A critical deadline related to 2020 RMDs is fast approaching. In addition, over the past two weeks the SBA and Treasury have provided numerous important updates. See below for several changes that may impact you soon.
- Due to the COVID crisis, Required Minimum Distribution (RMD) rules for those over 70 ½ have been suspended through December 31, 2020. Ordinarily there is a 60-day window to recontribute or roll over those dollars if you took a distribution and intend to deposit it back into your account. However, those rules were for recontributing an RMD and were changed to allow you to return those dollars by August 31, 2020, even if you took your RMD back in January or February. Although you're not required to put this money back into your IRA, you should be aware that you must return your RMD by August 31st if you would like to take advantage of avoiding your RMD for 2020. Don't forget that this will impact Qualified Charitable Distributions if you have made or ordinarily do make QCDs. Please speak with your accountant as soon as possible if you believe this may impact you.
- The IRS will be sending interest payments to about 13.9 million individual taxpayers who timely filed their 2019 federal income tax returns and are receiving refunds. The interest payments, averaging about $18, will be made to individuals who filed a 2019 return by this year's July 15 deadline and either received a refund in the past three months or will receive a refund. In most cases, taxpayers who received their refund by direct deposit will have their interest payment direct deposited in the same account. Everyone else will receive a check. The IRS reminds taxpayers that these interest payments are taxable and must be reported on the individual's Form 1040 for 2020. In January 2021, the IRS will send a Form 1099-INT to anyone who receives interest totaling at least $10.
- Due to the significant backlog at the IRS caused by the pandemic, the IRS has decided to halt certain tax bill notices until it is able to significantly reduce this backlog. Notices CP-501, CP-503, and CP-504 are ordinarily sent out automatically when taxpayers do not respond to their first balance due notice, but these follow-up letters will stop for the foreseeable future. The IRS will continue to monitor its backlog situation and resume letters once it is adequately caught up. This does not mean you will never have to pay your taxes if you have not done so already. In fact, if you have received a payment due notice, and you do owe the IRS, contact your accountant to discuss the best way to remit the amount owed.
- The SBA has specifically included vision and dental benefits in group health care benefits that are deemed eligible expenses for PPP loan use and forgiveness.
- If you received both an EIDL advance and a PPP loan, the SBA requires you to reduce the PPP loan forgiveness amount by this advance payment.
- After you submit your PPP forgiveness application, the SBA will notify your lender of the amount forgiven and any amount still to be repaid. Your lender is then responsible for contacting you about the loan forgiveness and the date on which your first loan payment is due, if applicable. Your lender must continue to service your loan, which must be repaid within two or five years, depending on your loan origination date.
- If you received an EIDL advance that was greater than your PPP loan, the SBA has now clarified that none of the PPP loan will be forgiven because the amount of an EIDL advance is deducted from the PPP loan forgiveness amount. The lender will service your loan over the two- or five-year maturity, as indicated in question #4 above.
- As a PPP borrower, you have the right to request a review of a lender decision or an SBA decision that you are ineligible for loan forgiveness. Final SBA decisions can be appealed to the Office of Hearings and Appeals (OHA). You may also request that the SBA review a lender decision outside of the OHA. In addition, documentation requirements, time limits, and a walk-through of the processes for seeking a review have been outlined by the SBA.
This information is up to date as of August 26, 2020. We will continue to monitor for additional information and provide updates as they come available.
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