Delay in Payment of Required Contributions to Single-Employer Pension Plans 

Ten Percent Tax on Early Distributions
The 10% tax that generally applies to distributions prior to age 59-1/2 from tax qualified retirement plans will not apply to any Coronavirus-related distribution, assuming this does not exceed $100,000. Amounts can be re-contributed back to the qualified plan within a three year time frame.

Qualified Plan Loans
A participant who would be eligible to receive a Coronavirus-related distribution from a tax qualified plan may receive plan loans in an amount not to exceed the lesser of $100,000 100% of the participant’s vested account balance. Also, a participant who has an outstanding plan loan or obtains a plan loan may defer any payments otherwise until December 31, 2020.

Temporary Waiver of Required Minimum Distributions
The required minimum distribution requirements for individuals over 70 ½ will not apply to qualified retirement plans for 2020.

Plan Amendments
Employers are not required to adopt plan amendments prior to making these changes, rather they will have at least through the last day of the plan year ending 2022.

Delay in Payment of Required Contributions to Single-Employer Pension Plans
The due date for minimum required contributions to single-employer defined benefit pension plans that would be due during calendar year 2020 is now January 1, 2021.

For more information, contact Paul Esche, CPA, CCIFP CCA at pesche@hsccpa.com.

COVID-19 Response Grant Applications  Available

Hosted by the Community Foundation of Southern Indiana, the Disaster Relief – COVID-19 Response Fund will award one-time grants on a rolling basis to non-profits whose operations in support of seniors, children, immigrants, workers and other vulnerable populations have been stressed by the outbreak.  The Fund is designed to be adaptable in its goals and focus, which will evolve as community members and nonprofits in our region share their needs.

For more information and to register click here.

INDOT Extends Prequalification Reports for  60 Days

These are unprecedented times and the Prequalification Division will be as flexible as possible with regard to the submission of Statements of Experience and Financial Condition.

Certificates of Qualification are also included in the Governor’s 60 day extension of state licenses, announced yesterday. If you need such an extension, please submit a request in writing. Such requests should be emailed as an attachment to the following recipients: Aggie Wagoner, Jose Murillo, and Chris Serak. Even if you are unable to make a request in writing due to Covid-19, INDOT will not allow your certificate to expire.

Please note that INDOT is still accepting applications and processing them as normal while virus-related measures are in affect.

While Covid-19 related restrictions are in place, the Prequalification Division will be working 100% remotely. As such, they will be sending out certificates of qualification by email, to the address listed on the first page of the company’s Statement. Original certificates of qualification will not be mailed during this time.

For more information or for any questions, please contact Paul Esche, CPA, CCIFP CCA  at pesche@hsccpa.com.

CARES Act Passes The House – Breaking News

Congress Reaches Agreement On A Coronavirus Relief Package: Tax Aspects Of The CARES Act. Congress has agreed in principle to a $2 trillion relief package. What tax benefits does it offer individuals and businesses?

Read about the CARES Act in Forbes. Additional information about the forgivable SBA 7(a) loans can be found in this original article.

For more information,on the tax provisions contact Mike Vogel mvogel@hsccpa.com, on the SBA loan information contact Scott Touro at stouro@hsccpa.com.

RSM Coronavirus Webcasts

RSM has lunched a weekly webcast series on issues related to the Coronavirus. The webcasts are typically approximately one hour, each Wednesday at 1:00 p.m. EDT.

Date and times are below:
Wednesday, April 8, 2020 – 1:00 p.m. EDT

Free webcast, no CPE will be provided.
Click here to register.

IRS Unveils New “People First” Initiative

The IRS (Internal Revenue Service) announced yesterday a series of steps to assist taxpayers by providing relief on a variety of issues ranging from easing payment guidelines to postponing compliance actions. To view specific details about these provisions, click here.

For more information or for any questions, please contact Mike Vogel, CPA at mvogel@hsccpa.com.

CARES Act 

The Coronavirus Aid, Relief, and Economic Security (CARES) Act was passed in the Senate on March 25, 2020 and now goes to the House. The CARES Act is the most expensive piece of Legislation passed to date with a total of 2.2 trillion dollar price tag.

The CARES Act provides tax relief for individual and businesses alike. Below are some major points from the Act as well a link to the full CARES Act Special Report from Wolters Kluwer.

Recovery Rebates

  • The Act would provide rebates of as much as $1,200 per individual or $2,400 for couples who file joint tax returns. An additional $500 would be provided for each child.
  • Taxpayers would be eligible if they had qualifying income on their 2018 tax returns – including earned income and certain retirement benefits – of at least $2,500, or net income tax liability greater than zero and gross income greater than the basic standard deduction.
  • The credit would be reduced by $5 for each $100 that a taxpayer’s income exceeds $75,000,or $150,000 for joint filers. It would completely phase out for individual incomes greater than $99,000 or joint incomes greater than $198,000.

Paycheck Protection Program (PPP) (SBA 7(a) forgivable loans)

  • Helps small businesses, 501(c)(3)’s, 501(c)(19)’s, and 31(b)(2)(c).
  • Limited to under 500 employees.
  • Includes independent contractors, sole proprietors and the self-employed.
  • Entities must have been operational by 2/15/20; had payroll, paid taxes.
  • Covered loan period is 2/25/20 through 6/30/20.
  • Maximum loan amount via 7(a) set to $10 million through 12/31/20.
  • Eligible expenses include payroll, insurance, rent, mortgage and utilities.
  • Amount spent by borrower in the first 8 weeks from loan origination may be forgiven;amount reduced proportionate to reductions in workforce as compared to previous year; if rehires made during 8 week period, no penalty in reflection of possible layoffs early in the 8 week period.
  • Borrower cannot apply/carry both PPP and Economic Injury Disaster Loan (EIDL) for
    COVID-19, but can carry previous, non-COVID-19 EIDL and participate in PPP.
  • Borrow must good-faith certify that funds are needed for COVID-19 related purposes, the funds will be used to retain workers, and that their request is not duplicative with other SBA funds for the same purpose.
  • Waives borrower and lender fees.
  • Waives credit elsewhere requirements.
  • Waives collateral and personal guarantees.
  • Sets maximum interest rate of 4%.
  • No prepayment fees.
  • Delegates authority to all existing 7(a) lenders to expedite approvals/distributions
  • Anything not forgiven or repaid by 12/31/20 will convert to a max 10 year loan at a max 4% interest rate.

 Deferral of Payroll Taxes

  • The Act would defer employer payroll, railroad retirement, and self-employed Social Security tax payments through the end of 2020. Deferred funds would be paid over two years in 2021 and 2022. Deferral wouldn’t apply to employers with 7(a) small business loan debt forgiven under the bill.

Retirement Plans

  • Individuals could withdraw as much as $100,000 from their retirement accounts through the end of 2020. Funds would be treated as a tax-exempt rollover contribution if repaid in the next three years. If funds weren’t repaid, they would be taxed as income over three years.
  • Individuals would be eligible to make withdrawals if they or their spouse are diagnosed with Covid-19, or if the pandemic hurts their finances, such as through layoffs or reduced hours.
  • Eligible individuals could receive loans for the lesser of $100,000 or the present value of their vested benefits in their employer retirement accounts in the 180 days after the bill’s enactment. The limit is currently $50,000 or half the account’s value.
  • Plans would have to be modified to allow some of these provisions.
  • Individuals affected by the coronavirus with retirement plan loans due by Dec. 31,2020, would have an extra year to repay them.

Charitable Contributions

  • The Act would create a permanent $300 above-the-line individual charitable contribution allowance, beginning in 2020, for individuals who don’t itemize their returns.
  • The Act would also would suspend for 2020 the limit on the individual charitable deduction, which is available to filers who itemize. The deduction is limited to 60% of individual taxpayers’ adjusted gross incomes through 2025.
  • The corporate charitable deduction limit would be increased in 2020 to 25% of taxable income, from 10%. A deduction for food inventory contributions would be increased to 25%, from 15%.

Business Provisions

  • The Act would allow business losses from tax years after Dec. 31, 2017, and before Jan. 1, 2020, to be carried back five years. Net operating loss carrybacks were previously eliminated for most businesses by the 2017 tax overhaul.
  • The Act would allow the full amount of net operating loss carryovers and carrybacks to be used for tax years beginning before Jan. 1, 2021. The deduction was limited to 80% of taxable income under the 2017 tax overhaul. A separate deduction limit would be established for tax years beginning after Dec. 31, 2020.
  • The Act would modify the effective date of changes to the net operating loss deduction included in the 2017 tax overhaul.
  • The measure would also modify net operating loss deduction limits for pass-through businesses and sole proprietorship as well as small business loss limitations.
  • The measure would modify the interest limitation provision of 163(j) modifying the income threshold from 30% to 50%. For 2019 & 2020.
  • Certain technical corrections are made to the TCJA including a correction of the rules related to qualified improvement property.
  • The bill provides for an exclusion of up to $5,250 from income for payments of an employee’s education loans. In order for the exclusion to apply, the loan must have been incurred by the employee for the education of the employee. The payment can be made to the employee or directly to the lender. The exclusion only applies for payments made by an employer after the date of enactment and before January 1, 2021.

Employee Retention Benefit 

  • 50% refundable payroll tax credit during COVID-19 crisis for businesses that either fully or partially shut down OR have a 50% decrease in receipts versus the same quarter in the previous year and continue to pay employees.
  • Based on qualified wages paid to employees during crisis, tied to number of employees (100+ full time employees = wages paid when they are not providing services due to COVID-19 and less than 100 full time employees = wages paid regardless of business closure status).
  • Covers up to $10,000 paid per employee, including benefits, for the period 3/13/20-12/31/20.

Student Loans Paid by Employers

  • The bill provides for an exclusion of up to $5,250 from income for payments of an employee’s education loans. In order for the exclusion to apply, the loan must have been incurred by the employee for the education of the employee. The payment can be made to the employee or directly to the lender. The exclusion only applies for payments made by an employer after the date of enactment and before January 1, 2021.

Unemployment Insurance

  • Provides an additional $600 per week in recipients of Unemployment Insurance (UI) for up to 4 months.
  • Federal government will cover 100% of the cost of the first week of UI if states waive the 1 week waiting period to begin benefits.

Read the CARES Act Special Report from Wolters Kluwer.

For more information,on the tax provisions contact Mike Vogel mvogel@hsccpa.com, on the SBA loan information contact Scott Touro at stouro@hsccpa.com.