Dougall Conradie COVID-19 Update
CARES Act for Individuals Webinar - June 4th, 2020 at 1:00 PM
Click Here to register or to view to On Demand after the live webinar.
On Demand Webinars:
PPP Loan Forgiveness and How to Manage Disbursements of Funds - May 28th at 1:00 PM
Click here to register for this webinar and also for access to the On Demand webinar after is has been completed.
April 10, 2020 - IRS Update on Stimulus Checks for Non-Filers
March 30, 2020 - COVID-19 and Tax Impacts FAQs
Extended Tax Deadlines
What relief has the IRS granted?
Due to the coronavirus, the IRS has extended the April 15 filing and federal income tax payment deadline to July 15, 2020.
On March 20, 2020, the IRS formalized their relief by publishing Notice 2020-18. Notice 2020-18 supersedes Notice 2020-17 which was issued on March 17. Notice 2020-18 provides that those with a filing deadline of April 15 (for a federal income tax return) have an automatic extension to July 15. No extension form (Form 4868 or Form 7004) is necessary.
The postponement of payments is available for federal income taxes (including payments of tax on self-employment income) due on April 15 for the 2019 tax year and to estimated income tax payments due on April 15 for the 2020 tax year. There is no limitation on the amount of the payment that may be postponed (which is an update from the superseded Notice 2020-17).
The postponement means that the period from April 15, 2020 through July 15, 2020 will be disregarded by the IRS for purposes of calculating any interest, penalties or additions to tax for failure to file a tax return or pay federal income taxes postponed by the notice.
More guidance can be found on the IRS’s FAQs page.
Does this affect second quarter estimated tax payments normally due June 15?
Notice 2020-18 does not address second quarter estimated income tax payments. IRS FAQ #16 also confirms this treatment. Absent further relief, this payment is still due June 15.
When are contribution deadlines for IRAs and HSA?
Based on IRS FAQs, the deadline for making contributions to IRAs, HSAs and MSAs is extended to July 15, 2020.
If I already filed my 2019 income tax return and scheduled taxes to be paid by April 15, 2020, can this payment be cancelled and/or rescheduled?
For those who have already filed their 2019 income tax return and scheduled the balance due to be withdrawn from their bank account by April 15, 2020, they may cancel the scheduled payment by calling the U.S. Treasury Financial Agent at 888.353.4537 at least two business days prior to the scheduled date. Then, go to irs.gov/directpay to reschedule the tax payment to meet the new deadline. For more information, see IRS FAQ #14.
What are states doing with filing and payment deadlines
Different states are doing different things. Oregon has postponed the filing and payment deadline to July 15, 2020. Other states have made different changes. Check out the latest developments on state tax filings related to the coronavirus.
Tax Credits for Employers (Families First Coronavirus Response Act, H.R. 6201)
What is the Families First Coronavirus Response Act?
The Families First Coronavirus Response Act, H.R. 6201, that was signed into law on March 18 contains refundable tax credits for employers who provide paid sick leave or family or medical leave for their employees who miss work for various coronavirus-related reasons.
Subject to limitations and exceptions, employers of less than 500 employees are required to provide mandatory sick time and paid family leave but are eligible for payroll tax credits to offset the costs.
How does the paid family leave work?
Subject to certain limitations, the bill provides an employer a payroll tax credit that equals 100% of the qualified family leave wages paid by the employer.
It requires employers with fewer than 500 employees to provide public health emergency leave under the Family and Medical Leave Act (FMLA), P.L. 103-3, when an employee is unable to work or telework due to a need for leave to care for a son or daughter under age 18 because the school or place of care has been closed, or the childcare provider is unavailable, due to a public health emergency related to COVID-19.
The paid leave is available for up to 10 weeks.
- The first 10 days of the leave may consist of unpaid leave. However, the employee may choose to use any accrued paid time off.
- The amount paid per day is calculated based on the “two-thirds rule” discussed in H.R. 6201.
- The credit is generally available for up to $200 in wages for each day an employee receives qualified family leave wages. A maximum of $10,000 in wages per employee would be eligible for the credit.
- The paid leave benefit is available to self-employed taxpayers.
Employers with fewer than 50 employees can be exempted from the requirement and healthcare providers and emergency responders can be excluded from this rule.
How does the paid sick time work?
Two weeks of sick pay must be paid when the employee is unable to work or telework for any of the following:
- The employee is subject to a federal, state or local quarantine or isolation order related to COVID-19.
- The employee has been advised by a healthcare provider to self-quarantine due to concerns related to COVID-19.
- The employee is experiencing symptoms of COVID-19 and is seeking a medical diagnosis.
- The employee is caring for an individual who is subject to an order.
- The employee is caring for a son or daughter of such employee if the school or place of care of the son or daughter has been closed, or the childcare provider of such son or daughter is unavailable, due to COVID-19 precautions.
- The employee is experiencing any other substantially similar condition specified by the Secretary of Health and Human Services in consultation with the Secretary of the Treasury and the Secretary of Labor.
There are exceptions for healthcare workers and emergency responders. And, employers with fewer than 50 employees can be exempted from the requirement.
The amount of sick pay is set at:
- The employee’s standard rate of pay (or minimum wage, if greater) for leave taken in situations 1, 2 and 3 discussed above and two-thirds of that amount for leave taken in situations 4, 5 and 6 above.
The maximum amount of paid sick time is:
- $511 per day ($5,110 in total) for leave paid because of situations 1, 2 and 3 above
- $200 per day ($2,000 in total) for leave paid due to situations 4, 5 and 6 above
The duration of the sick pay is 80 hours for full-time employees and equal to the average hours worked over a two-week period for part-time workers.
What is the tax credit applied against?
The credit can be used against the employer’s portion of Social Security (6.2%) and Medicare (1.45%) taxes.
What guidance has been released related to this legislation?
Payroll tax delay
The CARES Act delays payment of certain employer payroll taxes until December 31, 2021 and December 31, 2020. For self-employment taxes, there will also be delays in portions of their tax payments.
Other COVID-19 Tax-Related Questions
What effect will the COVID-19 outbreak have on IRS operations?
The IRS is continuing to monitor issues during the outbreak. More information about operations can be found in this statement from the IRS.
Are 2020 Required Minimum Distributions (RMD) still required?
The IRS has suspended the requirement to take an RMD for 2020. 2019 RMDs that were postponed to 2020 still must be taken by the filing deadline.
How are withdrawals from retirement accounts impacted?
Eligible taxpayers may take up to $100,000 in coronavirus-related distributions from retirement plans without being subject to the 10% additional tax for early distributions. Eligible distributions can be taken up to Dec. 31, 2020. Coronavirus-related distributions may be repaid within three years.
An eligible taxpayer is one who has been diagnosed with SARS-CoV-2 virus or COVID-19 disease or whose spouse or dependent has been diagnosed with SARS-CoV-2 virus or COVID-19 disease or who experiences adverse financial consequences from being quarantined, furloughed, or laid off, or who has had his or her work hours reduced, or who is unable to work due to lack of child care.
March 26, 2020 - Highlights of the bill currently working its way through Congress including the following items:
- Direct payments of $1,200 to adults and $500 per child. These payments phase out at higher income limits
- 2020 Required Minimum Distributions (RMD) are NOT required
- Certain withdrawals from retirement accounts won't incur the a 10% penalty for those under age 59.5
- Federal student loan payments may be suspended thru September 2020
- Forbearance on mortgage payments for those with federally backed mortgages, including certain multi-family properties
- Unemployment insurance will be available to more categories of workers and benefits may span to 39 weeks from the typical 26 weeks. It would also provide an extra $600 a week for four months
- Loans to small business with amounts spent on payroll, rent, utilities and certain other costs cause a portion of the loan to be waived
- Economic injury disaster loan (EIDL) for independent contractors
- Deferral of certain payroll tax payments for business owners
March 18, 2020 - During this time of great uncertainty, we want to reassure you that we continue to conduct business even as we adapt to the difficult circumstances, we are all encountering during this global COVID-19 pandemic. As you know, this is one of the busiest times of year with tax filing deadlines rapidly approaching. Below are some of the actions we are taking to provide for the continuity of our services while also addressing the safety of our employees, their families, and our clients.
Actions we are taking include:
- Canceling all in-person meetings based on advice from healthcare and government authorities
- Encouraging the use of teleconference and emails to communicate meeting tax deadlines
- The federal April 15th payment date has been postponed. We will continue to monitor this fluid change
- We continue to work toward completing as many tax returns as possible prior to any deadline
- We will communicate changes in filing deadlines and options available to you
- Extensions will be filed where necessary
- Implementing enhanced cleaning measures for our offices for the protection of our employees and clients
Ensuring we can continue to operate from outside of our offices if government actions require us to physically close our offices
Steps you can take to help:
- Mail in or send us your tax information electronically (we will provide a secure link)
- Email us with questions or concerns
- Schedule phone calls (or virtual meetings) when we need to talk. Please call our main number to schedule a meeting (971-249-9920).
As always, we appreciate your continued confidence and appreciate your flexibility and support as we work through this difficult time for all of us. We will do our very best to maintain the quality and timeliness of our services to you.
Our thoughts remain with everyone affected by the COVID-19 crisis.
Stimulus Check Estimator
Economic impact payments: What you need to know
IRS Q & A
Payments for 2019 taxes and Q1 estimates are due July 15, 2020.
IRS to suspend certain compliance actions
Stimulus package payment questions
FAQ’s about Oregon’s filing deadline delay
City of Portland filing deadline delay information
For other states:
Business owner resources
The rapidly changing situation has made it difficult for business owners to know and understand options that are available to them and their employees. Some available resources include unemployment insurance, tax credits for employers with employees on sick leave, and disaster loans from the SBA. Please reach out and we will do our best to discuss resources specific to your business.
SBA Disaster loans:
For employers laying off employees (including possibly themselves):
For employers that reduces hours for a group of workers:
For employers with employees on paid leave: