Sunday, April 12, 2020
Many small business owners such as brothers Hy and Adam Schwartz had a primary goal in mind: to their business - S&S Worldwide - in a position to financially recover once the virus pandemic is finally over. "We haven’t caught our breath to say, ‘Hey, this is a great time to transfer wealth to the next generation,'" Adam said. But for entrepreneurs and others that have the ability to do so, thinking through tax strategies now will reap benefits later.
The filing deadline for federal income tax returns has been pushed back to July 15, giving wealthier Americans who generally owe money a reprieve on both their annual filing and their quarterly payments for the first half of the year. Advisers also say that government relief plans to mitigate the financial impact of the pandemic have created significant opportunities to reduce personal and business tax bills for years. Many of the programs are complex and the incentives based on limited resources during this crisis, thus taxpayers may find it difficult calculating which programs are going to provide the most benefits in the long term.
Quite a large amount of focus has been on the federal government’s $349 billion emergency effort to get money quickly to small businesses through the Paycheck Protection Program, run by the Small Business Administration. The relief is structured as a loan, meant to provide for up to 8-weeks of payroll, but if the business owner spends it according to the agency’s guidelines, it converts to a tax-free grant. The filing process started April 3, but some banks were unable to accept applications on that date. There are other options available that have not been in the spotlight: the employee retention credit and the deferral on the payroll taxes are options that are better suited to some business owners, said Andrew Finkle, a partner in the Philadelphia office of the accounting firm Marcum.
See Paul Sullivan, Virus Relief Efforts Give Rise to New Tax Strategies, New York Times, April 10, 2020.
Special thanks to Matthew Bogin, (Esq., Bogin Law) for bringing this article to my attention.