Covid-19 Tax Relief Recap for Individuals and Businesses

As the coronavirus spreads, individuals and businesses are increasingly facing financial problems on top of the potential health concerns. In response to this, both the federal and New York State government have provided some tax relief. Here are a few developments:

Federal Taxes

The Treasury Department and the Internal Revenue Service have announced that individuals and businesses may defer filing and paying their taxes until July 15th., without penalties and interest, regardless of the amount owed.

In addition, the new IRS People First Initiative provides other relief including temporarily suspending audits, installment payments, offers in compromise, and various collection efforts. For more information, click here. The Family First Coronavirus Response Act also gives employers a refundable tax credit for 100% of the qualified sick leave wages paid to their employees under the sick leave and family medical leave programs that are part of the law. The Coronavirus Aid, Relief, and Economic Security Act (CARES Act) expands federal relief to businesses by allowing deferral of an employer’s portion of social security taxes for all of 2020. This must be repaid in two installments: the first due 12/31/2021, the second due 12/31/2022. Employers must continue to file payroll tax and pay Medicare taxes. Businesses may also be eligible for an employee retention tax credit equal to 50 percent of qualifying wages paid to each employee in a particular quarter, up to $10,000 per employee. However, these tax credits are not allowed where the employer takes advantage of the Paycheck Protection loan program. Additional information for taxpayers is available on the IRS Coronavirus webpage.

New York State

The State has extended the April 15, 2020 tax filing due date to July 15, 2020 for NYS personal income tax and corporation tax returns. In addition, taxpayers are permitted to defer all related tax payments due on April 15, 2020 to July 15, 2020 without penalties and interest, regardless of the amount owed.

Sales tax payments and returns were due March 20, 2020; however, penalty and interest may be waived for quarterly and annual filers who were unable to file or pay on time due to COVID-19. See Tax relief for quarterly and annual sales tax vendors affected by COVID-19 to request relief from penalties and interest. For additional guidance, see N-20-1, Announcement Regarding the Abatement of Penalties and Interest for Sales and Use Tax due to the Novel Coronavirus, COVID-19.

Notwithstanding this temporary action, failure to eventually remit the sales tax can still have significant consequences. Business owners who collect sales tax should read – Be Sure to File Your Sales Tax Returns – Even During COVID-19 – for some sales tax best practices. For additional updates and resources, see https://www.tax.ny.gov/press/alerts/nys-tax-response-to-covid-19.htm.

Business Resources

The city, state, and federal government are also offering COVID-19 assistance to businesses. For more information, visit these websites:

Small Business Administration –https://www.sba.gov/page/coronavirus-covid-19-small-business-guidance-loan-resources

NYS –https://esd.ny.gov/novel-coronavirus-faq-businesses

NYC – https://www1.nyc.gov/site/sbs/businesses/covid19-business-financial-assistance.page

These websites should be checked regularly as the government will likely implement additional measures in the coming weeks and months.

During this period, tax audits will continue although there may be delays in collections. In any event, a tax problem should be addressed as soon as possible when you have the most options for resolving the dispute.

If you have a tax problem, contact us for assistance. We are offering a free 15-minute consultation.

The information provided is solely for educational purposes. It is not intended to provide and does not constitute legal advice. Laws are subject to constant change. Every client should consult a qualified professional to discuss its, his or her rights, obligations, and unique circumstances.