April 6, 2020
Massachusetts Finally Issues their Official Tax Deadline Guidance
March 30, 2020
Coronavirus Aid, Relief and Economic Security (CARES) Act
The Coronavirus Aid, Relief and Economic Security (CARES) Act was recently passed into law and includes several important tax provisions to help businesses and individuals cope with the COVID-19 pandemic. Specifically for businesses, the CARES Act includes the Paycheck Protection Program, which offers businesses immediate access to liquidity through a new loan program tied to the company’s payroll costs and certain other operating expenses.
Highlights of the CARES Act
Provides a $500 billion lending program for loans, loan guarantees and investments.
Temporarily reverses or limits the revenue raising provisions of the Tax Cuts and Jobs Act (the TCJA) and makes several technical corrections to the TCJA.
Offers direct cash payments for qualifying individuals.
Increases unemployment benefits, including self-employed individuals and “Gig” workers.
Provides funding to support those on the front-line battling COVID-19, including public health programs, hospitals, medical providers and suppliers.
Affords protections against certain foreclosures and eviction.
PROVISIONS FOR BUSINESSES
Paycheck Protection Program
The Paycheck Protection Program (PPP) provision of the CARES Act is an extension of the Small Business Administration (SBA) 7(a) loan program and offers businesses immediate access to liquidity to help cover payroll and other overhead expenses through a new loan program tied to prior year payroll. Loans made under the Paycheck Protection Program are backed by the federal government. Lending requirements under this program are expected to be significantly less onerous than provisions found in the SBA’s Disaster Loan program. You can apply for the PPP at any lending institution that is approved to participate in the program through the SBA. Applicants are eligible to apply for the PPP loan until June 30, 2020.
Businesses in operation on February 15, 2020 with 500 or fewer employees, that had employees or paid independent contractors on that date. Special rules exist for businesses with common ownership. The SBA has also relaxed certain constraints tied to revenue and employment levels, which made obtaining SBA loans a challenge for some businesses in the past.
The maximum loan amount for an eligible business is the lesser of $10 million or 250% of the borrower’s average monthly payroll costs. Payroll costs generally include employee salaries and tips, healthcare benefits, retirement benefits, severance payments, and state and local taxes on employee compensation.
For example, if over the last 12 months your average monthly payroll was $100,000, your business could borrow $250,000 ($100,000 x 250%). The CARES Act does not require collateral or personal guarantees for the loan. The loan term is a maximum of 10 years at a maximum interest rate of 4%. Loan payments will be deferred for the first 6-12 months.
The borrower may apply for loan forgiveness in an amount equal to the cumulative amount of payroll costs (as defined), rent, utilities, and interest paid on mortgages during the 8 weeks after the loan is made. The amount forgiven is limited to the extent compensation and headcount are reduced relative to a base period, and any amount forgiven will not be taxable to the borrower. The reduction in the amount forgiven is dependent on the number of full-time equivalent employees during the covered period compared to prior periods, and amount of salary and wages paid during the covered period compared to the employee wages during the most recent full quarter that each employee was employed. For the portion of the loan not forgiven, the maximum term is ten years with interest capped at 4%. There are no fees associated with the loan, and collateral requirements and personal guarantees are waived. For tax purposes, there will not be cancellation of indebtedness income recognized upon forgiveness of the loan.
Economic Injury Disaster Loan Program
This program currently allows for emergency loans of up to $2M to assist companies affected by COVID-19. The Act would waive the requirement for personal guarantees on loans under $200K. It would also waive the requirement that the borrower not be able to obtain credit elsewhere; and it would provide emergency grants of up to $10K within 3 days of the borrower filing an application – though the amount of an emergency grant would reduce any loan forgiveness under the PPP. The Act also would streamline the loan application process.
Additional information on the COVID-19 Small Business Loan Resources can be found at sba.gov — found HERE.
Employee Retention Credit
Provision provides eligible employers a credit against employment taxes equal to 50 percent of qualified wages paid to employees who are not working due to the employer’s full or partial suspension of business or a significant decline in gross receipts. The credit is available to be claimed on a quarterly basis, but the amount of qualified wages to be taken into account for purposes of calculating the credit is limited to $10,000 in aggregate per employee for all quarters. This would result in a maximum credit of $5,000 per applicable employee. The provision contains several requirements defining qualified wages, qualified employees, and qualified employers. The credit applies to wages paid after March 12, 2020, and before January 1, 2021.
Deferral of Employer Payroll Tax Payments
The provision allows employers to defer the employer’s portion of certain payroll taxes. The provision requires that the employer taxes being deferred must be paid over the following two years, 50% due by December 31, 2021 and the remaining 50% due by December 31, 2022.
Net operating losses
This provision allows for a five-year carryback of net operating losses (NOLs) arising in 2018, 2019, or 2020 by a business. Businesses will be able to amend or modify tax returns for tax years dating back to 2013 in order to take advantage of the carryback.
The Act also eliminates the 80% loss limitation rule for losses incurred in years beginning before January 1, 2021. Thus, these NOL’s can utilized in full to offset income.
The Act also eliminates $500,000 net operating loss limitation rule applicable to individuals, to allow them to take advantage of both the five-year NOL carryback and the NOL carryforward.
Business Interest Expense Limitation
This provision also reduces the negative impact of the 30% business interest expense limitation previously imposed on certain taxpayers under the 2017 Tax Cuts and Jobs Act. For tax years beginning in 2019 and 2020, the business interest expense limitation is increased to 50% of taxable income, resulting in a potentially larger interest expense deduction for affected taxpayers.
Qualified improvement property
The CARES Act corrects Congressional oversight from the 2017 tax Cuts and Jobs Act by defining qualified improvement property as 15-year property, thus allowing a 100 percent bonus depreciation to be taken in the year incurred. This provision is applicable retroactively back to the 2018 tax year.
INDIVIDUAL TAX PROVISIONS
One-time payment of $1,200 for individuals and $2,400 for joint filers, with a $500 credit for each qualifying child. The amount of the payment begins to be phased out as follows:
Individuals with adjusted gross income (AGI) of $75,000, fully phased out if AGI is $99,000.
Head of household with AGI of $112,500, fully phased out if AGI is $136,500.
Married filers with AGI of $150,000, fully phased out if AGI is $198,000.
These thresholds are based upon 2018 AGI, unless a 2019 return has already been filed, in which case it will be based on 2019 AGI.
The Act also waives the 10-percent penalty on early withdrawals taken during the 2020 calendar year up to $100,000 from qualified retirement plans for coronavirus-related distributions. An election to spread the associated income from such withdrawals over a three-year period is available.
As an alternative, taxpayers may also choose to recontribute the withdrawn amounts to a qualified retirement plan within three years, and consequently avoid recognition of the income
Suspends the required minimum distribution rules for certain defined contribution plans and IRAs for calendar year 2020.
There is a new provision that provides an above-the-line deduction for charitable contributions up to $300; additionally, the limits on charitable contributions are changed for 2020.
The provisions of the CARES Act provide an unprecedented amount of relief for businesses and individuals during these uncertain times. We want to assist you by providing guidance that ensures that you are able to take advantage of any available resources that will help you navigate through this challenging time period. If you have any questions on what opportunities are available for you and your business, please contact your Sansiveri professional.
March 27, 2020
MA Extends Deadline to July 15
March 26, 2020
The Families First Coronavirus Response Act (FFCRA)
To Our Clients and Friends,
On March 18, 2020, the Families First Coronavirus Response Act (the FFCRA) was signed into law to respond to COVID-19 coronavirus outbreak. The FFCRA applies to employers with fewer than 500 employees and seeks to assist employees impacted by novel coronavirus (“COVID-19”). The FFCRA’s paid leave provisions are effective on April 1, 2020, and apply to leave taken between April 1, 2020, and December 31, 2020.
Employers with fewer than 500 employees will be affected by the following provisions of FFCRA:
EMERGENCY FAMILY AND MEDICAL LEAVE ACT EXPANSION (FMLA+)
EMERGENCY PAID SICK LEAVE ACT (EPSL)
EMPLOYER TAX CREDITS FOR PAID SICK AND PAID FAMILY AND MEDICAL LEAVE
Also Note: HEALTH INSURANCE PLAN CHANGES DUE TO COVID-19
What follows is the best information we have as of March 25, 2020. There are still many questions and there are likely to be modifications to follow.
EMERGENCY FAMILY AND MEDICAL LEAVE ACT EXPANSION (FMLA+) *
Covered Employers: Private employers with fewer than 500 employees. [This act changes from the original 50 employee threshold for FMLA and in doing so, employees working for smaller business, fewer than 50 employees, gain protection and relief under FMLA.]
Eligible Employees: Any employee who has been employed for at least 30 days and is unable to work (or telework) due to a need to care for children under 18 years of age, if the child’s school or place of care is closed or if the childcare provider is closed due to a public health emergency (including coronavirus).
Possible Exemptions: The Secretary of Labor has the authority to exclude certain health care providers or emergency responders from the definition of eligible employees and to exempt small businesses with fewer than 50 employees if compliance with the requirements would jeopardize the viability of the business.
Amount of Leave: Eligible employees may qualify for up to 12 work weeks of leave.
Salary Continuation: The first 10 days of leave may consist of unpaid leave; however, the employee may elect to substitute accrued paid time off for unpaid leave. After the initial 10 days the employer must pay eligible employees at least two-thirds of the employees’ regular rate of pay (as defined under the Fair Labor Standards Act) based on the number of hours the employees would otherwise have been scheduled to work. Paid leave shall not exceed $200 per day or $10,000 in aggregate.
*REMINDER: This FMLA+ expansion is temporary with these components ending on December 31, 2020
EMERGENCY PAID SICK LEAVE ACT (EPSL)
Covered Employers: Private employers with less than 500 employees and certain public agencies.
Eligible Employees: Any employee working for an employer, regardless of how long they have been employed by the employer.
Reasons to Take Sick Leave: Employer shall provide each employee with paid sick time if they are unable to work (or telework) due to the following circumstances:
Being subject to federal, state or local quarantine or isolation order related to COVID-19
Being advised by a health care provider to self-quarantine due to concerns related to COVID-19
Experiencing symptoms of COVID-19 and seeking a medical diagnosis
Caring for an individual who is subject to a federal, state or local quarantine or isolation
Caring for a child if the child’s school, place of care or childcare provider is closed due to a public health emergency, such as COVID-19
Experiencing any other substantially similar condition as may be specified by the Dept. of Health and Human Services (HHS)
Amount of Paid Sick Leave: Full-time employees may use up to 80 hours this year. Part-time employees may use the number of hours equal to the number of hours the employee works, on average, over a two-week period, which must be used before the end of the year.
Amount of Pay: Paid sick time shall not exceed:
$511/day and $5,110 in the aggregate for Reasons 1, 2, and 3 above. The pay must be provided at the employee’s regular rate of pay or the minimum wage, whichever is greater.
$200/day and $2,000 in the aggregate for Reasons 4, 5, and 6 above. The pay must be provided at two-thirds the employee’s regular rate of pay or minimum wage, whichever is greater.
The employee may use this paid sick time prior to using other paid time off provided by the employer.
Employers must post a notice regarding employee’s rights under the law. The Dept. of Labor will create a model notice no later than 7 days after the enactment of the Act.
EMPLOYER TAX CREDITS FOR PAID SICK, FAMILY AND MEDICAL LEAVE
While further guidance is still forthcoming with respect to implementation, the following tax credits will be available under the FFCRA:
Paid Sick Leave Credit
A) For an employee who is unable to work because of Coronavirus quarantine or self-quarantine or has Coronavirus symptoms and is seeking a medical diagnosis, eligible employers may receive a refundable sick leave credit for sick leave at the employee’s regular rate of pay, up to $511 per day and $5,110 in the aggregate, for a total of 10 days.
B) For an employee who is caring for someone with Coronavirus, or is caring for a child because the child’s school or child care facility is closed, or the child care provider is unavailable due to the Coronavirus, eligible employers may claim a credit for two-thirds of the employee’s regular rate of pay, up to $200 per day and $2,000 in the aggregate, for up to 10 days. Eligible employers are entitled to an additional tax credit determined based on costs to maintain health insurance coverage for the eligible employee during the leave period.
Child Care Leave Credit
In addition to the sick leave credit, for an employee who is unable to work because of a need to care for a child whose school or childcare facility is closed or whose childcare provider is unavailable due to the Coronavirus, eligible employers may receive a refundable childcare leave credit. This credit is equal to two-thirds of the employee’s regular pay, capped at $200 per day or $10,000 in the aggregate. Up to 10 weeks of qualifying leave can be counted towards the childcare leave credit. Eligible employers are entitled to an additional tax credit determined based on costs to maintain health insurance coverage for the eligible employee during the leave period.
Also Note: HEALTH INSURANCE PLAN CHANGES DUE TO COVID-19
A group health plan must provide coverage without any cost-sharing requirements, such as deductibles, co-payments and co-insurance, or prior authorization or other medical management requirements, for:
The costs of a test to detect or diagnose the virus that causes COVID-19; or
Health care provider visits, including telehealth visits, urgent care and emergency room visits, that result in an order for or administration of a test to detect or diagnose the virus that causes COVID-19.
We hope you find this information helpful. Please contact a Sansiveri team member if you have any questions.
March 21, 2020
THE LATEST ON TAX DAY:
NOW OFFICIALLY JULY 15
Please see below an announcement released today from the IRS. We are carefully monitoring this situation, particularly with respect to our neighboring states, and at this time, the following locations have either formally announced (or are expected to announce) similar deadline relief:
We will continue to provide updates as more definitive guidance becomes available. As always, if you have any questions, please do not hesitate to contact us.
Tax Day now July 15: Treasury, IRS extend filing deadline and federal tax payments regardless of amount owed
IR-2020-58, March 21, 2020
WASHINGTON — The Treasury Department and Internal Revenue Service announced today that the federal income tax filing due date is automatically extended from April 15, 2020, to July 15, 2020.
Taxpayers can also defer federal income tax payments due on April 15, 2020, to July 15, 2020, without penalties and interest, regardless of the amount owed. 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.
Taxpayers do not need to file any additional forms or call the IRS to qualify for this automatic federal tax filing and payment relief. Individual taxpayers who need additional time to file beyond the July 15 deadline, can request a filing extension by filing Form 4868 through their tax professional, tax software or using the Free File link on IRS.gov. Businesses who need additional time must file Form 7004.
The IRS urges taxpayers who are due a refund to file as soon as possible. Most tax refunds are still being issued within 21 days.
“Even with the filing deadline extended, we urge taxpayers who are owed refunds to file as soon as possible and file electronically,” said IRS Commissioner Chuck Rettig. “Filing electronically with direct deposit is the quickest way to get refunds. Although we are curtailing some operations during this period, the IRS is continuing with mission-critical operations to support the nation, and that includes accepting tax returns and sending refunds. As a federal agency vital to the overall operations of our country, we ask for your personal support, your understanding – and your patience. I’m incredibly proud of our employees as we navigate through numerous different challenges in this very rapidly changing environment.”
The IRS will continue to monitor issues related to the COVID-19 virus, and updated information will be posted on a special coronavirus page on IRS.gov.
This announcement comes following the President’s emergency declaration last week pursuant to the Stafford Act. The Stafford Act is a federal law designed to bring an orderly and systematic means of federal natural disaster and emergency assistance for state and local governments in carrying out their responsibilities to aid citizens. It was enacted in 1988.
Treasury and IRS will issue additional guidance as needed and continue working with Congress, on a bipartisan basis, on legislation to provide further relief to the American people.
March 19, 2020
APRIL 15 DEADLINE
APRIL 15 DEADLINE: WHERE WE STAND AS OF NOW
A Message from David H. Lichtenstein, Partner
By now, many of you have undoubtedly heard the announcement by Steve Mnuchin (Treasury Secretary) that the April 15 tax deadline has been extended to July 15. There is still lot of controversy and confusion surrounding this announcement. As it stands now, it appears that the new July 15 deadline only applies to tax payments that are normally due April 15.
This means that the deadline for actually filing a tax return is still April 15. In addition, most states have yet to provide guidance with respect to their own deadlines.
With the help of our National and State CPA societies, our industry is working hard to advocate for consistent and equitable relief for all taxpayers. Until we have definitive guidance from our Federal and State government agencies, we are operating under existing guidelines that the April 15 deadline is still our tax return filing deadline. We will continue to monitor the situation and we will keep you updated as definitive information becomes available.
For now, it is business as “usual” for all of us here at Sansiveri, Kimball & Co., LLP. With that in mind, we continue to ask for your assistance and encourage you to make every effort to send us any of your tax documents electronically to help protect you from any health risk. Mailing or dropping them by our offices may delay the completion of your work. Please click on the link at the top right corner of our homepage to upload your files.
As always, if you have any questions or concerns, please do not hesitate to contact us.
David H. Lichtenstein
To reach Dave, email email@example.com or call 401-331-0500.
March 16, 2020
TO OUR CLIENTS + COLLEAGUES
A Message from Jason M. DaPonte, Managing Partner
As we continue to monitor the Coronavirus (COVID-19) Pandemic, and navigate through this uncertain and rapidly changing time, I want to assure you that, on behalf of Sansiveri’s partners and our entire leadership team, we are committed to ensuring that the health and safety of our employees, our valued clients and all of our families is our top priority.
We have been working tirelessly to proactively develop plans and implement systems that protect the health and safety of our employees and their families and ensure that we continue to effectively service our clients. Our plans are aimed at addressing the rapidly changing nature of this virus and the effect it is having on the work that we do. Our goal is to follow all advice from local and national health authorities and the CDC to reduce face to face communications when possible and limit group interactions, so that we can do our part to limit and slow the spread of this virus. With that in mind:
We are following the CDC recommendations to avoid crowds, so effective, Monday, March 16th most all of our employees will be working remotely. Therefore, if anyone from Sansiveri is scheduled to work with you or your organization in a way that requires face-to-face interaction, we will be in touch with you to discuss options to safeguard both the health of your team and ours. Although under normal circumstances we prefer in person meetings, during this period of national emergency, and for the safety of all of us, we must utilize all available alternatives to face to face meetings. We have excellent technology that allows us to accomplish most of our work via phone, through electronic file sharing, or through the use of technologies such as Skype, which allows for security-protected video conferencing from a remote location.
Also, we ask for your assistance and encourage you to make every effort to send us any of your tax documents electronically to help protect you from any health risk. Mailing or dropping them by our offices may delay the completion of your work. In order to access our secure file upload, please visit our website at sansiveri.com. Please click on the link at the top right corner of our homepage to upload your files.
For your protection, if you plan to drop off documents in person, we will be accepting tax information at our Providence office Monday – Friday from 9:00 – 1:00 (our North Kingstown office will be closed).