Last week, the federal government enacted the CARES Act. It provides economic relief to Americans both as individuals and businesses. While the Act contains a variety of tax, loans and other measures, the following programs are of particular interest to employers and small businesses:
- Payroll Protection Program. In part, this law allows small and mid-sized businesses to receive federal loans to cover payroll, health insurance premiums, rent and other expenses, which are forgivable when the business pays these expenses. It also provides additional programs for these businesses during this crisis. The SBA is working on guidelines and more advice will be available by mid-April about these programs. Contact your banker to begin the application process as soon as possible, as funds are first-come, first served.
- Employee Retention Tax Credit. The CARES Act also provide eligible employers with a refundable payroll tax credit of 50% of wages paid from March 13, 2020 to December 31, 2020 for those:
- Operations were fully or partially suspended due to a COVID-19 related “shut-down order,” or
- Gross receipts declined by more than 50% when compared to the same quarter in the previous year.
There are some limits on how much an employer can claim. If an employer is already taking tax credits allowed by the Families First Coronavirus Response Act, it will have to exclude those amounts from this the Employee Retention Tax Credit.
- Payroll Tax Deferral. The Act also allows employers and self-employed individuals to defer any payment of the employer share of payroll taxes that are due from March 27, 2020 to December 31, 2020. Half of the deferred taxes must be paid by December 31, 2021 and the other half by December 31, 2022. If an employer has obtained a loan under the Payroll Protection Plan, then they are not eligible for the Payroll Tax Deferral.
- Unemployment Insurance Provisions. The Act further expands the availability of unemployment insurance to individuals by (1) expanding the coverage and eligibility to individuals that may not usually be covered; (2) increasing the weekly payment that is provided by the state to the employee by up to $600 a week; and (3) extending the coverage by 13 additional weeks. Employers should direct their employees to their state unemployment insurance office for more information on how the CARES Act will be implemented. Those sites are best accessed after 8 p.m. when site traffic is lower.
As the CARES Act is implemented by the various government agencies, we will continue to provide appropriate updates. Please do not hesitate to contact us with any questions – Ginny Cascio Bonifacino at firstname.lastname@example.org or Natasha M. Nazareth at email@example.com.