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Richey May Advisory provides the full spectrum of transformative solutions for your business. From Technology and Risk Management to Specialty Audit Services and more, Richey May Advisory has the solutions you need to find and focus on your competitive advantage.
Richey May Advisory provides the full spectrum of transformative solutions for your business. From Technology and Risk Management to Specialty Audit Services and more, Richey May Advisory has the solutions you need to find and focus on your competitive advantage.
Question or comments? Click here to fill out our inquiry form.
Richey May Advisory provides the full spectrum of transformative solutions for your business. From Technology and Risk Management to Specialty Audit Services and more, Richey May Advisory has the solutions you need to find and focus on your competitive advantage.
Richey May Advisory provides the full spectrum of transformative solutions for your business. From Technology and Risk Management to Specialty Audit Services and more, Richey May Advisory has the solutions you need to find and focus on your competitive advantage.
Question or comments? Click here to fill out our inquiry form.
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This information and related materials are intended to provide timely summary about complex legislation. The information provided may change as a result of Government Agency interpretations, the promulgation of new regulations, technical corrections to, or judicial interpretations and rulings, of existing law. This information is not intended to provide legal, accounting or other professional services and is provided solely for educational purposes. The information provided should not be used a substitute for professional advice. If professional advice or other expert assistance is required, the services of a competent professional should be sought. Statutory and Regulatory references in the materials are to the Internal Revenue Code of 1986, as amended, or Treasury Regulations thereunder, unless otherwise noted. The materials provided and presentation may not be reproduced in whole or part, without permission. It is unauthorized use to distribute any or all of this information to any third parties outside the company.
This page was updated on 7/9/2020 at 11:00 am MTN.
Phase 1 – H.R. 6074, the Coronavirus Preparedness and Response Supplemental Appropriations Act
Low-interest loans for working capital to small businesses suffering substantial economic injury due to COVID-19. Borrowers can request $10,000 payable three days after application which is classified as an advance. If the EIDL loan is denied, the advanced funds do not need to be returned.
Applicants exclusively work through the Small Business Administration (SBA)
Applications are submitted electronically or by mail
January 31, 2020 – December 31, 2020
Phase 2 – H.R. 6201, the Families First Coronavirus Response (FFCR) Act
Extended by : Phase 4 – H.R. 133, the Consolidated Appropriations Act, 2021
Employees are eligible for up to 80 hours paid sick leave, if sick, under a COVID-19 quarantine, or caring for an individual or child.
Employers receive a refundable tax credit in the amount of total paid sick leave gross pay, plus employer potion of Medicare sick pay & employer insurance cost(s) for those on sick leave.
Sick pay is exempt from Social Security employer tax
Payroll tax credit filed on form 941
April 1, 2020 – March 31,2021
DOL Qualifying Reasons for Leave & Related Required Wage Replacement Amounts
Phase 2 – H.R. 6201, the Families First Coronavirus Response (FFCR) Act
Payroll tax credit filed on form 941
Form 7200 for advanced credit payments
April 1, 2020 – December 31,2020
DOL Qualifying Reasons for Leave & Related Required Wage Replacement Amounts
Phase 3 – H.R. 758, the Coronavirus Aid, Relief, and Economic Security (CARES) Act
Enhanced by : Phase 4 – H.R. 133, the Consolidated Appropriations Act, 2021
Business Provisions
Intended to keep eligible employees on payroll by giving employers a payroll tax credit.
Tax credit equals 50% of gross pay & employer paid health insurance costs. Expanded availability until June 30, 2021 and increased to 70%.
Credit on income tax return
For employers with > 100 employees in 2019 – Credit on qualified wages paid to employees who are not working due to employer’s full or partial cessation of business
For employers with 100 or fewer employees in 2019 – all employee wages are eligible, even if employees haven’t been prevented from providing services
March 12, 2020 – December 31, 2020
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Phase 3 – H.R. 758, the Coronavirus Aid, Relief, and Economic Security (CARES) Act – Employer’s Portion
Phase 4 – H.R. 133, the Consolidated Appropriations Act, 2021 – Employee’s Portion
Business Provisions
Employer’s portion of social security tax (6.2%) through December 31, 2020 may be deferred – payable in 2 equal installments due December 31, 2021 and December 31, 2022.
Employee’s portion of social security tax (6.2%) from September 1, 2020 – December 31, 2020 may be deferred – payable on December 31, 2021.
Federal form 941 will be revised for the 2nd calendar quarter of 2020 (April-June). No special election is required.
Once limited for PPP borrowers but limitations were removed. Employers using PPP loan proceeds for payroll costs, can now defer FICA from March 27th – December 31, 2020 – half to be paid in 2021 and half to be paid in 2022.
Employer’s Portion: Wages Paid after March 12, 2020 through December 31, 2020
Employee’s Portion: Wages Paid after September 1, 2020 through December 31, 2020
Phase 3 – H.R. 758, the Coronavirus Aid, Relief, and Economic Security (CARES) Act, supplemented by H.R. 266, the Paycheck Protection Program and Health Care Enhancement Act (PPP & HCE Act), & H.R. 7010, the Paycheck Protection Program Flexibility Act (PPP Flexibility Act)
Business Provisions
Small business loan designed to be forgiven if the borrower uses the loan proceeds to finance payroll and other specific expenses. If forgiveness is not granted, the default terms of the loan are an interest rate of 1% and maturity of 5 years. No collateral, personal guarantees, or loan origination fees are required.
Apply for Small Business Administration (SBA) loan through an approved SBA financial institution. The application to acquire a PPP loan has been extended through August 8, 2020. Certain borrower certifications must be included in application process. Once the PPP loan has been approved, and loan proceeds have been spent, the borrower will have to apply for forgiveness through their lender as well.
Loan Forgiveness Eligibility
See linked resources for more details about employee counts, eligible payrolls costs, covered periods, measurement alternatives, affiliated business rules, and interplay with EIDL program.
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Changes to 3rd and 6th Interim Final Rules
Loan Forgiveness Application – revised June 16
Phase 3 – H.R. 758, the Coronavirus Aid, Relief, and Economic Security (CARES) Act
Business & Individual Provisions
5 Year carryback of NOLs arising in 2018, 2019, or 2020
Amended income tax returns
The 2017 Tax Cuts and Jobs Act (TCJA) 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 the 80% of income limitation and carryback prohibition until 2021. The Act also temporarily liberalizes 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:
The CARES Act also temporarily removed the excess business loss limitation set-out by the TCJA.
Tax Years prior to 2021
Phase 3 – H.R. 758, the Coronavirus Aid, Relief, and Economic Security (CARES) Act
Business & Individual Provisions
In general, a deduction for business interest expense is limited to a taxpayer’s business interest income plus 30% of adjusted taxable income (ATI). The CARES act increased the limitation threshold from 30% to 50%.
Current or amended income tax return filings
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.
Tax Years 2019 & 2020
Phase 3 – H.R. 758, the Coronavirus Aid, Relief, and Economic Security (CARES) Act
Business Provisions
The Adjusted Gross Income (AGI) limitation increased for Corporations
Current or amended income tax return filing
For the 2020 tax year, AGI limitation increased from 10% to 25%
2020
Phase 3 – H.R. 758, the Coronavirus Aid, Relief, and Economic Security (CARES) Act
Business Provisions
100% Bonus Depreciation now available on 15-year QIP
Current or amended income tax return filing
or method change
The CARES Act makes a technical correction to the 2017 Tax Law that retroactively treats;
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.
100% Bonus depreciation on QIP is available for tax years through 2022, then annually reduced by 20% through 2027
Property acquired and placed in service after 9/27/2017
Phase 3 – H.R. 758, the Coronavirus Aid, Relief, and Economic Security (CARES) Act
Individual Provisions
2020 refundable tax credit with advance funding feature to effectively get cash in the hands of individual taxpayers prior to 2020 tax season.
Amount of credit
To receive the advanced payment automatically
2020 tax year
Phase 3 – H.R. 758, the Coronavirus Aid, Relief, and Economic Security (CARES) Act
Individual Provisions
Different with each plan provider or account
Penalty waiver relates to Coronavirus-related amounts drawn up to $100k. Distribution can be re-contributed subject to guidelines, and income taxed over 3 years unless taxpayer elects 1 year taxation.
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.
Additional rules increase the ability to borrow from and IRA (up to $100k and 100% vested balance).
2020
Phase 3 – H.R. 758, the Coronavirus Aid, Relief, and Economic Security (CARES) Act
Enhanced by: Phase 4 – H.R. 133, the Consolidated Appropriations Act, 2021
Individual Provisions
Above-the-line deduction of up to $300 for contributions made and the Adjusted Gross Income (AGI) limitation increased
Income Tax Return
$300 above the line deduction is not available to taxpayer who itemizes deductions
You can make deductible cash contributions of up to 100% of you AGI
2020 & 2021. Amount increased to $600 for Married Filing Joint in 2021
Phase 3 – H.R. 758, the Coronavirus Aid, Relief, and Economic Security (CARES) Act
Individual Provisions
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).
Income Tax Return
Under the superseded rule, active net business losses in excess of $250,000 ($500,000 for joint filers) were disallowed and treated as NOL carryforwards to future tax periods.
The at-risk limits and the passive activity limits are applied before calculating the amount of any excess business loss.
Tax Years prior to 2021
Phase 3 – H.R. 758, the Coronavirus Aid, Relief, and Economic Security (CARES) Act
Individual Provisions
Interest rates set to 0% and no payments required for a period for six months
Pursue relief options through loan servicer
Automatic six-month payment relief and interest rate reduction to 0% for loans owned by the U.S. Department of Education. Perkins Loans and Federal Family Education Loans are not automatic, apply for forbearance with loan servicer.
March 27th, 2020 – September 30th, 2020
Phase 3 – H.R. 758, the Coronavirus Aid, Relief, and Economic Security (CARES) Act
Individual Provisions
Exclusion from income of up to $5,250 for payments made to employee’s education loans
Payment can be made to employee or directly to lender
Employer determination. Note an employee cannot take a deduction for student loan interest under IRC Sec. 221 for the amount attributable to any student loan repayment benefits.
March 27th, 2020 – December 31, 2020
Phase 4 – H.R. 133, the Consolidated Appropriations Act, 2021
Business Provisions
Small business loan designed to be forgiven if the borrower uses the loan proceeds to finance payroll and other specific expenses. If forgiveness is not granted, the default terms of the loan are an interest rate of 1% and maturity of 5 years. No collateral, personal guarantees, or loan origination fees are required.
Apply for Small Business Administration (SBA) loan through an approved SBA financial institution. Certain borrower certifications must be included in application process. Once the PPP loan has been approved, and loan proceeds have been spent, the borrower will have to apply for forgiveness through their lender as well. Borrowers can apply for a Second Draw PPP Loan until March 31, 2021, through any existing SBA 7(a) lender or through any federally insured depository institution, federally insured credit union, eligible non-bank lender, or Farm Credit System institution that is participating in PPP.
Same limits and eligibility as PPP round 1 accept for the following:
Apply between January 13, 2021 & March 31, 2021. Forgivable proceeds must be used in the 8- to 24-week covered period following loan disbursement.
Other Provisions, Assistance, and Guidance
Utilization of Code Section 139 for Qualified disaster relief payments to employees to assist with Coronavirus-related expenses without employee having to recognize taxable income.
Employer determination
Section 139 permits individuals to receive “qualified disaster relief payments” to assist with expenses incurred as a result of a “qualified disaster” and exclude these payments from taxable income. Notice 2020-18 clarifies that the IRS was permitted to postpone the due date for filing of returns and payment of taxes due on April 15, 2020 to July 15, 2020 as a result of the President’s emergency declaration under the Robert T. Stafford Disaster Relief and Emergency Assistance Act. This action by the President made the Coronavirus pandemic a federally declared disaster, which may be considered a “qualified disaster” for purposes of Section 139. Revenue Ruling 2003-12 clarified that employers can make “qualified disaster relief payments” to employees to assist them during a “qualified disaster”.
March 1, 2020 – date disaster declaration is lifted
Other Provisions, Assistance, and Guidance
Election to take deduction for preceding year specifically attributable to federally declared disaster
March 1, 2020 – date disaster declaration is lifted
Other Provisions, Assistance, and Guidance
Intended to facilitate lending to small and medium-sized Businesses by Eligible Lenders. Under the New Loan Facility (Facility), the Main Street Priority Loan Facility (“MSPLF”), and the Main Street Expanded Loan Facility (“MSELF”), the Federal Reserve Bank of Boston (“Reserve Bank”) will commit to lend to a single common special purpose vehicle (“SPV”) on a recourse basis. The SPV will purchase 95% participations in Eligible Loans from Eligible Lenders. Eligible Lenders will retain 5% of each Eligible Loan. The Department of the Treasury, using funds appropriated to the Exchange Stabilization Fund under section 4027 of the CARES Act, will make a $75 billion equity investment in the single common SPV in connection with the Facility, the MSPLF, and the MSELF. The combined size of the Facility, the MSPLF, and the MSELF will be up to $600 billion.
An Eligible Loan is an unsecured term loan made by an Eligible Lender(s) to an Eligible Borrower that was originated on or after April 8, 2020, provided that the loan has the following features:
Eligible Borrowers are businesses with up to 10,000 employees or up to $2.5 billion in 2019 annual revenues. Each Eligible Borrower must be a business that is created or organized in the United States or under the laws of the United States with significant operations in and a majority of its employees based in the United States. Eligible Borrowers that participate in the Facility may not also participate in the MSELF or the Primary Market Corporate Credit Facility.
SPV will cease purchasing participations in eligible loans on September 30, 2020
Other Provisions, Assistance, and Guidance
The purpose of PTAP/C19 is to honor the statutory duty Ginnie Mae has to pay timely and in full principal and interest payments due Mortgage-Backed Security (MBS) holders while minimizing any disruptions that may occur in the mortgage servicing market as a result of COVID-19. PTAP/C19 will also support Issuers in their administration of borrower relief measures, such as extended forbearance and moratoriums on foreclosures and evictions, announced by the federal agencies providing the mortgage insurance or guaranty.
Extension of assistance under PTAP/C19 will be made through a Request for Pass-Through Assistance Related to COVID-19 and Repayment Agreement (“Request and Repayment Agreement”), and subject to a Master Supervisory Agreement which will govern the terms of any PTAP/C19 assistance. Assistance advanced by Ginnie Mae will bear a fixed rate of interest. The rate that will apply to a given month’s pass-through assistance to all Issuers will be posted on Ginnie Mae’s website on the second business day of each month.
Issuers may request PTAP/C19 assistance only once per month to cover shortfalls on the P&I due to mortgage-backed security (MBS) holders for the month the request is made.
Assistance rendered under PTAP/C19, as provided for below and in Chapter 34, is to be considered an extraordinary measure, for use when other resources have been exhausted and with the requirement of full repayment by the Issuer.
All requests for PTAP/C19, including the required documents identified in bullets (a) and (b) above, must be submitted no earlier than the fifth (5th) business day of the month and no later than the sixth (6th) business day of each month. The Ginnie Mae advance associated with each Repayment Agreement, together with interest, will be due on the last calendar day of the month that is the seventh month from the month in which the corresponding investor remittance was made, or on July 30, 2021, whichever is earlier.
Other Provisions, Assistance, and Guidance
Tax Filings and Payments – All Federal income tax return filings and payments due on or after April 1, 2020, and before July 15, 2020, are now due on July 15, 2020.
Financial Statements for Mortgage Lenders – HUD approved Mortgagees with calendar year-ends have an automatic 30-day extension to submit audited financial statements and re-certify through HUD’s LEAP system pushing the deadline from March 31, 2020 to April 30, 2020.
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May 19, 2020
https://www.youtube.com/watch?v=2pLe5JM9A3A With the fast-moving new about the PPP Program (and, crucially, PPP Loan forgiveness), it can be hard for...
Read ArticleMar 20, 2020
Treasury Secretary Steven Mnuchin announced today, March 20th, that the tax deadline for filing returns or extensions has now also been moved from April...
Read ArticleMay 08, 2020
May 2020 The IRS recently released Notice 2020-32 which addresses the tax deductibility of expenses paid with PPP Funds that are subsequently forgiven...
Read ArticleMar 27, 2020
The economic impact of COVID-19 has pushed the federal government to act to curb the negative effects on individuals and businesses. The Coronavirus...
Read ArticleMay 18, 2020
As a result of the Coronavirus pandemic, the President has declared every state as a disaster area eligible for federal assistance. This declaration also...
Read ArticleApr 15, 2020
(Relationship to Paycheck Protection Program Loans [PPP]) The IRS provided additional guidance in the form of Frequently Asked Questions and...
Read ArticleDownload the latest version of our Guide as PDF.
The guide was updated on 7/9/2020 at 12:00 pm MTN.
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