The New England Accounting Advisor

As businesses continue to grapple with effects from the COVID-19 pandemic, many are turning attention to forgiveness of Payroll Protection Program (PPP) loans. Borrowers do not need to repay PPP loans as long as they satisfy a variety of conditions, including a requirement to spend PPP loan proceeds on qualifying expenditures such as payroll and rent. The IRS previously clarified in Notice 2020-32 that these expenditures are nondeductible for tax purposes. But in many cases, PPP loans will not be forgiven by the end of the tax year. In that case, it is uncertain how to treat the expenditures in the year incurred, and what to do in the year of loan forgiveness.

Topics: COVID19, Coronavirus, PPP Loan, payment protection plan, PPP Loan Forgiveness, Nondeductible Expenses

Late Friday, the IRS released guidance that implements President Trump’s executive order permitting employers to defer certain employee payroll taxes. The IRS guidance provides key details on employee eligibility, the repayment period, and employer responsibilities. But the IRS guidance leaves some questions unanswered, even as the optional deferral period takes effect September 1. Importantly, the IRS guidance could cause an economic hardship for many employees while exposing employers to a new contingent liability.

Topics: IRS, tax relief, payroll taxes, COVID19, Employee Payroll Tax Deferral

The Payroll Protection Program (PPP) brought swift relief to thousands of organizations disrupted by the COVID-19 pandemic by offering potentially forgivable loans to cover employee costs and certain other expenditures. Like the pandemic, the scale of the $650 billion loan program was unprecedented. Accounting and tax rulemakers are now parsing the manner in which PPP loan recipients should report their loan proceeds on financial statements and tax returns.

Topics: IRS, Taxes, COVID19, PPP, PPP Loan

As more options become available to work virtually, people are considering where they want to maintain a home or “domicile,” both for convenience and for personal fulfillment, since they may no longer be strictly tied to working from an office. One of these considerations may be moving to a state with lower taxes, particularly in the wake of changes made in the tax reform law commonly known as the Tax Cuts and Jobs Act (TCJA). Before planning a move to another state, it is important to understand  the concept of “domicile” or “residence,” and how these are defined for state and local tax purposes to avoid unwanted attention from states desperate to find revenue during this pandemic.

Topics: state and local tax (SALT), SALT, COVID19, Coronavirus, Coronavirus Aid, Relief, and Economic Security Act

Businesses that hold inventory for sale to customers are in for a bit of good news. Late last month, the IRS released final regulations on the business interest expense limitation, and eased up on proposed guidelines that would have curtailed larger deductions for business interest expense by businesses that capitalize certain expenses under Section 263A’s Uniform Capitalization rules (UNICAP).

Topics: IRS, tax relief, Business Interest Expense, COVID19, manufacturing, distribution, Uniform Capitalization rules, UNICAP

It is always important when considering year-end tax planning to include estate and gift tax considerations, but this year’s presidential election paired with the economic downturn makes estate planning especially important. It has been reported that Presidential candidate Joe Biden wants to roll back the estate tax exemption to as little as $3.5 million from the current amount of $11.58 million. He has stated that he also wants to remove many provisions of the tax reform law commonly known as the Tax Cuts and Jobs Act (TCJA), particularly those that benefit wealthy individuals. And lowering the exemption would be consistent with a campaign that is predicated on tax increases for the wealthy.

Topics: estate planning, estate tax, COVID19, Coronavirus, Coronavirus Aid, Relief, and Economic Security Act, Biden

The window for applying for a Paycheck Protection Program (PPP) expired on August 8, and the next phase of the program began—application for PPP loan forgiveness. A SaaS tool to simplify submission, the Small Business Administration (SBA)’s PPP Forgiveness Platform began accepting submissions on Aug. 10, 2020.

Topics: IRS, Taxes, COVID19, PPP, PPP Loan

In this market, you can’t afford to take a business as usual approach to your insurance renewal. In addition to rising rates and COVID-19 health concerns, businesses are having to implement new ways of working, which introduces new risks. This means it will likely take longer to complete your insurance renewal. Add the higher deductibles and lower limits being offered, and you may need more time to find an appropriate insurance solution. To help obtain the most favorable pricing and terms for your insurance renewal, here are some key considerations:

Topics: health insurance, captive insurance, COVID19, Coronavirus, Coronavirus Aid, Relief, and Economic Security Act, insurance renewal

With the imminent expiration of the expanded unemployment benefits in the Coronavirus Aid, Recovery, and Economic Security (CARES) Act, Senate Republicans released on July 27 their $1 trillion proposal for the next phase of coronavirus relief legislation. The proposal includes a bevy of nine separate bills that are collectively referred to as the Health, Economic Assistance, Liability Protection and Schools (HEALS) Act. The timing and nature of this legislation stands in contrast to the House legislation — the Health and Economic Recovery Omnibus Emergency Solutions (HEROES) Act — which was released in May as a single $3 trillion bill. Although the HEROES Act is not likely to be considered formally in the Senate, the HEALS Act in many regards is a counterproposal that borrows similar proposals. As Congress debates the HEALS Act proposals, its key provisions would ultimately represent the fourth phase of emergency legislation in response to the coronavirus pandemic. The details for each of the separate bills under the HEALS Act are summarized below.

Topics: IRS, Taxes, COVID19, Coronavirus, CARES Act, Coronavirus Aid, Relief, and Economic Security Act, Heals Act

As the overall economy starts to address both short- and long-term challenges from the COVID-19 pandemic, businesses may be starting to consider inorganic growth or exit plans again. There is no doubt that M&A activity looks different in the current environment and some of the process may look different for months to come as well. We discussed the state of the M&A market with representatives from the investment banking community, private equity firms, the private sector, and valuation providers to explore trends and where M&A activity may go from here. The following are some of the top takeaways from that discussion.

Topics: m&a, COVID19, Coronavirus, Coronavirus Aid, Relief, and Economic Security Act, Credit & Financing