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BUSINESS TAX RELIEF

March 30th, 2020

BUSINESS TAX RELIEF IN THE CARES ACT

The CARES ACT approved by Congress and signed by the President on March 27th 2020 includes tax relief for businesses.   The United States Chamber of Commerce is preparing analysis of the bill for all businesses to review.  Below are some of the changes included in this important legislation designed to move the economy forward again as the threat of the corona virus on the United States subsides.

An employee retention credit for employees subject to closure due to COVID-19 will permit a fully refundable 50% tax credit applicable to the employers share of payroll five taxes on wages up to $10,000 per employee.  This will be widely available with special rules for small employers.

Employer payroll taxes will be delayed.  Employer share of the Social Security tax due between now and January 1, 2021 to December 31, 2021 (50% due) and December 31, 2020 (remaining due).

Regarding net operating losses modifications are being made.  For 2018, 2019, 2020 losses can be carried back 5 years.  The 80% limitation is temporarily suspended.  These changes extend to pass throughs and sole proprietors.  Companies have an accelerated ability to recover Alternative Minimum Taxes (AMT).

  • Other business friendly provisions in the CARES Act include:
  • Modification of limitation on business interest (for 2019, 2020, increases 30% limitation to 50%).
  • A technical amendment regarding qualified improvement property.
  • Temporary exception from excise tax for alcohol used to produce hand sanitizer (for 2020).
  • Changes in Pension and Employee Benefit Requirements:
  • Authorizes the U.S. Department of Labor to delay employee benefit related deadlines because of a public health emergency the same as declared national disasters or terroristic military actions.
  • Delays any required minimum pension contributions due in 2020 until January 1, 2021 (plus interest).
  • For benefit restrictions, authorizes a plan sponsor to use the adjusted funding target attainment percentage for the last plan year ending before January 1, 2020 for plan years including calendar year 2020

For more information please go to the United States Chamber of Commerce website at

https://www.uschamber.com/coronavirus

Robert Johnson

President, ADKL LLC