News: Treasury Update on Paycheck Protection Program
Late on Thursday night, Treasury issued Interim Final Rules regarding the Paycheck Protection Program.
These rules back up most of what was expected, but there are critical changes coming in at the last minute. Since applications are starting to be filed it is important that people have this information in a timely manner. The full text of the rules can be found here. We will go through some of the critical changes below. However, anyone filing, or advising someone filing, should read through the 31 page document as soon as possible.
Confirmation that the program is “First Come First Served”:
This was expected, but it does confirm that once the allotted $349 Billion fund is exhausted the program ends, unless additional legislation is passed.
Confirmation that “independent contractors” are not employees:
There have been many questions as to how to count independent contractors. The Guidance confirms that independent contractors are not employees for purposes of this program. Independent contractors will have to apply for a PPP loan on their own.
In the rules, Treasury increases the interest rate to 100 basis points or 1%, with a maturity date of two years. This is a change from the 0.5% interest rate advertised earlier this week.
This is one of the most critical aspects of this rule making document. There have been many questions as to how to handle withholding taxes. In the rule making document, Treasury states that “Federal employment taxes imposed or withheld between February 15, 2020 and June 30, 2020, including the employee’s and employer’s share of FICA (Federal Insurance Contributions Act) and Railroad Retirement Act taxes, and income taxes required to be withheld from employees”, are excluded from the calculation. This limits these to only the amounts imposed or withheld between February 15, 2020 and June 30, 2020.
It is critical that companies review these rules as applications are submitted in the coming hours and days.
Technical Webinar Series Aimed at Maximizing Cash Flow during COVID-19
McGuire Sponsel has spoken with clients and heard the challenges ahead for businesses as a result of COVID-19. While we understand the health implications of the pandemic, we know the potential for devastating financial impacts on business owners. While our firm remains strong, the team understands the “gut punch” feeling many owners have experienced in the past few weeks.
Planning for many has shifted from growth to ensuring support for employees. The tax filing and payment deadline extension to July 15, 2020, gives taxpayers more time to explore strategies that reduce their tax liability to maintain liquidity. With this change, McGuire Sponsel is moving our summer continuing education webinar series to April. Our goal is to provide technical guidance as you walk clients through this unprecedented time.
Beginning next Tuesday, April 7th we’ll discuss the following specialty tax topics with a focus on how to maximize cash flow for clients (all qualify for 1 hr of CPE). Each webinar registration is linked below to sign up.
April 7: Do you answer “yes” to any of our questions related to the R&D Tax Credit?
April 9: How to Bring Cash Flow to the Forefront of an Investment
April 14: Are you using effective international tax strategies?
April 16: Qualifications of 179D & 45L and How to Claim the Benefit
April 21: Complementary Approach to Fixed Asset Management
April 23: Significance of Planning for Future Jobs, Building Expansions, Relocations and Capital Investments