Technical topics regarding tax preparation.
27-Mar-2020 12:53pm
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Seaside CPA wrote:What exactly does it mean when it says employers of 50 or less are exempt?
If the provision of childcare-related paid sick leave and Expanded FMLA would jeopardize the business as a going concern, then a small business exemption will apply. The DOL will be providing regulations shortly about documentation that will demonstrate that your business meets the criteria for exemption.
Taken from DOL website. They have a lot of info there.
https://www.dol.gov/agencies/whd/pandemic
27-Mar-2020 12:54pm
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Thank you sjrcpa! I haven't had a lot of time to look into all of this yet!
29-Mar-2020 2:28pm
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Wiles - I was doing some more reading last night on the payroll tax credit and how it might be reported. I pulled up a 941 and found line 11 - Qualified small business payroll tax credit , which has the additional words - for increasing reasearch activities and says to attach form 8974. I looked at that form, and can see where IRS can modify that one to provide information on this new credit. However, your thought of including the comment "Aurhorized by IR 2020-57" could possibly be typed at the top (similar to when you late file a 2553 for an S Election), complete the 941 with credit information on line 11 and then wait for mail from IRS to further elaborate.Form 8974 looks like it can be easily adapted, but is clearly related to increasing research activities. What do you think?
29-Mar-2020 9:08pm
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I am waiting for next Fridays Kiplinger Tax Letter.
30-Mar-2020 9:42am
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I'm waiting on Paychex, ADP, and Intuit....once we know the mechanics, we'll know what's what.
30-Mar-2020 10:51am
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I agree, JR1, there's not a whole lot we can do except try to understand how this is going to work for our clients, and then waiting for the forms so we can see how to apply it. It's hard to know how to counsel a client especially one who needs funds now.
30-Mar-2020 10:58am
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30-Mar-2020 10:59am
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For my business clients, I identified the following items that should be brought to their attention immediately:
* Unemployment for the self-employed
* SBA Paycheck Protection Loans. Apply at bank
* SBA EIDL Loans. Apply at SBA
* Grants of $10,000. I don't know where this is in the new law. I did find a Forbes article that said this is in the SBA EIDL Loans.
* Required paid sick/leave starting 4/1 with offsetting payroll tax credit
Did I miss any?
This what I am focusing on today.
30-Mar-2020 11:37am
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Regarding the paid sick/leave, an employee is entitled to receive pay if the employee "is subject to a Federal, State, or local quarantine or isolation order related to COVID-19". Does anybody know what this means?
My client's retail store is closed because of the State of CA shelter in place order. All of their employees are home. Are these employees included in this?
30-Mar-2020 11:43am
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30-Mar-2020 11:58am
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I thought Friday's Cares Act moved that April 1 date back?
30-Mar-2020 12:04pm
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I have clients who are construction contractors. When the state issued the stay at home order all of the guys were laid off for lack of work. How does this dovetail with the debt forgiveness provisions. The average number of employees in 2019 was close to 100. Now, with work suspended they are down to a skeleton crew of office workers.
There is no way they will beat the forgiveness phaseout if you compare 2019 to 2020. are they out of luck?
30-Mar-2020 12:10pm
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JR1 wrote:I thought Friday's Cares Act moved that April 1 date back?
Unfortunately, no. The IRS is NOW saying 4/1/20 - 12/31/20.
https://www.irs.gov/pub/irs-drop/n-20-21.pdfWith respect to the period "beginning on a date selected by the Secretary (or the Secretary’s delegate) which is during the 15-day period beginning on the date of the enactment of this Act” as specified in sections 7001(g), 7002(e), 7003(g), and 7004(e) of Division G of the Act, the date selected by the Secretary is April 1, 2020. This date is coordinated with the DOL’s determination of the effective date for employers’ compliance with the Emergency Family and Medical Leave Expansion Act and Emergency Paid Sick Leave Act requirements. Accordingly, the refundable tax credits for employers apply to qualified sick leave wages and qualified family leave wages paid for the period from April 1, 2020 to December 31, 2020.
30-Mar-2020 1:28pm
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I just read that elsewhere. Talk about f*d up! So employers who paid their folks in good faith from 3/18 on get total screwing! *smh*
30-Mar-2020 1:43pm
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JR1 wrote:I just read that elsewhere. Talk about f*d up! So employers who paid their folks in good faith from 3/18 on get total screwing! *smh*
Yeah...my wife falls into this category. Going to "burn" about a week of payroll due to this. She would've done it anyway, but I was hoping to have it wash.
~Captcook
30-Mar-2020 1:47pm
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And the directive on 3/18 was to PAY YOUR PEOPLE!!
30-Mar-2020 2:04pm
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rkrcpa wrote:I have clients who are construction contractors. When the state issued the stay at home order all of the guys were laid off for lack of work. How does this dovetail with the debt forgiveness provisions. The average number of employees in 2019 was close to 100. Now, with work suspended they are down to a skeleton crew of office workers.
There is no way they will beat the forgiveness phaseout if you compare 2019 to 2020. are they out of luck?
You probably can't take advantage of this program then, and you'd likely have to look into the employee retention credit instead. Luckily under 100 employees so you get the better retention credit rules.
I have a client that laid off employees for social distancing reasons, and since they laid people off there are no loans, either.
30-Mar-2020 3:22pm
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Just found this, part of the CARES Act, the Emergency Employee Retention Credit: The provision allows eligible employers carrying on a trade or business in 2020 a refundable tax credit against Social Security taxes imposed under section 3111(a) of the Internal Revenue Code (the “Code”) or Railroad Retirement Tax Act taxes imposed under section 3221(a) of the Code. Eligible employers include employers whose operations were fully or partially suspended due to a COVID-19 government-mandated shut-down order, or employers whose gross receipts declined by greater than 50 percent when compared to the corresponding calendar quarter of the prior year.
The refundable credit is applicable for all wages paid between March 12, 2020, and before January 1, 2021.
31-Mar-2020 5:32am
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missingdonut wrote:rkrcpa wrote:I have clients who are construction contractors. When the state issued the stay at home order all of the guys were laid off for lack of work. How does this dovetail with the debt forgiveness provisions. The average number of employees in 2019 was close to 100. Now, with work suspended they are down to a skeleton crew of office workers.
There is no way they will beat the forgiveness phaseout if you compare 2019 to 2020. are they out of luck?
You probably can't take advantage of this program then, and you'd likely have to look into the employee retention credit instead. Luckily under 100 employees so you get the better retention credit rules.
I have a client that laid off employees for social distancing reasons, and since they laid people off there are no loans, either.
That's how it appears but I can't believe they skipped over the construction industry. It is not uncommon for the size of the workforce to expand and contract as the jobs are finished and new ones begin.
31-Mar-2020 8:51am
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If you are concerned with forgiveness, it seems that the contractor would have to pay those employees to obtain the credit, as well as some rent, utility, and interest expense. So, as long as the contractor pays the employees for not working for 8 weeks, which is the intent of the law, the loan would be forgiven. Tax free. Perhaps the expenses are deductible.
With that number of employees the contractor will have to personally guarantee the loan since the loan amount would exceed $200,000.
The retention credit act gives you a mere $5,000 credit per employee.
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