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How you gonna write an update on the new acts?

Technical topics regarding tax preparation.
#1
JR1  
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I consider myself a bit of a writer, but am having a very hard time getting my arms around the Coronavirus act with the 10 days of leave, the tax credit for the employer on that, then the pickup of FMLA after that with more tax credits, changes in due dates, now the new money stimulus based on 18 or 19...oh, and I left off the various biz loan programs now available....

Anybody start on it?
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#2
zl28  
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the verbage is difficult

do you have a research company you use, like parker or thomspon...or natp....they should have letters.
 

#3
JR1  
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Those are always so weird and cold and most of it not even applicable....right now I've got about 4-6 different things open trying to gather the wheat from the chaff.
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#4
Webster  
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I agree JR1, especially when you have a very specific niche clientele. So much doesn't apply they wouldn't even read a research company letter.
 

#5
AlexCPA  
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The New York Times published a fairly comprehensive F.A.Q. today on the Senate version of the Coronavirus relief bill (although the highlighted points focus mostly on the benefits pertaining to individual and self-employed taxpayers -- not employers): https://www.nytimes.com/article/coronav ... swers.html

You might be able to Frankenstein a client letter based on that information (of course, you'd want to vet it first).
Even more of my antics may be found on YouTube:
https://www.youtube.com/channel/UCXDitB ... sMwfO19h7A
 

#6
MWPXYZ  
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I gotta wait until the Acts passed last week are subject to some coherent guidance. The biggest being the criteria for under 50 employee businesses being exempt. Another is the correct application of the credit to the ER FICA or to the entire 941 liability.

Now, I just send along The Poster and tell clients that they may not want to post it until either the under 50 criteria is set of April 1 or April 2, whenever the Act(s) are effective.

The fact that the Senate Bill 3548 changes some of last week's bill doesn't help in providing clarification to clients.
 

#7
JR1  
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Exactly. And what about owners who already had an ee or two on sick leave for mandatory quarantine? BEFORE the effective date of the act....do they get tax credit?
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#8
sjrcpa  
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JR No they don't get credit. The DOL Q&A from yesterday says this is not retroactive.
We are doing separate writeups for each law, cribbing from IRS releases, DOL releases, Checkpoint, and other newsletters we receive.
 

#9
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First I'm going to wait for the House to pass it and the president to sign it. Then I'm going to use careful phrases to explain that it will likely be a couple of weeks or longer before Treasury and IRS make decisions about implementation and we are all going to have to be a little patient and not make too many assumptions.
Because on T.A. ten was the most you were allowed
 

#10
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JR1 wrote:Those are always so weird and cold and most of it not even applicable....right now I've got about 4-6 different things open trying to gather the wheat from the chaff.


I'm glad I'm not the only one who feels that way. I do my best to translate tax law into English for my clients but I wasn't able to do that to my satisfaction for the sick leave bill. I think the stimulus bill will be easier to write but the problem is how quickly clients expect to know how much they will get and what date it will be in their bank account.
 

#11
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sjrcpa wrote:JR No they don't get credit. The DOL Q&A from yesterday says this is not retroactive.
We are doing separate writeups for each law, cribbing from IRS releases, DOL releases, Checkpoint, and other newsletters we receive.


As noted in that other thread, but what about the clients who followed the IRS guidance that said it was available immediately. I will be jerry rigging the credit on at least one Q1 941. We will see how that works out.

Maybe it's only required starting 4/1.
 

#12
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Wiles, how would you add the credit to an existing 941 form, and know for sure it's right?
 

#13
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I don't, but will write in "Authorized by IR 2020-57" in case they deny it.
 

#14
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And then, this morning, trying to understand even a summary of the new stimulus bill supposed to pass today....no freakin' way a human can take all this in!
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#15
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I have sent out a copy of IR 2020-57 to my small business clients and just told them to call to discuss or with any questions. Also advised that the logistics of how to handle things had not been finalized yet.

The new bill they are looking at passing is going to be a nightmare for all of us to understand and comprehend rapidly!
 

#16
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Apparently in the new stimulus bill to pass today? is the provision that biz's that do pay ee's prior to date of enactment will get tax credits as well....moving targets and way too many of them.
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#17
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I'm not even addressing it until it is all signed, official, and IRS releases more information. If employers of 50 or less are exempt, then I may not even have anything to address.
 

#18
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What exactly does it mean when it says employers of 50 or less are exempt? I have small employers (less than 50 employees)that want to continue to pay their employees. Can't they still take advantage of the items passed if they choose to continue paying?
 

#19
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I think I understand it to mean that they don't HAVE to abide by the acts, but can if they choose to....Obviously, those provisions can be real burdensome on small biz unless they get some loans or grants.
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#20
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That is the way I understand it also. The pay is to be netted against the payroll tax due, with any shortfall refunded fairly quickly. Seems like everyone would be able to take advantage of that (unless I am missing something).
 

#21
sjrcpa  
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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
 

#22
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Thank you sjrcpa! I haven't had a lot of time to look into all of this yet!
 

#23
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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?
 

#24
Jake  
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I am waiting for next Fridays Kiplinger Tax Letter.
 

#25
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I'm waiting on Paychex, ADP, and Intuit....once we know the mechanics, we'll know what's what.
Go Blackhawks! Go Pack Go!
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#26
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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.
 

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#28
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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.
 

#29
Wiles  
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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
Wiles  
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Never mind. Found the answers here:
https://www.dol.gov/agencies/whd/pandem ... -questions
See #23 - #28
 

#31
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I thought Friday's Cares Act moved that April 1 date back?
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#32
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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?
 

#33
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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.pdf

With 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.
 

#34
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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*
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#35
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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
 

#36
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And the directive on 3/18 was to PAY YOUR PEOPLE!!
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#37
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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.
 

#38
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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.
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#39
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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.
 

#40
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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.
 

#41
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The retention credit is not available to businesses receiving Small Business Interruption Loans. I know this includes the new forgivable Paycheck Protection Program loans. Does it also include the already existing Economic Injury Disaster Loans?
 

#42
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MWPXYZ wrote: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.


Payroll for 8 weeks (with benefits) would be about $2,000,000 for field labor. They're only trying to cover office salaries during the shutdown, a total of 5 people.

Like I said, seems like this program is not a good fit for this circumstance.
 

#43
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The retention credit is not available in conjunction with a certain loan:

(j) Rule for Employers Taking Small Business Interruption Loan.--If an eligible employer receives a
covered loan under paragraph (36) of section 7(a) of the Small Business Act (15 U.S.C. 636(a)),
as added by section 1102 of this Act, such employer shall not be eligible for the credit under
this section.
The EID Loan (and associated grant) is under 7(b)
 

#44
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Post 42 - If the loan is forgiven and the payroll is still deductible AND the employees are worth retaining for when life starts up again, maybe the Paycheck Protection Program might be a real benefit.

The deduction availability seems to be a question. And is a discussion on the forum here.

And I am just a tax guy. This SBA stuff is new to me. Folks who have been through major hurricanes, tornadoes, earthquakes, etc probably have a better handle on this.
 

#45
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It looks like the EID loan is NOT the way to go. The Paycheck Protection is the one they'll want.
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#46
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The owner can pay themself their normal salary for 8 weeks? and then have the debt forgiven?

I have a client who only has one employee.
 


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