In this week’s Wednesday episode (May 27, 2020) of the Town of Plymouth’s “COVID-19 Daily Update,” Heather reported that she still hasn’t seen movement on fixing the issue of expenses being deductible regarding the PPP loans, which will directly impact how many taxes are owed at the end of the year. The AICPA is working hard on that issue.

Businesses that did not receive a PPP loan still have access to relief through the CARES Act. Those with fewer than 500 employees are potentially eligible for payroll tax credits or employee retention credits. These businesses should contact their payroll companies for more information, as they’ll be processing the tax credits on the appropriate forms. Some local payroll companies, such as Brabo Payroll, are holding webinars to help local businesses understand the details of these credits.

Another issue that needs to be better understood is the possibility under the CARES Act of tax deferment. The employer taxes that are due for Social Security and Medicare can be extended out over two years, meaning they would be due in December 2021 and December 2022. This relief is also available for self-employed individuals. This is a provision that should only be used if absolutely necessary, as employer taxes are considered trustee taxes and are not forgivable. If you find that you don’t have the funds to pay the deferred taxes in a year or two, you will be held personally responsible. If you know what you’re doing and are sure you can pay them down the road, this deferrment can be a great short-term financing option to get you through a tough spell.

Regarding PPP loans, the interim final regulations are posted on SBA’s website. This 26-page document explains how the debt forgiveness portion of the PPP program is going to work. For self-employed individuals who file a Schedule C, debt forgiveness will look a little different. It will be based on the lesser of 8/52 of your 2019 self-employment income, or $15,385 (the $100,000 cap prorated to eight weeks).

Another piece of PPP loan forgiveness is what defines a full-time equivalent (FTE) employee. To simplify the definition for the purposes of the PPP loan forgiveness, the SBA is defining a FTE as someone who works 40 hours a week and a half FTE as anyone who works less than 40 hours a week. Many banks that have been issuing the PPP loans have been holding webinars to explain all this information.

Heather will be appearing on the show every Wednesday to give ongoing updates. Tune in next Wednesday at noon on the PAC-TV community channel and Plymouth government channel (Comcast 13 and 15, and Verizon 43 and 47), or online at PAC-TV’s streaming channel. You will have the opportunity to ask questions via email. The email address will be shown onscreen during the PAC-TV broadcast.