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New Announcement on Corporate Tax Benefits

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We would like to make sure you were aware of some of the provisions of the Consolidated Appropriations Act signed into law on December 27, 2020 which you could benefit from. Namely, the following items may affect you:

 

  1. If your company elected to defer payroll taxes under the Presidential Memorandum issued on August 8, 2020, the repayment date for such taxes has been extended from April 30, 2021 to December 31, 2021.
  2. If you received an initial round of PPP loan funds and used all such proceeds, you could be eligible to receive a second round of funds assuming you have fewer than 300 employees and can show a 25% gross revenue decline in any quarter in 2020 as compared to the same quarter in 2019. In addition, qualifying applicants who did not apply for the first round of funds could apply for funds now as well – the headcount threshold for such applicants is 500 rather than 300 and there is no need to demonstrate a reduction in gross receipts. In both scenarios, affiliation rules apply, meaning you would need to include all worldwide affiliate employees in the headcount. You also would be required to make a certification of economic necessity in either case.
  3. The employee retention credit has been significantly expanded and extended through the first two quarters of 2021. Previously limited to business with fewer than 100 employees, the credit is now available to businesses with up to 500 employees (on an aggregate, worldwide basis). The qualified wage base was increased from $10,000 annually to $10,000 per quarter, the credit rate was also increased from 50% to 70%, and there is now only a 20% reduction in year-over-year gross receipts required rather than the previous 50% required to qualify. Lastly, the credit is also now available to companies that received a PPP loan.

 

We would be happy to discuss these opportunities and your eligibility for them in greater detail.

Please contact your Rödl & Partner representative for additional information and assistance.

 

This publication contains general information and is not intended to be comprehensive or to provide legal, tax or other professional advice or services. This publication is not a substitute for such professional advice or services, and it should not be acted on or relied upon or used as a basis for any decision or action that may affect you or your business. Consult your advisor.

We have made reasonable efforts to ensure the accuracy of the information contained in this publication, however this cannot be guaranteed. Neither Rödl Langford de Kock LP nor any of its subsidiaries nor any affiliate thereof or other related entity shall have any liability to any person or entity which relies on the information contained in this publication, including incidental or consequential damages arising from errors or omissions. Any such reliance is solely at user's risk.

Any tax and/or accounting advice contained herein is based on our understanding of the facts, assumptions we have been asked to make, and on the tax laws and/or accounting principles in effect as of the date of this advice. No assurance is given that the conclusions would be the same if the facts or assumptions change, or are not as we understand them, or that the tax laws and/or accounting principles will not change subsequent to the issuance of these conclusions. In addition, we do not undertake any continuing obligation to advise on future changes in the tax laws and/or accounting principles, or of the impact on the conclusions herein.

No part of this document may be reproduced, retransmitted or otherwise redistributed in any form or by any means, electronic or mechanical, including by photocopying, facsimile transmission, recording, rekeying, or using any information storage and retrieval system, without written permission from Rödl Langford de Kock LP.

Copyright © January 2021 Rödl Langford de Kock LP
All rights reserved.

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Elisa Fay

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