Coronavirus Tax Legislation Updates

Coronavirus Aid, Relief, and Economic Security Act (CARES Act)

  • Paycheck Protection Program Click for more information
    • Update (4/5/2020):
      • Banks accepting loan applications for small businesses and sole proprietorships starting 4/3/2020 and independent contractors and self-employed individuals starting 4/10/2020. You are encouraged to contact your bank regarding the application process and specific questions regarding what information/documents will be required with the loan application.
      • Loans to be provided on a first come first served basis and are limited to one loan per eligible borrower.
      • Independent contractors are not considered employees for purposes of calculating the maximum loan amount.
      • Forgiveness possible if loan proceeds are used for payroll and not more than 25% of other qualifying costs. Amounts not forgiven have a term and interest date of 2 years at 1%.
      • Borrowers that are more than 50% owned or controlled by the same individual or entity will be considered together for purposes of determining eligibility as a small business for the PPP (e.g., 500 employees or less, subject to certain exceptions).
    • Loans up to $10M may be provided for payroll costs, mortgage payments, rent, and utilities.
    • The eligible loan amount is 2.5 times the prior year’s average monthly payroll costs.
    • Loan amounts may be eligible for forgiveness, but the amount of forgiveness may be reduced due to workforce or salary reductions.
    • The amount forgiven is not includable in income and any amount not forgiven has a term of 10 years with a maximum interest rate of 4%.
  • Employee Retention Credit Click for more information
    • Eligible employers may claim a refundable payroll tax credit (up to $10,000 per employee) each calendar quarter equal to 50% of the qualified wages paid to employees.
    • The credit is available if an employer is fully or partially closed due to a government mandate or if gross receipts have declined by more than 50% as compared to the same calendar quarter in 2019.
    • Employers with less than 100 employees can claim a credit for all wages during the period affected, while employers with more than 100 employees can claim a credit only for the wages paid while the business is fully or partially closed.  Note: the CARES Act also delayed the payment of employer payroll taxes.
    • The credit is not available if the employer receives a loan under the Paycheck Protection Program.

Families First Corona Virus Response Act

  • Emergency Paid Sick Leave Act (EPSLA) Click for more information
    • Provides an additional 2 weeks of paid sick leave if the employee is sick or may be sick with COVID-19, is caring for someone who is sick or may be sick or is caring for a child when schools are closed or child care providers are unavailable.
    • Employers are allowed to take a refundable tax credit for the amount of the sick leave pay.
    • Self-employed individuals are eligible for the credit.
    • Businesses with less than 50 employees may be exempt from the leave requirements.
  • Emergency Family and Medical Leave Act (EFMLEA) Click for more information
    • Additional leave up to 12 weeks for a qualifying need related to COVID-19 and employee must be returned to work at the end of the leave. However, an exception exists for employers with less than 25 employees if certain conditions are met.
    • Employees must have been employed for at least 30 days and is unable to work or telework.
    • Employers must notify employees of this leave and their rights to take the leave.
    • Can be used in conjunction with the Emergency Paid Sick Leave Act.

Tax Filing and Payment Deadlines Postponed Click for more information

  • The Federal due date for filing 2019 income tax returns and making 2019 and 2020 income tax payments (including estimated taxes) originally due April 15, 2020 has been postponed to July 15, 2020.
    • The postponed due date applies only to income taxes (including self employment taxes) and does not postpone the payment or deposit of any other Federal tax or filing of any informational returns.
  • The State of Hawaii due date for filing 2019 income tax returns and making 2019 income ta payments that were originally due April 20, 2020 has been postponed to July 20, 2020.  The 2020 estimated tax payment due April 20, 2020 has not been postponed.
    • The postponed due date applies only to the payment and filing of 2019 income taxes and does not postpone the due date of other State of Hawaii taxes such as the general excise tax, fuel tax, etc.
    • An automatic extension to file the 2019 Hawaii income tax returns is available to October 20,2020 provided the “properly estimated tax liability” is paid by July 20, 2020.