The IRS, U.S. Treasury, Federal Reserve and federal government have rolled out numerous coronavirus relief package and deadline extensions to help both individuals and small business owners who have been financially affected by the coronavirus pandemic (COVID-19). (see official IRS coronavirus guidance)
Here’s a round-up of all the laws and acts enacted:
“Tax Day” moved from April 15 to July 15
The April 15 federal income tax filing due date has been extended to July 15, the U.S. Treasury Department and IRS recently announced. Here are the details from the government’s announcement regarding the coronavirus relief package:
- Filing deadline pushed back 90 days: The filing deadline has been postponed, from April 15 to July 15.
- Due date for tax payments also pushed back 90 days: Taxpayers can also wait until July 15 to pay federal income tax payments due without penalties and interest, regardless of the amount owed. This applies to all taxpayers, including individuals, trusts and estates, corporations and other non-corporate tax filers as well as those who pay self-employment tax.
- 2019 and 2020 tax payments eligible for extension: Payments that can be extended to July 15 include income and self-employment tax payments for a taxpayer’s 2019 taxable year as well as estimated income and self-employment tax payments for a taxpayer’s 2020 taxable year.
- Taxpayers do not need to file an extension: The 90-day extension from April 15 to July 15 is automatic for all taxpayers. No additional forms must be filled out. Individual taxpayers who need additional time to file their returns beyond the July 15 deadline can request a filing extension by filing Form 4868. Businesses who need additional time beyond July 15 must file Form 7004.
- File as soon as possible if you’re expecting a refund: This IRS says that most tax refunds are still being issued within 21 days, which is the normal turnaround time for issuing refunds. Filing electronically with refunds being directly deposited into your bank account is the quickest way to get your refund.
- Check your state and local governments for extension information: State and local governments are issuing their own policies regarding extensions. Since many state and local tax returns requires copies of a taxpayer’s federal tax return, you may still want to be prepared to file your returns and pay your taxes due by April 15 unless you hear otherwise.
Families First Coronavirus Response Act
The IRS, U.S. Treasury Department and the U.S. Department of Labor banded together to craft the Families First Coronavirus Response Act (Families Act). This new law provides businesses with fewer than 500 employees the funds to provide employees with paid leave, either for the employee’s own health needs or to care for family members, for COVID-19 related reasons.
Here are the key provisions of the bill:
- Paid sick leave for workers: For COVID-19 related reasons, employees receive two weeks (up to 80 hours) of paid sick leave at 100% of the employee’s pay.
- Paid childcare leave for workers: An employee who is unable to work because of a need to care for an individual who is quarantined, to care for a child whose school is closed or whose childcare provider is unavailable for reasons related to COVID-19, can received up to two weeks (up to 80 hours) of paid leave at 2/3 the employee’s pay.
- Complete coverage for employers: Employers receive 100% reimbursement for an employee’s paid leave related to COVID-19. Health insurance costs will also be reimbursed. Employers also face no payroll tax liability for the paid sick leave. Self-employed individuals receive an equivalent credit.
- Payroll tax credit provides fast refund: 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 (see below).
- IRS to offer cash advances: The IRS recognizes that some businesses won’t have enough excess cash to wait to get reimbursed after paying the new, required mandatory paid leave. To take immediate advantage of the paid sick leave credit, businesses can retain and access funds that they would otherwise pay to the IRS in payroll taxes. If these amounts are not sufficient to cover the cost of paid leave, employers can seek an expediated advance from the IRS by submitting a soon-to-be streamlined claim form. (NOTE: Click here to see an illustration of this potential cash shortfall problem.)
- 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 childcare is unavailable, in cases where the viability of the business is threatened.
Federal Reserve preparing aid package for “Main Street” small buinesses
The Federal Reserve announced on Monday it is crafting a coronavirus relief package in an effort to keep the U.S. economy from sliding into a deep recession. The Fed will be rolling out a “Main Street Business Lending Program” very soon to complement efforts by Congress by expand lending by the Small Business Administration.
The Fed said it will establish three new lending facilities that will provide up to $300 billion by purchasing corporate bonds, a wider range of municipal bonds and securities tied to such debt as auto and real estate loans.
High-deductible health plans can cover coronavirus testing costs
The point of having a high-deductible health plan (HDHPs) is that you have to pay for pretty much every expense until you reach your deductible. The original HDHP policy for COVID-19 testing was no different, requiring the insured to pay for the test if the deductible hadn’t been met.
Under new IRS guidance, however, your employer’s HDHP plan has the option of waiving the out-of-pocket costs of COVID-19 testing and treatment if an employee has yet to meet their deductible, without your employer getting in trouble with the HDHP police.
Keep in mind that employers are not required by the IRS to waive the COVID-19 testing costs – rather, they have the option to exempt the costs from an employee’s deductible requirements.
Individuals participating in HDHPs or any other type of health plan should consult their particular health plan regarding the health benefits for testing and treatment of COVID-19 provided by the plan, including the potential application of any deductible or cost sharing.
We will continue to update our clients and readers as more information becomes available about the next coronavirus relief package expected to be passed into law today.
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