Federal Resource Updates: Tax, Tariff, and Duty Updates to Save Your Cash

Important Update: On Tuesday, April 21, 2020 the U.S. Senate passed a $484 billion interim emergency bill including an expansion of funding for small businesses. The bill is currently with the House and, once passed, will be sent to the President for his signature. Please keep an eye out for additional information in order to apply as expeditiously as possible.

IRS Business Tax Provisions That May Be of Interest to Your Company

Employee Retention Credit for Employers Subject to Closure or Experiencing Economic Hardship. 

For further assistance, visit the Internal Revenue Service website or contact your accountant directly.

  • What is it? This provision provides a refundable payroll tax credit for 50 percent of wages paid by eligible employers to certain employees during the COVID-19 crisis. The credit is provided for wages and compensation, including health benefits, and is provided for the first $10,000 in wages and compensation paid by the employer to an eligible employee. Wages do not include those taken into account for purposes of the payroll credits for required paid sick leave or required paid family leave, nor for wages taken into account for the employer credit for paid family and medical leave (IRC sec. 45S).
  • Who is eligible? The credit is available to employers, including non-profits, whose operations have been fully or partially suspended as a result of a government order limiting commerce, travel or group meetings. The credit is also provided to employers who have experienced a greater than 50 percent reduction in quarterly receipts, measured on a year-over-year basis. Wages of employees who are furloughed or face reduced hours as a result of their employer’s closure or economic hardship are eligible for the credit. For employers with 100 or fewer full-time employees, all employee wages are eligible, regardless of whether an employee is furloughed.
  • More details: The credit is not available to employers receiving assistance through the Paycheck Protection Program. The credit is provided through December 31, 2020.

Delay of Payment of Employer Payroll Taxes 

  • What is it? This provision allows taxpayers to defer paying the employer portion of certain payroll taxes through the end of 2020, with all 2020 deferred amounts due in two equal installments, one at the end of 2021, the other at the end of 2022.
  • Who is eligible? Payroll taxes that can be deferred include the employer portion of FICA taxes, the employer and employee representative portion of Railroad Retirement taxes (that are attributable to the employer FICA rate), and half of SECA tax liability.
  • More details: Deferral is not provided to employers receiving assistance through the Paycheck Protection Program.

Modification of Net Operating Loss Limitation

  • What is it? Temporarily modify Net Operating Loss limitations to (1) permit carry-back for NOLS generated in 2018, 2019 and 2020 based on a five-year carry-back window and (2) suspend the taxable income limitation. Losses carried back to pre-2018 tax years are refunded at up to 35% corporate tax rates.
  • How long will it take? Prior-Tax Year amended returns can be filed immediately.
  • More details: File an amended tax return for the relevant year(s).

Tax Credit for Paid Leave

  • What is it? Requires employers to provide emergency paid sick leave and emergency paid family leave, but provides a tax credit against payroll taxes to defer that cost.
  • How long will it take? Quarterly when filing your payroll tax return.
  • More details: Claim on your quarterly IRS Form 941.

Other Business Provisions

  • What are they? Expensing for qualified improvements. Increase in interest deductibility. Expanded AMT credit refundability.
  • How long will it take? Immediate for past tax years and/or reduced tax liability at time of 2019/2020 filing.
  • More details: Claim on your quarterly IRS Form 941.

U.S. Customs and Border Protection to Temporarily Defer the Deadline for Import Duties, Taxes, and Fees

  • What is it? On April 19, the Secretary of the Treasury, in consultation with the designee of the Secretary of Homeland Security (U.S. Customs and Border Protection (CBP)), is amending the CBP regulations to temporarily postpone the deadline for importers to pay duties, taxes, and fees.
  • Who is eligible? Importers of record with a significant financial hardship to deposit certain estimated duties, taxes, and fees that they would ordinarily be obligated to pay as of the date of entry, or withdrawal from warehouse, for consumption, for merchandise entered in March or April 2020, for a period of 90 days from the date that the deposit would otherwise have been due but for this emergency action.
  • More details: The National Commodity Specialist Division is accepting binding ruling requests. To submit requests via eRulings and for updated guidance, visit erulings.cbp.gov/s. Additional details can be found using this link: Temporary Postponement of Duties, Taxes, and Fees due to COVID-19.

For more information, visit coronavirus.utah.gov/business. For any questions or requests for assistance, Utah businesses are encouraged to reach out to the rapid response team here: wtcutah.formstack.com/forms/rapid_response_team_intake.