Tax Return Due Date Extended to July 15; Tax Payments Deferred
On Friday, March 20, 2020 the United States Treasury extended the April 15, 2020 tax-filing deadline to July 15, 2020. Treasury Secretary Steven Mnuchin communicated this extension via Twitter stating, “All taxpayers and businesses will have this additional time to file and make payments without interest or penalties.”
The automatic extension applies to all individual and business federal income tax filings that would otherwise be due on April 15.
In IR 2020-18, the IRS also confirmed that taxpayer can defer federal income tax payments (including 1st quarter estimated taxes) that were otherwise due on April 15, 2020, to July 15, 2020, without incurring penalties and interest (regardless of the amount owed). IR 2020-18 explains that 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.
Importantly, taxpayers do not need to file any additional forms for this automatic federal tax filing and payment relief.
The deferral does not apply to payroll taxes, estate taxes or excise taxes, nor does it apply to estimated taxes due on June 15, 2020.
On March 18, 2020, President Trump signed into law the Families First Coronavirus Response Act (the “Act”) which provides relief to employees and small and midsize businesses due to the COVID-19 outbreak.
Under the Act, employers with less than 500 employees that are required to provide emergency paid sick leave and emergency paid family and medical leave under the Act are entitled to certain tax credits based on qualifying leave they provide between the effective date of the Act and December 31, 2020. Similar credits are available to self-employed individuals as well.
For employees that are unable to work because of their own COVID-19-related health issues, such employers may receive a refundable tax credit at the employee’s regular rate of pay, up to $511 per day for 10 days (for a maximum of $5,110).
For an employee who is caring for another with COVID-19-related health issues (or is caring for a child due to a school or child care facility closure or unavailability of child care provider due to COVID-19 issues), such employers may receive a refundable tax credit at two-thirds of the employee’s regular rate of pay, up to $200 per day for 10 days (for a maximum of $2,000).
In addition to the aforementioned tax credits related to sick leave, if an employee is unable to work because of a need to care for a child affected by a school or child care facility closure or whose child care provider is unavailable due to COVID-19 issues, such employers may receive a refundable child care leave tax credit at two-thirds of the employee’s regular pay, up to $200 per day (up to a maximum of $10,000). A total of 10 weeks of qualifying leave can be counted towards the child care leave tax credit.
The Department of Treasury and the IRS have indicated that guidance will be released this week allowing eligible employers who pay qualifying sick leave or child care leave to retain a corresponding amount of payroll taxes instead of depositing them with the IRS.
For more information, please contact J. Troy Terakedis at 614-744-2589, or any one of the attorneys in our Tax Group or Employee Benefits Group.