The CARES Act passed in March 2020 created an “employee retention tax credit,” which entitled eligible employers to a refundable tax credit for wages paid to employees during periods that the employer’s business was subject to a suspension, a shutdown, or a significant decline in revenues. The tax credit was not widely used by employers with fewer than 500 employees, primarily due to the fact that employers with Paycheck Protection Program (PPP) loans could not take advantage of the credit. On December 27, 2020, the Consolidated Appropriations Act (the CAA) was signed into law. The CAA significantly expanded the usability of the employee retention tax credit by allowing employers with PPP loans to take advantage of the credit. Further, the CAA increased the amount of the tax credit available. In tandem, these changes make the credit an attractive opportunity for employers during 2021 as well as easier to obtain for qualifying wages paid during 2020.
Continue Reading “Stimulus Bill Provides Expanded Opportunity for Employers to Take Tax Credit for Retaining Employees”
CARES Act
Trump Signs Payroll Tax Deferral Executive Order
By Alex H. Glaser & Trevor Wilson on
Over the weekend, President Trump signed an executive order purporting to defer the payment of the employee’s share of the Social Security portion of FICA (payroll) tax from September 1, 2020, until December 31, 2020. The order is limited to only the employee’s share of the Social Security portion of the payroll tax, which is currently set at 6.2%. The order does not affect the Medicare portion of the payroll tax (1.45%), nor does the order affect the employer portion of the payroll tax, so these will still have to be withheld (where applicable) and deposited on a timely basis. The order also limits deferrals to employees with biweekly, pretax income of less than $4,000, or a similar amount where a different pay period applies. This roughly equates to an annual salary of $104,000. Importantly, the order is not a suspension of the payroll tax (a “payroll tax holiday”), but merely a deferral. The president directed the Treasury to seek ways to implement a full suspension at a later date, including by legislative action.
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CARES Act Funds for Hospitals and Other Providers: Where We Are Now?
By Meredith Maxwell & William W. Horton on
Recent congressional action has included significant additional funding for healthcare providers. The Coronavirus Aid, Relief, and Economic Security Act (the CARES Act), the massive stimulus legislation passed on March 27, appropriated $100 billion to the Department of Health & Human Services (HHS) for the Public Health and Social Services Emergency Fund (the Relief Fund) to be distributed to hospitals and healthcare providers on the front lines of the COVID-19 response. This was followed on April 24 by an additional $75 billion appropriated for healthcare providers under the Paycheck Protection Program and the Health Care Enhancement Act. In addition, the CARES Act expanded the existing Medicare accelerated and advance payment programs (AAP Programs) to allow qualified hospitals and other providers to obtain, as a lump sum or in periodic payments, up to six months of advance Medicare payments (based on prior-period experience) as a loan to stabilize cash flow.
So, what has actually happened with this new funding in the ensuing weeks? The following sections summarize what we know so far.…
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SBA Offers Further Guidance — and Certainty — Regarding Good Faith Certification of PPP Loan; Further Extends Safe Harbor Repayment Date
By Curt Hearn & Josh DeCuir on
In a significant, and overall welcome, development, on May 13, 2020, the Small Business Administration (SBA) issued additional guidance regarding the required certification by applicants for a Paycheck Protection Program (PPP) loan that the “current economic uncertainty makes th[e] loan request necessary to support the ongoing operations of the Applicant.”
Borrowers applying for a PPP loan are required to make the certification in good faith, and the SBA had previously issued guidance stating that all PPP loans of more than $2 million would be subject to audit to determine whether the borrower had an adequate basis for making the certification. This prior guidance also established that any borrower that repaid the PPP loan in full on or prior to May 7, 2020 (subsequently extended to May 14, 2020, and now further extended to May 18, 2020), would be deemed to have made the certification in good faith (see FAQ 31, FAQ 37, Interim Final Rule on Extension of Limited Safe Harbor with Respect to Certification Concerning Need for PPP Loan Requested dated May 8, 2020, and FAQ 47).…
Employers That Repay PPP Funds by May 14 Are Eligible for Employee Retention Tax Credit
By Alex H. Glaser & Curt Hearn on
The Coronavirus Aid, Relief, and Economic Security (CARES) Act provides for, among other things, an “employee retention tax credit” for employers that are forced to suspend operations or experience a financial downturn. The CARES Act disqualified employers that received Paycheck Protection Program (PPP) loans from taking the employee retention tax credit. Some employers that received PPP loans are now contemplating repaying the loans based on recently released guidance clarifying the scope of employers that are eligible for the PPP. The guidance allows employers that received PPP funds to repay the funds by May 14 without penalty.…