Many businesses spent the last few weeks determining if they qualified for a Paycheck Protection Program Loan (“PPP”). If your business did not qualify, you have an opportunity to assist with cash-flow management under the CARES Act. Such businesses may defer the deposit and payment of the “employer’s” portion of the Social Security taxes made during the period beginning on March 27, 2020 and ending December 31, 2020. One-half of such taxes are due, without interest or penalty, on December 31, 2021 and on December 31, 2022, defined as the applicable dates under IRS guidance. If your business is eligible, is your payroll preparer/provider aware of it?
Some employers started to defer employment taxes before receiving a PPP loan. When do those deferred taxes have to be paid? Following is an excerpt from the IRS FAQ on deferral:
“Once an employer receives a decision from its lender that its PPP loan is forgiven, the employer is no longer eligible to defer deposit and payment of the employer's share of Social Security tax due after that date. However, the amount of the deposit and payment of the employer's share of Social Security tax that was deferred through the date that the PPP loan is forgiven continues to be deferred and will be due on the "applicable dates."
What may be lesser known is that self-employed individuals (e.g. those filing a Schedule C or certain partners in partnerships/LLCs) are also eligible for deferral. Keep this in mind as you consider making 2020 federal estimated tax payments, Q1 and Q2 of which are both due on July 15th.
Cash-flow management matters more than ever. This provision, where applicable, helps with that. For a full text of the IRS FAQ on the subject, see the link that follows:
If you have questions, contact your Sisterson representative or firstname.lastname@example.org