The IRS and Treasury Department issued Notice 2020-65 providing guidance on the employee payroll tax deferral contained in President Trump’s August 8 memorandum. Under this memo, the Secretary of the Treasury was directed to postpone the collection of the employee portion of the 6.2% Social Security tax for the period of September 1, 2020, through December 31, 2020.

On August 8, 2020, President Trump took executive action towards the next COVID-19 stimulus package. These executive actions address a moratorium on renter evictions, an extension of unemployment benefits, a payroll tax deferral and extended relief for student loan debt.

The IRS recently released Notice 2020-51. This notice provides that anyone who already took a required minimum distribution (RMD) in 2020 from certain retirement accounts now has an additional amount of time to roll those funds back into a retirement account under the CARES Act RMD waiver for 2020.

The President signed legislation that was approved by both the House of Representatives and the Senate to extend the time to apply for a loan under the Paycheck Protection Program. Businesses will now have until August 8, 2020 to apply for loans under this SBA program. The original deadline to apply for a PPP loan was June 30, 2020.

The President signed in to law the PPP Flexibility Act of 2020 H.R. 7010 (“FA”), which provides several amendments to the current PPP under the CARES Act. These measures were earlier approved by the House of Representatives and the Senate . The amendments are as follows:

The Department of Justice has recently filed criminal charges against 6 individuals for participating in schemes to defraud the government regarding PPP loans.

The first IFR (RIN 1505-AC69) provides guidance on obtaining PPP loan forgiveness and clarifies the instructions for the Forgiveness Application (Form 3508). The most significant provisions of the IFR are that the SBA permits the use of bonuses and hazard pay and allows the use of PPP loan proceeds for costs paid or incurred during the covered period. Other items contained in the IFR are described below.

The second IFR (RIN 3245-AH47) involves lender requirements if the SBA reviews a loan or Forgiveness Application and that lenders will not be entitled to loan processing fees for any PPP loan where the borrower is found to be ineligible by the SBA – the lender will be required to repay the SBA any fees previously paid. Other details of the IFR are noted below.

The SBA has released the PPP Loan Forgiveness Application and Instructions – Form 3508. The form and detailed instructions inform borrowers on how to apply for forgiveness of their PPP loans. The form provides a format to calculate the amount of loan forgiveness and the instructions provide additional guidance to borrowers. According to the US Treasury Department Press Release on May 15, 2020, the form and instructions include measures that are intended to assist borrowers as they complete their applications and to provide lenders with guidance on their responsibilities.

The Small Business Administration Updates Frequently Asked Questions
Concerning the Paycheck Protection Program Related to the Review of Loans Under $2 Million and Extension of Time for Amnesty Repayments

The President has signed the Coronavirus Aid and Economic Relief Act (Cares Act) that was earlier approved by the US Senate and House of Representatives. The $2 trillion act contains many significant provisions that expand the availability of loans offered by the Small Business Administration (SBA). Additionally, the act provides substantial tax savings provisions that help individuals and businesses to create needed cash-flow during this urgent time. This summary will highlight many of the key provisions of the Cares Act. Note that many of the measures in the act have requirements and limitations that must be analyzed on a case by case basis by each taxpayer. In addition, the SBA, IRS and the Department of Labor are currently drafting procedures and regulations to implement these benefits in a timely manner. It remains uncertain how provisions in the Cares Act and other measures under the Emergency Paid Sick Leave Act and Emergency Family and Medical Act (approved two weeks prior) will work together.

On March 21st, 2020 the Treasury Department and Internal Revenue Service (IRS) announced that the federal income tax return filing deadline was automatically extended from April 15th, 2020 to July 15th, 2020 (automatically, meaning no forms need to be filed for such extension to apply).

On March 20, 2020 the IRS announced that small and midsized employers can begin taking advantage of two new refundable payroll tax credits, designed to reimburse employers for the cost of providing Coronavirus related paid leave to their employees. The paid leave for employees and tax credits for businesses are provided under the Families First Coronavirus Response Act (“Act”), signed into law on March 18, 2020. The Act applies to employers with less that 500 employees. Under the Act employees receive up to 80 hours of paid sick leave and expanded child-care leave. However, businesses with less than 50 employees will be eligible for an exemption.