The CARES Act also allows small businesses to defer their 2020 tax liability – half out to the 2021 tax year, the other half out to the 2022 tax year. However, businesses that have had debt forgiven under the Paycheck Protection Program are ineligible for tax deferrals.
The Paycheck Protection Program
Neil Simon, vice president, government relations for the Investment Advisor Association also addressed the CARES Act, specifically the Payroll Protection Program, the $350 billion small business relief package that was exhausted on Thursday.
“There is likely to be further stimulus enacted by Congress,” said Simon. “If you haven’t gotten your application in, do so.”
The program, according to Simon, provides loans intended to provide incentive for businesses to keep employees on the payroll. The principal, interest and fees can all be forgiven, and the Small Business Administration reimburses origination fees.
Simon noted that the program does require business owners to make a good faith certification that the current economic uncertainty makes their loan request necessary, but the requirement is “essentially a check box.” Furthermore, Finra has made clear that it will not require forgiven PPP loans to be reported on form U-4, though the SEC has not made similar provisions for ADVs.
Simon expects Congress to make passing additional Payroll Protection Program funding a priority when it reconvenes later this spring.
Regulatory Relief
During the outbreak SEC has also announced several different forms of relief for financial firms and has made a number of extensions to regulatory deadlines.
“On March 25 the SEC issues an order expanding the period covered by its first Form ADV and Form PF relief on March 13,” said Simon. “The new order extends the time frame for relief and delivery obligations for which the original due date was on or before June 30.”
“Advisors unable to meet deadlines because of coronavirus and unable to deliver those documents now have 45 days from their original due date,’ said Simon. “Originally, the SEC had a number of conditions you had to meet in order to avail yourself of the 45-day extension, but we and other organizations expressed our concerns to the SEC and the new order no longer includes those conditions – but it does still require that advisors notify the SEC by email and disclose that they intend to rely on the order.”
“There have been no extensions to the Form CRS or Reg BI deadline,” said Simon. “There have been a number of recent FAQs on Form CRS, and we’re busy informing our membership about them.”