Dougall Conradie COVID-19 Update
January 6th, 2021 - 2:00 PM
Tax, PPP and COVID-19 Relief Updates for 2021
December 28th Update
Consolidated Appropriations Act of 2021
- $600 stimulus payments to millions of America adults, plus $600 per dependent under age 17
- Income limits single up to $75,000, head of household $112,500 and married $150,000
- Dependents 17 and older will not be eligible for the $600 direct payment
- Extension of unemployment assistance for 11 weeks with supplemental $300 per week
- Continue and expand benefits for gig workers and freelancers and it would extend federal payments for people whose regular benefits have expired
- Eviction moratorium through January 31, 2021.
- Note: in Oregon, the eviction moratorium is into July 2021.
- Extension of student loan forbearance through April 1, 2021
- Extension of the special charitable contribution provision enacted for 2020 through 2021
- Medical expense deduction expansion is extended for one additional year
- PPP loan forgiveness
- Simplified for borrowers with PPP loans $150,000 or less
- Sign and submit one-page form
- Attest to comply with the PPP requirements
- Simplified forgiveness for loans between $150,000 and $2 million
- No requirement to submit documentation of FTEs, payroll and pay rates nor canceled checks, receipts, etc. for nonpayroll costs
- Keep relevant records related to employment for four years and other records for three years
- Lender review limited to completeness
- Business expenses paid with PPP loan proceeds are tax deductible
- Simplified for borrowers with PPP loans $150,000 or less
- Second round of PPP loans
- 300 or fewer employees
- 30% gross receipts decline in any quarter in 2020 compared to the same quarter in 2019
- Inclusion of 501(c)(6), restaurants, live venues, and EIDL grants
- Loan amount – similar to the 1st round of PPP loans
- Maximum is $2 million
- 2.5 X average total payroll costs
- Farmers and ranchers could use gross income instead of net income
- Employers allowed to provide up to $5,250 in student loan payments without it being a taxable benefit to the employee which has been extended through 2025
- The Employee Retention Tax Credit (ERTC) has been extended through June 30, 2021 and expanded so employers who receive PPP Loans may still qualify.
- Extension of the credit for paid sick and family leave enacted as part of the Families First Coronavirus Response Act through March 31, 2021.
- Restoration of the 100% business meals deduction for two years to help the restaurant industry
- Extension of subsidy by SBA of other small business loans (Type 7(a))
- Funding for EIDL grants
- Grants for shuttered venue operators (theater, museums, etc.)
- Extension of time allotted for repayment of employee Social Security taxes deferred under a presidential memorandum through the end of 2021
- Various other tax credits have been extended
July 21st Update
5 reasons borrowers shouldn't rush their PPP forgiveness applications https://blog.aicpa.org/2020/07/5-reasons-borrowers-shouldnt-rush-their-ppp-forgiveness-applications.html#sthash.XOQcS2C4.dpbs
July 10th Update
IRS announces rollover relief for required minimum distributions from retirement accounts that were waived under the CARES Act
WASHINGTON – The Internal Revenue Service today announced that anyone who already took a required minimum distribution (RMD) in 2020 from certain retirement accounts now has the opportunity to roll those funds back into a retirement account following the CARES Act RMD waiver for 2020.
The 60-day rollover period for any RMDs already taken this year has been extended to Aug. 31, 2020, to give taxpayers time to take advantage of this opportunity.
The IRS described this change in Notice 2020-51, released today. The Notice also answers questions regarding the waiver of RMDs for 2020 under the Coronavirus Aid, Relief, and Economic Security Act, known as the CARES Act.
The CARES Act enabled any taxpayer with an RMD due in 2020 from a defined-contribution retirement plan, including a 401(k) or 403(b) plan, or an IRA, to skip those RMDs this year. This includes anyone who turned age 70 1/2 in 2019 and would have had to take the first RMD by April 1, 2020. This waiver does not apply to defined-benefit plans.
In addition to the rollover opportunity, an IRA owner or beneficiary who has already received a distribution from an IRA of an amount that would have been an RMD in 2020 can repay the distribution to the IRA by Aug. 31, 2020. The notice provides that this repayment is not subject to the one rollover per 12-month period limitation and the restriction on rollovers for inherited IRAs.
The notice provides two sample amendments that employers may adopt to give plan participants and beneficiaries whose RMDs are waived a choice as to whether or not to receive the waived RMD.
Keep Economic Impact Payment notice with other tax records
People who receive an Economic Impact Payment this year should keep Notice 1444, Your Economic Impact Payment, with their tax records. This notice provides information about the amount of their payment, how the payment was made and how to report any payment that wasn’t received.
For security reasons, the IRS mails this notice to each recipient’s last known address within 15 days after the payment goes out. It’s especially important for people to keep this notice if they think their payment amount is wrong. When they file their 2020 tax return, they can refer to Notice 1444 and claim additional credits, if they are eligible for them.
Taxpayers should keep this notice filed with all their other important tax records. These include, W-2s from employers, 1099s from banks and other payers, other income documents and virtual currency transaction records.
All taxpayers should keep a copy of their past tax returns and supporting documents for at least three years. Key information from their prior year return may be required to file next year. Life changes like employment or marital status and financial gains or losses can affect a tax refund or the amount of taxes a person may owe.
June 10th Update
On June 5, President Trump signed the Paycheck Protection Program Flexibility Act (PPPFA) of 2020, providing more flexibility for participants in the PPP program. Provisions in the new law include:
- PPPFA lowers the amount of the loan that must be spent on payroll to 60% (down from 75%). The remainder of the funds must still be used on covered expenses for utility payment, transportation costs, rent obligations, or interest on mortgage obligations (not to include principal payments or prepayment)
- PPPFA has expanded the period for spending the loan proceeds to 24 weeks, instead of the 8 weeks contained in the original CARES Act. Businesses are NOT required to wait for 24 weeks to apply for forgiveness
- The June 30 deadline to rehire workers has been pushed back to December 31, 2020
- PPPFA provides additional exceptions if an employer is unable to rehire the required number of employees. For example, there is an exception if the employer is able to demonstrate an inability to hire similarly qualified employees on or before December 31, 2020. If, in good faith, the eligible recipient is able to document one of the following conditions, the related reduction in full-time equivalent employees will not reduce the amount of eligible loan forgiveness.
- The required number of employees were not available due to:
- An inability to rehire individuals who were employees of the eligible recipient on February 15, 2020; and
- An inability to hire similarly qualified employees for unfilled positions on or before December 31, 2020; or
- An inability to return to the same level of business activity as such business was operating at before February 15, 2020, due to compliance with requirements established or guidance issued by the Secretary of Health and Human Services, the Director of the Centers for Disease Control and Prevention, or the Occupational Safety and Health Administration during the period beginning on March 1, 2020, and ending December 31, 2020, related to the maintenance of standards for sanitation, social distancing, or any other worker or customer safety requirement related to COVID–19
- The required number of employees were not available due to:
- Businesses will have five years to repay any PPP loan, or portion of a PPP loan, made after the date of enactment of the PPPFA that is not forgiven. The PPPFA allows businesses that obtained a PPP loan prior to the enactment date to work with their lenders to modify the maturity terms to adopt the five year maturity period.
We expect the Treasury and SBA to continue providing additional guidance on the implementation of the PPPFA. The above items provide relief for many businesses as well as greater flexibility as we work toward forgiveness of PPP loans. We will continue to closely monitor updates to the PPP loan program as well as other legislation that will impact our clients.
Feel free to contact us if you would like additional information on how this may impact your business.
April 10, 2020 - IRS Update on Stimulus Checks for Non-Filers
March 30, 2020 - COVID-19 and Tax Impacts FAQs
Extended Tax Deadlines
What relief has the IRS granted?
Due to the coronavirus, the IRS has extended the April 15 filing and federal income tax payment deadline to July 15, 2020.
On March 20, 2020, the IRS formalized their relief by publishing Notice 2020-18. Notice 2020-18 supersedes Notice 2020-17 which was issued on March 17. Notice 2020-18 provides that those with a filing deadline of April 15 (for a federal income tax return) have an automatic extension to July 15. No extension form (Form 4868 or Form 7004) is necessary.
The postponement of payments is available for federal income taxes (including payments of tax on self-employment income) due on April 15 for the 2019 tax year and to estimated income tax payments due on April 15 for the 2020 tax year. There is no limitation on the amount of the payment that may be postponed (which is an update from the superseded Notice 2020-17).
The postponement means that the period from April 15, 2020 through July 15, 2020 will be disregarded by the IRS for purposes of calculating any interest, penalties or additions to tax for failure to file a tax return or pay federal income taxes postponed by the notice.
More guidance can be found on the IRS’s FAQs page.
Does this affect second quarter estimated tax payments normally due June 15?
Notice 2020-18 does not address second quarter estimated income tax payments. IRS FAQ #16 also confirms this treatment. Absent further relief, this payment is still due June 15.
When are contribution deadlines for IRAs and HSA?
Based on IRS FAQs, the deadline for making contributions to IRAs, HSAs and MSAs is extended to July 15, 2020.
If I already filed my 2019 income tax return and scheduled taxes to be paid by April 15, 2020, can this payment be cancelled and/or rescheduled?
For those who have already filed their 2019 income tax return and scheduled the balance due to be withdrawn from their bank account by April 15, 2020, they may cancel the scheduled payment by calling the U.S. Treasury Financial Agent at 888.353.4537 at least two business days prior to the scheduled date. Then, go to irs.gov/directpay to reschedule the tax payment to meet the new deadline. For more information, see IRS FAQ #14.
What are states doing with filing and payment deadlines
Different states are doing different things. Oregon has postponed the filing and payment deadline to July 15, 2020. Other states have made different changes. Check out the latest developments on state tax filings related to the coronavirus.
Tax Credits for Employers (Families First Coronavirus Response Act, H.R. 6201)
What is the Families First Coronavirus Response Act?
The Families First Coronavirus Response Act, H.R. 6201, that was signed into law on March 18 contains refundable tax credits for employers who provide paid sick leave or family or medical leave for their employees who miss work for various coronavirus-related reasons.
Subject to limitations and exceptions, employers of less than 500 employees are required to provide mandatory sick time and paid family leave but are eligible for payroll tax credits to offset the costs.
How does the paid family leave work?
Subject to certain limitations, the bill provides an employer a payroll tax credit that equals 100% of the qualified family leave wages paid by the employer.
It requires employers with fewer than 500 employees to provide public health emergency leave under the Family and Medical Leave Act (FMLA), P.L. 103-3, when an employee is unable to work or telework due to a need for leave to care for a son or daughter under age 18 because the school or place of care has been closed, or the childcare provider is unavailable, due to a public health emergency related to COVID-19.
The paid leave is available for up to 10 weeks.
- The first 10 days of the leave may consist of unpaid leave. However, the employee may choose to use any accrued paid time off.
- The amount paid per day is calculated based on the “two-thirds rule” discussed in H.R. 6201.
- The credit is generally available for up to $200 in wages for each day an employee receives qualified family leave wages. A maximum of $10,000 in wages per employee would be eligible for the credit.
- The paid leave benefit is available to self-employed taxpayers.
Employers with fewer than 50 employees can be exempted from the requirement and healthcare providers and emergency responders can be excluded from this rule.
How does the paid sick time work?
Two weeks of sick pay must be paid when the employee is unable to work or telework for any of the following:
- The employee is subject to a federal, state or local quarantine or isolation order related to COVID-19.
- The employee has been advised by a healthcare provider to self-quarantine due to concerns related to COVID-19.
- The employee is experiencing symptoms of COVID-19 and is seeking a medical diagnosis.
- The employee is caring for an individual who is subject to an order.
- The employee is caring for a son or daughter of such employee if the school or place of care of the son or daughter has been closed, or the childcare provider of such son or daughter is unavailable, due to COVID-19 precautions.
- The employee is experiencing any other substantially similar condition specified by the Secretary of Health and Human Services in consultation with the Secretary of the Treasury and the Secretary of Labor.
There are exceptions for healthcare workers and emergency responders. And, employers with fewer than 50 employees can be exempted from the requirement.
The amount of sick pay is set at:
- The employee’s standard rate of pay (or minimum wage, if greater) for leave taken in situations 1, 2 and 3 discussed above and two-thirds of that amount for leave taken in situations 4, 5 and 6 above.
The maximum amount of paid sick time is:
- $511 per day ($5,110 in total) for leave paid because of situations 1, 2 and 3 above
- $200 per day ($2,000 in total) for leave paid due to situations 4, 5 and 6 above
The duration of the sick pay is 80 hours for full-time employees and equal to the average hours worked over a two-week period for part-time workers.
What is the tax credit applied against?
The credit can be used against the employer’s portion of Social Security (6.2%) and Medicare (1.45%) taxes.
What guidance has been released related to this legislation?
Payroll tax delay
The CARES Act delays payment of certain employer payroll taxes until December 31, 2021 and December 31, 2020. For self-employment taxes, there will also be delays in portions of their tax payments.
Other COVID-19 Tax-Related Questions
What effect will the COVID-19 outbreak have on IRS operations?
The IRS is continuing to monitor issues during the outbreak. More information about operations can be found in this statement from the IRS.
Are 2020 Required Minimum Distributions (RMD) still required?
The IRS has suspended the requirement to take an RMD for 2020. 2019 RMDs that were postponed to 2020 still must be taken by the filing deadline.
How are withdrawals from retirement accounts impacted?
Eligible taxpayers may take up to $100,000 in coronavirus-related distributions from retirement plans without being subject to the 10% additional tax for early distributions. Eligible distributions can be taken up to Dec. 31, 2020. Coronavirus-related distributions may be repaid within three years.
An eligible taxpayer is one who has been diagnosed with SARS-CoV-2 virus or COVID-19 disease or whose spouse or dependent has been diagnosed with SARS-CoV-2 virus or COVID-19 disease or who experiences adverse financial consequences from being quarantined, furloughed, or laid off, or who has had his or her work hours reduced, or who is unable to work due to lack of child care.
March 26, 2020 - Highlights of the bill currently working its way through Congress including the following items:
- Direct payments of $1,200 to adults and $500 per child. These payments phase out at higher income limits
- 2020 Required Minimum Distributions (RMD) are NOT required
- Certain withdrawals from retirement accounts won't incur the a 10% penalty for those under age 59.5
- Federal student loan payments may be suspended thru September 2020
- Forbearance on mortgage payments for those with federally backed mortgages, including certain multi-family properties
- Unemployment insurance will be available to more categories of workers and benefits may span to 39 weeks from the typical 26 weeks. It would also provide an extra $600 a week for four months
- Loans to small business with amounts spent on payroll, rent, utilities and certain other costs cause a portion of the loan to be waived
- Economic injury disaster loan (EIDL) for independent contractors
- Deferral of certain payroll tax payments for business owners
March 18, 2020 - During this time of great uncertainty, we want to reassure you that we continue to conduct business even as we adapt to the difficult circumstances, we are all encountering during this global COVID-19 pandemic. As you know, this is one of the busiest times of year with tax filing deadlines rapidly approaching. Below are some of the actions we are taking to provide for the continuity of our services while also addressing the safety of our employees, their families, and our clients.
Actions we are taking include:
- Canceling all in-person meetings based on advice from healthcare and government authorities
- Encouraging the use of teleconference and emails to communicate meeting tax deadlines
- The federal April 15th payment date has been postponed. We will continue to monitor this fluid change
- We continue to work toward completing as many tax returns as possible prior to any deadline
- We will communicate changes in filing deadlines and options available to you
- Extensions will be filed where necessary
- Implementing enhanced cleaning measures for our offices for the protection of our employees and clients
Ensuring we can continue to operate from outside of our offices if government actions require us to physically close our offices
Steps you can take to help:
- Mail in or send us your tax information electronically (we will provide a secure link)
- Email us with questions or concerns
- Schedule phone calls (or virtual meetings) when we need to talk. Please call our main number to schedule a meeting (971-249-9920).
As always, we appreciate your continued confidence and appreciate your flexibility and support as we work through this difficult time for all of us. We will do our very best to maintain the quality and timeliness of our services to you.
Our thoughts remain with everyone affected by the COVID-19 crisis.
Stimulus Check Estimator
Economic impact payments: What you need to know
IRS Q & A
Payments for 2019 taxes and Q1 estimates are due July 15, 2020.
IRS to suspend certain compliance actions
Stimulus package payment questions
FAQ’s about Oregon’s filing deadline delay
City of Portland filing deadline delay information
For other states:
Business owner resources
The rapidly changing situation has made it difficult for business owners to know and understand options that are available to them and their employees. Some available resources include unemployment insurance, tax credits for employers with employees on sick leave, and disaster loans from the SBA. Please reach out and we will do our best to discuss resources specific to your business.
SBA Disaster loans:
For employers laying off employees (including possibly themselves):
For employers that reduces hours for a group of workers:
For employers with employees on paid leave: