COVID-19 Tax Update

The 2020 tax season is off to a hectic and ever-changing start. We want to be able to provide you with up to date information as we receive it. Please continue to visit this link to the IRS website for the most recent changes and dates. You can always call our office for more clarification. We are happy to answer any questions you may have during this time.

Updates on Tax Deadlines & Refunds:

  • The IRS has postponed the due date for certain Federal income tax payments from April 15, 2020 until July 15, 2020.
  • As a result of the postponement of the due date for filing Federal income tax returns and making Federal income tax payments from April 15, 2020, to July 15, 2020, the period beginning on April 15, 2020, and ending on July 15, 2020, will be disregarded in the calculation of any interest, penalty, or addition to tax for failure to file the Federal income tax returns or to pay the Federal income taxes postponed by this notice. Interest, penalties, and additions to tax with respect to such postponed Federal income tax filings and payments will begin to accrue on July 16, 2020.
  • At this time, Minnesota has NOT adopted these changes to their state tax deadlines but we are expecting this to change in the upcoming weeks.
  • There are new payroll tax credits for employers as stated in this IRS press release that discusses Paid Sick Leave for employees that have been affected by COVID-19, Child Care Leave Credit due to closures of schools/daycares, and reimbursements for employers.

Businesses & Non-Profits: TWO TRILLION DOLLAR STIMULUS UPDATE

Our top priority is helping our small businesses, non-profits, and individuals lessen their financial burden during this time.

This is what we know as of today:

  • The federal government is providing a forgivable loan.

How does the loan work?

  • The loan is forgivable, meaning, it does not have to be paid back if requirements are met during a covered period.

What is the covered period?

  • This is an 8 week period beginning at the time of the loan.

How much is the forgivable loan?

  • The total forgivable amount is equal to operating expenses during the 8 week covered period. Operating expenses include employee payroll, all forms of compensation (including health insurance), mortgage, rent, and utilities.

What if I reduce my workforce?

  • Once the loan is received, if you have to lay off employees during the covered period, the forgivable amount of the loan will be reduced proportionately. For example, if a small business cut back half of its workforce, the loan will be reduced by fifty percent. However, if all employees are rehired at their full salaries by June 30th, 2020, no reduction of the loan will incur.

Where can I apply?

  • This has been a vague issue. It was originally set up with financial institutions that are Small Business Administration (SBA) lenders, which many of our local banks are.
  • The AICPA (our professional resource) indicated the government is trying to have all lending institutions be qualifying lenders to speed up the process.
  • We were on the phone with several local banks on Friday and they are anticipating being informed shortly of their protocols.

How much should I apply for?

  • The maximum amount you can apply for is 2.5 times youraverage total monthly payroll, based on the precedingtwelve month period (special seasonal employer rules apply).
  • Businesses want to find a fine line of getting enough aid to support their employees and their business while being careful not to overwhelm themselves with debt that may not be forgiven.
  • In order for the debt to be forgiven you will need extensive documentation that the money was spent on the operating expenses described above (see page 50 of the document, link below)

There are some stipulations but MOST Lakes Area businesses should qualify for this forgivable loan.

We can’t stress enough that our main focus is to keep our small businesses financially afloat.  Please do not hesitate to contact us for help with compiling the necessary information to apply for this loan.

This link contains the stimulus document:

All small business owners should read pages 9 through 52. We know it is an 800 page document but this could be some of the most important information you read for your business this year.

This information is not designated to a specific person or entity. These items have changed very quickly in the last weeks and the above interpretation is subject to change.

We are all in this together!

 

The information provided by Clasen Stegner & Schiessl CPAs, Ltd. (us), on lakesareacpas.com (Site) and on our social media platforms is for general informational purposes only.  All information on the Site and our social media platforms is provided in good faith, however we make no representation or warranty of any kind, express or implied, regarding the accuracy, adequacy, validity, reliability, availability or completeness of any information on the Site or social media platforms.