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Tax Acts
CORONAVIRUS RESOURCES - TAX ACTS
December 29,2020
Consolidated Appropraitions Act, 2021
The Consolidated Appropriations Act, 2021 was signed by the U.S. Senate and House of Representatives on December 21, 2020 and was signed by the President on December 27, 2020. The key provisions in regards to the Paycheck Protection Program (PPP) loans and the Economic Injury Disaster Loan (EIDL) grants are as follows:
- Ensures tax deductibility for business expenses paid with forgiven PPP loans
- Creates a simplified loan forgiveness application process for loans of $150,000 or less
- Repeals the requirement that PPP borrowers deduct the amount of any EIDL advance from their PPP forgiveness amount
- Provides additional funds for a second round of PPP loans which will be available for first-time qualified borrowers and to businesses that previously received a PPP loan
- First-time qualified borrowers includes:
- Businesses with 500 or fewer employees that are eligible for other SBA 7(a) loans
- Sole proprietors, independent contractors, and eligible self-employed individuals
- Not-for-profits, including churches
- Accommodation and food service operations (those with North American Industry Classification Systems (NAICS) codes starting with 72) with fewer than 300 employees per physical location
- Previous PPP recipients may apply for another loan provided they:
- Have 300 or fewer employees
- Have used or will use the full amount of their first PPP loan
- Can show a 25% gross revenue decline in any 2020 quarter compared with the same quarter in 2019
- In addition to the eligible costs for loan forgiveness such as payroll, rent, covered mortgage interest, and utilities, the new act also makes the following potentially forgivable:
- Covered worker protection and facility modification expenditures, including personal protective equipment, to comply with COVID-19 federal health and safety guidelines
- Expenditures to suppliers that are essential at the time of purchase to the recipient’s current operations
- Covered operating costs such as software and cloud computing services and accounting needs
- The same parameters for full loan forgiveness applies (borrowers will have to spend no less than 60% of the funds on payroll over a covered period of either 8 or 24 weeks)
- Borrowers in accommodation and food service operations may apply for up to 3.5 times their average monthly payroll costs
- The maximum loan amount allowed for this round is $2,000,000
Check back for likely additional changes and clarification in the coming weeks.
December 2, 2020
President-Elect Joe Biden's tax proposal may hit wealthy estates with 67% rate
The former vice president's plan to increase the capital gains and estate levies for individuals who earned more than $1 million annually before death is one prong in a strategy of raising taxes on higher-income households and businesses to fund government initiatives. This could mean that estates of wealthy Americans are hit with a tax rate as high as 67%, according to a new analysis published by the Tax Foundation. Under Biden's proposal, unrealized capital gains would be taxed at 43.4% at death; a rate that includes taxing those gains at ordinary income tax rates, which he's vowed to raise to 39.6%. It also includes a 3.8% net investment income tax. The proposal would raise more than $280 billion over the next decade and shrink the size of the economy by about 0.15%.
Read the full article here.
November 23, 2020
IRS Clarifies Stance On No Deductibility Of Expenses Paid With PPP Funds
On November 18, 2020, the IRS issued Rev. Rul. 2020-27, which addresses the issue of borrowers who pay expenses in 2020 but whose PPP loan is not forgiven until 2021. The Rev. Rul. directs that a taxpayer who received a Paycheck Protection Program loan and paid otherwise deductible expenses with the proceeds, may not deduct those expenses in the year they were incurred if the taxpayer reasonably expects to receive forgiveness of the loan.
In short, even if forgiveness hasn't happened, borrowers can't deduct expenses paid for with PPP funds if they reasonably believe the loan will be forgiven.
The IRS says that "the fact that the tax-exempt income may not have been accrued or received by the end of the taxable year does not change this result because the disallowance applies whether or not any amount of tax-exempt income in the form of covered loan forgiveness and to which the eligible expenses are allocable is received or accrued."
See the Rev. Rul. 2020-27 in full here.
October 5, 2020
Tax Policies of the Major Presidential Candidates
In our ongoing effort to supply our clients with up to date information,we are providing the following summary describing the current tax plans of President Donald Trump and Presidential Candidate Joe Biden. It is strictly an informational summary for your planning and consideration.While this is just a brief overview, we hope that it paints a clearer picture of the changes that we may see after the 2020 election.
Please click here for current Tax Policies of the Major Presidential Candidates.
August 18, 2020
13.9 million Americans to receive IRS tax refund interest; taxable payments to average $18
This week the Treasury Department and the Internal Revenue Service will send interest payments to about 13.9 million individual taxpayers who timely filed their 2019 federal income tax returns and are receiving refunds.
This year's COVID-19-related July 15 due date is considered a disaster-related postponement of the filing deadline and the IRS is required, by law, to pay interest, calculated from the original April 15 deadline. The interest payments, averaging about $18, will be made to individual taxpayers who filed a 2019 return by this year's July 15 deadline and either received a refund in the past three months or will receive a refund.
By law, these interest payments are taxable and taxpayers who receive them must report the interest on the 2020 federal income tax return they file next year.
Learn more here.
June 5, 2020
Paycheck Protection Program Flexibility Act, H.R. 7010
The Paycheck Protection Program Flexibility Act (PPPFA) was signed into law on June 5, 2020. The purpose of this bill is to ease the forgiveness requirements for the Paycheck Protection Program loans. Loan recipients will have looser restrictions as to how and when the funds need to be spent.
Learn more here.
April 14, 2020
IRS Economic Impact Payments Learn more here.
April 1, 2020
Individual Tax Relief Provided by the CARES Act
An update on the tax-related provisions in the Coronavirus Aid, Relief, and Economic Security (CARES) Act
Read here
March 30, 2020
Economic impact payments: What you need to know
View here
March 21 and March 27, 2020
IRS and Michigan extend April 15 tax filing and payment deadline.
Federal: The Treasury Department and Internal Revenue Service announced today that the federal income tax filing due date is automatically extended from April 15, 2020, to July 15, 2020.
Taxpayers can also defer federal income tax payments due on April 15, 2020, to July 15, 2020, without penalties and interest, regardless of the amount owed. This deferment applies to all taxpayers, including individuals, trusts and estates, corporations and other non-corporate tax filers as well as those who pay self-employment tax.
State: Michigan Governor Gretchen Whitmer has signed an executive order (EO 2020-26) that will extend the state tax filing and payment deadline amid the coronavirus pandemic from April 15, 2020 to July 15, 2020. This decision comes over a week after the IRS pushed back the federal tax filing deadline to July 15, 2020, and the state of Michigan has now committed to follow suit allowing residents and businesses additional time to file their income taxes.
*This includes Michigan cities as well. An annual city income tax return otherwise due on April 15 or 30, 2020, and any accompanying city income tax payment due with the return, will instead be due on July 15 or 31, 2020.
Link: https://www.michigan.gov/whitmer/0,9309,7-387-90499_90705-523380--,00.html
