Client Alert: COVID-19 Tax Developments
- Review our In-Depth: CARES Act Tax Provisions.
In March 2020, the U.S. Congress passed three separate stimulus packages to address the effects of the COVID-19 (coronavirus) pandemic. The Coronavirus Preparedness and Response Supplemental Appropriations Act (which did not contain tax provisions) was signed into law on March 6, 2020, and the Families First Coronavirus Response Act (the “FFCRA”) was signed into law on March 18, 2020. In addition to this legislation, the Internal Revenue Service (the “Service”) has also issued guidance to advise taxpayers on certain response and relief measures to the coronavirus.
More recently, on March 27, 2020, the President signed the Coronavirus Aid, Relief, and Economic Security Act (the “CARES Act”) to provide an even larger stimulus package. The below summary is intended to highlight the key tax aspects of the recent law changes. We anticipate additional legislation and guidance to be issued by the government in the coming weeks and months. Please keep in mind that some of the relief provisions provided here may not be available to the extent certain other relief measures have already been utilized.
Tax Filing Date Extension
In Notice 2020-18, the Service postponed the due date for both filing returns and making income tax payments from April 15, 2020 to July 15, 2020, without penalties or interest. This extension applies to both individuals and businesses. The Service has also clarified this extension as applying to 2019 IRA contributions.
FFCRA Tax Provisions
To learn more about The Families First Coronavirus Response Act, visit: https://www.bfkn.com/in-depth-covid-19-new-employer-obligations
The FFCRA generally requires employers with 500 or fewer employees to provide additional paid leave to their full-time and part-time workers impacted by the coronavirus. To alleviate the financial burden to employers arising from these additional compensation costs, the FFCRA provides companies subject to the FFCRA refundable payroll tax credits through 2020. These credits are a dollar-for-dollar match of the wages required to be paid to an employee under the FFCRA and may be used to offset the employer portion of Social Security taxes. The credit amount may be increased if certain payments are made by an employer to a qualified health plan and by the amount of Medicare tax imposed on wages paid pursuant to the FFCRA.
CARES Act Tax Provisions
Click here to review the CARES Act tax provisions in more detail: www.bfkn.com/in-depth-cares-act-tax-provisions
- Tax Provisions Relating To Individuals
- Recovery Rebates For Individuals
- Special Rules For Use Of Retirement Funds
- Temporary Waiver Of Required Minimum Distribution Rules For Certain Retirement Plans & Accounts
- Allowance For Partial Above-The-Line Deduction For Charitable Contributions
- Modification Of Charitable Contribution Limitation
- Exclusion For Certain Employer Payments Of Student Loans
- Tax Provisions Relating To Businesses
- Increased Possibility Of Amended Returns
- Paycheck Protection Program
- Employee Retention Credit
- Delayed Payroll Tax Payments
- Changes To Net Operating Loss & Excess Business Losses
- Alternative Minimum Tax Credits
- Limitation On Business Interest
- Bonus Depreciation
- Increase In Charitable Contribution Limitations
We recommend reviewing the following pandemic-related business and legal considerations we have been discussing with our clients:
We Can Help You
Contact us with any questions. We are here to assist you with evaluating the tax provisions as they pertain to your organization.