YOUR TRUSTED ACCOUNTANTS AND ADVISORS
Serving the South Florida Area
Forrest Robinson specializes in a variety of accounting services with outstanding support. We understand how busy you are, and with our expertise we can take care of your accounting needs quickly and effectively. We are equipped to handle the books for you, leaving you to worry less and live more.
COVID-19 TAX UPDATES
Be In The Know
We will continue to do our best to keep all of our current and prospective clients informed of the latest developments we are all facing, as a result of the COVID-19 pandemic. If you still have questions, don’t hesitate to reach out to our office.
PPP FLEXIBILITY ACT OF 2020
Update as of 6/4/20
Late Wednesday evening, the Senate passed through the H.R. 7010 Bill for Flexibility on the original CARES Act, known now as the PPP Flexibility Act of 2020.
Some of the highlights for these changes include:
1. Extension of time to use funds from original 8 weeks, to the earlier of 24 weeks or December 31, 2020.
2. Adjustment to the ratio of payroll and non-payroll qualified expenses from 75% and 25% respectively, to 60% and 40%.
3. The repayment period has been extended for any portion of the loan not forgiven, from 2 years to a minimum of 5 years.
4. There are now additional exemptions for FTE qualifications, based on the inability to hire similarly qualified employees for unfilled positions, or the inability to return to the same level of business activity due to compliance requirements or guidance by a government health agency.
5. Currently, there is a restriction to take advantage of Section 2302 of the CARES Act, which allows for a business to defer their employer portion of social security once the PPP covered weeks have ended. This restriction is set to be removed, to allow for the deferment of payments through year end.
There are other items also included within the new legislation, and we will be working diligently to stay up to date and provide our clients with the relevent information to their particular circumstances.
The Bill still needs to be signed by the President in order to take effect.
WHAT IS THE CARES ACT?
The "CARES" Act was signed into law on Friday afternoon, March 27, 2020. Below, please find a summary of the $2 trillion dollar Coronavirus Aid Relief and Economic Security Act.
Recovery Rebate Program:
There is a one-time direct payment to American's of $1,200 per adult and $500 per child under the age of 17 (ie - that would be claimed as a dependent on your 1040). There is a phaseout threshold, however; For every individual who makes $75,000 or less
(MFJ - $150,000, HH - $112,500), you are eligible for the full $1,200. If you make above the thresholds, the benefit is reduced by $5 for every $100 the taxpayer makes.
The senate will use 2019 tax returns, to the extent already filed, or 2018 tax returns to assess income for determining the payment amounts.
401(k) Loans and Hardship Withdrawal Options:
Under the CARES Act, individuals who are under the age of 59 1/2, have the ability to take a distribution from their qualified retirement plan of up to $100,000, without incurring the 10% penalty. Please note, you are still responsible for the income tax on the distribution, however, there are some very important guidelines that were established to assist in the tax implication of taking the distribution.
Who is eligible to take the "corona-virus related distribution"?
1. An individual who is diagnosed with COVID-19, SRS COV-2 by way of testing as approved by the CDC.
2. Whose spouse or dependent is diagnosed with one of the two diseases.
3. A person who experiences adverse financial consequences as a result of being quarantined, laid off, furloughed, reduction of work hours, or unable to work due to lack of child care.
What are my options as it pertains to the tax implications of taking a withdrawal from a qualified retirement account?
There are two main options as it relates to the tax implication on taking a distribution from your qualified retirement account.
1. You can recognize the income from the distribution over a three (3) year period, beginning with 2020.
2. You can choose to repay the distribution back to your retirement account (works similarly to a loan from your retirement plan) over a three (3) year period to avoid paying income tax at this time.
Is there a temporary waiver of Required Minimum Distributions (RMDs)?
Yes. RMDs from IRAs, Defined Contribution Plans, and 457(b) plans are suspended for the calendar year 2020. This includes RMD requirements to any distribution required to be made in calendar year 2020 by reason of a required beginning date occurring during the calendar year 2020, and such distribution not having been made before January 1, 2020.
Loss Modification for Individuals:
Based upon the 2017 Tax Cut and Jobs Act (TCJA) there was a limitation placed on losses by non-corporate taxpayers, of $500,000. With the CARES Act in place, the limitation is suspended retroactive to 2018, and individuals to whom this may apply, can potentially amend their 2018 tax return. This will also allow for individuals who may incur significant losses in 2020, to be able to utilize the losses for tax purposes.
Charitable Contribution Options:
NON-ITEMIZED: For those individuals who do not itemize on their 2020 tax returns, there will be an above the line deduction of up to $300 for any qualified charitable contribution made during the calendar year.
ITEMIZED: For those individuals who do itemize, the CARES Act has modified the limitation on deductions for charitable contributions. For individuals, the 50% of Adjusted Gross Income limitation will be suspended for 2020. For Corporations, the 10% limitation will be increased to 25% of taxable income. Please note, this relief does NOT apply to cash gifts to Donor Advised Funds and Private Foundations.
Employer paid Student Loan Debt:
An employer is able to pay up to $5,250 of an employees student loan obligation, without it being treated as income to the employee, for 2020.
1. Paycheck Protection Program Loan via the CARES Act: Apply via your bank or other SBA approved lending institutions. (Please note a number of banks are requiring the application to be submitted online via the bank website)
Eligible Businesses include qualifying small businesses (including nonprofit organization, veteran's organization, religious organizations, or tribal business, as well as sole proprietors, independ contractors, and self-employed individuals) that have suffered significant disruption as a result of COVID-19 and have:
500 employees or fewer, whether full-time, part-time, or other basis, or
meet the SBA industry-based "size standard" requirements for the application NAICS code, which are based either on number of employees or annual receipts, if larger than 500 employees, in which the concern operates.
Note: There are some exceptions to the 500 employee rule. Please reach out to our office if you fall into this category.
Loans will be administered through the SBA Section 7(a) loan program, as modified by the CARES Act, and will be serviced by existing banks and lenders enrolled in the program, as well as other lenders that meet the necessary SBA standards.
What is the maximum funding available through the Paycheck Protection Loan?
**Please be sure to read the PPP Flexibility Act of 2020 update above, as some of the information herein, has now been changed.**
The Paycheck Protection Loan is a formula based loan, and is determined by taking the average monthly payroll costs at a 2.5 multiple, up to a total of $10 million. The amount is intended to cover eight (8) weeks of payroll expenses and any additional amounts for making payments towards debt obligations. The eight (8) week period can be applied to any time frame between February 15, 2020 and June 30, 2020. Please note seasonal businesses will be measured using a 12-week period beginning February 15, 2019, or March 1, 2019, whichever the seasonal employer chooses.
Loan Terms: Terms may differ by case, but generally the maximum terms are:
Originally 2 Yr. Term (if PPP Flexibility Act enacted into Law, term period increases to 5 years.)
1% per annum
No prepayment penalties
Loan payments (including principal, interest, and fees) will be deferred for between 6-12 months at the origination of loan.
Loan forgiveness eligibility
No personal guaranty required
No collateral required
Apply through a lending institution
Note: Loan forgiveness eligibility will be determined by an amount equal to the payroll cost, any payment of interest on certain mortgage obligations, certain rent obligations, and certain utility payments for the 8 week period following the date of the loan. The amount of the loan eligible for forgiveness will be reduced proportionally by the number of employees laid off during this period relative to the borrowers prior employment levels. However, if employees have already been laid off, the loan can still be forgiven for the full amount of payroll costs, if those employees are rehired by June 30, 2020 (December 31, 2020 under PPP Flexibility Act).
Any eligible loan forgiveness will not be treated as cancellation of debt income to the borrower, thus there is no income tax effect for federal income tax purposes.
Economic Injury Disaster Loan (EIDL) Under SBA Section 7(b) Lending Program: Apply directly with the SBA via the below website.
Assists qualified businesses affected by the novel coronavirus, COVID-19, to meet working capital needs or normal business operating expenses through the recovery period.
Under the CARES Act, an eligible entity that applies for the EIDL loan can get an "emergency grant" of up to $10,000 within three (3) days after the SBA receives the application. If the grant is used for eligible expenses, such as, payroll, utilities, mortgage/rent, etc. no payback is required.
In total a business can obtain up to $2 million dollars of a loan.
The requirements for obtaining the loan are as follows:
Submit Application; SBA Form 5 or 5C.
Complete and provide Form 4506-T, which is a tax information authorization form. (This is required by each application, each principal owning 20% or more of the business, each general partner or managing member, and for any owner who has a greater tahn 50% ownership in an affiliate company.)
Complete copies of federal income tax returns for the applicant business.
Personal financial statements completed by the applicant, each principal owning 20% or more of the applicant's business, and each general partner or managing member.
Completion of SBA Form 2202, Schedule of Liabilities listing all fixed debt.
A fee disclosure, SBA Form 159D, if applicable.
Up to 30 years Term Loan
3.75% Per Annum
No loan forgiveness eligibility
Collateral is required for loans over $25,000.
Waives personal guarantee requirement for loans less than $200,000.
Apply directly with the SBA.
If you have already applied for an EIDL between January 31, 2020 and the date at which the Paycheck Protection Program becomes available, borrowers will be able to refinance the EIDL into the Paycheck Protection Program for loan forgiveness purposes.
Borrowers are not eligible to take out both an EIDL and a Paycheck Protection Program for the same purposes.
If a borrower took advantage of the emergency EIDL grant award of up to $10,000, that amount would be subtracted from the amount forgiven under the Paycheck Protection Program.
Payroll Tax Credit:
Certain employers will become eligible for a payroll tax credit in each applicable quarter in an amount equal to 50% of the first $10,000 of qualified wages paid to employees (including health benefits) between March 13, 2020 and December 31, 2020.
Eligible businesses are:
Business whose business was fully or partially suspended due to a government shutdown order (OR)
experienced a decline of gross receipts of at least 50% versus the same calendar quarter in the prior year.
Note: For businesses with greater than 100 full-time employees, the tax credit is only available to the extent wages are paid to employees who are unable to work as a result of a government shutdown order.
Delay of making payroll tax deposits:
The CARES Act allows businesses to delay the 6.2% employer portion of the Social Security payroll tax for the remainder of the 2020 calendar year.
Repayment terms: The deferred tax liability will then need to be paid back as follows:
50% by December 31, 2021
50% by December 31, 2022
Interest Deductibility Limit Increased:
The Tax Cut and Jobs Act limited the deductibility of business interest to 30% of a company's adjusted taxable income, except for floor plan financing interest. The CARES Act allows businesses to deduct up to 50% of their adjusted taxable income for 2019 and 2020. Any company who is unable to use full expensing in 2019 due to interest expense falling between 30% and 50% of their adjusted taxable income, may be able to file amended 2019 return, to generate a refund.
NOL Carryback Modifications:
The new provision will allow for carrybacks for up to five years for net operating losses (NOLs) recorded by C Corporations in tax years 2018, 2019, and 2020. (This provision also has eligibility for individuals as well)
Corporations who have AMT Credits, are allowed to claim them against regular tax liability through tax year 2021. However, the new provision makes this credit a refundable credit for tax years 2018 and 2019.
HAS THE IRS DEADLINE FOR 4/15 BEEN EXTENDED? WHAT ARE THE FLORIDA STATE DEADLINES?
The sate of Florida has officially extended the filing deadline of corporate income tax returns from May 1, 2020 to June 1, 2020.
The filing of the Florida Annual Report with the Secretary of State has been extended to June 30,2020.
An announcement was made this morning that the filing deadline has also been extended from April 15th to July 15th. There is no language as of yet indicated on the IRS website. However, we will be monitoring and providing an update as the information comes in.
For additional information please go to where you will find guidance via Notice 2020-17.
We are closely monitoring and updating our website with useful information for our clients regarding the recent COVID-19 pandemic.
At this time, the IRS has provided for a 90 day extension of time to pay without incurring any interest or penalties.
Individual taxpayers can receive the extension on paying taxes of up to $1 million.
Corporations can defer tax payments of up to $10 million.
WHAT IS THE FAMILIES FIRST CORONAVIRUS RESPONSE ACT?
The Families First Coronavirus Response Act was passed into law on 3/18/20, as Public Law No,: 116-127.
Emergency Paid Sick Leave Act
Emergency Family and Medical Leave Act Expansion
Tax Credits for Paid Sick and Paid Family and Medical Leave
EMERGENCY PAID SICK LEAVE ACT OF 2020
Requires employers with fewer than 500 employees to provide paid sick leave to all employees. The law takes effect no later than April 2, 2020 and expires December 31, 2020.
The Emergency Paid Leave Benefits:
Eligible full-time employees must b provided with eighty (80) hours of paid sick leave. Part-time employees receive a pro-rata portion based upon average number of hours worked over a two week period.
Eligibility is due to any of the following reasons:
1.) The worker has a current diagnosis of COVID-19
2.) The worker is quarantined (including self-imposed quarantine), at the instruction of a health care provider, employer, or government official, to prevent the spread of COVID-19.
3.) The worker is caring for another person who has COVID-19 or who is under a quarantine related to COVID-19.
4.) The worker is caring for a child or other individual who is unable to care for themselves due to the COVID-19-related closing of their school, child care facility, or other care program.
5.) The employee is experiencing any of ther substantially similar condition specified by the Secretary of Health and Human Services in consult with the Secretary of the Treasury and the Secretary of Labor.
*Please note, there are some exceptions to the above if you are an employer of a healthcare provider/emergency responder.
BENEFIT AMOUNT: Employer must generally pay the employees regular rate of pay, or applicable minimum wage, whichever is higher, up to a maximum of $511 per day, which results in a maximum payout to employee of $5,110.
Exception: If the leave is to care for an individual on quarantine/isolation/self imposed quarantine, or to care for a child who school is closed, the employer may compensate at two-thirds of the individual's regular rate of pay, up to $200 maximum per day, for a total payout of $2,000.
Note: Days when an individual receives pay from their employer (regular wages, sick pay, or other paid time off) or unemployment compensation, do not count as leave days for purposes of this benefit.
EMERGENCY FAMILY AND MEDICAL LEAVE EXPANSION ACT OF 2020
Employees may use up to 12 weeks of job-protected leave to care for their children due to school closures, or childcare provider being unavailable.
First 10 days may be unpaid, but employee can elect to use any accrued paid time off to offset these days.
Post 10 days, employees are entitled to pay at a rate no less than, two-thirds their regular rate of pay, up to a maximum of $200 per day.
EXCEPTION: Employers with fewer than 50 employees where the requirements would jeopardize the viability of the business.
After the 12 week period, the employer must generally restore the employee into their same/similar position.
EXEMPTION: Employers with fewer than 25 employees are exempt from the requirement if:
1.) The position does not exist due to economic conditions or other changes in the operating conditions that affect employment and were caused directly by this public health emergency.
2.) The employer makes reasonable efforts to restore the employee to a position equivalent to the previously held position, and
3.) The employer makes reasonable efforts to contact the employee if an equivalent position becomes available within the following year.
PAID FAMILY LEAVE AND PAID SICK LEAVE TAX CREDITS
Employers are allowed a credit against employer social security tax liability for 100% of the qualified sick leave wages paid by the employer, subject to the aforementioned "caps".
This is a fully refundable credit
HAS THE IRS MADE ANY STATEMENTS AS IT RELATES TO HIGH DEDUCTIBLE HEALTH PLANS (HDHP) AND EXPENSES RELATED TO COVID-19?
The IRS has now issued A guidance under Notice 2020-15, which provides for the fact that part of the response efforts are to remove barriers for testing for and treatment of COVID-19.
This means that all medical care services received and items purchases associated with testing for and treatment of COVID-19 that are provided by a health plan without a deductible, or with a deductible below the minimum annual deductible otherwise required under section 223(c)(2)(A) for an HDHP, will be disregarded for purposes of determining the status of the plan as an HDHP.
IS FORREST ROBINSON REMAINING OPEN?
Forrest Robinson is currently open and fully operational, however we will be following the state and county protocols as they are issued.
We have made contingency preparations for the firm to continue operations remotely, should it be necessary to close the office.
We ask that you be understanding that there may be a short delay in service as we make the transition to a fully remote workspace.
Please note, whether we are physically in the office or not, we will be updating our website to keep you apprised of developments as they occur. We can always be reached via telephone, using our main office number, or email.
HOW WE HELP
Your Accounting Experts
Forrest Robinson provides unparalleled personalized accounting services to a broad range of clients across the South Florida tri-county area. As your certified public accountants, we are here to ensure that all of your financial decisions are made carefully and with your best interests in mind. We are ready and able to serve as your financial advisor, tax planner, and guide along your path to success.
Contact us to see how our accounting expertise and personalized services can save you time, money, and frustration with managing your finances.
5521 N University Dr
Coral Springs, FL 33067