President Trump signed into law the Coronavirus Aid, Relief, and Economic Security (CARES) Act, a $2 trillion fiscal stimulus bill intended to provide broad relief to address the impact of COVID-19. Below are a few of the highlights impacting business owners.
Paycheck Protection Program
A (partially) forgivable loan program offered through the Small Business Administration (SBA). Such loans must be applied for by June 30, 2020 with a maximum maturity of 10 years. They may be provided via existing approved SBA lenders.
New Employee Retention Credit for Employers Subject to Closure Due to COVID-19
As an incentive to encourage businesses from making further layoffs, the CARES Act introduces a new payroll tax credit provided they are not receiving a covered loan under section 7(a)(36) of the Small Business Act. In order to be eligible for the credit, the operations of the company have to been fully or partially suspended during a quarter either as a result of a governmental authority or in which revenue in 2020 has less than 50% of the revenue from the same quarter in 2019.
Deferral of Payment of Payroll Taxes
With the exception of employers who have debt forgiven by the CARES Act for certain loans provided by the Small Business Administration, employers are eligible to defer payroll taxes from the date of enactment, through the end of the year, until the end of 2021 and 2022. More specifically, 50% of the payroll taxes that would otherwise be due during this period may be deferred until December 31, 2021 with the remaining 50% due on December 31, 2022.
Net Operating Loss (NOL) Rules are Loosened
The CARES Act adjusts the NOL rules allowing NOL from 2018, 2019, or 2020 to be carried back up to five years. Technically, this should allow companies to reduce prior years’ tax bills, allowing them to claim refunds of amounts previously paid to provide further liquidity to their business.
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For more information about the financial planning strategies we utilize, please visit us at www.twpteam.com or contact directly Rob Lemmons, CPA, CFP® at 513-984-6696.