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CARES Act – Provisions for Employers

The House passed the Senate’s CARES Act yesterday. The Act includes a section related to provisions and resources available during this time for taxpayers:

CREDIT AGAINST EMPLOYMENT TAXES

  • Receive a credit of Qualified Wages for each quarter
  • Limited to $10,000 per employee per quarter
  • Qualified Employers
    • Greater than 100 employees
      • Would need to shut down operation
  • Less than 100 employees
    • If you shut down operation or
    • Revenue for the quarter is less than 50% of the same quarter for the prior year
      • Ends when your quarterly revenue is greater than 80% of the prior year
      • This is a refundable credit
      • If you take the Small Business Interruption Loan shall not be eligible for this credit
      • Eligible wages are wages paid after March 12- January 1, 2021

DELAY OF PAYMENT EMPLOYER PAYROLL TAXES

  • Applies to the SS match and not Medicare
  • Defer 50% of payroll taxes to December 31, 2021
  • Defer 50% of payroll taxes to December 31, 2022
  • Self employed
    • Defer 25% of the payroll tax until December 31, 2021
    • Defer 25% of the payroll tax until December 31, 2022
    • This provision is NOT available if you take Payroll Protection loan

MODIFICATION OF NET OPERATING LOSSES

  • Carryback provision has been reinstated for 2018, 2019 and 2020
  • Carryback 5 years
  • Losses carried forward to 2019 and 2020 will have no limitation

LIMITATION ON BUSINESS LOSSES

  • It removes the limitation of net business losses of $250/500k for Single/MFJ
  • Suspends this limitation 2020
  • Suspends this limitation retroactively to 2018 and 2019

INTEREST LIMITATION

  • Limitation of interest deduction is being increased from 30% to 50% for 2019 and 2020 of your adjusted taxable income
  • You will be able to use 2019 adjusted taxable income for 2020 (this is a benefit as most companies will have a loss this year)

QUALIFIED LEASEHOLD IMPROVEMENT

  • The technical correction to 2017 Tax Cuts and Jobs Act
  • QIP -improvement made to the interior portion of a non-residential building any time after the building was placed in service
  • Depreciation life has been reduced from 39 to 15 years
  • 100% bonus depreciation is available to assets with a life of 20 years or less
March 31, 2020