Main Menu
Posts tagged Treasury.

Swimming poolOn August 8, 2020, President Trump issued an executive order, directing the U.S. Treasury to grant employers the ability to defer the withholding, deposit and payment of certain payroll taxes as further COVID-19 tax relief.  The deferral applies only to the employee portion of Social Security taxes and Railroad Retirement taxes (i.e., 6.2 percent of wages) required to be withheld and paid under Internal Revenue Code (“Code”) Sections 3101(a) and 3201(a) from September 1, 2020 to December 31, 2020. 

PRACTICE ALERT:  The deferral does not apply to required employee Medicare tax withholdings under Code Section 3101(b) (either the standard 1.45 percent on all wages or the additional 0.9 percent tax on wages in excess of $200,000).  Further, the deferral is not available for the employer’s share of Social Security (6.2 percent) or Medicare (1.45 percent) taxes.

IRS NOTICE 2020-65

On August 28, 2020, the IRS issued Notice 2020-65, providing guidance relative to the president’s executive order.  It provides answers to several important questions.

Notice 2020-65 defines employers required to withhold and pay Social Security and Railroad Retirement taxes as “Affected Taxpayers.”  It goes on to provide that the due date for withholding and payment of the employee portion of Social Security taxes and Railroad Retirement taxes for the period September 1, 2020 to December 31, 2020 is postponed until the period commencing January 1, 2021 through April 30, 2021. 

Printing pressOn Friday, May 22, 2020, the Small Business Administration (“SBA”), in conjunction and consultation with the U.S. Department of the Treasury (“Treasury”), published an interim final rule (“IFR”) containing new guidance on the treatment of bonuses, prepayments, and the loan forgiveness application and process for Paycheck Protection Program (“PPP”) loans.

Loan Forgiveness Process 

Loan forgiveness under the PPP is not automatic.  Rather, borrowers must apply for forgiveness using the SBA’s Loan Forgiveness Application (SBA Form 3508) or their lender’s equivalent form, if any.  The process is somewhat streamlined:

    • The application is submitted to the lender for review and approval.
    • The lender will review the application and make a decision regarding loan forgiveness.
    • The lender has 60 days from receipt of a complete forgiveness application to issue a decision to the SBA.
    • The lender is responsible for notifying the borrower of the amount approved for forgiveness.
    • The lender will then request that the SBA repay the amount forgiven.
    • Within 90 days from the lender’s request for payment, the SBA will pay the lender the amount forgiven, plus any accrued interest. (If applicable, the SBA will deduct the amount of advances under the Economic Injury Disaster Loan program from its payment to the lender.) 

Rent checkIn addition to worrying about keeping their business afloat these days, businesses are focusing on whether their Paycheck Protection Program (“PPP”) loan will be forgiven.  Without loan forgiveness, many of these businesses will not survive.  Consequently, the stakes are high! 

The eligibility requirements for PPP loan forgiveness are complex.  As we discussed previously, in large part, loan forgiveness is based on the borrower using the loan proceeds within the eight-week period immediately following receipt of the loan on specified expenses, including payroll and rent. 

Some landlords have been generous enough to reduce or even abate rent for a period (e.g., three months) to assist the tenant in salvaging its business.  Consequently, these businesses may have little or no rent to pay during the eight-week period.  If a business owner asks the landlord for advice on what to do in this situation, the landlord will likely say: 

Love thy landlord – pay me anyway!

Whether the prepayment of rent (or the payment of rent for a period preceding the eight-week period) applies for purposes of the loan forgiveness computation under the PPP is likely a question being pondered by many businesses and their advisors.

WrenchLike other commentators, we have been writing extensively about the Coronavirus Aid, Relief, and Economic Security Act (the “CARES Act”), the historic $2.2 trillion relief package enacted last month by lawmakers in the wake of the COVID-19 pandemic.

In a prior post, we provided a summary and analysis of numerous tax provisions of the CARES Act. 

In this post, we expand on our previous coverage of the CARES Act relative to net operating losses (“NOLs”), and provide an overview of new guidance issued by the IRS.

NOTICE 2020-23

Working lateOn April 9, 2020, the U.S. Secretary of the Treasury issued Notice 2020-23.  It greatly expands the tax compliance relief previously granted to taxpayers in response to the COVID-19 pandemic.

Background

On March 13, 2020, President Trump issued an emergency declaration, instructing the U.S. Secretary of the Treasury to relieve taxpayers from certain tax compliance deadlines during these horrific times. 

Code Section 7508A grants Treasury authority to postpone the time to perform certain acts required under the Code for taxpayers affected by a federally declared disaster (as defined in Code Section 165(i)(5)(A)). 

Piggy bankOn March 13, 2020, President Trump issued an emergency declaration that, in part, instructed the U.S. Department of the Treasury (“Treasury”) to provide taxpayers with “relief from tax deadlines” due to the impact of the Coronavirus. 

Code Section 7508A gives Treasury authority to postpone the time to perform certain acts required under the Code for taxpayers affected by a federally declared disaster (as defined in Code Section 165(i)(5)(A)). 

The Secretary of the Treasury determined that any person with a federal income tax return and income tax payment due on April 15, 2020 is affected by the COVID-19 emergency.  Accordingly, as previously reported in our blog posts covering Notice 2020-17 and Notice 2020-18, Treasury postponed the due date for the filing of federal income tax returns and the payment of federal income taxes due on April 15, 2020 to July 15, 2020. 

Treasury has expanded taxpayer relief with the announcement of Notice 2020-20.

CautionYesterday, like other commentators, we reported that, in accordance with its terms, the Families First Coronavirus Response Act (“Act”) is effective on April 2, 2020.  Please be aware, the U.S. Department of Labor (“DOL”) posted on its website a statement that the Act is effective on April 1, 2020.  We assume this is not a premature April Fool’s joke.  Accordingly, since DOL is the agency enforcing the non-tax aspects of the Act, we advise employers to ready themselves for the new law one day earlier than expected.  It is better to be safe than sorry!    

FamilyPresident Trump signed the Families First Coronavirus Response Act (the “Act”) on March 18, 2020.  The Act becomes effective April 2, 2020, and contains a number of tax provisions that fund the Act’s mandatory paid leave provisions. 

This blog post summarizes the Act’s paid leave and associated employer tax-related benefits.  The Act is broad in application, creating complexity.  In general, it applies to employers with fewer than 500 employees.  We have attempted to dissect the Act in bite-sized, easily understandable chunks, removing the complexities whenever possible.

NewspapersYesterday, I reported that the U.S. Department of the Treasury (“Treasury”) issued Notice 2020-17, extending the due date for payment of federal income taxes from April 15, 2020 to July 15, 2020, because of the impact of the COVID-19 pandemic.  After some feedback from the tax community, Treasury has now restated and expanded the relief provided by Notice 2020-17.  

In accordance with Notice 2020-18, not only is the due date for payment of federal income taxes extended to July 15, 2020, but the date for filing federal income tax returns originally due on April 15 is now extended to July 15, 2020.

Notice 2020-18 supersedes and expands Notice 2020-17 in many helpful ways:

U.S. TreasuryOn March 13, 2020, President Trump issued an emergency declaration, which in part instructed the U.S. Department of the Treasury (“Treasury”) to provide taxpayers with “relief from tax deadlines” due to the impact of the Coronavirus.  In response, Treasury issued Notice 2020-17 (which will be published in IRB 2020-15, dated April 6, 2020).

Code Section 7508A gives Treasury authority to postpone the time to perform certain acts required under the Code for taxpayers affected by a federally declared disaster (as defined in Code Section 165(i)(5)(A)).  

Search This Blog

Subscribe

RSS RSS Feed

Larry J. Brant
Editor

Larry J. Brant is a Shareholder in Foster Garvey, a law firm based out of the Pacific Northwest, with offices in Seattle, Washington; Portland, Oregon; Washington, D.C.; New York, New York, Spokane, Washington; and Beijing, China. Mr. Brant practices in the Portland office. His practice focuses on tax, tax controversy and transactions. Mr. Brant is a past Chair of the Oregon State Bar Taxation Section. He was the long-term Chair of the Oregon Tax Institute, and is currently a member of the Board of Directors of the Portland Tax Forum. Mr. Brant has served as an adjunct professor, teaching corporate taxation, at Northwestern School of Law, Lewis and Clark College. He is an Expert Contributor to Thomson Reuters Checkpoint Catalyst. Mr. Brant is a Fellow in the American College of Tax Counsel. He publishes articles on numerous income tax issues, including Taxation of S Corporations, Reasonable Compensation, Circular 230, Worker Classification, IRC § 1031 Exchanges, Choice of Entity, Entity Tax Classification, and State and Local Taxation. Mr. Brant is a frequent lecturer at local, regional and national tax and business conferences for CPAs and attorneys. He was the 2015 Recipient of the Oregon State Bar Tax Section Award of Merit.

Recent Posts

Topics

Select Category:

Archives

Select Month:

Upcoming Speaking Engagements

Contributors

Back to Page

We use cookies to improve your experience on our website. By continuing to use our website, you agree to the use of cookies. To learn more about how we use cookies, please see our Cookie Policy.