If you’re a business or individual who owes tax payments to the federal government, now is a good time to not pay.
On March 21, the IRS announced the coronavirus (COVID-19)-motivated tax deadline and deferral adjustments. In addition to Tax Day being moved from April 15 to July 15, it said, “Taxpayers can also defer federal income tax payments due on April 15, 2020, to July 15, 2020, without penalties and interest, regardless of the amount owed. This deferment 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.”
If needed, additional tax filing extensions through Oct. 15 are available by request; nevertheless, payments are due by July 15. Interest and penalties on unpaid taxes will be assessed beginning July 16.
However, if you are due a federal tax refund, file your tax return soon because there’s no reason to wait.
To deal with the economic hammering the country is taking from COVID-19, the Families First Coronavirus Response Act (FFCRA), passed by Congress and signed into law by President Donald Trump, goes into effect April 2 and requires businesses with fewer than 500 employees to provide employees with a list of paid benefits.
The FFCRA is technically in two sections. The first (Emergency Paid Leave Act) requires in several cases employers to provide full‐time employees with 80 hours of paid sick leave at the employee’s regular rate; however, in other cases, it’s at two‐thirds the employee’s regular rate.
Paid leave wages are limited to $511 per day up to $5,110 total per employee if they are affected by COVID-19, and up to $200 per day, or $2,000 total, if they are caring for someone else.
An eligible employee can take paid sick leave if they are ordered into quarantine by a government, told by a health care provider to self-quarantine, showing symptoms and seeking a medical determination, the employee must care for someone with COVID-19 or who’s been told by a doctor to self-quarantine, has a child whose school or place of care has been closed, anything ordered by the U.S. Health and Human Services secretary.
The second section of the FFCRA (Emergency Family and Medical Leave Expansion Act) essentially extends these benefits to 10 weeks to employees who must care for their children.
It's necessary to understand each FFCRA section to know which employees are eligible for what benefits. A good description of the FFRCA is found in the National Law Review ad online.
Employers justifiably worried about the cost will be, generally speaking, reimbursed through payroll tax credits and other forms of tax relief.
Employers may receive a tax credit equaling up to 100% of their FFRCA mandated employee leave expenses, which includes associated insurance costs. There is also an exemption from the employer portion of the 6.2% Social Security payroll tax.
None of this is free. There’s an associated cost to the U.S. treasury, government revenues and spending, the national debt, and the interest all of us as taxpayers pay on the national debt. The argument is that the cost of taking action is offset by the cost of digging out from more serious economic damage if nothing is done.
The situation is changing rapidly, and the scenarios here have more parts to them now and could, or will, be affected in the coming days. The extent of the business and individual tax and cost implications to ease COVID-19’s economic effects should be discussed with your financial adviser, tax attorney or accountant. There’s not a moment to lose.
This article first appeared in KnoxNews.Share