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What You Need to Know about Small Business Relief

The CARES Act specifically outlines the Paycheck Protection Program, a forgivable loan program that allows small businesses to get cash quickly and incentivizes them to not lay off employees.

Paycheck Protection Program 

Who qualifies for a forgivable loan?

Businesses with 500 or fewer employees

How much are the loans for?

Loan amounts for established businesses:

  • 2.5x monthly average payroll costs (based on payroll costs in 2019) 
  • $10 million limit

Loan amounts for new and seasonal businesses:

  • 2.5x monthly average payroll costs (Based on whichever time period is applicable: March 1, 2019 – June 30, 2019 or Jan. 1, 2020 – Feb. 29, 2020) 
  • Payroll cost cap of $100,000 per employee (annualized) 

What is the interest rate?

1% fixed rate 

When can businesses apply?

April 3 for small businesses and sole proprietors
April 10 for self-employed individuals and independent contractors 

How can businesses apply?

Businesses can apply through the following:

  • Existing SBA lenders 
  • Federally insured banks
  • Federally insured credit unions
  • Farm Credit System institutions

What qualifications does a business have to meet for their loan to be forgiven? 

The loan should be used to pay for the following expenses over an 8 week period after receiving the loan:

  • Payroll 
  • Mortgage interest 
  • Rent 
  • Utilities

Forgiveness is reduced if a business decreases full-time employee headcount or if they decrease wages by more than 25% for any employee who makes less than $100,000 in 2019. 

When do businesses have to start paying loan interest? 

Payments are deferred 6 months, but interest will accrue over that time.

When are these loans due?

In 2 years. 

Quick facts for business taxes 

  • Refundable tax credit on 50% of worker wages paid between March 12, 2020 and Jan. 1, 2021 with a maximum amount of $10,000 in qualified wages per employee.
  • Employers’ portions of payroll taxes for Social Security will be delayed until 2021 and 2022. 
  • Net operating loss rules under the Tax Cuts and Jobs Act have been modified. Losses for 2018, 2019, and 2020 can be carried back 5 years and the 80% rule is suspended until 2021. 

Looking for more information about small business relief? Check out 5 Ways Businesses Can Maximize Cash Flow Under the CARES Act

What you need to know about stimulus payments for individual taxpayers

Stimulus payment amounts for individuals and families are as follows:

  • Singles – $1,200 
  • Head of household filers – $1,200 
  • Married couples – $2,400
  • Parents – $500 for each child under age 17 

Payments begin to phase out at certain adjusted gross income (AGI) levels based on a taxpayer’s 2019 tax return if they’ve already filed and their 2018 tax return if they haven’t filed yet. 

Phaseout levels

Singles – Begins at $75,000, phases out completely at $99,000

Head of household – Begins at $112,500, phases out completely at $136,500

Couples (with no children) – Begins at $150,000, phases out completely at $198,000 

Children – No limit to how many children under age 17 a parent can receive $500 for.* 

For every $100 above income thresholds, the amount the taxpayer receives will decrease by $5. 

*Note: A couple whose AGI is more than $198,000 and has children may still receive some money. But for every $1,000 above $198,000, they’ll receive $50 less. For example, if a couple’s AGI is $200,000 and they have 2 children, that puts them $2,000 above the income phaseout level so they’ll receive $100 less from the child rebate. Instead of $1,000 ($500 per child), they will receive $900. 

Quick tax facts to keep in mind

  • The money received is nontaxable
  • Stimulus payments are technically advances of a refundable tax credit.
  • If someone receives an underpayment, they’ll be able to get the money they were owed when they file their 2020 tax return.
  • If someone receives an overpayment, they shouldn’t have to pay anything back. 
  • Stimulus payments do not affect 2019 tax refunds. 
  • Taxpayers should still receive a stimulus payment even if they owe a tax debt. 
  • Seniors who do not file a tax return will still be able to receive money if they meet the income qualifications based on their SSA-1099 form or RRB forms.
  • Adults who are claimed as dependents (such as college students or seniors) will not receive money. 
  • U.S. citizens living abroad will receive money if they meet income requirements and have a social security number. 

When will individual taxpayers see this money?

US Treasury Secretary, Steven Mnuchin, said stimulus payments will start going out 3 weeks after the bill passed, but some speculate it could be months for certain taxpayers. Those who selected direct deposit for their tax return will likely receive their money sooner than those who opted to receive their refund by mail. However, the IRS will also be offering an online portal to those taxpayers who opted to receive their refund by mail to provide their banking information.

NSA Update #25 – COVID-19 Economic Relief Applications and Enrollment Dates

NSA members:

Applications are available for:

  • Employee Retention Credit (Application Enrollment OPEN)
  • Paycheck Protection Program (Application Submission Starts April 3, 2020)
  • Economic Injury Disaster Loans and Loan Advance (Application Enrollment OPEN)

NSA members are encouraged to review these programs and apply as soon as possible if they meet program eligibility requirements.

Employee Retention Credit available for many businesses financially impacted by COVID-19: Application Enrollment Currently Open

The Treasury Department and the Internal Revenue Service today launched the Employee Retention Credit, 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.

PROGRAM INFORMATION: https://www.irs.gov/newsroom/irs-employee-retention-credit-available-for-many-businesses-financially-impacted-by-covid-19

APPLICATION FORMS: https://www.irs.gov/forms-pubs/about-form-7200

FAX COMPLETED FORM TO: (855) 248-0552.

PAYCHECK PROTECTION PROGRAM (PPP): Application Enrollment STARTS APRIL 3, 2020 (Starts April 10, 2020, for independent contractors and self-employed individuals). Although the program is open until June 30, 2020, we encourage you to apply as quickly as you can because there is a funding cap and lenders need time to process your loan.

PROGRAM INFORMATION: https://home.treasury.gov/system/files/136/PPP–Fact-Sheet.pdf

APPLICATION FORM: https://home.treasury.gov/system/files/136/Paycheck-Protection-Program-Application-3-30-2020-v3.pdf

You can apply through any existing SBA 7(a) lender or through any federally insured depository institution, federally insured credit union, or Farm Credit System institution that is participating. LOCAL ASSISTANCE & OFFICES:  https://www.sba.gov/local-assistance

The Paycheck Protection Program authorizes up to $349 billion in forgivable loans to small businesses to pay their employees during the COVID-19 crisis. All loan terms will be the same for everyone. The loan amounts will be forgiven as long as the loan is used to cover payroll costs, most mortgage interest, rent, and utility costs incurred over the 8-week period after the loan is made; as long as employee and compensation levels are maintained.  Payroll costs are capped at $100,000 on an annualized basis for each employee. Due to likely high subscriptions, it is anticipated that not more than 25% of the forgiven amount may be for non-payroll costs.  Loan payments will be deferred for 6 months.

COVID-19 Economic Injury Disaster Loan & Loan Advance: Application Enrollment Currently Open

In response to the Coronavirus (COVID-19) pandemic, small business owners in all U.S. states, Washington D.C., and territories are eligible to apply for an Economic Injury Disaster Loan advance of up to $10,000. The SBA’s Economic Injury Disaster Loan program provides small businesses with working capital loans of up to $2 million that can provide vital economic support to small businesses to help overcome the temporary loss of revenue they are experiencing.

ONLINE PROGRAM INFORMATION AND APPLICATION:  https://covid19relief.sba.gov/#/

The loan advance will provide economic relief to businesses that are currently experiencing a temporary loss of revenue. Funds will be made available within three days of a successful application, and this loan advance will not have to be repaid.

Economic Injury Disaster Loans are also available to residents in declared disaster areas. To view the full list of disaster declarations, click here. To apply for a disaster loan unrelated to COVID-19, click here.

-NSA

Department of Revenue Extends March Sales Tax Due Dates for Adversely Affected Taxpayers

On March 26, 2020, Florida Department of Revenue Executive Director Jim Zingale issued Order of Emergency Waiver/Deviation #20-52-DOR-002 to extend certain filing deadlines for Florida businesses.

Quarterly Filers Deemed Adversely Affected by the COVID-19 Outbreak

For taxpayers that are adversely affected by the COVID-19 outbreak, the order extends the due date for March 2020 quarterly sales and use tax returns and payments to Thursday, April 30, 2020. You must file a tax return even if you do not owe tax

If you file a paper return, your return and payment must be postmarked by Thursday, April 30, 2020.

If you electronically pay only or you electronically file and pay at the same time, you must initiate your electronic payment and receive a confirmation number no later than 5:00 p.m. ET on Wednesday, April 29, 2020.

“Adversely affected” is defined as any of the following conditions:

  1. The business closed in March 2020 in compliance with a state or local government order issued in response to the COVID-19 outbreak and following the closure had no taxable sales transactions.
  2. The business experienced sales tax collections in March 2020 that are less than 75% of March 2019 sales tax collections.
  3. The business was established after March 2019.
  4. The business is registered with the Department to file quarterly.

If you have already submitted your return and payment, or you file and pay electronically, please disregard this reminder.

Additional COVID-19 Information
The Department is monitoring developments pertaining to the COVID-19 outbreak and is following guidance from federal and state officials. We understand you may have some concerns and uncertainty pertaining to COVID-19 and are committed to being responsive to your needs. The Department has established a dedicated team to address your tax-related questions and concerns via email at COVID19TAXHELP@FloridaRevenue.com. For more information regarding the sales and use tax extended due date, visit the General Tax Administration Program COVID-19 webpage.

Please keep your subscription preferences up to date. You received this email because you signed up to receive a quarterly reminder. If your filing frequency changes, update your profile using the “Update Profile” link below. If you want to stop receiving these email reminders, use the “SafeUnsubscribe” link below.

IRS: Employee Retention Credit available for many businesses financially impacted by COVID-19

Dear Client,

For your information,

IRS: Employee Retention Credit available for many businesses financially impacted by COVID-19

WASHINGTON — The Treasury Department and the Internal Revenue Service today launched the Employee Retention Credit, 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.

Does my business qualify to receive the Employee Retention Credit?

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.

These measures are calculated each calendar quarter.

How is the credit calculated?

The amount of the credit is 50% of qualifying wages paid up to $10,000 in total. Wages paid after March 12, 2020, and before Jan. 1, 2021, are eligible for the credit. Wages taken into account are not limited to cash payments, but also include a portion of the cost of employer provided health care.

How do I know which wages qualify?

Qualifying wages are based on the average number of a business’s employees in 2019.

Employers with less than 100 employees: If the employer had 100 or fewer employees on average in 2019, the credit is based on wages paid to all employees, regardless if they worked or not. If the employees worked full time and were paid for full time work, the employer still receives the credit.

Employers with more than 100 employees:  If the employer had more than 100 employees on average in 2019, then the credit is allowed only for wages paid to employees who did not work during the calendar quarter.

I am an eligible employer. How do I receive my 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.

Where can I find more information on the Employer Retention Credit and other COVID-19 economic relief efforts?

Updates on the implementation of this credit,  Frequently Asked Questions on Tax Credits for Required Paid Leave and other information can be found on the Coronavirus page of IRS.gov.