Marc J. Soss, Esq., Licensed in FL., RI and CT
On March 27, 2020, President Trump signed into law the Coronavirus Aid, Relief, and Economic Security Act (the ‘‘Act”). The Act addresses the coronavirus pandemic by directing funds to address the strains on the health care system as well as alleviate the economic pressures facing the country’s employers and workers through expanded unemployment benefits and individual and business tax changes. A brief look at them follows.
BUSINESS RELATED RELIEF
Employee Retention Tax Credit
The Act provides tax credits equal to fifty percent of employment taxes for qualified wages (up to $10,000), including health benefits, paid to each employee. The tax credit is effective for wages paid between March 13, 2020 to December 31, 2020. Eligibility for the credit is predicated on (i) the employer carrying on a trade or business in 2020 and the operation of that business is fully or partially suspended (for specified reasons) by the government (federal, state or local) due to COVID-19, or (ii) the business has seen a significant decline in gross revenue (50% less than in the calendar quarter of the prior year) and for so long until the business recovers to eighty percent of prior year’s revenue. A business may not make this election if the business elects to receive a loan under the Paycheck Protection Program.
For businesses with one hundred (100) or fewer employees, all employee wages qualify for the credit, regardless of whether the employer is open for business or subject to a shut-down order. For businesses with more than one hundred (100) fulltime employees, qualified wages are wages paid to employees when they are not working due to the COVID-19-related circumstances.
The Act postpones payment of employer and self-employed individual’s payroll taxes (6.2 percent portion of Social Security taxes) until December 31, 2021 for half (1/2) of the amount due, with the other half due on December 31, 2022.
Small Business Support
The Paycheck Protection Program provides relief to small businesses (less than 500 employees), sole proprietorships, independent contractors and the self-employed, as well as non-profit organizations, tribal businesses and veteran organizations through loans to pay salaries, benefits, payroll costs, mortgage interest, utilities, and interest on certain debt obligations. Every applicant is required to certify that the funds “will be used to retain workers and maintain payroll or make mortgage payments, lease payments, and utility payments.” For eligibility purposes, every business should count all employees, including full-time, part-time and temp workers as well as independent contractors. Businesses and owners currently in bankruptcy, delinquent on a federal loan or...