A federal bill that would help certain small businesses that have been hit hard during the COVID-19 pandemic by letting them defer payment on their first year of payroll taxes was reintroduced last week.
Brought forward again by U.S. Rep. Eric Swalwell (D-Livermore) -- who originally introduced the legislation, independent of any pandemic, as his very first proposed law during his first term in office -- and New York Congressman John Katko, "The Main Street Revival Act" aims to "free up money during that critical launch period" of the first year in operation for qualified small businesses.
Deferred taxes would be paid in installment over the following four years of operation.
"Small businesses are at the heart of our economy, and as we work to solve this public health crisis, we must also be looking out for those who keep our communities up and running," Swalwell said. "The Main Street Revival Act helps new small business owners build a strong foundation for the future and alleviates a significant source of financial stress, while freeing up cash that can be critical in the first year. As businesses begin to navigate new health and safety protocols, this cash could be a necessary lifeline for many."
Deferment is limited to businesses that plan to hire a maximum of 25 people during their first year, and are located in historically underutilized business zones -- or HUB Zones -- that have been identified by the U.S. Small Business Administration.
The CARES Act that went into effect earlier this year also allows businesses to defer payroll tax payments for a limited period of time. According to Swalwell, "the Main Street Revival Act utilizes this concept and makes it permanent for a small business’s first year if it is located in a HUB Zone."