U.S. tax authorities across the country have taken emergency measures to provide relief for taxpayers in the wake of the Covid-19 pandemic. Businesses in particular have several tax benefits they can take advantage of as provided at both the state and federal level. Here are some of the major relief measures being offered at this time:
Extended tax filing deadline – Corporations and individuals now have until July 15, 2020 to file and pay their 2019 tax returns.
Employee Retention Credit (CARES Act, PL 116-136) – This is a refundable credit against payroll taxes on employee wages up to $10,000 (including covered health plan costs) paid between March 12, 2020 and January 1, 2021. In order to claim this credit, employers should report the amount of qualified wages on their quarterly payroll tax return (Form 941) beginning in the second quarter of 2020 and withhold that amount from their deposit with the IRS. If the employer can claim more than the total amount of payroll tax due, they should submit Form 7200 for an advance payment from the IRS.
- This credit is only applicable up to 50% of the qualified wages per employee (or $5,000 total).
- For employers with more than 100 employees, qualified wages are only those paid to employees who are not providing services due to a decline in gross receipts or suspended operations.
- For employees with fewer than 100 employees, qualified wages are those paid to an employee during a period of suspended operations or decline in gross receipts regardless of the employee’s status.
Families First Coronavirus Response Act (FFCRA, PL 116-127)– Under this program, businesses with fewer than 500 employees are eligible for immediate, dollar-for-dollar reimbursement for sick leave as required by the Act.
- Paid sick leave at the full rate of pay is required for employees who are quarantined, self-quarantined, or experiencing Coronavirus symptoms. The max rate of reimbursement under this provision is $511 per day.
- Paid sick leave at 2/3 regular pay is required for employees with substantially similar symptoms to Covid-19, or employees who need to care for an individual subject to quarantine or experiencing Covid-19 symptoms. This requirement also covers individuals who must care for a child whose school was closed due to Covid-19. The max rate of reimbursement under this provision is $200 per day.
- Businesses with fewer than 50 employees may be exempt from the requirement to provide paid sick leave to employees if the employee’s absence would jeopardize the viability of the business.
New York State
Extended tax filing deadline – 2019 personal income and corporate tax returns originally due on April 15, 2020 are now due July 15, 2020. Taxpayers can also file for an automatic extension until October 15, 2020 if the extension is requested by July 15 and an estimated payment is made with the request.
Abatement of penalties and interest for sales and use tax – The New York State Department of Taxation and Finance may now waive interest due on quarterly and annual sales tax filings due March 20, 2020. To obtain relief, vendors must file and remit sales taxes within 60 days of March 20th and must submit a request for relief on the department’s website.
Validity of electronic signatures – Governor Cuomo has issued an executive order that temporarily authorizes the Department of Taxation and Finance to accept electronic signatures on tax returns. This temporary measure does not apply to power of attorney documents.
To submit a digitally signed tax document, the taxpayer must include a cover letter that declares “The attached [name of document] includes [name of taxpayer/POA]’s valid signature and the taxpayer/POA intends to transmit the attached document to the Department of Taxation and Finance.”