Congress has acted to extend the April 15 tax filing deadline to May 17, 2021. Here’s how it may affect you and your business:
PERSONAL TAX RETURNS
This 30 day extension of time to file is welcomed news for many people in continuing to manage the impact that COVID-19 is having on our daily schedules. There is nothing anyone needs to do to be given this extension – it is automatic for both filing your return and for any kind of tax payment as well. Of course, if additional time is still needed beyond this May 17 initial extended deadline, a regular request for extension can be filed to give you until October 15, 2021 to file your 2020 personal tax returns.
We are continuing to mindfully work through your personal returns, but we are not racing to complete them for any kind of April 15 deadline. We will continue to communicate with you about the status of things or if we have any questions as we work through your personal returns. This extra 30 days is to ease the stress on all of us in completing your annual tax returns which again this year involve so many changes and unique reporting requirements.
PPP ROUND 2 LOAN APPLICATIONS
For the business owners out there who meet the qualifying criteria for a Paycheck Protection Program loan from the Small Business Administration (“SBA”), the loan application deadline originally scheduled to end March 31, 2021 has been extended by 60 days to May 31, 2021. There are a couple of important factors that I believe have influenced the decision to extend this application deadline:
- With the various changes to the Round 1 forgiveness criteria, the banks and SBA have been trying to update their systems and processes so that this Round 2 application and forgiveness process is set up correctly on the front end.
- As of March 21, 2021 the total amount of PPP Round 2 funds that have been disbursed is around $196 billion of the total $290 billion allotted for the program. This means that only about 2/3 of the funds have been issued and this additional time should allow for qualifying small businesses to capture this remaining 1/3 of the funds (or $90 billion).
As a reminder, here is an outline of who qualifies for a PPP Round 2 forgivable loan from the SBA and what you can expect:
- Small businesses including privately owned C Corporations, S Corporations, Limited Liability Companies, sole proprietors and non-profit organizations.
- Business must have less than 300 employees
- Business must have experienced a decline in revenues of at least 25% in any quarter of 2020 compared with the same quarter of 2019.
- Loan is calculated based on the average monthly payroll from either the 2020 or 2019 year times 2.5 (or 3.5 if you are in food or hospitality industry)
- Loans cannot exceed $2 million
Based on the current projections and trending of applications under this Round 2 program, it is expected that the funding could run out toward the middle to end of April. This is before the extended deadline, so take a look at the criteria and look at your books to determine if PPP Round 2 is an option that you want to apply for.
WHAT WASN’T EXTENDED?
If your business is organized and files as a C Corporation, the deadline for your 2020 business tax returns is still April 15, 2021.
If you are required to make quarterly estimated tax payments during 2021, the first quarter estimated tax payment deadline remains April 15, 2021.
We want to support you as you seek to make the best decisions possible. If you have any questions or concerns as you approach the end of the 2020 tax filing season and the PPP Round 2 application process, please contact us and we will be happy to assist.