Tax Changes Due to the Impact of the Coronavirus

Tax Changes Due to the Impact of the Coronavirus

On Tuesday, Treasury Secretary Mnuchin announced that as part of the economic relief efforts related to fiscal impacts of COVID-19 that the IRS will be granting some tax relief to certain taxpayers.

As of 3pm Tuesday, March 17th, we know the following based on comments from the press briefing earlier today:

a.) Individual Taxpayers can defer, without penalty or interest, up to $1,000,000 in payments.

b.) Corporate Taxpayers can defer, without penalty or interest, up to $10,000,000 in payments.

These deferrals are for up to 90 days based on comments given.

At this time, it is currently unknown if this means that if an individual or corporation owes more than this amount if they can defer any payments, or if the relief means that only payers who owe less than this amount can defer. Based on prior public comments, it is likely that this means only taxpayers who owe this amount will be eligible to defer. Further, it is believed, but not confirmed, that this payment refers to income tax only (aka not any payroll taxes), and at this point only for Federal income tax.

As of now, taxpayers (individual & calendar-year corporate) still have an April 15th, 2020 deadline to file their personal tax returns. The deadline for pass-through entities (such as S Corporations or LLCs taxed as partnerships) was on Monday, March 16th, 2020. To date, other than in California, Connecticut and Maryland, no such relief on this deadline has been given.

To note, even if taxpayers are taking advantage of this waiver, they still will be required to file their tax returns by April 15th, 2020.

Other Coronavirus changes that are currently in place:

1.) NYS has waived the 7-day waiting period for any employee to claim unemployment benefits if displaced by business closures as a result of Coronavirus, such as restaurants or other personal services.

2.) The House has passed and refined the “Family First Coronavirus Response Act” which is the first of several planned legislation items designed to assist both workers and businesses. This bill includes legislation that will grant 2 weeks of paid sick leave, up to $511 per day or up to 12 weeks at 67% of the person’s normal pay, up to $200 per day. Small and midsize companies are required to provide this coverage. There are many moving parts and details coming and it still has to pass the Senate, but the general idea is that the credits will be given in the form of payroll tax relief; there is still much to be determined in full mechanics of the bill.

As more details come out, we will continue to inform you. We are here to help you navigate the waters of how to claim these benefits for your business. We will continue directly communicating with our clients as we traditionally do during this time of year as part of our tax compliance services.

For more Coronavirus updates and resources, click here.

Edward McWilliams, CPA

Edward McWilliams, CPA

Partner

Ed is a Partner in the firm’s tax and business advisory practice focusing on providing services to middle market private companies across different industries as well as to early stage startups. Ed has over a decade of experience providing tax and business consulting services to these companies of different sizes and across different industries, bringing a broad and diverse knowledge base and strategic solutions to the many complex issues that businesses face.

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