Recent Tax Changes and Proposed Relief for Taxpayers and Employers

febrey-tax-update-web Recent Tax Changes and Proposed Relief for Taxpayers and Employers
Image: Gerd Altmann

The past couple of weeks have been unprecedented, scary, and even a little crazy to say the least. A lot has been happening that we want to tell you about as it relates to your taxes, business, and families.

View the COVID-19 Guide that provides a snapshot of scenarios and benefits available to employees, individuals, and business owners.

Federal Tax Filing Deadlines

On March 20, the IRS released a notice providing guidance for taxpayers with respect to the extension of time to file tax returns and to make certain tax payments. The details are as follows:

  • The due date for filing federal income tax returns and making federal income tax payments due April 15, 2020, is automatically postponed to July 15, 2020.
  • Payments of tax on self-employment income are included in the relief.
  • Taxpayers do not have to file a request for extension of time to file their returns to be eligible for the relief.
  • The new guidance states that it applies to individuals, trusts, estates, partnerships, associations or corporations.
  • No extended payment date is yet provided for the second or third quarter estimated tax payments.
  • There are no extended payment dates for the payment or deposit of any other type of federal tax, or for the filing of any federal information return as of this time.
  • Unlike the prior guidance issued Wednesday, March 18, the $1-million limit for individual and the $10-million limit for corporation payments have been lifted.

It is expected that states will follow the federal extension. So far, New York and Connecticut have indicated their intention to do so.

CARES Act

The Coronavirus Aid, Relief, and Economic Security Act or “CARES Act,” contains major tax relief provisions providing taxpayers with significantly, greater relief.

The current bill builds upon an earlier version of the CARES Act and is intended to be the third round of federal government support in the wake of the coronavirus public health crisis and associated economic fallout. The CARES Act builds on the two former pieces of legislation by providing more robust support to both individuals and businesses, including changes to tax policy.

Paid Leave for Employers and Employees

The U.S Department of Labor’s Wage and Hour Division recently released the “Families First Coronavirus Response Act: Employee Paid Leave Rights (FFCRA).” This Act requires certain employers to provide employees with paid sick or family leave for specified reasons related to COVID-19. The Division administers and enforces the new law’s paid leave requirements, that will apply from the effective date through December 31, 2020.

How this might this Act impact your family or business?

Under the FFCRA, an employee qualifies for paid sick time if he/she is unable to work (or unable to telework) due to these reasons.

Employees:

  • Two weeks (up to 80 hours) of paid sick time at the employee’s regular rate of pay where the employee is unable to work because the employee is quarantined (pursuant to Federal, State, or local government order or advice of a health care provider), and/or experiencing COVID-19 symptoms and seeking a medical diagnosis; or
  • Two weeks (up to 80 hours) of paid sick time at two-thirds the employee’s regular rate of pay because the employee is unable to work because of a bona fide need to care for an individual subject to quarantine (pursuant to Federal, State, or local government order or advice of a health care provider), or to care for a child (under 18 years of age) whose school or child care provider is closed or unavailable for reasons related to COVID-19, and/or the employee is experiencing a substantially similar condition as specified by the Secretary of Health and Human Services, in consultation with the Secretaries of the Treasury and Labor; and
  • Up to an additional 10 weeks of paid family leave at two-thirds the employee’s regular rate of pay where an employee, who has been employed for at least 30 calendar days, is unable to work due to a bona fide need for leave to care for a child whose school or child care provider is closed or unavailable for reasons related to COVID-19.

Employers:

The paid sick leave and expanded family and medical leave provisions of the FFCRA apply to certain public employers and private employers with fewer than 500 employees. Most employees of the federal government are covered by Title II of the Family and Medical Leave Act, which was not amended by this Act, and are therefore not covered by the expanded family and medical leave provisions of the FFCRA. However, federal employees covered by Title II of the Family and Medical Leave Act are covered by the paid sick leave provision.

Small businesses with fewer than 50 employees may qualify for exemption from the requirement to provide leave due to school closings or child care unavailability if the leave requirements would jeopardize the viability of the business as a going concern.

According to the Department of Labor, each covered employer (i.e., employers with fewer than 500 employees) must post the FFCRA Notice Poster in a conspicuous place on its premises. Covered employer may satisfy this requirement by emailing or direct mailing this notice to employees, or posting the FFCRA Notice Poster on an employee information internal or external website.

People First Initiative – Stimulus Checks

The IRS released a sweeping series of steps, called the People First initiative, to assist taxpayers by providing relief on a variety of issues ranging from easing payment guidelines to postponing compliance actions.

What most people want to know is, “How Much Will I Get?” This easy-to-use calculator provides you with an estimate of how much you should receive from the U.S. government.

The IRS also provided a series of frequently asked questions related to the stimulus checks.

Paycheck Protection Program (PPP)

An SBA loan that helps businesses keep their workforce employed during the Coronavirus (COVID-19) crisis. The Paycheck Protection Program is a loan designed to provide a direct incentive for small businesses to keep their workers on the payroll. SBA will forgive loans if all employees are kept on the payroll for eight weeks and the money is used for payroll, rent, mortgage interest, or utilities. This Program will be available through June 30, 2020.

Additional Resources

Other Assistance

In response to the Coronavirus (COVID-19) pandemic, small business owners in all U.S. states, Washington D.C., and territories are currently eligible to apply for disaster assistance.

Enhanced Debt Relief is also available in SBA’s other business loan programs to help small businesses overcome the challenges created by this health crisis.

For information on additional Lending options, please click here.

SBA provides local assistance via 68 district offices and a nationwide network of resource partners. To find resources near you, please click here.

Payroll & Paper Checks

At this time, employers should consider transitioning to direct deposit to pay employees. Your business and team could face hardships as additional restrictions may be enforced locally or at the state or national level. If you need help setting up direct deposit for your employees, please let us know.

As changes are announced, we will continue to keep you updated on new developments. In the meantime, stay well, be safe, and remain healthy.

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