Payroll Tax Relief, New Guidance on Depreciation and Employment Tax Deferment for PPP Loan Recipients

Apr 30, 2020

DEFERRAL OF EMPLOYMENT TAX DEPOSITS

The IRS has issued frequently asked questions (FAQs) on the payroll tax deferral opportunity provided by the Coronavirus, Aid, Relief, and Economic Security (CARES) Act (Public Law 116-136). Under that provision, employers of all sizes (including tax exempt/non-profit employers) can defer the deposit and payment of the employer’s share of Social Security taxes. Self-employed individuals can also defer payment of some self-employment taxes.

In addition, new guidance has been issued on whether employers who obtain a Paycheck Protection Program (PPP) Small Business Administration (SBA) loan could use the payroll tax deferral.

See details here.

COVID-19 PAYROLL TAX RELIEF CREDITS

Two COVID-19 aid packages recently became law that deliver federal assistance to employers by providing them credits against their payroll taxes. The Families First Coronavirus Response Act (FFCRA) provides 100% of the funds needed by employers with fewer than 500 employees to pay federally mandated emergency leave to employees caring for themselves or others for COVID-19 reasons. The Coronavirus Aid, Relief, and Economic Security (CARES) Act provides partial assistance to employers who continue to pay employees instead of sending them to the unemployment system.

See what relief is available and other details here.

CARES ACT GUIDANCE PROVIDES FLEXIBILITY TO MAKE FAVORABLE ADJUSTMENTS TO DEPRECIATION AND EXCESS BUSINESS INTEREST

In April 2020, the IRS released several pieces of guidance providing taxpayers with the ability to receive immediate cash flow benefits and implement tax planning opportunities associated with changes made to depreciation under the Coronavirus Aid, Relief, and Economic Security (CARES) Act. The procedures in the guidance present taxpayers with a limited time period in certain circumstances to claim additional depreciation expense for assets placed in service during 2018, 2019 and 2020.

Additionally, Rev. Proc. 2020-22 sets forth the procedures for taxpayers to make other Section 163(j) elections under the CARES Act, including the election out of the 50% adjusted taxable income (ATI) limitation for 2019 or 2020 and the election to use 2019 ATI in a 2020 taxable year.

See details here.

Here at Frost, PLLC we are actively monitoring the situation and are available to help you navigate these turbulent times.

Please contact your Frost representative(s) with any questions.