IRS Payment Extension
The Treasury Department and the Internal Revenue Service are providing special payment relief to individuals and businesses in response to the COVID-19 Outbreak. The filing deadline for tax returns remains April 15, 2020. The IRS urges taxpayers who are owed a refund to file as quickly as possible. For those who can't file by the April 15, 2020 deadline, the IRS reminds individual taxpayers that everyone is eligible to request a six-month extension to file their return.
This payment relief includes:
- Individuals: Income tax payment deadlines for individual returns, with a due date of April 15, 2020, are being automatically extended until July 15, 2020, for up to $1 million of their 2019 tax due. This payment relief applies to all individual returns, including self-employed individuals, and all entities other than C-Corporations, such as trusts or estates. IRS will automatically provide this relief to taxpayers. Taxpayers do not need to file any additional forms or call the IRS to qualify for this relief.
- Corporations: For C Corporations, income tax payment deadlines are being automatically extended until July 15, 2020, for up to $10 million of their 2019 tax due.
This relief also includes estimated tax payments for tax year 2020 that are due on April 15, 2020.
Penalties and interest will begin to accrue on any remaining unpaid balances as of July 16, 2020. If you file your tax return or request an extension of time to file by April 15, 2020, you will automatically avoid interest and penalties on the taxes paid by July 15.
This relief only applies to federal income tax (including tax on self-employment income) payments otherwise due April 15, 2020, not state tax payments or deposits or payments of any other type of federal tax. Taxpayers also will need to file state income tax returns.
California: The Franchise Tax Board (FTB) announced special tax relief for California taxpayers affected by the COVID-19 pandemic. Affected taxpayers are granted an extension to file 2019 California tax returns and make certain payments until June 15, 2020. This relief includes moving the various tax filing and payment deadlines that occur on March 15, 2020, through June 15, 2020, to June 15, 2020. This includes:
- Partnerships and LLCs who are taxed as partnerships whose tax returns are due on March 15 now have a 90-day extension to file and pay by June 15.
- Individual filers whose tax returns are due on April 15 now have a 60-day extension to file and pay by June 15.
- Quarterly estimated tax payments due on April 15 now have a 60-day extension to pay by June 15.
The FTB's June 15 extended due date may be pushed back even further to align with the extension granted by the Internal Revenue Service.
H.R. 6201: The Families First Coronavirus Response Act
Signed by President Trump last night, this bill responds to the coronavirus outbreak by providing paid sick leave and free coronavirus testing, expanding food assistance and unemployment benefits, and requiring employers to provide additional protections for health care workers.
Of particular importance to employers, HR6201 requires employers to provide Emergency Paid Sick Leave of 2 weeks if the employee is unable to work for any of the following reasons:
- The employee is subject to a Federal, State, or local quarantine or isolation order related to the coronavirus;
- The employee has been advised by a health care provider to self-quarantine due to concerns related to the coronavirus;
- The employee is experiencing symptoms of coronavirus and is seeking a medical diagnosis;
- The employee is caring for an individual who is subject to a quarantine or isolation order or advised to self-quarantine by a health care provider;
- The employee is caring for a child whose school or care provider is closed or unavailable due to coronavirus precautions
Eligible employees are those who work for employers with fewer than 500 employees (employers with less than 50 employees can be exempt if the requirements would jeopardize the viability of the business).
The big takeaway for businesses who have to pay this is that there is a payroll tax credit available equal to 100% of the emergency paid sick leave wages paid. The credit will offset their overall employer social security taxes owed for the quarter. The credit is capped per employee at $200 a day and per employee at $10,000 per calendar quarter. The daily employee credit cap is raised to $511 if the employee's leave is due to being subject to a quarantine or isolation order, have been advised by a health care provider to self-quarantine, or are experiencing coronavirus symptoms and seeking medical diagnosis.
This law is effective in 15 days and will be in place until the end of 2020. It is imperative that employers quickly assess whether or not they are subject to the Emergency Sick Pay Leave with an understanding that there is a quarterly tax credit available that will offset most if not all of the benefits they pay under this act.