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AN UPDATE REGARDING COVID-19

Last update 07/09/2020

Coronavirus (COVID-19) has impacted our country in ways few of us could imagine. Throughout these times, we want to let you know that we are here for you.


We at Atchley & Associates, LLP are monitoring the COVID-19 situation constantly and we are adapting our plan accordingly.


Here is what we know:


Updated Notice 2020-18 was issued by the US Treasury:

  • An additional 3 months have been granted to both the filing tax deadline and payment deadline. April 15th is now automatically adjusted to July 15th, with no need to file Forms 4868 or 7004 to grant an extension.
  • Payment amount limitations were removed. The previously imposed $1 million individual limitation and $10 million corporate limitation are no longer in place. 
  • Estimated tax payments normally due April 15th may be deferred until July 15th.

 

CARES ACT
On March 27, President Trump signed into law another coronavirus (COVID-19) bill, which provides extensive relief for businesses and employers. The new law provides a refundable payroll tax credit for 50% of wages paid by eligible employers to certain employees during the crisis. It also allows eligible taxpayers to defer paying the employer portion of Social Security taxes through Dec. 31, 2020. Instead, employers can pay 50% of the amounts by Dec. 31, 2021 and the remaining 50% by Dec. 31, 2022. In addition, there are changes to net operating losses, the business interest expense deduction and more. Other rules and limits may apply.

Keep reading here for our full CARES Act article.


Families First Coronavirus Response Act
The Families First Coronavirus Response Act was signed into law. This bill provides paid leave benefits for employees, including sick and expanded child care leave. Payroll tax credits will be provided to employers providing the leave, including 100% reimbursement for paid leave pursuant to the Act. Self employees receive an equivalent credit. FICA tax relief is also provided for employers. 

SBA Economic Disaster Injury Loan 

Small businesses can now apply for a long-term Economic Injury Disaster Loan. The U.S. Small Business Administration's EIDL program can provide economic support to those affected by COVID-19. Eligible businesses are able to apply for a long-term, low-interest working capital loan of up to $2 million. For further information regarding requirements and eligibility, contact us today. Also, our dedicated COVID-19 resource center will offer more details and application forms.


Update on additional funding: The SBA will resume accepting PPP applications on April 27th, 2020. The latest COVID-19 relief package allows the SBA to resume processing EIDL Loan and Advance applications that are already in the queue on a first come, first-served basis.


Paycheck Protection Program 

Paycheck Protection Loan Program allows businesses to borrow money for qualified costs related to employee compensation and benefits. Under certain circumstances, these loans can be forgiven and the forgiveness is not taxable. Loans can be forgiven if they are used for costs such as payroll, rent, and utility costs over the 8 week period after the loan is made, and employee and compensation levels are maintained.


Applications for small businesses and sole proprietorships start April 3, 2020. Independent contractors and self-employed individuals can also apply starting April 10, 2020.


Notice 2020-32 - The IRS released this notice to provide further guidance regarding the Paycheck Protection Program loan. It states that if a taxpayer receives a PPP loan, meet the necessary conditions and have the loan forgiven, the expenses paid with these funds are not able to be deducted on the tax return, up to the amount of loan forgiveness. The loan proceeds and the loan forgiveness are not considered taxable income. 

Update 05/13/2020 -

Q46. How will SBA review borrowers’ required good-faith certification concerning the necessity of their loan request?

Answer: When submitting a PPP application, all borrowers must certify in good faith that “[c]urrent economic uncertainty makes this loan request necessary to support the ongoing operations of the Applicant.” SBA, in consultation with the Department of the Treasury, has determined that the following safe harbor will apply to SBA’s review of PPP loans with respect to this issue: Any borrower that, together with its affiliates, received PPP loans with an original principal amount of less than $2 million will be deemed to have made the required certification concerning the necessity of the loan request in good faith. SBA has determined that this safe harbor is appropriate because borrowers with loans below this threshold are generally less likely to have had access to adequate sources of liquidity in the current economic environment than borrowers that obtained larger loans. For full information, visit PPP FAQs.


We will continue to monitor this situation and keep you up to date on the latest tax changes. Please keep this page bookmarked for the latest information. 


For more detailed information on how this will affect you, please do not hesitate to reach us at (512) 346-2086.



FOR LINKS, FAQs AND MORE, VISIT OUR DEDICATED COVID-19 RESOURCE CENTER