In addition to small business loans available through the recently passed CARES Act, Congress has extended other benefits to businesses. Here’s a list, courtesy of the Auto Care Association:
Employee Retention Credit (2301) For employers who either do not, or cannot, participate in the Payroll Protection Program (PPP), one alternative is the employee retention credit. Qualified employers are allowed a credit against applicable payroll taxes for each calendar quarter in the amount equal to 50% of the qualified wages paid to each employee, not to exceed $10,000. Qualified employers must have either had their operations fully or partially suspended due to COVID-19, or their gross receipts declined by 50% or more compared to the same calendar quarter the prior year. If your business has more than 100 fulltime employees, qualified wages are those paid to employees when they are not able to work. If your business has fewer than 100 fulltime employees, then employee wages qualify for the credit, irrespective of whether the employee is working.
Delay of Payment of Employer Payroll Taxes (2302) Employers are allowed to defer their 6.2% share of the social security tax that they are otherwise responsible for paying. This deferred tax will instead be paid in two parts: the first half will be due Dec. 31, 2021, and the second half will be due Dec. 31, 2022.
Modifications for Net Operating Losses (2303) Allows a net operating loss arising in 2018, 2019 or 2020 to be carried back five years. This provision also temporarily removes the taxable income limitation to allow a net operating loss to fully offset income. These provisions are aimed at providing cash flow and liquidity.
Modification of Credit for Prior Year Minimum Tax Liability of Corporations (2305) Accelerates the ability of companies to recover alternative minimum tax credits.
Modification of Limitation on Business Interest (2306) The amount of interest expense that businesses are allowed to deduct on their tax returns is increased from 30% to 50% of taxable income (with adjustments) for 2019 and 2020.
Advance Refunding of Credits (3606) Small business employers who are eligible for a payroll tax credit for the sick leave and family leave (§7001) that they paid pursuant to the Families First Coronavirus Response Act may receive an advance of that credit from the Treasury.
Loans for Mid-Sized Businesses (4003) The Treasury Department shall endeavor to create a loan program for U.S. domiciled businesses between 500 and 10,000 employees to retain at least 90% of their workforce, with full compensation and benefits, through September 2020. Annualized interest rate should be not higher than 2% and no principal or interest should be due and payable for at least the first six months. Additional restrictions, like not offshoring jobs for the term of the loan, may apply.
The U.S. Department of the Treasury is expected to publish additional guidance on these provisions in the near future at: https://home.treasury.gov/
For additional assistance, please reach out to Gabrielle Hopkins, vice president, federal affairs, Auto Care Association, at [email protected].