Changes in Tax Policy for Business

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The COVID-19 pandemic disrupted our 2020 plans in a way the world has never seen before. We began living a new normal as we saw changes in our households, communities, and businesses. Business owners had to abide by government guidelines and shut down operations all while heading into this year’s tax season. The passing of the CARES Act by Congress was focused on helping families and businesses navigate the effects COVID-19, and those changes could impact IRS rules and business deductions and reporting.

In the wake of the pandemic, the government moved the federal tax filing and payment deadline to July 15, 2020. This deemed necessary, but some businesses, especially small businesses, still need further assistance and relief as they reestablish operations. Below is some tax policy that is under review to help you potentially track and record things differently.

  • Delayed employer payroll tax payments in 2021 and 2022 – If you are looking for financial relief and did not qualify for the PPP Program and are not using government funding to make payroll, it is important to keep an eye on this. As of right now, there is discussion of possible deferrals or delays in employer payroll taxes. Your CPA can keep you up-to-date on the latest rule and policy changes.
  • Net operating loss rule changes – If you paid tax on earnings in recent years, you might be able to claim losses in 2019 and 2020 against those past profits to receive critical cash back into your business. This policy is currently in review and it is important to work with your CPA to account for all losses of income and COVID-19 related costs.
  • Potential increase of interest expense deductions for 2019 and 2020 – Make sure you are working with the latest tables to ensure your calculating deductions appropriately. If you have already filed and the IRS makes this modification, you may be eligible to take additional deductions on interest you paid on your 2019 taxes.
  • Employee retention tax credits for COVID-19 impacted businesses – These could amount to 50% or up to $10,000 per employee on wages during a yet-to-be-defined period. Once the rules are finalized for this tax credit, you should work with your CPA to determine if you qualify. It is important to note that there are different regulations for businesses who employ under and over 100 people.
  • Paid leave tax credits for employers – The IRS says there is credit available for employers (who employ fewer than 500 people) who pay sick leave and/or family sick leave wages from April 1, 2020 through December 31, 2020 related to COVID-19. The amount of the tax credits could change. Speak with your CPA about your eligibility.
  • Deferral of payments on existing loan programs – Several programs are adjusting or deferring repayment schedules to help borrowers. Make sure to check with the Small Business Administration if you can modify your schedule to benefit you.

For more information about corona virus and economic impact payment resources and guidance, visit

To get help with mitigating the impact of COVID-19, recovery and business preparation and planning, contact MCK CPAs and Advisors.