The Coronavirus Aid, Relief, and Economic Security Act (the “ CARES Act” ) was signed into law on March 27, 2020. The CARES Act offers relief and assistance to businesses and individuals alike, to stem the economic downturn resulting from business closures implemented to slow the spread of the COVID-19 virus. Your business may be entitled to benefits from this stimulus package. LimNexus stands ready to advise clients on the programs and benefits available to businesses under the Act. Following is a summary of the Act’s primary benefits for businesses:
- EMPLOYEE RETENTION TAX CREDIT. A tax credit of 50% of wages and health benefits paid, up to $10,000 per employee, may be available when a business that is closed or restricted by government order continues to pay its furloughed employees.
- MODIFIED TAX TREATMENT OF OPERATING LOSSES. Under the CARES Act, for certain qualifying businesses, net operating losses from 2018 through 2020 can be carried back five years to offset income from profitable years.
- DEFERRAL OF PAYROLL TAX PAYMENTS. With limits and restrictions, most employers can defer until December 2021 and beyond, the employer’s share of federal payroll taxes that would be payable from March 27, 2020 through the end of 2020.
- “PAYCHECK PROTECTION PROGRAM”. The CARES Act allocates nearly $350 billion for loans for operational expenses and payroll to certain Covid-19 affected businesses with 500 or fewer employees. Repayment of these loans can be deferred, and a substantial portion of the PPP loans can actually be forgiven under certain circumstances if the business retains its employees during the crisis. There are significant qualification requirements and limits.
In addition to its business relief programs, the CARES Act provides substantial benefits to individuals such as direct cash payments, relaxed rules for various IRA and pension plans, deferral of student loan payments and changes to income tax deductions for charitable contributions.
LimNexus offers guidance and advice regarding the complex restrictions and rules governing the CARES Act programs. Contact any LimNexus attorney via www.LimNexus.com or send an email to [email protected]