Taxpayer Guide to the CARES Act

Jul 6, 2020 - Alerts by Hinkle Law Firm

The Coronavirus Aid, Relief, and Economic Security (CARES) Act was approved by Congress and signed into law on March 27, 2020. The CARES Act is a $2.2 Trillion Dollar tax-and-spending package intended to provide economic relief to businesses and individuals in light of the COVID-19 pandemic by, in part, amending the Internal Revenue Code in ways to increase liquidity and generate available cash for the tax payer. In doing so, Congress hoped to avoid a recession and prevent a large number of small businesses from going out of business and millions of Americans becoming unemployed.

What follows is a listing of the major changes to the tax code implemented by the CARES Act. Knowing an understanding how these changes affect your and your client’s businesses is key to taking full advantage of the benefits and savings made possible by the CARES Act, which is critical in this time of economic uncertainty.

Hinkle Law Firm has been focused since day one on understanding the CARES Act and advising our clients how to fully capitalize and put the tax code changes to work for the benefit of them and their businesses. Let us help you navigate the complexities of the CARES Act.

Business Tax Provisions:

Beneficial Treatment of Net Operating Losses (CARES Act section 2303)
Accelerated Refund of Prior Minimum Tax Liability Credits (CARES Act section 2305)
Modification of Limitation on Business Interest (CARES Act section 2306)
Amendments for Qualified Improvement Property (CARES Act section 2307)
Increased Limitations on 2020 Charitable Contributions (CARES Act section 2205)
Treatment of Federal Loans, Guarantees, and Other Investments in Mid- to Large-Size Businesses (CARES Act section 4003)
Temporary Suspension of Federal Excise Taxes (CARES Act sections 4007 and 2308)

Retirement Plans and Employee Benefits:

Penalty-Free Early Access to Retirement Funds (CARES Act section 2202(a))
Increased Limits on Loans from Retirement Plans (CARES Act section 2202(b))
Suspension of Required Minimum Distributions (CARES Act section 2203)
Extension of Qualified Defined Benefit Plan Funding Deadline (CARES Act section 3608(a))
Beneficial Changes to Defined Benefit Plan Certification (CARES Act section 3608(b))
Special Treatment of Employer Payments of Student Loans (CARES Act section 2206)

Employer-Focused Provisions:

Employee Retention Tax Credit
Delay in Required Deposit of Payroll Taxes
Advance for Payroll Credits and Refunds

Individual Tax Relief:

Tax-Free Cash Payments (CARES Act section 2201)
Above-the-line Deduction for Charitable Contributions (CARES Act section 2204)
Increased Limitations on 2020 Charitable Contributions (CARES Act section 2205)
Limitation on Losses for Taxpayers Other than Corporations (CARES Act section 2304)

If you wish to learn more about the CARES Act and how the associated changes to the tax code can benefit you and your clients, contact Chris Arellano or Scott MacBeth.