For businesses not availing themselves to the SBA Paycheck Protection Program, the Coronavirus Aid, Relief, and Economic Security (CARES) Act creates a refundable payroll tax credit for businesses and non-profits who retain their employees during the coronavirus pandemic. The tax credit is equal to 50% of wages and compensation. There is an overall limit on wages per employee of $10,000. The credit is provided through December 31, 2020.
Employers are eligible if they have been fully or partially suspended as a result of a government order, or if they experience a 50 percent reduction in quarterly receipts as a result of the crisis, and if they have not participated in the SBA Paycheck Protection Program.
AMOUNT OF TAX CREDIT
Speak to your tax advisor for precise credits. For employers with 100 or fewer full-time employees, they may claim a credit for wages paid to all of their employees, up to $10,000 a person. For employers with more than 100 employees, they may claim a credit for those employees who are furloughed or face reduced hours as a result of the employer’s closure or economic hardship.
HOW TO USE THE CREDIT
Speak to your tax advisor for use as it pertains to your business. The credit can be claimed against the business or non-profit’s quarterly payroll tax liability and is fully refundable to the extent of excess. The Department of the Treasury may make advance payments of the tax credit and may waive penalties for employers who do not deposit applicable payroll taxes in anticipation of receiving the credit.
IMPORTANT NOTICE FROM NEEDLEMAN MANAGEMENT
Needleman Management presents this information as a service to our tenants, clients, vendors and contractors as an informational resource only. We do not claim to be lawyers, accountants or tax professionals. We present this material for informational purposes only and is based solely as our best understanding at this time. We accept no liability for any action based on this information nor for any errors or omissions. We strongly suggest that you discuss the material provided herein with your legal and tax professionals.
The full 880-page CARES Act document can be found here.
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Last Updated: March 30, 2020