Certified Public Accounting Firm

COVID-19 - Page 2

Articles On This Page

Affects of Tax Regulation Changes Due to COVID-19

SEC Staff Speech, Division of Corporation Finance Statement Regarding Requirements for Form 144 Paper Filings in Light of COVID-19 Concerns

Requirements for Certain Paper Documents (other than Forms 144) in Light of COVID-19 Concerns

SEC Staff Speech, Keynote Address: Securities Enforcement Forum West 2020 by Steven Peikin, Co-Director, Division of Enforcement

Financial Stability Oversight – SEC Chairman Addresses Financial Stability Oversight Council

Asset Management – SEC Chairman Addresses SEC’s Asset Management Advisory Committee

SEC Staff Q&A: COVID-19 Related FAQs NEW!

Articles 

Affects of Tax Regulation Changes Due to COVID-19

Authored by Tabitha Ford, Tax Senior, MaloneBailey, LLP.

Summary – In an effort to mitigate the negative impact that COVID-19 has had on affected Americans, Congress enacted the Coronavirus Aid, Relief, and Economic Security (CARES) Act. The majority of the tax relief is offered mainly through the deferment of taxes, as well as relaxing some of the limitations placed on businesses from the Tax Cuts and Jobs Act (TCJA). The most significant of these changes are summarized below and are attributable to net operating losses, 163(J) business interest expenses and AMT credits.

Net Operating Losses (NOL)

Just recently, the Tax Cuts and Jobs Act (TCJA) eliminated the carryback of NOL’s for tax years beginning in 2018, allowing only an indefinite carryforward. The CARES act is reversing this limitation with the following changes:

  • Allowing corporations and individuals a 5-year carryback for tax years 2018-2020. Corporations and individuals can amend their returns all the way back to 2013 in order to receive any potential refunds.
  • Foreign income subject to transition tax (section 965) that normally would have been included as income during the 5-year carryback period can be disregarded.
  • For taxable years beginning before Jan 1., 2018 and ending after Dec. 31, 2017, the carryback period can be waived, reduced or the election to waive the carryback period can be revoked.
  • NOL arising before 1/1/2021 can be fully utilized without the 80% taxable income limitation.
  • For passthrough entities and sole proprietors, the CARES Act eliminates the $250,000 (per non-corporate taxpayer) business loss limitation.

163(J) Business Interest Expense Limitations

Current law, also enacted by the TCJA, limits business interest expenses for entities subject to section 163(J) up to 30% of adjusted taxable income. The Act increased this limitation to 50% for taxable years 2019 and 2020 with a special allocation election required for partnerships for 2019. For tax year 2020, the taxpayer may also elect to use the adjusted taxable income from 2019 to calculate this limitation. Additionally, the taxpayer may also elect out of deducting the 50% excess business interest expense for taxable years beginning in 2020 without limitation.

Alternative Minimum Tax (AMT) Credit Refund

Prior to the Act, AMT was eliminated for corporations beginning in 2017, though refundable portions of any unused tax credits were allowed to be claimed through 2021, after a 50% limitation is applied on any excess minimum tax in 2018 through 2020, before it is fully refundable in 2021. The Act is essentially allowing the refundable credit to be fully claimed in 2019, as well as allowing the corporation to elect to claim the refundable credits in 2018.

If you have questions or need assistance with any IRS tax relief options mentioned above, please feel free to contact our Senior Tax Manager, Nicole Zhao.

SEC Staff Speech, Division of Corporation Finance Statement Regarding Requirements for Form 144 Paper Filings in Light of COVID-19 Concerns

Summary - The staff of the SEC’s Division of Corporation Finance (Corp Fin) has indicated that it “is aware of logistical difficulties of submitting Forms 144 in paper given the spread of coronavirus disease 2019 (COVID-19). In light of ongoing health and safety concerns related to COVID-19, the staff is providing the following statement to those affected by COVID-19 regarding Forms 144. This staff statement is temporary and covers those who submit Forms 144 for the period from and including April 10, 2020 to June 30, 2020.”

Corp Fin indicates that it will not recommend enforcement action to the SEC if Forms 144 filed in paper under Rules 101(b)(4) or 101(c)(6) of Regulation S-T are submitted via email in lieu of mailing or delivering the paper form to the SEC if the filer or submitter attaches a complete Form 144 as a PDF attachment to an email sent to PaperForms144@SEC.gov.

If the filer or submitter is unable to provide a manual signature on the Form 144 submitted by email, Corp Fin will not recommend enforcement action to the SEC if the filer or submitter provides a typed form of signature in lieu of the manual signature and:

  • The signatory retains a manually signed signature page or other document authenticating, acknowledging, or otherwise adopting his or her signature that appears in typed form within the electronic submission and provides such document, as promptly as practicable, upon request by Corp Fin;
  • Such document indicates the date and time when the signature was executed; and
  • The filer or submitter (with the exception of natural persons) establishes and maintains policies and procedures governing this process.

Filers and submitters may continue to submit Forms 144 to the SEC mailroom. There may, however, be delays in the processing of such documents.

For more information, click here.

© 2020 CCH Incorporated and/or its affiliates. All rights reserved. Used with permission.

Requirements for Certain Paper Documents (other than Forms 144) in Light of COVID-19 Concerns

Summary - The staff of the Division of Corporation Finance (Corp Fin) has published guidance for certain paper documents in light of COVID-19. Corp Fin indicates that it is aware of logistical difficulties submitting certain forms (other than Forms 144) in paper given the spread of COVID-19. Corp Fin has previously issued guidance on Forms 144.

This staff statement is temporary and covers those who submit the following forms for the period from and including April 23, 2020 to June 30, 2020:

  • Annual reports to security holders furnished by foreign private issuers on Form 6-K pursuant to Rule 101(b)(1) of Regulation S-T;
  • Forms 11-K pursuant to Rule 101(b)(3) of Regulation S-T;
  • Periodic reports and distribution reports filed by certain international development banks pursuant to Rule 101(b)(5) of Regulation S-T;
  • Reports or other documents furnished by foreign private issuers on Form 6–K pursuant to Rule 101(b)(6) of Regulation S-T; and

Unabridged foreign language documents and English translations of a foreign government’s or its political subdivision’s latest annual budget pursuant to Rules 306(b) and (c) of Regulation S-T.

Corp Fin will not recommend enforcement action to the SEC “if the above documents are submitted via email in lieu of mailing or delivering the paper document to the SEC if the filer attaches a complete document, including any required exhibits, as PDF attachments to an email sent to CorporationFinancePaperForms@SEC.gov.”

If the filer is unable to provide a manual signature on a document submitted by email, the staff will not recommend enforcement action to the SEC if the filer provides a typed form of signature in lieu of the manual signature and:

The signatory retains a manually signed signature page or other document authenticating, acknowledging, or otherwise adopting his or her signature that appears in typed form within the email submission and provides such document, as promptly as practicable, upon request by the Division or other SEC staff;
Such document indicates the date and time when the signature was executed; and
The filer establishes and maintains policies and procedures governing this process.

Filers may continue to submit these documents to the SEC mailroom. There may, however, be delays in the processing of such documents.

For more information, click here.

© 2020 CCH Incorporated and/or its affiliates. All rights reserved. Used with permission.

SEC Staff Speech, Keynote Address: Securities Enforcement Forum West 2020 by Steven Peikin, Co-Director, Division of Enforcement

Summary - Steven Peikin, Co-Director of the SEC’s Division of Enforcement, recently discussed the SEC’s enforcement during COVID-19. Peikin indicates that the Division of Enforcement “have focused significant time and resources on responding to COVID-related matters. In organizing our response, we have looked to the experiences had, and the lessons learned, by our predecessors in other periods of emergency and serious market disruption, including the September 11 attacks and the 2007-08 global financial crisis.”

Topics discussed by Peikin included: (a) COVID-19 enforcement matters; and (b) ongoing non-COVID-19 work. Peikin expects there to be more trading suspensions related to COVID-19 and more fraud cases related to potential COVID-19 investment scams.

For more information, click here.

© 2020 CCH Incorporated and/or its affiliates. All rights reserved. Used with permission.

Financial Stability Oversight – SEC Chairman Addresses Financial Stability Oversight Council

Summary - SEC Chairman Jay Clayton recently addressed the Financial Stability Oversight Council indicating that the “continued orderly operation of our funding markets and other capital markets has been and will continue to be an essential factor in driving an effective national health and safety response to COVID-19. Consumers, the thousands of firms and entrepreneurs that are working to fight and respond to COVID 19—not to mention the state and local governments, hospital systems, transportation and public services that are critical to the response—all depend on continued access to financial services and markets.”

Clayton discussed the SEC primary responsibilities in the areas of market function, market monitoring, and corporate or other issuer disclosure.

For more information, click here.

© 2020 CCH Incorporated and/or its affiliates. All rights reserved. Used with permission.

Asset Management – SEC Chairman Addresses SEC’s Asset Management Advisory Committee

Summary - SEC Chairman Jay Clayton recently addressed the Asset Management Advisory Committee. Chairman Clayton described the SEC’s efforts in light of COVID-19. Clayton indicated that going forward the SEC “will continue to monitor the effects of our responses to COVID-19 as they evolve, and we will consider modifying, supplementing, and withdrawing relief and guidance as appropriate.”

For more information, click here.

© 2020 CCH Incorporated and/or its affiliates. All rights reserved. Used with permission.

SEC Staff Q&A: COVID-19 Related FAQs

Summary - The staff in the SEC’s Division of Corporation Finance (Corp Fin) has published COVID-19 Related FAQs. These FAQs provide guidance specific to financial reporting guidance related to the COVID-19 pandemic. The FAQ provides guidance on: (1) implementing the SEC’s guidance with the COVID-19 Order modifying exemptions from the reporting and proxy delivery requirements for public companies; and (2) questions related to registration statements on Form S-3.

For more information, click here.

© 2020 CCH Incorporated and/or its affiliates. All rights reserved. Used with permission.