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In Conjunction with
In Conjunction with
The Coronavirus Crisis:Dealers Questions and
Answers
HBK Dealership Solutions GroupThird Thursday Webinar Series
FFCRA – Tax Credits
• Paid Sick Leave Refundable Credit– Credit on any paid sick leave under FFCRA made
between April 1, 2020 and December 31, 2020 – Most taxpayers will claim the credits on Form 941,
Employer’s Quarterly Federal Tax Return (form you file to report income tax, social security and Medicare taxes withheld with ER share of taxes)
– How do I afford it? • Accessing Federal Employment Taxes Set Aside• What if there isn’t enough set aside?
FFCRA – Tax Credits
• Paid Family Leave Refundable Credit– Credit on any paid sick leave under FFCRA made
between April 1, 2020 and December 31, 2020 – Most taxpayers will claim the credits on Form 941,
Employer’s Quarterly Federal Tax Return (form you file to report income tax, social security and Medicare taxes withheld with ER share of taxes)
– How do I afford it? • Accessing Federal Employment Taxes Set Aside• What if there isn’t enough set aside?
FFCRA – Tax Credits
• Paid Sick Leave Credit
• Paid Family Leave Refundable Credit- Matches 2/3 regular pay with maximum amount in chart above for the additional 10 weeks
Steps to Take for Dealership Survival
• Assess your current financial situation.• Prepare a cash flow budget.• Sources of capital. (Owners, Lenders, etc.)• Cut unnecessary spending.• Reduce payroll…selectively.• Can you obtain a Disaster Assistance Loan?
Steps to Take for Dealership Survival
• What if one of your employees gets Covid-19? • Assess your talent and communicate with your
employees.• Marketing, social media, website, etc.• Needed operational initiatives.• Allow appropriate employees to work remotely.• Re-assess your 2020 Strategic Plan• Remain a good citizen
Paycheck Protection Program • April 3, 2020 – June 30, 2020 • Small businesses / Affiliation Rules • Existing 7(a) Lender or through FDIC-insured depository
institution, federally insured credit union, or other regulated lender
• All loan terms will be the same for everyone (2-year loan, Deferred 6 months, Interest Accrues during Deferral Period, 0.5% Fixed Rate)
• Disallows participation in certain other CARES stimulus package programs
• No prepayment penalty, personal guarantees, or collateral
Paycheck Protection Program
• Application• Additional Permitted Use: interest on mortgages,
rent, and utilities • Loan Amount
– 2.5 X Average Monthly Payroll (max $10M)• Forgiveness - amount of qualifying expenses
incurred over 8-week period after loan origination– Headcount– Wage Dollars – Economic Injury Disaster Emergency Advance
Economic Injury Disaster Loan & Grant• $2 million maximum term loan• Supports working capital• 3.75% interest rate for small businesses• 2.75% interest rate for non-profits• 30-year maximum amortization• Deferral for first year principal, interest still accrued• No early-payment penalty• No fees• Sba.gov/disaster• Complete required information – SBA contacts for more
Economic Injury Disaster Loan & Grant
• CARES Adjustments– Cannot use Paycheck Protection Program and EIDL for
same purposes (EIDL for other than Payroll costs)– Emergency Advance up to $10,000 within 3 days of
applying– Advance not repaid– If you receive both a Paycheck Protection Program and
EIDL Loan, or if you refinance the EIDL Loan into a Paycheck Protection Program Loan, the advance awarded will be subtracted from the amount forgiven in the Paycheck Protection Program
– No personal guarantee under $200,000
Small Business Debt Relief Program
• This program will provide immediate relief to small businesses with non-disaster SBA loans, in particular 7(a), 504, and microloans. Under it, SBA will cover all loan payments on these SBA loans, including principal, interest, and fees, for six months. This relief will also be available to new borrowers who take out loans within six months of the President signing the bill into law.
Other Financing Options
Your state and local government are in some instances trying to help as well.• Look at Governor’s Press Releases • State Websites• Local Media Coverage
Employee Retention Credit• Refundable credit against employer portion of social
security taxes of 50% of up to $10,000 in wages paid by eligible employer
• Who is eligible? – Any employer regardless of size if during 2020:
• Is fully or partially suspended due to a governmental order related to COVID-19, OR
• Experiences a significant decline in gross receipts (50% reduction in gross receipts for same quarter in 2019)
• Business receiving PPP Loan is ineligible for this program
• Qualified wages paid from March 13, 2020 through December 31, 2020
Employee Retention Credit
• Example 1: Eligible Employer pays $10,000 in qualified wages to Employee A in Q2 2020. The Employee Retention Credit available to the Eligible Employer for the qualified wages paid to Employee A is $5,000.
• Example 2: Eligible Employer pays Employee B $8,000 in qualified wages in Q2 2020 and $8,000 in qualified wages in Q3 2020. The credit available to the Eligible Employer for the qualified wages paid to Employee B is equal to $4,000 in Q2 and $1,000 in Q3 due to the overall limit of $10,000 on qualified wages per employee for all calendar quarters.
Delay of Payment of Employer Payroll Taxes
• IRS NOTICE 2020-20– Section 2302 of the CARES Act provides that the payment and
deposit of the employer’s share of the social security portion of FICA tax and the employer’s share of the social security portion of RRTA tax for deposits that are due to be made during the period beginning on March 27, 2020, and ending before January 1, 2021, is not due before December 31, 2021 (for the first 50 percent of the liability), and December 31, 2022 (for the remaining 50 percent of the liability). Under this provision, an employer is treated as having timely made these required deposits of FICA and RRTA taxes if all such deposits are made not later than the applicable due dates. This deferral of payment does not apply to employers that have had indebtedness forgiven under either section 1106 or 1109 of the CARES Act
Individual Stimulus Payments
• Amount: $1,200/adult ($2,400/married couples) with an additional $500/child
• Who is eligible: Full amount available for single filers who make $75,000 or less ($150,000 or less for married filing jointly). Phases out for single filers who make more than $99,000 ($198,000 for married filing jointly) – phase out amount increases for each child
• How payments made: direct deposits will be made for all taxpayers who have previously provided bank information; IRS will provide more information on how to provide bank information for direct deposit if they do not want a check
• How will the amount be calculated: IRS will first look to 2019 tax returns, if filed. Then will look to 2018 returns, if filed. Then will look to Social Security statements.
What are some other Tax Provisions in CARES?
• Retirement Plan Provisions• Charitable Contributions • Business Loss Limitations• Student Loans • NOL Carryback Period Expanded • 163(j) limitation increase (Interest Limitation)• Corporate AMT Refundable • Qualified Improvement Property
Rex A. COLLINS, CPA, CVA(317)504.7900
Ron Smith(317) 258-5003
Contact the HBK Dealership Solutions Group anytime at
317-886-1624
HBK PresentsHBK presents: The CARES Act: Individual and Business Tax Provisions What You Should Know Live Webinar: Friday, April 3, 2020 10:00 a.m. - 11:00 a.m. Eastern Time Join Amy Dalen, JD and Ben DiGirolamo, CPA, JD as they cover the individual and business tax provisions within the recently passed CARES Act. Topics discussed will include:
• Individual Stimulus Payments • Retirement Plan Provisions • Employee Retention Tax Credit • Payroll Tax Deferral • Expanded NOL Provisions
Space is limited. If you are unable to register, you can still access the presentation and recording on the HBK website after the event concludes.
Click Here to Register
