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.

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.”

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 Coronavirus Aid, Relief, and Economic Security Act (CARES Act) has passed the Senate and, as of this writing, awaits a vote in the House. The bill contains several provisions that address the burdens on individuals as a result of the coronavirus (COVID-19) pandemic. Among other things, it provides recovery rebates of up to $1,200 for singles and $2,400 for married couples filing jointly (plus $500 per qualifying child) subject to income-based phaseouts; waives the 10% penalty tax on early retirement account withdrawals for coronavirus-related distributions; and temporarily waives the required minimum distribution rules for certain retirement accounts. Contact us for more information.

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As many Americans are forced to stay home to help stop the spread of the coronavirus (COVID-19), businesses are losing revenue and having to lay off employees. The Coronavirus Aid, Relief, and Economic Security Act (CARES Act) includes provisions to help businesses survive, including a new employee retention tax credit; deferral of the employer portion of payments of certain payroll taxes; a modification of the net operating loss rules by providing a five-year carryback and temporarily removing the 80% limitation for carryforwards; changes to the business interest deduction; and an expansion of the ways the Small Business Administration can help small businesses. Contact us for details.

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The IRS has provided guidance on how taxpayers can report the election to roll over gains from the sale of empowerment zone assets in 2018. The empowerment zone rules were retroactively extended through Dec. 31, 2020. Businesses and individual residents within such a zone are eligible for tax incentives. One incentive is the deferral of capital gains tax on the sale of qualified assets that are replaced with other empowerment zone assets (a “rollover of gain”). If a taxpayer is eligible to roll over gain from empowerment zone assets in 2018, he or she will need to file Form 1040-X to claim the rollover and deferral of gain. For more information: IRS.GOV: Instructions for Schedule D (Form 1040) Rollover of Gain from Empowerment Zone Assets is Available for 2018

Late on March 25, the U.S. Senate passed the Coronavirus Aid, Relief, and Economic Security Act (the CARES Act) by a vote of 96-0. The bill, which provides $2 trillion in coronavirus (COVID-19) relief, will now move to the U.S. House of Representatives for consideration. The House is expected to vote on the bill on March 27. The proposed law contains a wide variety of relief, including small business loans, expanded unemployment aid, $100 billion for hospitals and health systems, funds for industries hit by the virus and direct cash payments to individuals under a certain income threshold. We’ll provide more information as it becomes available.

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You probably know by now that, due to the coronavirus (COVID-19) pandemic, the IRS has announced that taxpayers have until July 15 to file their 2019 federal tax returns (rather than April 15) and to make payments that would otherwise be due on April 15. But to qualify for that relief, do you have to be directly affected by COVID-19? The answer is no. Specifically, the IRS says “you do not have to be sick, or quarantined, or have any other impact from COVID-19 to qualify for relief.” You only need to have a tax return or payment due on April 15. Keep in mind, this relief doesn’t apply to federal income tax returns and payments due on any other date. IRS.GOV: Filing and Payment Deadlines Questions and Answers

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Does your health insurance plan include a tax-smart health savings account (HSA) or perhaps an Archer Medical Savings Account (MSA)? If so, you may be aware that for prior years, you could continue making tax deductible contributions to your account up to the date you file your return or April 15, whichever is later. Due to the coronavirus (COVID-19) outbreak, the filing and tax paying deadline for 2019 federal tax returns has been moved to July 15. That means you now also have until July 15 to contribute to your HSA or MSA. For more information contact us, or see question 21 on this list of frequently asked questions from the IRS: IRS.GOV: Filing and Payment Deadlines Questions and Answers

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Taxpayers who make estimated tax payments are generally expected to make their first quarter (Q1) payments for 2020 by April 15. However, because of the coronavirus (COVID-19) emergency, the filing and tax paying deadline for 2019 tax returns has been extended to July 15, 2020. Along with that, certain other tax tasks that were due on April 15 have also been extended, including the due date for the Q1 2020 estimated tax payment. However, as of this writing, the June 15 due date for the second quarter estimated tax payment has not been extended. Contact us with questions.