Business Tax Relief Under the CARES Act

Business Tax Relief

The following table outlines at a high level the major business tax changes in the CARES Act.  Please contact Joe Mandarino, if you have any follow up questions.

 Employment tax credit  

  • Eligible employers allowed a refundable credit against their social security tax liability equal to 50% of the qualified wages of each employee.
  • Credit capped at $5,000 per employee.
  • Applies to wages paid after 3/12/2020 and prior to 2021.
  • Eligible employer:
    • business is fully or partially suspended due to COVID-19, or
    • gross receipts decline by at least 50%
 Employment tax payment     deferral  

  • Employers can defer payment of their social security tax liability (net of the credit above).
  • Applies to taxes that would otherwise be due starting 3/27/2020 through 12/31/2020.
  • Half of the deferred tax due 12/31/2021; balance is due 12/31/2022.
  • For self-employed individuals, same general rule but applies to 50% of SECA tax liability.
 NOL rules  

  • NOLs from 2018, 2019 and 2020 can be carried back 5 years.
  • 80% income limitation does not apply to these carrybacks.
 EBL rules  

  • Application of EBL rules for non-corporate taxpayers deferred until after 2020.
 AMT credit rules  

  • Corporations with stranded AMT credits can get a refund of the remaining balance starting with the 2019 tax year.
 Interest expense cap  

  • The 30% limitation on net interest expense is increased to 50% for 2019 and 2020.
 QIP Fix  

  • The 2017 TCJA erroneously failed to include qualified improvement property for 100% bonus depreciation.
  • Change is effective as if included in the 2017 TCJA.
 Hand sanitizer tax  

  • Waiver for 2020 of excise tax for alcohol used in hand sanitizer that is used or produced in a manner consistent with FDA guidance related to the COVID-19 outbreak.
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