T&K Tax Knowledge

IRS Issues Additional Guidance on Payroll Tax Credits

Posted by Neely Munnerlyn

  

The Families First Coronavirus Response Act (the “FFCRA”) allows an employer to claim refundable payroll tax credits for the emergency paid sick leave and emergency paid family leave that an employer is required to provide to employees who are absent from work due to the COVID-19 crisis.  On its website, the IRS has released a series of frequently asked questions (“FAQs”) which provide further information about the requirements, limitations, and application of the FFCRA payroll tax credits.

In addition, the IRS has issued FAQs on the employee retention credit that is contained in the Coronavirus Aid, Relief, and Economic Security Act (the “CARES Act”). The employee retention credit is a refundable payroll tax credit for employers equal to 50% of qualified wages (including allocable qualified health plan expenses) that eligible employers pay their employees. The maximum amount of qualified wages taken into account with respect to each employee is $10,000.  Consequently, the maximum credit for an eligible employer for qualified wages paid to any employee is $5,000. 

Both sets of FAQs provide that eligible employers can claim the credits by reducing their federal employment tax deposits (including taxes withheld from its employees) as they become due by the amount of the credits to which the employer is entitled.  If the employer has insufficient federal employment taxes due to cover the amount of the tax credits, the employer may request an advance payment of the credits from the IRS by submitting the new Form 7200 (Advance Payment of Employer Credits Due to COVID-19).

Please contact the above author or the Thompson & Knight attorney with whom you regularly work if you have any questions regarding these developments.

Covid-19 and Employee Benefit Plans: Frequently Asked Questions

Posted by Russell Gully, Jason Loden, Jessica Morrison, and Neely Munnerlyn

 

The COVID-19 pandemic has resulted in economic hardships for many employers and employees.  These challenges, along with a number of legislative and administrative developments, have led employers to consider making adjustments to their employee benefit programs.  To assist employers with assessing the requirements and considerations for their employee benefit programs, we have answered some commonly-asked questions in a client alert, available here.  Please contact the above authors or the TK tax attorney with whom you regularly work if you have any questions regarding the information in the client alert.

Impacts of the COVID-19 Response to Tax-Exempt Organizations

Posted by David Rosenberg, Neely Munnerlyn, and Jana Wight

     

On March 27, 2020, in response to the COVID-19 pandemic, the President signed the “Coronavirus Aid, Relief, and Economic Security Act” (“CARES Act”) in to law. The CARES Act includes the following provisions intended to provide relief to tax-exempt organizations:

Estate Planning Dos and Don’ts During a Lockdown

Posted by Bill Mureiko, Eric Reis, Barbara Ferguson, Sarah Marks, and Rachel Deming

   

During these unprecedented times, many people may be wondering about the status of their estate plans and, in particular, whether it is possible to make changes to their estate planning documents.  Our estate planning group has prepared a client alert with a few “Dos and Don’ts” to help people think through what can and cannot be done while sheltering in place.  Click here to read the client alert.

Please contact any of the above authors or the TK tax attorney with whom you regularly work if you have any questions or need assistance.

Potential Business Tax Relief in COVID-19 Legislation

Posted by Dean Hinderliter

    

The Senate and the House have each released proposed legislation to be Phase 3 of the COVID-19 economic stimulus package. This legislation, although not yet enacted, proposes the following important tax provisions in an effort to assist businesses:

Claiming Payroll Tax Credits Under the Families First Coronavirus Response Act

Posted by Neely Munnerlyn

  

The IRS has issued Information Release 2020-57 announcing that employers can begin taking advantage of the two new refundable payroll tax credits created by the Families First Coronavirus Response Act. 

The Information Release says that under guidance to be released next week, eligible employers who pay qualifying sick or child care leave will be able to retain an amount of the payroll taxes equal to the amount of the qualifying sick and child care leave that they paid, rather than deposit those taxes with the IRS.  The payroll taxes that are available for retention include withheld federal income taxes, the employee share of FICA taxes, and the employer share of FICA taxes.

IRS Extends Filing Due Date to Match New Payment Due Date

Posted by Abbey Garber

     

After previously announcing an extension for paying income taxes, Treasury Secretary Mnuchin tweeted this morning that “we are moving Tax Day from April 15 to July 15. All taxpayers and businesses will have this additional time to file and make payments without interest or penalties.”

Families First Coronavirus Response Act

Posted by Neely Munnerlyn 

On March 14, 2020, the U.S. House of Representatives passed H.R. 6201, entitled The Families First Coronavirus Response Act (the “Act”).  The House approved certain technical corrections to the Act on March 16, 2020, and the revised version was approved by the Senate on March 18, 2020.  The Act, which has been signed into law by President Trump, requires covered employers to provide up to 80 hours of paid sick leave to employees for absences related to Coronavirus/COVID-19 (“qualified sick leave benefits”).  It also amends the Family and Medical Leave Act (“FMLA”) to provide temporary additional reasons for leave related to Coronavirus/COVID-19 and requires covered employers to provide pay for such FMLA leaves that extend beyond two weeks at a reduced rate (“qualified FMLA benefits”).  For purposes of private employers, the Act applies only to employers with fewer than 500 employees.  It becomes effective no later than 15 days after enactment and expires on December 31, 2020.

Taxpayers May Delay Paying IRS 90 Days

Posted by Abbey Garber

     

The Secretary of the Treasury announced on March 17 that individual taxpayers may defer payments to the IRS of up to $1 million (and corporations may defer paying up to $10 million) from the statutory deadline of April 15 to July 15, without being liable for interest or penalties.  This announcement was made by Secretary Mnuchin during the daily coronavirus task force press conference at the White House.  It is important to note that the filing deadline was not extended from April 15.

IRS Final Regulations Eliminate Bottom-Dollar Guarantees

Posted by Lee Meyercord and Jessica Kirk

           

The IRS recently released final regulations under section 752 that ended the viability of bottom-dollar guarantees.  The final regulations substantially adopt the temporary regulations issued on October 5, 2016.  Bottom-dollar guarantees have long been a tax-planning technique to increase a partner’s basis in her partnership interest and defer gain recognition. The IRS has been critical of bottom-dollar guarantees because it believes they lack a substantial business purpose and economic significance.