COVID-19 Update from Lethert
We hope you and your families are staying safe and healthy. The COVID-19 situation is a constantly developing and changing situation, affecting all people and industries. As tax professionals, we wanted to provide some additional helpful resources from within our industry during this challenging time
There is an excellent new COVID-19 resource center on the Thomson Reuters Website: https://www.thomsonreuters.com/covid-19
Many tax professionals are already receiving the daily Checkpoint newsstand email from Thomson Reuters, but just a reminder that anyone can sign up for this excellent daily news briefing right here: https://tax.thomsonreuters.com/en/checkpoint/news
We will post additional updates, links, articles and other helpful information as we receive it.
CARES ACT WILL PROVIDE BILLIONS OF DOLLARS OF RELIEF TO INDIVIDUALS, BUSINESSES, STATE AND LOCAL GOVERNMENTS, AND THE HEALTH CARE SYSTEM
Posted on April 9, 2020 by Lethert
After extensive negotiations between the U.S. House of Representatives, the U.S. Senate and the White House, an agreement has been reached on a massive stimulus bill to address the financial and health care crisis resulting from the coronavirus (COVID-19) pandemic.
As of this writing, the Coronavirus Aid, Relief, and Economic Security Act (CARES Act) has been passed by the Senate and is expected to be passed by the House, although the mechanics are still to be determined because most House members are currently in their home districts. The President has indicated that he will sign the legislation.
The CARES Act includes a “Marshall Plan” for the health care system to help provide needed treatment during the pandemic and financial assistance to state, local, tribal and territorial governments, as well as to private nonprofits providing critical and essential services. It also provides significant relief to individuals, businesses and other employers to help them weather the pandemic.
Key provisions for individuals, businesses and other employers
Here’s a quick look at some of the CARES Act provisions that may affect you — keep in mind that it’s possible that some provisions could change before the act is signed into law:
Individuals
Recovery rebates of up to $1,200 for singles, $1,200 for heads of households and $2,400 for married couples filing jointly — plus $500 per qualifying child — subject to income-based phaseouts starting at $75,000, $122,500 and $150,000, respectively
Expansion of unemployment benefits, including for self-employed and gig-economy workers
Waiver of the 10% penalty on COVID-19-related early distributions from IRAs, 401(k)s and certain other retirement plans
Waiver of required minimum distribution rules for IRAs, 401(k)s and certain other retirement plans
Expansion of charitable contribution tax deductions
Exclusion for certain employer payments of student loans
Businesses and other employers
Retention tax credit for eligible employers that continue to pay employee wages while their operations are fully or partially suspended as a result of certain COVID-19-related government orders
Deferral of the employer portion of payments of certain payroll taxes
Modification of net operating loss (NOL) and limitation on losses rules
Modification of the deduction limitation on business interest
Qualified improvement property technical correction, allowing qualifying interior improvements of buildings to be immediately expensed rather than depreciated over 15 years
Expansion of the ways the Small Business Administration (SBA) can help small businesses
THE IRS ANNOUNCES THAT INCOME TAX PAYMENTS DUE APRIL 15 CAN BE DEFERRED TO JULY 15, REGARDLESS OF THE AMOUNT
Posted on April 9, 2020 by Lethert
The IRS and the U.S. Treasury Department have been making a series of announcements to provide tax relief in the wake of the coronavirus (COVID-19) pandemic. After previously announcing that taxpayers could defer making federal income tax payments up to certain limits for three months, the IRS has now announced that taxpayers can postpone payments without penalties or interest “regardless of the amount.”
Filing and payment extension
According to new Notice 2020-18, any person with a federal income tax return or payment due on April 15, 2020, has until July 15, 2020, to file a return or make a payment. Specifically, a “person” includes an individual taxpayer, trust, estate, partnership, association, company or corporation. Taxpayers can defer payment of federal income tax (including any self-employment tax) owed for the 2019 tax year from the normal April 15 deadline until July 15. They can also defer their initial quarterly estimated federal income tax payments for the 2020 tax year (including any self-employment tax) from the normal April 15 deadline until July 15.
Previously, the IRS had issued guidance (in Notice 2020-17) stating that corporations could postpone tax payments up to $10 million and all other taxpayers could postpone payments up to $1 million without penalties or interest. In Notice 2020-18, the IRS now states: “There is no limitation on the amount of the payment that may be postponed.”
Normally, when you file an extension, you must still make a good-faith estimate of your tax liability and, by the normal filing deadline, pay the full amount estimated to be due. The relief in Notice 2020-18 is an exception to the general rule.
Taxpayers don’t need to file any additional forms to qualify for this automatic federal tax filing and payment relief. But, if you’re due a refund, you probably still want to file your income tax return as soon as possible so you can receive your money. The IRS stated that “most tax refunds are still being issued within 21 days.”