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Congress Responds to COVID-19: Extended Income Tax Payment Deadline, Refundable Payroll Credit for Certain Employers, and More Stimulus to Come

March 19, 2020 Business & Tax Blog Legislation

Relief for American taxpayers amid the COVID-19 outbreak came in two forms on Wednesday, March 18, 2020. First, IRS action to postpone the April 15 income tax payment deadline. Second, Congress enacted the Families First Coronavirus Response Act (H.R. 6201), which provides for a refundable payroll tax credit for small businesses. This is the second COVID-19 funding bill. President Trump signed the bill into law shortly after its passage by the Senate. Both the Notice and the Families First Coronavirus Response Act are summarized below.

Notice 2020—17, Relief for Taxpayers Affected by Ongoing Coronavirus Disease 2019 Pandemic

  • Individuals can defer tax payments up to $1 million for 90 days (until July 15, 2020). This $1 million limit is also applicable to married individuals.
  • The Treasury Department indicated that the $1 million limit is also meant to cover small business and pass-through entities.
  • Corporations can defer tax payments up to $10 million for the same period (until July 15, 2020).
  • Estimated income tax payments for a taxpayer’s 2020 taxable year are included within these deferrable amounts.
  • Does not extend the payment or deposit of any other type of Federal tax
  • Does not extend the deadline for filing any tax return or information return
  • Interest, penalties, or additions to tax with respect to these postponed income tax payments will be waived during the 90-day period, starting on April 15, 2020.

Families First Coronavirus Response Act (H.R. 6201)

  • Provides 100% refundable tax credit to private-sector employers with fewer than 500 employees that are required to provide paid sick leave and paid family leave benefits
    • For sick leave, covered employers will pay employees their full wages up to $511 per day and $5,100 in the aggregate when an employee cannot work due to Federal, state, or local ordered quarantine or isolation, an employee has been told by a healthcare provider to self-quarantine, or the employee is experiencing symptoms of COVID-19. Employers are required to pay employees two-thirds of their full wages, up to $200 per day and $2,000 in the aggregate when employees are unable to work due to providing care to an individual subject to Federal, state, or local ordered quarantine or isolation, care for a child whose school or place of care has been closed due to COVID-19, or due to another similar condition specified by federal officials.
    • For family leave, the amount of mandated paid leave may not exceed $200 per day and $10,000 in the aggregate. The first 10 days of public health emergency leave may consist of unpaid leave after which paid leave is required.
  • Other detailed rules apply.

“Stage-Three” Economic Stimulus Package

The Treasury Department also released a two-page summary of key elements of the Trump Administration’s “Stage-Three” proposals for a broad stimulus package to further address the economic impact of COVID-19, including:

  • $200 billion for an exchange stabilization fund for specified uses, such as the airline industry and loan guarantees for other severely distressed sectors;
  • $500 billion for “economic impact” payments in the form of two rounds of direct payments to individuals based on income and family size to be issued on approximately April 6 and May 18; and
  • $300 billion for small business interruption loans.

Various senators have proposed other stimulus packages that focus on childcare costs incurred due to school and daycare closures and providing further relief to businesses.