FOR TAX PROCESSING UPDATES/INFORMATION - SEE CONTACTS TAB UPDATE 3/28/2020 Whitmer - Executive Order 2020-26 (COVID-19)
Governor Whitmer has extended tax filing deadline to July 15 to concur with federal filing.
Final Tax Deadline Order
UPDATE 3/26/2020 PROPOSED - Coronavirus Aid, Relief, and Economic Security Act (CARES Act) (In Process):
Key components include a loan program from the SBA, changes to unemployment benefits and changes to business tax filing requirements.
- Small Business Paycheck Protection Program: A new lending program that allows businesses to borrow enough to cover monthly payroll costs for businesses for up to 2.5 months. If used for payroll, mortgage interest or other qualified expenses, these loans will be forgiven as long as the employer continues to employ its workers or rehires them when they reopen for business.
- Business tax provisions:
- Employers are eligible for a 50 percent refundable payroll tax credit on wages paid up to $10,000 during the crisis. The credit would be available to employers whose businesses were disrupted due to virus shutdowns and those that had a decrease in gross receipts of 50 percent or more when compared to the same quarter last year. The credit can be claimed for employees who are retained but not currently working due to the crisis for firms with more than 100 employees, and for all employee wages for firms with 100 or fewer employees.
- Employer-side Social Security payroll tax payments may be delayed until January 1, 2021, with 50 percent owed on December 31, 2021 and the other half owed on December 31, 2022. The Social Security Trust Fund will be backfilled by general revenue in the interim period.
- Firms may take net operating losses (NOLs) earned in 2018, 2019, or 2020 and carry back those losses five years. The NOL limit of 80 percent of taxable income is also suspended, so firms may use NOLs they have to fully offset their taxable income. The bill also modifies loss limitations for non-corporate taxpayers, including rules governing excess farm losses, and makes a technical correction to the treatment of NOLs for the 2017 and 2018 tax years.
- Technical corrections to the depreciation treatment of qualified improvement property (QIP).
- Payments for individuals: Proposed recovery rebates will use 2019 tax returns (2018 return if 2019 has not been filed) to determine advanced rebate amounts. It is anticipated those who make less than $75,000 a year will receive direct payments of $1,200 per individual ($2,400 joint return) plus $500 per child. This will phase out for incomes above $75,000 ($150,000 joint filings).
- Unemployment assistance: Unemployment insurance provisions now include an additional $600 per week payment to each recipient for up to four months, and extend UI benefits to self-employed workers, independent contractors, and those with limited work history. The federal government will provide temporary full funding of the first week of regular unemployment for states with no waiting period and extend UI benefits for an additional 13 weeks through December 31, 2020 after state UI benefits end.
- Above-the-line charitable contribution: Creates a $300 partial above-the-line charitable contribution for filers taking the standard deduction and expands the limit on charitable contributions for itemizers.
- Waiver on early withdrawal penalty: Waives the 10 percent early withdrawal penalty on retirement account distributions for taxpayers facing virus-related challenges. Withdrawn amounts are taxable over three years, but taxpayers can recontribute the withdrawn funds into their retirement accounts for three years without affecting retirement account caps. Eligible retirement accounts include individual retirement accounts (IRAs), 401Ks and other qualified trusts, certain deferred compensation plans, and qualified annuities. The bill also waives required minimum distribution rules for certain retirement plans in calendar year 2020
Families First Coronavirus Response Act (March 18, 2020):
Provide assistance to covered employees and households with eligible children affected by COVID-19. Direct components of the act effecting small business are; Mandatory emergency paid sick leave for covered employees who, as a result of COVID-19, are quarantined, symptomatic or caring for a symptomatic individual, or caring for a child whose school has been closed and the expansion of Unemployment benefits.
- Paid sick and family leave. The law requires all private businesses with fewer than 500 employees to provide emergency paid sick or family leave for employees affected by the coronavirus outbreak.
- Employer tax credits. The law provides employers with fewer than 500 employees with refundable payroll tax credits to cover the cost of providing the paid sick leave and the paid FMLA leave to their employees. Specifically, the law states that:
- Employers will receive 100% tax credit against their payroll tax liability up to the capped amount of benefits they must pay.
- Health insurance costs are also included in the credit.
- Self-employed individuals receive an equivalent credit.
- If an employer is owed more than the capped amount and a refund is owed, the IRS will send the refund as quickly as possible.
Coronavirus Preparedness and Response Supplemental Appropriations Act (March 6, 2020):
Provide emergency funding for federal agencies to respond to the coronavirus outbreak including the U.S. Small Business Administration (SBA) to provide low-interest loans to businesses impacted by COVID-19.
- The SBA is offering designated states and territories low-interest federal disaster loans to small businesses suffering substantial economic harm as a result of the coronavirus.
- These loans may be used by small businesses to pay fixed debts, payroll, accounts payable and additional bills that can’t be paid because of COVID-19’s impact. Businesses with credit available elsewhere are not eligible.
- The SBA loans come with long-term repayments
Update 3/25/20: Confirmation of 1st Quarter Estimates
The IRS has recently issued guidance on the 2020 estimate due dates confirming the first quarter estimate is now due July 15th. However, this does not change the original 2nd quarter estimate due date that remains June 15th. Please see attached article for additional information.
Update 3/18/20: Families First Coronavirus Response Act: Employee Paid Leave Rights
This bill responds to the coronavirus outbreak by providing paid sick leave and free coronavirus testing, expanding food assistance and unemployment benefits, and requiring employers to provide additional protections for health care workers.