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COVID-19 Tax Update

Today, Treasury Secretary Steven Mnuchin announced that individuals can defer tax payments up to $1 million for 90 days and corporations can defer tax payments up to $10 million for the same period. Specific details on tax payment relief were announced today by the IRS. Click to read the notice.

As of March 20, 2020, the IRS has updated the payment extension to allow taxpayers to “…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”.

Treasury Secretary Mnuchin commented that, “Americans should file their tax returns by April 15 because many will receive a refund.  Those filing will be able to take advantage of their refunds sooner”.  “This deferment allows those who owe a payment to the IRS to defer the payment until July 15 without interest or penalties.  Treasury and IRS are ensuring that hardworking Americans and businesses have additional liquidity for the next several months.”

The guidance provided claimed that this will “result in about $300 billion of additional liquidity in the economy in the near term”.  Additionally, the Senate voted 90 to 8 to pass the COVID-19 relief legislation (H.R. 6201) approved by the House, clearing the measure for the White House without further change. This legislation provides a new business tax credit for certain employers with fewer than 500 employees to provide paid sick leave and paid family and medical leave through the end of 2020. The Senate is discussing a range of options for an economic stimulus package to respond to the economic effects of COVID-19. The Treasury Department today released proposals for a $1 trillion stimulus plan.

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