Taxes During COVID-19

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Graphic with money, a sign for taxes and Covid-19

On March 20, 2020, the IRS announced that the tax filing date has moved from April 15 to July 15.  Business and individual taxpayers will not be subject to additional interest and penalties on amounts due for 2019.

  • The first quarterly tax payment for 2020 is also due on July 15
  • The IRS is encouraging those expecting refunds to file as soon as reasonable, so they can get their refund checks more quickly.
  • On April 9, the Department of the Treasury and the IRS extended more than 300 tax filing deadlines
    • Relief for tax-exempt organizations and fiscal year businesses: tax returns and payments due between April and June are postponed until July 15, 2020.
    • Estate taxes and associated gift taxes: Tax return and payment deadlines typically due within nine months from the date of death, are postponed to July 15, 2020.
    • Administrative deadlines: For all taxpayers, an additional 270 administrative deadlines were extended to July 15, 2020.
      • These extensions appear to apply to 1031 exchanges. More clarity is needed, but it seems the language will automatically extend any 45-day and 180-day deadline in an existing 1031 exchange transaction that falls between April 1 and July 15, 2020 to July 15, 2020.
    • You can read the notice (2020-23) here

Tax credits related to FFCRA

  • Under FFCRA, employers with more than 50 employees are required to provide additional paid leave related to COVID-19. 100% of the employers’ costs for complying with FFCRA (for wages and the cost of health care benefits during the FFCRA leave period) can be recouped via payroll tax credits.
  • Employers can take a tax credit against (i.e. to offset) amounts owed for the employer’s portion of Social Security and Medicare taxes. An excess cost (above the amounts owed for SS and Medicare taxes) is a refundable tax credit.
  • To improve cashflow, employers can take this tax credit early as an advance
  • Self employed
    • FFCRA family leave and sick leave payments are treated as “wages” for income and payroll tax purposes, but the employer is not required to pay the employer’s share of FICA on those payments.
    • Employer is required to include the tax credits in income, but the wages paid are an offsetting deduction, so there should be a net zero effect
  • See your tax advisor for details

There are several other federal tax related changes described on our CARES Act blog.

In Washington:

  • On request, the Washington Department of Revenue Business Relief will provide extensions for filing and paying tax returns, assessments and billings, work with taxpayers on payment plan agreement to extend payment dates and reschedule planned audits.
  • In Clark County:
    • Property Tax Deadline Extended to June 3, 2020:for individual residential and commercial taxpayers. This extension order does not apply to mortgage companies or third party processors who make payments on behalf of taxpayers. Click here to read more.
    • Payment Plans for Businesses: Businesses that are financially impacted by the closure order and need to discuss payment arrangements for business personal property taxes, please click here and you can email the treasurer to begin those discussions.

In Oregon:

  • tax filings for corporate income/excise taxpayers:
    • filing due date for tax year 2019 is extended from May 15, 2020 until July 15, 2020. Returns due after May 15, 2020 are not extended at this time.
    • tax payment deadline for payments due with the 2019 return by May 15, 2020 is automatically extended to July 15, 2020. Payments for returns due after May 15, 2020 are not extended at this time.
    • Estimated tax payments for tax year 2020 are not extended.
  • Oregon Department of Revenue and the Corporate Activity Tax (“CAT”): Business are required to register within 30 days of passing the $750,000 in Oregon commercial activity for the year.
    • Businesses that passed the threshold in late February were required to register with the department by the end of March.
    • Businesses that are uncertain as to when they will reach the threshold due to COVID-19 are encouraged to use best judgment about when to register.
    • Businesses with an annual liability of less than $10,000 for the CAT will not be required to make quarterly payments (this is an increase of the liability threshold from $5,000).
    • NEW PPP, EIDL and Small Business Loans are considered not to be commercial activity and are NOT SUBJECT to Oregon’s Corporate Activity Tax.
    • Businesses with an annual liability of less than $10,000 for the CAT will not be required to make quarterly payments (this is an increase of the liability threshold from $5,000).
    • Oregon Department of Revenue will not assess underpayment penalties to taxpayers that made a good faith effort to estimate their first quarter payments for the CAT due April 30.
      • The department also said it would not assess penalties on businesses if they cannot make a payment now.
      • “If businesses know they’ll owe $10,000 or more in annual Corporate Activity Tax in 2020 and can pay, they should make estimated quarterly payments and comply with the law to the fullest extent possible,” the department’s new release said.
      • Click here for more information.

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