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William Byrnes (Texas A&M) tax & compliance articles

SBA (Forgivable) Employee Retention Loan or Tax Credit for Employee Retention? Which is best for my business?

Posted by William Byrnes on April 14, 2020


The IRS provided concrete responses to the COVID-19 virus in the tax field. First, the IRS has now formally extended the income tax filing deadline for tax year 2019 to July 15, as well as the FBAR form, FATCA form, and several other reporting forms initially left out of the IRS extension. Because this is an extension of the actual filing deadline (not just an extension of time to pay owed taxes) it also pushes a number of related deadlines (e.g. for qualified plan contributions) back to July.  April 15ths Estimated Tax Payments for 2020 (the first one) is also postponed. But not the estimated tax payment due June 15th as of yet (I expect Treasury to postpone it as well.  September 15 and January 15, 2021 are the 3rd and 4th required estimated tax payments.

President Trump also signed the Families First Coronavirus Response Act, which creates a paid sick leave program and related tax credits for small businesses, as well as the CARES Act calling for forgivable SBA loans (without tax consequences) or a $5,000 tax credit per employee retained for medium and large size businesses.

Byrnes and Bloink comment from Tax Facts: For a business with by example 400 employees, a $5,000 credit per employee is worth $2,000,000 of tax-free tax credit that can be more beneficial than an SBA Loan.  The SBA loan is not straight forward and regardless, is not in general allowed for business above 500 employees.  The taxpayer must choose either one or the other – the PPP (forgivable employee retention) SBA loan or the employee retention tax credit.  For small employers with less than say 250 employees (not exactly ‘small’ in most American minds) the answer is probably the SBA loan.  But above 250, careful consideration and analyzing the benefits/outcomes of each program must be weighed. Watch the webinar below or the one forthcoming Thursday, April 16th (Register now for our webinar on Thursday, April 16, at 2:00 EDT)

Texas A&M University School of Law has launched a Covid-19 expert response team.  Find the response team members from all disciplines here: Download Texas A&M Coronavirus_Experts  Listen to Professor Neal Newman and William discussing the Covid-19 SBA forgiveness loans, deferral on paying the employer’s Social Security tax, and the Employee Retention Tax Credit (YouTube).

2020’s Tax Facts Offers a Complete Web, App-Based, and Print Experience

Reducing complicated tax questions to understandable answers that can be immediately put into real-life practice, Tax Facts works when and where you need it….on your desktop, at home on your laptop, and on the go through your tablet or smartphone.  Questions? Contact customer service: TaxFactsHelp@alm.com800-543-0874

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