Mar 19, 2020

Important Updates Regarding Washington’s Response to the Coronavirus

Please see below for important updates regarding relief efforts that have evolved over the last day or two.

Plan to Send Checks to Americans Being Discussed But Still Evolving:

In the Tuesday, March 17 White House Press Briefing, Treasury Secretary Mnuchin discussed the possibility of sending checks directly to Americans as part of a stimulus package to help households and businesses, perhaps within the next two weeks. A Treasury proposal circulating Wednesday envisions two rounds of payments, one starting in early April and another starting in the middle of May, with amounts varying by family size and income level. Details must still be worked out and the ultimate plan approved.

The government last sent money to Americans in 2008 during the economic downturn. At that time, the payments were up to $600 per adult and $300 for every child. This plan is expected to be part of a $1 trillion package that the Senate is about to develop, which will then require approval by the House.

IRS Releases Notice on 90-Day Payment Delay But Confusion and Policy Questions Remain:

The IRS released, on Wednesday, March 18, Notice 2020-17 with guidance on a 90-day delay until July 15 without the imposition of penalties or interest for payments due to the IRS on April 15. The Notice may be confusing taxpayers (and some tax preparers) who understood that Treasury Sec. Mnuchin was speaking about an extension of the filing deadline, when he mentioned this subject in a White House press briefing on Tuesday.

The relief applies to payments due on April 15 for the 2019 tax return or for first quarter estimates on the 2020 return. The relief applies only to the first $1,000,000 of aggregate payments due at April 15 for all taxpayers other than corporations. Corporations have a $10,000,000 limit.

President Trump Signs the Families First Coronavirus Response Act:

On Wednesday, March 18, 2020, the Senate passed the Families First Coronavirus Response Act (FFCRA),an $8.3 billion stimulus package, after which the bill was signed into law by the President. The House had originally passed the bill on Saturday, March 14, 2020. On Monday evening, March 16, the House passed amendments to the FFCRA before sending it to the Senate. You can read about the FFCRA in the Wolters Kluwer Tax Briefing on Coronavirus Tax Relief published March 18, 2020 on our webpage (link below).

Key features of the FFCRA relative to businesses include:

  • Paid Leave – The new law requires employers with fewer than 500 employees to provide paid sick leave to employees who are forced to stay home due to quarantining or to care for a family member (“qualified paid sick leave), or to care for a child if school/other child care options are closed (“qualified family leave”). Sick leave pay and related credits are limited to 10 days of wages.
  • Credits – Employers and self-employed will receive refundable tax credits against payroll taxes as compensation for this paid leave.
  • Credits for Sick Leave Pay – This will be refundable credits against payroll taxes and claimed on a quarterly basis. Credit is equal to 100 percent of sick pay wages but limited to $200/day or $511/day, depending on the reason for employee leave.
  • Credits for Family Leaves Wages – This will be a separate refundable payroll tax credit against the employer’s share of the payroll tax, limited to $200 per day, up to an aggregate of $10,000.
  • Exemptions– Exemptions may also be sought by employers with fewer than 50 employees whose economic viability would be jeopardized by complying with the new category of leave, under criteria that would be determined by the Secretary of Labor.

The accounting, tax and general business implications of COVID-19 is a rapidly evolving situation and BMSS will provide updated and/or revised information as it becomes available. Some information that we provide, for example, updates on the progress, passage, and contents of The Families First Coronavirus Response Act, may raise legal implications in addition to tax and accounting issues. Our mention of any such matters is for general information purposes and not intended to be legal advice. We encourage you to consult with your legal counsel on such matters.