Controlled groups of business entities have a limit of $100,000 per participant if more than one plan exists. An employee may certify to a plan that such conditions have been met. In addition, single employer pension plans have been provided with relief to meet required funding obligations by delaying the contribution due date until January 1, 2021. Interest will accrue on the deferred payment owed to the single employer plan and adjustments will be permitted to occur in Tax Code Section 436 and ERISA Section 206 adjusted funding target percentages.

Charitable Contributions: The Tax Code now includes a new deduction for up to $300 for 2020, above the line, in calculating adjusted gross income (AGI) for charitable contributions.

The limit on qualified charitable cash contribution deductions has increased from 60% of the individual’s AGI to 100% of the individual’s AGI for this year. Excess charitable contribution amounts are to be carried over to future tax years under existing Tax Code provisions.

The deductible limit for “C” corporation charitable contributions is increased to 25% from 10% of taxable income for 2020.

Business-Related Tax Benefits

Employee Retention Tax Credits: An employee retention tax credit is available to eligible employers that close their businesses or suffer large business declines due to COVID-19. This tax credit applies to the employer’s share of the relevant FICA employment taxes for each quarter, which equals 50% of the qualified employee wages. This 50% tax credit is based on an amount that may not exceed $10,000 in wages paid to each person for all covered quarters in 2020. This credit is reduced by the other described credits allowed under the CARES Act, and it relates to all eligible employees for each quarter.

If the employee retention credit exceeds such limited amount, the difference may be refunded to the employer as a federal tax overpayment. This benefit may also apply to tax-exempt entities. There are separate detailed tests that are applied to determine the extent of the required business decline and other qualifications to obtain this tax credit.

Deferred FICA Tax Payment: Employer and self-employed persons may now defer payment of applicable FICA payroll taxes. The employer portion of employment taxes or self-employment taxes may be deferred to December 31, 2021 and December 31, 2022. However, 50% of the total deferred payroll taxes for 2020 must be repaid on each such date. Penalties will not apply for non-payment of taxes under these provisions. The tax deferral period is from March 27, 2020 to January 1, 2021.

Expansion of Net Operating Loss and Related Carryback Rules: The net operating loss (NOL) carryover and carryback rules are expanded. NOLs from 2018 to 2020 are now eligible for a five-year loss carryback and federal income tax refund period. The 80% prior limit in NOL usage per year is eliminated, so the loss may be fully utilized to offset prior or future net income in any applicable tax year.

The employer corporate change in control loss limiting rules will not apply to stock or equity transfers made as part of a COVID-19 covered loan.