The CARES Act revised, relaxed and created a number of new tax policies for businesses. While a number of these are still being clarified with respect to interpretation and implementation, they are worth looking at and being aware of. The primary focus for a number of business is the Paycheck Protection Program, but there are several others worth noting as well.
- There are a number of options under the Act that allow for the delay of Employer Payroll Taxes. There are also several tax credits available for qualifying employers to offset employment taxes, if the operation of the company is fully or partially suspended due to an order of the government.
- Employers can now make payments of up to $5,250 per employee for student loans in a calendar year to either the employee directly or to the lender and such payment is excludable from the employees gross income. The regulations and the implementation of all of the provisions of the CARES Act are getting clarified every day. There have been a number of well prepared summaries that explain the details of many of the provisions.
- It is also now clear that in addition to the annual tax filing date and payment date being extended from April 15th to July 15th, the 2020 first quarter annual estimate tax payment is due July 15th. This is not a provision of the CARES Act, but it is still a relevant update for businesses to be aware of.
- To qualify for the Paycheck Protection Program you/your business must be:
- A small business with fewer than 500 employees
- A small business that otherwise meets the SBA’s size standard
- A 501(c)(3) with fewer than 500 employees
- An individual who operates as a sole proprietor
- An individual who operates as an independent contractor
- An individual who is self-employed who regularly carries on any trade or business
- A Tribal business concern that meets the SBA size standard
- A 501(c)(19) Veterans Organization that meets the SBA size standard
In addition, some special rules may make you eligible:
- If you are in the accommodation and food services sector (NAICS 72), the 500-employee rule is applied on a per physical location basis
- If you are operating as a franchise or receive financial assistance from an approved Small Business Investment Company the normal affiliation rules do not apply
- REMEMBER: The 500-employee threshold includes all employees: full-time, part-time, and any other status.
We continue to work tirelessly to understand the CARES Act to help our clients navigate through it so they can continue to operate their business during these challenging times.
Here are a few links to some key overviews:
If you have any further questions about the tax implications or programs under the CARES Act, please give Partner Daniel Pauley a call at 402-397-7300.