More stimulus credit and second PPP

Here’s some information on federal income tax credits – thanks to O’Connor Tax Reduction Experts:

A federal income tax credit of $7,000 per employee is available to employers with a 20% reduction in revenue or “gross receipts”! In addition, the federal government will write the employer a check if they can’t use the full credit. You read it right; the U.S. government will write employers a check for up to $7,000 per employee if the credit can’t be used to pay the employers portion of payroll taxes.

This $7,000 per employee tax credit is available for the first and second quarters of 2021. The total can be $14,000 per employee. The credit will pay 70% of payroll costs for employees earning $10,000 per quarter.

Details:

1.To qualify, a business’ first quarter 2021 revenue (“gross receipts”) must be 20% lower than first quarter 2019 revenue. Same criteria for second quarter; Q2 2021 revenue 20% less than Q2 2019 revenue. There are other options to qualify.

2.Wages covered / paid by a PPP loan do not qualify for the tax credit.

3.A 70% tax credit is available for up to $10,000 of wages per employee per quarter, for the first and second quarters of 2021.

Refer your income tax preparer or CFO to page 4927, Section 206, of $900 billion stimulus package. This section is titled CLARIFICATIONS AND TECHNICAL IMPROVEMENTS TO CARES ACT EMPLOYEE RETENTION CREDIT.

A business with 100 employees could receive tax credits of $700,000 in both the first and second quarters of 2021.

There is also a $5,000 tax credit available to businesses that experienced a 50% reduction in revenue in 2019.

Please contact your CPA / CFO / income tax preparer. Thanks for your business and for supporting O’Connor. We appreciate the opportunity to reduce your property taxes.

O’Connor Tax Reduction Experts – contact them here

Second PPP (Paycheck Protection Program)

This information is compliments of Asset Enhancement Solutions LLC on the second Paycheck Protection Program (PPP):

For 2nd Draw Loans:

To be eligible for a 2nd Draw, applicant must have used or will use the full amount of its First Draw PPP loan on or before the expected date on which the 2nd Draw will be disbursed.

Maximum PPP loan amount is $2 million, up to $4 million for businesses that are part of a single corporate group.

To maximize PPP loan amount, applicant can use the average payroll for 2020 or 2019.

Second Draw applicants are eligible if they have 300 or less employees unless it is in the hospitality industry with a NAICS code beginning with 72.

To be eligible, must have experienced a revenue reduction of at least 25% in 2020 compared to 2019 for at least one quarter or on an annual basis.

Applicants including employer paid health insurance and retirement benefits in the calculation of the PPP loan must now provide documentation for these expenses.

For 1st Draw Loans:

Maximum PPP loan amount is $10 million, up to $20 million for businesses that are part of a single corporate group.

To maximize PPP loan amount, applicant can use the average payroll for 2020 or 2019.

First Draw applicants are eligible if they have 500 or less employees.

If applicant has more than 500 employees, they need to meet the Alternative Standard of having both Net Worth of less than $15 million and average after tax net income of less than $5 million for the past two years.

In addition to those that were eligible for PPP Round 1, the following additional entity types are now eligible: Certain 501 (c) ( 6 ) organizations such as chambers of commerce, housing cooperatives (as defined in section 216(b) of the IRS Code of 1986) and destination marketing companies are now eligible.

Faith based organizations are eligible and they are exempt from the SBA’s affiliation rules.

A portfolio company of a private equity firm is eligible if it meets the affiliation rules.

Applicants including employer paid health insurance and retirement benefits in the calculation of the PPP loan must now provide documentation for these expenses.

A payroll report or similar documentation from the pay period that covered February 15, 2020 must be provided to establish you were in operation on that date.

Independent contractors and sole proprietors that use Form 1040 Schedule C as the basis to calculate their PPP loan amount will now have to substantiate the revenue amount with some of the following documentation: IRS Form 1099-MISC, invoices, bank statements or books of record.

Expenses available for Forgiveness have been expanded to include the following: software that facilities business operations, property damage from public disturbances that occurred during 2020, certain purchases from suppliers and expenses related to PPE and social distancing. However, at least 60% of PPP loan proceeds must be used for payroll costs to achieve 100% Forgiveness.

AES helped many businesses during the first round of the Paycheck Protection Program. To discuss how they can help you, your company or your clients, please reach out to them at PPPsupportstaff@assetenhancement.com
516-767-0100

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