Tax Issues Related to Coronavirus

Tax Issues Related to Coronavirus

No need for a long introduction, because something may have changed by the time we finish. This issue will cover the multitude of tax breaks and stimulus coming out of Congress in their attempt to lessen the economic impact to small businesses, their families and the economy from the Coronavirus.

Tax Payments Deferred for Taxpayers & Small Businesses
Cash is king. The last thing anyone needs at this time is to worry overusing precious cash to pay taxes with the April 15th tax return filing. As a result, in an unprecedented move the President directed the Treasury Department to give taxpayers the ability to defer tax-due payments for ninety days, without interest or penalties for individuals and businesses. 
https://www.irs.gov/coronavirus

The Particulars on Deferring Tax Payments:

• Families and small businesses can defer tax payments for July 15, 90 days. This covers a broad range of taxpayers including small businesses that file as individuals.  Up to $1 million in tax due can be deferred. This covers LLC, S-corporations, Partnerships, and sole proprietors.  Corporations (i.e. C corp.) can defer up to up to $10 million for 90-days.
• Penalties and interest that would otherwise apply during this nearly three-month period will be waived until July 15.
• This information is contained in IRS Notice 2020-17.

What About Estimated Income Tax Payments?  
Yes, these payments are postponed for 90-days as well.  

Are There Different Limits For Joint and Single Filers?
No. The individual limit for deferral is $1 million regardless of filing status

Are Other Types of Taxes Extended?
No. Only the payment of federal individual income and corporate income tax are extended. For these purposes, the individual self-employment tax of sole proprietors, and others, are considered part of the individual income tax and can be deferred as well.

The estate tax and federal excise tax, to name a few, are not extended and should be filed and paid timely.

What About the Filing Deadline? 

Tax forms and payments won’t be due to the Internal Revenue Service until July 15 this year, Treasury Secretary Steven Mnuchin said in a tweet.

“We are moving Tax Day from April 15 to July 15,” Mnuchin said. “All taxpayers and businesses will have this additional time to file and make payments without interest or penalties.” 
 

What About State Deadlines?
This is an interesting question. Many states are cash-strapped to begin with, but the states generally copycat federal action in these matters. Numerous states have already announced some form of deferral, both of filing and payment deadlines, some 60-days and others 90. At this point, it would be hard to imagine a state not following federal guidelines. We will monitor this issue as it develops. We suggest you contact your tax adviser for details.

What If I Have Already Filed, and Paid, My Tax?
The notice issued by the Treasury Department did not address this scenario. The presumption at this point is that those returns, and payment will stay as is.

Stimulus Cash Payments to Individuals:
Congress and the White House are working on additional stimulus package measures that would send direct cash money to households based on income and family size. 

Coronavirus-Related Paid Sick Leave and Family Leave:  
Don’t ignore the recent update to the Paid Sick and Family Leave law just passed by Congress. It was designed to assist employees who need to take time off due to Coronavirus-related issues, including the shutdown of schools. More to the point, these new rules may apply to small businesses with less than 50 employees who have previously been exempted from these laws. The Department of Labor is currently working on further guidance for small businesses. All monies paid out on account of sick leave pay can be subtracted from payroll tax deposits as a credit.