“Latest update and several items of interest”
1. There is a strong push in D.C. to have the tax deadline automatically extended until July 15th. Initially this idea was floated several weeks ago, and the IRS stated it would not be extended. However, Congress member have now stepped in “suggesting” that the extension is needed. Stay tuned.
2. It was announced this week that the rules have been relaxed for PPP Round 2 loans for the self-employed and for “gig” workers. The process as advertised sounds very easy. You take your 2019 Schedule C to the bank. I am sure some banks will have different rules, but that is supposed to be all you need. If you need a copy of your Schedule C for 2019 let us know.
3. The Employee Retention Tax Credit-I could go on about this single item for a long while, but here is the “Cliff Note” version after the revision to the credit in the last stimulus package. There is a lot of money available for businesses with employees three ways. First, if the business suffered a 50% decrease in revenues in the second quarter of 2020 it is eligible. And now it is eligible even if it got a PPP loan, previously it was not. Depending on revenues for the remainder of 2020, it might be eligible for the third and fourth quarters of 2020 also. Second, most of the southern counties of Mississippi were declared a major disaster area after Hurricane Zeta which made most businesses eligible for the ERTC on 10/28/20. Third, the newest stimulus bill sets criteria for the first and second quarters of 2021 to be eligible if there is a 20% decrease in revenues against the corresponding quarters of 2019. The 2021 limits and percentages are even more generous than the 2020 amounts. We are on top of this for our clients who have payroll as it will most likely result in substantial refund of previous paid payroll taxes.
4. Everyone needs to be aware that the State of Mississippi is taxing the PPP loans for businesses. For federal tax purposes the PPP proceeds are tax free, but Mississippi chose not to allow that same tax free treatment.