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CARES Act Economic Stimulus Package Moves Forward

March 25, 2020

In the early morning hours on Wednesday, White House and Senate leaders agreed on a $2 trillion coronavirus relief package.

View the bill at this link. It provides a $367 billion program for small businesses to maintain their payroll for employees forced to stay at home. Another notable spending measure is $500 billion guaranteed and subsidized loans for industries including airlines, which is still creating obstacles to finalizing the bipartisan bill.

We are facing incredible economic times and the federal government is taking unprecedented actions to maintain the economy.

Highlights

To assist you with some of these impacts, we have listed specific elements to the bill as it might relate to your business.

  • Direct payments to all Americans.
  • Small Business Interruption Loans will be funded with almost $300B in loan guarantees and loan subsidies to be used for payroll support, paid sick or medical leave, employee salaries, mortgage payments and other debts with a maximum amount of $10M available.
  • Loan forgiveness available to borrowers equal to the payroll costs and costs related to debt obligations.
  • Businesses can postpone estimated tax payments due until October 15, 2020, without a cap on the amount of tax payments postponed.
  • Employers & self-employed individuals allowed to defer payment of the employer share of the social security tax. The deferred employment tax would be required to be paid over the following two years, with half to be paid by December 31, 2021, and the other half by December 31, 2022.
  • Net-operating losses (NOLs) from prior years in the current tax year would be relaxed allowing losses from 2018, 2019, or 2020 to be carried back five years, and would temporarily remove the taxable income limitation to allow an NOL to fully offset income.
  • Acceleration for companies to recover AMT credits.
  • Increase to 50% of interest expense businesses can deduct.
  • Immediate write-offs of costs to improve facilities instead of having to depreciate improvements.
  • Allow companies to recover the overpayment of taxes paid on the one-time repatriation toll charge in 2017.
  • Limitation of not more than $200 per day and $10,000 total for each employee in paid family & medical leave.

Areas where we expect to see short- and long-term tax planning considerations and consequences:

  • Payroll and unemployment tax planning
  • Saving and maximization of cash tax refunds and deferrals
  • Corporate provision implications (and how that impacts financial statements)
  • Other implications specific to your unique tax situation

This is not an exhaustive list for you to consider, but a summary of the most impactful.

We're here to help

We're closely monitoring the COVID-19 changes, and we will send out updates as they become available. Reach out to our Rapid Response Team below if you need further information on this topic.

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