” of coronavirus economic relief. The CARES Act provides much needed stimulus to individuals, businesses, and hospitals in response to the economic distress caused by the coronavirus (COVID-19) pandemic.
The bill passed on March 25 is not yet law. Until the CARES Act is passed by the House of Representatives and signed into law by the President, it is subject to revisions. The bill will now go to the House, which is currently not in session. The House may reconvene to address the bill or pass the bill by unanimous consent agreement. The House is expected to pass the bill without changes on March 27, and it will then be presented to the President for his signature.
Additional information, updates, and analysis regarding the CARES Act will be posted on our blog. Please check back frequently for updates. We are available to assist in interpretation of the CARES Act for your business and can help you find ways to claim and/or use available funding for your company.
The CARES Act
Top 10 Takeaways:
- Provides stimulus to individuals, businesses, and hospitals in response to the economic distress caused by the coronavirus (COVID-19) pandemic.
- Creates a $349 billion loan program for small businesses, including 501(c)(3) non-profits and physician practices. These loans can be forgiven through a process that incentivizes companies to retain employees.
- Allocates $500 billion for assistance to businesses, states, and municipalities, with no more than $25 billion designated for passenger air carriers, $4 billion for air cargo carriers, and $17 billion for businesses critical to maintaining national security. The remaining $454 billion may be used to support lending to eligible businesses, states, and municipalities.
- Allocates $130 billion in relief to the medical and hospital industries, including for medical supplies and drug and device shortages.
- Expands telehealth services in Medicare, including services unrelated to COVID-19 treatments.
- Provides $1,200 to Americans making $75,000 or less ($150,000 in the case of joint returns and $112,500 for head of household) and $500 for each child, to be paid “as rapidly as possible.”
- Expands eligibility for unemployment insurance and provides people with an additional $600 per week on top of the unemployment amount determined by each state.
- Expands the Defense Protection Act, allowing for a period of two years when the government may correct any shortfall in resources without regard to the current expenditure limit of $50 million.
- Provides the Secretary of the Treasury with the authority to make loans or loan guarantees to states, municipalities, and eligible businesses and loosens a variety of regulations prior legislation imposed through the Dodd-Frank Wall Street Reform and Consumer Protection Act, the Economic Stabilization Act of 2008, and others.
- Accompanied by supplemental appropriations to help the government respond to this pandemic.
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.
The full CARES act can be read here
Official IRS release can be read here
How to apply: https://floridadisasterloan.org/
- Qualified Applicant: Applications will be accepted by qualified for-profit, privately held small businesses that maintain a place of business in the state of Florida. All qualified applicants must have been established prior to March 9, 2020, and suffered economic injury as a result of the designated disaster. Qualified small business applicants must be an employer business with 2 to 100 employees.
- Amount: Up to $50,000 per eligible small business. Loans of up to $100,000 may be made in special cases as warranted by the need of the eligible small business.
- Term: 1 year.
- Limitation: Only one loan may be made per eligible business. All previous bridge loans received MUST be paid in full.
- Interest Rate: Loans will be interest-free for the loan term (1 year). The Interest rate will be 12% per annum on the unpaid balance thereafter, until the loan balance is repaid in full. Loan default is subject to a normal commercial collection process.
- Application Period: Applications will be accepted by qualified Florida small businesses under this program through May 8, 2020, contingent on the availability of funds.
Designated Disaster Areas: All Florida counties statewide per Executive Order 20-52.
The Trump administration has announced that most individuals and businesses will be allowed to delay paying their federal tax bills for 90 days as part of an emergency relief plan amid the coronavirus pandemic.
Some questions and answers about the delay and its potential impact on the US economy;
DO I STILL NEED TO FILE?
The details on the program are still scant. But as of now, taxpayers need to file their federal tax returns by the traditional April 15 deadline. The 90-day extension is solely for the money that is due. Those delayed payments are now due July 15.
However, taxpayers who are facing difficulty filing on time always still have the option to request a six-month extension. Visit the IRS website for more details.
WHO GETS TO WAIT TO PAY?
Treasury Secretary Steven Mnuchin said individuals who owe less than $1 million will be able to delay paying. Corporations will be able to defer payment on taxes due up to $10 million. Mnuchin said only the “super rich” would be excluded.
However, because details are still pending, it’s unclear if the delay applies to trusts or whether people who make quarterly payments on their taxes will still need to make that first payment by April 15, said Lance Christensen, a partner at the accounting firm of Margolin Winer & Evens.
WILL I BE PENALIZED FOR WAITING TO MAKE PAYMENTS?
No. During this unprecedented delay, individuals and corporations will not be subject to interest or penalty payments.
WHAT IF I AM EXPECTING A REFUND?
If you are expecting a refund, continue to file as usual. As of now, the IRS is still processing returns and sending out refunds.
DOES THIS APPLY TO MY STATE TAXES TOO?
No. Check with your state tax authority to see about any changes to due dates. Some are not extending their deadline, others are following the federal model and others still are setting their own deadlines. California, for example, has bumped its date for filing and payment of state taxes to June 15.
HOW WILL THIS HELP THE ECONOMY?
Treasury Secretary Steven Mnuchin estimates that taxpayers will be able to keep $300 billion in the economy for now. And some tax and economic experts say any extra cash in the hands of Americans is helpful because many will be struggling to get by.
However, some say the tax delay will not provide widespread financial relief.
Howard Gleckman, a senior fellow at the nonpartisan Tax Policy Center, says he thinks it will have a limited impact. That is in part because about three-quarters of Americans get refunds in any year and won’t benefit from a delayed tax bill.
The IRS expected about 150 million individual tax returns, as of the most recent count, about 68 million taxpayers have already filed.
Those who file early tend to be low- and middle-income individuals who are getting a refund. Higher-income individuals, or those with complex taxes who owe money to the government, tend to file later, Gleckman said. This move will provide some relief for them, but Gleckman warns that higher income individuals have extra cash, and they tend to save it not spend it. That leaves lower income individuals, who need it most and are more likely to go out and spend it, without relief from this move.
As the COVID-19 situation continues to evolve, CPA Partners’ priority remains on doing our part to ensure the health and welfare of our staff, our clients, and the community at large. As you are likely aware, government authorities are asking businesses to do all they can to help limit the spread of the coronavirus.
Effective Wednesday, March 18th CPA Partners will be operating primarily in a remote working environment.
Our long-standing practice of utilizing technology, tools, and processes that support remote work provide our team with the ability to continue to effectively service clients and continue business operations during this time.
Our offices will be closed to visitors until further notice. In-person meetings will need to be rescheduled with conference calls, or other electronic communication tools. If you need to reschedule a meeting, please contact our office.
Please submit documents to us electronically thru your portal (https://www.cpapartnersllc.com/portal-login). Contact our admin team to assist if you are not currently set-up for portal at email@example.com or 727-398-2080 extension 0.
Alternatively, we ask that you mail documents to our office at 8200 – 113th Street North, Suite 103, Seminole FL 33772
We are closely following the COVID-19 situation as it evolves, and are working to publish insights to keep you informed about potential business implications. This includes emerging tax proposals and financial statement filing requirements. Continue to check our new Coronavirus Resource Center at https://www.cpapartnersllc.com/coronavirus-resource-center for updates and additional resources in the coming days.
We will continue to monitor the COVID-19 situation and respond accordingly. We will continue to adapt our processes and keep you informed of changes that may impact you. If you have any questions or concerns in the shadow of the coronavirus pandemic, please do not hesitate to contact our office.
Thank you for partnering with us as we push forward during this situation. I have utmost confidence in the talents and abilities of our team members and clients to work through these challenges and emerge stronger together.
CLICK HERE to view the new Florida Sales Tax Rates for 2019 Commercial Real Estate.
September 15 - S-Corporations (1120S) & Partnerships (1065)
October 15 — Individuals (1040) & C-Corporations (1120)
If you have an automatic 6-month extension to file your Individual income tax return for 2017, file Form 1040, 1040A, or 1040EZ and pay any tax, interest, and penalties due.
What Business Owners Need to Know
The biggest news to come from the tax law changes is the reduction of the corporate tax rate from 35 percent to 21 percent. The question is, do these changes apply to all businesses? No, they don't. But there are significant changes for businesses, regardless of structure.
While the C Corporation tax rate has been reduced to 21%, the Pass-Through entities are eligible for a qualified business income deduction. Beginning this tax year, S-Corporations, Partnerships, Trusts, Estates & Schedule C (Sole Proprietors), and Schedule E filers might be eligible to a deduction of up to 20 percent of their qualified business income.
All these rate deductions sound great, but there are major shockers in what businesses will be able to write off as expenses under the new law.
One example: entertainment expenses will no longer be deductible under this new law. So whether you are buying season football tickets for clients to watch your favorite team, or going to the opera, these benefits are no longer write-offs on your tax return.
We are keeping up-to-date with new regulations as they come in and as additional guidance is issued. We are including the new tax laws in all our tax planning.
The Tax Cuts and Jobs Act was passed with little guidance provided to the IRS and professionals on the rules for applying the new requirements. We are constantly researching and seeking additional guidance on the implementation and will provide you with updates as we learn more. We highly recommend you consult with us regarding your tax planning to learn how this Tax Cuts and Jobs Act affects you.
Call us at 727-398-2080 or email us: firstname.lastname@example.org and we would be happy to set up a Free half hour in office free consultation to discuss the new tax laws.