How will it impact you?
On March 18, 2020, the U.S. Senate passed and President Trump signed a multibillion-dollar relief and stimulus bill meant to address the financial hardships for U.S. families and businesses as a result of the COVID-19 coronavirus outbreak.
Key aspects of the bill
The bill calls for several measures directed to individuals and primarily small businesses meant to ease the financial hardships resulting from the pandemic including:
Paid sick leave, family leave credits
The legislation includes two refundable tax credits that generally would help certain employers absorb the cost of included mandates to provide paid sick leave and paid family and medical leave to certain employees affected by the coronavirus.
Both credits would apply only to qualified sick and family leave wages paid with respect to the period beginning on a date selected by the Secretary of the Treasury (or the Secretary’s delegate) which is during the 15-day period beginning on the date of the enactment of this bill, and ending on December 31, 2020.
Mandates and credits not applicable to all employers
The statutory provisions allowing leave and resulting in credits do not apply to all employers:
- The paid family leave applies to employers with fewer than 500 employees, with possible exemptions for certain health care providers and first responders and businesses with fewer than 50 employees.
- The paid sick leave applies to (1) a private entity or individual which employs fewer than 500 employees and (2) a public agency (e.g., government) and any other entity that is not a private entity or individual with more than one employee.
Payroll tax holiday NOT mentioned
The proposal for direct cash payments to taxpayers – that is, the “economic impact payments” – appears to supplant for the time being the possibility of a temporary reduction in payroll taxes, something that President Trump has pushed for in recent weeks but is not included in the administration’s outline.
At a White House press conference on March 17, the president and Treasury Secretary Steven Mnuchin commented that a payroll tax holiday might not provide the immediate jolt to the economy the administration is seeking.
Treasury, IRS announce extended tax-payment deadline
In addition to the relief and stimulus bill enacted into law, the Treasury Department and Internal Revenue Service on March 18 issued guidance (see IRS Notice 2020-17) allowing all individual and other noncorporate tax filers to defer up to $1 million of federal income tax payments (including self-employment tax) due on April 15, 2020, until July 15, 2020, without penalties or interest.
The guidance also allows corporate taxpayers a similar deferment of up to $10 million of federal income tax payments that would be due on April 15, 2020, until July 15, 2020, also without penalties or interest.
According to the notice, the deadline extension applies solely to:
- Federal income tax payments (including payments of tax on self-employment income) due on April 15, 2020, for a taxpayer’s 2019 taxable year.
- Federal estimated income tax payments (including payments of tax on self-employment income) due on April 15, 2020, for a taxpayer’s 2020 taxable year.
The deadline extension does not apply to the payment or deposit of any other type of federal tax or for the filing of any tax return or information return.
The relief does not change the April 15 filing deadline.
Effective dates and transition
The law was effective when signed on March 18, 2020, with the provisions related to additional accrual of sick and family medical leave days to commence immediately. The Treasury is currently determining its timing and ability to issue relief payments. The tax payment deferral was an administrative precept effective even prior to the enactment of H.R. 6201. Guidance related to the refundable credits will be provided at a future date.
What to do next
We are happy to discuss the impacts this new legislation may present for your organization. Please reach out to Joel Gardosik (617-620-9705, jgardosik@cfgi.com), Chris Booth (508-789-3254, cbooth@cfgi.com) or Mark Gauthier (978-273-8457, mgauthier@cfgi.com) if you have any questions.