In the face of the global pandemic and the subsequent economic crisis it has spurred, the federal government has taken several steps to protect small business owners. One of the most notable of these steps is the offering of Paycheck Protection Program (PPP) loans, which are being trumpeted as forgivable loans. Though the loans are indeed forgivable, the requirements for forgiveness are not as broad as many borrowers originally thought.
The IRS has issued a final version of Form 7200 (Advance Payment of Employer Credits Due to COVID-19) and its accompanying instructions on March 31, 2020. Sick and family leave credits. The Families First Coronavirus Response Act (FFCRA) requires eligible employers to provide paid sick leave and expanded family and medical leave for COVID-19 related reasons and offsets the costs of providing required leaves with refundable paid tax credits for eligible employers. Eligible employers are businesses and tax-exempt organizations with fewer than 500 employees that are required to provide emergency paid sick leave and emergency paid family leave under the FFCRA.
The Coronavirus, Aid, Relief and Economic Security Act (CARES Act) allows employers to defer the deposit and payment of the employer’s share of Social Security taxes and self-employed individuals to defer payment of certain self-employment taxes.
The Coronavirus Aid, Relief, and Economic Security Act (CARES Act), enacted on March 27, 2020, is designed to encourage Eligible Employers to keep employees on their payroll, despite experiencing economic hardship related to COVID-19, with an employee retention tax credit (Employee Retention Credit).
PPP & The CARES Act
Following the passage of the $2.2 trillion CARES Act stimulus package at the end of March, one of the most talked about provisions was the Paycheck Protection Program (PPP). The CARES Act had earmarked $349 billion for PPP, which was designed to help small businesses cover their payroll, benefits, utilities, and rent and mortgage payments.
However, it came as no surprise that these loans – forgivable if certain requirements were met – ran out extremely quickly, as small businesses flocked to banks to apply for relief. On paper, $349 billion sounded like a lot of money – but it was “destined to be oversubscribed from the start.”
The public demand for more funding allocated to the PPP was a major factor in driving the creation of the latest bill.
To encourage charitable contributions to deserving qualified charities during these trying times, Congress has relaxed some of its restrictions related to how much a taxpayer can deduct as a charitable contribution in any given year.
As part of the stimulus package to help offset the financial damage inflicted on businesses as a result of the COVID-19 crisis, Congress restored the ability of businesses that suffer a loss to carry those losses back and recover taxes paid in prior years. The limitation on business interest deductions has also been relaxed, as has the business loss limitation for larger businesses. The legislative package also made a long-awaited beneficial retroactive correction to treatment of qualified improvement property. These changes allow affected taxpayers to recover taxes paid in earlier years, thus providing badly needed cash during these trying times.
The IRS is planning to create a new, online portal called “Where’s My Economic Impact Payment” where people can obtain details about their payment from the economic stimulus package and also provide their banking information.
Among the hardest hit during the coronavirus epidemic are the small businesses that have lost their revenue sources and do not have the financial resources to weather the storm. In this case, the federal government’s SBA (Small Business Administration) Economic Injury Disaster Loan (EIDL) can help a business make it through these trying times.
To our valued clients and friends,
Things are changing by the day as governments continue grappling with ways to provide relief during the Coronavirus Pandemic. Please see below for updates on various taxing jurisdictions:
State of Oregon
Except as specifically stated in this order, this order does not change any other payment, filing or other deadline prescribed by law.
For Personal Income Tax (PIT), Transit Self‐Employment Tax, and Fiduciary Taxpayers
- The Oregon return filing due date for tax year 2019 is automatically extended from April 15, 2020 to July 15, 2020.
- The Oregon tax payment deadline for payments due with the tax year 2019 tax return is automatically extended to July 15, 2020.
Estimated tax payments for tax year 2020 are not extended.
The tax year 2019 six‐month extension to file, if requested, continues to extend only the filing deadline until October 15, 2020.
For Corporate Excise/Income Taxpayers:
- The Oregon return filing due date for tax year 2019 is automatically extended from May 15, 2020 until July 15, 2020. Fiscal year returns due after May 15, 2020 are not extended at this time.
- The Oregon tax payment deadline for payments due with the 2019 return by May 15, 2020 is automatically extended to July 15, 2020. Payments for fiscal year returns due after May 15, 2020 are not extended at this time.
Estimated tax payments for tax year 2020 are not extended.
Taxpayers do not need to file any additional forms or call to qualify for this automatic Oregon tax filing and payment extension.
Interest and penalties
As a result of the extension of the due dates for filing Oregon tax returns and making Oregon tax payments to July 15, 2020, interest and penalties with respect to the Oregon tax filings and
payments extended by this Order will begin to accrue on July 16, 2020.
City of Portland & Multnomah County
The City of Portland has followed Oregon’s lead as it relates to a partial movement of due dates:
Portland Arts Education and Access Income Tax (Arts Tax)
- TAX YEAR 2019 FILING AND PAYMENT DEADLINE: The Revenue Division is automatically extending the Portland Arts Tax return filing and payment due on 4/15/2020 until 7/15/2020.
Portland Business License Tax & Multnomah County Business Income Tax
Including Pay Ratio Surtax, Heavy Vehicle Tax, and Residential Rental Program Fees)
- TAX YEAR 2019 FILING DEADLINE: The Revenue Division is automatically extending the Portland and Multnomah County business tax return filing due on 4/15/2020 until 7/15/2020. For C-Corporations that have a 5/15/2020 deadline with the State of Oregon, the deadline for the Portland and Multnomah County business tax return filings due on 5/15/2020 is also extended until 7/15/2020. Tax returns due after 4/15/2020 (or 5/15/2020 for C-Corporations) are not extended at this time.
- TAX YEAR 2019 PAYMENT DEADLINE: The Revenue Division is automatically extending the tax payment deadline for Portland and Multnomah County business tax payments due with the 2019 tax year return due on 4/15/2020 until 7/15/2020. For C-Corporations that have a 5/15/2020 tax payment deadline with the State of Oregon, the deadline for Portland and Multnomah County business tax payments due with the 2019 tax year return due on 5/15/2020 is also extended until 7/15/2020. 2019 tax payments due with returns due after 4/15/2020 (or 5/15/2020 for C Corporations)
are not extended at this time.
- TAX YEAR 2020 ESTIMATED BUSINESS TAX PAYMENTS: Estimated Portland and Multnomah County business tax payments for tax year 2020 are not extended. Interest on the underpayment of quarterly estimated payments per PCC 7.02.710 B and the “safe harbor” provisions of PCC 7.02.710 C will still apply.
CARES ACT – Federal
The President has signed the CARES Act into law. The IRS is being flooded with phone calls from taxpayers asking when their stimulus payment will be received and has asked for people to wait until they’ve had a chance to post some FAQs. The IRS will post additional information about the stimulus payments on their website here:
Next week Isler NW will send out additional information “spotlights” on various aspects of the new CARES Act. As noted above, situations and relief measures are changing by the day and sometimes within the same day. We will continue monitoring these changes and send additional information as it becomes available. We are grateful for our relationship with you and hope you are all staying safe and healthy.