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April 20, 2020

Reminder: Tax Benefits Available To U.S. Businesses Dealing With Fallout Of COVID-19

As Connecting the Dots readers are aware, there are several federal programs currently underway from which firms can draw financial support. On Monday, April 6 MSCI hosted a call for members with the U.S. Chamber of Commerce to discuss these programs. A replay of the call is available here.

While the Economic Injury Disaster Loan Program and the Paycheck Protection Program await more money from Congress, and the Federal Reserve Bank continues to work to launch the Main Street Lending Program, these other programs also can help businesses:

  • Employee Retention Credit. The CARES Act, the third stimulus bill passed by the U.S. Congress, provides automatic payroll tax relief to companies. This Employee Retention Credit can provide up to $5,000 per employee in credits to employers of all sizes. No approval is necessary and the estimated refundable portion of the credit can be advanced, but firms that use the Paycheck Protection Program cannot also use this retention credit program. Click here to read the National Association of Wholesalers’ Legal Advisory explanation of this program. Click here to read the USCC’s review of this program.
  • Operating Loss Carryback. The Internal Revenue Service (IRS) has issued guidance for the CARES Act’s net operating loss (NOL) carryback provision. This provision allows companies to use tax losses from 2018, 2019, and 2020 to offset income from the prior five years. A new tax deadline extension also builds on prior IRS guidance and now allows firms to delay certain estimated tax payments. Per the IRS, “any individual or corporation that has a quarterly estimated tax payment due on or after April 1, 2020, and before July 15, 2020, can wait until July 15 to make that payment, without penalty.” A press release on the IRS action can be found here, and the guidance document can be found here. The IRS has announced it will be accepting claims by fax, rather than hard-copy mailing, for net operating loss refunds. More information on the temporary faxing process can be found here.

For more information on these programs, and for other important advice on how to lead and manage through this crisis, we recommend visiting BDO’s COVID-19 portal, available here.