Payroll Tax Relief Could Bring Cash to Many Businesses

Wolters Kluwer Tax & Accounting look at payroll tax relief in response to COVID-19

One of the favorite methods used by Congress to assist businesses during the COVID-19 pandemic has been payroll tax credits and related payroll tax relief. Even those businesses that may not owe income taxes as a result of government-ordered shutdowns or downturns in business still have payroll tax obligations. By providing credits for the employer portion of payroll taxes, Congress has enabled businesses to reduce their current payroll tax obligations. Through provisions in both the Families First Coronavirus Relief Act and the CARES Act (Coronavirus Aid, Relief, and Economic Security Act) the savings to business can be substantial.

Provisions aimed at helping businesses reduce tax obligations

Payroll tax provisions should help many businesses reduce their tax obligations and help them lower the cost of retaining employees during the COVID-19 pandemic. With so many payroll tax breaks having many different requirements, taxpayers should seek the help of their tax advisors to sort through the options and determine which provisions can provide the greatest benefits.

Families First Coronavirus Relief Act

  • Paid sick leave credit for employees impacted by COVID-19
  • Paid sick leave credit for employees to care for individuals impacted by COVID-19
  • Paid family leave credit for employees to care for a child whose school or daycare is closed

CARES Act

  • Employee Retention Credit – not available for loans obtained under PPP (Paycheck Protection Program)
  • Delay of payment of payroll taxes – not available if PPP loan is forgiven
  • Cannot use more than one credit for the same payroll taxes

Paycheck Protection Program Flexibility Act

  • Reverses CARES Act to permit delay of payment of payroll taxes even if PPP loan is forgiven

IRS Actions

  • Notice 2020-22: waiver of penalty for failure to pay payroll taxes where an offsetting credit is available
  • Form 7200: employer may apply for an advance of payroll tax credits

Payroll tax relief guidance available

Tax expert Mark Luscombe, JD, LL.M, CPA, Principal Federal Tax Analyst at Wolters Kluwer Tax & Accounting, can help explain the payroll tax relief available for businesses dealing with the COVID-19 pandemic.

To read the full press release, click here.

Media Contact

To arrange interviews with Mark Luscombe or other federal and state tax experts from Wolters Kluwer Tax & Accounting on this or any other tax-related topics, please contact:

BART LIPINSKI
847-267-2225
Bart.Lipinski@wolterskluwer.com

AUTHOR

Wolters Kluwer Tax and Accounting

Wolters Kluwer Tax and Accounting is a leading provider of software solutions and local expertise that helps tax, accounting, and audit professionals research and navigate complex regulations, comply with legislation, manage their businesses and advise clients with speed, accuracy and efficiency. Wolters Kluwer Tax and Accounting is part of Wolters Kluwer N.V. (AEX: WKL), a global leader in information services and solutions for professionals in the health, tax and accounting, risk and compliance, finance and legal sectors. We help our customers make critical decisions every day by providing expert solutions that combine deep domain knowledge with specialized technology and services. Wolters Kluwer reported 2016 annual revenues of €4.3 billion. The company, headquartered in Alphen aan den Rijn, the Netherlands, serves customers in over 180 countries, maintains operations in over 40 countries and employs 19,000 people worldwide. Wolters Kluwer shares are listed on Euronext Amsterdam (WKL) and are included in the AEX and Euronext 100 indices. Wolters Kluwer has a sponsored Level 1 American Depositary Receipt program. The ADRs are traded on the over-the-counter market in the U.S. (WTKWY).

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