As a follow up to my prior email communications I have further information to share relating to the small business tax relief as part of the recent CARES ACT that passed last Friday.
Payroll Tax Credits – PL 116-127 Families First Coronavirus Response Act was passed on March 18, 2020. This law provides for a credit against payroll taxes for 100% of employer paid sick leave wages and qualified family leave amounts paid each calendar quarter, subject to limitation. Advance funding of this credit is available. The IRS has been instructed to waive any penalties for failure to deposit payroll taxes if the failure was due to anticipated payroll tax credit. This credit is also available for the self -employed.
Employee Retention Credit – The bill provides for a credit against employment taxes for employers that close or significantly reduce operations due to the coronavirus pandemic. The credit limit is 50% of qualified wages limited to $ 10,000 per employee. Eligible employers are employers who were carrying on a business during 2020 for which the operation of that business is fully or partially suspended due to government orders limiting commerce, travel or group meetings due to the COVID – 19 outbreak. Employers that have suffered a 50% decline in gross receipts compared to the same quarter in prior year are also eligible. For employers with 100 or fewer employees all wages qualify for the credit.
Payroll Tax Delay – The bill delays payment of employer payroll taxes. 50% of pPayroll taxes due from the period 3/27/2020 through 12/31/20 are delayed until 12/31/2021. The other 50% is delayed and due on 12/31/2022. This applies to the 6.2% portion of payroll taxes owed by employers. This delay also applies for 50% of self- employment taxes for self- employed individuals.
Net Operating Losses (NOL’s) – The bill allows for a five-year carryback for losses arising in 2018, 2019 and 2020. The bill also temporarily repeals the 80% limit for NOL deductions for years beginning before 2021.
If you believe you may qualify for any of the above or have further questions please call or email our office at (248) 524-5240.
