COVID-19 Tax Implications
On Friday, March 13, 2020, President Trump declared a national emergency over the virus, setting the stage for the Treasury and IRS to offer administrative tax relief. Some of the solutions being discussed include extending deadlines for tax return filing and tax payments, waiving penalties for late payments and interest, and expediting amended tax return processing.
In addition, the House and Senate are voting on a bill to provide tax cuts for employers offering emergency sick leave. It does not include the payroll tax cut sought by the President, but it does require insurers to cover virus testing and it provides enhanced unemployment benefits and increased food aid for children, among other things. The Senate is expected to pass the bill this week, and a Presidential signature after that is all but certain.
The President has announced that he will instruct Treasury to allow individuals and businesses that are negatively affected by the Coronavirus to defer their tax payments beyond the April 15 deadline. Individuals and businesses will have an extra 90 days to pay the IRS if they owe additional income tax for 2019.
Normally, taxpayers owe the amount due by April 15. But as part of the government’s response to the Coronavirus, individual and small business filers will be able to defer payments of up to $1 million and corporations can defer up to $10 million — without incurring interest or penalties. Please be aware this is not an extension of time to file extension requests or tax returns, but does provide some relief for those who owe tax.
It is important to remember that all bills must pass both the House of Representatives and the Senate and be signed into law by the President – many things being discussed in the media have not yet become laws and until they are, the current laws stand including the due dates for tax returns and extension requests.