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Employee Payroll Tax Deferral & PPP Update

Posted by Admin Posted on Sept 09 2020
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Employee Payroll Tax Deferral & PPP Update
 
Hagan, Tucker, Schmitt & Gintz Business Partners:
 
Employee Payroll Tax Deferral
 
We wanted to take a moment and address the Presidential Memorandum issued August 8, 2020 that allows employers to defer withholding and payment of the employee's portion of the Social Security tax if the employee's wages are below a certain amount.
 
 
Employers can choose to offer this deferral or not.
 
Employer is responsible for payment of the deferred amounts.
  • If payments are not made by April 30, 2021, the employer will be subject to interest and penalties.
 
Deferral of employee portion of Social Security taxes (6.2%)
  • Available for employees making less than $4,000 bi-weekly for payments of wages from September 1 through December 31, 2020
  • To be repaid from January 1 through April 30, 2021 through employee withholding (in addition to regular Social Security tax withholding)
  • Employer would basically double withhold the 6.2% of employees portion of Social Security taxes during this time frame.
 
There are many questions we are awaiting answers to, the major one being: will this eventually move to being a forgiven amount? Until we see additional guidance released we would advise our clients not to offer this deferral at this time. We will continue to send updates as they are released.
PPP Update
 
Things are still unclear regarding PPP Loan Forgiveness. Though we have some guidance, there are still many questions without answers. Here is a brief update according to what we know now.
 
  • WAIT - We understand everyone's anxiety regarding forgiveness, but being patient about applying could be more beneficial than moving forward immediately.
  • Does your business want to be a guinea pig for the 1st round of forgiveness applications? Just like in the early days of the loan, there could be more changes coming down the pike. How many times do you want to have to recalculate or submit?
  • In addition to the forgiveness process, documentation requirements may also change.
  • We are still waiting on additional guidance regarding FTE reductions and Related Party Rent.
  • Timing of forgiveness - can we defer recognition to next year by waiting to apply? If possible, is it advisable? This will depend on the business.
  • If the loan is $150,000 or lower, there may still be legislative action to make it a simple signed affidavit.
  • Forgiveness should be available for up to 10 months after the end of the covered period for your PPP loan.
 
We are uniquely positioned to assist our clients with the application of forgiveness, as well as business modeling, cash flow/break even analysis and assessment for other loan assistance for those who continue to struggle. "PPP2" could be coming, although with a much narrower focus for those experiencing severe declines in revenue. We are happy to help our clients in any way we can.
 
Please contact us with additional questions and concerns.
Thank you for your continued trust and relationship with our firm.
Follow us on social media to keep in touch.
 
Hagan, Tucker, Schmitt & Gintz LLC
417-881-6919