COVID-19 Tax Resources Overview

Extension of Emergency Paid Sick Leave and Emergency Paid Family and Medical Leave and Other Changes

The new American Rescue Plan Act of 2021, enacted in March 2021, renews further the possibility for employers to voluntarily extend the Emergency Paid Sick Leave and Emergency Family Medical Leave through September 30, 2021.

This information is based on the statutes and guidance available as of the date of publication (May 4, 2021) and is subject to change.

Interaction Between PPP Loans and Employee Retention Credit

Further, the Employee Retention Credit was extended again through the end of 2021 via the American Rescue Plan Act.

This information is based on the statutes and guidance available as of the date of publication (March 23, 2021) and is subject to change.

Employee Retention Credit

On March 27, 2020, the CARES Act introduced a new Employee Retention Credit available for certain employers subject to a complete or partial government-mandated shutdown or a greater than 50% decline in gross revenue due to COVID-19.

This information is based on the statutes and guidance available as of the date of publication (February 5, 2021) and is subject to change.

New Announcement on Corporate Tax Benefits

We would like to make sure you were aware of some of the provisions of the Consolidated Appropriations Act signed into law on December 27, 2020 which you could benefit from.
This information is based on the statutes and guidance available as of the date of publication (January 20, 2021) and is subject to change.

Second Round of Paycheck Protection Program Funding

As part of the Consolidated Appropriations Act, 2021, $284.5 billion was made available for a second round of Paycheck Protection Program ("PPP") funding.

This information is based on the statutes and guidance available as of the date of publication (January 15, 2021) and is subject to change.

COVID-Relief Bill Provides Clarity to Businesses while Extending Certain Tax Benefits

This weekend President Trump signed the COVID-relief bill recently passed by Congress. While the headlines of the bill include additional cash payments of $600 to most Americans, there are provisions in the bill that will impact business taxpayers as well. The chart provides a summary of the most relevant items in the new law.

This information is based on the statutes and guidance available as of the date of publication (December 29, 2020) and is subject to change.

Audits of PPP Loans in Excess of $2 Million

In addition to completing the PPP forgiveness application, businesses that together with their affiliates received $2 million or more in PPP loans will need to complete one of two new necessity questionnaires.

This information is based on the statutes and guidance available as of the date of publication (November 20, 2020 and January 28, 2021) and is subject to change.

Negotiated Incentive Agreements during COVID-19

Businesses receiving negotiated or discretionary economic incentives (tax abatements, cash grants, land grants, etc) in exchange for a minimum investment and jobs in a community could be at risk of losing these incentives due to the economic downturn caused by COVID.
This information is based on the statutes and guidance available as of the date of publication (November 11, 2020) and is subject to change.

Telecommuting Workers during COVID: Considerations for Businesses and their Employees
At the beginning of the COVID pandemic, much of the world retreated to the safety of homes, anticipating a short-term crisis. Businesses and their employees are faced with potential tax consequences as the result of decisions made for employees’ safety. Unfortunately, governments have been slow to provide guidance to businesses and employees on how working from a different tax jurisdiction may impact tax liabilities.
This information is based on the statutes and guidance available as of the date of publication (October 7, 2020) and is subject to change.

Update on Presidential Memorandum for Deferring Payroll Tax Obligations

As previously discussed in Rödl Tax Matters Volume 2020 – 10, on August 8, 2020, President Trump signed a Memorandum on Deferring Payroll Tax Obligations in Light of the Ongoing COVID-19 Disaster, which directed the Secretary of the Treasury to use his authority to defer the withholding, deposit, and payment of employee Social Security taxes on wages or compensation paid during the period of September 1, 2020, through December 31, 2020.
This information is based on the statutes and guidance available as of the date of publication (September 25, 2020 and January 28, 2021) and is subject to change.

Presidential Memorandum for Deferring Payroll Tax Obligations

On August 8, 2020, President Trump signed a Memorandum on Deferring Payroll Tax Obligations in Light of the Ongoing COVID-19 Disaster, which directs the Secretary of the Treasury to use his authority to defer the withholding, deposit, and payment of employee Social Security taxes on wages or compensation paid during the period of September 1, 2020, through December 31, 2020.

This information is based on the statutes and guidance available as of the date of publication (August 18, 2020) and is subject to change.

PPP Loan Application Deadline Extended To August 8, 2020

On July 4, President Trump signed S. 4116 extending the deadline for applying for a loan under the Paycheck Protection Program (PPP) from June 30 to August 8, 2020. No other statutory changes to the PPP or borrower eligibility were made.

Paycheck Protection Program Flexibility Act Favorably Modifies the Terms of Loan Forgiveness

On Friday, June 5th, the President signed the Paycheck Protection Program Flexibility Act of 2020 modifying the terms of the loan forgiveness for a Paycheck Protection Program ("PPP") loan. The amendments are effective as if included in the CARES Act and apply to any PPP loan. There is welcome relief in the Act providing taxpayers greater flexibility in achieving loan forgiveness.
This information is based on the statutes and guidance available as of the date of publication (June 8, 2020) and is subject to change.

Eligibility for PPP Loan Clarified –Deadline TODAY for Returning Fund (published May 18, 2020)

On May 18, 2020, the SBA published the interim final rule on the treatment of entities with foreign affiliates.

You can read the full rule here: https://home.treasury.gov/system/files/136/Interim-Final-Rule-on-Treatment-of-Entities-with-Foreign-Affiliates.pdf

The SBA stated that there has been uncertainty regarding whether PPP applicants with 500 or fewer employees whose principal place of residence is in the United States qualified for a PPP loan. The SBA has clarified in this rule that any entity that, together with its domestic and foreign affiliates, does not meet the 500-employee or other applicable PPP size standard is ineligible for a PPP loan. It goes on to state, however, that SBA will not find any borrower that applied for a PPP loan prior to May 5, 2020 to be ineligible based on the borrower's exclusion of non-U.S employees from the borrower's calculation of its employee headcount if the borrower (together with its affiliates) had no more than 500 employees whose principal place of residence is in the United States.

Given this most recent guidance, we recommend that any entity that applied for and received a PPP loan after May 5th and is not eligible based on this guidance return the funds. The deadline to return the funds is today, May 18, 2020. If a loan application was submitted after May 5, 2020 and is in process and the entity has now determined they do not qualify, we recommend that the loan process be suspended.

Main Street Lending Program

The Paycheck Protection Program has received a lot of attention, particularly given that part of the loan may be forgiven. Another loan program that is part of the recently enacted Coronavirus Aid, Relief, and Economic Security Act of 2020 (the “CARES Act”) may, however, also be of benefit. The “Main Street Lending Program” is intended to provide additional financing for small- and medium-sized businesses impacted by the ongoing COVID-19 pandemic.
This information is based on the statutes and guidance available as of the date of publication (May 12, 2020) and is subject to change.

PPP Loan Practices to Consider

The Paycheck Protection Program (PPP) was created as part of the Coronavirus Aid, Relief, and Economic Security (CARES) Act which was signed into law on March 27, 2020.

CARES Act Business Provisions

On Friday March 27, 2020, President Trump signed the new Coronavirus Aid, Relief, and Economic Security Act (“CARES Act” or the “Act”) into law. Major provisions of the Act affecting business taxpayers are discussed below. More details regarding the specifics of each provision are emerging daily.

Paycheck Protection Program (SBA Loan) Under the CARES Act

COVID-19 - “Coronavirus Aid, Relief, and Economic Security Act” (CARES Act)

President Trump has signed the new Coronavirus Aid, Relief, and Economic Security Act (CARES Act) into law. Major highlights of the Act are discussed below. Details regarding the specifics of each provision are forthcoming. If you have questions, please contact your Rödl & Partner representative.

Federal Payment Extensions

In a press conference on Tuesday, March 17, 2020 Treasury Secretary Steven Mnuchin announced that individuals and corporations can delay their tax payments for 90 days due to the Coronavirus pandemic. Individuals can defer up to $1 million in payments for 90 days from the April 15 deadline. Corporations can defer up to $10 million in payments for 90 days. During that time, the IRS will not charge interest or penalties.

COVID-19 Tax Impacts - Families First Coronavirus Response Act

On March 18, 2020, the President has signed into law the Families First Coronavirus Response Act (H.R. 6201) which provides affected individuals with paid sick and family leave, creates tax credits for affected employers, expands food and nutrition services, allows for emergency state unemployment insurance grants, and increases Medicaid funding to states, among other things.

Unemployment Claims

Please check with local labor departments regarding new rules relating to COVID-19-induced layoffs and slowdowns.

COVID-19 Resources for Employers

Please check these important outside resources for employers.

Disclaimer

This publication contains general information and is not intended to be comprehensive or to provide legal, tax or other professional advice or services. This publication is not a substitute for such professional advice or services, and it should not be acted on or relied upon or used as a basis for any decision or action that may affect you or your business. Consult your advisor.

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