IRS Issues News Releases and Establishes a Special Section Focused on Steps to Help Taxpayers, Businesses and Others Affected by the Coronavirus
The IRS has issued the several news releases in response to the COVID-19 pandemic:
IRS Notice 2020-18
Tax Day now July 15. Treasury, IRS extend filing deadline and federal tax payments regardless of amount.
IR-2020-54 IRS: High-deductible health plans can cover coronavirus costs.
- The Treasury Department and IRS announced the federal income tax filing due date (for individual, trusts, estates, partnerships, corporations, and associations) is automatically extended from April 15, 2020, to July 15, 2020.
- Taxpayers do not need to file any additional forms or call the IRS to qualify for this automatic federal tax filing and payment relief. Individual taxpayers who need additional time to file beyond the July 15 deadline can request a filing extension by filing Form 4868. Businesses who need additional time must file Form 7004.
- We can expect further details from the IRS to follow as to the application of this notice to other tax returns, such as gift or charitable entity tax returns.
- This notice also included guidance allowing all individual and other non-corporate tax filers to defer payment of federal income tax (including self-employment tax) payments (including estimated tax payments) due on April 15, 2020, until July 15, 2020, without penalties or interest - and without limit - updating previous similar guidance that included limits on amounts. The guidance also allows corporate taxpayers a similar deferment from federal income tax payments that would be due on April 15, 2020, until July 15, 2020, without penalties or interest.
Families First Coronavirus Response Act ("Act") and IR-2020-57
- The Internal Revenue Service today advised high-deductible health plans ("HDHPs") can pay for 2019 Novel Coronavirus (COVID-19)-related testing and treatment, without jeopardizing their status. This also means an individual with an HDHP that covers these costs may continue to contribute to a health savings account.
- In Notice 2020-15, posted on IRS.gov, the IRS said health plans that otherwise qualify as HDHPs will not lose that status merely because they cover the cost of testing for or treatment of COVID-19 before plan deductibles have been met. The IRS also noted that, as in the past, any vaccination costs continue to count as preventive care and can be paid for by an HDHP.
Treasury, IRS, and Labor announce plans to implement Coronavirus-related paid leave for workers and tax credits for small and midsize businesses to swiftly recover the cost of providing Coronavirus-related leave as a result of passage of the Act.
Tax Highlights of the Act:
- This relief to employees and small and midsize businesses is provided under the Families First Coronavirus Response Act ("Act"), signed by President Trump on March 18, 2020 (Act text available here and technical explanation of the Act's tax credits available here).
- On March 20, 2020, the U.S. Treasury Department, IRS, and the U.S. Department of Labor announced (in IR-2020-57) that small and midsize employers can begin taking advantage of two new refundable payroll tax credits (Paid Sick Leave Credit and Child Care Leave Credit), designed to immediately and fully reimburse them, dollar-for-dollar, for the cost of providing Coronavirus-related leave to their employees.
- The Act is intended to help the United States combat COVID-19 by giving all American businesses with fewer than 500 employees funds to provide employees with paid leave, either for the employee's own health needs or to care for family members. The legislation will enable employers to keep their workers on their payrolls, while at the same time ensuring workers are not forced to choose between their paychecks and the public health measures needed to combat the virus.
- Paid Sick Leave for Workers
- For COVID-19 related reasons, employees receive up to 80 hours of paid sick leave and expanded paid child care leave when employees' children's schools are closed or childcare providers are unavailable.
- Complete Coverage
- Employers receive 100 percent reimbursement for paid leave pursuant to the Act.
- Health insurance costs are also included in the credit.
- Employers face no payroll tax liability.
- Self-employed individuals receive an equivalent credit.
- Fast Funds
- Reimbursement will be quick and easy to obtain.
- An immediate dollar-for-dollar tax offset against payroll taxes will be provided.
- Where a refund is owed, the IRS will send the refund as quickly as possible. The IRS is to release details on this procedure shortly.
- Small Business Protection
- Employers with fewer than 50 employees are eligible for an exemption from the requirements to provide leave to care for a child whose school is closed, or child care is unavailable in cases where the viability of the business is threatened.
- Easing Compliance
- Requirements subject to 30-day non-enforcement period for good faith compliance efforts.
To take immediate advantage of the paid leave credits, businesses can retain and access funds that they would otherwise pay to the IRS in payroll taxes. If those amounts are not sufficient to cover the cost of paid leave, employers can seek an expedited advance from the IRS by submitting a streamlined claim form that will be released next week.
For more information about these credits and other relief, visit Coronavirus Tax Relief
at Information regarding the process to receive an advance payment of the credit will be posted next week.
If you have any questions or need assistance, please contact our COVID-19 Task Force