On March 27, President Trump signed into law another coronavirus (COVID-19) law, which provides extensive relief for businesses and employers. Here are some of the tax-related provisions in the Coronavirus Aid, Relief, and Economic Security Act (CARES Act). 

Employee retention credit

The new law provides a refundable payroll tax credit for 50% of wages paid by eligible employers to certain employees during the COVID-19 crisis.

Employer eligibility. The credit is available to employers with operations that have been fully or partially suspended as a result of a government order limiting commerce, travel or group meetings. The credit is also provided to employers that have experienced a greater than 50% reduction in quarterly receipts, measured on a year-over-year basis.

The credit isn’t available to employers receiving Small Business Interruption Loans under the new law.

Wage eligibility. For employers with an average of 100 or fewer full-time employees in 2019, all employee wages are eligible, regardless of whether an employee is furloughed. For employers with more than 100 full-time employees last year, only the wages of furloughed employees or those with reduced hours as a result of closure or reduced gross receipts are eligible for the credit.

No credit is available with respect to an employee for whom the employer claims a Work Opportunity Tax Credit.

The term “wages” includes health benefits and is capped at the first $10,000 paid by an employer to an eligible employee. The credit applies to wages paid after March 12, 2020 and before January 1, 2021.

The IRS has authority to advance payments to eligible employers and to waive penalties for employers who don’t deposit applicable payroll taxes in anticipation of receiving the credit.

Payroll and self-employment tax payment delay

Employers must withhold Social Security taxes from wages paid to employees. Self-employed individuals are subject to self-employment tax.

The CARES Act allows eligible taxpayers to defer paying the employer portion of Social Security taxes through December 31, 2020. Instead, employers can pay 50% of the amounts by December 31, 2021 and the remaining 50% by December 31, 2022.

Self-employed people receive similar relief under the law.

Temporary repeal of taxable income limit for NOLs

Currently, the net operating loss (NOL) deduction is equal to the lesser of 1) the aggregate of the NOL carryovers and NOL carrybacks, or 2) 80% of taxable income computed without regard to the deduction allowed. In other words, NOLs are generally subject to a taxable-income limit and can’t fully offset income.

The CARES Act temporarily removes the taxable income limit to allow an NOL to fully offset income. The new law also modifies the rules related to NOL carrybacks.

Interest expense deduction temporarily increased

The Tax Cuts and Jobs Act (TCJA) generally limited the amount of business interest allowed as a deduction to 30% of adjusted taxable income.

The CARES Act temporarily and retroactively increases the limit on the deductibility of interest expense from 30% to 50% for tax years beginning in 2019 and 2020. There are special rules for partnerships.

Bonus depreciation for qualified improvement property

The TCJA amended the tax code to allow 100% additional first-year bonus depreciation deductions for certain qualified property. The TCJA eliminated definitions for 1) qualified leasehold improvement property, 2) qualified restaurant property, and 3) qualified retail improvement property. It replaced them with one category called qualified improvement property (QIP). A general 15-year recovery period was intended to have been provided for QIP. However, that period failed to be reflected in the language of the TCJA. Therefore, under the TCJA, QIP falls into the 39-year recovery period for nonresidential rental property, making it ineligible for 100% bonus depreciation.

The CARES Act provides a technical correction to the TCJA, and specifically designates QIP as 15-year property for depreciation purposes. This makes QIP eligible for 100% bonus depreciation. The provision is effective for property placed in service after December 31, 2017.

Careful planning required

This article only explains some of the relief available to businesses. Additional relief is provided to individuals. Be aware that other rules and limits may apply to the tax breaks described here. Contact us if you have questions about your situation.

On Friday, March 27th, President Trump signed into law the Coronavirus Aid, Relief, and Economic Security (CARES) Act. The CARES Act provides support to both individuals and businesses, including changes to tax policy.

With this in mind, we want to share with you a special tax briefing which summarizes the following:

  • Recovery Rebates
  • Payroll Tax Deferral Provisions
  • Expanded NOL Utilization and Carryback Provisions
  • Employee Retention Credits
  • Unlimited Charitable Deductions for 2020
  • Expanded Business Interest Expense Deductibility

 

The briefing may be downloaded here or by clicking the image above.

If you have questions about how the information in this briefing applies to your tax situation, please connect with your specific PKF Texas tax team members via email.

Additionally, we are keeping PKFTexas.com/COVID-19 up-to-date with information and resources to assist you as we all navigate these quickly-changing times.

Jen: This is the PKF Texas Entrepreneurs Playbook. I’m Jen Lemanski and I’m back again with Chip Schweiger, one of our audit directors and a member of our PKF Texas SEC team. Chip, welcome back to the Playbook.

Chip: Thanks, Jen. Good to be back.

Jen: So I’ve heard a little bit in the news about FCPA. What is it and how does it affect public companies?

Chip: Sure so FCPA, also known as the Foreign Corrupt Practices Act, was actually a law that was enacted in 1977 and it generally prohibits the payment of bribes to foreign officials to gain business. It includes, not only the officers and the agents of that company, but also the company themselves. Continue Reading Monitoring the FCPA: Is Your Public Company in Compliance?

As the COVID-19 situation continues to evolve, the priority at PKF Texas remains on doing our part to ensure the health and well-being of our staff, our clients and our community.

Following Harris County Judge Lina Hidalgo’s March 24th Stay Home-Work Safe order, PKF Texas is doing just that.

While our physical office is now closed, PKF Texas is still open, with our business operations continuing without interruption, as we work from home. Although we believe PKF Texas is considered an essential business as professional advisors to you, we have determined this is the best way to help our community.

Our team is here to answer your questions and help you and your business get through these uncertain times. Please don’t hesitate to contact me directly or a member of your client service team. We are only a phone call, video chat or email away.

Additionally, we are keeping PKFTexas.com/COVID-19 up-to-date with information and resources to assist you as we all navigate these quickly-changing times.

Thank you for your understanding and for your partnership with us as we all work through this unprecedented event.

PKF Texas is grateful for your business and for the confidence you have placed in our firm.

Taxpayers now have more time to file their tax returns and pay any tax owed because of the coronavirus (COVID-19) pandemic. The Treasury Department and IRS announced that the federal income tax filing due date is automatically extended from April 15, 2020, to July 15, 2020.

Taxpayers can also defer making federal income tax payments, which are due on April 15, 2020, until July 15, 2020, without penalties and interest, regardless of the amount they owe. This deferment applies to all taxpayers, including individuals, trusts and estates, corporations and other non-corporate tax filers as well as those who pay self-employment tax. They can also defer their initial quarterly estimated federal income tax payments for the 2020 tax year (including any self-employment tax) from the normal April 15 deadline until July 15.

No forms to file

Taxpayers don’t need to file any additional forms to qualify for the automatic federal tax filing and payment relief to July 15. However, individual taxpayers who need additional time to file beyond the July 15 deadline, can request a filing extension by filing Form 4868. Businesses who need additional time must file Form 7004. Contact us if you need assistance filing these forms. Continue Reading Individuals get Coronavirus (COVID-19) Tax and Other Relief

Jen: This is the PKF Texas Entrepreneur’s Playbook. I’m Jen Lemanski and I’m back once again with Ryan Istre, an Audit Director and one of the faces of our PKF Texas SEC team. Ryan, welcome back to The Playbook.

Ryan: Thanks, Jen.

Jen: Recently, one of our industry publications, Accounting Today, had an article where it said the PCAOB may fold into the SEC by 2022? What’s going on there?

Ryan: Yes, I did read that in Accounting Today. Right now, it’s a White House budget blueprint. The proposal is for, you know, for budgeting purposes, of course, to potentially save the country $580 million by the year 2030. Continue Reading PCAOB and SEC: Possible Merger by 2022?

On Friday, March 20th, the IRS issued Notice 2020-18, Relief for Taxpayers Affected by Ongoing Coronavirus Disease 2019 Pandemic. This provides individual and corporate taxpayers an extension for the tax return filing and payment deadline to July 15, 2020.

Notice 2020-18 expands upon and supersedes Notice 2020-17.

With this in mind, we want to share with you a special tax briefing which summarizes the following:

  • Tax Return Due Date Moved to July 15
  • New Law Mandates Paid Leave
  • Tax Credits Provided for Paid Leave
  • IRS issues additional guidance

 

 

The briefing may be downloaded here or by clicking the image above.

Additionally, we are keeping PKFTexas.com/COVID-19 up-to-date with information and resources to assist you as we all navigate these quickly-changing times.

If you have questions about how the information in this briefing applies to your tax situation, please connect with your PKF Texas tax team members.

We know you rely on PKF Texas to provide you with information to assist you when evaluating and making critical business decisions. With this in mind, we want to share with you a special tax briefing which summarizes the following:

  • New Law Mandates Paid Leave
  • Tax Credits Provided for Paid Leave
  • Tax Payment Due Date Moved to July 15
  • IRS issues additional guidance

 

 

The briefing may be downloaded here or by clicking the image above.

We will send further guidance related to today’s announcement about the extension of the April 15, 2020 tax filing deadline as soon as it becomes available from the IRS.

Additionally, we are keeping PKFTexas.com/COVID-19 up-to-date with information and resources to assist you as we all navigate these quickly-changing times.

If you have questions about how the information in this briefing applies to your tax situation, please connect with your PKF Texas tax team members.

On Wednesday, March 18th, the IRS issued Notice 2020-17, Relief for Taxpayers Affected by Ongoing Coronavirus Disease 2019 Pandemic. This provides individual and corporate taxpayers an extension of time for the payment of income tax amounts due at April 15, 2020. This is an automatic extension of time to pay for 90 days, until July 15, 2020.

It is important to note that Notice 2020-17 does not extend the filing deadline for individual and corporation tax returns otherwise due at April 15, 2020.

Our tax advisors have prepared a summary of the key points from Notice 2020-17, which may be downloaded here – IRS Notice 2020-17 Key Points Summary.

Additionally, we are keeping PKFTexas.com/COVID-19 up-to-date with information and resources to assist you as we all navigate these quickly-changing times.

If you have questions about how Notice 2020-17 applies to your tax situation, please connect with your PKF Texas tax team members.

It’s all too easy to let not-for-profit programs that have outlived their effectiveness to continue, even as they consume budget resources. To help ensure your resources are being deployed efficiently and effectively, consider using the tradition of spring cleaning to review and, potentially, replace older programs.

Go to the sources

Instead of relying on old assumptions about your programs’ effectiveness, perform new research. Start by surveying participants, members, donors, employees, volunteers and community leaders about which of your nonprofit’s programs are the most — and least — effective and why.

Continue Reading Clearing the Cobwebs from Your Not- For-Profit’s Program Offerings