Check back to get IRS updates on COVID-19
During this unprecedented public heath emergency surrounding the Coronavirus (COVID-19), we want to keep you informed about ways to can do handle your tax filings. You don't need an appointment to do your taxes. You can mail, upload, or deliver your information to us. We can conduct an interview by phone so we can complete your tax returns for the 2019 year. That way, we are keeping you and our staff safe.
Also, we highly recommend that you visit the Utah Department of Health. You will receive current guidelines on good hygiene practices and business practices to help prevent the spread of COVID-19.
Lastly, the damage the Coronavirus has done on the economy has been enormous. There are untold billions of dollars lost because our daily routine has been disrupted. Our local merchants and restaurateurs have been especially hard hit. Most small businesses simply don't have resources to be shut down for an extended time. If you are in a able to do so, please support local merchants and local restaurants in any way possible.
Announcement: Easier Loan Forgiveness Application for PPP loans of $50k or less
On October 8, 2020, the Department of Treasury introduced an easier Loan Forgiveness Application for businesses that received PPP loans of $50,000 or less. This new application does not require any calculations for Loan Forgiveness and borrowers are not subject to any wage or FTE reductions. All relevant payroll reports and records of other qualified expenses should still be kept on file, as they could be requested in the future by the SBA.
Links are provided below to access these new, simpler forms. Our firm is here to help if you have questions about your PPP Loan Forgiveness.
Link to application: https://www.sba.gov/document/sba-form-3508s-ppp-loan-forgiveness-form-3508s
Link to instructions: https://www.sba.gov/document/support-ppp-loan-forgiveness-form-3508s-instructions
Payroll Tax Deferral
Under guidance issued by the IRS on August 28, 2020, payroll tax deferral (based on presidential memorandum and IRS notice 2020-65) enables employers to stop withholding Social Security payroll taxes from paychecks from September 1, 2020 through December 31, 2020.
Before diving into key details, be advised that, Evans & Associates, Inc. advises against following, utilizing, or entering into the Payroll Tax Deferral Program.
The following provides a summary of IRS Notice 2020-65:
Payroll tax deferral:
● Any employee who makes less than $4,000 pre-tax wages in a bi-weekly pay period qualifies to have their Social Security Tax (6.2%) deferred.
● The deferral covers paychecks starting on September 1, 2020, and the deferral ends on December 31, 2020.
● This deferral enables employees to keep more of their money during the defined pay periods.
● The determination for the $4,000 wage limit is done on a bi-weekly pay period basis. This means that an employee could qualify for deferral during some pay periods and not others, depending on the pay amount during a given period.
Payroll tax repayment:
● Employers must pay deferred taxes no later than April 30, 2021. Otherwise, penalties and interest will start to accrue on taxes owed.
● Employers will need to increase the employee social security tax for current employees between January 1, 2021 and April 30, 2021 to recover the amount deferred during 2020. This means that employees can expect reduced paychecks in 2021 to repay the deferred taxes.
● For employees who are no longer with a business and had taxes deferred, the employer will need to make arrangements with the employee to recover the deferral amounts (details pending on this process).
Items awaiting clarification:
● The process to collect former employees’ deferred taxes.
● The type of recordkeeping or other items required for compliance on this deferral.
SBA Beginning to Accept PPP Loan Forgiveness Applications
August 10, 2020 -- The SBA has announced that they will begin acceptance PPP loan forgiveness applications. While the date has been set by the SBA, more than likely, the lender will have a different date for accepting PPP forgiveness applications.
Just so you are are aware, there is potential legislation that could allow automatic forgiveness of loans that are $150,000 or less. We are hoping that this legislation will pass and that the President will sign the legislation.
Paycheck Protection Program Flexibility Act
June 5, 2020 -- Today, the Paycheck Protection Program Flexibility Act, (HR 7010) was signed into law. Below are six key provisions that may apply.
- Social Security payments can be deferred -- In the original Cares Act, employers who received PPP money could not defer the employer social security tax payments. This bill changes that. A business that has any social security payments between March 27, 2020 and December 31, 2020 can pay half of the amount due by the end of 2021 and the reminder by the end of 2022.
- Covered time extended -- The time period to use the PPP money was originally 8 weeks. It is now 24 weeks. More time has been granted to maximize and utilize the PPP funds for forgiveness.
- Loan payment deferral -- In the original CARES Act, the deferral of your first payment was 6 months. This has now been extended to 10 months. Payments are required on the amount not forgiven with qualifying expenses.
- The 75% payroll threshold adjusted -- Originally, the SBA and the IRS had made a determination that at least 75% of the funds had to be used for qualifying expenses. This bill changes that threshold to 60%.
- Loan term date extended -- All new PPP loans will have a five-year loan after the passing of the HR 7010. If you would like the 5 year term, you will need to work with your lender to amend your the terms of your loan.
- Safe harbor date extended -- When the CARES Act was initially passed, you where required to rehire or restore your full-time employees by June 30, 2020. This date has know be extended to December 31, 2020.
This is a constantly changing area of tax law. We will keep you updated as this changes. We expect more changes and clarifications to be made coming weeks.
IRS announces its People First Initiative
March 25, 2020 -- Today, the IRS announced its People First Initiative. This initiative provides relief on a variety of issues ranging from postponing compliance actions to easing payment guidelines. In the press release, the IRS states that during this period of time, they will generally not start new field, office, and correspondence examinations. In addition, for taxpayers under an existing Installment Agreement with the IRS, payments due between April 1 and July 15, 2020, are suspended. Although, the IRS, will still accrue interest on any unpaid balance. For more information refer to the IRS press release.
US Department of Labor
March 23, 2020 -- The US Department of Labor has released and resources regarding COVID-19.
Utah State Workforce Services issues COVID-19 FAQ's
March 23, 2020 -- The Department of Workforce Services (unemployment), has released guidance for employers and employees during this health crisis. Please visit their website to get additional information regarding employment issues.
March 23, 2022 -- For users of the myPaysolutions, please refer to the following info to answer questions in regards to any payroll questions you may have.
Latest Federal Government Updates
Marcy 21, 2020 -- Under the enacted Coronavirus Preparedness and Response Supplemental Appropriations Act (the Act), small businesses that have suffered substantial economic injury can apply for low-interest federal disaster loans through the SBA. Small businesses and nonprofits can apply for working capital loans of up to $2 million.
Below are important details, but you can also learn more by visiting the COVID-19 page on SBA’s website.
State governors must first request access to the Economic Injury Disaster Loan program. Once the declaration is made, information on the application process for disaster loan assistance will be made available to affected small businesses within the given state.
Loans carry an interest rate of 3.75% for small businesses and 2.75% for nonprofits.
Loans can be used to cover accounts payable, debts, payroll and other bills.
Loans can be offered with long-term repayments in order to keep payments affordable—up to a maximum of 30 years. Terms are determined on a case-by-case basis.
Businesses will apply for loans online and select “Economic Injury” as the reason for seeking assistance.
SBA offers disaster assistance via its customer service center. If you have questions or want to check if your state is eligible, contact U.S. Small Business Administration via phone at 800-659-2955 (TTY: 800-877-8339) or e-mail email@example.com.
The Coronavirus situation is changing rapidly, as are the updates to various relief efforts. We will continue to monitor news and keep you updated as clarification is provided.
Family and Medical Leave Act (FMLA) expanded to grant relief to those
affected by COVID-19
March 20, 2020 -- The Families First Coronavirus Response Act (FFCRA), goes into effect April 2, 2020 and expires December 31, 2020. The FFCRA, responds to the coronavirus outbreak by providing additional assistance in the areas of COVID-19 testing, sick leave, food assistance, and more. Below are details of FFCRA that we believe you need.
- Requires insurance plans to provide free COVID-19 testing
- Requires employers to provide emergency paid sick leave to workers affected by COVID-19 and expands family and medical leave.
- Offers increased funding for state unemployment insurance, food stamp, and nutritional programs.
Specifically, this is what FFCRA means for both business owners and employees in the areas of sick leave and expanded family and medical leave.
- Employees are eligible for up to two weeks of sick leave (full pay for self, 2/3 pay for family care) for illness, quarantine or school closures.
- Employees are eligible for up to 12 weeks of FMLA leave for school closures (10 days unpaid and then up to 10 weeks at 2/3 pay).
FMLA expansion covers:
- Employers with fewer than 500 employees
- Employees who have been employed for at least 30 calendar days (some exclusions may apply)
- Employees who must care for children under the age of 18 in the event of school and place-of-care closures or if care provider is unavailable due to a public health emergency with respect to COVID-19.
Emergency paid sick leave covers:
- Employers with fewer than 500 employees
- All employees no matter the length of employment (some exclusions may apply)
- Small businesses with fewer than 50 employees may qualify for exemption from the requirement to provide leave due to school closings or child care unavailability if the leave requirements would jeopardize the viability of the business as a going concern.
The Coronavirus situation is changing constantly. We will continue to post additional information as updates are released.
Utah will follow Federal filing and payments to July 15, 2020
March 20, 2020 -- The State of Utah has announced they will follow the Federal filing and tax payment rules for individual returns to July 15, 2020.
The IRS extends the filing deadline to July 15, 2020
March 20, 2020 -- Secretary Mnuchin announced Notice 2020-18 that the tax filing deadline and payments has been extended to July 15, 2020. All taxpayers and businesses will have additional time to file and make payments to July 15, 2020, without interest and penalties.
This is an supersedes IRS Notice 2020-17 which had only extended tax payments to July 15, 2020.
For relief of state filing and paying requirements, please monitor the AICPA website.
The IRS defers tax payments to July 15, 2020
March 19, 2020 -- The IRS release Notice 2020-17 which announced special payment relief in response to the coronavirus outbreak.
- Tax returns are still due April 15, 2020.
- The tax payment deadline is July 15, 2020 for up to $1 million in 2019 taxes.
- The payment extension applies to all individual returns including Schedule "C" filers.
- Federal 1040ES taxes are also included in the July 15, 2020 payment relief.
- The deferred payments only apply to Federal Returns. Each state will set their own rules regarding filing requirements and payment due dates.
If there are changes to this IRS announcement, we will update to keep you informed.